October 30, 2023
KOKUYO CO., LTD.
FINANCIAL RESULTS
(Consolidated)
Results for the nine months ended September 30, 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: +81-6-6976-1221 (general)
Date for submission of securities report: November 6, 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 nine months ended September 30, 2023 (January 1, 2023 to September 30, 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 | |||||||
9 months ended | 248,813 | 10.6 | 19,677 | 31.5 | 21,667 | 23.4 | |||
September 30, 2023 | |||||||||
9 months ended | 224,899 | − | 14,963 | − | 17,555 | − | |||
September 30, 2022 | |||||||||
(Note) Comprehensive income: | |||||||||
For the nine months ended September 30, 2023 ¥21,155 million | [33.3%] | ||||||||
For the nine months ended September 30, 2022¥15,868 million | [−%] | ||||||||
Profit attributable to owners of | Earnings per share | Diluted earnings per share | |||||||
parent | |||||||||
Millions of yen | % change from | Yen | Yen | ||||||
the previous year | |||||||||
9 months ended | 14,874 | 14.0 | 128.91 | − | |||||
September 30, 2023 | |||||||||
9 months ended | 13,053 | − | 112.91 | − | |||||
September 30, 2022 | |||||||||
(Note) Starting from the first quarter of the fiscal year ended December 2022, we have applied the ASBJ Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020). The standard has been retroactively applied to the corresponding period of the previous fiscal year. However, the 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 | ||
September 30, 2023 | 351,248 | 253,704 | 71.8 | 2,189.38 | |
December 31, 2022 | 337,538 | 239,617 | 70.4 | 2,058.11 | |
(Reference) Equity: | |||||
September 30, 2023 | ¥252,048 million | ||||
December 31, 2022 | ¥237,744 million |
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(Note) During the first half (six months ended June 30, 2023), we finalized provisional amounts that we had used to account for a business combination. The finalized amounts have been incorporated into the results for the previous fiscal year (ended December 31, 2022).
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 December | − | 28.00 | − | 29.00 | 57.00 | ||||||
31, 2022 | |||||||||||
Fiscal period ending December | − | 32.50 | − | ||||||||
31, 2023 | |||||||||||
Fiscal period ending December | 32.50 | 65.00 | |||||||||
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 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 | ||||
Full-year forecast | 337,000 | 12.0 | 23,000 | 20.2 | 25,200 | 19.1 |
(Jan-Dec 2023) | ||||||
Profit attributable to owners of | Earnings per share | |||||
parent | ||||||
Millions of yen | % change from | Yen | ||||
the previous year | ||||||
Full-year forecast | 18,500 | 1.4 | 160.15 | |||
(Jan-Dec 2023) | ||||||
(Note) Revisions to financial forecasts published most recently: None
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* Others
- Significant changes in subsidiaries during the period under review (changes in certain specified subsidiaries accompanying revised scope of consolidation): None
New: − | Removed: − |
- 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).
- Changes in accounting principles, procedures and methods of presentation relating to preparation of the consolidated financial statements
- Changes due to revision of accounting standards: Yes
- Changes other than those under above: None
- Changes in accounting estimates: None
- Restatement: None
(Note) See page 14 of the reference document (2. Consolidated Financial Statements, (4) Notes: Changes in accounting principles).
(4) Number of shares of common stock issued
- Number of shares of common stock (including treasury stock) issued at:
September 30, 2023 | 121,542,463 |
December 31, 2022 | 128,742,463 |
- Number of shares of treasury stock held at:
September 30, 2023 | 6,419,642 |
December 31, 2022 | 13,226,417 |
- Number of shares of average stock during a term held at:
September 30, 2023 | 115,387,489 |
September 30, 2022 | 115,608,512 |
- 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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4. 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.
On July 21, 2022, we merged with HNI Hong Kong Limited (now Kokuyo Hong Kong Limited). During the previous fiscal year (ended December 31, 2022), we accounted for this business combination using provisional amounts. We finalized these amounts during the first half (six months ended June 30, 2023). To enable year-on-year comparisons and analysis, we have incorporated into the results for the previous fiscal year a material change to the initial purchase price allocation.
