Ladies and gentlemen, welcome to the conference call on Asahi Kasei Corporation. Thank you very much for your attendance today. I am Futoshi Hamamoto of Investor Relations. Let me introduce the members of our company present today. In addition to Koshiro Kudo, CFO, here with us today are Yozo Sato, Corporate Accounting and Control, Takuya Takahashi, Basic Materials Strategic Business Unit, or SBU, Nobuhiro Yamaguchi, Performance Products SBU, Hiroaki Sugiyama, Specialty Solutions SBU, Eiji Ishikawa, Specialty Solutions SBU, Izumi Kawata, Asahi Kasei Microdevices Corp., Kensuke Sakai, Asahi Kasei Homes Corp., and Ryuji Kibe, Asahi Kasei Pharma Corp. Now I would like to invite Koshiro Kudo to start his presentation on the financial results.
Thank you. I am Koshiro Kudo. I will walk you through the financial results of Fiscal 2020. Please turn to page four.
We achieved net sales of JPY 2,106.1 billion, operating income of JPY 171.8 billion, ordinary income of JPY 178.0 billion, and net income attributable to owners of the parent of JPY 79.8 billion. The year-on-year decline in Material and Homes was mostly canceled out by the rise in Healthcare, allowing the entire group to be almost even with the previous year in both net sales and the operating income. We suffered a large year-on-year decrease in net income attributable to the owners of the parent, chiefly as a result of a temporary income tax expense related to reconfiguration of the organizations of Veloxis Pharmaceuticals, Inc.
As the tax expense posted was JPY 24 billion, if you were to add the JPY 24 billion to the JPY 79.8 billion in net income attributable to the owners of the parent, we would have achieved a level comparable to that in Fiscal 2019. We also maintained annual dividends at JPY 34 per share in accordance with the policy of stable and continually increased dividends. Compared to the forecast made in February 2021, we were ahead at every level of the profits. Let us move on to page five. I will give you the summary of the impacts of COVID-19. First of all, Material was hit by the decline in demand for automotive related and petrochemical products, mainly in the first quarter, but saw a recovery in demand and improvement in market prices from the second quarter.
There was also increased demand for lithium-ion battery separators and electronic materials resulting from stay-at-home demand. On the other hand, as for apparel related markets, severe conditions for fibers continued. There are some signs of recovery seen more recently, but this is mainly in overseas markets. Our understanding is that the domestic situation has remained quite challenging. In Homes, mainly due to the emergency declarations issued, the number of visitors to model homes declined, resulting in the severe environment for orders sustained throughout the year. However, by reinforcing measures to attract customer traffic through means other than model homes, such as online events, we have seen signs of recovery in orders more recently. In Healthcare, a large increase in the demand for ventilators was seen in critical care. In addition, there was increased demand for virus removal filters related to development and manufacture of COVID-19 drugs and vaccines.
Healthcare was no exception when it comes to sales activities, as sales calls to hospitals were curtailed by COVID-19 restrictions. Please turn to Page six. Let me explain about net sales and operating income by segment. In Material, we were significantly affected by COVID-19, mainly in the first quarter, saw a recovery from the second quarter for automotive markets and petrochemical market prices. The improvement fell short of making up for the decline in the first quarter, resulting in the Material segment posting decreases in both sales and operating income year-on-year. In Homes, despite the real estate business showing firm performance, sales and operating income decreased year-on-year because of a decline in orders associated with the impact of 2019 consumption tax hike, as well as due to COVID-19 in order built homes and remodeling.
In Healthcare, on the other hand, sales and operating income increased year-on-year with a large increase in demand for ventilators and firm performance in pharmaceuticals and medical devices. Those sales activities were inhibited by COVID-19. The operating income in Fiscal 2019 was JPY 92.4 billion for Material, JPY 72.7 billion for Homes, and JPY 43.5 billion for Healthcare. Whereas in Fiscal 2020, all three segments recorded between JPY 60 billion and JPY 70 billion respectively. Please move to Page seven, which shows statement of income on a consolidated basis. Net sales total JPY 2,106.1 billion, down JPY 45.6 billion year-on-year. This includes sales recorded by newly consolidated companies, such as Veloxis, and therefore, if we were to exclude them, we would have fallen by JPY 79.4 billion, or 3.7% year-on-year.
