The shares of Sumitomo Chemical, a leading Japanese chemical company, have experienced a significant decline following the company’s projection of a deeper fiscal-year net loss. This downturn is primarily attributed to weaker drug sales in North America and a worsening outlook for its petrochemical joint venture with Saudi Aramco.
Shares Plunged by 8.2%
As of now, the shares are trading 8.2% lower at 305.3 yen, having experienced an initial drop of as much as 11% on Monday morning.
Net Loss Projection Revised
Sumitomo Chemical announced on Friday, after the market closed, that it had adjusted its net loss projection for the fiscal year ending in March. The company now expects a net loss of 245.00 billion yen ($1.65 billion), a significant increase from its previous forecast of a net loss of Y95.00 billion. This also stands in stark contrast to the net profit of Y6.99 billion achieved in the previous fiscal year.
Challenges in North American Drug Sales
One of the key factors contributing to the projected net loss is weaker sales of various drugs in North America. Of particular concern is the decline in sales of prostate cancer medicine Orgovyx.
Deteriorating Outlook for Petrochemical Joint Venture
The earnings outlook for Sumitomo Chemical’s joint venture with Saudi Arabian Oil, known as Rabigh Refining & Petrochemical, is also expected to worsen. This can be attributed to a decrease in demand and a decline in profit margins resulting from the ongoing global economic downturn.
Sumitomo Chemical reported a net loss of Y109.78 billion for the nine months that ended on December 31. This loss was accompanied by a 20% drop in revenue, which stood at Y1.807 trillion.
In conclusion, Sumitomo Chemical is facing several challenges as weaker drug sales in North America and a deteriorating outlook for its petrochemical joint venture have negatively impacted its financial performance. These factors have led to a revision in the company’s net loss projection for the current fiscal year.