Review of Financial Results

  • FY09 / 2021
    Second quarter
  • FY09 / 2021
    First quarter
  • FY09 / 2020
    Full year
  • FY09 / 2020
    Third quarter


During the first six months (September 30, 2020, to March 31, 2021) of the consolidated fiscal year ending September 30, 2021, the Japanese economy continued to face difficult conditions due to the effects f COVID-19, but showed signs of recovery bolstered by the effects of economic measures and improvements in overseas economies.
However, concerns remain over the further spread and prolonged impact of the pandemic suggested particularly by the declaration of a state of emergency for the third time in April, covering four prefectures, resulting in continued uncertainty about the future.
Under such conditions, consolidated results for the first six months under review were net sales of ¥45,525 million (up 11.1% year on year), operating income of ¥3,634 million (up 23.3% year on year), ordinary income of ¥4,018 million (up 26.2% year on year), and earnings attributable to owners of the parent of ¥2,667 million (up 26.1% year on year).

 

Results for each business segment are described below.
Starting in the first quarter of the fiscal year under review, YPTECH Co., Ltd., which was previously included in the Chemicals segment, is included in the Machinery & Industrial Products segment. Accordingly, in the year-on-year comparisons below, the figures for the first six months of the previous year have been restated to reflect the new segment classification.

 

(i) Chemicals
Demand for rubber merchandise used for automobiles, office automation, medical equipment, and construction equipment recovered. Sales of a new product, functional filler for heat radiation of electronics, were strong.
Among chemical-related products, sales of raw materials for UV ink such as polymerization initiators, the mainstay product, remained strong. Exports of electronic materials to South Korea and films to North America recovered.
As a result, the segment recorded net sales of ¥15,353 million (up 0.5% year on year) and operating income of ¥922 million (up 26.4% year on year).

 

(ii) Machinery & Industrial Products
As for merchandise related to industrial products, demand for materials around seats, the Company’s mainstay products, grew significantly given continuously high production levels at Japanese automakers. As regards merchandise related to machinery and the environment, delivery of the mainstay product, feed granulators, increased and the levels of consumable components and maintenance service remained high. The woody biomass business enjoyed steady sales from consumables and maintenance service despite the absence of sales of main unit products. In merchandise categorized as scientific equipment, delivery that had been delayed by COVID-19 was completed and demand for inhalant evaluators related to COVID-19 infection control was active.
As a result, the Machinery & Industrial Products segment recorded net sales of \17,569 million (up 3.4% year on year) and operating income of \2,373 million (up 15.5% year on year).

 

(iii) Overseas Subsidiaries
At Sanyo Corporation of America, sales of super absorbent resins and rubber merchandise remained strong, although this was offset by additional tariffs on auto parts made in China and an increase in SGA expenses,resulting in a slight decrease in operating income. The overall performance of Sanyo Trading (Shanghai) Co., Ltd. was very strong thanks to successful growth in sales of auto parts driven by the rapid recovery of the automotive market. Sanyo Trading Asia Co., Ltd. (Thailand) posted gains in sales and income thanks mainly to stable sales of rubber products, in addition to chemicals, and auto parts. At Sanyo Trading (Viet Nam) Co., Ltd., sales of paint and ink products were strong. At Sun Phoenix Mexico, S.A. de C.V., sales rose but income fell due to a surge in expenses for marine transportation from China despite strong sales of automobile merchandize. In addition, PT.
Sanyo Trading Indonesia is included in the scope of consolidation starting from the current fiscal year.
As a result, the Overseas Subsidiaries segment recorded net sales of \12,549 million (up 45.6% year on year) and operating income of \714 million (up 39.6% year on year).


During the first three months (September 30, 2020 to December 31, 2020) of the consolidated fiscal year ending September 30, 2021, the Japanese economy continued to face difficult conditions due to the effects of COVID-19 but showed signs of recovery, bolstered by the effects of various economic measures and improvement of overseas economies. However, the outlook is extremely uncertain, given factors such as the impact of the changeover of political power in the United States and the declaration of a second state of emergency in response to rising infections in Japan.
Under such conditions, consolidated results for the first three months under review were net sales of \21,609 million (up 2.0% year on year), operating income of \1,721 million (up 9.3%), ordinary income of \1,836 million (up 3.1%), and earnings attributable to owners of the parent of \1,226 million (up 10.1%).

 

Results for each business segment are described below.
Starting from the first quarter under review, YPTECH Co., Ltd., which was previously included in the Chemicals segment, is included in the Machinery & Industrial Products segment. Accordingly, in the year-on-year comparisons below, the figures for the first quarter of the previous year have been restated to reflect the new segment classification.

