Hitachi Metals : Consolidated Financial Report for the 6-month period ended September 30, 2021 (IFRS)（PDF：）

Consolidated Financial Report [IFRS]

For the 6-month period ended September 30, 2021

October 26, 2021

Listed Company: Hitachi Metals, Ltd. (URL https://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: [phone]

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

1. Performance for the First Half Ended September 30, 2021 (April 1, 2021 to September 30, 2021)

(1) Operating Results		(% indicates the rate of +/- compared with the same term of the previous fiscal year)
	Revenues		Adjusted Operating	Operating		Income (loss)		Net Income (loss)
		Income (loss)		Income (loss)		before Income Taxes
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Million yen	%
Sept, 2021	456,352		33.9	15,270		－	14,781		－	15,282		－	11,227	－
Sept, 2020	340,831		(25.4)	(12,364)		－	(38,565)		－	(39,537)		－	(33,330)	－

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.

Net Income (loss) attributable to

Comprehensive

Earnings per Share

Earnings per Share

Shareholders of the Parent Company

Income (loss)

(Basic)

(Diluted)

Million yen

%

Million yen

%

Yen

Yen

Sept, 2021

11,276

－

11,913

－

26.37

－

Sept, 2020

(33,208)

－

(36,022)

－

(77.67)

－

(2) Financial Standing

Total Asset

Total Equity

Equity attributable to

Equity attributable to

Equity per Share attributable

Shareholders of the

Shareholders of the Parent to Shareholders of the Parent

Parent Company

Company Ratio

Company

Million yen

Million yen

Million yen

%

Yen

Sept, 2021

1,007,510

503,994

501,573

49.8

1,173.11

March, 2021

972,249

492,118

489,671

50.4

1,145.26

2. Dividends

				Dividends per Share
	1Q	2Q	3Q	Term-end	Annual
	Yen		Yen	Yen	Yen	Yen
March, 2021	－		0.00	－	0.00	0.00
March, 2022	－	0.00
March, 2022				－	0.00	0.00
(Forecast)
Note: Revision of	the latest forecasts of results : No

3. Business results forecast for the year ending March 31, 2022 (April 1, 2021 to March 31, 2022)

					(% indicates the rate of +/- compared with the previous fiscal year)
			Adjusted		Income		Net Income		Earnings
	Revenues				attributable to Shareholders	per Share
		Operating Income	before Income Taxes
			of the Parent Company		(Basic)
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full-year	920,000	20.8	34,000	－	17,000	－	12,000	－	28.07

Note: 1. Revision of the latest forecasts of results : Revised

2. In order to give a true view of the condition of the 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.

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※ Other Notes

Numbers of shares issued (Common stock)
(ⅰ) Number of shares outstanding at end of period
(Including treasury stock)	Sept, 2021	428,904,352	March, 2021	428,904,352
(ⅱ) Number of treasury stock outstanding at end of period	Sept, 2021	1,347,184	March, 2021	1,340,710
(ⅲ) Average number of shares issued during the term	Sept, 2021 (2Q)	427,559,498	Sept, 2020 (2Q)	427,566,272

*This quarterly consolidated financial report is not subject to the quarterly review procedure by the scope of audit.

*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 may differ from those projected. Please refer to "(3) Forecasts for the Fiscal Year Ending March 31, 2022, including Consolidated Operating Forecasts" on page 7 for precondition and assumption as the basis of the above forecasts.

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○ Table of Contents

1. Qualitative Information Regarding Financial Results for the Six Months Ended September 30, 2021………………………… 4

1. Information Regarding Operating Results………………………………..……………………………………………… 4
2. Analisys of Financial Condition…………………………………………………………………….…………………… 6

(3) Forecasts for the Fiscal Year Ending March 31, 2022, including Consolidated Operating Forecasts…………………	7
2. Condensed Interim Consolidated Financial Statements and Notes to Condensed Interim Consolidated Financial Statements…	8

1. Condensed Interim Consolidated Statement of Financial Position……………………………………………………… 8
2. Condensed Interim Consolidated Statement of Income and Condensed Interim Consolidated Statement of Comprehensive Income………………………………………………………………………………………….……… 10 [ Condensed Interim Consolidated Statement of Income ]……………………………………………………………… 10 [ Condensed Interim Consolidated Statement of Comprehensive Income ]……………………………………………. 11
3. Condensed Interim Consolidated Statement of Changes in Equity……………………………………………………… 12
4. Condensed Interim Consolidated Statement of Cash Flows…………………………………………………………….. 13
5. Segment Information…………………………………………………………………………………………………….. 15

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1. Qualitative Information Regarding Financial Results for the Six Months Ended September 30, 2021

1. Information Regarding Operating Results

The Group's operating results for the six months ended September 30, 2021 were as followings.

