Translation
Notice: This document is a translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.
Consolidated Financial Results
for the Three Months Ended June 30, 2024
(Based on Japanese GAAP)
August 9, 2024 | |||||
Company name: | HOKUTO CORPORATION | ||||
Stock exchange listing: | Tokyo | ||||
Stock code: | 1379 | URL | https://www.hokto-kinoko.co.jp | ||
Representative: | President | Masayoshi Mizuno | |||
Inquiries: | Executive | Officer, | General Manager | of Kohei Nakada | TEL 026-259-5955 |
Accounting Department | |||||
Scheduled date to commence dividend payments: | - | ||||
Preparation of supplementary material on financial results: | Yes | ||||
Holding of financial results meeting: | No |
(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the three months ended June 30, 2024 (from April 1, 2024 to June 30, 2024)
(1) Consolidated operating results (cumulative) | Percentages indicate year-on-year changes | ||||||||||
Net sales | Operating profit | Ordinary profit | Profit attributable to | ||||||||
owners of parent | |||||||||||
Millions of yen | % Millions of yen | % Millions of yen | % Millions of yen | % | |||||||
Three months ended June 30, 2024 | 17,825 | 5.8 | 3 | - | 923 | - | 602 | - | |||
Three months ended June 30, 2023 | 16,849 | 7.6 | (1,248) | - | (304) | - | (332) | - | |||
Note: Comprehensive income Three months ended June 30, 2024 | ¥402 million | [-%] | |||||||||
Three months ended June 30, 2023 | ¥(117) million | [-%] | |||||||||
Earnings per share | Diluted earnings per share | ||||||||||
Yen | Yen | ||||||||||
Three months ended June 30, 2024 | 19.00 | 16.89 | |||||||||
Three months ended June 30, 2023 | (10.50) | - | |||||||||
(2) Consolidated financial position | |||||||||||
Total assets | Net assets | Equity ratio | |||||||||
Millions of yen | Millions of yen | % | |||||||||
As of June 30, 2024 | 111,528 | 53,954 | 48.4 | ||||||||
As of March 31, 2024 | 103,505 | 54,824 | 53.0 | ||||||||
Reference: Equity | As of June 30, 2024 | ¥53,954 | million | ||||||||
As of March 31, 2024 | ¥54,824 | million | |||||||||
2. Cash dividends | |||||||||||
Annual dividends per share | |||||||||||
1st quarter-end | 2nd quarter-end | 3rd quarter-end | Fiscal year-end | Total | |||||||
Yen | Yen | Yen | Yen | Yen | |||||||
Year ended March 31, 2024 | - | 10.00 | - | 40.00 | 50.00 | ||||||
Year ending March 31, 2025 | - | ||||||||||
Year ending March 31, 2025 (Forecast) | 10.00 | - | - | - |
Notes: 1. Revisions to the cash dividend forecasts most recently announced: None
-
The breakdown of year-end dividends for the year ended March 31, 2024 Ordinary dividend: ¥35.00 per share
Commemorative dividend ¥5.00 per share - The forecast for the year-end dividends for the year ending March 31, 2025 has not yet been determined.
