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Chugoku Marine Paints

Chugoku Marine Paints 4617

中国塗料
Chugoku Marine Paints, Ltd.
Recent Updates
2022-05-12
Full-year FY03/22 flash update
2022-03-22
Measures to prevent a recurrence of accounting irregularities
2022-02-21
Q3 FY03/22 report update
Get in touch
Tokyo club building 3-2-6 Kasumigaseki, Chiyoda-ku, Tokyo 100-0013
https://www.cmp.co.jp/
03-3506-3951
Summary
2017 marks 100th anniversary since founding; core competency in marine paints
Chemicals
Key dates
2015-12-24
Coverage initiation
Full Report
2022-05-12
Full-year FY03/22 flash update
2022-05-12
Q3 FY03/22 flash update
2022-02-01
1H FY03/22 flash update
2021-10-29
Q1 FY03/22 flash update
2021-07-30
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Executive summary

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 statementFY03/13FY03/14FY03/15FY03/16FY03/17FY03/18FY03/19FY03/20FY03/21FY03/22FY03/23
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons. Est.
Sales83,65690,901106,737115,06682,36882,98088,45287,72982,44284,29583,000
YoY-10.6%8.7%17.4%7.8%-28.4%0.7%6.6%-0.8%-6.0%2.2%-1.5%
Gross profit22,07925,22729,42436,11526,58923,44819,86923,98625,33119,664
YoY-11.2%14.3%16.6%22.7%-26.4%-11.8%-15.3%20.7%5.6%-22.4%
Gross profit margin26.4%27.8%27.6%31.4%32.3%28.3%22.5%27.3%30.7%23.3%
Operating profit4,7154,0587,4429,9695,4293,704-6433,4416,506687500
YoY-13.9%-13.9%83.4%34.0%-45.5%-31.8%--89.1%-89.4%-27.2%
Operating profit margin5.6%4.5%7.0%8.7%6.6%4.5%-3.9%7.9%0.8%0.6%
Recurring profit5,1195,0588,35910,3736,0343,855-2244,0076,3761,012800
YoY-15.2%-1.2%65.3%24.1%-41.8%-36.1%--59.1%-84.1%-20.9%
Recurring profit margin6.1%5.6%7.8%9.0%7.3%4.6%-4.6%7.7%1.2%1.0%
Net income2,9783,2694,7486,4623,6042,394-760-1243,279257300
YoY-2.9%9.8%45.2%36.1%-44.2%-33.6%----92.2%16.7%
Net margin3.6%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) 69,06969,06969,06969,06969,06969,06969,06969,06969,06962,000
Treasury shares ('000)2,8382,8562,8462,8653,5653,5658,36810,85214,42911,243
EPS (JPY)44.249.471.797.654.936.6-12.2-2.157.74.95.9
EPS (fully diluted; JPY)----------
Dividend per share (JPY)13.013.015.016.018.028.034.034.034.035.035.0
Book value per share (JPY)7989441,0951,0961,0991,1381,0339871,0501,089
Balance sheet (JPYmn)
Cash and cash equivalents22,11229,49430,86834,27337,10433,89329,41326,90525,01620,096
Total current assets74,31583,11895,72692,06184,00487,25879,56175,28172,13871,495
Tangible fixed assets23,78225,61025,91525,11226,82627,04925,58624,80324,44924,054
Intangible assets8871,2961,5011,6431,4271,4821,341513397359
Investments and other assets7,2558,99411,9449,5759,8029,9857,3665,4748,1858,708
Total fixed assets31,92535,90139,36136,33138,05638,51634,29430,79233,03233,123
Total assets106,240119,019135,087128,392122,061125,775113,855106,074105,170104,618
Short-term debt22,04420,93021,68619,58917,39419,53119,26217,49919,26017,181
Total current liabilities41,87943,17850,20143,18236,53139,32539,09835,28036,21934,694
Long-term debt3,3773,4031,1031,7422,7131,0391,7303,3185523,315
