The drastic downturn in the Japanese economy has affected the financial results of Tokyo-based company Showa Denko, but positivity remains strong.

Showa Denko K.K. (SDK), involved in the production and supply of specialty gases and high grade ammonia gas, has released details of its business results for 2008.

Consolidated net sales for the year decreased 1.9%, to JPY 1,003,876m, and operating income fell 65.1%, to JPY 26,792m.

According to Showa Denko, the drop in operating income was mainly due to the fall in shipments of petrochemicals and the influence of the sharp fluctuations in naphtha costs; the effect of higher yen and increased depreciation expenses in the Electronics segment; and low demand for aluminum from the construction and automobile industries.

Ordinary income was down 83.7%, to JPY 9,793m, due mainly to the fall in operating income, and net income decreased 92.6%, to JPY 2,451m.

The global financial crisis resulted in sharp appreciation of the yen and steep declines in crude oil prices and stock markets; as a result, the Japanese economy was deeply affected in the second half of 2008, with drastic falls in production and capital investment by corporations.

Under the circumstances, the Showa Denko Group implemented its consolidated business plan, the Passion Project, with a view to laying the groundwork for long-term sustainable growth.
The Group took various steps to expand growth businesses, while continuing its structural reform and cost reduction efforts.

Nevertheless, the business environment for the chemical and nonferrous metals industries was very difficult, reflecting volatile naphtha and aluminum metal prices that soared in the first half of the year and sharply declined in the second half.

The situation in the electronic parts/materials industry was also very difficult due to substantial inventory adjustments by customer industries in the second half of the year.

In his New Year message, President and CEO for Showa Denko, Kyohei Takahashi said, “The year 2009 marks the 70th anniversary of Showa Denko; we should always remember the founder Mr Nobuteru Mori's motto of “perseverance”, based on this motto, we must overcome all difficulties and speedily carry out various measures to ensure the Group's future growth.”