Report of Business Operations for the57th Business Period (Business Period ended October 2021) (Attachment to the Notification and Invitation to the 57th Regular General Meeting of the Shareholders)
From November 1, 2020 to October 31, 2021
1. Analysis of Operating Results and Financial Position
- Analysis of Operating Results
- Summary of consolidated fiscal year operating results (From November 1, 2020 to October 31, 2021)
During the consolidated fiscal year under review, Japan's economy continued to face difficult conditions, partly due to the prolonged spread of COVID-19. Also, in the global economy, while some countries and regions began to show signs of recovery, there were still significant concerns about sluggish economic activity and stock market turmoil caused by COVID-19 and the situation remained unpredictable.
In the construction industry in which the Group is involved, public sector investment including activity being carried out for Japan's National Resilience Plan remained strong and private sector construction investment has shown signs of picking up although the situation still requires monitoring as rising material prices and the shortage of skilled construction workers are apparent.
In such circumstances, based on the three key measures of the Medium-Term Corporate Management Plan "Creative 60" (FY2020-2024), the Group is promoting the strengthening of the Alliance Group's foundations and the expansion of its businesses in Japan and overseas. In addition, the Group is committed to the sustainable development of the Group and the enhancement of corporate value through an asset strategy that carefully assesses changes in the business environment as well as selection and concentration to reinforce profitability.
Consequently, in the fiscal year ended October 31, 2021, the Group reported net sales of ¥189,416 million, up 5.8% compared with the prior year. Operating profit increased 2.6% from the prior year to ¥14,624 million, ordinary profit increased 7.9% from the prior year to ¥15,391 million, and profit attributable to owners of parent increased 5.2% from the prior year to ¥8,907 million.
Results for each of the Company's business segments were as follows.
- Summary of consolidated operating results by business segment [Business related to the Construction Equipment Rental Division]
In the construction-related business, which is Kanamoto's core business, public sector investments were firm, mainly in construction related to disaster recovery work and infrastructure-related construction as well as disaster prevention-related construction, while private sector construction investments varied by region although overall rental demand for construction equipment remained steady.
In addition to promoting business alliances and M&As that can be expected to generate significant synergies, the Group aims to strengthen its profitability by further improving operational efficiency and productivity through focusing on measures such as ensuring the optimal ownership and model mix of assets according to market conditions. As a result, sales by region in this business were up 6.7% in the Hokkaido Region, down 1.9% in the Tohoku Region, up 2.5% in the Kanto & Koushinetsu Region, up 10.6% in the Nishi-nihon Region, and up 5.0% in the Kyushu & Okinawa Region.
Used construction equipment sales decreased 10.5% year on year, as Kanamoto has carried out the extension of the rental equipment operation period as planned at the beginning of the fiscal year.
Reflecting these factors, the Group posted net sales in the construction-related businesses of ¥171,020 million, an increase of 6.3% year on year, and operating profit of ¥13,043 million, an increase of 1.5%.
[Other Businesses]
In the Group's other businesses, net sales increased by 0.9% year on year to ¥18,395 million and operating profit increased by 14.5% to ¥1,110 million, as the business related to the Steel Sales Division as well as the business related to the Information Products Division and welfare-related business performed well.
(Millions of yen) | |||
56th Business Period | 57th Business Period | Change from | |
Segment | Business Period | Business Period | prior year |
ended October 2020 | ended October 2021 | (%) | |
Business related to the | |||
Construction Equipment | 160,826 | 171,020 | 6.3 |
Rental Division | |||
Other Businesses | 18,226 | 18,395 | 0.9 |
Total | 179,053 | 189,416 | 5.8 |
- Financing activities
1) Funds Procurement
Funds procurement through capital increase or the issuance of corporate bonds has not
been performed during the current consolidated fiscal year.
2) Capital investment
Capital investment implemented by the Kanamoto Group during the current consolidated fiscal year totaled ¥28,596 million. This included purchases of rental equipment of ¥25,346 million, and investments in assets used by the group, including the establishment, relocation and expansion of branches, of ¥3,249 million.
- Main branches newly established in the Corporate Group >
During the consolidated fiscal year under review, Kanamoto newly opened 6 branches .
Kanamoto Co., Ltd.
New branches: Obama Branch (Obama City, Fukui Prefecture)
Marumori Branch (Marumori Town, Igu County, Miyagi Prefecture)
Kitakyusyu Branch (Kitakyusyu City)
Tokyo Construction Branch, Special Small Equipment Center(Misato City, Saitama Prefecture)
Futaba Branch (Futaba Town, Futaba County, Fukushima Prefecture) Nakatonbetsu Equipment Center (Nakatonbetsu Town, Esashi County, Hokkaido)
- Transfer, absorption, division or new establishment of businesses The Company had no material items to report.
