#Japan #Tokyo #Construction Materials #Sumitomo Forestry #Geolive Group

Strategic Business Alliance Between Sumitomo Forestry and Geolive Group

On August 29, 2023, Sumitomo Forestry Co., Ltd. (President: Toshirou Mitsukoshi, Headquarters: Chiyoda, Tokyo) and Geolive Group Co., Ltd. (President: Hiroyuki Ueki, Headquarters: Minato, Tokyo) entered into a capital business alliance agreement. This collaboration aims to elevate the corporate value of both companies and promote sustainable growth in the timber and construction material distribution sector.

As part of this arrangement, Sumitomo Forestry will acquire 100% of the shares of Benia Shokai, which holds 27.19% of the stocks of Geolive Group, increasing its total holdings to 30.3%, including previously owned shares. Consequently, Geolive Group will become an associated company referenced under the equity method of Sumitomo Forestry. Furthermore, in an effort to enhance and expand its exterior and sash businesses, Geolive Group will also acquire all shares of several subsidiaries related to timber material distribution owned by Sumitomo Forestry.

The Changing Landscape of the Timber and Construction Material Distribution Industry

The domestic housing market is facing significant challenges due to declining birth rates and a shrinking population, leading to an expected decrease in new housing starts. This is compounded by a shortage of skilled labor, as many artisans are aging, coupled with succession issues among construction firms. Additionally, the industry must adapt to legal changes aimed at realizing a decarbonized society and meet the increasing demand for high-quality housing stock. These factors are contributing to an intensifying competition for maintaining operational territories, which will likely require enhanced functions in logistics, processing, and construction within the industry.

Objectives of the Capital Business Alliance

Sumitomo Forestry and Geolive Group aim to leverage their respective strengths to build a robust revenue base. Sumitomo Forestry will focus on expanding its wood and building materials manufacturing and distribution businesses, while promoting domestic wood utilization through its wood processing business. Geolive Group will utilize its extensive logistics, processing, and construction capabilities to group the four timber distribution subsidiaries of Sumitomo Forestry, strengthening functions related to exterior materials and sash deliveries in the Chubu and Western Japan regions, thus driving business growth. Furthermore, both companies will provide solutions utilizing digital transformation (DX) for estimation and delivery services, as well as structural frame supply systems, improving overall productivity in the construction material distribution sector.

Details on the Business Collaboration

Both Sumitomo Forestry and Geolive Group will explore collaboration on the following themes:
1. Streamlining logistics and various operations through DX initiatives.
2. Establishing structural frame supply systems and promoting simplified construction practices.
3. Promotion of carbon-neutral designs and materials, as well as the utilization of domestic resources.
4. Expanding into new markets and enhancing the sales of original products.

Sumitomo Forestry Group operates globally with businesses centered on “wood,” ranging from forest management and timber material manufacturing and distribution to building and real estate, as well as wood biomass power generation. Their long-term vision, “Mission TREEING 2030,” aims to enhance the carbon dioxide absorption capacity of forests by circulating their value chain, thereby contributing to societal decarbonization.

Geolive Group focuses on developing construction material distribution businesses throughout Japan. They are strengthening their initiatives towards a decarbonized society by expanding energy-related products, such as solar energy systems, and improving the support systems for construction contractors in response to increasingly complex residential buildings. M&A strategies are also being employed to bolster construction functions in the non-residential sector, expediting new business developments beyond traditional construction material distribution boundaries.

Company Profiles

Sumitomo Forestry Co., Ltd.

• - Headquarters: 1-3-2 Otemachi, Chiyoda, Tokyo
• - Representative: President Toshirou Mitsukoshi
• - Established: February 20, 1948
• - Capital: ¥55,101 million
• - Business Overview: Wood and building material business, housing, architectural and real estate operations, resource and environmental services, and lifestyle service businesses.
• - Website: Sumitomo Forestry

Geolive Group Co., Ltd.

• - Headquarters: 6-3-4 Shinbashi, Minato, Tokyo
• - Representative: President Hiroyuki Ueki
• - Established: October 1, 2009
• - Capital: ¥850 million
• - Business Overview: Purchase and sale of plywood, construction materials, and housing equipment.
• - Website: Geolive Group

Subsidiaries of Sumitomo Forestry Group

1. Igeta Toei Co., Ltd.
- Headquarters: 1-15 Juunihaya, Minato, Nagoya, Aichi
- Established: April 3, 1950
- Capital: ¥150 million
- Business Overview: Wholesaling of residential-related materials.

2. Sumirin Sash Center Co., Ltd.
- Headquarters: 1650-38 Okuhara, Ushiku, Ibaraki
- Established: December 8, 1981
- Capital: ¥50 million
- Business Overview: Processing and sales of residential aluminum sashes.

3. Jukyo Co., Ltd.
- Headquarters: 22-25 Shima, Ibaraki, Osaka
- Established: October 1, 1971
- Capital: ¥20 million
- Business Overview: Assembly, processing, installation, and sale of architectural aluminum sashes.

4. Jukyo Wintech Co., Ltd.
- Headquarters: 763-2 Oouchida, Kita, Okayama
- Established: August 19, 1976
- Capital: ¥22 million
- Business Overview: Installation and sales of sash and exterior products for residential and commercial properties.