A marine paints leader: Alongside International Paint (UK; the marine/protective coatings division of Dutch firm AkzoNobel) and Jotun (Norway), Chugoku Marine Paints (CMP) is one of the world’s top three suppliers of marine paints. The company reported FY03/21 sales of JPY82.4bn (-6.0% YoY) and operating profit of JPY6.5bn (+89.1% YoY). Sales in FY03/21 reached JPY68.7bn (-2.3% YoY) in marine paints, JPY11.4bn (-8.0% YoY) in industrial paints, and JPY2.0bn (-57.1% YoY) in container paints.

Marine paints: Marine paints are used primarily (over 95%) for large ships such as tankers, bulk carriers, and container ships, but also for pleasure boats, fishing boats, and fishing nets. Marine paints are considered a niche market, accounting for just 3–4% of the total paints market. CMP in FY03/21 held a 30% share of the global market in antifouling paints for new ships, and about 20% of the ship repair paints market. In paints for new ships, it maintains a 60% share in Japan, and shares of about 20% in China and South Korea. With the market for marine paints being dominated by just a few companies, Shared Research understands that this trend is due to the characteristics required for marine paint manufacturers, including: 1) the capacity to offer marine paints with special features such as antifouling agents that dissolve like soap, thereby preventing seaweed, barnacles, and other marine life from becoming attached to the ship’s hull; 2) a global network that allows them to supply the needs of the global ship market; and 3) long-term relationships with client companies.

The new ship paints and ship repair paints business: Generally speaking, it seems that about 1% of a ship’s overall manufacturing cost is earmarked for paint. Because of this, when prices for new ships are depressed, so is the price of the marine paints used on those ships—a situation that makes for a bad orders environment for CMP. Demand for new ship paints is generated at each stage in a ship’s construction. Under current business practices in the industry, the prices of paints ordered for use on new ships are fixed at the time the new ships are ordered, which is usually several years before the paint is delivered. Due to this large time lag between order and delivery, sharp jumps in raw material costs, including naphtha and epoxy resins, are difficult to pass along to customers, making earnings at CMP vulnerable to fluctuating raw material prices in the near term. Turning to paint used in ship repairs, the ship repair cycle is three to five years, and demand itself is heavily influenced by global shipping tonnage. During repairs, antifouling paints are completely reapplied. At this time, many customers may specify that the same paint manufacturer as the one used when the ship was built be used in order to ensure coating quality and to prevent new issues from arising. As such, it can reasonably be said that new ship paint orders can contribute, at least to some extent, to an increased market share in paint used during repairs. In the case of orders for new ship paints, sales are generally booked in the country of the shipyard where the ship is built. For ship repair paints, sales are booked in the country where the shipowner is based.

Industrial paints: Construction paints comprise about two-thirds of the company’s industrial paint sales in Japan, making CMP vulnerable to conditions in housing starts. The company maintains a high market share within Japan in antifouling paints for power generation and wood floor coatings. CMP holds a 60–70% market share in antifouling paints for power generation applications, with the three top companies (including Kansai Paint Co., Ltd. [TSE1:4613]) holding a combined 90% share of the market. The company’s share in wood flooring coating is about 50%. Overseas sales are primarily in heavy anti-corrosion paints and are focused in Southeast Asia.

Container paints: Most container buyers are in China, with sales and production (including paints) conducted mainly in that country. The characteristics of container paints differ in several ways from those of marine paints: 1) Container paints are water-based, hence is simpler than marine paints; 2) container production and demand is centered around China, making the company’s global network less of an advantage; and 3) there is a stronger focus on price compared to marine paints. These are also the reasons behind the company’s struggle with price competition from local manufacturers. Local manufacturers have set off aggressive price competition in this market, and their share has rapidly increased since 2017. Local manufacturers now account for about 50–60% of the overall market. The company is scaling back orders in the container paints market to avoid being drawn into price competition, and its share is around 10%.

Trends and outlook

In FY03/22, sales were JPY84.3bn (+2.2%, or +JPY1.9bn YoY). Higher sales of container paints offset the sales decline in marine paints. In mainstay marine paints (-JPY2.6bn YoY), sales of ship repair paints remained robust, especially in Europe. Meanwhile, demand for new ship paints dropped sharply in Japan and China due to a decline in new shipbuilding volume. In industrial paints (+473mn YoY), sales of heavy anti-corrosion paints in Southeast Asia were sluggish, but demand for paints for construction materials and heavy anti-corrosion paints outside of Southeast Asia recovered, resulting in strong sales. In container paints (+JPY4.0bn YoY), paint demand rebounded along with the expansion of container production. Full-year operating profit was JPY687mn (-89.4%, or -JPY5.8bn YoY), recurring profit was JPY1.0bn (-84.1% YoY), and net income attributable to owners of the parent was JPY257mn (-92.2% YoY). The gross profit margin deteriorated 7.4pp YoY to 23.3% from 30.7% in FY03/21. Profitability declined due to high key raw material prices owing to a surge in prices of crude oil and other natural resources.

For FY03/23, CMP forecasts sales of JPY83.0bn (-1.5% YoY), operating profit of JPY500mn (-27.2% YoY), recurring profit of JPY800mn (-20.9% YoY), net income attributable to owners of the parent of JPY300mn (+16.7% YoY), and EPS of JPY5.91 (JPY4.92 in FY03/22). The company targets a dividend of JPY35 per share (JPY35 per share in FY03/22). The company projects sales growth in both marine and industrial paints, while it expects sales decline in container paints. As for the profit outlook, raw material prices have recently soared to record levels, and as such higher manufacturing costs are viewed as inevitable. To improve profitability, the company will aggressively review its selling prices in line with rising raw material procurement costs.

Long-term vision and medium-term management plan (announced in May 2021): Alongside an update to its existing long-term vision, the company announced CMP New Century Plan 2 as its new medium-term management plan for the five years from FY2021 to FY2025 (FY03/22 to FY03/26). In its long-term vision (extending through 2030), CMP aims to become a leading global niche company distinguished by its sustainability and high level of profitability. In FY2025, the final year in the new medium-term management plan, the company targets sales of JPY110.0bn (+33% compared to FY2020 results and including a JPY10.0bn contribution from M&A and alliances), operating profit of JPY8.5bn (+31% compared to FY2020 results and including a JPY500mn contribution from M&A and alliances), net income attributable to owners of the parent of JPY5.2bn (+59% compared to FY2020 results and including a JPY200mn contribution from M&A and alliances), and ROE of at least 8%. The company assumes that major raw material (domestic naphtha and epoxy resin) prices in FY2025 will be about the same as the average for 2016–2020. It forecasts capital investment over five years of JPY17.0bn, including JPY12.0bn to optimize its production systems (renovating or relocating production at the Shiga Factory in Japan and locations in East Asia) and JPY5.0bn for the regular maintenance and upgrading of its facilities.

Strengths and weaknesses

Shared Research sees the following as CMP’s main strengths: 1) its superior core technology in marine paints built up over roughly 100 years in the field, 2) its possession of the type of global sales network needed to sell marine paints, and 3) its brand’s strong image.

We see the following as the company’s main weaknesses: 1) the vulnerability of its profit margins to fluctuations in raw materials prices, particularly in the new ship market, 2) the historical concentration of its overseas production plants in East Asia, where they were built at a time when demand for marine paints in this region was growing rapidly, and 3) the high level of dependence on marine paints resulting in ship-related business environments heavily affecting business performance.

