On February 2, 2023 Nippon Kayaku reported its Third Quarter of the Fiscal Year Ending March 31, 2023 (Press release, Nippon Kayaku, FEB 2, 2023, View Source [SID1234626794]).
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Filing date of quarterly securities report: February 8, 2023
Scheduled date for start of dividend payments: –
Preparation of supplementary materials for quarterly financial results: Yes
Quarterly results presentation meeting: Yes (for securities analysts and institutional investors)
1. Consolidated Business Results for the First Three Quarters of the Fiscal Year Ending March 31, 2023 (April 1, 2022–December 31, 2022)
(Figures shown are rounded down to the nearest million yen.)
(1) Consolidated Operating Results
(Percentages indicate amount of change from the same period of the previous fiscal year.)
Net sales Operating income Ordinary income Profit attributable to owners of parent Million yen % Million yen % Million yen % Million yen % First three quarters of fiscal year ending March 31, 2023 153,627 11.2 19,062 9.9 20,994 11.8 15,241 8.4 First three quarters of fiscal year ended March 31, 2022 138,095 9.9 17,339 47.1 18,781 54.6 14,058 56.7 Note: Comprehensive income
First three quarters of fiscal year ending March 31, 2023: 17,699 million yen ((0.2)%) First three quarters of fiscal year ended March 31, 2022: 17,743 million yen (24.3%)
Profit attributable to owners of parent per share-primary Profit attributable to owners of parent per share-diluted Yen Yen First three quarters of fiscal year ending
March 31, 2023 90.62 90.60 First three quarters of fiscal year ended March 31, 2022 83.10 83.09
( 2) Consolidated Financial Position
Total assets Net assets Equity ratio Million yen Million yen % As of December 31, 2022 331,405 255,714 76.9 As of March 31, 2022 315,459 246,425 77.8
Reference: Equity As of December 31, 2022: 254,741 million yen
As of March 31, 2022 245,479 million yen
2. Status of Dividends
Dividend amount per share End of first quarter End of second quarter End of third quarter End of year Year Yen Fiscal year ended
March 31, 2022
Fiscal year ending
March 31, 2023 –
– 15.00
20.00 –
– 25.00 40.00 Fiscal year ending
March 31, 2023
(forecast) 20.00 40.00
Note: Changes to the most recent dividend forecast: None
3. Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022–March 31,
2023)
(Percentages indicate amount of change from the same period of the previous fiscal year.)
Net sales Operating income Ordinary income Profit attributable to owners of parent Profit attributable to owners of parent per share Million yen % Million yen % Million yen % Million yen % Yen Full year 210,000 13.6 23,800 13.1 26,600 14.9 19,400 12.9 115.31
Note: Changes to the most recent forecast for consolidated business results: None
Notes
(1) Significant changes in subsidiaries during the first three quarters (changes in designated subsidiaries that result in changes in scope of consolidation): None
(2) Adoption of special accounting methods for presenting the quarterly consolidated financial statements: None
(3) Changes to accounting policies and estimates and restatements
[1] Changes to accounting policies associated with revision of accounting standards or similar items: None
[2] Changes other than [1]: None
[3] Changes to accounting estimates: None
[4] Restatements: None
(4) Number of shares issued (common stock)
[1] Number of shares issued at end of the fiscal period (including treasury stock)
As of December 31, 2022: 170,503,570 shares
As of March 31, 2022: 170,503,570 shares
[2] Number of treasury stock at end of the fiscal period
As of December 31, 2022: 2,960,258 shares
As of March 31, 2022: 2,257,985 shares
[3] Average number of shares during the fiscal period (cumulative)
First three quarters of fiscal year ending March 31, 2023: 168,186,975 shares First three quarters of fiscal year ended March 31, 2022: 169,174,386 shares
*Quarterly summary financial statements are not subject to audit by a certified public accountant or audit firm.
*Analysis related to appropriate use of the business results forecasts, and other notes
(Disclaimer concerning forward-looking statements)
The information in this report constitutes forward-looking statements regarding future events and performance. This information is based on the beliefs and assumptions of management in light of information currently available to it at the time of announcement and subject to a number of uncertainties that may affect future results. Actual business results may differ substantially from the forecasts herein due to various factors. For matters pertaining to business forecasts, please refer to "(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts" on page 3 of the Supplementary Information.
.
(How to obtain the materials for the briefing on quarterly financial results)
We have scheduled a teleconference for securities analysts and institutional investors on Tuesday, January 31, 2023.
