Tosoh Reports on its First-Half Consolidated Results for Fiscal 2022

November  02,  2021 -

Tokyo, Japan— Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2022, from April 1, 2021, to September 30, 2021.

The company’s consolidated net sales totaled ¥428.5 billion (US$3.9 billion), an increase of ¥100.0 billion (30.5%) from the same period a year earlier. The increase was attributable to a rise in selling prices resulting from higher costs of raw materials and fuels such as naphtha and rising overseas product markets, and an increase in sales volume resulting from a recovery in demand.

Operating income was ¥65.3 billion (US$594.7 million), an increase of ¥47.7 billion (270.2%) from the same period the preceding year. Higher selling prices exceeding the impact of higher raw material and fuel prices resulted in improved terms of trade, contributing to the increase.

Ordinary income was ¥69.0 billion (US$628.4 million), an increase of ¥51.0 billion (283.6%) compared with the same period the preceding year. Profit attributable to owners of the parent company totaled ¥46.0 billion (US$418.9 million), an increase of ¥34.3 billion (293.0%) over the same term the previous year.

During the period under review, the Japanese economy continued to be severely impacted by the spread of the coronavirus. The outlook remained uncertain as signs of economic recovery continued in the background of increased exports and capital investment on the one hand, meanwhile, social and economic activities were restricted due to concerns about the re-emergence of infections even as vaccination progressed. As for the global economy, restrictions on economic activities have been gradually eased—especially in developed countries where vaccination is progressing—and demand is showing signs of recovering. However, the waves of the coronavirus infections have been intermittent and it remains difficult to predict when economic activities may resume full scale.

Results by Business Segment

Petrochemical Group

Petrochemical Group net sales increased 58.2%, or ¥32.3 billion, to ¥87.7 billion (US$798.7 million) compared with the same period the preceding year. The group’s operating income increased ¥9.1 billion to ¥8.6 billion (US$78.3 million). Increased shipments of a wide range of products and an improvement in the difference between product receipt and payment due to higher prices for naphtha and other raw materials contributed to the increase in operating income.

Shipments of propylene and cumene increased on the back of increased production volume due to this being a non-maintenance year. In addition, higher prices for raw materials and fuels such as naphtha and higher prices in overseas markets led to the increase in product prices.

Shipments of polyethylene resin increased in both domestic and export markets due to a recovery in demand. Moreover, product prices increased, reflecting the rise in naphtha prices and improved overseas market conditions. Exports of chloroprene rubber, primarily to Asia, increased in line with the recovery in demand.

Chlor-alkali Group

The Chlor-alkali Group’s net sales increased 34.5%, or ¥41.1 billion, to ¥160.1 billion (US$1.5 billion). The group’s operating income likewise increased, ¥27.2 billion, to ¥28.1 billion (US$255.9 million) due to improved trading conditions for PVC products and urethane raw materials.

A decline in production volume due to 2021 being a planned maintenance year* led to a decrease in shipments of caustic soda. Meanwhile, product prices increased, reflecting the rise in overseas market prices. Shipments of vinyl chloride monomer (VCM) and PVC resin both decreased in line with a decrease in production volume. However, product prices for vinyl chloride products increased, reflecting the rise in naphtha prices and product prices in overseas markets.

Both domestic and export shipments of cement remained strong.

Shipments of methylene diphenyl diisocyanate (MDI) increased in domestic and export markets due to a recovery in demand and stable operations at production subsidiaries in China. Moreover, product prices increased, reflecting the rise in overseas market prices. Shipments of hexamethylene diisocyanate (HDI) hardeners increased in Japan and overseas due to a recovery in demand. And product prices likewise increased, reflecting the rise in overseas market prices.

Specialty Group

Compared with the same period the preceding year, Specialty Group net sales increased 26.8%, or ¥23.3 billion, to ¥110.0 billion (US$1.0 billion). The group’s operating income also increased, 96.5%, or ¥10.9 billion, to ¥22.2 billion (US$202.2 million). The increases in net sales and operating income resulted mainly from increased sales volume driven by the recovery in demand.

The recovery in demand led to an increase in ethyleneamines domestic and export shipments. And higher prices in overseas markets resulted in increased product prices.

Among the Specialty Group’s separation media-related products, shipments of packing materials for liquid chromatography increased to Europe, the United States, and China. Diagnostic-related product shipments of in vitro diagnostic products increased in Japan, Europe, the U.S., and Asia due to a recovery in demand.

Shipments of high-silica zeolites—mainly for use in automobile exhaust gas catalyst applications—and shipments of zirconia for use in dental applications both increased due to a recovery in demand. The expansion of demand in the semiconductor market led to increased shipments of quartz glass. And shipments of electrolytic manganese dioxide, mainly for dry-cell applications, increased.

Engineering Group

Engineering Group net sales increased ¥4.9 billion, or 10.3%, to ¥52.8 billion (US$480.9 million) compared with the same period the preceding year. Operating income also increased by ¥500 million, or 11.8%, to ¥5.0 billion (US$45.5 million).

Sales in the water treatment business grew due to steady progress in large-scale project construction in Japan and overseas, primarily for the electronics industry.

Sales by the Engineering Group’s construction subsidiaries increased.

Ancillary

Ancillary net sales fell ¥1.4 billion, or 7.5%, to ¥18.0 billion (US$163.9 million) compared with the same period a year earlier, while operating income increased by ¥20 million, or 1.4%, to ¥1.4 billion (US$12.8 million).

Sales at trading and other companies declined during the period under review.

Summary of Financial Position

Explanation concerning forecast information such as consolidated performance forecast

Domestic and overseas economies, which had been stagnant due to the effects of the coronavirus, are expected to enter a full-fledged recovery phase. Progress in vaccination and the associated easing of economic and social activities restrictions are seen contributing to this recovery. Meanwhile, the future of the economy remains uncertain, as there are concerns about headwinds to the economic recovery, such as disruptions in the global supply chain including semiconductors, soaring prices of crude oil, coal, and other resources, and the economic slowdown in China.

Amidst these circumstances, Tosoh will strive to secure profits by responding quickly and flexibly to changes in the business environment, paying attention to trends in raw material and fuel prices, overseas product markets, and exchange rates—which fluctuate due to various factors—while also monitoring the normalization of the coronavirus situation in Japan and overseas.

Tosoh Corporation has revised its full-year forecasts announced on August 3, 2021. Assumptions for the second half of the fiscal year are based on a domestic naphtha price of ¥60,000/kiloliter and an exchange rate of ¥110/US$ .

For details, please refer to “Tosoh Revises Fiscal 2022 Consolidated Results Forecast,” released on the same day as this release.

Note: For reference purposes only, US dollar amounts have been translated, unless otherwise indicated, from yen at the rate of ¥109.8=US$1, the average exchange rate during the period under review.

*Each year, one of Tosoh’s Nanyo and Yokkaichi Complexes shut down temporarily for cleaning and maintenance with 2021 being a planned maintenance year for Nanyo Complex’s chlor-alkali related plants which will be followed next year by Yokkaichi Complex’s petrochemical related plants.

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. It 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.