Mitsubishi Chemical to exit petchem business; carve off in IPO or sale

In line with Japan’s move to make the country carbon neutral by 2050, Japanese chemical giant Mitsubishi Chemical says it will exit its carbon products and petrochemicals businesses by its 2023 fiscal year. The statement outlined a new vision for the company and said its plan was part of a bid to "spearhead the reorganisation of the domestic basic chemicals industry".

The petrochemical business had sales during the last fiscal year of US$3.8 billion, about 13% of Mitsubishi’s total. It makes olefins and polyolefins. The coal business, which makes coke, carbon black, and synthetic rubber, had sales of US$1 billion. Mitsubishi says the businesses face both limited growth potential and difficulties as Japan shifts toward carbon neutrality.

The carve-out plan is the first major initiative at Mitsubishi under CEO Jean-Marc Gilson, who joined the company in April after a career at firms including Dow Corning and Roquette, and is the Japanese firm’s first foreign boss.

According to Gilson, “In the medium term it is our goal to completely exit these businesses.” He said the rising cost of energy is set to drive consolidation in Japan. The units will likely first be merged with another Japanese firm, after which Mitsubishi Chemical will exit through a sale or IPO, he said.

Gilson said Mitsubishi Chemical will seek to fuel future growth from specialty materials for electronics, life sciences and health care, focusing on areas such as materials for electric-vehicle batteries and semiconductors.

At the same time, as part of its future management policy, Mitsubishi Chemical has allocated US$16.7 billion for group capital expenditures. By fiscal year 2025, about 750 billion yen will be used for "capital expenditure growth" and 570 billion yen will be used for R&D.

It also said that by fiscal year 2025, a series of strategic cost transformation measures will be adopted to save more than 100 billion yen in costs each year.

(PRA)

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