Displaying items by tag: Sumitomo Osaka

April 2020 data from the Japanese Cement Association (JCA) suggests that Japan has avoided the worst effects of the coronavirus outbreak. The industry’s total sales fell by 2.4% year-on-year to 16.4Mt in the first four months of 2020 from 16.8Mt in the same period in 2019. This is the kind of change associated with business as usual market trends, rather than the 20% declines seen elsewhere around the world in association to the coronavirus. In part this reflects the country’s case and mortality rate, which are far lower than other Group of Seven (G7) countries. The reasons for this may be due to lower levels of testing, less stringent lockdown measures and a more effective public health strategy. That last point is perhaps even more impressive given the population’s high median age (47.3). Whatever the reasons, the overall effect on the construction materials business seems low.

Graph 1: Cement production, sales, imports and exports in Japan. Source: Japanese Cement Association.

Graph 1 above shows the Japanese cement market in a historical context. Production peaked in the mid 1990s at a little below 100Mt/yr followed by a decline to above 40Mt/yr since 2010. This informs the current situation once one removes any effects from the health emergency. As Naoki Ono, the chairman of the JCA and the chief executive officer (CEO) of Mitsubishi Materials, described it in late May 2020, domestic demand for cement fell by 3.8% year-on-year to 41Mt in 2019. He blamed this on the completion of construction work for the 2020 Tokyo Olympic and Paralympic Games, the end of a period of rebuilding following natural disasters and a shortage of manpower.

All of this may explain why Taiheiyo Cement announced the acquisition of a 15% stake in state-owned Semen Indonesia subsidiary Solusi Bangun Indonesia in April 2020. At the time the producer said explicitly that the partnership with Semen Indonesia was part of Taiheiyo Cement’s response to a, “forecasted long-term decline in domestic cement demand in Japan.” Given the competiveness of the Indonesian market it seems like a brave move given the country’s overcapacity, the departure of LafargeHolcim and the arrival of China’s Anhui Conch. Meanwhile at home, Mitsubishi Materials and Ube Industries said in February 2020 that the companies were discussing a potential merger of their cement businesses. The letter of intent suggests a schedule of late September 2020 to sign a definitive agreement and a target of April 2022 to complete the integration. This follows the two companies working together since 1998 on a joint venture called Ube-Mitsubishi Cement, which integrated their cement sales and logistics operations. Mitsubishi Materials and Ube Industries are the third and fourth largest producers by production capacity in the country. A merger would potentially give the combined entity the same production base as the largest producer, Taiheiyo Cement.

Taiheiyo Cement’s experience in its 2020 financial year to 31 March 2020 was in line with Naoki Ono’s summary above, with both sales and profits down. Its domestic sales volumes decreased by 5% to 14.5Mt, although exports rose by 11% to 3.9Mt. In its financial report it highlighted its key foreign markets in the US, China, Vietnam and the Philippines. Despite increasing its sales in its 2020 financial year, Sumitomo Osaka Cement’s operating income and profits fell. It blamed this on energy costs, principally coal, and other raw material inputs. It has since published its next medium-term management plan. This includes a number of measures such as cutting costs and looking at overseas expansion. Both Mitsubishi Materials and Ube Industries reported similar reductions in their sales and profits. Mitsubishi Materials noted that it had observed a decrease in cement shipment due to the construction delay caused by the coronavirus.

Ratings company R&I is optimistic about the Japanese market following the start to 2020. In a recent news release it concluded that domestic cement demand is ‘solid’ for the next few years due to order backlog and anticipated infrastructure projects. In its assessment local producers have been improving their cost structures since 2010 in ways that should support ‘certain levels of profit’ provided domestic demand remains around 40Mt/yr. In the medium to longer term though it still expects domestic demand to decrease slowly. Hence, the overseas expansion, merger and acquisition activity and cost cutting plans of the larger producers. Long trends aside, the Japanese cement sector is coping well so far with the global health pandemic.

Japan: Sumitomo Osaka Cement’s net profit in the fiscal year that ended on 31 March 2020 was US$102m, up by 40% year-on-year from US$72.7m in the fiscal year 2019. Sales fell by 2.4% to US$2.28bn from US$2.34bn. This was due to the collapse in cement demand following the coronavirus state of emergency declared in Tokyo and six other prefectures on 7 April 2020.

Japan: Sumitomo Osaka Cement’s nine-month net profit over the period ending 31 December 2019 fell by 35% year-on-year to US$45.6m from US$70.3m over the corresponding period of 2018. Nine-month revenues were US$1.66bn, down by 3.3% year-on-year from US$1.71bn. Sumitomo Osaka Cement predicted revenues in the fiscal year ending 31 March 2020 of US$2.23bn, which would give it an estimated net profit of US$97.5m for the whole year, down by 27% from US$134m in the 2019 fiscal year.

Japan: Sumitomo Osaka Cement has recorded sales of US$1.10bn in the six months to 30 September 2019, down by 0.9% from US$1.11bn in the corresponding period of 2018. In spite of this, as well as high fuel costs and an upgrade to its Shimizu cement terminal during the period, it increased its six-month profit by 7.5% to US$57.8m in the six months to 30 September 2019 from US$53.8m in the corresponding period of 2018.

Japan: Sumitomo Osaka Cement has commissioned a new 6000t silo at its Shimizu termimal in Shizuoka. Following the upgrade, the unit now has three silos. The new silo will be used to support infrastructure projects, including expansions to the Shinkansen high-speed railway network.

Japan: Toshihiko Onishi has been appointed as Representative Director, Executive Vice President of Sumitomo Osaka. He succeeds Yushi Suga. The final decision on the promotion will be made in late June 2019 at the company’s annual general meeting. Onishi, aged 61 years, is currently a Senior Managing Executive Office for Sumitomo Osaka. He joined the group in 1981 and became a director in 2016.

Japan: Sumitomo Osaka has blamed falling income from its cement business on rising coal prices. Its overall net sales rose by 2.5% year-on-year US$2.92bn the year to 31 March 2019 from US$2.24bn in the same period in 2018. It net income nearly halved to US$71.2m from US$134m. Despite national exports falling in the cement sector the company said that it was focusing on an overseas cement strategy.

Japan: Sumitomo Osaka Cement has completed a new cement silo at its Kochi plant. The upgrade is part of a long-term plan to focus on exports to Southeast Asia. The cement producer intends to establish an overseas business presence outside of Japan.

Japan: Sumitomo Osaka’s sales have risen but national exports have fallen. The cement producer has starting promoting exports to counteract this trend. Its sales revenue rose by 4% year-on-year to US$1.71bn in the nine months to 31 December 2018 from US$1.65bn in the same period in 2017. Its operating profit fell by 27% to US$91.9m from US$125m. The company said that local cement demand grew by 1.3% to 32.5Mt in the reporting period. However, exports fell by 12.8%. Overall, national cement sales volumes decreased by 1.6% to 40.3Mt.

Japan: Sumitomo Osaka Cement’s net sales rose by 4.6% year-on-year to US$2.24bn in the financial year that ended on 31 March 2018 from US$2.14bn in the same period of the previous year. It attributed the increase to higher sales volumes of cement. However, its operating income fell by 15.6% to US$92m from US$113 due to higher coal prices. The company said that overall local demand in the country rose by 0.2% to 42Mt during the reporting period. Exports rose by 2.4% to 11.8Mt.