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Sumitomo Chemical swings to loss on one-off items, COVID-19 impact; elevates forecast

October 30/2020

MOSCOW (MRC) -- Sumitomo Chemical swung to a net loss of GDP1.0 billion (USD10.4 million) in the fiscal first half ended 30 September, compared with a net profit of GDP29.7 billion a year earlier, said Chemweek.

The figure includes one-off, unrealized losses on securities amounting to GDP33.6 billion. Sales were down 5.4% year on year (YOY) to ?1 trillion. Operating profit plunged 50.4% YOY to GDP50.7 billion, from GDP102.5 billion in the year-ago period. Quarterly figures have not been disclosed.

Sales at Sumitomo's petrochemicals and plastics business segment, the company's largest, declined by 30.8% YOY to GDP243 billion. It sank to an operating loss of GDP31.2 billion from an operating profit of GDP17.4 billion a year earlier due to declining shipment volumes, deteriorating margins for petchem products, and a periodic shutdown for maintenance at Petro Rabigh (Rabigh, Saudi Arabia), a joint venture with Saudi Aramco. Amid the economic downturn caused by the COVID-19 pandemic, shipments of synthetic resins mainly for automotive use declined. Impacted by a drop in market prices for raw materials, the prices of petrochemical products hovered at a low level, Sumitomo says. Market prices for plastics decreased in line with falling feedstock costs. Prices of fiber intermediates and methyl methacrylate also declined.

In Sumitomo's energy and functional business, hurt by the COVID-19 pandemic, shipments of materials for automotive use decreased, including synthetic rubber as well as separators and cathode materials for lithium-ion secondary batteries. Operating income in the segment plummeted by 62% YOY to GDP4.7 billion from GDP12.8 billion in the same period of the previous year, and sales dropped 19.6% YOY to ?105 billion.

Revenue at Sumitomo's IT-related chemical segment rose 3% YOY to GDP213 billion and operating income grew by 44.7% YOY to GDP22 billion. Shipments of processing materials for semiconductors, including high-purity chemicals and photoresists, increased driven by growing demand. Shipments of materials for display applications increased due to stay-at-home demand and work-from-home demand, it adds.

The health and crop-science business swung to an operating profit of GDP9.9 billion, against an operating loss of GDP8.1 billion a year earlier due to improved margins for methionine. Revenue at the business rose 27% YOY to GDP186 billion after the acquisition of four South American subsidiaries of Nufarm in April 2020.

Sumitomos other business unit is pharmaceuticals.

The company has upgraded its forecast for the full year ending 31 March 2021. It now expects net profit to be GDP30 billion, compared with an earlier estimate of GDP20 billion. Sumitomo has raised its operating-income guidance to ?105 billion, versus a previous projection of ?70 billion. No changes have been made to the full-year revenue forecast of GDP2.2 trillion.

The upward revision is attributed to resilient performance of shipments in the pharmaceuticals and IT-related chemicals sectors despite the delay expected in the recovery of sales of synthetic resins in the petrochemicals and plastics sector."

As MRC informed earlier, Sumitomo Chemical has begun construction of a new polypropylene (PP) compounding plant in Jiangsu province, its fifth facility in China, due to start up next year.

According to ICIS-MRC Price report, Poliom took off-stream its PP production for the scheduled maintenance on 2 September; the shutdown will take a little more than two weeks. The plant's annual production capacity is 230,000 tonnes. It is also worth noting that Ufaorgsintez also shut its production capacities for a scheduled turnaround on 12 September, the outage will last until 10 October.
Author:Anna Larionova
Tags:petroleum products, PP, PE, neftegaz, petrochemistry, Sumitomo.
Category:General News
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