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Business

Japanese Firms Keep Improving

Most companies achieve strong operational performance during first half

by Jean-François Tremblay
November 21, 2005 | A version of this story appeared in Volume 83, Issue 47

Earnings

First-half profits for the fiscal year that will end March 31, 2006, improved at most large Japanese chemical companies; they enjoyed strong demand from Japan and the rest of Asia and performed fewer balance-sheet adjustments.

Mitsubishi Chemical and Mitsui Chemicals sharply improved their net profit compared with a year ago. Net earnings nearly doubled at Mitsubishi, and Mitsui turned a loss into a $152 million gain. Last year, the two performed costly downward revaluations of some of their assets to comply with new accounting standards.

Sumitomo Chemical achieved its highest first-half profit ever. Sales increased in all business segments except fine chemicals, where the company encountered intensifying competition. Sumitomo recorded a gain from the divestment of subsidiaries and improved margins in basic chemicals, petrochemicals, and agrochemicals. New facilities for electronic chemicals also came on-line.

Dainippon Ink & Chemicals declared a $32 million net loss despite improving its operating income by 3.7%. The loss was caused by writing off the value of its former U.S. subsidiary Reichhold, which it had bought for $540 million in 1987 and sold for a dollar earlier this fall.

Fiber and plastics makers Teijin and Toray both declared lower net earnings despite achieving higher sales and operating earnings. Unlike a year ago, Teijin did not post a large exceptional gain on the sale of securities. Toray recorded special losses on its provisions for retirement benefits and on the scrapping of facilities.

Shin-Etsu boosted its net by nearly 20%. Unlike most other companies, where profits fluctuated because of special items, Shin-Etsu simply increased sales and margins in all of its major business segments.

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