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Results from Japan’s largest petrochemicals companies for the year to March 31st reflect the crisis facing a sector plagued by sluggish domestic demand, over capacity, plunging prices and the appreciation of the yen. News of the sectors cire trading position follow this weeks decision by Showa Denko to sell its polystyrene business.
The company, a marginal manufacturer, sold its 30, 000 tonnes a year Kawasaki plant to Asahi Chemical, Japans largest polystyrene manufacturer with capacity of about 333, 000 tonnes a year, equivalent to about 25 percent of the market. The move was the latest in a series of alliances and mergers as the troubled industry restructures.
Mitsubishi Petrochemical, the country’s biggest plastics group, reported a loss of 8,39bn (＄ 80m) compared with pre-tax profits last year of  8.25bn. The group made an operating loss of 13.8bn, the first since 1982. The poor result came despite cost-cutting measures, lower raw material prices, and  4bn worth of profits from equity sales.
Turnover fell 12.2 percent from 372bn to 326bn, as prices and volumes declined. Earnings per share, which reached 52. 5 in 1991, fell to a loss per share of 9.44. The group, which is scheduled to merge with Mitsubishi Kasei on October 1st, cut its dividend from  8 per share to 4.
Mitsubishi Kaseis pre-tax profits fell 76.8 percent from  9.3bn last year to  2.2bn. The group reported its first operating loss in 40 years at 467m, and only managed to post positive pre-tax results by selling 15.7bn worth of equities. Turnover fell 1.8 percent, the fourth yearly decline, to 696bn. The dividend was halved to 3 per share.
Mr. Morihisa Takano, managing director, said the newly merged group would generate pre-tax profits of  10bn on sales of  855 bn during the year to March 1995. He predicted petrochemicals prices would bottom out during the summer. No decision had been made about the dividend, but the new company could pass it during the current year. The pre-tax profits at Mitsui Petrochemical Industries, Japans biggest polyethylene maker, plunged 75 percent from  9bn to  2.26bn on sales down 9.3 percent at 272bn. The company blamed poor demand for the slump which offset the benefits of cost-cutting measures. The dividend is unchanged at 6 per share. The group forecast pre-tax profits for the current-year marginally up at 3bn on turnover of 276bn. Shin-Etsu, one of Japans biggest makers of polyvinyl chloride, reported profits down 26.1 percent from 17. 6bn to 13bn.  Sales increased 0.2 percent from 275bn to 276bn. Net profits fell 26.6 percent to 7.08bn, or 421.85 per share. The group maintained the final dividend at 3.75, making the full-year pay out  7.5 per share. Shin-Etsu forecast pre-tax profits for the current year of 15.5bn on sales of 277bn.
The outlook for the petrochemicals industry remains blank. The imbalance between supply and demand for ethylene, the basic building block of petrochemicals, is about 2.8m tonnes of ethylene and is set to deteriorate further this year.
A massive 700,000-tonne-a-year ethylene complex owned by Maruzen, Mitsoi Petrochemical and Sumitomo Chemical comes on stream later this year and Mitsubishi Petrochemical is also commissioning a new 300, 000-torme-a-year plant this year.