Tosoh Reports on Nine Month Consolidated Results for Fiscal 2014 (the interim period from April 1, 2013, to December 31, 2013)

February  03,  2014 -

Tokyo, Japan—Tosoh Corporation is pleased to announce its consolidated results for the first nine months of its 2014 fiscal year, from April 1, 2013, to December 31, 2013. Consolidated net sales amounted to ¥560.5 billion (US$5.6 billion), up ¥86.1 billion, or 18.1%, over the amount recorded for the same period a year earlier. Factors contributing to the increase included the lessening impact of the accident at the Nanyo Complex’s No. 2 Vinyl Chloride Monomer Plant, adjustments to domestic prices based on a rise in the cost for naphtha and other raw materials, and adjustments to export prices based on the weakening of the yen.

Profits also jumped substantially year on year for the first nine months. Supported by improvements in volume sold and in terms of trade, the company posted operating income of ¥28.9 billion (US$291.3 million), an increase of ¥17.2 billion, or 145.9%, over operating income for the same period the previous year. Ordinary income for the first nine months increased ¥22.3 billion, to ¥36.8 billion (US$370.4 million), or 153.4%, over ordinary income for the same period last year. This increase was attributed to exchange rate gains. Tosoh’s net income for the first nine months of fiscal year 2014 climbed ¥17.2 billion, or 312.2%, to ¥22.7 billion (US$228.2million).

In the first nine months of fiscal 2014, signs of a self-sustaining recovery in Japan’s real economy strengthened. The recovery is being driven by the impact of the lifting of long-term deflation and the ripple effect of the Japanese government’s monetary and fiscal initiatives. Financial markets strengthened amid rising stock prices and a weakening yen. In addition, business confidence continued to spread and improve while consumer spending remained firm amid improving numbers for employment and personal income.

Results by business segment

Petrochemical Group
Petrochemical Group net sales for the first nine months of fiscal 2014 rose ¥31.7 billion, or 22.9%, compared with group net sales for the same period the year before, to ¥170.2 billion (US$1.7 billion). The group’s operating income increased ¥4.1 billion, or 56.7%, to ¥11.3 billion (US$113.7 million).

Shipments of olefins, such as ethylene and propylene, expanded because of production increases. Those production increases resulted from fiscal 2014 not being a scheduled plant maintenance year. In addition, increased costs for naphtha allowed for increases in product prices, and cumene benefited from a weaker yen and consequently higher returns from exports.

Polyethylene resin benefited from a recovery in the photovoltaic cell market that boosted shipments of ethylene vinyl acetate copolymer. In addition, Tosoh implemented domestic price increases to reflect higher naphtha costs. Shipments of chloroprene rubber (CR) and chlorosulphonated polyethylene (CSM) expanded on the back of recovering demand in markets abroad and improved export prices because of the weaker yen. 

Chlor-alkali Group
Chlor-alkali Group’s net sales for the first nine months increased ¥41.5 billion, or 25.0%, compared with the same period a year earlier, to ¥207.6 billion (US$2.1 billion). The group registered operating income of ¥2.5 billion (US$25.6 million), up ¥7.3 billion from an operating loss recorded in the same period last year. 

The Chlor-alkali Group’s exports and domestic shipments of caustic soda fell during the first nine months of fiscal 2014. The decline for exports was attributed to weakening markets abroad for caustic soda. A recovery in our vinyl chloride monomer (VCM) manufacturing volumes supported an increase in VCM and polyvinyl chloride (PVC) shipments. Moreover, the weaker yen and strengthening of overseas markets improved export prices. A PVC price increase implemented in spring 2013 resulted in higher gains on domestically sold PVC.

The group’s shipments of cement increased as a result of strong demand created by the ongoing rebuilding efforts related to the Great East Japan Earthquake. 

Shipments of urethane raw materials likewise expanded in Japan and export prices improved because of the weaker yen. 

Specialty Group
Net sales for the Specialty Group in fiscal 2014’s first nine months amounted to ¥108.9 billion (US$1.1 billion), an increase of ¥15.9 billion, or 17.1%, over the group’s net sales for the same period the preceding fiscal year. The group recorded an ¥8.3 billion, or 145.3%, increase in operating income, to ¥14.1 billion (US$141.5 million).

Shipments of ethyleneamines by the Specialty Group decreased because of adjustments to production volumes that were made as part of an effort to improve profitability. An increase to prices and the depreciation of the yen, however, provided for gains. The group’s shipments, meanwhile, of bromine and bromine fire retardant products rose.

Similarly, the group’s shipments of separation-related products, and especially of its liquid chromatography packing materials, expanded. Among the group’s diagnostic-related products, shipments of automated immunoassay (AIA) equipment and in vitro diagnostic reagents also increased.

Shipments of electrolytic manganese dioxide for dry cell and rechargeable batteries rose as did shipments of high-silica zeolites (HSZ) for petrochemical and automobile catalytic converter applications. Zirconia shipments likewise increased. 

Engineering Group
Net sales for the Engineering Group in the first three quarters were ¥43.5 billion (US$437.6 million), a decrease of ¥4.0 billion, or 8.4%, year on year in fiscal 2013. The group’s operating income deteriorated further, declining ¥2.9 billion from the same period last year, resulting in an operating loss of ¥838.0 million (US$8.4 million).

Despite an overall increase in domestic water treatment business orders, the Engineering Group’s sales of water treatment facilities, services, and related chemicals declined because of postponement of capital investment, maintenance, renovation, and other business by domestic clients in the electric power generation industry and industry in general. In contrast, overseas orders and sales rose on the strength of improved industrial performance, particularly in the electronics industry. 

The group’s construction-related companies likewise experienced a decrease in sales compared with the same period the year before.

Other
Other net sales for the first nine months of fiscal 2014 increased ¥882.0 million, or 3.0%, over net sales for the same period the year before, to ¥30.3 billion (US$305.2 million). Other operating income was ¥1.9 billion (US$18.9 million), an increase of ¥349 million, or 22.8%.

Sales by trading companies and logistics subsidiaries increased.

Note: For reference purposes only, US dollar amounts have been translated, unless otherwise indicated, from yen at the rate of ¥99.36 = US$1, the average exchange rate during the period under review. 

The Japanese government has initiated aggressive monetary and other policies to address Japan’s economic issues. Japan’s economy is showing strong signs of a steady recovery. Risk remains, though, that a downward swing in the global economy could topple a recovery in Japan. The Tosoh Group is therefore making every effort to boost its profitability. It is expanding its sales volume, maintaining an optimum pricing structure, and reducing costs throughout its operations, among other things.

Tosoh’s performance forecasts for fiscal 2014 remain unchanged from those announced on November 1, 2013. These full-year forecasts are based on a standard price for naphtha of ¥65,000 per kiloliter and on an exchange rate of ¥95.00 to the US dollar.

Performance Forecasts for Fiscal Year 2014 (April 1, 2013 - March 31, 2014)

Download a detailed release here »