Sekisui Chemical Co Ltd
TSE:4204
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Mastercard Inc
NYSE:MA
|
Technology
|
|
US |
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Walmart Inc
NYSE:WMT
|
Retail
|
|
US |
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
1 883
2 446.5
|
Price Target |
|
We'll email you a reminder when the closing price reaches JPY.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Mastercard Inc
NYSE:MA
|
US | |
UnitedHealth Group Inc
NYSE:UNH
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Walmart Inc
NYSE:WMT
|
US | |
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Thank you very much for participating in today's briefing session. I'd like to go straight into the presentation. On the first page, the foreign exchange rate assumptions are shown here. Compared to the October forecast, the yen has appreciated so we have been impacted by ForEx rates.
Now let's move on to Page 2. This is an overview of third quarter results. Net sales were JPY 266.4 billion, almost the same as the previous year. Operating income was JPY 17.5 billion, an increase of JPY 800 million over the previous year. Ordinary income was JPY 13.2 billion, a decrease of JPY 4.3 billion year-over-year. And net income was JPY 7.6 billion, a decrease of JPY 2.8 billion.
The operating income for the third quarter was affected by COVID-19, but it turned out to be an increase year-over-year. Ordinary income and quarterly net income decreased due to nonoperating losses caused by foreign exchange losses and the impact of impairment of intangible assets.
Please turn to Page 3. I would like to explain the retroactive revision of the results for the first half of fiscal 2020. The intangible assets associated with the HPP, High Performance Plastics Company's acquisition of Aerospace were finalized in December of this fiscal year. In accordance with this, amortization based on the provisional value of goodwill up to the first half of the fiscal year was retroactively revised and the operating income for the first half was revised from JPY 22.1 billion to JPY 22.4 billion.
Please refer to Page 4. In Q3, on a 9-month cumulative basis, as you can see, net sales decreased and profit at each level also declined.
On Page 5, you can see the results by divisional company for the third quarter. Both sales and profits of the HPP company increased in the third quarter due to recovery and market conditions in excess of expectations, sales expansion of high value-added products and the effect of fixed cost reduction.
The housing company also secured about the same level of profit as the previous year, thanks to the reduction of fixed costs and leveling out in Q3. On the other hand, UIEP, the Urban Infrastructure & Environmental Products company was strongly affected by market conditions, resulting in lower sales and profits.
Also, for the Medical business, the decrease in the number of tests in Japan was offset by the expansion of sales of COVID-19 diagnostic kits overseas, resulting in an increase in profit, and the business is progressing broadly in line with plan. In total, operating income increased by JPY 800 million year-over-year.
Please turn to Page 6. This page is the outlook for market conditions. First of all, the number of automobiles manufactured globally was 94% of the previous year's level in the third quarter, which is better than the October forecast. In Q4, we expect 101% against the previous year's level, which is broadly in line with the October forecast.
The number of smartphone shipments in Q3 was 97% of the previous year's level, better than the original forecast. Although there are some concerns about pre-buys in Q3 and inventory adjustments in Q4, we expect the recovery trend to continue.
On the other hand, in terms of attracting customers in the housing business, due to the impact of COVID-19, the number of visitors to our showrooms decreased, but we were able to attract customers through online, which resulted in overall visitors reaching almost 100% of the previous year's total. New housing starts are expected to fall below 400,000 units in the second half of this fiscal year, as initially expected.
In addition, the price of domestic naphtha and other raw materials has risen more than we expected in the fourth quarter compared to the October outlook. So the fourth quarter is expected to be affected by higher raw material prices.
Please turn to Page 7. This is the forecast by divisional company for the second half. For the second half, we were forecasting an increase in profit of JPY 1.1 billion, which is broadly in line with our plan. However, there will be some upward and downward revisions by divisional company.
HPP, which performed well in the third quarter, was revised upward by JPY 1 billion, while housing and UIEP, which will continue to be affected by the spread of COVID-19 in the fourth quarter, were revised downward. In addition, we will further reduce fixed costs at the head office, et cetera, and expect to finish the fiscal year broadly in line with plan.
