Kokuyo : Financial Results for the three months ended March 31, 2023 （279KB）

April 28, 2023

KOKUYO CO., LTD.

FINANCIAL RESULTS

(Consolidated)

Results for the three months ended March 31, 2023

Company name: KOKUYO Co., Ltd.

Stock listings: Tokyo Stock Exchange (Prime)

Stock code: 7984 (URL https://www.kokuyo.com)

Representative: Hidekuni Kuroda, President

For further information, please contact: Naotaka Umeda, Managing Officer, Financial Administration Division

Telephone: [phone] (general)

Date for submission of securities report: May 11, 2023

Commencement date for dividend payments: −

Supplemental material of quarterly results: None

Convening briefing of quarterly results: Yes (for institutional investors and securities analysts)

(Figure less than ¥1 million have been omitted.)

1. Results for the three months ended March 31, 2023 (January 1, 2023 to March 31, 2023)

(1) Consolidated operating results

		Net sales	Operating income	Ordinary income
			% change from			% change from			% change from
		Millions of yen	the previous	Millions of yen		the previous	Millions of yen		the previous
			year			year			year
	3 months ended	92,555	7.1	10,815		7.7	11,220		5.0
	March 31, 2023
	3 months ended	86,437	−	10,043		−	10,688		−
	March 31, 2022
(Note) Comprehensive income:
	For the three months ended March 31, 2023	¥9,246 million	[21.8%]
	For the three months ended March 31, 2022	¥7,592 million	[−%]
		Profit attributable to owners of	Earnings per share	Diluted earnings per share
		parent
			% change from
		Millions of yen	the previous	Yen		Yen
			year
	3 months ended	7,666	(0.2)			66.43			−
	March 31, 2023
	3 months ended	7,681	−			66.36			−
	March 31, 2022

(Note) Starting from the first quarter of the fiscal year ending December 2022, we have applied the ASBJ Accounting Standard for Revenue Recognition (Japanese GAAP Standard No. 29, March 31, 2020). The standard has been retroactively applied to the corresponding period of the previous fiscal year. However, the change (numerical and percentage change) between the two periods is not shown.

(2) Consolidated financial position

			Total assets	Net assets	Equity ratio	Net assets per share
			Millions of yen	Millions of yen	%	Yen
	March 31, 2023		349,304	246,890	70.1	2,122.75
	December 31, 2022		337,166	239,745	70.6	2,059.21
(Reference) Equity:
	March 31, 2023	¥244,974 million
	December 31, 2022	¥237,871 million

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2. Dividends

					Dividend per share
		March 31		June 30		September 30		Year-end		Full-year
					dividend		dividend
		Yen		Yen		Yen		Yen		Yen
Fiscal period ended		-	28.00		-	29.00	57.00
December 31, 2022
Fiscal period ending		-
December 31, 2023
Fiscal period ending			29.00		-	29.00	58.00
December 31, 2023
(forecast)

(Note) Revisions to estimated dividends published most recently: None

3. Consolidated Forecasts for the Fiscal Period Ending December 31, 2023 (January 1, 2023 to December 31, 2023)

	Net sale	Operating income	Ordinary income
		% change from			% change from		% change from
	Millions of yen	the	Millions of yen		the	Millions of yen	the
		previous year			previous year		previous year
H1 forecast	176,100	12.6	13,200		3.7	14,000	(4.2)
(Jan-Jun 2023)
Full-year forecast	337,000	12.0	20,000		3.5	21,400	0.2
(Jan-Dec 2023)
	Profit attributable to owners of	Earnings per share
	parent
		% change from
	Millions of yen	the	Yen
		previous year
H1 forecast	9,600	(11.5)			83.11
(Jan-Jun 2023)
Full-year forecast	15,600	(15.1)			135.05
(Jan-Dec 2023)

(Note) Revisions to financial forecasts published most recently: None

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* Others

1. Significant changes in subsidiaries during the period under review (changes in certain specified subsidiaries accompanying revised scope of consolidation): None

New: －

Removed: －

1. Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: Yes

(Note) See page 14 of the reference document (2. Consolidated Financial Statements, (4) Notes: Application of particular accounts procedures to the preparation of quarterly consolidated financial statements).

1. Changes in accounting principles, procedures and methods of presentation relating to preparation of the consolidated financial statements
2. 1. Changes due to revision of accounting standards: Yes
   2. Changes other than those under above: None
   3. Changes in accounting estimates: None
   4. Restatement: None

(Note) See page 14 of the reference document (2. Consolidated Financial Statements, (4) Notes: Changes in accounting principles).

1. Number of shares of common stock issued
2. 1. Number of shares of common stock (including treasury stock) issued at:

	March 31, 2023	128,742,463
	December 31, 2022	128,742,463
2)	Number of shares of treasury stock held at:
	March 31, 2023	13,338,199
	December 31, 2022	13,226,417
3)	Number of shares of average stock during a term held at:
	March 31, 2023	115,404,467
	March 31, 2022	115,746,050

*This quarterly financial summary is not subject to a review by a certified public account or independent auditor.

