Mitsubishi Chemical reports sharp drop in profit but expects strong recovery

Mitsubishi Chemical Group Corp. has announced its financial results for the fiscal first quarter ended June 30, revealing a net profit of Yen19.6 billion (USD130.7 million), a decline of 50.5% year-over-year, as per Chemweek.

The company reported sales of Yen880 billion, reflecting a 13.4% year-on-year decrease, while operating profit fell 9.3% to ?60.9 billion.

The company attributed these declines to signs of slowing economic growth globally, influenced by concerns over potential economic downturns resulting from US trade policies. While some support came from economic stimulus measures in China and aggressive fiscal spending in Europe, along with robust private consumption in the US and a recovery in personal spending in Japan, the overall market conditions remained challenging.

In the specialty materials segment, revenue decreased by 5.9% year-over-year to ?258.7 billion. However, core operating income increased by 23.6% to ?14.1 billion, driven by a recovery in demand for barrier packaging and other applications, as well as rationalization efforts through the review of production sites. The company also managed to improve price gaps in semiconductor-related businesses, despite facing challenges in the carbon fiber sector.

Sales in the advanced films and polymers subsegment saw a decline, primarily due to the transfer of triacetate fiber and other businesses, compounded by forex impacts. Despite a moderate recovery in demand for barrier packaging, overall revenue was affected.

The advanced solutions subsegment reported decreased sales revenue, primarily due to reduced demand for electric vehicle applications in Europe and the US, along with diminished demand for display-related applications. Similarly, the advanced composites and shapes sector experienced a drop in sales revenue, influenced by forex impacts and lower selling prices amid declining demand for molded products using carbon fiber.

In the methyl methacrylate (MMA) and derivatives segment, revenue decreased by 18.4% year-over-year to Yen91.2 billion, with core operating income plummeting by 64% to Yen3.9 billion. The decline was driven by reduced price gaps due to falling market prices for MMA monomers, despite improved sales volume following a reduction in maintenance impacts.

Mitsubishi’s basic materials and polymers business division saw a sales drop of 29% year-over-year to Yen191 billion, although core operating losses narrowed to ?3.6 billion from Yen7.1 billion. The decrease in revenue was largely attributed to the transfer of shares in a specified subsidiary within the pure terephthalic acid business, negative forex impacts and lower selling prices in line with declining raw material costs.

The industrial gases segment, managed under Nippon Sanso Holdings Group, reported a 4.2% decrease in revenue to Yen313 billion, with core operating income also declining by 4.2% to Yen45 billion. The sluggish demand both domestically and internationally, coupled with currency effects, contributed to the revenue drop, despite some positive impact from price management efforts.

Mitsubishi Chemical Group has maintained its forecasts for the fiscal year ending March 31, 2026, expecting a net profit of Yen145 billion, which would represent more than a tripling from the current figures. However, the company anticipates a 5% decline in sales, projecting revenues of Yen3.7 trillion.

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Navin Fluorine International Ltd. (Mumbai) announced a robust 39% year-over-year increase in revenue for the fiscal first quarter ended June 30, reaching 7.2 billion Indian rupees ($83.4 million), as per Chemweek.

The company’s EBITDA has also seen significant growth, doubling to 2 billion rupees from 1 billion rupees in the previous year. Furthermore, profit figures have more than doubled, soaring to 1.1 billion rupees compared to 510 million rupees in the same quarter last year.

A key driver of the company’s performance was the high-performance product (HPP) business, which recorded sales of 4 billion rupees, marking a 45% increase year over year. The HPP unit, which includes refrigerant gas and inorganic fluoride units, benefited from higher prices and improved sales volumes. The company noted that the pricing landscape for refrigerant gases remains firm, with overseas business contributing a substantial 59% of HPP revenue. This unit supplies inorganic fluoride products to a diverse range of industries, including pharmaceuticals, oil and gas, agricultural chemicals, steel and electronics.

In addition, sales in the specialty segment rose by 35% year over year to 2.1 billion rupees, with overseas business accounting for 63% of this revenue. The specialty segment has achieved higher capacity utilization rates at its manufacturing sites in Dahej and Surat, India, serving sectors such as pharmaceuticals, crop protection, hydrocarbons and fragrances.

The contract development and manufacturing organization business unit also showed growth, with sales at 990 million rupees from 810 million rupees in the year-earlier period. The overseas market was a significant contributor, accounting for 97% of sales in this unit.

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Indian state refiners have stopped buying Russian oil in the past week as discounts narrowed this month and U.S. President Donald Trump warned against purchasing oil from Moscow, as per Reuters.

