Quarterly Consolidated Financial Results for the 2nd Quarter, Ended September 30, 2023 (Japanese GAAP)
November 9, 2023 | ||||
Name of Listed Company: Kaneka Corporation | Stock Exchange Listing: Tokyo | |||
Code Number: | 4118 | URLhttps://www.kaneka.co.jp/en/ | ||
Representative: Minoru Tanaka, President, Representative Director
Contact Person: Osamu Ishida, Managing Executive Officer - Investors & Public Relations Department Phone: +81-3-5574-8090
Scheduled date for filing financial statements: November 13, 2023 Scheduled date of dividend distribution: December 5, 2023
Note: Figures have been rounded down to the nearest million yen.
1. Consolidated Financial Results for the 2nd Quarter, Ended September 30, 2023 (from April 1, 2023 to September 30, 2023)
(1) Consolidated operating results | (% indicates year-on-year change) | |||||||
Net sales | Operating income | Ordinary income | Net income attributable | |||||
to owners of parent | ||||||||
¥ million | % | ¥ million | % | ¥ million | % | ¥ million | % | |
Apr.1, 2023 - Sep. 30, 2023 | 370,116 | (2.8) | 12,606 | (39.4) | 12,741 | (43.4) | 8,897 | (46.3) |
Apr.1, 2022 - Sep. 30, 2022 | 380,602 | 15.2 | 20,813 | (9.6) | 22,518 | 7.8 | 16,568 | 12.2 |
Note: Comprehensive income: ¥26,201 million [(1.5%)] for the six months ended September 30, 2023 ¥26,605 million [40.2%] for the six months ended September 30, 2022
Basic net income | Diluted net | ||
per share | income per share | ||
¥ | ¥ | ||
Apr.1, 2023 - Sep. 30, 2023 | 137.09 | 136.71 | |
Apr.1, 2022 - Sep. 30, 2022 | 252.67 | 252.04 | |
(2) Consolidated financial position | |||
Total assets | Net assets | Equity ratio | |
¥ million | ¥ million | % | |
As of September 30, 2023 | 841,246 | 456,974 | 51.9 |
As of March 31, 2023 | 782,640 | 436,422 | 53.3 |
Reference: Equity (Shareholders' equity + Accumulated other comprehensive income): ¥436,878 million as of September 30, 2023
¥417,372 million as of March 31, 2023
2. Dividends
Annual dividends | |||||
1st Quarter | 2nd Quarter | 3rd Quarter | Year-end | Annual | |
¥ | ¥ | ¥ | ¥ | ¥ | |
Apr.1, 2022 - Mar. 31, 2023 | - | 55.00 | - | 55.00 | 110.00 |
Apr.1, 2023 - Mar. 31, 2024 | - | 55.00 | |||
Apr.1, 2023 - Mar. 31, 2024 | - | 55.00 | 110.00 | ||
(Forecasts) | |||||
Note: Changes in dividend forecast during the quarter under review: None
3. Forecast for Consolidated Financial Results for the Fiscal Year Ending March 31, 2024 (from April 1, 2023 to March 31, 2024)
(Percentage figures represent changes from the corresponding periods of the previous fiscal year)
Operating | Net income | Net income | |||||||
Net sales | Ordinary income | attributable to | |||||||
income | per share | ||||||||
owners of parent | |||||||||
¥ million | % | ¥ million | % | ¥ million | % | ¥ million | % | ¥ | |
Full year | 779,000 | 3.1 | 35,500 | 1.2 | 33,500 | 3.4 | 26,000 | 13.0 | 400.58 |
Note: Revisions to consolidated business performance forecasts during the quarter under review: Yes
- Notes
- Changes in principal subsidiaries during the term: None
- Application of simplified methods of accounting and specific accounting methods: None
- Changes in accounting principles, changes in estimates, or restatements
- Changes owing to revisions in accounting standards: None
- Changes other than 1. above: None
- Changes in accounting estimates: None
- Restatements: None
- Number of shares issued (common stock)
- Number of shares issued at the end of the period (including treasury stock):
- Number of shares of treasury stock at the end of the period:
- Average number of shares outstanding during the period (calculated cumulatively from the beginning of the fiscal year):
September 30, | 68,000,000 | March 31, 2023 | 68,000,000 |
2023 | shares | shares | |
September 30, | 3,085,700 | March 31, 2023 | 3,106,293 |
2023 | shares | shares | |
September 30, | 64,905,854 | September 30, | 65,573,827 |
2023 | shares | 2022 | shares |
※These financial statements are exempt from audit procedures to be performed by certified public accountants or an audit firm.
