Consolidated Financial Report [IFRS]

For the Year Ended March 31, 2022

April 26, 2022

Listed Company: Hitachi Metals, Ltd. (URLhttps://www.hitachi-metals.co.jp/e/index.html)

Listed Stock Exchanges: Tokyo Stock Exchange, Inc. (First Section, Code Number 5486)

Representative: Mitsuaki Nishiyama, Chairperson, President, and CEO

Contact: Izumi Tsubouchi, General Manager, Corporate Communications Dept. Tel: +81-3-6774-3077 Date of the Ordinary General Meeting of Shareholders: June 21, 2022

Note: Figures are rounded off to the nearest million yen.

1. Performance over the year under review (April 1, 2021 - March 31, 2022)

(1) Operating Results

(% indicates the rate of +/- compared with the previous fiscal year)

Net Income (loss)

Net Income (loss)

attributable to Shareholders of the Parent Company

March, 2022

942,701

23.8

March, 2021

761,615

(13.6)

Million yen

Million yen

Million yen

Million yen

Million yen

26,809

26,695

32,740

11,890

12,030

(4,977)

(49,213)

(50,588)

(42,556)

(42,285)

(Note) In order to give a true view of the condition of the whole Group's business without the effects of business restructuring etc., the Hitachi Metals Group (the

"Group") shows "adjusted operating income" which is the operating income (loss) recorded in the consolidated statement of income, excluding non-operating income and expenses, and extraordinary income and losses. Adjusted operating income is a unified profit indicator for the Hitachi Group, including Hitachi, Ltd.

Comprehensive Income (loss)

Earnings per Share (Basic)

Earnings per Share (Diluted)

Net Income (loss) Ratio to Equity attributable to Shareholders of the Parent Company

Income (loss) before Income Taxes

Ratio to Assets

Operating Income

(loss) Ratio to Revenues

March, 2022

March, 2021

Million yen 39,438 (25,160)

% - -

Yen 28.14 (98.90)

Yen - -

2.4 (8.4)

3.2 (5.2)

2.8 (6.5)

Reference: Share of profit of investments accounted for using the equity method

March, 2022 ¥1,152 millionsMarch, 2021 ¥77 millions

(2) Financial Standing

Total Asset

Total Equity

Equity attributable to Shareholders of the Parent Company

Equity attributable to

Shareholders of the Parent Company Ratio

Equity per Share attributable to

Shareholders of the Parent Company

March, 2022

March, 2021

Million yen 1,069,695 972,249

Million yen 531,118 492,118

Million yen 527,563 489,671

49.3 50.4

Yen 1,233.91 1,145.26

(3) Statement of Cash Flows

Cash Flows from Operating Activities

Cash Flows from Investment Activities

Cash Flows from Financing Activities

Cash and Cash Equivalents at the End of Period

March, 2022

March, 2021

Million yen 29,851 52,586

Million yen

(6,372)

2,191

Million yen

(7,873) (1,096)

Million yen 124,645 99,339

2. Dividends

Dividends per Share

Total Dividends

(Annual)

Dividend Payout

Ratio (Consolidated)

Dividends on Equity attributable to Shareholders of the Parent Company (Consolidated)

1Q

2Q

3Q

Term-end

Annual

March, 2021

March, 2022

Yen - -

Yen 0.00 0.00

Yen - -

Yen 0.00 0.00

Yen 0.00 0.00

Million yen - -

% - -

% - -

March, 2023 (Forecast)

0.00

0.00

0.00

3. Business results forecast for the year ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(% indicates the rate of +/- compared with the same term of the previous fiscal year)Revenues

Adjusted Operating Income

Income before Income Taxes

Net Income attributable to Shareholders of the Parent Company

Full-yearMillion yen1,100,000

16.7

Million yen 70,000

161.1

Million yen 41,500

26.8

Million yen 30,000

149.4

(Note) In order to give a true view of the condition of the whole Group's business without the effects of business restructuring etc., the Group shows "adjusted operating income" which is the operating income recorded in the consolidated statement of income, excluding non-operating income and expenses, and extraordinary income and losses. Adjusted operating income is a unified profit indicator for the Hitachi Group, including Hitachi, Ltd.

Other Notes

Numbers of shares issued (Common stock)

  • (i) Number of shares outstanding at end of period (Including treasury stock)

  • (ii) Number of treasury stock outstanding at end of period

  • (iii) Average number of shares issued during the term

March, 2022

428,904,352

March, 2021

428,904,352

March, 2022

1,349,888

March, 2021

1,340,710

March, 2022

427,557,344

March, 2021

427,565,354

*This financial report is outside the scope of audit procedures.

*The forecast figures, with the exception of actual results, are based on certain assumptions and predictions of the management at the time of preparation. Changes in business conditions or underlying assumptions may cause actual results to differ from those projected.

Please refer to "1. (1) Overview of Operating Results" on page 4 for precondition and assumption as the basis of the above forecasts.

