Bull s
JK Holdings
Quarterly ReportInternationalJuly,2024
CONTENTS

75No.

P1 JK Holdings overview of consolidated financial
results for year ending March 2024
P2 Business Prospect for July–September 2024
P3 Market Outlook of Plywood
President Aoki of JK Holdings visitscommissioned forest plantation in Indonesia
P4 Japan Kenzai installs roofs of  Kumenan town hall complex
Butsurin secures runner-up position in
1st Japan Kubb OpenJK Holdings overview of consolidated
financial results for year ending March 2024
In the fiscal year ending March 2024, Japan's economy has
been gradually recovering as socio-economic activities
return to normal following the end of the COVID-19 pandemic. Currently, there are positive signs such as the Nikkei
Stock Average reaching a record high and major companies
announcing significant wage increases. Meanwhile, theoutlook remains uncertain, as we are still facing soaring
prices of materials and energy imposed by the prolonged
war in Ukraine and the conflicts in the Middle East, and the
yen's depreciation caused by the interest rate differential
between Japan and the U.S., in addition to the fact that the“Logistics 2024 Issue” has intensified the labor shortage.
In the housing industry to which our company group belongs, housing demand has been sluggish due to suchfactors as housing prices remaining high while real wages
have been stagnant. The overall number of housing starts
declined by 7.0%. Additionally, owner-occupied houses,
which are our group’s forte, dropped by 11.5%, and wooden structures decreased by 4.6%, indicating continuous
reductions respectively.

Keiichiro Aoki

President
JK Holdings Co., Ltd.

the profits, our wholesale and retail distribution businessesof general building materials secured a consistent level ofprofits despite challenging market conditions, whereas theplywood manufacturing and wood processing businesses
decreased significantly, and the profits saw a sharp decline
as a whole. Specifically, the operating income was 7.871
billion yen (down 19.1% year-on-year) and the ordinary
income was 8.67 billion yen (down 15.8%). The net income
attributable to the shareholders of the parent company was5.049 billion yen (down 24.5%). However, compared to theplan at the beginning of the fiscal year, which incorporated
various factors after the “wood crisis,” the sales werealmost in line with the plan and the profit exceeded thetarget.

Under these circumstances, our company group has resumed holding Japan Kenzai Fairs in Tokyo and otherlocations on a pre-COVID scale, thereby revitalizing oursales activities. Concurrently, we have been working on
optimizing our inventory levels, proposing changes to
product lineup with consideration of price and agility, andpromoting proposals of value-added items for “buildinghouses that retain their asset value,” among other things.
This has strengthened our sales activities, not only for thepresent but also with an eye on future industry conditions.
As a result, our performance for the fiscal year ending
March 2024 is as follows.

In the fiscal year ending March 2025, we expect the recovery trend to continue, as there are positive signs such asreports indicating that real wages are expected to increase
starting this summer. However, uncertainty remains. Thereare concerns that housing demand may be further dampened by geopolitical risks such as the situation in Ukraine,
the weak yen, rising resource prices, and increased laborcosts leading to persistently high prices for housing equipment.

The net sales decreased by 4.4% compared to a year ago,
reaching 388.91 billion yen, remaining at a comparable
level to the previous year’s results, which significantly
broke the past records due to the “wood crisis.” In terms of

In such circumstances, we will continue to strengthen
governance while leveraging the comprehensive strengthand agility of our company group to address various challenges as we have done so far.
All the articles contain information as of June 2024

Bulls International No.75

2Survey

points, with both remaining below
minus 30 points. However, their indiceshave improved compared to the previous quarter’s survey. By region, there
has been a significant improvement in
Hokuriku, whereas the negative forecast is particularly large in Shikoku.

Business Prospect for
July–September 2024

Housing starts in FY2023 were 800,176
units (92.9% against the result of theprevious year), which saw a decrease
for two consecutive years. By owner/occupant, the figures declined year-onyear in all types of houses including
owner-occupied houses (88.5%), rental
houses (98.0%), condominiums for sale
(88.0%), and detached houses for sale(92.6%). In particular, owner-occupied
houses and detached houses for sale
have fallen below the previous year's
level for 28 consecutive months and 17
consecutive months, respectively,
which clearly shows the sluggishnessof single-family homes.

Since the beginning of 2024, eligibility
requirements for housing loan tax
deductions have changed, and efforts todisplay energy-saving performance
have become mandatory starting from
April. Looking ahead to 2025, withmany regulations and laws scheduled
for revision, and in light of recent
disasters such as the Noto Peninsula
earthquake, there is increasing interestin overall housing performance, such as
seismic retrofitting in addition to highly
airtight and well-insulated homes. In
times like these, it is essential to actively pursue the construction of homesthat enhance performance and holdhigh asset value.

