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The AGC Group recently announced its consolidated financial results for the nine months ended September 30, 2009. During the third quarter of fiscal year 2009, the global economic environment around the AGC Group continued to be severe, affected by the financial crisis since the previous year. In Japan, although exports and production had begun to recover, the overall economy still remained sluggish. In Asia, the Chinese economy is on a recovery phase mainly led by restoring domestic demand, while the economy in other countries and regions is also picking up. Meanwhile, Europe and the U.S. continued to face difficult economic situations, despite the effects of various government programs.
Giving an overview of the markets in which the AGC Group operates, although demand continued to be weak in the housing market, the demand in the automotive market showed signs of recovery. The demand for displays remained robust.
Under such a business environment, the AGC Group posted net sales of 303.7 billion yen (approximately $3.4 billion), a 21.1% decrease compared to the corresponding period of the previous year; operating income of 31.8 billion yen (~ $354.2 million), a 23.9% decrease year-on-year; ordinary income of 31.2 billion yen (~ $347.6 million), a 0.4% increase year-on-year; and net income of 17.4 billion yen (~ $193.8 million), a 17.7% increase year-on-year.
Sales in the flat glass business decreased year-on-year. Demand continued to be weak in Japan, North America and Europe, and the AGC Group has been trying to restore prices in Europe since the second quarter. In Asia, demand improvement was seen in China and some other countries. Shipments of glass for solar power systems had recovered in the second quarter and grew in the third quarter, affected by certain countries’ governmental policy.
In the automotive glass business, sales decreased due to a decline in automotive production on a global basis. Meanwhile, there were signs of recovery in the third quarter that were brought about by some countries’ governmental support for automobile purchases. As a result, net sales from the Glass operations for the third quarter were 135.1 billion yen (~ $1.5 billion), a 30.5% decrease year-on-year, and the operating loss was 6.7 billion yen (~ $74.6 million).
Sales in the Display business increased year-on-year. The AGC Group’s shipments rapidly recovered from the latter half of the first quarter and continued at a good pace following a rebound of demand for glass substrates for flat panel displays (FPDs).
In the Electronics Materials business, sales decreased year-on-year, but are recovering slowly. As a result, net sales from the Electronics and Display operations for the third quarter were 102.4 billion yen (~ $1.1 billion), which was a 1.8% increase year-on-year, and operating income was 39.1 billion yen (~ $435.6 million), a 19.2% year-on-year increase.
In the Ceramics business, a decline in demand was seen both in the glass engineering sector and in the environmental energy sector. As a result, net sales from the Other operations for the third quarter of 2009 were 16.8 billion yen (~ $187.1 million), a decrease of 31.7% compared to the previous year’s quarter, while operating income was 0.6 billion yen (~ $6.7 million), a decrease of 64.8%.
In 2009, the global economy still remains uncertain and is not expected to make a full-fledged recovery, although there are some signs of recovery. Under these circumstances, in the flat glass business of the Glass operations, the AGC Group forecasts its shipments will continue to be low in Japan, North America and Europe, and the group will continuously try to restore prices in Europe. In the automotive glass business, shipments are also estimated to remain sluggish, but will likely improve gradually. Concerning glass for solar power systems, shipments are expected to continue increasing. In the Electronics and Display operations, the AGC Group foresees that shipments will remain steady in the fourth quarter.
The AGC Group will continue to improve performance in each operation in the fourth quarter, and the group therefore expects to improve productivity, control capacity utilization corresponding to demand, reduce inventories, and take other measures. Further, the group has decided to cease the automotive glass operations at the Kitakyushu Plant by the end of December 2009.
Based on the outlook for the business conditions described above, the AGC Group expects sales for the 2009 fiscal year of 1,150.0 billion yen (~ $12.8 billion); operating income of 72.0 billion yen (~ $802.1 million); ordinary income of 70.0 billion yen (~ $779.8 million); and a net loss of 5.0 billion yen (~ $55.7 million).
For additional details, visit www.agc.co.jp.