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Earnings for Japanese chemical makers slumped in fiscal 2022

Companies blame a poor economy for slow sales

by Alexander H. Tullo
May 19, 2023

Japanese chemical companies ground through a tough fiscal year 2022. For the period, which ended on March 31, sales rose for nearly every major firm, but earnings were down almost across-the-board as companies grappled with sluggish economic conditions and rising energy and raw material costs.

Japan's 2022 results
Earnings dropped sharply for most leading chemical firms.
Earnings table for Japanese companies in fiscal 2022.
Source: C&EN tabulations based on company documents.

Sumitomo Chemical saw its profits decline 95%, even as sales rose nearly 5%. In its earnings statement, the company blamed a poor global economy compared to 2021: “Although the impact of the COVID-19 pandemic eased, economic growth was held back by such factors as global monetary tightening to control inflation and a delay in the recovery of China’s economy.”

Sales in Japan benefited from a rise in consumer spending, Sumitomo said, but high raw material prices weighed on earnings. The company saw strength in materials for semiconductor fabrication but weakness in those for displays, largely because the trend of people buying devices to stay at home during the pandemic had run its course.

Mitsubishi Chemical Group said the global economy “continued to modestly trend upward” throughout the year. However, it noted, rising raw material costs and tightening monetary policy by central banks to control inflation have been increasing the risk of an economic downturn. The firm’s profits declined 46% during the year, but it would have seen an increase if not for charges related to its chemical and healthcare segments.

Shin-Etsu Chemical’s results were the strongest of the group: sales rose 35% and earnings jumped 42%. The company’s main complaint wasn’t about its Japanese business but rather about its large US polyvinyl chloride enterprise. Monetary tightening is raising interest rates, cooling the construction activity that creates demand for PVC pipe and fixtures. “The market today can generally be described as being in a state of inactivity, or what sailors call ‘the doldrums,’ ” the company said in a conference call with investors.

Asahi Kasei suffered a loss for the year, though sales increased by 11%. While selling prices for its products increased, volumes slipped in some sectors, such as engineering plastics.

Ube posted a loss for the year and also saw sales decline. The company attributed the drop in sales to a cement-related business. It blamed higher raw material prices and weak demand in its polymer and chemical segment for the profit decrease.



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