※Explanations or other items pertaining to appropriate use of business performance forecasts The business performance forecasts and certain other statements contained in this document are forward-looking statements, which are based on information currently available to the Company and certain assumptions determined to be reasonable by the Company. For a variety of reasons, actual performance may differ substantially from these forecasts. They do not constitute a guarantee that the Company will achieve these forecasts or other forward-looking statements. For cautionary items used in business performance forecasts, please refer to the section entitled "(3) Earnings Forecasts and Other Forward-lookingStatements" under "1. Quarterly Consolidated Financial Results" on page 5.
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation (4118)
Supplementary Materials
Contents
1. Quarterly Consolidated Financial Results-------------------------------------------------------------- | P. 2 | |
(1) | Operating Results -------------------------------------------------------------------------------------- | P. 2 |
(2) | Financial Position --------------------------------------------------------------------------------------- | P. 4 |
(3) | Earnings Forecasts and Other Forward-looking Statements -------------------------------- | P. 5 |
2. Quarterly Consolidated Financial Statements and Main Notes --------------------------------- | P. 6 | |
(1) | Quarterly Consolidated Balance Sheets ---------------------------------------------------------- | P. 6 |
(2) | Quarterly Consolidated Statements of Income and Comprehensive Income ------------ | P. 8 |
(3) | Quarterly Consolidated Statements of Cash Flows -------------------------------------------- | P. 10 |
(4) | Notes to the Consolidated Financial Statements ----------------------------------------------- | P. 12 |
(Going Concern Assumption) ------------------------------------------------------------------------ | P. 12 | |
(Notes in the Event of Significant Changes in the Amount of Shareholders' Equity) | -- P. 12 | |
(Segment Information) -------------------------------------------------------------------------------- | P. 12 |
-1-
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation(4118)
1.Quarterly Consolidated Financial Results
(1) Operating Results
-
State of the Global Economy - Delayed economic recovery and uncertain outlook -
During the first six months (April 1 to September 30, 2023, "1H") of the fiscal year ending March 31, 2024, the situation in the Middle East became more tense in addition to the prolonged Russian invasion of Ukraine. Further, geopolitical and country risks have become a major factor that delays the global economic recovery. In Europe and the U.S., monetary tightening continues, and the global economy remains stagnant due to friction between the U.S. and China and the shrinking Chinese economy.
A wide range of primary industries such as agriculture and fisheries, and manufacturing including digital components, continues to face a situation with no end in sight. - Kaneka Group's Business Performance - Sales and profits decreased while sound performance in Life Science fields -
Under these circumstances, Kaneka Group's business performance for 1H was as follows. Consolidated net sales were ¥370,116 million (down 2.8% year-on-year), operating income was ¥12,606 million (down 39.4% year-on-year), ordinary income was ¥12,741 million (down 43.4% year- on-year), and net income attributable to owners of parent was ¥8,897 million (down 46.3% year-on- year).
Under the severe demand environment, the second quarter (July 1 to September 30, 2023, "2Q") showed recovery, with earnings at the above or same level of the first quarter (April 1 to June 30, 2023, "1Q") in all business segments. While overseas demands in Material Solutions Unit (SU), E & I Technology, and Performance Fibers remained slow, Health Care SU and Nutrition SU solidly contributed to profits. Portfolio transformation has been progressing steadily. Net profit has continued to improve since the previous 3Q (October 1 to December 31, 2022).
