Mixed results at Japan’s Big Three PM producers despite 19% increase in car production
February 20, 2013
Japan’s ailing economy is taking its toll on the country’s PM producers despite a buoyant car manufacturing sector which saw production increase by 19.4% to 8.554 million units over the whole of 2012. The increase in Japan’s vehicle production did not help stop the country’s continuing recession with a 0.4% drop in GDP in the final quarter of 2012 – the third decline in a row. However, over the whole year Japan’s economy did manage a 1.9% growth in GDP, but this followed a 0.6% contraction in 2011 due to the March 2011 tsunami disaster.
Japan’s Big Three PM companies Sumitomo Electric, Mitsubishi Materials, and Hitachi Chemicals recently reported their 3rd Quarter financial figures (to December 31, 2012).
Mitsubishi Materials Corp. (MMC) stated in its financial report that the economy was initially helped by the reconstruction effort after the tsunami but that the global economic slowdown plus some other factors has halted the ‘normalisation of business conditions’. MMC reported that the drop in copper and other metal prices combined with the stagnant demand in semi-conductor related markets affect its sales in the first 9 months of its 2012/2013 financial year.
Consolidated net sales for the period totalled Yen 956,898 billion ($10.237 billion), down 12.1% from the same period last year. Operating profit decreased by 9.2% to Yen 39,684 billion ($424.5 million). This was due to the sharp drop (20.6%) in sales in the Metals Division (copper, gold and other metals) which makes up over 50% of total sales.
MMC’s ‘Advanced Materials & Tools’ segment of the business includes structural PM parts, PM bearings, and cemented carbide products saw sales decline by 6.8% to Yen 103.2 billion ($1.104 billion) with operating profit down 27.5% to Yen 8.2 billion ($87.7 million). Cemented carbide sales decreased due to the impact of flooding in Thailand and general deterioration of market conditions. The high performance alloy products business also saw a drop in sales but an increase in operating profit.
Hitachi Chemical reported a 1.9% drop in group net sales to Yen 350,000 billion ($3.746 billion) in the 9 month period to December 31, 2012, and a decrease in operating income to Yen 18,796 billion ($201 million) compared with the same period last year. The ‘Advanced Components & Systems’ segment of the company showed a 3.1% decrease in sales to Yen 163,431 billion ($1.749 billion). Within this segment the Automotive Products group, which includes Hitachi Powdered Metals, reported that sales of PM products remained at almost the same level as the same period last year. This was attributed to a decline in demand for Japanese automobiles in China, and in spite of an increase in PM sales of variable valve timing parts in North America.
With no significant recovery in sight for the automotive market in Japan and the stagnation of the PC market, Hitachi Chemical expects net sales and operating income for the whole financial year ending March 31, 2013 to decrease compared with the previous forecast.
Sumitomo Electric Group is the only one of the three striving to buck the downward trend in Japan with a reported 3% increase in sales in the 3rd quarter to 31 December, 2012, and the company is forecasting a 2% increase for the whole financial year ending March 31, 2013. Sales increased to Yen 520.5 billion (S5.571 billion) and group net income was reported at Yen 10.256 billion ($109.7 million) down from Yen 17,884 billion in the same period last year. Around 50% of group sales are derived from the Automotive Division which supplies wiring harnesses to the automotive sector.
The ‘Industrial Materials & Others’ division at Sumitomo Electric includes the production of cemented carbides (hardmetals), PM parts, and the fully owned A.L.M.T. subsidiary which produces W, Mo, heavy metal, thermal management materials, ceramics, diamond tools and hardmetals. This division, which makes up around 12.5% of group sales, reported 3rd quarter sales of Yen 65.3 billion ($698.8 million), down 4.6% on the previous (2nd) quarter, and down 7.3% on the same quarter last year.
Structural PM parts managed a 3.7% increase in sales to Yen 11.2 billion ($119.8 million), but both the hardmetal business and that of A.L.M.T. saw sales decrease to Yen 16.8 billion ($179.7 million) and Yen 9.9 billion ($105.9) respectively.
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