FY2021 1Q Financial Results Conference Call Presentation Summary
May 14, 2021
Good afternoon everyone. I'm Yuichiro Wakatsuki, Co-President of Nippon Paint Holdings. Thank you very much for taking the time today to participate in our conference call regarding financial results for 1Q of FY2021.
Today's conference call is being streamed live (audio only) on the Internet, and is held in Japanese and English with simultaneous interpretation.
I will continue to be the speaker presenting our financial results after the change in our leadership. I will refer to this later.
I would like to begin by summarizing the results of operations for 1Q of FY2021.
Revenue and operating profit increased significantly both on a Tanshin basis (figures based on legal disclosure) and Non-GAAP basis. The difference between the Tanshin results and Non-GAAP results is mainly due to three factors. The first is new consolidation, that is, the new consolidation of the Indonesia and India businesses. This had a positive impact on the Tanshin results but did not affect the Non-GAAP results. The second is exchange rate fluctuations, which had a positive impact on the Tanshin results because the yen weakened against major currencies compared with our initial assumptions. Meanwhile, the Turkish lira was weaker against the yen compared with the prior-year period, which had an adverse impact on the Tanshin results. The third is M&A expenses related to the acquisition of 100% ownership of the Asian JVs, which were an expense in the Tanshin results but not in the Non-GAAP results.
Our Chinese business was most severely hit by the COVID pandemic last year through March, which is the peak demand season. Although we naturally expected revenue growth on the rebound from the COVID downturn, we actually achieved very strong results both in the DIY and Project segments with estimated market share growth.
The Japan segment continued to be affected by the COVID pandemic and revenue was on a par with 1Q of FY2020. In regions excluding Japan, our performance was generally strong. When comparing our earnings between 1Q of FY2021 and FY2020, please remember that 1Q of FY2020 was an unusual period due to the impact of COVID.
The Indonesia business, which is a newly-consolidated unit, achieved growth in revenue and operating profit, with a particularly high operating profit margin based on reference values.
The outlook for the remainder of FY2021 is unclear because raw material prices are generally rising. However, the sales and demand for paint and coatings are remaining relatively firm. We are determined to achieve our initial earnings forecast by raising prices, holding down expenses and using other measures. Furthermore, our primary focus is on how much we can exceed the initial forecast. We hope to give you updates on our progress in 2Q or afterward if raw material price stabilizes.
Beginning in the 1Q, we reclassified headquarters expenses as adjustments to clarify the earnings in the Japan segment. These expenses are unallocated expenses incurred for Nippon Paint Holdings and correspond to the headquarters expenses presented in our New Medium-Term Plan.
As was announced recently, we had a change of Representative Executive Officer and started the Co-President structure on April 28.
The reason for the resignation of former President & CEO Tanaka was as explained by Mr. Tanaka himself at the press conference, and I don't think it is appropriate for me to comment on this. Admitting that the timing of his resignation was unusual, one point I would like to clarify is that Mr. Tanaka decided to resign for the sustainable growth of the Nippon Paint Group when faced with the reality of the stamina required to keep driving the growth of the Group. Wee Siew Kim and I have taken up the position of Representative Executive Officer & Co-President with a commitment not only to steadily execute the growth strategies set out in the Medium-Term Plan but also to surpass our goals. Motivated by the pressure of succeeding Mr. Tanaka, we will strive to deliver solid results. We would like to ask for your support and guidance.
We know that the Co-President structure is not common among listed companies. However, the Nominating Committee has decided to use this structure as most suitable method for the advancement of Nippon Paint Holdings. I'm confident that the two of us can make this unique structure work successfully because the Nippon Paint Group is itself a unique and powerful corporate group. While I cannot deny the pressure, I will stay committed to delivering results.
As I mentioned earlier, and as was explained by the Chairperson of the Nominating Committee at the press conference, I will continue to be in charge of engagement with the capital market community, where I can fully utilize my experience, as part of my responsibilities as Co-President. Rather than appointing a new CFO, I will continue to perform the duties of the CFO. In addition, I will oversee the overall business management. Wee Siew Kim and I will be jointly responsible for the execution of the overall management of our Group. Wee Siew Kim will supervise the overall operations of our Group by using his 12 years of experience as CEO of the NIPSEA Group as well as his extensive knowledge of the paint business. Wee Siew Kim and I will also be jointly responsible for the execution of business operations.
On a final note, Chairman Goh Hup Jin will continue to give us advice from a broad perspective as he has been doing before. As he is the representative of the majority shareholder of Nippon Paint Holdings, Mr. Masayoshi Nakamura, the Lead Independent Director, will serve as the Board Chair.
This concludes my brief explanation about our new management structure.
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Nippon Paint Holdings Co. Ltd. published this content on 20 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 June 2021 08:53:02 UTC.