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Message from the President

Report on the business performance in the third quarter of the fiscal year ending March 2018

Updated on January 31, 2018
Koji Fujiwara
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 up to the third quarter of fiscal 2017 as well as the current situation of the company.

1. Business performance in the third quarter of fiscal 2017.

 In fiscal 2017, ASAHI YUKIZAI's consolidated business results accumulated up to the third quarter are as mentioned in the table.

 Sales  ¥35.05 billion  Up 18.2% year-on-year
 Operating profit  ¥2.27 billion  Up 97.8% year-on-year
 Ordinary profit  ¥2.46 billion  Up 120.5% year-on-year
 Net profit (Note 1)  ¥2.12 billion  Up 201.3% year-on-year

 As shown in the table, both sales and profit marked an increase over the same period of the preceding year.

 Business situation in the third quarter are summarized as below.

  1) Sales increased due to the continued investment in the electronic industry and brisk domestic production of foundry materials for the automobile industry and others as did in the second quarter. In addition, subsidiaries located in various places of the world increased their sales to the same industries.
  2) Operating profit marked an increase in the face of rising prices of major raw materials, contributed to by, in addition to the effect of the sales increase, the continued effect of the supply chain reform including the changes of business flows and material supply system.
  3) Both ordinary profit and net profit(Note 1) registered sharp increases, thanks to the increased operating profit and, in addition, the stable foreign exchange rate trends as well as the negative goodwill arising from our purchase of the stock of Daiwa Kosan K.K.(Note 2)

 For the full fiscal 2017, we expect that we will achieve the consolidated business results forecast disclosed on October 31, 2017 (¥48 billion in sales, ¥3 billion in operating profit, ¥3 billion in ordinary profit and ¥2.3 billion in net profit), in spite of some factors of concern such as the geopolitical risk and rising raw material prices.

2. Business performance in each business segment.

 In the Valve & Piping Systems Business segment, demand for products in the anticorrosive product field remained strong, and that for products used in the electronics industry has continued to increase. Against such a backdrop, we are continuously promoting customer-oriented sales activities: In addition to the promotion activities utilizing demonstration trucks, etc., we held explanatory meetings on our sales policy in October 2017 in Tokyo and in November in Osaka. In anticipation of further increase in demand, we are positively enhancing facilities in our Nobeoka Manufacturing Plant. As to overseas development, we have determined to enter the Middle-East area where there is strong demand in the seawater desalination field, and are promoting our project of establishing a representative office there.

 In the Resin Business segment, demand for foundry materials trended brisk for the automobile and construction machinery industries. We are promoting preparation for meeting new demand and the rises in major material prices. Meanwhile, the project of constructing a resin-coated sand production plant in Mexico is being proceeded with as planned, so that we will be able to start its operation in the first half of 2018.

 Regarding the Water Treatment and Natural Resources Exploitation Business segment, sales in the water treatment, maintenance and environmental chemicals segment remained flat from the preceding year and those in the natural resources exploitation segment have been increasing following the progress in execution of ordered construction projects. However, as profit rate is declining gradually due to the rises in labor and material costs, we have established a project for improving such a situation.

 In this way, implementation of various measures set in the mid-term plan “ARS2020” has started to bring results gradually, helped also by the strong business environment.

 It is our intention to continue our efforts aiming at achievement of the targets. Shareholders are kindly requested to provide unchanged support and guidance to us.

January 31, 2018
Koji Fujiwara
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. With regard to the purchase of the stock of Daiwa Kosan K.K., details are found in the IR News dated October 2, 2017 “Notice on the purchase of the stock of Daiwa Kosan Kabushiki Kaisha (which was made into our subsidiary)” in the Asahi Yukizai's Website.