Key financial data

Income statement		FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)		Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons. Est.
Sales		83,656	90,901	106,737	115,066	82,368	82,980	88,452	87,729	82,442	84,295	83,000
	YoY	-10.6%	8.7%	17.4%	7.8%	-28.4%	0.7%	6.6%	-0.8%	-6.0%	2.2%	-1.5%
Gross profit		22,079	25,227	29,424	36,115	26,589	23,448	19,869	23,986	25,331	19,664
	YoY	-11.2%	14.3%	16.6%	22.7%	-26.4%	-11.8%	-15.3%	20.7%	5.6%	-22.4%
	Gross profit margin	26.4%	27.8%	27.6%	31.4%	32.3%	28.3%	22.5%	27.3%	30.7%	23.3%
Operating profit		4,715	4,058	7,442	9,969	5,429	3,704	-643	3,441	6,506	687	500
	YoY	-13.9%	-13.9%	83.4%	34.0%	-45.5%	-31.8%	-	-	89.1%	-89.4%	-27.2%
	Operating profit margin	5.6%	4.5%	7.0%	8.7%	6.6%	4.5%	-	3.9%	7.9%	0.8%	0.6%
Recurring profit		5,119	5,058	8,359	10,373	6,034	3,855	-224	4,007	6,376	1,012	800
	YoY	-15.2%	-1.2%	65.3%	24.1%	-41.8%	-36.1%	-	-	59.1%	-84.1%	-20.9%
	Recurring profit margin	6.1%	5.6%	7.8%	9.0%	7.3%	4.6%	-	4.6%	7.7%	1.2%	1.0%
Net income		2,978	3,269	4,748	6,462	3,604	2,394	-760	-124	3,279	257	300
	YoY	-2.9%	9.8%	45.2%	36.1%	-44.2%	-33.6%	-	-	-	-92.2%	16.7%
	Net margin	3.6%	3.6%	4.4%	5.6%	4.4%	2.9%	-	-	4.0%	0.3%	0.4%
Per-share data (split-adjusted; JPY)
Shares issued (year-end; '000)		69,069	69,069	69,069	69,069	69,069	69,069	69,069	69,069	69,069	62,000
	Treasury shares ('000)	2,838	2,856	2,846	2,865	3,565	3,565	8,368	10,852	14,429	11,243
EPS (JPY)		44.2	49.4	71.7	97.6	54.9	36.6	-12.2	-2.1	57.7	4.9	5.9
EPS (fully diluted; JPY)		-	-	-	-	-	-	-	-	-	-
Dividend per share (JPY)		13.0	13.0	15.0	16.0	18.0	28.0	34.0	34.0	34.0	35.0	35.0
Book value per share (JPY)		798	944	1,095	1,096	1,099	1,138	1,033	987	1,050	1,089
Balance sheet (JPYmn)
	Cash and cash equivalents	22,112	29,494	30,868	34,273	37,104	33,893	29,413	26,905	25,016	20,096
Total current assets		74,315	83,118	95,726	92,061	84,004	87,258	79,561	75,281	72,138	71,495
	Tangible fixed assets	23,782	25,610	25,915	25,112	26,826	27,049	25,586	24,803	24,449	24,054
	Intangible assets	887	1,296	1,501	1,643	1,427	1,482	1,341	513	397	359
	Investments and other assets	7,255	8,994	11,944	9,575	9,802	9,985	7,366	5,474	8,185	8,708
Total fixed assets		31,925	35,901	39,361	36,331	38,056	38,516	34,294	30,792	33,032	33,123
Total assets		106,240	119,019	135,087	128,392	122,061	125,775	113,855	106,074	105,170	104,618
	Short-term debt	22,044	20,930	21,686	19,589	17,394	19,531	19,262	17,499	19,260	17,181
Total current liabilities		41,879	43,178	50,201	43,182	36,531	39,325	39,098	35,280	36,219	34,694
	Long-term debt	3,377	3,403	1,103	1,742	2,713	1,039	1,730	3,318	552	3,315
Total fixed liabilities		7,661	8,508	6,660	7,002	7,974	5,987	6,952	8,571	6,634	9,884
Total liabilities		49,541	51,686	56,861	50,184	44,506	45,313	46,051	43,852	42,854	44,578
	Shareholders' equity	52,821	62,488	72,480	72,573	71,985	74,540	62,717	57,465	57,377	55,291
Total net assets		56,699	67,332	78,225	78,208	77,554	80,462	67,804	62,221	62,315	60,039
Total interest-bearing debt		25,421	24,333	22,789	21,331	20,107	20,570	20,992	20,817	19,812	20,496
Cash flow statement(JPYmn)
Cash flows from operating activities		8,719	10,084	4,355	9,774	10,750	-629	3,135	4,612	7,129	-238
Cash flows from investing activities		-3,624	-2,364	-597	-3,552	-5,448	-1,049	-186	2,237	867	155
Cash flows from financing activities		-4,455	-4,420	-3,900	-3,133	-2,737	-1,388	-6,754	-5,950	-7,009	-6,318
Financial ratios
ROA (RP-based)		5.0%	4.5%	6.6%	7.9%	4.8%	3.1%	-0.2%	3.6%	6.0%	1.0%
ROE		5.9%	5.7%	7.0%	8.9%	5.0%	3.3%	-1.1%	-0.2%	5.7%	0.5%
	Financial leverage (equity multiplier)	2.1	2.0	1.9	1.8	1.8	1.7	1.7	1.8	1.8	1.9
	Total asset turnover	0.8	0.8	0.8	0.9	0.7	0.7	0.7	0.8	0.8	0.8
	Net margin	3.6%	3.6%	4.4%	5.6%	4.4%	2.9%	-0.9%	-0.1%	4.0%	0.3%

Source: Shared Research based on company data

Recent updates

Measures to prevent a recurrence of accounting irregularities

2022-03-22

On March 18, 2022, Chugoku Marine Paints, Ltd. (CMP) announced that it had put in place measures to prevent a recurrence of the failure to record retirement benefit obligations at subsidiary Chugoku Marine Paints (Shanghai), Ltd. (CMP Shanghai).

Causal analysis and policy for preventing recurrence of above incident

An investigation committee of outside experts informed the company that the above incident was caused by a lack of oversight structure in the personnel and finance departments of CMP Shanghai; inadequate oversight of subsidiaries by CMP and poor accounting structure at the company; lack of accountability of directors and employees; poor communication between CMP's management team, oversight divisions, and employees; and inadequate internal audits of subsidiaries. The company considered these findings and recommendations of the investigation committee in formulating measures to prevent a recurrence of the above incident and made plans to strengthen its group-wide oversight structure and governance, including CMP Shanghai.

