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The global economic environment around the company and its consolidated subsidiaries continued to be severe, notably in the first half of the year, due to the global economic downturn. In Japan, although exports and production showed signs of picking up, the economic conditions in the region remained harsh throughout the year. While the economy remained sluggish in Asia in the first half, business conditions in China headed toward recovery with the expansion of domestic demand from the middle of the year, and economic activities in other countries picked up due to positive factors including the increase in exports for China. In Europe and the U.S., economic conditions remained tough, though the economic stimulus measures proved effective.
Giving an overview of the markets in which the AGC Group operates, although the demand had continued to be weak in the housing and automotive markets, the automotive market started to show signs of recovery from the middle of the year due partly to the effect of demand stimulus measures. In the meantime, the display market was strong after the second quarter.
Under such a business environment, AGC Group took all-out measures to streamline its business in all areas, ranging from management to operations. Furthermore, to respond swiftly to the rapidly changing business climate, AGC Group made every effort to improve profitability and asset efficiency by establishing a production system to meet the demand trend, improving productivity, leveraging spare facilities and personnel, and managing cash thoroughly. However, while the Group’s business conditions turned to a recovering trend in the second half due to these efforts, net sales, operating income, ordinary income, and net income were lower than in the previous fiscal year under the influence of decreasing demand and a sluggish market throughout the year.
In the Glass operations segment, sales in the flat glass business decreased year-on-year because shipments declined in Japan, North America and Europe while the demand recovered in Asia (notably in China) after the second quarter. In Europe, while prices dropped sharply with a slump in demand, the Group adjusted the capacity utilization rate of its facilities to meet the weak demand, and has been trying to restore prices since the second quarter of the year. In the meantime, although the growth in shipments of glass for solar power systems temporarily slowed down, it got back on a recovery track after the middle of the year.
In the automotive glass business, shipments began to recover after the middle of the year due to the effect of demand stimulus measures implemented in various countries. However, shipments for the full fiscal year remained at low levels, and sales in this business decreased year-on-year. Further, the Group ceased the automotive glass operations at the Kitakyushu Plant in December 2009.
As a result, net sales from the Glass operations for the year were 525.0 billion yen (~ $5.9 billion), which was a 29.2% decrease year-on-year, and the operating loss was 35.0 billion yen (~ $391.1 million), which was 53.7 billion yen (~ $600.0 million) lower than the previous year.
In the Electronics and Display operations segment, sales in the display business increased year-on-year on the strength of the rapid increase in the AGC Group’s shipments from the latter half of the first quarter, following a rebound in demand for glass substrates for flat panel displays (FPDs). In the electronics materials business, although shipments have been recovering gradually since the second half of the year, shipments for the full year remained at low levels and sales decreased year-on-year.
As a result, net sales from the Electronics and Display operations for the fiscal year were 369.3 billion yen (~ $4.1 billion), which was a 0.9% decrease year-on-year, and operating income was 126.9 billion yen (~ $1.4 billion), which was a 0.3% increase year-on-year.
Part of the Other operations segment, the ceramics business’ sales decreased year-on-year due to the decline in demand in both in the glass engineering market and in the environmental energy market. As a result, net sales from the Other operations for the fiscal year was 68.9 billion yen (~ $770.0 million), which was a 28.7% decrease year-on-year, and operating income was 2.0 billion yen (~ $22.3 million), which was a 59.4% decrease year-on-year.
Additional details are available at www.agc.co.jp/english.