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The most recent financial results and earnings forecast, graphs of selected financial and non-financial data, and ESG information

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Latest Results and Forecast

Latest Results

<Consolidated Financial Results for the Nine Months Ended September 30, 2020 (January 1, 2020 to September 30, 2020)>

The Company finalized the provisional accounting treatment relating to business combinations carried out during the nine months ended September 30, 2019 at the end of the fiscal year ended December 31, 2019. As a result, the financial figures for the nine months ended September 30, 2019 have been adjusted to reflect the finalized provisional accounting treatment, and year-on-year comparisons were made with figures adjusted retroactively.
During the nine months ended September 30, 2020, consolidated revenue of the Company and its group companies (collectively, the “Group”) increased by 13.6% from the corresponding period of the previous year (the “previous year”) to ¥562,294 million due to the conversion of Australian paint manufacturer DuluxGroup Limited and Turkish paint manufacturer Betek Boya ve Kimya Sanayi Anonim Sirketi into subsidiaries. Consolidated operating profit decreased by 4.6% from the previous year to ¥63,314 million due to the absence of insurance income recorded for the Japan segment in the previous year and the impact of the COVID-19 pandemic on all Group businesses. Consolidated profit before tax decreased by 3.4% from the previous year to ¥63,572 million, and profit attributable to owners of the parent company decreased by 3.0% from the previous year to ¥31,637 million.

Earnings Forecast

FY2020 Forecast

(Billion yen)


FY2019
Actual
FY2020
Forecast
YoY
(Amount)
YoY
(%)
Revenue692.0760.0
68.09.8%
Operating profit78.176.0
-2.1-2.7%

Assumptions for earnings forecast

COVID impact easing globally but the risk of market deterioration remains in some regions due to the resurgence of new cases. Still difficult to reasonably estimate final demand but updated FY2020 guidance to reflect strong 3Q earnings

Various Assumptions for the FY2020 Forecast

NIPSEA China (0%~+5% YoY)

  • Decorative (DIY)
    0%~+5% YoY; Improved Chinese consumer post COVID. Demand recovery for repainting existing houses following lifting of restrictions on entry to repainting sites. The momentum will extend to Q4. Expected full-year revenue to register single digit growth
  • Decorative (PRJ)
    +15%~+25% YoY; New construction project from Northern and Western region. Focus and strengthen partnership in key and strategic customers and wider product range in project. Steady growth to continue into 4Q due to sales driven activities, although sharper growth seen in 2Q and 3Q unlikely. Full-year revenue to exceed August assumptions
  • Automotive
    -5%~-10% YoY; 1H decrease to be offset by car production recovery from 3Q onwards. Full-year revenue to recover to prior-year level

Asia Excepting for NIPSEA China (-10%~-15% YoY)

  • Automotive
    -25%~-30% YoY; 4Q gradually recover, but given large COVID impact up till 3Q, forecast for decrease in full-year revenue remained unchanged
  • Decorative
    -5%~-10% YoY; Recovery to progress in 2H at a pace varying from country to country but in line with August assumptions. Full-year growth forecast unchanged. Note that Malaysia requires attention with lockdowns back in place in some areas in October

Japan (-10%~-20% YoY)

  • Automotive
    -20%~-30% YoY; A smaller revenue decline due to slightly stronger recovery of auto market compared to August assumptions
  • Decorative
    -5%~-10% YoY; Lower revenue projected despite measures aimed at market share gains, due to slow recovery from COVID, a long rainy season and typhoons in 3Q
  • Industrial
    -10%~-20% YoY; Market deterioration projected due to expanded and prolonged COVID impact in line with August assumptions. Partial market recovery expected but forecast unchanged

Oceania (for reference: around +10% YoY)

  • Full-year forecast upwardly revised based on high COVID enhanced home improvement activity continuing longer than assumed in August. Investment in marketing and growth initiatives planned in 4Q

Americas (-5%~-10% YoY)

  • Automotive
    -20%~-25% YoY; 3Q production increased as assumed in 2Q due to low inventory at customers, but the market slowdown remains a cause for concern after the inventory build-up ends in 4Q. The full-year forecast revised
  • Decorative
    0%~+10% YoY; Favorable market to continue, with housing market underpinned by easing of COVID restrictions and government’s stimulus measures. But with concerns about resurgence of COVID infections in 4Q, August assumptions are unchanged

Other

  • Automotive
    -20%~-30% YoY; Modest recovery to continue in 4Q in line with August assumptions, but YoY revenue decrease forecast is unchanged due to soft market
  • Betek Boya
    (For reference: +30%~+40% YoY)
    Previous full-year forecast: Revenue: \31.0 bn; Operating profit: \2.6 bn (Calculated by applying exchange rate as of financial results announcement in August/Before PPA depreciation)
    Current forecast: Revenue: \32.0 bn; Operating profit: \4.0 bn (Calculated by applying exchange rate as of financial results announcement in November/Before PPA depreciation)
    Higher demand in every business compared to August assumptions, combined with effects of sales promotion activities. A slight downturn expected in 4Q but the August forecast was increased

Raw materials costs

  • Assumption for naphtha price in Japan kept unchanged from August assumptions at ¥34,000 for 4Q

*Figures are in local currencies

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