Shikoku Kasei (4099) Q1 2023 earnings summary

Executive summary

• Q1 net sales fell 1.5% YoY to ¥14.685bn, while operating profit rose 7.5% to ¥2.408bn, supported by Housing Materials price increases and favorable FX.

• Profit attributable to owners of parent declined 16.3% to ¥1.744bn, with lower gains on investment securities and higher impairment losses among the year-on-year factors.

Financial highlights

• Ordinary profit increased 1.6% YoY to ¥2.610bn; foreign exchange gains were ¥57m, down ¥192m YoY.

• Operating profit increased ¥167m YoY: Chemicals rose ¥50m and Housing Materials ¥80m, with higher profit margins contributing ¥170m in total.

• Chemicals sales declined ¥410m YoY, while Housing Materials sales rose ¥160m; consolidated sales decreased ¥220m.

• FX changes boosted Q1 operating profit by about ¥400m net of foreign-currency sales, purchases and transportation costs.

Outlook and guidance

• FY2023 forecast unchanged: net sales ¥64.0bn, operating profit ¥6.5bn, ordinary profit ¥7.0bn and profit attributable to owners of parent ¥4.9bn.

• Forecast YoY changes: sales +4.1%, operating profit -25.3%, ordinary profit -28.9% and attributable profit -30.8%.

• Q1 progress versus full-year plan: sales 23%, operating profit 37%, ordinary profit 37% and attributable profit 36%; Housing Materials operating profit progress was 52%.

• Chemicals profit is expected to decline on lower unit selling prices and higher depreciation; Housing Materials profit is forecast unchanged as higher materials costs weigh on margin.

• FX sensitivity is estimated at ¥150m for sales and ¥70m for operating profit per ¥1 exchange-rate movement; Q1 FX versus plan added ¥270m sales and ¥170m profit.