Appendix

Table of Contents

1. Overview of Operating Results ………………………………………………………………………………………………… 4

(1) Overview of Operating Results ……………………………………………………………………………………………… 4

(2) Overview of Financial Condition ……………………………… ... ……………… .. ……………… .. ………………………… 7

(3) Business Risks ………………………………………………………………………………………………………………… 9

2. Basic Views of Selecting Accounting Standards ………………………………………………………………………………… 10

3. Consolidated Financial Statements and Notes to Consolidated Financial Statements …………………………………………… 11

(1) Consolidated Statement of Financial Position ……………………………………………………………………………… 11

(2) Consolidated Statements of Income and Comprehensive Income …………………………………………………………… 13

[ Consolidated Statement of Income ] ………………………………………………………………………………………… 13

[ Consolidated Statement of Comprehensive Income ] ……………………………………………………………………… 14

(3) Consolidated Statement of Changes in Equity ……………………………………………………………………………… 15

(4) Consolidated Statement of Cash Flows ……………………………………………………………………………………… 16

(5) Notes to the Consolidated Financial Statements ……………………………………………………………………………… 18

[ Segment Information ] ……………………………………………………………………………………………………… 18

[ Net Income per Share ] ……………………………………………………………………………………………………… 23

[ Subsequent Events ] ………………………………………………………………………………………………………… 23

1. Overview of Operating Results

(1) Overview of Operating Results

1) Overview of Fiscal 2021 (fiscal year ended March 31, 2022)

The Group's operating results for the full year ended March 31, 2022 were as follows.

During the fiscal year ended March 31, 2022, the global economy continued to recover although the recovery varied depending on the containment level of the spread of COVID-19 (the novel coronavirus disease) and on economic policies. In the business fields of the Group, the automotive-related area was impacted by production adjustments implemented by automobile manufacturers due to a supply shortage of semiconductors, and in tandem with measures, mainly lockdowns in Southeast Asian countries hit by the spread of COVID-19; however, demand increased year on year. In the FA/robot-related area, capital investment demand related to the manufacture of automobiles and smartphones increased. In the semiconductor-related area, demand increased as a result of a rise in demand for use in telecommunication devices and automobile. Furthermore, reflecting the impact of the rise in raw material prices (sliding-scale raw material price system) and the depreciation of the yen, revenues increased by 23.8% year on year to ¥942,701 million.

In terms of profit, adjusted operating income* increased by ¥31,786 million year on year to ¥26,809 million, owing to the effects of various cost structure improvement measures and an increase in revenues, despite the negative impact of increases in expenses and energy costs due to soaring raw material prices. Operating income rose ¥75,908 million year on year to ¥26,695 million. This reflects mainly the posting of ¥35,857 million in impairment losses, recorded under other operating expenses, for the fiscal year 2020. Income before income taxes increased by ¥83,328 million year on year to ¥32,740 million and net income attributable to shareholders of the parent company increased by ¥54,315 million year on year to ¥12,030 million.

As announced in "Announcement of Opinion in Support of the Tender Offer by K.K. BCJ-52 for the Shares of Hitachi Metals, Ltd., and Recommendation of Tender" dated April 28, 2021 and "Announcement Concerning Progress of the Tender Offer by K.K. BCJ-52 for the Shares of Hitachi Metals, Ltd. (Securities Code 5486)" dated November 30, 2021, a tender offer by K.K. BCJ-52 ("BCJ-52") for the common shares of the Company and other matters (the "Tender Offer") are planned in the future. BCJ-52 intends to make the Company its wholly owned subsidiary through the Tender Offer and a series of transactions thereafter. As a result, the Company will be independent from the Hitachi Group and its common shares will be delisted. Following the transaction, the Company will aim to increase its corporate value through renewed growth by speeding up transformation and growth, obtaining investment funds, and introducing external knowledge to reinforce its competitiveness and profitability by undertaking business reforms with the new partner.

The results by business segment are as followings. Note that revenues for each segment include intersegment revenues. There were no significant changes to the businesses of the Group during the nine months ended March 31, 2022.

Specialty Steel Products

Revenues across the entire Specialty Steel Products segment for the fiscal year ended March 31, 2022, were ¥261,760 million, an increase of 20.4% as compared with those of the fiscal year ended March 31, 2021.

Breaking down the revenues by business, sales of molds and tool steel increased year on year reflecting an increase in both Japanese and international demand. Sales of materials for industrial equipment increased year on year due to a rise in demand for products related to automobiles. Among aircraft and energy-related materials, sales of aircraft-related materials remained sluggish as a result of travel restrictions following the spread of COVID-19. However, as demand related to small- and medium-sized passenger aircraft grew markedly in each quarter, overall sales of aircraft and energy-related materials remained virtually unchanged year on year for the fiscal year ended March 31, 2022. Sales of electronic materials increased year on year due to remaining high levels of demand for semiconductor package materials and solid sales of clad metals for smartphones and batteries, in addition to increased sales of organic EL panel-related components.

