Gunze : Consolidated Financial Statements - Summary (Nine months ended December 31, 2022)

February 3, 2023

Consolidated Financial Statements - Summary

(Nine months ended December 31, 2022)

This document is an English translation of the Japanese-language original. All financial information has been prepared in accordance with accounting principles generally accepted in Japan.

Company Name:	GUNZE LIMITED
Securities Code:	3002
Stock Market Listings:	Tokyo
URL:	https://www.gunze.co.jp/
Representative:	Toshiyasu Saguchi, President and Representative Director
Contact:	Junko Nakashima, General Manager, Corporate Communications
Tel:	[phone]

Filing of Quarterly Securities Report (Shihanki hokokusho) (Scheduled):	February 13, 2023
Start of Distribution of Dividend (Scheduled):	-
Preparation of Supplementary Materials for Quarterly Financial Results:	No
Holding of Presentation of Quarterly Financial Results:	No

1. Consolidated Operating Results for the nine months ended December 31, 2022 (April 1, 2022 to

December 31, 2022)

(1) Consolidated operating results				(Amounts less than one million yen are omitted)
						(Percentages represent year-over-year changes)
	Net sales	Operating profit	Ordinary profit	Profit attributable to
	owners of parent
Nine months ended	¥ millions	%	¥ millions	%	¥ millions	%	¥ millions	%
December 31, 2022	103,843	12.0	4,787	(12.1)	4,976	(16.1)	3,871	(41.3)
December 31, 2021	92,750	-	5,448	-	5,933		-	6,598	-
Note: Comprehensive	income
Nine months ended December 31, 2022: ¥7,095 million [15.8%]
Nine months ended December 31, 2021: ¥6,127 million [-%]
		EPS			Diluted EPS
Nine months ended		¥				¥
December 31, 2022	224.23			223.69
December 31, 2021	378.36			377.23

Note: GUNZE has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and other related standards. Accordingly, year-over-year increases/decreases (%) of the figures for the nine months ended December 31, 2021 are not provided.

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio	Net assets per share
	¥ millions	¥ millions	%	¥
As of December 31, 2022	171,145	118,975	68.3	6,813.99
As of March 31, 2022	158,216	114,790	71.4	6,535.42
Reference: Total equity
As of December 31, 2022: ¥116,972 million	As of March 31, 2022: ¥112,903 million

2. Dividends

				Annual dividends per share (¥)
		1st quarter-end		2nd quarter-end		3rd quarter-end	Year-end	Total
	¥	¥	¥		¥		¥
FY2021		−		−		−	140.00		140.00
FY2022		−		−		−
FY2022 (projected)								145.00		145.00

(Note) Revision to the projected dividends announced most recently: None

3. Projected results for FY2022 (April 1, 2022 to March 31, 2023)

	Net sales		Operating profit	Ordinary profit
	¥ millions	%	¥ millions		%	¥ millions	%
FY2022 full year	136,000	9.4	6,000		23.0	6,000	11.1
	Profit attributable to	EPS
	owners of parent
	¥ millions	%	¥
FY2022 full year	3,700	25.9	214.57

(Note) Revision to the projected results announced most recently: None

Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries during the period accompanied by changes in the scope of consolidation): No
2. Application of an accounting method specific to the preparation of quarterly consolidated financial statements: Yes
3. Changes in accounting policies, changes in accounting estimates, and restatement after error corrections
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: No
   2. Changes in accounting policies due to other reasons: No
   3. Changes in accounting estimates: No
   4. Restatement after error corrections: No
5. Number of shares issued and outstanding (common stock)
6. 1. Number of shares at the end of period (including treasury stock):

As of December 31, 2022: 18,293,516 shares

As of March 31, 2022: 18,293,516 shares

(b) Treasury stock at the end of period:

As of December 31, 2022: 1,126,977 shares

As of March 31, 2022: 1,017,897 shares

(c) Average number of shares during the period:

Nine months ended December 31, 2022: 17,266,660 shares

Nine months ended December 31, 2021: 17,439,858 shares

• This summary of quarterly consolidated results is exempt from the quarterly review procedures by certified public accountants or an audit corporation.
• Notes regarding the proper use of projections of the results and other matters
  Projections of results and future developments are based on information available to the Company at the current time, as well as certain assumptions judged by the Company to be reasonable. Various factors could cause actual results to differ materially from these projections. For the assumptions that form the basis of the projected results and notes regarding the use of projections, see "(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" of "1. Qualitative Information on Quarterly Financial Results for the Period under Review" on page 3 of attached materials.

