Tokyo, Japan— Tosoh presents its full-year consolidated results for its 2021 fiscal year, from April 1, 2020, to March 31, 2021. The company’s consolidated net sales were ¥732.9 billion (US$6.9 billion), down ¥53.2 billion, or 6.8%, from fiscal 2020. The decrease resulted from a decline in product prices due to lower costs for raw materials, such as naphtha, and from worsening trade conditions overseas.
Operating income for fiscal 2021 was ¥87.8 billion (US$827.5 million), up ¥6.1 billion, or 7.5%. This increase was mainly due to improvements in international trade conditions resulting from the impact of lower prices for naphtha and other raw materials and fuels exceeding the impact of lower product prices. Ordinary income also rose, ¥9.1 billion, or 10.7%, to ¥95.1 billion (US$896.3 million). And net profit attributable to owners of the parent company was up ¥7.7 billion, or 13.9%, to ¥63.3 billion (US$596.6 million).
The Japanese economy experienced a rapid decline in domestic and overseas demand caused by restrictions on social and economic activities in response to the spread of COVID-19. And while there have been indications of an economic upturn since summer 2020, the future of the economy remains uncertain, as COVID-19 variants have sparked a resurgence of infections in Japan.
The spread of COVID-19 has caused significant social and economic damage worldwide. Although progress in vaccination primarily in developed countries has led to a recovery in economic activity, the outlook for the global economy remains unclear.
Results by business segment
Petrochemical Group
Petrochemical Group net sales fell ¥27.7 billion, or 17.4%, to ¥131.4 billion (US$1.2 billion), compared with fiscal 2020. The group’s operating income also fell, 2.6 billion, or 25.2%, to ¥7.7 billion (US$72.5 million). The decreases were attributable to deteriorating terms of trade and falling prices for raw materials and fuels, such as naphtha, which negatively affected the difference between product receipts and payments.
Shipments of propylene and cumene decreased because of reduced production volume. And lower prices for raw materials and fuels, such as naphtha, and a deterioration in overseas markets led to a decrease in product prices.
The group’s shipments of polyethylene resin decreased in line with diminished demand both domestically and overseas due to the impact of the COVID-19 pandemic. In addition, polyethylene resin prices decreased, reflecting the decline in the cost of naphtha. Chloroprene rubber exports, primarily within Asia, rose as demand recovered in the region, although prices fell.
Chlor-alkali Group
The Chlor-alkali Group’s net sales fell ¥22.5 billion, or 7.6%, to ¥274.9 billion (US$2.6 billion), primarily on account of declining trade conditions. The group’s operating income, conversely, rose ¥13.3 billion, or 47.2%, to ¥41.5 billion (US$391.1 million). The increase in operating income was due to improved terms of trade for polyvinyl chloride (PVC) products and urethane raw materials.
Caustic soda product prices decreased, reflecting a decline in market prices overseas.
Vinyl chloride monomer shipments increased on the back of an increase in production volume. Polyvinyl chloride resin shipments decreased domestically and overseas, as the spread of COVID-19 suppressed demand.
Domestic and overseas shipments of cement were also down because of weak demand.
Methylene diphenyl diisocyanate shipments also fell, with demand driven downward by the spread of COVID-19.
Specialty Group
Net sales by the Specialty Group decreased ¥4.4 billion, or 2.4%, to ¥180.6 billion (US$1.7 billion). Operating income declined ¥4.4 billion, or 15.6%, to ¥23.5 billion (US$221.5 million). The declines owed themselves to a decline in sales volume and an increase in fixed costs.
Ethyleneamine product shipments remained at essentially the same level as in the previous fiscal year.
Separation-related products saw an increase in shipments of packing materials for liquid chromatography, primarily to Europe. Among diagnostic-related products, in vitro diagnostic reagent shipments to Europe, the United States, and China fell in line with a decrease in demand amid the spread of COVID-19.
Decreased demand because of COVID-19’s spread also drove down shipments of high-silica zeolite, mainly for automotive exhaust gas catalysts.
Shipments of zirconia for use in decorative applications and of silica glass rose, with the latter buoyed by a strong semiconductor market. Shipments of electrolytic manganese dioxide, primarily for batteries, were also up, domestically and overseas.
Engineering Group
Engineering Group net sales increased ¥4.7 billion, or 4.6%, to ¥106.2 billion (US$1.0 billion). Operating income decreased ¥700.0 million, or 5.9%, to ¥12.0 billion (US$113.1 million). The decline in operating income was caused mainly by a dearth of profitable water treatment engineering projects in the electronics field in the preceding fiscal year.
