Okamura : Financial Results for Third Quarter of Fiscal Year Ending March 31, 2024 (Consolidated)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

February 9, 2024

Consolidated Financial Results

for the Nine Months Ended December 31, 2023

(Under Japanese GAAP)

Company name:	Okamura Corporation
Listing:	Tokyo Stock Exchange
Securities code:	7994
URL:	https://www.okamura.com/
Representative:	Masayuki Nakamura, Representative Director, President and Chief Executive Officer
Inquiries:	Sakae Fukuda, Director and Executive Officer, Chief Financial Officer
Telephone:	[phone]

Scheduled date to file quarterly securities report:	February 13, 2024
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Not prepared
Holding of quarterly financial results briefing:	Not scheduled

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated Operating Results for the Nine Months Ended December 31, 2023 (From April 1, 2023 to December 31, 2023)

(1) Operating Results (cumulative)					(Percentages indicate year-over-year changes.)
				Net sales	Operating profit		Ordinary profit	Profit attributable to
					owners of parent
	Nine months ended		Millions of yen	%	Millions of yen	%	Millions of yen		%	Millions of yen	%
	December 31, 2023			210,221	6.4	13,191	64.3		14,990		58.5	12,634	37.6
	December 31, 2022			197,531	8.1	8,027	(14.5)		9,460		(11.1)	9,184	18.0
Note: Comprehensive income	For the nine months ended December 31, 2023:	¥16,703 million	[82.9%]
				For the nine months ended December 31, 2022:	¥9,132 million	[35.7%]
				Basic earnings	Diluted earnings
				per share	per share
	Nine months ended				Yen		Yen
	December 31, 2023				133.49		-
	December 31, 2022				93.98		-
(2) Financial Positions
				Total assets	Net assets		Equity ratio
	As of			Millions of yen	Millions of yen				%
	December 31, 2023				257,039		162,206				62.2
	March 31, 2023				252,914		152,702				59.6

Reference: Equity
As of December 31, 2023:	¥159,922 million
As of March 31, 2023:	¥150,756 million

2. Dividend

			Annual dividends per share
		First quarter-end	Second quarter-end		Third quarter-end		Fiscal year-end	Total
		Yen	Yen		Yen		Yen	Yen
	Fiscal year ended	-	22.00		-		33.00	55.00
	March 31, 2023
	Fiscal year ending	-	43.00		-
	March 31, 2024
	Fiscal year ending						43.00	86.00
	March 31, 2024 (Forecast)
Note: Revisions to the forecast of dividends most recently announced: None

3. Forecast of Consolidated Performance for the Fiscal Year Ending March 31, 2024 (From April 1, 2023 to March 31, 2024)

(Percentages indicate year-over-year changes.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	290,600		4.9	23,600	35.8	25,500	34.7	20,100	26.4	212.37

Note: Revisions to the forecast of performance most recently announced: None

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in a change in scope of consolidation): None
   Newly included: -
   Excluded: -
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury stock)

As of December 31, 2023

As of March 31, 2023

100,621,021 shares

100,621,021 shares

(ii) Number of treasury stock at the end of the period

As of December 31, 2023

As of March 31, 2023

5,975,261 shares

5,972,073 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Nine months ended December 31, 2023

Nine months ended December 31, 2022

94,647,212 shares

97,735,266 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts and other special matters
  The performance forecasts and other forward-looking statements contained herein are based on the information available to the Company at the time, and contain certain assumptions that the Company considers to be reasonable. They are subject to diverse factors that may cause actual results of operations and other items to differ significantly from the statements and forecasts. For a description of the assumptions underlying the performance forecasts and the points to note when using the performance forecasts in this document, etc., please refer to (3) Explanation of Forecast of Consolidated Performance and Other Forward-Looking Information in 1. Qualitative Information on Quarterly Financial Results on page 4 of the Attachments to this Financial Results summary.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	4
(3)	Explanation of Forecast of Consolidated Performance and Other Forward-Looking Information	. 4
2. Quarterly Consolidated Financial Statements and Principal Notes	5
(1)	Quarterly Consolidated Balance Sheets	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	7
(3)	Quarterly Consolidated Statements of Cash Flows	9
(4)	Notes to Quarterly Consolidated Financial Statements	11
	(Notes on going concern assumption)	11
	(Notes in case of significant changes in shareholders' equity)	11
	(Segment information, etc.)	11
	(Significant subsequent events)	12