Business performance for the first six months (April 1, 2023 to September 30, 2023) (Millions of yen)
FY2022 | FY2023 | Difference | |
1H(Apr.-Sep.) | 1H(Apr.-Sep.) | (year-on-year) | |
Net sales | 380,602 | 370,116 | (10,485) |
(2.8%) | |||
Operating income | 20,813 | 12,606 | (8,206) |
(39.4%) | |||
Ordinary income | 22,518 | 12,741 | (9,777) |
(43.4%) | |||
Net income attributable to | 16,568 | 8,897 | (7,670) |
owners of parent | (46.3%) | ||
Net sales and operating income by business segments | (Millions of yen) | |||||||
Net sales | Operating income | |||||||
FY2023 | Difference | FY2023 | Difference | |||||
1Q | 2Q | Total | (year-on-year) | 1Q | 2Q | Total | (year-on-year) | |
Material SU | 77,659 | 78,814 | 156,474 | (16,420) | 5,513 | 6,610 | 12,123 | (6,580) |
(9.5%) | (35.2%) | |||||||
Quality of Life SU | 40,878 | 43,880 | 84,758 | (2,436) | 2,939 | 4,159 | 7,099 | (1,569) |
(2.8%) | (18.1%) | |||||||
Health Care SU | 17,745 | 18,448 | 36,193 | 2,200 | 2,967 | 2,926 | 5,893 | (1,616) |
6.5% | (21.5%) | |||||||
Nutrition SU | 46,037 | 46,006 | 92,043 | 6,073 | 2,277 | 2,298 | 4,575 | 2,472 |
7.1% | 117.6% | |||||||
Others | 419 | 226 | 645 | 98 | 288 | 101 | 389 | 107 |
17.9% | 38.0% | |||||||
Adjustment | - | - | - | - | (8,381) | (9,093) | (17,475) | (1,020) |
- | ||||||||
Total | 182,740 | 187,376 | 370,116 | (10,485) | 5,603 | 7,002 | 12,606 | (8,206) |
(2.8%) | (39.4%) | |||||||
※SU:Solutions Unit | -2- |
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation(4118)
In "Life Focus Management", the management plan announced in May 2023, we defined Life Science fields as technologies that make life on earth healthy, and we are working to shift our focus to these business fields. We are steadily implementing measures to further expand our business in Medical, Pharma, Supplemental Nutrition, dairy products, and PV & Energy management, and are accelerating market development in Green Planet and Food Production Support.
The operating performance by business segment was as follows:
- Material Solutions Unit
This unit recorded sales and profits slow to recover amid prolonged economic stagnation in Europe, the U.S., and Asia, despite bottoming out in the previous 3Q.
- For Vinyls and Chlor-Alkali, sales of both PVC and caustic soda were affected by the delayed recovery of the Chinese economy and a decline in the Asian market, resulting in weak performance.
- For Modifiers, demand for non-PVC products and the Asian market have been on a recovery trend since the late 2Q, while the demand-supply adjustments for construction use are prolonged on the back of ongoing high inflation and high interest rates in Europe and the U.S. Sales of epoxy masterbatch (MX) mainly for EV structural adhesives have grown, and sales for new applications are also expanding.
- For Modified Silicone polymers, after bottoming out, profit increased with sales expansion to new regions and applications. To address the rising global demand, we are increasing production capacity in Belgium.
- For Green Planet, we have established various processing technologies, which are the key to market development, as well as formulation technologies to improve the required functionality. With these technologies, we are making progress in strengthening our biomanufacturing capabilities. Further, progress has been made in joint development and product launch with major brand holders in Japan, the U.S., and Europe.
- Quality of Life Solutions Unit
This unit recorded decreased sales and profits mainly due to the weak smartphone market.
- For Foam & Residential Techs, although demand remained weak, profit margin improved mainly through price revisions of expandable polystyrene beads. Demand is recovering for expanded polyolefin foam products in the automotive sector, both in Japan and overseas. Both sales and profits increased overall.
- For PV & Energy management, sales of high-efficiency photovoltaic modules for residential use are firm. As the mandatory installation of PV in new houses is spreading nationwide, we are strengthening our production capability.