As for SG&A expenses, we saw a decrease of about JPY 17 billion centered on travel expenses due to COVID-19. However, amortization of intangible assets related to Veloxis acquisition and labor expenses, especially for critical care, went up. As a result, the total SG&A expenses increased by JPY 11.1 billion from a year before. Net extraordinary income and loss was JPY -28.1 billion in Fiscal 2019, and JPY -27.1 billion in Fiscal 2020, posting almost the same values in both years. I will elaborate more on this later in my presentation. For income taxes, an income tax expense of about JPY 24 billion was incurred in Fiscal 2020 on the intragroup asset transfer for the reconfiguration of Veloxis organizations. Page eight shows consolidated balance sheet. Total assets increased JPY 96.7 billion from the end of March 2020.
Goodwill and other intangible assets decreased due to amortization. PP&E increased. Investment and other assets increased due to higher market value of investment securities. Total assets increased. Liabilities decreased by JPY 14.4 billion due to interest-bearing debt decrease of JPY 44.9 billion. As of the end of the first half, we had a forecast of interest-bearing debt for the end of FY 2020. The results were JPY 659 billion, which were lower than the forecast. As a result, D/E ratio was 0.45. We almost sustained the guidance level of 0.5. Page nine shows consolidated cash flows. As for operating cash flow, efficiency of working capital, including inventories, improved. The cash inflow increased year-on-year. As for investing cash flow in FY 2020, with the absence of JPY 141.5 billion payment for Veloxis acquisition in FY 2019, cash outflow decreased.
Financing cash flow, in addition to the dividend payment, repayment of borrowings resulted in a cash outflow. After paying dividend, free cash flow turned to positive JPY 50.1 billion, showing the improvement year-on-year. I covered the results of FY 2020. Please turn to Page 11. I will explain the forecast for FY 2021. The forecast for FY 2021, net sales were JPY 2,375 billion, operating income is JPY 190 billion, ordinary income is JPY 196 billion, and net income is JPY 155 billion. Compared to the FY 2020, sales are up 12.8%, operating income is up 10.6%, but net income is up substantially by JPY 75.2 billion or 94.3% in the plan. Temporary tax expenses of JPY 24 billion related to reconfiguration of Veloxis organization were paid in FY 2020.
In FY 2021, tax expense reduction almost equivalent to the previous year's tax expense is expected, and that generates substantial gap. As for sales and operating income forecast, expecting significant recovery of performance in Material, we plan to achieve increase both in sales and profit. As a result, dividend in FY 2021 forecast is expected to be JPY 34 per share, and we continue to pursue stable and continually increased dividend, keeping the conventional policy unchanged, while making decision in consideration of full-year results. Payout ratio is 30.4% in the forecast for FY 2021, and in terms of the average of the previous three years of FY 2019, 2020, 2021 of the current midterm management plan, payout ratio is over 40%. Page 12 shows sales and operating income forecast by segment.
As for Material, as mentioned before, large increase in sales and income is forecasted with recovery of automotive market and petrochemical market prices. As for Homes, increased sales and income forecasted with the consolidation of McDonald Jones Homes Proprietary Limited and firm performance in each business. As for Healthcare, decrease in sales and income is forecasted with leveling of spike in demand for ventilators in critical care despite firm performance in each business. I covered forecast for FY 2021, and now I would like to pick up some items to explain from appendix. Please turn to Page 15 for extraordinary income and loss mentioned before. In FY 2019, impairment losses were JPY 21.9 billion, which includes impairment loss of JPY 17 billion for synthetic rubber factory in Singapore. In FY 2020, impairment losses remained at JPY 1.9 billion without any major loss.
Loss on semiconductor plant fire of Asahi Kasei Microdevices is shown below. In FY 2020, it was JPY 22.3 billion. Loss on product compensation JPY 2.1 billion is shown below in FY 2020, but it is not related to semiconductor plant fire of this time.
