Bull s
JK Holdings
Quarterly ReportInternationalApril,2024
CONTENTS

74No.

P1 JK Holdings overview of 3Q business results
for year ending March 2024
P2 Business Prospect for April-June 2024
P3 Market Outlook of Plywood

Butsurin’s community contribution cleanup activities
P4 Japan Kenzai’s initiatives to visualize its environmental
contribution
Products of KEY TEC Co., Ltd. adopted for new JR station

JK Holdings overview of 3Q businessresults for year ending March 2024
The Japanese economy in the third quarter of the year
ending March 2024 continued to show gradual recovery asa whole, while socioeconomic activities normalized in thepost covid. Meanwhile, the outlook remains uncertain, as
we are still facing soaring prices of materials and energy
imposed by the situation in Ukraine and the tensions in the
Middle East, and the yen’s depreciation caused by theinterest rate differential between Japan and the U.S., andothers, in addition to the fact that the “Logistics 2024
Issue” has intensified the labor shortage.
In the housing industry to which our group belongs, housing demand has been sluggish due to factors such as housing prices remaining high while real wages have beenstagnant. The overall number of housing starts until the endof the third quarter declined by 6.3%. Additionally, owner-occupied houses, which are our group’s forte, droppedby 12.2%, and wooden structures decreased by 5.0%,indicating a continuous reduction respectively.

Keiichiro Aoki

President
JK Holdings Co., Ltd.

retail business of general building materials secured asmuch profits as the previous term to remain firm, the plywood manufacturing and wood processing business decreased significantly. As a whole, there was also a sharp
decline in profits. Specifically, operating income was 6.552
billion yen (down 36.6% year-on-year) and ordinary income was 7.202 billion yen (down 33.1%). Net income
attributable to the shareholders of the parent company was
4.14 billion yen (down 40.1%). However, compared to theplan at the beginning of the fiscal year, which incorporated

Under these circumstances, our group has been stimulating
sales activities at the same scale as we did before thevarious factors after the “wood crisis”, the sales were
almost in line with the plan and the profits exceeded theCOVID-19 pandemic, passing on price increases appropriately and promoting new products and proposals of value-added items for “building houses that retain their asset
value,” among other things.

target.

As a result, our financial performance for the third quarter
was as follows.
Net sales decreased by 4.7% compared to a year ago,
reaching 295.156 billion yen, close to the result in the same
term of the previous year, which significantly broke the pastrecords due to the “wood crisis”. As for profits, while theThe operating environment is expected to become evenmore difficult toward the end of the fiscal year, as midsized builders of built-for-sale housing, which had been
performing relatively well, are now disposing of theirinventories. Moreover, we are also concerned that housing
demand may slow down further early next fiscal year due tothe expected hike in interest rates in addition to the soaring
prices of materials. In such a challenging environment, wewill strive to improve performance by leveraging the overall strength of the group.

All the articles contain information as of March 2024Bulls International No.74

2Survey

and minus 36.1 point respectively,
whose minus points expanded from theprevious survey. The forecast went
downside for the first time in a year. By
area, housing demand in all areas
excluding Hokuriku and Chugoku wasexpected to show increased minuspoints.

Business Prospect for
April-June 2024

Housing starts in 2023 were 819,623
units (95.4% against the result of theprevious year), which turned to decrease for the first time in three years.
Looking at the result by owner/occupant, the figures decreased in all typesof houses including owner-occupied
houses (88.6%), rental houses (99.7%),
condominiums for sale (99.7%), anddetached houses for sale (94.0%).
Among them, those of owner-occupied
houses were lower than the result of thepreceding year for the 25th consecutive
month and those of detached houses for
sale, for the 14th consecutive month,which clearly shows the sluggishnessof single-family houses.

In 2023, housing performance improved to a certain degree thanks tonational policies such as “2023 housing
energy saving support campaign”. Dueto the influence of the Noto Peninsula
earthquake at the beginning of thisyear, people’s interest in earthquake
resistance has grown significantly.
There is a movement in local governments to strengthen the utilization
promotion of seismic renovation subsidies for wooden buildings. Now thatpublic’s interests on the improvementof housing performance are growing,
we need to proactively offer safe,
secure, and comfortable housing focusing on the quality and the performancesuch as high seismic resistance, highinsulation, and high airtightness.

