TOKYO—JSR Corp. is prepared to launch a restructuring plan intended to boost earnings in its elastomers business. The measures include a review of the segment's product mix and a move reduce costs, CEO Eric Johnson said in an earnings call.
In addition, JSR will minimize investment in the segment and carry out minimal maintenance as part of the plan to enhance profitability.
For the year ended March 31, the elastomers business saw a significant decline in results, leading JSR to miss its final target for the financial year 2019, according to Johnson.
The unit was impacted by "dramatic changes" in the business environment, including macro market drivers for crude oil, as well as supply/demand balance shifts caused mainly by new capacities in China, the JSR official said.
Operating profit of the unit, which contributes more than 40 percent of total group sales, plunged, recording a $16.9 million loss on 11 percent lower sales of $1.67 billion.
JSR linked the drop to a decline in sales volume as a result of "a significant deterioration in the market and a slump in the automobile and tire markets, including China."
Japan's domestic tire production increased in the first half of the fiscal year, but declined significantly in the final quarter of year.
Globally, JSR said tire markets remained sluggish while automotive production followed a negative trend, particularly in China.
"In China, production was recovering from a sharp drop in FY18 toward December 2019, but production decreased significantly in the fourth quarter due to the impact of COVID-19," Johnson said.
For the full year, JSR expects the elastomers business to register a $46.8 million operating loss, mainly due to the COVID-19 pandemic. Sales are projected to fall 19 percent for the fiscal year ending March 2021.