- For E & I Technology, although the smartphone market demand showed recovery, its momentum is slower than expected. As for polyimide products, we are expecting the strong recovery period to begin in the third quarter (October 1 to December 31, 2023, "3Q") or later. Demand for acrylic resins for large-screen TVs and polyimide varnishes for organic EL has bottomed out and on track for growth.
- For Performance Fibers, shipments to African market have showed a recovery trend after bottoming out in the 1Q. The market for new high-performance products such as light-weight,water-repellent, and anti-bacterial properties is highly evaluated. We are focusing on efforts to increase demand by launching these new products and expanding sales to untapped regions in Africa.
-3-
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation(4118)
- Health Care Solutions Unit
This unit recorded solid performance due to Medical Device sales expansion. On the other hand, some shipments in Pharma were delayed until the 3Q or later.
- For Medical Device, the sales of blood purification devices and catheters expanded both domestically and internationally, and solid performance continued. We are strengthening our sales system in the U.S. market to further expand our business, aiming for higher sales and profits growth from the fourth quarter (January 1 to March 31, 2024, "4Q"). The construction of a production facility for blood purification devices in Hokkaido (Japan) is proceeding well to start operation next spring. In addition, we are rapidly considering building a new catheter production facility to accommodate the global expansion of catheters.
- Pharma was affected by the settling down of the COVID-19 pandemic and customers' shipment adjustments. For the Bio-CDMO business of Kaneka Eurogentec S.A., we are working on acquiring new biopharmaceutical projects by taking advantage of our meticulous responsiveness from the development stage to mass production. For small molecule pharmaceuticals, we are striving to expand sales in both domestic and overseas markets based on our long-standing sales track record. The construction to increase the manufacturing capacity of mRNA will be completed at the year-end, and we will promote its adoption in therapeutics for genetic diseases and cancer to meet growing global demand.
- Nutrition Solutions Unit
This unit recorded substantial increases in both sales and profits owing to continued strong performance of Foods and Supplemental Nutrition. Brisk performance is expected to continue even after 3Q.
- For Supplemental Nutrition, the sales of the active form of coenzyme Q10 are expanding steadily in the U.S., Asia, Oceania, and other regions. We will further strengthen our sales promotion activities to expand the market. For the probiotics business, sales are also expanding, and we are considering establishing new production facilities for the further sales expansion.
- For Foods, a shift to the sales of high-value-added products and improved spreads have largely contributed to business performance. We are strengthening our business foundation by expanding new high-value-added businesses, including organic dairy products. Kaneka Foods Corporation is focusing on improving profitability through transforming its business, such as by establishing a customer center for all domestic locations.
(2) Financial Position
-
Assets, Liabilities, Net Assets
At the end of 2Q of the current fiscal year, total assets were ¥841,246 million, up ¥58,606 million from the previous fiscal year-end. This is due to an increase in inventory assets as well as in property, plant and equipment resulting from expanded capital investment and an increase in overseas group companies' assets denominated in yen resulting from the weakening of yen.
Liabilities totaled ¥384,271 million, up ¥38,053 million, primarily reflecting an increase in loans payable.
Net assets were ¥456,974 million, up ¥20,552 million, owing chiefly to an increase in foreign currency translation adjustments resulting from the weakening of yen and an increase in valuation difference on available-for-sale securities due to an increase in the fair value of shares held.
Equity ratio was 51.9%.
-4-
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation(4118)
- Consolidated Cash Flows
Net cash provided by operating activities during 1H was ¥24,029 million, mainly due to the recording of income before income taxes and depreciation and amortization, offsetting the increase in working capital and payments for income taxes paid. Net cash used in investing activities amounted to ¥30,642 million, mainly due to purchase of property, plant and equipment. Net cash provided by financing activities was ¥9,873 million, mainly due to proceeds from an increase in loans payable, which offset payments for dividends. As a result, cash and cash equivalents as of September 30, 2023 totaled ¥44,900 million.
(3) Earnings Forecasts and Other Forward-looking Statements
The global economy is becoming increasingly uncertain, partly due to the outbreak of new conflicts in the Middle East. The IMF announced its 2023 global GDP growth forecast, predicting a slowdown to 3%.
