Bull s
JK Holdings
Quarterly ReportInternationalApril,2023
CONTENTS

70No.

P1 JK Holdings overview of 3Q business results
for year ending March 2023
P2 Business Prospect for April – June 2023

P3 Market Outlook of Plywood
Prec Component’s environmental and social contributions
P4 KEY TEC signs forest improvement agreement
for sustainable forest management
Matsui Building ANNEX‒ First 75-minute semi-fireproof structure in Japan as
hybrid of post-and-beam & CLT

JK Holdings overview of 3Q businessresults for year ending March 2023
In the third quarter, the movement restrictions due to theCOVID-19 pandemic continued to be eased in Japan.
Meanwhile, we are facing sharp price hikes caused by theinsufficient supply of raw materials and energy imposed by
the prolonged Russian invasion of Ukraine and the depreciation of the yen. Business prospects have become more
uncertain with concerns about recession in the U.S. andEurope due to the rising interest rates, heightening geopolitical risks, changes in the monetary policy, and others.
In the housing industry, rental and built-for-sale houses aregoing well. However, owner-occupied and wooden houses,
which are our group’s forte, are declining year-on-year andthe degree of decrease is spreading lately.  

Keiichiro Aoki

President
JK Holdings Co.,Ltd.

6.915 billion yen (down 7.1%), which exceeded the fullyear prediction announced at the beginning of the fiscalyear.

Under these circumstances, we have resumed our exhibitions and sales to stimulate our sales activities in earnest. InAs described, our third quarter results were extremely

addition, we have been promoting a variety of measures forthe next generation in the first year of our new medium-term management plan “Further Growth 24.”

while the first quarter saw a significant year-on-year in-strong on a cumulative basis. In terms of profits, however,crease, which maintained the momentum from the previous

As a result, our consolidated financial performance for thethird quarter of the fiscal year ending March 2023, whichbroke the past records in both sales and ordinary income,year, the second quarter showed a year-on-year decline, ofwhich extent widened in the third quarter. In the remaining
fourth quarter, it is expected that gains from the sale ofcertain shares of affiliated companies will boost net profit,
whereas expenses will increase due to valuation loss on ourwas as follows.

inventories in response to lower material prices.

Net sales rose by 10.7% year-on-year to 309.671 billion
yen, showing a double-digit increase. Profits for the whole

although profit margins have been declining lately due tohigher purchase prices. Specifically, operating income was
10.334 billion yen (up 2.2% year-on-year), and ordinary
income was 10.764 billion yen (up 0.2%). Net income

The biggest concerns in the housing industry are the trends
in wood-based material prices, which have turned fromupward to downward, and the slowdown in housing demand, which has been firm to date. Under these circumstances, we will appropriately control risks while keeping
an eye on the direction of change in the market. Furthermore, we will strive to improve our business performanceby intensifying sales activities, including taking on new

attributable to the shareholders of the parent company wasinitiatives.

financial year maintained the level of the previous year,
which had recorded the largest growth in our history,

All the articles contain information as of March 2023

Bulls International No.70

2Survey

According to our survey, both small builders (contractors and other building companies) and distributors predicted morenegative index than the previous survey
for the previous quarter: a negative index
of 32.6 points by smaller builders and anegative index of 37.9 points by distributors. By prefecture, however, regional
differences were found.

Business Prospect forApril – June 2023
〈Demand Forecast byBuilders and Distributors〉
Housing starts for January to December
2022 totaled 859,529 units, which was100.4% compared to the previous year’s
result, according to a report released by
the Ministry of Land, Infrastructure,
Transport and Tourism. This was a growth
for two consecutive years. By owner/
occupant, the number of owner-occupied
houses was 253,287 units, which was88.7% compared to the previous year. Itwas the lowest ever recorded since thestatistics began. On the other hand, rental
houses and built-for-sale homes performed well, pushing up the overall
number of starts. Rental houses were
107.4% compared to the previous year,
built-for-sale condominiums 106.8%, andbuilt-for-sale houses 103.5%.

Price hikes, sluggish growth in real wages, rising housing prices, and uncertain
mortgage rates have led to a sense ofstagnation in the market of newly built
single-family houses. On the other hand,as energy costs rise, homebuyers are moreaware of net zero energy houses (ZEH)
and other energy-saving and high-performance housing. Their interests in improving housing performance through renovation and remodeling are growing. Thesubsidies and incentive programs forhigher housing performance have become
more generous, and it should be closely
monitored how the adoption rate of theprograms will affect the housing market
in the future.

