UBE Reform: 35 Billion Loss for New Beginnings

UBE Corporation has recently announced its detailed plans for structural reforms aimed at driving growth in its specialty chemicals business while addressing global environmental challenges. The company is expanding its specialty chemicals segment through investment while downsizing and restructuring its core business to adapt to the current market landscape.

To achieve sustainable growth, UBE Corporation is steadily implementing its specialty chemicals expansion strategy. This includes investments in production facilities for polyimides, separation membranes, ceramics (silicon nitride), and C1 chemicals. Recently, the company has also agreed to acquire the polyurethane systems business from Germany's Lanxess.

However, the challenges are significant. Due to oversupply from Chinese companies, especially in the Asian market, the current business environment is proving to be more difficult than expected. Consequently, UBE Corporation has decided to accelerate structural reforms, including downsizing through facility closures to ensure the company’s long-term health.

At the Ube Chemical Plant in Japan, production of ammonia and related products will cease by the end of FY2027, more than two years ahead of the original plan. Additionally, the production of caprolactam will be halted by the end of FY2026, further reducing capacity. Following these changes, the Ube Chemical Plant will become a hub for the production of specialty chemicals such as polyimides.

In Thailand, UBE Corporation will stop producing cyclohexanone, caprolactam, and ammonium sulfate by the end of FY2026, and will close one of its nylon polymer production lines. Nevertheless, its operations in Thailand will continue to produce composite materials and high-performance coatings.

In Spain, UBE Europe will continue to produce caprolactam and nylon polymers while planning to expand its production of eco-friendly products. The company holds a significant position in the nylon polymer market and is expected to cease the production of certain products promptly through agreements with clients.

With the reduction of production capacities for products like ammonia, caprolactam, and nylon polymers, UBE Corporation aims to mitigate the impact of market fluctuations on its performance. The company anticipates that by March 2025, impairment losses and related expenses will reach approximately 35 billion yen, with about 10 billion yen attributed to the Ube plant and 25 billion yen to the Thai production base.

By accelerating the closure of facilities with high greenhouse gas emissions, UBE Corporation expects to achieve its greenhouse gas reduction targets ahead of 2030, further promoting the company's sustainable development. Overall, this series of reforms offers hope for financial stability and profit improvement for UBE Corporation.