Total fixed liabilities7,6618,5086,6607,0027,9745,9876,9528,5716,6349,884
Total liabilities49,54151,68656,86150,18444,50645,31346,05143,85242,85444,578
Shareholders' equity52,82162,48872,48072,57371,98574,54062,71757,46557,37755,291
Total net assets56,69967,33278,22578,20877,55480,46267,80462,22162,31560,039
Total interest-bearing debt25,42124,33322,78921,33120,10720,57020,99220,81719,81220,496
Cash flow statement(JPYmn)
Cash flows from operating activities8,71910,0844,3559,77410,750-6293,1354,6127,129-238
Cash flows from investing activities-3,624-2,364-597-3,552-5,448-1,049-1862,237867155
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%
ROE5.9%5.7%7.0%8.9%5.0%3.3%-1.1%-0.2%5.7%0.5%
Financial leverage (equity multiplier)2.12.01.91.81.81.71.71.81.81.9
Total asset turnover0.80.80.80.90.70.70.70.80.80.8
Net margin3.6%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)FY03/20FY03/21FY03/22FY03/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Sales20,99644,45565,47087,72919,40539,85761,26082,44219,50640,96962,14384,295101.6%83,000
YoY2.1%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 profit5,17711,70117,62123,9866,28212,68919,43925,3315,34910,29615,09719,664
YoY4.1%17.8%15.7%20.7%21.3%8.4%10.3%5.6%-14.9%-18.9%-22.3%-22.4%
Gross profit margin24.7%26.3%26.9%27.3%32.4%31.8%31.7%30.7%27.4%25.1%24.3%23.3%
SG&A expenses4,90110,21915,23020,5444,6859,43114,16918,8244,5329,20414,23418,976
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 ratio23.3%23.0%23.3%23.4%24.1%23.7%23.1%22.8%23.2%22.5%22.9%22.5%
Operating profit2751,4812,3903,4411,5973,2575,2706,5068171,092862687137.4%500
YoY----480.7%119.9%120.5%89.1%-48.8%-66.5%-83.6%-89.4%-92.3%
Operating profit margin1.3%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 profit3861,7323,0274,0071,8253,4255,3066,3761,0691,3361,3651,012101.2%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 margin1.8%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 income439171,694-1241,0232,1073,4083,27982294646025785.7%300
YoY-----129.8%101.2%--19.6%-55.1%-86.5%-92.2%-90.9%
Net margin0.2%2.1%2.6%-5.3%5.3%5.6%4.0%4.2%2.3%0.7%0.3%0.4%
Earnings (quarterly)FY03/20FY03/21FY03/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Sales20,99623,45921,01522,25919,40520,45221,40321,18219,50621,46321,17422,152
YoY2.1%3.8%-10.5%2.1%-7.6%-12.8%1.8%-4.8%0.5%4.9%-1.1%4.6%
Gross profit5,1776,5245,9206,3656,2826,4076,7505,8925,3494,9474,8014,567
YoY4.1%31.5%11.8%37.1%21.3%-1.8%14.0%-7.4%-14.9%-22.8%-28.9%-22.5%
Gross profit margin24.7%27.8%28.2%28.6%32.4%31.3%31.5%27.8%27.4%23.0%22.7%20.6%
SG&A expenses4,9015,3185,0115,3144,6854,7464,7384,6554,5324,6725,0304,742
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 ratio23.3%22.7%23.8%23.9%24.1%23.2%22.1%22.0%23.2%21.8%23.8%21.4%
Operating profit2751,2069091,0511,5971,6602,0131,236817275-230-175
YoY--396.7%-480.7%37.6%121.5%17.6%-48.8%-83.4%--
Operating profit margin1.3%5.1%4.3%4.7%8.2%8.1%9.4%5.8%4.2%1.3%--
Recurring profit3861,3461,2959801,8251,6001,8811,0701,06926729-353