〈Demand Forecast byBuilders and Distributors〉
Small builders (contractors and otherbuilding companies) predicted a negative index of 30.6 points, and distributors predicted a negative index of 33.1

〈Sales Forecast byLeading Manufacturers〉

Demand Forecast by Builders
100-10
-20
-30

-10.0
-16.6
-15.0

-18.3

-24.0

-32.0

-32.1
-32.6

-40

-30.6

-50
-60
-70

-80 Jul-Sep.
2022

Jan-Mar.
2023

Jul-Sep.
2023

Jan-Mar.
2024

Jul-Sep.
2024

In all sectors except ceramics & insulation, the number of manufacturers
forecasting a decline has
increased compared to theprevious survey. Approximately half of the respondents in the sectors ofceramics & insulation,
plywood, and wood building materials predicted

As it has been over 15 years since theimplementation of the Long-Term
Excellent Housing System, the importance of home inspection has increased.
However, the responses indicate thatefforts to address this issue have not yet
been sufficient. It is important to makeefforts toward tackling it to adapt tofuture changes in the construction
environment for new homes.
On the regulatory front, there has been
progress in complying with the mandatory energy-saving standards, and there
is significantly increased interest compared to the previous survey regarding
the reduction of the No. 4 building
exception under the Building Standards
Act. Furthermore, a certain number ofrespondents are facing challenges inaddressing issues related to the implemented logistics laws and the invoicesystem.
The percentage of those respondents
making use of social media for theirbusiness is 32.9%, indicating slow
progress in full utilization. Looking
ahead, it is important to consider not
only social media but also enhancing
business efficiency through digitaltransformation to address future challenges, including labor shortages.

Dealing Volume of Lumber

Demand Forecast by Distributors
1065060-10-30〈Various Surveys〉

The forecast survey for July to September, 2024 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, 2024.

Point0=business result in April-June,1992-20

decreases. Meanwhile, forecasts ofincreases have also risen in the threesectors excluding plywood, indicating apolarizing trend.

- 20.5- 23.3-15.6 -19.1- 26.7- 37.9-40

50- 36.1- 36.9-5055- 33.1Laminated lumber
Solid lumber
Precut lumber
LVL45-6040-70-80 Jul-Sep.
2022

Jan-Mar.
2023

Jul-Sep.
2023

Jan-Mar.
2024

35Jul-Sep.
2024

Jul-Sep.
2022

Jan-Mar.
2023

Jul-Sep.
2023

Jan-Mar.
2024

Jul-Sep.
2024

Point100=all responses expect increase

Point0=business result in April-June,1992

Sales Forecast by Major Supplying Manufacturers（Jul-Sep. 2024）
increase

Plywood（11 firms）
Wooden Building Materials（11 firms）
Ceramic/Heat Insulation（18 firms）
Housing Equipment（18 firms）
averagelevel-offdecreaseover15％14 ～ 10％

below10％

below10％10 ～ 14％

over15％

0.0

0.0

9.1

36.3

27.318.2

9.1

0.0

0.0

27.3

27.2

36.4

9.1

0.0

0.0

0.0

16.7

33.3

44.4

5.6

0.0

0.0

0.0

38.9

27.8

33.3

0.0

0.0

0.0

0.0

23.0

31.1

35.4

8.2

2.3

Bulls International No.75

Trend

a new JAS-certified plant beginning
production in mid-May, we will closely
monitor the future supply volume.

Market Outlookof Plywood〈Trend of Imported Plywood〉〈Trend of Japanese Plywood〉
Japan’s production of softwood plywood in April 2024 was 209,579 cubic
meters (109.6% of the same month in
the previous year), and the shipmentsof the item 208,775 cubic meters(104.4%). The inventory was179,608
cubic meters (107.7%).
Japanese plywood manufacturers havebeen advocating for a price recovery orprice increase starting in April, which
has gradually been accepted in themarket. Some distributors, sensing abottoming-out of prices, finally began
to build up some inventories. However,they do not perceive that actual demandis as strong, leading to a reversion totheir previous pattern of purchasing for
immediate needs since May. As aresult, although they succeeded instabilizing the bottom prices, the situation remains such that the price increases advocated by each manufacturer
have not been fully actualized. Japanese manufacturers continue to aim forprice stability through production cuts.
However, there is no sign of shortage inthe market, highlighting a significant
disparity between the manufacturers’
intentions and the market reality. WithTopics 1

