Zeon lowers fiscal 2023 forecast on 'deteriorating' markets

TOKYO—Zeon Corp. has revised down its financial forecast for its fiscal year ending March 31, 2024, amid "deteriorating China and elastomer markets."

The Japan-based group now expects sales to come at around $2.58 billion, down from an estimate of $2.67 billion announced in July.

Operating income is expected to reach $170 million, down from a forecast of $213 million, Zeon added in an Oct. 27 financial update.

"The main products of the materials business division and high-performance materials business division are being affected by the delayed recovery in demand," the company said. Overall sales volume, therefore, is expected to be lower than what was expected when the initial earnings forecast was announced.

For the second quarter of the year, Zeon's elastomers business unit reported a 9-percent year-on-year decline in sales to $356 million.

Operating profit for the unit posted a sharp 77-percent decline to $8.1 million, down from $403 million (according to average 2022 exchange rates) reported the year before. Zeon linked the downturn in sales to "delay in recovery in demand for chemicals," as synthetic rubber volumes remained mostly flat.

Quarter-on-quarter, volumes were up, driven by an increase in demand for general purpose rubber, the group noted.

Operating income was down due to increase SG&A (selling, general and administrative expenses) for synthetic rubber and "financial market efficiency" for chemicals.

Zeon noted a $1.35 million negative impact from lower sales volumes of chemicals and latices and a $4 million impact from "regular maintenance" at overseas subsidiaries.

Lower sales prices also had a negative impact of $12.2 million on earnings, partially offset by a $6.8 million impact of exchange rates and $2 million positive impact of raw materials.