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Interview - Business performance and the future plan

Business performance

How did Sanyo Chemical Group Perform in FY2013?

Net sales decreased by appropriate sales price revision to respond to a fall in raw materials costs.  In terms of profit, however, we recorded increases because of growing sales amount, cost down measurements and other factors, despite declining profit margins due to yen appreciation.

 

During FY2016 (April 1, 2016 through March. 31, 2017), Japanese economy could marginally break free of the economy leveling off mainly because export showed signs of recovery, despite a long-term stagnation in capacity investment and private consumption. In addition, the outlook for the circumstance surrounding Japan is heading for mild recovery such as a continued economic recovery in the United States and a break in Chinese economic slowdown, despite a continued low growth in European economy.



In the chemical industry, business environment remained severe, because a continuing decline in raw material costs turned upward, the yen got weaker from the trend of the strong yen and other factors.

 

Under these circumstances, net sales of the current fiscal year decreased by 5.0% from the previous fiscal year, to ¥150,166 million mainly by appropriate sales price revision in each segment to respond to a fall in raw material costs. However, profit increased from the previous fiscal year because of growing sales amount, cost down measurements and other factors, despite declining profit margins due to yen appreciation. As a result, operating income was ¥13,647 million (a 9.3% increase from the previous fiscal year), and ordinary income was ¥15,341 million (a 15.4% increase). Profit attributable to owners of parent was ¥10,192 million (a 47.1% increase).

Net sales will increase by appropriate sales price revision to respond to a hike in raw materials costs and increased sales volume.  Profit will increase due to sales volume increase, despite reduction of spread to respond to a hike in raw materials costs.

 

Japanese economy remains at a standstill as a whole because of stagnations in private consumption and leveling-off in export situation and is expected to continue uncertain situation through FY2017. Moreover, the outlook for the circumstance surrounding Japan remains unclear amid the stagnation such as a slowdown of economic expansion in emerging countries including China and a destabilization of international financial market.



In such business environment, we forecast sales will increase due to appropriate sales price revision to respond to a hike in raw materials costs in addition to increased sales volume of super absorbent polymer thanks to successful addition of production facilities began operations in San-Dia Polymers (Nantong) Co., Ltd. in FY2015. Profit is forecasted to increase because of sales volume increase, despite reduction of spread to respond to a hike in raw materials costs.



For FY2017, we forecast at this time net sales of ¥167,000 million (a 11.2% increase from the previous fiscal year), operating income of ¥14,000 million (a 2.6% increase), ordinary income of ¥15,500 million (a 1.0% increase), and profit attributable to owners of parent of ¥11,000 million(a 7.9% increase).

We make smooth progress in implementing our plan for achieving its goal. We continue to make efforts to strengthen business bases and expand business more globally taking advantage of the strength of business division.

 

The Ninth Medium-Term Management Plan, which covers the four-year period from FY 2015 through FY 2018, seeks to achieve consolidated net sales of 230.0 billion yen or higher, operating income of 20.0 billion yen or higher, and return on equity (ROE) of 10% or higher by FY 2018, the final fiscal year of the plan. Net sales are weak by appropriate sales price revision to respond to a fall in raw materials costs. However, profits are in accordance with the plan.

As the main activities in FY2016, we established "Imaging Materials Division" and "Biotechnology & Medical Division" directly controlled by the President. Consequently Sanyo Chemical will have a three-business division organization, combined with "Lubricating Oil Additives Division", which was established in October, 2015. Besides these business fields, we focus on energy and electronics business to be the next core business and we newly built R&D facility in Kinuura factory.

We continue to make efforts to strengthen business bases and expand business globally taking advantage of the strength of newly established business divisions.

 

 

  

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