■Future prospects for Kyokuto Trade ＜8093＞

1. Earnings forecast for the fiscal year ending March 31, 2025

Consolidated financial results for the fiscal year ending 2025/3 are expected to increase 4.2% from the previous fiscal year, operating income to 1200 million yen, up 7.9% from the same period, ordinary profit to 1500 million yen, and net income attributable to parent company shareholders to increase 3.7% to 1200 million yen.

The company's sales and profit have recovered steadily from the effects of the COVID-19 pandemic, but with sales of 45,000 million yen and operating income of 1200 million yen for the fiscal year ending 2025/3, we are aiming to achieve the highest operating profit level ever (1203 million yen for the fiscal year ending 2016/3). Order acceptance forecasts seem to be steady for all three business segments (industrial equipment-related division, industrial materials-related division, and machine parts-related division), and we believe that there is a high possibility that sales and profits will rise depending on the business environment.

2. Business Segment Forecast

(1) Industrial equipment related departments

Sales are expected to increase sales and profits to 12825 million yen, up 4.1% from the previous fiscal year, and gross profit to 3330 million yen, up 7.9% from the same period. In industrial infrastructure-related businesses, the recovery trend continues in the equipment and equipment business for core industries (steel, chemicals, etc.), and the equipment business for overseas plants is also expected to remain steady. Also, sales of the seismic and vibration meter business (seismograph business will begin production of seismometers by the consolidated subsidiary Nippon System Kogyo due to business succession from the fiscal year ending 2023/3) is expected to increase. In the resource/measurement-related business, it is said that orders for bird survey radar systems for wind power generation and measurement/inspection equipment for automobiles will remain stable.

The performance of the industrial equipment related division, which is the core business, has been sluggish for a long time, but it seems that it bottomed out in the fiscal year ending 2023/3. The company also has many positive results in both industrial infrastructure-related businesses and resource/measurement-related businesses, and it is anticipated that overall growth will occur.

(2) Industrial Materials Related Division

Sales are expected to remain generally steady, with sales rising 7.6% from the previous fiscal year to 14160 million yen, and gross profit rising 6.9% to 2100 million yen. In the functional materials-related business, resins and paints for automotive parts, which are the main forces, are expected to remain steady, mainly in the US market. Since the situation is severe due to the decline in Japanese auto parts manufacturers, etc. in China, development of trade areas (new business partners in China, etc.) to complement it is urgent.

Carbon fiber auxiliary materials in the growth field are expected to remain steady due to the recovery of the aircraft industry. The overseas market for carbon fiber (especially North America and China) is tens of times larger than the Japanese market, and the market ranges from the current main aircraft market to new markets (EVs, windmill blades, liquid hydrogen storage tanks, etc.), and high growth is expected. The company is actively developing its business targeting domestic, European and American markets, and anticipates contributing to sales for the fiscal year ending 2025/3 onwards. In lifestyle and environment-related businesses, the impact of exchange rates has been minimized for materials for food, and it is expected to recover due to demodulated demand.

(3) Machine parts related departments

Sales were 18515 million yen, up 1.8% from the previous fiscal year, and gross profit was 4170 million yen, up 2.6% from the same period, and strong sales are expected to continue. In the precision fastener-related business, although there are concerns about the impact of changes in the Chinese economy for industrial machinery, it is expected that the vehicle market will remain steady, mainly for the US and Southeast Asia. Also, in the future, market development and strengthening using the Indian base as a foothold has become an issue. The special spring-related business is focusing on developing new markets, such as overseas and for medical/convenience stores, while the main automobile market is sluggish.

(Written by FISCO Visiting Analyst Keiji Shimizu)