Shikoku Kasei (4099) Q2 2023 earnings summary

Executive summary

• H1 FY2023 revenue rose 0.6% YoY to ¥30,880m, while operating profit fell 5.7% to ¥3,786m and net income fell 12.3% to ¥3,212m amid higher input, labor and depreciation costs.

• The full-year forecast was revised to lower sales but higher profit than initially forecast, reflecting a weaker yen, lower export freight rates and unplanned FX gains through Q2.

Financial highlights

• Jan–Jun net sales were ¥30,880m, up ¥174m (+0.6%) YoY; operating profit was ¥3,786m, down ¥229m (-5.7%).

• Ordinary profit was ¥4,720m, down ¥410m (-8.0%); profit attributable to owners of parent was ¥3,212m, down ¥450m (-12.3%).

• H1 foreign exchange gains were ¥554m, ¥283m lower YoY; securities-sale gains were nil versus ¥856m in the prior-year period.

• Impairment losses and losses on investment-security valuation increased ¥760m YoY, weighing on the comparison.

Outlook and guidance

• FY2023 forecast: net sales ¥63,000m, down ¥1,000m (-1.6%) from initial guidance; operating profit ¥7,500m, up ¥1,000m (+15.4%).

• Revised ordinary profit is ¥8,300m, up ¥1,300m (+18.6%), and net income is ¥6,800m, up ¥1,900m (+38.8%) versus initial guidance.

• Forecast FX assumptions are US$1=¥135, €1=¥150 and RMB1=¥19; each ¥1 FX move is estimated to affect full-year sales by ¥150m and operating profit by ¥70m.

• The upward revision includes cross-shareholding sale gains planned from Q3; the Chemicals outlook assumes temporarily tight North American organic-chemical supply, while Housing Materials sales were revised down after weaker-than-expected post-price-revision demand.

• Versus FY2022, revised FY2023 sales are up 2.5% to ¥63,000m, while operating profit is down 13.8% to ¥7,500m, ordinary profit down 15.7% to ¥8,300m and net income down 4.0% to ¥6,800m.