TOLI : Financial Announcement for 1st Quarter of the Year Ending March 2024

Financial Announcement for First Quarter of the Year Ending March 2024

[Japan standard] (Consolidated)

						July 31, 2023
Company name: TOLI Corporation	Stock exchange: Tokyo Stock Exchange
Code number	7971	URL https://www.toli.co.jp
Representative	(Position)	President and Representative Director	(Name) Motohiro Nagashima
Official	(Position)	General Manager, Accounting and Finance	(Name) Takashi Matsumoto	TEL [phone]
responsible for		Department
inquiries
Scheduled date for submission August 9, 2023
of quarterly reports
Scheduled date for start of	―
dividend payments
Preparation of supplementary explanatory materials for the quarterly financial announcement	:	None
Holding of a briefing on the quarterly financial announcement		:	None

(Amounts of less than one million yen are rounded off)

1. Consolidated results for first quarter of the year ending March 2024 (April 1, 2023 to June 30, 2023)

(1) Consolidated results (year to date)		(% shows change for the quarter against the same quarter of the previous year)
	Net sales		Operating income		Ordinary income		Profit attributable to
				owners of parent
	Million yen		%	Million yen		%	Million yen		%	Million yen	%
Q1 for year ending March 2024	22,294		8.0	534	―		651	―		391	―
Q1 for year ended March 2023	20,651		5.1	(120)	―		(45)	―		(67)	―

(Note) Comprehensive income	Q1 for year ending March 2024: 960 million yen [―%]
	Q1 for year ended March 2023: 22 million yen [―%]

	Profit per share			Profit per share - diluted
			Yen					Yen
Q1 for year ending March 2024			6.50			―
Q1 for year ended March 2023			(1.13)			―
(2) Consolidated assets
	Total assets				Net assets				Capital-to-asset ratio
			Million yen			Million yen		%
Q1 for year ending March 2024			81,761			41,248		50.1
Year ended March 2023			84,791			40,894		47.9
(Reference) Equity capital	Q1 for year ending March 2024: 40,971 million yen
	Year ended March 2023: 40,613 million yen
2. Dividend payments
						Annual dividend
	End 1st quarter	End 2nd quarter	End 3rd quarter		End of year	Total
	Yen				Yen	Yen		Yen	Yen
Year ended March 2023	―		0.00	―				10.00	10.00
Year ending March 2024	―
Year ending March 2024			3.00	―				8.00	11.00
(forecast)

(Note)

Adjustment from most recently published dividend forecast: Yes

3. Consolidated forecasts for year ending March 2024 (April 1, 2023 to March 31, 2024)

(% shows the change for the full term against the previous full term and change for the quarter against the same quarter of the previous year)

	Net sales		Operating income	Ordinary income	Profit attributable to	Profit per
		owners of parent	share
2nd quarter	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
(YTD)	45,500		6.4	700	―	800	―	500	―	8.31
Full term	99,500		4.5	3,600	1.9	3,900	7.1	2,650	3.4	44.03

(Note)

Adjustment from most recently published performance projections: Yes

• Notes

1. Significant changes to subsidiaries during the consolidated first quarter under review (changes for a specified subsidiary entailing a change in the scope of consolidation): None
2. Application of specific accounting procedure for creation of quarterly consolidated financial statement: None
3. Changes in accounting policies, changes in accounting estimates, representation of amendments

[1]	Changes in accounting policies accompanying revisions to accounting standards	: None
[2]	Changes to accounting policies other than [1]	: None
[3]	Changes in accounting estimates	: None
[4]	Representation of amendments	: None

(4) Number of outstanding shares (ordinary shares)
[1]	Number of outstanding shares at end	Q1 for year ending	66,829,249	Year ended March	66,829,249
	of year (including treasury shares)	March 2024	shares	2023	shares
[2]	Number of shares in treasury shares at	Q1 for year ending	6,643,208	Year ended March	6,642,988
	end of year	March 2024	shares	2023	shares
[3]	Average number of shares during the	Q1 for year ending	60,186,146	Q1 for year ended	60,223,490
	term (cumulative from start of fiscal	March 2024	shares	March 2023	shares
	year)

• Quarterly financial announcements are out of the scope of quarterly review by a certified public accountant or an audit corporation.
• Explanation of the appropriate use of performance projections and other special instructions

The financial forecasts and other descriptions related to future events presented in this document are based on information currently available and certain assumptions judged as reasonable. As such, the financial forecasts and future descriptions are not considered to ensure the fulfillment thereof. Actual financial performance may vary significantly due to various factors. For details, such as assumptions for financial forecasts and cautions when using financial forecasts, please refer to "1. Qualitative information regarding quarterly results - (3) Explanation concerning future predictive information, such as consolidated forecasts" on page 3 of the attachment.

