October 28, 2005


Sanix Revises First-Half Earnings Forecasts



Fukuoka, October 28, 2005 - SANIX Inc. (Ticker: 4651, TSE/OSE/FSE, President & CEO: Shin-ichi Munemasa) announced downward revisions of its earnings forecasts for the first-half ended September 30, 2005.

1. Details of the revisions

1) Revision to first-half consolidated results forecast
(April 1, 2005 to September 30, 2005)

（Millions of Yen）
Net Sales
Recurring Profit
Net Income
Previous Forecast
(as of August 9, 2005)
21,978 
424 
334 
Revised Forecast
20,540 
(860) 
(1,290) 
Difference
(1,438) 
(1,284) 
(1,624) 
% Change
(6.5) 
- 
- 
Results from year before
22,748 
(289) 
(415) 

2) Revision to first-half non-consolidated results forecast
(April 1, 2005 to September 30, 2005)

(Millions of yen)
Net Sales
Recurring Profit
Net Income
Previous Forecast
(as of August 9, 2005)
21,000 
360 
300 
Revised Forecast
19,770 
(930) 
(1,330) 
Difference
(1,230) 
(1,290) 
(1,630) 
% Change
(5.9) 
- 
- 
Results from year before
21,910 
(301) 
(385) 

2. Reasons for the downward revision:
During this interim period, media reports on a series of frauds by many nefarious housing improvement operators attracted keen public attention. Negative impressions caused by these incidents led to consumer distrust in the housing improvement industry and door-to-door sales, and the resulting shrinkage of the market has negatively affected the Company’s business.

In this adverse environment, consumers’ holding-off from buying has affected the businesses of the Home Sanitation (HS) Division and Establishment Sanitation (ES) Division during the second quarter. Since the mass media coverage of these frauds began to calm down from about mid-August, we had expected that our sales would gradually recover, after reaching the bottom in July. However, due to the prolonged influence, sales of both divisions for the second quarter declined from the same period last year even more sharply than we had previously expected. Moreover, in the Environmental Resource Development Division, revenues from electric power sales declined resulting from the suspended operations of the Tomakomai Power Plant of Sanix Energy Inc. (Tomakomai City, Hokkaido) because of a fire that occurred at the plant in the end of August. As a result, we are obliged to modify our previous forecast of the Company’s consolidated sales for the interim period.

Regarding profits/loss, the Company expects an operating loss for this interim period, due primarily to the unexpectedly sharp decline in the revenues of the HS and ES divisions, both businesses having high margin profit ratios. For this interim period, then, net income is expected to be negative, due to the ordinary loss combined with a special loss of 220 million yen, calculated based on an estimate of increasing fuel storage costs in the latter half resulting from the suspended operations of the Tomakomai Power Plant in the Environmental Resource Development Division, together with a special loss of 147 million yen incurred by the transfer of the head office building. Consequently, the Company has modified its previously announced forecasts for the consolidated ordinary profits/loss and consolidated net profits/loss for this interim period.

For the same reason as above, the Company has also modified its forecast of non-consolidated operating results for this interim period.

(Note) These forecasts are based on information available as of October 28, 2005. Actual results may be different from forecasts due to various unexpected factors in the future.
 
 

For more information, please contact:
Kozo Inoue, Managing Director
E-mail: k-inoue@sanix.co.jp