October 28, 2024
KOKUYO CO., LTD.
FINANCIAL RESULTS
(Consolidated)
Results for the nine months ended September 30, 2024
Company name: KOKUYO Co., Ltd
Stock listings: Tokyo Stock Exchange (Prime)
Stock code: 7984 (URL https://www.kokuyo.com)
Representative: Hidekuni Kuroda, President and CEO
For further information, please contact: Hitoshi Honda, Managing Officer, Financial Administration Division
Telephone: +81-6-6976-1221 (general)
Commencement date for dividend payments:
Supplemental material for results: None
Briefing about results: Yes (for institutional investors and securities analysts)
(Figures less than ¥1 million have been omitted.)
1. Results for the nine months ended September 30, 2024 (January 1 to September 30, 2024)
(1) Consolidated operating results
Net sales | Operating income | ||
Millions of yen | Year-on-year | Millions of yen | Year-on-year |
change (%) | change (%) | ||
Ordinary income
Millions of yen | Year-on-year |
change (%) | |
Jan-Sep 2024 | 251,549 | 1.1 | 17,510 | (11.0) | 19,197 | (11.4) | ||
Jan-Sep 2023 | 248,813 | 10.6 | 19,677 | 31.5 | 21,667 | 23.4 | ||
(Note) Comprehensive income: | ||||||||
January to September 30, 2024 | ¥16,369 million | [(22.6%)] | ||||||
January to September 30, 2023 | ¥21,155 million | [33.3%] | ||||||
Profit attributable to owners of | Earnings per share | Diluted earnings per share | ||||||
parent | ||||||||
Millions of yen | % change from | Yen | Yen | |||||
the previous year | ||||||||
Jan-Sep 2024 | 16,374 | 10.1 | 144.38 | | ||||
Jan-Sep 2023 | 14,874 | 14.0 | 128.91 | |
(2) Consolidated financial position
Total assets | Net assets | Equity ratio | Net assets per share | |
Millions of yen | Millions of yen | % | Yen | |
September 30, 2024 | 344,091 | 263,229 | 75.5 | 2,293.74 |
December 31, 2023 | 358,412 | 253,426 | 70.3 | 2,209.32 |
(Reference) Equity: | ||||
September 30, 2024 | ¥259,914 million | |||
December 31, 2023 | ¥251,841 million |
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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 | | 32.50 | | 34.00 | 66.50 |
31, 2023 | |||||
Fiscal period ending December | | 38.00 | | ||
31, 2024 | |||||
Fiscal period ending December | 38.00 | 76.00 | |||
31, 2024 (forecast) | |||||
(Note) Revisions to estimated dividends published most recently: None
3. Consolidated Forecasts for the Fiscal Period Ending December 31, 2024 (January 1 to December 31, 2024)
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 | 338,000 | 2.8 | 21,500 | (9.8) | 23,500 | (9.6) |
(Jan-Dec 2024) | ||||||
Profit attributable to owners of | Earnings per share | |||||
parent | ||||||
Millions of yen | % change from | Yen | ||||
the previous year | ||||||
Full-year forecast | 21,400 | 12.2 | 187.74 | |||
(Jan-Dec 2024) | ||||||
(Note) Revisions to financial forecasts published most recently: Yes
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* Other
(1) Significant changes in subsidiaries during the period under review: Yes
New: 4 companies added to scope of consolidation:
Origin Co.,Ltd., Estic Co., Ltd., Kokuyo-Ik (Thailand) Co., Ltd., Kokuyo International (Thailand) Co., Ltd.
Removed:
-
Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: Yes
See page 12 of the reference document (2. Consolidated Financial Statements, (4) Notes: Application of particular accounts procedures to the preparation of quarterly consolidated financial statements). - Changes or restatements in accounting principles, procedures and methods of presentation relating to preparation of the consolidated financial statements
- Changes due to revision of accounting standards: None
- Changes other than those under above: None
- Changes in accounting estimates: None
- Restatements: None
- Number of shares of common stock issued
- Number of shares of common stock (including treasury stock) issued at:
September 30, 2024 | 121,542,463 |
December 31, 2023 | 121,542,463 |
- Number of shares of treasury stock held at:
September 30, 2024 | 8,227,751 |
December 31, 2023 | 7,552,105 |
- Number of shares of average stock during a term held at:
September 30, 2024 | 113,411,264 |
September 30, 2023 | 115,387,489 |
- Has a public accountant or independent auditor reviewed the appended consolidated statements? No.
