TOKYO -- Japanese chemical company Asahi Kasei expects net profit to swing to an 18% decline this fiscal year on costlier materials and slowing business in smartphone components.
Profit will drop to 140 billion yen ($1.28 billion) for the year ending March 2019, the company said Friday when releasing results for the just-ended term, which saw earnings reach an all-time high. Sales are projected at 2.15 trillion yen, up 6%.
In the mainstay materials segment, Asahi Kasei sees profit margins on petrochemical products squeezed by higher input costs, which are being driven up by rising oil prices even as product prices stay flat. The spread between product prices and materials costs is projected to shrink more than 10% for acrylonitrile, used to make plastics and synthetic fibers.
Flagging smartphone sales in such markets as China are another headwind for Asahi Kasei, Japan's fourth-largest chemical company by revenue and one of the industry's more diversified groups.
The company sees sales of electronic parts used in smartphone cameras slowing this fiscal year. It expects to increase shipments of separators used in lithium-ion batteries, but heavy charges from upfront investment will weigh profit down.
In the health care segment, profits will take a hit from changes in government-set drug pricing and competition from generics.
Profit growth is expected in the homes segment, with rental property management, unit home development and remodeling operations faring well.
In the year ended March 31, Asahi Kasei's net profit jumped 48% to a record 170.2 billion yen. Sales grew 8% to 2.04 trillion yen to top the 2 trillion yen mark for the first time. The company raised its annual dividend by 10 yen on the year to 34 yen per share.
With the midday earnings release, Asahi Kasei shares ended Friday down 3% at 1,469 yen.