Makita : Consolidated Financial Results for the six months ended September 30, 2018 (IFRS) PDF /315KB

Makita Corporation

Consolidated Financial Results for the six months ended September 30, 2018 (IFRS Financial Information)

(English translation of "KESSAN TANSHIN"

originally issued in Japanese)

CONSOLIDATED FINANCIAL RESULTS

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2018 (Unaudited)

October 30, 2018

Makita Corporation

Stock code: 6586

URL:https://www.makita.co.jp/

Munetoshi Goto, President, Representative Director

1. Summary operating results of the six months ended September 30, 2018 (From April 1, 2018 to September 30, 2018)

(1) CONSOLIDATED OPERATING RESULTS

Yen (millions)

For the six months ended	For the six months ended
September 30, 2017	September 30, 2018
(%)	(%)

Revenue ................................................................	230,951	-	242,796	5.1
Operating profit ....................................................	37,934	-	40,064	5.6
Profit before income taxes ....................................	38,996	-	42,269	8.4
Profit .....................................................................	27,590	-	29,907	8.4
Profit attributable to owners of the parent ............	27,348	-	29,679	8.5
Comprehensive income ........................................	45,893	-	25,591	(44.2)
Profit attributable to
Owners of the parent per share
(Basic) ..................................................................	100.74	109.33
(Diluted) ..............................................................	100.73	109.32
Notes:

Yen

• 1. Amounts of less than one million yen have been rounded.

• 2. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes and profit attributable to owners of the parent, and comprehensive income against the corresponding period of the previous year.

(2) SELECTED CONSOLIDATED FINANCIAL POSITION

Yen (millions)

As of March 31, 2018

As of September 30, 2018

Total assets ............................................................ 654,841

Total equity ........................................................... 558,439

Equity attributable to owners of the parent ........... 554,046 Total Makita Corporation shareholders' equity

ratio to total assets (%) .........................................

84.6%

660,917 570,032 565,503

85.6%

2. Dividend Information

Yen

For the year ended

For the year ending

March 31, 2018

March 31, 2019

(Forecast)Cash dividend per share:

Interim ................................................................. Year-end .............................................................. Total .................................................................... Notes:

10.00 51.00 61.00

10.00 (Note) (Note)

• 1. The forecast for cash dividend announced on April 26, 2018 has not been revised.

• 2. The projected amount of dividends for the year ending March 31, 2019 has not been determined yet. For further

• details, refer to "Explanation regarding proper use of business forecast, and other significant matters" on page 2.

3. Consolidated Financial Performance Forecast for the year ending March 31, 2019 (From April 1, 2018 to March 31, 2019)

Yen (millions)

For the year ending

March 31, 2019

(%)

Revenue ..................................................................................................................	490,000	2.7
Operating profit ......................................................................................................	78,500	(2.2)
Profit before income taxes .....................................................................................	78,700	(1.5)
Profit attributable to owners of the parent ..............................................................	54,800	(0.3)
Yen
Profit attributable to
Owners of the parent per share ...............................................................................	201.87
Notes:

• 1. The consolidated financial forecast for the year ending March 31, 2019 has not been revised.

• 2. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes and profit attributable to owners of the parent against the previous year.

4. Other

• (1) Changes in important subsidiaries during the period (Changes in specified subsidiaries accompanied by changes in scope of consolidation during the quarter): None

• (2) Changes in accounting policies and accounting estimates:

  • 1. Changes in accounting policies required by IFRS: None

  • 2. Changes in accounting policies other than 1: None

  • 3. Changes in accounting estimate: None

(3)Number of shares outstanding (common stock)

• 1. Number of shares issued (including treasury stock):

• 2. Number of treasury stock:

• 3. Average number of shares outstanding:

As of September 30, 2018: 280,017,520

As of March 31, 2018: 280,017,520

As of September 30, 2018: 8,550,012

As of March 31, 2018: 8,549,592 For the six months ended

September 30, 2018: 271,467,793 For the six months ended

September 30, 2017: 271,463,675

This consolidated financial report is not subject to audit procedures by certified public accountants or an auditing firm.

Explanation regarding proper use of business forecasts, and other significant matters

• 1. Makita has adopted International Financial Reporting Standards (IFRS) in its consolidated financial statements from the year ending March 31, 2019. Furthermore, the Company has presented financial figures for the six-month period ended September 30, 2017 and the year ended March 31, 2018 in accordance with IFRS.

• 2. The financial forecast given above is based on information as available at the present time, and includes potential risks and uncertainties. As a consequence of the factors above and other, actual results may vary from the forecasts provided above. Regarding the assumptions for the forecasts and other matters, refer to [Qualitative Information and Financial Statements] Section 3 "Explanation of Information Relevant to Forecast such as Consolidated Financial Performance Forecast" on page 4.

• 3. Makita's basic policy on the distribution of profits is to maintain a consolidated dividend payout ratio of 30% or greater, with a lower limit on annual cash dividends of 10 yen per share. However, in the event special circumstances arise, computation of the amount of dividends will be based on profit attributable to owners of the parent after certain adjustments.

