Message from Our President
Let me begin my message by expressing my deepest gratitude to all stakeholders who have been steadfast in their support for Mandom Corporation.
Problems abound in societies around the globe at present. Environmental destruction and climate change are becoming increasingly more serious issues for us all. The economic growth model has changed. Then, the COVID-19 pandemic arrived to create innumerable difficulties. Social uncertainties have been further compounded. This is the context in which businesses are expected to respond by overhauling their business models.
Consumers now have more time to rethink their lifestyle and their own existence, which has led to a big shift in their perceptions and behavior. Businesses can no longer offer them new value by merely coasting along the lines of old and established values.
So what do businesses have to do now? We must justify our own purpose and role. We must provide contributions to society. Faced with these changes in society, what then does Mandom have to do? We must put our management mission into practice and serve society as a human-oriented company. We must try and deliver more Dedication to Service (Oyakudachi) to our customers, today and tomorrow. We must provide original and unique values that match the trends of the new era in a way that only Mandom can in the realms of health, cleanliness, beauty and fun.
We started the current fiscal year in April 2021 by launching our 13th Mid-Range Planning (MP-13). Our previous mid-range plan, MP-12 had focused on infrastructure development. In MP-13, we moved onto the theme of Reformation and Challenges. We are unwavering in our resolve to adapt to and tackle all the challenges of the new era that has opened up before us. We are working under a brave new framework to realize our VISION 2027. All the more so because we face such challenging times of turbulence, we must redefine our baseline, of providing our customers with health, cleanliness, beauty and fun. We must not be trapped in the old business model. We must embrace Innovation and Challenge. For this purpose, all Mandom members will unite and concert our effort in creating new values, delivering them to all our customers.
We are committed to giving satisfaction and happiness to customers in their daily lives, however small these may be. Through our effort, we will develop into a company that can provide society with sustainability and enrichment.
Report on Business Results for the First Half of the Fiscal Year Ending March 31, 2022
The first six months of the current fiscal year was impacted by the continuing ravages of COVID-19. Net sales fell 12.6% year-on-year. In Japan, we implemented the use of Accounting Standard for Revenue Recognition and other changes, as at the start of the First Quarter of our consolidated accounting period of the current fiscal year, and therefore, our net sales in real terms for comparison purposes year-on-year is a decrease of 7.0%.
Operating loss was a devastating figure of 646 million yen (We had posted 895 million yen in profit for the same period of the previous year.) Quarterly net income attributable to owners of the parent company saw a decrease of 84.7%, despite posting the income from the disposal of investment securities.
Net sales results by segment showed a dip. In Japan, consumption was sluggish due to the declaration of the state of emergency resulting in consumers staying at home for a prolonged period of time, with the remote working from home or engaging in web-based learning and attending online lectures. Meanwhile, GB Series facial paper and body paper faced intense competition. The result was a fall of income by 18.3% year-on-year. The actual net sales disregarding the effect of Accounting Standard for Revenue Recognition was a decrease by 9.9%.
Net sales in Indonesia was a 13.2% year-on-year decrease. This was mainly due to the slump in consumption resulting from the major social restrictions imposed by the government in Indonesia because of COVID-19. Net sales in Overseas recorded an 8.9% increase despite variations in areas, thanks to good sales in China, which was relatively free of severe impact from COVID-19.
Operating income suffered hugely from the decrease in net sales both in Japan and in Indonesia. The big decrease in gross profit due to the cost rate rise could not be offset by the reduction in selling and administration costs, resulting in the posting of loss. Overseas, however, we managed to stay in the black thanks to generating a profit in sales to begin with.
Outlook for the Second Half of the Fiscal Year Ending March 31, 2022
With the hope of COVID-19 coming under control at the earliest opportunity, Mandom's activities over the next six months will focus on improving the cost rate by increasing volume of sales on the strength of the newly completed Fukusaki Factory in Japan (September 2021) alongside production of the Indonesian factory, as well as on promoting gatsby THE DESIGNER, which we began marketing in October.
In E-commerce, which we are reinforcing in Japan and in other markets, we will push marketing further throughout. In Japan, we will be launching new products in spring. In China and other overseas markets, we will be launching new products as well as strengthening marketing efforts. By so doing, we will strongly engage in recovering sales.
Finally, I would like to ask all stakeholders for their continued generous support towards all our endeavors.
Representative Director and President Executive Officer