Please turn to Page 8. This page shows the results and forecast by divisional company for the third and fourth quarters, with a profit increase of JPY 800 million for the third quarter and a JPY 300 million rise expected for the fourth quarter, we expect to continue to increase profits in the fourth quarter.
Here is the analysis of net sales and profits. In the second half, net sales are expected to decrease by JPY 5.4 billion, but operating income is expected to increase by JPY 1.1 billion, as shown in the waterfall chart on the right. The second half of the fiscal year will be affected by consolidated basis changes, foreign exchange and a decrease in sales volume and product mix, but we will strive to recover the negative impact through cost reduction and fixed cost reduction to achieve a JPY 1.1 billion increase.
Please turn to Page 10. This is the forecast of net sales and operating income by divisional company for the full year. Operating income for the full year is expected to reach JPY 70 billion, which is in line with plan. By divisional company, as I explained earlier, HPP has been revised upward, while housing and UIEP have been revised slightly downward.
This page shows the fiscal 2020 full year forecast for net sales and profits at each level. Net sales are expected to be JPY 1,057.4 billion, slightly higher than planned. Operating income is forecasted at JPY 70 billion, in line with plan, and ordinary income was revised down by JPY 6 billion. Net income is forecasted at JPY 43.5 billion, which is in line with plan.
In particular, we have revised downward our forecast for ordinary income due to the foreign exchange losses caused by the depreciation of the yen and the onetime cost of structural reforms that we are currently implementing ahead of schedule. However, net income for the current fiscal year is expected to be in line with plan due to extraordinary income from the sale of a former factory site.
From Page 12, we show an overview by divisional company. First, for the HPP company, as you can see here, market conditions recovered in the third quarter. In addition, we have made progress in expanding sales of high value-added products, which we have been focusing on. And the effects of various structural reforms and fixed cost reductions that we have been working on since the first quarter of this fiscal year have contributed to Q3, which resulted higher than planned.
As you can see here, net sales are expected to increase by JPY 3.1 billion in the second half. Operating income is expected to increase by JPY 2.1 billion in the second half. As for the breakdown of the JPY 2.1 billion in the second half of the fiscal year, sales volume and product mix are expected to turn positive.
The positive impact from cost reduction and fixed cost is expected to be almost the same as the impact from sales volume and product mix, which will contribute to the expected JPY 2.1 billion increase in profit. Consolidated basis changes, which includes the aerospace impact together with foreign exchange, are expected to have a negative impact on profits.
Turning to Page 13, which shows the status of the 3 strategic fields in the third quarter, sales and profits increased in all 3 fields. In the second half of the fiscal year, there will be a negative impact from aerospace. But still, all 3 fields are expected to exceed plan.
As for Electronics, sales expansion in the non-LCD field, which we have been focusing on in particular, has been strong. Although we expect a temporary drop-off in demand in the fourth quarter due to the accelerated demand in the third quarter, sales are expected to remain brisk.
For the Mobility business, sales and profit turned positive due to the recovery of the automobile market in the third quarter. In particular, sales of high-performance interlayer film, which we are focusing on, has turned positive year-on-year since the third quarter. Sales of interlayer films for head-up displays, which is the core part of the business, are expected to reach 130%, compared to the previous year in the second half.
On the other hand, we are moving forward with rationalization measures for aerospace in an accelerated manner as the slump in aircraft demand is expected to continue over a prolonged period of time.
As for Building and Infrastructure, sales of CPVC to India were particularly strong in the third quarter. Although we have factored in a partial drop-off in demand in the fourth quarter, sales are expected to remain brisk. Demand for fire-resistant materials is also recovering steadily. We have also accounted for some COVID-19 impact in the fourth quarter. That is all for the HPP company.
Next, on Page 14 is the Housing Company. For the Housing business, orders in the third quarter recovered to 97% of the previous year's level as shown here and progressed as planned. In the fourth quarter, however, we expect impact from COVID-19 and the state of emergency declaration. As a result, we have revised downward our second half operating income forecast as sales recognition is expected to be delayed.