 

(i) Chemicals
With regard to rubber merchandise, both sales and income fell year on year, reflecting the slow pace of recovery in demand. As for chemical merchandise, sales decreased due to the transfer of livestock-related business. However, mainstay paint and ink-related businesses performed strongly and newly established SANYO LIFE MATERIAL CO., LTD. also contributed to earnings.
As a result, the Chemicals segment recorded net sales of \7,206 million (down 8.1% year on year) and operating income of \425 million (up 12.5%).

 

(ii) Machinery & Industrial Products
Merchandise related to industrial products performed solidly as a result of the resumption of production by Japanese automobile manufacturers. Merchandise related to machinery and the environment recorded a
moderate performance, driven by consumables and maintenance services, in the absence of any large projects involving main units. COSMOS SHOJI CO., LTD. recorded strong sales of geothermal drilling equipment
but its income fell short of level the previous year when large projects were recorded. YPTECH CO., LTD.
saw strong sales and increased shipments of livestock feed additives but its income fell due to a combination of higher transport expenses overseas driven by container shortages and higher expenses associated with business transfer. In merchandise categorized as scientific equipment, sales increased reflecting the completion of receiving inspections delayed due to COVID-19 but income fell due to smaller profit margins.
As a result, the Machinery & Industrial Products segment recorded net sales of \8,560 million (up 1.0% year on year) and operating income of \1,149 million (up 8.7% year on year).

 

(iii) Overseas Subsidiaries
At Sanyo Corporation of America, super absorbent resins, automobile merchandise and rubber merchandise performed strongly. Sanyo Trading (Shanghai) Co., Ltd. performed extremely strongly overall, with sharp
growth in automobile merchandise driven by the rapid recovery of the automotive market offsetting a weak performance in rubber merchandise. Sanyo Trading Asia Co., Ltd. (Thailand) posted gains in sales and
income thanks to solid performances in rubber, chemicals and automobile merchandise as well as lower SG&A expenses. Sun Phoenix Mexico, S.A. de C.V. achieved increased sales on the back on increased shipments of automobile merchandise but posted a year-on-year drop in operating income mainly due to higher logistics costs.
In addition, PT. Sanyo Trading Indonesia is included in the scope of consolidation starting from the current fiscal year.
As a result, the Overseas Subsidiaries segment recorded net sales of \5,813 million (up 20.8% year on year) and operating income of \364 million (up 35.8% year on year).


At the beginning of the fiscal year under review, the Japanese economy was experiencing a moderate recovery, but it has since faced harsh conditions with the economic environment sharply deteriorating due to the impact of the COVID-19 pandemic. The outlook remains uncertain because it is unknown when the COVID-19 pandemic will come to an end, although the economy is expected to pick up going forward with the return of socioeconomic activities in stages.
In this business environment, the Group has been making a group-wide effort to improve its business performance by pursuing and deepening higher value-added businesses, leveraging its strengths along with its long-term plan, VISION2023, and striving to develop new businesses, accelerate the global expansion and promote new investments. The Group has also been addressing COVID-19, giving priority to business continuation, while ensuring the safety of employees and making sure that funds on hand are fully prepared.
In terms of new investments, the Company acquired YPTECH Co., Ltd., a trading company that imports functional livestock feed materials and feed additives, to maximize synergy with existing businesses in the livestock business, as well as NKS Corporation, which engages in import and sale of food additives and industrial chemicals, to strengthen earnings power in the life science field.
Consolidated results were net sales of \76,087 million (down 8.6% year on year), operating income of \4,791 million (down 18.4%), ordinary income of \5,271 million (down 13.2%), and earnings attributable to owners of the parent of \3,013 million (down 25.0%).

 

Results for each business segment are described below.
To reflect the financial results of reportable segments more fully, the Group reviewed the allocation standards for the amortization of goodwill and allocated it to each business segment, starting from the fiscal year under review.
Segment information for the previous fiscal year is prepared based on the calculation method after the change.

 

(i) Chemicals
With regard to rubber merchandise, shipments of synthetic rubber and indirect materials for home appliances and information equipment remained weak, and exports also declined. As for chemical merchandise, high value-added additives related to paint and ink, our mainstay products, were strong in the first half but sluggish from summer onwards. Merchandise related to semiconductors and adhesives grew at a sluggish pace, and exports to Asia were also weak. While YPTECH Co., Ltd., which recently became a consolidated subsidiary, contributed to earnings, segment income fell below the year-ago level partly due to the temporary posting of acquisition expenses.
As a result, the Chemicals segment recorded net sales of \30,508 million (down 1.9% year on year) and operating income of \1,353 million (down 14.2%).

 

(ii) Machinery & Industrial Products
Of merchandise categorized as industrial products, sales of interior parts for automobiles were affected by a sharp fall in production activities of automobile manufacturers in Japan. In merchandise related to machinery and the environment, results of merchandise related to feed processing equipment were strong, but results of woody biomass business fell below the year-ago level due to the absence of posting of new large projects. Of merchandise categorized as scientific equipment, results of equipment related to biotechnology were strong, but element analytical and particle dispersion equipment performed weakly. Of merchandise related to resource development, results fell as a backlash to large projects posted in the previous fiscal year in ocean development, but results of geothermal development equipment were firm.
As a result, the Machinery & Industrial Products segment recorded net sales of \27,205 million (down 17.5% year on year) and operating income of \3,333 million (down 17.1% year on year).

