Tosoh Reports on First-Half Consolidated Results for Fiscal 2019
2018-11-02    [Source:tosoh]

Tokyo, Japan—Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2019, from April 1, 2018, to September 30, 2018.

The company’s consolidated net sales amounted to ¥424.5 billion (US$3.8 billion), up ¥32.8 billion, or 8.4%, from the same period a year earlier. The increase was attributable to higher sales prices driven by an increase in the price of naphtha and by rising overseas product markets, and to progress in the Engineering Group’s plant projects in the electronic industry.

Operating income also increased ¥1.5 billion, or 2.8%, over the same period the preceding year, to ¥56.0 billion (US$509.1 million). Although trade conditions worsened because of increased raw material and fuel prices, the increased earnings recorded by the Specialty and Engineering groups helped to drive the increase in operating income.

Ordinary income climbed ¥2.4 billion, or 4.3%, compared with the first half of fiscal 2018, to ¥60.7 billion (US$552.2 million). This rise was due to foreign exchange gains. Profit attributable to owners of the parent company totaled ¥41.7 billion (US$378.8 million), an increase of ¥1.4 billion, or 3.4%, over the same term the previous year.

Results by Business Segment

Petrochemical Group

Petrochemical Group net sales rose ¥5.0 billion, or 5.6%, to ¥93.9 billion (US$853.8 million), compared with the first half of fiscal 2018. The group’s operating income decreased ¥2.3 billion, or 22.2%, to ¥8.0 billion (US$72.6 million).

Shipments of olefin products, such as ethylene and propylene, decreased in line with a decrease in production volume due to fiscal 2019 being a scheduled maintenance year. The group, however, increased sales prices of its olefin products to reflect increased naphtha costs.

Shipments of polyethylene resin in Japan decreased, but the group again increased product prices to reflect the increase in naphtha costs. Chloroprene rubber shipments likewise decreased because of a decline in production volume, but export prices rose, driven by strong overseas demand.

Chlor-alkali Group

The Chlor-alkali Group’s net sales increased ¥12.7 billion, or 8.1%, to ¥168.7 billion (US$1.5 billion). Its operating income likewise rose, ¥157 million, or 0.6%, to ¥25.1 billion (US$227.8 million), compared with the corresponding period the preceding year.

Domestic and international shipments of caustic soda were strong. Additionally, prices were revised upward due to domestic caustic soda price adjustments. Vinyl chloride monomer shipments increased. Prices also increased, driven by improvements in overseas markets. Polyvinyl chloride resin shipments declined on account of decreased production volume, but domestic price adjustments and improved conditions in overseas markets likewise resulted in an increase in product prices.

Domestic shipments of cement were strong. Cement exports, however, decreased.

Shipments of methylene diphenyl diisocyanate (MDI) fell. But MDI export prices rose to reflect the improvement in overseas market conditions.

Specialty Group

Compared with the first half of the previous fiscal year, net sales by the Specialty Group increased ¥6.5 billion, or 7.1%, to ¥98.4 billion (US$894.8 million). The group’s operating income also increased, 8.1%, or ¥1.4 billion, to ¥19.3 billion (US$175.5 million).

Ethyleneamine shipments declined in tandem with a decrease in production volume. Shipments of separation-related packing materials for liquid chromatography, primarily to Europe, also decreased. Diagnostic-related product shipments, especially of in vitro diagnostic reagents bound for China, increased.

Shipments of high-silica zeolites (HSZ) for automobile exhaust gas catalysts declined. And shipments of zirconia for decorative applications and of silica quartz for semiconductor devices increased.

Engineering Group

Engineering Group net sales rose ¥7.0 billion, or 20.1%, compared with the first half of fiscal 2018, to ¥41.9 billion (US$380.8 million). Operating income also increased, ¥2.2 billion, to ¥2.4 billion (US$21.5 million).

The increase in the group’s net sales owed itself to a strong performance in solution services, such as plants, maintenance, and the replacement of consumable parts. This performance was driven by increased demand for semiconductors and electronic devices domestically and overseas and by robust corporate manufacturing activity and capital investment in general industrial fields.

Sales by the Engineering Group’s construction subsidiaries also increased.


Ancillary net sales rose ¥1.5 billion, or 7.6%, to ¥21.5 billion (US$195.6 million), compared with the same period a year earlier. Operating income also increased ¥20 million, or 1.6%, to ¥1.3 billion (US$11.6million).

The increases owed themselves to increased sales by trading companies and other operations during the period under review.

Outlook for the fiscal year ending March 31, 2019

Despite a temporary deceleration in the domestic economy due to recent natural disasters, recovery and reconstruction demand and improved wages are driving an increase in personal consumption. This should result in the continued expansion of Japan’s economy through the end of fiscal year 2019.

International uncertainties remain, however, particularly in regard to the outcome of discussions related to a Japan-United States trade agreement, to the impact of trade friction between the United States and China, and to instability in the Middle East. These and other factors may lead to a slowdown in the global economy, an increase in fuel prices, and the appreciation of the yen, which may, in turn, affect Tosoh’s performance.

The Tosoh Group will respond with appropriate measures to increases in raw material and fuel prices, changes in product market conditions and fluctuations in exchange rates by continuing to grow its sales volume, decrease its costs, and ensure consistent product supply to its customers.

Tosoh has revised the full-year fiscal 2019 forecast that it announced on May 9, 2018. The revised forecast, shown in the table to follow, is based on a standard domestic naphtha price of ¥59,000 per kiloliter and an exchange rate of ¥110 to the US dollar.

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