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
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.
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.
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
Recent updates
Measures to prevent a recurrence of accounting irregularities
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
Revise oversight structure for CMP Shanghai
Revise accounting structure
CMP Shanghai
CMP
Enforce compliance
Strengthen internal audit structure
Trends and outlook
Quarterly trends and results
Results by product category
Note: Pleasure boats include pleasure boats, fishing boats, and fishing nets.
Note: If YoY changes exceed 1,000%, they are shown as "-"
Results by region
Raw material prices
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