M'bishi Chemical Beats Retreat From FY15 Business Goals

TOKYO (Nikkei)--Mitsubishi Chemical Holdings Corp. (4188) on Tuesday presented a medium-term business plan through fiscal 2015 that backtracked from its original financial objectives due to shrinking margins for commodity chemicals.

The company revised the fiscal 2011-15 plan, drafted at the end of 2010, lowering its sales target to 4.3 trillion yen and slashing its operating income projection from 400 billion yen to 280 billion yen. Although the new objectives are respectively 38% and 2.8 times higher than its forecasts for the current fiscal year, President Yoshimitsu Kobayashi says the firm "changed the figures to realistic ones" in light of lagging chemical product sales.

On top of falling sales caused by the languishing European economy, a host of new factories in China and the Middle East are saturating the global market. Not only is Mitsubishi Chemical experiencing sluggish domestic sales of electronic components for liquid crystal technology, but lithium ion batteries for green cars and OLEDs have been slow to catch on, meaning it will likely be forced to slash capital investments.

The company's domestic business will likely contract as it wages an uphill battle against higher petrochemical production from shale gas. Mitsubishi Chemical will not change its basic policy of focusing on high-functionality products, environmental matters and overseas expansion, but will lower its numerical targets and carefully choose future projects. It intends to reduce investments from 1 trillion yen in the original plan to 840 billion yen.

Responding to a government call for higher wages, Kobayashi says he "wants to leave that to firms like Lawson that are faring well." He added that it would be difficult to raise pay, and about all he can do is consider offering a temporary bonus at some of the stronger-performing subsidiaries.

(The Nikkei, March 6 morning edition)

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