Fukoku : Financial Results Summary for the Three Months Ended June 30, 2023

Financial Results Summary for the Three-Month Period Ended June 30, 2023 [Japanese GAAP]

(Consolidated)

								July 31, 2023
Listed company:	Fukoku Co., Ltd.			Exchange listed on:	Tokyo Stock Exchange
Securities code:	5185				URL	https://www.fukoku-rubber.co.jp/
Representative:	(Title)	President & CEO	(Name)	Ikuo Oshiro
Contact:	(Title)	General Manager of Finance	(Name)	Yukio Yamazaki	(TEL) 048-615-4400
Department
Scheduled date for submission of	August 10, 2023		Scheduled commencement date of	-
quarterly report:				dividends payment:
Preparation of supplementary materials for quarterly report	:	None
Convening quarterly results briefing		:	None
					(Amounts rounded down to the nearest millions of yen.)

1. Consolidated Financial Results for the Three-Month Period Ended June 30, 2023 (From April 1, 2023 to June 30, 2023)

(1) Consolidated Operating Results (cumulative)				(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	%
Three months ended June 30, 2023	21,506		10.9	667	49.1		825	-23.6	383	-55.5
Three months ended June 30, 2022	19,389		2.2	447	-66.6		1,080	-22.6	861	-0.6

(Note) Comprehensive income	Three months ended June 30, 2023	706 million yen	(-70.6%)
	Three months ended June 30, 2022	2,405 million yen	(26.3%)
		Profit per share	Profit per share - diluted
		yen		yen
Three months ended June 30, 2023	23.80		-
Three months ended June 30, 2022	53.51		-

(2) Consolidated Financial Position

	Total assets	Net assets	Shareholders' equity ratio
	million yen	million yen	%
Three months ended June 30, 2023	71,171	38,257	50.5
As of March 31, 2023	71,530	37,952	49.8

(Reference) Shareholders' equity	Three months ended June 30, 2023	35,938 million yen
	As of March 31, 2023	35,619 million yen

2. Dividends

			Annual dividends
	End of Q1	End of Q2	End of Q3		End of Q4	Total
	yen	yen	yen		yen	yen
As of March 31, 2023	-	27.00	-		23.00	50.00
Fiscal year ending March 31, 2024	-
Fiscal year ending March 31, 2024 (forecast)		27.50	-		27.50	55.00
(Note) Revision of the dividends forecast released most recently	: None

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

(Percentages represent year-on-year changes.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Profit per share
		owners of parent
	million yen		%	million yen	%	million yen		%	million yen	%	yen
Full year	88,000		6.9	3,900	94.0		4,000		27.4	2,900	35.8	180.02
(Note) Revision of the consolidated results forecast released most recently	: None

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* Notes

(1) Changes in major subsidiaries during the period under review

: None

(Changes in specific subsidiaries resulting in changes in the scope of consolidation)

(2) Adoption of special accounting procedures used in preparation of	: Yes
the quarterly consolidated financial statements

(Note) For details, please see "2. Quarterly Consolidated Financial Statements and Key Notes, (3) Notes to quarterly consolidated financial statements (Adoption of special accounting procedures used in preparation of the quarterly consolidated financial statements)" on Page 8 of the attachments.

(3) Change in accounting policies or estimates and retrospective restatements
(i) Change in accounting policies in accordance with revision of accounting standards :	None
(ii) Change in accounting policies other than item i) above			:	None
(iii) Change in accounting estimates				:	None
(iv) Retrospective restatements				:	None
(4) Number of shares issued (common shares)
(i)	Number of shares issued at the end of	As of June 30, 2023	17,609,130	shares	As of March 31, 2023	17,609,130 shares
	the period (including treasury shares)
(ii)	Number of treasury shares at the end	As of June 30, 2023	1,500,006	shares	As of March 31, 2023	1,500,004 shares
	of the period
(iii) Average number of shares issued
	during the period (cumulative from	As of June 30, 2023	16,109,125	shares	As of June 30, 2022	16,095,595 shares
	the beginning of the fiscal year)

* Quarterly financial results are not subject to quarterly reviews by a Certified Public Accountant or audit firm.

* Explanation of appropriate use of operating results forecasts and other special notes

Any forward-looking statements, such as the financial results outlook, included in this material are based on information the Company presently has and certain assumptions the Company considers reasonable, and they do not constitute a promise that the Company will achieve them. In addition, the actual financial results may differ significantly due to various factors. For assumptions for operating results forecasts and points to consider in utilizing them, please see "1. Qualitative Information on Quarterly Financial Results under Review, (3) Explanation of future forecast information such as consolidated financial results forecasts" on Page 3 of the attachments.

• This document is an English translation of a statement initially written in Japanese. The Original Japanese document should be considered as the primary version.

