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Edited Transcript of 4005.T earnings conference call or presentation 15-May-20 8:00am GMT

Full Year 2020 Sumitomo Chemical Co Ltd Earnings Call

Tokyo May 15, 2020 (Thomson StreetEvents) -- Edited Transcript of Sumitomo Chemical Co Ltd earnings conference call or presentation Friday, May 15, 2020 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Keigo Sasaki

Sumitomo Chemical Company, Limited - Managing Executive Officer

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Conference Call Participants

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* Mikiya Yamada

Mizuho Securities Co., Ltd., Research Division - Senior Analyst

* Shigeki Okazaki

Nomura Securities Co. Ltd., Research Division - Head of Basic Material Research Team & Analyst of Chemicals, Textiles, Electronic Materials of Japan

* Shinobu Takeuchi

SMBC Nikko Securities Inc., Research Division - Senior Analyst

* Takato Watabe

Morgan Stanley, Research Division - Research Analyst

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Presentation

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Operator [1]

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Thank you very much for participating in the Sumitomo Chemical conference call for fiscal year 2019 financial results. First, Mr. Sasaki, Managing Executive Officer, will give you a briefing on financial results for fiscal year 2019. Later, he will be joined by Mr. Kun, General Manager of Accounting Department to take questions.

Before the conference, let me give you some reminders. In the presentation, future projections based on current forecast may be provided. Please be informed that they may include risks and uncertainties. Please be aware that the actual results may greatly differ from projections.

We will start with our conference call. Mr. Sasaki, please.

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [2]

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This is Sasaki from Sumitomo Chemical. Thank you very much for attending the Sumitomo Chemical Conference Call despite your busy schedule. I'd like to thank the investors and analysts for your big understanding and support to our management.

Let me start now with the explanation of financial results of fiscal year 2019. Please look at slide Page 4. Consolidated financial results for fiscal year 2019, sales revenue was JPY 2.2258 trillion, which is down by JPY 92.8 billion year-on-year. Core operating income, showing our recurring income ability was JPY 132.7 billion, which is down by JPY 71.6 billion year-on-year. Nonrecurring items not included in core operating income posted JPY 48.5 billion of changes in fair value of contingent consideration as a profit direction. On the other hand, there was JPY 37.3 billion of impairment loss and JPY 7.8 billion of restructuring charges in the loss direction. And in net, there was JPY 4.9 billion of profit, which is an improvement of JPY 26.1 billion compared to the previous term.

Majority of changes in fair value of contingent conservation and impairment loss occurred in the area of Pharmaceuticals. In changes in fair value of contingent consideration, the review of business plan in the cancer area reduced the value of contingent consideration, which is a liability item leading to negative expenses.

On the other hand, with a review of the business plan, there were impairment losses in in-process R&D and patent rates, which are intangible assets. As a result, operating income was JPY 137.5 billion, down JPY 45.5 billion year-on-year. Finance income and expenses was a loss of JPY 7 billion, worsening by JPY 12.4 billion year-on-year. Out of this gain or loss on foreign currency transactions, with the strengthening of the yen this term, there was a loss of JPY 5.6 billion, worsening by JPY 11.1 billion year-on-year.

Income tax expenses were JPY 76.1 billion, increase of JPY 40.2 billion year-on-year. Major factors for the increase was that, as I mentioned earlier, with the business plan review in the area of Pharmaceuticals, there was a reversal of deferred tax assets, which was recognized in the United States. As a result, net income attributable to owners of the parent was JPY 30.9 billion, down JPY 87.1 billion year-on-year. The JPY 87.1 billion drop in net income attributable to owners of the parent is larger than the drop of core operating income of JPY 71.6 billion. This is mainly the influence of reversal of deferred tax assets and one-time loss without funds disbursement.

As for the exchange rate and naphtha price influencing our results, the average exchange rate during the term was JPY 108.7 to the dollar and naphtha price was JPY 43,000 per kiloliter. Yen was stronger and the feedstock was cheaper compared to the prior term, though not included in the chart.

In the forecast announced in February, we estimated sales revenue to be JPY 2.250 trillion, core operating income to be JPY 125 billion, operating income to be JPY 130 billion and net income attributable to owners of the parent to be JPY 30 billion.