- 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. Read more about the assumptions behind the forecasts, as well as precautions on using the forecasts, on page 7 of the reference document (1. Activity Report (3) Qualitative Information Related to Consolidated Forecasts).
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1. Activity Report
All forward-looking statements in this document are based on assumptions deemed reasonable as of the end of the period under review.
(1) Business results in period under review
(Millions of yen) | |||
January-September | January-September | Year-on-year change | |
2023 (million yen) | 2024 (million yen) | (%) | |
Net sales | 248,813 | 251,549 | +1.1 |
Operating income | 19,677 | 17,510 | (11.0) |
Ordinary income | 21,667 | 19,197 | (11.4) |
Profit attributable to owners of parent | 14,874 | 16,374 | +10.1 |
During the period under review (January 1 to September 30, 2024), the Japanese economy traced a moderate recovery path, with improved corporate earnings, employment situation, and personal income. However, the economic outlook was mired by an economic downturn overseas amid economic uncertainties in China and by other factors such as the soaring 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, actively deployed strategic expenditures, and stepped up our global expansion efforts.
Despite a turbulent business climate, we maintained our competitiveness by flexibly adapting to the changing business conditions and shifting customer needs.
Net sales reached ¥251.5 billion (up 1.1% year on year). This year-on-year growth reflects the success of the furniture business in capitalizing on the brisk demand for office relocations and office renovations. Gross profit increased to ¥99.7 billion (up 3.1% year on year), reflecting sales price revisions, which more than offset the high raw material prices. Gross profit ratio came to 39.6% (0.8 points up year on year). Selling, general and administrative expenses increased to ¥82.2 billion (up 6.7% year on year), reflecting the proactive increase in strategic expenditures for expanding the business fields. Expense ratio (selling, general, and administrative expenses to net sales) came to 32.7% (up 1.7 points year on year).
Reflecting these results, operating income reached ¥17.5 billion (down 11.0% year on year). Ordinary income reached ¥19.1 billion (down 11.4% year on year). Profit attributable to owners of parent reached ¥16.3 billion (up 10.1% year on year), reflecting the sale of non-current assets.
Segment
As part of our long-term vision, CCC 2030, we have redefined our role in society as that of a "Work & Life Style Company," and committed to being an organization that creates life-affirming solutions, alongside tangible stationery and furniture, in the domain of work and the domain of learning and daily life.
In the workstyle field, the pandemic has entrenched the dispersed workplace and diverse working styles. 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.
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The following table shows the segment-specific results for the period under review.
(Millions of yen)
Workstyle field
Furniture
Business supply
distribution
Lifestyle field
Stationery
Interior retail
Others
Reconciliation
Total
Workstyle field
• Furniture businesses
January-September | January-September | Year-on-year change | |
2023 | 2024 | (%) | |
Net sales | 190,906 | 193,116 | +1.2 |
Operating income | 20,772 | 20,389 | (1.8) |
Net sales | 117,464 | 118,502 | +0.9 |
Operating income | 17,872 | 16,918 | (5.3) |
Net sales | 73,442 | 74,614 | +1.6 |
Operating income | 2,900 | 3,470 | +19.7 |
Net sales | 78,934 | 79,236 | +0.4 |
Operating income | 5,827 | 5,499 | (5.6) |
Net sales | 63,968 | 63,625 | (0.5) |
Operating income | 5,322 | 5,102 | (4.1) |
Net sales | 14,966 | 15,611 | +4.3 |
Operating income | 504 | 397 | (21.3) |
Net sales | 306 | 304 | (0.7) |
Operating income | (193) | (373) | |
Net sales | (21,335) | (21,108) | |
Operating income | (6,728) | (8,005) | |
Net sales | 248,813 | 251,549 | +1.1 |
Operating income | 19,677 | 17,510 | (11.0) |
For our furniture businesses, we target the burgeoning demand for office renovation driven by the diversification of working styles. Meanwhile, Kokuyo Hong Kong Limited (Kokuyo Hong Kong) spearheads our overseas business expansion. In this way, the business drives earnings growth for our organization as a whole.
