Financial Results for the three months ended March 31, 2025 （272KB）

April 25, 2025

KOKUYO CO., LTD.

FINANCIAL RESULTS

(Consolidated)

Results for the three months ended March 31, 2025

Company name: KOKUYO Co., Ltd.

Stock listings: Tokyo Stock Exchange (Prime) Stock code: 7984 (URLhttps://www.kokuyo.com) Representative: Hidekuni Kuroda, President and CEO

For further information, please contact: Hitoshi Honda (Executive Officer, Manager of Finance and Accounting Division)

Telephone: +81-6-6976-1221 (general) Commencement date for dividend payments: − Supplemental material for results: Yes

Briefing about results: Yes (for institutional investors and securities analysts)

(Figures less than ¥1 million have been omitted.)

1. Results for the three months ended March 31, 2025 (January 1 to March 31, 2025)

(1) Consolidated operating results

(Note) In the period under review, we changed the method for presenting rental income and expenses in some cases. Previously, such items were included in non-operating income and non-operating expenses. Now, they are included in net sales and cost of sales. We have retroactively applied the new method and restated the net sales and operating income items for the comparative period (the three months ended March 31, 2024). Accordingly, we have omitted the percentage year-on-year change (%) in net sales and operating income for the comparative period (the three months ended March 31, 2024).

(2) Consolidated financial position

March 31, 2025

December 31, 2024

¥263,109 million ¥260,552 million

2. Dividends

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

3. Consolidated Forecasts for the Fiscal Period Ending December 31, 2025

(January 1 to December 31, 2025)

(Note) Revisions to financial forecasts published most recently: None

In the period under review, we changed the method for presenting rental income and expenses in some cases. Previously, such items were included in non-operating income and non-operating expenses. Now, they are included in net sales and cost of sales. The above forecasts have been restated to reflect this change. The year-on-year changes (numeric and percentage) in the above forecasts have been restated on the hypothetical basis that the above method was applied in the previous year (ended December 2024).

* Others

• (1) [Have there been any] significant changes in subsidiaries during the period under review: None

  New: − Removed: −

• (2) Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: Yes

  Note: See page 14 of the reference document (2. Consolidated Financial Statements, (4) Notes on the Consolidated Statements: Changes in Presentation Method).

• (3) Changes or restatements in accounting principles, procedures and methods of presentation relating to preparation of the consolidated financial statements

  • 1) Changes due to revision of accounting standards: Yes

  • 2) Changes other than those stated above: None

  • 3) Changes in accounting estimates: None

  • 4) Restatements: None

  Note: See page 14 of the reference document (2. Consolidated Financial Statements, (4) Notes on the Consolidated Statements: Changes in Presentation Method).

• (4) Number of shares of common stock issued

  • 1) Number of shares of common stock (including treasury stock) issued at:

    March 31, 2025 115,742,463

    December 31, 2024 115,742,463

  • 2) Number of shares of treasury stock held at:

    March 31, 2025 2,429,173

    December 31, 2024 2,428,833

  • 3) Number of shares of average stock during a term held at:

March 31, 2025 113,313,495

March 31, 2024 113,561,013

* Have these quarterly consolidated financial statements been reviewed by a certified public accountant or independent auditor: 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. See page 7 of the reference document (1. Activity Report, (3) Qualitative Information Related to Consolidated Forecast) for information about the assumptions underlying the financial forecasts and disclaimers about using the financial forecasts.

1. Activity Report

All forward-looking statements herein are based on assumptions deemed reasonable as of the period under review.

(1) Business Results in Period Under Review

(Millions of yen)

During the fiscal period under review (January 1 to March 31, 2025), 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, US policy, and inflation.

Against this backdrop, we made a start on Unite for Growth 2027, our fourth medium-term plan aligned with our long-term vision, CCC 2030. Unite for Growth 2027 sets out a strategy of combining the knowledge assets in each of our businesses with the strengths that our group has cultivated to date to create inter-business synergy, grow our existing businesses, and expand the reach of the business fields.

The business climate had changed dramatically, but we maintained our competitiveness by flexibly adapting to the changing business conditions and shifting customer needs.

Net sales reached ¥99.4 billion (up 3.5% 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 ¥42.4 billion (up 7.4% year on year), reflecting sales price revisions, which more than offset the high raw material prices. Gross profit ratio came to 42.7% (1.6 points up year on year). Selling, general and administrative expenses increased to ¥28.9 billion (up 4.5% year on year), reflecting strategic expenditures and organizational bolstering for expanding the business fields. Expense ratio (selling, general, and administrative expenses to net sales) came to 29.1% (up 0.3 points year on year).

Reflecting these results, operating income reached ¥13.4 billion (up 14.4% year on year). Ordinary income reached ¥13.0 billion (up 3.7% year on year). Profit attributable to owners of parent was ¥10 billion, down 16.4% year on year. The decrease was relative to the spike in the comparative period, when we recorded gain from 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.

While we changed our two-category structure (workstyle field and lifestyle field) to enable greater flexing of our strengths across the group and to maximize the sharing of knowledge assets between businesses, the four-segment structure (furniture, business-supply distribution, stationery, interior retail) remains the same.

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

(Millions of yen)

• • Furniture businesses

For our furniture businesses, we target the burgeoning demand for office renovation driven by the diversification of working styles. Meanwhile, we pursue growth overseas by channeling Kokuyo Hong Kong's resources and applying the interior design expertise we demonstrated in Japan. 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, the market remained sluggish amid economic adversities, but Kokuyo Hong Kong made progress in growing order volume.