Compared to this forecast, sales revenue was lower. And at each income item, the result was higher. And as the impact of the novel coronavirus or COVID-19, we estimated JPY 4 billion to JPY 5 billion, but the result was impact of a similar level of about JPY 4 billion.

Next is the sales revenue by segment. Please move to Page 5. Sales revenue is on this page. Total sales revenue went down JPY 92.8 billion year-on-year. Looking by segments, sales revenue were up in IT-related Chemicals, Health & Crop Sciences and Pharmaceuticals.

In IT-related Chemicals, Health & Crop Sciences and Pharmaceuticals were up and down in Petrochemicals and Energy and Functional Materials. Analyzing by factors that changes in sales revenue from the prior year term, sales price is down by JPY 146.5 billion, volume up by JPY 94.2 billion and foreign exchange translation of sales revenue of foreign subsidiaries is down JPY 40.5 billion.

Next is Page 6. Total core operating income is down JPY 71.6 billion year-on-year. Analyzing by segment for each sector, there was a reduction in all business segments. So by factors, price is negative by JPY 55 billion and cost is negative by JPY 29 billion. On the other hand, volume and others, including changes in equity in earnings of affiliates, this was positive JPY 12.4 billion.

Next is outlined by segment, Page 7. In Petrochemicals & Plastics segment, sales revenue is JPY 656.9 billion, down JPY 100.6 billion year-on-year. Core operating income is JPY 14.5 billion, down JPY 47.1 billion year-on-year. With lower feedstock price, such as naphtha, market price of petrochemicals and synthetic resins dropped. And market price of MMA and caprolactam were also low, leading to the drop in sales revenue. In addition to the drop in profit margin of MMA and caprolactam, equity in earnings of affiliates, such as Petro Rabigh and PCS of Singapore decreased, leading to a decline in core operating income.

Next page. Energy & Functional Materials segment. Sales revenue was JPY 255 billion, down JPY 27.8 billion year-on-year. Core operating income was JPY 20.3 billion, down JPY 2.6 billion year-on-year. In addition to lower market price for aluminum and decline in the selling price of cathode materials, there was decrease in shipments of cathode materials and lithium-ion secondary battery separators, leading to drop in sales revenue. Core operating income went down, mainly as a result of decrease in shipments.

Next page, please. Regarding IT-related Chemicals segment, sales revenue totaled JPY 404.9 billion, up JPY 8 billion year-over-year. Core operating income totaled JPY 25.1 billion, down JPY 1.1 billion year-over-year. Sales revenue increased, backed by increase in shipments of polarizing films and touchscreen panels, while selling prices for these products declined. Core operating income was down due to greater negative impact of decrease in selling prices over increase in shipments.

Please turn to the next page. Health & Crop Sciences segment. Sales revenue totaled JPY 343.7 billion, up JPY 5.6 billion year-over-year. Core operating income was JPY 2.1 billion, down JPY 17.6 billion year-over-year. Sales revenue declined owing to decrease in shipments of crop protection products with the impact of extreme weather in North America. Methionine shipments increased as a result of expansion of production capacity in fiscal year 2018, although methionine market prices dipped. As a result, the segment posted year-over-year gains. Core operating income, in the meantime, decreased with declines in shipment of crop protection products, margin erosion of methionine and increase in cost due to the expansion of production capacity.

Please turn to the next page. Pharmaceuticals segment. Sales revenue totaled JPY 515.8 billion, up JPY 23.7 billion year-over-year. Core operating income was JPY 75.3 billion, down JPY 5.5 billion year-over-year. Sales revenue increase was contributed by increase in shipments of Latuda in North America, coupled by launch in sales of Equa and EquMet for type 2 diabetes. Core operating income was down while sales revenue picked up, increase in fixed cost incurred by Sumiko branch and its subsidiaries, newly acquired under the strategic alliance with Roivant led to drop in core operating income. This is all for me for business performance breakdown by segment.

And next page, please. As I have already covered the main topics and amounts of nonrecurring items at the beginning, I will not go over them now.

Next is consolidated balance sheets. Please turn to Page 13. Total assets as of end of March 2020 was JPY 3.6503 trillion, up JPY 478.7 billion from the end of the previous year. This is primarily due to the strategic alliance of Sumitomo Dainippon Pharma with Roivant as well as increase in goodwill and intangibles and the Others item under noncurrent assets, due to acquisition of Nufarm's South American business.