During the six months ended September 30, 2021, the global economy continued to recover, mainly in the U.S. and China, 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 reflecting a recovery in automobile sales in each region. 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, revenues increased by 33.9% year on year to ¥456,352 million.

In terms of the profit front, on top of a reduction in fixed costs and other expenses and owing to an increase in revenues, adjusted operating income* increased by ¥27,634 million year on year to ¥15,270 million. Operating income rose ¥53,346 million year on year to ¥14,781 million. This reflects the posting of ¥24,589 million in impairment losses, recorded under other operating expenses, in the second quarter ended September 30, 2020. Income before income taxes increased by ¥54,819 million year on year to ¥15,282 million and net income attributable to shareholders of the parent company increased by ¥44,484 million year on year to ¥11,276 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, 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 six months ended September 30, 2021.

Specialty Steel Products

Revenues in the Specialty Steel Products segment for the six months ended September 30, 2021 were ¥127,473 million, an increase of 22.0% as compared with those for the six months ended September 30, 2020.

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. Sales of aircraft and energy-related materials decreased year on year due to continued weakness in demand for aircraft-related materials as a result of travel restrictions following the spread of COVID-19. Sales of alloys for electronic products increased year on year due to 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.

Sales of rolls as a whole were flat, reflecting a slight year-on-year decline in sales of various rolls and steel-frame joints for construction, while sales of injection molding machine parts were strong.

Adjusted operating income increased by ¥9,932 million year on year to ¥7,264 million, due in part to an increase in demand for our mainstay products. Meanwhile, operating income climbed ¥15,779 million year on year to ¥7,214 million. This was attributable to the posting of ¥6,932 million in impairment losses, recorded under other operating expenses, in the second quarter ended September 30, 2020, on top of an increase in adjusted operating income.

Functional Components and Equipment

Revenues in the Functional Components and Equipment segment for the six months ended September 30, 2021 were ¥152,966 million, an increase of 47.4% year on year.

Breaking down the revenues by business, among automotive casting component sales, sales of cast iron products were impacted by production adjustments carried out by automobile manufacturers. Nonetheless, demand expanded in comparison with the same period of the previous fiscal year, when automobile sales volume sharply dropped. In addition, in the market in North America, demand increased for components for commercial vehicles and construction and agricultural equipment. On top of

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this, there was also the impact from the rise in raw material prices (sliding-scale raw material price system). Consequently, revenues outperformed the same period of the previous fiscal year. Sales of heat-resistant exhaust casting components also saw a year-on-year increase owning to a recovery in demand. 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 due to the recovery of capital investment demand following 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 ¥7,824 million year on year, resulting in a loss of ¥2,304 million, due in part to an increase in demand for our mainstay automotive casting components. Operating loss was ¥3,042 million, an improvement of ¥8,349 million year on year.

Magnetic Materials and Applications / Power Electronics

Revenues in the Magnetic Materials and Applications / Power Electronics segment for the six months ended September 30, 2021 were ¥65,885 million, an increase of 37.7% 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, automotive-related sales increased underpinned by a recovery in automobile sales in each region. In addition, in the rare earth magnets business, demand trended briskly related to FA/robots and electronics. 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 ¥7,125 million year on year to ¥6,676 million, due to an increase in demand for both magnetic materials and power electronics materials. Meanwhile, operating income climbed ¥23,076 million year on year to ¥7,011 million. This was attributable to the posting of ¥15,657 million in impairment losses, recorded under other operating expenses, in the second quarter ended September 30, 2020, 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 six months ended September 30, 2021, were ¥109,722 million, an increase of 30.2% 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 and cables for medical devices, revenues overall remained unchanged from the same period last year. Although demand for tubes recovered, demand for cables retreated. 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 the same period last year. Although the recovery trend grew sluggish during the second quarter ended September 30, 2021 due to production adjustments implemented by automobile manufacturers, demand increased year on year, and the sharp drop in automobile sales in the same period last year.

Adjusted operating income increased by ¥2,861 million year on year to ¥2,587 million, due to an increase in demand for both electric wires and cables and automotive components. Meanwhile, operating income climbed ¥3,235 million year on year to ¥1,217 million. This was attributable to the posting of ¥2,000 million in impairment losses, recorded under other operating expenses, in the second quarter ended September 30, 2020.

Other

Revenues in the Other segment for the six months ended September 30, 2021, were ¥1,061 million, a decrease of 26.2%, and adjusted operating income decreased by ¥456 million to ¥99 million, as compared with those for the six months ended September 30, 2020. Operating income of the segment increased by ¥5,092 million year on year, resulting in ¥5,626 million.

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