As a result, net extraordinary loss in FY 2019 was JPY 28.1 billion, in FY 2020, loss was JPY 27.1 billion, with improvement of JPY 0.9 billion, almost unchanged from FY 2019. Please turn to Page 16. Page 16 shows overseas sales by business category. As for Homes, with some overseas business expansion, as of today, majority of sales are domestic ones. Including Homes, overseas sales ratio increased from 40% in FY 2019 to 42.8% in FY 2020, up 2.8 percentage point. In particular, the Americas overseas sales ratio increased from 13.6% in FY 2019 to 15.9% in FY 2020. In China, it increased from 8.8%- 9.4%. For many Japanese companies, China serves as a major overseas sales region. In the case of Asahi Kasei, through acquisition of Healthcare businesses in Americas and acquisition of Sage Automotive Interiors, overseas sales ratio in America stays high.
Finally, let me comment on page 22. This slide shows operating income forecast by business category covering three years. As for Basic Materials and Performance Products, in the first quarter FY 2020, operating income fell sharply, but the recovery is expected in FY 2021. Operating income in FY 2021 will exceed the level of FY 2019. As for Specialty Solutions, income increased from FY 2019 to FY 2020, and the strong momentum would be sustained in FY 2021. As for Homes business category, operating income in FY 2019 was remarkably high, JPY 67.4 billion, and it dropped markedly to JPY 59.7 billion. In FY 2021, with recovery in the second half, it would grow to JPY 63 billion. Healthcare operating income was JPY 17.8 billion in FY 2019, JPY 23 billion in FY 2020, and will be JPY 24.5 billion in FY 2021, achieving steady growth.
As for Critical Care, as mentioned before, in FY 2020, operating income increased drastically to JPY 44.6 billion, with special demand for ventilators. In FY 2021, with some slowdown, operating income will be JPY 30.5 billion, which shows increase of JPY 5 billion over FY 2019, indicating steady progress. This concludes my presentation.
Thank you. We would like to take questions. Watanabe from Morgan Stanley MUFG Securities.
I have two questions. My first question is, in Material, could you tell me your assumptions for main products of Basic Materials in your forecast for FY 2021? Performance Products is expected to soar in operating income, more than double from the second half, and a significant rise even from the fourth quarter of FY 2020. Could you give me reasons behind this? The operating income of Specialty Solutions is expected to remain almost flat. Is it because of the impact from the fire at the semiconductor plant? Could you give me more details, including updates on separators?
Takahashi from Basic Materials will answer your question on Basic Materials.
As Kudo explained on Page 22, the operating income from Basic Materials was almost zero in the first half of FY 2020, and started to recover in the second half to JPY 13.9 billion. In FY 2021, it is expected to post JPY 12 billion in the first half and JPY 15.5 billion in the second half, indicating it is on a recovery track. When you say main products of Basic Materials, I believe you're referring to acrylonitrile, or AN. Around February 2020, the U.S. was hit by cold waves, which among others, resulted in the soaring AN market.
The impact is still lingering in April-June of 2021, and is expected to begin to subside around June, and to further settle down from July-September. In the second half, a new plant in China is likely to come on stream. Given such factors, it is expected to settle down gradually from April-June quarter to July-September quarter, and over to the second half.
Yamaguchi from Performance Products. As you are aware, in Fiscal 2020, the operating income plunged in the first quarter, but showed a strong recovery in automotive applications in the second half, and a gradual recovery in apparel applications. In Fiscal 2021, we expect a strong recovery in demand for automotive applications and the gradual one in apparel applications to continue. The operating income reflected recoveries more than those seen in the sales volume. Partly due to the business practice, positive changes in terms of trade tend to lag behind a recovery in the sales volume. In other words, the sales volume starts to change first, followed by changes in terms of trade. In particular, in automotive applications, the sales volume was very strong in the second half of Fiscal 2020, but the terms of trade failed to catch up.
However, in Fiscal 2021, there will be an improvement in terms of trade, which allows us to forecast a significant increase in the operating income. Sugiyama will answer the question on Specialty Solutions.
As you said, in Fiscal 2021, we expect a positive growth in sales, but no change in the operating income. That is because in Fiscal 2021, we will need to account for an impact from the fire in the semiconductor plant compared to the previous year. As for the breakdown of the expected increase in sales, automotive-related products, which dipped especially in the first quarter of Fiscal 2020, is likely to perform well in Fiscal 2021. We also anticipate an increase in the sales volume of electronic materials in Fiscal 2021.