Property, plant and equipment increased as a result of adopting IFRS 16 lease. Interest-bearing liabilities was JPY 1.3047 trillion, up JPY 465.1 billion at the end of the previous year. This is due to bridge loan procurement related to payment of consideration by Sumitomo Dainippon Pharma for the strategic alliance, and also due to publicly offered hybrid bonds that the company issued. Assets totaled JPY 1.3888 trillion, up JPY 37 billion from the end of the previous year. As a result, equity attributable to owners of the parent to total assets or equity ratio was 25.3%, down 6.2 points year-over-year.

Next is consolidated cash flow. Please turn to Page 14. Cash flow from operating activities was JPY 106 billion in inflow, down JPY 102.1 billion year-over-year, mainly due to drop in operating income. Cash flows from investing activities, JPY 499.7 billion of outflow. Cash outflow increased by JPY 318.8 billion year-over-year, primarily due to payment of considerations by Sumitomo Dainippon Pharma due to strategic alliance with Roivant. As a result, free cash flow was JPY 393.7 billion in outflow compared to JPY 27.3 billion in cash inflow, in the previous year, cash outflow increased by JPY 421 billion. Cash flows from financing activities was JPY 373.5 billion in inflow. Cash inflow increased JPY 434.4 billion.

Before closing, I will talk about our outlook for fiscal year 2020. Please turn to Page 16. The company will refrain from providing earnings forecast and dividend projections for fiscal year 2020. Amid the pandemic of COVID-19, economic landscape in and out of Japan dramatically deteriorated, affecting the business environment surrounding the Sumitomo Chemical group. Especially difficult situations are foreseen going forward in the businesses related to automotive and display areas, and they are expected to continue until the pandemic comes to an end.

Please look at Page 17. Under such circumstances, the Sumitomo Chemical group refrains from providing earnings forecast and dividend projections for fiscal 2020, as I said earlier, as reasonable calculation for such outlook and the assumption of future foreign exchange rates and naphtha prices is not currently feasible. Going forward, the Sumitomo Chemical group will examine the business trend, factoring in the impact of the pandemic and announce financial forecast as soon as the situation allows.

Please turn to Page 18. Regarding sharing of liquidity by the group, the company has concluded overdraft facilities and a commitment line contract of JPY 101 billion in total with financial institutions. For domestic and overseas group companies, group finance is implemented to enable mutual financial accommodations. The company continues to preserve cash necessary for future business operations, while at the same time, pursuing financial stability.

This is all for financial results for fiscal year 2019. We welcome your questions.

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Questions and Answers

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Operator [1]

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Now we would like to answer the questions. The first question is from Morgan Stanley, MUFG Securities, Mr. Watabe.

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Takato Watabe, Morgan Stanley, Research Division - Research Analyst [2]

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This is Watabe speaking. My first question is that as for 2020, I understand there are no forecasts made. But Petro Rabigh had a very poor result in the first quarter. And looking at the situation and also inventory valuation losses might have been calculated. And if in May, including the impact of COVID-19, what do you think will be the situation? It might be very difficult to say but the current situation of crop protection market, including the price trend of methionine, what do you think is the current situation?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [3]

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As for the future, we have mentioned that it is still undetermined. Right now, we are just working on that. In announcing the financial results, this matter impacts of COVID-19 infection, there lots of trouble or it takes a lot of time. So we actually are not yet able to work on that. And it's also difficult to make projections about the future. But under such situation -- actually, on the 28th of May, the President is planning to make a presentation of our business strategy, and we believe some details will be disclosed then. But as of today, as a general trend, as I have explained earlier, for automobile-related areas and areas related to displays, these areas might be affected. So in our sector, petrochemicals and including the tires, there could be resorcinol and synthetic rubber and separators also could be affected. And for displays, televisions and smartphones also could have been inflected. On the other hand, Pharmaceuticals and crop protection products, in these areas, there could be some impact, but the impact may not be that large in these sectors. For crop protection products and the reversal, there was an appropriate profit of JPY 2.1 billion in the previous term. So in the spring of 2019, there was abnormal weather, floods, which had a big impact. But this year, for fiscal year 2020, we believe there will not be such a major impact. But one year before that, where the situation was very good, compared to that, we still cannot say what will be the level of recovery, but a certain level of recovery of crop protection products could be expected. That is all. Did I answer your question?