〈Demand Forecast byBuilders and Distributors〉
Both builders and distributors gave
their evaluations with minus 32.0 point
Demand Forecast by Builders
100-10-20

-10.0
-16.6

-9.0
-15.0

-30

-18.3

-24.0
-32.1

〈Sales Forecast〈by Leading-32.0 〈Manufacturers〉

In all groups of business,
the number of makers who
answered ‘decrease’ enlarged from the previous

-32.6

-40
-50
-60
-70

-80 Apr-Jun.
2022

Oct-Dec.
2022

Apr-Jun.
2023

Oct-Dec.
2023

Apr-Jun.
2024

1065

-13.0

60

- 20.5-20- 23.3-15.6 -19.1-30

The results showed that the respondents
are feeling the necessity of base materials for temporary repairs, and then,temporary electrical equipment when alarge-scale disaster occurs.
Regarding the price pass-throughstatus, the rise in material cost seems tohave come to a halt, however, morethan half of the respondents answered,‘that is ongoing’, which tells that theprice pass-though is proceeding juststep by step. The Small and Medium
Enterprise Agency set every March and
September as “Promotion Months forPrice Negotiation” under the situation
where energy costs, raw material costs,and labor costs are increasing. Whentransportation costs and personnel costs
increase due to so-called “2024 issue”,
further price pass-through will berequired.
Nowadays, it is considered effective touse generative AI, a total of 22% of
those answered “will use” or “considering using it”. But security measures
should be prepared.

Dealing Volume of Lumber

Demand Forecast by Distributors
0〈Various Surveys〉

The forecast survey for April to June, 2024 is based on the totaled data
gathered from 3,000 client companies in Japan through the internet, which
took place from late-January to mid-February, 2024.

Point0=business result in April-June,1992-10

survey. Especially about “plywood”
and “ceramics/insulation”, the rates of‘decrease’ were more than 50%. On theother hand, regarding “housing equipment”, the answers predicting ‘increase’ expanded and turned into a plus,
which shows the solidity of housing
renovation.

- 26.7- 37.9-40-5055- 36.150- 36.9Laminated lumber
Solid lumber
Precut lumber
LVL

45

-60

40

-70

-80 Apr-Jun.
2022

Oct-Dec.
2022

Apr-Jun.
2023

Oct-Dec.
2023

35

Apr-Jun.
2024

Apr-Jun.
2022

Oct-Dec.
2022

Apr-Jun.
2023

Oct-Dec.
2023

Apr-Jun.
2024

Point100=all responses expect increase

Point0=business result in April-June,1992

Sales Forecast by Major Supplying Manufacturers（Apr-Jun. 2024）
increase

Plywood（11 firms）
Wooden Building Materials（17 firms）
Ceramic/Heat Insulation（24 firms）
Housing Equipment（23 firms）
averageover15％14 ～ 10％

below10％

0.0

0.0

18.2

0.0

0.0

0.0

level-offdecrease
below10％10 ～ 14％

over15％

27.3

54.5

0.0

0.0

11.8

47.0

35.3

5.9

0.0

0.0

12.5

29.2

58.3

0.0

0.00.0

4.3

26.1

56.6

13.0

0.0

0.0

0.0

1.1

17.2

40.0

40.3

1.5

0.0

Bulls International No.74

Trend
Market Outlookof Plywood〈Trend of Japanese Plywood〉
Japan’s production of softwood plywood in January 2024 was 199,085
cubic meters (104.5% of the samemonth in the previous year), and theshipment of the item was 196,615 cubic
meters (105.2%). The inventory was
167,961 cubic meters (92.6%).
Market prices continued to decrease,and in February, they declined further.
Still in March, the topic of price drop ismuch talked about. Due to the sluggishness of housing starts, especially inwooden houses, purchase for immediate needs is continuing in the routes ofwooden building materials. With low
operating ratio, precut factories
wouldn’t arrange necessary materials
until the last minute. Though domesticmakers are trying to stabilize the market prices by production reduction,currently, they have not hit therock-bottom prices yet. Although thevolume of manufacturers’ inventories
has not extremely increased, the production volume might be still high forcurrent demand. Various cost increases
are expected in April including wage
increases. Unless makers send anddisseminate strong messages, it will

still take some more time to stabilize
the market prices.

