Sumitomo Chemical to Cease Production of SSBR and EPDM
- 25-May-2023 5:40 PM
- Journalist: Patricia Jose Perez
TOKYO: Sumitomo Chemical is targeting to double its core operating income to approximately $1.5 billion in the next two years and has already taken measures towards achieving this goal. One of the steps taken was discontinuing the production of styrene solution butadiene rubber at its Singapore plant.
The plant, which has been operational since 2014, can produce approximately 40,000 metric tons of synthetic rubber materials per year. As part of its strategic steps, the company has decided to withdraw from the production of Caprolactam, dyestuffs, and chemical fertilizers segments. At present, the company is actively reviewing its display materials operations to optimize efficiency.
As part of its cost-reduction measures, the company plans to purchase low-priced raw materials and improve yields to lower manufacturing costs. The company also aims to enhance work efficiency through digitalization while reducing general expenses. During a financial presentation on May 15th, the group announced that it is almost done with its exit from the EPDM segment.
Sumitomo Rubber Industries Ltd. aims to attain a core operating income of approximately $1.5 billion within two years. The company, based in Tokyo, disclosed that its core operating income for the fiscal year 2022, which ended on March 31, was $668.2 million. However, Sumitomo Chemical projects that the figure will decline by more than half to approximately $290.5 million for the following fiscal year. Exiting from the markets is expected to yield roughly $181.5 million for the company by the end of fiscal 2024, which concludes in March 2025.
Sumitomo Chemical has announced its decision to halt the production of elastomer materials in Chiba, Japan by March 2023. The move comes as part of the company's efforts to enhance the value proposition of its product offerings and minimize manufacturing expenses, thus bolstering its overall competitiveness in the market.
Due to the advanced age of the facility, it has become increasingly challenging to maintain a balance between production efficiency and profitability while also dealing with rising maintenance and repair costs. The manufacturing plant located in Chiba specializes in producing EPDM materials and currently has an annual capacity of 40,000 metric tons per year.
Sumitomo Chemical currently holds a 50% stake in the Petro Rabigh joint venture with Saudi Aramco, which produces 75,000 metric tons of EPDM annually in Saudi Arabia. It remains uncertain whether Sumitomo Chemical intends to withdraw from its partnership with Petro Rabigh.