Denka books €50m loss for US rubber plant shutdown

Tokyo – Denka Inc. has booked an extraordinary loss of Yen9.4 billion (€52 million) for the first half of its fiscal year, linked to the wind-down of its US-based Denka Performance Elastomer (DPE) business.

The loss includes write-downs on raw materials and intermediate goods as well as labour costs tied to materials removal and related shutdown work at the Louisiana chloroprene rubber plant, which DPE has “elected not to restart” for an indefinite period.

In a 10 Nov earnings presentation, Denka president Ikuo Ishida said the company was continuing work to bring the DPE facilities into a “safe” shutdown state.

“We are still in the process of extracting and disposing of hazardous materials including raw materials and intermediate products that remain in the manufacturing facilities,” he said.

Ishida noted that extraction and treatment of “several substances classified as the most hazardous” has been completed.

However, added the Japanese group's leader, “there are still some hazardous materials in the facilities that pose risk...”

Discussions with stakeholders are continuing “to minimise future costs,” although Denka, he said, cannot yet disclose details.

As for supply continuity, Ishida said the switch of chloroprene rubber shipments from DPE to the Omi plant in Japan “has been completed,” with most of the DPE inventory shipped during the first half.

Denka reported that demand for chloroprene rubber was level year-on-year, while shipments from Omi increased due to the switch of supply from the US facility.

For the first half to 30 Sept, Denka's elastomers & infrastructure solutions division, which includes chloroprene rubber, posted net sales of Yen49,879 million, down 11.6% year-on-year.

The division recorded an operating loss of Yen3,413 million compared with a loss of Yen3,033 million a year earlier.