Volume 85 Issue 21 | p. 6 | News of The Week
Issue Date: May 21, 2007

Japan Profits Rising

Major Japanese firms once again boosted their full-year results
Department: Business

It's raining profits in the Land of the Rising Sun. In the fiscal year that ended March 31, nine of 10 major Japanese companies reported a sizable improvement in their performance in terms of sales and earnings.

Shin-Etsu Chemical in particular achieved earnings of $1.3 billion, a 34% increase over last year's performance and the first time ever that a Japanese chemical firm has broken the $1 billion mark in earnings. This year marks the 12th consecutive year of record earnings at Shin-Etsu, the world's top producer of silicon wafers and polyvinyl chloride. The firm said it benefited from strong economic conditions in Japan and the rest of the world.

Sumitomo Chemical also achieved another year of record earnings: $798 million on the back of a 15% surge in total sales. The profitability of the company declined, however, from 5.8% one year ago to 5.2% in the fiscal year that just ended. This was due largely to an 84% drop in margins in the company's electronic materials business, which accounts for 15% of its total sales.

Mitsubishi Chemical Holdings, Japan's largest chemical company, posted a 17.3% earnings gain on an 8.9% increase in sales. The earnings increase, however, was due mainly to a decrease in extraordinary losses. The company's income from operations actually fell by 3.8% because of a weaker market for petrochemicals.

Alone among the majors, Kaneka posted a 35% drop in earnings. The company says its life sciences business, including drug actives and intermediates, performed poorly. It also notes that it faced increased competition in its functional foodstuffs business.

The major firms are divided in their outlook for the current year. Shin-Etsu notes that business conditions are uncertain, but it reckons it can improve its earnings by another 12% in the current year. More pessimistic, Sumitomo expects its earnings to shrink by 25%, partly due to scheduled maintenance shutdowns at some of its petrochemical plants.

 
Chemical & Engineering News
ISSN 0009-2347
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