YoY-8,312.5%340.5%-372.8%18.9%45.3%9.2%-41.4%-83.3%-98.5%-
Recurring profit margin1.8%5.7%6.2%4.4%9.4%7.8%8.8%5.1%5.5%1.2%0.1%-
Net income43874777-1,8181,0231,0841,301-129822124-486-203
YoY----2,279.1%24.0%67.4%--19.6%-88.6%--
Net margin0.2%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) FY03/20FY03/21FY03/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Marine paints16,48335,38352,17970,27416,17433,26151,18268,68115,62532,50748,65066,123
YoY15.4%17.6%12.0%10.1%-1.9%-6.0%-1.9%-2.3%-3.4%-2.3%-4.9%-3.7%
% of sales78.5%79.6%79.7%80.1%83.3%83.5%83.5%83.3%80.1%79.3%78.3%78.4%
Japan7,39414,88721,77729,0377,12713,52020,48126,9776,38612,55818,56624,829
YoY0.4%7.4%3.4%4.3%-3.6%-9.2%-6.0%-7.1%-10.4%-7.1%-9.4%-8.0%
China2,9016,69710,11313,4982,0096,08810,22713,7552,2555,0667,89511,087
YoY54.2%37.3%27.1%17.3%-30.7%-9.1%1.1%1.9%12.2%-16.8%-22.8%-19.4%
South Korea1,5813,5575,1397,1691,7443,4704,8806,7391,7713,6175,4447,299
YoY74.3%60.3%40.2%23.1%10.3%-2.4%-5.0%-6.0%1.5%4.2%11.6%8.3%
Southeast Asia1,5993,6545,2987,0341,6343,0914,6586,5371,6063,3824,9706,931
YoY9.9%10.7%11.7%13.9%2.2%-15.4%-12.1%-7.1%-1.7%9.4%6.7%6.0%
Europe and US3,0066,5859,85013,5333,6587,09010,93314,6713,6057,88211,77315,975
YoY12.4%13.0%7.5%8.4%21.7%7.7%11.0%8.4%-1.4%11.2%7.7%8.9%
New ships7,71116,37624,54833,1276,99015,00323,16030,6736,41513,11119,827
YoY23.6%22.4%15.8%11.7%-9.4%-8.4%-5.7%-7.4%-8.2%-12.6%-14.4%-
Japan4,3098,48412,79116,9004,1877,79411,71114,9793,2726,3359,456
YoY0.9%0.6%0.9%0.6%-2.8%-8.1%-8.4%-11.4%-21.9%-18.7%-19.3%-
China1,9594,5867,0179,5621,1654,0147,0549,6261,4823,3995,202
YoY63.3%51.6%33.3%25.2%-40.5%-12.5%0.5%0.7%27.2%-15.3%-26.3%-
South Korea1,3263,0894,4646,3211,5643,0464,1785,7341,5883,1874,870
YoY88.6%74.0%47.3%27.6%17.9%-1.4%-6.4%-9.3%1.5%4.6%16.6%-
Southeast Asia43811101453170961313771127
YoY10.3%-6.9%-17.3%-12.1%-27.9%-13.6%-12.7%-9.7%19.4%1.4%32.3%-
Europe and US73135166217427711919935116171
YoY170.4%121.3%100.0%87.1%-42.5%-43.0%-28.3%-8.3%-16.7%50.6%43.7%-
Ship repair7,92817,36525,54234,4818,24716,67725,95635,3218,25717,63126,571
YoY9.5%14.6%9.0%9.0%4.0%-4.0%1.6%2.4%0.1%5.7%2.4%-
Japan2,5365,2507,47210,2622,3584,6107,27310,1112,5585,1267,674
YoY-0.8%21.9%7.8%11.8%-7.0%-12.2%-2.7%-1.5%8.5%11.2%5.5%-
China9422,1113,0963,9568432,0743,1734,1287731,6672,693
YoY38.3%14.1%15.2%2.2%-10.5%-1.8%2.5%4.3%-8.3%-19.6%-15.1%-
South Korea2554686758481804237011,004183429574
YoY25.0%5.4%6.3%-2.4%-29.4%-9.6%3.9%18.4%1.7%1.4%-18.1%-
Southeast Asia1,4813,4645,0596,6951,5322,9504,4926,2701,4783,1864,667
YoY4.6%7.8%9.7%11.4%3.4%-14.8%-11.2%-6.3%-3.5%8.0%3.9%-
Europe and US2,7126,0699,23812,7193,3326,61810,31513,8073,2637,22110,961
YoY13.8%13.7%8.0%8.6%22.9%9.0%11.7%8.6%-2.1%9.1%6.3%-
Pleasure boats, other8441,6412,0872,6659351,5802,0652,6869531,7642,251
YoY5.5%6.1%5.5%5.5%10.8%-3.7%-1.1%0.8%1.9%11.6%9.0%-
Japan5481,1521,5131,8745811,1151,4961,8865551,0951,434
YoY2.0%2.9%4.1%0.4%6.0%-3.2%-1.1%0.6%-4.5%-1.8%-4.1%-
Southeast Asia7510812819470706913591124175