1

1. Qualitative Information on Quarterly Financial Results

1. Explanation of Operating Results
   At the Okamura Group (the "Group"), our mission is to "contribute to society by creating environments where people can thrive with rich ideas and reliable quality." We aim to achieve a society where people can thrive.
   During the nine months ended December 31, 2023, the Japanese domestic economy was on a path toward the normalization of economic activity as behavioral restrictions resulting from COVID-19 were eased and inbound demand recovered due to the increase in foreign tourists. However, the outlook remained clouded due to factors such as geopolitical risk surrounding the situations in Ukraine and the Middle East, concerns surrounding the future of the Chinese economy, soaring materials and parts prices, and movements in interest and exchange rates due to global monetary tightening.
   Under these conditions, the Group worked to enhance its corporate value by providing society with high-quality products and services that accurately capture customer needs.
   As a result, for the period under review, the Group recorded net sales of 210,221 million yen (up 6.4% year over year), operating profit of 13,191 million yen (up 64.3% year over year), ordinary profit of 14,990 million yen (up 58.5% year over year), and profit attributable to owners of parent of 12,634 million yen (up 37.6% year over year).

Performance by segment is presented below.

		Net sales		Segment profit (loss)
	(Millions of yen)		(Millions of yen)
Segment name	Nine months	Nine months			Nine months	Nine months
ended	ended			ended	ended
		Change		Change
	December 31,	December 31,		December 31,	December 31,
	2022	2023			2022	2023
Office Furniture	107,302	109,503		2,200	7,291	8,450		1,158
business
Store Displays	76,135	81,979		5,843	1,949	3,633		1,684
business
Material Handling	9,734	13,772		4,037	(1,193)	928		2,122
Systems business
Other	4,359	4,966		607	(20)	178		199
Total	197,531	210,221		12,689	8,027	13,191		5,164

Note: The totals for segment profit (loss) correspond to operating profit on the quarterly consolidated statements of income.

2

Office Furniture business

In the Office Furniture business, it has become a key management issue for many companies, regardless of industry sector or scope, to structure offices that are compatible with new working styles, and demand for office refurbishment was vigorous. Under these conditions, Okamura Corporation (the "Company") endeavored to capture demand through sales proposals for new working styles compatible with hybrid working and the digital age, and by supporting these proposals with an enhanced lineup of new products that embrace working style changes. Meanwhile, amid the impact from soaring materials and parts prices, we endeavored to reduce production and logistics costs and promoted our efforts to pass on price rises. This led to the segment achieving its highest-ever levels of both net sales and profit.

As a result, segment net sales amounted to 109,503 million yen (up 2.1% year over year) and segment profit was 8,450 million yen (up 15.9% year over year).

Store Displays business

In the Store Displays business, demand for store renovations remained steady against the backdrop of competition among businesses that handle food and expectations for a recovery in inbound demand. Under these conditions, the Company worked to capture demand through proposals leveraging its overall strength by expanding total support framework for store creation, including services such as store design and construction management, in addition to its extensive product lineup featuring display fixtures, refrigerated showcases and other products. Meanwhile, amid the impact from soaring prices of materials and parts, we endeavored to reduce production and logistics costs and promoted our efforts to pass on price rises. This led to the segment achieving its highest-ever levels of both net sales and profit.

