Japan’s Mitsui Chemicals Q1 net profit falls 3.6% on lower prices

SINGAPORE (ICIS)–Mitsui Chemicals’ first-quarter net profit fell by 3.6% year on year to yen (Y) 16.2bn ($159m), weighed down by lower sales prices and volumes, the Japanese producer said on Tuesday.

Its net sales declined by 22.5% year on year to Y293.7bn in April-June this year, but operating income increased by 12.3% to Y25.5bn, the company said in a statement.

“Sales prices were lower because of the drop in naphtha, other raw materials and fuel prices and changes in foreign exchange rates,” Mitsui Chemicals said.

Higher June-quarter operating income was realised due to improvement in trading terms following declines in raw material costs and fixed costs, it said.

The company’s basic materials unit, which includes its petrochemicals business, posted a 29.0% year-on-year decline in net sales to Y130.7bn, but operating income surged to Y7.0bn from Y2.9bn in the same period of last year.

Mitsui Chemicals reorganised its business structure on 1 April this year into four core areas namely mobility, healthcare, food and packaging and basic materials with the aim to grow its operating income to Y100bn and its net income to Y50bn by 2020. 

Its former basic chemicals segment was integrated with petrochemicals to form the new basic materials segment.

“Naphtha cracker operating rates grew compared with the same period of the previous fiscal year,” the company said.

For its phenol products, the market environment was “severe but slowly improved in comparison with the same period of the previous fiscal year”, it said.

For the fiscal half-year ending September 2016, the company expects to post a net profit of Y25.0bn and net sales of Y583.0bn.

Its expects its year-to-March 2017 net profit to be higher at Y44.0bn from Y23bn in the previous year, although net sales will be lower at Y1,215bn from Y1,344bn.

“Regarding financial forecasts for the full year, in the mobility, healthcare and food & packaging segments, sales are expected to be healthy. In the basic materials segment, the group expects firm demand and continued high operating rates at naphtha crackers and other facilities,” Mitsui Chemicals said.

($1 = Y102)

Picture: Tokyo port (Photographer: Hitoshi Yamada/NurPhoto/REX/Shutterstock)