While sales of various rolls remained virtually unchanged year on year, demand for steel-frame joints for construction continued to pick up since the third quarter ended December 31, 2021, and sales of injection molding machine parts remained brisk. As a result, sales of rolls on the whole increased year on year.

Adjusted operating income increased by ¥16,309 million year on year to ¥17,120 million, due in part to an increase in demand for our mainstay products. Meanwhile, operating income climbed ¥27,837 million year on year to ¥15,861 million. This was attributable to the posting of ¥12,226 million in impairment losses, recorded under other operating expenses, in the fiscal year 2020 ended March 31, 2021, on top of an increase in adjusted operating income.

Functional Components and Equipment

Revenues in the Functional Components and Equipment segment for the fiscal year ended March 31, 2022, were ¥313,965 million, an increase of 26.6% compared with those of the fiscal year ended March 31, 2021.

Breaking down the revenues by business, among automotive casting product sales, sales of heat-resistant exhaust casting components saw a year-on-year decrease owing to the changes in product mix and the impact of production adjustments carried out by automobile manufacturers. Sales of cast iron products were impacted by production adjustments carried out by automobile manufacturers. Nonetheless, due to the impact from the rise in raw material prices (sliding-scale raw material price system) as well as an increase in demand for components for commercial vehicles and construction and agricultural equipment in the North America market, revenues outperformed the same period of the previous fiscal year. As a result, sales of automotive casting components as a whole increased year on year.

Among piping components, sales of mainstay pipe fittings expanded year-on-year, owing to an increase in demand mainly thanks to a recovery in housing starts in Japan and the U.S. Sales of equipment for semiconductor manufacturing devices increased year on year as capital investment demand remained brisk reflecting the strength of the semiconductor market. As a result, sales of piping components as a whole increased year on year.

Adjusted operating loss improved by ¥3,201 million year on year as a whole, resulting in a loss of ¥9,611 million, due in part to the improved profitability of heat-resistant exhaust casting components and a rise in demand in other businesses, despite the worsening profitability of automotive casting products in North America. Meanwhile, operating loss was ¥11,290 million, an improvement of ¥7,838 million year on year. This was attributable to the absence of ¥5,847 million in impairment losses, which were recorded as other operating expenses a year earlier, on top of the improvement in adjusted operating income.

Magnetic Materials and Applications / Power Electronics

Revenues in the Magnetic Materials and Applications/ Power Electronics segment segment for the fiscal year ended March 31, 2022 were ¥136,216 million, an increase of 28.3% year on year.

Breaking down the revenues by business, in magnetic materials, sales of rare earth magnets and ferrite magnets were impacted by production adjustments implemented by automobile manufacturers. In comparison with the same period of the previous fiscal year, the automotive related revenues increased. Specifically, in the rare earth magnets business, demand trended briskly related to FA/robots. As such in the magnetic materials business overall, revenues were up year on year.

Among power electronics materials, soft magnetic materials, and their applied products saw brisk demand for use in telecommunications applications such as smartphones, tablets, and server equipment. Demand for amorphous metals for transformers also increased mainly in Asia. As a result, sales of soft magnetic materials, and their applied products as a whole increased year on year. Sales of ceramic components increased year on year due to an increase in demand for use in automobiles as well as for server equipment and continued strength in demand for use in medical devices from the previous fiscal year. As a result, sales of power electronics materials as a whole increased year on year.

Adjusted operating income increased by ¥10,313 million year on year to ¥12,794 million, due to an increase in demand for both magnetic materials and power electronics materials. Meanwhile, operating income climbed ¥27,031 million year on year to ¥12,947 million. This was attributable to the posting of ¥15,657 million in impairment losses, recorded under other operating expenses, in the fiscal year 2020 ended March 31, 2021, on top of an increase in adjusted operating income.

Wires, Cables, and Related Products

Revenues in the Wires, Cables, and Related Products segment for the fiscal year ended March 31, 2022, were ¥230,181 million, an increase of 21.6% year on year.

Breaking down the revenues by business, among electric wires and cables, sales of wires and cables for rolling stock decreased year on year mainly reflecting a decline in demand among users in China. In wires, cables, and tubes for medical devices, revenues overall increased due to the demand increased year on year. Sales of magnet wires increased year on year reflecting a recovery in demand mainly for automotive and industrial equipment use. Sales of electronic wires increased year on year due to an increase in demand for FA/robot applications. As a result, sales of electric wires and cables as a whole increased year on year.

Sales of automotive components overall rose in contrast with last fiscal year, although the recovery trend had grown sluggish since the second quarter ended September 30, 2021 due to production adjustments implemented by automobile manufacturers. Adjusted operating income increased by ¥664 million year on year to ¥5,224 million, due to an increase in demand mainly for electric wires and cables. Meanwhile, operating income was ¥3,686 million, an increase of ¥1,854 million year on year. This was attributable to the absence of ¥2,003 million in impairment losses, which were recorded as other operating expenses a year earlier, on top of an increase in adjusted operating income.

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Hitachi Metals Ltd. published this content on 26 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2022 06:29:07 UTC.