In Japan, we continue seeing brisk demand for new office builds (office relocations) and office renovations. To capitalizing on this demand, we are working to expand the business and improve profitability by tailoring workstyle solutions to customers' strategic issues more effectively and by streamlining workflows.
In China and ASEAN, Kokuyo Hong Kong has played a central role in efforts to improve production and strengthen sales operations. However, in the period under review, these efforts were affected by the economic malaise in China.
Under such circumstances, the segment's net sales increased to ¥118.5 billion (up 0.9% year on year). Operating income decreased to ¥16.9 billion (down 5.3% year on year).
• Business supply distribution
In this business area, we are streamlining workflows by integrating Kaunet with our wholesale functions. To expand business, we are accelerating efforts to develop e-commerce in a way that enhances customer experience value.
During the period under review, profitability improved following sales revisions, and our solutions system for large-scale corporate clients performed well.
Under these circumstances, the segment's net sales came to ¥74.6 billion (up 1.6% year on year). Operating income increased to ¥3.4 billion (up 19.7% year on year).
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Lifestyle field
• Stationery businesses
For our stationery businesses, we aim to increase revenue and profit through global growth. To that end, we focus on the growing market for value-added stationery, which is driven by the demand for self-expression (as exemplified by social media). We have also committed to the radical organizational change in order to prepare for a full-on global expansion.
In Japan, we have worked to improve profitability by revising sales prices and optimizing business resource allocation. We have also made progress in our e-commerce business.
In China, with our stationery for secondary school girls remaining in strong demand, we built up retail partnerships, but performance was adversely affected by the economic malaise in China.
In India, we focused on improving sales productivity and expanding capacity to supply mainstay products and launched value-added products. However, performance was adversely affected by inflation and intensifying competition in India.
Under these circumstances, the segment's net sales decreased to ¥63.6 billion (down 0.5% year on year). Operating income decreased to ¥5.1 billion (down 4.1% year on year).
• Interior retail businesses
To capture emerging living-space needs, Actus has committed to following an online-merged-with-offline marketing strategy to integrate its online store with its brick-and-mortar stores.
During the period under review, profit margins narrowed amid the low yen. However, revenue grew thanks to successful sales campaigns and progress in our e-commerce business.
Under these circumstances, the segment's net sales increased to ¥15.6 billion (up 4.3% year on year). Operating income decreased to ¥0.3 billion (down 21.3% year on year).
- Financial position at end of period under review 1) Assets, liabilities, and net assets
As of September 30, 2024, total assets amounted to ¥344.0 billion, down ¥14.3 billion from December 31, 2023, (the end of the previous fiscal year).
Current assets decreased by ¥13.0 billion to ¥217.1 billion. The main factors were a decrease of ¥9.7 billion in notes and accounts receivable and contract assets, a decrease of ¥1.5 billion in cash and deposits, and a decrease of ¥1.2 billion in merchandise and finished goods.
Non-current assets decreased by ¥1.2 billion to ¥126.9 billion. The main factor was a decrease of ¥2.4 billion in investment securities, partially offset by an increase of ¥0.4 billion in property, plant and equipment and an increase of ¥0.2 billion in retirement benefit assets.
As of September 30, 2024, liabilities amounted to ¥80.8 billion, down ¥24.1 billion from December 31, 2023. The main factors were a decrease of ¥16.1 billion in notes and accounts payable - trade, a decrease of ¥4.8 billion in current portion of long-term loans payable, and a decrease of ¥2.6 billion in income taxes payable, which more than offset an increase of ¥2.1 billion in provision for bonuses.
As of September 30, 2024, net assets totaled ¥263.2 billion, up ¥9.8 billion from December 31, 2023. The main factors were an increase of ¥9.9 billion in retained earnings and an increase of ¥1.7 billion in non- controlling interests. Partially offsetting these factors was a decrease of ¥1.6 billion representing an increase in purchase of treasury shares.
