Kokuyo : FINANCIAL RESULTS (Consolidated) Results for the nine months ended September 30, 2022 （318KB）

November 14, 2022

KOKUYO CO., LTD.

FINANCIAL

RESULTS

(Consolidated)

Results for the nine months ended September 30, 2022

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: November 14, 2022

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, 2022 (January 1, 2022 to September 30, 2022)

(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	224,899	−	14,963		−	17,555		−
	September 30, 2022
	9 months ended	241,861	8.1	18,423		51.0	14,540		23.4
	September 30, 2021
(Note) Comprehensive income:
	For the nine months ended September 30, 2022 ¥15,868 million	(-%)
	For the nine months ended September 30, 2021 ¥10,594 million	(21.0%)
		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	13,053	−			112.91			−
	September 30, 2022
	9 months ended	11,505	38.1			97.77			−
	September 30, 2021

(Note) Starting from the first quarter of the fiscal year ending 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, 2022		324,876	238,752	72.9	2,049.90
	December 31, 2021		324,576	230,105	70.4	1,967.60
(Reference) Equity:
	September 30, 2022	¥236,797 million
	December 31, 2021	¥228,470 million

(Note) Starting from the first quarter of the fiscal year ending 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.

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			−	21.50		−	25.50	47.00
31, 2021
Fiscal period ending December			−	28.00		−
31, 2022
Fiscal period ending December							29.00	57.00
31, 2022 (forecast)

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

3. Consolidated Forecasts for the Fiscal Period Ending December 31, 2022 (January 1, 2022 to December 31, 2022)

	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	306,000	4.6	19,300		(3.0)	22,200	35.2
(Jan-Dec 2022)
	Profit attributable to owners of	Earnings per share
	parent
	Millions of yen	% change from	Yen
	the previous year
Full-year forecast	18,500	35.0			160.02
(Jan-Dec 2022)

(Note) Revisions to financial forecasts published most recently: Yes

Starting from the first quarter of the fiscal year ending December 2022, we have applied the ASBJ Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020). In year-on-year comparisons in the above tables, we have retroactively applied the standard to the corresponding periods of the previous fiscal year.

* Others

1. Significant changes in subsidiaries during the period under review (changes in certain specified subsidiaries accompanying revised scope of consolidation): Yes

New: Kokuyo Hong Kong Limited

Removed: －

1. Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: Yes
   (Note) See page 13 of the reference document (5. Consolidated Financial Statements, (4) Notes: Application of particular accounts procedures to the preparation of quarterly consolidated financial statements).
2. Changes in accounting principles, procedures and methods of presentation relating to preparation of the consolidated financial statements
3. 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 (5. 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:

	September 30, 2022	128,742,463
	December 31, 2021	128,742,463
2)	Number of shares of treasury stock held at:
	September 30, 2022	13,226,078
	December 31, 2021	12,626,419
3)	Number of shares of average stock during a term held at:
	September 30, 2022	115,608,512
	September 30, 2021	117,675,539

• This quarterly financial summary is not subject to quarterly 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. For more on the assumptions underlying the performance forecasts, as well as cautionary notes regarding the use of thereof, see page 4 of this document (4. Qualitative Information and Financial Statements, etc. (3) Qualitative Information Related to Consolidated Forecasts).

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.

Starting from the first quarter of the fiscal year ending December 2022, we have applied the ASBJ Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020).

For details, see 5. Consolidated Financial Statements (4) Notes: Changes in accounting principles.

(1) Business Results

					(Millions of yen)
	9 months ended	9 months	% change from the
	September 30, 2021	previous year
	ended
	Before	After	Before	After
	September
	retroactive	retroactive	retroactive	retroactive
	30, 2022
	application	application	application	application
Net sales	241,861	223,315	224,899	(7.0)	0.7
Operating income	18,423	18,348	14,963	(18.8)	(18.4)
Ordinary income	14,540	14,540	17,555	20.7	20.7
Profit attributable to owners of parent	11,505	11,505	13,053	13.5	13.5

(Note) Starting from the first quarter of the fiscal year ending December 2022, we have applied the ASBJ Accounting Standard for Revenue Recognition. The above table includes two sets of results for the corresponding period of the previous fiscal year: the results before and after the standard was retroactively applied to said period.