(Attachment)
Table of Contents
1. Qualitative Information on Quarterly Financial Results for the Period under Review	2
(1)	Explanation of Business Results	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information	..... 3
2. Quarterly Consolidated Financial Statements and Primary Notes	4
(1)	Quarterly Consolidated Balance Sheets	4
(2)	Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of
	Comprehensive Income	6
(3)	Notes to Quarterly Consolidated Financial Statements	8
	(Notes regarding assumptions of continuing operations)	8
	(Notes in the case of significant changes in shareholders' equity)	8
	(Application of an accounting method specific to the preparation of quarterly consolidated financial
	statements)	8
	(Changes in accounting policies, changes or restatement of accounting estimates)	8
	(Additional information)	8
	(Segment information, etc.)	9
	(Significant subsequent events)	9

1

1. Qualitative Information on Quarterly Financial Results for the Period under Review

1. Explanation of Business Results

During the nine months ended December 31, 2022 (April 1, 2022 - December 31, 2022), the Japanese economy was largely on a recovery track, as social and economic activities moved toward normal primarily owing to the easing of restrictions on activities due to COVID-19. The economic outlook, however, remains unclear, what with rising prices due to soaring raw material and fuel prices as the situation in Ukraine prolongs and unstable exchange rate fluctuations.

Amid this operating environment, the GUNZE Group set about pursuing four basic strategies of "Creation of new value," "Capital cost-focused management," "Evolution of corporate constitution," and "Environmentally responsible management" to kick off its new medium-term management plan, "VISION 2030 stage 1."

By segment, the functional solutions business performed strongly overall, although the soaring raw material and fuel prices had an impact on the business. In the apparel business, exchange rate fluctuations and skyrocketing raw material and fuel prices had an impact on the business, despite the recovery trend in sales. The lifestyle creations business, on the other hand, posted an increase in sales thanks to the redevelopment of idle land.

As a result of the above, for the period under review, net sales increased by 12.0% year-on-year to ¥103,843 million, operating profit decreased by 12.1% year-on-year to ¥4,787 million, ordinary profit decreased by 16.1% year-on-year to ¥4,976 million, and profit attributable to owners of parent decreased by 41.3% year-on-year to ¥3,871 million on a consolidated basis. The substantial decline in profit attributable to owners of parent is attributable to the recording of ¥4,999 million in gain on sale of non-current assets (extraordinary income) following sales of real estate in the corresponding period of the previous fiscal year.

(Results by Business Segment)

[Functional Solutions]

In the plastic films subsector, sales of packaging films remained strong, although the soaring raw material and fuel prices had an impact on the business. In the engineering plastics subsector, too, sales of products aligned with the semiconductor market remained strong in addition to a recovery in sales of products for office equipment. In the electronic components subsector, market conditions had an impact on touch screen sales in the Chinese market. Meanwhile, the medical materials subsector remained firm overall partly owing to new product launches, although conditions in the supply chain had an impact on sales of medical lasers.

As a result of the above, the functional solutions business recorded net sales of ¥46,298 million (up by 12.4% year-on-year) and operating profit of ¥6,690 million (up by 12.7% year-on-year).

[Apparel]

The apparel business saw its sales grow overall as the market began recovering after the easing of pandemic- related regulations, as well as brisk sales in e-commerce and the SPA channel, but its profitability is deteriorating owing to the rising raw material and fuel prices and exchange rate fluctuations. As such, the Company has begun revising its prices. In the innerwear subsector, cut-off innerwears and the differentiated product line of foundation garments performed briskly. The legwear subsector, on the other hand, recorded revenue growth thanks to the recovery in the flow of people, but its profitability still needs to be improved.

As a result of the above, the apparel business recorded net sales of ¥47,030 million (up by 8.2% year-on-year) and operating profit of ¥363 million (down by 73.0% year-on-year).

[Lifestyle Creations]

The real estate subsector recorded revenue growth as sales of an idle land redevelopment project were recorded.

2