• Contents of the supplementary materials

1.	Qualitative information regarding quarterly results ················································································	2
	(1)	Explanation of the management performance ················································································	2
	(2)	Explanation of the financial situation ··························································································	3
	(3)	Explanation concerning future predictive information, such as consolidated forecasts ·································	3
2.	Quarterly consolidated financial statements and major notes ····································································	5
	(1)	Consolidated balance sheet ······································································································	5
	(2)	Consolidated statement of income and consolidated statement of comprehensive income ····························	7
		Consolidated statement of income
		Consolidated first quarter ·····································································································	7
		Consolidated statement of comprehensive income
		Consolidated first quarter ·····································································································	8
	(3)	Notes on consolidated financial statements ···················································································	9
		(Notes on the assumption of the company as a going concern) ································································	9
		(Notes when there are significant changes in amounts of shareholders' equity) ············································	9
		(Segment information, etc.) ·········································································································	9

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1. Qualitative information regarding quarterly results

1. Explanation of the management performance

During the consolidated first quarter under review, the Japanese economy showed a moderate recovery trend due to the lifting of border control measures for visitors and the transition of COVID-19 to a Class 5 infectious disease. On the other hand, the future of the business environment remains uncertain as evidenced by further price increases due to higher raw material prices caused by the depreciation of the yen and the prolonged situation in Ukraine, and to soaring energy costs.

In the construction industry, which is closely related to our Group's business, a recovery trend is observable in the renovation market for stores and accommodation facilities thanks to an increase in the number of visitors to Japan. However, the business environment remains unpredictable due to concerns about downturn in construction investments caused by soaring prices for various construction materials.

Under these circumstances, our Group is pursuing the following five key strategies in the Medium-term Business Plan "SHINKA Plus ONE" covering the period from FY2021 to FY2024 toward the realization of our long-term vision "TOLI VISION 2030": A. Reinforcement of core businesses, B. Expanding the growth of promising business, C. Creation of a fifth business, D. Enhancement of capabilities across the Group, and E. Building a business base that supports growth. In the period under review, while working to spread the third sales price revisions implemented in September 2022, our Group made efforts to establish a stable supply system and improve revenues, focusing on reducing manufacturing costs such as by having full-scale operation of the new No. 3 line of Hiroka TOLI Floor, expanding in-house production of raw nylon yarn for carpet tiles, and increasing the recycling rate at a carpet tile recycling plant.

As a result, for the consolidated first quarter under review, the Company posted net sales of 22,294 million yen (up 8.0% compared with the same period of the previous year), operating income of 534 million yen (operating loss of 120 million yen for the same period of the previous year), ordinary income of 651 million yen (ordinary loss of 45 million yen for the same period of the previous year), and profit attributable to owners of parent of 391 million yen (loss attributable to owners of parent of 67 million yen for the same period of the previous year).

Performance for business segments is as follows. This information includes business between segments.

In the Product Business, net sales increased due to the effect of a sales promotion for products launched in the previous fiscal year, in addition to the spread of the effect of sales price revisions. In the area of vinyl flooring materials, in addition to strong sales of highly functional vinyl floor sheets such as "Deodorant NS Toware NW" and "HITOE," we focused our sales activities on the "Tile Collection," which contains vinyl floor tiles such as "E-CleanNW-EX" that do not require wax maintenance for a long time. Net sales of vinyl flooring materials increased significantly year on year as the use of "ToughtecTile," a new, third flooring material that combines the strengths of vinyl floor tiles and ceramic tiles, has been growing mainly in the store market.

