NIPPON PAINT HOLDINGS CO., LTD. Latest Results
＜Consolidated Financial Results for the Three Months Ended March 31, 2022 (January 1, 2022 to March 31, 2022)＞
During the three months ended March 31, 2022, consolidated revenue of the Nippon Paint Group increased by 27.6% from the corresponding period of the previous year to ¥284,096 million due to the acquisition on January 20, 2022 of European paint manufacturer Cromology Holding SAS (Cromology) by NPHD, making it a subsidiary, and the depreciation of the Japanese yen, coupled with the strong first quarter performance underpinned by continuous selling price increases in the decorative paints business in China, which is a key business of the Nippon Paint Group. Consolidated operating profit decreased by 1.5% from the previous year to ¥24,335 million due to raw material price increases around the world. Consolidated profit before tax increased by 3.2% from the previous year to ¥24,913 million, and profit attributable to owners of parent increased by 10.6% to ¥18,072 million.
Summary of reportable segments
The Nippon Paint Group's operations are classified into business segments for which separate financial information is available and are subject to periodical evaluation by the Board of Directors, which is the highest decision-making body, in order to make decisions regarding management resource allocation and performance assessments. The Group's primary businesses are the paint and coating business which manufactures and sells automotive coatings, decorative paints, industrial coatings, fine chemicals, and other paints, and the paint related business which manufactures and sells paint-related products such as adhesives. An independent local company and companies overseen by this company are responsible for business activities in Japan, and independent local companies, led by Nipsea and DuluxGroup, are responsible for the Asia, Oceania, and other overseas regions. Other independent local companies are responsible for Americas. Each company constitutes an individual management unit which makes decisions about items to carry and comprehensive strategies for each region to foster business growth. As a result, the Group consists of four reportable segments divided by management unit or region with a manufacturing and sales structure as a base: Japan, Nipsea, DuluxGroup, and Americas. The Japan segment includes the overseas marine coatings business. The Board of Directors of NPHD approved a resolution at the Board of Directors on August 10, 2021 to dissolve and liquidate NPE and the shares of NPI, NPAE, and BNPA were transferred to INC on August 27, 2021. As a result, these businesses have been classified as discontinued operations and excluded from the segment information. The segment information for the three months ended March 31, 2021 are amounts for continuing operations only, excluding discontinued operations.
Reclassified reportable segments by management unit or region from 1Q 2022
Key points
*Nippon Paint Corporate Solutions |
Japan
Revenue for automotive coatings decreased from the previous year because the number of automobiles manufactured declined as a result of semiconductor chip shortage and other factors. Industrial coatings revenue was flat from the previous year due to the continuing impact of the pandemic despite solid new housing starts and other favorable market trends. Decorative paints revenue increased due to factors such as progress at delayed construction projects despite the impact of a resurgence of the pandemic.
As a result, consolidated revenue decreased by 1.9% from the previous year to ¥41,796 million. Consolidated operating profit decreased by 93.2% to ¥289 million due to raw material price increases and other factors. In the first quarter of the current fiscal year, all businesses other than businesses related to functions as a listed company and a pure holding company whose expenses were previously presented under "Adjustments" were spun off and moved to the Japan segment. The aim of this change is to more properly reflect the operating results of each reportable segment.
Nipsea
Revenue for automotive coatings increased from the previous year, despite the impact of the semiconductor chip shortage and other factors, due to the increase in the number of automobiles manufactured in China. Revenue for decorative paints, a mainstay business in Asia, was higher than in the previous year due to the continuing strengths of paint demand for repainting interiors of existing homes in China and aggressive selling price increases in major markets including China, Malaysia, Indonesia, and Turkey.
As a result, consolidated revenue increased by 26.3% from the previous year to ¥152,628 million. Consolidated operating profit decreased by 8.5% to ¥17,807 million due to increases in raw material prices.
DuluxGroup
Earnings of Cromology are included in the consolidated performance of the Nippon Paint Group beginning with January 2022. Revenue for decorative coatings was robust overall due to progress with selling price increases in Oceania and Europe. Revenue in the paint related business was robust due to strong consumer DIY and trade DIFM sales in Oceania, coupled with strong sales of External Thermal Insulation Composite Systems (ETICS) in Europe.
As a result, consolidated revenue increased by 63.8% from the previous year to ¥68,027 million, and consolidated operating profit increased by 11.7% to ¥6,408 million.
Americas
Revenue for automotive coatings increased from the previous year, driven by the weaker yen, despite lower production of automobiles compared to the previous year in the United States, a core region, due to production adjustments at automobile manufacturers as a result of the semiconductor chip shortage. Decorative paints revenue increased from the previous year due to factors such as solid housing demand and favorable weather.
