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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for joining Kuraray earning report conference call. Let us now share with you all our fiscal year 2021 third quarter financial results.
This is Page 2. In fiscal year 2021 third quarter, the global economy showed recovery in general with the advancement of the COVID-19 vaccination provision and hence the revitalization of economic activities mainly in developed countries and China. As a result, as shown in this slide, net sales increased by JPY 65.4 billion to JPY 459.2 billion. Operating income increased by JPY 21.8 billion to JPY 54.3 billion, and net income increased by JPY 13.5 billion to JPY 28.6 billion. Sales and profits both increased significantly. The results of foreign exchange and raw materials and fuel costs are shown at the bottom of the page as reference.
Next on Page 3. This slide shows the third quarter results of net sales and operating income for each segment compared to the same period last year. Despite significant increases in raw material and fuel prices and logistics costs, sales increased due to the growth in demand and price negotiations advancement to respond to rising costs. As a result, sales and profits increased in all businesses compared to the same period of the previous year.
Now on Page 4. From here, let me explain the status of our business by segment. The first is the Vinyl Acetate segment. In this segment, sales and profits increased compared to the previous year. For the status of sales in each business, please refer to the comments on the top-right table. Operating income increased by JPY 14.9 billion versus the previous year. As a result of price negotiations in response to rising raw material and fuel prices and logistic costs, selling price/product mix component has given an increase of JPY 7.1 billion to operating income. However, as the raw material and fuel prices continue to rise, raw materials, fuel and exchange became a negative factor of JPY 15.4 billion. Other was a negative factor of JPY 2.0 billion, mainly due to an increase in logistic costs. Meanwhile, due to the increase in sales volume in all businesses, volume difference has given an uplift of JPY 25.3 billion to the operating income. As a whole, operating income increased for the whole segment from the same period last year.
Page 5. Next is Isoprene segment. In this third quarter, this segment, too, achieved higher sales and profits compared to the same period of previous year. Please refer to the comments in the upper right-hand corner for the status of sales in each business. Operating income increased by JPY 2.6 billion. In this segment, the total impact of raw materials and fuel, foreign exchange and others put together was a negative JPY 3.6 billion due to the impact of higher raw material and fuel prices and logistic costs. Meanwhile, with increased sales and progress in price negotiations, the total impact of volume factor and selling price/product mix factor together was a positive JPY 6.2 billion impact to operating income. As a result, the segment as a whole recorded an increase in profit.
Now on Page 6. The Functional Materials segment achieved year-on-year increases in both sales and profits this third quarter. The status of sales in each business is as shown in the comments, operating income increased by JPY 2.4 billion. In this segment, too, raw materials and fuel, foreign exchange and others, mainly logistics costs, were negative factors to operating income. And they gave together a negative impact of JPY 2.1 billion. Selling price/product mix was a factor in the increase of JPY 1.3 billion. This came with the progress of price negotiations as well as continued favorable market conditions in the methacrylic business. And this improvement in selling price, product mix and volume together created an uplift of JPY 4.4 billion. The segment as a whole recorded an increase in profit.
Page 7. Next is the Fibers and Textiles segment. This segment also achieved higher sales and profits compared to the same period last year. For the status of sales in each business, please refer to the comments listed. Operating income of this segment increased by JPY 1.6 billion. The raw materials, fuel and foreign exchange component and the other, which is mainly logistics costs, each gave a negative impact of JPY 0.6 billion. Although price negotiations were held in response to rising costs, with the given product mix, selling price/product mix factor was a negative factor of JPY 0.1 billion. Meanwhile, the volume factor gave an increase of JPY 2.9 billion. As a result, the segment as a whole recorded an increase in profit.
This is Page 8. This slide shows, as a reference, a company-wide summary of the factors impacting operating income.
Now on Page 9. This is a comparison of the assets section of the balance sheet with the end of last year. In current assets, notes and accounts receivable trade increased by JPY 9.8 billion and inventories by JPY 17.4 billion due to the increase in sales. But cash and deposits dropped by JPY 37.4 billion due to the redemption of commercial paper. Total assets, hence, decreased by JPY 10.8 billion. Fixed assets increased by JPY 21.4 billion. This was due to an increase in capital investment and an increase in the valuation of fixed assets of overseas subsidiaries due to the depreciation of the yen.
This is Page 10. This slide shows the liabilities and net assets section of the balance sheet. Liabilities decreased by JPY 33.4 billion. In addition to the redemption of commercial paper and corporate bonds, the main factor was the payment of a settlement received for the fire accident of the U.S. subsidiary. Net assets increased by JPY 44.0 billion. As a result, the equity ratio increased by 3.5 points from the end of fiscal year 2020. And now it is 51.0%.
Page 11. Based on the results for the third quarter and the current business environment, we have revised our full year forecast for fiscal year 2021. This slide shows the revised full year forecast for 2021 compared to the previous forecast announced on August 12. Net sales are expected to increase by JPY 5 billion to JPY 615 billion. Operating income is expected to increase by JPY 4 billion to JPY 70 billion. And net income is expected to increase by JPY 2.0 billion to JPY 35.0 billion.
Page 12. Here, we're comparing net sales and operating income by segment of the revised full year earnings forecast for fiscal year 2021 with the previous forecast.
Page 13. Here, we're comparing net sales and operating income by segment of the revised full year earnings forecast for 2021 with the actuals of the previous year.
Page 14. This slide is showing the operating income bridges of each segment, highlighting how each factors are contributing to the numbers in the revised fiscal year 2021 full year forecast.
Page 15. This is the operating income bridge chart for the whole company, highlighting how each factors are contributing to the numbers in the revised fiscal year 2021 full year forecast.
Page 16. This slide shows the quarterly changes of raw materials, fuel and exchange rates and selling price/product mix coming from quarterly operating income analysis, including the forecasted figures for the fourth quarter. As a result of price negotiations, the amount of increase in profit from selling price/product mix is getting larger with each passing quarter, but it has not yet caught up with the increase in raw material and fuel pricing rises. We continued the effort of passing and reflecting costs to sales prices while making sure that we gain understanding from our customers.
Page 17. This slide shows the quarterly trend of net sales by segment, including the forecast for the fourth quarter.
Page 18. This slide shows the quarterly trend of operating income by segment, including the forecast for the fourth quarter.
That concludes this session. Thank you for your attention.