DOWA : Second Quarter Corporate Strategy Briefing Material

Corporate Strategy Briefing

First Half of FY2022 (FY Ending March 2023)

November 16, 2022

FY2022 Full Year Forecasts

In Q1 FY2022, market prices and volumes were firm, but metal prices began softening from Q2, and electricity costs rose more than expected.

In H2 profit is expected to decline compared with H1, in part due to falling metal prices, a decrease in demand for some applications, and a sharp rise in unit prices for electricity.

	Billion yen	FY2022/H1		FY2022/H2		FY2022
	Results	Year-on-Year	Forecasts	Year-on-Year	Forecasts	Year-on-Year
			383.1		785.0
Net Sales	401.8	(21.4)	(25.3)	(46.7)
Operating Income	30.0	(7.9)	16.9	(8.8)	47.0	(16.8)
Ordinary Income	36.9	(10.5)	20.0	(8.5)	57.0	(19.0)
	Environmental	5.8	(0.7)	4.5	(2.5)	10.4	(3.2)
	Management & Recycling
Segment	Nonferrous Metals	23.5	(3.5)	10.1	(5.5)	33.7	(9.0)
Electronic Materials	3.8	0.1	1.8	(1.0)	5.7	(0.8)
Metal Processing	3.4	(0.4)	2.4	(0.4)	5.9	(0.9)
By
Heat Treatment	0.7	(0.3)	1.5	(0.3)	2.3	(0.7)
	Other/ Eliminations	(0.6)	(5.6)	(0.3)	+1.4	(1.0)	(4.2)
Profit attributable	22.7	(9.8)	12.2	(6.1)	35.0	(16.0)
to owners of parent

❚ Operating Income		(billion yen)
80.0	63.8	58.5
60.0		47.0
25.8
	27.5
40.0
	16.9
20.0	37.9	31.0	30.0
0.0
	Results	on Aug. 10	on Nov. 11
	FY2021	FY2022 Forecasts

❚ Ordinary Income		(billion yen)
80.0	76.0	68.0
	57.0
60.0	28.6
30.5
		20.0
40.0
20.0	47.4	37.5	36.9
0.0
	Results	on Aug. 10	on Nov. 11
	FY2021	FY2022 Forecasts

© 2022 DOWA HOLDINGS CO., LTD. 2

Factor Analysis of FY2022 H2 Ordinary Income (Changes from Previous Forecasts)

Previous

forecasts (H2)

Sales reduction

Electricity costs

Fuel costs, Other

materials costs

Free metal incomes

Hedging costs

Others

Metal prices, Forex

Sales expantion

Latest

forecasts (H2)

0

(billion yen)

30.5

(4.5)

(3.0)

(2.1)

(1.8)

(0.5)

(2.0)

2.6

0.8

20.0

15 20 25 30

Major factors for change

• Decline in sales of products such as silver powder for solar panels and copper rolled products for smartphones.
• Downward pressure on revenue in the Nonferrous Metals segment due to sharply rising electricity costs.
• Rising unit prices due to skyrocketing global energy prices and increases in material prices.
• Differential sales in the Nonferrous Metals segment expected to decline (mainly platinum group metals).
• Hedging costs are expected to increase slightly.
• Product mix, lower profit from equity method affiliates, etc.
• Enjoying the benefits of the weak yen, mainly in the Nonferrous Metals segment and Electronic Materials segment.
• Effects of increased sales and price revisions are limited.

A decline in profit of 10.5 billion yen compared with the previous forecast is expected.

© 2022 DOWA HOLDINGS CO., LTD. 3

Major Market Trends (1) (Compared to Q1 of FY2020)

Volume of treated waste (Japan)

Volume of collected recycling materials

Volume of zinc produced

120											140
110				102 103	107		108		103	120
	102
100
96						96
100		92					94		100
90											80
80											60
1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2
	2020			2021			2022

										140
				103						120
100	93					91	94	99	100
	84	82		86	89		100
										80
										60
1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2
	2020			2021			2022

		111				108 105 106		116
		102	106
100
	72				79				75
1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2
	2020			2021			2022

Orders received (Southeast Asia) *

Volume of recycled used home electronics appliances

Volume of collected spent catalysts

140		140

120						117
				103				120	112	112
	100	94	94	99	94	97	98	111	111			106
100				104	101	104		100
85					100			100
	81
							100
80

60

80

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

H2

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

H2

2020

2021

2022

2020

2021

2022

*Local closing month basis, consolidated results reflected 3 months after the above.

160
140				132
									116
120			113		107 101		109
100		99			92
100								83
78
80
60
1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2
	2020			2021			2022

© 2022 DOWA HOLDINGS CO., LTD. 4

Major Market Trends (2) (Compared to Q1 of FY2020)

Volume of sales of LEDs	Volume of sales of copper rolled products
	(for automobiles)

260												220												280
240									208			200												260
220													167 165			166				165	240
											180			163	162
200														153	157 151	220
									160 164
180						154 146			160									200
																		180
160										140		121
							124														160
140
100 105									120	100											140
120	98	98	93
						100											120
100																							100
80												80												80
	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2		1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2
		2020			2021			2022				2020			2021			2022

Volume of carburizing treatment

		199 217			199 213	195 209	229
		193 201
	162
100
1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2
	2020			2021			2022

Volume of sales of silver powder

Volume of sales of copper rolled products

(for information and communication equipment)

160												160
140		114	112	112		123						140
120	100				97								114 119	117 114
			96		95						107 112
100					89			120		108	104
											100	95
80										62
									44	100
60											80										71
40
20												60
	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	H2
		2020			2021			2022			2020			2021			2022

[H2 Market Trends (Summary)]

• While silver powder and copper rolled products for information and communication equipment will decline compared with H1, demand will generally remain firm for other products and services.
• For automotive-related products, a turnaround in demand is expected due to recovery production from Q4.
• Rising costs of electricity fuel, other materials will place downward pressure on the balance of income and expenditures.

© 2022 DOWA HOLDINGS CO., LTD. 5