Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2021, from April 1, 2020, to September 30, 2020.
The company's consolidated net sales amounted to JPY328.5 billion (US$3.1 billion), down JPY67.9 billion, or 17.1%, from the same period a year earlier. The decrease was attributable to a contraction in global demand caused by the spread of the coronavirus and to the resulting decline in overseas market conditions for naphtha and other products.
Operating income also decreased, JPY22.8 billion, or 56.3%, over the same period the preceding year, to JPY17.6 billion (US$164.6 million). Lower sales volumes, worsening trade conditions as declining sales prices exceeding the impact of lower raw material and fuel prices, and a deterioration in the difference between product receipt and payment contributed to the decrease in operating income.
Ordinary income was JPY18.0 billion (US$168.4 million), a decrease of JPY23.9 billion, or 57.1%, compared with the first half of fiscal 2020. Profit attributable to owners of the parent company totaled JPY11.7 billion ((US$109.4 million), a decrease of JPY15.1 billion, or 56.3%, over the same term the previous year.
During the period under review, the spread of the coronavirus brought about restrictions on economic and social activities and rapid declines in demand domestically and abroad. These conditions led to a rapid decline in both Japanese and global economies. As for the global economy, China, which resumed economic activity early, is experiencing an economic recovery. However, the number of infections continues to rise in Europe, the United States, and emerging countries. And the pace of recovery in demand varies by region, due to the different timing and extent of easing of restrictions on economic activity, as well as to regional economic measures. Given this, prolonged economic stagnation remains a concern.
Results by Business Segment
Petrochemical Group net sales declined JPY28.1 billion, or 33.7%, to JPY55.4 billion (US$518.2 million), compared with the first half of fiscal 2020. The group's operating income decreased JPY5.8 billion, or 109.3%, resulting in a loss of JPY0.5 billion (US$4.7 million). Decreasing product shipments, worsening trade conditions, the decline in olefin product sales prices exceeding the impact of lower raw material prices, and the decrease in prices of naphtha and other raw materials leading to a deterioration in the difference between product receipt and payment contributed to the decrease in operating income.
Shipments of ethylene, propylene, and cumene decreased. Moreover, a decrease in prices of naphtha and other raw materials and a decline in overseas market conditions resulted in decreased product prices.
Shipments of polyethylene resin decreased in both domestic and export markets due to a decrease in demand caused by the spread of the coronavirus. Besides, product prices fell, reflecting the decline in naphtha prices. Exports of chloroprene rubber, primarily to Asia, decreased due to a decrease in demand also brought about by the coronavirus.
The Chlor-alkali Group's net sales decreased JPY28.4 billion, or 19.3%, to JPY119.0 billion (US$1.1 billion). Its operating income likewise fell, JPY10.3 billion, or 91.6%, to JPY0.9 billion (US$8.4 million), on account of the decline in sales prices exceeding the impact of lower raw material and fuel prices, as well as decreased shipments of urethane raw materials and polyvinyl chloride (PVC) resin.
An increase in production volume led to an increase in shipments of caustic soda, primarily for export. And product prices fell, reflecting the deterioration in overseas market conditions. Shipments of vinyl chloride monomer (VCM) rose in line with an increase in production volume, and worsening market conditions abroad and falling naphtha prices exerted downward pressure on product prices. The spread of coronavirus infection suppressed demand for PVC resin both domestically and overseas, leading to a decrease in shipments. And worsening market conditions abroad caused product prices to fall.
Domestic shipments of cement decreased due to sluggish demand.
Domestic and export shipments of methylene diphenyl diisocyanate (MDI) fell due to the impact of the coronavirus. Moreover, product prices fell, reflecting the decline in overseas markets. Shipments in Japan and abroad of hexamethylene diisocyanate (HDI) hardeners decreased as the spread of the coronavirus suppressed demand.
Compared with the first half of the previous fiscal year, net sales by the Specialty Group decreased JPY7.5 billion, or 8.0%, to JPY86.7 billion (US$811.0 million). The group's operating income also decreased, 26.5%, or JPY4.1 billion, to JPY11.3 billion (US$105.7 million). The decreases in net sales and operating income resulted from lower sales volume caused by the spread of the coronavirus.
The decline in demand brought about by the spread of the coronavirus led to a decrease in ethyleneamine domestic shipments.
Among the Specialty Group's separation media-related products, shipments of packing materials for liquid chromatography, mostly to Europe and the United States, increased. Diagnostic-related product shipments, especially of in vitro diagnostic reagents bound for Europe, the United States, and China, fell due to sluggish demand attributable to the spread of the coronavirus.
Shipment of high-silica zeolites, mainly for automotive exhaust gas catalyst applications, decreased due to flagging demand caused by the coronavirus. Shipments of zirconia for decorative applications, however, increased. Shipments of quartz glass likewise increased, buoyed by a robust semiconductor market.
Engineering Group net sales fell JPY1.6 billion, or 3.2%, to JPY47.9 billion (US$448.1 million), compared with the first half of fiscal 2020. Operating income also decreased, JPY2.7 billion, or 37.8%, to JPY4.5 billion (US$42.1 million). A decline in orders received, primarily from the electronics industry, contributed to a decrease in the water treatment business profit margin.
Sales in the water treatment business's service solutions segment, including overseas semiconductor-related projects in the electronics industry and maintenance work, were solid. Sales overall declined, however, as a result of the curtailing and postponement of capital investment driven by the spread of the coronavirus.
Sales by the Engineering Group's construction subsidiaries decreased.
Ancillary net sales fell JPY2.2 billion, or 10.4%, to JPY19.4 billion (US$181.5 million), compared with the same period a year earlier, while operating income increased JPY0.1 billion, or 8.7%, to JPY1.4 billion (US$13.1 million).
Sales at trading and other companies declined 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 JPY106.9 = US$1, the average exchange rate during the period under review.
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