Tosoh Corporation is pleased to announce its consolidated results for the first quarter of fiscal 2021, from April 1, 2020, to June 30, 2020.
The company's consolidated net sales totaled JPY156.5 billion (US$1.4 billion), down JPY36.3 billion, or 18.8%, compared with consolidated net sales in the first quarter of fiscal 2020. The decrease was attributable to a global-scale contraction in demand caused by the spread of coronavirus infection, which led to sudden decreases in naphtha prices and deterioration in overseas market conditions.
Operating income also decreased, JPY17.0 billion, compared with operating income in the same period the preceding year, resulting in a loss of JPY900 million (US$8.4 million). The decrease resulted from the worsening trade conditions, which included a decline in sales volume and sales prices that exceeded the effect of decreasing raw fuel prices. Despite a decrease in foreign exchange losses, ordinary income fell JPY15.9 billion compared with ordinary income for the first quarter of fiscal 2020, resulting in a loss of JPY500 million (US$4.6 million). And net profit attributable to owners of the parent company decreased JPY11.1 billion, resulting in a loss of JPY2.0 billion (US$18.6 million).
During the first quarter of fiscal 2021 (April 1, 2020 to June 30, 2020), the Japanese economy has been impacted by the spread of coronavirus infection. Economic and social activity has been restricted, personal consumption and exports plunged suddenly, and employment conditions and capital spending have weakened. The impact of the coronavirus has also affected the global economy, pushing it rapidly toward a recession. As it is extremely difficult to predict when the situation will begin to normalize, there are concerns over potentially prolonged economic stagnation on a global scale.
Results by business segment
Petrochemical Group net sales fell JPY18.8 billion, or 44.6%, to JPY23.4 billion yen (US$217.5 million), in the first quarter of fiscal 2021, compared with group net sales in the first quarter of fiscal 2020. Operating income likewise declined, JPY5.9 billion, resulting in a loss of JPY3.1 billion (US$28.8 million).
Shipments of olefin products, such as ethylene and propylene, decreased in line with scheduled maintenance. Shipments were also affected by decreased demand-particularly for cumene-due to the impact of the spread of coronavirus infection. And product prices also fell, reflecting decreased prices for raw materials such as naphtha and declining overseas product market conditions.
Both domestic and export shipments of polyethylene resin decreased in line with falling demand caused by the spread of the coronavirus. And product prices decreased, reflecting lower prices for naphtha. Exports of chloroprene rubber, particularly to Asia, decreased due to demand being suppressed by the spread of the coronavirus.
The Chlor-alkali Group's first-quarter 2021 net sales decreased JPY14.7 billion, or 20.3%, to JPY57.5 billion (US$534.4 million). The group's operating income also fell, JPY8.4 billion, resulting in a loss of JPY4.9 billion (US$45.5 million).
Shipments-primarily exports-of caustic soda increased in line with increased production. Product prices declined, reflecting the worsening of overseas market conditions. Vinyl chloride monomer (VCM) shipments rose due to an increase in production. Domestic and export shipments of polyvinyl chloride (PVC), with demand falling due to the spread of the coronavirus, decreased. And PVC product prices decreased, reflecting falling naphtha prices and deteriorating market conditions overseas.
Shipments of cement decreased as domestic demand remained sluggish.
Domestic and export shipments of methylene diphenyl diisocyanate (MDI) were driven downward by reduced production volume and a decline in demand caused by the coronavirus. And worsening overseas market conditions caused a drop in product prices. Both domestic and export shipments of hexamethylene diisocyanate (HDI) hardener, which is used primarily in urethane paints, decreased in line with flagging demand resulting from the spread of infection from the coronavirus.
First-quarter fiscal 2021 net sales by the Specialty Group decreased JPY1.9 billion, or 4.2%, to JPY44.7 billion (US$415.4 million), compared with group net sales in the same period of the previous fiscal year. The group's operating income, too, decreased, JPY2.0 billion to JPY4.9 billion (US$45.5 million).
Both domestic and export shipments of ethyleneamines decreased in line with sluggish demand caused by the spread of coronavirus infection.
Shipments especially to Europe and the United States of separation-related packing materials for liquid chromatography increased. Decreased demand resulting from the spread of the coronavirus resulted in a decrease in shipments of in vitro diagnostic reagents to Europe, the United States, and China.
Shipments of high-silica zeolites (HSZ) for use in automotive exhaust catalysts decreased due to sluggish demand resulting from the spread of the coronavirus. Shipments of zirconia for decorative applications increased. Shipments of silica glass, buoyed by a solid semiconductor market, remained essentially the same as the corresponding period in fiscal 2020. Electrolytic manganese dioxide for use in batteries saw decreases in both domestic and export shipments.
Engineering Group net sales for the first quarter of 2021 decreased 0.1%, compared with group net sales in the first quarter of fiscal 2020, to JPY21.0 billion (US$195.2 million). With regard to operating income, the impact of the status of orders in the water treatment business contributed to a decreased profit margin, leading to a decrease of JPY700 million, or 31.1%, to JPY1.6 billion (US$14.9 million).
The Engineering Group's water treatment business saw a decline in net sales during the period under review. In addition to postponements of some maintenance work, significant construction progress on large-scale semiconductor-related projects had not been made. This resulted in net sales decreasing compared with the corresponding period the previous year, when the sales from the large-scale project were recorded.
Sales, however, by the group's construction subsidiaries increased.
Ancillary net sales fell JPY800 million, or 7.6%, to JPY10.0 billion (US$92.9 million), compared with net sales in the same quarter a year earlier. Ancillary operating income likewise fell 3.0%, to JPY600 million (US$5.6 million). Sales by ancillary trading companies and other operations decreased during the period under review.
Note: For reference purposes only, US dollar amounts have been translated, unless otherwise indicated, from yen at the rate of JPY107.6 = US$1, the average exchange rate during the period under review.
Summary of Financial Results
Explanation concerning forecast information such as consolidated performance forecast
In the 'Tosoh Reports Its Consolidated Results for Fiscal 2020' news release dated May 12, 2020, we were unable to present a realistic consolidated performance forecast for fiscal year 2021. Based on information currently available, however, we hereby present the cumulative second-quarter performance forecast for fiscal year 2021.
Regarding the full-year performance forecast, please note that the impact of the global-scale spread of infection from the coronavirus makes the calculation of a rational performance forecast difficult. Tosoh will release its full-year performance forecast as soon as conditions permit.
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