Business performance
Net sales for the fiscal year under review increased by 7.7% year on year, to ¥174,973 million, mainly due to the revision of selling prices in response to rising raw material prices. In terms of profit, operating profit was ¥8,405 million (a decrease of 29.2% year on year), and ordinary profit was ¥9,918 million (a decrease of 22.3% year on year) mainly due to decreased sales volume and increased selling, general and administrative expenses. Profit attributable to owners of parent was ¥5,684 million (a decrease of 15.2% year on year).
During the fiscal year ended March 31, 2023, the Japanese economy remained in a severe situation as supply chain disruptions and supply constraints on raw materials and parts continued, although restrictions on economic activities due to the impact of the novel coronavirus disease (COVID-19) eased and consumer spending and exports showed signs of picking up. The global economy is in an uncertain situation, with concerns of an economic slowdown in the U.S. and Europe through monetary tightening, China’s lack of strength in its recovery from the economic downturn caused by restrictions on movement, and resource and energy prices remaining high and inflation due to the prolonged situation in Russia and Ukraine.
In the chemical industry, the business environment remains unpredictable, as the yen’s sharp depreciation due to interest rate hikes in the U.S. and Europe was followed by a reversal to a stronger yen due to concerns about the economic slowdown in the U.S. and Europe and revisions to the Bank of Japan’s monetary easing measures, while the price of crude oil has been moving without a sense of direction due to a mix of speculation about rising and falling prices caused by concerns about a global economic slowdown and supply concerns.
Under these circumstances, net sales for the fiscal year under review increased by 7.7% year on year, to ¥174,973 million, mainly due to the revision of selling prices in response to rising raw material prices. In terms of profit, operating profit was ¥8,405 million (a decrease of 29.2% year on year), and ordinary profit was ¥9,918 million (a decrease of 22.3% year on year) mainly due to decreased sales volume and increased selling, general and administrative expenses. Profit attributable to owners of parent was ¥5,684 million (a decrease of 15.2% year on year).
| FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | |
|---|---|---|---|---|---|
| Net sales(Millions of yen) | 161,599 | 155,503 | 144,757 | 162,526 | 174,973 |
| Operating profit(Millions of yen) | 12,919 | 12,439 | 11,932 | 11,868 | 8,405 |
| Percentage of operating profit to net sales(%) | 8.0 | 8.0 | 8.2 | 7.3 | 4.8 |
| Ordinary profit(Millions of yen) | 15,205 | 12,704 | 11,999 | 12,771 | 9,918 |
| Percentage of ordinary profit to net sales(%) | 9.4 | 8.2 | 8.3 | 7.9 | 5.7 |
| Profit attributable to owners of parent(Millions of yen) | 5,345 | 7,668 | 7,282 | 6,699 | 5,684 |
| Percentage of profit attributable to owners of parent to net sales(%) | 3.3 | 4.9 | 5.0 | 4.1 | 3.2 |
| Net income per share (yen) | 242.50 | 347.87 | 330.34 | 303.76 | 257.57 |
| ROE (Return on equity)(%) | 4.1 | 6.0 | 5.4 | 4.7 | 3.9 |
| ROA (Return on assets*)(%) | 7.7 | 6.8 | 6.4 | 6.5 | 4.9 |
| Overseas sales(Millions of yen) | 61,537 | 60.179 | 63,567 | 69,903 | 76,378 |
| overseas sales ratio(%) | 38.1 | 38.7 | 43.9 | 43.0 | 43.7 |
| Cash dividends paid per share(yen) | 125.0 | 140.0 | 150.0 | 170.0 | 170.0 |
| Dividend payout ratio(%) | 51.5 | 40.2 | 45.4 | 56.0 | 66.0 |
*ROA(Return on assets) is calculated based on ordinary profit.
Financial position
Equity ratio was 72.2%, unchanged from the end of the previous fiscal year. Net assets per share increased by ¥67.51 from ¥6,549.60 at the end of the previous fiscal year to ¥6,617.11.
Total assets as of the end of the fiscal year under review increased by ¥1,988 million compared with the end of the previous fiscal year, amounting to ¥202,182 million. Current assets increased by ¥3,560 million from the end of the previous fiscal year to ¥97,324 million mainly due to a ¥3,561 million increase in merchandise and finished goods, and a ¥1,118 million increase in raw materials and supplies, despite a ¥1,057 million decrease in cash and deposits. Non-current assets decreased by ¥1,571 million from the end of the previous fiscal year to ¥104,857 million, mainly due to decreases of ¥1,698 million in investment securities and ¥1,597 million in property, plant and equipment, despite an increase of ¥2,628 million in intangible assets.
