Bull s
JK Holdings
Quarterly ReportInternationalJuly,2023
CONTENTS71No.

P1 JK Holdings overview of consolidated
financial results for year ending March 2023
P2 Business Prospect for July – September 2023

P3 Market Outlook of Plywood
President of Japan Kenzai plants trees in Indonesia
P4 Butsurin, Shirataka Town of Yamagata,and Deloitte Tohmatsu conclude partnership agreement
NX Haneda Building has obtained ZEB certificationby 75% reduction in energy consumption

JK Holdings overview of consolidated
financial results for year endingMarch 2023
In Japan, while COVID-19 has been subsiding and economic activities are moving towards normalization, we arefacing soaring prices of resources and energy imposed by
the prolonged Russian invasion of Ukraine, among otherfactors. This has pushed up the cost of living, coupled withthe depreciation of the yen due to the interest rate differential between Japan and the United States.
In the housing industry, prices for lumber and woodenmaterials have dropped in response to the end of the “woodcrisis”. However, prices for building materials and housing
equipment have continued to rise, leading to higher housing
prices. As a result, overall housing starts for the year ending
March 2023 declined by 0.6%. In particular, the number ofowner-occupied houses and wooden houses, which are ourgroup’s forte, showed a large fall of 11.8% and 5.9%.
Under these circumstances, we have resumed exhibitions
nationwide, including our large-scale exhibit “Japan Kenzai
Fair” for the first time in three years, to stimulate our sales
activities in earnest. In addition, we have been promoting avariety of initiatives for the next generation in the first yearof our new medium-term management plan, “FurtherGrowth 24”.  
As a result, our consolidated financial performance for thefiscal year ending March 2023 was as follows.  
Net sales rose by 8.2% year-on-year to 407.022 billion yen,breaking the past records following the previous year. Profit
margins were on a downward trend throughout the year due
to higher purchase prices. Profits showed a double-digit
decline from the previous year, which had recorded thelargest growth in our history, although the full year results
remained well above the level before the “wood crisis”.
Specifically, operating income was 9.723 billion yen (down22.1% from the previous year), and ordinary income wasKeiichiro Aoki

President
JK Holdings Co., Ltd.

10.3 billion yen (down 21.4%). Net income attributable tothe shareholders of the parent company was 6.686 billion
yen (down 24.9%).  
While we have these results of the increase in revenue anddecrease in profit, it is worth mentioning that we were able
to maintain ordinary income above 10 billion yen for two
consecutive years.
In the year ending March 2024, it is expected that the trendof recovery will continue as the impact of COVID-19
diminishes. Meanwhile, geopolitical risks such as thesituation in Ukraine, as well as volatility in interest rates
and exchange rates, remain high. Therefore, it is difficult at
this point to predict when and at what level the prices of
plywood and other materials, which are on a downward
trend, and building materials and housing equipment, which
are on an upward trend, will stabilize. Moreover, the situation remains uncertain, as there are concerns that housing
demand may decline further depending on trends in theserisks.
Our group will strengthen the governance by transitioning
to a company with an audit and supervisory committee, andwill address current issues at hand. In addition, we will
strive for further growth as we steadily execute our midterm management plan, “Further Growth 24”, in order toachieve our long-term vision, “Brand-New JKHD 2030”.
All the articles contain information as of June 2023

Bulls International No.71

2Survey
Business Prospect forJuly–September 2023
〈Demand Forecast byBuilders and Distributors〉
Japan’s GDP for January–March 2023turned to a positive growth for the firsttime in three quarters, up 0.4% from theprevious quarter, and the real GDP growthrate for FY2022 increased by 1.2% fromthe previous year, according to the Cabinet Office. Housing starts for FY2022,
announced by the Ministry of Land,
Infrastructure, Transport and Tourism,
totaled 860,828 units (99.4% of the previous year’s result), which was almost thesame as the previous year. By owner/occupant, on the other hand, the numberof owner-occupied houses remained low
at 248,132 units, representing 88.2% ofthe previous year's result. This marks thefirst time since 1965, when comparison
data is available, that the number did not
100-9.0

-20

-21.1

-30
-40
-50

-10.0

1.5

-15.0

-40.6

-60
-70

-80 Jul-Sep.
2021

Jan-Mar.
2022

Jul-Sep.
2022

According to our survey about businessdemand prospects for July to September
2023, both small builders (contractors andother building companies) and distributors
predicted a slightly better index than theprevious survey for the previous quarter,
but the number of negative views continued to significantly surpass that of positive ones. In the remodeling sector, theoverall number of positive views increased slightly while that of negative
views decreased a little compared to theprevious quarter. However, the situation
still exhibits significant stagnation.

