These achievements were made despite such concerns as price hikes of various raw materials and fuels such as oil.
The increase in interest rates after the end of quantitative monetary easing policy also remained as a concern. In other Asian countries, China and ASEAN countries sustained high economic growth, while the economies of NIEs (Newly Industrialized Economies) slowed especially in IT and digital sectors. For Europe, the economy continued to be steady in Eastern Europe, including Russia, and consumer spending grew in Western Europe. The U.S. economy continued to grow, although such factors as weak housing market were causes for concern. As for the target markets of the AGC Group, the market for cathode ray tube (CRT) glass continued to be weak, but the market for glass substrates for flat panel displays (FPDs) continued to be relatively steady despite not being in demand season.
Regarding the Glass operation, growth in demand for flat glass was stagnant in some parts of Asia, but demand in Europe continued to be strong. For Chemicals operations, the market showed a weak recovery. Under such market circumstances, the Group posted net sales of 390.0 billion yen for the first quarter under review, down 1.9 billion yen or 0.5% from a year earlier, operating income of 43.5 billion yen, up 11.2 billion yen or 34.9%, and ordinary income of 41.3 billion yen, up 8.9 billion yen or 27.6%. Net income increased 8.1 billion yen or 38.0%, year-on-year, to 29.4 billion yen.
2. Overview of the first quarter of 2007 by business segment
- Glass operations
The Glass operations comprise flat glass and automotive glass businesses, which are both conducted globally, as well as other glass business involving fiberglass and other glass applications, which are operated mainly in Japan. Sales in the flat glass business increased from the same period last year thanks to the continuously firm market in Europe. Glass shipments showed a steady growth in fast-growing markets such as Russia. Demand also continued to grow in Western Europe. In Asia, the market was stagnant under the influence of Chinese-made low-priced products entering the market.
The slower growth of housing starts in Japan and North America adversely affected the sales volume. In the automotive glass business, earnings increased from a year earlier as sales volume remained steady, although worldwide auto production almost unchanged from a year earlier. In other glass business, sales volume decreased from the same period last year due to withdrawal, by Asahi Fiber Glass Co., Ltd., from the composites business in March 2006.
Consequently, net sales from the Glass operations for the first quarter under review increased 10.6 billion yen or 5.3%, year-on-year, to 211.0 billion yen, and operating income increased 6.4 billion yen or 68.0% to 15.8 billion yen.
- Electronics and Display operations
The Electronics and Display operations consist of the display business, which handles glass substrates for flat panel displays (FPDs) and cathode-ray tube (CRT) glass, as well as the electronic materials business. In the FPD glass business, revenue increased from a year earlier due to strong shipments mainly of glass substrates for thin film transistor liquid crystal displays (TFT LCDs), supported by a rise in demand of panels for thin-screen televisions and the spread of larger sizes of such panels. Especially, the shipments of glass substrates for TFT LCDs steadily increased due to the completion of facility renovations in the latter half of the previous year and the start of the operation at new facilities. Meanwhile, revenue in the CRT glass business decreased from the same period last year due to the accelerated shift in demand for FPDs. In the electronics materials business, demand for synthetic quartz, which is used as projection lens materials in semiconductor manufacturing equipment, continued to grow steadily, although demand for display materials slightly slowed down. In the small- and medium-sized displays sector, revenue decreased from a year earlier due to stagnant business of products for mobile devices and industrial use, although demand for products for automotive use showed a steady growth. As a result, net sales from Electronics and Display operations for the first quarter under review decreased 18.8 billion yen or 16.1%, year-on-year, to 97.8 billion yen. Operating income increased 3.3 billion yen or 16.9% to 22.5 billion yen.