14 Annual Report 2008 Started new in-house project to enhance capabilities in product and technology development Aiming at higher corporate profile in four priority product fields Business Performance Raw materials prices turned downward toward the end of the reporting business term, but Aron Kasei’s plastics processing business faced a severe operating environment owing to the accumulated high costs of petroleum products caused by the prolonged high price level from fiscal 2007, as well as a decline in public demand. Mikuni Plastics Co., Ltd. was included in the scope of consolidation in October 2008. Despite this, the Company posted sales for the plastics segment on a consolidated basis of \30,550 million for the business year ended December 31, 2008, representing a year-onyear decline of 5.2%. Operating income, meanwhile, fell 41.4% from the previous year. Although we saw an end to the delays in construction starts that had occurred after the revisions of the Buildings Standards Law, sales of our mainstay pipes and couplings posted a year-on-year decline owing to weakening demand due to the economic downturn. The market for nursing care products, however, remained firm, contributing increased revenues. Sales of elastomer compounds registered a decrease due to slack demand overseas. Sales volumes were lower for pipes and couplings, as well as elastomer compounds, and harsh market conditions prevented the Company from raising selling prices to compensate for higher raw materials costs. These factors led to a year-on-year decline in operating income. Plastics ■ Net sales ■ Operating income 0 0 10,000 20,000 30,000 40,000 2,500 5,000 7,500 10,000 (Millions of yen) 04 05 06 07 08 18.8% Net sales \30,550 million Operating income \1,299 million Net sales/Operating income Sales by segment