Amada : Consolidated Results for the Three Months Ended June 30, 2021(with script)

Miwa: This is a summary of the financial results.

In the first quarter of the last fiscal year, the impact of the spread of COVID-19, mainly in April and May, was the greatest, resulting in a significant decrease in sales revenue. In the current fiscal year, with economic activities beginning to normalize, sales revenue increased 30.4% YoY to JPY62.1 billion, far exceeding the initial forecast.

On the other hand, although we recorded JPY5.3 billion in operating income, this was a 38.9% decrease from the same period last year due to a special factor in the first quarter of the last fiscal year, when we recorded a gain of approximately JPY10 billion from the sale of fixed assets. Net income was JPY4.1 billion, a decrease of only 35%.

Orders received were higher than expected in April-including in Japan where there was a sense of delay in the start of the fiscal year- as explained in the financial results briefing for the last fiscal year in May, and remained strong in May and June, reaching JPY84.7 billion, an increase of 82.2% compared to the same period last year.

In terms of the rate of increase, it is necessary to take into account the low hurdle of the previous fiscal year, but this order volume of JPY84.7 billion is the highest level ever for the first quarter, which means the demand environment was favorable.

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Next, on the second page is the summary of financial results.

As mentioned at the beginning of this report, sales revenue was JPY62.1 billion, an increase of 30.4% from the same period last year. Gross profit was JPY26.1 billion, an increase of 39.1% over the same period last year, and the gross profit margin increased by 2.6 percentage points, from 39.4% to 42%.

As for the gross profit margin, it was improved by positive factors including 1.2 points of increased capacity utilization due to higher production output; improved selling prices, 0.8 points; and the impact of foreign exchange rates, 1.4 points, which more than offset negative factors, such as increased manufacturing costs.

SG&A expenses totaled JPY20.9 billion, an increase of JPY1.3 billion from the same period last year, but the SG&A ratio improved significantly to 33.7% from 41.2% in the same period last year. Fixed costs increased by JPY0.6 billion, but decreased slightly in consideration of foreign exchange rates. The increase in sales-related expenses due to the increase in sales revenue was offset by the effects of the structural reforms that have been implemented since last fiscal year.

As I explained earlier, last fiscal year's operating income included a gain on the sale of fixed assets of approximately JPY10 billion, so the JPY5.3 billion in operating income was 38.9% lower than the same period last year. However, operating income on a Japanese GAAP, which doesn't have "other income and expenses" section including this special factor, turned into a profit of JPY5.1 billion from a loss in the same period of the previous year.

In the financial results briefing of the last fiscal year in May, we reported that market conditions were recovering faster than initially expected this fiscal year and that we would focus on expanding sales revenue and profit rather than streamlining based on the judgment that it would be unwise to cause a decline in sales

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capacity through excessive reductions of cost. However, the break-even point for the first quarter was JPY192.9 billion on an annualized basis, below the JPY200 billion structure.

The yen stayed weak against all major currencies. The US dollar to JPY109.49, JPY131.95 to the euro, and JPY16.96 to the Chinese yuan.

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Next, we will look at order trends on page 3.

As mentioned at the beginning of this report, orders received were JPY84.7 billion, up 82% from JPY46.5 billion in the same period last year. Of this total, the sheet metal division accounted for JPY61 billion, an increase of 86% from JPY32.7 billion in the same period last year.

In particular, machinery orders increased 2.3 times from JPY19 billion in the same period of the previous year to JPY43.4 billion. By region, domestic orders increased by 64% to JPY28.2 billion, and overseas orders increased significantly by 93% to JPY56.5 billion.

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Next. On page 4 is the business results by business segment.

By business segment, sales revenue in the Metal Working Machinery segment increased by 31% to JPY50.8 billion, but operating income decreased by 53% to JPY4.1 billion due to the impact of the special factors mentioned earlier.

In the Metal Machine Tools segment, sales increased 29% to JPY11.0 billion, and operating income was JPY0.9 billion, returning to profitability from last year's loss.

The fiber laser ratio, which is the pillar of our business growth strategies, shown in the table in the center of the upper row, increased to 91.1%, up 2.4% from the same period last year, and the ratio of automated bending machines increased to 27%, up 0.5% from the same period last year. The ratio of after-sales business remained at a high level of 37.4%, as machine sales grew, especially in the sheet metal division.