Profits Jump at KH Neochem, Yushiro

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Profits Jump at KH Neochem, Yushiro

In Japan, KH Neochem Co. and metalworking fluid and industrial oil producer Yushiro Chemical Industry Co. both reported large increases in profits for the quarter ending Sept. 30. KH Neochem said an uptick in air conditioner sales raised demand for its refrigeration lubricant raw materials. Yushiro said its results were aided by recovery in automotive production in several key countries despite the impacts of the ongoing global shortage in semiconductors.

KH Neochem

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KH Neochem’s performance materials segment, which includes refrigeration lubricant raw materials, reported that its operating income jumped 97% to 7.1 billion yen (U.S. $61.5 million), improving from ¥3.6 billion in the same quarter last year.

The company said that all three of its segments – including electronic materials and basic chemicals – were capturing increasing demand due to recovery from COVID-19 and that the trend of increasing profit continued. For the performance materials segment, that meant continuing a trend of growth in sequential profit since 2020’s third quarter, rising from ¥800 million then to ¥1.9 billion in 2021’s first quarter and ¥2.3 billion in this year’s second quarter.

Net sales for the segment grew 46% to ¥31.1 billion, rising from ¥21.3 billion in the same quarter last year.

Air conditioner sales remained firm throughout the third quarter, despite the peak demand period from July coming to an end as usual, KH Neochem said in its earnings presentation. Global air conditioner sales this year are expected to return to 2019 levels as Japan’s economy recovers from the COVID-19 pandemic, the company said.

Sales volumes for all three of the company’s segments remained strong in the third quarter, KH Neochem said, and it corrected its selling prices to a level commensurate with the value of the products. Adverse trends in the quarter noted by the company included rising raw material costs and rising logistics costs attributed to continued supply chain issues.  Positive trends cited for the three segments included an expanded share of sales maintained, strong continued sales volumes and increased product prices.

KH Neochem specializes in hydroformylation, or oxo reactions, that produce alcohols and esters along with such derivatives as 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 Industry

Yushiro Chemical Industry reported ¥720 million in operating income for the quarter ending Sept. 30, rebounding from a $72 million loss in the same period in 2020.

Sales for the quarter rose 28% to ¥18.1 billion, improving from ¥14.2 billion.

Profit for each of Yushiro’s regional business segments is based on operating income.

In its home country, Yushiro’s sales increased 23% to ¥8 billion yen, and the segment’s operating profit rebounded to ¥19 million, improving from a ¥215 million operating loss a year earlier. The company explained that despite the continued shortage of semiconductors, sales increased due to recovery in automobile production in Japan.

In the Americas, sales increased 25% to ¥5.5 billion, and segment profit jumped 206% to ¥392 million.

In China, sales jumped 36% to ¥2.4 billion, and segment profit grew 144% to ¥213 million. Automobile production in China is recovering steadily, the company noted. In Southeast Asia and India, sales increased 47% to ¥2.2 billion, and segment profit rose 148% to ¥291 million. Although business was affected by pandemic-related restrictions implemented by each country in the region, the company said, sales and profits increased due to the recovery of automobile manufacturers in Southeast Asia and India.