- Receipt of businesses from other companies
The Company had no material items to report
- Succession to rights and obligations concerning the businesses of other corporations etc. by absorption and merger or absorption and division
The Company had no material items to report.
- Acquisition or disposal of shares, other equity or subscription rights to shares of other companies
The Company had no material items to report
- Financial position and profit and loss in the current business period and three immediately prior business periods
(Millions of yen except per share data, which are in yen)
57th Business Period | ||||
54th Business Period | 55th Business Period | 56th Business Period | (current consolidated | |
Category | (Business Period ended | (Business Period ended | (Business Period ended | fiscal year) |
October 2018) | October 2019) | October 2020) | (Business Period ended | |
October 2021) | ||||
Net sales | 168,188 | 180,694 | 179,053 | 189,416 |
Ordinary income | 17,925 | 18,277 | 14,268 | 15,391 |
Profit attributable to | 11,857 | 11,430 | 8,466 | 8,907 |
owners of parent | ||||
Net income per share | 335.54 | 295.30 | 221.45 | 235.55 |
Total assets | 241,374 | 268,182 | 301,533 | 303,754 |
Net assets | 102,031 | 121,779 | 126,188 | 134,917 |
Net assets per share | 2,707.49 | 2,981.68 | 3,150.30 | 3,357.10 |
Note: During the 57th Business Period (the fiscal year under review), the Company finalized the provisional accounting treatment for business combinations. As a result, figures for the 56th Business Period reflect the finalization of the provisional accounting treatment.
(4) Issues to be Addressed by the Company
The outlook of the economy is unclear due to the impact of the spread of the novel coronavirus disease (COVID-19).
In the construction equipment rental business, which is a core business of the Kanamoto Group, it is important to select rental assets that match the characteristics of sales areas and customers' needs. Based on the collected data, the Company must build an asset portfolio structure aimed at maximizing operational efficiency and establish a strong earnings structure with a detailed operation. In addition, the Company also needs to aspire to be a "general rental company" that provides one-stop and comprehensive customer service, not just rental of goods.
1) Strengthen human resources training, and also Kanamoto Group alliances
In the construction equipment rental industry, intensifying competition between companies could lead to a trend of mergers and acquisitions due to a further increase in distinction and selection. The Company will make efforts to develop employees with the knowledge and skills appropriate for a leader in the construction equipment rental industry, and we will work to develop human resources that can adapt to business expansion in Japan and overseas.
Also, in order to expand the business domains that are essential for the Company to become a general rental company, we will strengthen cooperation with the Group
companies and relationships with alliance companies to increase synergy effects between the Group.
2) Deepen asset strategies
In introducing rental assets, we give top priority to market needs, but in recent years the particulars of domestic construction demand, such as ICT techniques, are changing, and therefore we ultimately determine the composition of the assets to be introduced and appropriate amount thereof by thoroughly examining the market and earnings characteristics not only at present, but also looking forward.
3) Optimizing Maintenance Costs
Maintaining and improving rental asset value is the very lifeline of the construction equipment rental business, and maintenance costs are essential to that end, but we aim to reduce the cost ratio by consolidating and optimizing the expertise of the Group in terms of expenditures.
4) Promotion of overseas business
In addition to strengthening sales activities in the countries whose markets we have currently entered, we also seek to increase profitability through thorough asset and revenue management.
- Main businesses (As of October 31, 2021)
Activities | Main products and services |
Business related to the | Rental and sale of equipment and instruments for use in construction, |
temporary materials for construction use, safety products for the | |
Construction Equipment | construction industry, measuring instrument and modular housing units |
Rental Division | for temporary use |
Sale of steel products such as steel bar, steel plate and round bar, contract | |
Other Businesses | construction, rental and sale of computers and computer peripheral |
equipment、 Rental and sales of social-welfare-service and nursing-care | |
equipment | |
- Main offices of the Kanamoto Group (As of October 31, 2021)
- Main offices and facilities
Kanamoto's Head Office and Operations Control Headquarters are located in Chuo-ku in Sapporo, Hokkaido, and the Company's Business Coordination Headquarters is located in Minato-ku in Tokyo.
The number of branches in each of the Company's operating regions is shown below.
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Kanamoto Co. Ltd. published this content on 24 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 December 2021 08:16:04 UTC.