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Asahi Glass Releases First Quarter Financials (posted 5/22/09)

May 22, 2009
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AGC posted net sales of 236.3 billion yen, a decrease of 141.2 billion yen, or 37.4%, from the same period of the previous year.

During the first quarter of fiscal 2009 (January 1 through March 31, 2009), the global economic environment around Asahi Glass Co., Ltd. (AGC) and its consolidated subsidiaries was sluggish across all regions, affected by the financial crisis since previous year. In Japan, the economic conditions worsened as weaker demand in Japan and overseas decreased corporate profits. In China, Southeast Asia and other parts of Asia, economic growth slowed down because of a significant decline in exports. The economies remained sluggish in Western Europe, and the economies in Russia and Eastern Europe, which had previously continued to grow steadily, also slowed down as investments flowed out of these countries. The U.S. economy worsened as well.

Reviewing the markets in which the AGC Group operates, the housing and automotive markets are facing a global slump in demand. The market for glass substrates for flat panel displays (FPDs) is strong, though panel manufacturers have been making operational adjustments since the second half of the previous year. The overall market conditions for chemical products were weak.

Under such a business environment, the AGC Group posted net sales of 236.3 billion yen (approximately $2.5 billion), which represents a decrease of 141.2 billion yen (~ $1.5 billion), or 37.4%, from the corresponding period of the previous year; an operating loss of 6.0 billion yen (~ $63.4 million), which is 60.0 billion yen (~ $634.1 million) worse than the operating income reported the corresponding period of the previous year; an ordinary loss of 10.6 billion yen (~ $112.0 million), which is 48.2 billion yen (~ $509.4 million) worse than the ordinary income reported at the corresponding period of the previous year; and a net loss of 14.0 billion yen (~ $148.0 million), which is 42.1 billion yen (~ $444.9 million) worse than the net income reported the corresponding period of the previous year.

Sales in the flat glass business decreased from the corresponding period of the previous year. In Western Europe, demand continued to weaken as the economy slowed down, and prices also dropped from a year earlier. Affected by the slowing economy, fast-growing markets such as Russia also saw a decrease in demand that was accompanied by a significant decline in prices. In North America, to cope with weakened demand, the AGC Group decided to stop operations of some additional flat glass production facilities. Shipments decreased in Japan, affected by continued weak demand from the construction sector. Shipments of glass for solar cells remained at a slight increase due to a slowdown in the growth of the solar cell market. Prices of raw materials and fuels declined, but the effects were limited because of the weak demand.

In the automotive glass business, sales decreased from the corresponding period of the previous year because of a significant decline in auto production in all the regions, including North America, Europe, Japan and the rest of Asia. As a result, net sales from the Glass operations for the first quarter were 113.8 billion yen (~ $1.2 billion), down 80.7 billion yen (~ $852.9 million), or 41.5%, from the corresponding period of the previous year; and the operating loss was 15.8 billion yen (~ $167.9 million), which is 24.1 billion yen (~ $254.7 million) worse than the operating income reported the corresponding period of the previous year.

Sales in the display business decreased from the corresponding period of the previous year. The Group made major adjustments to the production of glass substrates for FPDs, affected by operational adjustments at panel manufacturers. However, shipments of these products recovered in the first quarter under review.

In the electronics materials business, overall shipments decreased because of weakening demand, resulting in a decline in sales compared to the corresponding period of the previous year. As a result, net sales from the Electronics and Display operations for the first quarter were 65.6 billion yen (~ $693.3 million), down 35.6 billion yen (~ $376.2 million), or 35.2%, from the corresponding period of the previous year); and operating income was 12.0 billion yen (~ $126.8 million), which is 30.4 billion yen (~ $321.3 million) worse than the corresponding period of the previous year.

In the ceramics business, both the glass engineering sector and the environmental energy sector saw a decline in demand. As a result, net sales from the Other operations for the first quarter were 15.7 billion yen (~ $165.9 million), down 3.9 billion yen (~ $41.2 million), or 19.9%, from the corresponding period of the previous year; and operating income was 0.6 billion yen (~ $63,412) which is 0.1 billion yen (~ $10,569) worse than the corresponding period of the previous year.

Visit www.agc.co.jp/english for additional details.

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