Overseas Market Entry and Strengthening the Operating Environment for the Leather-Related Business

「Sales of leather for apparel and online stores performed steadily, but leather for men's and women's shoes struggled as demand for leather shoes declined. Sales of steering-wheel leather also declined, and profit fell, due to weak demand resulting from China's economic slowdown. As a result, net sales in the leather-related business were ¥5,852 million, down 19.0% year on year, while operating profit and segment profit were ¥167 million, down 20.2%.」

「Sales of leather for steering wheels declined, and profit fell, due in part to lower exports of vehicles to the United States resulting from China's economic slowdown and the impact of U.S. tariff policies. As a result, net sales were ¥3,057 million, down 20.4% year on year, while operating profit and segment profit were ¥81 million, down 41.6%.」

「Sales of leather for both men's and women's shoes remained steady as demand recovered. Sales of leather for steering wheels struggled due in part to China's economic slowdown and temporary production and sales suspensions by automobile manufacturers related to certification irregularities, although costs were reduced through improvements to production processes and other measures. Profit declined significantly due to higher costs for raw materials, materials, freight and labor, including import-related foreign exchange costs. As a result, net sales in the leather-related business were ¥7,227 million, down 4.8% year on year, while operating profit and segment profit were ¥210 million, down 41.5%.」

「Sales of leather for steering wheels were approximately in line with the previous interim consolidated accounting period, despite the impact of China's economic slowdown and production and sales suspensions for automobiles related to the falsified data issue. Sales of leather for both men's and women's shoes performed steadily as demand recovered. Although operating profit benefited from cost reductions achieved through changes to production processes and formulations, it declined due to higher costs for raw materials, materials, freight and labor, including foreign exchange effects. As a result, net sales were ¥3,843 million, up 2.9% year on year, while operating profit and segment profit were ¥139 million, down 11.4%.」

「Demand in the shoes and leather goods division continued to recover as the normalization of economic activity provided support. Profit increased as price revisions improved profitability. Sales in the vehicle division also performed well as the automobile industry recovered. As a result, net sales in the leather-related business were ¥7,593 million, up 3.8% year on year, while operating profit and segment profit were ¥359 million, up 215.6%.」

「Operating profit increased as profitability improved through cost reductions from changes to production processes and formulations, as well as the partial pass-through of higher raw material costs into selling prices. As a result, net sales were ¥5,673 million, up 2.9% year on year, while operating profit and segment profit were ¥258 million, up 648.2%.」

「Sales of leather for both men's and women's shoes showed signs of recovering as activity restrictions were eased, but sales of leather for steering wheels struggled due to China's economic slowdown and supply chain disruptions, while sales of raw hides also declined, resulting in lower sales overall. Operating profit increased as profitability improved through cost reductions from changes to production processes and formulations, as well as the partial pass-through of higher raw material costs into selling prices. As a result, net sales were ¥3,735 million, down 0.4% year on year, while operating profit and segment profit were ¥157 million, up 3,101.2%.」

「Sales of leather for steering wheels struggled partly due to disruptions in the automobile industry's supply chain, while sales of leather for both men's and women's shoes increased as demand showed signs of recovery following the easing of activity restrictions. As a result, net sales were ¥1,804 million, up 8.7% year on year, and operating profit and segment profit were ¥51 million, compared with operating loss and segment loss of ¥7 million in the same quarter of the previous year.」

「As a result, net sales in the leather-related business were ¥7,315 million, up 15.7% year on year, while operating profit and segment profit were ¥113 million, compared with operating loss and segment loss of ¥133 million in the previous consolidated fiscal year.」

「Sales of leather for steering wheels declined because shipments were delayed by the Shanghai lockdown and other factors. Sales of leather for both men's and women's shoes increased as demand showed signs of recovery following the easing of restrictions on activity, but conditions remained difficult because increases in costs including raw materials, processing and import-related foreign exchange costs could not be fully passed through to selling prices. As a result, net sales were ¥5,511 million, up 15.5% year on year, operating profit was ¥34 million, compared with an operating loss of ¥65 million in the same quarter of the previous year, and segment profit was ¥34 million, compared with a segment loss of ¥95 million.」

「Sales of leather for both men's and women's shoes increased, as demand for leather shoes showed signs of recovery, resulting in higher sales and profit. Sales of leather for steering wheels declined because shipments were delayed by the Shanghai lockdown, and profitability continued to struggle as higher costs including raw materials, processing and import-related foreign exchange costs could not be fully passed through. As a result, net sales were ¥3,752 million, up 16.5% year on year, operating profit was ¥4 million, compared with an operating loss of ¥74 million in the same quarter of the previous year, and segment profit was ¥4 million, compared with a segment loss of ¥94 million.」