Demand Forecast by Builders
100

1.5

-10
-20
-30

-9.0 -10.0

-21.1

-34.5

-16.6
-15.0
-32.6

-40

-40.6

-50
-60

〈Sales Forecast〈by Leading〈Manufacturers〉

In the sales forecasts, allplywood manufacturers had
negative views. In addition,
the forecasts by manufacturers of wooden building-70-80 Apr-Jun.
2021

Oct-Dec.
2021

Apr-Jun.
2022

Oct-Dec.
2022

materials showed more negative views
compared to the previous survey for theprevious quarter, predicting stagnant
housing starts. In the forecasts by manufacturers of housing equipment, thenumber of positive views exceeded thatof negative ones, indicating that a certain
volume of business has been secured,
including remodeling demand and thesales of highly value-added products.

〈Various Surveys〉
The purchasing costs have increased
10% or more, according to 45% of therespondents. Manufacturers have announced price increases one after another, and it seems unlikely that the pricehikes will stop for the time being.
As to what kind of requests they received
from customers, the most common
answer showed customers’ expectations
based on product images on the websiteof the respondents. This indicates that
information sources have become morediverse for users to make decisions, aside
from an impact of the image strategy ofthe production side.
Meanwhile, as important sources ofinformation, the survey respondents
prioritized "suggestions from suppliers,"
ahead of "the Internet and social media.”This is due to the trust relationships thathave long existed between the respondents and suppliers.

The forecast survey for April to June, 2023 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, 2023.

Apr-Jun.
2023

Point0=business result in April-June,1992

Dealing Volume of Lumber

Demand Forecast by Distributors
100-13.0-10-40-50

60- 20.5-20-30

65

-1.3

55

-15.6 -19.1

-26.2
-43.1

50

-38.0

- 37.9Laminated lumber
Solid lumber
Precut lumber
LVL

45-60

40-70

-80 Apr-Jun.
2021Oct-Dec.
2021

Apr-Jun.
2022

Oct-Dec.
2022

35 Apr-Jun.

Apr-Jun.
2023

2021

Oct-Dec.
2021

Apr-Jun.
2022

Oct-Dec.
2022

Apr-Jun.
2023

Point100=all responses expect increase

Point0=business result in April-June,1992

Sales Forecast by Major Supplying Manufacturers（Apr-Jun. 2023）
increase

Plywood（12 firms）
Wooden Building Materials（10 firms）
Ceramic/Heat Insulation（15 firms）
Housing Equipment（9 firms）
averagelevel-offdecreaseover15％14 ～ 10％

below10％

below10％10 ～ 14％

over15％

0.0

0.0

0.0

0.0

27.363.6

9.1

4.8

4.8

14.3

23.6

42.9

4.8

4.8

0.0

0.0

11.5

65.5

19.2

3.8

0.0

4.0

8.0

20.0

52.0

16.0

0.0

0.0

2.2

3.2

11.5

35.3

26.4

18.1

3.5

Bulls International No.70

Trend
Market Outlookof Plywood〈Trend of Japanese Plywood〉
Japan’s production of softwood plywood in January 2023 was 190,516
cubic meters (78.2% of the same monthin the previous year), and the shipmentof the item was 186,851 cubic meters(75.4%). The inventories were 166,620
cubic meters (181.4%).
Buyers of Japanese softwood plywood
are focused on the purchase for current
use because demand for the item has
decreased due to the smaller number ofhousing starts. Prices have also beenfalling gradually, causing buyers’ spot
purchasing with a wait-and-see attitude.
Japanese manufacturers take a stance tomaintain prices by adjusting supply
through production cuts. However, they
are not completely aligned because theextent of production reductions varies
depending on manufacturers.
Furthermore, the manufacturers which
decreased supply due to fires last year
are planning to resume operations thisspring. The market might find evenmore difficult conditions than they are
now, depending on future demandtrends.

