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Sumitomo Chemical Co Ltd (JP:4005)
:4005

Sumitomo Chemical Co (4005) AI Stock Analysis

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Sumitomo Chemical Co

(OTC:4005)

Rating:62Neutral
Price Target:
¥362.00
▲(7.64%Upside)
Sumitomo Chemical's overall score reflects moderate financial performance with recent improvements in cash flow, reasonable valuation, and positive technical indicators. The earnings call indicates a recovery, but future revenue and expense challenges limit upside potential.

Sumitomo Chemical Co (4005) vs. iShares MSCI Japan ETF (EWJ)

Sumitomo Chemical Co Business Overview & Revenue Model

Company DescriptionSumitomo Chemical Company, Limited engages in the petrochemicals and plastics, energy and functional materials, IT-related chemicals, health and crop sciences, pharmaceuticals, and other businesses worldwide. Its Petrochemicals & Plastics segment offers synthetic resins, such as polyethylene, polypropylene, and polymethyl methacrylate resins; raw materials for synthetic fibers; and various industrial chemicals. The company's Energy & Functional Materials segment provides alumina and aluminum products used for energy products; polymer additives and rubber chemicals; synthetic rubber for tires, shoes, construction materials, and other applications; and engineering plastics and lithium-ion secondary battery materials for use in electronic components and next-generation vehicles. Its IT-Related Chemicals segment provides polarizing films, touch screen sensor panels, and color resists for LC and OLED displays; photoresists and high-purity chemicals for semiconductor manufacturing process; and compound semiconductor materials for antenna switches and other components of communication terminal equipment. The company's Health & Crop Sciences segment offers crop protection chemicals, fertilizers, feed additives, and household insecticides; active pharmaceutical ingredients and intermediates; and products to control infectious diseases. Its Pharmaceuticals segment provides prescription and diagnostic pharmaceuticals. The company's Others segment supplies electric power and steam; designs, constructs, and supervises chemical plants; provides transportation and warehousing services; and conducts physical property and environmental analysis. It has collaboration with Ginkgo Bioworks Announces Sumitomo Chemical to develop bio-based chemicals. Sumitomo Chemical Company, Limited was founded in 1913 and is headquartered in Tokyo, Japan.
How the Company Makes MoneySumitomo Chemical Co. generates revenue through its diversified portfolio of chemical products and solutions. The company operates in five major business segments: Petrochemicals & Plastics, Energy & Functional Materials, IT-related Chemicals, Health & Crop Sciences, and Pharmaceuticals. Each segment contributes to the company's earnings through the sale of products such as petrochemical raw materials, agricultural chemicals, electronic materials, and active pharmaceutical ingredients. Sumitomo Chemical also benefits from strategic partnerships and joint ventures, enhancing its market reach and technological capabilities. The company's focus on research and development, along with its commitment to innovation and sustainability, plays a crucial role in driving its profitability and competitive advantage in the global market.

Sumitomo Chemical Co Earnings Call Summary

Earnings Call Date:May 14, 2025
(Q4-2024)
|
% Change Since: -7.74%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted a significant financial recovery and improved performance across various segments in fiscal 2024. However, challenges such as anticipated revenue decreases in FY 2025, increased finance expenses, and the impact of exchange rates and U.S. tariffs suggest mixed prospects moving forward.
Q4-2024 Updates
Positive Updates
V-Shaped Financial Recovery
Core operating income for fiscal 2024 was JPY140.5 billion, marking a significant improvement of approximately JPY290.0 billion from the previous year, which saw a core operating loss of JPY149.0 billion.
Revenue Increase Across All Segments
Sales revenue totaled JPY2,606.3 billion, an increase of JPY159.4 billion year-on-year, with all segments reporting an increase in revenue.
Significant Improvement in Non-Recurring Items
Non-recurring items improved by JPY392.3 billion compared to the previous year, resulting in a total gain of JPY52.5 billion on non-recurring items.
Free Cash Flow Turnaround
Free cash flow was positive JPY318.3 billion, a JPY481.8 billion improvement from the negative JPY163.6 billion in the previous fiscal year.
Positive Outlook for Core Operating Income
The company expects core operating income for FY 2025 to be JPY150 billion, an increase of about JPY10 billion compared to FY 2024.
Negative Updates
Decrease in Operating Income Forecast
Operating income is expected to decrease by JPY88 billion year-on-year to JPY105 billion for FY 2025.
Revenue Decrease Anticipated in FY 2025
Sales revenue is expected to decrease by JPY266.3 billion year-on-year to JPY2.34 trillion in FY 2025, with a decrease expected in all segments.
Impact of Exchange Rates and Tariffs
A strong yen and U.S. tariff policy are expected to negatively impact core operating income, with a projected JPY10 billion impact included in the forecast.
Financial Expenses Increase
Finance expenses amounted to JPY134.9 billion, a deterioration of JPY161.0 billion from the previous fiscal year, mainly due to losses related to the waiver of loans to Petro Rabigh.
Company Guidance
In the conference call held on May 14, 2025, Keigo Sasaki of Sumitomo Chemical presented the financial results for fiscal year 2024, highlighting a significant V-shaped recovery. Core operating income for FY 2024 was JPY140.5 billion, a stark improvement from the JPY149.0 billion loss in FY 2023, marking an approximately JPY290.0 billion year-on-year increase. Sales revenue reached JPY2,606.3 billion, up JPY159.4 billion from the previous year. Non-recurring items yielded a gain of JPY52.5 billion, with a notable improvement of JPY392.3 billion compared to the previous fiscal year. Despite finance expenses increasing by JPY161.0 billion, primarily due to losses from Petro Rabigh, net income attributable to owners was JPY38.6 billion, a JPY350.4 billion improvement. The company expects FY 2025 core operating income to rise to JPY150 billion, with a focus on achieving JPY200 billion by FY 2027, amid challenges like an appreciating yen and periodic plant maintenance at Petro Rabigh. The call also addressed the anticipated decrease in sales revenue to JPY2.34 trillion for FY 2025, alongside an expected increase in net income to JPY40 billion.