Overview of measures to prevent a recurrence (planned implementation date)

Strengthen oversight of overseas subsidiaries

Clarify organization responsible for, and centralize oversight of overseas subsidiaries (implemented)
Recruit and train human resources for oversight of overseas subsidiaries (target date: September 2022)
Revise related internal regulations (by March 2022)
Improve training of personnel deployed overseas (by June 2022)
Strengthen communication between CMP's management team and overseas subsidiaries (implemented)

Revise oversight structure for CMP Shanghai

Dispatch a Japanese manager who is an expert in accounting and management oversight to CMP Shanghai (target date: December 2022)
Provide training on accounting and internal control (by March 2022)
Facilitate internal communication (by March 2022)
Establish oversight structure for internal regulations and ensure employees are fully informed (by March 2022)
Revise rules and regulations on approvals and decision-making authority (by March 2022)

Revise accounting structure

CMP Shanghai

Recruit personnel with expert knowledge of accounting and consult accounting professionals (implemented)
Clarify the decision-making flow for important accounting issues (by May 2022)

CMP

Revise system for sharing information with subsidiaries and the frequency of information sharing (by May 2022)
Revise and clarify group accounting standard (by June 2022)

Enforce compliance

Run compliance workshops (by June 2022)

Strengthen internal audit structure

Increase the number of audit office personnel (target date: June 2022)
Revise and formulate audit plan (by March 2022)
Revise risk assessment and adopt risk-based approach to audit (by June 2022)
Examine how overseas subsidiaries enforce internal regulations and rules (by March 2022)
Analyze subsidiaries' data (by September 2022)
Monitor improvement status at CMP Shanghai (through March 2023)

Trends and outlook

Quarterly trends and results

Earnings (cumulative)		FY03/20				FY03/21				FY03/22				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Sales		20,996	44,455	65,470	87,729	19,405	39,857	61,260	82,442	19,506	40,969	62,143	84,295	101.6%	83,000
	YoY	2.1%	3.0%	-1.8%	-0.8%	-7.6%	-10.3%	-6.4%	-6.0%	0.5%	2.8%	1.4%	2.2%		0.7%
Gross profit		5,177	11,701	17,621	23,986	6,282	12,689	19,439	25,331	5,349	10,296	15,097	19,664
	YoY	4.1%	17.8%	15.7%	20.7%	21.3%	8.4%	10.3%	5.6%	-14.9%	-18.9%	-22.3%	-22.4%
	Gross profit margin	24.7%	26.3%	26.9%	27.3%	32.4%	31.8%	31.7%	30.7%	27.4%	25.1%	24.3%	23.3%
SG&A expenses		4,901	10,219	15,230	20,544	4,685	9,431	14,169	18,824	4,532	9,204	14,234	18,976
	YoY	-3.0%	0.2%	-0.5%	0.2%	-4.4%	-7.7%	-7.0%	-8.4%	-3.3%	-2.4%	0.5%	0.8%
	SG&A ratio	23.3%	23.0%	23.3%	23.4%	24.1%	23.7%	23.1%	22.8%	23.2%	22.5%	22.9%	22.5%
Operating profit		275	1,481	2,390	3,441	1,597	3,257	5,270	6,506	817	1,092	862	687	137.4%	500
	YoY	-	-	-	-	480.7%	119.9%	120.5%	89.1%	-48.8%	-66.5%	-83.6%	-89.4%		-92.3%
	Operating profit margin	1.3%	3.3%	3.7%	3.9%	8.2%	8.2%	8.6%	7.9%	4.2%	2.7%	1.4%	0.8%		0.6%
Recurring profit		386	1,732	3,027	4,007	1,825	3,425	5,306	6,376	1,069	1,336	1,365	1,012	101.2%	1,000
	YoY	-	-	1,406.0%	-	372.8%	97.7%	75.3%	59.1%	-41.4%	-61.0%	-74.3%	-84.1%		-84.3%
	Recurring profit margin	1.8%	3.9%	4.6%	4.6%	9.4%	8.6%	8.7%	7.7%	5.5%	3.3%	2.2%	1.2%		1.2%
Net income		43	917	1,694	-124	1,023	2,107	3,408	3,279	822	946	460	257	85.7%	300
	YoY	-	-	-	-	-	129.8%	101.2%	-	-19.6%	-55.1%	-86.5%	-92.2%		-90.9%
	Net margin	0.2%	2.1%	2.6%	-	5.3%	5.3%	5.6%	4.0%	4.2%	2.3%	0.7%	0.3%		0.4%
Earnings (quarterly)		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales		20,996	23,459	21,015	22,259	19,405	20,452	21,403	21,182	19,506	21,463	21,174	22,152
	YoY	2.1%	3.8%	-10.5%	2.1%	-7.6%	-12.8%	1.8%	-4.8%	0.5%	4.9%	-1.1%	4.6%
Gross profit		5,177	6,524	5,920	6,365	6,282	6,407	6,750	5,892	5,349	4,947	4,801	4,567
	YoY	4.1%	31.5%	11.8%	37.1%	21.3%	-1.8%	14.0%	-7.4%	-14.9%	-22.8%	-28.9%	-22.5%
	Gross profit margin	24.7%	27.8%	28.2%	28.6%	32.4%	31.3%	31.5%	27.8%	27.4%	23.0%	22.7%	20.6%
SG&A expenses		4,901	5,318	5,011	5,314	4,685	4,746	4,738	4,655	4,532	4,672	5,030	4,742
	YoY	-3.0%	3.3%	-2.0%	2.2%	-4.4%	-10.8%	-5.4%	-12.4%	-3.3%	-1.6%	6.2%	1.9%
	SG&A ratio	23.3%	22.7%	23.8%	23.9%	24.1%	23.2%	22.1%	22.0%	23.2%	21.8%	23.8%	21.4%
Operating profit		275	1,206	909	1,051	1,597	1,660	2,013	1,236	817	275	-230	-175
	YoY	-	-	396.7%	-	480.7%	37.6%	121.5%	17.6%	-48.8%	-83.4%	-	-
	Operating profit margin	1.3%	5.1%	4.3%	4.7%	8.2%	8.1%	9.4%	5.8%	4.2%	1.3%	-	-
Recurring profit		386	1,346	1,295	980	1,825	1,600	1,881	1,070	1,069	267	29	-353
	YoY	-	8,312.5%	340.5%	-	372.8%	18.9%	45.3%	9.2%	-41.4%	-83.3%	-98.5%	-
	Recurring profit margin	1.8%	5.7%	6.2%	4.4%	9.4%	7.8%	8.8%	5.1%	5.5%	1.2%	0.1%	-
Net income		43	874	777	-1,818	1,023	1,084	1,301	-129	822	124	-486	-203
	YoY	-	-	-	-	2,279.1%	24.0%	67.4%	-	-19.6%	-88.6%	-	-
	Net margin	0.2%	3.7%	3.7%	-	5.3%	5.3%	6.1%	-	4.2%	0.6%	-	-

Source: Shared Research based on company data

Overseas consolidated subsidiaries
It should be noted that CMP’s FY03/22 consolidated financial results include overseas subsidiaries’ results for January–December 2021.

Results by product category

Marine paints

Marine paints (cumulative)				FY03/20				FY03/21				FY03/22
(JPYmn)				Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Marine paints				16,483	35,383	52,179	70,274	16,174	33,261	51,182	68,681	15,625	32,507	48,650	66,123
	YoY			15.4%	17.6%	12.0%	10.1%	-1.9%	-6.0%	-1.9%	-2.3%	-3.4%	-2.3%	-4.9%	-3.7%
	% of sales			78.5%	79.6%	79.7%	80.1%	83.3%	83.5%	83.5%	83.3%	80.1%	79.3%	78.3%	78.4%
	Japan			7,394	14,887	21,777	29,037	7,127	13,520	20,481	26,977	6,386	12,558	18,566	24,829
		YoY		0.4%	7.4%	3.4%	4.3%	-3.6%	-9.2%	-6.0%	-7.1%	-10.4%	-7.1%	-9.4%	-8.0%
	China			2,901	6,697	10,113	13,498	2,009	6,088	10,227	13,755	2,255	5,066	7,895	11,087
		YoY		54.2%	37.3%	27.1%	17.3%	-30.7%	-9.1%	1.1%	1.9%	12.2%	-16.8%	-22.8%	-19.4%
	South Korea			1,581	3,557	5,139	7,169	1,744	3,470	4,880	6,739	1,771	3,617	5,444	7,299
		YoY		74.3%	60.3%	40.2%	23.1%	10.3%	-2.4%	-5.0%	-6.0%	1.5%	4.2%	11.6%	8.3%
	Southeast Asia			1,599	3,654	5,298	7,034	1,634	3,091	4,658	6,537	1,606	3,382	4,970	6,931
		YoY		9.9%	10.7%	11.7%	13.9%	2.2%	-15.4%	-12.1%	-7.1%	-1.7%	9.4%	6.7%	6.0%
	Europe and US			3,006	6,585	9,850	13,533	3,658	7,090	10,933	14,671	3,605	7,882	11,773	15,975
		YoY		12.4%	13.0%	7.5%	8.4%	21.7%	7.7%	11.0%	8.4%	-1.4%	11.2%	7.7%	8.9%