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Takato Watabe, Morgan Stanley, Research Division - Research Analyst [4]

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Yes, on the 28th of May, I think this will be presented. The financial status is worsening quite a lot. So to consolidate the financial situation, our share side and also cost reduction might be in salaries. Is that also going to be presented?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [5]

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Yes, including refraining from making investments and improving the financial position, like with CGC improvement, which we have been doing so far, but we need further efforts to that direction. So we plan to make that presentation as well.

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Takato Watabe, Morgan Stanley, Research Division - Research Analyst [6]

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My second question is that in the first quarter, you're starting with losses, I believe. And the outlook for dividend payment is also not yet fixed. In the fiscal year, which just ended, was JPY 6. So will that be better? Or maybe it would be possible that there will be no dividend payments?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [7]

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I'm not in a position to answer this question. That is up to the decision of the top management. Even in making the forecast of our business performance, we have difficulties in making such projections. So for the dividends, as of today, I have to refrain from making comments about it.

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Operator [8]

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We would like to move to the next question. Mizuho Securities, Mr. Yamada.

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Mikiya Yamada, Mizuho Securities Co., Ltd., Research Division - Senior Analyst [9]

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This is Yamada from Mizuho. Anything about the future should be waited until the 28th of May, I think. So I will wait until that timing. But with regards to fiscal 2019, I would like to ask some questions on that. In Health & Crop Sciences, fourth quarter operating income for the 3 months compared to the fourth quarter, the previous year, it's almost in line. Methionine in the fourth quarter last year was worse this year, and therefore, for Health & Crop Sciences or crop protection materials is improving or methionine prices, market prices trend, could you describe on the recovery of Crop Sciences business? Combined with that, fourth quarter previous year, JPY 28 billion in operating income was generated. This, of course, was contributed by methionine. But for crop protection material -- the products, crop protection products, do you have expectations that we can go back to that level? I don't think COVID-19 will have much impact on that. So this is my first question from crop protection chemicals.

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [10]

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Well, this was a question on crop protection chemicals. Fourth quarter in fiscal year 2019 and the fourth quarter of 2018, the previous year, and if you look at crop protection chemicals, and if you look at North America, it was quite tough. In the meantime, Central America, where it is growing now and markets like India, there was an impact of monsoon and there was some delay, and there was less than expected performance. But those were some markets where we saw some positive performance. So there was some difference across markets. With regards to methionine, prices have been declining over the months. After April 2019, every quarter, we have been seeing decline in methionine prices. But from 2020, steadily, we are seeing some recovery in methionine prices. This is spot prices. But, for example, if you look at European spot prices, so we are seeing some strong growth there. So that is the situation with methionine. And so for fiscal 2019 -- or fiscal 2020 compared to fiscal 2019, we expect and hope that market prices will increase. Whether there will be an impact of COVID-19 or not, we are still quite unsure. We have expectations, but there are reservations on that.

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Mikiya Yamada, Mizuho Securities Co., Ltd., Research Division - Senior Analyst [11]

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Let me confirm, Central and South America, Nufarm acquisition took place. And therefore, that would have some impact this fiscal year. Am I correct?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [12]

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Well, Central and South America markets had been growing. It's a region that has been growing. And with the acquisition, and of course, the acquisition took place with expectations for growing -- growth in the market. But in the meantime, since it's a growing market, there is competition with generics. The competition is quite fierce. And therefore, certain products are not seeing rise in prices as much as we expected. So there are some plus and minuses. But as much as possible, we want to leverage on our strengths so that we can see increase in sales. Coming back to the point of the contribution of the acquired business, the impact is not that significant, but we are expecting some impact in fiscal 2020 as well.