The materials for the briefing will be posted on the corporate website.
This document is an English translation of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
Supplementary Information
Contents
1. Qualitative Information Concerning Results for the First Three Quarters 2
(1) Analysis of Operating Results 2
(2) Analysis of Financial Position 3
(3) Analysis of Forward-looking Statements, including Consolidated Business Results Forecasts 3
2. Quarterly Consolidated Financial Statements and Notes to Quarterly Consolidated Financial Statements 4
(1) Consolidated Balance Sheets 4
(2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income 6
(3) Notes to Quarterly Consolidated Financial Statements 8
(Notes Regarding Assumptions for the Going Concern) 8
(Notes in Case of Significant Change in Shareholders’ Equity) 8
(Segment Information and Other Items) 8
1. Qualitative Information Concerning Results for the First Three Quarters
(1) Analysis of Operating Results
During the first three quaters of this consolidated fiscal year (April 1 to December, 2022), the global economy saw a return to normalcy from the COVID-19 pandemic. However, the sense of uncertainty increased even more as a result of the Russian invasion of Ukraine, increasing global inflation caused by high fuel and raw material prices, and the zero COVID policy in China.
The Nippon Kayaku Group launched KAYAKU Vision 2025, the new mid-term business plan beginning this fiscal year, amid such conditions, we are working to implement the roadmap to the vision specified for each business while advancing initiatives to address key company-wide issues aimed at achieving the vision.
As a result, net sales for the first three quarters of this consolidated fiscal year totaled 153,627 million yen, an increase of 15,532 million yen (11.2%) year-on-year. Sales in the pharmaceuticals business underperformed while the functional chemicals, safety systems, and other businesses outperformed the first three quarters of the previous fiscal year.
Operating income totaled 19,062 million yen, an increase of 1,722 million yen (9.9%) year-on-year. Ordinary income totaled to 20,994 million yen, an increase of 2,212 million yen (11.8%) year-on-year. Profit attributable to owners of parent was 15,241 million yen, an increase of 1,182 million yen (8.4%) year-on-year. Performance by business segment is as described below.
[Functional Chemicals Business]
Net sales reached 65,433 million yen, an increase of 6,888 million yen (11.8%) year-on-year.
The functional materials business as a whole outperformed the first three quarters of the previous fiscal year. The outperformance resulted from strong sales of MEMS and other resin composites, despite the decline in demand for epoxy resins used as semiconductor materials in consumer applications.
The color materials business as a whole outperformed the first three quarters of the previous fiscal year. This outperformance resulted from a rebound in market demand for colorants and ink for inkjet printers in industrial applications, despite the slowdown in colorants for inkjet printers for consumer uses and dyes for textiles.
The catalyst business outperformed the first three quarters of the previous fiscal year, due to strong orders, both in Japan and for exports overseas.
In the Polatechno business, demand for dye-type polarizing film was sluggish. However, demand was firm for components for X-ray analysis systems and the exchange rate on sales in foreign currencies was advantageous. This resulted in outperformance of the Polatechno business as a whole, compared with the first three quarters of the previous fiscal year.
Segment profit totaled 10,067 million yen, an increase of 527 million yen (5.5%) year-on-year. This increase resulted from growth in sales in the functional materials and catalyst businesses.
[Pharmaceuticals Business]
Sales totaled 39,293 million yen, a decrease of 453 million yen (1.1%) year-on-year.
Pharmaceuticals in Japan underperformed the first three quarters of the previous fiscal year. The underperformance resulted from the impact of drug price revisions, despite the launch of DARVIASⓇ Injection, a new drug for blood cancer, in August 2022 and growth in sales of the new generic anti-cancer drug PEMETREXED for I.V. Infusion and ALAGLIOⓇ granule packets, a photodynamic diagnostic agent.
Sales of active pharmaceutical ingredients for the Japanese domestic market and exports outperformed while sales of contract production and diagnostic drugs underperformed the first three quarters of the previous fiscal year. Segment profit totaled 6,944 million yen, an increase of 46 million yen (0.7%) year-on-year.
[Safety Systems Business]
Sales reached 40,951 million yen, an increase of 7,679 million yen (23.1%) year-on-year.
The domestic business as a whole underperformed the first three quarters of the previous fiscal year. This underperformance resulted from a year-on-year decline in sales of airbag inflators owing to low demand from automobile production cuts caused by the shortage of semiconductors and other factors, despite growth in sales of micro gas generators for seatbelt pretensioners.