Current liabilities decreased by ¥966 million from the end of the previous fiscal year to ¥46,938 million, mainly due to a ¥570 million decrease in income taxes payable and a ¥304 million decrease in provision for bonuses. Non-current liabilities increased by ¥992 million from the end of the previous fiscal year to ¥6,249 million, mainly due to a ¥1,759 million increase in long-term borrowings, despite a ¥578 million decrease in deferred tax liabilities.
Net assets as of the end of the fiscal year under review increased by ¥1,962 million from the end of the previous fiscal year, to ¥148,994 million. Equity ratio was 72.2%, unchanged from the end of the previous fiscal year. Net assets per share increased by ¥67.51 from ¥6,549.60 at the end of the previous fiscal year to ¥6,617.11.
| FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | |
|---|---|---|---|---|---|
| Current assets(Millions of yen) | 95,053 | 85,835 | 89,340 | 93,764 | 97,324 |
| Non-current assets(Millions of yen) | 98,577 | 93,038 | 106,382 | 106,429 | 104,857 |
| Net assets(Millions of yen) | 193,630 | 178,873 | 195,723 | 200,194 | 202,182 |
| Current liabilities(Millions of yen) | 52,524 | 42,766 | 46,222 | 47,904 | 46,938 |
| Non-current liabilities(Millions of yen) | 8,482 | 6,009 | 6,548 | 5,257 | 6,249 |
| Shareholders’ equity(Millions of yen) | 129,371 | 127,635 | 140,474 | 144,479 | 146,067 |
| Shareholder’s equity ratio(%) | 66.8 | 71.4 | 71.8 | 72.2 | 72.2 |
| Net assets per share(yen) *1 | 5,868.58 | 5,789.88 | 6,371.77 | 6,549.60 | 6,617.11 |
| Research and development cost(Millions of yen) | 5,569 | 5,322 | 5,384 | 5,650 | 5,691 |
| Investment in plant and equipment(Millions of yen) | 10,848 | 8,219 | 10,073 | 9,847 | 12,033 |
| Depreciation and amortization(Millions of yen) *2 | 9,087 | 9,078 | 9,569 | 9,533 | 10,083 |
| Number of employees | 2,078 | 2,060 | 2,096 | 2,106 | 2,089 |
Cash flow
Cash and cash equivalents as of the end of the fiscal year under review amounted to ¥17,042 million. This marked a decrease of ¥1,129 million compared with the end of the previous fiscal year.
Net cash provided by operating activities amounted to ¥10,852 million (compared to ¥11,328 million in net cash provided during the previous fiscal year). This result was mainly due to the cash inflow from profit before income taxes of ¥9,414 million and depreciation of ¥10,239 million, which outweighed the cash outflow mainly from the increase in inventories of ¥4,351 million and income taxes paid of ¥3,839 million.
Net cash used in investing activities amounted to ¥10,172 million (compared to ¥11,704 million in net cash used during the previous fiscal year). This result was mainly due to a cash outlay of ¥9,382 million for purchase of non-current assets.
Net cash used in financing activities amounted to ¥2,336 million (compared to ¥5,979 million in net cash used during the previous fiscal year). This result was mainly due to the cash outflow from dividends paid of ¥3,743 million and repayments of long-term borrowings of ¥850 million, which was below the cash inflow mainly from the increase in proceeds from long-term borrowings of ¥2,188 million.
| FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | |
|---|---|---|---|---|---|
| Operating activities(Millions of yen) | 14,603 | 17,232 | 22,300 | 11,328 | 10,852 |
| Investing activities(Millions of yen) | (11,312) | (11,115) | (12,498) | (11,704) | (10,172) |
| Financing activities(Millions of yen) | (1,492) | (7,084) | (4,146) | (5,979) | (2,336) |
| Cash and cash equivalents at the end of the year (Millions of yen) | 19,151 | 18,009 | 23,647 | 18,171 | 17,042 |
Fiscal Year 2023 Forecast
During the fiscal year ended March 31, 2023, the Japanese economy saw a recovery in individual consumption and exports as restrictions on economic activities due to the impact of COVID-19 were eased. However, overall conditions remained challenging amid continuing supply chain disruptions and supply restrictions on raw materials and parts.
While we anticipate that the economy will recover due to the normalization of social and economic activities in the fiscal year ending March 31, 2024, conditions including trends in raw material prices and foreign exchange caused by the emergence of geopolitical risk remain extremely unpredictable.
Under these circumstances, for the Group’s consolidated earnings forecasts for the fiscal year ending March 31, 2024, mainly due to expanded sales for high-value-added products, we forecast net sales of ¥180,000 million, operating profit of ¥10,000 million, ordinary profit of ¥11,000 million, and profit attributable to owners of parent of ¥6,500 million.