Meanwhile, the number of applications
for the Home Living Support Project for
Households with Children and Young
Couples, a subsidy program which has abudget of 150 billion yen forthis fiscal year, has alreadysurpassed one-third of thebudget as of mid-May, less-16.6
than two months since its
registration started. It is-32.1
highly likely that the budget-32.6
ceiling will be reached at an
early stage, indicating thatdemand and investment

Demand Forecast by Builders-10

reach 250,000 units. The housing industry, which did well during the COVID-19
pandemic, is facing various challenges
both internally and externally, including
the continued negative growth in real
wage rates. The situation for owner-occupied homes in particular remains difficult.

Jan-Mar.
2023

Point0=business result in April-June,1992

0-40
-50

55

-15.6 -19.1-26.2- 37.9-43.1

50- 36.9

Laminated lumberSolid lumber
Precut lumber
LVL

45-60

40-70-80

More than 90% of the surveyed companies reported a labor shortage, particularly in sales, delivery, and other front-line
occupations. Regarding the distributionof existing homes, the most frequent
request is for cost measures and support.
We would like to see expanded support
not only for new construction, but also
for the remodeling and performance
improvement of existing housing.

60- 20.5-30〉〈   Various Surveys

65-13.0-20

Manufacturers of plywood and woodenbuilding materials reduced the number ofnegative views, showing a sign of bottoming out. On the other hand, in theforecasts by manufacturers of ceramics& insulation and housing equipment, thenumber of negative views increased.
This indicates that they are adopting acautious approach due to uncertainty
about the future, as some companies areplanning to revise their prices.

Dealing Volume of Lumber

-1.3

-10

〈Sales Forecast byLeading Manufacturers〉

The forecast survey for July – September, 2023 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, 2023.

Jul-Sep.
2023

Demand Forecast by Distributors
10appetite for housing is strong. Although
there are concerns over the recession due
to price hikes and slowdown in overseas
economies, the current Japanese economy is widely expected to remain resilient, especially in terms of domestic
demand. In the housing industry, the key
will be how the supply side can discoverand seize the latent demand for enhanced
performance and decarbonization in both
new and existing houses.

Jul-Sep.
2021

Jan-Mar.
2022

Jul-Sep.
2022

Jan-Mar.
2023

35 Jul-Sep.

Jul-Sep.
2023

2021

Jan-Mar.
2022

Jul-Sep.
2022

Jan-Mar.
2023

Jul-Sep.
2023

Point100=all responses expect increase

Point0=business result in April-June,1992

Sales Forecast by Major Supplying Manufacturers（Jul-Sep. 2023）
increase

Plywood（13 firms）
Wooden Building Materials（16 firms）
Ceramic/Heat Insulation（22 firms）
Housing Equipment（19 firms）
averagelevel-offdecreaseover15％14 ～ 10％

below10％

below10％10 ～ 14％

over15％

0.0

0.0

0.0

30.7

7.7

46.2

15.4

0.0

0.0

25.0

31.2

31.3

12.5

0.0

0.0

0.0

13.6

50.036.4

0.0

0.0

0.0

5.3

26.3

36.8

26.3

5.3

0.0

0.0

1.3

16.2

37.2

25.4

16.0

3.9

Bulls International No.71〈Trend of Imported Plywood〉

Trend
Market Outlookof Plywood〈Trend of Japanese Plywood〉
Japan’s production of softwood plywood in April 2023 was 191,260 cubic
meters (74.1% of the same month in theprevious year), and the shipment of theitem was 199,930 cubic meters(79.4%). The inventory was 159,156
cubic meters (154.9%).  
Domestic market prices have been
declining gradually and the movementof the products remained sluggish. Thebuyers have maintained the purchasefor immediate demand. However, thesupply-demand balance appears to bein equilibrium at present partly becauseof the effect of supply adjustments
resulting from production cuts. It seems
that the market has started to show asign of nearing the bottom by now.
From now on, the industry concerned istrying to assess the extent of the impactthat will result from the manufacturers
restarting operations after the shutdown
caused by the fires. In any case, in asituation of slowing growth in housing
starts, it would still be difficult to see asignificant improvement in shipmentsof the products, and it is highly likelythat the purchasing for immediate needs
will continue.

warehouses, anticipating a future
decline in the arrivals of plywood, havebegun to look for cargoes other thanplywood. Prices are also showing asign of stability, mainly for ordinary
plywood, which seems to be at thelowest level. However, they have yet toraise the prices fully for coated plywood for concrete formwork, andbuyers continue the purchase for current demand. Also low prices aretemporarily observed in some cases.  