The overseas business outperformed the first three quarters of the previous fiscal year in sales of airbag inflators, micro gas generators for seatbelt pretensioners, and squibs, as demand rebounded from the slump caused by policies to combat the COVID-19 pandemic implemented in different countries and despite increasing global inflation and the impact from the shortage of semiconductors.
Segment profit reached 6,165 million yen, an increase of 1,447 million yen (30.7%) year-on-year, owing to the rebound in demand and growth in sales boosted by the weakening yen.
[Other]
Sales were 7,949 million yen, an increase of 1,417 million yen (21.7%) year-on-year. The agrochemicals business overall saw a year-on-year increase in domestic sales and exports. Sales in the real estate business were flat year-onyear.
Segment profit totaled 1,536 million yen, an increase of 121 million yen (8.6%) year-on-year.
(2) Analysis of Financial Position
Total assets were 331,405 million yen, an increase of 15,945 million yen from the end of the previous consolidated fiscal year. The main increases were in raw materials and stores, an increase of 8,110 million yen; merchandise and finished goods, an increase of 7,362 million yen; notes and accounts receivable-trade, an increase of 3,631 million yen; and cash and deposits, an increase of 3,055 million yen. The main decrease was in securities, a decrease of 8,965 million yen.
Liabilities were 75,691 million yen, an increase of 6,657 million yen compared to the end of the previous consolidated fiscal year. The main increases were in short-term loans payable, an increase of 7,428 million yen; and notes and accounts payable-trade, an increase of 5,304 million yen. The main decrease was in current portion of bonds payable, a decrease of 4,000 million yen.
Net assets were 255,714 million yen, an increase of 9,288 million yen compared to the end of the previous consolidated fiscal year. The main increases were in retained earnings, an increase of 7,667 million yen; and translation adjustments, an increase of 3,310 million yen.
(3) Analysis of Forward-looking Statements, including Consolidated Business Results Forecasts
We expect the future business environment surrounding the Nippon Kayaku Group to bring a greater return to normalcy from the COVID-19 pandemic. However, the Russian invasion of Ukraine and increasing global inflation from high fuel and raw material prices pose the risk of an economic downswing.
Under these conditions, the Nippon Kayaku Group aims to respond flexibly to changes in the business environment and pursue optimal use of operating capital to increase the shareholder value, expand existing businesses in global growth markets, accelerate the development of new businesses and new products, and enhance profits.
There has been no change in the consolidated business results forecasts for fiscal year ending March 31, 2023 announced on July 29, 2022.
2. Quarterly Consolidated Financial Statements and Notes to Quarterly Consolidated Financial Statements
(1) Consolidated Balance Sheets
As of March 31, 2022 As of December 31, 2022
Million yen Assets
Current assets
Cash and deposits
38,459 41,514 Notes and accounts receivable-trade 60,719 64,350 Electronically recorded monetary claims-operating 1,868 2,469 Securities 15,186 6,220 Merchandise and finished goods 36,784 44,146 Work in process 1,149 950 Raw materials and stores 17,901 26,012 Other 3,832 4,946 Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net (57) (54) 175,843 190,556
43,469
43,716 Machinery, equipment and vehicles, net 26,923 26,221 Other, net
Total property, plant and equipment
Intangible assets Goodwill 18,667 19,804 89,060 89,742
3,016
2,624 Other
Total intangible assets
Investments and other assets Investment securities 4,569 4,166 7,586 6,790
33,511
34,767 Net defined benefit asset 4,572 4,716 Other 4,949 4,894 Allowance for doubtful accounts
Total investments and other assets
Total non-current assets Total assets (63) (62) 42,970 44,316 139,616 140,849 315,459 331,405
As of March 31, 2022 As of December 31, 2022
Million yen Liabilities
Current liabilities
Notes and accounts payable-trade
18,011 23,316 Short-term loans payable 3,176 10,605 Current portion of bonds payable 4,000 – Accounts payable-other 9,617 9,745 Income taxes payable 2,997 1,995 Other
Total current liabilities
Non-current liabilities Bonds payable 7,956 6,910 45,760 52,573
8,000
8,000 Long-term loans payable 1,474 800 Net defined benefit liability 380 439 Other
Total non-current liabilities Total liabilities
Net assets
Shareholders’ equity Common stock 13,419 13,877 23,273 23,117 69,034 75,691
14,932
14,932 Additional paid-in capital 15,759 15,794 Retained earnings 195,566 203,233 Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized holding gains on other securities (2,624) (3,463) 223,633 230,498
