In Kosaku Narioka
Denka shares rose sharply in early trade on Wednesday after the Japanese chemical company announced it was exiting its cement business, which has been suffering from high production costs.
The shares were up 8.4% at 3,490 yen after earlier rising 8.9%.
Denka said after the market closed on Tuesday that it plans to sell its cement sales business to Taiheo Cement Corp by the end of March 2023 and exit the cement production business in the first half of 2025.
Nomura analyst Takaomi Kono said in a research note that Denka’s exit from the cement business could be positive for the stock price. According to Mr. Kono, Denka’s cement market share is only about 3% in Japan, due to declining demand.
Nomura expects Denka’s cement business to post an operating loss of Y5.0 billion ($33.8 million) in the fiscal year ending March 2023 due to higher coal prices for cement production.
Denka cut its revenue guidance for the fiscal year, with net profit down 29% to Y18.50 billion, compared to a previous net profit of Y29.00 billion, leaving it with an exceptional loss of Y19.0 billion. Leaving the cement business.
The Topix sub-index of chemical companies recently rose 1.6%, while the Nikkei stock average rose 1.1%.
Write to Kosaku Narioka at firstname.lastname@example.org