Kokuyo : Financial Results For the Months Ended June 30, 2022 （285KB）

July 29, 2022

KOKUYO CO., LTD.

FINANCIAL

RESULTS

(Consolidated)

Results for the six months ended June 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: August 5, 2022

Commencement date for dividend payments: September 6, 2022

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 six months ended June 30, 2022 (January 1, 2022 to June 30, 2022)

(1) Consolidated operating results

		Net sales	Operating income	Ordinary income
		Millions of yen	% change from the	Millions of yen	% change from the	Millions of yen	% change from the
		previous year		previous year	previous year
	6 months ended	156,424	−	12,731		−	14,614	−
	June 30, 2022
	6 months ended	168,140	7.9	14,710		45.8	10,464	10.5
	June 30, 2021
(Note) Comprehensive income:
	For the six months ended June 30, 2022	¥12,463 million	[−%]
	For the six months ended June 30, 2021	¥5,478 million	[(0.6%)]
		Profit attributable to owners of	Earnings per share	Diluted earnings per share
		parent
		Millions of yen	% change from the	Yen		Yen
		previous year
	6 months ended	10,845	−			93.78		−
	June 30, 2022
	6 months ended	8,332	32.5			70.64		−
	June 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
	June 30, 2022		324,446	238,583	73.0	2,049.18
	December 31, 2021		324,576	230,105	70.4	1,967.60
(Reference) Equity:
	June 30, 2022	¥236,714 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.

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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: Yes

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

	Net sales	Operating income	Ordinary income
	Millions of yen	% change from the	Millions of yen	% change from the	Millions of yen	% change from the
	previous year	previous year	previous year
Full-year forecast	307,000	4.9	20,800	4.5	23,200	41.3
(Jan-Dec 2022)
	Profit attributable to owners of	Earnings per share
	parent
	Millions of yen	% change from the	Yen
	previous year
Full-year forecast	16,400	19.7		141.81
(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.

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* Others

1. Significant changes in subsidiaries during the period under review (changes in certain specified subsidiaries accompanying revised scope of consolidation): None
2. Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: Yes

(Note) See page 15 of the reference document (5. Consolidated Financial Statements, (4) Notes: Application of particular accounts procedures to the preparation of quarterly consolidated financial statements).

1. Changes in accounting principles, procedures and methods of presentation relating to preparation of the consolidated financial statements
2. 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 15 of the reference document (5. Consolidated Financial Statements, (4) Notes: Changes in accounting principles).

(4) Number of shares of common stock issued

1)	Number of shares of common stock (including treasury stock) issued at:
	June 30, 2022	128,742,463
	December 31, 2021	128,742,463
2)	Number of shares of treasury stock held at:
	June 30, 2022	13,225,591
	December 31, 2021	12,626,419
3)	Number of shares of average stock during a term held at:
	June 30, 2022	115,647,891
	June 30, 2021	117,946,672

• 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 8 of this document (4. Qualitative Information and Financial Statements, etc. (3) Qualitative Information Related to Consolidated Forecasts).

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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.

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)
	6 months ended		% change from the
	June 30, 2021	6 months	previous year
	Before	After	ended June	Before	After
	retroactive	retroactive	30, 2022	retroactive	retroactive
	application	application		application	application
Net sales	168,140	155,281	156,424	(7.0)	0.7
Operating income	14,710	14,655	12,731	(13.5)	(13.1)
Ordinary income	10,464	10,464	14,614	39.7	39.7
Profit attributable to owners of parent	8,332	8,332	10,845	30.2	30.2

(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 six months ended June 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 situation in Ukraine.

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 ¥156.4 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. Gross profit decreased to ¥61.2 billion (down 1.1% year on year) and gross profit ratio came to 39.1% (down 0.7 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 ¥48.4 billion (up 2.6% 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 31.0% (up 0.6 percentage point year on year).

Reflecting these results, operating income decreased to ¥12.7 billion (down 13.1% year on year). Ordinary income increased to ¥14.6 billion (up 39.7% 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 ¥10.8 billion (up 30.2% 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 half of the previous fiscal year.

Segment

We have reorganized our reportable segments. We now have four reportable segments: furniture businesses, business-supplies 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.

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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)
			6 months ended		% change from the
			June 30, 2021	6 months	previous year
			Before	After	ended June	Before	After
			retroactive	retroactive	30, 2022	retroactive	retroactive
			application	application		application	application
		Net sales	137,580	123,944	122,309	(11.1)	(1.3)
Workstyle field
Operating	13,541	13,521	12,820	(5.3)	(5.2)
		income
		Net sales	76,025	74,322	72,371	(4.8)	(2.6)
	Furniture
	Operating	11,928	11,913	10,927	(8.4)	(8.3)
		income
	Business supply	Net sales	61,555	49,622	49,938	(18.9)	0.6
	Operating
	distribution	1,613	1,607	1,892	17.3	17.7
	income
		Net sales	47,413	46,853	48,043	1.3	2.5
Lifestyle field
Operating	4,258	4,224	3,947	(7.3)	(6.5)
		income
		Net sales	38,297	37,912	38,497	0.5	1.5
	Stationery
	Operating	3,779	3,744	3,397	(10.1)	(9.3)
		income
		Net sales	9,115	8,940	9,545	4.7	6.8
	Interior retail
	Operating	479	479	549	14.8	14.8
		income
		Net sales	221	221	204	(7.4)	(7.4)
	Others
	Operating	15	15	(53)	−	−
		income
		Net sales	(17,074)	(15,737)	(14,132)	−	−
	Reconciliation
	Operating	(3,105)	(3,105)	(3,981)	−	−
		income
		Net sales	168,140	155,281	156,424	(7.0)	0.7
	Total
	Operating	14,710	14,655	12,731	(13.5)	(13.1)
		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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