Edited from: “To our stockholders and stakeholders”, annual report 2009
Mitsubishi Chemical Corporation (MCC) says that in fiscal year 2009 it faced a sudden decline in domestic and overseas demand affected by the global financial crisis. On that basis, it experienced a “substantial” drop in sales and profits.
“We are refocusing our operations to emerge as a more profitable, growing and innovative group,” says president and chief executive officer, Yoshimitsu Kobayashi.
In addition, MCC completed the first year of its “APTSIS 10” mid-term management plan. Due to the current climate the company revised its basis strategy to “respond to severe economic contraction by restructuring in order to accelerate innovation” and resource. Specifically, it reduced capital expenditures and investments and loans from Yen590bn to Yen380bn.
It also made changes in each of its businesses:
(1) In its Chemicals business it announced its withdrawal from unprofitable businesses, such as polyvinyl chloride (PVC)/ vinyl chloride monomer (VCM), caprolactam, and styrene monomer. To reduce costs, it moved some of its purified terephthalic acid (PTA) business to Singapore and Asia, and entered a joint venture in the fertilizer business.
(2) In its Performance Products business, it is expanding its growth businesses, such as food ingredients, non-optical media and barrier film. It is starting businesses in new areas such as synthetic fibres for reinforcing concrete and asphalt.
(3) In its Health Care business, it is putting more effort to personalise medicine. The company says that it has launched a number of promising new drugs and preparations that it expects to contribute to performance in the upcoming fiscal year.
In addition, MCC has reduced its R&D expenditures from Yen425bn to Yen407bn. It has also concentrated its R&D on new businesses, such as white light-emitting diodes (LEDs) and lithium-ion battery materials for hybrid electric vehicles (HEVs). These are areas in which it anticipates major sales increases in the upcoming fiscal years.
“A great number of producers, including its customers, have reduced their production rates because of high inventory levels. These reductions caused huge drops in our revenue and profit, except for food ingredients and pharmaceuticals. Since March 2009, differences are apparent in our business domains. On one hand, we are seeing a slight recovery for liquid crystal displays (LCDs), but on the other hand, we see no significant changes elsewhere,” says Kobayashi.
“Considering this situation, we have not changed our basic future strategies of withdrawing from unprofitable businesses even if they have long history; concentrating on growing businesses; and continuing to invest in new businesses such as lithium-ion battery materials and white LEDs,” continues Kobayashi.
Looking ahead, MCC is aiming for an operating income of more than Yen190bn in fiscal year 2010.
Please also see: Japan’s Mitsubishi Chem eyes M&A; Mitsubishi Rayon maybe a target on ICIS news.
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Financial highlights: Mitsubishi Chemical, year ended 31 March
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Mitsubishi Chemical is an all-round chemical company, founded on the development of a diverse range of chemical materials, as well as the application of those materials to a variety of uses. The company was established in 1934.
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