The percentage figures for breakdown of net sales and operating income by segment
- Note: Net sales and Operating income by segment include intragroup transactions between segments
Single-Family Houses Business
In the Single-Family Houses Business segment, during the term under review, we earnestly addressed our role as a home builder and pursued community-based business projects to expand sales.
In our custom-built houses business in Japan, we aim to meet customer needs with a varied product lineup. This includes, most notably, our xevoΣ single-family house, which boasts a strong level of earthquake resistance guaranteed to last for many years, as well as comfort thanks to exterior wall thermal insulation and 2.72-meter-high ceilings for a spacious living environment. The xevo Gran Wood is another of our top-of-the line wooden-house products, and we also offer our "skye" home in three-, four-, and five-story versions. And since November 2019 we have been offering our "Lifegenic" products, which can be individually designed by the customer employing our simple, user-friendly website.
In June, as a home environment proposal to match the "new normal," we began proposing our company's original telework style "Comfortable workplace" and "Connecting work pit" which allows owners to work from home comfortably. This is one of our steps to promote business expansion.
In our overseas operations, in the United States, Stanley-Martin Communities, LLC and Trumark Companies, LLC focused on sales employing information technology. Meanwhile, the COVID-19 pandemic had little impact on the number of contracts signed or the number of properties handed over, and their business performance remained favorably on track.
However, due to the impact of COVID-19, net sales for this segment amounted to 90,902 million yen (-10.3% year on year), while operating loss of 1,027 million yen was recorded which compares with an operating income of 1,553 million yen for the corresponding quarter of the previous fiscal year.
Rental Housing Business
In the Rental Housing Business segment, we make proposals based on a comprehensive balancing of the various factors involved, including the needs of individual land owners, the particular characteristics of each site, and overall market demand. Our land-use proposals are tailored to achieve optimal value, not only for the land owners themselves, but also for the prospective residents and the wider regional community.
In the Japanese market, we have been seeking to expand the volume of orders received through various proposals targeted at land owners, who are spending more time at home as a result of the voluntary adoption of the "stay home" strategy to fight the pandemic. These proposals include providing additional support for the resolution of issues by delivering information on "asset health checkups" to address owners' concerns about passing on their assets to the next generation as well as proposals for the construction and management of rental housing and medium- to high-rise properties located in city centers and urban areas in general.
Overseas, at the end of April 2020 we commenced operation of our second serviced apartment building in Vietnam. Despite the COVID-19 pandemic, the property has enjoyed a steady inflow of tenants.
However, due to the impact of COVID-19, net sales for this segment amounted to 216,491 million yen (-10.8% year on year), while operating income came to 16,463 million yen (-33.7% year on year).
In the Condominiums Business segment, during the term under review, in addition to constructing condominiums designed to reduce environmental impact that provide asset value and a high level of added value for both the owners and the community at large, we also strove to improve our condominium building management support service, in which we leverage an integrated and comprehensive system to enable a safe residential experience, with peace of mind.
In Japan, we halted operation of our marketing activities at "model room" sites around the country in response to the government's declaration of a state of emergency, and then restarted them once the state of emergency was declared over. There has since been a gradual return to the sort of visitor numbers we saw prior to the shutdown. In the Tokyo area, the sale of units at the " Premist Shimura-Sanchome " project has been progressing at a good pace. This is attributable to the site's easy access to Tokyo city center and the fact that the location offers a good selection of shops and other facilities essential to day-to-day living. In addition, the condominium offers "Shared LDK" units which function as shared working spaces (coworking spaces) suitable for teleworking, usable by all residents. This has proved very popular. In our Chubu marketing area, the" Premist Inagawa" offers pleasant living spaces, and has been designed to take the needs of the natural environment into account. Thanks to this, it has attracted favorable responses, and has been selected by the Agency for Natural Resources and Energy of METI as the first pilot project for a net zero-energy high-rise condominium (designated as ZEH-M in Japan) in Shizuoka Prefecture.
Group member Cosmos Initia Co., Ltd. exercised "self-restraint" in respect to the marketing of lot-subdivision properties in April and May via personal, face-to-face sales, in response to the COVID-19 pandemic, and instead made extensive use of online marketing. With the subsequent resumption of face-to-face sales (when the customer requests it), the company has seen sales trending roughly in line with its forecasts. Cosmos Initia also designed a plan for condominium buildings being renovated, whereby workspaces are built into dwelling units, and these units are being put on sale.
In our overseas operations, sales of units in our two properties which went on sale last year in China were unaffected by the COVID-19 pandemic. We received applications for home unit purchases right from the first day of sale.
However, due to the impact of COVID-19, net sales for this segment amounted to 46,224 million yen (-38.3% year on year), while operating loss of 1,928 million yen was recorded which compares with an operating income of 4,129 million yen for the corresponding quarter of the previous fiscal year.
Existing Homes Business
In the Existing Homes Business segment, the mainstay of our business is to provide renovation proposals through inspections and diagnosis to owners of single-family houses and rental housing constructed by the Company. Self-restraint was exercised in this business from March to mid-May, amid the ongoing COVID-19 pandemic, as a result of which the value of orders received in April and May recorded a year-on-year slump. Upon resuming normal operations in June, however, orders recovered to the level for the average year.