YoY-----6.7%-35.2%-46.1%-30.4%30.0%77.1%153.6%-
Europe and US220380445596283394498664306544640
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) FY03/20FY03/21FY03/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Marine paints16,48318,90016,79618,09516,17417,08717,92117,49915,62516,88216,14317,473
YoY15.4%19.6%1.7%5.0%-1.9%-9.6%6.7%-3.3%-3.4%-1.2%-9.9%-0.1%
% of sales78.5%80.6%79.9%81.3%83.3%83.5%83.7%82.6%80.1%78.7%76.2%78.9%
Japan7,3947,4936,8907,2607,1276,3936,9616,4966,3866,1726,0086,263
YoY0.4%15.4%-4.4%7.2%-3.6%-14.7%1.0%-10.5%-10.4%-3.5%-13.7%-3.6%
China2,9013,7963,4163,3852,0094,0794,1393,5282,2552,8112,8293,192
YoY54.2%26.7%11.0%-4.8%-30.7%7.5%21.2%4.2%12.2%-31.1%-31.7%-9.5%
South Korea1,5811,9761,5822,0301,7441,7261,4101,8591,7711,8461,8271,855
YoY74.3%50.6%9.3%-5.8%10.3%-12.7%-10.9%-8.4%1.5%7.0%29.6%-0.2%
Southeast Asia1,5992,0551,6441,7361,6341,4571,5671,8791,6061,7761,5881,961
YoY9.9%11.3%14.0%21.4%2.2%-29.1%-4.7%8.2%-1.7%21.9%1.3%4.4%
Europe and US3,0063,5793,2653,6833,6583,4323,8433,7383,6054,2773,8914,202
YoY12.4%13.5%-2.1%10.8%21.7%-4.1%17.7%1.5%-1.4%24.6%1.2%12.4%
New ships7,7118,6658,1728,5796,9908,0138,1577,5136,4156,6966,716-
YoY23.6%21.3%4.6%1.3%-9.4%-7.5%-0.2%-12.4%-8.2%-16.4%-17.7%-
Japan4,3094,1754,3074,1094,1873,6073,9173,2683,2723,0633,121-
YoY0.9%0.4%1.4%-0.1%-2.8%-13.6%-9.1%-20.5%-21.9%-15.1%-20.3%-
China1,9592,6272,4312,5451,1652,8493,0402,5721,4821,9171,803-
YoY63.3%43.9%8.5%7.3%-40.5%8.5%25.1%1.1%27.2%-32.7%-40.7%-
South Korea1,3261,7631,3751,8571,5641,4821,1321,5561,5881,5991,683-
YoY88.6%64.5%9.5%-3.3%17.9%-15.9%-17.7%-16.2%1.5%7.9%48.7%-
Southeast Asia4338293531392635373456-
YoY10.3%-20.8%-37.0%9.4%-27.9%2.6%-10.3%0.0%19.4%-12.8%115.4%-
Europe and US7362315142354280358155-
YoY170.4%82.4%40.9%54.5%-42.5%-43.5%35.5%56.9%-16.7%131.4%31.0%-
Ship repair7,9289,4378,1778,9398,2478,4309,2799,3658,2579,3748,940-
YoY9.5%19.2%-1.1%8.8%4.0%-10.7%13.5%4.8%0.1%11.2%-3.7%-
Japan2,5362,7142,2222,7902,3582,2522,6632,8382,5582,5682,548-
YoY-0.8%55.0%-15.4%24.5%-7.0%-17.0%19.8%1.7%8.5%14.0%-4.3%-
China9421,1699858608431,2311,0999557738941,026-
YoY38.3%0.0%17.7%-27.4%-10.5%5.3%11.6%11.0%-8.3%-27.4%-6.6%-
South Korea255213207173180243278303183246145-
YoY25.0%-11.3%8.4%-26.1%-29.4%14.1%34.3%75.1%1.7%1.2%-47.8%-
Southeast Asia1,4811,9831,5951,6361,5321,4181,5421,7781,4781,7081,481-
YoY4.6%10.3%14.3%17.0%3.4%-28.5%-3.3%8.7%-3.5%20.5%-4.0%-
Europe and US2,7123,3573,1693,4813,3323,2863,6973,4923,2633,9583,740-
YoY13.8%13.6%-1.5%10.3%22.9%-2.1%16.7%0.3%-2.1%20.5%1.2%-
Pleasure boats, other844797446578935645485621953811487-
YoY5.5%6.7%3.5%5.7%10.8%-19.1%8.7%7.4%1.9%25.7%0.4%-
Japan548604361361581534381390555540339-
YoY2.0%3.6%8.1%-12.6%6.0%-11.6%5.5%8.0%-4.5%1.1%-11.0%-
Southeast Asia75332066700-166913351-
YoY-----6.7%--0.0%30.0%---
Europe and US2201606515128311110416630623896-
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) FY03/20FY03/21FY03/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Industrial paints3,1046,3089,45712,3532,9735,6158,50511,3692,9245,9468,97411,842
