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Tosoh Corporation Q1 profits decrease
26
Sep '08
Tosoh Corporation is pleased to announce its consolidated financial results for the first quarter of the fiscal year ending March 31, 2009.

During the first quarter, corporate profits and exports decreased while manufacturing slowed because of the further weakening of Japan's economy.

Japan's economic woes were attributed to the sharp rise in the price of crude oil and the significant slowing of the U.S economy.

For the Japanese chemical industry, the surging price of crude oil continued to cause havoc, pushing the cost of raw materials, such as naphtha, ever higher. This exerted extreme pressure on profitability despite robust overseas demand for petrochemical products.

Amid these harsh conditions, Tosoh Corporation reported growth in consolidated sales and a decrease in profits for the first quarter.

Market growth abroad and the Company's implementation of price adjustments in Japan for such of its core products as polyvinyl chloride and urethane raw materials combined to boost Tosoh's net sales 0.8% over the first quarter of the previous fiscal year, to ¥193.3 billion (US$1.8 billion).

The rising cost of raw materials, the increased burden of depreciation costs from substantial investments for growth, and scheduled plant stoppages and rising maintenance costs combined to push operating income down 74.7%, to ¥3.5 billion (US$33.0 million); ordinary income down 66.0%, to ¥5.0 billion (US$47.4 million); and net income down 58.5%, to ¥3.0 billion (US$28.3 million).

Compared with the same period a year earlier, total assets increased ¥9.1 billion, to ¥826.1 billion (US$7.8 billion). This was attributed to an increase in fixed assets resulting from capital investments.

As a result of increased borrowing, however, debt rose ¥22.7 billion over the first quarter of the year before, to ¥597.4 billion (US$ 5.6 billion).

And because of adjustments after exchange rate conversions and a decrease in minority shareholders, shareholders' equity declined ¥13.7 billion from the same period for the previous fiscal year, to ¥229.0 billion (US$ 2.1 billion).

Tosoh's business segments enacted countermeasures to return to profitability. In the Petrochemical Group, olefin products faced high prices across the board for raw materials, especially naphtha.

Under these conditions, Tosoh pushed forward by implementing domestic price increases for ethylene, propylene, and aromatic compounds and by diversifying its raw materials to further cost cutting. Markets abroad, meanwhile, grew for cumene.

Polyethylene shipments decreased in Japan and overseas. Price adjustments were implemented in Japan to reflect the high cost of naphtha.

Chloroprene rubber sales rose in overseas markets. And the Company expanded its domestic shipments of and increased its domestic price for polyvinyl chloride (PVC) paste.

The Basic Group increased its overall shipment volumes of caustic soda and vinyl chloride monomer (VCM) in Japan and abroad.

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