Annual Report 2013
For the year ended March 31, 2013

DAIKEN CORPORATION

Company ProﬁleSince the founding of the company in September 1945, the core focus of ourbusiness has been the development and provision of materials for residential
housing and construction. Daiken’s corporate activities cover a broad anddiverse range, including the manufacturing and sales of materials forresidential housing and construction as well as materials for industrial use.
These activities have led Daiken to grow into one of the world’s foremost
comprehensive manufacturers of building materials.
Through its highly-motivated research and development, Daiken is
continuously working with the latest materials, concepts and technologies.
With a core of technological and material-supply capabilities for building
materials, the very basis for the housing ﬁeld in which Daiken specializes,
Daiken shall continue to provide its customers with new generations oftechnologies and products.

Contents
Financial Highlights.................................... 1
A Message from the President................... 2
Review of Operations................................. 4
Topics........................................................ 6
Consolidated Financial Statements ............ 8

Financial Highlights

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2013, 2012, 2011, 2010 and 2009

Millions of Yen and Thousands of U.S. Dollars

2009

2010

2011

2012

2013

2013

Net sales ........................... ¥ 150,325 ¥ 140,936 ¥ 141,506 ¥ 151,209 ¥ 158,153 $ 1,682,299
Operating income .............
3,010
1,830
4,349
4,542
4,703
50,026
Ordinary income ...............
Net income .......................

1,331
598

Net assets .........................
Total assets .......................

34,562125,0802,819
511
36,663
123,862

4,373
1,375

4,600
874

5,669
1,318

60,302
14,01936,839115,969

36,949125,469

39,870131,618

424,1031,400,042¥ 10.51$ 0.11

Yen and U.S. Dollars

Net income per share ........

¥ 4.64¥ 4.01¥ 10.88¥ 6.97

Note: The translations into U.S. dollars are based on $1= ¥94.01, the approximate exchange rate on March 31, 2013
Note: Net income per share is computed based upon the weighted average number of shares of common stock outstanding
during each ﬁscal year.

1

Net sales

Net income

Total assets

Net income per share(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Yen)

200,000

2,500

150,000

20

180,000

2,000

120,000

16

160,000

1,500

90,00012

140,000

1,000

60,0008

120,000

500

30,0004

002009 2010 2011 2012 201302009 2010 2011 2012 201302009 2010 2011 2012 20132009 2010 2011 2012 2013

Daiken Corporation

Annual Report 2013

A Message from the President

We herein present our shareholders and persons
concerned a report on the consolidated businessresults for the Daiken Corporation in ﬁscal year
2012 (April 1, 2012 to March 31, 2013).

Business Progress and Results

2

In regard to the consolidated business results forthe year in review, we achieved net sales totaling¥158,153 million (an increase of 4.6% comparedwith the previous year), operating income of¥4,703 million (an increase of 3.6% comparedwith the previous year), ordinary income of¥5,669 million (an increase of 23.2% comparedwith the previous year) and a net income of¥1,318 million (an increase of 50.8% comparedwith the previous year).
The outlook for the Japanese economy thisﬁscal year is positive, despite the slowdown in the
global economy. This optimism is underpinned by
the rebuilding and reconstruction efforts
following the Great East Japan Earthquake andthe change in government in the latter half of theﬁscal year, which has raised hopes for an
economic recovery as well as sending share prices
rising.
With regard to the housing market, the market
has been supported by the demand from therecovery effort in the Tohoku region as well as thegovernment policy incentives such as preferential
interest rates for housing loans, etc. As a result of
the impending increase in consumption tax, many
more people are considering buying a home andas a result in ﬁscal 2012 the number of new
housing starts, with a total of 893,000 units (anincrease of 6.2% on the previous year), istransitioning strongly.
Under these business conditions, the Daiken
Group declared a “turnaround and makeoutstanding progress” policy and has taken a leap
forward to actively proceed towards developing
areas where growth is predicted, such as theremodeling market, markets overseas, theindustrial materials market and the engineering
market. With regard to the remodeling market,
we opened the TDY Tokyo Collaboration
Showroom in conjunction with TOTO Ltd. and