In April 2024, Japan’s import of plywood was 174,175 cubic meters(115.3% of the same month in theprevious year), which increased 5.8%
from 164,641 cubic meters marked in
the previous month. By country oforigin, 43,520 cubic meters (150.9%)
came from Malaysia, 58,901 cubicmeters (108.5%) from Indonesia, and41,730 cubic meters (97.4%) fromChina.
In addition to a decrease in port arrivals, the steady pace of shipments fromWholesalers’ Prices of Plywood in Tokyo
4,500

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☆

4,000
3,500
3,000
2,500
2,000
1,500
1,000

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

Apr.
MayJun.
2024 2024 2024

President Aoki of JK Holdings visitscommissioned forest plantation in Indonesia

On February 2, President Aoki visitedthe Falcata forest area of Kutai TimberIndonesia (KTI), a major plywood
manufacturer in Probolinggo, Indonesia, to plant commemorative trees.

Japan Kenzai, the core company of JK
Holdings, commissions KTI to plant
36,300 Falcata trees in a 33-hectare
forest area every year as materials for
FSC ®-certified Falcata combination
plywood for its private brand of environmentally friendly products,“J-GREEN”.
KTI provides saplings free of charge toa forest cooperative formed by local
farmers who cultivate them for about
five years. KTI then purchases theFalcata logs at market price, processes
them into plywood, and exports them.
Japan Kenzai sells the plywood under thebrand name “J-GREEN”. Since Januaryof this year, we have also started sales to
our U.S. subsidiary, Interra USA.

Falcata Plantation

port warehouses has resulted in moreavailable space than before. By item,shipments were going well centering on
coated plywood for concrete formwork.
While occasional shortages due todelayed arrivals are observed in somecases, there is no widespread shortage
occurring on-site. As the depreciationof the yen continues, combined withlocal price increase announcements, it
is certain that future procurement costs
will rise. However, the pace of priceincreases in Japan has been slow andthe industry is struggling, possibly due
to weak demand. Purchase orders for
immediate needs to local producers
continue, and it is presumed that thevolume of port arrivals will not increase significantly.

As strengthening relationships withPresident Aoki plants commemorative tree

overseas shippers and buyers becomesincreasingly important, we will use thisproject as a model to accelerate our efforts
towards improving the global environment and enhancing local economies
abroad.
FSC®-Ｃ081849

3

4Bulls International No.75

Topics 2

Japan Kenzai installs
roofs of Kumenan town hall complex

Exterior view of Kumenan Town Hall and complex facilities

Distinctive design continuous to the eaves

The Community Center Kappii Terrace-Kumenan Town Hall complex wasestablished as the town hall and civic
center in Kumenan Town, Okayama
Prefecture.

hub based on the disaster prevention
plan. Specifically, steel is used for theposts and beams, while LVL withvisible laminated layers is applied forthe purlin.

A hybrid roof structure combining steel
and wood was adopted for the building
to meet requirements such as longspans and a lightweight structure. This
design enables the lobby, community
space, and large hall to be used as anevacuation center and disaster response

Japan Kenzai supplied larch LVL
purlin, Japanese cedar rafters (specifiedas wood grown in Okayama Prefecture), larch structural plywood, andLVL interior and fixture materials, andalso conducted the roof construction.
KEY TEC from the JKHD Group

Butsurin secures runner-up positionin 1st Japan Kubb Open

handled the LVL and structural plywood, with a total of 184 cubic metersof Japanese wood used. The carbon
storage of the Japanese wood, converted to CO2, amounted to 168 metric tonsof CO2.
Moving forward, we will continue toleverage the expertise gained from ourexperience in wood construction tomeet the growing demand for hybridstructures.

Topics 3

On April 27, the First Japan Kubb Open in Tokyo East
was held at Toyosu Gururi Park in Koto-ku, Tokyo.
Butsurin participated with 12 volunteers, including thisyear's new hires. With a total of 16 teams participating,the tournament was lively and exciting.
Butsurin kubb team “Maruta Team” (Maruta means login Japanese) achieved a remarkable feat by advancing tothe finals after winning through the preliminary roundwith a mixed team that included first-time participants.
Though they narrowly lost in the finals, the team rallied
together, gave their all, and achieved a splendid result by
securing the runner-up position.
Throughout the tournament, the employees deepened
their communication and built teamwork and bonds
among each other. We aim for victory in next year'scompetition.

Throwing the ball into opponent's kubb

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/
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