Japan’s Sumitomo Chemical cuts stake in Sumitomo Bakelite

Nurluqman Suratman

04-Feb-2025

SINGAPORE (ICIS)–Japan’s Sumitomo Chemical has sold a portion of its stake in specialty chemicals producer Sumitomo Bakelite as part of a broader plan to enhance its financial performance through asset sales.

Sumitomo Chemical on 4 February said that it has sold around 5.25 million shares of Sumitomo Bakelite for around yen (Y) 19.1 billion ($123 million), the Japanese producer said on Tuesday.

Sumitomo Bakelite produces a range of chemical products, including phenolic, epoxy and polyimide resins, as well as other specialty chemicals.

The stake sale reduced Sumitomo Chemical’s stake in the specialty chemicals producer to 10.6% from 15.6% previously.

Sumitomo Chemical expects a one-time gain of around Y17.7 billion from the sale in its non-consolidated financial results for the year ending 31 March 2025.

“Sumitomo Chemical is implementing its short-term intensive performance improvement measures aimed at ensuring a V-shaped recovery in fiscal 2024 and strengthening its financial position to lay the groundwork for future fundamental structural reforms,” the company said.

On 3 February, the company announced that it will be divesting 66.6% of its share in wholly-owned subsidiary Sumitomo Chemical Engineering Co (SCEC) by 31 March to Japan’s JFE Engineering Corp for an undisclosed fee.

Sumitomo Chemical will retain a 33.4% stake in SCEC following the sale.

“SCEC will maintain a good relationship with the Sumitomo Chemical Group as it works to maximize its synergies with the JFE Group,” the company said.

SCEC provides engineering, procurement, construction, operation and maintenance services for environmental facilities, energy facilities, including liquified natural gas stations and renewable energy plants, as well as chemical plants.

In the nine months to 31 December 2024, Sumitomo Chemical swung into a net profit on improved selling prices at its core essential and green materials segment, the Japanese producer said on 3 February.

in Japanese yen (Y) billions Apr-Dec 2024 Apr-Dec 2023 % Change
Sales 1,904.8 1,806.9 5.4
Operating income 145.4 -160.6
Net income 28.6 -109.8

The company’s selling prices for synthetic resins, methyl methacrylate, and industrial chemicals rose due to higher raw material costs during the period.

However, aluminum shipments declined following the group’s exit from the business, resulting in a ¥8.8 billion decrease in essential and green materials sales revenue to Y672.9 billion.

Despite this, the segment trimmed its core operating loss by Y16.2 billion to Y44.3 billion, aided by better market conditions, although the financial performance of its 37.5%-owned Saudi chemical producer Petro Rabigh deteriorated. Saudi Aramco owns 62.5% of Petro Rabigh.

MANAGEMENT CHANGES
Sumitomo Chemical on 3 February announced that Nobuaki Mito, the company’s senior managing executive officer, will take over as the company’s new president.

Mito is expected to be inaugurated as representative director and president of Sumitomo Chemical in June this year, while incumbent president, Keiichi Iwata, will become chairman.

($1 = Y155.20)

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