9,818
9,164 Translation adjustments 10,630 13,940 Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets 1,396 1,138 21,846 24,243 945 973 246,425 255,714 315,459 331,405
(2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
First three quarters of fiscal First three quarters of fiscal year ended March 31, 2022 year ending March 31, 2023
Million yen Net sales 138,095 153,627 Cost of sales
Gross profit on sales
Selling, general and administrative expenses
Operating income
Non-operating income Interest income 89,883 100,640 48,211 52,986 30,871 33,924 17,339 19,062
123
381 Dividend income 777 852 Equity in earnings of affiliates 271 – Foreign exchange gains
Other
Total non-operating income
Non-operating expenses Interest expense 54 517 534 611 1,761 2,362
77
95 Equity in losses of affiliates – 47 Other losses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets 241 287 319 430 18,781 20,994
1,392
479 Gain on sales of investment securities Gain on change in equity
Total extraordinary income
Extraordinary loss
Loss on disposal of non-current assets 183 413 – 123 1,575 1,015
445
385 Loss on valuation of investment securities
Total extraordinary loss
Profit before income taxes
Income taxes-current 57 3 503 388 19,854 21,621 4,208 5,209 Income taxes-deferred
Total income taxes
Profit
Profit attributable to non-controlling interests
Profit attributable to owners of parent 1,531 1,116 5,740 6,325 14,114 15,296 55 54 14,058 15,241
Consolidated Statements of Comprehensive Income
First three quarters of fiscal First three quarters of fiscal year ended March 31, 2022 year ending March 31, 2023
Million yen Profit 14,114 15,296 Other comprehensive income
Unrealized holding gains on other securities
(23)
(654) Translation adjustments 3,687 3,316 Remeasurements of defined benefit plans (31) (259) Share of other comprehensive income of companies accounted for by the equity-method Total other comprehensive income Comprehensive income (3) 1 3,629 2,403 17,743 17,699 Comprehensive income attributable to: Owners of parent
Non-controlling interests
17,634 109
17,638
61
. (3) Notes to Quarterly Consolidated Financial Statements
(Notes Regarding Assumptions for the Going Concern)
No items to report
(Notes in Case of Significant Change in Shareholders’ Equity)
No items to report
(Segment Information and Other Items)
I. First three quarters of the fiscal year ended March 31, 2022 (April 1, 2021– December 31, 2021) 1. Information on sales and profit (loss) by reportable segment
Reportable segments Other (Note 1) Total Adjustments
(Note 2) Consolidated
(Note 3)
Functional chemicals business Pharma-
ceuticals business Safety systems business Total Million yen Sales
Sales to third parties 58,545 39,746 33,272 131,563 6,531 138,095 – 138,095 Intersegment sales and transfers 106 0 – 106 78 184 (184) – Total 58,651 39,746 33,272 131,670 6,610 138,280 (184) 138,095 Segment profit 9,539 6,898 4,718 21,156 1,414 22,571 (5,231) 17,339 Note 1: "Other" indicates a business segment that is not included in the reportable segments, including the agrochemicals business and real estate business.
Note 2: The 5,231 million yen downward adjustment to segment profit reflects a negative 5,237 million yen in corporate expense not allocable to the reportable segments and 5 million yen in eliminations for intersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments.
Note 3: Segment profit has been adjusted to correspond with the total operating income as shown in the consolidated statements of income.
II. First three quarters of the fiscal year ending March 31, 2023 (April 1, 2022– December 31, 2022) 1. Information on sales and profit (loss) by reportable segment
Reportable segments Other (Note 1) Total Adjustments
(Note 2) Consolidated
(Note 3)
Functional chemicals business Pharma-
ceuticals business Safety systems business Total Million yen Sales
Sales to third parties 65,433 39,293 40,951 145,678 7,949 153,627 – 153,627 Intersegment sales and transfers 122 0 – 122 82 204 (204) – Total 65,555 39,293 40,951 145,800 8,032 153,832 (204) 153,627 Segment profit 10,067 6,944 6,165 23,177 1,536 24,714 (5,652) 19,062 Note 1: "Other" indicates a business segment that is not included in the reportable segments, including the agrochemicals business and real estate business.
Note 2: The 5,652 million yen downward adjustment to segment profit reflects a negative 5,673 million yen in corporate expense not allocable to the reportable segments and 21 million yen in eliminations for intersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments.
Note 3: Segment profit has been adjusted to correspond with the total operating income as shown in the consolidated statements of income.