October 7, 2022 | ||
Consolidated Financial Results | ||
for the Second Quarter of the Fiscal Year Ending February 28, 2023 | ||
(Six Months Ended August 31, 2022) | [Japanese GAAP] | |
Company name: | Freund Corporation | |
Listing: Tokyo Stock Exchange | ||
Securities code: | 6312 | URL: https://www.freund.co.jp |
Representative: | Iwao Fusejima, President & CEO | |
Contact: | Masao Wakai, Managing Director, Division Director, Corporate Planning Division | |
Tel: +81-3-6890-0750 |
Scheduled date of filing of Quarterly Report: | October 7, 2022 |
Scheduled date of payment of dividend: | - |
Preparation of supplementary materials for quarterly financial results: | Yes |
Holding of quarterly financial results meeting: | Yes (for institutional investors and |
securities analysts) |
(All amounts are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Second Quarter (March 1, 2022 - August 31, 2022) of the Fiscal Year Ending February 28, 2023
(1) Consolidated results of operations | (Percentages represent year-on-year changes) | |||||||||||
Net sales | Operating profit | Ordinary profit | Profit attributable to | |||||||||
owners of parent | ||||||||||||
Million yen | % | Million yen | % | Million yen | % | Million yen | % | |||||
Six months ended Aug. 31, 2022 | 8,534 | 6.0 | (67) | - | 32 | (89.6) | (17) | - | ||||
Six months ended Aug. 31, 2021 | 8,048 | 14.3 | 293 | 17.1 | 314 | 16.0 | 204 | 11.5 | ||||
Note: Comprehensive income | Six | months ended Aug. 31, 2022: | 700 million yen | (up 88.5%) | ||||||||
Six months ended Aug. 31, 2021: | 371 million yen | (up 321.1%) | ||||||||||
Net income per share | Diluted net income per share | |||||||||||
Yen | Yen | |||||||||||
Six months ended Aug. 31, 2022 | (1.02) | - | ||||||||||
Six months ended Aug. 31, 2021 | 12.24 | - | ||||||||||
Reference: Equity in earnings of affiliates | Six months ended Aug. 31, 2022: | (9) million yen | ||||||||||
Six months ended Aug. 31, 2021: | - million yen |
Note: The provisional accounting treatment for a business combination with Cos.Mec S.r.l. was finalized in the third quarter of the fiscal year ended February 28, 2022 and figures for the six months ended August 31, 2021 reflect the finalized content of the provisional accounting treatment.
(2) Consolidated financial position
Total assets | Net assets | Equity ratio | Net assets per share | |||
Million yen | Million yen | % | Yen | |||
As of Aug. 31, 2022 | 23,031 | 14,694 | 63.8 | 877.54 | ||
As of Feb. 28, 2022 | 22,273 | 14,354 | 64.4 | 857.28 | ||
Reference: Equity capital | As of Aug. 31, 2022: | 14,694 million yen | As of Feb. 28, 2022: 14,354 million yen |
2. Dividends
Dividend per share | |||||||
1Q-end | 2Q-end | 3Q-end | Year-end | Total | |||
Yen | Yen | Yen | Yen | Yen | |||
Fiscal year ended Feb. 28, 2022 | - | 0.00 | - | 20.00 | 20.00 | ||
Fiscal year ending Feb. 28, 2023 | - | 0.00 | |||||
Fiscal year ending Feb. 28, 2023 (forecast) | - | 20.00 | 20.00 |
Note: Revision to the most recently announced dividend forecast: None
3. Consolidated Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 - February 28, 2023)
(Percentages represent year-on-year changes)
Net sales | Operating profit | Ordinary profit | Profit attributable to | Net income per | |||||
owners of parent | share | ||||||||
Million yen | % | Million yen | % | Million yen | % | Million yen | % | Yen | |
Full year | 18,500 | 4.9 | 700 | (28.7) | 720 | (30.3) | 450 | (17.2) | 26.87 |
Note: Revision | to the most recently announced consolidated forecast: None |
* Notes
- Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None
Newly added: - | Excluded: - |
(2) Application of special accounting methods for presenting quarterly consolidated financial statements: Yes
Note: Please refer to page 10 "(4) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements" for details.
