Denka Elastomers returns to growth following US plant closure

Tokyo — Denka Co. Ltd has returned to growth within its 'elastomers and infrastructure solutions' division, which includes the group’s chloroprene rubber operations.

Over its fiscal third quarter, to 31 Dec 2025, Denka posted an 18% decline in sales to Yen23 billion, due in part to lower volumes following a halt in CR production in the US.

Operating income at the Elastomers & Infrastructure unit, meanwhile, switched from a prior-year-period loss of Yen2.6 billion to a Yen1.1-billion profit, noted the Japanese group.

Over the first three quarters of Denka's fiscal year, the division narrowed loss to Yen2.3 billion, compared to negative Yen5.7 billion reported for the same period last year.

Elastomers & Infrastructure sales for the nine-month period dropped 14% year-on-year to Yen72.8 billion, continued Denka's quarterly report issued 6 Feb.

Denka linked the nine-month earnings improvement primarily to a Yen4.2 billion positive effect of the suspension of operations at its Denka Performance Elastomers (DPE) facility in LaPlace, Louisiana.

For the full-year, the group said it expects an Yen8.6 billion positive impact from the production halt in LaPlace.

"The fourth quarter improvement is expected to be significant, as the same quarter last year saw a further deterioration in profitability due to the impact of  periodic repairs to DPE and other factors," Denka explained.

Furthermore, the division's earnings were hit by a Yen2.7 billion negative impact of costs and volumes, partially offset by a Yen1.8 billion positive impact of pricing, Denka added. 

While CR demand for the quarter remained flat, Denka posted higher volumes at its facility in Omi, Japan, following the US suspension. 

Separately, Denka said it expected to record an extraordinary loss of Yen14 billion in the first nine months of the fiscal year, due to losses linked to the “liquidation” of the US business.

The extraordinary loss “mainly includes the writedowns of raw materials and intermediate goods, and labour costs associated with material removal and related expenses” at DPE, it said.

However, Denka said it expected the loss to be offset by “extraordinary gains from the sale of assets,” which it said have already been reflected in its forecast for the fiscal year.