Showa Denko (SDK) Announces 2017 Second Quarter Financial Results

2017-08-08

Aug. 8, 2017 - Showa Denko K.K. today announced its 2017 second quarter financial results.

 

During the first half of 2017 (January 1 - June 30), the Japanese economy continued to recover gradually. Export and production recovered. Backed by the good employment situation, consumer spending also recovered gradually. Corporate earnings improved due to stable yen-dollar exchange rate. As for overseas economies, the US economy continued to recover. The European economy recovered gradually. The Chinese economy showed signs of recovery. The economies of ASEAN countries also showed signs of recovery. The economies of resource-producing countries including Russia and Brazil bottomed out and showed improvement.

 

In the petrochemical industry, prices of products including olefins increased due to a rise in crude oil prices. Operating rates at domestic petrochemical plants maintained high levels due to strong demand for petrochemical products in Asia. In the electronic parts/materials industry, production of parts/materials maintained high levels due to increasing demand for semiconductors for use in electronic devices including smartphones.

 

Under these circumstances, the Showa Denko Group has been promoting its medium-term consolidated business plan “Project 2020+” since 2016. Under this business plan, in order to achieve continuous growth of the Showa Denko Group, we will expand and strengthen our “individualized businesses,” reform our business structure, and strengthen our revenue base, thereby enhancing our corporate value.

 

The Group recorded consolidated net sales of ¥372,193 million in the first half of 2017, up 16.8% from the same period of the previous year. Sales increased in all segments. In the Petrochemicals segment, sales significantly increased due to the consolidation of SunAllomer Ltd. in the second half of 2016. In the Electronics segment, sales increased due to the increase in shipment volumes of HD media.

 

Operating income of the Group substantially increased by 202.9%, to ¥35,027 million. The Petrochemicals segment recorded considerably higher income due to a strong market caused by a tight supply-demand balance in Asia. The Electronics segment also recorded considerably higher income due to an increase in shipment volumes of HD media. The Chemicals, Inorganics and Aluminum segments also recorded higher income.

 

The Group recorded ordinary income of ¥22,238 million, up 187.2%. Though the Group recorded a loss on investment to companies under the application of equity method with regard to P.T. Indonesia Chemical Alumina (ICA), the Group’s ordinary income increased in the end.

 

The Group recorded net income attributable to owners of the parent of ¥7,837 million in the first half of 2017, up 236.2% from the same period of the previous year. The group recorded an extraordinary loss due partly to the posting of a loss on provision of allowance for doubtful accounts with regard to ICA. Corporate tax and other expenses also increased. However, the Group’s net income attributable to owners of the parent increased in the end.

 

In the Petrochemicals segment, sales increased 44.0%, to ¥123,924 million. Production of ethylene and propylene increased from the same period of the previous year in which we had coinciding periodic shutdown maintenance of plants to produce derivatives in Oita Complex. Sales of olefins increased due to an increase in prices of products caused by a rise in raw naphtha price, centering on the first quarter. Sales of organic chemicals increased due partly to higher shipment volumes and a rise in prices of products including vinyl acetate. Consolidation of SunAllomer Ltd. in the second half of 2016 also increased the sales of the segment. Operating income of the segment increased 119.3%, to ¥16,157 million.

 

In the Chemicals segment, sales increased 8.0%, to ¥70,116 million. Production of liquefied ammonia and high-purity gases for electronics increased from the same period of the previous year. In the basic chemicals business, sales of chloroprene rubber increased due to strong demand for export including that to the United States. Sales of acrylonitrile increased due to a rise in price. Sales of liquefied ammonia slightly increased. Sales of electronic chemicals increased due to higher shipment volumes of high-purity gases for electronics caused by an increase in production in the semiconductor and LCD panel industries. Sales of functional chemicals increased due to higher shipment volumes for use in the domestic automotive industry. However, sales of industrial gases slightly decreased. Operating income of the segment rose 26.0%, to ¥6,891 million.

 

In the Inorganics segment, sales increased 6.8%, to ¥26,585 million. Production of graphite electrodes increased from the same period of the previous year due to an improvement in the situation of the electric steel industry as the customer. Sales of graphite electrodes slightly increased due to an increase in shipment volumes resulting from an increase in production in the electric steel industry. Sales of ceramics increased due to an increase in shipment volumes for the steel and electronics industries. The segment recorded operating income of ¥143 million, an improvement of ¥4,493 million.

 

In the Aluminum segment, sales increased 6.5%, to ¥50,880 million. Production of high-purity foil for aluminum electrolytic capacitors increased from the same period of the previous year. Shipment volumes and sales of rolled products increased due to higher shipment volumes of high-purity foil for aluminum electrolytic capacitors for use in home electrical appliances and automotive applications. Sales of aluminum specialty components increased due partly to higher shipment volumes for use in railcars and laser-beam printers. Sales of aluminum cans increased due to higher shipment volumes recorded by Hanacans Joint Stock Company of Vietnam. Operating income of the segment increased 120.0%, to ¥3,237 million.