(3) Changes in accounting policies and accounting-based estimates, and restatements
1) | Changes in accounting policies due to revisions in accounting standards, others: | Yes |
2) | Changes in accounting policies other than 1) above: | None |
3) | Changes in accounting-based estimates: | None |
4) | Restatements: | None |
(4) Number of outstanding shares (common stock)
1) Number of shares outstanding at the end of the period (including treasury shares)
As of Aug. 31, 2022: | 18,400,000 shares | As of Feb. 28, 2022: | 18,400,000 shares |
2) Number of treasury shares at the end of the period | |||
As of Aug. 31, 2022: | 1,655,480 shares | As of Feb. 28, 2022: | 1,655,480 shares |
3) Average number of shares outstanding during the period | |||
Six months ended Aug. 31, 2022: | 16,744,520 shares | Six months ended Aug. 31, 2021: | 16,744,520 shares |
This financial report is not subject to quarterly review by certified public accountants or auditing firms.
Cautionary statement with respect to forecasts of future performance and other special items
Forecasts regarding future performance in these materials are based on certain assumptions judged to be valid and information currently available to the Company. Actual performance may differ significantly from these forecasts for a number of reasons.Please refer to the section "Explanation of Consolidated Forecast and Other Forward-looking Statements" on page 3 of the attachments regarding preconditions or other related matters for forecasts shown above.
Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23
Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance | 2 | |
(1) | Explanation of Results of Operations | 2 |
(2) | Explanation of Financial Position | 3 |
(3) | Explanation of Consolidated Forecast and Other Forward-looking Statements | 3 |
2. Quarterly Consolidated Financial Statements and Notes | 4 | |
(1) | Quarterly Consolidated Balance Sheet | 4 |
(2) | Quarterly Consolidated Statements of Income and Comprehensive Income | 6 |
(3) | Quarterly Consolidated Statement of Cash Flows | 8 |
(4) | Notes to Quarterly Consolidated Financial Statements | 10 |
Going Concern Assumption | 10 | |
Significant Changes in Shareholders' Equity | 10 | |
Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements | 10 | |
Additional Information | 10 | |
Changes in Accounting Policies | 10 | |
Segment and Other Information | 12 | |
Business Combinations | 13 | |
Revenue Recognition | 14 | |
3. Others | 14 | |
Orders and Sales | 14 |
1
Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23
1. Qualitative Information on Quarterly Consolidated Financial Performance
(1) Explanation of Results of Operations
The Japanese economy recovered slowly during the first half of the current fiscal year as the number of COVID-19 cases declined and pandemic restrictions were eased. However, the pace of the recovery is slow. One reason is a rapid increase in the severity of the pandemic that started in July. The recovery is also held down by supply-side limitations caused by the prolonged Ukraine crisis and China's restrictions on economic activities and inflation linked to the yen's rapid depreciation.
Most major countries of the world, with the exception of China, are returning to normal economic activity as they live with COVID-19. Despite this positive trend, the outlook remains uncertain. The primary reasons for this uncertainty are the accelerating rate of inflation caused by increasing limitations on the supply of many goods due to the Ukraine conflict and other events, the high price of energy and the tight supply of labor and concerns about the impact of the upturn in interest rates in the United States and Europe on the global economy.
In the pharmaceutical industry, which is the primary source of demand for Freund Group products, companies need to deal with the challenges of the rising cost of R&D programs and increasing measures to hold down healthcare expenditures. In Japan, drug prices will be affected because the national health insurance drug price revisions will be implemented annually instead of once every two years as in prior years. In the generic drug market, the growth rate of sales is expected to decrease as the benefits of actions by the Japanese government to increase the use of these drugs decline. Due to problems involving manufacturing operations at some companies, there is a need to build a sound infrastructure for ensuring the quality and supply reliability of generic drugs. To ensure a stable supply of these drugs, several companies, primarily large generic drug manufacturers, plan to enlarge factories and take other steps to raise production capacity.
