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Performance review and future efforts

On November 13, 2020, we published a financial result for the fiscal year ending September 2020.

The followings are detailed result and our future efforts.

About the 18th period (the fiscal year ending September 2020)

During the consolidated fiscal year, consumer confidence dropped due to consumption tax rise enforced from October 1, 2019, and the government declared the state of emergency on April 7, 2020 to prevent the spread of COVID-19. The state of emergency was officially lifted for all of Japan on May 25 and the number of COVID-19 patients seemed to come down but increased again after June. Furthermore, recovery of managerial environment is still slow, and the situation is unstable. On July 2, the Cabinet Office significantly revised down the forecast of the real economic growth rate in 2020 to minus 4.5% (estimated to be plus 1.4% at the beginning of 2020).
In our cosmetic industry, customer needs for cosmetics have been changing dramatically due to the shift to new lifestyle due to COVID-19 pandemic, and a sharp decline of foreign tourists caused heavy damage to the cosmetic market for inbound visitors, making the environment surrounding us severer.
Although we implemented active measures suited for characteristics of each group company to move into black under such condition, we posted a lower-than-expected profit with a strong influence from COVID-19 pandemic.

 

From the above result, our business performance of this consolidated fiscal year was 1,967,541,000 yen in sales (decrease of 0.5% compared to the same period of the previous year), while the operating loss was397,831,000 yen (operating loss in the same period of the previous year was 231,570,000 yen), the ordinary loss was 405,855,000 yen (ordinary loss in the same period of the previous year was 226,653,000 yen), and the net loss in this period attributable to shareholders of the parent company was 464,829,000 yen (the net loss attributable to shareholders of the parent company in the same period of the previous year was 367,918,000 yen). 

 

■ Communication sales business

The sales of the communication sales business was 1,335,553,000 yen (increase of 4.0% compared to the same period of the previous year), but the loss by segment was lower-than-expected 1,335,553,000 yen (loss by segment in the same period of the previous year was 258,283,000 yen).
The spread of COVID-19 had higher impact than expected and has brought us into a very severe condition, causing pullbacks in existing customer spending and postponements of transactions with wholesalers, which are our new sales channel. However, by shifting focus from promotion via radio ads based on telephone marketing to web promotion which has become the dominant trend, new customer acquisition greatly exceeded the previous year and the component ratio of sales on website expanded to 50% of total sales. As a result, the sales exceeded previous year’s results.
Nevertheless, increase in advertisement and promotion costs to strengthen web promotion, succession cost of ANYTHINGWHITE which is expected to serve as the third brand, prior investment to develop new products like “BB EXIT” and “REDREST”, and impairment loss on discontinued products caused loss by segment.

 

■ Cosmetics wholesale business

The sales of cosmetic wholesale business was 584,237,000 yen (decrease of 13.6% compared to the same period of the previous year), and loss by segment was 35,435,000 yen (in the same period of the previous year, segment margin was 115,231,000 yen).
As for domestic wholesale, the Electronic Transactions Law of the People’s Republic of China enforced from January 1, 2019 and COVID-19 pandemic caused drastic decrease of demand of foreign tourists. In addition, restriction of business activities such as voluntary suspension of business of retail stores and a ban on visiting stores to prevent infection resulted in sharply decreased sales compared to the previous year. On the other hand, domestic EC sales, which have been concentrating on since the previous period, achieved robust growth in revenue compared to the previous period and overseas sales reached 100 million yen even we had no overseas business record in the previous period, but the amount of decrease in domestic sales revenue cannot be supplemented even if domestic EC sales and overseas sales are added together, resulting sales lower than the previous year.
There are effects from impairment loss on discontinued products but decrease in sales directly influences loss by segment.

 

■ Hygiene consulting business

The sales of hygiene consulting business, which became a consolidated subsidiary from this period, was 49,193,000 yen and loss by segment was 46,464,000 yen.
Since the Food Sanitation Law was revised in June 2020, activities to enhance recognition degree like holding seminars, actively participating with exhibitions, and being adopted by “Fukuoka Growth Next”, have been focused. We hired staff to prevent opportunity loss because active PR activities generate strong demand, but seminars and exhibitions were completely called off and restaurants were temporarily closed down due to the spread of COVID-19, so we had no choice but to shelve sales activities, resulting in sales and loss by segment lower than planned.
However, we had many inquiries about “DevirusAC” (space sterilization device released in April) because of rising awareness of hygiene and sterilization, and its nationwide sales have been increasing steadily through established major trading form as an agent.

 

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 and “News of our growth strategy” announced on June 25, we raised funds for our group’s growth strategy and will focus more on web marketing, speeding up establishment of hygiene consulting business, and 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 not cease in the next period, our future efforts are as follows:

The communication sales business will increase sales by focusing on web promotion, as well as developing organizational structure with precise distribution of roles and expanding overseas sales.

The communication sales business will increase sales by focusing on web promotion, as well as developing organizational structure with precise distribution of roles and expanding overseas sales.

The cosmetic wholesale business will increase sales by stimulating demand for exfoliating with our new product “Medicated White Clear Gel”, as well as strengthening domestic EC sales and overseas sales.

The hygiene consulting business will increase sales by sterilization of office space collaborating with major companies, development of total solution for event facilities where we have had sufficient results and supervising of HACCP app for restaurants.

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.


November 2020

 

Financial highlights

Change of business records

Amount of sales

The 13th The 14thThe 15thThe 16thThe 17th
2,3734,3112,6682,2481,958

(Unit: one million yen)

Business profit/sales ratio

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

(Unit: one million yen/%)

Ordinary profit/sales ratio

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

(Unit: one million yen/%)

Current net profit/sales ratio

The 13thThe 14thThe 15thThe 16thThe 17th
Current net profit31122200△45△367
Sales ratio1.32.87.5△2.0△18.8

(Unit: one million yen/%)

Change of financial condition

Gross asset

The 13thThe 14thThe 15thThe 16thThe 17th
2,8823,2113,2683,1132,580

(Unit: one million yen)

Net asset

The 13thThe 14thThe 15thThe 16thThe 17th
1,1621,2821,4781,4341,037

(Unit: one million yen)

Own capital/gross asset ratio

The 13thThe 14thThe 15thThe 16thThe 17th
Own capital1,1521,2741,4741,4281,031
Gross asset ratio40.039.745.145.940.0

(Unit: one million yen/%)

Change of cash flow

Cash flow from business operations

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

(Unit: one million yen)

Cash flow from investments

The 13thThe 14thThe 15thThe 16thThe 17th
△591344166△124

(Unit: one million yen)

Free cash flow ※1

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

(Unit: one million yen)

Cash flow from financial activities

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

(Unit: one million yen)

Cash and cash equivalents at end of year

The 13thThe 14thThe 15thThe 16thThe 17th
7241,1031,5861,6901,201

(Unit: one million yen)

Information per share

Net profit per share

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

(Unit: yen)

PER ※2

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

(Unit: times)

Net asset per share

The 13thThe 14thThe 15thThe 16thThe 17th
167.76185.56214.75208.04152.15

(Unit: yen)

PBR ※2

The 13thThe 14thThe 15thThe 16thThe 17th
1.51.82.12.83.2

(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  
6,973,470 6,973,470  

Number of employees ※4

The 13thThe 14thThe 15thThe 16thThe 17th
11711010110399

(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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