Sumitomo Chemical Group has been implementing its Corporate Business Plan (for fiscal 2019 - fiscal 2021), centered on the basic policies of accelerating the development of next-generation businesses, improving productivity through digital innovation, raising the sophistication of the company’s business portfolio, and building a more robust financial structure. The Group has come together in working to create a sustainable society and to deliver sustainable growth through dramatic growth in productivity and acceleration of innovation.

The Group’s sales revenue on a consolidated basis for its 2020 fiscal year, ended March 31, 2021, increased by ¥61.2 billion from the previous year, to ¥2,287.0 billion. Its core operating income was ¥147.6 billion, higher than the previous year, but operating income was ¥137.1 billion, remaining almost flat compared with the previous year. Net income attributable to owners of the parent was ¥46.0 billion, higher than the previous year.

The financial results by business segment for the fiscal 2020 are as follows:

Petrochemicals & Plastics

Amid the economic downturn due to the COVID-19 pandemic, shipments of synthetic resins declined, particularly those used in automotive applications. Impacted by a drop in market prices for raw materials, the prices of petrochemical products hovered a low level. As a result, sales revenue declined by ¥67.6 billion from the previous year, to ¥589.3 billion. Core operating income suffered a loss of ¥12.0 billion, declined by ¥26.5 billion from the previous year, affected by lower shipment volumes and periodic shutdown maintenance at Rabigh Refining and Petrochemical Company, our equity method investee.

Energy & Functional Materials

Impacted by the COVID-19 pandemic, shipments of materials for automotive applications (including separators for lithium-ion secondary batteries and synthetic rubber) decreased. As a result, sales revenue dropped by ¥9.8 billion from the previous year, to ¥245.2 billion, on the other hand, core operating income remained almost flat with the previous year at ¥20.3 billion due to improvements in profit margins because of a drop in market prices for raw materials.

IT-related Chemicals

Shipments of processing materials for semiconductors (including high purity chemicals and photoresists) increased, driven by growing demand for these items. Shipments of materials for display applications increased in the face of stay-at-home demand and demand for remote work products. As a result, sales revenue increased by ¥26.9 billion from the previous year, to ¥431.8 billion, and core operating income increased by ¥14.6 billion from the previous year, to ¥39.7 billion.

Health & Crop Sciences

Sales of crop protection products increased year-over-year after the acquisition of four South American subsidiaries of Nufarm in April 2020. Shipments in India also performed well. Market prices for methionine (feed additives) increased from the previous year. As a result, sales revenue increased by ¥79.3 billion from the previous year, to ¥423.0 billion. Backed by the improved margins of methionine and increased global shipments of crop protection products, core operating income increased by ¥29.5 billion from the previous year, to ¥31.5 billion.

Pharmaceuticals

In Japan, sales of Equa and EquMet (for type II diabetes mellitus), launched in the middle of previous fiscal year, increased since it was sold throughout this fiscal year. In North America, sales of Latuda (atypical antipsychotic agent) increased, and revenues were recorded relating to relugolix. As a result, sales revenue increased by ¥30.6 billion from the previous year, to ¥546.5 billion. Despite the higher sales revenue, core operating income decreased by ¥3.6 billion from the previous year, to ¥71.7 billion, due to higher sales expenses, general and administrative expenses (SG&A) and research and development expenses resulting from the year-round coverage of expenses at Sumitovant Biopharma and its subsidiaries (which were acquired as part of the strategic alliance with Roivant Sciences Ltd., in the previous fiscal year).

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 ¥1.7 billion from the previous year, to ¥51.1 billion, and core operating income increased by ¥4.0 billion from the previous year, to ¥12.8 billion.

Regarding the year-end dividend for fiscal 2020, in light of the financial results for the fiscal year, as described above, and because there is great uncertainty regarding the future operating environment, Sumitomo Chemical has decided to pay a year-end dividend of ¥9 per share. As a result, the Company’s annual dividend for fiscal 2020 will be ¥15 per share, including an interim dividend of ¥6 per share.

For fiscal 2021, the Company forecasts that sales revenue will increase compared to fiscal 2020, to ¥2,610.0 billion, core operating income and operating income are projected to be ¥200.0 billion and ¥180.0 billion, respectively, and net income attributable to owners of the parent to be ¥100.0 billion, assuming an exchange rate of ¥110.0/US$ and a naphtha price of ¥47,000/kl.

While it remains uncertain when the COVID-19 pandemic will be over, its impact on the Group’s business performance after fiscal 2021 would be limited.

The company plans to pay an interim dividend of ¥10 per share and a year-end dividend of ¥10 per share, making the Company’s annual dividend for fiscal 2021 ¥20 per share, increasing ¥5 per share from the previous fiscal year.