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Japan Delivers Steady Results

First half: Chemical companies are buoyed by improving economic conditions

by Jean-François Tremblay
November 10, 2014 | A version of this story appeared in Volume 92, Issue 45

Table showing Japan's first half sales and earnings, change from 2013, and profit margin.

The global economy has not exactly boomed over the past few months, but Japan’s largest chemical makers made the best of what growth there was. In the first half of the fiscal year that will end on March 31, 2015, most companies reported higher profits than they did a year ago.

Japanese firms offered a mix of reasons for their robust performance. A few reported strong demand for specific materials. Others said profit margins improved even when volume remained stable. And some simply credited improving economic conditions, particularly in Europe and Japan.

Toray Industries attributed its performance to both the economy and strong demand for some materials. The firm improved its net earnings by more than 40%, a surge that carried its profit margin to a respectable 4.4%.

“The global economy in general continued to expand steadily,” the company stated, noting that China and Southeast Asia are exceptions. “The U.S. economy showed clear signs of recovery, and Europe as a whole picked up steadily.”

Less effusive than Toray about the economy, Shin-Etsu Chemical managed to boost its net income by 5.9%. Operating income in the company’s polyvinyl chloride business declined 16%, but margins in silicones climbed by nearly a third. Shin-Etsu also lifted the profitability of its semiconductor silicon business by more than 12%.

Alone among the Japanese majors, Teijin reported a loss. The firm is launching a restructuring that includes ending R&D in Osaka, shuttering polyester fiber plants in Japan, and closing a polycarbonate subsidiary in Singapore.


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