3. Forecast of consolidated financial results for the year ending March 31, 2025 (from April 1, 2024 to March 31, 2025)
Percentages indicate year-on-year changes
Net sales | Operating profit | Ordinary profit | Profit attributable to | ||||||
owners of parent | |||||||||
Millions of yen | % | Millions of yen | % | Millions of yen | % Millions of yen | % | |||
Six months ending | 36,200 | 3.8 | (1,420) | - | (1,290) | - | (1,030) | - | |
September 30, 2024 | |||||||||
Full year | 81,200 | 2.2 | 3,310 | 4.1 | 3,540 | (24.9) | 2,440 | (30.8) | |
Note: Revisions to the earnings forecasts most recently announced: None | |||||||||
4. Notes | |||||||||
(1) Significant changes in the scope of consolidation during the three months ended June 30, 2024: | No | ||||||||
(2) Application of special accounting methods for preparing quarterly consolidated financial statements: | No |
Earnings per share Yen
(32.47)
76.91
(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations: | Yes |
Changes in accounting policies due to other reasons: | No |
Changes in accounting estimates: | No |
Restatement of prior period financial statements: | No |
(4) Number of issued shares (common shares) | |||||
Total number of issued shares at the end of the period (including treasury shares) | |||||
As of June 30, 2024 | 33,359,040 | shares | As of March 31, 2024 | 33,359,040 | shares |
Number of treasury shares at the end of the period | |||||
As of June 30, 2024 | 1,634,972 | shares | As of March 31, 2024 | 1,634,972 | shares |
Average number of shares during the period (cumulative from the beginning of the fiscal year)
Three months ended June 30, 2024 | 31,724,068 shares Three months ended June 30, 2023 | 31,672,114 shares |
- Review of the Japanese-language originals of the attached quarterly consolidated financial statements by certified public accountants or an audit corporation: None
- Proper use of forecasts of financial results, and other special matters
(Cautions on forward-looking statements, etc.)
Forward-looking statements, including the earnings forecasts stated in this document, are based on information currently available to the Company and certain assumptions deemed reasonable. Consequently, any statements herein do not constitute assurances regarding actual results by the Company. Actual results may differ materially from the forecasts due to various factors. For the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof, please refer to '(3) Information regarding consolidated earnings forecasts and other forward-looking statements' in '1. Overview of Operating Results, Etc.,' on page 3 of the attached materials.
1. Overview of Operating Results, Etc.
(1)Overview of operating results for the three months of the fiscal year ending March 31, 2025
During the first three months ended June 30, 2024, the Japanese economy maintained a moderate recovery trend amid improvement in the employment and personal income environment and increasing inbound consumption. However, the outlook remained uncertain mainly due to the soaring prices of energy resources and raw materials caused by the protracted Russian-Ukraine war, the growing instability in the Middle East, and weakening economic activity in China.
In this economic environment, placing its priority on the safety of all consumers and employee, the Group carried out business activities primarily in the mushroom business to deliver deliciousness and health to more and more people through research & development, production, and sales of mushrooms, which are a health food. Furthermore, the Group carried out initiatives with the Management Vision to "Expand the market and consumption, with delivering health through mushrooms as our mission" and to "Balance profit generation and corporate social responsibility."
As a result of the above, the operating results of the Group for the three months ended June 30, 2024, were net sales of ¥17,825 million (up 5.8% from the same period of the previous fiscal year), operating profit of ¥3 million (operating loss of ¥1,248 million in the same period of the previous fiscal year), ordinary profit of ¥923 million (ordinary loss of ¥304 million in the same period of the previous fiscal year), and profit attributable to owners of parent of ¥602 million (loss attributable to owners of parent of ¥332 million in the same period of the previous fiscal year).
Production output for the three months ended June 30, 2024 consists of 10,958t of Bunashimeji, including Bunapi (down 0.8% from the same period of the previous fiscal year), 4,245t of Eryngii (down 3.9% from the same period of the previous fiscal year), and 3,655t of Maitake (down 1.8% from the same period of the previous fiscal year).
Performance in each business segment for the three months ended June 30, 2024, was as follows.
[Mushroom business in Japan]
The production division, amid a significant rise in costs of raw materials, electricity costs, packaging costs, labor costs, and other production costs, worked to reduce costs, performed even more thorough hygiene control, worked to improve quality and for stable cultivation, and provided mushrooms safely and securely.
The R&D division worked to strengthen the quality control system, develop new high value-added products, improve existing mushrooms, develop new varieties, and pursue the pharmacological effects and functionality of mushrooms.
The sales division advocated for "Kinkatsu through mushrooms" (the lifestyle habit of incorporating mushrooms into daily meals) with the three pillars of health, beauty, and sports in order to stimulate mushroom demand and carry out sales activities with a commitment to freshness. In terms of sales, the volume of vegetables have been generally low since the beginning of the current reporting period due to rough weather and low temperatures across Japan from late March, keeping vegetable prices at a high level. As a result, the prices of mushrooms have also been firm while sales proceeded stably.
