MOSCOW (MRC) -- Mitsubishi Chemical Holdings reports a 54% decline year on year (YOY) in net income for the company's fiscal nine months ended 31 December to Yen 76.27 billion (USD695.6 million), on sales that fell 4.9% YOY to Yen 2.7 trillion, reported Chemweek.
Operating income dropped 40% to Yen 160.5 billion from ?268 billion a year earlier owing to goodwill impairment charges relating to the pharmaceutical formulation materials business in the healthcare field, says Mitsubishi. The supply/demand balance for certain products, mainly for semiconductors and cars, was impacted by growing concerns over US-China trade friction, it says.
Mitsubishi's performance products business reports a 14% YOY decline in operating income to Yen 54.4 billion on sales of Yen 821 billion, down 5% YOY. Core operating income decreased primarily because of a drop in market prices for phenol-polycarbonate chain materials in advanced polymers. In functional products, revenue fell due to lower sales volumes in high-performance engineering plastics and other products for advanced moldings and composites, owing to weaker demand, principally in semiconductor and automotive applications. Sales of performance chemicals decreased, reflecting the price decline for phenol-polycarbonate chain materials in advanced polymers, which had been favorable last year, it says.
Operating profit for the chemicals business, Mitsubishi's largest, plummeted 64% to ?38.7 billion from Yen 107.7 billion a year earlier. Core operating income decreased mainly because of a decline in prices of methyl methacrylate (MMA) monomers and other products, despite higher sales volumes stemming from a reduced impact from scheduled maintenance and repairs in petrochemicals. Sales in this sector stood at Yen 826 billion, a drop of 15.3% YOY. The company says revenue decreased because of the continued deceleration of demand growth, especially in China, and lower prices of MMA and other products. In petchems, sales grew despite lower prices because of an increase in volumes stemming from a reduced impact of scheduled maintenance and repairs at ethylene plants, together with a drop in raw material costs and other factors. In carbon products, revenue was down.
Operating income in the industrial gases business increased 58% YOY to Yen 66.5 billion, on sales of Yen 732.8 billion, up 22.6% from Yen 628.2 billion in the prior-year period. This sector saw continued firmness in the overseas gases business because of the acquisition of a portion of the European business of Praxair and a portion of the HyCO business and related assets in the US owned by Linde, says Mitsubishi.
The company has cut its earnings estimate for the fiscal full year ending 31 March 2020, with net income lowered to Yen 81 billion from its previous guidance of Yen 131 billion. Operating profit is now forecast to be Yen 182 billion, compared with Yen 241 billion previously. Projected sales of Yen 3.76 trillion have also been reduced to Yen 3.63 trillion.
As MRC informed earlier, Mitsubishi Chemical has a steam cracker in Kashima with an ethylene production capacity of 564,000 mt/year. It shut one steam cracker there in 2014 - which has an ethylene production capacity of 375,000 mt/year -- following a sluggish petrochemical demand in the country.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
Mitsubishi Chemical with headquarters in Tokyo, Japan, is a diversified chemical company involved in petrochemicals, polymers, agrochemicals, speciality chemicals and pharmaceuticals. The company's main focus is on three business pillars: petrochemicals, performance and functional products, and health care.
MRC