Showa Denko postpones 2016 results announcement, downgrades net income forecast

February 15, 2017 | Francinia Protti-Alvarez

Showa Denko has downgraded its net income forecast for the full year 2016, to ¥11 billion ($96.7 million). The previous forecast, published in December, was ¥12 billion. Showa Denko’s net income in 2015 totaled ¥969 million. The company forecasts 2016 operating income of ¥41.8 billion, which would represent 24% growth, and anticipates a 14% drop in net sales, to ¥671.2 billion.

The company, meanwhile, has postponed announcing its 2016 financial results, which had originally been scheduled for 14 February. Shoko, a consolidated subsidiary of Showa Denko, is now required to undergo a detailed examination of the way one of Shoko’s subsidiaries records sales to a specific customer, the company says. Showa Denko says it will publish its financial results no later than 7 March.

The company says it will record a ¥15.2-billion impairment loss in the fourth quarter due to declining profitability at the company’s electronics materials operations at Chichibu, Japan, and an aluminum specialty components operation at Oyama, Japan.

The forecast increase in operating income is due to a substantial depreciation, toward the end of the year, of the yen against the US dollar, Showa Denko says. Operating income in the company’s petrochemical segment should also exceed the earlier forecast because the ethylene spread has improved, reflecting tight supply in Asia. Operating income in the electronics segment will also exceed the earlier forecast because shipment volumes of high-definition media increased.

Meanwhile, Showa Denko and SK Materials (Yeongjyu-si, South Korea) plan to establish this month a previously announced joint venture to produce and sell high-purity monofluoromethane gas. They plan to finish constructing a production plant in August 2017.

Showa Denko has also decided to install a production plant at its Tokuyama, Japan, site, to produce newly developed grades of high-purity solvent. The new plant will start commercial operations in June 2017.