On July 30, 2021 Nippon Kayaku reported that (Press release, Nippon Kayaku, JUL 30, 2021, View Source [SID1234585676])
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1. Consolidated Business Results for the First Quarter of Fiscal Year Ending March 31, 2022 (April 1, 2021– June 30, 2021) (Figures shown are rounded down to the nearest million yen.)
(1) Consolidated Operating Results(2) Consolidated Financial Position
2. Status of Dividends
3. Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2022 (April 1, 2021– March 31, 2022)1. Qualitative Information Concerning Results for the First Quarter
(1) Analysis of Operating Results During the first quarter of this consolidated fiscal year (April 1 to June 30, 2021), the global economy saw economic activity begin to return to normal and signs of economic recovery, due in part to progress on vaccinations for the novel coronavirus (COVID-19). While the Japanese economy continues to experience a slump in consumer spending and other domestic demand relative to Europe and the U.S., business sentiment has improved due to growth in demand accompanying the rebound in overseas economies.
However, a sense of uncertainty remains due to concerns about the resurgence of COVID-19 and deterioration in profitability from the steep rise in raw material prices. The semiconductor shortage has also impacted the automotive industry domestically and overseas. Amid these conditions, the Nippon Kayaku Group worked to implement the key themes and resolve the midand long-term key issues outlined in "KAYAKU Next Stage," the mid-term business plan launched in the fiscal year ended March 31, 2020, while also making active use of flextime, telecommuting, and other systems to accommodate the partial restrictions on corporate activity. We took these steps to ensure the safety of employees working in the Company and at Group companies while also implementing a new lifestyle and promote efficient workstyles aimed at minimizing the impact on our business. As a result, net sales for the first quarter of this consolidated fiscal year totaled 46,447 million yen, an increase of 9,622 million yen (26.1%) year-on-year.
Sales in the functional chemicals, the pharmaceuticals, the safety systems, and other businesses outperformed the first quarter of the previous fiscal year in all segments. Operating income totaled 5,938 million yen, an increase of 3,164 million yen (114.1%) year-on-year. Ordinary income totaled 6,399 million yen, an increase of 3,414 million yen (114.4%) year-on-year. Profit attributable to owners of parent was 5,295 million yen, an increase of 3,546 million yen (202.9%) year-on-year. Regarding changes in accounting policies, the Company implemented the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, revised March 31, 2020) and other guidance from the beginning of the first quarter of this consolidated fiscal year.
We have therefore used numbers based on calculation methods subject to different standards than in the same period of the previous fiscal year. See 2. Quarterly Consolidated Financial Statements and Notes to Quarterly Consolidated Financial Statements, (3) Notes to Quarterly Consolidated Financial Statements (Changes to Accounting Policies) for further details. Performance by business segment is as described below. [Functional Chemicals Business] Sales stood at 20,089 million yen, an increase of 4,256 million yen (26.9%) year-on-year. The functional materials business as a whole outperformed the first quarter of the previous fiscal year.
The outperformance resulted from strong sales of epoxy resins used in semiconductor encapsulation, circuit boards, and LCD cleaners from increased demand for IT equipment due to teleworking, in addition to the proliferation of high-speed (5G) communications devices and IoT, and the increasingly sophisticated electronic equipment in vehicles. The color materials business as a whole outperformed the first quarter of the previous fiscal year. This outperformance was due to a rebound in demand for colorants for inkjet printers in industrial applications and developer for thermal paper, in addition to strong sales of colorants for inkjet printers for consumer use. The catalyst business outperformed the first quarter of the previous fiscal year, both in Japan and exports overseas. In the Polatechno business, a rebound in demand for polarizing films for LCD projectors and dye-type polarizing films, in addition to strong sales of components for X-ray analysis systems resulted in outperformance of the Polatechno business as a whole, compared with the first quarter of the previous fiscal year. Segment profit totaled 3,449 million yen, an increase of 1,945 million yen (129.3%) year-on-year.
This increase resulted from growth in net sales in each business. [Pharmaceuticals Business] Sales stood at 12,773 million yen, an increase of 82 million yen (0.6%) year-on-year. Pharmaceuticals in Japan underperformed the first quarter of the previous fiscal year due to the impact from drug price revisions, despite market penetration of Portrazza, a biomedicine; the switch to antibody biosimilars, TRASTUZUMAB BS and INFLIXIMAB BS; and growth in sales of a cancer-related generic, APREPITANT capsule. Exports and sales of active pharmaceutical ingredients for the Japanese domestic market underperformed while sales of contract production and diagnostic drugs outperformed the same period of the previous fiscal year.
Segment profit totaled 1,925 million yen, a decrease of 225 million yen (10.5%) year-on-year. This resulted from the impact of drug price revisions, in addition to increased expenses related to sales activities adjusted to the new life style and progress on R&D activities. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the First Quarter of the Fiscal Year Ending March 31, 2022 This document is an English translation of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan.-3-[Safety Systems Business] Sales reached 11,382 million yen, an increase of 5,081 million yen (80.6%) year-on-year. During the first quarter of this consolidated fiscal year, the automobile market continued to rebound from the slump in global demand caused by the global spread of the novel coronavirus, with the exception of a few regions.
While decrease in the pace of automobile production was seen from the latter half of the period owing to the impact of the semiconductor shortage, sales of airbag inflators, micro gas generators for seatbelt pretensioners, and squibs outperformed the first quarter of the previous fiscal year in both the domestic and overseas businesses, due to strong demand for the period. The increase in sales led to segment profit of 1,799 million yen, an increase of 1,536 million yen (584.2%) from the same period of the previous fiscal year. [Other] Sales stood at 2,202 million yen, an increase of 202 million yen (10.1%) year-on-year. The agrochemicals business overall saw a year-on-year increase in domestic sales and exports. Sales in real estate and other business increased compared to the same period of the previous fiscal year. Segment profit totaled 444 million yen, a decrease of 62 million yen (12.4%) year-on-year. (2) Analysis of Financial Position Total assets were 297,619 million yen, an increase of 3,084 million yen from the end of the previous consolidated fiscal year.
The main increases were in raw materials and stores, an increase of 3,087 million yen; goodwill, an increase of 1,305 million yen; and securities, an increase of 1,241 million yen. The main decreases were in notes and accounts receivable-trade, a decrease of 1,167 million yen; and investment securities, a decrease of 1,021 million yen. Liabilities were 66,807 million yen, an increase of 545 million yen compared to the end of the previous consolidated fiscal year. The main increase was in notes and accounts payable-trade, an increase of 1,121 million yen.
The main decrease was in accounts payable-other, a decrease of 1,165 million yen. Net assets were 230,812 million yen, an increase of 2,538 million yen compared to the end of the previous consolidated fiscal year. The main increases were in retained earnings, an increase of 2,745 million yen; and translation adjustments, an increase of 1,465 million yen. (3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts The future business environment surrounding the Nippon Kayaku Group is expected to bring further economic rebound as economic activities in Japan and overseas return to normal, owing to progress on vaccination for the novel coronavirus. However, uncertainty over the impact of a change in interest rate policies in different countries and U.S.-China trade friction poses the risk of an economic downswing.
Under these conditions, the Nippon Kayaku Group aims to respond flexibly to changes in the business environment and pursue optimal use of operating capital to increase the shareholder value, as well as expand existing businesses in global growth markets, accelerate the development of new businesses and new products, and enhance profits. Consolidated business results forecasts for the first half and full year consolidated business results forecasts of fiscal year ending March 31, 2022 announced on May 11, 2021 have been revised. See the disclosure today entitled, Notice Concerning Revision of Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2022 for further details.