2) Cash Flows
As of September 30, 2024, consolidated cash and cash equivalents (hereafter referred to as cash) totaled ¥113.8 billion, a decrease of ¥1.3 billion from December 31, 2023.
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Cash flows from operating activities
Net cash provided by operating activities was ¥9.5 billion (down ¥18.1 billion year on year). Positive cash flows increased. The cash flows included ¥24.2 billion in profit before income taxes, ¥10.9 billion in decrease in notes and accounts receivable - trade, adjustment for non-financial gain/loss (e.g. ¥5.8 billion in depreciation), and ¥2.0 billion in increase in provision for bonuses. Negative cash flows decreased. These cash flows included ¥16.7 billion in decrease in notes and accounts payable - trade, ¥10.3 billion in income taxes paid, and ¥4.8 billion in gain on sales of non-current assets.
Cash flows from investing activities
Net cash earned by investing activities was ¥0.7 billion (compared to ¥3.3 billion used the same period last year). The main positive cash flows were ¥5.5 billion in proceeds from sales of property, plant and equipment and ¥0.8 billion in proceeds from sales and redemption of investment securities. The main negative cash flow was ¥5.0 billion in capital expenditure.
Cash flows from financing activities
Net cash used in financing activities was ¥14.6 billion (up ¥3.9 billion year on year). The main positive cash flow was ¥1.6 billion in decrease in cash segregated as deposits for purchase of treasury shares. The main negative cash flows were ¥8.2 billion in cash dividends paid, ¥5.1 billion in repayments of long-term loans payable, ¥1.6 billion in purchase of treasury shares, and ¥1.0 billion in repayments of lease obligations.
(3) Qualitative Information Related to Consolidated Forecasts
On February 13, 2024, we released forecasts for the current fiscal year (ending December 31, 2024). We reviewed these forecasts in view of the results for the period under review (nine months ended September 30, 2024), in which profit declined year on year despite revenue growth. Concluding that we are unlikely to close the gap during the fourth quarter, we have decided to downgrade the forecasts.
One factor behind the above results was that, amid the economic downturn in China, the furniture business won fewer and less lucrative contracts and saw some contracts being postponed. Another factor was that the stationery businesses experienced waning consumer demand for value-added goods.
The forecast for profit attributable to owners of parent remains unchanged considering the effect of selling cross-held shares. Also unchanged is the year-enddividend-we will still pay ¥38.00 per share.
Consolidated forecasts for the year ending December 31, 2024
(Millions of yen) | |||||
Initial forecast | Latest forecast | Difference | Change from | Result in | |
previous year | |||||
(A) | (B) | (B - A) | previous year | ||
(%) | |||||
Net sales | 355,000 | 338,000 | (17,000) | (4.8) | 328,753 |
Operating income | 24,500 | 21,500 | (3,000) | (12.2) | 23,830 |
Ordinary income | 25,500 | 23,500 | (2,000) | (7.8) | 25,989 |
Profit attributable to owners | 21,400 | 21,400 | | | 19,069 |
of parent | |||||
Earnings per share | ¥187.74 | ¥187.74 | | | ¥165.60 |
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Segment-specific forecasts for the year ending December 31, 2024
(Millions of yen) | ||||
Initial | Latest | Difference | Change from | Result in |
forecast | forecast | previous year | previous | |
(B - A) | ||||
(A) | (B) | (%) | year | |
Workstyle field | Net sales | 271,800 | 261,500 | (10,300) | (3.8) | 252,293 |
Operating income | 28,600 | 27,300 | (1,300) | (4.5) | 26,351 | |
Furniture | Net sales | 168,100 | 161,800 | (6,300) | (3.7) | 154,472 |
