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Message from the President

Report on the business performance in the fiscal year ended March 2018

Updated on May 15, 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 explain our consolidated business results for fiscal 2017 which ended in March 2018 and the current situation of the company, as well as the upward revision of the estimated term-end dividend and the targeted figures of managerial indicators in the mid-term management plan.

1. Business performance in fiscal 2017.

 In the full fiscal 2017, Asahi Yukizai’s consolidated business results are as mentioned in the table.

 Sales  ¥50.17 billion  Up 19.4% year-on-year
 Operating profit  ¥3.36 billion  Up 63.0% year-on-year
 Ordinary profit  ¥3.42 billion  Up 74.9% year-on-year
 Net profit (Note 1)  ¥2.79 billion  Up 155.2% year-on-year

 As shown in the table, both sales and profit (operating profit) marked an increase for the fifth consecutive year and, furthermore, sales reached an all-time high (on a consolidated basis).

 Business situation in the full fiscal year 2017 are summarized as below.

  1) Sales posted a year-on-year increase: As the liquid crystal product, semiconductor and automobile field businesses trended brisk throughout the 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 Daiwa Kosan K.K. and its subsidiary to be our consolidated subsidiaries in October 2017 (Note 2).
  2) Operating profit marked an increase in the face of rising prices of major raw materials: In addition to the effect of the sales increase, we continued promoting the supply chain reform including the changes of business flows and the raw material supply system, as well as modernization of production and distribution systems.

2. Summary of business performance in each business segment.

 With the achievement of the targets of our five-year managerial plan entitled “ARS2020” in scope, each of the business segments engaged in the activities as summarized below.

  1) For the Valve & Piping Systems Business segment, demand showed a steady tone in such fields as those related to chemical plants, in which we have strength, since demand for semiconductor and liquid crystal products maintained its rising trend. The segment registered an increase in both sales and profit, as it placed an emphasis on the promotion of the following measures aiming at “realization of the greatest confidence and the brand power,” as stipulated in the mid-term plan.
a) Timely launching of new products (automatic plastic valves, high-pressure air valves and the products closely connected to customers) and positive investment in facilities of our Nobeoka Manufacturing Plant.
b) Sharing of information on customer needs and product strategies through holding explanatory meetings on our sales policy for partner corporations (agents, sales agencies, suppliers and users) and private exhibits.
 
  2) The Resin Business segment also marked a year-on-year increase in both sales and profit. In spite of the adverse influence of material prices which started rising in the second half of the fiscal year, demand for foundry materials trended brisk in the domestic market for automobiles and construction machinery, and the segment placed an emphasis on the following measures aiming at “building of the stable earning structure and strengthening of the capacity of customization” as stipulated in the mid-term plan.
a) Reinforcement of customer services through reforming the business flow.
b) Optimization of the system for supplying materials between Japan and China.
 
  3) The Water Treatment and Natural Resources Exploitation Business segment reinforced its business system for pursuit of private demand expansion and the synergetic effects between business sections as the segment stipulates “reinforcement of integrated power of solution” in the mid-term plan. As a result, sales in the segment increased year on year, since, in addition to the natural resources exploitation business which enjoyed orders incoming steadily, execution of orders received for projects of constructing water treatment made a remarkable progress during the second half of the year and both the maintenance and environmental chemicals businesses trended on a firm note.

3. Upward revision of the dividend expected to be paid at the end of fiscal 2017.

 The consolidated business results for the full fiscal year 2017 proved to be above the business results estimates in terms of profit. We have consequently determined to revise upward the dividend to be paid for the term end to ¥25 per share, adding ¥5 to the latest expectation of dividend (¥20 per share). It will be deliberated on at our 97th Ordinary Meeting of Shareholders scheduled to be held on June 21, 2018 (Note 3).

4. Upward revision of the targeted managerial indicators in the mid-term management plan “ARS2020.”

 Sales and profit increased steadily in each of the business segments, as they endeavored to implement the specific measures based on the mid-term management plan which started in fiscal 2016 and, in the plan for the fiscal year ending March 2019, operating profit and ROE are expected to achieve the managerial indicators targeted for the final fiscal year of the plan. We have therefore revised upward the targets of managerial indicators, aiming at further growth and increase in profitability instead of maintaining the current situation, in accordance with the basic philosophy of “ARS2020” (Note 4).

 In fiscal 2018, 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, targeting at continuous growth in business scale.

 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.

May 15, 2018
Kazuya Nakano
President and Representative Director

Notes: 1. “Net profit” refers to the net profit for the term attributable to the shareholders of the parent.
Notes: 2. Details of the purchase of the stock of Daiwa Kosan K.K. are found in the “IR News” in the Asahi Yukizai’s Website dated October 2, 2017.
Notes: 3. We have carried out a 1-for-5 reverse stock split with the effective date of October 1, 2017. Since the interim dividend for the current term (¥4 per share) should be ¥20 if converted for the reverse stock split, annual dividend for the term should be equivalent to ¥45 per share. This represents a ¥15 increase in dividend compared with the ¥30 equivalence of annual dividend for the previous fiscal year (¥15 for the second quarter and ¥15 for the term end) which is converted after the reverse stock split.

Notes: 4. Details of the revision of our mid-term management plan ASAHI RISING SUN 2020 are found in the “IR News” in the Asahi Yukizai’s Website dated May 15, 2018.
  URL of the IR News: http://www.asahi-yukizai.co.jp/ir/news.html