INVESTORS

Review of Operations: Petrochemical Group


Forward-Looking Statements: Annual reports contain estimates, projections, and other forward-looking statements, which are subject to unforeseeable risks and uncertainties. Readers should understand that Tosoh’s business and financial results could differ significantly from management’s estimates and projections.

For reference purposes only, US dollar amounts have been translated, unless otherwise indicated, from yen at the rate of ¥112.68 = US$1, the prevailing exchange rate at the end of the fiscal year under review.

Tosoh Corporation’s 2016 fiscal year covers the period from April 1, 2015, to March 31, 2016.

 

icon-PC.jpg

Snapshot

The Petrochemical Group supplies diverse customers with conventional and high-performance and specialty products. Polymers, including polyethylenes and functional polymers, and olefins are the group’s main product lines, and the group maintains its competitive edge by moving its products upstream, managing its product mix, cutting its costs, and diversifying its product lines. The Petrochemical Group bridges the gap between the Specialty and Chlor-alkali Groups in Tosoh’s dual commodities and specialties strategy.

Tosoh has utilized olefin feedstock from the Petrochemical Group to become an integrated manufacturer of hydrocarbon-based products and their derivatives, including ethylene, propylene, cumene, and aromatic compounds. Customers use olefins to manufacture a broad range of products, from automotive additives to food flavors and fragrances.

The Petrochemical Group’s polymer operations manufacture ethylene vinyl acetate (EVA); low-density polyethylene (LDPE); linear low-density polyethylene (LLDPE); high-density polyethylene (HDPE); and such functional polymers as chloroprene rubber (CR), adhesive polymers, and engineering plastic resins. The polymer operations adapt product specifications to meet customer needs for polymers in consumer and industrial products. Various grades of EVA are found in everything from solar cells to shoe soles. LDPE is used in medical applications and food packaging. And HDPE is applied in injection moldings and high-purity pharmaceutical containers.

Chlorosulphonated polyethylene (CSM) rubber and polyphenylene sulfide (PPS) feature in the Petrochemical Group’s functional polymer lineup. CSM is a highly durable rubber, and Tosoh is the leading global CSM producer. PPS is also in great demand globally as an engineering plastic, as it helps automakers develop lighter, more fuel efficient vehicles.

toggle

Group Performance and Markets

Tosoh fiscal 2016 Petrochemical figures
 

Significantly Improved Profitability

The Petrochemical Group’s net sales decreased 21.6% from a year earlier, to ¥175.4 billion (US$1.5 billion). The group’s contribution to Tosoh’s consolidated net sales likewise declined, from 27.6% to 23.3%. In contrast, operating income rose ¥4.7 billion, or 67.7%, to ¥11.6 billion (US$103.0 million), owing to increased sales volumes, and accounted for 16.7% of Tosoh’s consolidated operating income. The group’s operating margin was 6.6%, up from 3.1% a year earlier.

Among shipments of olefin products, cumene shipments rose because of increased demand for derivatives. The cumene market, though, weakened abroad, and decreases in the cost of raw material feedstocks translated into low prices for cumene products in the Japanese market.

Shipments of polyethylene resin increased amid improved trade conditions for exports because of the weak yen and lower raw material prices. But polyethylene resin product prices in Japan declined, reflecting falling naphtha prices. The weak yen, meanwhile, improved export prices for CR and CSM.

toggle

Developments

toggle

Strategies and Outlook

toggle

Medium-term Business Plan