As a result, segment net sales amounted to 81,979 million yen (up 7.7% year over year) and segment profit was 3,633 million yen (up 86.4% year over year).

Material Handling Systems business

In the Material Handling Systems business, demand for automated warehousing equipment remained at a high level, mainly for large-scale logistics facilities, against the backdrop of demand for personnel savings and labor savings. Meanwhile, procurement difficulties and soaring prices of materials and parts continued due to disruptions in global supply chains. Under these conditions, the Company engaged in proactive proposal activities making maximum use of the strength of its superior products, and orders received increased robustly. In the nine months ended December 31, 2023, the Company recorded sales from multiple large projects. In addition, we endeavored to improve profitability, for example by reducing production and logistics costs and passing on price increases. This led to record-high net sales and a significant increase in operating profit.

As a result, segment net sales amounted to 13,772 million yen (up 41.5% year over year) and segment profit was 928 million yen (compared to segment loss of 1,193 million yen in the same period of the previous fiscal year).

3

1. Explanation of Financial Position
   The financial position as of December 31, 2023 (the end of the third quarter under review) was as follows. Total assets amounted to 257,039 million yen, an increase of 4,125 million yen from the end of the previous fiscal year. Current assets decreased by 7,742 million yen, mainly due to a decrease in notes and accounts receivable - trade, and contract assets, despite increases in cash and deposits and merchandise and finished goods. Non-current assets increased by 11,867 million yen, mainly due to increases in buildings
   and structures, land, and investment securities.
   Liabilities stood at 94,833 million yen, a decrease of 5,378 million yen from the end of the previous fiscal year, mainly due to decreases in notes and accounts payable - trade and income taxes payable.
   Net assets amounted to 162,206 million yen, an increase of 9,503 million yen from the end of the previous fiscal year, mainly due to increases in retained earnings and valuation difference on available-for- sale securities.
   As a result, the equity ratio increased by 2.6 percentage points from the end of the previous fiscal year to 62.2%.
   Cash flows for the nine months ended December 31, 2023 were as follows.
   Net cash provided by operating activities was 15,425 million yen (compared to 8,105 million yen provided in the same period of the previous fiscal year). This was mainly a result of profit before income taxes of 18,716 million yen, depreciation of 4,786 million yen, and a decrease in trade receivables and contract assets of 11,965 million yen, despite income taxes paid of 8,374 million yen, a decrease in trade payables of 5,066 million yen, and a gain on sale of investment securities of 3,751 million yen.
   Net cash used in investing activities was 6,852 million yen (compared to 2,455 million yen used in the same period of the previous fiscal year). This was mainly a result of purchase of property, plant and equipment of 11,336 million yen, and purchase of intangible assets of 952 million yen, despite proceeds from sale and redemption of investment securities of 4,839 million yen.
   Net cash used in financing activities was 5,766 million yen (compared to 3,569 million yen used in the same period of the previous fiscal year). This was mainly a result of dividends paid of 6,758 million yen.
   As a result, cash and cash equivalents at the end of the nine months ended December 31, 2023 amounted to 40,313 million yen, a net increase of 3,314 million yen from the end of the previous fiscal year (compared to a net increase of 2,814 million yen in the same period of the previous fiscal year).
2. Explanation of Forecast of Consolidated Performance and Other Forward-Looking Information
   The forecast of consolidated performance for the fiscal year ending March 31, 2024 remains unchanged from the forecast figures announced on November 2, 2023.
   Please note that the performance forecasts are based on the information available as of the day of their announcement, and actual results may differ from these forecasts due to various factors.