Daiken Corporation

Annual Report 2013YKK AP Inc., making it more effective for us topropose solutions to our customers. In theoverseas market, we opened a new ofﬁce inIndonesia as well as reinforcing the production
line that manufactures a range of door products
at our consolidated subsidiary company. We arelooking to strengthen our capability to supply
Japanese businesses that are establishingthemselves overseas. Moreover, in the ﬁeld ofindustrial materials, we have worked to ensure asteady supply of our eco-friendly materials, suchas MDF and our eco-friendly base plate products(afforested timber plywood combined with special
MDF), as well as planning for growth in terms ofsales. Moreover, thanks to our business alliancewith HOKUSHIN Co., Ltd. we are seeing more
efﬁcient manufacturing output. With regard to
the engineering market, due to orders related tolarge-scale construction projects in the Osaka
area, our sales increased. In addition to thisexpansion in sales volume, we are also looking toemphasize proﬁt and as a result we are selectively
choosing orders as well as strengthening ourmanagement systems at each individual work site,with the aim of prompting a recovery in corporate
earnings.
On the other hand, we have been striving tostrengthen our corporate constitution as well asworking to reduce ﬁxed costs, such as reducing
our total personnel expenses as well as looking to
reduce our sales, general and administrative
expenses, such as our logistics and distribution
costs, proceeding with rationalization including
withdrawing from underperforming businesses
and the integration of our production bases.

Issues and Policies for the Future
Looking to the future, ﬂuctuations in the ﬁnancial
markets, due to the European sovereign debt
crisis, etc. as well as the downward swing of the
global economy as a whole, means that we haveto pay attention to sudden ﬂuctuations in
exchange rates, increases in interest rates and therising cost of raw materials. The direction of theeconomy requires careful monitoring as we move
forward. On the other hand, measures tostimulate the economy have been implemented
by the government and with the economic
situation overseas showing some signs ofimprovement, there is some reason for optimism
regarding a recovery in the domestic economy. In
particular, the housing market is seeing
fully-ﬂedged reconstruction demand for new
housing following the Great East Japan
Earthquake as well as artiﬁcial demand driven by
the looming rise in the rate of consumption tax
and this sector is expected to transition steadily
going forwards.
Our mid-term management plan started inﬁscal year 2011 and based on this plan, we willfurther commit management resources to actively
match expanding and growing markets, as we
look to expand the scope of our business
operations.
With regard to the domestic market, we plan
to expand our sales through developing ourbusiness by catching the eye of the consumer
through our showrooms. Overseas, we aremoving forward with increasing our sales inSouth-East Asia and China. In the ﬁeld ofindustrial materials, we will further strengthen
our supply of our eco-friendly materials such as
MDF to ensure stability.
Moreover, as part of reinforcing our systems,
we have carried out a drastic reform of ourlogistics and distribution system as well as
implementing measures to improve earnings in
our engineering business, all with the aim ofincreasing proﬁts.
Accordingly, for the consolidated businessresults projected for the ﬁscal year ending March
31, 2014, our goal is to achieve net sales totaling¥173,000 million, an operating income of ¥5,700
million, an ordinary income of ¥6,000 million,
and a net income of ¥2,600 million.
We sincerely hope that we may continue to lookforward to the support and encouragement of allof our shareholders and persons concerned.

3

Ryoji Sawaki,
Representative Director, President
Chief Executive Ofﬁcer

August 2013

Daiken Corporation

Annual Report 2013

Review of Operations

Housing Business4

In regard to the consolidated
business results in this ﬁeld forthe ﬁscal year in review, weachieved net sales totaling¥83,192 million (an increase of
3.7% compared with theprevious year) and an ordinary
income of ¥2,915 million (anincrease of 48.8% comparedwith the previous year).
With regard to our housingbusiness, in order to promote
the use of domestically
produced timber, we processcedar, etc. using our proprietary
technologies to manufacture a
new surface material productthat was introduced to themarket as the Japanese Wood
Series. Sales have increased
since the product launched.

