Tosoh : Reports on Its Consolidated Results for Fiscal 2018
Tokyo, Japan – Tosoh Corporation is pleased to announce its full-year consolidated results for the 2018 fiscal year from April 1, 2017, to March 31, 2018. Consolidated net sales for the year under review were ¥822.9 billion (US$7.4 billion), up ¥79.8 billion, or 10.7%, from fiscal 2017. The increase resulted from a rise in petrochemical product prices associated with increased prices for raw materials, such as naphtha, and from improved market conditions for products overseas.
Our operating income for fiscal 2018 was ¥130.6 billion (US$1.2 billion), up ¥19.4 billion, or 17.4%, compared with fiscal 2017. This increase was mainly due to improved trade conditions resulting from rising sales prices that offset heightened raw fuel prices. Ordinary income, meanwhile, rose ¥19.2 billion, or 16.9%, to ¥132.3 billion (US$1.2 billion). And net profit attributable to owners of the parent company was up ¥13.1 billion, or 17.4%, to ¥88.8 billion (US$801.0 million).
During fiscal 2018, the Japanese economy continued its gradual recovery on the strength of improved corporate earnings and increased domestic capital investment. The global economy likewise continued to improve, propelled by economic expansion in advanced nations and particularly by nations in Europe and by the United States. Heightened geopolitical risk, however, in the Middle East, and intensifying international trade friction contributed to uncertainty about the stability of the global economy.
Results by business segment
Petrochemical Group net sales rose ¥13.0 billion, or 8.0%, to ¥174.8 billion (US$1.6 billion), compared with fiscal 2017. The group’s operating income increased ¥2.4 billion, or 12.2%, to ¥22.5 billion (US$203.2 million).
Shipments of olefin products, including ethylene and cumene, were down. But prices rose as a result of increases in the cost of naphtha and other raw materials.
Domestic shipments of polyethylene resin increased, and its prices likewise rose because of increases in the cost of naphtha.
Shipments and export prices of chloroprene rubber increased on strong demand overseas.
The Chlor-alkali Group’s net sales rose ¥55.3 billion, or 19.8%, to ¥335.0 billion (US$3.0 billion).
The group’s operating income increased ¥18.7 billion, or 39.0%, to ¥66.6 billion (US$601 million), because of improvements in terms of trade.
Caustic soda prices increased because of domestic price corrections and improved market conditions overseas.
Shipments of vinyl chloride monomer and polyvinyl chloride resin were strong. In addition, polyvinyl chloride resin prices rose, bolstered by domestic price corrections and better market conditions abroad.
Domestic and export shipments of cement increased.
Export prices of methylene diphenyl diisocyanate (MDI) increased reflecting improved market conditions abroad.
Net sales by the Specialty Group in fiscal 2018 increased ¥11.2 billion, or 6.4%, to ¥187.1 billion (US$1.7 billion). Operating income, however, decreased 4.2%, or ¥1.5 billion, to ¥33.9 billion (US$305.8 million).
Ethyleneamine product shipments to North America increased.
Separation-related products saw an increase in shipments of liquid chromatography packing materials. Diagnostic-related products also saw an increase in shipments, of in vitro diagnostic reagents.
Shipments of high-silica zeolites to Europe increased, as did shipments of zirconia for use in dental materials and ornamental products.
Shipments of fused silica glass for the semiconductor industry likewise rose.
Engineering Group net sales decreased ¥1.7 billion, or 2.0%, to ¥84.8 billion (US$765.2 million).
Operating income also decreased, ¥276 million, or 5.4%, to ¥4.9 billion (US$43.9 million).
Tosoh’s water treatment business saw increased sales to the electronics industry because of robust capital investment in Japan and China. The group’s net sales, however, decreased because of the completion of large-scale general industrial projects in the preceding fiscal year, diminished domestic investment in the electric power and water supply and sewage fields, and cancellations and delays in investment plans in Southeast Asia.
Sales by the Engineering Group’s construction subsidiaries increased.
Other net sales increased ¥2.0 billion, or 5.0%, to ¥41.1 billion (US$371.0 million).
Operating income, conversely, was down ¥18 million, or 0.7%, to ¥2.7 billion (US$24. million).
Sales by trading companies and other operations increased during the year in review.
Note: For reference purposes only, US dollar amounts have been translated, unless otherwise indicated, from yen at the rate of ¥110.85 = US$1, the average exchange rate during the period under review.
Outlook for the fiscal year ending March 31, 2019
In the fiscal year ahead, the pace of Japan’s economic growth is anticipated to be somewhat slower than in fiscal 2018. The yen has risen and stock prices have declined. Japanese corporate earnings nonetheless should remain steady because of robust exports. And this, and expected sustained improvement in employment and income, should contribute to the Japanese economy’s continued gradual expansion.
The global economy, led by advanced nations, should also continue its improvement, especially given the economic growth in the United States that is being driven there by expansionary fiscal policy. But ongoing geopolitical risk, particularly in the Middle East, intensifying trade friction stemming from the US protectionist policies, and capital outflow from emerging markets caused by the normalization of monetary policies in the United States and Europe combine to raise the risk of downward fluctuation. The outlook globally, therefore, remains difficult to forecast.
The Tosoh Group’s forecast for its fiscal year 2019, ending March 31, 2019, calls for net sales of ¥850 billion, for operating income of ¥110 billion, for ordinary income of ¥112 billion, and for net profit attributable to owners of the parent company of ¥76 billion. These performance forecasts are predicated on domestic naphtha prices of ¥47,000 a kiloliter and an exchange rate of ¥105 to the US dollar.