As a result, net sales for the mushroom business in Japan as a whole were ¥11,274 million (up 4.6% year on year).
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[Mushroom business outside Japan]
At Hokto Kinoko Company, a local subsidiary in the U.S., the extra effort put into growing the customer base compared with a year ago steadily brought results and sales in April and May exceeded those of last year but demand fell slightly in June upon entering the low demand period of summer, and for the entire three months, both net sales and operating profit rose year on year but fell short of the projections.
Taiwan Hokuto Corporation, a local subsidiary in Taiwan, faced a fallback in demand for vegetables overall and a decline in the trading prices for vegetables on account of generally higher-than-typical temperatures. Although trading prices for vegetables rose temporarily in early May due to heavy rain, the impact was limited and did not significantly affect the demand for mushrooms. Consequently, both net sales and operating profit fell short of projections.
Hokto Malaysia Sdn. Bhd., a local subsidiary in Malaysia, lifted their prices in a market of large retailers and high consumer buying power amid the importing of Chinese-grown mushrooms at a record-low price. In addition, it deployed a strategic plan of differentiation such as rolling out sales promotion plants to large-retailer customers. Consequently, both net sales and operating profit improved year on year but fell short of the plan.
As a result, net sales for the mushroom business outside Japan as a whole were ¥1,911 million (up 15.3% year on year).
[Processed products business]
The processed products business carried out sales of processed mushroom products, such as those that are boiled or frozen, and worked to develop new products and markets. Also, sales of products for restaurants, delicatessens and prepared meals were strong, while commercial-use fresh mushroom sales as part of area strategies of convenience stores and sales of frozen mushroom products also proceeded steadily. Sales of processed products for the commercial fruit and vegetable market were also steady, mainly for dried and boiled products and pre-packaged shiitake mushroom rice products. In the mail-order businesses, sales of retort pouched foods were strong.
Furthermore, at the subsidiary Arden Corporation, although it was not possible to recover sales to customers after rising prices on products, sales to other companies covered for the shortfall, and both set sales and operating profit exceeded projections, albeit slightly.
As a result, net sales for the processed products business were ¥1,732 million (up 10.4% year on year).
[Chemical products business]
In the chemical products business, the First Sales Department, whose main business is packaging materials, worked on proposal-based marketing for value-added products, with a focus on functional packaging materials that limit quality deterioration and environmental packaging materials made from recycled materials. At the same time, by working on capturing rationalization-related investment reflecting the problem that society faces in securing personnel, sales to mass retailers and food vendors were comparatively robust. Moreover, sales of industrial materials, such as those for semiconductor and automotive parts-related manufacturers were slow to recover, but a trend of recovery strengthened mainly for export-related products.
The Second Sales Department, which focuses on production and sales of in-house products and sales of agricultural materials, continued to improve the quality of in-house products and expand sales. Sales of production materials to mushroom producers remained strong, and we also captured spot capital investment demand.
As a result, net sales for the chemical products business were ¥2,907 million (up 2.1% year on year).
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(2)Overview of financial position for the period under review
Positions of assets, liabilities and net assets, and the factors thereof as of June 30, 2024 are as follows.
(Assets)
Current assets as of June 30, 2024 amounted to ¥39,860 million, up ¥8,634 million from the previous fiscal year end. This was due mainly to an increase of ¥5,421 million in cash and deposits and ¥3,999 million of securities. Non-current assets amounted to ¥71,668 million, down ¥611 million from the previous fiscal year end.
As a result, total assets amounted to ¥111,528 million, up ¥8,023 million from the previous fiscal year end.
(Liabilities)
Current liabilities as of June 30, 2024 amounted to ¥29,848 million, down ¥456 million from the previous fiscal year end. Non-current liabilities amounted to ¥27,725 million, up ¥9,349 million from the previous fiscal year end. This was due mainly to an increase of ¥10,018 million in bonds with share acquisition rights.