	New ships			7,711	16,376	24,548	33,127	6,990	15,003	23,160	30,673	6,415	13,111	19,827
		YoY		23.6%	22.4%	15.8%	11.7%	-9.4%	-8.4%	-5.7%	-7.4%	-8.2%	-12.6%	-14.4%	-
		Japan		4,309	8,484	12,791	16,900	4,187	7,794	11,711	14,979	3,272	6,335	9,456
			YoY	0.9%	0.6%	0.9%	0.6%	-2.8%	-8.1%	-8.4%	-11.4%	-21.9%	-18.7%	-19.3%	-
		China		1,959	4,586	7,017	9,562	1,165	4,014	7,054	9,626	1,482	3,399	5,202
			YoY	63.3%	51.6%	33.3%	25.2%	-40.5%	-12.5%	0.5%	0.7%	27.2%	-15.3%	-26.3%	-
		South Korea		1,326	3,089	4,464	6,321	1,564	3,046	4,178	5,734	1,588	3,187	4,870
			YoY	88.6%	74.0%	47.3%	27.6%	17.9%	-1.4%	-6.4%	-9.3%	1.5%	4.6%	16.6%	-
		Southeast Asia		43	81	110	145	31	70	96	131	37	71	127
			YoY	10.3%	-6.9%	-17.3%	-12.1%	-27.9%	-13.6%	-12.7%	-9.7%	19.4%	1.4%	32.3%	-
		Europe and US		73	135	166	217	42	77	119	199	35	116	171
			YoY	170.4%	121.3%	100.0%	87.1%	-42.5%	-43.0%	-28.3%	-8.3%	-16.7%	50.6%	43.7%	-

	Ship repair			7,928	17,365	25,542	34,481	8,247	16,677	25,956	35,321	8,257	17,631	26,571
		YoY		9.5%	14.6%	9.0%	9.0%	4.0%	-4.0%	1.6%	2.4%	0.1%	5.7%	2.4%	-
		Japan		2,536	5,250	7,472	10,262	2,358	4,610	7,273	10,111	2,558	5,126	7,674
			YoY	-0.8%	21.9%	7.8%	11.8%	-7.0%	-12.2%	-2.7%	-1.5%	8.5%	11.2%	5.5%	-
		China		942	2,111	3,096	3,956	843	2,074	3,173	4,128	773	1,667	2,693
			YoY	38.3%	14.1%	15.2%	2.2%	-10.5%	-1.8%	2.5%	4.3%	-8.3%	-19.6%	-15.1%	-
		South Korea		255	468	675	848	180	423	701	1,004	183	429	574
			YoY	25.0%	5.4%	6.3%	-2.4%	-29.4%	-9.6%	3.9%	18.4%	1.7%	1.4%	-18.1%	-
		Southeast Asia		1,481	3,464	5,059	6,695	1,532	2,950	4,492	6,270	1,478	3,186	4,667
			YoY	4.6%	7.8%	9.7%	11.4%	3.4%	-14.8%	-11.2%	-6.3%	-3.5%	8.0%	3.9%	-
		Europe and US		2,712	6,069	9,238	12,719	3,332	6,618	10,315	13,807	3,263	7,221	10,961
			YoY	13.8%	13.7%	8.0%	8.6%	22.9%	9.0%	11.7%	8.6%	-2.1%	9.1%	6.3%	-

	Pleasure boats, other			844	1,641	2,087	2,665	935	1,580	2,065	2,686	953	1,764	2,251
		YoY		5.5%	6.1%	5.5%	5.5%	10.8%	-3.7%	-1.1%	0.8%	1.9%	11.6%	9.0%	-
		Japan		548	1,152	1,513	1,874	581	1,115	1,496	1,886	555	1,095	1,434
			YoY	2.0%	2.9%	4.1%	0.4%	6.0%	-3.2%	-1.1%	0.6%	-4.5%	-1.8%	-4.1%	-
		Southeast Asia		75	108	128	194	70	70	69	135	91	124	175
			YoY	-	-	-	-	-6.7%	-35.2%	-46.1%	-30.4%	30.0%	77.1%	153.6%	-
		Europe and US		220	380	445	596	283	394	498	664	306	544	640
			YoY	-16.3%	-10.8%	-14.9%	-9.3%	28.6%	3.7%	11.9%	11.4%	8.1%	38.1%	28.5%	-

Source: Shared Research based on company data

Marine paints (quarterly)				FY03/20				FY03/21				FY03/22
(JPYmn)				Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Marine paints				16,483	18,900	16,796	18,095	16,174	17,087	17,921	17,499	15,625	16,882	16,143	17,473
	YoY			15.4%	19.6%	1.7%	5.0%	-1.9%	-9.6%	6.7%	-3.3%	-3.4%	-1.2%	-9.9%	-0.1%
	% of sales			78.5%	80.6%	79.9%	81.3%	83.3%	83.5%	83.7%	82.6%	80.1%	78.7%	76.2%	78.9%
	Japan			7,394	7,493	6,890	7,260	7,127	6,393	6,961	6,496	6,386	6,172	6,008	6,263
		YoY		0.4%	15.4%	-4.4%	7.2%	-3.6%	-14.7%	1.0%	-10.5%	-10.4%	-3.5%	-13.7%	-3.6%
	China			2,901	3,796	3,416	3,385	2,009	4,079	4,139	3,528	2,255	2,811	2,829	3,192
		YoY		54.2%	26.7%	11.0%	-4.8%	-30.7%	7.5%	21.2%	4.2%	12.2%	-31.1%	-31.7%	-9.5%
	South Korea			1,581	1,976	1,582	2,030	1,744	1,726	1,410	1,859	1,771	1,846	1,827	1,855
		YoY		74.3%	50.6%	9.3%	-5.8%	10.3%	-12.7%	-10.9%	-8.4%	1.5%	7.0%	29.6%	-0.2%
	Southeast Asia			1,599	2,055	1,644	1,736	1,634	1,457	1,567	1,879	1,606	1,776	1,588	1,961
		YoY		9.9%	11.3%	14.0%	21.4%	2.2%	-29.1%	-4.7%	8.2%	-1.7%	21.9%	1.3%	4.4%
	Europe and US			3,006	3,579	3,265	3,683	3,658	3,432	3,843	3,738	3,605	4,277	3,891	4,202
		YoY		12.4%	13.5%	-2.1%	10.8%	21.7%	-4.1%	17.7%	1.5%	-1.4%	24.6%	1.2%	12.4%

