Strengthening the Earning Power of the Energy and Chemicals Business

「The Digital Unit saw increased sales of thermal control equipment and other products for semiconductor manufacturing equipment, in addition to gas supplies for advanced semiconductors, against the backdrop of strong demand for semiconductors used in generative AI. The functional materials business performed well as sales of sealing materials and basic chemicals recovered, while price management also progressed.」

「Overall, business performance improved substantially as sales expanded for materials and components essential to semiconductor and electronic equipment manufacturing, including electronic materials and precision polishing pads, while demand for basic chemicals recovered and market conditions improved. Segment revenue was ¥28,869 million, 119.9% of the year-earlier level, and operating profit was ¥2,739 million, 170.8% of the year-earlier level.」

「On 1 October this year, as an important step in the structural transformation, the Company integrated the Electronic Materials Development Division, Kawasaki Kasei Chemicals Co., Ltd., and Daito Chemical Co., Ltd., and launched Air Water Performance Chemicals Co., Ltd.」

「In this segment, the company is pursuing a structural shift toward a functional chemicals business centered on electronic materials. As an important step, the company's Electronic Materials Development Division and 川崎化成工業 will be integrated with 大東化学㈱, which joined the group in 2019, into a new company, エア・ウォーター・パフォーマンスケミカル㈱, effective 1 October of this year. By integrating their respective technological resources and customer bases, the company will pursue synergies across the business as a whole, while anticipating changes in and expansion of the demand structure toward the coming super-smart society across the chemicals business, including basic chemicals, functional materials and food chemicals, in addition to electronic materials. Segment revenue was ¥9,653 million, up 138.3% year on year, and operating profit was ¥997 million, up 396.0%.」

「In the chemicals-related business, the company plans to integrate its Electronic Materials Development Division, centred on functional chemicals, with Kawasaki Kasei Kogyo Co., Ltd. and Daito Chemical Co., Ltd. of the Group in October 2021. Across its chemicals businesses, including basic chemicals, food chemicals and pharmaceutical and agrochemical intermediates, the company is also strengthening its development structure and integrating its production and logistics systems to anticipate changes in demand associated with the ultra-smart society and pursue further growth.」

「Profitability improved as the company restructured its production system across the entire business, including the closure of its Chinese plant.」

「Revenue in this segment was ¥14.699 billion, or 136.8% year on year, and operating profit was ¥576 million, compared with an operating loss of ¥68 million in the same period of the previous year. In the functional chemicals business, sales of electronic materials expanded as new applications for displays increased. The newly consolidated results of ㈱FILWEL, whose sales of precision polishing pads remained firm against the backdrop of growing hard disk drive demand at data centers, and 大東化学㈱, Japan's leading manufacturer of sodium acetate, also made a significant contribution.」

「Segment revenue was ¥6,978 million, up 147.1% year on year, and operating profit was ¥251 million, compared with an operating loss of ¥29 million in the year-earlier period. In the functional chemicals business, sales of electronic materials expanded as new applications for displays grew. The new consolidation effects of 株式会社FILWEL, whose precision polishing pad sales expanded against a backdrop of growing hard disk drive demand at data centers, and 大東化学㈱, Japan’s leading domestic manufacturer of sodium acetate, also contributed.」

「Profitability was an issue in the Chemical-related business, but the 3 M&A transactions conducted during the consolidated fiscal year brought the initial stage of structural reform to an end. Going forward, the company aims to expand earnings power by optimizing its production structure and generating synergies in development.」

「The Functional Chemicals business was affected by the continued suspension of operations at its Chinese plant due to environmental regulations, as well as lower sales of high-performance circuit products for industrial robots. However, profitability of products for electronic materials improved through increased sales and greater efficiency at domestic production sites, and the business as a whole remained firm. The effects of newly consolidating FILWEL Co., Ltd. and Daito Chemical Co., Ltd., which were acquired through M&A during the consolidated fiscal year, also contributed.」

「Although the Fine Chemicals business was affected by operating fluctuations at its Chinese production plant due to tighter environmental regulations, earnings improved substantially owing to a review of unprofitable products, higher sales of products for electronic materials and the effects of price revisions. Kawasaki Kasei Industries Co., Ltd. also worked to reduce manufacturing costs through lower fixed costs and more efficient procurement, and earnings improved substantially as market conditions for its major products recovered, resulting in strong performance.」

「The group's 川崎化成工業㈱ reduced fixed costs and rationalized procurement to lower manufacturing costs. Earnings also improved as market conditions for its major products recovered, and the business performed well. As a result, segment revenue was ¥36.381 billion, or 107.5% of the year-earlier level, and ordinary profit was ¥1.774 billion, or 218.4%.」

「In addition to thoroughly reducing manufacturing costs, the Group's 川崎化成工業 revised its selling prices, improving the profitability of organic acid products, including phthalic anhydride. Demand for naphthoquinone and its derivatives, which the company is the only producer of commercially worldwide, also remained firm, particularly in the information and electronic materials fields, resulting in generally strong performance. As a result, segment revenue was ¥18,617 million, or 103.0% of the same period of the previous year, and ordinary profit was ¥680 million, or 416.3%.」

「The fine chemicals business remained solid as the suspension of unprofitable facilities improved profitability and sales of high-performance circuit products for industrial robots grew. In addition, the Group's Kawasaki Kasei Chemicals Ltd. performed well overall, as sales of naphthoquinone and its derivatives, for which it is the world's only commercial producer, expanded significantly for uses including pesticide raw materials and photosensitisers, while sales of phthalic anhydride, used mainly as a raw material for plasticisers, recovered and export market conditions improved.」

「The Fine Chemicals business performed well as sales of high-performance circuit products for industrial robots increased and earnings improved following the shutdown of unprofitable facilities. In addition, sales of naphthoquinone and its derivatives, which the group's Kawasaki Kasei Industries Co., Ltd. is the world's only commercial producer of, expanded substantially for applications including agricultural chemical materials and photosensitizers. Sales of phthalic anhydride, used in plasticizers and other products, also recovered, while export market conditions improved, resulting in strong overall performance.」

「The chemicals-related business, whose performance had been sluggish, particularly in the coal tar distillation business, returned to profitability as market conditions for its products improved and structural reforms in the functional chemicals field progressed.」

「The chemicals-related business, whose performance had been sluggish, mainly in the tar distillation business, recovered faster than initially expected as product market conditions improved and structural reform progressed in the functional chemicals field.」

「The company actively pursued fuel switching as part of its initiatives for industrial energy and sought to acquire new customers, making a significant contribution to increased volumes. It also expanded the application of a service providing electronic-money credits to attract customers through ancillary sales with LPG, and pursued business expansion as a comprehensive energy services company rooted in local communities.」

「For household use, LP gas sales volume was steadily increased through wider adoption of the VIVIDO energy-saving system and the acquisition of new customers through an electronic-money rewards service. For industrial use, the Company actively promoted proposals for fuel conversion, resulting in steady growth in both sales volume and customer numbers.」

「In the household market, adoption of the Company's energy-saving VIVIDO system expanded, while the provision of services offering electronic money incentives also helped increase customers and sales.」

「Against this backdrop, for large customers we promoted fuel conversion by leveraging environmental and cost advantages. For households, we expanded our customer base from both the hardware and software perspectives by proposing energy-saving equipment and offering a new service that provides electronic money. As a result, both sales volumes and the number of customers steadily increased compared with the same period of the previous year.」

「In the energy-related and chemical-related businesses, we will continue structural reforms to strengthen profitability while working to build business structures that are resilient to changes in the operating environment.」