As a result, total liabilities amounted to ¥57,574 million, up ¥8,893 million from the previous fiscal year end.
(Net assets)
Total net assets as of June 30, 2024, amounted to ¥53,954 million, down ¥869 million from the previous fiscal year end.
As a result, the equity ratio was 48.4% (53.0% at the end of the previous fiscal year).
-
Information regarding consolidated earnings forecasts and other forward-looking statements
There is no change in the earnings forecasts in the "Summary of Consolidated Financial Results for the Year Ended March 31, 2024 (Based on Japanese GAAP)," dated May 10, 2024.
The earnings forecasts are based on information currently available to the Company and certain assumptions deemed reasonable. Actual results may differ materially from the forecasts due to various factors.
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2. Quarterly Consolidated Financial Statements and Significant Notes Thereto
(1)Consolidated balance sheets
(Millions of yen) | ||
As of March 31, 2024 | As of June 30, 2024 | |
Assets | ||
Current assets | ||
Cash and deposits | 14,924 | 20,346 |
Notes and accounts receivable - trade | 7,953 | 6,890 |
Securities | - | 3,999 |
Merchandise and finished goods | 2,254 | 2,751 |
Work in process | 4,306 | 4,376 |
Raw materials and supplies | 1,150 | 1,078 |
Other | 675 | 429 |
Allowance for doubtful accounts | (39) | (12) |
Total current assets | 31,225 | 39,860 |
Non-current assets | ||
Property, plant and equipment | ||
Buildings and structures | 72,663 | 73,315 |
Accumulated depreciation | (37,423) | (38,259) |
Buildings and structures, net | 35,240 | 35,055 |
Machinery, equipment and vehicles | 69,569 | 70,361 |
Accumulated depreciation | (59,727) | (60,971) |
Machinery, equipment and vehicles, net | 9,841 | 9,390 |
Land | 14,674 | 14,738 |
Other | 2,992 | 3,119 |
Accumulated depreciation | (2,056) | (2,097) |
Other, net | 935 | 1,021 |
Total property, plant and equipment | 60,691 | 60,206 |
Intangible assets | 171 | 159 |
Investments and other assets | ||
Investment securities | 7,986 | 7,856 |
Retirement benefit asset | 1,581 | 1,596 |
Other | 2,000 | 2,009 |
Allowance for doubtful accounts | (151) | (159) |
Total investments and other assets | 11,416 | 11,302 |
Total non-current assets | 72,279 | 71,668 |
Total assets | 103,505 | 111,528 |
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(Millions of yen) | ||
As of March 31, 2024 | As of June 30, 2024 | |
Liabilities | ||
Current liabilities | ||
Notes and accounts payable - trade | 2,134 | 1,984 |
Electronically recorded obligations - operating | 3,842 | 4,065 |
Short-term borrowings | 12,084 | 13,099 |
Income taxes payable | 926 | 193 |
Provision for bonuses | 1,248 | 768 |
Other | 10,068 | 9,736 |
Total current liabilities | 30,304 | 29,848 |
Non-current liabilities | ||
Bonds with share acquisition rights | - | 10,018 |
Long-term borrowings | 15,118 | 14,267 |
Retirement benefit liability | 350 | 356 |
Asset retirement obligations | 1,058 | 1,072 |
Other | 1,848 | 2,010 |
Total non-current liabilities | 18,376 | 27,725 |
Total liabilities | 48,680 | 57,574 |
Net assets | ||
Shareholders' equity | ||
Share capital | 5,500 | 5,500 |
Capital surplus | 5,728 | 5,728 |
Retained earnings | 44,194 | 43,524 |
Treasury shares | (3,024) | (3,024) |
Total shareholders' equity | 52,397 | 51,727 |
Accumulated other comprehensive income | ||
Valuation difference on available-for-sale securities | 2,675 | 2,579 |
Foreign currency translation adjustment | (500) | (604) |
Remeasurements of defined benefit plans | 251 | 251 |
Total accumulated other comprehensive income | 2,427 | 2,226 |
Total net assets | 54,824 | 53,954 |
Total liabilities and net assets | 103,505 | 111,528 |
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- Consolidated statements of income (cumulative) and consolidated statements of comprehensive income (cumulative)