In the area of carpets, "GA-3600 Sustive Back," an environmentally friendly carpet tile launched last year that addresses market needs, remained strong. On the other hand, although the sales volume of carpet tiles for housing remained weak as stay-at-home demand somewhat slowed down, overall net sales of carpet tiles grew year on year thanks to the effect of sales price revisions.

For wallcovering materials, net sales exceeded the previous year's level due to the spread of the effect of sales price revisions, in addition to strong sales of "Real Deco," our proprietary non-combustible decorative wallcovering material, as well as sales of "Non-combustible Certified Wallpaper," a vinyl wallpaper.

In the area of curtains, we focused on sales promotion activities by releasing a comprehensive sample book called "fuful" with the concept of "Choosing curtains is fun!" in June, which focuses on design and functionality. However, net sales were lower than the previous year due to weak demand for made-to-order curtains.

As a result, for the Product Business, net sales were 13,611 million yen (up 9.5% from the previous fiscal year) and segment income came to 711 million yen (up 1,155.2% from the previous fiscal year).

In the Interior Wholesaling and Installation Business, amid a continued rise in procurement costs for various interior design- related materials, we increased both revenues and profits in Japan by focusing on product proposals that met customer needs while passing these costs onto selling prices. On the other hand, while the business environment in China was expected to improve accompanying the end of the Zero-COVID policy, net sales of TOLI (SHANGHAI) Corporation for the first quarter (January to March 2023) declined year on year as the Chinese economy failed to achieve a full-fledged recovery.

As a result, the Interior Wholesaling and Installation Business reported net sales of 14,516 million yen (up 6.7% compared with the same period of the previous year) and segment income of 160 million yen (up 115.5% compared with the same period of the previous year).

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1. Explanation of the financial situation

Current assets at the end of first quarter of the fiscal year under review were down 3,685 million yen compared with the end of the previous fiscal year to 46,992 million yen. This was mainly due to a decrease in notes and accounts receivable-trade resulting from collection of notes and accounts receivable and others. Non-current assets amounted to 34,769 million yen, up 656 million yen from the end of the previous fiscal year.

As a result, total assets were down 3,029 million yen compared with the end of the previous fiscal year to 81,761 million yen.

Current liabilities at the end of first quarter of the fiscal year under review were down 3,925 million yen compared with the end of the previous fiscal year to 27,801 million yen. This was mainly due to a decrease in notes and accounts payable-trade resulting from payment of notes and accounts payable and others. Non-current liabilities amounted to 12,710 million yen, up 541 million yen from the end of the previous fiscal year.

As a result, total liabilities were down 3,383 million yen compared with the end of the previous fiscal year to 40,512 million yen.

Total net assets at the end of first quarter of the fiscal year under review were up 353 million yen compared with the end of the previous fiscal year to 41,248 million yen. This was mainly due to an increase in valuation difference on available-for-sale securities as a result of higher stock prices.

1. Explanation concerning future predictive information, such as consolidated forecasts

1. Revision of financial results forecasts

With respect to the financial results for the six-month period of the fiscal year ending March 2024, net sales are expected to exceed the previously announced forecast due to the smooth execution of the third price revisions implemented in September 2022. Profits are also expected to exceed the previously announced forecast due to an increase in net sales and a reduction in manufacturing costs, although some raw materials prices are expected to rise.

Accordingly, based on the results of the first quarter under review, we revise the consolidated forecasts for the six-month period of the fiscal year ending March 2024 announced on May 9, 2023, as follows.

The current full-year consolidated forecasts for the fiscal year ending March 2024 will remain unchanged due to unpredictable trends in energy costs and the environment for purchasing raw materials from now until the second half of the fiscal year.

Revision of consolidated forecasts for six-month period of the year ending March 2024 (April 1, 2023 to September 30, 2023)

		Operating		Profit attributable
	Net sales	Ordinary income	to owners of	Profit per share
	income
			parent
	Million yen	Million yen	Million yen	Million yen	yen
Previous forecast (A)	45,000	350	500	300	4.98
Revised forecast (B)	45,500	700	800	500	8.31
Change (B − A)	500	350	300	200	-
Change (%)	1.1	100.0	60.0	66.7	-
(Reference) Results for
the previous fiscal year	42,754	(68)	17	(67)	(1.13)
(Six-month period for
year ended March 2023)

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