Tosoh’s water treatment business achieved steady progress in large-scale projects in the electronics industry in fiscal year 2021. This, combined with continued large-scale capital investment overseas and ongoing growth in maintenance and other service solutions, resulted in the increase in the group’s net sales.
Sales by the Engineering Group’s construction subsidiaries increased.
Ancillary
Ancillary net sales decreased ¥3.2 billion, or 7.5%, to ¥39.8 billion (US$375.1 million). Operating income increased ¥500.0 million, or 21.1%, to ¥3.1 billion (US$29.2 million).
Sales by trading companies and other operations decreased during the year in review.
Overview of Tosoh’s financial position for the period under review
Increases in cash and deposits and in notes and accounts receivable boosted total assets ¥96.2 billion, to ¥982.8 billion (US$9.3 billion), from a year earlier.
Because of an increase in short-term loans and taxes payable, total liabilities rose ¥44.2 billion, to ¥321.1 billion (US$3.0 billion).
Net assets increased ¥52.0 billion, to ¥661.7 billion (US$6.2 billion). The increase in net assets owed itself to the recording of current net income attributable to owners of the parent company.
Overview of Tosoh’s cash flow for the period under review
Cash and cash equivalents were up ¥51.2 billion, to ¥148.4 billion (US$139.9 million).
Net cash provided by operating activities amounted to ¥95.1 billion (US$896.3 million), down ¥4.8 billion from a year earlier. This decrease was due to an increase in trade accounts receivable.
Net cash used in investing activities was ¥46.4 billion (US$437.3 million), a decrease of ¥23.9 billion caused by decreased expenditures used in the acquisition of fixed assets.
Free cash flow rose ¥19.2 billion, to ¥48.8 billion (US$459.9 million).
Net cash used in financing activities was ¥1.6 billion (US$15.1 million), down ¥25.6 billion because of a net increase (decrease) in short-term loans payable.
Outlook for the fiscal year ending March 31, 2022
The prevailing view is that the economies in Europe, the United States, and Asia will recover fully during Tosoh’s fiscal 2022 year. This view is supported by steady progress in vaccinations against COVID-19 and by recoveries in stock markets and interest rates.
It may, however, take longer than expected to bring COVID-19 under control amid the spread of highly infectious variants in Japan and elsewhere. And with escalating tension between the United States and China and turmoil in overheated financial markets concerns persist regarding an economic slowdown, in Japan and abroad. As such, the economic outlook is difficult to assess.
Tosoh, therefore, must remain vigilant in observing its business environment. It is vital that we continue to pay attention to progress in the normalization of the COVID-19 pandemic in Japan and overseas; to the intensifying friction between the US and China; and to the trends in raw material and fuel prices, overseas product market prices, and exchange rates, all of which fluctuate in accordance with various factors, including international political issues.
The Tosoh Group’s forecast for its fiscal year 2022, ending March 31, 2022, calls for net sales of ¥800 billion, for operating income of ¥93 billion, for ordinary income of ¥92 billion, and for net profit attributable to owners of the parent company of ¥60 billion. These performance forecasts are predicated on domestic naphtha prices of ¥45,000 a kiloliter and an exchange rate of ¥105 to the US dollar.
Stance on financial standards
Tosoh will continue to observe Japanese financial standards for the foreseeable future. We are in the meantime proceeding with preparations and considerations for our future application of International Financial Reporting Standards (IFRS).
Note: For reference purposes only, US dollar amounts have been translated, unless otherwise indicated, from yen at the rate of ¥106.1= US$1, the average exchange rate during the period under review.
TOSOH CORPORATION
WHO WE ARE
Tosoh Corporation is the parent of the Tosoh Group, which comprises over 100 companies worldwide and a multiethnic workforce of over 12,000 people and generated net sales of ¥732.9 billion (US$6.9 billion at the average rate of ¥106.1 to the US dollar) in fiscal 2021, ended March 31, 2021.
WHAT WE DO
Tosoh is one of the largest chlor-alkali manufacturers in Asia. The company supplies the plastic resins and an array of the basic chemicals that support modern life. Tosoh’s petrochemical operations supply ethylene, polyethylene, and functional polymers, while its advanced materials business serves the global semiconductor, display, and solar industries. Tosoh has also pioneered sophisticated bioscience systems that are used for the monitoring of life-threatening diseases. In addition, Tosoh demonstrates its commitment to a sustainable future in part by manufacturing a variety of eco-products.
Stock Exchange Ticker Symbol: 4042
DISCLAIMER
This document may contain forward-looking statements, including, without limitation, statements concerning product development, objectives, goals, and commercial introductions, which involve certain risks and uncertainties. Forward-looking statements are identified through the use of the word anticipates and other words of similar meaning. Actual results may differ significantly from the results expressed in forward-looking statements.