The fiscal years of DIC Corporation and its domestic subsidiaries, with the exception of one company, end on March 31, while the fiscal years of its overseas subsidiaries end on Dec. 31. Accordingly, information for the third quarter includes the accounts for the three months ended Dec. 31 of DIC and its domestic subsidiaries and the accounts for the three months ended Sept. 30 of its overseas subsidiaries.
In the three months ended Dec. 31, 2008, the prospect of a recession became increasingly evident as the impact of the financial crisis that originated in U.S. began spreading to the real economy around the world. For the DIC Group, the operating environment was characterized by an unprecedented collapse in demand in a nearly all customer industries. While the printing industry experienced a comparatively slight waning of demand on a global basis, other industries, including electrical and electronics equipment and automobiles, saw the pace of decline quicken with each passing month.
Under such harsh conditions, consolidated net sales for the quarter amounted to ¥240.0 billion, down 12.5 percent from the corresponding quarter of the previous fiscal year. This was largely attributable to a slump in sales in most segments, the appreciation of the yen and the deconsolidation of a subsidiary, among others.
Operating income dropped 72.7 percent, to ¥3.8 billion, owing largely to a decrease in shipments. Ordinary income, at ¥1.2 billion, was down 89.0 percent.
In the Graphic Arts Materials market, net sales for the third quarter were ¥152.1 billion, down 7.1 percent, while operating income was ¥5.0 billion, down 43.3 percent from 2007. Sales declined in the Americas and Europe by 8.5 percent in the third quarter, to ¥108.6 billion and an operating profit of ¥4.3 billion, a decline of 23.9 percent from 2007.
In North America and Europe, the impact of recessionary conditions extended to inks for packaging applications. Shrinking print runs for magazines and other publications dulled sales of inks for publishing.
In Central and South America, sales of inks for packaging applications were robust, although sales of inks for publishing waned. Sales of organic pigments were essentially level with the third quarter of the previous fiscal year as a steep increase in sales for cosmetics and digital printing applications offset sluggish sales for printing inks, coatings and plastics.
In Asia and Oceania, sales were slightly up by 0.3 percent to ¥19.5 billion, although operating profit declined 35.7 percent to ¥1.0 billion. In India, sales were brisk for all products, including offset and news inks. Sales of news inks were firm in the People’s Republic of China (PRC), although sales of offset and gravure inks to exporters struggled. In Oceania, sales of offset inks rose, while flagging demand caused sales of news inks to slow.
Efforts to revise sales prices in response to rising raw materials prices fell short in the PRC and Oceania. As a consequence, operating income declined.
In Japan, despite firm sales of gravure inks for flexible packaging applications, particularly beverage containers and food packaging, sales of offset inks were slack as sales for publishing and advertising leaflets, among others, remained stagnant. In news inks, sales of black and color inks trended downward, hampered by a steady decline in newspaper print runs and page counts. Sales of organic pigments languished, owing to the appreciation of the yen and sinking sales of products used in coatings and plastics, particularly for automotive applications.
Owing to such factors as a decrease in shipments and a delay in implementing sales price revisions in response to previous increases in raw material prices, the segment registered an operating loss for the quarter in Japan.