Japanese fertilizer makers predicting lower profits, reduced sales

The results in the first half of the current fiscal year were mixed for major fertilizer manufacturers in Japan, whose fiscal years end at different times. For their full fiscal years, the companies are mostly forecasting poorer earnings on shrunken sales. Although raw-material costs are tracking downward, the costs still remain on the high side, and an expansion in domestic demand is unlikely because of slumps in agriculture product prices, a shortage of farmers, and diminished use of fertilizers.

Co-op Chemical and Katakura Chikkarin, whose fiscal years end in March, suffered backlash compared with fiscal 2008 when they saw higher earnings on higher sales, thanks to product price markups and orders rushed in before the price hikes.

Asahi Industries, whose fiscal year also ends in March, managed substantially higher earnings because of an improved rate of return for its other principal business of steel-product manufacture, as costs fell for steel scrap materials, but its agribusiness, whose main product is fertilizers, reported a 25.0% year-on-year tumble in sales to 5,856 mn yen($65.8mn) and an 86.5% plunge in operating profit to 53mn yen due to a rise in production cost along with a decrease in production volume.

Taki Chemical’s fiscal year ends in December. The sales of its agribusiness sank 11.4% year on year to 7,147 mn yen for the January-September period of this year.

Nitto FC, whose fiscal year ends in September, posted higher profit on higher sales for its fiscal year running from October 2008 to September 2009, with strong sales in fiscal first half more than offsetting a decline in the second half.