Hanwa : Financial Results for the Second Quarter ended September 30, 2022

Financial Results for the Second Quarter ended September 30, 2022

			(Japan GAAP)
			November 10, 2022
Company name:	HANWA Co., Ltd.	Listed stock exchange: Tokyo
Stock exchange code:	8078		(URL https://www.hanwa.co.jp)
Representative:	Yoichi Nakagawa	President
Enquiries:	Hisashi Honda	Executive Officer	Phone [phone]

Scheduled date of issue of audited financial statements: November 10, 2022

Scheduled date of payout of dividend: December 2, 2022

(Amounts less than one million yen are rounded down)

１．Consolidated financial results for the Second Quarter ended September 30, 2022 (April 1, 2022 to September 30, 2022)

(1) Consolidated operating results

（Percentage indicate a change from the previous year）

Net sales

Operating income

Ordinary income

Profit attributable to

owners of the parent

For the 2nd Quarter

(Millions of yen)

(％)

(Millions of yen)

(％)

(Millions of yen)

(％)

(Millions of yen)

(％)

ended September 30, 2022

1,338,965

36.6

41,374

36.0

52,958

73.0

37,189

77.1

ended September 30, 2021

980,342

－

30,426

174.7

30,615

198.7

20,996

206.0

Note: Comprehensive

income

For the Fiscal

Year ended September

30, 2022

57,236

million yen

109.9

%

For the Fiscal Year ended September 30, 2021

27,266

million yen

465.6

%

Net income

Net income

per share

per share(diluted)

For the 2nd Quarter

(yen)

(yen)

ended September 30, 2022

915.15

－

ended September 30, 2021

516.69

－

• From the beginning of the fiscal year ending March 31, 2022, the Company applies the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan Statement No. 29). As a result, the figures for the 2nd quarter ended September 30, 2021 in the above consolidated operating results constitute the figures after application of said accounting standard. For this reason, rates of increase/decrease YoY are not shown for net sales ended September 30, 2021.

(2) Consolidated financial position

		Total assets	Net assets		Shareholders'	Net assets
			equity ratio	per share
		(Millions of yen)	(Millions of yen)	(％)	(yen)
As of September 30, 2022		1,362,151		295,761		21.3	7,131.27
As of March 31, 2022		1,715,394		240,497		13.8	5,834.98
Note: Shareholders' equity	As of September 30, 2022	289,794	million yen
		As of March 31, 2022	237,117	million yen

２．Cash dividends

		Cash dividends per share
	1st Quarter	2nd Quarter	3rd Quarter	Year-end	Annual
	(yen)	(yen)	(yen)	(yen)	(yen)
Year ended March 31, 2022	－	50.00	－	50.00	100.00
Year ended March 31, 2023	－	50.00
Year ending March 31, 2023			－	50.00	100.00
（estimated）

３．Forecast of consolidated financial results for fiscal year ending March 31, 2023 (April 1, 2022 to March 31, 2023)

（Percentage indicate a change from the previous year）

	Net sales		Operating income	Ordinary income	Profit attributable to	Net income
		owners of the parent	per share
	(Millions of yen)	(％)	(Millions of yen)	(％)	(Millions of yen)	(％)	(Millions of yen)	(％)	(yen)
Annual	2,600,000	20.1	70,000	12.2	73,000	16.4	51,000	16.9	1,255.01

• The above forecasts reflect assumptions and prospects based on the information currently available. They are subject to various risks and uncertainties that could cause actual results to differ materially from this information.

－1－

Financial Results for the Second Quarter ended September 30, 2022 《Consolidated Balance Sheets》

