DIC Reports Consolidated Financial Results 1H 2022

DIC Corporation reported its consolidated financial results for the six months ended June 30, 2022. In the six months ended June 30, 2022, DIC Corporation’s consolidated net sales climbed 33.1%, to ¥521.4 billion ($3.86 million).

This sharp increase reflected ongoing efforts to adjust sales prices for a wide range of products across all segments and was despite the impact of persistently high energy, logistics and raw materials costs amid increasing global economic uncertainty caused by, among others, rising resource prices, a consequence of the situation in Ukraine, and supply chain disruptions, ascribed to a resurgence of COVID-19 in the People’s Republic of China (PRC) and elsewhere.

In the Color & Display segment, the margin of improvement in net sales was boosted by the addition of sales from the C&E pigments business, which was not included in the scope of consolidation in the corresponding period of the previous fiscal year.

Amid an unclear global economic outlook and prolonged supply chain turmoil, shipments for certain products and regions showed signs of stagnation, hindered by falling automobile production and the impact of pandemic lockdowns in the PRC.

Operating income, at ¥24 billion, was down 12.2%. With shipments for a number of products and regions languishing, attempts were made to modify sales prices for a wide range of products to pass on increases in energy, logistics and raw materials costs. However, such moves fell short.

Against this backdrop, the C&E pigments business shifted into the black as shipment delays—caused by the fact that it took some time to build a logistics configuration following the business’ integration—were resolved, underpinning firm sales.
Ordinary income declined 7.4%, to ¥26.2 billion. The margin of decline was narrower than that for operating income thanks to an increase in foreign exchange gains, among others.

Packaging & Graphic segment sales advanced 22.0%, to ¥257.4 billion ($1.9 billion). In materials for food packaging, sales of packaging inks increased, supported by continued efforts to adjust sales prices on a global scale. Nonetheless, shipments in Asia were down from the corresponding period of the previous fiscal year, as those in the PRC remained listless despite the repeal of lockdowns.

In publication inks, which center on inks for commercial printing and news inks, a limited recovery in Japan for use in pamphlets and event-related printed materials following the lifting of targeted measures to prevent the spread of COVID-19 and flagging demand in the Americas and Europe due to paper shortages caused shipments in these regions to slump, but sales rose thanks to assertive sales price adjustments worldwide.

Sales of jet inks for digital printing increased, buttressed by persistently brisk sales for industrial applications, including outdoor signage (billboards and posters) and banners, and for commercial printing. The inclusion of the sales of Italian adhesives manufacturer Sapici S.p.A., the acquisition of which was completed in January 2022, also bolstered segment sales.

Segment operating income fell 26.9%, to ¥7.7 billion. Despite seeking to counter increases in energy, logistics and raw materials costs worldwide by modifying sales prices, such attempts struggled to keep pace, as a result of which operating income declined in all regions. Against this backdrop, the successful completion of the post-acquisition integration of Sapici’s operations and moves to boost sales of adhesives led to steady growth in the Italian company’s profits.

Color & Display segment sales soared 126.2%, to ¥133.9 billion ($1 billion). Owing to the addition of sales from the C&E pigments business, sales of pigments for coatings, plastics and cosmetics increased sharply.

Shipments of pigments for cosmetics rose as a recovery in demand came into focus, underpinned by a shift away from wearing face masks overseas. In display materials, sales of pigments for color filters decreased, as production adjustments by display manufacturers depressed shipments.

In pigments for specialty applications, which center on effect pigments, sales of pigments for agricultural uses remained firm, although sales of those for building materials, used in autoclaved aerated concrete, declined in Europe, the principal market for these products.

Segment operating income, at ¥7.8 billion, was up 11%. Although shipments of certain high-value-added products, notably pigments for color filters and specialty applications, flagged, decisive steps were taken to modify sales prices, including the assessment of surcharges. The segment operating income reflected the fact that the C&E pigments business reported a profit, as the resolution of shipment delays supported firm sales.