With regard to the interiormaterials business ﬁeld, where
our focus is on ﬂooringmaterials, with the increased
adoption of our products in thecondominium and rental
markets, we have seen an
increase in sales for our
eco-friendly ﬂooring basematerials that utilize ourproprietary technology as a
ﬂooring material.
Furthermore, we arecontributing to theimprovement of the housing
environment of the areas
affected by the Great East
Japan Earthquake, as well as
helping to stimulate a rapid
reconstruction of the local
economy, by promoting amodel of local production for
local consumption. One
example is the Tohoku Support
Floor, a new product that wedeveloped using cedar plywood
sourced from Iwate and Miyagi
Prefectures, which is being usedin post-disaster municipal
housing construction.
With regard to our homefurnishings and equipment
business, which focuses mainly
on interior doors, storage andhome ﬁxtures and ﬁttings, wehave worked to reinforce our
proposals for architecturaldesign ofﬁces and generalcontractors, centered on our‘Omoiyari Series’ of building
materials for housing targeted
at elderly customers.

We have launched the Japanese Wood Series, the first in the industry to
promote the use of domestic timber

The Omoiyari Series — building materials for housing andfacilities for the elderly

Daiken Corporation

Annual Report 2013

Asedas Earthquake Resistant Board —increase the lifespan of your homewith this highly earthquake-resistantboard with outstanding moisturepermeability

Eco-BusinessIn regard to the consolidated
business results in this ﬁeld forthe ﬁscal year in review, weachieved net sales totaling¥47,402 million (an increase of
1.8% compared with theprevious year) and an ordinary
income of ¥2,596 million (anincrease of 4.6% comparedwith the previous year).
With respect to our
eco-business and focusing on
MDF, the market for MDF as a
ﬂooring material has grown on
the back of increased demand
as well as increased adoption ofthis product by kitchen
manufacturers, etc. and sales
have grown accordingly.
With regard to Dailite, wehave implemented our plans to
expand sales of this product as
an earthquake-resistant material

for remodeling aswell as ﬁnding new
purposes for Dailite,
such as a basematerial for metal panels, etc.
With regard to insulation board,in addition to its original use intatami matting and as a basematerial for roofs, we havedeveloped a new market for thisproduct as a durable surface
material and are currently
working to drive sales of thisproduct across the country.
With regard to tatami mat
surfaces, we are enjoying
positive sales due to the soundreputation and uniquecharacteristics of the raw
material, namely washi Japanese
paper, such as peace of mind,
safety and durability. In May
2012 we added a new

Sukoyaka Omote — multi-purpose
tatami surface material made frommachined Japanese washi paper

production line at the Aizu
Plant, which is run by the Tobu
Daiken Corporation (aconsolidated subsidiarycompany) in order to expand
our capability to supply thisproduct.

Engineering BusinessIn regard to the consolidated
business results in this ﬁeld forthe ﬁscal year in review, weachieved net sales totaling¥18,049 million (an increase of
23.8% compared with theprevious year) and an ordinary
income of ¥191 million(compared with an ordinary loss
for the previous ﬁscal year of¥54 million).
With regard to thecondominium, building andshop market, we have worked
to increase sales bystrengthening our order-based
sales system, which waspreviously centered on ceilingorders, to accommodate
composite orders involving
other interior work. In
particular, our sales in this
sector have also beneﬁted thelarge construction project thathas recently been completed in
the Osaka area.
Moreover, rising costs due toa shortage of construction
workers has led us to movefrom looking to expand oursales to emphasizing
proﬁtability, which means that
we are working to improve ourmanagement systems at each

A large-scale construction projectcompleted in the Osaka Area

work site as well as selectively
choosing orders for thecompany in this regard, thus
reversing our losses in this
sector.

Daiken Corporation

Annual Report 2013

5

Topics

1

TDY Tokyo Collaboration Showroom Opens

On November 3, 2012 the TDYTokyo Collaboration Showroom
opened in the Shinjuku area of
metropolitan Tokyo and this newbase will serve to transmit ourmessage of remodeling to ourcustomers.
This ﬂagship showroom is acollaboration between TOTO,DAIKEN and YKK AP and enjoys
an excellent location, situatedsome 4 minutes walk away fromthe JR Shinjuku Station. This is thelargest of these collaboration
showrooms located in Japan, with
3.696m2 (the Daiken section
measures 594m2) of available ﬂoor
space.
6

The products provided by thethree companies are presented

2

In the Daiken area of theshowroom, we are exhibiting theJapanese Wood Series, a beautiful
decorative surface material madefrom domestically-produced timber,which has been well-received by
the market, in addition to approx.
190 different types of door andapprox. 260 sample ﬂooring
designs. Since the showroom
opened, an average of over 2000
customers a month are visiting theshowroom, where it is “easy tovisualize a lifestyle.” We plan toemploy advisors at the showroom
to increase the degree of visitor
satisfaction.

