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2025-02-07
Nissan Chemical Industries has revised its forecast for the 2025 fiscal year, projecting a solid 8% increase in net profit to 40.9 billion usd. This revision exceeds its previous estimates by 1.5 billion usd, aligning closely with market expectations. The increase is attributed to the favorable currency fluctuations, particularly the weaker usd, which have significantly impacted the company’s financial outlook. As a result, the company’s Return on Equity (ROE) is now expected to reach 17.7%, up from the previously planned 17.1%.
Key figures for the fiscal year include a forecasted 9% increase in sales, reaching 247.6 billion usd, and an operating profit projection of 55 billion usd, reflecting a 14% growth. Both figures have been revised upward by 2.6 billion usd and 2 billion usd, respectively. The company has adjusted its exchange rate assumption for the year to 1 USD = 152 usd from the earlier 149 usd. A 1-usd depreciation against the dollar is expected to boost operating profit by 300 million usd.
The company also attributes its upward revision to a review of business risks that had previously been considered more conservative. According to Hideki Daimon, Senior Executive Officer, the company felt confident in revising its forecast based on currency trends. Furthermore, its functional materials business, particularly in semiconductor-related products, has shown strong performance, driven by the increasing demand for AI. Sales of multi-layer semiconductor materials have exceeded expectations, with growth anticipated across both front-end and back-end materials for the 2025 fiscal year. In addition, demand for display materials for laptops and monitors has also contributed positively.
The company’s agricultural chemicals division has benefitted from growing demand for fungicides like “Raimei” in Europe. The sales of the animal pharmaceutical ingredient “Fluralaner” have also surpassed expectations.
For the first half of the fiscal year 2024 (April to December), Nissan Chemical reported a 13% increase in sales to 174.8 billion usd, with net profit rising by 22% to 31.7 billion usd.
What Undercode Says:
Nissan Chemical’s robust performance in the 2025 fiscal year, spurred by favorable currency fluctuations, highlights the significant impact that macroeconomic factors, such as exchange rates, can have on a company’s bottom line. The company’s decision to revise its forecast upwards, especially in light of a 1-usd depreciation against the dollar, demonstrates how strategically managing exchange risks can benefit firms that are heavily reliant on global trade.
The revised net profit and ROE projections are a testament to Nissan Chemical’s strong position in its industry, particularly in the functional materials and agricultural chemicals sectors. The semiconductor-related products, in particular, benefit from the growing AI-driven demand. The AI sector’s influence on high-tech materials continues to be a promising trend, as evidenced by the success of Nissan’s semiconductor materials. This success aligns with the broader industry trend where companies producing components for semiconductor manufacturing and advanced electronics are poised for growth as AI and other emerging technologies expand.
The agricultural chemicals division’s performance, fueled by the growth in demand for fungicides like “Raimei” in Europe, is a testament to the increasing focus on food security and sustainable farming practices. In a world facing challenges such as climate change and crop disease, demand for effective agricultural products is rising. Additionally, the performance of animal pharmaceuticals like “Fluralaner” suggests the growing importance of veterinary care and disease prevention in the global market.
Looking forward, Nissan Chemical’s focus on the semiconductor and AI sectors positions it strategically to capitalize on these rapidly expanding industries. However, there are risks to consider, such as potential volatility in global exchange rates and shifting trade dynamics. While the weaker usd has been a positive factor for the company, any reversal in currency trends could present challenges. Therefore, the company’s ability to adapt to these changes while maintaining growth in its core sectors will be crucial for sustaining its positive momentum.
In conclusion, Nissan Chemical’s impressive financial performance is a result of strong sectoral growth, effective currency management, and a keen understanding of market trends. The company’s ability to navigate these elements will be essential for future growth, making it an intriguing player in the chemical and materials industries moving forward.
References:
Reported By: Xtech.nikkei.com_2a835778a9a81b9e8038fc86
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