Despite this stormy global economy, we expect Health Care SU in Life Science field will continue to expand its earnings as new R&B-oriented products in Pharma and Medical fulfill their potentials. Nutrition SU, composed of Foods and Supplemental Nutrition, is brisk due to growing awareness of "food and health" and the resumption of tourism to Japan. We have been taking notice of above two segments as a key business that will continue to make our business portfolio stronger. As for the Material SU and QoL SU, which had been affected by raw material's price trends and currency fluctuations, the markets for Modifiers, E & I Technology, and Performance Fibers are beginning to recover.
We will work on to strengthen our cost competitiveness by incorporating technological innovations. Through these efforts, we expect overall performance recovery to accelerate in 3Q and beyond.
Based on the business performance up until 2Q and the business environment outlook, we have revised our forecast for consolidated business performance announced on May 12, 2023.
Revisions to the forecast for consolidated business performance for the fiscal year ending March 31, 2024 (April 1, 2023 to March 31, 2024) | |||||
Net income | Net income | ||||
Net sales | Operating income | Ordinary income | attributable to | ||
per share | |||||
owners of parent | |||||
Previous forecast (A) | ¥million | ¥million | ¥million | ¥million | ¥ |
800,000 | 42,000 | 38,500 | 27,000 | 416.06 | |
Current forecast (B) | 779,000 | 35,500 | 33,500 | 26,000 | 400.58 |
Change (B-A) | (21,000) | (6,500) | (5,000) | (1,000) | |
Percent change (%) | (2.6) | (15.5) | (13.0) | (3.7) | |
(Reference: | 755,821 | 35,087 | 32,411 | 23,008 | 349.59 |
Year ended March 31, 2023) | |||||
Revisions to the forecast for business peformance by business segments | (Millions of yen) | |||||
Net sales | Operating income | |||||
Previous | Revised | Difference | Previous | Revised | Difference | |
forecast | forecast | forecast | forecast | |||
Material SU | 323,000 | 332,000 | 9,000 | 27,500 | 25,700 | (1,800) |
2.8% | (6.5%) | |||||
Quality of Life SU | 212,000 | 180,000 | (32,000) | 21,600 | 17,400 | (4,200) |
(15.1%) | (19.4%) | |||||
Health Care SU | 82,000 | 79,000 | (3,000) | 17,700 | 16,000 | (1,700) |
(3.7%) | (9.6%) | |||||
Nutrition SU | 182,000 | 187,000 | 5,000 | 8,600 | 12,000 | 3,400 |
2.7% | 39.5% | |||||
Others | 1,000 | 1,000 | - | 600 | 600 | - |
- | - | |||||
Adjustment | - | - | - | (34,000) | (36,200) | (2,200) |
- | ||||||
Total | 800,000 | 779,000 | (21,000) | 42,000 | 35,500 | (6,500) |
(2.6%) | (15.5%) | |||||
※SU:Solutions Unit
-5-
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation (4118)
2. Quarterly Consolidated Financial Statements and Main Notes
(1) Quarterly Consolidated Balance Sheets
(Millions of yen) | ||
FY2022 | FY2023 2nd Quarter | |
As of | As of | |
March 31, 2023 | September 30, 2023 | |
Assets | ||
Current assets | ||
Cash and deposits | 41,774 | 46,253 |
Notes and accounts receivable-trade, and contract assets | 170,154 | 183,493 |
Short-term investment securities | 94 | - |
Merchandise and finished goods | 89,223 | 97,594 |
Work in process | 13,317 | 11,556 |
Raw materials and supplies | 65,574 | 69,173 |
Other | 18,327 | 19,275 |
Allowance for doubtful accounts | (1,502) | (1,597) |
Total current assets | 396,964 | 425,750 |
Noncurrent assets | ||
Property, plant and equipment | ||
Buildings and structures, net | 96,399 | 97,451 |
Machinery, equipment and vehicles, net | 107,829 | 108,440 |
Other, net | 88,385 | 104,456 |
Total property, plant and equipment | 292,615 | 310,348 |
Intangible assets | ||
