Profits Rise at KH Neochem, Yushiro

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Profits Rise at KH Neochem, Yushiro

Japan’s KH Neochem Co.’s performance materials segment, which includes refrigeration lubricant raw materials, and metalworking fluid and industrial oil producer Yushiro Chemical Industry Co. both reported higher profit and sales for the quarter ending Dec. 31.

KH Neochem

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KH Neochem’s performance materials segment, which includes refrigeration lubricant raw materials, reported operating profit of 2.9 billion yen (U.S. $25.1 million) for the fourth quarter, a 93% jump from ¥1.5 billion yen in the same period in 2020. For the full year, the segment’s operating profit reached ¥10 billion, rising 96% from ¥5.1 billion in 2020.

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

Net sales for the quarter was ¥13.1 billion, a 44% improvement from ¥9.1 billion. For the full year, net sales rose 25% to ¥44.2 billion, up from ¥30.5 billion.

Product price correction progressed during last year thanks to strong demand, the company said in its earnings presentation on the full-year results.  The company said refrigeration lubricant raw materials product prices were revised in response to the tight supply-demand balance and soaring raw material and fuel prices.

Production and sales of environmentally friendly air conditioners in China and other countries increased, the company noted, and its products that are miscible with environmentally friendly refrigerants experienced strong sales.

In its 2022 business overview, the company expressed optimism about the market for its refrigeration lubricant raw materials. “Despite concern about an economic slowdown due to the deterioration of the Chinese real estate market, sales of environmentally friendly air conditioners increase thanks to rising income levels in emerging countries,” the company said in its earnings presentation.

Yushiro Chemical

Yushiro Chemical, whose fiscal year ends in March, reported operating income of ¥845 million for the quarter ending Dec. 31 – the third quarter of its fiscal year starting April 1 – a 105% increase from ¥412 million in the same period in 2020.

Sales reached ¥27.7 billion, a 22% increase from ¥22.7 billion.

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

The company said sales in its home country increased 15% to ¥12 billion. In Japan Yushiro recorded a ¥63 million operating loss, compared to a ¥99 million operating loss in the same period in 2020. Although sales increased in its domestic market due to recovery in automobile production, the company attributed the operating loss to the impact of soaring raw material prices.

In the Americas, sales rose 25% to ¥8.6 billion in the quarter, while segment profit rose 32% to ¥486 million. Sales recovered steadily to the recovery of the utilization rate by major customers. Although operating income in the regional was also impacted by soaring raw material prices, the company said profits increased due to the effect of increased sales.

In China, sales increased 13% to ¥3.7 billion in the quarter, and segment profit grew 66% to ¥337 million. Due to steady recovery in the country’s automobile production, both sales and operating profit increased to a level exceeding the same quarter in 2019, according to Yushiro.

In Southeast Asia and India, sales increased 12% to ¥3.3 billion, and profit jumped 73% to ¥374 million. The company said that despite the impact of restrictions on activities in each country and rising raw material prices, the recovery of automobile parts manufacturers resulted in higher sales and profits.