Japan’s import of plywood in April
2023 was 151,025 cubic meters (62.5%of the same month in the previousyear), which decreased 3.7% from156,901 cubic meters in the previousmonth. By country of origin, 28,832
cubic meters (36.2%) came from Malaysia, 54,301 cubic meters (65.0%)
from Indonesia, and 42,841 cubicmeters (77.5%) from China.  
The arrivals of plywood from Malaysia
are much lower than they have everbeen in the past, but consumers do notseem to buy the items in a hurry evenunder such a situation. The decline inarrivals has significantly improved thesituation at port warehouses, in whichmore space is available. Some port

It is difficult to forecast the future
demand; the recent depreciation of theyen appears to hinder buyers fromplacing significant orders with the local
suppliers. It is likely that they willcontinue to make hand-to-mouth buying on a wait-and-see basis.

Wholesalers’ Prices of Plywood in Tokyo

yen/sheet

4,500
4,000
3,500
3,000

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

2,500
2,000
1,500
1,000

Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
MayJun.
2022 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 2023

Topics 1

President of Japan Kenzai plants
trees in Indonesia
President Ogawa of Japan Kenzai Co.,
Ltd. visited a reforestation site inIndonesia in March 2023. The woodgrown at the plantation site is used as
raw materials for falcata-combined
plywood, one of Japan Kenzai's envi-

Afforestation workby local residentsronmentally-friendly private label
products known as “J-GREEN”.
Recently, securing resources has become a global concern from various
perspectives, and Japan Kenzai, as a

Visiting grown falcata trees

President Ogawa at a tree planting experience

In front of a seedling fieldcompany that handles a large volume ofwooden materials, places great importance on securing wood resources.
This afforestation project in which
Japan Kenzai participates provides
stable income and employment opportunities for local people. It also helps
protect the environment by combating
global warming and reducing carbon
dioxide emissions. We will continue theproject to contribute to the creation of abetter environment, society, and economy.

34Bulls International No.71

Topics 2

Butsurin, Shirataka Town of Yamagata,and Deloitte Tohmatsu conclude partnership agreement
On April 11, Butsurin Co., Ltd., Shirataka Town Office, and Deloitte Tohmatsu LLC signed a partnership agreement
to promote forestry and regional revitalization in Shirataka Town, Yamagata
Prefecture.
Butsurin established a company April
2022 through investment with two local
companies after being involved in theconstruction of the Shirataka Town Hallbuilding. In October last year, Butsurin
was entrusted with the management of
1,700 hectares of forests owned by thelargest forest owner in Shirataka Town.
In parallel, Butsurin and Deloitte
Tohmatsu have exchanged views with abackcasting mindset on what actions
they should take for the future of theforestry industry.  
These efforts were appreciated by theShirataka Town Office, leading to an

Cooperation agreement signing ceremonyagreement among the three parties topromote the forestry industry andrevitalize the local community. Thiswas reported not only in local newspapers but also in general newspapers
throughout Japan, highlighting thewidespread interest it has generated.
When viewed from a bird's-eye perspective, the future situations surrounding Japan's planted forest resources,

Cooperation Agreement

forestry, and mountain villages are
considered to be extremely challenging.
Meanwhile, many of the forests thatwere planted during the postwar periodof afforestation expansion have now
reached the time for harvest. In light ofthese conditions, we would like toachieve fruitful results from the partnership initiative and expand similar
efforts in other areas of Japan.

Topics 3

NX Haneda Building has obtained ZEB certificationby 75% reduction in energy consumption
The NX Haneda Building was built inOta-ku, Tokyo as the base of the inspection business of NJS Co., Ltd.
Japan Kenzai was involved in thedesign collaboration and constructionof CLT and laminated lumber.
NJS positions the inspection businessas compliant with carbon neutrality andBlack and white modern architecturewith wood accent walls

climate change regulations. The building, aiming to be an “environmentallyadvanced building”, has achieved a
75% reduction in energy consumption
through the introduction of energy-saving equipment and solar power system,and has acquired ZEB (net Zero EnergyBuilding) certification.

It is an environmentally conscious
design by using CLT as well as structural laminated lumber for some of thebeams. The building is also meant toserve as a pilot project, while theintroduction of wooden materials isunderway in public facilities which arebusiness targets of NJS.
The exterior of the building combines amodern black and white color, withaccents of wood. The interior is finished with visible wooden beams, woodceiling surfaces, and white steel beams
to create a good working environment.

White steel beams flatter visible wooden beams
and wood ceiling surface

The building is a hybrid structure
incorporating both steel and wood. In
the future, the key to making the mostof trees in Japan will depend on how
much wood structures can be incorporated into heterogeneous structures.

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
C 2023
JK Holdings Publication Copyright○