Tokyo -- Mitsui Chemicals Inc's future business in polyurethanes lies in specialty grades and will be more closely aligned to the Middle East, said Toshikazu Tanaka, president and ceo as he announced a major business restructuring.
The restructuring, which will see Japanese facilities close, is an attempt to stem losses and return to profitability, the company said in a statement on Friday, 6 February.
Speaking at a special explanation of business results and outlook during Mitsui Chemical's Q3 2013 announcement, Tanaka said: "With unwavering determination, we will initiate the measures and tactics full force to assure realisation of a V-shaped turnaround."
The company is struggling with costs, according to the announcement. Sales grew from Yen 1406bn ($13.7bn) in 2012 to an estimated Yen 1570bn in 2013, said Tanaka. He said the firm's operating loss would grow from Yen 4.3bn to Yen 25bn and has taken a Yen32bn cost in 2013 to pay for restructuring. Tanaka also promised to cut director salaries by 12-20%, and bonuses too. He added that the company expected to start paying a dividends to shareholders at the end of 2014 financial year.
Mitsui's polyurethane business saw its loss of Yen 2.6bn in 2012 grow to an estimated Yen 4bn in 2013, said Tanaka.
In future, Mitsui plans to focus on coating engineering materials in polyurethane through speciality isocyanates which account for 36% of the company's Yen 170bn sales in the sector. Mitsui's portfolio of plants in its general polyurethanes sector, which account for 64% of sales in the business sector, will be optimised, he said.
The firm is planning to increase speciality isocyanates capacity by 2400 T/year at Omuta. This plant is scheduled to be operational in 2015 and will take capacity to 5000 T/year, said Tanaka who added: "Unique proprietary technology will be used to increase capacity." Tanaka expects output to go to coating resins and ophthalmic lens monomers.
In the general use sector, Tanaka said that new facilities in China are depressing prices for toluene diisocyanate (TDI) in the region. This has forced the company's Kashima plant in Japan into uncompetitiveness, said Tanaka. He added that in TDI, Mitsui's TDI plant at Omuta was competitive. In the MDI space, Mitsui's Korean MDI production is competitive while Omuta is too small to compete and will be closed by December 2016, Tanaka said. He added that this will take 60kT/year out of production.
In Kashima all plants will be closed and 117kT/year TDI will be removed from the market, said Tanaka. Customers will be supplied from third parties.
In future he said, the company would only make specialty isocyanates in Kashima, Japan. It would make TDI and specialty isocyanates in Omuta. Korea would be the Asian production base for MDI. Mitsui expects that its Vithal bio-polyol plant in India will be ready in January 2015. It has an agreement with Sabic regarding a Middle Eastern production for MDI and TDI.
|Mitsui Chemicals plant capacity in 2012 T/year|
|Kumho Mitsui Chemicals (Korea)||-||155,000|
|Source: Mitsui Chemicals|
XE Currency conversion: 10 February