India, the world's third-largest oil importer, is the biggest buyer of seaborne Russian crude. The Reuters Power Up newsletter provides everything you need to know about the global energy industry.

The country's state refiners - Indian Oil Corp (IOC.NS), opens new tab, Hindustan Petroleum Corp (HPCL.NS), opens new tab, Bharat Petroleum Corp (BPCL.NS), opens new tab and Mangalore Refinery Petrochemical Ltd (MRPL.NS), opens new tab - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters.

IOC, BPCL, HPCL, MRPL and the federal oil ministry did not immediately respond to Reuters' requests for comment.
The four refiners regularly buy Russian oil on a delivered basis and have turned to spot markets for replacement supply - mostly Middle Eastern grades such as Abu Dhabi's Murban crude and West African oil, sources said.
Private refiners Reliance Industries (RELI.NS), opens new tab and Nayara Energy are the biggest Russian oil buyers in India, but state refiners control over 60% of India's overall 5.2 million barrels per day refining capacity.
On July 14, Trump threatened 100% tariffs on countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine.

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The UK chemical industry continues to face steep challenges. The latest quarterly business survey by the Chemical Industries Association (CIA; London) showed that a third of the UK’s chemical companies saw falls in sales, production levels and capacity utilization in the second quarter, as per Chemweek.

The performance is directly attributed to the cost of energy and international economic uncertainty, the CIA said. Global oversupply is also weighing on UK chemical producers.

“Our members have noted significant price erosion in key markets due to Chinese overcapacity,” said CIA Chief Executive Steve Elliott. “This fierce international competition, coupled with internationally uncompetitive industrial policies and input costs, is threatening the future of our domestic manufacturing sector. Numerous companies have announced closures, restructuring, strategic reviews or profit warnings over the past two years because investment is being redirected to more competitive locations.”

Dow Inc.’s basic siloxanes plant at Barry and Sabic’s steam cracker at Wilton are among the most recent UK closures to be announced.

“Our surveys clearly show more than two years of contraction for the industry, with both investment and employment falling for chemical businesses,” said CIA Head of Economics Michela Borra. “We are particularly worried that employment has been contracting for six consecutive quarters, likely due to long-term market share losses.”

The survey also showed that expectations for the third quarter and the next 12 months are “downbeat,” the CIA said. No vast improvements are expected for the current quarter and, despite expectations of higher sales in a year’s time, employee numbers are still expected to fall — signifying potential long-term market share losses, it said. Labor costs are expected to worsen for 70% of UK chemical companies, and demand is expected to weaken for almost 60% of companies.

“The government’s industrial strategy is good news for the country, but for many businesses, implementation needs to be ‘yesterday,’” Elliott said. “What we now need is urgent action to back up these commitments — that’s action on energy cost relief, action on growth-hampering regulation, such as the newly proposed landfill tax, and action to secure the future of thousands of highly skilled jobs across the UK in regions that desperately need jobs,” Elliott said.

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Azelis Group NV, a distributor of specialty chemicals and ingredients, reported a 10.2% decline in second-quarter net profit compared with the same period last year, to €49.9 million on sales down 3.1%, to €1.06 billion, as per Chemweek.

The company’s adjusted EBITDA dropped 10.3% year over year, to €126.1 million, and its gross profit decreased 5.5%, to €251.3 million.

Azelis’ 3.1% revenue decline consisted of a 5.1% negative currency impact to stable organic sales growth and a 2.1% revenue growth contribution from acquisitions, the company said.

In EMEA, revenue increased by 5.7% year over year in the second quarter, as organic growth accelerated to 5.1%, driven by continued growth in volumes and “constructive” pricing across most end markets in the company’s life science and industrial chemical businesses. In the Americas, sales decreased by 9.5% reflecting a “significant” currency headwind of 6.3% and an organic decline of 3.2%. The organic decline was due largely to a further deterioration in the personal care business as consumer sentiment over the near-term economic outlook weighed on demand, Azelis said. In Asia-Pacific, revenue decreased by 9.1% year over year, driven by a 5.1% organic decline and a negative currency impact of 5.2%, it said.

Azelis said it is focused on managing costs while uncertainty persists in the near term.

“Despite the impact of the growing trade and geopolitical uncertainty around the world, we remain confident that we have the right strategy to ensure that we capture the opportunities created by the volatility in the industry and emerge stronger than before,” said Azelis CEO Anna Bertona. “We are making good progress on aligning our resources with end-market demand. We remain focused on delivering further on our cost savings program as we move through the remainder of the year."

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