March 18, 2014 2:00 am JST

Mitsui Chemicals op profit poised to climb 40% in fiscal 2014

TOKYO -- Mitsui Chemicals Inc.'s operating profit is on track to rise to roughly 35 billion yen ($341 million) for the year ending March 2015, underpinned by increased sales of high-value-added products.

      Sales of materials used to make bumpers and other autoparts are expected to grow as Mitsui Chemicals expands production, mainly abroad. The Japanese firm is also boosting output capacity for eyeglass lens materials and nonwoven fabric used in such products as diapers, with sales of these materials likely to increase. Sales are brisk for agrochemicals as the company expands overseas sales channels. The strength of such products is seen giving operating profit a boost of 6 billion yen to 7 billion yen.

     Restructuring efforts are projected to lift operating profit by around 7 billion yen as well. With businesses in such commodity-grade chemicals as phenol struggling amid tougher competition with Chinese firms, the company announced plans last month to close domestic facilities making urethane materials and phenol. This is seen reducing losses in the phenol segment next fiscal year, and the write-offs will lower depreciation charges.

     Extraordinary losses stemming from streamlining are expected to settle down next fiscal year. With its main businesses recovering, Mitsui Chemicals is projected to post a net profit for the first time in four years, swinging to the black from this fiscal year's estimated 23 billion yen loss. Overall sales are seen declining slightly to 1.56 trillion yen on the shuttering of the phenol plant.

     For the current year through March 31, Mitsui Chemical is likely to hit its projection of 1.57 trillion yen in sales, up 12%, and operating profit of 25 billion yen, up 480%. Operating profit could end up hundreds of millions of yen higher because prices for commodity chemicals have been firm of late.