Lithium-ion battery separators are also expected to increase in sales volume, but their prices are going down gradually every year, and we have taken that into account in our forecast. The impact of the fire at the semiconductor plant will be negative in both sales and profit. Including all these impacts, we have come up with the forecast of increased sales and flat operating income.
Thank you. In critical care, although it may be difficult to give us specific figures, could you tell us what was the contribution from the ventilators in Fiscal 2020? Furthermore, how do you see the recovery of LifeVest wearable defibrillators? Could you share with us the breakdown of the increases and decreases of the operating income of critical care?
Hamamoto of IR will answer the question.
Ventilators are expected to return to levels we used to see before the COVID-19 pandemic. In that sense, it will become a relatively low-profile part of the entire performance of critical care. The mainstay of critical care is LifeVest and other defibrillators, and ventilators will return to their conventional low-key presence. In terms of the scale of the business, critical care rose in sales by JPY 49 billion from Fiscal 2019 to 2020.
While LifeVest and other defibrillators struggled to grow under the pandemic as strongly as they used to, majority of the increase was attributed to the growth in ventilators. While we expect the demand for ventilators to settle down from Fiscal 2020- 2021, the total sales decline is forecasted to be only JPY 26 billion. This means that we have assumed LifeVest and other defibrillators to recover and get back on the growth trajectory to help offset the lost revenue of ventilators.
Am I correct to say that you have already started to see signs of recovery?
Yes. Orders for LifeVest have been recovering more recently.
Thank you.
Yamada from Mizuho Securities. My first question is about homes. With regard to the forecast for Fiscal 2021, with the newly consolidated McDonald Jones of Australia, how much incremental operating income can we expect? If I remember correctly, you had owned about a 40% stake in McDonald Jones before consolidation, and therefore, I would assume the net equity in earnings of affiliates to go down. Could you clarify the impacts and which items to increase and which items to decrease? Moreover, how did you take into account the price raise of steel and other materials in your forecast for Fiscal 2021?
Order backlog for order- built homes declined by close to 10% from the end of Fiscal 2019 to the end of Fiscal 2020. Yet your forecast for Fiscal 2021 is fairly aggressive. Could you elaborate on the breakdown of your forecast?
Sakai from Homes. Overseas business is expected to grow in operating income from Fiscal 2020. The contribution from the business in Australia is included to some extent. As for the breakdown of the forecast for Fiscal 2021, there was a significant dip in the order backlog due to COVID-19, which should have a serious impact on the number of homes units to be delivered. However, given that unit prices are becoming higher and the fixed costs will continue to be reduced following the effort in Fiscal 2020, order- built homes expects to see a slight increase in the operating income year-on-year.
Remodeling was severely affected by COVID-19 in Fiscal 2020. It's likely to recover in Fiscal 2021. We expect to see an increase in both sales and operating income for the entire segment of homes.
The forecast for sales of the business in Australia is about JPY 100 billion, isn't it?
At this moment, our forecast for the sales of the business in Australia is JPY 75 billion. I believe the cost of materials will also rise. To what extent do you take that into account? As you rightly said, the cost of various materials, including steel, has been going up, and as in Fiscal 2020, the cost of logistics has been rising as well. I cannot give you any specific numbers, those factors have been incorporated in the budget as items to push up the costs.
Did you assume that, for instance, the cost of steel materials will rise by JPY 20,000 per ton? I would like to decline mentioning specific numbers, but we do assume a significant rate of increase.
Is it fair to say that while assuming a significant rate of increase in cost, with such a decline in the order backlog, you're still confident enough to generate this much profit?
Yes. We'll continue our efforts to reduce costs and plan to increase profit, mainly in remodeling and overseas businesses.
My second question. I'm now looking at the main pharmaceutical sales on Page 31. Sales of Teribone osteoporosis drug has increased in Fiscal 2020 despite an impact from romosozumab. Am I correct to understand that impact from romosozumab was not so severe in Fiscal 2020, and your new formulation of Teribone auto-injector has helped achieve the year-on-year growth? I'm also interested to know how you look at the potential impacts of abaloparatide, which is expected to be launched going forward, and the impacts of generic drugs. Furthermore, could you also explain why the sales volume of Recomodulin, recombinant thrombomodulin, dipped slightly in Fiscal 2020 from a year before?
