Idemitsu Kosan says that operating income for the company’s petrochemical segment, in the nine months ended 31 December 2016, was ¥27 billion ($240.2 million), down about 10% year-over-year (YOY). The negative impact of a strong yen outweighed the positive impact of higher margins on products such as styrene, the company says. Idemitsu has not disclosed net profit or quarterly figures. The company has not revised the forecasts for the full fiscal year ending 31 March 2017 that it published in May last year.
The yen rose against the dollar for reasons including uncertainty following the United Kingdom’s vote in June 2016, through a referendum, to withdraw from the European Union. The Japanese currency began to fall later due to developments such as expectations of an expansionary US economic policy following Donald Trump’s victory in the United States presidential election, the company adds.
Net sales of the petrochemical products segment for the nine-month period were ¥320.4 billion, down about 20% YOY due largely to declines in naphtha prices on a customs-clearance basis, the company says. Idemitsu’s petrochemical production grew 2.5% YOY, to 2.47 million metric tons.
Idemitsu also says that discussions on the previously announced integration of the company with Showa Shell Sekiyu are taking place based on a memorandum of understanding signed by the companies in November 2015. The deal was closed on 19 December 2016 with the acquisition by Idemitsu of 117.76 million Showa Shell shares at ¥1,350/share, for a total value of ¥158.98 million and 31.3% of that company’s voting rights. Idemitsu plans to refinance part of the funds used to acquire the shares of Showa Shell through a syndicated loan with special provisions on subordination.