Investor Relations

Message from the President

About the Business Summary for the 96th Term

Greetings to all our valued investors. We would like to give you our sincerest thanks for your continued patronage. We present our business summary for the 96th term to you here.

Koji Akamizu
President and Representative Director

Photo: Koji Akamizu President and Representative Director

Progress and Achievements of Our Operations

During the fiscal year under review, the Japanese economy continued to face a difficult situation due to stagnation of economic activity and sluggish consumer spending resulting from the outbreak of the new Corona contagious disease. However, the economy began to show signs of recovery following the lifting of priority measures to prevent the epidemics and the effects of various policies.
On the other hand, there are concerns about a variety of risks, such as soaring prices of various resources, inflationary concern under depression caused by rapid depreciation of yen, Russia's invasion of Ukraine under the situation that the global economy has not yet fully recovered from the pandemic, lockdown due to the spread of infection in China and influence on the supply chain and so on.
As a result, the outlook is extremely uncertain.

Effective from the fiscal year under review, the Sakai Trading Group adopted the "Accounting Standard for Revenue Recognition" ("Revenue Recognition Accounting Standard"). The Group's sales transactions include both "principal transactions" in cases where a company has a performance obligation to provide goods or services itself and "agent transactions" in cases where the company has a performance obligation to arrange for a customer to receive the goods or services. For the following reasons, the Group continues to assess its performance based on total sales.

  • There are no material differences in operating profit margins between "principal transactions" and "agent transactions", and significant differences in gross profit margins on the surface will occur even though the impact of these factors on profits is insignificant.
  • The net sales method is not compatible with the profitability of business transactions and the efficiency of working capital.
  • Our "agency transactions" are mainly based on the so-called "outright sale/purchase" model, and trade receivables and payables are generated based on gross transactions. Therefore, conventional standards are desirable for understanding and analyzing counterparty credit information management, etc.

Based on the above and other factors, our Group quantifies total sales as "transaction volume" as a performance management factor and utilizes it for performance analysis and other purposes based on the judgment of management.

Therefore, in the explanation of the analysis and review of the status of operating results, etc., we will also explain the "net sales" based on the revenue recognition accounting standards, etc. and the "transaction volume" as a management indicator within our group in a concurrent format.

The Group's net sales for the fiscal year under review amounted to 12.733 billion yen. The transaction volume for the fiscal year under review increased 22.5% from the previous fiscal year to 45.253 billion yen, mainly due to significant growth in environmental and functional materials and electronic materials, which had fallen in the previous fiscal year due to the impact of the new Corona Virus infectious disease and other factors. Our Group's transaction volume exceeded 40 billion for the first time since our foundation. This was the number as our long-term target. As a result, it was a revolutionary year in our history as well.
In the fiscal year under review, the transaction volume on a quarterly basis showed a relatively stable trend in the previous fiscal year. In the fiscal year under review, the transaction volume remained unchanged until the second quarter, albeit exceeding the level of the previous fiscal year. However, from the third quarter onwards, inventory demand by customers increased due to the impact of resource hikes and the rapid depreciation of the yen from the fourth quarter onward. As a result, all quarters of the fiscal year exceeded the level of the previous fiscal year.

In terms of profits, operating income for the fiscal year under review increased 20.4% from the previous fiscal year to 1.033 billion. A major factor contributing to the increase in operating income was the substantial increase in transaction volume. In the fiscal year under review, the rate of increase in operating income was lower than the rate of increase in transaction volume due to increases in purchasing costs and manufacturing costs associated with soaring resource prices. Ordinary income for the fiscal year under review increased 34.7% from the previous fiscal year to 1.169 billion. The main factors behind this were an increase in operating income, and an improvement in non-operating income and expenses compared to the previous fiscal year due to foreign exchange gains arising from a sharp depreciation of the yen at the end of the fiscal year. Net income attributable to the parent company for the fiscal year under review increased 43.4% from the previous fiscal year to 746 million as a result of an increase in income before income taxes and a decrease in net income attributable to non-controlling shareholders.

The breakdown of major businesses is as follows.
From the first quarter of the fiscal year under review, the Company partially changed the scope of each business. As a result, year-on-year comparisons have been reclassified and compared using the new classification method.

Electronic Materials

In electronic materials, net sales for the fiscal year under review amounted to 2.117 billion yen. Transaction volume increased 28.1% year on year to 13.874 billion as a result of significant growth in barium for electronic materials and dielectric materials on the back of increased demand in the electronic materials market.

Environmental and Performance Materials

Net sales of environmental and functional materials for the fiscal year under review amounted to 4.996 billion. Transaction volume increased 31.4% year on year to 20.918 billion, mainly due to the recovery of barium intermediates and ore for the domestic market, which had been sluggish in the previous fiscal year due to the impact of the new corona viral infectious disease, and growth in sales of denitrification catalysts for China, as well as significant growth in sales of other imported products in the second half of the fiscal year.

Hygienic and Industrial Materials

Net sales of hygiene and industrial materials for the fiscal year under review amounted to 5.619 billion. Despite sluggish growth in industrial materials, transaction volume of diapers and sanitary products reached 10.46 billion yen, an increase of 2.6% compared with the previous fiscal year. In sales of diapers and sanitary products, although a significant increase in demand due to the Corona crisis in the previous fiscal year came to a halt, sales remained steady in the fiscal year under review as well.

The business performances for each segment are as follows.

Domestic Corporation

Segment sales for the fiscal year under review amounted to 10.1 billion.
During the fiscal year under review, transaction volume increased 21.7% year on year to 39.851 billion due to significant growth in environmental and functional materials and electronic materials driven by increases in barium intermediates and barium carbonate, as well as solid performance in hygiene and industrial materials. Operating profit also rose 48.8%, to 745 million, due to a sharp increase in transaction volume.

International Subsidiaries

Segment sales for the fiscal year under review amounted to 2.633 billion.
In the fiscal year under review, sales at the Indonesian manufacturing subsidiary were firm, and increased sales of denitrification catalysts in China and the recovery from the Corona crisis in North America resulted in a 28.7% increase in transaction volume compared with the previous fiscal year to 5.401 billion. On the other hand, operating income fell 19.8% to 292 million due to cost pressures stemming from soaring resource prices at the manufacturing subsidiary in Indonesia.

Issues to Be Handled

Our group has the following action plans to realize the vision of our management plan.

  1. We will focus on new overseas markets and undeveloped fields in order to improve our trade ratio as we work to further expand and deepen our overseas operations.
  2. We will further expand our foreign offices beyond the 8 locations we currently have over a 5 year period, as well as increase our number of personnel (including foreign subsidiary staff) by around 30.
  3. We will treat staff diversity in terms of nationality, gender and age as a source of competitive strength as we work to improve our corporate performance.
  4. We will review our organization and policies in order to encourage ambition and develop our strengths, while promoting human resources that match with the appropriate roles on a global basis.
  5. We will take action to improve our working environment with the aim of being a corporate group that is filled with appeal and energy, while working to raise the motivation of our employees.
  6. We will create value within the chemical product industry that is unique to Sakai Trading, while broadly contributing to society by responding to the needs of our stakeholders.
  7. We aim to improve the quality of our operations through strengthening our corporate governance and internal control system.
  8. We will construct a strong business foundation that can withstand changes to the management environment as we aim towards sustainable growth and raising our corporate value.

To all our valued shareholders, we are grateful and look forward to your continued support and guidance.

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