By: ICN Bureau
Last updated : May 10, 2021 9:58 am
Operating income is expected to increase in all segments excepting the others segment
Showa Denko announces that it revises its forecast of consolidated business results for the first half of the year ending on December 31, 2021, which was announced on February 17, 2021, taking the latest economic conditions into consideration. Following this revision, SDK also revises its full-year forecast of consolidated business results for the year ending on December 31, 2021. Regarding the latter forecast, we revised the full-year forecast to reflect only the changes in the performance forecast for the first half of 2021.
Regarding net sales, although the Others segment's sales is expected to decrease due to unconsolidation of Shoko Co., Ltd. resulting from the sale of SDK's shares in Shoko aiming to tender them into a tender offer, sales in all the other segments are expected to increase from those in the previous forecast. In the Showa Denko Materials' segment, sales of semiconductor related products have been exceeding previous forecast due to tighter supply-demand situation. In the Inorganics segment, sales volumes of graphite electrodes have been exceeding the previous forecast due to an improvement in supply-demand situation. In the Petrochemicals segment, market prices of products have been exceeding the level in the previous forecast due to a rise in raw naphtha prices and strong demand in Asia.
Operating income is expected to increase in all segments excepting the Others segment. In the Showa Denko Materials segment, operating income is expected to increase due to an increase in sales of electronic materials and circuit board materials resulting from market growth in the semiconductor industry and the data center industry. In addition, operating income from sales of mobility materials has been exceeding the previous forecast due to the recovery of production in the car industry which is stronger than expected. In the Inorganics segment, operating income has been increasing due to an increase in sales volumes of graphite electrodes which exceeds the previous forecast. In the Petrochemicals segment, operating income has been increasing because market prices of products continue exceeding the level in the previous forecast due to strong demand in Asia, a cold wave in the United States in the last winter, and a rise in raw naphtha prices.
On the basis of the situation above, we also expect improvements in ordinary income and net income attributable of owners of the parent from those in the previous forecast.
Regarding consolidated performance forecast for full-year 2021, we revised the forecast to reflect only the changes in the performance forecast for the first half of 2021. Regarding the dividend, we do not revise our forecast that the Company will pay 65 yen per share as year-end dividend.
Recording of extraordinary losses
At Kitakata Plant, which is located in Kitakata City, Fukushima Prefecture, SDK currently manufactures aluminum specialty components. Recently, at the Plant, we found groundwater contamination by fluorine and other chemicals exceeding environmental standard, which was caused by a business operated in the past. Therefore, SDK has decided to conduct construction work to establish environmental measures as countermeasures against the groundwater contamination in order to conform to the Soil Contamination Countermeasures Act. To cover the expense for the construction work, we have decided to record an extraordinary loss of about 9 billion yen in the Company's consolidated financial statements for the first quarter of 2021. In addition, we also have decided to record an extraordinary loss of about 2.7 billion yen in the Company's consolidated financial statements for the same period, in order to reflect the special early retirement allowance incurred due to the structural reform in the Showa Denko Materials segment.
[Reference] Segment-wise breakdown of net sales and operating income (consolidated) for the first-half of the year ending on December 31, 2021.