Mitsubishi Chemical Aims for 4% Return on Assets

Strategic Insights -

Mitsubishi Chemical, Japan's largest integrated chemicals maker, is striving to achieve a return on assets of 4% by 2002-03 on a consolidated basis. This ambitious goal is part of the company's new three-year business plan, which is expected to be drawn up by the end of this year. The plan aims to turn around the company's financial performance, which suffered a group net loss of ¥27.5bn in the year ended in March, primarily due to restructuring costs.

Key Takeaways:

  • Mitsubishi Chemical aims to achieve a return on assets of 4% by 2002-03 on a consolidated basis, with the goal of catching up with the financial strength of the world's leading chemical producers.
  • The company expects the pharmaceuticals business to contribute significantly to its income, with new drugs with substantial revenue potential expected to hit the market soon.
  • A new HIV drug is expected to be marketed in the US next year, with global sales forecast to reach about ¥30bn.
  • A new diabetes drug, likely to hit the US market in 2003 or 2004, has the potential to generate ¥100bn in revenues.
  • Mitsubishi Chemical hopes to set up a task force with Asahi Chemical Industry, Japan Energy, and Nippon Mitsubishi Oil to consider the integration of their refinery plants in Okayama prefecture, western Japan.
  • The company's previous year's result was a group net loss of ¥27.5bn, primarily due to restructuring costs.
  • The company's new business plan is expected to be drawn up by the end of this year, with the goal of achieving a group net profit of ¥80bn by 2002-03.

Statistics:

  • ¥80bn: Target group net profit by 2002-03
  • ¥27.5bn: Group net loss in 1998-99
  • ¥30bn: Forecast global sales for Mitsubishi's new HIV drug
  • ¥100bn: Potential revenue for Mitsubishi's new diabetes drug
  • 2002-03: Target year for achieving 4% return on assets
  • 1999: Current year, with the company planning to draw up a new three-year business plan by the end of the year

Sources:

  • Financial Times Limited, 1999
  • Mitsubishi Chemical Corporation
  • Kanji Shono, President of Mitsubishi Chemical Corporation