Under these circumstances, we proceeded to enhance our product lineup by acquiring new operations for the Chemicals Business divisions and strengthening our overseas business locations. We also made concerted efforts to increase orders and reduce the total overhead of the entire corporate group. Subsequently, we experienced an increase in orders through a favorable trend in orders for the technical and engineering departments, among others. Consolidated revenue and earnings of the group in the fiscal year ended March 2005 increased over the previous term. The Nippon Soda group posted net sales of ¥144.4 billion, income from operation of ¥5.1 billion, and a net income of ¥1.9 billion. As for dividends, we have determined to continue to pay ¥5 per share.
Evaluation on policy measures of focal points Agro Products Division
Additionally acquired business operations include: the preservative and antifungal agent businesses (BIOCIDE) in the industrial chemicals field. In this sector, we expect further development and significant progress in the future, by integrating the drug development knowhow accumulated by the former DIC and Nippon Soda´s proprietary agricultural fungicide and water treatment techniques.
Taking this opportunity, while we have been strengthening the advertising and distribution system of agrochemical products, we have also continued efforts to procure intermediate materials and establish measures for counterfeit products, where we have already produced material results.
As for our becoming the largest shareholder of IHARABRAS S/A., we have built our next foundation in Brazil, where the agrochemical market is dramatically growing, by showing our commitment to local distributors and respective companies in the industry. In addition, I think that we can expect actual results for the enhancement of our product lineup owing to the increase in contracted sales for various agrochemical companies in Japan and the strengthening of our corporate management base, etc. Thereby, we can greatly contribute to the expansion and development of our agrochemical business.
Also, overseas, we will further develop our own network. We have built a four tier system by incorporating our Shanghai office last year and will further improve and enhance these operations. In the United States, we have started to concretely examine the feasibility of setting up our own sales network. With these measures, I think that we can expect to be able to benefit from direct involvement in the planning of market information/sales policies, and the enhancement of profitability due to the decline of local sales margins, and such.
Through these measures, we will devise strategies that are different from major overseas agrochemical companies so as to be clearly recognized as a distinct entity in our own right.
Other business divisions
Also, photoresist for semiconductor, VP-POLYMER, maintains a top share in the KrF photoresist market. In the next generation ArF area, we promote research and development so that we may play a leading role and aim at introducing to the market soon, once we are capable of satisfying the tough demands of users.
As for the dye-related business (color developers for thermal paper), a new developer D-90, which was introduced to the market 5 years ago, has been improved dramatically in terms of lower plasticity and better oil resistance of the current major developer D-8. Its benefits have recently come to be recognized and its sales are expected to grow remarkably. Therefore, we have decided to newly install more equipment to increase our capacity to 1,000 tons/year at our Chiba Factory.
This spring, we launched the next generation developer D-100, which is excellent particularly in its good thermal resistance and high light resistance. This is the result of our research and development on color developers for thermal paper, and we will endeavor to enthusiastically promote it.
Among the phosgene derivatives that are part of the business categories of Custom Manufacturing and treatment system by dechlorination for PCBs, the demand for special ISOCYANATE, urethane materials for automotive auxiliary springs, increased. This was partially due to the booming market in the automobile industry, and we are responding to this higher demand by stepping up production. High class/high refractive index glass lens materials, which are also sulfur derivatives, have been going strong.
In the pharmaceutical product sector, we also aim to expand our contracted business based on our proprietary technology in various areas; for instance, the early commercialization of A-0026, new disinfectant drug substances.
The treatment system by dechlorination for PCBs via SD method, utilizing our own proprietary sodium metal, was adopted by Hokuriku Electric Power Company in 2003 and subsequently picked up by the Kita-Kyushu branch of JESCO (Japan Environmental Safety Corporation), where it is now in full-scale use. Also, Tohoku Electric Power Co., Inc. recently decided to adopt it; and we will endeavor to positively expand our business, starting from the second stage of JESCO Kita-Kyushu business and other demand from electric companies and private enterprises.
Towards the next fiscal year
Under such circumstances, the Nippon Soda group will proactively promote its business activities, beginning with the development of high value-added products to meet the needs of the market, and, at the same time, strive to continuously reduce production costs and expenses. However, regrettably, in the next fiscal year, we find ourselves needing to book considerable impaired losses due to the adoption of asset-impairment accounting. With this opportunity, we will plan and implement adequate measures for those items to which asset-impairment accounting will be applied, while we will consistently pursue a policy for expanding the demand for our products and a policy for fostering the development of new products.
Further, as for the consolidated business results for the fiscal year ending March 2006, we forecast ¥145.0 billion for net sales and ¥2.1 billion for net loss.
Message to shareholders and investors
In this situation, the Company must transform itself to respond to such changes and survive and grow. In other words, while strengthening our core products and businesses, we are required to newly establish growing products and businesses by cutting out inefficient areas. To tackle these challenges, the Company will steadily proceed to implement corporate restructuring from the adoption of impairment-accounting during fiscal years ending March 2006 and 2007. We will further concentrate the collective efforts of the entire group to achieve a corporate makeup that enables us to post steady profits.
Also, the Nippon Soda group will strengthen the compliance system by establishing the Nippon Soda Group Code of Conduct to proactively engage in environmental corporate activities, increase corporate disclosure of financial information, and comprehensively adopt corporate activities based on compliance and corporate ethics; thus enhancing our reliability in the eyes of society.
We regret to inconvenience you, our cherished shareholders, but we hope that you will extend even greater support and encouragement to the Company in the critical times to come.