	(Amounts less than one million yen are rounded down)
		Millions of yen
		March 31, 2022	September 30, 2022
Assets
Current assets;
Cash and deposits	165,451	137,826
Trade notes, accounts receivable and contract assets	542,444	452,739
Electronically recorded monetary claims	33,012	47,266
Inventories	243,603	282,313
Accounts receivable-other	222,549	95,303
Others	66,569	65,575
Allowance for doubtful receivables	(1,580)	(1,393)
Total current assets	1,272,049	1,079,631
Fixed assets;
Property and equipment;
Land	34,677	35,162
Others	43,211	48,425
Total property and equipment	77,889	83,587
Intangible assets	10,556	10,969
Investments and other assets;
Investment securities	81,443	98,173
Long-term guarantee deposits	248,541	61,142
Others	26,317	29,884
Allowance for doubtful receivables	(1,403)	(1,236)
Total investments and other assets	354,898	187,962
Total fixed assets	443,344	282,520
Total assets	1,715,394	1,362,151
Liabilities;
Current liabilities;
Trade notes and accounts payable	388,294	258,272
Electronically record obligations	33,456	37,826
Short-term loans payable	458,984	327,142
Commercial paper	40,000	70,000
Current portion of bonds payable	10,000	10,000
Income taxes payable	16,098	13,305
Accrued bonuses	4,223	3,478
Provision for product warranties	66	61
Commodity forwards contracts liabilities	186,766	21,515
Others	100,725	91,006
Total current liabilities	1,238,615	832,608
Long-term liabilities;
Bonds payable	20,000	10,000
Long-term loans payable	190,890	190,876
Retirement benefits liabilities	4,454	4,502
Others	20,935	28,402
Total long-term liabilities	236,280	233,781
Total liabilities	1,474,896	1,066,390
Net assets;
Shareholders' equity;
Common stock	45,651	45,651
Capital surplus	26	26
Retained earnings	180,119	215,155
Treasury stock	(3,729)	(3,730)
Total shareholders' equity	222,066	257,102
Accumulated other comprehensive income
Net unrealized holding gains on securities	16,725	20,412
Deferred hedge profit and loss	(1,000)	1,019
Land revaluation difference	3,191	3,455
Foreign currency translation adjustments	(531)	10,807
Remeasurements of defined benefit plans	(3,334)	(3,002)
Total accumulated other comprehensive income	15,050	32,691
Non-controlling interests	3,379	5,967
Total net assets	240,497	295,761
Total liabilities and net assets	1,715,394	1,362,151

－2－

Financial Results for the Second Quarter ended September 30, 2022

《Consolidated Statements of Income and Comprehensive Income》

		(Amounts less than one million yen are rounded down)
			Millions of yen
			2nd Quarter ended	2nd Quarter ended
			September 30, 2021	September 30, 2022
Net sales		980,342	1,338,965
Cost of sales		922,809	1,267,834
Gross profit		57,532	71,131
Selling, general and administrative expenses		27,105	29,756
Operating income		30,426	41,374
Other income;
	Interest income		734	1,875
	Dividend income		1,020	6,421
	Equity in earnings of affiliates		1,384	7,141
	Foreign exchange gain		―	1,763
	Others		727	1,076
	Total other income		3,866	18,278
Other expenses;
	Interest expenses		1,854	4,503
	Foreign exchange loss		747	―
	Others		1,076	2,190
	Total other expenses		3,678	6,693
Ordinary income		30,615	52,958
Extraordinary income
	Gain on sale of investment securities		―	541
	Arbitration related income		―	259
	Total extraordinary income		―	800
Extraordinary loss;
	Loss on devaluation of investment securities		―	251
	Value added taxes for prior periods		―	57
	Total extraordinary loss		―	309
Income before income taxes and non-controlling interests		30,615	53,450
Income taxes		9,295	14,096
Net income		21,319	39,353
Net income attributable to
	Owners of the parent		20,996	37,189
	Non-controlling interests		323	2,164
Other Comprehensive Income
	Valuation difference on available-for-sale securities		2,648	3,692
	Deferred hedge profit and loss		240	2,019
	Foreign currency translation adjustments		2,361	10,103
	Remeasurements of defined benefit plans		382	326
	Share of other comprehensive income of entities accounted	314	1,741
	for using equity method
	Total other comprehensive Income		5,946	17,882
Comprehensive Income		27,266	57,236
Comprehensive income attributable to
	Owners of the parent		26,770	54,513
	Non-controlling interests		496	2,723

－3－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 2022

《Consolidated Statements of Cash Flows》

(Amounts less than one million yen are rounded down)