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Mikiya Yamada, Mizuho Securities Co., Ltd., Research Division - Senior Analyst [13]

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My second question is about IT-related Chemicals. From the third quarter to the fourth quarter, even under the COVID-19 impact, earnings did not drop as much. Sales revenue actually increased and operating income has not dropped that much. Actually, it's increasing. Fourth quarter with COVID-19, I think you revised down. But even with the impact of COVID-19, the performance is this or did you not have much impact in the fourth quarter? Was that the reason?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [14]

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IT-related Chemicals, their performance -- earnings from the third quarter to fourth quarter, yes, as you said, in terms of income has increased quarter-over-quarter. Let me explain about that. At the end of the third quarter, there was some extraordinary reasons, should I say, for example, the timing of switching over to new models. So third quarter numbers were lower than a normal year. I think I've explained that. In that sense, new products were launched in the fourth quarter as scheduled, so that was a positive. And another factor to explain this performance is that OLED ratio -- the higher the OLED ratio leads to higher earnings for us. And OLED take up was actually greater in the fourth quarter compared to the third quarter. And talking about the impact of COVID-19. Originally, when we revised our earnings in February, impact in IT-related Chemicals was, as we explained, expected to be greatest, but it so turns out that IT-related Chemicals suffered less of an impact of COVID-19 that we expected. Polarizing films and touchscreen panels decreased, and those products were in line with our expectations. But in the meantime, chemicals for semiconductors, Chinese New Year and after the Chinese New Year, there was a time in which it didn't start-up. And until the start-up for those businesses, customers or clients were keen to gather inventory, their stock -- to build their stock. There was, therefore, some extraordinary demand related to semiconductors. We saw some increase. And that I think has led to the better performance in the fourth quarter. That is all from me.

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Mikiya Yamada, Mizuho Securities Co., Ltd., Research Division - Senior Analyst [15]

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So for semiconductors, downstream stock level is, therefore, not foreseeable, but impact was dimmed?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [16]

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Yes. In that sense, semiconductor is seeing a boom, should I say, with more people working from home and the cloud storage is being used. And therefore, we have high expectations for that. But in the meantime, against the backdrop of the new coronavirus, it could have negative impact on the overall economic performance. So we cannot be wholly seeing the rosy picture entirely for the future.

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Operator [17]

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The next question is Mr. Okazaki from Nomura Securities.

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Shigeki Okazaki, Nomura Securities Co. Ltd., Research Division - Head of Basic Material Research Team & Analyst of Chemicals, Textiles, Electronic Materials of Japan [18]

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My first question is about Energy & Functional Materials, resorcinol separator is the main product, and towards the fourth quarter, which is the trend of shipments of such main products?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [19]

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For Energy & Functional Materials, from the third to the fourth quarter, in terms of profit, it was slightly negative. There's a slight decline. And the background for that is that for resorcinol, as you might know, currently, we have 2 factories and the plant in Oita in the fourth quarter was under the periodic maintenance shutdown. And the Chiba plant in the first quarter of 2020, we planned to hold a periodic plant maintenance. So in terms of volume, there was some limit to the volume. And another bad influence was that the super engineering plastics is seasonal. So it is slightly down. For aircraft use as well, restoration was not very good. And separators, for separators, the third quarter, there was some adjustment in inventory, so there was some drop. And from that area, there was some recovery in the fourth quarter. On the other hand, for ones produced in Japan with the shift to the major American manufacturers, as you know, there's some slowdown. So that is another influence that we might have experienced. And in that sense for separators for the third to fourth quarter, there were no major improvement factors. So these are the major movements.

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Shigeki Okazaki, Nomura Securities Co. Ltd., Research Division - Head of Basic Material Research Team & Analyst of Chemicals, Textiles, Electronic Materials of Japan [20]

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In terms of a trend of demand for resorcinol and the separators, are there some drastic changes?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [21]

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So far -- how should I say, the large American manufacturers in these places, the factory is not operating. They're working and trying to start operation, according to press reports. So the operations of clients of our customers have been stopped. So we must keep watching the future trend.