 

(iii) Overseas Subsidiaries
At Sanyo Corporation of America, rubber and film merchandise was sluggish, but sales of highly functional resins remained strong.
At Sanyo Trading (Shanghai) Co., Ltd., the COVID-19 had an impact, but automobile merchandise and rubber merchandise were strong due to the early recovery of economic activities. At Sanyo Trading Asia Co., Ltd. (Thailand), results of interior parts for automobiles and rubber merchandise declined, reflecting the sluggish performance of the automobile industry. At Sanyo Trading (Viet Nam) Co., Ltd., results of chemicals and automobile merchandize were weak. At Sun Phoenix Mexico, S.A. de C.V., sales of automobile merchandize were trending weaker.
As a result, the Overseas Subsidiaries segment recorded net sales of \18,227 million (down 3.8% year on year) and operating income of \839 million (down 4.7% year on year).


During the first nine months (October 1, 2020, to June 30, 2021) of the consolidated fiscal year ending September 30, 2021, the Japanese economy initially experienced a moderate recovery, but it has since faced exceptionally harsh conditions caused by a significant decline due to the impact of the COVID-19 pandemic. The outlook remains extremely unclear due to concerns over the second surge in COVID-19 cases, despite expectations for recovery with economic activities resuming in stages in response to the lifting of the state of emergency on May 25, 2021.
 Under these conditions, consolidated results for the first nine months under review were net sales of ¥57,372 million (down 10.5% year on year), operating income of ¥3,821 million (down 22.0% year on year), ordinary income of ¥4,205 million (down 17.5% year on year), and earnings attributable to owners of the parent of ¥2,741 million (down 20.3% year on year).

 

Results for each business segment are described below.
To reflect the financial results of reportable segments more appropriately, the Group reviewed the allocation standards for the amortization of goodwill in the first three months of the fiscal year under review and has allocated it to each business segment.
 In addition, the segment information for the first nine months of the previous fiscal year has been recalculated accordingly.

 

(i) Chemicals
Revenue from rubber merchandise decreased in addition to sluggish shipment of mainstay synthetic rubber and subsidiary materials for automobiles Export fell in reaction to an increase in the previous year. Among chemical-related products, sales of high value-added merchandise related to mainstay paints and inks remained strong. While a new consolidated subsidiary, YPTECH Co., Ltd., contributed to the revenue, sluggish sales of semiconductor-related merchandise and adhesives, a decrease in exports to Asia, and the posting of the total expenses for the subsidiary purchase resulting in an overall year-on-year decrease.
 As a result, the Chemicals segment recorded net sales of ¥24,006 million (up 1.6% year on year) and operating income of ¥1,090 million (down 14.5% year on year).

 

(ii) Machinery & Industrial Products
Of merchandise categorized as industrial products, sales of interior parts for automobiles such as seat components were affected by a sharp fall in production activities of automobile manufacturers in Japan. In merchandise related to machinery and the environment, sales of woody biomass business fell year on year due to the absence of new large projects to be posted. In merchandise categorized as scientific equipment, sales of core products, including friction and abrasion testers and biological devices, remained strong. Sales of merchandise related to resource development fell in reaction to large projects posted in the ocean exploration business in the previous fiscal year while sales of geothermal exploration equipment remained strong.
 As a result, the Machinery & Industrial Products segment recorded net sales of ¥20,368 million (down 20.3% year on year) and operating income of ¥ 2,554 million (down 23.9%).

 

(iii) Overseas Subsidiaries
At Sanyo Corporation of America, a decrease in SGA expenses offset sluggish sales of rubber merchandise, resulting in a year-on-year increase in operating income. Sales at Sanyo Trading (Shanghai) Co., Ltd. were affected by the temporary business suspension of its major customers related to automobiles and other products due to COVID-19. Sanyo Trading Asia Co., Ltd. (Thailand) suffered a significant fall in both sales and profit due to a continuous decrease in export caused by a slowdown in the automobile market and rising prices of auto parts in Thailand. At Sanyo Trading (Viet Nam) Co., Ltd., results remained flat due to weak sales of chemical and automobile-related merchandise. Sun Phoenix Mexico, S.A. de C.V. reduced SG&A expenses, which offset a slowdown in sales of automobile-related merchandise, and achieved a slight increase in operating income.
 As a result, the Overseas Subsidiaries segment recorded net sales of ¥12,882 million (down 12.8% year on year) and operating income of ¥675 million (down 12.2% year on year).