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Good afternoon, everyone. This is Keiji Taga of Kuraray. Thank you for taking time out of your busy schedule to participate in our conference call.
Let me begin the presentation of the financial results for the first quarter of FY 2021. This is Page 2. In the first quarter of fiscal year 2021, sales expanded due to recovery from the global economic stagnation caused by the spread of COVID-19. As shown on the slide, the business results for the first quarter were as follows: net sales increased by 5.5% year-on-year to JPY 144.4 billion. Operating income increased by 40.2% to JPY 16.8 billion. Ordinary income increased by 43.9% to JPY 16.3 billion, and net income decreased by 21.2% to JPY 5.3 billion. The decrease in net income was due to booking some extraordinary losses, including a litigation-related loss of JPY 3.1 billion tied to a fire accident in the U.S. and a disaster loss of JPY 3 billion coming from the impact of the cold wave hit the U.S. back in February.
Next is Page 3. I will now explain the status of our business by segment. The first is the Vinyl Acetate segment. This segment achieved higher sales and profits compared to the previous year. Please refer to the comments at the top right of this page for the sales status of each business. Operating income increased by JPY 5 billion from the previous year. The reasons for this are as follows: The volume difference resulted in giving an increase of JPY 6.7 billion due to increased sales in all businesses. Selling price and product mix was a negative impact because of the product mix. Raw materials, fuel and foreign exchange was affected by the sharp rise in raw materials and fuel prices, mainly due to the cold wave of the United States and resulted in being a negative impact of JPY 1.2 billion to profit. Others gave a negative impact of JPY 0.2 billion with an increase in logistics cost. With all these, sales and profits increased in the first quarter compared with the same period of the previous year.
Please go to Page 4. Next, in the Isoprene segment, sales increased and profits decreased slightly in the first quarter compared to the same period of the previous fiscal year. Please refer to the comments on this page for the status of sales in each business. Operating income decreased by JPY 0.1 billion. Volume difference provided an increase of JPY 0.7 billion to profit due to increases in sales volume. Selling price and the product mix gave a negative impact of JPY 0.2 billion to profit due to product mix change. Raw materials, fuel and exchange rate gave a decrease of JPY 0.3 billion due to higher raw material and fuel prices. Others had a negative impact of JPY 0.3 billion to profit, mainly due to an increase in logistics cost.
Please go to Page 5. In the first quarter of the Functional Materials segment, sales and profits decreased compared to the same period of the previous fiscal year. The status of sales in each business is as shown in the comments on the upper right. Operating income decreased by JPY 0.2 billion. Volume difference gave a positive impact of JPY 0.1 billion, mainly due to increased sales of medical products. Operating income decreased by JPY 0.3 billion due to the impact of higher raw material and fuel prices. In terms of others, goodwill amortization was decreased, but logistics cost was increased, and there was no net impact given by others as a whole.
Page 6. In the Fibers and Textiles segment, sales and profits decreased in the first quarter compared to the same period of previous year. Please refer to the comments listed for the status of sales in each business. Operating income decreased by JPY 0.5 billion. In terms of volume, sales of CLARINO increased but as other businesses decreased. Volume gave a negative impact of JPY 0.1 billion. Selling price/product mix gave a JPY 0.2 billion negative impact to profit due to product mix change. Raw materials, fuel and exchange rate gave a negative impact of JPY 0.1 billion due to the impact of higher raw material and fuel prices in each business segment. Others gave a negative impact of JPY 0.1 billion due to the logistics cost rise.
Please turn to Page 7. This slide shows the first quarter results of net sales and operating income for each segment compared to the same period of the previous year. This is just for your reference.
Page 8. This slide shows a company-wide summary of the factors affecting the operating income. This is also for your reference.
This is Page 9. This slide shows the assets section of the balance sheet compared to the end of last year. Notes and accounts receivable trade increased by approximately JPY 5 billion due to the increase in sales. But as cash and cash deposits decreased by approximately JPY 30 billion due to the redemption of commercial paper, current assets decreased by JPY 23 billion in total. Fixed assets increased by JPY 20.1 billion due to the increase in the valuation of a fixed assets of overseas subsidiaries and goodwill due to the depreciation of the yen.
This is Page 10. This slide shows the liabilities and the net assets section of the balance sheet. Current liabilities decreased by JPY 27.2 billion. This is mainly due to the redemption of commercial paper and the payment of a settlement due to the progress of a lawsuit involving a fire accident at the U.S. subsidiary. Total net assets increased by JPY 22.8 billion, mainly due to an increase in foreign currency translation adjustment. As a result, the equity ratio increased by 2.2% from the end of FY 2020 and has become to be 49.6%.
Page 11. This slide shows the revised forecast for FY 2021 being compared to the initial forecast. In the first quarter, sales volume increased in the many businesses due to continued strong demand for displays and electronic devices as well as a recovery in demand for automotive applications. This trend is expected to continue in the second quarter, and we have hence revised our first half earnings forecast. As mentioned at the beginning of this report, in the first quarter, we booked extraordinary losses of JPY 3.1 billion related to litigation in the U.S. and JPY 3.0 billion due to the cold wave in the U.S., respectively, but we have not changed our forecast for net income. No revision has been made to the full year earnings forecast at this point.
Please turn to Page 12. This slide shows a comparison between the revised forecast for FY 2021 and the actual results of FY 2020. This is another page for your reference.
Page 13. We are here comparing the sales and operating income by segment of the revised forecast for the first half of FY 2021 with the initial forecast.
Now this is Page 14. Again, for your reference, here, the revised forecast of net sales and operating income by segment for the first half of FY 2021 is compared with those of the previous fiscal year.
This concludes the presentation. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]