Bull s
JK Holdings
Quarterly Report

July,2021
CONTENTSInternationalP1P2P3P463No.

JK Holdings Overview of Business Results for YearEnding March 2021
Japan Kenzai's new proposal style, "Selected Building Materials Project"
Prospect of Business Condition for July-September
Market Outlook of Plywood
Prec Component Co., Ltd.-Activities Utilizing timberoﬀcuts
JK Timber Engineering Group completed 3-story
wooden school buildings with structural LVL withthe largest ﬂoor area in JapanJK Holdings Overview of Business Results forYear Ending March 2021
Japanʼs housing starts for the ﬁscal year ending March 2021
decreased 8.1% year-on-year to 812,164 units. Although thedecline was slightly smaller than the cumulative results till thethird quarter of the ﬁscal year, housing starts for the owner-occupied, which is our main market, reduced 7.1% to 263,000
units. The impact of the COVID-19 pandemic was one of thefactors behind this, in addition to structural factors such as adeclining population. It was a year in which we struggled tobalance infection control with business operations.
Under these business environments, our group has been working on our sales activities, carefully taking various steps toprevent infection with COVID-19. At the same time, we havebeen preparing for the next generation, such as the introduction of a new core system, in order to accelerate examinationand implementation of the measures listed in our medium-term management plan “Breakthrough 21”. As a result,
the results for the consolidated ﬁscal year ending March 2021
were as follows.
Our sales decreased 6.8% from the previous year to 343,254

SummaryJapan Kenzai Co., Ltd. launched “Selected Building Materials Project” inApril 2021.
“Selected Building Materials Project” iswhere we carefully select and propose avariety of quality products regardless ofmanufacturers to customers.
Now that there are more and morehomeowners who are particular about
their housing aesthetics, “SelectedBuilding Materials Project” will help
solve problems of a larger number of
those contracted dealers and buildersʼ
offices who hesitate to make individual proposals to such homeowners bythemselves. The project makes them
free from dealing with selecting prod-Keiichiro Aoki

President
JK Holdings Co.,Ltd.

million yen, but the decline was less than what was in housingstarts. Operating proﬁt turned to an increase of 6.2% to 5,430
million yen, for gross margins rose on a company-wide basis,
while SG & A expenses decreased, in addition to an increasein the occupancy rate at the KEY TEC Yamanashi Plywood
Plant, which began operations spring 2019. Ordinary profit
was 5,223 million yen (up 10.9%) due to the receipt of employment adjustment subsidies associated with the COVID-19
outbreak. Net income attributable to shareholders of the parentcompany was 2,949 million yen (up 6.1%), due to the recording of gain on sale of under-utilized real estate and gain on
negative goodwill associated with M & A as extraordinary income. Both of them resulted in higher proﬁts, and we revised
up our full-year forecast for the fiscal year ending March
2022.

Japan Kenzai’s new proposal style,“Selected Building Materials Project”
ucts, making proposals, placing orders,and managing deadlines, in order topresent attractive ideas to their customers.
All customers have to do is choose
what they like from 3 main model plans
and 100 parts for the bulk orders. “Selected Building Materials Project” is a
useful sales tool for those contracted
dealers and buildersʼ offices who havecustomers looking for stylish items fortheir home building.
◆ Two “moki” catalogs are available,
one for the client and one for the con-tractor (for estimates and orders).
◆ You can select a plan of your preference from the model plans listed in thecatalogs, and can also choose a varietyof parts from the optional item pages.

Selected Building Materials Project"moki"Bulls International No.63

2Survey

Prospect of Business Condition for July− September

Prospect of BusinessCondition forJuly - September<Demand Forecast byBuilders and Distributors>
According to the Cabinet Oﬃce, Japanʼsreal gross domestic product growth inﬁscal 2020 was minus 4.6%, the worst
negative growth after World War II, exceeding the rate at the time of the 2008
ﬁnancial crisis.
Housing starts for fiscal 2020 (April2020 to March 2021) totaled 812,164
units, 91.9% of the previous yearʼsresult, declining for two years in arow. By owner/occupant, the numberof owner-occupied houses dropped to92.9%, rental houses to 90.6%, andhouses built for sale to 92.1%. Detached houses built for sale, which had
been steady, turned to a decline for theﬁrst time in six years. On the contrary,housing starts for March was 71,787
Demand Forecast by Builders
100-10

5.1

2.0
-18.3

-7.3

-20
-30
-40
-50
-60
-70

units (101.5% of the result in the samemonth in the previous year), the firstincrease in 21 months.

