By: ICN Bureau
Last updated : November 01, 2022 7:16 pm
Selling prices for synthetic resins, methyl methacrylate and various industrial chemicals improved due to an increase in raw material prices.
For the half-year ended September 30, 2022, the Sumitomo Chemical Group reported consolidated sales revenue of ¥1,528.6 billion, an increase of ¥203.4 billion year on year, core operating income* of ¥115.6 billion, operating income of ¥60.6 billion, and net income attributable to owners of the parent of ¥81.1 billion, all lower than the results from the same period in the previous year. Sumitomo Chemical decided to pay an interim dividend of ¥12 per share.
The financial results by business segment for the half-year are as follows:
Essential Chemicals & Plastics
Selling prices for synthetic resins, methyl methacrylate and various industrial chemicals improved due to an increase in raw material prices. The weak yen also benefited sales revenues of subsidiaries outside of Japan when converted into yen.
On the other hand, shipments declined, primarily because of weak demand for products in automotive applications. As a result, sales revenue increased by ¥67.8 billion from the same period in the previous year, to ¥467.3 billion. Core operating income was ¥23.3 billion, a decline of ¥18.8 billion from the same period in the previous year, because of a deterioration in margins caused by higher raw material prices and the impact of lower shipment volumes, despite an improvement in the performance of Rabigh Refining and Petrochemical Company, our equity method investee.
Energy & Functional Materials
Selling prices for aluminum and cathode materials increased with the improvement in market conditions. Shipments of separators for lithium-ion secondary batteries stayed firm. The weak yen also had a positive effect. As a result, sales revenue increased by ¥25.0 billion, to ¥173.5 billion from the same period in the previous year. Core operating income was ¥13.4 billion, higher by ¥0.9 billion from the same period in the previous year, led by higher income from exports due to the weak yen, despite a decline in margins resulting from the rise in raw material prices.
IT-related Chemicals
Sales revenue benefited from the weak yen’s effect on the sales of subsidiaries outside of Japan in yen terms. In addition, demand growth for processing materials for semiconductors, such as high purity chemicals and photoresists, brought about an increase of shipments. On the other hand, shipments of display-related materials declined because stay-at-home demand had run its course, and consumer sentiment deteriorated in the face of inflation concerns. As a result, sales revenue decreased by ¥5.5 billion from the same period in the previous year, to ¥222.2 billion, and core operating income decreased by ¥3.1 billion from the same period in the previous year, to ¥26.4 billion.
Health & Crop Sciences
Sales of crop protection products in South America increased significantly, and shipments in such markets as India performed well. Moreover, market prices of methionine (feed additives) increased from the same period in the previous year. The weak yen also had a positive effect on sales from subsidiaries outside of Japan when converted into yen. As a result, sales revenue increased by ¥84.5 billion from the same period in the previous year, to ¥293.9 billion. Core operating income was ¥36.3 billion, an increase of ¥17.9 billion from the same period in the previous year, driven by the increase in sales and higher income from exports as a result of the weak yen, despite higher prices for raw materials.
Pharmaceuticals
In North America, revenue grew as sales of Latuda® (atypical antipsychotic agent), Orgovyx® (therapeutic agent for advanced prostate cancer) and Gemtesa® (therapeutic agent for overactive bladder) increased, on top of the favorable effects of the forex situation, even though results in the same period of the previous year were boosted by the receipt of a lump-sum upfront payment for a development and commercial collaboration agreement. On the other hand, in Japan, sales revenues were adversely affected by the National Health Insurance (NHI) drug price revisions.
As a result, sales revenue increased by ¥24.9 billion from the same period in the previous year, to ¥334.4 billion. Core operating income was ¥25.2 billion, a decrease of ¥24.8 billion from the same period in the previous year, as increases in selling, general and administrative expenses and R&D expenses, primarily due to the effects of the forex situation, outweighed revenue growth.
Others
In addition to the above five segments, the Sumitomo Chemical Group supplies electric power and steam, designs chemical plants and supervises the construction of those facilities, provides transportation and warehousing, and conducts physical property analysis and environmental analysis. Sales revenue of these businesses increased by ¥6.6 billion from the same period in the previous year, to ¥37.2 billion, and core operating income decreased by ¥4.2 billion from the same period in the previous year, to ¥2.6 billion.