Daiki Axis Co., Ltd. (4245, Section 1, Tokyo Stock Exchange) Overview of operating performance for the first three months ended March 31, 2021


TOKYO, June 11, 2021 / PRNewswire / – During the three months ended March 31, 2021, net sales increased while profits declined. In the meantime, the Company has formulated its new medium-term management plan, “PROTECT × CHANGE” and pursues its corporate mission of “Protecting the environment and changing the future”.

Summary of Findings

The business environment around the Company remained gloomy during the three months ended March 31, 2021 due to the impact of the COVID-19 pandemic.

In these circumstances, in February 2021, the Company formulated “PROTECT × CHANGE”, a new medium-term management plan extending from the financial year ending December 31, 2021 until the end of the exercise December 31, 2023. The title of the plan, which simultaneously serves as the corporate slogan of the Company, also represents the main theme of the plan. All Group employees will familiarize themselves with and strive to embody this corporate theme and slogan as the Group advances its corporate mission of “protecting the environment and changing the future” on a unified front. .

In formulating this new medium-term management plan, the Company only calculated quantitative targets on an annual basis due to the impact of the COVID-19 pandemic. At the same time, the qualitative objectives of the plan follow those of the Company’s previous medium-term management plan and remain focused on promoting growth strategies for the future. More specifically, in the environmental equipment segment, the Company will promote business development abroad while developing its activities as a recurring revenue energy service company (ESCO) in the areas of maintenance and water. At the same time, in the household equipment business segment, the Company will launch an e-commerce activity with the aim of moving from stable activity to growth. In the renewable energy segment, the Company will lead initiatives aimed at achieving a recycling-oriented society, strengthening its ability to ensure stable profits and to design high value-added businesses and products for post-conclusion conditions. the feed-in tariff (FIT) application of the system. In terms of overall initiatives, the Company will strengthen its internal organizations to support the successful implementation of IT strategies and apply IT as a tool for improving productivity.

Revenue generated during the three months ended March 31, 2021 amounted to JPY 9,878 million (up 3.0% year-on-year). At the end of the six-month period ending June 30, 2020, the Company sold the subsidiary DAD Co., Ltd., which operated a civil engineering business. As a result, the gross profit amounts to 2,041 million JPY (against 2,042 million JPY during the three-month period ended March 31, 2020) while the operating result amounted to 449 million JPY (down 10.5% over one year), recurring result JPY 495 million (down 8.9% year-on-year), profit before tax JPY 498 million (up 8.7% year-on-year) and profit attributable to owners of parent company JPY 277 million (down 1.4% year-on-year).

In the environmental equipment segment, sales of wastewater treatment systems are increasing year by year. Domestic sales increased thanks to an increase in orders for large-scale projects that occurred despite a drop in demand for capital investment caused by the COVID-19 pandemic. Foreign sales continued to be impacted by the deterioration in business conditions resulting from the pandemic. When it comes to recurring revenue businesses, performance associated with Johkasou / wastewater treatment systems and maintenance has been stable year over year, while sales generated by energy service companies ( ESCO) in the field of water services decreased year over year mainly due to a decrease in the number of customers water consumption. Therefore, sales in the environmental equipment segment amounted to JPY 5,172 million (up 2.6% year-on-year) while segment profit was JPY481 million (down 3.9% year-on-year).

In the home equipment business segment, construction-related sales increased significantly thanks to the upward impact of large-scale projects primarily involving environmentally friendly products, such as as cooling systems for gyms and home improvement renovations. Housing projects were impacted by a cautious shift in demand for capital investment, and associated sales declined overall, as lower sales related to agricultural greenhouses and sales generated by repair exterior walls offset an increase in sales of refrigeration and freezer equipment that occurred due to the impact of large-scale projects. During the three month period ended March 31, 2020, sales of retail products made in DIY stores have been affected by delays in shipping products from manufacturers, caused by circumstances associated with the COVID-19 pandemic and resulting in delivery delays. However, the supply of these products has not encountered such obstacles during the three months ended. March 31, 2021, and the corresponding sales have increased considerably. In the CE sector, field surveys targeting end users and other sales activities have been delayed by the pandemic. As a result of these factors, the revenue of the home equipment business segment amounted to 4,363 million yen (up 9.5% year-on-year) while segment operating income stood at JPY197 million (up 59.8% year-on-year).

In the renewable energies segment, through its solar energy sales activity, the Company has been renting space on the roofs of DCM Group stores since fiscal year 2018. In this space, it has built electricity production facilities and sold electricity under a feed-in tariff system (FIT). From March 31, 2021, the Company has interconnected with 130 external power sources (compared to 126 at the March 31, 2020) and the corresponding sales have been increasing year by year. Sales in the biodiesel and compact wind power generation sectors were almost stable year over year. Despite the overall increase in segment sales, operating profit declined primarily because the Company recorded JPY 7 million costs associated with repairing solar energy installations. Therefore, sales in the renewable energy segment amounted to JPY183 million (up 11.6% over one year) while segment operating income stood at JPY29 million (down 1.9% year-on-year).

In other segments, engineering business sales declined significantly year over year due to the sale of DAD Co., Ltd., which was completed at the end of the half year ended. June 30, 2020. In the domestic drinking water business, sales were sustained thanks to an increase in the number of contracts for water distributors directly connected to the water supply networks. Due to these factors, sales generated in other segments amounted to JPY158 million (down 60.4% year-on-year) while operating income from other segments stood at JPY28 million (down 55.1% year-on-year).

Daiki Axis Co., Ltd. (4245, first section, TSE http://www.daiki-axis.com/english/)
“Summary of consolidated financial results for the three months ended March 31, 2021“is available here:
→https://www.daiki-axis.com/ir/library/#

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SOURCE Daiki Axis Co., Ltd.


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