		Millions of yen
		2nd Quarter ended	2nd Quarter ended
		September 30, 2021	September 30, 2022
Cash flows from operating activities;
	Income before income taxes	30,615	53,450
	Depreciation and amortization	2,900	3,333
	Amortization of goodwill	196	152
	Increase(decrease) in allowance for doubtful receivables	490	(451)
	Interest and dividend income	(1,754)	(8,297)
	Interest expense	1,854	4,503
	Equity in earnings of affiliated companies (gain)	(1,384)	(7,141)
	Gain on sale of investment securities	―	(541)
	Loss on devaluation of investment securities	―	251
	Arbitration related income	―	(259)
	Value added taxes for prior periods	―	57
	(Increase)decrease in trade receivables and contract assets	(81,171)	91,559
	(Increase)decrease in inventories	(41,581)	(23,201)
	(Increase)decrease in accounts receivable-other	(5,746)	127,589
	(Increase)decrease in advance payment	(11,706)	8,669
	Increase(decrease) in trade notes and accounts payable	52,947	(135,602)
	Increase(decrease) in deposits received	(2,587)	(24,963)
	Increase(decrease) in advance payment	(1,575)	7,317
	Increase(decrease) in commodity forwards contracts liabilities	1,839	(165,264)
	(Increase)decrease in long-term guarantee deposits	(5,584)	187,315
	Increase(decrease) in retirement benefits	604	476
	Other, net	2,426	3,948
	Sub total	(59,219)	122,903
	Interest and dividends received	1,531	7,956
	Interest paid	(1,798)	(4,438)
	Income taxes (paid) refund	(6,695)	(16,566)
	Arbitration related income	―	259
	Net cash provided by (used in) operating activities	(66,182)	110,114
Cash flows from investing activities;
	Payment for time deposits	(24)	(16)
	Proceeds from refund of time deposits	12	369
	Payment for purchase of property and equipment	(3,064)	(5,573)
	Proceeds from sale of property and equipment	21	425
	Payment for acquisition of investment securities	(3,317)	(3,961)
	Proceeds from sale and redemption of investment securities	25	1,164
	(Increase)decrease in short-term loans receivable, net	(5,410)	(258)
	Increase in long-term loans receivable	(238)	(301)
	Collection of long-term loans receivable	4,522	51
	Other, net	(1,075)	(508)
	Net cash provided by (used in) investing activities	(8,549)	(8,609)
Cash flows from financing activities;
	Increase(decrease) in short-term loans, net	40,610	(130,745)
	Increase(decrease) in commercial paper, net	40,000	30,000
	Proceeds from long-term debt	6,605	5,050
	Repayments of long-term debt	(6,882)	(14,245)
	Payment for redemption of bonds	(13)	(10,000)
	Payment for cash dividends	(1,223)	(2,031)
	Cash dividends paid to non-controlling interests in consolidated subsidiaries	(12)	(136)
	Other, net	(438)	(485)
	Net cash provided by (used in) financing activities	78,644	(122,593)
Effect of exchange rate changes on cash and cash equivalents	(429)	(6,647)
Net increase(decrease) in cash and cash equivalents	3,482	(27,736)
Cash and cash equivalents at beginning of year	50,892	165,083
Increase in cash and cash equivalents from newly consolidated subsidiaries	1,842	464
Increase in cash and cash equivalents resulting from mergers with unconsolidated subsidiaries	9	―
Cash and cash equivalents at end of period	56,226	137,811

－4－

Financial Results for the Second Quarter ended September 30, 2022

《Segment information》

Segment information by business category for the 2nd Quarter ended September 30, 2021 and 2022, is as follows:

							(Amounts less than one million yen are rounded down)
2nd Quarter ended September 30, 2021									Millions of yen
			Reportable segment						Consoli-
		Primary	Metal		Energy	Overseas	Sub-	Other	Total	Adjustment
	Steel	Foods	& Living	sales	dated
	Metal	Recycling	total
			Materials	subsidiaries
Net sales
Customers	438,193	92,594	61,665	57,982	122,182	155,795	928,414	51,928	980,342	―	980,342
Inter-segment	9,724	2,800	1,557	280	4,904	5,954	25,222	1,529	26,751	(26,751)	―
Total	447,918	95,395	63,223	58,262	127,087	161,750	953,637	53,457	1,007,094	(26,751)	980,342
Segment income	18,213	3,519	3,234	1,607	3,065	2,501	32,143	1,201	33,344	(2,728)	30,615
2nd Quarter ended September 30, 2022									Millions of yen
			Reportable segment						Consoli-
		Primary	Metal		Energy	Overseas	Sub-	Other	Total	Adjustment
	Steel	Foods	& Living	sales	dated
	Metal	Recycling	total
			Materials	subsidiaries
Net sales
Customers	595,927	122,476	76,366	61,005	173,989	231,613	1,261,379	77,586	1,338,965	―	1,338,965
Inter-segment	14,885	2,740	1,482	473	7,641	23,384	50,607	2,375	52,982	(52,982)	―
Total	610,813	125,216	77,848	61,478	181,631	254,998	1,311,986	79,961	1,391,948	(52,982)	1,338,965
Segment income(loss)	17,968	12,576	5,421	(225)	6,663	5,431	47,835	2,282	50,117	2,840	52,958

Notes:

1. "Other" comprises businesses that are not included in reportable segments, such as lumber section and machinery section.
2. Adjustments for segment income or loss include inter-segment elimination and Group costs that have not been distributed to reportable segments. These group costs consist mainly of expenses of administrative departments.
3. Segment income or loss is adjusted between ordinary income on the consolidated statements of income and comprehensive income.
4. Since January 2022, the Company has changed its method of classification of business segments, integrating a part of the Overseas sales subsidiaries business into the Foods business.The classification change also applies to segment information for the 2nd quarter of the previous fiscal year.

－5－