Message from the President

President, Saguchi Toshiyasu President, Saguchi Toshiyasu

Gunze continues to strive to achieve the targets of the second phase of the “CAN20,” the current Medium-Term Management Plan.

In the fiscal year that ended March 31, 2021, the Japanese economy suffered from considerable restrictions on personal spending and corporate activities caused by the spread of COVID-19. This situation arose out of the Japanese government’s requests for business suspension, as well as from the need for people to avoid nonessential travel.
Even now, the situation remains unpredictable due to resurgence of COVID-19, which resulted in the Japanese government’s reissuance of the declaration of the state of emergency. In the stock market, however, the aggressive monetary-easing policy caused a significant rise in the Nikkei Stock Average, which hit its highest level since the collapse of the bubble economy. As such, the gap between the financial markets and the real economy has become a matter of concern.

In the second phase of the GUNZE Group’s “CAN 20” medium-term management plan, the GUNZE Group has been promoting three pivotal strategies, based on the key concept of “Focus and Concentration.” They are: implementation of segment-specific business strategies, creation of new businesses, and reinforcement of the management foundation. However, because of the heavy impact of the COVID-19 pandemic on the GUNZE Group’s business, we have decided to place top priority on measures to minimize the impact of COVID-19 in fiscal 2020. As such, we are extending the period of the second phase of “CAN 20” up to the fiscal year ending March 31, 2022.

GUNZE’s functional solutions business was adversely impacted by the spread of COVID-19 in various business fields. In the apparel business, although GUNZE worked hard to promote sales on the fast-growing e-commerce channel, the sales increase in this channel was not enough to offset the slump in in-store sales. The lifestyle creation business was also heavily affected by temporary closures of shopping centers and sports clubs.

Consequently, the GUNZE Group’s consolidated net sales for the fiscal year under review amounted to ¥123,649 million (a year-over-year decrease of 11.9%).
Consolidated operating income amounted to ¥4,673 million (a year-over-year decrease of 30.7%). Consolidated ordinary income was ¥5,094 million (a year-over-year decrease of 25.8%). Consolidated net income attributable to owners of the parent amounted to ¥2,147 million (a year-over-year decrease of 51.1%).

Results by business segment are as follows:

In plastic films, shrink label films for beverage bottle applications experienced slow sales due to the need for people to avoid going on outings or attending events to contain the spread of COVID-19. However, sales of packaging films were strong because of increasing demand related to home cooking. In engineering plastics, products for the semiconductor market performed strongly, but products for office equipment suffered from sluggish sales. In electronic components, touch screen sales decreased due to stagnant demand for repeat orders for existing products, and postponements in new product launches. Medical material sales were put on the recovery track, despite the ongoing negative impact from the decrease in surgical operations and restricted access to medical institutions.
Consequently, the functional solutions business posted net sales of ¥49,673 million (a year-over-year decrease of 11.9%) and operating income of ¥4,852 million (a yearover-year decrease of 20.7%).

The apparel business as a whole was back on course for recovery, but suffered from slow in-store sales resulting from the reissuance of the declaration of the state of emergency and other factors. In innerwear, the e-commerce and drugstore channels performed strongly, helping to boost the sales growth of basic products and women’s innerwear. In legwear, leggings performed well, but overall legwear sales were adversely affected by decreased opportunities for wearing stockings as people refrained from going on nonessential outings or attending events.
Consequently, the apparel business posted net sales of ¥62,640 million (a yearover-year decrease of 9.9%) and operating income of ¥2,306 million (a year-over-year decrease of 15.9%).

In the real estate category, commercial facilities experienced a decrease in the number of visitors, caused by the resurgence of COVID-19. However, revenues from new properties positively contributed to the performance of the property leasing business. In the sports club business, the spread of COVID-19 caused a substantial drop in the number of members, which resulted in a delayed recovery even after the closure requests by the government were cancelled.
Consequently, the lifestyle creation business recorded net sales of ¥11,976 million (a year-over-year decrease of 19.9%) and operating income of ¥482 million (a year- over-year decrease of 59.4%).

FY 2021 is the final year of the second phase of our Medium-Term Management Plan “CAN20.” At the same time, we are also formulating our next Medium-Term Management Plan. Gunze remains dedicated to achieving the targets for the second phase of “CAN20” while taking sufficient measures to minimize the unfavorable effects of COVID-19. Your continued support and guidance will be greatly appreciated.

June 2021

President, Saguchi Toshiyasu

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