Here I will report the business results for this company’s 49th consolidated cumulative second quarter (between September 21, 2020 and March 20, 2021).
General conditions in the current consolidated cumulative second quarter
In the second quarter of the fiscal year under review, the Japanese economy remained in a severe situation due to the prolonged outbreak of COVID-19 infection. In the March short-term economic survey conducted by the Bank of Japan, business sentiment in the manufacturing industry recovered to the level before pandemic of COVID-19 infection for both large enterprises, medium-sized enterprises, and small-to-medium sized enterprises. As a result, the economy showed signs of recovery.
On the other hand, it is necessary to closely monitor the risks that developments in infectious diseases and fluctuations in financial and capital markets may cause the domestic and overseas economies to deviate downward from the baseline scenario while raising the level of socio-economic activity.
In this situation, our MAEDAKOSEN group has announced the corporate message “MAEDAKOSEN is a company that mixes together” since its 100th anniversary in 2018.This message embodies our strong commitment to achieving sustainable growth. By “mixing” the Group’s management resources, we believe that it will serve as the driving force for aggressively promoting our growth strategies of “M&A,” “Overseas Business,” and “Human Resource Development.”
In our M&A strategy, we will create new products and technologies by “mixing” the various technologies and know-how possessed by different fields, rather than capturing only the textile and resin processing technologies that our Group has cultivated to date.
In our overseas business, we will expand our overseas production bases and leverage our domestic and overseas technologies and sales networks through business alliances with foreign companies. In this way, we will aim to expand the market for our Group products.
In human resource development, we will build an innovative organizational culture by making all of our Group employees workforce, recruiting and developing diverse human resources, and “blending” the human resources born from those abilities and experiences. In addition, based on the idea that “the health of our employees determines the future of the company,” our Group is determined to be deeply involved in the health of all employees and has made a “Health Declaration.” Going forward, we will continue to take various measures to create a healthy and rewarding workplace.
In this way, through manufacturing, our Group will put into practice our management philosophy of “We will contribute to the creation of a sustainable, safe, and prosperous society with our unique wisdom and technology,” and strive to become a company that is even more needed by the world.
Sales in the cumulative second quarter of this fiscal year were 21.678 billion yen (down 0.0% from the same period of the previous year).In terms of profits, operating income was ¥3.112 billion (up 10.0%), ordinary income was ¥3.145 billion (up 5.3%), and quarterly net income attributable to owners of the parent was ¥2.118 billion (up 5.4%).
From the first quarter of the current fiscal year, the Group reorganized its segments and shifted the Automotive Wheels Business, which was the Human Infrastructure Business, to the Industry Infrastructure Business, and the Health Care Business, which was the Other Business, to the Human Infrastructure Business. The business environment has changed dramatically, including the advancement of DX (Digital Transformation), the development of high-speed communications networks including 5G, and the “Green Growth Strategy” aimed at realizing a carbon-free society. The Japanese corporate culture and the living environment of individuals have also changed due to anchoring of telework and online conferences triggered by the Corona disaster. Our Group sees these major reforms as an opportunity, and in the field of “Infrastructure” by blending management resources within the Group, we will create new markets through business restructuring, M&A, and other growth strategies that anticipate the aftersales corona era. At the same time, our policy is to implement measures to realize a “safe and secure” society and enhance people’s QOL (Quality of Life), which is our Group DNA.As part of our efforts to realize these measures, we have reviewed the operating companies that make up our reportable segments and decided to further strengthen management through a management approach. For the following year-on-year changes, the figures for the same period of the previous fiscal year have been reclassified into the revised segment classifications for comparison.
Business Performance according to Segment
Social Infrastructure Business
In our public works business, sales fell below the results for the corresponding period of the previous fiscal year due to sluggish sales of river revetment materials and offshore civil engineering products, despite steady sales of slope environmental products and Rehabilitation and Reinforcement materials for concrete structures. Operating income increased year on year due to changes in the product portfolio, including an increase in the in-house manufacturing ratio of our products for public works projects. In non-woven fabric-related products, both sales and income increased year on year. Demand recovered in the industrial materials field for spunbonds (continuous-filamental non-woven fabrics), and orders for medical and hygiene products were firm for the new Corona Virus infectious disease measure implementation.
Measure implementation Veterinary Damage Sales and earnings declined from the same period of the previous fiscal year due to distortion in some veterinary and livestock-related construction projects at our MIRAI no Agri CO., LTD., which handles horticultural houses and agricultural materials. In addition, MIRAI TECNO CO., LTD., a subsidiary that handles tenmaku and sambu fabric products, worked to expand sales of its own original products and reduce selling, general and administrative expenses. However, orders for products for the Ministry of Defense and offshore civil engineering products were sluggish. As a result, both sales and income fell below the results for the corresponding period of the previous fiscal year. At KUSHIRO Highmeal CO., LTD., which manufactures and sells fish meal and fish oil, both sales and profits increased year on year due to favorable fishing volumes and the effects of reductions in fuel costs and SG&A expenses. In addition, MAEDA KOSEN VIETNAM CO., LTD., both sales and earnings remained steady compared to the forecasts due to the expansion of products handled.
In this business, net sales were 14.738 billion yen (a-year-on-year decrease of 1.9%), and operating income was 3.254 billion yen (a-year-on-year increase of 12.7%).
Industrial Infrastructure Business
In the Industry Infrastructure Business, sales fell below the results for the corresponding period of the previous fiscal year as a result of the following factors. First, MIRAI KOSEN CO., LTD., a subsidiary that manufactures, processes, and sells wiping cloth for precision equipment manufacturing and rounded knitting products for clothing and various industrial materials, continued inventory adjustments by contract companies, although demand for products for semiconductors was recovering. Second, sales of contract products for apparel and products for pharmaceutical-related applications were sluggish due to the impact of COVID-19 infection. Operating income increased year on year due to a reduction in manufacturing expenses.
BBS Japan Co., Ltd., a subsidiary that manufactures and sells aluminum forged wheels, posted a year-on-year increase in sales due to strong sales of OEM supplies to domestic automakers and products for the aftermarket, despite weak performance at its German subsidiary BBS Motorsport GmbH due to replacement adjustments for OEM-adopted vehicle models. Operating income fell below the results for the corresponding period of the previous fiscal year due to an increase in Depreciation costs associated with the full-scale operation of new facilities and new plants, despite a decrease in SG&A expenses such as freight.
In this business, net sales were 6.94 billion yen (year-on-year increase of 4.2%), and operating income was 541 million yen (year-on-year decrease of 7.9%).
From the first quarter of the consolidated fiscal year under review, the Automotive Wheels Business, which was the Human Infrastructure Business, has been transferred to the Industry Infrastructure Business.
Human Infrastructure Business
Subsidiary MDK Medical Co., Ltd. began full-scale clinical trials of medical devices, resulting in an operating loss of 202 million yen (compared with an operating loss of 102 million yen in the same period of the previous fiscal year).
From the first quarter of the current fiscal year, the Healthcare Business, which had been the Other Business, has been transferred to the Human Infrastructure Business.