Nikko : (Delayed) Fiscal Year 2021 (Ending March 31, 2022) 1st Quarter Financial Results Briefing Session Materi

In this briefing material, AP denotes asphalt plants in our business and BP denotes concrete plants.

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Figures for the first quarter

Sales increased about 20% from a year earlier to 8,817 million yen. Operating income declined 8.1% to 375 million yen.

Quarterly net income declined significantly by 49.3% due to special factors in the same period a year earlier.

Profits declined compared with the same period a year earlier, while sales increased. In our view, the earnings figures for the first half were in line with our plan and the business made progress according to the initial plan.

There were no major changes in the business environment surrounding the main businesses of AP and BP.

Mixture output, which is a benchmark for the AP market environment, was 99.5%, almost no change from a year earlier.

Ready‐mixed concrete shipment slightly declined to 98.6% of the same period a year earlier, but is more or less at a similar level as the previous year.

We recognize that our customers' appetite for capital investment remains very high like last year.

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Performance highlights

Sales have significantly increased compared with the same period a year earlier.

The factors behind the increase are significant increases in domestic sales of AP and BP products and improved overseas sales, as there was not much of an impact of COVID‐19 on the first‐quarter sales in China, which were slow last year because of the infection.

The amount of operating income slightly declined, but operating margin deteriorated greatly, from 5.6% last year, to 4.2%.

The two main contributing factors were the two unprofitable projects in AP product sales and an increase in SG&A expenses reflecting the growth in R&D expenses.

Regarding the first factor, we had recorded provision for loss on orders received for unprofitable AP projects as of the account settlement at the end of the previous fiscal year, but the actual cost of sales exceeded the expected cost of sales and the provision was not enough to cover it. So we recorded additional losses.

As for the second factor, while the amount is not large, we are planning to increase annual R&D expenses by about 300 million yen in the current fiscal year, and SG&A expenses increased because of the rise in R&D expenses.

Net income declined greatly due to the absence of special dividends, unlike the same period in the previous fiscal year where special dividends from Maeda Road Construction accounted for about 340 million yen.

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Overall figures of the first quarter

New orders received in the first quarter totaled 9,753 million yen, which is a slight increase from last year (9,469 million yen).

By segment, new orders for AP were down 730 million yen compared with the same period a year earlier, but the figures are only for the three months of the first quarter, and so far there is no change to our forecast that the amount of new orders in Japan and abroad together would increase for the full year compared with the previous fiscal year.

Meanwhile, new orders for BP increased 1,080 million yen compared with the previous fiscal year.

At the beginning of the fiscal year, full‐year new orders were expected to slightly decline from a year earlier, but the order situation at the moment is very strong.

Order backlog for AP was down 1.0 billion yen while it increased 1.3 billion yen for BP. In total, order backlog as of the end of the first quarter was high at 15.2 billion yen, up about 900 million yen compared with a year ago.

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