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 sales14.8%14.2%14.4%14.1%15.3%14.1%13.9%13.8%15.0%14.5%14.4%14.0%
Japan1,5333,1304,6976,0221,3432,6264,1175,4541,4472,8114,3255,694
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%
China2454776939161893986469282796129611,237
YoY41.6%-1.9%-15.2%-16.2%-22.9%-16.6%-6.8%1.3%47.6%53.8%48.8%33.3%
South Korea149513714734751051453178143182
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 Asia1,2672,5123,7705,0111,3302,4033,4494,5931,1002,2683,2754,347
YoY8.5%9.2%7.0%7.6%5.0%-4.3%-8.5%-8.3%-17.3%-5.6%-5.0%-5.4%
Europe and US43911582557511018624664175269380
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 materials1,0532,0583,0623,8557601,5602,4733,3058741,7292,682
YoY-8.4%-9.9%-10.3%-11.7%-27.8%-24.2%-19.2%-14.3%15.0%10.8%8.5%-
Japan9271,8962,8423,5997291,5092,3993,2158411,6602,576
YoY-11.5%-8.5%-8.2%-9.9%-21.4%-20.4%-15.6%-10.7%15.4%10.0%7.4%-
Southeast Asia126161220256305174903369106
YoY23.5%-24.1%-30.6%-30.4%-76.2%-68.3%-66.4%-64.8%10.0%35.3%43.2%-
Heavy anti-corrosion2,0504,2496,3948,4982,2124,0546,0328,0632,0494,2176,291
YoY3.1%5.3%2.8%3.5%7.9%-4.6%-5.7%-5.1%-7.4%4.0%4.3%-
Japan6051,2331,8552,4236141,1171,7182,2396061,1511,749
YoY-5.3%-1.8%-2.5%-2.3%1.5%-9.4%-7.4%-7.6%-1.3%3.0%1.8%-
China245477693916189398646928279612961
YoY41.6%-1.9%-15.2%-16.2%-22.9%-16.6%-6.8%1.3%47.6%53.8%48.8%-
South Korea149513714734751051453178143
YoY-22.2%102.1%87.7%93.4%142.9%-21.1%-23.4%-1.4%-8.8%4.0%36.2%-
Southeast Asia1,1412,3503,5494,7551,2992,3513,3754,5031,0662,1983,168
YoY7.0%12.5%10.7%10.8%13.8%0.0%-4.9%-5.3%-17.9%-6.5%-6.1%-
Europe and US43911582557511018624664175269
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) FY03/20FY03/21FY03/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Industrial paints3,1043,2043,1492,8962,9732,6422,8902,8642,9243,0223,0282,868
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 sales14.8%13.7%15.0%13.0%15.3%12.9%13.5%13.5%15.0%14.1%14.3%12.9%
Japan1,5331,5971,5671,3251,3431,2831,4911,3371,4471,3641,5141,369
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%
China245232216223189209248282279333349276
YoY41.6%-25.9%-34.7%-19.2%-22.9%-9.9%14.8%26.5%47.6%59.3%40.7%-2.1%
South Korea148142103441304031476539
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 Asia1,2671,2451,2581,2411,3301,0731,0461,1441,1001,1681,0071,072
YoY8.5%9.9%3.0%9.2%5.0%-13.8%-16.9%-7.8%-17.3%8.9%-3.7%-6.3%
Europe and US43486797753576606411194111
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 materials1,0531,0051,004793760800913832874855953-
YoY-8.4%-11.5%-11.1%-16.5%-27.8%-20.4%-9.1%4.9%15.0%6.9%4.4%-
Japan927969946757729780890816841819916-
YoY-11.5%-5.4%-7.7%-15.8%-21.4%-19.5%-5.9%7.8%15.4%5.0%2.9%-
Southeast Asia12635593630212316333637-
YoY23.5%-68.2%-43.8%-29.4%-76.2%-40.0%-61.0%-55.6%10.0%71.4%60.9%-
Heavy anti-corrosion2,0502,1992,1452,1042,2121,8421,9782,0312,0492,1682,074-
YoY3.1%7.4%-1.7%5.6%7.9%-16.2%-7.8%-3.5%-7.4%17.7%4.9%-
Japan605628622568614503601521606545598-
