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Performance review and future efforts

On February 10, 2021, we published a financial result for the first quarter of the fiscal year ending September 2021.   

The followings are detailed result and our future efforts.

About the first quarter (of the fiscal year ending September 2021) in the 19th period

 As for Japan’s economy during the first quarter of the consolidated fiscal year, market for inbound visitors remained almost vanished, but personal consumption rebounded due to step-by-step lifting of the state of emergency in late May of 2020 and effects of political measures such as the “Go To” campaign. However, the future of Japan’s economy is still unclear because the third wave of COVID-19 causes business failures and unemployment to increase and the state of emergency declared on January 7 was extended until March 7. As a result, we posted a lower-than-expected profit, but we have been implementing active measures suited for characteristics of each group company aiming at business recovery. The performance largely exceeded previous year’s results because of the cost improvement project in which the entire company participated.

 From the above result, our business performance of the first quarter of this consolidated fiscal year was 478,214,000 yen in sales (increase of 10.9% compared to the first quarter of the previous year), while the operating loss was 39,349,000 yen (operating loss in the first quarter of the previous year was 93,811,000 yen), the ordinary loss was 41,301,000 yen (ordinary loss in the first quarter of the previous year was 96,740,000 yen), and the net loss in this period attributable to shareholders of the parent company was 44,733,000 yen (the net loss attributable to shareholders of the parent company in the first quarter of the previous year was 98,894,000 yen).  

 

■ Communication sales business

The sales of the communication sales business was 350,653,000 yen (increase of 30.8% compared to the first quarter of the previous year) and the loss by segment was 601,000 yen (loss by segment in the first quarter of the previous year was 83,356,000 yen). Although there is a loss by segment, the performance increased significantly compared to the first quarter of the previous year.

 As for the future measures, we aim at enlarging revenue by rebuilding sales system to gain more repeat and regular customers, dealing with the customers who haven’t done business with us for a certain time, and encouraging cross sell, based on new customer acquisition by strengthening web promotion. Making new customers acquired on the web into fixed customers is also making gains. Building the sales organizational structure which clarified each role realized restoration of profitability in December. In order to expand overseas sales channel, we used Chinese SNS “RED” and “Weibo” and gained about 25,000 followers in a short time. We also started business in Vietnam and now considering open our store in “Lazada”, a cross-border e-commerce site.

 

■ Cosmetics wholesale business

 The sales of cosmetic wholesale business has the impact of COVID-19 pandemic such as loss of inbound demand, and the sales was 97,952,000 yen (loss of 33.4% compared to the first quarter of the previous year) and the loss by segment was 35,970,000 yen (loss by segment in the first quarter of the previous year was 4,374,000 yen), which were lower than the first quarter of the previous year.

 Although we strived for domestic sales recovery and expansion of e-commerce by strengthening advertising and sales promoting activities to find new customers, the impact of COVID-19 pandemic was severe, causing significant decrease in domestic wholesale performance compared to the previous year. However, overseas sales which started last year largely surpassed the previous year sales and we received additional orders in W11 and W12, the big events in China.

 

■ Hygiene consulting business

 The sales of hygiene consulting business was 29,909,000 yen (increase of 75.5% compared to the first quarter of the previous year) and loss by segment was 7,431,000 yen (loss by segment in the first quarter of the previous year was 14,499,000 yen). Although there is a loss by segment, the performance increased significantly compared to the first quarter of the previous year.

  As for the future measures, we will work with major companies and increase agents and focus on expanding sales of “DevirusAC” (space sterilization device). As we have been disclosing actively, sales have expanded steadily; verification of using chlorous acid water “Klorus sterilization water” for sterilization during surgery of Holstein cow in Hokkaido was started by Hokkaido University, we provided infectious disease prevention solutions for tourism in Monbetsu city in Hokkaido, healthcare facilities operated by Kameyama city in Mie Prefecture, and major tutoring school. To deal with such sales expansion, we opened a new plant to manufacture dilution water in December 15, 2020. However, as to boosting potential demand for hygiene service in restaurants and food factories, which is our origin, recovery of restaurants seems to take time due to impact of COVID-19 pandemic.