Ryuji Kibe from Asahi Kasei Pharma will answer the question.
As for Teribone, the self-injection formulation is growing rapidly in sales, and in that sense, there's room for both Teribone and romosozumab in the market. Abaloparatide is a new drug, and we do not know when it is going to be launched yet. However, abaloparatide is a drug administered once every day through self-injection, and therefore, the way we look at the drug is that it will pose more direct competition to FORTEO than to Teribone.
What we need to do is to make sure Teribone will be prescribed to those patients it is supposed to be prescribed to. As for Recomodulin, sales have been declining recently. It was partly because hospital beds were once in acute shortage due to the influx of COVID-19 patients, leading to a decline in the number of patients with diseases such as DIC, disseminated intravascular coagulation, requiring admissions into large hospitals. Having said that, however, our share in DIC treatment drugs has not dropped. Moving forward, now that Recomodulin has been recommended for DIC associated with sepsis in the sepsis treatment guideline, we expect its sales to turn upward again. In fact, sales in April and in May after the extended holidays of Golden Week, sales of Recomodulin have been showing strength.
As for DIC, patients will die if they don't get injected with the drug, yet, is it your view that demand for the drug decreased? I find it hard to believe that instance of DIC decreased due to COVID-19. If patients with COVID-19 develop thrombi, would they not receive treatment similar to those for DIC?
We have not been able to get a handle on what is going on exactly. In the case of patients with life-threatening diseases such as DIC, we suspect the possibility of patients transported to hospitals that are not the large ones that they used to be admitted to, but are smaller and have fewer beds. In that sense, we are now exploring reasons why the number of DIC patients is decreasing.
Thank you. That's all the questions I have.
Miyamoto from SMBC Nikko Securities. I want to ask about lithium-ion battery separators. Could you first give me the index of the sales volume in Fiscal 2020 and your forecast for growth rate in Fiscal 2021? I'm also interested to know how your forecast varies by application.
Ishikawa from Separator Business will answer the question.
Let me give you the volume indices we disclose every six months based on the volume recorded in the first quarter of 2013 being 100. In the second half of Fiscal 2020, it was 448. As it was 390 in the first half, the volume increased by about 40% for the full- year from a year before. Now, how are we looking at Fiscal 2021? In Fiscal 2020, partly due to the great contribution from the increased production capacity, the sales volume significantly increased. From the first half of Fiscal 2021, a new production facility will come online, but it will be ramped up gradually.
Our plan is to see about 10% increase in the sales volume for the full- year of Fiscal 2021. In terms of growth by application, both consumer products and automotive applications are expected to grow in line with the rates of the growth of their markets. Demand for automotive application is larger, we accounted for more growth for automotive applications.
If the volume growth is only 10%, will it not be reflected in the growth of operating income as much? That said, you expected the operating income of its Specialty Solutions to be flat year-on-year, while electronic devices to drop in Fiscal 2021. In that sense, Separators Business should be contributing to a positive growth in operating income.
If it isn't, what would be the factors for increased operating income in Specialty Solutions?
As you know, there's pressure from customers to reduce prices of separators, while the volume is expected to grow by 10%. Given that, we have incorporated just a slight increase in the operating income for separators business as a whole.
Sugiyama from Specialty Solutions. Let me add to what has been said. In separators, we anticipate an increase in upfront fixed expenses. Main factors that will contribute to a positive growth by more than making up for the decline in electronic devices include former performance materials or electronic materials in particular, as well as coating materials for automotive applications, which struggled in Fiscal 2020. With a positive growth in those areas, we made the forecast for Specialty Solutions as shown before.
Understood. As Homes segment, Page 28 shows that value of new orders will increase 25% year-on-year in FY 2021 forecast. You had a strong start in April, can we expect such strong orders growth supported by successful online marketing among others? How do you feel about the orders growth? As for real estate sales, some say that FY 2020 might have been too good. For FY 2021, you are aiming for even higher number. Do you see that the real estate business is really strengthening?