In ASEAN, we stepped up efforts to target middle and high market segments.

Under such circumstances, the segment's net sales increased to ¥53.8 billion (up 8.7% year on year). Operating income increased to ¥12.5 billion (up 19.8% year on year).

In the period under review, we changed our presentation method. See 2. Consolidated Financial Statements (4) Notes on the Consolidated Statements: Changes in Presentation Method.

• • Business supply distribution

In this business area, we use technological innovation to deliver personalized shopping experiences through Benri Net, a platform-based service for purchase management.

During the period under review, we worked to expand our clientele and offer our solutions systems (Benri Net and With Kaunet) to large-scale clients, but we experienced delays in the process of inhering Fujitsu Coworco's business.

Under these circumstances, the segment's net sales came to ¥26.5 billion (down 0.9% year on year).

Operating income decreased to ¥1.3 billion (down 1.1% year on year).

• • Stationery businesses

In this business area, we are shifting to a strategy that involves capitalizing on the global momentum for positive study/learning experiences. To this end, we are positioning our Campus brand as a brand that delivers value in study/learning.

In Japan, we revised sales prices and made progress in rebranding Campus and developing our e-commerce business.

In China, with our stationery for secondary school girls remaining in strong demand, we opened retail locations and grew our fanbase, but performance was adversely affected by the economic malaise in the country.

In India, we expanded new 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 ¥21.8 billion (down 4.8% year on year).

Operating income decreased to ¥2.1 billion (down 9.1% year on year).

• • Interior retail businesses

In this business area, we building a network of offline and online stores, channeling the customer connections and marketing prowess developed in our existing interior retail businesses. We are also working closer with partners to expand our business reach in the B2B sector as part of a business portfolio shift that will contribute to long-term growth.

During the period under review, we made progress in growing sales in our offline stores and the online store and in growing order volume in the B2B sector.

Under these circumstances, the segment's net sales increased to ¥5.3 billion (up 6.1% year on year). Operating income decreased to ¥0.1 billion (down 11.6% year on year).

(2) Financial Performance During Period Under Review

1) Assets, liabilities, and net assets

Total assets at March 31, 2025, amounted to ¥359.5 billion, down ¥3.3 billion from December 31, 2024, the end of the previous fiscal year.

Current assets increased by ¥0.8 billion to ¥253.7 billion. The main factors were an increase of ¥11.4 billion in notes and accounts receivable and contract assets, an increase of ¥2.0 billion in real estate for sale in progress, and an increase of ¥1.9 billion in merchandise and finished goods, partially offset by a decrease of ¥12.7 billion in cash and deposits.

Non-current assets decreased by ¥4.2 billion to ¥105.8 billion. The main factors were a decrease of ¥3.5 billion in investment securities and a decrease of ¥1.0 billion in property, plant and equipment.

Liabilities at March 31, 2025, amounted to ¥93.1 billion, down ¥5.7 billion from December 31, 2024, the end of the previous fiscal year. The main factors were an increase of ¥2.0 billion in provision for bonuses, offset by a decrease of ¥3.4 billion in income taxes payable and a ¥1.2 billion decrease in notes and accounts payable.

Net assets at March 31, 2025, came to a total of ¥266.4 billion, up ¥2.4 billion from December 31, 2024, the end of the previous fiscal year. The main factors were an increase of ¥5.5 billion in retained earnings, offset by a decrease of ¥1.6 billion in valuation difference on available-for-sale securities and a decrease of ¥1.2

billion in foreign currency translation adjustment.

2) Cash Flows

On a consolidated basis, cash and cash equivalents (hereafter referred to as cash) as of March 31, 2025, totaled ¥119.3 billion, a decrease of ¥12.7 billion from the previous fiscal year-end.

Cash flows from operating activities

Net cash used from operating activities was ¥7.8 billion (up ¥6.7 billion year on year). The main positive cash flows were ¥14.5 billion in profit before income taxes, ¥2.0 billion in increase in provision for bonuses and an increase in reconciliation of non-cash profit/loss, which included ¥1.8 billion in depreciation. The main negative cash flows were ¥11.7 billion in increase in notes and accounts receivable - trade, ¥7.9 billion in income taxes paid, ¥2.0 billion in increase in real estate for sale, ¥1.8 billion in increase in inventories, ¥0.9 billion in decrease in notes and accounts payable - trade, and ¥1.5 billion in gain on sale of investment securities not included in operating cash flows.

Cash flows from investing activities

Net cash earned by investing activities was ¥0.3 billion (down ¥4.2 billion year on year). The main positive cash flow was ¥2.7 billion in proceeds from sale of investment securities. The main negative cash flow was ¥2.2 billion in capital expenditure.

Cash flows from financing activities

Net cash used in financing activities was ¥4.5 billion (up ¥0.8 billion year on year). The main positive cash flow was ¥0.2 billion in increase in short-term loans payable. The main negative cash flows were ¥4.4 billion in cash dividends paid and ¥0.3 billion in repayments of lease obligations.

(3) Qualitative Information Related to Consolidated Forecasts

The forecasts for the fiscal period ending December 31, 2025, remain unchanged from those announced on February 14, 2025.

If we do have to change the forecasts, we will disclose the details without delay.

2. Consolidated Financial Statements (1) Consolidated Balance Sheets

(Millions of yen)

(2) Quarterly Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income for the Three Months Ended March 31, 2025

(Millions of yen)

161

55

Other

18 37

12,565

13,029

4,867

−

−

14

14

56

5,493

4,506

58

11

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