As for orders, in Q3, it was 97% of the previous year's level, and we expect 98% in the fourth quarter. This is a downward revision of 5% from the October forecast. Although overall sales are expected to increase by JPY 2.4 billion, operating income is expected to decrease by JPY 1.2 billion in the second half.
Looking at the factors contributing to the housing business, the reason for this outlook is due to the decrease of houses sold, which is down by 210 units from the previous year. On the other hand, the renovation and town and community development businesses will start contributing to earnings in the second half. So we expect an increase in profits from renovation and the others business in the second half.
Please turn to Page 15. Here are new housing orders. As I mentioned earlier, the number of visitors to our showrooms were significantly lower than the previous year. But by attracting customers online, we were able to secure almost the same number of visitors as the previous year overall. As you can see in this page, sales of subdivision housing and ready-built houses, which we are focusing on this fiscal year, is expected to be 124% in the second half of the fiscal year compared to the previous year, and we expect these areas to remain strong.
In terms of measures to secure orders, we are working to strengthen digital marketing, especially in light of COVID-19; and to maintain customer contact points even under the COVID-19 environment by inviting customers by appointment only to our experience-based showrooms, which has been increasing in number.
In terms of land, we have 50% more inventory of ready-built houses than in the same period last year. So our preparations for land strategy have been steadily progressing. As you can see on the right, the ratio of 0 energy houses is steadily on track to reach 85% this year, which is quite high even by industry standards.
Please turn to Page 16, which is regarding the UIEP company. The UIEP company has revised downward its operating income forecast for the second half of the fiscal year. Due to the delay in demand recovery, especially in the domestic nonresidential sector and the impact of lockdowns overseas and sluggish demand for aircraft sheets overseas.
Net sales is expected to decrease by JPY 14.1 billion. Of this, JPY 8.7 billion is due to the impact of the transfer of the HINOMARU business in the first half. Although the operating income for the second half has been revised downward, it is still expected to remain about the same level as the previous year, with cost reduction and fixed costs making up for the decrease in sales volume and product mix.
Please turn to Page 17, which is regarding the 3 strategic fields. In particular, in Piping and Infrastructure, the nonhousing sector is struggling, but the housing sector and public sector and overseas plant sector have been recovering. Some pipe renewal construction work has been delayed due to the effects of lockdowns overseas.
In the area of Advanced Materials, the slump in demand for aircraft sheets is expected to be prolonged. So we will work to develop multiple applications for these products. In addition, FFU, a synthetic wood product, has been affected by delays in tenders and construction periods especially in North America.
The Building and Living Environment business has been affected by a decline in construction starts, but profitability is improving as a result of strengthening our earnings structure. The ratio of domestic sales of the prioritized products, which we are focusing on, has been steadily increasing, and we hope to build on this in the next fiscal year.
Lastly, the Medical business. Although the recovery of the Japan Diagnostics segment has been delayed due to a decrease in the number of outpatient tests, we expect to achieve the operating income outlook in the second half of the fiscal year through sales expansion of COVID-19 diagnostic kits overseas. Sales are expected to increase by JPY 3 billion in the second half and operating income by JPY 1.6 billion in the second half.
Although the diagnostic business in Japan is struggling more than the October plan, we will make up for this by expanding overseas sales of tests and steadily increased profit from the previous year in the medical business, resulting in a profit increase of JPY 1.6 billion.
Please turn to Page 19. This page is an overview by business. In the domestic Diagnostics business, we expect impact from the spread of COVID-19 in the fourth quarter. In addition, sales of some influenza test kits are expected to be affected by a significant decrease in the number of people infected with the flu. On the other hand, in the overseas Diagnostics business, sales of COVID-19 test kits were brisk in Q3 and Q4, and sales of reagents for blood coagulation in China were also strong.
In the Pharmaceutical Sciences business, shipments of new pharmaceutical ingredients from major pharmaceutical manufacturers are expected to start in the fourth quarter, and this is expected to have a positive impact on sales and earnings.
Please also refer to the details of the financial results which are available from Page 20 onwards. Thank you for your kind attention.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]