April 17, 2014 2:00 am JST

Sumitomo Chemical's fiscal 2013 profit seen surging 110%

TOKYO -- Sumitomo Chemical Co. is expected to report an estimated 110% rise in group pretax profit to 108 billion yen ($1.04 billion) for the year ended March 31, beating the forecast by about 8 billion yen, thanks to growth in its businesses related to drugs and agricultural chemicals.

     Sales broke the 2 trillion yen mark for the first time, climbing 14% to around 2.23 trillion yen.

     The pharmaceutical segment helped drive growth on higher sales of the antipsychotic drug Latuda and other offerings in North America. The segment apparently exceeded the target and achieved a double-digit profit gain, having also kept down marketing and administrative costs.

     Its health and crop sciences segment -- primarily focused on agricultural chemicals -- also fared well, propped up by such products as herbicides, which are in high demand overseas. Expanded production also bolstered the business.

     The information-technology-related chemicals segment apparently notched strong profit growth, helped by liquid crystal display materials for smartphones.

     The petrochemical business, however, continued to struggle and will likely undershoot the target. Demand is stagnating for materials such as synthetic fiber and synthetic resin, exacerbated by increased output from Chinese producers.

     Sumitomo Chemical will see fatter foreign exchange gains -- booked as nonoperating profit -- due to a weaker-than-expected yen, which it had pegged at 97 against the dollar.

     Saudi Arabian equity-method affiliate Petro Rabigh saw profit fall less than forecast. The venture, which manufactures and markets petroleum products, had anticipated a steep decline, partly due to an interruption in its power supply, but it received settlement money from the utility.

     For fiscal 2014, sales are expected to rise 5% to around 2.34 trillion yen. Pretax profit is seen climbing 9% to about 118 billion yen.

     While adjustments to drug pricing will likely weigh on the pharmaceutical business, Sumitomo Chemical foresees growing demand for its agricultural chemicals, especially in overseas markets. Demand is also expected to increase for products used in smartphones.