During the nine months ended September 30, 2022, the Japanese economy continued to recover from the Covid impact, but economic uncertainty remained high amid the impact of the lockdown in China and the prolonged conflict in Ukraine. Confidence was further worsened after the rapid depreciation of the yen pushed up 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 and actively deployed strategic expenditures.

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

Net sales increased only marginally, to ¥224.8 billion (up 0.7% year on year). The lack of significant sales growth reflected the fact that furniture business performed less well than initially forecasted. Another factor was the impact of the Shanghai lockdown on the stationery business, particularly in the second quarter. Gross profit decreased to ¥87.2 billion (down 0.8% year on year) and gross profit ratio came to 38.8% (down 0.6 percentage point year on year). This decrease reflects the increase in prices for steel and other raw materials, which offset our efforts to roll out price revisions for our products. Selling, general and administrative expenses increased to ¥72.2 billion (up 3.9% year on year), reflecting the increase in strategic expenditures for expanding the fields. Expense ratio (selling, general, and administrative expenses to net sales) came to 32.1% (up 1.0 percentage point year on year).

Reflecting these results, operating income decreased to ¥14.9 billion (down 18.4% year on year). Ordinary income increased to ¥17.5 billion (up 20.7% year on year). This increase represents a bounce-back from the recording, in the first quarter of the previous fiscal year, of ¥5.0 billion following impairment in equity-method affiliate Pentel Co., Ltd. It also reflects the recording of foreign exchange gains. Profit attributable to owners of parent increased to ¥13.0 billion (up 13.5% year on year).

Starting from the first quarter of the fiscal year ending December 2022, we have applied the ASBJ Accounting Standard for Revenue Recognition. To enable year-on-year comparisons, we have retroactively applied the standard to the results for the first nine months of the previous fiscal year.

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Segment

We have reorganized our reportable segments. We now have four reportable segments: furniture businesses, business supply distribution, stationery businesses, and interior retail. These are distributed between two broad business fields: the workstyle field and lifestyle field. The changes to segments reflect our new strategy. Specifically, having redefined our role in society as that of a "Work & Life Style Company," we are working toward our long-term goals in CCC 2030 by being an organization that creates life-affirming solutions in the domain of work and the domain of learning and daily life. To assist these efforts, we have reorganized our reportable segments, effective as of the current fiscal year (ending December 2022).

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 new segment structure has been retroactively applied to the results for the corresponding period of the previous fiscal year.

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

							(Millions of yen)
			9 months ended	months	% change from the
			September 30, 2021	previous year
			ended
			Before	After	Before	After
			September
			retroactive	retroactive	retroactive	retroactive
			30, 2022
			application	application	application	application
		Net sales	196,071	176,634	172,222	(12.2)	(2.5)
Workstyle field
Operating	17,501	17,474	15,111	(13.7)	(13.5)
		income
		Net sales	107,890	105,735	100,357	(7.0)	(5.1)
	Furniture
	Operating	15,548	15,528	12,795	(17.7)	(17.6)
		income
	Business supply	Net sales	88,180	70,899	71,864	(18.5)	1.4
	Operating
	distribution	1,953	1,945	2,315	18.5	19.0
	income
		Net sales	69,002	68,175	72,452	5.0	6.3
Lifestyle field
Operating	5,807	5,759	5,939	2.3	3.1
		income
		Net sales	55,291	54,744	58,312	5.5	6.5
	Stationery
	Operating	5,031	4,983	5,230	4.0	5.0
		income
		Net sales	13,711	13,431	14,140	3.1	5.3
	Interior retail
	Operating	776	776	708	(8.7)	(8.7)
		income
		Net sales	308	308	292	(5.4)	(5.4)
	Others
	Operating	(4)	(4)	(95)	−	−
		income
		Net sales	(23,521)	(21,803)	(20,067)	−	−
	Reconciliation
	Operating	(4,881)	(4,881)	(5,992)	−	−
		income
		Net sales	241,861	223,315	224,899	(7.0)	0.7
	Total
	Operating	18,423	18,348	14,963	(18.8)	(18.4)
		income

(Note) Starting from the first quarter of the fiscal year ending December 2022, we have applied the ASBJ Accounting Standard for Revenue Recognition. The above table includes two sets of results for the corresponding period of the previous fiscal year: the results before and after the standard was retroactively applied to said period.

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