Dependence on specific industries and small markets, and customers’ overseas relocation

「Against this backdrop, the Group recorded higher revenue because automobile production increased at sites excluding China, while price pass-through and sales of high-value-added products remained firm in Japan and overseas.」

「In the special lubricants division, volumes of hydraulic fluids and die-casting oils declined due to sluggish automotive production, but division revenue exceeded the level of the same period a year earlier as expanded sales of cutting fluids to new customers and increased sales of surface lubricants for hard disks used in data centres offset the decline.」

「Sales volumes of hot-melt adhesives increased on strong demand for hygiene materials, while volumes of materials and synthetic lubricants declined due to lower demand from major customers. Although total sales volumes in the Japan segment were below the year-earlier level, revenue increased following product price adjustments.」

「Volumes of hot-melt adhesives increased on strong sales for hygiene-material applications, while volumes of base materials and synthetic lubricants declined due to lower demand from key customers. Although total sales volumes in the Japan segment were below the year-earlier period, margins improved as product prices were revised. As a result, sales to external customers in this segment were ¥9,966 million, up 3.6% year on year, and segment profit was ¥216 million, up 50.4%.」

「In the Specialty Lubricants segment, domestic automobile production exceeded the previous fiscal year, but volumes fell below the previous fiscal year due to lower production by key customers. As a result, sales to external customers in this segment were ¥19,637 million, up 6.8% year on year, while segment profit fell 96.0% to ¥33 million due to the impact of higher raw-material prices and other factors.」

「In the Specialty Lubricants segment, volumes were broadly in line with the year-earlier period as the decline in die-casting lubricants was offset by recovering demand for fire-resistant hydraulic fluids and expanded sales of cutting fluids. In the Hot-Melt Adhesives segment, volumes exceeded the year-earlier period due to solid performance in the core hygiene-material applications and increased sales from winning new customers in adhesive applications.」

「In the Specialty Lubricants segment, volumes exceeded the year-earlier period as the decline in die-casting lubricants resulting from lower domestic automobile production was offset by recovering demand for high-vacuum pump oils and fire-resistant hydraulic fluids, as well as expanded sales of cutting fluids. As a result, sales to external customers in this segment were ¥9,624 million, up 6.3% year on year, while segment profit declined 74.3% to ¥143 million due to the impact of higher raw-material prices.」

「Against this backdrop, the Group recorded sales of ¥20,415 million, up 13.6% year on year, and operating profit of ¥1,375 million, up 114.5%, supported by the recovery of automobile production in various countries. In addition, ordinary profit was ¥1,732 million, up 164.0%, as foreign exchange gains replaced foreign exchange losses.」

「Against this backdrop, the Group recorded sales of ¥13,366 million, up 17.8% year on year, and operating profit of ¥923 million, up 820.0%, supported by the recovery of automobile production in various countries.」

「With automobile production running 16.7% below the previous period, sales in this division, which is closely linked to automobile and crude steel production, declined.」

「As automobile production in the first half (March to August) declined 30.5% year on year, sales of specialty lubricants, including die-casting lubricants, declined.」

「Affected by operating stoppages and production cuts at automotive-parts manufacturers, its key customers, in various countries, sales were ¥5,884 million, down 13.2% year on year, and operating profit was ¥142 million, down 54.0%.」

「The Specialty Lubricants segment manufactures and sells industrial lubricants, including high-vacuum pump oils, fire-resistant hydraulic fluids, die-casting lubricants, cutting fluids and hot-forging lubricants. These products accounted for 46.3% of total Group sales in the fiscal year ended February 2020.」

「In the automotive industry, the Group's principal area of demand, production volumes have also stagnated in emerging markets such as Southeast Asia and India, in addition to China and the United States.」

「In the automotive industry, the principal area of demand, production volumes in China and the United States have remained stagnant, while production volumes in emerging markets such as Southeast Asia and India, which had previously been solid, have also shown signs of stagnation.」

「The specialty lubricants segment accounted for 45.7% of the Group's total sales in the fiscal year ended February 2019. If demand declines sharply due to an economic downturn or other factors, the segment will be significantly affected by the operating conditions of user industries. In addition, among users of the Company's products, manufacturers, particularly in the automotive and electrical equipment industries, are increasing their overseas production ratios, which may affect demand for the Company's products.」

「The specialty lubricants segment accounted for 45.4% of the Group's total sales in the fiscal year ended February 2017. Because it serves markets in specific fields, the individual markets are small. If demand declines sharply due to an economic downturn or other factors, the segment will be significantly affected by the operating conditions of user industries.」