Sumitomo Chemical Co Financial Statement Overview

Summary
Sumitomo Chemical faces challenges with declining revenue and profitability, evidenced by negative net income and margins. Despite improved cash flow in the TTM period, high leverage and reduced equity pose risks. The company needs to enhance operational efficiency to stabilize and improve its financial health.
Income Statement
40
Negative
The company's revenue shows a declining trend with a TTM revenue decrease of 12.1% from the previous year. Gross profit margin dropped to 26.4% in the TTM period from a high of 31.5% in 2022. The net profit margin is negative at -1.0% in TTM, indicating profitability challenges. EBIT and EBITDA margins are negative, reflecting operating difficulties.
Balance Sheet
55
Neutral
The debt-to-equity ratio has increased slightly over the years, standing at 1.52 in TTM, indicating moderate leverage. Stockholders' equity decreased in recent periods, reflected in a reduced equity ratio of 25.4% in TTM. The return on equity has turned negative, which poses a risk to investors.
Cash Flow
50
Neutral
The TTM period shows positive free cash flow of ¥81.4 billion, an improvement from the negative free cash flow in previous years. However, the operating cash flow to net income ratio is negative due to negative net income. This indicates a reliance on non-operating activities to generate cash.
Breakdown
TTMMar 2024Mar 2023Mar 2022Mar 2021Mar 2020
Income StatementTotal Revenue
2.54T2.45T2.90T2.77T2.29T2.23T
Gross Profit
624.35B499.69B820.93B873.86B771.20B706.76B
EBIT
-245.87B-387.43B-30.98B215.00B137.12B137.52B
EBITDA
2.74B-258.31B199.08B388.68B306.28B268.52B
Net Income Common Stockholders
-173.48B-311.84B6.99B162.13B46.04B30.93B
Balance SheetCash, Cash Equivalents and Short-Term Investments
217.45B217.45B337.08B389.42B373.73B189.59B
Total Assets
3.93T3.93T4.17T4.31T3.99T3.65T
Total Debt
1.67T1.56T1.46T1.35T1.35T1.30T
Net Debt
1.46T1.35T1.16T985.04B990.15B1.12T
Total Liabilities
2.77T2.77T2.68T2.61T2.51T2.26T
Stockholders Equity
965.75B965.75B1.17T1.22T1.02T922.34B
Cash FlowFree Cash Flow
81.45B-204.19B-31.96B64.25B253.65B-14.44B
Operating Cash Flow
224.39B-51.32B111.62B171.72B374.46B106.01B
Investing Cash Flow
22.29B-112.24B-19.41B-115.42B-177.39B-499.67B
Financing Cash Flow
-253.54B49.25B-178.50B-81.39B-39.97B373.54B

Sumitomo Chemical Co Technical Analysis

Technical Analysis Sentiment
Negative
Last Price336.30
Price Trends
50DMA
337.51
Negative
100DMA
339.46
Negative
200DMA
362.29
Negative
Market Momentum
MACD
-0.07
Positive
RSI
46.55
Neutral
STOCH
48.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4005, the sentiment is Negative. The current price of 336.3 is below the 20-day moving average (MA) of 343.39, below the 50-day MA of 337.51, and below the 200-day MA of 362.29, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 46.55 is Neutral, neither overbought nor oversold. The STOCH value of 48.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4005.