(1) Business Results
(Millions of yen) | |||
9 months ended | 9 months ended | % change from the | |
September 30, 2022 | September 30, 2023 | previous year | |
Net sales | 224,899 | 248,813 | +10.6 |
Operating income | 14,963 | 19,677 | +31.5 |
Ordinary income | 17,555 | 21,667 | +23.4 |
Profit attributable to owners of parent | 13,053 | 14,874 | +14.0 |
During the nine months ended September 30, 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 ¥248.8 billion (up 10.6% 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 Kokuyo Hong Kong Limited following our full acquisition of the company last year. Gross profit increased to ¥96.7 billion (up 10.9% year on year) and gross profit ratio came to 38.9% (on par with the result for the nine months ended September 30, 2022). Selling, general and administrative expenses increased to ¥77.0 billion (up 6.6% 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 31.0% (down 1.2 percentage point year on year).
Reflecting these results, operating income reached ¥19.6 billion (up 31.5% year on year). Ordinary income reached ¥21.6 billion (up 23.4% year on year). Profit attributable to owners of parent reached ¥14.8 billion (up 14.0% year on year).
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.
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(Millions of yen) | |||||
9 months ended | 9 months ended | % change from the | |||
September 30, 2022 | September 30, 2023 | previous year | |||
Workstyle field | Net sales | 172,222 | 190,906 | +10.8 | |
Operating income | 15,111 | 20,772 | +37.5 | ||
Furniture | Net sales | 100,357 | 117,464 | +17.0 | |
Operating income | 12,795 | 17,872 | +39.7 | ||
Business supply | Net sales | 71,864 | 73,442 | +2.2 | |
distribution | Operating income | 2,315 | 2,900 | +25.3 | |
Lifestyle field | Net sales | 72,452 | 78,934 | +8.9 | |
Operating income | 5,939 | 5,827 | (1.9) | ||
Stationery | Net sales | 58,312 | 63,968 | +9.7 | |
Operating income | 5,230 | 5,322 | +1.7 | ||
Interior retail | Net sales | 14,140 | 14,966 | +5.8 | |
Operating income | 708 | 504 | (28.8) | ||
Others | Net sales | 292 | 306 | +5.0 | |
Operating income | (95) | (193) | − | ||
Reconciliation | Net sales | (20,067) | (21,335) | − | |
Operating income | (5,992) | (6,728) | − | ||
Total | Net sales | 224,899 | 248,813 | +10.6 | |
Operating income | 14,963 | 19,677 | +31.5 | ||
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, we targeted the demand for office relocation and the brisk demand for office renovation amid the large growth in the supply of office buildings in the Tokyo Metropolitan Area. We pitched workstyle-focused office solutions for customers' strategic challenges. Our track record grew and our profits improved.
In China and ASEAN, we seek to expand in these markets by cross-selling and production integration, with Kokuyo Hong Kong Limited playing the central role. The Chinese economic outlook is uncertain.
Under such circumstances, the segment's net sales increased to ¥117.4 billion (up 17.0% year on year). Operating income increased to ¥17.8 billion (up 39.7% year on year).
• Business supply distribution
To expand business supply distribution, we are streamlining operations by integrating Kaunet with our wholesale distribution operations. We are also using system investment to improve user interface and user experience design, thereby enhancing customer value.
In the period under review, the retailer saw strong sales to large employers, with higher average revenue per unit thanks to the recovery in office attendance along with pricing revisions.
Under these circumstances, the segment's net sales came to ¥73.4 billion (up 2.2% year on year). Operating income increased to ¥2.9 billion (up 25.3% year on year).
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Lifestyle field
• Stationery
For our stationery businesses, we aim to increase revenue and profit through a global expansion. To that end, we focus on the growing market for value-added stationery, which is driven by the demand for self-expression (as exemplified by social media). We have also committed to the radical organizational change in order to prepare for global expansion.
In Japan, business has been hit hard by sluggish demand and high raw material prices. Amid these circumstances, we work to improve the bottom line by optimally allocating business resources.
In China, we saw strong demand for stationery among secondary school girls. However, China's economic downturn continues to shroud the business outlook.
In India, we spent the period under review overhauling our business activities, strengthening merchandise, and improving business productivity. Consequently, business results were pleasing.
Under these circumstances, the segment's net sales increased to ¥63.9 billion (up 9.7% year on year). Operating income increased to ¥5.3 billion (up 1.7% year on year).
• Interior retail
To capture emerging living-space needs, Actus has committed to following an online-merged-with-offline strategy to integrate its online store with its brick-and-mortar stores.
During the third quarter, we made good progress in our online marketing efforts, offsetting a decline in stay- at- home demand. However, we recorded less profit because of the low yen and because we were unable to absorb the increase in SG&A expenses.