Consolidated statements of income (cumulative)
(Millions of yen) | ||
Three months ended | Three months ended | |
June 30, 2023 | June 30, 2024 | |
Net sales | 16,849 | 17,825 |
Cost of sales | 14,230 | 13,830 |
Gross profit | 2,618 | 3,995 |
Selling, general and administrative expenses | 3,867 | 3,991 |
Operating profit (loss) | (1,248) | 3 |
Non-operating income | ||
Dividend income | 87 | 107 |
Rental income from land and buildings | 40 | 39 |
Foreign exchange gains | 777 | 765 |
Other | 69 | 46 |
Total non-operating income | 976 | 959 |
Non-operating expenses | ||
Interest expenses | 29 | 29 |
Other | 3 | 10 |
Total non-operating expenses | 32 | 39 |
Ordinary profit (loss) | (304) | 923 |
Extraordinary income | ||
Gain on sale of non-current assets | 0 | 0 |
Gain on sale of investment securities | - | 0 |
Total extraordinary income | 0 | 1 |
Extraordinary losses | ||
Loss on retirement of non-current assets | 0 | 0 |
Total extraordinary losses | 0 | 0 |
Profit (loss) before income taxes | (304) | 924 |
Income taxes - current | 245 | 98 |
Income taxes - deferred | (217) | 223 |
Total income taxes | 28 | 322 |
Profit (loss) | (332) | 602 |
Profit (loss) attributable to owners of parent | (332) | 602 |
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Consolidated statements of comprehensive income (cumulative)
(Millions of yen) | ||
Three months ended | Three months ended | |
June 30, 2023 | June 30, 2024 | |
Profit (loss) | (332) | 602 |
Other comprehensive income | ||
Valuation difference on available-for-sale securities | 263 | (95) |
Foreign currency translation adjustment | (53) | (104) |
Remeasurements of defined benefit plans, net of tax | 5 | (0) |
Total other comprehensive income | 215 | (200) |
Comprehensive income | (117) | 402 |
Comprehensive income attributable to | ||
Comprehensive income attributable to owners of parent | (117) | 402 |
Comprehensive income attributable to non-controlling | - | - |
interests | ||
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- Notes to quarterly consolidated financial statements Notes on changes in accounting policies
Application of Accounting Standard for Current Income Taxes, etc.
The Company has applied the "Accounting Standard for Current Income Taxes" (Accounting Standards Board of Japan (ASBJ) Statement No. 27, October 28, 2022; the "Revised Accounting Standard of 2022") and other relevant ASBJ regulations from the beginning of the first quarter of the fiscal year ending March 31, 2025. Revisions to categories for recording current income taxes (taxation on other comprehensive income) conform to the transitional treatment in the proviso of paragraph 20-3 of the Revised Accounting Standard of 2022 and to the transitional treatment in the proviso of paragraph 65-2(2) of "Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ Guidance No. 28, October 28, 2022, the "Revised Application Guidance of 2022"). This change of accounting policy has no impact on the quarterly consolidated financial statements.
In addition, for revisions related to the review of the treatment in consolidated financial statements when a gain or loss on sale arising from the sale of shares of subsidiaries, etc. among consolidated companies is deferred for tax purposes, the Company has applied the Revised Application Guidance of 2022 from the beginning of the first quarter of the fiscal year ending March 31, 2025. The change in the accounting policy has been applied retrospectively. Therefore, the new accounting policy was reflected in the consolidated financial statements for the same period of the previous fiscal year and for the previous fiscal year. This change in accounting policy has no impact on the quarterly consolidated financial statements for the same period of the previous fiscal year and for the consolidated financial statements for the previous fiscal year.
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