<Various Topics and Current Status of Remodeling>

The demand forecast survey for Julyto September 2021 shows an index ofminus 40.6 points among small builders(contractors and other building companies) and an index of minus 43.1 points
among distributors. Both builders anddistributors predict a fall in demand
from the previous survey.

To cope with the soaring wood prices
and the shortage of supply, the mostcommon countermeasure is taking alternatives such as changing the woodspecies to use. Besides, more than 20%of the respondents had extended theconstruction periods to cope with theissues. It is concerned how to deal withowners of houses to be built while passing on the higher costs and extending
the constructions.

The figures reflect concerns over thewood crisis where a sharp price rise ofwood and a worsening supply shortage stemming from rising demand for
new housing in the U.S. due to theCOVID-19 pandemic and container
shortages caused by Chinaʼs economic
recovery. We would keep an eye on
whether the impact will be prolonged
and how it will affect the housing industry.

<Sales Forecast by Leading
Manufacturers>
Among the sales prospects by leading
manufacturers, all the sectors foundmore expectations forshrinkage comparedto the previous surveyresults. While only theceramics & insulation
sector expects a growth-34.5
of 4.5% compared to theprevious survey, theytend to have projections-40.6
for decline on the whole.
-46.0

Jan-Mar
2020

2019

Jul-Sep2020

Jan-Mar
2021

More than half of the respondents said,“they had not coped with” or “had notknown about” the mandatory explanations due to the revision of the Building
Energy Conservation Act effective inApril 2021.
The Ministry of Land, Infrastructure,
Transport and Tourism plans to mandate compliance with the energy-saving
standards in fiscal 2025. As initiatives
toward decarbonization are accelerated,each of us in the industry is required towork on them.

The forecast survey for July to September 2021 is based on the totaled data
gathered from 3,000 client companies in Japan through the Internet, which
took place from late-April to mid-May 2021.

-67.0 -65.4-80 Jul-Sep

Nearly half of the respondents showed
their expectation for the Green Housing
Point System to be used for remodeling,followed by new home building. The
users can exchange the earned points
immediately for listed products or additional work. We hope active utilizationof the system will stimulate demand.

Jul-Sep
2021

Point0=business result in April-June,1992

Demand Forecast by Distributors

Dealing Volume of Lumber

20
100-109.2

4.9-6.4

-20

65
60

-15.4

55

-30

50

-43.1

-40

-48.5

-50

-38.0

-60
-70
-80

Jul-Sep
2019

Jun-Mar2020

40-66.7-68.6
Jul-Sep2020

Laminated lumber
Solid lumber
Precut lumber
LVL

45

Jun-Mar2021

35 Jul-Sep

Jul-Sep
2021

2019

Point0=business result in April-June,1992

Jan-Mar
2020

Jul-Sep
2020

Jan-Mar
2021

Jul-Sep
2021

Point100=all responses expect increase

Sales Forecast by Major Supplying Manufacturers（Jul-Sep 2021）
increaselevel-offdecreaseover15％14 ～ 10％

below10％

below10％10 ～ 14％

over15％

20.0

0.0

0.0

50.0

30.0

0.0

0.0

0.0

6.7

20.0

33.2

26.7

6.7

6.7

0.0

5.3

15.8

21.0

47.4

0.0

10.5

House Equipments（9firms）

0.0

0.0

23.5

41.2

29.4

0.0

5.9

average

5.0

3.0

14.8

36.3

33.4

1.7

5.8

Plywood（13firms）
Wooden Building Materials（10firms）
Ceramic/Heat Insulation（15firms）

International No.63

Trend
Market Outlook
of Plywood<Trend of Domestic Plywood>
Japanʼs production of softwood plywood in April 2021 was 257,507 cubicmeters (111.0% of the previous yearʼsresult), and shipment was 268,342 cubic meters (114.9%). Inventories havebeen decreasing gradually to 103,765
cubic meters (59.7%) since the peak in
May 2020.
Shipments from manufacturers remainstrong, and delivery times have become
longer than ever due to the low inventories and ample backlog of orders. Manufacturers are quoting higher prices forrising costs of raw materials, and thedistribution side is accepting it.
However, the operation rate of precut
factories has remarkably gone down
due to the shortage of wood, and theshipments may calm down a little depending on the operating situation inthe future.