「海寧日皮皮革有限公司, which was one of the Company's overseas consolidated subsidiaries, ceased manufacturing leather products in December 2021, and its liquidation was completed on 1 July 2022.」

「Sales of leather for vehicles showed signs of recovery as automobile production recovered, but profitability became extremely challenging due to soaring global raw material prices. As a result, net sales in the leather-related business were ¥6,324 million, up 22.2% year on year, operating loss was ¥133 million, up 107.7%, and segment loss was ¥133 million, up 3.9%.」

「Sales of leather for both men's and women's shoes showed signs of recovery after the lifting of the state of emergency declaration, although demand for leather shoes remained weak. Sales of leather for steering wheels also recovered and began to increase in volume, but profitability remained difficult because rising costs including raw materials, processing and foreign exchange costs could not be passed through. As a result, net sales were ¥4,771 million, up 25.6% year on year, operating loss was ¥65 million, up 324.2%, and segment loss was ¥95 million, up 50.3%.」

「Although sales volumes of leather for steering wheels recovered and began to increase, the business struggled because rising costs, including raw materials, processing and foreign exchange costs, could not be passed through. As a result, net sales were ¥3,221 million, up 30.3% year on year, operating loss was ¥74 million, up 595.6%, and segment loss was ¥94 million, up 120.4%.」

「Sales of leather for both men's and women's shoes remained at approximately the previous fiscal year's level, as store operating rates remained low and demand for leather shoes stagnated, partly due to the reissuance of a state of emergency declaration. Sales of leather for steering wheels struggled because, although volumes increased, higher costs including processing costs could not be passed through. As a result, net sales were ¥1,652 million, up 37.5% year on year, operating loss was ¥23 million, up 166.2%, and segment loss was ¥33 million, up 34.5%.」

「In the shoes and leather goods division, demand, including for the core product of leather for men's shoes, fell sharply amid restrictions on going out and the spread of teleworking during the COVID-19 pandemic, resulting in extremely difficult conditions. In the vehicle division, sales declined substantially as automobile manufacturers significantly reduced production due to the closure of automobile plants following infection-related lockdowns, production adjustments caused by delays in air and sea transport amid travel restrictions, and other factors. As a result, net sales in the leather-related business were ¥5,174 million, down 45.9% year on year, operating loss was ¥64 million, and segment loss was ¥128 million.」

「Sales of leather for shoes stagnated as demand for leather shoes for both men and women fell sharply due to fewer opportunities to go out, weaker consumer spending and lower store operating levels. Although the Chinese market for leather for automobile steering wheels had nearly recovered, the domestic market declined due to reduced automobile production and other factors. As a result, net sales were ¥3,797 million, down 47.7% year on year, operating loss was ¥15 million, compared with operating profit of ¥291 million in the same quarter of the previous year, and segment loss was ¥63 million, compared with segment profit of ¥244 million.」

「Sales of leather for shoes stagnated as demand for leather shoes fell sharply amid changes in lifestyles, including calls to refrain from going out and the spread of teleworking. Although the Chinese market for leather for automobile steering wheels had nearly recovered, the domestic market declined due to reduced automobile production and other factors. As a result, net sales were ¥2,473 million, down 50.6% year on year, operating loss was ¥10 million, compared with operating profit of ¥194 million in the same quarter of the previous year, and segment loss was ¥42 million, compared with segment profit of ¥163 million.」

「Sales of leather for shoes stagnated as demand for leather shoes fell sharply amid changes in lifestyles, including calls to refrain from going out and the spread of teleworking. Leather for automobile steering wheels also declined due to reduced automobile production amid the COVID-19 pandemic. As a result, net sales were ¥1,202 million, down 52.7% year on year, operating loss was ¥8 million, compared with operating profit of ¥98 million in the same quarter of the previous year, and segment loss was ¥24 million, compared with segment profit of ¥83 million.」

「In the shoes and leather goods division, sales of men's shoes performed steadily, but leather for women's shoes, imported shoes and leather for soles struggled amid weakening demand. In the vehicle division, sales of cut materials and chemicals to major customers performed steadily, but sales of crust leather declined under the impact of China's economic slowdown. In the fourth quarter, sales also declined due in part to the spread of COVID-19. As a result, net sales in the leather-related business were ¥9,569 million, down 11.7% year on year.」

