PROFITS SURGE FOR JAPANESE | May 24, 2004 Issue - Vol. 82 Issue 21 | Chemical & Engineering News
Volume 82 Issue 21 | p. 12 | News of The Week
Issue Date: May 24, 2004


Chemical producers benefit from strengthening of the world economy
Department: Business

Large Japanese chemical companies reported a sharp improvement in profit in the 2003 fiscal year that ended on March 31. After years of lackluster results, the financial performance of Japanese producers is now becoming comparable to that of Western firms.

JSR Corp., a producer of synthetic rubber and electronic materials, was one of the best performers, improving its net earnings by 76% to $183 million. JSR's net return on sales of 7% for its 2003 fiscal year is better than DuPont's 4.6% return in the 2003 calendar year. JSR credits strong demand for materials used to manufacture flat-panel displays.

For at least the 10th straight year, Shin-Etsu Chemical achieved record net earnings. The firm is raising its dividend by 2 yen, to 16 yen per share. Shin-Etsu says it achieved higher sales of polyvinyl chloride worldwide. Despite poor housing starts, sales of PVC rose even in Japan because of an increase in price. In addition, the firm experienced strong demand for its entire range of electronic materials.

Sumitomo Chemical boosted its net earnings by 10% to $325 million. Its profit would have been higher if Sumitomo had not chosen to amortize a loss in its employee benefit plan. Sales of electronic materials rose by almost 50%, allowing a 30-fold improvement in operating profit in the segment. But Sumitomo's petrochemical business recorded an operating loss as a result of the high price of naphtha feedstock and the negative impact of the appreciating yen on profits from foreign sales.

Teijin Chemicals returned to profitability after reporting a net loss last year of $203 million resulting from exceptional items. Other than not recording major exceptionals, Teijin attributes its improved performance to stronger sales across all of its business segments.

Mitsui Chemicals, which could not operate several of its Japanese petrochemical plants for two unscheduled weeks following safety violations, reported a 40% drop in net earnings to $118 million.

The performance of Japanese chemical producers mirrored that of the Japanese economy, which grew by an annual rate of 5.6% in the first three months of 2004 as a result of strong exports and rising consumer demand.

Fiscal 2003 was healthy for Japanese chemical makers

Asahi Kasei $11,865.8 $262.2 5.0% nm
Dainippon Ink 9,227.2 60.1 1.3 164.3%
JSR Corp. 2,603.9 183.2 11.3 76.1
Mitsubishi Chemical 18,225.4 327.0 2.0 62.0
Mitsui Chemicals 9,969.5 118.0 3.0 -39.0
Shin-Etsu Chemical 7,883.4 708.1 4.4 2.5
Sumitomo Chemical 10,965.6 324.9 4.0 10.0
Teijin Chemicals 8,278.8 80.0 -2.0 nm
Toray 10,303.9 197.9 5.4 261.1

NOTE: Currency converted at March 31, 2004, rate. a Net earnings. nm = not meaningful. SOURCE: Company data


Chemical & Engineering News
ISSN 0009-2347
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