Kito has good start to its financial year
The Kito Group announces a record quarter for sales despite external economic challenges.
During the first quarter cumulative period (1 April to 30 June 2022) of fiscal 2022, ending March 31, 2023, although global economic activity gradually began returning to normal following the coronavirus pandemic, the outlook remained unclear as a result of increases in raw material prices and continued disruption in logistics networks, as well as the prolonged conflict between Russia and Ukraine, and the sharp depreciation of the yen. Under such conditions, Kito Group focused on securing its supply chain in order to capture the firm market demand, while working to boost production capacity and provide stable customer service.
As a result, net sales in the subject period reached ¥16,756 million (up 21.4% from the same period of the previous fiscal year), breaking the previous record set in the same period last year. In terms of earnings, although the Company managed to counter the significant increase in material costs by revising sales prices and focusing on production
efficiency, because of the recording of advisory expenses related to the management integration, operating income declined to ¥860 million (down 13.2%). Ordinary income amounted to ¥1,215 million (up 25.0%) on foreign exchange gain, with net income attributable to owners of parent of ¥819 million (up 24.1%). Ordinary income and net income attributable to owners of parent both reached record highs.
The Kito Group’s business activities are classified by geographical segment for the Company and its consolidated group companies.
Although a wide range of industries in Japan, particularly automotive-related companies, were forced to scale back production in response to the semiconductor shortage, demand for construction showed signs of recovery, centred on urban areas. Exports continued to grow steadily on rising demand in North America, Europe, and other overseas markets.
As a result, net sales amounted to ¥7,119 million (up 22.4% from the corresponding period of the previous fiscal year), with operating income of ¥1,780 million (up 31.4%).
Net sales in the US rose sharply to ¥8,779 million (up 37.6% from the corresponding period of the previous fiscal year),with operating income of ¥350 million (up 1,293.4%), on continued positive corporate investment activities, and infrastructure-related demand. Despite concerns about supply chain delays and rising costs for materials, the Company
focused on securing means of transport and maintaining customer service.
Despite firm demand trends, because of the impact from far-reaching measures enacted by local authorities in response to Covid-19 outbreaks in Shanghai and other areas, net sales amounted to ¥2,137 million (up 12.0% from the corresponding period of the previous fiscal year), with operating income of ¥285 million (down 1.3%). Of note, the fiscal year for this segment starts in January, so the results for the subject first quarter period are from January through March.
Asia (excluding Japan and China)
Demand in Asian countries recovered along with the relaxing of constraints on economic activities. As a result, net sales amounted to ¥867 million (up 58.3% from the corresponding period of the previous fiscal year), with operating income of ¥95 million.
Despite continued firm increase in demand, the fallout from the conflict between Russia and Ukraine resulted in a marked rise in material and energy prices. Net sales amounted to ¥1,799 million (up 24.3% from the corresponding period of the previous fiscal year), with the segment posting an operating loss of ¥65 million for the subject period.
This segment currently comprises business in Australia only. Net sales amounted to ¥445 million (down 7.8% from the corresponding period of the previous fiscal year), with an operating income of ¥14 million.