Nippon Sheet Glass: sales slightly down for 1H fiscal 2006

Nippon Sheet Glass reported net sales for the 1H of fiscal 2006 of JPY 127,207 million, down 1.9% on the corresponding period of fiscal 2005. Operating income for the period, which comprises the 6 mon…

Nippon Sheet Glass reported net sales for the 1H of fiscal 2006 of JPY 127,207 million, down 1.9% on the corresponding period of fiscal 2005. Operating income for the period, which comprises the 6 months to September 2005, declined to JPY 3,870 million (down 27.2%), while income before extra-ordinary items increased to JPY 5,982 million (up 2.7%) and net income declined slightly to JPY 3,885 million (down 0.8%). The results have come during what the company describes as an expansionary phase in the Japanese economy represented by an improvement in business earnings and the increase of private capital investment. Economic factors affecting the results included more housing starts and greater automobile sales in Japan than in the previous-year 1H, continued strong growth in the market for communications and IT devices (although some markets showed falls in unit price and inventory adjustment), and high oil prices. Although net sales of Flat and Safety Glass and Building Material Division increased because of fairly steady demand, sales by the Information / Electronics Materials and Devices Division and the Glass Fiber Division fell because of adjustments to demand and supply. Operating income declined year-on-year due to soaring oil prices. Income before extra-ordinary items was a little higher than in the 1H 2005, thanks to the achievement of a financial account balance surplus and an increase in the equity method investment gain from Pilkington plc and the automotive glass manufacturing operation in the USA, amongst others. As for extraordinary income and losses, NSG posted extraordinary losses of JPY 3,052 million generated from losses on the disposal of property, plant and equipment. At the same time, the company posted extraordinary income of JPY2,655 million generated from the gain on sales of investments in securities and others. NSG says it will pay an interim dividend of JPY 3 per share. FLAT AND SAFETY GLASS AND BUILDING MATERIALS DIVISION Although net sales increased to JPY 85,663 million (up 9.3%), operating income declined to JPY 2,534 million (down 16.7%) from the 1H of 2004 because of the cost increase of raw materials including oil. Domestic sales were better for Architectural Glass and Materials than in the previous year due to solid demand in the construction market, especially for value added products such as glass for double glazing and security glass. Overseas sales exceeded those of the 1H year of fiscal 2005 due to the strong glass market in Asia and the start-up of an additional furnace in Malaysia. Automotive glass sales were much higher than those of the same period in fiscal 2005, because of higher automobile production in Japan and the contribution of the after-market sales company. INFORMATION / ELECTRONICS MATERIALS AND DEVICES DIVISION Net sales amounted to JPY 18,813 million (down 21.2%) with operating income of JPY 307 million (down 55.5%). For Optical Telecommunication and Optoelectronics Devices, although sales of optical lenses for multifunctional printers grew steadily, tough competition in light source components led to lower net sales. Net sales from optical telecommunications showed a gradual recovery. In Display Glass, continuing inventory adjustments in the passive matrix LCD market led to a decline in net sales. GLASS FIBER DIVISION Net sales amounted to JPY 15,891 million (down 16.9%) with operating income of JPY 1,827 million (down 24.7%). A good result was reported for the firm“s glass cord for timing belts. On the other hand, net sales of battery separators and air filters fell because of strong competition in the battery separator market and slower growth in the semiconductor production market. OTHERS Sales of shares in former subsidiary Isolite Co., Ltd. led to decline of net sales to JPY 6,839 million (down 17.3%) and an operating loss of JPY 818 million. OUTLOOK Looking to the prospects for the rest of fiscal 2006, NSG sees the Japanese economy remaining strong. The and automotive glass markets will remain sound, while the markets of the Information and Electronics business will fluctuate in the short term but continue growing in the longer term.