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Shigeki Okazaki, Nomura Securities Co. Ltd., Research Division - Head of Basic Material Research Team & Analyst of Chemicals, Textiles, Electronic Materials of Japan [22]

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My second question is for Petrochemicals. From the third and fourth quarter, Rabigh, I think, has worsened. So if excluding Rabigh, I believe the situation of losses was poor. What is the situation?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [23]

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Yes. As you have mentioned, from the third or fourth quarter, the situation was quite worsening. And there has been a reversal for Rabigh and other subsidiaries under the equity method. The solution has worsened quite a lot. And in addition to that, well, that is some worsening factors of other factors influencing. And mainly at Sumitomo Chemicals, this would be negative. So it is slightly negative because polyolefin margin has worsened. That is a major factor. With the worsening of margin in the first quarter in Japan that is from January to March, we're not surprised, went slightly up. Compared to third quarter, in the fourth quarter, the price was slightly up. And of course, that is another factor. So there is a delay in the quarter to make up for that. So the feedstock price went up between the third to the fourth quarter. And I think that is a major factor influencing. And besides those, MMA. In such products, the margin has slightly improved from the third to the fourth quarter, but more than that, there was a negative factor. So for other companies not in the equity method, there was a technical factor. Yes, that is a onetime factor.

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Operator [24]

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The next question is from SMBC Nikko Securities, Mr. Takeuchi.

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Shinobu Takeuchi, SMBC Nikko Securities Inc., Research Division - Senior Analyst [25]

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This is Takeuchi from SMBC Nikko. My first question is about the fourth quarter impact of COVID-19, JPY 4 billion, approximately, you said. But in your earlier explanation, there were some discrepancies in what you've explained in the February -- explained -- briefing. Can you give us a brief description by segment?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [26]

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Well, originally, we had said the impact will be JPY 4 billion to JPY 5 billion, of which half will be from IT-related Chemicals. That was our original thinking. And the rest, Petrochemicals & Plastics main, but the rest would take slightly of the rest of the pie. Now starting with IT-related Chemicals, actually, it's so turned out that the impact was maybe less than half of that. As I said earlier, touch sensors and polarizing films dipped. But semiconductors and chemicals use, there was some special or onetime extraordinary increase. So the impact was lessened. But in the meantime, for Petrochemicals & Plastics, there were a couple of things like margin erosion, I think, had an impact. On top of that, sales volume also dropped. Those were some of the factors. Compound works, factories that we had in places like China, operations stopped, and of course, there was impact on our side, which was as expected. But margin erosion is one and sales volume had dropped. Those were some additional factors.

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Shinobu Takeuchi, SMBC Nikko Securities Inc., Research Division - Senior Analyst [27]

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So Petrochemicals & Plastics suffered most, followed by IT-related Chemicals and Others. Is that the right way to put it?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [28]

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Yes, you are correct. That is right.

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Shinobu Takeuchi, SMBC Nikko Securities Inc., Research Division - Senior Analyst [29]

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Understood. My second question is the utilization of major products of fourth quarter and the current situation. If you compare basically, utilization has dropped. Capacity utilization, for example, CGC has to be stepped up, for example, you said earlier, but the decline in production is quite significant at this moment?

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [30]

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In terms of capacity utilization, and if I may answer your question in a broad general term, there are some differences, I must say. But for example, in Petrochemicals & Plastics, for propylene, PP, tend to have or are able to maintain high capacity utilization. But polyethylenes are more liable, more affected by changes in the economic conditions. And therefore, it is partially seeing some impact. And earlier, I already talked about the periodic maintenance shutdown in Chiba Works and also partially in Ehime, there will be partial periodic maintenance shutdown, which will also have an impact. And as for capacity utilization going forward, there is not much that I can speak about. But as, Takeuchi, you mentioned, improvement of CGC. If you think of that, we think we need to be able to take action and mobilize by understanding the customer situation as much as possible and be flexible in adjusting the capacity utilization.

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Operator [31]

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It's now time to conclude. So we'd like to conclude the Q&A session. Lastly, I'd like to ask Mr. Sasaki of Sumitomo Chemical for your final remarks.

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Keigo Sasaki, Sumitomo Chemical Company, Limited - Managing Executive Officer [32]

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Thank you very much for participating in the conference call. As I have explained right now, we are in a very difficult environment. And under such a situation, we are trying to do what we can. It is quite difficult to make projections about the future where we are not able to compare that for today. So we are -- apologize for that. On the 28th of May, we plan to make presentations about it. So we'd like to continue to ask for your future support. Thank you very much.

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Operator [33]

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Thank you very much. Today's conference call will be delivered as archive as a web page of Sumitomo Chemicals for 3 months from today. Please access them whenever you need.

This concludes our conference call. Thank you very much for your participation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]