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Mitsubishi Chemical (4188) to exit petrochemicals operations

By Mensholong Lepcha

08:22, 2 December 2021

Logo of Mitsubishi Chemical through a test tube
Logo of Mitsubishi Chemical - Photo: Shutterstock

Japan’s Mitsubishi Chemical Holdings Corp (MCHC) closed at an over seven-month low on Thursday after announcing plans to exit petrochemicals and coal chemicals businesses on its road to carbon neutrality by 2050.

Japan’s largest chemicals maker said it will “carve-out” its petrochemicals and coal chemicals businesses by fiscal 2023.

Shares in MCHC slumped 8.2% to JPY828.50, its lowest close since 30 April.

Focus on electronics and healthcare

The company said it will focus on electronics, healthcare and life science sectors as a part of its new management policy covering period up to the end of fiscal 2025.

Under electronics, the company will target growth opportunities in electric vehicle lightweight materials, batteries and semiconductors.

“We will lead innovation in targeted areas in the food sector, and in healthcare we will realize the value of late-stage development assets such as a potential coronavirus vaccine,” added MCHC, with healthcare expected to contribute JPY130bn in revenue in fiscal 2025.

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Reduced costs

The company said it will reduce costs by more than JPY100bn per year by fiscal 2025.

MCHC said it will keep capital expenditures less than depreciation and amortisation as a part of its latest strategic allocation plan. The company will accelerate “deleveraging” and will review its current dividend policy with a view to increase shareholder return.

The company said its base target group revenue for fiscal 2025 was at JPY3trn which is less than JPY3.258trn reported in fiscal 2021.

However, base earnings before interests, taxes, deprecation and amortisation margin is target at about 18% to 20% in fiscal 2025 compared with 12.5% reported in fiscal 2021.

Read more: JPY forecast: Looking beyond the lows

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Mitsubishi Chemical Holdings Corporation
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Mitsubishi Chemical Holdings Corporation
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