  The Board of Directors plans to meet in April 2019 for a report on earnings for the year ending March 31, 2019. At the time, in accordance with the basic policy regarding profit distribution mentioned above, the Board of Directors plans to propose a dividend equivalent to at least 30% of profit attributable to owners of the parent. The Board of Directors will submit this proposal to the General Meeting of Shareholders scheduled for June 2019.

  The consolidated dividend payout ratio is calculated as annual dividends per share divided by consolidated profit attributable to owners of the parent per share (after adjustments for special circumstances) and multiplied by 100.

[Qualitative Information and Financial Statements]

1. Explanation of Consolidated Operating Results

We have adopted International Financial Reporting Standards (hereinafter "IFRS") instead of accounting principles generally accepted in the United States of America (hereinafter "U.S. GAAP") from the beginning of the fiscal year ending March 31, 2019. In addition, financial figures during the first six-month period the fiscal year ending March 31, 2018 and the year ended March 31, 2018, which were prepared in accordance with U.S. GAAP in the reporting of those previous periods, are also reclassified in accordance with IFRS and used in the comparative analysis.

Looking at the global economic situation during the first six-month period the fiscal year ending March 31, 2019, there were rising uncertainties, such as escalating tensions between the U.S. and China over trade and a decline in emerging-country currencies. However, the economy gradually expanded, supported by a strong employment and income situation and robust business performance in developed countries, principally the U.S.

Under these circumstances on the development side, the Makita Group launched new products, mainly lithium-ion battery product lines, such as cordless models with brushless motors featuring work efficiency higher than AC-powered ones. Moreover, we established a technology development base in South Korea to enhance the capability to develop electrical technologies and accelerate development speed. On the production side, we continued to implement measures including the promotion of multi-polarized global production, cost reduction through local procurement of components, and introduction of labor-saving or unmanned facilities. On the sales side, we focused on expanding the sales of lithium-ion battery products, such as cordless gardening equipment. Furthermore, we worked hard to strengthen our community- and customer-based sales network by increasing sales and after-sales service bases.

Our consolidated revenue for this period increased by 5.1% to 242,796 million yen compared to the same period of the previous year due to robust sales both in Japan and overseas, although the value of overseas revenue translated into yen was eroded by a fall in emerging-country currencies. Operating profit increased by 5.6% to 40,064 million yen (operating profit ratio: 16.5%) owing to a rise in revenue, although selling, general and administrative expenses increased. Profit before income taxes increased by 8.4% to 42,269 million yen (profit before income taxes ratio: 17.4%) and profit attributable to owners of the parent increased by 8.5% to 29,679 million yen (ratio of profit attributable to owners of the parent: 12.2%).

Revenue results by region were as follows:

Revenue in Japan increased by 9.6% to 43,699 million yen compared to the same period of the previous year. This was due to the continuation of steady sales of power tools and gardening equipment, particularly lithium-ion battery products.

Revenue in Europe increased by 7.0% to 105,458 million yen, supported by solid demand for tools in almost all areas and steady sales of cordless gardening tools, although an extremely hot summer and droughts affected sales of gardening equipment.

Revenue in North America increased by 3.7% to 36,313 million yen due to solid sales through other sales routes, although shipments to home improvement centers stagnated in the U.S.

Revenue in Asia decreased by 4.7% to 20,444 million yen. This was due to sluggish sales in other countries, despite steady sales in China and India.

Revenue in Central and South America increased by 3.1% to 13,906 million yen, due to robust sales in almost all countries amid concerns over negative impacts from the depreciation of each country's currency.

In Oceania, sales continued growing at a level as high as the same period of the previous year, although the housing market, which had been overheated, showed signs of slowing down. However, revenue decreased by 1.3% to 15,397 million yen due to the yen's appreciation against local currencies.

Revenue in the Middle East and Africa increased by 9.6% to 7,579 million yen. This was because of large shipments to local distributors, despite poor sales amid political and economic turmoil in the Middle East.

2. Explanation of Consolidated Financial Position

Total assets as of September 30, 2018 increased by 6,076 million yen to 660,917 million yen compared to the balance as of March 31, 2018. The increase was mainly due to the increase in "Inventories".

Total liabilities decreased by 5,517 million yen to 90,885 million yen compared to the balance as of March 31, 2018.

This decrease was mainly due to the decrease in trade payables and income taxes payable.

Total equity increased by 11,593 million yen to 570,032 million yen compared to the balance as of March 31, 2018. The increase was mainly due to the increase in "Retained earnings".

3. Explanation of Information Relevant to Forecast such as Consolidated Financial Performance Forecast

Makita reported generally solid consolidated financial results for the first six-month period of the fiscal year ending March 31, 2019. However, there are rising uncertainties about the demand environment and developments in exchange markets in the third quarter and later. Therefore, Makita has not revised the forecast of its consolidated financial performance for the year ending March 31, 2019 announced on April 26, 2018.