	New ships			7,711	8,665	8,172	8,579	6,990	8,013	8,157	7,513	6,415	6,696	6,716	-
		YoY		23.6%	21.3%	4.6%	1.3%	-9.4%	-7.5%	-0.2%	-12.4%	-8.2%	-16.4%	-17.7%	-
		Japan		4,309	4,175	4,307	4,109	4,187	3,607	3,917	3,268	3,272	3,063	3,121	-
			YoY	0.9%	0.4%	1.4%	-0.1%	-2.8%	-13.6%	-9.1%	-20.5%	-21.9%	-15.1%	-20.3%	-
		China		1,959	2,627	2,431	2,545	1,165	2,849	3,040	2,572	1,482	1,917	1,803	-
			YoY	63.3%	43.9%	8.5%	7.3%	-40.5%	8.5%	25.1%	1.1%	27.2%	-32.7%	-40.7%	-
		South Korea		1,326	1,763	1,375	1,857	1,564	1,482	1,132	1,556	1,588	1,599	1,683	-
			YoY	88.6%	64.5%	9.5%	-3.3%	17.9%	-15.9%	-17.7%	-16.2%	1.5%	7.9%	48.7%	-
		Southeast Asia		43	38	29	35	31	39	26	35	37	34	56	-
			YoY	10.3%	-20.8%	-37.0%	9.4%	-27.9%	2.6%	-10.3%	0.0%	19.4%	-12.8%	115.4%	-
		Europe and US		73	62	31	51	42	35	42	80	35	81	55	-
			YoY	170.4%	82.4%	40.9%	54.5%	-42.5%	-43.5%	35.5%	56.9%	-16.7%	131.4%	31.0%	-

	Ship repair			7,928	9,437	8,177	8,939	8,247	8,430	9,279	9,365	8,257	9,374	8,940	-
		YoY		9.5%	19.2%	-1.1%	8.8%	4.0%	-10.7%	13.5%	4.8%	0.1%	11.2%	-3.7%	-
		Japan		2,536	2,714	2,222	2,790	2,358	2,252	2,663	2,838	2,558	2,568	2,548	-
			YoY	-0.8%	55.0%	-15.4%	24.5%	-7.0%	-17.0%	19.8%	1.7%	8.5%	14.0%	-4.3%	-
		China		942	1,169	985	860	843	1,231	1,099	955	773	894	1,026	-
			YoY	38.3%	0.0%	17.7%	-27.4%	-10.5%	5.3%	11.6%	11.0%	-8.3%	-27.4%	-6.6%	-
		South Korea		255	213	207	173	180	243	278	303	183	246	145	-
			YoY	25.0%	-11.3%	8.4%	-26.1%	-29.4%	14.1%	34.3%	75.1%	1.7%	1.2%	-47.8%	-
		Southeast Asia		1,481	1,983	1,595	1,636	1,532	1,418	1,542	1,778	1,478	1,708	1,481	-
			YoY	4.6%	10.3%	14.3%	17.0%	3.4%	-28.5%	-3.3%	8.7%	-3.5%	20.5%	-4.0%	-
		Europe and US		2,712	3,357	3,169	3,481	3,332	3,286	3,697	3,492	3,263	3,958	3,740	-
			YoY	13.8%	13.6%	-1.5%	10.3%	22.9%	-2.1%	16.7%	0.3%	-2.1%	20.5%	1.2%	-

	Pleasure boats, other			844	797	446	578	935	645	485	621	953	811	487	-
		YoY		5.5%	6.7%	3.5%	5.7%	10.8%	-19.1%	8.7%	7.4%	1.9%	25.7%	0.4%	-
		Japan		548	604	361	361	581	534	381	390	555	540	339	-
			YoY	2.0%	3.6%	8.1%	-12.6%	6.0%	-11.6%	5.5%	8.0%	-4.5%	1.1%	-11.0%	-
		Southeast Asia		75	33	20	66	70	0	-1	66	91	33	51	-
			YoY	-	-	-	-	-6.7%	-	-	0.0%	30.0%	-	-	-
		Europe and US		220	160	65	151	283	111	104	166	306	238	96	-
			YoY	-16.3%	-1.8%	-33.0%	12.7%	28.6%	-30.6%	60.0%	9.9%	8.1%	114.4%	-7.7%	-

Source: Shared Research based on company data
Note: Pleasure boats include pleasure boats, fishing boats, and fishing nets.

Industrial paints

Industrial paints (cumulative)				FY03/20				FY03/21				FY03/22
(JPYmn)				Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Industrial paints				3,104	6,308	9,457	12,353	2,973	5,615	8,505	11,369	2,924	5,946	8,974	11,842
	YoY			-1.2%	-0.2%	-1.8%	-1.8%	-4.2%	-11.0%	-10.1%	-8.0%	-1.6%	5.9%	5.5%	4.2%
	% of sales			14.8%	14.2%	14.4%	14.1%	15.3%	14.1%	13.9%	13.8%	15.0%	14.5%	14.4%	14.0%
	Japan			1,533	3,130	4,697	6,022	1,343	2,626	4,117	5,454	1,447	2,811	4,325	5,694
		YoY		-9.1%	-5.9%	-6.1%	-7.0%	-12.4%	-16.1%	-12.3%	-9.4%	7.7%	7.0%	5.1%	4.4%
	China			245	477	693	916	189	398	646	928	279	612	961	1,237
		YoY		41.6%	-1.9%	-15.2%	-16.2%	-22.9%	-16.6%	-6.8%	1.3%	47.6%	53.8%	48.8%	33.3%
	South Korea			14	95	137	147	34	75	105	145	31	78	143	182
		YoY		-22.2%	102.1%	87.7%	93.4%	142.9%	-21.1%	-23.4%	-1.4%	-8.8%	4.0%	36.2%	25.5%
	Southeast Asia			1,267	2,512	3,770	5,011	1,330	2,403	3,449	4,593	1,100	2,268	3,275	4,347
		YoY		8.5%	9.2%	7.0%	7.6%	5.0%	-4.3%	-8.5%	-8.3%	-17.3%	-5.6%	-5.0%	-5.4%
	Europe and US			43	91	158	255	75	110	186	246	64	175	269	380
		YoY		-53.8%	-42.0%	-27.5%	-5.9%	74.4%	20.9%	17.7%	-3.5%	-14.7%	59.1%	44.6%	54.5%

	Construction materials			1,053	2,058	3,062	3,855	760	1,560	2,473	3,305	874	1,729	2,682
		YoY		-8.4%	-9.9%	-10.3%	-11.7%	-27.8%	-24.2%	-19.2%	-14.3%	15.0%	10.8%	8.5%	-
		Japan		927	1,896	2,842	3,599	729	1,509	2,399	3,215	841	1,660	2,576
			YoY	-11.5%	-8.5%	-8.2%	-9.9%	-21.4%	-20.4%	-15.6%	-10.7%	15.4%	10.0%	7.4%	-
		Southeast Asia		126	161	220	256	30	51	74	90	33	69	106
			YoY	23.5%	-24.1%	-30.6%	-30.4%	-76.2%	-68.3%	-66.4%	-64.8%	10.0%	35.3%	43.2%	-

