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Message from the President

Report on the business performance in the first quarter of the Fiscal Year ending March 2022

Updated on July 30, 2021
Kazuya Nakano
President & Representative Director
ASAHI YUKIZAI CORPORATION

I would like to express my sincere appreciation for our shareholders’ continued patronage.
Asahi Yukizai Corporation released today our consolidated business results for the first quarter of the current fiscal year ending March 2022 as well as the business performance by business segment. We would like to report its summary as follows:

1. Consolidated business performance for the first quarter of the fiscal year ending March 2022

Sales 13.67 billion yen An increase of 2.50 billion yen year-on-year (up 22.4%)
Operating profit 0.82 billion yen An increase of 0.74 billion yen year-on-year (up 878.8%)
Ordinary profit 0.89 billion yen An increase of 0.82 billion yen year-on-year (up 1,128.4%)
Net quarterly profit attributable to owners of parent 0.63 billion yen An increase of 0.57 billion yen year-on-year (up 970.2%)

Business performance for the quarter is summarized as follows:


  1) Amid the managerial environment surrounding us, in which we are unable to forecast when the COVID-19 might subside, as far as our group’s businesses are concerned, the situation has returned to the situation in which we can engage in ordinary business activities while taking measures against expansion of the infection.
Although automobile production in the first quarter of the current fiscal year proved to be greater than in the preceding year, the number of cars manufactured was shy of that in fiscal 2019 affected adversely by the shortage in the supply of semiconductors. With regard to the domestic capital investment, demand for facility replacement ended up only showing a recovering trend, as people took conservative stance due to the expanded COVID-19.
Overseas, capital investment grew, centering at semiconductor-related industries.
  2) In the field of semiconductor manufacturing, demand for semiconductors to be used in 5G-related products, data centers, personal computers, etc. trended strong. In relation to investment in semiconductor-manufacturing equipment, too, demand remained strong as did in the preceding term.
  3) As for business activities in our group companies, we performed most of the sales activities through telephone calls, e-mails and our Website and, in addition to those, we did face-to-face sales activities within a possible range. At the same time we continued encouraging our employees to work from home at our head office and sales offices and, at our factories and warehouses, we prohibited outsiders from entering those places in principle, and continued our business operations by taking infection-preventing measures including always wearing masks, washing hands and gargling.
  4) As a consequence, sales turned out to be greater than in the preceding year. Operating profit posted a significant increase over the preceding year thanks to the increased sales, regardless of the influence by higher raw material prices.

2. Business performance by business segment

Business activities by business segment are summarized as follows:


  1) In the Valve and Piping System segment, we have been promoting sales activities focusing on the expansion of the area of their usage, either in Japan or overseas, and better services to our customers, adopting the basic strategy to expand the thermoplastic piping material market by developing products in pursuit of the solution of the issues related to corrosion resistance and the functionality for thermoplastic piping materials, taking advantage of having the thermoplastic valves as our mainstay products.
Sales of such main products as thermoplastic valves designed for the domestic market were greater than in the preceding year supported by the large-scale construction projects in relation to semiconductors, though the demand for equipment replacement in general plants failed to recover to the level of fiscal 2019 due to the conservative stance corporations took in capital investment caused by the expansion of COVID-19 and increased raw material prices.
Overseas sales were greater than in the preceding year, since demand for semiconductor-related products and others continued recovering in the US. Meanwhile, in China and in Korea, sales posted significant increases over the preceding year, reflecting the increase in demand thanks to the capital investment for semiconductors and liquid crystal displays.
Sales of the Dymatrix products for semiconductor manufacturing equipment increased significantly over the preceding year, due to the steady increase in sales in Korea, Taiwan and China as well as in Japan.
In the face of the adverse impact of higher raw material prices, profits increased significantly over the preceding year thanks to increased overseas sales and increased sales of Dymatrix products, etc.
 
  2) In the Resin Business segment, regarding the products for foundry materials, we are promoting, domestically, making proposals which should lead to the improved quality of customers’ products along with our sales activities targeting at new customers, and overseas, our proposal activities to meet the product quality the customers required. Sales posted significant increases both domestically and overseas, thanks to such factors as the recovery in automobile production.
Among the foaming material products, sales of the on-the-spot foaming heat insulation materials with our CFC-free system increased significantly over the preceding year as a result that we endeavored to promote sales activities emphasizing its easy handling, the raised construction quality of the undiluted solution system and the spraying machines, which led to an increase in the number of new customers.
Sales of solidification materials, which are used when digging tunnels for ground and soil reinforcement, surpassed those of the preceding year, since demand for products with higher added value that have higher agglomeration strength and water cut-off function increased for construction in which such products are accepted.
Sales of functional resins, mainly used for making electronic materials, increased over the preceding year, thanks to steady demand for low metal content products from major Japanese photoresist manufacturers working on miniaturization of semiconductors as well as the increasing demand for the products for the “legacy” semiconductors.
Overseas sales increased steadily, due to such factors as increased demand for LEDs and the “legacy” semiconductors in China.
Profits were greater than in the preceding year: Although higher raw material prices had adverse impact, sales increased so much as to more than offset it.
 
  3) With regard to the water treatment business in the Water Treatment & Natural Resources Exploitation Business segment, we succeeded in receiving orders for a large-scale project for food production wastewater treatment facilities in the private sector, and the value of successful bids in the governmental bidding matters was higher than in the preceding year. In addition, the private and public construction projects for which we had received orders were started or made progress as originally scheduled, resulting in sales surpassing those of the preceding year.
Sales from the natural resources exploitation business also increased over the preceding year, since construction projects, either for hot spring facilities construction or for geothermal well drilling, for which we had received orders, were started or made progress as originally projected. Sales derived from the maintenance and management service business were smaller than in the preceding year: Although the operation of water treatment facilities which had been outsourced to us was increasing, the number of repairing construction projects remained small.
Sales derived from the environmental chemical business were smaller than in the preceding year, due to the decrease in the number of successful bids for public facilities.
Profits increased significantly over the preceding year thanks to the increase in sales from the water treatment business and the natural resources exploitation business, along with the decline in fixed expenses.

It is our intention that we will continue our business activities while promoting the measures to counter COVID-19 and, simultaneously, we will endeavor to create added value by concentrating our energy in promoting digital transformation in our operation and in fostering human resources, aiming at sustainable growth of the Asahi Yukizai group.
We would highly appreciate it if our shareholders continue to believe in the growth of Asahi Yukizai group in the future and extend a continuous support and guidance to us.

July 30, 2021
Kazuya Nakano,
President & Representative Director