<Trend of Imported Plywood>
Japanʼs import of plywood in April
2021 was 213,730 cubic meters (92.5%Topics
Prec Component Co., Ltd. (Head oﬃcein Hiroshima City, Hiroshima Prefecture), a group company of JK Holdings
Co.,Ltd is engaged in activities to givebuilding blocks made of timber oﬀcuts
to childcares and elementary schools inthe city as a gift.

of the previous yearʼs result), whichslightly decreased to 99.9% of the results of 231,750 cubic meters in theprevious month. Looking at the result
by country oforigin, the amount of import from Malaysia was 66,327 cubic meters (96.3%),
that from Indonesia was 67,383 cubic
meters (85.1%), and that from China
was 56,398 cubic meters (88.9%).
The domestic port inventories havebeen extremely low and there remains asign of shortage. Some port warehouse
operators in Japan have shifted part ofthe capacity of their warehouses to oth-Bulls

er cargoes as they predicted no increasein arrivals of imported plywood for thefuture.
As the purchasing costs of imported
plywood keep rising, importers try toraise sales prices, but the distributorsof concrete form have a strong sense ofresistance to it. The factor is consideredthat the price pass-through is delayed
while prices of other materials are also
rising at the same time. In any case, it isunlikely that a large volume of products
will arrive in the future, and the trendof scarcity is expected to continue.

Wholesalers' Prices of Plywood in Tokyo

yen/sheet

2000
Structural Use 12mm JAS F4☆
Concrete Form 12mm JAS
Softwood Plywood for Structural Use 12mm JAS F4☆
Softwood Plywood for Structural Use Neda-non 24mmwith tongue JAS F4☆

1500

1000500

Jan 2021

Feb 2021 Mar2021 Apr2021

May2021 Jun2021

Prec Component Co., Ltd.
-Activities Utilizing timber oﬀcuts
ed by Tsuji (current president), who hadbeen thinking it wasteful to simply haveit taken away. And then the recycling oftimber oﬀcuts began, and the company
shall actively continue to contribute tothe local community for the future.
Step stool

The company, which had been payingfor disposal of about 100 cubic metersof timber offcuts annually, started toprovide it to contribute to the local
community in February 2021.
The idea started as using scrap woodfor nest boxes in the ﬁrst place, suggest-

Board from wood wasteBlocks

34Bulls International No.63

Company

JK Timber Engineering Group completed 3-story
wooden school buildings with structural LVL
with the largest floor area in JapanJK Group worked together on construction of Nagareyama Municipal Oogurono-Mori Elementary School. Madeof structural LVL, it consists of threeschool buildings (1-hour semi-ﬁreproofstructure) and a gymnasium, with afloor area of 12,000 square meters. It
is the largest-scale three-story wooden
school construction in Japan.

Scape.

player.

It is attracting a large attention as abuilding project that structural LVL
plays the core role sufficiently in theframe, instead of structural laminatedlumber which is the traditional main

We started a larger building project for
Ooguro-no-Mori Junior High Schoolin March 2021, which is scheduled toopen in April 2022.

For the frame, used is structural LVL ofJapanese cedar grown in Chiba Prefecture where the school is located and oflarch grown in Shinano-machi, Nagano
Prefecture, a sister city of Nagareyama City. Using 2,110 cubic meters ofwood, mainly from local sources, it
contributes to achieving the Sustainable
Development Goals as well.
The entire wood-related work was handled by JK group companies, including
the construction of wooden structures
by Japan Kenzai, LVL manufacturing
by KEY TEC, and the work with ﬂooring and interior materials by Timber

Concept:“Blending in withthe greeneryhillSchoolhouse inthe forest”

Wood Land Tower 1-7-22 Shinkiba Koto-ku,Tokyo 136-8405 Japan
Phone +81-3-5534-3800 Fax +81-3-5534-3835
URL https://www.jkhd.co.jp
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