In such a situation, the Nippon Soda group posted net sales of ¥157.5 billion, operating income of ¥9.8 billion, ordinary income of ¥10.7 billion, and net income of ¥5.1 billion with all figures increased from the previous year. Consolidated ordinary income reached a historical high of ¥10.7 billion for the period ended March 2008.
The increases in sales and profits year-on-year were attributable to a contribution of the Treatment System by Dechlorination for PCBs committed to for many years to the results, all efforts to revise prices of industrial chemicals, strong market conditions for the feed additive Methionine, sales expansion of pharmaceutical intermediates and the pharmaceutical and food additive HPC, and a rise in overseas sales volume of agricultural chemicals including Mospilan and Nissorun. A company-level cost reduction, in particular fixed costs and expenses, backed by a lean management structure constructed the previous year and solid results in the transportation and warehouse category and the construction category also contributed to sales and profit growth.
For the reduction of total assets, we achieved the target by reducing total assets to ¥134 billion, down ¥9 billion from the previous term, on a non-consolidated basis at the end of March 2008, which resulted in an operating profit return on total assets of 5.4%. As a result, we decided to propose a final dividend per share of ¥6 for year ended March 31, 2008, up ¥1 from the previous year.
2.New medium-term business plan
The fiscal 2009 consolidated medium-term plan aims to achieve net sales of ¥162 billion, operating income of ¥11 billion, ordinary income of ¥11 billion, and net income of ¥6 billion. We also set another target to achieve net sales of ¥170 billion, operating income of ¥13 billion, ordinary income of ¥13 billion, net income of ¥7 billion, and a return on assets (ROA) of 8% or more on a consolidated basis for fiscal 2011.
We position the period for the new medium-term business plan through fiscal 2009 as a test period for the fiscal 2011 target. We will promote the development of high value-added products by aggressively allocating necessary management resources to the above three targeted areas.
In the greenery field, the new herbicide for lawns Conclude, which is effective for several types of weeds, is scheduled to be launched in the second half. Using this opportunity, we will strive to expand the area. From the view of economic rationality, some agents, where the production has been outsourced, will be manufactured in house during the next fiscal year. Additionally, we aim to achieve efficient production by renovating plants for agricultural chemicals.
Hardening accelerators for resin adopting a clathration technology, shipments of which have steadily increased, are scheduled to be launched as products for sale. Among many existing products with characteristics, we strive to expand the functional polymer business applied anion living polymerization technology, enhancing product offerings of the photosensitive resin for semiconductors VP-Polymer and production capacity to maintain the leading share in the Krf market and to expand overseas operations of the food and pharmaceutical addictive HPC.
For a Treatment System by Dechlorination for PCBs, which enjoys strong performance as an environmental business, equipment has been completed and operates steadily at Tohoku Electric Power Co., Inc. following the Kita-Kyushu project of JESCO (Japan Environmental Safety Corporation). We are considering the development of new deals with experience in the Kita-Kyushu second phase project of Hokuriku Electric Power Company and JESCO under construction as well as generating chemical process-based environmental businesses.
Please tell us about the Basic Chemicals business.
In the dye field, we, as a developer for thermal paper hold the world´s premier brands D-8 and D-90 and will enhance the production bases while developing safer, higher-quality improved products.
At present, people desire for safety and relief in foods. We promote the R&D of biological agricultural chemicals. We plan to file an application for registration of the biological agricultural chemical for vegetables Agrocare by the first half of the fiscal year under review.
To accelerate development in the functional material area, we will establish the Processing Technology Center in the premise of the R&D Laboratory for High-Performance Materials located in Ichihara, Chiba Prefecture. The center, which is scheduled to be completed in fiscal 2009, will be equipped with up-to-date film deposition equipment and property measurement instruments for manufacturing prototype related to the above SAM and electronic materials and establishing evaluation technology. This enables us to accelerate development and aim to launch products as soon as possible.
In the precise organic synthesis filed, we are focusing on high organic functional products including pharmaceutical intermediates in the precise organic synthetic area. We will enhance multi-test equipment to promote the development of new products and create opportunities for contract manufacturing in the area and drive prompt development by immediately responding to consumers.
3.Outlook for the next fiscal year, and message to shareholders and investors
Our export rate, mainly in agro products, is above 30% on a non-consolidated basis. As the recent appreciation of the yen has negative effects on management, and higher raw materials and fuel caused an increase in production costs, we see an adverse business climate.
Under such an environment, we expect to record net sales of ¥160 billion, operating income of ¥6.2 billion, ordinary income of ¥6.7 billion, and net income of ¥3.7 billion on a consolidated basis for the next fiscal year. The projected income will decline from the previous year, but we intend to work to exceed this minimum target even to some degree.
Meanwhile, we are obliged to file an Internal Control Report on the financial statements effective this fiscal year. To carry out the basic management policy of compliance with laws and execution of robust and transparent management, we will strive to establish a system for evaluation and management centered on the Internal Control Audit Department.
The environment around the chemical industry is becoming more serious. The Group relatively suffers from these effects including appreciation of the yen and the higher costs for raw materials and fuel. Under such conditions, our survival and the achievement of expansion and development depend on the expansion of existing products and the peripheral areas as well as development and launch of value-added products based on long-term technologies in the targeted areas.
With the continuously holding slogan of speed-up and execution, we intend to overcome adverse conditions by bringing together group companies and enhancing the management structure of the Group. We sincerely ask for your continued understanding and support.