AGC Releases Consolidated Financial Results for the Fiscal Year Ended December 31, 2017
2018-02-12    [Source:AGC]
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During the fiscal year ended December 31, 2017, the global economic environment surrounding the Company and its consolidated subsidiaries (hereinafter collectively referred to as the “AGC Group” or simply as the ”Group”) was on a gradual recovery track on the whole. In Japan, the economy showed a gradual upward trend thanks to factors such as economic measures taken by the government. The European economy made a gradual recovery and the United States continued its economic recovery along with increased consumer spending and other factors. The economies of Russia, Brazil, China and other emerging countries were picking up as well.

Under such a business environment, due to increased volume of shipments at each business section as well as consolidation of acquired companies, the AGC Group posted net sales of 1,463.5 billion yen, up 181.0 billion yen, or a 14.1% increase from the previous year. Operating profit increased by 23.4 billion yen, or 24.3% increase, year-on-year to 119.6 billion yen, and profit before tax was 114.4 billion yen, up 46.9 billion yen or a 69.4% increase on a year-on-year basis. Profit for the year attributable to owners of the parent was 69.2 billion yen, up 21.8 billion yen or a 45.9% increase on a year-on-year basis. 
 

Overview by reportable segment (Unit: billions of yen)

- Chemicals

Sales of chlor-alkali products and urethane materials increased from the previous fiscal year mainly because of the consolidation of Vinythai Public Company Limited, the increase of shipments from the growing demand in Southeast Asia, and the rising international market prices. In the categories of fluorine products and specialty products, sales increased from the previous fiscal year resulting from the consolidation of CMC Biologics and favorable shipments of existing fluorine chemical products.
As a result, net sales from the Chemicals Operations for the fiscal year, were 437.6 billion yen, up 121.0 billion yen or a 38.2% increase from the previous fiscal year. Operating profit was 63.7 billion yen, up 23.7 billion yen or a 59.2% increase from the previous fiscal year

Forecast for FY2018

Operating forecast for FY2018

In 2018, there is uncertainty over the world economy outlook as affected by national policies around the world and other factors, however, the world economy is expected to maintain moderate growth on the whole.

Under such a business environment, the shipments of architectural glass are expected to increase moderately in many regions. In the automotive glass business, shipments are projected to remain high as a whole, supported by favorable demand.

Regarding LCD glass substrates, shipments are likely to be favorable and the range of price decline is expected to shrink. Shipments of specialty glass for display applications and cover glass for car-mounted displays are expected to increase from the previous fiscal year. In the category of electronic materials, shipments of optoelectronic materials and semiconductorrelated products are both expected to increase from the previous fiscal year.

In the Chemicals business, shipments of chlor-alkali products are expected to continue to increase in Southeast Asia, and the construction of the power plant at an Indonesian subsidiary will also contribute to cost reduction. Shipments of fluorine products and life science products will also remain favorable.

Taking into account the above factors, net sales of the AGC Group for the fiscal year ending December 31, 2018 are forecasted to be 1,550.0 billion yen, up 86.5 billion yen or a 5.9% increase from previous year, and operating profit is forecasted to be 130.0 billion yen, up 10.4 billion yen or a 8.7% increase year-on-year. Profit before tax will be 118.0 billion yen, up 3.6 billion yen or a 3.1% increase from the previous fiscal year and profit for the year attributable to owners of the parent is estimated to be 77.0 billion yen, up 7.8 billion yen or a 11.2% increase from the previous fiscal year. Average exchange rates assumed for the fiscal year ending December 31, 2018 are 110 yen to the U.S. dollar and 135 yen to the Euro.

Forecast of financial conditions for FY2018

Regarding cash flows from operating activities, profit before tax is expected to increase by 3.6 billion yen to 118.0 billion yen as compared with that for the fiscal year ended December 31, 2017. Depreciation expenses are expected to be 135.0 billion yen, up 6.8 billion yen from the previous fiscal year.

Of the cash flows from investing activities, capital expenditures are expected to increase 54.9 billion yen year-on-year to 220.0 billion yen.

As for financing activities, the AGC Group will repay and borrow interest-bearing debts and increase borrowings, in addition to dividend payments in accordance with the Group's dividend policy.

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