at Kosaku Narioka
Consider the company’s sharp gains in early trading Wednesday after the Japanese chemical company announced it would exit its high-cost cement business.
The stock recently rose 8.4% to 3,490 yen after rising 8.9% earlier.
Denka said after market close on Tuesday that it plans to sell its cement sales business to Taiheiyo Cement Corp. Ends March 2023 and exits its cement production business around the first half of 2025.
Denka’s exit from the cement business could be positive for its shares, Nomura analyst Takaomi Kono said in a research note. gentlemen. Kono said Denka’s cement market share in Japan is only around 3 percent, where demand has been trending downward.
Nomura expects Denka’s cement business to incur an operating loss of 5 billion yen ($33.8 million) in the fiscal year ending March 2023 due to a sharp rise in the price of coal used in cement production.
Denka cut its fiscal year earnings forecast, forecasting a 29% drop in net profit to 18.5 billion yen, compared with a previously expected net profit of 29 billion yen, as it expected to incur a special loss of 19 billion yen or exit the cement business as a result .
The Topix of chemical companies was up 1.6% recently, while the Nikkei average rose 1.1%.
Write to Kosaku Narioka at firstname.lastname@example.org