Financial/Performance Highlights
Overview of Results for FY2023
During the fiscal year ended March 31, 2024, the global economy was negatively affected by lingering economic stagnation in China. Reflecting this, the pace of global economic recovery has been slower than expected. In addition, prolonged inflation, the continuation of monetary tightening policies and other negative factors led to the deceleration of European and U.S. economies. With stagnation in overall economic activities leading to sluggish demand for goods, the economic environment thus remained harsh. Furthermore, in addition to the continuing situation in Ukraine, geopolitical volatility was exacerbated by increasing tensions centered around the Middle Eastern region. Because of these factors, formulating the future economic outlook remains challenging.
The overall business environment for the MGC Group remained harsh, even though the Group’s operating results were positively affected by the depreciation of the yen, ongoing recovery in sales of semiconductor-related products, such as electronic materials, and other factors. This harshness was primarily attributable to stagnant product prices as well as sluggish demand for basic chemicals due to the lingering stagnation of the Chinese economy and economic deceleration in Europe and elsewhere.
Against this backdrop, in the fiscal year ended March 31, 2024 the MGC Group concluded the final year of its medium-term management plan. In line with this plan, the Group has continued to pursue a basic policy of shifting to a profit structure resilient to changes in the business environment. To this end, the Group has striven to:
- “Further strengthen competitively advantageous (“differentiating”) businesses,”
- “Accelerate creation and development of new businesses,” and
- “Reevaluate and rebuild unprofitable businesses.”
Through these efforts, the Group has pushed ahead with business portfolio reforms.
Net sales increased. Although the exclusion of JSP Corporation from the scope of consolidation at the end of the third quarter of the fiscal year ended March 31, 2024 and downturns in methanol and ammonia market prices affected sales negatively, these factors were more than offset by positive effects arising from the inclusion of Mitsubishi Engineering-Plastics Corporation into the scope of consolidation in the first quarter, the depreciation of the yen, and other factors.
Operating profit decreased, despite the depreciation of the yen, improvement in the profitability of polycarbonates, recovery in demand for electronic materials and other positive factors. The decrease - 18 - was due mainly to stagnant polyacetal market prices in contrast with robust market prices seen in the previous fiscal year, as well as lower sales volumes of meta-xylenediamine, aromatic aldehydes, and other offerings.
Ordinary profit declined, reflecting a decrease in equity in earnings of affiliates due to downturns in methanol market prices, impairment losses recorded at overseas methanol producing companies in the Republic of Trinidad and Tobago, and the absence of non-operating income recorded in the previous fiscal year through the reversal of deferred tax liabilities at an overseas methanol producing company in Venezuela.
Profit attributable to owners of parent decreased due primarily to lower ordinary profit, despite the positive impact on profit arising from the recording of gain on step acquisitions in connection with the inclusion of Mitsubishi Engineering-Plastics Corporation into the scope of consolidation.
Results by Business Segment
Basic Chemicals
- ※ Pie charts exclude other operations and adjustments.
- ※From fiscal 2024, the Basic Chemicals Business Sector has been renamed as the Green Energy & Chemical Business Sector due to an organizational change.
The methanol business saw decreases in both net sales and earnings due primarily to lower market prices compared with the previous fiscal year and deterioration in equity in earnings of affiliates.
Methanol and ammonia-based chemicals posted a decrease in net sales due mainly to downturns in market prices for ammonia and other offerings, but recorded an increase in earnings thanks to the successful structural reform of formalin-related operations and a resulting improvement in their profitability.
The energy resources and environmental business saw a decrease in net sales due mainly to the lower sales volume of LNG for power generation use, but posted earnings on par with the previous fiscal year due to the higher sales volume of iodine and rising market prices for this offering.
High-performance products posted decreases in both net sales and earnings, due mainly to lower sales volumes of meta-xylenediamine and aromatic aldehydes, which reflected stagnant demand among overseas customers.
Xylene separators and derivatives saw decreases in both net sales and earnings due primarily to downturns in sales prices of purified isophthalic acid (PIA), phthalic anhydride and other offerings in general.
Specialty Chemicals
- ※ Pie charts exclude other operations and adjustments.
Inorganic chemicals posted increases in both net sales and earnings due mainly to the successful upward revision of sales prices of chemicals for use in semiconductor manufacturing in order to reflect higher raw material and fuel prices as well as growing transportation costs.
Engineering plastics saw an increase in net sales and a decrease in earnings. The inclusion of Mitsubishi Engineering-Plastics Corporation into the scope of consolidation led to sales growth, while the profitability of polycarbonates improved due primarily to growing sales for high-value-added products. However, overall earnings declined due mainly to downturns in polyacetal market prices.
Optical materials posted increases in both sales and earnings, as demand for smartphones, a primary application of optical polymers, remained on an ongoing recovery track from the second quarter onward on the back of the commencement of production of new models in that quarter.
Electronic materials saw increases in net sales and earnings, due mainly to recovery in demand for smartphone and PC-related BT materials for IC plastic packaging, the core product category for electronic materials.
Oxygen absorbers such as AGELESSTM posted earnings on par with the previous fiscal year, with the depreciation of the yen and the resulting improvement of export prices offsetting such negative factors as a recoil from the temporary surge (due to stay-at-home demand) for products marketed in Japan for food applications and higher raw material prices.