4

2. Quarterly Consolidated Financial Statements and Principal Notes

(1) Quarterly Consolidated Balance Sheets

			(Millions of yen)
		As of March 31, 2023	As of December 31, 2023
Assets
Current assets
Cash and deposits		38,534	41,015
Notes and accounts receivable - trade, and contract	73,571	61,606
assets
Securities		491	-
Merchandise and finished goods	9,974	11,571
Work in process		5,298	5,413
Raw materials and supplies	5,892	6,560
Other		3,838	3,710
Allowance for doubtful accounts	(157)	(176)
Total current assets		137,443	129,701
Non-current assets
Property, plant and equipment
Buildings and structures, net	14,713	23,382
Land		27,823	30,381
Other, net	23,812	20,303
Total property, plant and equipment		66,349	74,067
Intangible assets
Goodwill		2,161	2,658
Other	3,052	3,211
Total intangible assets		5,213	5,870
Investments and other assets
Investment securities		36,975	40,410
Other	6,958	7,023
Allowance for doubtful accounts		(26)	(33)
Total investments and other assets	43,907	47,401
Total non-current assets		115,470	127,338
Total assets		252,914	257,039

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			(Millions of yen)
		As of March 31, 2023	As of December 31, 2023
Liabilities
Current liabilities
Notes and accounts payable - trade		28,906	21,857
Electronically recorded obligations - operating	11,603	13,735
Short-term borrowings		6,314	7,932
Current portion of long-term borrowings	1,194	3
Current portion of bonds payable		-	5,000
Income taxes payable	4,909	2,102
Provision for bonuses		4,246	3,011
Other	9,293	9,040
Total current liabilities		66,470	62,682
Non-current liabilities
Bonds payable		10,000	5,000
Long-term borrowings	3,650	4,670
Retirement benefit liability		15,169	16,102
Other	4,921	6,377
Total non-current liabilities		33,741	32,150
Total liabilities	100,211	94,833
Net assets
Shareholders' equity
Share capital		18,670	18,670
Capital surplus	16,770	16,770
Retained earnings		112,162	117,589
Treasury shares	(7,711)	(7,717)
Total shareholders' equity		139,891	145,312
Accumulated other comprehensive income
Valuation difference on available-for-sale securities		10,135	12,526
Foreign currency translation adjustment	563	1,936
Remeasurements of defined benefit plans		165	147
Total accumulated other comprehensive income	10,864	14,610
Non-controlling interests		1,946	2,283
Total net assets	152,702	162,206
Total liabilities and net assets		252,914	257,039

6

1. Quarterly Consolidated Statements of Income and Comprehensive Income
   Quarterly Consolidated Statements of Income Nine months ended December 31

			(Millions of yen)
		Nine months ended	Nine months ended
		December 31, 2022	December 31, 2023
Net sales		197,531	210,221
Cost of sales	136,441	141,966
Gross profit		61,090	68,254
Selling, general and administrative expenses
Packing and transportation costs		7,243	7,265
Salaries and allowances	19,247	19,623
Provision for bonuses		1,578	2,181
Rent expenses	6,735	6,438
Other		18,258	19,553
Total selling, general and administrative expenses	53,063	55,062
Operating profit		8,027	13,191
Non-operating income

Interest income

Dividend income

Share of profit of entities accounted for using equity method

Foreign exchange gains

Other

Total non-operating income

Non-operating expenses

21		32
872	906
436		363
281	2
444		774
2,055	2,078

Interest expenses	123	107
Loss on sale and retirement of non-current assets		357	83
Other	140	88
Total non-operating expenses		622	279
Ordinary profit	9,460	14,990
Extraordinary income
Gain on sale of investment securities	4,517	3,771
Insurance claim income		202	-
Total extraordinary income	4,720	3,771
Extraordinary losses
Impairment losses	30	25
Loss on sale of investment securities		139	19
Loss on valuation of investment securities	1	-
Loss on disaster		181	-
Total extraordinary losses	352	44
Profit before income taxes		13,828	18,716
Income taxes - current	3,838	5,414
Income taxes - deferred		657	504
Total income taxes	4,495	5,919
Profit		9,332	12,797
Profit attributable to non-controlling interests	148	162
Profit attributable to owners of parent		9,184	12,634

7