	Heavy anti-corrosion			2,050	4,249	6,394	8,498	2,212	4,054	6,032	8,063	2,049	4,217	6,291
		YoY		3.1%	5.3%	2.8%	3.5%	7.9%	-4.6%	-5.7%	-5.1%	-7.4%	4.0%	4.3%	-
		Japan		605	1,233	1,855	2,423	614	1,117	1,718	2,239	606	1,151	1,749
			YoY	-5.3%	-1.8%	-2.5%	-2.3%	1.5%	-9.4%	-7.4%	-7.6%	-1.3%	3.0%	1.8%	-
		China		245	477	693	916	189	398	646	928	279	612	961
			YoY	41.6%	-1.9%	-15.2%	-16.2%	-22.9%	-16.6%	-6.8%	1.3%	47.6%	53.8%	48.8%	-
		South Korea		14	95	137	147	34	75	105	145	31	78	143
			YoY	-22.2%	102.1%	87.7%	93.4%	142.9%	-21.1%	-23.4%	-1.4%	-8.8%	4.0%	36.2%	-
		Southeast Asia		1,141	2,350	3,549	4,755	1,299	2,351	3,375	4,503	1,066	2,198	3,168
			YoY	7.0%	12.5%	10.7%	10.8%	13.8%	0.0%	-4.9%	-5.3%	-17.9%	-6.5%	-6.1%	-
		Europe and US		43	91	158	255	75	110	186	246	64	175	269
			YoY	-53.8%	-42.0%	-27.5%	-5.9%	74.4%	20.9%	17.7%	-3.5%	-14.7%	59.1%	44.6%	-
Industrial paints (quarterly)				FY03/20				FY03/21				FY03/22
(JPYmn)				Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Industrial paints				3,104	3,204	3,149	2,896	2,973	2,642	2,890	2,864	2,924	3,022	3,028	2,868
	YoY			-1.2%	0.8%	-4.9%	-1.6%	-4.2%	-17.5%	-8.2%	-1.1%	-1.6%	14.4%	4.8%	0.1%
	% of sales			14.8%	13.7%	15.0%	13.0%	15.3%	12.9%	13.5%	13.5%	15.0%	14.1%	14.3%	12.9%
	Japan			1,533	1,597	1,567	1,325	1,343	1,283	1,491	1,337	1,447	1,364	1,514	1,369
		YoY		-9.1%	-2.7%	-6.3%	-10.2%	-12.4%	-19.7%	-4.9%	0.9%	7.7%	6.3%	1.5%	2.4%
	China			245	232	216	223	189	209	248	282	279	333	349	276
		YoY		41.6%	-25.9%	-34.7%	-19.2%	-22.9%	-9.9%	14.8%	26.5%	47.6%	59.3%	40.7%	-2.1%
	South Korea			14	81	42	10	34	41	30	40	31	47	65	39
		YoY		-22.2%	179.3%	61.5%	233.3%	142.9%	-49.4%	-28.6%	300.0%	-8.8%	14.6%	116.7%	-2.5%
	Southeast Asia			1,267	1,245	1,258	1,241	1,330	1,073	1,046	1,144	1,100	1,168	1,007	1,072
		YoY		8.5%	9.9%	3.0%	9.2%	5.0%	-13.8%	-16.9%	-7.8%	-17.3%	8.9%	-3.7%	-6.3%
	Europe and US			43	48	67	97	75	35	76	60	64	111	94	111
		YoY		-53.8%	-25.0%	9.8%	83.0%	74.4%	-27.1%	13.4%	-38.1%	-14.7%	217.1%	23.7%	85.0%

	Construction materials			1,053	1,005	1,004	793	760	800	913	832	874	855	953	-
		YoY		-8.4%	-11.5%	-11.1%	-16.5%	-27.8%	-20.4%	-9.1%	4.9%	15.0%	6.9%	4.4%	-
		Japan		927	969	946	757	729	780	890	816	841	819	916	-
			YoY	-11.5%	-5.4%	-7.7%	-15.8%	-21.4%	-19.5%	-5.9%	7.8%	15.4%	5.0%	2.9%	-
		Southeast Asia		126	35	59	36	30	21	23	16	33	36	37	-
			YoY	23.5%	-68.2%	-43.8%	-29.4%	-76.2%	-40.0%	-61.0%	-55.6%	10.0%	71.4%	60.9%	-

	Heavy anti-corrosion			2,050	2,199	2,145	2,104	2,212	1,842	1,978	2,031	2,049	2,168	2,074	-
		YoY		3.1%	7.4%	-1.7%	5.6%	7.9%	-16.2%	-7.8%	-3.5%	-7.4%	17.7%	4.9%	-
		Japan		605	628	622	568	614	503	601	521	606	545	598	-
			YoY	-5.3%	1.9%	-3.9%	-1.6%	1.5%	-19.9%	-3.4%	-8.3%	-1.3%	8.3%	-0.5%	-
		China		245	232	216	223	189	209	248	282	279	333	349	-
			YoY	41.6%	-25.9%	-34.7%	-19.2%	-22.9%	-9.9%	14.8%	26.5%	47.6%	59.3%	40.7%	-
		South Korea		14	81	42	10	34	41	30	40	31	47	65	-
			YoY	-22.2%	179.3%	61.5%	233.3%	142.9%	-49.4%	-28.6%	300.0%	-8.8%	14.6%	116.7%	-
		Southeast Asia		1,141	1,209	1,199	1,206	1,299	1,052	1,024	1,128	1,066	1,132	970	-
			YoY	7.0%	18.2%	7.4%	11.2%	13.8%	-13.0%	-14.6%	-6.5%	-17.9%	7.6%	-5.3%	-
		Europe and US		43	48	67	97	75	35	76	60	64	111	94	-
			YoY	-53.8%	-25.0%	9.8%	83.0%	74.4%	-27.1%	13.4%	-38.1%	-14.7%	217.1%	23.7%	-

Source: Shared Research based on company data

Container paints

Container paints (cumulative)			FY03/20				FY03/21				FY03/22
(JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Container paints			1,330	2,600	3,588	4,772	175	812	1,318	2,049	870	2,347	4,274	6,001
	YoY		-56.5%	-60.6%	-64.8%	-59.3%	-86.8%	-68.8%	-63.3%	-57.1%	397.1%	189.0%	224.3%	192.9%
	% of sales		6.3%	5.8%	5.5%	5.4%	0.9%	2.0%	2.2%	2.5%	4.5%	5.7%	6.9%	7.1%
	China		1,115	2,192	2,955	4,004	58	588	918	1,463	702	2,043	3,882	5,355
		YoY	-60.4%	-64.1%	-68.6%	-62.7%	-94.8%	-73.2%	-68.9%	-63.5%	-	247.4%	322.9%	266.0%
	Southeast Asia		177	331	506	619	100	196	352	502	138	241	286	509
		YoY	0.0%	-3.5%	4.1%	-7.5%	-43.5%	-40.8%	-30.4%	-18.9%	38.0%	23.0%	-18.8%	1.4%
	Europe and US		38	77	126	148	16	28	47	83	29	63	105	135
		YoY	-40.6%	-47.6%	-54.5%	-53.5%	-57.9%	-63.6%	-62.7%	-43.9%	81.3%	125.0%	123.4%	62.7%
Container paints (quarterly)			FY03/20				FY03/21				FY03/22
(JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Container paints			1,330	1,270	988	1,184	175	637	506	731	870	1,477	1,927	1,727
	YoY		-56.5%	-64.1%	-72.5%	-22.8%	-86.8%	-49.8%	-48.8%	-38.3%	397.1%	131.9%	280.8%	136.3%
	% of sales		6.3%	5.4%	4.7%	5.3%	0.9%	3.1%	2.4%	3.5%	4.5%	6.9%	9.1%	7.8%
	China		1,115	1,077	763	1,049	58	530	330	545	702	1,341	1,839	1,473
		YoY	-60.4%	-67.3%	-77.0%	-19.8%	-94.8%	-50.8%	-56.7%	-48.0%	-	153.0%	457.3%	170.3%
	Southeast Asia		177	154	175	113	100	96	156	150	138	103	45	223
		YoY	0.0%	-7.2%	22.4%	-38.3%	-43.5%	-37.7%	-10.9%	32.7%	38.0%	7.3%	-71.2%	48.7%
	Europe and US		38	39	49	22	16	12	19	36	29	34	42	30
		YoY	-40.6%	-53.0%	-62.3%	-46.3%	-57.9%	-69.2%	-61.2%	63.6%	81.3%	183.3%	121.1%	-16.7%