Sakai of Homes speaking. As for orders, latest orders in March and April have been gradually recovering. With issuance of declaration of state of emergency, future prospect is still uncertain. We are enhancing diverse measures to attract customers to increase orders, not only by model homes, but through various non-model homes activities. We will try to achieve the target. Condominium business in real estate is rather inconsistent year- by- year. In FY 2020 and 2021, inventory level is rather high.
I am Watabe from Mitsubishi UFJ Morgan Stanley Securities. As for Homes, presentation materials of Asahi Kasei Homes show some figures. According to this, I think other housing-related operations for FY 2021 includes contribution by McDonald Jones. In FY 2020, profit of other housing-related operations was JPY 1.2 billion. FY 2021 forecast shows JPY 4.8 billion of profit. Therefore, I assume JPY 3 billion-JPY 4 billion is attributable to McDonald Jones consolidation. In FY 2020, McDonald Jones was not consolidated, so we cannot tell whether McDonald Jones profit increasing or decreasing. May I compare the profit of McDonald Jones alone this year over the previous year? Is it increasing or decreasing?
For FY 2021, profit will increase. As for the disclosed consolidated figure, other housing-related operations includes other North America businesses. Not all year-on-year difference comes from the impact of McDonald Jones consolidation.
I see. Another question on Homes. It is about real estate. In FY 2021 forecast, you plan the sales growth, but operating income will be down by about JPY 3 billion. In the mix of real estate, I think that condominium profit will decrease. Would you tell us the reason more in detail for the profit decline in real estate in FY 2021?
As I said, profit decline is due to condominium business. We have certain number of units to sell in FY 2021, but profitability widely varies depending on the geographical areas and so on. FY 2021 profit is expected to decrease.
Thank you very much.
I am Umebayashi from Daiwa Securities. My first question is also about lithium-ion battery separator. We were informed at the third quarter results meeting that originally, sales of wet type were strong. In the FY 2020, from the second half, dry type sales started to increase. We also learned that dry type application includes energy storage system, or ESS, and small EVs. Now I'd like to know that in FY 2020, how wet and dry type developed. In FY 2021, you said total sales volume of lithium-ion battery separator would grow 10% year-on-year. As dry type has not fully utilized capacity, even if wet type would face capacity constraint, if you include the potential of dry type, I think the volume growth could be a bit higher. I would like to have your thoughts on this.
Ishikawa of Separator business speaking. As for the volumes in the second half FY 2020, wet type robust business was sustained. In dry type, ESS recovered from the sluggishness in FY 2019. Volume hope for automotive also increased due to new adoption in some projects. In FY 2021, sales volume would grow both for wet and dry types.
Dry type would grow for automotive, especially for developed countries in the plan. You asked why growth in FY 2021 year-on-year will be just 10% or so, although we achieved strong growth in FY 2020. It is partly because in FY 2020, shipment volume was more than expected. Next year in FY 2021 also, capacity for wet type would be expanded. Immediately after the launch, we would face various technical issues and issues of certification by customers. We would not be able to step up to the full utilization immediately. That is why we do not expect the remarkable growth in FY 2021. Understood. According to the index that you showed before, it was 838 combining the first and the second half of FY 2020. With 10% increase in FY 2021, it will be 920.
If it is evenly divided for the half year, half year will be about 460. Given the second half in FY 2020 was 448, there will be almost no growth from the second half. How do you see this?
In the fourth quarter, in the second half, usually due to Chinese New Year, especially volume of wet type for consumer product sector decrease. In the second half of this year, as in other industries, customers did not suspend the production lines during the Chinese New Year holidays. The shipment volume was remarkably high. Therefore, we had to restock our inventory. Because of this, the volume growth is not remarkable.
I see. That is clear. My second question is about acrylonitrile. Its price volatility is rather notable. Would you give us again its price and margin in FY 2020 and those assumptions for FY 2021, if possible, for the first half and second half?