〈Trend of Imported Plywood〉
In January 2024, Japan’s import ofplywood was 201,527 cubic meters(111.2% of the same month in theprevious year), which increased 9.5%
from 184,068 cubic meters marked in
the previous month. By country oforigin, 50,319 cubic meters (124.2%)
came from Malaysia, 60,682 cubic
meters (108.3%) from Indonesia, and55,288 cubic meters (107.3%) fromChina.
The volume of arrival seems to berelatively big for this period when thefiscal year end (end of March) is approaching, and the main port warehouses are almost full of stock. Major
reasons for it could be that products
were shipped locally before Chinese
New Year, and that stock items werepurchased prior to the changes in JASlabeling from February. As a result,containers concentrated at ports, and it
is taking long time to do the operation.
Some items are low in stock, however,there is no feeling of deficiency because the demand is weak. As pricepass-through due to the depreciation ofthe yen has not yet progressing asexpected, minimum essential purchaseorder to manufacturing areas is likely tocontinue.

Wholesalers’ Prices of Plywood in Tokyo4500

yen/sheet

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☆

4000
3500
3000
2500
2000
1500
1000

Apr.
May
Jun.
2023 2023 2023

Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
2023 2023 2023 2023 2023 2023 2024 2024 2024

Topics 1

Butsurin’s community contribution
cleanup activities
On November 11, 2023, we conducted a cleanup of the seawall
area adjacent to Toyosu Gururi Park in Tokyo. The park ismanaged and operated by a group of companies led by ButsurinCo., Ltd. It was the second cleanup activity for the area, as we
aim to contribute to the district surrounding the park throughenvironmental beautification.

Various kinds of waste are being dumped

In addition to employees of JK Holdings Group, including
Butsurin, participants from other companies headquartered in
the area also joined the effort. A total of 44 people began thecleanup at 10 a.m. and managed to collect 88.45 kilograms oftrash.
Butsurin will continue to contribute to the community throughvarious activities.
A lot of garbage is collected34Bulls International No.74

Topics 2

Japan Kenzai’s initiatives to visualize
its environmental contribution

Japan Kenzai Co., Ltd. has been displaying the carbon storage volume ofsome of its wooden products on delivery forms and other documents sinceNovember 20, 2023, in order to shareits environmental contribution withcustomers in a visible and easy-to-understand manner. The current target

products include its private brand for
ecological products “J-GREEN” andforest-certified lumber.
We are currently conducting an exhibition at the headquarters of Japan Kenzai to raise awareness of this initiative.
The centerpiece exhibit is a 2.7-meter

Example of display of carbon storage quantity in CO2
equivalent per wooden product on a form

diameter balloon representing thevolume of carbon storage in CO2
equivalent per softwood plywood sheet
measuring 12 x 910 x 1820 millimeters.
The balloon enables us to visualize thespecific amount of carbon stored,
thereby enhancing the visibility of theproducts’ environmental contributions.

The centerpiece exhibit :The volume of carbon storage (CO2 equivalent) per sheet of softwood plywood

The carbon storage function of wood isattracting attention in a decarbonizedsociety. We hope that the exhibit attracts many visitors, leading to wider
recognition of the carbon storage potential of wood and consequently increasing demand for wooden houses.

Products of KEY TEC Co., Ltd. adopted for
new JR station

Topics 3

KEY TEC’s product Keylam Interior,
LVL for interiors, has been adopted for
Makuharitoyosuna Station, a JR station
newly opened in 2023.
In ordinary station interiors, metallic
materials such as aluminum and steel
plates are applied extensively, but for
Makuharitoyosuna Station, Japanesecedar LVL for interior (Keylam Interior) produced in Chiba Prefecture, isused abundantly for pillar finishing andBright and open station spacebenches on platforms. A distinctive
appearance on the cross-section ofLVL, resembling that of Baumkuchen,a layered cake, is partially incorporated
with other materials to create a soft
wooden atmosphere in the station
space.
Benches at Makuharitoyosuna Station

In addition, benches made of Legacy

Wood are installed at Makuharitoyosuna Station. They are recrafted fromChiba-produced Japanese cedar LVL
manufactured by KEY TEC, which wasused in the Tokyo Olympic andParalympic Athletes’ Village.
KEY TEC will continue to promotewood use in a variety of ways.

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/english/
C 2024JK Holdings Publication Copyright○