Japan's Sumitomo Chemical targets Y90bn in net profit by March 2016

12 February 2013 16:01  [Source: ICIS news]

Japan announces stimulus packageTOKYO (ICIS)--Japanese chemical producer Sumitomo Chemical plans to achieve a net profit of yen (Y) 90bn ($963.2m, €719.4m) in fiscal 2015, ending March 2016, swinging from a net loss for fiscal 2012, the company’s president said on Tuesday.

The producer aims to generate an operating profit of Y140bn in fiscal 2015, while net sales are targeted at Y2,400bn, president Masakazu Tokura said at a press conference, where he outlined Sumitomo Chemical’s new corporate business plan for fiscal 2013-2015.

The company expects to incur a net loss of Y50bn for fiscal 2012, ending March 2013, while it predicts its full-year operating profit will Y50bn, Sumitomo Chemical said when it announced its nine-month results on 1 February 2013. The company attributed the forecast net loss in part to restructuring costs.

Net sales for the current fiscal year are expected to be Y1.95bn.

Under its new business plan, Sumitomo Chemical aims to decrease its balance of interest-bearing liabilities to below Y900bn by March 2016 from Y1,070bn, expected for fiscal 2012, Tokura said.

To achieve the financial targets laid out in the new business plan, Sumitomo Chemical plans to devote the next three years to strengthening the foundations for its business, with the aim of achieving sustained growth over the next 100 years, as 2013 marks the 100th year the company's establishment, Tokura said.

Sumitomo Chemical plans to do so by downsizing, exiting from underperforming businesseses and improving its business portfolio, among other strategies, he added.

As part of such efforts, Sumitomo Chemical announced on 1 February it would permanently shut its 415,000 tonne/year naphtha cracker at Ichihara by September 2015.

The producer also aims to maximize profits from the ongoing Petro Rabigh project in Saudi Arabia, according to Tokura.

As a second phase of the project, Sumitomo Chemical and its partner Saudi Aramco are investing $7bn (€5.3bn) to expand the current facilities of Petro Rabigh to produce products including ethylene propylene diene monomer (EPDM), thermoplastic polyolefin (TPO), methyl methacrylate (MMA) monomer, methyl methacrylate polymer, low-density polyethylene/ethylene vinyl acetate (LDPE/ EVA), para-xylene/benzene, cumene and phenol/acetone, the president said.

The companies are also mulling production of other chemicals such as acrylic acid, super-absorbent polymer (SAP), caprolactam and nylon 6 at Petro Rabigh, he added.

Currently, each of Sumitomo Chemical’s three manufacturing bases - Japan, Singapore and Saudi Arabia - makes up a third of the company’s total production, but after the Rabigh II project comes on stream in the first half of 2016, 50% of products is expected to be produced in Saudi Arabia, 30% in Singapore and 20% in Japan, Tokura said.

($1 = €0.75, $1 = Y93.44, €1 = Y125.11)

By: Tomomi Yokomura
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