Taiyo Nippon Sanso Corporation hasn’t escaped the economic crisis unscathed, but strategies put in place to ensure it gets the most out of a tough business environment have been effective.
Business conditions in 2008 were tough for TNSC; the global financial crisis caused major downturns in the Japanese economy, prices of raw materials and fuels rocketed, and there was a rapid appreciation of the yen against major currencies.
Among the principle industries of the TNSC Group, the steel and electronics industries were hit by weak demand, resulting in drastic production cutbacks.
The cutbacks resulted in a sharp drop-off in demand for gases; the decline in demand from large-lot users of oxygen, such as steel and chemicals manufacturers, meant demand for the gas dwindled, shipments and sales of argon all fell from the previous year’s level, owing to steep falls in demand for stainless steel smelting, welding, and the manufacture of silicon crystals.
Nitrogen sales remained stable, thanks to a firm undertone in demand from steelmakers, chemical companies, and electronics manufacturers. Demand for carbon dioxide from ship builders also remained stable, but demand from automotive firms and construction machinery makers declined, meaning sales stayed roughly at the same level as the previous term.
Amid the decline, the group commenced a new medium-term business plan to combat the poor business conditions, and took active measures to develop its business operations in regions of the world where it saw good growth prospects.
North America and East/Southeast Asia, particularly China, were the principle regions the group focused on, due to the forecast strong growth in the product fields of photovoltaic cells and light-emitting diodes.
In Japan, the group focused on achieving more thoroughly integrated and efficient Groupwide management, as well as on cost-cutting efforts.
As a result of the measures taken, demand in the first half of the year remained relatively stable. However, the group were not able to prevent a sharp drop in demand in the second half, as its principle users and a wide range of other customer enterprises suffered at the hands of the crisis.
As a result, the group recorded a year-on-year decline of 2.4% in sales on a consolidated basis, to ¥495,746m.
On a non-consolidated basis, sales were down by 2.0% at ¥267,047m, recurring income fell 32.8% to ¥14,672m, and net income posted a sharp 39.8% decline, to ¥8,274m.
The group expects the global downturn to worsen on a global scale for some time yet, and said that for the time being, it will continue taking every measure it can to reduce total costs and secure an adequate level of earnings.
For the full year 2009, the group expects net sales of ¥450m, a year on year decrease of 9.2%, operating income of ¥27.4m, a decrease of 6% compared to 2008, and net income of ¥13.3m, a 19.6% drop from the 2008 figure, based on an exchange rate of ¥95/$1.