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Message from the President

Report on the business performance in the first quarter of the fiscal year ending March 2019

Updated on July 31, 2018
Kazuya Nakano
President & Representative Director
ASAHI YUKIZAI CORPORATION

 I would like to extend our sincere appreciation of our shareholders’ continued patronage. It is my pleasure to inform you of our consolidated business results for the first quarter of fiscal 2018 ending in March 2019 and the current situation of the company, as well as the upward revision of the estimated first-half and full-year business results, which we released today.

1. Business performance in the first quarter of fiscal 2018.

 In the first quarter of fiscal 2018, Asahi Yukizai’s consolidated business results are as mentioned in the table.

 Sales  ¥13.25 billion  Up 28.8% year-on-year
 Operating profit  ¥0.71 billion  Up 97.0% year-on-year
 Ordinary profit  ¥0.87 billion  Up 123.4% year-on-year
 Net profit (Note 1)  ¥1.38 billion  Up 326.7% year-on-year

 As shown in the table, we have got off to a good start, with the figures surpassing those of the preceding year by a wide margin (on a consolidated basis).

 Business situation in the first quarter of fiscal 2018 are summarized as below.

  1) Sales posted an increase: As the liquid crystal product, semiconductor and automobile field businesses trended brisk continuously since the preceding fiscal year, both piping materials and resin products sold well and, in addition, overseas subsidiaries were also in good shape in their respective locations. Another factor contributing to the sales growth was that we made Asahi AV Sangyo K.K. our consolidated subsidiary in April 2018 (Note 2).
  2) Operating profit posted an increase thanks to the significant growth in sales of ASAHIAV valves and Dymatrix products, which are higher value-added among piping materials.
  3) Sharp increases were posted in ordinary profit and net profit attributable to shareholders of the parent, mainly due to the exchange rate profit arising from the yen which trended on a weak note in the currency market, and the “negative” goodwill generated as the value of the purchase of the Asahi AV Sangyo shares referred to earlier was lower than its net asset value.

2. Summary of business performance in each business segment

 The current situation of activities of each of the business segments are summarized as below.

  1) For the Valve & Piping Systems Business segment, we implemented such measures as releasing of new products and participation in the European exhibit “ACHEMA.” Our automatic plastic valve released in April this year, in particular, received favorable response and we expect for further increase of its sales. Concerning the business environment, demand showed a steady tone in such fields as those related to chemical plants, in which we have strength and, in the liquid crystal product and semiconductor fields, demand maintained its expanding trend. We are emphasizing on accommodating demand by stressing our sales activities with close contact with customers.

Automatic plastic valve (AR type)
 
  2) In the Resin Business segment, the recent shortening of the business flow activated our conversation with customers and, as a result, we have accelerated our activities of finding new needs. Concerning the business environment, demand for foundry materials trended brisk in the domestic market for automobiles and construction machinery; however, the segment is being adversely affected by the rises in raw material prices since the preceding term. In the civil engineering field, demand for natural ground consolidation materials and water sealing materials is rising for use in the tunnel construction for linear Shinkansen Line and Shin Tomei Expressway: We are placing emphasis on accommodating such demand.
     
     
  
Snapshots of tunnel construction
 
  3) Regarding the Water Treatment and Natural Resources Exploitation Business segment, the water treatment business trended firmly backed by the favorable bidding for government office projects in Western Japan. Among the natural resource exploitation businesses, while there were brisk orders for the hot spring drilling projects in the Atami area and others, order incoming for the geothermal drilling projects slowed down as new projects entered in the adjustment phase.

3. Upward revision of estimated business results for the first half of fiscal 2018 and for the full year

 Consolidated business performance trended favorably during the first quarter of fiscal 2018 in terms of both sales and profits and is expected to continue strong in and after the second quarter. We have therefore revised upward the consolidated business results estimates, which were made at the beginning of the year, as mentioned below for both the first half and full year of fiscal 2018.

 For the first half of fiscal 2018

 Sales  ¥28.00 billion  Up 30.2% year-on-year
 Operating profit  ¥1.70 billion  Up 47.5% year-on-year
 Ordinary profit  ¥1.90 billion  Up 47.6% year-on-year
 Net profit (Note 1)  ¥2.10 billion  Up 115.2% year-on-year

 For full fiscal 2018

 Sales  ¥57.50 billion  Up 14.6% year-on-year
 Operating profit  ¥3.90 billion  Up 16.0% year-on-year
 Ordinary profit  ¥4.10 billion  Up 20.5% year-on-year
 Net profit (Note 1)  ¥3.80 billion  Up 36.5% year-on-year

 In the future, targeting at continuous growth in business scale, we are determined to continue implementing various measures stipulated in the mid-term plan, namely reform of product marketing strategy, expansion of overseas sales, reform of supply chains, innovation of manufacturing and company-wide cost reduction.

 We truly hope that shareholders will have expectations for the future growth of the Asahi Yukizai Group, and will provide unchanged support and guidance to us.

July 31, 2018
Kazuya Nakano
President and Representative Director

Notes: 1. “Net profit” refers to the net profit for the fiscal year (or quarter) attributable to the shareholders of the parent.
Notes: 2. Turning Asahi AV Sangyo K.K. into our consolidated subsidiary: Details are stated in the news article titled “Notice on the additional purchase of shares of an affiliated company (turning it into a consolidated subsidiary) and merger between consolidated subsidiaries” dated January 31, 2018, in the IR News within our Website.
URL of the IR News: http://www.asahi-yukizai.co.jp/ir/news.html