*Advice relating to appropriate use of financial forecasts and other relevant information

This document contains performance forecasts and other forward-looking statements. Such statements are based on information available at the time and, in part, on what are deemed to be reasonable assumptions. They are not guarantees of future performance. Actual results may differ markedly from what the forward- looking statements suggest due to a plethora of variables.

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1. Qualitative Information and Financial Statements, etc.

All forward-looking statements in this document are based on assumptions deemed reasonable as of the end of the period under review.

(1) Business Results

(Millions of yen)

	3 months ended	3 months ended	% change from
	the
	March 31, 2022	March 31, 2023
	previous year
Net sales	86,437	92,555	7.1
Operating income	10,043	10,815	7.7
Ordinary income	10,688	11,220	5.0
Profit attributable to owners of parent	7,681	7,666	(0.2)

During the first quarter under review (January 1, 2023, to March 31, 2023), the Japanese economy continued on the normalization path that began with the easing of Covid restrictions, but uncertainties prevailed with fears of economic downturn abroad, the prolonged conflict in Ukraine, and soaring costs of energy and raw materials.

Against this backdrop, we continued working on our third medium-term plan, Field Expansion 2024, in which we tweak existing business and expand our business fields as part of our long-term vision, CCC 2030. To expand business fields, we reallocated resources from existing businesses, actively deployed strategic expenditures, and stepped up our global expansion efforts.

Despite a turbulent business climate, we maintained our competitiveness by flexibly adapting to the changing business conditions and shifting customer needs.

Net sales reached ¥92.5 billion (up 7.1% year on year). This year-on-year growth reflects the success of the furniture business in capturing office renovation demand. It also reflects the contribution of HNI Hong Kong Limited (now Kokuyo Hong Kong Limited) following our full acquisition of the company last year. Gross profit increased to ¥37.1 billion (up 6.2% year on year) and gross profit ratio came to 40.1% (down 0.3 percentage point year on year). Selling, general and administrative expenses increased to ¥26.3 billion (up 5.6% year on year), reflecting the proactive increase in strategic expenditures for expanding the business fields. Expense ratio (selling, general, and administrative expenses to net sales) came to 28.4% (down 0.4 percentage point year on year).

Reflecting these results, operating income reached ¥10.8 billion (up 7.7% year on year). Ordinary income reached ¥11.2 billion (up 5.0% year on year). Profit attributable to owners of parent remained high, at ¥7.6 billion, although this was a small year-on-year decrease (of 0.2%), representing a comedown from the recording, in the previous year, of gain on sales of non-current assets and gain on sales of investment securities.

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Segment

As part of our long-term vision, CCC 2030, we have redefined our role in society as that of a "Work & Life Style Company," and committed to being an organization that creates life-affirming solutions, alongside tangible stationery and furniture, in the domain of work and the domain of learning and daily life.

In the workstyle field, the pandemic has entrenched the dispersed workplace and diverse working patterns. Against this backdrop, we target emerging needs related to the rise of hybrid work.

In the lifestyle field, we target the rising demand for authentic self-expression in learning and lifestyle tools.

The following table shows the segment-specific results for the period under review.

					(Millions of yen)
			3 months ended	3 months ended	% change from
			March 31, 2022	March 31, 2023	the previous year
	Workstyle field	Net sales	69,575	74,674	7.3
Operating income	9,461	10,701	13.1
	Furniture	Net sales	43,201	47,981	11.1
	Operating income	8,386	9,582	14.3
	Business supply	Net sales	26,373	26,692	1.2
	distribution	Operating income	1,075	1,118	4.1
	Lifestyle field	Net sales	25,193	26,427	4.9
	Operating income	2,624	2,230	(15.0)
	Stationery	Net sales	20,559	21,910	6.6
	Operating income	2,352	2,207	(6.1)
	Interior retail	Net sales	4,633	4,516	(2.5)
	Operating income	271	23	(91.5)
	Others	Net sales	119	92	(22.9)
	Operating income	(14)	(63)	−
	Reconciliation	Net sales	(8,450)	(8,637)	−
	Operating income	(2,027)	(2,053)	−
	Total	Net sales	86,437	92,555	7.1
	Operating income	10,043	10,815	7.7

Workstyle field

Furniture

For our furniture businesses, we target the burgeoning demand for office renovation driven by these changes. Meanwhile, Kokuyo Hong Kong Limited spearheads our overseas business expansion. In this way, we drive earnings growth for our organization as a whole.

In Japan, the large growth in the supply of office buildings in the Tokyo Metropolitan Area has led to renewed demand for office relocation and brisk demand for office renovation. To capture these opportunities, we focus on developing proposals for office renovations that address clients' strategic issues.

To expand business in China and ASEAN, we focus on cross-selling and production integration, with Kokuyo Hong Kong Limited playing the central role. However, in the period under review, these efforts were hampered by a Covid wave that occurred after China eased its zero-Covid policy.

Under such circumstances, the segment's net sales increased to ¥47.9 billion (up 11.1% year on year). Operating income increased to ¥9.5 billion (up 14.3% year on year).

Business supply distribution

To expand business supply distribution, we are streamlining operations by integrating Kaunet with our

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