Zeon confirms plans to withdraw from ‘low-profitability’ rubber products

Tokyo – Zeon Corp. has confirmed plans to exit what it describes as “low-profitability” products and shift focus to non-rubber investments, as part of a broader effort to improve profitability.

The Japanese group is targeting a 63% increase in earnings (EBITDA) to Yen 80 billion (€475 million) by fiscal year 2028, up from Yen 48.8 billion reported in fiscal 2024, ended 31 March.

Zeon also aims to increase sales to Yen 450 billion by 2028, up 7% compared to 2024, and improve operating income by 43% to Yen 42 billion.

Return on invested capital (ROIC) is projected to reach 7.0%, up from 6.2% in 2024.

In its medium-term strategy update 11 June, Zeon said it will continue with portfolio restructuring and expand capacity for high-profitability products, including cyclo olefin polymers (COP).

As part of the move, the group will “gradually discontinue” low-profitability products at its Tokuyama elastomer plant and establish a 12 kilotonne-per-annum (ktpa) COP unit at the site as a new 'growth driver'.

Furthermore, the group will step up its focus on anode binder production for batteries, with plans to expand domestic capacity.

It will also reconsider capital investment in North America, having temporarily frozen the project earlier this year. (ERJ report)

By 2026, Zeon said it plans to discontinue the production of ESBR-1 (emulsion-styrene butadiene rubber) and NBR (nitrile butadiene rubber) latex.

From 2028 onward, the group will also phase out the production of butadiene rubber at the Tokuyama site.

The cuts will represent 60% of elastomer production capacity at the Japanese facility, according to Zeon.

The group will, however, continue producing ESBR-2, nitrile butadiene rubber and solution styrene butadiene rubber, which it categorises as “high profitability products”.

Following the portfolio changes, Zeon expects its elastomers business to generate Yen 214 billion in sales, accounting for nearly half of total revenue.

The division is also projected to deliver Yen 14.7 billion in operating income — over 30% of the group's total expected Yen 42 billion operating income.