8 Annual Report 2008 For the creation of a profitable value chain Year-on-year growth in earnings, although revenue declines Shipments in Japan of acrylic esters in 2008 grew on a value basis as a result of an upward revision in selling prices to reflect surging raw materials prices. On a volume basis, however, sales declined slightly. Sales of value-added products such as the Aron Powder series (powder paints) and the Arufon series of non-solvent acrylic polymers were also brisk. We have also realized substantial growth in flocculant sales, achieved by MT AquaPolymer, Inc., a joint venture with Mitsui Chemicals Inc., through the leveraging of synergies afforded by this integration. In addition, we have expanded our production capability for specialty esters, and posted increased sales of acrylamide tertiary butyl sulfonic acid (ATBS), a specialty acrylic monomer, and Aron Powder, both of which roughly met our original targets. With regard to our earnings performance, demand stagnated from October onward. Profitability of the acrylic esters operations deteriorated sharply, mainly due to the application of the lower of cost or market method for the valuation of inventories at term-end. Profitability of downstream derivatives operations showed a significant year-on-year decline, despite a substantial contribution to earnings by robust sales of downstream derivative Arufon. This decline was due in part to delays in the launch of new downstream polymer products with high earnings potential, as well as sluggish product sales toward the year-end. As a result, the acrylic products segment reported a year-on-year decline in operating income. Acrylic Products ■ Net sales ■ Operating income 0 0 15,000 30,000 45,000 60,000 2,500 5,000 7,500 10,000 (Millions of yen) 04 05 06 07 08 31.4% Net sales \51,057 million Operating income \1,379 million Net sales/Operating income Sales by segment