Tokyo, Japan—Tosoh Corporation is pleased to announce its full-year consolidated results for the 2017 fiscal year (from April 1, 2016, to March 31, 2017). Consolidated net sales for the year under review were ¥743.0 billion (US$6.9 billion), down ¥10.7 billion, or 1.4%, from fiscal 2016. The decrease resulted from a drop in petrochemical prices associated with declining fuel and raw material costs, including for naphtha, and from declines in the export sales prices for our products because of a strong yen.
Our operating income for fiscal 2017 was ¥111.2 billion (US$1.0 billion), up ¥41.8 billion, or 60.2%, compared with fiscal 2016 because of improvements in the terms of trade and lower raw material and fuel prices. Ordinary income increased ¥47.3 billion, or 71.8%, to ¥113.1 billion (US$1.0 billion). And net profit attributable to owners of the parent company was up ¥36.0 billion, or 90.7%, to ¥75.7 billion (US$698.3 million).
During fiscal 2017, the Japanese economy continued to see a gradual recovery in employment and income with the influence of Japanese government economic policy. Concern continued, however, over the persistent and increasing economic uncertainty overseas. Particularly worrisome are the policy trends that will take hold in the wake of Britain’s Brexit vote to leave the European Union and of the new administration taking office in the United States and the rising threat to geopolitical stability from problems in the Middle East and on the Korean peninsula.
Results by business segment
Petrochemical Group
Petrochemical Group net sales fell ¥13.7 billion, or 7.8%, to ¥161.7 billion (US$1.5 billion) compared with fiscal 2016. The group’s operating income, however, increased ¥8.5 billion, or 72.9%, to ¥20.1 billion (US$185.3 million).
Petrochemical product shipments were steady in ethylene, propylene, and other olefins but prices fell as a result of decreases in the cost of naphtha and other raw materials and fuel.
Prices of polyethylene resin products in Japan likewise fell, reflecting lower naphtha prices. But exports of chloroprene rubber and chlorosulfonated polyethylene increased on strong demand overseas. Their prices, though, dropped on account of the strong yen.
Chlor-alkali Group
The Chlor-alkali Group’s net sales fell ¥164.0 million, or 0.1%, compared with fiscal 2016, to ¥279.7 billion (US$2.6 billion). Improved trade conditions during the year nevertheless yielded an increase in operating income of ¥29.9 billion, or 166.4%, to ¥47.9 billion (US$442.3 million).
Caustic soda prices in Japan gradually decreased, but export prices for caustic soda increased because of improved market conditions overseas. Shipments of vinyl chloride monomer and polyvinyl chloride resin remained strong; however, prices for these products decreased because of the strong yen and the fall in naphtha prices.
Cement shipments decreased domestically as demand fell in Japan. Cement exports, though, increased.
Shipments of methylene diphenyl diisocyanate (MDI) increased, but export prices of MDI fell, largely because of a strong yen.
Specialty Group
Net sales by the Specialty Group in fiscal 2017 increased ¥1.4 billion, or 0.8%, year on year, to ¥175.9 billion (US$1.6 billion). Operating income also increased, to ¥35.4 billion (US$326.6 million), a rise of ¥2.7 billion, or 8.2%.
Ethyleneamine product prices declined as a result of the strong yen and because of softening markets overseas.
Separation-related products witnessed an increase in shipments of liquid chromatography packing materials. Diagnostic-related products similarly saw an increase in shipments of in vitro diagnostic reagents.
Shipments of high-silica zeolites for application in automobile catalytic converters likewise increased, as did shipments of zirconia for use in dental materials and ornamental products. The year also saw an increase in fused silica glass shipments for the semiconductor industry.
Engineering Group
Engineering Group net sales increased ¥2.4 billion, or 2.8% over fiscal 2016, to ¥86.6 billion (US$799 million) in fiscal 2017. Operating income improved ¥568 million, or 12.4%, to ¥5.1 billion (US$47.5 million).
Tosoh’s water treatment business increased its sales during the year under review through growth in plant construction, maintenance, and reconstruction projects for general industrial wastewater treatment and water purification facilities. Its overseas sales were steady to the electronics in industry in Taiwan and to the petrochemical industry in Southeast Asia.
Sales by the Engineering Group’s construction subsidiaries increased.
Other
Other net sales decreased ¥584.0 million, or 1.5%, compared with fiscal 2016, to ¥39.1 billion (US$361.3 million). Operating income was ¥2.7 billion (US$24.8 million), an increase of ¥118 million, or 4.6%.
Sales by trading companies and other operations trended low for the year in review.
Note: For reference purposes only, US dollar amounts have been translated, unless otherwise indicated, from yen at the rate of ¥108.35 = US$1, the average exchange rate during the period under review.
Outlook for the fiscal year ending March 31, 2018
For the time being, a gradual recovery in the Japanese economy is anticipated amidst improvements in employment and in income. There are, though, so many unknowns given the international political situation and economic climate that reduce optimism for the long-term continuation of Japan’s economic recovery.
The Tosoh Group faces a business climate in which it must remain cautious of fluctuations in raw material and fuel prices and in overseas markets. Management believes that the Tosoh Group must respond swiftly and flexibly to changes in its business environment. We need in particular to respond to economic trends in Asia and in other emerging economies.
The Tosoh Group’s forecast for fiscal year 2018, the year ending March 31, 2018, calls for net sales of ¥770 billion, for operating income and ordinary income of ¥100 billion each, and for net profit attributable to owners of the parent company of ¥68 billion. These performance forecasts are predicated on domestic naphtha prices of ¥41,000 a kiloliter and an exchange rate of ¥110 to the US dollar.
TOSOH CORPORATION
WHO WE ARE
Tosoh is the parent of the Tosoh Group, which comprises over 100 companies worldwide and a multiethnic workforce of over 12,000 people and generated net sales of ¥743.0 billion (US$6.9 billion at the average rate of ¥108.35 to the US dollar) in fiscal 2017, ended March 31, 2017.
WHAT WE DO
Tosoh is one of the largest chlor-alkali manufacturers in Asia. The company supplies the plastic resins and an array of the basic chemicals that support modern life. Tosoh’s petrochemical operations supply ethylene, polyethylene, and functional polymers, while its advanced materials business serves the global semiconductor, display, and solar industries. Tosoh has also pioneered sophisticated bioscience systems that are used for the monitoring of life-threatening diseases. In addition, Tosoh demonstrates its commitment to a sustainable future in part by manufacturing a variety of eco-products.
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DISCLAIMER
This document may contain forward-looking statements, including, without limitation, statements concerning product development, objectives, goals, and commercial introductions, which involve certain risks and uncertainties. Forward-looking statements are identified through the use of the word anticipates and other words of similar meaning. Actual results may differ significantly from the results expressed in forward-looking statements.