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○ Table of Contents of Attachments
1. Qualitative Information on Quarterly Financial Results under Review	2
(1)	Explanation of operating results	2
(2)	Explanation of financial position	2
(3)	Explanation of future forecast information such as consolidated financial results forecasts	3
2. Quarterly Consolidated Financial Statements and Key Notes	4
(1)	Quarterly consolidated balance sheet	4
(2)	Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive income	6
	(Quarterly consolidated statement of income)
	(Three months ended June 30, 2023)	6
	(Quarterly consolidated statement of comprehensive income)
	(Three months ended June 30, 2023)	7
(3)	Notes to quarterly consolidated financial statements	8
	(Notes on going concern assumption)	8
	(Notes when there is a significant change in the amount of shareholders' equity)	8
	(Adoption of special accounting procedures used in preparation of the quarterly consolidated financial
	statements)	8
	(Segment information)	9

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1. Qualitative Information on Quarterly Financial Results under Review

(1) Explanation of operating results

During the three months ended June 30, 2023, the Japanese economy saw progress in the normalization of socioeconomic activities as behavioral restrictions put in place to prevent the spread of infection were eased and COVID-19 was downgraded to a category 5 disease. However, the outlook remained uncertain due to unstable global conditions, such as the prolonged situation in Ukraine, rising prices due to soaring resource costs, and rapid exchange rate fluctuations.

Demand remained up in the automotive industry, where some automakers have emerged from the doldrums and are showing signs of recovery from the semiconductor supply shortage, although others still must scale down their production plans.

Under these economic circumstances, the Group has been affected by the declining operation rate due to adjustments to production by automakers, rising raw material and fuel costs as a result of surging resource prices, despite an increase in the gain on conversion to the Japanese yen due to the depreciation of the yen.

Regarding financial results for the three months ended June 30, 2023, consolidated net sales increased 10.9% year on year to 21,506 million yen due to the impact of foreign exchange rates despite an income decrease resulting from adjustments to production by automakers. Operating profit was up 49.1% year on year to total 667 million yen due to streamlining efforts, cost pass-throughs, etc., which absorbed the impact of rising raw material and fuel costs. Ordinary profit decreased 23.6% year on year, amounting to 825 million yen, since one-time income that included a gain on sales of non-current assets owned by subsidiaries was posted in the same period last year. Likewise, since one-time income, such as earnings from the termination of the retirement benefit plan due to the change in our company's retirement benefit plan, was posted in the same period last year, profit attributable to owners of the parent decreased 55.5% to total 383 million yen.

If the one-time income was not factored in, ordinary profit and net profit attributable to owners of the parent would be higher than what they were in the same period last year.

The Group's business performance by segment is as follows.

Functional Parts Business

Net sales increased 9.1% year on year to reach 8,612 million yen due to the impact of foreign currency translation despite a decline in the operation rate as a result of production adjustments by automakers. Segment income increased 8.3% year on year to total 806 million yen due to the effect of streamlining efforts and the passing of the rising cost of materials on to selling prices.

Anti-Vibration Parts Business

Net sales increased 14.0% year on year to reach 9,211 million yen due to growing demand in Southeast Asia and the effect of currency translation. Segment income was up 64.8% year on year to total 459 million yen due to the effect of streamlining efforts and the passing of the rising cost of materials for metal parts on to selling prices.

Metal Business

Net sales increased 11.2% year on year to 1,753 million yen due to steady orders for construction machinery. Segment income (which was a loss of 2 million yen for the same period last year) came to 25 million yen due to the effect of streamlining efforts and the passing of the rising cost of materials for metal parts on to selling prices.

Hose Business

Net sales climbed 10.5% year on year to total 1,369 million yen due to strong orders. Segment income increased 4.5% year on year to hit 36 million yen.

Industrial Equipment Business

Net sales increased 2.8% year on year to total 771 million yen. Segment income increased 18.7% year on year to 136 million yen due to an improvement in the operation rate associated with the increase in net sales.

(2) Explanation of financial position

Total assets as of June 30, 2023 were 71,171 million yen, a decrease of 358 million yen from the end of the previous fiscal year. Current assets decreased 503 million yen from the end of the previous fiscal year to 42,024 million yen. This was primarily

attributable to a decrease in raw materials and supplies.

Non-current assets rose 144 million yen over the end of last fiscal year to total 29,146 million yen. This was mainly due to an increase in intangible assets such as software.

Liabilities totaled 32,913 million yen, a decrease of 664 million yen from the end of the previous fiscal year. This decrease was

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primarily attributable to the repayment of borrowings.

Net assets totaled 38,257 million yen, an increase of 305 million yen from the end of the previous fiscal year. This was primarily due to an increase in foreign currency translation adjustments.

As a result, the shareholders' equity ratio came to 50.5%, up 0.7 percentage points from the end of the previous fiscal year.

(3) Explanation of future forecast information such as consolidated financial results forecasts

While socioeconomic activities are returning to normal due to the easing of behavioral restrictions put in place to prevent the spread of COVID-19, the future remains uncertain due to the prolonged situation in Ukraine, rising prices, and rapid exchange rate fluctuations.

Working against this backdrop, Fukoku aims to stay on track with its New Medium-Term Management Plan 2026, which was announced on June 28, 2023, through company-wide efforts designed to strengthen existing businesses and expand growth businesses as well as new businesses. In addition to these strategies, the Company will also work on reinforcing its business foundation with a focus on ESG, all with an aim of maximizing profitability.

There have been no changes made to the full-year consolidated financial results forecasts for the fiscal year ending March 31, 2024 announced on May 15, 2023.

The above forecasts represent the Company's best judgment based on information currently available. Actual results may vary from the above forecasts due to various factors.

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