Japan's Mitsui aiming for operating profit of Y100bn by March 2016

14 November 2012 12:05  [Source: ICIS news]

TOKYO (ICIS)--Japanese chemical producer Mitsui Chemicals aims to achieve a full-year operating profit of yen (Y) 100bn ($1.3bn) by fiscal year 2015, ending March 2016, the company president said on Wednesday.

The manufacturer hopes to achieve this goal by focusing on three business areas – value-added polymers, performance products and the phenol-acetone chain – and investing a total of Y75bn into these businesses.

“It is difficult [to make an operating profit of Y100bn] by next [fiscal] year, but we want to achieve it no matter what, even if it is delayed,” Toshikazu Tanaka told reporters in Japanese at a press conference.

Mitsui Chemicals said it aimed to generate a full-year operating profit of Y100bn by fiscal 2013, ending March 2014, according to a Mitsui Chemicals press release issued in November 2011.

However, the company’s operating profit for the first six months to 30 September 2012 was Y1.48bn – down by 95% from the same period the previous year – while the producer now expects its operating profit for the second half of fiscal 2012 to be Y21.5bn, the president said.

The reason for the large difference between the first six-month operating profit and a forecast for the second half is partly because the company incurred losses totaling Y6.5bn in the first half, mainly due to an explosion at the Iwakuni-Otake plant in April and the shutdown of the Chiba naphtha cracker because of a power supply cut, Tanaka said.

Mitsui Chemicals expects its operating profit for the full year to 31 March 2013 to be Y23bn, Tanaka said.

To achieve the goal of Y100bn in operating profit by fiscal 2015, ending March 2016, the company plans to speed up business expansion of value-added polymers overseas and high-performance compounds including polypropylene (PP) compounds, Tanaka added.

As part of the scheme, Mitsui Chemicals announced on 9 November that it would construct a 300,000 tonne/year plant producing metallocene linear low density polyethylene (MLLDPE) in Singapore.

The producer also plans to expand its healthcare and agrochemicals businesses through merger and acquisitions, Tanaka said, without disclosing further details.

“The healthcare business is highly profitable, and it’s less likely to be affected by the change of economic situation,” Tanaka said.

Furthermore, Mitsui Chemicals aims to strengthen the business of the phenol-acetone chain by restructuring it, the president said.

“Even though we are number two [phenol/acetone producer] in the world, and the top in Asia, we are in the red. That means we need to thoroughly restructure the business and determine if we are cost competitive,” Tanaka said.

To take a measure, Mitsui Chemicals has reduced the production of phenols at Chiba in October to improve the spread, according to Tanaka.

Following Mitsui Chemicals’ move, other phenol producers also began to reduce production, the president said.

As a result, the market condition for phenols has significantly improved, and it is expected to improve further in December, Tanaka said.

The margins of acetone are also rapidly improving, he added.

“We want to make our phenol-acetone chain our core business no matter what,” Tanaka said.

($1 = Y79.39)

By: Tomomi Yokomura
+65 6780 4359

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