Source: Shared Research based on company data
Note: If YoY changes exceed 1,000%, they are shown as "-"

Results by region

Segments (cumulative)			FY03/20				FY03/21				FY03/22
(JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Sales			20,996	44,455	65,470	87,729	19,405	39,857	61,260	82,442	19,506	40,969	62,143	84,295
	YoY		2.1%	3.0%	-1.8%	-0.8%	-7.6%	-10.3%	-6.4%	-6.0%	0.5%	2.8%	1.4%	2.2%
	Japan		9,005	18,180	26,720	35,389	8,554	16,315	24,852	32,775	7,920	15,538	23,136	30,853
		YoY	-1.4%	4.8%	1.6%	2.2%	-5.0%	-10.3%	-7.0%	-7.4%	-7.4%	-4.8%	-6.9%	-5.9%
	China		4,262	9,367	13,762	18,419	2,256	7,075	11,792	16,147	3,237	7,723	12,739	17,680
		YoY	-12.5%	-18.3%	-24.4%	-21.1%	-47.1%	-24.5%	-14.3%	-12.3%	43.5%	9.2%	8.0%	9.5%
	South Korea		1,596	3,653	5,277	7,317	1,779	3,546	4,986	6,884	1,803	3,695	5,587	7,481
		YoY	72.5%	61.1%	41.1%	24.1%	11.5%	-2.9%	-5.5%	-5.9%	1.3%	4.2%	12.1%	8.7%
	Southeast Asia		3,044	6,498	9,575	12,665	3,064	5,690	8,460	11,633	2,845	5,891	8,531	11,788
		YoY	8.7%	9.3%	9.4%	10.1%	0.7%	-12.4%	-11.6%	-8.1%	-7.1%	3.5%	0.8%	1.3%
	Europe and US		3,087	6,754	10,135	13,937	3,750	7,229	11,167	15,001	3,699	8,121	12,148	16,491
		YoY	9.0%	10.1%	4.9%	6.6%	21.5%	7.0%	10.2%	7.6%	-1.4%	12.3%	8.8%	9.9%
Operating profit			275	1,481	2,390	3,441	1,597	3,257	5,270	6,506	817	1,092	862	687
	YoY		-	-	-	-	480.7%	119.9%	120.5%	89.1%	-48.8%	-66.5%	-83.6%	-89.4%
	Japan		341	877	1,187	1,673	617	1,061	1,670	2,218	139	-57	-637	-1,086
		YoY	432.8%	-	-	834.6%	80.9%	21.0%	40.7%	32.6%	-77.5%	-	-	-
	China		-464	-748	-917	-1,134	-180	142	437	391	-123	-304	-353	-624
		YoY	-	-	-	-	-	-	-	-	-	-	-	-
	South Korea		-42	7	78	111	156	369	433	318	-121	-286	-461	-685
		YoY	-	-	-	-	-	-	455.1%	186.5%	-	-	-	-
	Southeast Asia		367	982	1,335	1,721	594	955	1,386	1,858	457	824	1,185	1,619
		YoY	16.9%	69.9%	50.8%	49.9%	61.9%	-2.7%	3.8%	8.0%	-23.1%	-13.7%	-14.5%	-12.9%
	Europe and US		-314	-519	-747	-883	74	8	266	313	155	277	282	274
		YoY	-	-	-	-	-	-	-	-	109.5%	-	6.0%	-12.5%
	Eliminations		694	1,464	2,297	3,042	614	1,256	1,867	2,463	593	1,180	1,658	2,259
	Company-wide		-306	-582	-842	-1,090	-279	-535	-792	-1,056	-283	-540	-812	-1,069
Segments (quarterly)			FY03/20				FY03/21				FY03/22
(JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales			20,996	23,459	21,015	22,259	19,405	20,452	21,403	21,182	19,506	21,463	21,174	22,152
	YoY		2.1%	3.8%	-10.5%	2.1%	-7.6%	-12.8%	1.8%	-4.8%	0.5%	4.9%	-1.1%	4.6%
	Japan		9,005	9,175	8,540	8,669	8,554	7,761	8,537	7,923	7,920	7,618	7,598	7,717
		YoY	-1.4%	11.6%	-4.6%	4.1%	-5.0%	-15.4%	0.0%	-8.6%	-7.4%	-1.8%	-11.0%	-2.6%
	China		4,262	5,105	4,395	4,657	2,256	4,819	4,717	4,355	3,237	4,486	5,016	4,941
		YoY	-12.5%	-22.6%	-34.7%	-9.4%	-47.1%	-5.6%	7.3%	-6.5%	43.5%	-6.9%	6.3%	13.5%
	South Korea		1,596	2,057	1,624	2,040	1,779	1,767	1,440	1,898	1,803	1,892	1,892	1,894
		YoY	72.5%	53.3%	10.3%	-5.5%	11.5%	-14.1%	-11.3%	-7.0%	1.3%	7.1%	31.4%	-0.2%
	Southeast Asia		3,044	3,454	3,077	3,090	3,064	2,626	2,770	3,173	2,845	3,046	2,640	3,257
		YoY	8.7%	9.8%	9.7%	12.4%	0.7%	-24.0%	-10.0%	2.7%	-7.1%	16.0%	-4.7%	2.6%
	Europe and US		3,087	3,667	3,381	3,802	3,750	3,479	3,938	3,834	3,699	4,422	4,027	4,343
		YoY	9.0%	11.1%	-4.1%	11.3%	21.5%	-5.1%	16.5%	0.8%	-1.4%	27.1%	2.3%	13.3%
Operating profit			275	1,206	909	1,051	1,597	1,660	2,013	1,236	817	275	-230	-175
	YoY		-	-	396.7%	-	480.7%	37.6%	121.5%	17.6%	-48.8%	-83.4%	-	-
	Japan		341	536	310	486	617	444	609	548	139	-196	-580	-449
		YoY	432.8%	-	213.1%	285.7%	80.9%	-17.2%	96.5%	12.8%	-77.5%	-	-	-
	China		-464	-284	-169	-217	-180	322	295	-46	-123	-181	-49	-271
		YoY	-	-	-	-	-	-	-	-	-	-	-	-
	South Korea		-42	49	71	33	156	213	64	-115	-121	-165	-175	-224
		YoY	-	-	-	-	-	334.7%	-9.9%	-	-	-	-	-
	Southeast Asia		367	615	353	386	594	361	431	472	457	367	361	434
		YoY	16.9%	133.0%	15.0%	46.8%	61.9%	-41.3%	22.1%	22.3%	-23.1%	1.7%	-16.2%	-8.1%
	Europe and US		-314	-205	-228	-136	74	-66	258	47	155	122	5	-8
		YoY	-	-	-	-	-	-	-	-	109.5%	-	-98.1%	-

Source: Shared Research based on company data

Europe and US segment profit
Calculation of Europe and US segment profit includes the business costs of orders from European shipowners for paint produced and delivered in Japan, China, and South Korea. Those business costs are charged as inter-regional non-operating profit (loss), but earnings figures at the operating profit level inherently include positive effects for Japan, China, and South Korea, and negative effects for Europe and the US. It should therefore be noted that, profit figures for the Europe and US segment tend to appear superficially inferior.

