Zeon trims forecasts on China, elastomer market developments

Tokyo – Zeon Corp. has revised down its financial forecast for its fiscal year ending 31 March 2024, amid ‘deteriorating China and elastomer markets’.

The Japanese group now expects sales to come at around Yen380 billion (€2.4 billion), down from an estimate of Yen394 billion announced in July.

Operating income is expected to reach Yen25 billion, down from a forecast of Yen31.5 billion, Zeon added in a 27 Oct financial update.

“The main products of the materials business division and high-performance materials business division are being affected by the delayed recovery in demand,” explained Zeon.

Therefore, , it added, overall sales volume is expected to be lower than what was expected when the initial earnings forecast was announced.

For the second quarter of the year, Zeon’s elastomers business unit reported a 9% year-on-year decline in sales to Yen52.5 billion.

Operating profit for the unit posted a sharp 77% decline to Yen1.2 billion, down from Yen53 billion reported the year before.

Zeon linked the downturn in sales to “delay in recovery in demand for chemicals”, as synthetic rubber volumes remained mostly flat.

Quarter-on-quarter, volumes were up, driven by an increase in demand for general purpose rubber, the group noted.

Operating income was down due to increase SG&A (selling, general and administrative expenses) for synthetic rubber and 'financial market efficiency' for chemicals.

Zeon noted a Yen200-million negative impact from lower sales volumes of chemicals and latices and a Yen600-million impact from 'regular maintenance' at overseas subsidiaries.

Lower sales prices also had a negative impact of Yen1.8 billion on earnings, partially offset by a Yen1 billion impact of exchange rates and Yen300 million positive impact of raw materials.