Under these circumstances, the segment's net sales increased to ¥14.9 billion (up 5.8% year on year). Operating income decreased to ¥0.5 billion (down 28.8% year on year).
- Qualitative and Other Information Related to Consolidated Financial Position 1) Assets, liabilities, and net assets
Total assets at September 30, 2023, amounted to ¥351.2 billion, up ¥13.7 billion from December 31, 2022, the end of the previous fiscal year.
Current assets increased by ¥6.9 billion to ¥221.9 billion. The main factors were an increase of ¥14.4 billion in cash and deposits, which more than offset a decrease of ¥5.0 billion in notes and accounts receivable and contract assets, and a decrease of ¥1.6 billion in merchandise and finished goods.
Non-current assets increased by ¥6.7 billion to ¥129.3 billion. The main factor was an increase of ¥6.0 billion in investments securities.
Liabilities at September 30, 2023, amounted to ¥97.5 billion, down ¥0.3 billion from December 31, 2022, the end of the previous fiscal year. The main factors were a decrease of ¥5.4 billion in notes and accounts payable - trade, which more than offset an increase of ¥3.7 billion in income taxes payable and an increase of ¥2.0 billion in provision for bonuses.
Net assets at September 30, 2023, came to a total of ¥253.7 billion, up ¥14.0 billion from December 31, 2022, the end of the previous fiscal year. The main factors were an increase of ¥9.6 billion in disposal of treasury shares and an increase of ¥3.5 billion in valuation difference on available-for-sale securities.
2) Cash Flows
On a consolidated basis, cash and cash equivalents (hereafter referred to as cash) as of September 30, 2023 totaled ¥112.6 billion, an increase of ¥14.3 billion from the previous fiscal year-end.
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Cash flows from operating activities
Net cash provided by operating activities was ¥27.7 billion (up ¥22.9 billion year on year). The main positive cash flows were ¥21.9 billion in profit before income taxes, ¥5.6 billion in decrease in notes and accounts receivable - trade, ¥5.5 billion in depreciation, and ¥2.0 billion in increase in provision for bonuses. The main negative cash flows were ¥5.9 billion in decrease in notes and accounts payable - trade and ¥2.1 billion in income taxes paid.
Cash flows from investing activities
Net cash used by investing activities was ¥3.3 billion (down ¥6.6 billion year on year). The main positive cash flow was ¥2.0 billion in proceeds from sales and redemption of investment securities. The main negative cash flows were ¥4.6 billion in capital expenditure and ¥0.6 billion in acquisition of non-consolidated subsidiary stock.
Cash flows from financing activities
Net cash used in financing activities was ¥10.7 billion (up ¥2.4 billion year on year). The main negative cash flows were ¥7.0 billion in cash dividends paid, ¥1.1 billion in repayments of lease obligations, ¥1.0 billion in increase in cash segregated as deposits for purchase of treasury shares, ¥0.7 billion in purchase of treasury shares, and ¥0.5 billion in payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation.
(3) Qualitative Information Related to Consolidated Forecasts
The forecasts for the fiscal period ending December 31, 2023, remain unchanged from those announced on July 31, 2023.
If we do have to change the forecasts, we will disclose the details without delay.
