Showa Denko has announced an operating increase of nearly a quarter for the first six months of the year, but says the forecast is ‘severe’.

The company, which manufacturers and markets chemical products serving a wide range of fields ranging from heavy industry to the electronic and computer industries, says its ordinary income rose 44.5 per cent to JPY 23,446 million. Net income was up 22.7 per cent to JPY 20,866 million.

The company says in the chemical and nonferrous metals industries, costs of naphtha, aluminium ingot, and other raw materials remained at high levels, but demand for chemical products increased, helped by steady exports to China and other Asian countries. In the electronic parts/materials industry, the situation remained severe due to prolonged inventory adjustments that had started in the latter half of 2004.

Production of ethylene and propylene increased slightly over the same period last year helping the petrochemicals segment’s sales rose 21.6 per cent to JPY 142,611 million. Operating income rose by 49.6 per cent to JPY 11,408 million.

In the chemicals segment, overall sales of gases and chemicals increased slightly with production of liquefied ammonia increasing over last year. Sales of industrial gases fell as a result of the transfer last year of the commodity gas business to TG Showa KK. Sales of industrial chemicals, including acryolonitrile and ammonia were up due to steady shipment volumes and prices.

Sales of speciality chemicals declined overall by six per cent by JPY 36,250 million but operating income rose 55.4 per cent to JPY 2,577 million. In the electronics segment, sales increased 21.9 per cent fo JPY 62,667 million and operating income rose 12.8 per cent to JPY 7,768 million.

Inorganic Materials segment sales rose 11.8 per cent to JPY 29,843 million and operating income jumped 50 per cent to JPY 4,152 million and in the aluminium segment, sales increased by 4.6 per cent to JPY 119,580 million, but operating income dropped 28 per cent to JPY 4,554 million.

Showa Denko says production and exports are expected to remain steady owing to continued growth of overseas economies, including the US and China, but due to the influence of inventory adjustments by the electronic parts industry and expected continuation of high prices of oil and other raw materials, the business environment is forecast to remain severe.