Investment Bridge Announces Investment Opinion: Bridge Report on ZEON CORPORATION: Lower Profits despite Higher Sales in FY3/15, Growth in Both Sales and Profits Expected in FY3/16

Investment Bridge, one of Japan’s leading independent investor relations services companies, has released a "Bridge Report” on ZEON CORPORATION (TOKYO:4205) reviewing its earnings results for the fiscal year March 2015 and estimates for the fiscal year March 2016.

Report Highlights

• Despite the increase in sales of 3.7% year-on-year to JPY307.5 billion, operating income declined by 5.5% to JPY28.2 billion during fiscal year March 2015. Higher sales volumes and fluctuation in foreign exchange rates positively influenced its business, but weakness in the overseas elastomer materials market and price reduction pressures in optical films were negative factors.
• Zeon’s fiscal year March 2016 earnings estimates call for sales and operating income to rise by 4.1% and 13.3% year-on-year to JPY320.0 and JPY32.0 billion respectively. Capacity utilization rates at the Singapore plant are expected to rise in the elastomer materials business, and the specialty materials business is expected to benefit from investments to increase optical film capacity.
• Dividend payment is expected to rise by JPY1 to JPY15.00 per share, and dividend payout ratio is expected to be 14.8%.
• The Bridge Report calls attention to the start of mass production of carbon nanotubes from the second half of the coming term as an important development for the medium-to long-term growth of Zeon.

ZEON CORPORATION is a petrochemical manufacturer that boasts numerous products with large shares of global markets, including synthetic rubber used in automobile parts and tires, and synthetic latex used in medical gloves. The Company’s strengths include its innovative technology development function, research and development structure, and high earnings generation capability. The ZEON Group is comprised of the parent company, 57 subsidiaries and 10 affiliated companies. The Company operates manufacturing facilities in various locations in Japan and in overseas markets.

During fiscal year March 2015, sales rose by 3.7% year-on-year to JPY307.5 billion on the back of increases in volume of optical film and the positive influence of foreign exchange rate fluctuations, and despite weakness in overseas market conditions for the elastomer materials business. Operating income declined by 5.5% year-on-year to JPY28.2 billion due in part to the negative impact of downward pressures on pricing.

While cash and equivalents declined due in part to a decline in current assets of JPY1.7 billion from the end of the previous term, total assets rose by JPY28.6 billion from the previous term end to JPY399.5 billion at the end of the current term. Net assets rose by JPY34.2 billion over the same period. As a result of these changes, equity ratio rose by 5.0% points to 52.9%.

During fiscal year March 2016, Zeon earnings estimates call for sales to rise by 4.1% year-on-year to JPY320.0 billion on the back of expectations of increased capacity utilization rates at the Singapore Plant for mainly elastomer materials.. Operating income is expected to rise by 13.3% year-on-year to JPY32.0 billion and operating margin to recover to 10%, due to increase in capacity utilization rates, JPY depreciation and decline in raw materials pricing.

The Bridge Report also calls for close attention to be paid to the start of mass production of carbon nanotubes from the second half of the coming term as an important development for the medium-to long-term growth of Zeon.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/4205/20150713.html

About Bridge Report:
Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies. Investment Bridge was founded in August 2000 and is one of Japan’s leading independent IR support services companies. Investment Bridge specializes in providing various solutions to Japan’s publicly traded companies with the goal of expanding our clients’ shareholder base and liquidity through increased recognition and understanding of companies.

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