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5. Consolidated Financial Statements
(1) Consolidated Balance Sheets
(Millions of yen) | ||||
As of December 31, 2022 | As of September, 2023 | |||
Assets | ||||
Current assets | ||||
Cash and deposits | 68,467 | 82,941 | ||
Notes and accounts receivable and contract assets | 68,997 | 63,997 | ||
Securities | 29,996 | 29,996 | ||
Merchandise and finished goods | 31,822 | 30,150 | ||
Work in process | 2,394 | 2,770 | ||
Raw materials and supplies | 5,789 | 6,165 | ||
Other | 7,639 | 6,024 | ||
Allowance for doubtful accounts | (106) | (100) | ||
Total current assets | 215,001 | 221,945 | ||
Non-current assets | ||||
Property, plant and equipment | ||||
Buildings and structures, net | 20,569 | 21,173 | ||
Land | 28,298 | 28,316 | ||
Other, net | 12,237 | 12,102 | ||
Total property, plant and equipment | 61,105 | 61,592 | ||
Intangible assets | ||||
Goodwill | 5,316 | 5,487 | ||
Other | 11,189 | 11,177 | ||
Total intangible assets | 16,505 | 16,664 | ||
Investments and other assets | ||||
Investment securities | 35,574 | 41,591 | ||
Retirement benefit asset | 4,002 | 4,120 | ||
Other | 5,722 | 5,698 | ||
Allowance for doubtful accounts | (373) | (365) | ||
Total investments and other assets | 44,926 | 51,045 | ||
Total non-current assets | 122,537 | 129,302 | ||
Total assets | 337,538 | 351,248 | ||
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(Millions of yen) | ||||
As of December 31, 2022 | As of September, 2023 | |||
Liabilities | ||||
Current liabilities | ||||
Notes and accounts payable - trade | 53,971 | 48,488 | ||
Short-term loans payable | 4,329 | 4,399 | ||
Current portion of long-term loans payable | 138 | 5,000 | ||
Income taxes payable | 818 | 4,618 | ||
Provision for bonuses | 1,158 | 3,252 | ||
Other | 19,077 | 17,299 | ||
Total current liabilities | 79,494 | 83,057 | ||
Non-current liabilities | ||||
Long-term loans payable | 5,000 | − | ||
Retirement benefit liability | 82 | 84 | ||
Other | 13,344 | 14,402 | ||
Total non-current liabilities | 18,426 | 14,486 | ||
Total liabilities | 97,920 | 97,544 | ||
Net assets | ||||
Shareholders' equity | ||||
Capital stock | 15,847 | 15,847 | ||
Capital surplus | 18,127 | 18,136 | ||
Retained earnings | 207,772 | 206,483 | ||
Treasury shares | (19,215) | (9,568) | ||
Total shareholders' equity | 222,532 | 230,899 | ||
Accumulated other comprehensive income | ||||
Valuation difference on available-for-sale securities | 13,109 | 16,685 | ||
Deferred gains or losses on hedges | (34) | 150 | ||
Foreign currency translation adjustment | 1,755 | 3,988 | ||
Remeasurements of defined benefit plans | 380 | 324 | ||
Total accumulated other comprehensive income | 15,212 | 21,148 | ||
Non-controlling interests | 1,873 | 1,655 | ||
Total net assets | 239,617 | 253,704 | ||
Total liabilities and net assets | 337,538 | 351,248 | ||
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- Quarterly Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income for the Nine Months Ended September 30, 2023
(Millions of yen) | ||||||
Nine months ended September | Nine months ended September | |||||
30, 2022 | 30, 2023 | |||||
Net sales | 224,899 | 248,813 | ||||
Cost of sales | 137,652 | 152,075 | ||||
Gross profit | 87,246 | 96,737 | ||||
Selling, general and administrative expenses | 72,283 | 77,059 | ||||
Operating income | 14,963 | 19,677 | ||||
Non-operating income | ||||||
Interest income | 71 | 106 | ||||
Dividend income | 471 | 404 | ||||
Real estate rent | 669 | 629 | ||||
Share of profit of entities accounted for using equity | 512 | 173 | ||||
method | ||||||
Foreign exchange gains | 1,078 | 830 | ||||
Other | 257 | 293 | ||||
Total non-operating income | 3,062 | 2,439 | ||||
Non-operating expenses | ||||||
Interest expenses | 117 | 150 | ||||
Rent expenses on real estate | 142 | 146 | ||||
Other | 208 | 152 | ||||
Total non-operating expenses | 469 | 449 | ||||
Ordinary income | 17,555 | 21,667 | ||||
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Reversal of allowance for doubtful accounts
Reversal of provision for loss on business of subsidiaries and associates
304 | 77 | |||
1,022 | 283 | |||
8 | − | |||
8 | 2 |
Subsidy income | 108 | − | ||
Total extraordinary income | 1,451 | 363 | ||
Extraordinary losses | ||||
Loss on valuation of investment securities | 33 | 14 | ||
Provision of allowance for doubtful accounts | 20 | 29 | ||
Costs for addressing IT system failure | − | 60 | ||
Total extraordinary losses | 53 | 104 | ||
Profit before income taxes | 18,954 | 21,926 | ||
Income taxes - current | 5,745 | 6,860 | ||
Profit | 13,208 | 15,066 | ||
Profit attributable to non-controlling interests | 154 | 191 | ||
Profit attributable to owners of parent | 13,053 | 14,874 | ||
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Kokuyo Co. Ltd. published this content on 30 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2023 07:20:47 UTC.