Showa Denko Announces Recording Extraordinary Loss on Valuation of Investment Securities; Difference between Forecast and Actual Results for 1H; and Revision of Performance Forecast for Full Year
September 22, 2014     Japanese 
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Showa Denko Announces Recording Extraordinary Loss on Valuation of Investment Securities; Difference between Forecast and Actual Results for 1H; and Revision of Performance Forecast for Full Year - JCN Newswire
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Showa Denko Announces Recording Extraordinary Loss on Valuation of Investment Securities; Difference between Forecast and Actual Results for 1H; and Revision of Performance Forecast for Full Year

Tokyo, July 31, 2014 - (JCN Newswire) - Showa Denko (SDK) (TOKYO: 4004) has recorded loss on valuation of investment securities in the first-half period (January 1 - June 30) of 2014. We accordingly announce that the actual results for the first half reported today are different from the forecast announced on February 13, 2014. Based on that and, taking into consideration the recent business trends, we have revised our performance forecast for full-year 2014.

1. Recording of loss on valuation of investment securities (extraordinary loss)

We recorded a JPY 4 billion loss on valuation of investment securities regarding our shares in C.V.G. Venalum, an aluminum smelting company in Venezuela. Venalum is a state-run aluminum smelter and several Japanese companies, including SDK, hold part of the shares in the company. We recorded the loss in view of the company's deteriorating performance.

2. Difference between forecast and actual consolidated business results for Jan. 1 - June 30, 2014
                       (Millions of yen, excepting net income per share)
                          Net  Operating  Ordinary      Net  Net income
                        sales     income    income   income  share*(Yen)

Earlier forecast(A)
(Feb. 13, 2014)       405,000     8,000     5,000      3,000        2.00

Actual results (B)
(July 31, 2014)       413,606    10,542     7,210     -3,433       -2.29

(B) - (A)               8,606     2,542     2,210     -6,433          --  
 
Percentage of changes    2.1%     31.8%     44.2%         -          --

1H 2013 results       401,409     6,723     5,387      2,158        1.44
3. Reasons for the difference

Net sales increased due mainly to higher-than-expected sales in the Petrochemicals segment, in which selling prices increased following the rise in naphtha prices. Operating income increased from the earlier forecast due to the improvement in the HD media business (Electronics segment) and steady demand for olefins (Petrochemicals segment), notwithstanding less-than-expected operating income in the Chemicals and Aluminum segments due mainly to the influence of higher raw material costs. Ordinary income increased, reflecting higher operating income. However, the net income figure fell below the earlier forecast, reflecting the above-mentioned recording of loss on valuation of investment securities and the increase in tax expenses.

4. Revised forecast of consolidated business results for Jan. 1 - Dec. 31, 2014
                        (Millions of yen, excepting net income per share)
                          Net  Operating  Ordinary       Net  Net income
                        sales     income    income    income  share*(Yen)

Earlier forecast(A)
(Feb. 13, 2014)       890,000    32,000     25,000    12,000        8.02

Actual results (B)
(July 31, 2014)       895,000    32,000     26,000     7,000        4.68


(B) - (A)               5,000         0      1,000    -5,000          --  

Percentage of changes    0.6%      0.0%       4.0%    -41.7%          --

1H 2013 results       848,071    25,953     23,488     9,065        6.06
5. Reasons for the revision of full-year consolidated performance forecast

As for the full-year performance forecast, net sales will increase slightly due mainly to higher sales in the Petrochemicals segment recorded in the first half of the year. Although operating income in the first half was actually higher than the earlier forecast, we will maintain the operating income forecast for full year at the initial level. This is mainly because operating income from the Aluminum segment in the second half of the year is expected to fall below the initial forecast due to the influence of the soaring aluminum metal price. Ordinary income is expected to increase slightly. Nevertheless, in the second half of the year, we will not be able to fully offset the fall in net income recorded in the first half. As a result, we have revised downward our net income forecast for the full year.

Note: The above forecast is based on the information available as of today and assumptions as of today regarding risk factors that could affect our future performance. Actual results may differ materially from the forecast due to a variety of risk factors, including, but not limited to, the economic conditions, costs of naphtha and other raw materials, demand for our products, market conditions, and foreign exchange rates.

About Showa Denko

Showa Denko K.K. ('SDK'; TSE: 4004, US: SHWDF) is a major manufacturer and marketer of chemical products serving a wide range of fields ranging from heavy industry to the electronic and computer industries. SDK makes petrochemicals (ethylene, propylene), aluminum products (ingots, rods), electronic equipment (hard disks for computers) and inorganic materials (ceramics, carbons). The company has overseas operations and a joint venture with Netherlands-based Montell and Nippon Petrochemicals to make and market polypropylenes. In March 2001, SDK merged with Showa Denko Aluminum Corporation to strengthen the high-value-added fabricated aluminum products operations, and is today developing next-generation optical communications-use wafers. For more information, please visit www.sdk.co.jp .

Contact:

Showa Denko (SDK)
Public Relations Office
Phone: +81-3-5470-3235
 


July 31, 2014
Source: Showa Denko

Showa Denko (TSE: 4004) (U.S: SHWDF)

From the Japan Corporate News Network
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Topic: Earnings
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