Sekisui Chemical (4204) FY17 Q1Results – Waiting for Growth Strategies
Key Points
- Sekisui’s shares finished up 1.7% on July 27th after the mid-afternoon Q1 announcement, but fell back 2.0% on July 28th. FY17 Q1 OP grew 12.6% YoY, but rising raw material costs partially offset higher volumes. RP rose 128%, and NP expanded by 150x from a very low level a year ago – boosted by a ¥1bn land sale at a subsidiary. Non-operating profits were boosted by a ¥3.4bn improvement in forex factors and the dropping out of ¥3.1bn in restructuring related costs.
- High-Performance Plastics growth was sluggish. Sekisui continues to plan a joint venture with PeptiDream (4587) and Shionogi (4507) for research and manufacture of peptide pharmaceuticals.
- Housing OP increased as Sekisui sold 180 more units compared to a year ago.
- Urban Infrastructure & Environment recorded a profit in Q1 for the first time, as restructuring efforts have proven successful. Domestic demand has been firm, and the company is once again making efforts to increase sales in Asia, including India and Vietnam.
- Low growth is in part due to forward-looking investments in areas including energy materials and life sciences.
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