Japan’s import of plywood in January2023 was 181,270 cubic meters (70.8%of the same month in the previousyear), which decreased 6.4% from
192,891 cubic meters in the previousmonth. By country of origin, 40,525
cubic meters (51.2%) came from Malaysia, 56,048 cubic meters (64.8%)
from Indonesia, and 51,525 cubic
meters (81.5%) from China.

was before, but shipments from warehouses remain sluggish and they are
managing the situation by adjusting thevolume of arrivals to the ports. Sales
prices are falling sharply due to lowpriced sales by importers and distributors in anticipation of the fiscal yearend. As a result, the wait-and-see moodhas further spread in the market, withbuyers purchasing for current use,which is no different from the situationof Japanese plywood.

Despite a significant decrease in arrivals particularly from Malaysia, there isno sign of shortage at all. The decline
in arrivals has improved the situation at
port warehouses compared to what it

Demand upsurge has yet to occur andthe foreign exchange rate is unstable,
so it is likely that the purchases willcontinue to be on a temporary basis forthe time being.

〈Trend of Imported Plywood〉

Wholesalers’ Prices of Plywood in Tokyo

yen/sheet

4,500
4,000
3,500

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☆

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

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

Topics 1

Prec Component’s environmental and social contributions
Prec Component Co., Ltd. has beenworking on upcycling industrial wastes,including timber offcuts from themanufacturing process of 2×4 housing
panels, to reduce them as well as tosupport the creation of job opportuni-ties. In addition, the company
transforms the packing sheets thatwrap 2x4 lumber for transportation into bags through upcycling.
The bags with stylish design arehighly appreciated.

Timber offcuts reborn to blocks and other things

Prec Component would liketo achieve such effective
utilization of industrial
wastes and employment
support. These activities willlead to increasing the popularity of 2×4 housing as well
as spreading the knowledge
about the advantages ofwooden houses to the public.
Furthermore, we will contribute to the creation of communities

Upcycled bag easy to use in outdoor activities, etc.

where people can continue to live by
providing 2×4 houses which are earthquake resistant.

3

4Bulls International No.70

Topics 2

KEY TEC signs forest improvement agreement
for sustainable forest management
KEY TEC Co., Ltd. signed a forest
improvement agreement on March 2with forest owners and log producers in
Yamanashi Prefecture. This will encourage sustainable forest management
through purchasing logs as raw materials for plywood and LVL at prices thatallow for planned reforestation.
Under the agreement, the log sellers
will separately collect two percent of
the value of log sales to KEY TEC to
be allocated to the costs of reforesta-tion. It is also important to maintain themarket levels that can prevent easy
price depreciation of logs and wooden
products in order to secure financial
resources for the reforestation.
For specific reforestation, low density
planting of about 1,200 larch trees per
hectare is planned. This is to lower thecost of planting, undercutting, andthinning. Moreover, the project willencourage mixed forestation by leaving
red pine and hardwood species such as

KEY TEC President Nakanishi signs Forest Improvement
Agreement in Yamanashi Prefecture

chestnut and Konara oak trees when
undercutting, taking the biodiversity ofthe forests into consideration.

Topics 3
Matsui Building ANNEX‒First 75-minute semi-fireproof structure in Japanas hybrid of post-and-beam & CLTMatsui Building ANNEX, completed in Chuo-ku, Tokyo in
October 2022, is a two-story building on a narrow urbansite with a ground area of 191 square meters, a building
area of 96 square meters, and a total floor area of 174
square meters. This is the first 75-minute semi-fireproof
structure in Japan as a hybrid building of wooden post-andbeam and CLT construction methods. Japan Kenzai Co.,
Ltd. was involved in the structural design, material procurement, and woodwork for the building.

Exterior - front, northeast side

The construction was built with the TE System that fivecompanies including Japan Kenzai were jointly certified.
The TE System is a CLT panel construction method inwhich floor and roof beams, rather than CLT floors, areplaced on CLT wall panels, and beams are prioritized overposts when constructing. Supporting the floor and roof withbeams allows us to design open spaces with long-spanstructures.
The total amount of wood used for the building is 63 cubic
meters, of which 41 cubic meters are CLT.
The building embodies the solutions for promoting wooden
constructions on narrow urban sites, including fire-resistantdesign to actualize wood constructions in urban fire protection districts, maximum use of a limited site, rational costallocation, and how to design exposed structural wood.

The entrance
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○