Comfortable living space proposals forcustomers based on a rich line-up of exhibits

Attaining the Highest DBJ BCM Rating –A First for a Building Materials Company

On July 31, 2012, Daiken attained
the highest BCM Rating as certiﬁedby the Development Bank ofJapan, Inc. (DBJ). This rating,awarded after an evaluation,means ﬁnancing can be extended
to Daiken at the most favorable
rates. This ﬁnancing shall be used
to fund additional
earthquake-prooﬁng measures at
our main plants as well as being
used to install additional
emergency power generators topromote and strengthen ourbusiness continuity management
going forward.
The DBJ BCM Rating wasdeveloped by the DBJ as their own,
unique evaluation system in order
to identify and evaluate companies

Daiken Corporation

together in a collaborative space
to introduce case studies for
remodeling detached homes aswell as for remodelingcondominiums, a ﬁrst for a TDY
Showroom. Proposals are alsopresented for creating living
spaces that touch on 3 distinct
themes: health-conscious,
long-lasting housing and reduced
CO2 emissions.

Annual Report 2013that had put measures in place toprevent disasters and ensure thecontinuity of their business. The
BCM Rating is a direct reﬂection ofthis evaluation as well as
determining the terms of any
ﬁnancing and is the ﬁrst rating of
its type in the world. Looking at
the disaster prevention measures
implemented by Daiken, theevaluation recognized the highstandards that the company had
set, with initiatives such as creatinga BCM system across the Daiken
Group as a whole and establishinga viable alternative production
system in the event of a disaster.
The DBJ appreciated the measures
implemented by Daiken to prevent
disaster and to ensure thecontinuity of its business, which inturn led to the company being
awarded the highest grade interms of its BCM Rating.
Furthermore, this is the ﬁrst timethat a building material
manufacturer has been certiﬁed
with the highest DBJ BCM Rating.

Receiving certification from the Development
Bank of Japan

3

Opening an Ofﬁce in Indonesia (Jakarta)

In recent years, Indonesia has
witnessed startling growth in its
economy and as a result in
October 2012, Daiken opened its
ﬁrst ofﬁce in Jakarta Province,
Indonesia. The ofﬁce will researchand survey the market for housing
construction materials as demand
increases as well as creating a
product sales and distribution
system based on this research.
In Indonesia, steady population
growth combined with strong
economic growth has seen a rapid
increase in housing developments

4targeting the high-income bracket
and those in the middle classes.
With regard to the housing being
constructed, there is growinginterest in high quality homes witha sense of design. By supplying
the building materials for thismarket, we are contributing to
improving the living environment
through the application of ourtechnology and know-how. Goingforward, we shall look to develop
the housing construction materials
market in Indonesia, a country
that looks set to continue growing
in terms of demand. Our sales
target for the Indonesian market
for FY 2015 is 5 billion yen.

Employees at work at our Indonesia Office

Increasing the Interior Door Manufacturing Output
Capabilities of Our Chinese Subsidiary in Zhejiang

In July 2012, Daiken acted to
upgrade the manufacturing
facilities at the Daiken Industries(Ningbo) Corporation (Yuyao City,
Zhejiang Province, China), a
subsidiary company that produces
interior doors and ﬂooringmaterials, etc. The plant can now
manufacture double the number ofinterior doors.
The Ningbo Plant manufacturesinterior doors, storage unit andﬂooring materials, etc. for theJapanese market as well as the
Chinese domestic market. Daiken
is aiming to increase sales and toachieve this aim the company has
invested approx. 100 million yen inorder to strengthen the capabilityof the plant to supply mainly the
Chinese domestic market withinterior doors.
The Ningbo Plant was capable ofmanufacturing 95,000 interior

doors a year, but after Daiken
invested in increasing its
production capacity, the plant can
now output 180,000 interior doors
a year. In particular, the output
capacity for the high-end
Kamachigumi doors that are
currently so popular in China has
been drastically increased. Daiken
is looking to target the wealthiersections of Chinese society andtherefore expand its sales.
Furthermore,
Daiken isaiming tostrengthen theability of thecompany toreact to themarket byimplementing
more efﬁcientmanufacturing
processes,

which will reduce current delivery
times by two thirds.

