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Segment Information : Chemical

Highlights & Strategy

Highlights & Strategy by Operating Segment - from Annual Report 2009

As of or for the Years Ended March 31, 2009 2008 2007
Operating Results
(¥ billion)		 Gross Profit 80.0 100.2 95.6
Operating Income 24.2 42.8 36.2
Equity in Earnings of Associated Companies 1.7 5.8 4.9
Net Income(Loss) (10.2) 18.3 20.8
Financial Condition
(¥ billion)		 Total Assets 546.0 806.4 -
Investments in and Advances to Associated Companies 39.9 42.9 -
Property Leased to Others and Property and Equipment 49.9 58.4 -
Cash Flows
(¥ billion)		 Cash Flows from Investing Activities 3.0 (16.7) (21.1)
Number of Employees Consolidated 2,752 3,489 3,731
Mitsui 669 687 713

HIGHLIGHTS

This segment faced a sharp squeeze of its margin due to a rapid decline in demand, which was hit by the financial crisis, unprecedented destocking, a falloff in prices throughout almost every value chain, and impairment of equity holdings. In the meantime, agrobusiness (fertilizers, agricultural chemicals, feed additives, etc.) was resilient and weathered the storm, reflecting stable growth in global demand for foodstuffs.

MARKET OUTLOOK & STRATEGY

Market Outlook

Demand is expected to slightly increase month by month, especially of some petrochemical products in Asia, including China, as inventory levels throughout the value chain are replenished.
Prices of various products appear to have turned a corner as well. However, the supply and demand balance is likely to weaken in the medium term with the underlying additional plants still under construction in the Middle East and an inflow of a certain amount of petrochemical products into Asian markets. Under such circumstances, major structural changes forced by megacross-border M&A, which began prior to the financial crisis, are most likely to accelerate.

Strategy
  • To efficiently cope with the structural changes in the chemical industry globally, Mitsui has regrouped its Chemical Segment and formed two business units effective April 1, 2009, as follows:
  • Basic Chemicals Business Unit: Vertically integrated basic chemicals, such as olefins, aromatics, methanol, chlor-alkali products, and its derivatives, such as industrial chemicals and commodity resins, to optimize Mitsui’s marketing and trading capabilities on a global basis as well as facilitate investments mainly in the upstream part of the chemical value chain
  • Performance Chemicals Business Unit: Downstream chemicals targeting mainly the fields of automotive, electronics, environment, new energy, and agricultural industries, to strengthen and to develop marketing capabilities and new business in the downstream part of the chemical value chain
  • Petrochemicals: Maintain and reinforce Mitsui’s global marketing network, a key element of Mitsui’s strong presence in the industry that comprises in-house chemical storage capabilities, ocean vessels, a global customer network, and diverse proprietary marketing and logistics expertise in global operations.
    In addition, seek to participate in new production capacity where competitive natural resources are abundant
  • Chlor-Alkali: Provide various service within chlor-alkali value chain, strengthening salt business structure and distribution business of caustic soda, PVC resin, and urethane raw materials
  • Fertilizers and agrochemicals: Seek to secure sources of key raw materials and products for fertilizer and agrochemicals, and further strengthen Mitsui’s global marketing network with global partners both inside and outside Japan
  • Environmental chemicals: Develop and nurture “green” (environmentally friendly) chemicals and new energies, such as photovoltaic power generation systems
  • Performance materials / Advanced materials: Strengthen sales and distribution activities through our global sales platform, including both marketing capabilities and SCM business models, for growing markets, such as automotive, office automation, and electronics

PORTFOLIO AND NEW BUSINESS DEVELOPMENT

  • Reorganized Chemical Segment into Basic Chemicals Business Unit and Performance Chemicals Business Unit (April 2009)
  • Newly established Renewable Energy Division (June 2008) to develop global business participation in the industry, including photovoltaic power generation system integration
  • Merged MITSUI BUSSAN SOLVENT & COATING CO., LTD. (Japan), with Bussan Chemicals Co., Ltd. (Japan), and established Mitsui Bussan Chemicals Co., Ltd. (Japan), aiming to strengthen sales and marketing capability in the domestic chemical industry (April 2009)

Salt business of Shark Bay Salt Pty. Ltd., Australia

Solar cell systems




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