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I would like to thank all of our shareholders for their continued support.
I would like to extend my greetings as I deliver the 211th Interim Report (April 1, 2023 to March 31, 2024).

In the first half of FY 2023, consumer spending recovered with the normalization of socio-economic activities, including designation of COVID-19 as a Category V infectious disease. On top of this, the increase in inbound tourism and other factors led to a gradual recovery in the Japanese economy. On the other hand, the economic outlook remains uncertain due to exchange rate fluctuations caused by global monetary tightening and inflation resulting from hikes in raw material and energy prices.

It is in this business environment that we are pursuing the basic policies of our ACTION22-24 medium-term business plan, which began in April 2022, namely the strengthening of our business foundation, initiatives for the next innovative growth, and initiatives toward sustainability management. In the current, second year, we have continued to take on the challenge of creating and working on new projects. For the industrial materials segment, we have started construction of a new plant for Shikibo Sakai Ltd., which is the base of our food and chemical product business and positioned as a new core business. In addition, based on the Code of Conduct revised last year, we have newly established our Action Plans, which specifically describe the human capital policy and environmental policy of the Shikibo Group, and we have been promoting sustainability management initiatives.

In terms of business results, although sales increased year-on-year in line with market recovery, profits suffered due to the increased prices of raw materials and fuel and higher production cost caused by foreign exchange factors.
As a result, consolidated net sales for the current accounting period up to the second quarter were 19.351 billion yen (year-on-year increase of 4.6%), operating profit was 561 million yen (year-on-year decrease of 3.2%), ordinary profit was 551 million yen (year-on-year decrease of 6.0%), and quarterly net profit attributable to shareholders of the parent company was 401 million yen (year-on-year decrease of 47.8%).

For the second half of FY 2023 as well, we do not expect much positive turnaround in the business environment in terms of costs and exchange rate trends, but we will continue to work on improving profit margins in existing businesses, including further cost-cutting, production efficiency improvement, and cost pass-through. At the same time, we will steadily promote new initiatives in line with the basic policies and business strategies of the ACTION22-24 medium-term business plan.

In the textile segment, we have decided to establish a sales company in Vietnam, which had been delayed due to the COVID-19 pandemic. This will finally allow us to establish an overseas production and sales base, thereby accelerating our initiatives to expand overseas sales, which comes under the basic policies of the medium-term business plan. In the food and chemical product business of the industrial materials segment, we will make steady progress on the construction of the new plant at Shikibo Sakai Ltd., aiming to start operation in January 2025.
Furthermore, in the linen supply business of the real estate/service segment, the construction of a new plant and the renewal of facilities at Iwade First Office of Shikibo Linen Co., Ltd. will be completed by the end of this year, and the plant will be in full operation. This will allow us to expand our business through increased production capacity.

We aim to fulfill our social responsibility and improve our corporate value to realize a safe, reliable, and comfortable society that is kind to the environment to gain the support of our shareholders and stakeholders.

I would like to thank you again, and I hope to continue receiving support from all of our shareholders.

December 2023