The Freund Group is working on further strengthening sales capabilities in the machinery and chemicals businesses and building a framework for utilizing the group's technologies for meeting customers' most important needs. All of these initiatives will create a sound base for even more aggressive product development, manufacturing and sales activities worldwide. The Freund Group added to its operations in Japan and the United States by starting operations in India in 2019 and Italy in 2020. We plan to start operations in China during the current fiscal year, which will enlarge our global infrastructure to five locations. Our goal is to benefit from synergies among all group companies in order to give us even better access to markets worldwide.
The fiscal year ending in February 2023 is the final year of the Eighth Medium-term Management Plan. All group companies are working on reaching the consolidated targets of sales of 18,500 million yen and an operating profit of 700 million yen.
Net sales increased 6.0% year-over-year to 8,534 million yen and there was an operating loss of 67 million yen (compared with operating profit of 293 million yen in the same period of the previous fiscal year), ordinary profit decreased 89.6% year-over-year to 32 million yen and loss attributable to owners of parent was 17 million yen (compared with profit attributable to owners of parent of 204 million yen in the same period of the previous fiscal year).
Business segment performance was as follows.
Machinery Business Segment
Granulating and coating equipment are the main products of this segment. The volume of orders has been high because generic drug manufacturers are raising production capacity and the order backlog rose to a new record. At the U.S. subsidiary, there were significant delays in shipments of finished products because of the labor shortage and the long time needed to procure parts and materials due to supply chain disruptions. Furthermore, the higher cost of raw materials caused by rapid inflation exerted downward pressure on profit margins. In Japan as well, lead times for shipments of finished products have increased because of the long time needed to procure semiconductors and other parts and materials.
As a result, net sales increased 1.0% year-over-year to 5,420 million yen and segment loss was 268 million yen (compared with segment profit of 210 million yen in the same period of the previous fiscal year).
2
Freund Corporation (6312) Financial Results for the Second Quarter of FY2/23
Chemicals Business Segment
Sales of pharmaceutical excipients increased in Japan and other countries and are growing at a pace that is expected to result in fiscal year sales that surpass the prior fiscal year's all-time high. Operating profit also increased.
Food preservative sales and operating profit increased. Demand continues to increase because of the recovery in demand for confectionery products and strong e-commerce sales of bread. Sales in this category are also at a level that is expected to exceed the prior fiscal year's all-time high.
Sales of health food products declined because of the completion of a contract for manufacturing products for a high-volume customer.
As a result, net sales increased 16.1% year-over-year to 3,113 million yen and segment profit increased 44.1% to 478 million yen.
(2) Explanation of Financial Position
Total assets increased 757 million yen from the end of the previous fiscal year to 23,031 million yen at the end of the second quarter. This mainly reflected increases of 902 million yen in work in process and 268 million yen in raw materials and supplies, while there were decreases of 604 million yen in notes and accounts receivable-trade, and contract assets, and 506 million yen in cash and deposits.
Total liabilities increased 418 million yen from the end of the previous fiscal year to 8,337 million yen at the end of the second quarter. This mainly reflected an increase of 963 million yen in short-term borrowings, while there were decreases of 340 million yen in electronically recorded obligations-operating and 265 million yen in notes and accounts payable-trade.
Net assets increased 339 million yen from the end of the previous fiscal year to 14,694 million yen at the end of the second quarter. This mainly reflected an increase of 740 million yen in foreign currency translation adjustment, while there was a decrease of 387 million yen in retained earnings.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements
There are no revisions to the full year consolidated forecasts for the fiscal year ending February 28, 2023, which were disclosed in the Consolidated Financial Results for the Fiscal Year Ended February 28, 2022 dated April 13, 2022.
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Freund Corporation published this content on 07 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2022 08:22:04 UTC.