Edited from: “To our shareholders”, annual report 2009
Mitsui Chemicals says that it has been implementing a set of emergency measures since January 2009 due to what it calls an “unprecedented economic crisis”.
“In response to sharp hikes in the cost of such raw materials as crude oil and naphtha in the first half of fiscal 2009, Mitsui Chemicals took steps to adjust its product prices. Just as these efforts were beginning to bear fruit, the abrupt downturn in the global economy placed considerable downward pressure on the company's principal Basic Chemicals business sector,” says president and chief executive officer, Toshikazu Tanaka.
“Impacted by the drop in demand from both the automotive and electronic information material fields, we are bearing the brunt of a harsh operating environment. Against this backdrop of dramatic fluctuation and change, we have positioned fiscal 2010 as a period in which Mitsui Chemicals must improve its disappointing results,” continues Tanaka.
On this basis, the company plans to “boost” performance and restore profitability in the second half of the fiscal year ending 31 March 2010. For fiscal 2011, the company has drawn up additional emergency measures aimed at “entrenching its profit growth trajectory”.
“Our efforts and goals extend beyond a single-minded focus on expenses. As a part of the company's emergency measures, Mitsui Chemicals will improve its profit structure by intensifying cost-cutting initiatives, restructuring its business by overhauling strategies and commence steps to reinforce its marketing capabilities,” says Tanaka.
The company says that it will continue to focus on making cost cuts. In the January to March 2009 quarter, it reduced its personnel costs by a total of Yen2.5bn. This it says was largely attributable to reductions in wages and compensation paid to directors, management and staff. From an operating expense perspective, the company made cost savings of Yen1.5bn through reductions in fixed costs at production sites.
Successful efforts to optimise production processes and promote increased energy efficiency also generated variable cost benefits of Yen1bn. In total it made cost savings of Yen5bn from 1 January 2009 to 31 March 2009.
Looking ahead, the company says it will further intensify its cost-cutting efforts. With the aim of improving the company's profit structure, Mitsui Chemicals is targeting total cost cuts of Yen30bn for the full fiscal year ending 31 March 2010.
“In addition, we are striving to improve our cash flow. In principle, Mitsui Chemicals engages in investment and loan activities within the general scope of depreciation and amortisation. By adopting a more selective approach toward investment, we improved cash flow Yen30bn in fiscal 2009 compared with the medium-term business plan,” says Tanaka.
Together with projected cutbacks of Yen102bn in fiscal 2010, it is targeting a two-year reduction in investments of Yen132bn.
In an effort to optimise inventories, it is targeting a reduction of Yen168bn in fiscal 2010 compared with the third quarter of fiscal 2009.
In addition, impacted by structural changes in industry worldwide, Mitsui Chemicals has adopted a basic policy of ensuring its survival in the domestic market while expanding overseas with a focus on Asia.
Please also see: INSIGHT: Mitsui Chemicals adapts but falls short or go to ICIS news
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Financial highlights: Mitsui Chemical, year ended 31 March
| |
2009 |
2008 |
2007 |
2006 |
| Sales (Yen m) |
1,487,600 |
1,786,700 |
1,688,062 |
1,472,435 |
| Net Profit (Yen m) |
-95,200 |
24,800 |
52,297 |
-- |
| Total Assets (Yen m) |
1,188,900 |
1,469,200 |
1,498,183 |
1,328,890 |
| Number of Employees |
12,964 |
12,814 |
12,511 |
12,472 |
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Mitsui Chemicals
Company Structure
Mitsui Chemicals group consists of Mitsui Chemicals, with around 100 subsidiaries and 86 affiliates. Mitsui Chemicals is a Japanese producer of petrochemicals, polymers, industrial chemicals, fine chemicals and engineering materials. Its three main business areas are Performance Materials, Advanced Chemicals and Basic Chemicals.
More about Mitsui Chemicals Structure
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