Operating income | 24,200 | 22,700 | (1,500) | (6.2) | 22,458 | |
Business supply | Net sales | 103,700 | 99,700 | (4,000) | (3.9) | 97,820 |
distribution | Operating income | 4,400 | 4,600 | +200 | +4.5 | 3,892 |
Lifestyle field | Net sales | 110,900 | 104,500 | (6,400) | (5.8) | 104,248 |
Operating income | 8,600 | 6,500 | (2,100) | (24.4) | 7,501 | |
Stationery | Net sales | 90,700 | 83,500 | (7,200) | (7.9) | 83,899 |
Operating income | 8,000 | 6,000 | (2,000) | (25.0) | 6,802 | |
Interior retail | Net sales | 20,200 | 21,000 | +800 | +4.0 | 20,348 |
Operating income | 600 | 500 | (100) | (16.7) | 698 | |
Others | Net sales | 700 | 400 | (300) | (42.9) | 438 |
Operating income | (500) | (500) | | | (370) | |
Reconciliation | Net sales | (28,400) | (28,400) | | | (28,226) |
Operating income | (12,200) | (11,800) | +400 | | (9,651) | |
Total | Net sales | 355,000 | 338,000 | (17,000) | (4.8) | 328,753 |
Operating income | 24,500 | 21,500 | (3,000) | (12.2) | 23,830 | |
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2. Consolidated Financial Statements
(1) Consolidated Balance Sheets
(Millions of yen) | ||
As of December 31, 2023 | As of September 30, 2024 | |
Assets | ||
Current assets | ||
Cash and deposits | 85,533 | 84,006 |
Notes and accounts receivable and contract | 68,551 | 58,761 |
assets | ||
Securities | 30,086 | 30,109 |
Merchandise and finished goods | 31,458 | 30,213 |
Work in process | 2,177 | 3,235 |
Raw materials and supplies | 6,082 | 6,047 |
Other | 6,358 | 4,770 |
Allowance for doubtful accounts | (91) | (19) |
Total current assets | 230,157 | 217,125 |
Non-current assets | ||
Property, plant and equipment | ||
Buildings and structures, net | 21,360 | 21,420 |
Land | 28,305 | 27,426 |
Other, net | 11,875 | 13,135 |
Total property, plant and equipment | 61,542 | 61,982 |
Intangible assets | ||
Goodwill | 5,416 | 5,161 |
Other | 11,197 | 11,450 |
Total intangible assets | 16,614 | 16,612 |
Investments and other assets | ||
Investment securities | 40,112 | 37,669 |
Retirement benefit asset | 4,559 | 4,820 |
Other | 5,779 | 6,266 |
Allowance for doubtful accounts | (354) | (384) |
Total investments and other assets | 50,098 | 48,371 |
Total non-current assets | 128,254 | 126,966 |
Total assets | 358,412 | 344,091 |
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(Millions of yen) | ||
As of December 31, 2023 | As of September 30, 2024 | |
Liabilities | ||
Current liabilities | ||
Notes and accounts payable - trade | 55,157 | 38,966 |
Short-term loans payable | 4,238 | 4,499 |
Current portion of long-term loans payable | 5,000 | 146 |
Income taxes payable | 6,548 | 3,861 |
Provision for bonuses | 979 | 3,110 |
Other | 19,357 | 16,271 |
Total current liabilities | 91,281 | 66,855 |
Non-current liabilities | ||
Long-term loans payable | | 120 |
Retirement benefit liability | 83 | 232 |
Other | 13,620 | 13,654 |
Total non-current liabilities | 13,704 | 14,006 |
Total liabilities | 104,985 | 80,862 |
Net assets | ||
Shareholders' equity | ||
Capital stock | 15,847 | 15,847 |
Capital surplus | 18,136 | 18,160 |
Retained earnings | 210,677 | 220,589 |
Treasury shares | (12,206) | (13,818) |
Total shareholders' equity | 232,455 | 240,778 |
Accumulated other comprehensive income | ||
Valuation difference on available-for-sale | 15,912 | 15,183 |
securities | ||
Deferred gains or losses on hedges | (22) | (94) |
Foreign currency translation adjustment | 2,905 | 3,551 |
Remeasurements of defined benefit plans | 590 | 495 |
Total accumulated other comprehensive | 19,386 | 19,135 |
income | ||
Non-controlling interests | 1,585 | 3,314 |
Total net assets | 253,426 | 263,229 |
Total liabilities and net assets | 358,412 | 344,091 |
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