YoY-5.3%1.9%-3.9%-1.6%1.5%-19.9%-3.4%-8.3%-1.3%8.3%-0.5%-
China245232216223189209248282279333349-
YoY41.6%-25.9%-34.7%-19.2%-22.9%-9.9%14.8%26.5%47.6%59.3%40.7%-
South Korea1481421034413040314765-
YoY-22.2%179.3%61.5%233.3%142.9%-49.4%-28.6%300.0%-8.8%14.6%116.7%-
Southeast Asia1,1411,2091,1991,2061,2991,0521,0241,1281,0661,132970-
YoY7.0%18.2%7.4%11.2%13.8%-13.0%-14.6%-6.5%-17.9%7.6%-5.3%-
Europe and US43486797753576606411194-
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) FY03/20FY03/21FY03/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Container paints1,3302,6003,5884,7721758121,3182,0498702,3474,2746,001
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 sales6.3%5.8%5.5%5.4%0.9%2.0%2.2%2.5%4.5%5.7%6.9%7.1%
China1,1152,1922,9554,004585889181,4637022,0433,8825,355
YoY-60.4%-64.1%-68.6%-62.7%-94.8%-73.2%-68.9%-63.5%-247.4%322.9%266.0%
Southeast Asia177331506619100196352502138241286509
YoY0.0%-3.5%4.1%-7.5%-43.5%-40.8%-30.4%-18.9%38.0%23.0%-18.8%1.4%
Europe and US3877126148162847832963105135
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) FY03/20FY03/21FY03/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Container paints1,3301,2709881,1841756375067318701,4771,9271,727
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 sales6.3%5.4%4.7%5.3%0.9%3.1%2.4%3.5%4.5%6.9%9.1%7.8%
China1,1151,0777631,049585303305457021,3411,8391,473
YoY-60.4%-67.3%-77.0%-19.8%-94.8%-50.8%-56.7%-48.0%-153.0%457.3%170.3%
Southeast Asia1771541751131009615615013810345223
YoY0.0%-7.2%22.4%-38.3%-43.5%-37.7%-10.9%32.7%38.0%7.3%-71.2%48.7%
Europe and US383949221612193629344230
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

Results by region
Segments (cumulative) FY03/20FY03/21FY03/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Sales20,99644,45565,47087,72919,40539,85761,26082,44219,50640,96962,14384,295
YoY2.1%3.0%-1.8%-0.8%-7.6%-10.3%-6.4%-6.0%0.5%2.8%1.4%2.2%
Japan9,00518,18026,72035,3898,55416,31524,85232,7757,92015,53823,13630,853
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%
China4,2629,36713,76218,4192,2567,07511,79216,1473,2377,72312,73917,680
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 Korea1,5963,6535,2777,3171,7793,5464,9866,8841,8033,6955,5877,481
YoY72.5%61.1%41.1%24.1%11.5%-2.9%-5.5%-5.9%1.3%4.2%12.1%8.7%
Southeast Asia3,0446,4989,57512,6653,0645,6908,46011,6332,8455,8918,53111,788
YoY8.7%9.3%9.4%10.1%0.7%-12.4%-11.6%-8.1%-7.1%3.5%0.8%1.3%
Europe and US3,0876,75410,13513,9373,7507,22911,16715,0013,6998,12112,14816,491
YoY9.0%10.1%4.9%6.6%21.5%7.0%10.2%7.6%-1.4%12.3%8.8%9.9%
Operating profit2751,4812,3903,4411,5973,2575,2706,5068171,092862687
YoY----480.7%119.9%120.5%89.1%-48.8%-66.5%-83.6%-89.4%
Japan3418771,1871,6736171,0611,6702,218139-57-637-1,086
YoY432.8%--834.6%80.9%21.0%40.7%32.6%-77.5%---
China-464-748-917-1,134-180142437391-123-304-353-624
YoY------------
South Korea-42778111156369433318-121-286-461-685
YoY------455.1%186.5%----
Southeast Asia3679821,3351,7215949551,3861,8584578241,1851,619
