Asics Inc. reported net earnings climbed 19.6 percent in the nine months ended Dec. 31 on a 25.1 percent sales gain, benefiting from a weakening yen and strength in running shoes. The company also raised its forecast for the year for both sales and earnings.
The company does not break out quarterly results. Subtracting out six month results from nine month figures indicates that sales in the third quarter rose 32.4 percent to ¥84.6 billion ($834.4 mm) from ¥63.9 million. Operating profits jumped 79.6 percent to ¥9.7 billion ($95.7 mm) from ¥5.4 billion. Net income gained 5.2 percent to ¥7.05 million ($69.5 mm) from ¥6.7 million.
In the first nine months of fiscal 2014, consolidated net sales reached ¥238.3 billion ($2.35 bn). Domestic net sales increased 4.2 percent to ¥66.3 billion ($652.5 mm), mainly due to the steady sales of walking shoes and Onitsuka Tiger shoes accompanying the expansion of directly managed sales venues, in addition to the strong sales of running shoes and baseball equipment. Overseas sales increased 35.5 percent to ¥172 billion ($1.69 bn) due to the strong sales of running shoes in the Americas, Europe and other regions and the effect of foreign exchange rates.
Gross profit rose 30.3 percent to ¥106.5 billion ($1.05 bn), mainly due to an increase in net sales. Selling, general and administrative expenses increased 27.0 percent to ¥82.9 billion ($815 mm), primarily due to increases in advertising expenses and Korean subsidiaries’ commission paid to distributors. As a result, operating income increased 43.6 percent to ¥23.6 billion ($232 mm)
Ordinary income increased 47.4 percent to ¥25.0 billion ($246 mm), mainly due to an increase in exchange gain. Net income rose 19.6 percent to ¥15.0 billion ($147.6 mm), which was primarily due to the recording of gain on sales of property, plant and equipment arising from the sale of the land of former Kanto Kashiwa Distribution Center, and also due to the recording of income taxes refunded in the corresponding period of the previous fiscal year.
Business results by reportable segment were as follows.
Japan Area
Sales were ¥81.97 billion ($806.7 mm) and segment income was ¥909 million ($9 mm). The company said that effective from the fourth quarter of fiscal 2013, reportable segment in
Japan Area has been changed. As it is difficult to prepare results for
the third quarter of fiscal 2013 in accordance with the changed
reportable segment, year-on-year comparisons were not provided.
America Area
Sales increased 37.1 percent (an increase of 13.4 percent using the previous fiscal year’s foreign exchange rate) to ¥70.5 billion ($693.8 mm), due to the strong sales of running shoes and the effect of foreign exchange rates. Moreover, segment income increased 76.4 percent (an increase of 45.9 percent using the previous fiscal year’s foreign exchange rate) to ¥8.2 billion ($80.7 mm), mainly due to the improvements of the cost of sales ratio.
In the third quarter, sales climbed 45.2 percent to ¥24.1 billion ($237.7 mm) from ¥16.6 billion. Operating profits grew 114.3 percent to ¥3.0 billion ($29.6 mm) from ¥1.4 billion.
Europe Area
Sales increased 36.4 percent (an increase of 10.0 percent using the previous fiscal year’s foreign exchange rate) to ¥66.4 billion ($653.4 mm), thanks to the strong sales of running shoes and the effect of foreign exchange rates. However, segment income increased 19.4 percent (a decrease of 3.7 percent using the previous fiscal year’s foreign exchange rate) to ¥7.9 billion ($77.7 mm), mainly owing to the effect of foreign exchange rates on purchasing costs and an increase in selling, general and administrative expenses due to new openings of directly managed stores.
In the third quarter, sales rose 49.7 percent to ¥26.5 billion ($261.4 mm) from ¥17.7 billion. Operating profits reached ¥3.6 million from ¥2.9 million ($28.6 mm), a gain of 24.1 percent.
Oceania Area
Sales increased 32.6 percent (an increase of 15.9 percent using the previous fiscal year’s foreign exchange rate) to ¥10.8 billion ($106.3 mm), due to the strong sales of running shoes and the effect of foreign exchange rates. Segment income increased 37.8 percent (an increase of 20.5 percent using the previous fiscal year’s foreign exchange rate) to ¥2.4 billion ($23.6 mm).
In the third quarter, sales improved 32.0 percent to ¥3.3 billion ($32.6 mm) from ¥2.5 billion. Operating income improved to ¥650 million ($6.4 mm) from ¥395 million.
East Asia Area
Sales increased 74.1 percent (an increase of 39.9 percent using the previous fiscal year’s foreign exchange rate) to ¥16.6 billion ($163.4 mm), due to the effect of foreign exchange rates and the recording of net sales at the sales price to end consumers at the Korean subsidiary. Segment income increased 74.1 percent (an increase of 40.2 percent using the previous fiscal year’s foreign exchange rate) to ¥1.36 billion ($13.4 mm).
In the third quarter, sales climbed to ¥5.6 billion ($55.2 mm) from ¥2.9 billion. Operating earnings rose to ¥521 million ($5.1 mm) from ¥146 million.
Other business
Sales increased 31.5 percent (an increase of 4.8 percent using the previous fiscal year’s foreign exchange rate) to ¥7.9 billion ($77.7 mm), due to the steady sales of outdoor shoes and outdoor wear under the HAGLÖFS brand, in addition to the effect of foreign exchange rates. Segment loss was ¥406 million ($4 mm) mainly due to the effect of foreign exchange rates on purchasing costs.
In the third quarter, sales rose to ¥3.88 billion ($38.3 mm) from ¥2.84 billion. Operating income gained to ¥388 million ($3.8 mm) from ¥276 million.
Forecast
For the full fiscal year through March 31, Asics now expects companywide sales of ¥327 billion, up 25.7 percent over the prior fiscal year. Operating income is expected to reach ¥25.5 billion, representing a 36.6 percent gain. Net income is expected to reach ¥15 million, up 8.9 percent. When it reported six month results on Nov. 6, it expected revenues for the year to rise 21.1 percent; operating income to grow 31.3 percent, and net income to increase 5.3 percent.