 

 

About our future efforts

 As described in “Notice of information about new shares issued as a result of third-party allotment and 15th solicitation of share options for subscription” announced on June 12, 2020, we raised 1 billion yen fund for our group’s growth strategy, and as in “News of our growth strategy” announced on June 25, we have already invested in strengthening of web marketing of our leading brand “FAVORINA” and speeding up in establishment of hygiene consulting business. We will focus more on M&A toward start-up business to enhance our group’s value.

 Assuming that the impact of COVID-19 pandemic on our company group business will last this period, our future efforts are as follows:

 The communication sales business will restore profitability within this period by focusing on web promotion and exhibiting new products which is under development.

 The cosmetic wholesale business will improve performance by exhibiting our new product “Medicated White Clear Gel” in drug stores, and by using Instagrammers and Youtubers as the new measure to strengthen appeal to exfoliating market.

 The hygiene consulting business will restore profitability within this period by focusing sales of much-needed “DevirusAC” (space sterilization device) and HACCP app for restaurants which has been developed as scheduled.

 Our business forecast for the fiscal year ending September 2021 is 2,755,000 yen in sales (increase of 40.0% compared to the same period of the previous year), 159,000,000 yen in business profit (business loss in the same period of the previous year was 397,831,000 yen), 152,000,000 yen in ordinary profit (ordinary loss in the same period of the previous year was 405,855,000 yen), and 123,000,000 yen of the net profit attributable to shareholders of the parent company (the net loss attributable to shareholders of the parent company in the same period of the previous year was 464,829,000 yen).
 The forecast shown above has been created based on information available on the day of announcement of this material and actual performance results may differ from expected figure due to various factors.

 Moreover, we will make a commitment to our business to resume dividends as soon as possible.


February 2021

 

Financial highlights

Change of business records

Amount of sales

The 13th The 14thThe 15thThe 16thThe 17thThe 18th
2,3734,3112,6682,2481,9581,967

(Unit: one million yen)

Business profit/sales ratio

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
Business profit8727711137△231△397
Sales ratio3.76.44.21.7△11.8△20.2

(Unit: one million yen/%)

Ordinary profit/sales ratio

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
Ordinary profit7726016125△226△405
Sales ratio3.26.06.01.1△11.6△21

(Unit: one million yen/%)

Net income attributable to owners of the parent/sales ratio

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
Net income
attributable to
owners of the parent
31122200△45△367△464
Sales ratio1.32.87.5△2.0△18.8△23.6

(Unit: one million yen/%)

Change of financial condition

Gross asset

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
2,8823,2113,2683,1132,5802,026

(Unit: one million yen)

Net asset

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
1,1621,2821,4781,4341,037673

(Unit: one million yen)

Own capital/gross asset ratio

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
Own capital1,1521,2741,4741,4281,031663
Gross asset ratio40.039.745.145.940.032.7

(Unit: one million yen/%)

Change of cash flow

Cash flow from business operations

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
△14424424093△186△233

(Unit: one million yen)

Cash flow from investments

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
△591344166△12444

(Unit: one million yen)

Free cash flow ※1

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
△735248284260△311△188

(Unit: one million yen)

Cash flow from financial activities

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
623133196△156△177△99

(Unit: one million yen)

Cash and cash equivalents at end of year

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
7241,1031,5861,6901,201969

(Unit: one million yen)

Information per share

Net profit per share

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
4.7917.4929.21△6.67△54.08△68.02

(Unit: yen)

PER ※2

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
53.419.815.6

(Unit: times)

Net asset per share

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
167.76185.56214.75208.04152.1594.99

(Unit: yen)

PBR ※2

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
1.51.82.12.83.24.8

(Unit: times)

Others

Total number of issued shares ※3

(Unit: share)






















The 13th The 14th The 15th
6,973,470 6,973,470 6,973,470
The 16th The 17th The 18th
6,973,470 6,973,470 7,175,570

Number of employees ※4

The 13thThe 14thThe 15thThe 16thThe 17thThe 18th
1171101011039995

(Unit: people)

※1 Free cash flow is calculated as “cash flow from business operations + cash flow from investments”
※2 PER and PBR are calculated from the market price at the end of each fiscal year.
※3 Total number of issued shares at the end of each fiscal year (including treasury shares)
※4 Temporary employees are not included.

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