MRC to withdraw from SILPALON acrylic filament yarn biz
16 Nov '09
2 min read
Mitsubishi Rayon has decided to withdraw from the SILPALON acrylic filament yarn business operated by its subsidiary Mitsubishi Rayon Textile.
SILPALON, an acrylic filament yarn and the only one of its kind in the world, offers a rich luster similar to silk, as well as high color development. Taking these features into account, we pursued a differentiation strategy focusing on sweaters.
However, sales in Japan have decreased, with the market share for imported sweaters currently exceeding 95% in the domestic market. Moreover, falling textile prices are prompting manufacturers to switch to low-priced alternative fibers. Accordingly, sales volumes in our main export markets of South Korea and China have also continued to show a downward trend.
In addition, since the onset of the global recession last autumn, department store sales have remained at low levels, and the sweater market has contracted dramatically. Another factor which has had an adverse effect on overall profitability is the higher production costs resulting from surging materials prices in recent years, and reductions in production volume.
Given these circumstances, an assessment of the future outlook for this business suggests that business conditions will become increasingly harsh in the future, and that a recovery of profitability is unlikely.
Future schedule March 31, 2010 Production to be halted June 30, 2010 Sales activities to be discontinued
Impact on earnings performance On a consolidated basis, we estimate the posting of an extraordinary loss of ¥360 million due to the withdrawal from this business in the second half of fiscal 2009.