Third Quarter, Overview of 2023 Financial Statements
Business Results
(Unit: billions of yen)
| Net Sales | 942.3 | Increase / decrease (91.8) |
|---|---|---|
| Operating Income | (4.3) | (59.1) |
| Ordinary Income |
(7.1) |
(72.5) |
| Net Income Attributable to Owners of the Parent | (6.4) | (43.0) |
| Net Income Attributable to Owners of the Parent per Share | (¥35.15) | (¥237.68) |
In the nine-month period ended September 30, 2023 (“2023 1Q-3Q”), the global economy continued to normalize and recover due to the easing of restrictions on activities related to the COVID-19 pandemic. However, the semiconductor industry continued the adjustment phase, and the global inflation and the prolonged situation in Ukraine continued to raise energy and raw material costs, as well as supply constraints, resulting in weaknesses in some regions. In the Japanese economy, consumer spending and corporate capital investment showed a gradual
recovery.
Consolidated sales for 2023 1Q-3Q decreased to ¥942,307 million from the corresponding nine-month period of the previous year (“2022 1Q-3Q”). The increase in sales in the Chemicals segment was mainly due to an increase in volume in Olefins and Derivatives (the absence of shutdowns related to large-scale maintenance in 1H 2022) and an increase in sales prices of Graphite Electrodes and Basic Chemicals. Sales in the Semiconductors and Electronic Materials segment decreased due to adjustments in the semiconductor and electronic materials-related industries, while sales in the Mobility and Innovation Enabling Materials segments also posted declines. Consolidated operating income for 2023 1Q-3Q decreased from 2022 1Q-3Q to a loss of ¥4,309 million. Operating income increased in the Mobility segment, mainly due to an increase in the volume of Automotive Products, and in the Innovation Enabling Materials segment, mainly due to price increase. On the other hand, in the Semiconductor and Electronic Materials segment, operating income decreased significantly and in the Chemicals segment, operating income decreased due to the negative impact of the difference between receipt and payment of Graphite Electrodes. Ordinary income for 2023 1Q-3Q was a loss of ¥7,150 million due to a decrease in foreign exchange gains and a decrease in equity in earnings of affiliates from 2022 1Q-3Q. Net income attributable to owners of the parent for 2023 1Q-3Q was a loss of ¥6,367 million, due to an increase in
income taxes despite a gain on business transfer.
Segment Information
Net sales by Segment
(Unit: billions of yen)
| Semiconductor and Electronic Materials | 241.7 | (90.6) |
|---|---|---|
| Mobility | 131.6 | (3.3) |
| Innovation Enabling Materials | 95.5 | (10.1) |
| Chemicals | 384.7 | + 7.8 |
Operating Income by Segment
(Unit: billions of yen)
| Semiconductor and Electronic Materials | (12.5) | Increase / decrease (53.0) |
|---|---|---|
| Mobility | 0.0 | + 1.5 |
| Innovation Enabling Materials | 8.3 | + 0.7 |
| Chemicals | 10.2 | (9.1) |
Semiconductor and Electronic Materials
In the Semiconductor and Electronic Materials segment, sales of both Front-end Semiconductor Materials and Backend Semiconductor Materials subsegments decreased due to continued weakness in the semiconductor market since the 2nd half of the previous year. In the Device Solutions subsegment, sales decreased significantly due to continued weakness in HD media demand for data centers from the fourth quarter of the previous year, while SiC epitaxial wafers’ sales increased. As a result, sales in this segment decreased from 2022 1Q-3Q. Operating loss was recorded due to a decrease in sales as well as inventory write-downs and loss on disposal of inventories of HD
media.
Mobility
In the Mobility segment, sales of the Automotive Products subsegment increased due to the launch of products for new car models, despite the impact of the divesture of ISOLITE GmbH in the July-September quarter of the previous fiscal year. Sales of the Lithium-ion Battery Materials subsegment decreased due to a slowdown in consumer demand. As a result, sales decreased, and operating income increased in this segment from 2022 1Q-3Q.
Innovation Enabling Materials
In the Innovation Enabling Materials segment, from 2022 1Q-3Q, sales decreased due to a decrease in volume, and on the other hand, operating income increased due to higher selling prices caused by a rise in raw material prices.
Chemicals
In the Chemicals segment, sales and operating income of the Petrochemicals subsegment increased significantly from 2022 1Q-3Q due to the absence of shutdowns related to large-scale maintenance. In the Basic Chemicals subsegment, sales and operating income increased from 2022 1Q-3Q as a result of progress in passing on higher raw material and fuel prices to selling prices. Sales of the Graphite Electrodes subsegment increased from 2022 1Q-3Q due to selling price increase based on the cost increase, while operating income decreased due to the
negative impact of the inventory valuation difference. As a result, sales increased, and operating income decreased in this segment from 2022 1Q-3Q.
Financial Conditions
(Unit: billions of yen)
| Total Assets | 2,098.9 | Increase / decrease (515.2) |
|---|---|---|
| Total Equity | 597.1 | (22.4) |
| Stockholders' Equity Ratio | 27.2% | + 0.9p |
Total assets at the end of 2023 3Q, increased by ¥5,152 million from the end of the previous fiscal year 2022 to ¥2,098,896 million due to an increase in cash and deposits, and property, plant and equipment, despite a decrease in intangible fixed assets such as goodwill. Total liabilities decreased by ¥17,220 million to ¥1,501,806 million due to a decrease in notes and accounts payable trade and interest-bearing debt. Net assets increased by ¥22,372 million, to ¥597,090 million, mainly due to an increase in foreign currency translation adjustments.