SHOEI CO., LTD. (7839) |
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Company |
SHOEI CO., LTD. |
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Code No. |
7839 |
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Exchange |
Second Section, TSE |
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Chairman |
Masaru Yamada |
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President |
Hironori Yasukochi |
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Headquarters |
Ueno 5-8-5, Taito-ku, Tokyo |
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Year End |
September |
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Website |
* Share price as of close on December 5, 2013. Number of shares outstanding at end of the most recent quarter excluding treasury shares.
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* Estimates are those of the Company.
This Bridge Report discusses the fiscal year September 2013 earnings results and fiscal year September 2014 earnings estimates for SHOEI Co., Ltd.
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Key Points |
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Company Overview |
① A global brand "Made in Japan" and synonymous with "World Top Quality" helmets
② The world's only helmet manufacturer utilizing the Toyota Production System to achieve the "World Top Competitiveness in Cost"
③ Achieve the status of "World Top Delightful Company" by endeavoring to satisfy not only its customers, but also its shareholders, employees and management
<Business Description>
Motorcycle use helmets (Hereafter called premium helmets) account for about 90% of total sales. SHOEI focuses upon high value added "premium helmets" that are manufactured at two plants in Ibaraki (Inashiki City), Iwate (Ichinoseki City) Prefectures in Japan. The Company is able to maintain high quality levels and prevent the leakage of technology by maintaining manufacturing facilities within Japan. In addition, SHOEI is the only helmet company in the world utilizing the "Toyota Production System" to achieve high levels of marginal profitability, inventory turnover and asset efficiency.
<Maintaining Basic Policy for Medium and Long Term Stable Growth and Stable Profit>
1. Protect Own Company by Ourselves
2. Made in Japan and maintaining constant employment (Transmission of Manufacturing)
3. Maintain healthy financial positions
4. Continuation of Investment (Development of new products, Cost saving, Improvement of quality, Firm safety)
5. Targeting #1 in All Premium Helmet Markets in the World
6. Development of New Markets and Deepening of Existing Markets
7. Fair distribution of retained earnings (50% dividend of profit after tax, distribution to employees and distribution to company (proper retained earnings kept))
<SHOEI System Helmets>
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Fiscal Year September 2013 Earnings Results |
Sales, Ordinary Income Rise 29.7%, 806.0%
Sales rose by 29.7% year-over-year to ¥11.158 billion during fiscal year September 2013. Sales within Japan rose by 24.9% year-over-year due to higher sales of premium helmets on the back of new product introductions and of aircraft use helmets to the Japanese Defense Ministry arising from extraordinary demand. Continued provision of new touring type helmets that satisfy the needs of customers in the European and North American markets contributed to increased differentiation of SHOEI from its competitors and allowed helmet sales to grow despite stagnant motorcycle sales in those markets. Favorable sales of products to other regions including Russia, Oceania, and other parts of Asia allowed total overseas sales to rise by 31.4% year-over-year. Combined with these positive developments, foreign exchange rates trended favorably with the yen weakening relative to the dollar by ¥15.73 per dollar and the euro by ¥19.63 compared with the previous term and contributed to stronger sales.With regards to profits, higher sales, the weaker yen, and a recovery in capacity utilization rates accompany strong sales of helmets contributed to a large improvement in the parent company's profitability. On a consolidated basis, gross margins rose by a large margin of 6.2% points. Due in part to the decline in insurance fees of ¥117 million, sales, general and administrative expense margins fell by a large margin of 4.6% points, allowing operating income to rise by a large amount from ¥97 million in the previous term to ¥1.340 billion in the current term. The impact of foreign exchange reservations and subsequent foreign exchange translation losses (¥35 million) upon non-operating income and the disappearance of employment adjustment subsidies (¥22 million) booked in the previous term caused the margin of growth in profits from the ordinary level and below to contract relative that of the operating level. In addition, yearend dividend payment is expected to be increased by ¥27 from the previous fiscal yearend to ¥29 per share. |
Fiscal Year September 2014 Earnings Estimates |
Full Year Earnings Estimates Call for Sales, Ordinary Income to rise 7.5%, 53.9%
SHOEI's earnings estimates call for sales and ordinary income to rise by 7.5% and 53.9% year-over-year to ¥12.0 and ¥2.0 billion respectively. With regards to sales, favorable trends in motorcycle related sales within Japan and subsequent strong order conditions, the influence of new product introductions in overseas markets, and the positive influence of a weaker yen are expected to lead to higher sales in all geographic regions. With regards to profits, the impact of the weaker yen and improvements in profitability of overseas subsidiaries are expected to allow profits to increase by large margins despite increases in cost of sales and sales, general and administrative expenses accompanying the higher sales. In particular, the weaker yen are expected to contribute to improvements in profitability of exports and large improvements in operating profitability of European subsidiaries. Dividends are expected to be raised by ¥16 to ¥45 per share at the term end. During fiscal year September 2014, SHOEI's exchange rate assumptions are ¥98.0 to US dollar, and ¥130.0 per euro. Moreover, the Company has booked two thirds of its US dollar needs at over ¥100, and nearly all of its euro needs at ¥133.
Capital Investments
Capital investment is expected to rise by ¥129 million from the current term to ¥494 million during fiscal year September 2014. This money is expected to be spent upon investments in the production facilities at both the Ibaraki and Iwate factories, and for molds.
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Conclusions |
Amidst the current trend of quantitative financial easing by governments around the world, recoveries in personal consumption in Japan, Europe and North America, a weaker yen, and resolution of the excess inventories at the distribution level have appeared. The difficult business environment seen until now has contributed to a fortification of the Company's corporate structure and an earnings structure that can more readily produce profits in a recovery in the overall business environment. Therefore, SHOEI's ability to leverage the current recovery to produce higher earnings should be watched closely. Because another key to success in realizing higher earnings is the ability to introducing new high value added products that meet the needs of customers, the reception and sales trends of new products to be introduced into the markets during the coming fiscal year should also be monitored closely. And while economic recovery in Southern Europe remains sluggish, the benefits of economic recoveries in the United States and Germany are expected to spread out throughout Europe. And because Europe is SHOEI's largest market, a bottoming in the market there should have a large impact upon the Company's earnings. Disclaimer
This report is intended solely for information purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the Company, and comes from sources that we judge to be reliable. However we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration.Copyright(C) 2014 Investment Bridge Co., Ltd. All Rights Reserved. |