Sumitomo Chemical Group swings to loss of 2.71B yen in H1 ended Sept. 30 from profit of 2.51B yen in year-ago period on large extraordinary losses, decline in ordinary income; sales up 9B yen to 998.3B yen
October 31, 2011
– The Sumitomo Chemical Group’s sales for the half-year ended September 30, 2011 were ¥998.3 billion, an increase of ¥9.0 billion compared with the same period of the previous fiscal year. Operating income was ¥54.0 billion, representing an increase from the first half of the previous fiscal year, but ordinary income, at ¥49.0 billion, declined from the same period of the previous fiscal year because of lower equity in earnings of affiliates. The Group recorded a net loss of ¥2.7 billion, representing a decline from the first half of the previous year, because of large extraordinary losses in addition to the decline in ordinary income.
Sumitomo Chemical decided to pay an interim dividend of ¥6 per share.
The Sumitomo Chemical Group’s financial results by business segment for the half-year were as follows.
Sales of methyl methacrylate increased due to a rise in overseas market prices. While market prices rose, sales of raw materials for synthetic fibers declined due to decrease in shipments as a result of the impact of the earthquake. As a result, the segment’s sales were unchanged from the same period of the previous fiscal year at ¥152.3 billion, and operating income improved by ¥0.8 billion, to ¥12.5 billion.
Petrochemicals & Plastics
While domestic shipments of some synthetic resins and petrochemical products declined as a result of the impact of the earthquake, sales increased overall due to higher market prices overseas and higher selling prices in Japan, with a sharp rise in prices of naphtha and other feedstocks. As a result, the segment’s sales rose by ¥23.5 billion compared with the same period of the previous fiscal year, to ¥341.0 billion, and operating income grew by ¥2.0 billion, to ¥7.8 billion.
Shipments of polarizing film used in liquid crystal displays (LCDs) rose thanks to higher demand, but shipments of color filters decreased. In addition to lower sales prices of both polarizing film and color filters, the value of sales of overseas subsidiaries decreased in yen terms because of the effects of a stronger yen. As a result, the segment’s sales declined by ¥15.4 billion compared with the same period of the previous fiscal year, to ¥148.6 billion, and operating income decreased by ¥7.1 billion, to ¥10.1 billion.
Health & Crop Sciences
Sales of the feed additive methionine increased steadily. In the area of crop protection chemicals, shipments of herbicides remained strong in overseas markets. Despite the decrease in the value of sales of overseas subsidiaries in yen terms because of the effects of a stronger yen, the segment’s sales rose by ¥12.7 billion compared with the same period of the previous fiscal year, to ¥138.5 billion, and operating income improved by ¥0.4 billion, to ¥14.8 billion.
The Sumitomo Chemical Group initiated US sales of Latuda® (atypical antipsychotic) in February 2011. Sales of Avapro® (therapeutic agent for hypertension), Lonasen® (atypical antipsychotic), and the new drugs Trerief® (therapeutic agent for Parkinson’s disease) and Metgluco® (biguanide oral hypoglycemic) increased as a result of continued sales promotion activities. Sales of Amlodin® (therapeutic agent for hypertension and angina pectoris), however, declined because of competition with generic drugs. In addition, the value of sales of overseas subsidiaries decreased in yen terms because of the effects of a stronger yen. As a result, the segment’s sales declined by ¥11.5 billion compared with the same period of the previous fiscal year, to ¥193.2 billion, and operating income increased by ¥0.8 billion, to ¥15.5 billion.
In addition to the above five segments, the Sumitomo Chemical Group engages in supplying electrical power and steam, providing services for the design, engineering, and construction management of chemical plants, providing transport and warehousing, and conducting materials and environmental analysis. The segment’s sales were the same as those for the same period of the previous fiscal year, at ¥24.7 billion, and operating income improved by ¥2.6 billion, to ¥3.5 billion.
(Note) Change in Reported Segments Classification Methods
As of April 1, 2011, the Fine Chemicals Segment was eliminated, and functional materials, additives, and dyes that had been included in this segment were transferred to the Basic
Chemicals Segment. In addition, pharmaceutical chemicals, which had also been included in this segment, were transferred to the Agricultural Chemicals Segment. Following this change, the Agricultural Chemicals Segment changed its name to the Health & Crop Sciences Segment. The businesses of consolidated subsidiaries in the Pharmaceuticals Segment that had been included in the Others Segment were transferred to the Pharmaceuticals Segment.
The Company has revised its consolidated financial forecast of fiscal 2011 announced on July 29, 2011. It now projects its consolidated financial forecast of fiscal 2011 to sales of ¥2,020.0 billion, operating income of ¥75.0 billion, ordinary income of ¥72.0 billion, and net income of ¥10.0 billion. This forecast is based on the assumptions of a foreign exchange rate of ¥77.5/US$ and a naphtha price of ¥54,000/kl for the half-year ending March 31, 2012.
For further details, please refer to today’s release titled “Sumitomo Chemical Announces Variances between its Financial Forecast and Actual Results for the Half-year Ended September 30, 2011 and Revisions to its Financial Forecast for the Year Ending March 31, 2012.”