As a result, consolidated revenue increased by 22.2% from the previous year to ¥21,644 million. Consolidated operating profit decreased by 6.8% to ¥862 million due to higher prices of raw materials.
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Revenue composition by region (Million yen) ■ Japan: 41,796 ■ Nipsea: 152,628 ■ DuluxGroup: 68,027 ■ Americas: 21,644 |
Revenue composition by business (Million yen) ■ Automotive coatings: 36,774 ■ Decorative paints: 180,266 ■ Industrial coatings: 20,287 ■ Fine chemicals: 4,400 ■ Other paints: 14,578 ■ Paint related business: 27,788 |
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Revenue (cumulative results)
(Million yen)
*1: Following the business transfer to the Wuthelam Group announced on August 10, 2021, the European automotive coatings business and the two India businesses have been classified as discontinued operations. Figures for the 3Q FY2020 cumulative period and full year FY2020 have been adjusted retrospectively to the amounts for continuing operations.
*2: Following the business transfer to the Wuthelam Group announced on August 10, 2021, the European automotive coatings business and the two India businesses have been classified as discontinued operations. Figures for the 1Q FY2021, 3Q FY2021 cumulative period, and full-year FY2021 are the amounts for continuing operations excluding discontinued operations.
Operating profit (cumulative results)
(Million yen)
*1: Following the business transfer to the Wuthelam Group announced on August 10, 2021, the European automotive coatings business and the two India businesses have been classified as discontinued operations. Figures for the 3Q FY2020 cumulative period and full year FY2020 have been adjusted retrospectively to the amounts for continuing operations. Figures for the full year FY2020 have been adjusted retrospectively to reflect a change in the accounting policy for configuration or customization costs in a cloud computing arrangement implemented beginning with the 4Q FY2021.
*2: Following the business transfer to the Wuthelam Group announced on August 10, 2021, the European automotive coatings business and the two India businesses have been classified as discontinue operations. Figures for the 1Q FY2021, 3Q FY2021 cumulative period, and full year FY2021 are the amounts for continuing operations. Figures for the 1Q and full year FY2021 have been adjusted to reflect a change in the accounting policy for configuration or customization costs in a cloud computing arrangement implemented beginning with the 4Q FY2021.
Profit attributable to owners of parent (cumulative results)
(Million yen)
*1: Figures for the 1Q and full year FY2020 have been adjusted to reflect a change in the accounting policy for configuration or customization costs in a cloud computing arrangement implemented beginning with the 4Q FY2021.
*2: Figures for the full year FY2021 have been adjusted retrospectively to reflect a change in the accounting policy for configuration or customization costs in a cloud computing arrangement beginning with the 4Q FY2021.
Earnings Forecast
＜FY2022 Forecast＞ ※February 14, 2022
During the fiscal year ending December 31, 2022, the momentum of the global economic recovery is expected to slow down due to concerns about the resurgence of the pandemic and continuing disruptions in supply chains, coupled with the impact of prolonged hyperinflation due to the rise in the price of crude oil and other factors.
The Nippon Paint Group is implementing a three-year New Medium-Term Plan (FY2021-2023), which started in the fiscal year ended December 31, 2021. In accordance with this plan, we will further strengthen the foundation for growth in our existing businesses and use M&A to add highly skilled people and powerful brands. These actions are aimed at generating additional earnings and achieving sustained growth. These actions include initiatives for more growth in the decorative paints business, including in Asia and Oceania, and for strengthening ETICS, adhesives and other paint related business. At Cromology Holding SAS (Cromology), which we acquired on January 20, 2022, we plan to accelerate its growth by sharing the Nippon Paint Group's expertise and knowhow. We will continue activities to increase our market share in every operating region and business field by driving the autonomous management of our group companies in Japan and other countries.
Based on this outlook, we forecast consolidated revenue of ¥1,200,000 million, consolidated operating profit of ¥115,000 million, profit before tax of ¥113,000 million and profit attributable to owners of the parent of ¥81,000 million.
Based on this earnings forecast, we plan to pay a dividends of ¥11 per share for the fiscal year ending December 31, 2022.
(Billion yen)
Assumptions for the FY2021 Forecast
Japan
*1: Figures are based on local currency
NIPSEA China
*1: Figures are based on local currency
Asia Excepting NIPSEA China
*1: Figures are based on local currency
Indonesia: PT Nipsea
*1: Figures are based on local currency
Oceania: DuluxGroup
*1: Figures are based on local currency
(For reference)Cromology
*1: Figures are based on local currency
*2: Unaudited pro forma figures
Americas
*1: Figures are based on local currency
Other：Betek Boya
*1: Figures are based on local currency
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Nippon Paint Holdings Co. Ltd. published this content on 31 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 May 2022 06:59:06 UTC.
