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Business
Japan's Good Year
Shin-Etsu continues strong performance, while other firms rebound
by Jean-François Tremblay
May 23, 2005
| A version of this story appeared in
Volume 83, Issue 21
EARNINGS
Major Japanese chemical firms performed strongly in the fiscal year that ended March 31. Shin-Etsu continued to post record earnings, and Mitsui Chemicals and Asahi Kasei doubled theirs compared with the previous year.
Sumitomo Chemical will pay a special dividend after posting net earnings of $601 million, its highest ever. The company enjoyed particularly strong demand for basic chemicals like caprolactam, styrene, and propylene oxide. Its sales of electronic materials, such as polarizing films for flat-panel displays, grew 41.5% under the influence of surging demand.
Shin-Etsu has been posting record profits every year for more than a decade, and it did so again in its latest fiscal year with a 24.5% earnings rise. The company says it enjoyed strong sales in its major business segments as a result of favorable economic conditions.
At Asahi Kasei, booming demand from China and the U.S. and the recovery in Japan led to a doubling of earnings. The company builds houses and also produces synthetic fibers, basic industrial chemicals, and electronic materials.
Mitsui boosted operating income in its petrochemical and basic chemical businesses by 80%. The segments account for 60% of the company's sales.
Mitsubishi Chemical raised its profit margin to 2.5%, a sharp improvement from the heavy losses it suffered just a few years ago. The company ran its petrochemical plants at full capacity during a period of thriving demand.
Typical of Japanese companies, Mitsubishi attributes its improved profitability more to favorable business conditions than to decisions made by its management, even though the company has rejuvenated its leadership and initiated several reforms in the past five years.
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