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Japanese Chemical Makers Perform Well In First Half

Earnings: Major companies benefit from cheaper yen

by Jean-François Tremblay
November 11, 2013 | A version of this story appeared in Volume 91, Issue 45

Major Japanese chemical makers returned to profitability or improved their earnings in the first half of the fiscal year ending March 31, 2014.

Several companies credit the improvement in their performance to the lower value of the yen. The Japanese currency has dropped 26% in value compared with the U.S. dollar since September 2012.

Sumitomo Chemical swung to earnings of $127 million in the first half after recording a loss of $133 million in the year-earlier period. Sumitomo reported that the cheaper yen made its products lower priced overseas.

A consistently strong performer, Shin-Etsu Chemical outdid itself in the half with a profit margin of more than 11%. Shin-Etsu is the world’s top producer of polyvinyl chloride and silicon wafers. In the PVC business, the company’s sales increased 20% compared with a year ago, and earnings rose 40%. Although Shin-Etsu’s sales of silicon wafers fell 2%, the firm managed to increase earnings in that business 15%.

The cheaper yen helped with overseas sales, but companies with significant market in Japan also did well. Asahi Kasei achieved a respectable profit margin of 5.1% in the first half. Earnings for the company’s business in residential homes, which are mostly sold in Japan, rose 40% compared with a year ago. Asahi also did well in basic chemicals. Styrene, for example, was a highly profitable material owing to outages at foreign competitors.


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