Profits Drop at Yushiro, KH Neochem

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Profits Drop at Yushiro, KH Neochem

Price hikes were insufficient to make up for sharp increases in raw material prices and distribution costs in the quarter ending Sept. 30, Japan’s Yushiro Chemical reported, resulting in a nearly 50% drop in profits. At KH Neochem’s performance materials segment, production problems and soaring raw material and fuel prices caused a 13% decline in profits.

Yushiro Chemical

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Yushiro Chemical, whose fiscal year ends in March, reported operating income of ¥366 million for the quarter ending Sept. 30, a 49% drop from ¥720 million in the same period last year.

Sales rose 20% to ¥21.8 billion in the quarter, improving from ¥18.1 billion. This increase occurred as production continued to recover in Japan and overseas, although the company noted that a full-fledged recovery wasn’t achieved because of the unforeseen supply shortage of semiconductors for automakers, Yushiro’s main customers.

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

Yushiro reported a ¥171 million operating loss in its home market in the quarter, compared to a ¥19 million operating loss in the same period last year. The domestic loss expanded due to soaring raw material prices exceeding implementation of sales price revisions, the company noted. Sales increased by 7% to ¥8.5 billion.

In the Americas, segment profit increased 10% to ¥430 million. Sales rose 43% from ¥5.5 billion to ¥7.9 billion. Sales were strong at QualiChem and in Brazil, the company noted, in spite of the impact of lower operating rates for customers at some locations.

In China, segment profit fell 24% to ¥162 million, while sales rose 13% to ¥2.7 billion. Profits decreased as costs of sales increased due to factors such as rising raw material prices. Despite restrictions on activities due to the country’s zero-Coronavirus policy, sales remained strong, the company said.

In Southeast Asia and India, segment profit dropped 42% to ¥168 million. Continuing a sales recovery trend in the region, sales rose 18% to ¥2.6 billion.

KH Neochem

Japanese specialty chemical producer KH Neochem reported a that third quarter operating profit for its performance materials segment was ¥1.9 billion, down from ¥2.9 billion. Net sales for the segment increased 13% to ¥12.7 billion.

The company specializes in alcohols and esters produced by oxo reactions. Yushiro sells derivatives, such as 2-ethylhexanoic acid and isononanoic acid, for use as raw materials in lubricants. The company also makes fatty acids, esters and feedstocks for refrigeration compressor lubricants.

Air conditioner sales in China remained firm in the third quarter, the company said. Although affected by a continuing real estate slump in China, sales of air conditioners still increased because of a worldwide heatwave.

KH Neochem said sales volume decreased – despite firm demand – due to production facilities problems and a bottleneck of raw material supply. Soaring raw material and fuel prices also pressured profits.

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