Showa Denko to Stop Commodity Aluminium Foil Business

Showa Denko decided at the board meeting on Tuesday to withdraw from production and sales of commodity aluminium foil which is used for food packaging. The firm will stop new order reception on December 15, 2006 and cease the sales at the end of April, 2007. The firm estimates 1.3 billion of extraordinary loss mainly for removal of facilities, while the influence will be slight on the earning results of Showa Denko for 2006 as a reserve has already been provided to cover part of the costs. The firm will transfer 30 employees engaged in the business to other sections at Oyama plant in Tochigi Prefecture, Japan.Showa Denko had incurred losses in the commodity aluminium foil business section with the demand decline and the over supply capacities at the makers when the domestic market had reached maturity. In addition productive costs expanded due to the surge of primary aluminium ingot price. The firm expected no possibility to improve profitability and decided to withdraw from the business.Showa Denko will focus on high-performance aluminium foil business, in which Kanagawa based subsidiary, Showa Denko Packaging engages. High-performance aluminium foil demand is increasing mainly for electronic materials including electrolytic capacitor.