Profits Up for KH Neo, Down for Yushiro


In Japan, KH Neochem Co. reported higher first-quarter operating profit and sales for its performance materials segment, which includes raw materials for refrigeration lubricants, while metalworking fluids and industrial oil producer Yushiro Chemical Industry posted lower profits and sales for its fiscal year that ended on March 31.

KH Neochem

Japanese specialty chemical producer KH Neochem reported that operating profit for its performance materials segment increased 6% to 1.9 billion Japanese yen (U.S. $17.3 million) for the first quarter, compared to 2020’s first quarter. The company said factors hindering profits in the first quarter included a surge in prices for imported raw materials, affected not only by rising naphtha prices but also by a cold wave in the United States. Logistic costs also climbed due to recovering supply chain flows.

The segment’s net sales increased 12% to ¥9.3 billion, up from ¥8.3 billion. Demand for refrigeration lubricant raw materials continued to recover since the latter half of 2020, the company noted in its earnings presentation. Demand for air conditioners remains solid, in line with economic recovery globally, the company said.

The company specializes in oxo reactions that produce alcohols and esters along with derivatives, like 2-ethylhexanoic acid and isononanoic acid, which it sells as raw materials for lubricants. It also makes fatty acids, esters and feedstocks for niche lubricants used in refrigeration compressors.

Yushiro Chemical

Metalworking fluids and industrial oil producer Yushiro Chemical Industry reported that fiscal year net profit declined 49% to ¥978 million yen, down from ¥1.9 billion for the prior fiscal year. The company’s fiscal year runs from April 1 through March 31. Operating profit decreased 51% to ¥2.2 billion.

Yushiro attributed the operating income decline to an inability to absorb fixed costs due to a decrease in sales attributed to the spread of the COVID-19 virus in Japan. Sales slid 15% to ¥31.7 billion for the fiscal year, down from ¥37.7 billion. The company attributed the decline in sales mainly to a decline in the manufacturing plant utilization rate of Japanese automobile manufacturers and parts manufacturers, due to the spread of the new coronavirus infection in the country.

According to Yushiro, this decline in plant utilization was most prevalent in Japan at the start of the company’s fiscal year – in March and April 2020 – and impacted the company’s sales. Since last June, the sales have been on a recovery trend due to improvements in automobile manufacturer and parts manufacture occupancy rate.

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