「Sales of imported raw hides and processing of shoe materials remained steady, but sales of imported shoes and leather for shoes struggled amid weakening demand. Leather for automobile steering wheels also declined under the impact of China's economic slowdown. As a result, net sales were ¥7,257 million, down 12.1% year on year, operating profit was ¥291 million, down 5.3%, and segment profit was ¥244 million, down 9.2%.」

「Leather for shoes, imported raw hides and processing of shoe materials performed steadily, but leather for automobile steering wheels declined under the impact of economic slowdowns in Japan and China. As a result, net sales were ¥5,009 million, down 7.5% year on year, operating profit was ¥194 million, down 5.1%, and segment profit was ¥163 million, down 9.3%.」

「Leather for shoes, imported raw hides and processing of shoe materials performed steadily, but leather for automobile steering wheels struggled under the impact of the economic slowdown in China. As a result, net sales were ¥2,544 million, down 4.9% year on year, operating profit was ¥98 million, down 5.6%, and segment profit was ¥83 million, down 9.0%.」

「In April 2018, NIPPI (THAILAND) CO.,LTD. was established in Bangkok, Thailand, to expand the Group's business, centered on leather for automobile steering wheels, in Thailand and neighboring Southeast Asian countries.」

「Processing of leather for automobile steering wheels and shoe materials performed well, but imported raw hides, imported shoes and leather for shoe soles declined. Margins on leather for steering wheels also declined following price revisions under contracts.」

「Sales of leather for automobile steering wheels and processed products performed steadily, but margins declined due to price revisions and other factors. Sales of leather for shoes also performed steadily, while sales of imported raw hides to domestic tanners declined. As a result, net sales were ¥5,417 million, up 0.4% year on year, operating profit was ¥205 million, down 13.4%, and segment profit was ¥180 million, down 16.9%.」

「Although sales of imported raw hides declined, leather for men's shoes and leather for automobile steering wheels performed steadily. As a result, net sales were ¥2,675 million, up 1.2% year on year, operating profit was ¥104 million, up 11.2%, and segment profit was ¥91 million, down 10.9%.」

「Meanwhile, the vehicle division performed steadily as it focused on selecting quality-stable crust leather for major customers. In addition, sales and operating profit increased because 日皮(上海)貿易有限公司 and 海寧日皮皮革有限公司, the Company's overseas subsidiaries, were included in the scope of consolidation from the current consolidated fiscal year. As a result, net sales in the leather-related business were ¥11,308 million, up 19.2% year on year, and operating profit was ¥557 million, up 100.7%.」

「Leather for men's shoes performed steadily, but leather for women's shoes continued to struggle, while sales of both domestically produced and imported shoes declined. Sales and operating profit from leather for automobile steering wheels both increased because 日皮(上海)貿易有限公司 and 海寧日皮皮革有限公司, the Company's overseas subsidiaries, were included in the scope of consolidation from the first quarter. As a result, net sales were ¥8,325 million, up 17.0% year on year, operating profit was ¥354 million, up 60.9%, and segment profit was ¥323 million, up 85.4%.」

「Sales of leather for automobile steering wheels increased because 日皮(上海)貿易有限公司 and 海寧日皮皮革有限公司, the Company's overseas subsidiaries, were included in the scope of consolidation from the first quarter. As a result, net sales were ¥5,396 million, up 10.7% year on year, operating profit was ¥237 million, up 53.9%, and segment profit was ¥216 million, up 75.8%.」

「In addition, 日皮(上海)貿易有限公司 and 海寧日皮皮革有限公司, the Company's overseas subsidiaries, have been included in the scope of consolidation from the first quarter of the current consolidated fiscal year, as they are expected to play an important role in the handle leather business as it expands from a domestic focus to an overseas focus, and their significance in terms of total assets, net sales, net income and retained earnings is expected to increase.」

「The automotive division also worked on providing technical guidance to factories of overseas partner companies that serve as cutting and sewing bases, with the aim of increasing sales volumes in markets including ASEAN and emerging markets.」

「Automotive leather sales declined, mainly due to trilateral trade. Men's shoe leather performed steadily, but women's shoe leather continued to struggle. However, profit margins improved as raw material prices stabilized. As a result, sales were ¥7,115 million, down 18.1% year on year, operating profit was ¥220 million, up 2.0%, and segment profit was ¥174 million, up 3.0%.」

「Men's shoe leather performed steadily, but women's shoe leather continued to struggle. Automotive leather sales declined, mainly due to trilateral trade. However, profit margins improved as raw material prices began to stabilize.」

「The automotive division aims to increase sales volumes by strengthening its business environment through sales cooperation with overseas distributors and technical guidance for overseas factories, in order to enter markets with growth potential, including Southeast Asia and emerging markets.」