YoY16.9%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-314-519-747-883748266313155277282274
YoY--------109.5%-6.0%-12.5%
Eliminations6941,4642,2973,0426141,2561,8672,4635931,1801,6582,259
Company-wide-306-582-842-1,090-279-535-792-1,056-283-540-812-1,069
Segments (quarterly) FY03/20FY03/21FY03/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Sales20,99623,45921,01522,25919,40520,45221,40321,18219,50621,46321,17422,152
YoY2.1%3.8%-10.5%2.1%-7.6%-12.8%1.8%-4.8%0.5%4.9%-1.1%4.6%
Japan9,0059,1758,5408,6698,5547,7618,5377,9237,9207,6187,5987,717
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%
China4,2625,1054,3954,6572,2564,8194,7174,3553,2374,4865,0164,941
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 Korea1,5962,0571,6242,0401,7791,7671,4401,8981,8031,8921,8921,894
YoY72.5%53.3%10.3%-5.5%11.5%-14.1%-11.3%-7.0%1.3%7.1%31.4%-0.2%
Southeast Asia3,0443,4543,0773,0903,0642,6262,7703,1732,8453,0462,6403,257
YoY8.7%9.8%9.7%12.4%0.7%-24.0%-10.0%2.7%-7.1%16.0%-4.7%2.6%
Europe and US3,0873,6673,3813,8023,7503,4793,9383,8343,6994,4224,0274,343
YoY9.0%11.1%-4.1%11.3%21.5%-5.1%16.5%0.8%-1.4%27.1%2.3%13.3%
Operating profit2751,2069091,0511,5971,6602,0131,236817275-230-175
YoY--396.7%-480.7%37.6%121.5%17.6%-48.8%-83.4%--
Japan341536310486617444609548139-196-580-449
YoY432.8%-213.1%285.7%80.9%-17.2%96.5%12.8%-77.5%---
China-464-284-169-217-180322295-46-123-181-49-271
YoY------------
South Korea-4249713315621364-115-121-165-175-224
YoY-----334.7%-9.9%-----
Southeast Asia367615353386594361431472457367361434
YoY16.9%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-314-205-228-13674-66258471551225-8
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 pricesFY03/20FY03/21FY03/22
Apr–JunJul–SepOct–DecJan–MarApr–JunJul–SepOct–DecJan–MarApr–JunJul–SepOct–Dec
Domestic naphtha (JPY/kl)45,40040,20041,30044,80025,00030,20031,30038,80047,70053,50060,700
YoY-6.8%-24.9%-23.8%8.7%-44.9%-24.9%-24.2%-13.4%90.8%77.2%93.9%
QoQ10.2%-11.5%2.7%8.5%-44.2%20.8%3.6%24.0%22.9%12.2%13.5%
Epoxy resin (USD/ton)2,4272,3702,2932,3542,1982,0862,6583,5834,9264,6454,557
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.

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. Please refer to the "FY03/23 company forecast" section for details on the assumptions behind the earnings forecast.

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
FY03/21FY03/22FY03/23
(JPYmn)1H Act.2H Act.FY Act.1H Act.2H Act.FY Act.FY Est.
Sales39,85742,58582,44240,96943,32684,29583,000
YoY-10.3%-1.6%-6.0%2.8%1.7%2.2%-1.5%
Cost of goods sold27,16729,94457,11130,67333,95864,631
YoY-17.1%-3.4%-10.4%12.9%13.4%13.2%
Gross profit12,68912,64225,33110,2969,36819,664
YoY8.4%2.9%5.6%-18.9%-25.9%-22.4%
Gross profit margin31.8%29.7%30.7%25.1%21.6%23.3%
SG&A expenses9,4319,39318,8249,2049,77218,976
YoY-7.7%-9.0%-8.4%-2.4%4.0%0.8%
SG&A ratio23.7%22.1%22.8%22.5%22.6%22.5%
Operating profit3,2573,2496,5061,092-405687500
YoY119.9%65.8%89.1%-66.5%--89.4%-27.2%
Operating profit margin8.2%7.6%7.9%2.7%-0.8%0.6%
Recurring profit3,4252,9516,3761,336-3241,012