29-Nov-2004 - Hitachi Chemicals Co. Ltd.

Hitachi Chemicals Transfers Thermoplastic Molding Material Business to UMG

Hitachi Chemical Co., Ltd. concluded a basic agreement with UMG ABS, Ltd. on the transfer of Hitachi Chemical's thermoplastic molding material business to UMG.

Hitachi Chemical has marketed acrylonitrile acrylate styrene (AAS) resins since 1970. AAS resin is a thermoplastic molding material that is extremely weather resistant and has a superior post-molding outer appearance. Because of these features, AAS resins contribute to reducing coating cost and are also easily recyclable. The resins are mainly used as outdoor material for automobile parts and construction materials.

In recent years, however, Hitachi Chemical's profits began dropping due to the persistent high cost of materials, including styrene monomers and acrylonitrile, as well as the declining sales price of AAS resins.

Although Hitachi Chemical attempted to deal with this situation by reducing fixed cost and streamlining the business by integrating product lines and expanding sales through overseas business development, the company ultimately determined that it would be too difficult to improve profitability in the current severe business environment characterized by the increasing cost of materials and the impossibility of passing on the higher cost of its products to our customers. Hitachi Chemical has therefore decided to transfer its thermoplastic molding material business to UMG, which is a leading manufacturer of acrylonitrile butadiene styrene (ABS) resins, and has concluded a basic agreement on the transfer to UMG. AAS resins are often used in materials that need to be certified by customers, and in order to fulfill its responsibility as an AAS resins supplier, Hitachi Chemical will manufacture the resins for UMG over a certain period of time.

To bring about the business transfer in April 2005, Hitachi Chemical will follow all necessary procedures and negotiate with UMG on the details.

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