Sumitomo Chem targets to grow sales by 34.5%

05 March 2007 04:31  [Source: ICIS news]

By Florence Tan

SINGAPORE (ICIS news)--Sumitomo Chemical is targeting to grow sales by 34.5% over the next three years, with profitability boosted by the start-up of the Rabigh project in west Saudi Arabia on schedule, the company said on Monday.

Unveiling its three-year corporate business plan, Japan’s third biggest chemical company by market capitalisation said it plans to invest Y370bn ($2.2bn) during the period to fund future growth, and up to Y200bn to be set aside from its free cash flow.

It will also seek to boost profitability in areas such as the life sciences and IT-related materials with sustained market growth, while continuing to launch new projects, shift production to higher value-added products, implement cost-cutting measures and expanding capacities.

Boosted by these measures and the Rabigh project, sales in fiscal 2009 to 31 March is expected to reach yen (Y) 2,400bn from a projected Y1,785bn for 2006.

Ordinary income during the period is targeted to grow by two-thirds to Y250bn from Y150bn and net income to rise 64.8% to Y150bn from Y91bn.

Rabigh Refining and Petrochemical Co (PetroRabigh) – a 50:50 joint venture with Saudi Aramco formed in 2005 to operate the $9.8bn project - is expected to play a big role in achieving the targets..

The project will "radically strengthen the foundation" of its petrochemical business, "propel a quantum leap" in profitability and accelerate the company’s globalisation, Sumitomo said.

"At present, the most important objective is for the company to concentrate its efforts on completing the Rabigh project on schedule and bringing it into stable commercial operation as early as possible as well as establishing the necessary marketing structures," it added.

The project, to start commercial production in the second half of 2008, will drive major advances in its business development, strengthen and enhance its corporate governance and management systems to support the further development of its businesses on the global stage, it added.

When completed, PetroRabigh will have an 18.4m tonnes/year refinery and an ethane cracker that can produce 1.3m tonnes/year of ethylene.

It would also have the capacity to produce 900,000 tonnes/year of propylene, 750,000-900,000 tonnes/year of linear low density polyethylene (LLDPE), 700,000 tonnes/year of polypropylene (PP), as well as propylene oxide (PO), monoethylene glycol (MEG) and alpha-olefins.

($1=Y117)

By: Florence Tan
+65 6780 4359

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