Chemicals Division Strategies and Initiatives
Industry Environment and Fiscal 2010 Results
Steady Expansion in Business Scope and New Initiatives for the Future
The industry environment was favorable in fiscal 2010, with the market led by growth in emerging economies. In petrochemicals, business performance improved steadily, buoyed mainly by growth in the trade of olefins and other petrochemicals. This was coupled with an increase in business scope at synthetic rubber operating companies driven by growing demand for car tires. The division also advanced several new initiatives for the future. In addition to a strategic partnership agreement with Tianjin Bohai Chemical Industry Group Corporation and promotion of a joint venture in the manufacture of propylene in China, we established an operating company for the manufacture of synthetic rubber through a joint venture in India and signed a memorandum to study the feasibility of a methanol business in the Republic of Ghana.
In inorganic and agricultural chemicals, the business scope at agriculture-related operating companies grew steadily, supported by healthy market prices for grain. Furthermore, in January 2011 the division decided to establish a manufacturing joint venture in high-purity lithium carbonate, the raw material for lithium-ion batteries, in response to soaring growth in projected demand. In electronic materials, business performance recovered strongly mainly supported by handling solar panel-related components, for which demand has grown substantially, and array exposure used to produce LCD panels in China. Contributions to earnings also came from other sources, including the conversion of a compound business in Indonesia into an affiliate in the vinyl alkali field, stable operations at operating companies in plastics involved in producing acrylic sheets for Light Guide Panel (LGP) used in LCD televisions, and from increased handling of fluorine gas in specialty chemicals. These contributions laid a firm foundation for the future, and resulted in strong segment performance, with gross trading profit for fiscal 2010 of ¥24.1 billion and segment net income of ¥6.1 billion.
Initiatives in Fiscal 2011
Accelerating Business Development Based on Strengths in Trade
The division continued to accelerate business development based on its strengths in trade, thereby seeking out growth and expansion on well-balanced business and trade. In petrochemicals, we are steadily launching operations at our Indian synthetic rubber business, which we finished setting up in fiscal 2010. We will also promote propylene and other businesses in China as we continue to aggressively unveil new business projects that capture growth in resource-producing countries and emerging economies. In inorganic and agricultural chemicals, the division will focus its efforts on its agriculture-related operating companies to expand trade, mainly for raw materials for fertilizer, and to create new business projects. In parallel, we will continue to pursue development for the future in lithium-ion batteries, factory horticulture sites, and other areas. Our efforts to expand trade and business will also apply to the electronic materials and specialty chemicals fields.
In fiscal 2011, we intend to spur trade growth by further building trading volume in growing emerging markets, such as China, India and Brazil, and doing the same for petrochemicals and other products from the Middle East. At the same time we will boost earnings by widening our business scope, mainly at plastic and chemical sales companies in Japan, agriculture-related operating companies in Europe and North America, and operating companies involved in synthetic rubber manufacturing and sales in China.
