Denka elastomers business returns to profit on DPE suspension

Tokyo — Denka Co. Ltd.’s Elastomers & Infrastructure Solutions business has returned to profitability in fiscal 2025 following the suspension of chloroprene rubber production at its US subsidiary Denka Performance Elastomer (DPE).

For the year ended 31 March, the division reported a 12.6% year-on-year decline in sales to Yen97.5 billion (€528 million), down Yen14.1 billion from the previous fiscal year, sad Denka 14 May.

Operating profit, however, improved by Yen8 billion to Yen68 million, compared with an operating loss of Yen7.9 billion in the year before.

The Japanese supplier said demand for chloroprene rubber “continued to remain sluggish,” but profitability improved because “high-cost manufacturing facilities at a US-based subsidiary remained suspended.”

According to Denka, the improvement was driven by an Yen8.8 billion positive impact from “DPE production suspension,” through which losses were eliminated.

Denka reported that CR volume and pricing contributed Yen1.6 billion and Yen2.2 billion to operating results respectively, while costs had a negative Yen4.6 billion impact.

Within chloroprene rubber, Denka said demand was “level year-on-year,” while shipments of products from the Omi plant, in Japan, increased “due to substitution for DPE products.”

Fourth quarter figures showed the elastomers business returning to profit in the second half of the fiscal year, with operating income reaching Yen1.1 billion in the third quarter and Yen2.4 billion yen in the fourth quarter.

On the shutdown of DPE, Denka said the company was “in the final stages of the removal and disposal of materials, including raw materials and intermediates.” 

DPE, it added, is also working to optimise its workforce, with employee numbers expected to decline from about 250 at the end of March 2025 to around 80 by the end of April 2026.

For FY2026, Denka expects the impact of its “fundamental measures” linked to DPE to improve operating income by Yen15 billion compared with FY2024 levels.