In our Livness business, we worked to inject greater vitality into the market for good-quality previously-owned homes. Specifically, Daiwa House Industry's Single-Family Houses Division opened 51 offices nationwide, while Nihon Jyutaku Ryutu Co., Ltd. opened one new office each in Hiroshima and Chiba prefectures, to meet the needs of a wide range of customers, particularly home owners.
However, due to the impact of COVID-19, net sales for this segment amounted to 20,307 million yen (-43.3% year on year), while operating loss of 83 million yen was recorded which compares with an operating income of 6,336 million yen for the corresponding quarter of the previous fiscal year.
Commercial Facilities Business
In our Commercial Facilities business, we designed and proposed store-opening plans that both matched tenant corporations' strategic needs and took into account the impact of the COVID-19 pandemic. The different plans offered included those that make the best of the particular characteristics of each region and meet a wide range of needs.
In particular, we strengthened our efforts in the field of large-scale projects such as commercial buildings and office buildings. Also, for customers looking for options in the purchase of real estate for investment purposes, we took steps to expand our services to encompass land acquisition, construction, and leasing-out to tenants.
In the Japanese market, we had a grand opening the "iias Okinawa Toyosaki," a large-scale shopping mall that includes an aquarium, in Toyosaki, Tomigusuku, Okinawa Prefecture in June 2020, and was the first of its kind in the prefecture. In these ways, we combine and utilize our management assets to develop multipurpose facilities that meet our customers' needs.
However, due to the impact of COVID-19, net sales for this segment amounted to 197,981 million yen (+9.7% year on year), while operating income came to 30,431 million yen (-3.9% year on year).
Logistics, Business and Corporate Facilities Business
In the Logistics, Business and Corporate Facilities Business segment, during the term under review, we worked to enhance the Group’s business scope by constructing a variety of facilities to suit the differing business needs of our corporate customers, and by providing total support services that enable customers to most effectively utilize their assets.
In Japan, as our marketing activities have been constrained by the COVID-19 pandemic, following the lifting of the state of emergency we focused on pre-arranged visits to customers. In the field of logistics facilities, we began construction of ten new facilities nationwide, leveraging our extensive experience and know-how to provide the essential back-up to our customers' logistics strategies. Particularly notable among these newly commenced projects is the" DPL Hiroshima Kan-on", which is being built on a former airfield site in Nishi-ku, Hiroshima City, and when completed will be the largest logistics facility in the Chugoku-Shikoku region.
In the field of medical and nursing care facilities, we targeted hospitals whose existing facilities are showing signs of aging and which do not meet current earthquake resistance standards, making proposals for reconstruction or relocation. We also strengthened our lineup of solutions to meet the management needs of healthcare corporations, such as those operating homes for senior citizens or multipurpose nursing care facilities.
In the area of support for offices, manufacturing plants, and so on, at the "Hofu No.2 Techno-Town"―a greenfield site currently being developed at Hofu City, Yamaguchi Prefecture—we put extra efforts into attracting the first corporate tenants to an industrial park developed by Daiwa House.
For food factories, we held seminars for manufacturers and processors of food products for making HACCP* compulsory, while also enhancing our proposals for the building of facilities adapted to safety certification.
However, due to the impact of COVID-19, net sales for this segment amounted to 234,606 million yen (-19.3% year on year), while operating income came to 24,585 million yen (-20.9% year on year).
* Hazard analysis and critical control points (HACCP) is a systematic preventive approach to food safety in production and preparation processes, in which the dangers posed by contamination by microorganisms at each stage of the process are analyzed and managed.
In our home centers business, we took a number of steps to help prevent the spread of the COVID-19. These included closing our home centers on Sundays during May 2020. In spite of that sales and profit increased due to demand among consumers choosing to stay at home.
In our Accommodation business, following the declaration of the state of emergency, Daiwa Resort Co., Ltd. was forced to close almost all its hotels, but following the end of the state of emergency, the company has been resuming business at one hotel after another, taking all due precautions to prevent the spread of the infection.
In the field of logistics, we experienced a decrease in the volume of goods transport as a result of the closure of many retail outlets and a reduction in operating hours by others in response to the declaration of the state of emergency. Following the lifting of the state of emergency, however, we have seen a gradual increase in logistics work volume.
In our fitness club business, Sports Club NAS Co., Ltd. temporarily closed all its facilities for the period up to May 31,2020, but from the start of June the company has been re-opening one facility after another, while observing the COVID-19 prevention guidelines for fitness centers promulgated by the Fitness Industry Association of Japan.
However, due to the impact of COVID-19, net sales for this segment amounted to 116,383 million yen (-4.2% year on year), while operating income came to 3,631 million yen (-24.3% year on year).
1. Net sales for each segment include internal (inter-segment) sales and transfers in addition to sales to external customers.
2. The above monetary amounts are exclusive of consumption tax, etc.