Overseas consolidated subsidiaries
Based on accounting standards, the earnings results of overseas consolidated subsidiaries are reflected in the company’s consolidated financial results with a three-month delay. For example, CMP’s FY03/22 consolidated financial results will include overseas subsidiaries’ results for January–December 2021.

Raw material prices

Main raw material prices

Main raw material prices		FY03/20				FY03/21				FY03/22
		Apr–Jun	Jul–Sep	Oct–Dec	Jan–Mar	Apr–Jun	Jul–Sep	Oct–Dec	Jan–Mar	Apr–Jun	Jul–Sep	Oct–Dec
Domestic naphtha (JPY/kl)		45,400	40,200	41,300	44,800	25,000	30,200	31,300	38,800	47,700	53,500	60,700
	YoY	-6.8%	-24.9%	-23.8%	8.7%	-44.9%	-24.9%	-24.2%	-13.4%	90.8%	77.2%	93.9%
	QoQ	10.2%	-11.5%	2.7%	8.5%	-44.2%	20.8%	3.6%	24.0%	22.9%	12.2%	13.5%
Epoxy resin (USD/ton)		2,427	2,370	2,293	2,354	2,198	2,086	2,658	3,583	4,926	4,645	4,557
	YoY	-15.9%	-12.9%	-13.9%	-6.1%	-9.4%	-12.0%	15.9%	52.2%	124.1%	122.7%	71.4%
	QoQ	-3.2%	-2.3%	-3.2%	2.7%	-6.6%	-5.1%	27.4%	34.8%	37.5%	-5.7%	-1.9%

Source: Shared Research based on company data

Naphtha CIF prices and GPM

Source: Shared Research based on Ministry of Finance and company data

Full-year FY03/22 results

Overview

Sales: FY03/22 sales were JPY84.3bn (+2.2%, or +JPY1.9bn YoY). Higher sales of container paints offset the sales decline in marine paints. In mainstay marine paints (-JPY2.6bn YoY), sales of ship repair paints remained robust, especially in Europe. Meanwhile, demand for new ship paints dropped sharply in Japan and China due to a decline in new shipbuilding volume. In industrial paints (+473mn YoY), sales of heavy anti-corrosion paints in Southeast Asia were sluggish, but demand for paints for construction materials and heavy anti-corrosion paints outside of Southeast Asia recovered, resulting in strong sales. In container paints (+JPY4.0bn YoY), paint demand rebounded along with the expansion of container production. By region, sales growth in China, Europe, and the US had a positive impact, while lower sales in Japan weakened overall performance.

Profits: In FY03/22, operating profit was JPY687mn (-89.4%, or -JPY5.8bn YoY), recurring profit was JPY1.0bn (-84.1% YoY), and net income attributable to owners of the parent was JPY257mn (-92.2% YoY). The gross profit margin deteriorated 7.4pp YoY to 23.3% from 30.7% in FY03/21. The surge in key raw material prices—owing to the price increase of crude oil and other natural resources—negatively impacted profitability. The operating profit in Japan, which fell JPY3.3bn YoY, weighed heavily on overall results.

Results by region: Sales and profit fell in Japan. Sales grew, but profit declined in China, South Korea, Southeast Asia, Europe, and the US. The company posted operating losses in Japan, China, and South Korea.

Achievement rates: Against the company’s full-year FY03/22 forecast (revised on January 31, 2022), sales reached 101.6%, operating profit 137.4%, recurring profit 101.2%, and net income attributable to owners of the parent 85.7%. Operating profit exceeded the company's forecast thanks to higher-than-expected sales, especially in marine paints. Net income attributable to owners of the parent fell short of the company's projections, as tax expenses grew higher than anticipated.

Results by product category and region

Sales by product category

Marine paints

Sales declined YoY. Demand for new ship paints fell in Japan and China due to a decline in shipbuilding volume. Sales of ship repair paints were firm, especially in Europe.

Industrial paints

Sales rose YoY. Demand for paints for construction materials recovered. Sales of heavy anti-corrosion paints in Southeast Asia were sluggish due mainly to the pandemic-induced postponement of projects.

Container paints

Sales grew YoY. Demand for container paints picked up as container production expanded owing to tight global container transportation demand.

Results by region

Japan

Sales fell YoY. The decline in shipbuilding volume at shipyards in Japan caused sales of new ship paints to drop significantly, but sales of ship repair paints were solid. In industrial paints, sales of paints for construction materials recovered thanks to improved capacity utilization at construction material manufacturers following a period of pandemic-related production adjustments in FY03/21.

The company posted an operating loss in Japan as the surge in key raw material prices pushed up procurement costs.

China

Sales were up YoY. In marine paints, sales of new ship paints dropped due to a decline in shipbuilding volume. Sales of ship repair paints were also weak owing to a decline in the number of customers' ships coming into dock. In industrial paints, sales of heavy anti-corrosion paints were brisk. Sales of container paints also grew sharply as paint demand bounced back.

The company recorded an operating loss in China. Procurement costs rose due to the spike in key raw material prices.

South Korea

Sales rose YoY. In marine paints, sales of mainstay new ship paints were strong, driven by increased shipments of high-value-added products.

The company posted an operating loss in South Korea. Negative forex impact and higher procurement costs stemming from the surge in key raw material prices weighed on earnings.

Southeast Asia

Sales grew YoY. In marine paints, sales of ship repair paints were robust. However, in industrial paints, sales of heavy anti-corrosion paints were weak due to delays in infrastructure-related projects caused by the impact of the pandemic.

Profit fell YoY, hurt by an increase in procurement costs resulting from the rise in key raw material prices.

Europe and the US

Sales were up YoY. In marine paints, sales of ship repair paints mainly grew. The company also benefitted from favorable forex rate movement.

Profit fell YoY. Despite efforts to curb operating costs and other expenses and to expand sales of high value-added products, the company was unable to offset the rise in procurement costs due to soaring prices of key raw materials.

FY03/23 company forecast

Full-year company forecast

		FY03/21			FY03/22			FY03/23
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	FY Est.
Sales		39,857	42,585	82,442	40,969	43,326	84,295	83,000
	YoY	-10.3%	-1.6%	-6.0%	2.8%	1.7%	2.2%	-1.5%
Cost of goods sold		27,167	29,944	57,111	30,673	33,958	64,631
	YoY	-17.1%	-3.4%	-10.4%	12.9%	13.4%	13.2%
Gross profit		12,689	12,642	25,331	10,296	9,368	19,664
	YoY	8.4%	2.9%	5.6%	-18.9%	-25.9%	-22.4%
	Gross profit margin	31.8%	29.7%	30.7%	25.1%	21.6%	23.3%
SG&A expenses		9,431	9,393	18,824	9,204	9,772	18,976
	YoY	-7.7%	-9.0%	-8.4%	-2.4%	4.0%	0.8%
	SG&A ratio	23.7%	22.1%	22.8%	22.5%	22.6%	22.5%
Operating profit		3,257	3,249	6,506	1,092	-405	687	500
	YoY	119.9%	65.8%	89.1%	-66.5%	-	-89.4%	-27.2%
	Operating profit margin	8.2%	7.6%	7.9%	2.7%	-	0.8%	0.6%
Recurring profit		3,425	2,951	6,376	1,336	-324	1,012