Daiken Industries(Ningbo) Corporation
Manufactured items:
flooring materials,
doors, stairs

Various types of door
design manufactured
in China

Daiken Corporation

Annual Report 20137

Consolidated Financial Statements

Consolidated Balance Sheets

Daiken Corporation and Consolidated Subsidiaries
March 31, 2013 and 2012

Millions of Yen
2012
2013

8

Thousands of
U.S. Dollars
2013

ASSETS
Current assets ...............................................................................
Noncurrent assets:
Property, plant and equipment ................................................
Intangible assets ......................................................................
Investments and other assets ...................................................
Total noncurrent assets .................................................................
Deferred assets..............................................................................
Total assets.........................................................................................

38,427
1,962
18,05158,44067¥ 125,469

LIABILITIESCurrent liabilities ...........................................................................
Noncurrent liabilities .....................................................................
Total liabilities.....................................................................................

70,06518,45488,51964,904
26,84391,747690,394
285,533
975,928

NET ASSETS
Shareholders’ equity......................................................................
Accumulated other comprehensive income ...................................
Minority interests ..........................................................................
Total net assets...................................................................................
Total liabilities and net assets .............................................................

33,51256
3,380
36,949¥ 125,469

33,894
2,107
3,868
39,870¥ 131,618

360,536
22,412
41,144424,103$ 1,400,042

Daiken Corporation

Annual Report 2013¥

66,961¥ 71,889$ 764,695

38,549410,052
2,192
23,316
18,853
200,542
59,596
633,932132
1,404¥ 131,618 $ 1,400,042

Consolidated Statements of Income

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Millions of Yen
2012
2013

Net sales.............................................................................................
Cost of sales..................................................................................
Gross proﬁt ........................................................................................
Selling, general and administrative expenses .................................
Operating income...............................................................................
Non-operating income ..................................................................
Non-operating expenses................................................................
Ordinary income.................................................................................
Extraordinary income ....................................................................
Extraordinary loss ..........................................................................
Income before income taxes and minority interests ............................
Total Income taxes ........................................................................
Income before minority interests ........................................................
Minority interests in income ..........................................................
Net income.........................................................................................

¥ 151,209¥ 158,153

113,189
38,02033,477
4,542
1,045
987
4,600
261
2,968
1,893
741
1,151
277
¥
874

119,12139,031
34,327
4,703
1,834
869
5,669
2,091
5,387
2,373
487
1,885
566
¥
1,318

Thousands of
U.S. Dollars
2013$ 1,682,299
1,267,109
415,179
365,142
50,026
19,5089,243
60,302
22,24257,302
25,241
5,180
20,051
6,020$
14,0199Consolidated Statements of Cash Flows

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Millions of Yen
2012
2013

Net cash provided by (used in) operating activities ...................................

¥

9,074

¥

Thousands of
U.S. Dollars
2013

2,624

$ 27,911

Net cash provided by (used in) investing activities.....................................

(3,218)(2,033)(21,625)

Net cash provided by (used in) ﬁnancing activities ....................................
Effect of exchange rate change on cash and cash equivalents ..................

(1,929)
(12)

224
75

2,382
797

Net increase (decrease) in cash and cash equivalents ................................
Cash and cash equivalents at beginning of period....................................
Increase in cash and cash equivalents from newly consolidated
subsidiary...............................................................................................

3,914
5,716

891
9,630

9,477
102,435

–

74

787

9,630

¥ 10,596$ 112,711

Cash and cash equivalents at end of period .............................................

¥

Daiken Corporation

Annual Report 2013

DAIKEN CORPORATION
Registered Head Office:1-1, Inami, Nanto City, Toyama 932-0298, Japan
Phone: +81-763-82-5850
Operational Headquarters:
22F, Dojima Avanza
6-20, Dojima 1-chome Kita-ku, Osaka 530-8210, Japan
Phone: +81-6-6452-6000