OREANDA-NEWS. Toyota Tsusho Corporation (TSE: 8015) reported consolidated net sales of 6,260.859 billion yen and net income attributable to owners of the parent of 35.052 billion yen, or 99.64 yen per share, for the nine months ended December 31, 2015.

Consolidated Results of Operations

In the first nine months of the fiscal year (April 1, 2015 – December 31, 2015), the U.S. and European economies were resurgent, spearheaded by domestic demand, but the global economy was destabilized by a slowdown in emerging market economies.

The U.S. economy benefited from growth in personal consumption fueled by improvement in the employment environment. Consequently, the Federal Reserve began raising its policy rate, reversing its previous policy of monetary accommodation. Europe experienced a mild economic recovery, the outlook for which has recently been clouded by several concerns, including a refugee crisis and the Paris terrorist attacks. Among emerging market economies, Chinese growth slowed in response to a real estate market correction and control on overinvestment amid a transition to a "new normal." The Indian economy grew, driven by domestic demand, chiefly public investment. Other emerging market economies, however, continued to slow in the wake of resource price declines and a falloff in exports to China.

Against such a backdrop, the Japanese economy hit a soft patch as personal consumption largely stagnated and exports' recovery slackened.

Amid such an environment, the Toyota Tsusho Group's consolidated net sales decreased 323.2 billion yen (4.9%) year on year to 6,260.8 billion yen in the nine months ended December 31, largely as result of lower crude oil prices. Consolidated operating income decreased 19.221 billion yen (15.5%) to 104.616 billion yen from 123.837 billion yen in the year-earlier period, largely due to increased selling, general and administrative expenses. Consolidated ordinary income decreased 21.628 billion yen (17.9%) to 99.120 billion yen from 120.748 billion yen in the year-earlier period. Consolidated net income attributable to owners of the parent consequently decreased 29.281 billion yen (45.5%) to 35.052 billion yen from 64.333 billion yen in the year-earlier period.

Metals

Net sales decreased 89.5 billion yen (6.0%) year on year to 1,393.1 billion yen.

In the automotive steel business, the Group acquired an equity stake in Mirra & Mirra Industries Private Limited, making it a subsidiary. With this acquisition, the Group decisively entered the specialty steel secondary processing business in India, another market with promising growth prospects. In the nonferrous metals business, Sales de Jujuy S.A., an Argentine lithium miner in which the Group owns an equity stake, began supplying customers with lithium produced at Salar de Olaroz in Argentina's Jujuy Province. Additionally, to strengthen its management foundations, the Company decided to split off portions of its operations and consolidate them into Toyotsu Tekkou Hanbai Co., Ltd., and Toyotsu Material Inc.

Global Parts & Logistics

Net sales increased 51.5 billion yen (7.4%) year on year to 748.9 billion yen.

In Malaysia, the Group entered into an exclusive aftermarket sales agreement pertaining to automotive batteries manufactured by the Hitachi Chemical Group. In Cameroon, the group entered into a general distributorship agreement with Makita Africa s.a.r.l.a.u., a local Makita Corporation subsidiary that manufactures and sells electric power tools.

Automotive

Net sales declined 28.7 billion yen (2.9%) year on year to 956.1 billion yen.

In Indonesia, the Group entered the used-car auction business by acquiring an equity stake in PT.Balai Lelang Serasi, an Astra Group affiliate. Additionally, investee CFAO S.A. established a joint-venture with Yamaha Motor Co., Ltd., to manufacture and sell motorcycles in Nigeria. It also opened auto dealerships and state-of-the-art service centers in Côte d'Ivoire and the Democratic Republic of Congo to increase sales to consumers, a market segment with promising growth prospects.

Machinery, Energy & Project

Net sales decreased 316.2 billion yen (20.4%) year on year to 1,237.3 billion yen.

Having designated North America as a key market for the electric power business, the Group signed on as an equity investor to construct and operate a gas-fired power plant in St. Joseph County, Indiana. A consortium to which the Group belongs, together with Tokyu Corporation et al., established Sendai International Airport Co., Ltd., in the aim of privatizing Sendai Airport and entered into an agreement with the Ministry of Land, Infrastructure, Transport and Tourism to operate the airport. Additionally, subsidiary Ene-Vision Co., Ltd., completed construction of the Gotsu Biomass Power Plant in Gotsu-shi, Shimane Prefecture and commissioned it into operation.

Chemicals & Electronics

Net sales increased 15.0 billion yen (1.0%) year on year to 1,475.6 billion yen.

In the chemical and synthetic resin business, subsidiary SDP Global Co., Ltd., established SDP Global (Malaysia) SDN. BHD. in Malaysia to meet growing demand for superabsorbent polymers in the wake of rising living standards in ASEAN nations. The new company is slated to commence production in 2018. In the electronics business, subsidiaries Tomen Electronics Corporation and Toyota Tsusho Electronics Corporation have joined forces to expand their collective footprint in the automotive, medical and industrial (e.g., factory automation) equipment markets through Tokyo Electron Device Ltd. (TED) and TED's inrevium brand.

Food & Agribusiness

Net sales increased 42.7 billion yen (14.8%) year on year to 332.2 billion yen.

In the agriculture and aquaculture business, the Group signed a memorandum of understanding with Kinki University to collaborate more closely in the aquaculture business and established Tuna Dream Goto Fish Nursery Center in Goto-shi, Nagasaki Prefecture, in the aim of stably producing and supplying Bluefin tuna hatchlings. In the grain business, the Group acquired an equity stake in NovaAgri Infra-Estrutura de Armazenagem e Escoamento Agrícola S.A., an operator of grain infrastructure in central and northeastern Brazil, making it a subsidiary.

Consumer Products & Services

Net sales increased 1.6 billion yen (1.5%) year on year to 115.1 billion yen.

In the living & healthcare business, the Group formed an alliance with Sharp Corporation and Hikari Sports Corporation and ramped up a hitherto pilot venture to provide health management services at fitness facilities. The venture is now pursuing new customers. Additionally, the Group reached an agreement with Prince Hotels, Inc., to open a hotel and conference center at Global Gate, a mixed-use development under construction in Nagoya's Sasashima Live 24 district.

Consolidated Financial Condition

At December 31, 2015, consolidated assets totaled 4,310.5 billion yen, a decrease of 223.1 billion yen from March 31, 2015. Factors behind the decrease included reductions in trade notes and accounts receivable, cash and cash equivalents, and inventories of 60.0 billion, 53.9 billion, and 52.3 billion yen, respectively. Consolidated net assets at December 31 totaled 1,223.6 billion yen, a decrease of 80.8 billion yen from March 31. Although retained earnings grew 13.4 billion yen, mainly as a result of net income attributable to owners of the parent, this addition to net assets was offset by a 6.7 billion yen decrease in net unrealized gains on available-for-sales securities and a 74.5 billion yen decrease in foreign currency translation adjustments.