Tough 1st half for Sumitomo
Sumitomo Chemical's first-half agrochemical sales were hit by lower prices on world markets and inventory adjustments in Japanese distribution channels, the company says. However, household pesticide sales remained "solid" outside of Japan.
Overall sales for the company's agricultural chemicals division, which includes feed additives, rose by 5.6% to ¥100,623 million ($843 million) in the six months ended September 30th 2007. Interim pesticide sales are not available, but they account for around 77% of divisional sales. Sales of US subsidiary Valent recorded a 5.5% increase in first-half sales to ¥26,900 million. Increased development and other costs reduced Valent's profits "slightly", Sumitomo says.
The decline in selling prices for agrochemicals outside of Japan contributed to an 11.7% drop in operating profit to ¥10,815 million for the agricultural chemicals division. First-half research and development expenses were 6.8% lower, at ¥9,400 million.
Sumitomo forecasts full-year divisional sales of ¥200 million, up by just 0.9% on the previous year. A ¥2,200 million benefit in volume sales is expected to be offset by a ¥500 million decline due to lower prices. Lower prices and higher costs are expected to result in a 9.9% decline in full-year divisional operating profit to ¥21,000 million. Full-year research and development expenses are forecast to be 9.6% higher, at ¥20,500 million.