Goodwill | 2,201 | 2,050 |
Other | 13,987 | 14,255 |
Total intangible assets | 16,189 | 16,306 |
Investments and other assets | ||
Investment securities | 57,422 | 68,191 |
Other | 19,731 | 20,958 |
Allowance for doubtful accounts | (283) | (309) |
Total investments and other assets | 76,870 | 88,840 |
Total noncurrent assets | 385,675 | 415,495 |
Total assets | 782,640 | 841,246 |
- 6 -
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation (4118)
(Millions of yen) | ||
FY2022 | FY2023 2nd Quarter | |
As of | As of | |
March 31, 2023 | September 30, 2023 | |
Liabilities | ||
Current liabilities | ||
Notes and accounts payable-trade | 88,663 | 98,244 |
Short-term loans payable | 116,491 | 137,130 |
Current portion of bonds payable | - | 5,000 |
Income taxes payable | 5,055 | 4,532 |
Provision | 119 | 7 |
Other | 47,912 | 54,387 |
Total current liabilities | 258,242 | 299,302 |
Noncurrent liabilities | ||
Bonds payable | 10,000 | 5,000 |
Long-term loans payable | 33,706 | 31,628 |
Provision | 2,375 | 2,193 |
Net defined benefit liability | 20,829 | 20,716 |
Other | 21,063 | 25,430 |
Total noncurrent liabilities | 87,974 | 84,969 |
Total liabilities | 346,217 | 384,271 |
Net assets | ||
Shareholders' equity | ||
Capital stock | 33,046 | 33,046 |
Capital surplus | 32,245 | 30,333 |
Retained earnings | 323,213 | 328,526 |
Treasury stock | (11,407) | (11,331) |
Total shareholders' equity | 377,098 | 380,574 |
Accumulated other comprehensive income | ||
Valuation difference on available-for-sale securities | 22,204 | 29,704 |
Deferred gains or losses on hedges | (3) | 3 |
Foreign currency translation adjustment | 11,543 | 20,224 |
Remeasurements of defined benefit plans | 6,529 | 6,370 |
Total accumulated other comprehensive income | 40,273 | 56,303 |
Subscription rights to shares | 622 | 648 |
Non-controlling interests | 18,427 | 19,447 |
Total net assets | 436,422 | 456,974 |
Total liabilities and net assets | 782,640 | 841,246 |
- 7 -
Quarterly Financial Results for the 2nd Quarter, Ended September 30, 2023, Kaneka Corporation (4118)
(2) Quarterly Consolidated Statements of Income and Comprehensive Income | |
Quarterly Consolidated Statements of Income | (Millions of yen) |
FY2022 2nd Quarter FY2023 2nd Quarter
From April 1, 2022 | From April 1, 2023 | |
to September 30, 2022 | to September 30, 2023 | |
Net sales | 380,602 | 370,116 |
Cost of sales | 277,284 | 274,003 |
Gross profit | 103,317 | 96,112 |
Selling, general and administrative expenses | 82,503 | 83,506 |
Operating income | 20,813 | 12,606 |
Non-operating income | ||
Dividends income | 928 | 931 |
Foreign exchange gains | 3,365 | 2,007 |
Equity in earnings of affiliates | 93 | 73 |
Other | 395 | 408 |
Total non-operating income | 4,783 | 3,420 |
Non-operating expenses | ||
Interest expenses | 750 | 1,600 |
Loss on retirement of noncurrent assets | 692 | 590 |
Other | 1,634 | 1,093 |
Total non-operating expenses | 3,077 | 3,285 |
Ordinary income | 22,518 | 12,741 |
Extraordinary income | ||
Gain on sale of investment securities | - | 1,138 |
Gain on sale of businesses | - | 517 |
Total extraordinary income | - | 1,656 |
Income before income taxes | 22,518 | 14,397 |
Income taxes-current | 5,563 | 4,806 |
Income taxes-deferred | (107) | 14 |
Total income taxes | 5,456 | 4,820 |
Net income | 17,062 | 9,577 |
Net income attributable to non-controlling interests | 493 | 679 |
Net income attributable to owners of parent | 16,568 | 8,897 |
- 8 -
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Kaneka Corporation published this content on 13 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2023 13:50:47 UTC.