Sumitomo Chemical Co Peers Comparison

Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
62
Neutral
$555.02B14.263.96%2.16%6.51%
51
Neutral
$2.01B-1.11-21.16%3.67%2.69%-30.65%
$9.49B10.207.25%3.59%
$4.10B28.682.92%2.75%
$7.53B25.332.49%4.04%
DENSC
€3.52B13.3818.55%4.20%
$63.23B18.3211.81%2.17%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:4005
Sumitomo Chemical Co
336.30
24.72
7.93%
AHKSF
Asahi Kasei
6.55
0.33
5.31%
KURRF
Kuraray Co
12.48
1.19
10.54%
MTLHF
Mitsubishi Chemical Holdings
5.25
0.11
2.14%
DE:NSC
Nissan Chemical
25.20
-1.21
-4.58%
SHECF
Shin-Etsu Chemical Co
33.16
-4.33
-11.55%

Sumitomo Chemical Co Corporate Events

Sumitomo Chemical Announces Leadership Change
May 14, 2025

Sumitomo Chemical Co., Ltd. has announced a change in its leadership, appointing Keigo Sasaki as the new Representative Director. This decision, aimed at strengthening the company’s management structure, will be finalized at the upcoming General Meeting of Shareholders and subsequent Board of Directors meeting.

The most recent analyst rating on (JP:4005) stock is a Hold with a Yen370.00 price target. To see the full list of analyst forecasts on Sumitomo Chemical Co stock, see the JP:4005 Stock Forecast page.

Sumitomo Chemical Proposes Amendments to Enhance Governance
May 14, 2025

Sumitomo Chemical Co., Ltd. has announced a proposal for partial amendments to its Articles of Incorporation, which will be discussed at the upcoming General Meeting of Shareholders on June 20, 2025. The proposed changes include transitioning to a company with an Audit and Supervisory Committee, establishing new provisions for directors and decision-making processes, and allowing for more flexible resolutions by the Board of Directors. These amendments aim to enhance the company’s governance structure and operational flexibility.

The most recent analyst rating on (JP:4005) stock is a Hold with a Yen370.00 price target. To see the full list of analyst forecasts on Sumitomo Chemical Co stock, see the JP:4005 Stock Forecast page.

Sumitomo Chemical Reports Impairment and Forex Losses in Q4 FY2024
May 14, 2025

Sumitomo Chemical Co., Ltd. announced significant impairment losses and finance expenses for the fourth quarter of FY2024. The impairment losses, totaling ¥20,802 million, were primarily due to decreased profitability in their advanced medical solutions and essential materials sectors, as well as the devaluation of patent rights. Additionally, a foreign exchange loss of ¥26,342 million was recorded, impacting the company’s financial results due to fluctuations in foreign currency valuations.

The most recent analyst rating on (JP:4005) stock is a Hold with a Yen370.00 price target. To see the full list of analyst forecasts on Sumitomo Chemical Co stock, see the JP:4005 Stock Forecast page.

Sumitomo Chemical Reports Strong FY 2024 Financial Results
May 14, 2025

Sumitomo Chemical Co. reported its consolidated financial results for the fiscal year 2024, highlighting a significant improvement in financial performance compared to the previous year. The company achieved a sales revenue of ¥2,606,281 million, marking a 6.5% increase from FY 2023, and a notable recovery in net income attributable to owners of the parent, which stood at ¥38,591 million. This positive financial outcome reflects the company’s strategic efforts to enhance its operational efficiency and market positioning, benefiting stakeholders and reinforcing its industry standing.

The most recent analyst rating on (JP:4005) stock is a Hold with a Yen370.00 price target. To see the full list of analyst forecasts on Sumitomo Chemical Co stock, see the JP:4005 Stock Forecast page.

Sumitomo Chemical Reports Financial Variances in Subsidiaries
May 13, 2025

Sumitomo Chemical Co. reported variances in the non-consolidated financial results of its subsidiaries for fiscal years 2024 and 2023. Sumitomo Pharma Co., Ltd. saw significant improvements in net sales and income due to increased sales in North America and China, alongside reduced expenses. Taoka Chemical Co., Ltd. experienced growth in sales and income driven by higher sales of resin raw materials and cost-cutting measures. The overall impact on Sumitomo Chemical’s consolidated financial forecast is considered immaterial.

The most recent analyst rating on (JP:4005) stock is a Hold with a Yen370.00 price target. To see the full list of analyst forecasts on Sumitomo Chemical Co stock, see the JP:4005 Stock Forecast page.

Sumitomo Chemical Revises Financial Forecast Upwards for FY 2025
Apr 30, 2025

Sumitomo Chemical has revised its financial forecast for the fiscal year ending March 31, 2025, reflecting improved performance across several segments. The company anticipates higher core operating income and net income due to increased sales in North America for its prostate cancer therapeutic agent and higher shipments of display-related materials. These adjustments indicate a positive outlook for the company’s financial health and strategic positioning in its industry.

Sumitomo Chemical’s Strategic Move in Asian Market
Apr 1, 2025

Sumitomo Chemical Co., Ltd. announced a strategic move involving its subsidiary, Sumitomo Pharma Co., Ltd., which plans to establish a new wholly-owned subsidiary to manage its Asian business. This business will undergo a simplified absorption-type company split, with 60% of the new company’s shares to be transferred to Marubeni Global Pharma Inc. The agreements are expected to strengthen Sumitomo’s financial foundation and leverage Marubeni’s global network for further growth, although the immediate financial impact is deemed immaterial.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.