Thank you for your question. Takahashi of Basic Materials speaking. Let me share with you the market price and the spread of acrylonitrile in the fourth quarter FY 2020. Market price of acrylonitrile was $1,889 per ton, propylene was $1,040, and the spread was $849. As for the assumption for this FY 2021, for the first half, acrylonitrile $2,200, propylene $1,100, and the spread is $1,100. For the second half, as mentioned at the beginning, some falls are expected as $1,700 for acrylonitrile, $1,100 for propylene, and the spread is $600. For the first half, we assumed the average price of acrylonitrile as $ 2,200, the latest price has been rather high, from the first to the second quarter, we expect the price will be settling down toward the level of the second half.
As for utilization, do you basically assume full utilization?
As for utilization, since the fourth quarter FY 2020, supply-demand has been tightening, currently it is more than 90% effectively fully utilized. Mizushima Works and Tongsuh Petrochemical Corp., Ltd. in Korea would have maintenance turnaround, in PTT Asahi Chemical Company Limited in Thailand, operation was suspended due to blackout at the end of April. Production is reduced due to these reasons. Except these, basically capacity is fully utilized.
Thank you. That is all from me.
I'm Okazaki from Nomura Securities. I have two questions.
First question is about Page 21 and 22 on Healthcare business category. How should we see the change in sales and profit from FY 2020- 2021? Sales of Envarsus XR, a biologics in the U.S., seems to have slightly decreased in the fourth quarter FY 2020. Would you tell us about this background and the prospect for Fiscal 2021?
Kibe of Asahi Kasei Pharma speaking. Let me answer on Asahi Kasei Pharma. As mentioned before, Teribone and KEVZARA, agent for rheumatoid arthritis, have been firm. We expect the sales increase. As for operating income, sales growth of Teribone and KEVZARA are expected as mentioned. R&D expenses will be growing. In total, profit is expected to increase. That's all from me. As for medical devices and biologics-related question, Hamamoto of IR Office will respond.
As for medical devices from FY 2020- FY 2021, sales will increase and profit will decrease. Concerning sales growth, in addition to the market expansion of conventional biopharmaceuticals as before, partly due to increased demand related to development and manufacture of COVID-19 drugs and vaccines, sales of Planova will continue to grow. Even with sales growth, due to upfront expenses for capacity expansion and increase in SG&A cost, profit is expected to decrease. As for Veloxis, as I mentioned, from the third to fourth quarter, growth seems to slow down. I'm referring to sales of Envarsus XR in the U.S. It is affected by the overlap of COVID-19 impact and other temporary issues. Conventionally, in this period, at the beginning of the calendar year, due to U.S. insurance system, purchase of drug tends to be curtailed.
In this year, COVID markedly impacted economy, and household economy, and the impact of curtailed purchase continued longer, and it showed a deeper impact. Additionally, as you know, in February, U.S. suffered heavy snow, and that also affected shipment. As for the share in the new patients who took operation for kidney transplant, it has been growing steadily. Latest orders are already recovering, so the move in the fourth quarter is seen as temporary one, and we expect to achieve the continued strong growth as before in FY 2021.
Thank you. My second question is also about the lithium-ion battery separators. I'd like to have some confirmations based on the previous comments. In FY 2020, demand for notebook PC and tablet was remarkably strong. Based on your talk before, can we take that it will be slightly slowing down in FY 2021?
Would you tell us about the profit of Separator alone in FY 2020? You repeatedly said that the price competition is severe, but compared to half a year ago or one year ago, how is it developing? You expanded the capacity, and with this, do you have confidence to increase sales in line with the expansion?
Ishikawa of Separator business speaking. As you said, it is true that the demand for notebook PC and tablet was strong in FY 2020. We do not expect a significant demand growth there in FY 2021. In FY 2020, Separator business increased sales and profit year-on-year. As for price, we always face strong customers' request to cut price. Price is revised at the beginning of the calendar year. In 2021, price was revised as usual.
As for the confidence for the new CapEx, as mentioned before, we decide the capacity expansion after talking with customers on future demand expectation among others. As market environment of lithium-ion battery changes from time to time, we cannot be sure 100%, but basically, toward the launch of operation in FY 2023 for the capacity expansion announced in March, sales volume will grow steadily.
That is all from me. Thank you.
With this, I'd like to close the meeting. Thank you very much for joining us today.