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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Hello, everyone. This is Taga speaking. Thank you for taking the time out of your busy schedule to attend our conference call.
Let me now turn to the earnings results for the third quarter FY 2022. Please turn to Slide 2. In the third quarter of FY 2022, economy continues to recover gradually as countries eased restrictions on economic activities. However, there are signs of a slowdown in the recent months and uncertainty over the future heightened.
Meanwhile, we revised our selling prices in response to rising raw material and fuel prices and logistics costs. As a result, as shown on the slide, our net sales was JPY 553.2 billion, an increase of JPY 94 billion year-on-year. Operating income was JPY 70.8 billion, higher by JPY 16.5 billion. And net income was JPY 47.2 billion, up JPY 18.6 billion, posting both higher sales and profit.
Foreign exchange and raw material actuals are indicated on the slide. Please turn to Page 3.
This slide compares the third quarter net sales and operating income by segment. We have posted year-on-year increase in sales and profits in many of our businesses. Please turn to Page 4.
This slide summarizes the company-wide factors affecting the changes in operating income. Raw materials and fuel and exchange rate was the cause of the negative factor at minus JPY 46.8 billion, while selling price and product mix was positive at JPY 56.9 billion. While others include increase in logistic costs and expenses, it is JPY 10.5 billion positive due to inventory valuation difference.
Now regarding the term inventory valuation gains and losses, which we have been using to explain from this year. Since this expression is not used internally, we will align the terminology we use internally to inventory valuation difference, but the content, the meaning remains the same. Please turn to Page 5. I will explain the business situation by segment. First is the vinyl acetate segment. This segment posted higher sales and profit compared to the previous year. For the sales situation of each business, please refer to the comments on the right side of the slide.
Operating income increased by JPY 15.2 billion year-on-year. Raw materials and fuel cost, as well as exchange rates, were negative JPY 33.2 billion due to rising raw material and fuel prices. Meanwhile, as a result of price revision, selling price and product mix was positive at JPY 39.5 billion, contributing to the profit increase of overall segment. Please turn to Page 6.
This is Isoprene segment. This segment had higher sales but lower profit compared to the previous year. For the sales situation of each business, please refer to the comments on the right side. Operating income was minus JPY 900 million. Selling price and product mix was plus JPY 5.8 billion due to price revision. Meanwhile, raw materials and fuel, as well as exchange rate, was minus JPY 4.3 billion due to the impact of soaring prices of raw materials and fuel. Please turn to Page 7.
Functional Materials posted higher sales and profits in the third quarter. Sales situation of each business is as stated on the right side of the page. Raw materials and fuels, as well as exchange rate, was minus JPY 6.1 billion. While selling price and product mix was positive at JPY 8.3 billion achieved through price revisions, which included the increase in fuel and material cost of the previous year. As a result, operating income was plus JPY 1.1 billion year-on-year. Please turn to Page 8.
Next is the Fibers and Textile segment. This segment also posted higher sales and profit year-on-year. Please refer to the comments section for the sales situation of each business. Operating profit was higher by JPY 2 billion year-on-year, while raw materials and fuel and exchange rate pushed down the profit with minus JPY 2.5 billion. Selling price and product mix were positive at JPY 3.2 billion year-on-year. Please turn to Page 9.
This slide is a year-on-year comparison of the assets section of the balance sheet. Current assets increased by JPY 44.2 billion. While cash and equivalents decreased by JPY 63 billion, sales increase and weaker yen have caused increases in accounts receivables by JPY 20.8 billion year-on-year.
In addition, inventories increased by JPY 84 billion due to exchange rate and rising raw materials and fuel prices. Noncurrent assets increased by JPY 80.5 billion due to increase in CapEx as well as higher valuation of fixed assets of our overseas subsidiaries as a result of weaker yen. Please turn to Page 10.
This presents our liabilities and net assets on the balance sheet. While long-term borrowings decreased by JPY 38.3 billion, as a result of issuing commercial papers and corporate bonds along with weaker yen, the total liabilities increased by JPY 11.1 billion.
Net assets increased by JPY 113.5 billion. As a result, equity ratio increased by 3.9% from the end of 2021 to 55.2%. Next on Page 11 is our full year earnings forecast.
With regards to net sales, we have priced in our Q3 year-to-date financial results and currency effect and revised our forecast to JPY 760 billion, which is higher by JPY 20 billion from the previous forecast. Operating income and ordinary income remain unchanged in consideration of trends in raw material and fuel as well as the recent slowdown in economy.
Net income will be revised upward by JPY 3 billion to JPY 48 billion in light of our Q3 year-to-date performance. Page 12 onward is a comparison of revised earnings forecast by segment and detailed numerical information. This is for you to be for your reference.
Let me briefly supplement on Page 16 on the reference pages. Page 16 shows the quarterly trend on operating income. While the level of profit for Q3 2022 is high, Q4 profit is lower. Actually, Q4 profits tended to be lower than Q3 from before, but there are some additional reasons to this.
First of all, the scheduled maintenance of some plants and group companies in Q4 will be taking place. Also, the effect of selling relatively low-cost inventory of the first half in the third quarter. And there was an increase in the cost of products to be sold in Q4 as a result of rising raw material and fuel and the impact of production adjustment of certain products.
So this is an overlay of multiple reasons. And so we hope you will look at Q3 and Q4 together when you analyze the earnings forecast for the second half. So that is all from me. Thank you very much for your kind attention.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]