Hitachi Metals : Consolidated Financial Report for the 9-month period ended December 31, 2021 (IFRS)（PDF：）

Consolidated Financial Report [IFRS]

For the 9-month period ended December 31, 2021

January 31, 2022

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 Third Quarter Ended December 31, 2021 (April 1, 2021 to December 31, 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	%
Dec, 2021	690,849	27.6	20,628		－	18,960		－	20,500		－	13,413	－
Dec, 2020	541,403	(19.3)	(8,585)		－	(37,927)		－	(39,402)		－	(33,940)	－

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

Dec, 2021

13,544

－

21,482

－

31.68

－

Dec, 2020

(33,719)

－

(37,041)

－

(78.86)

－

(2) Financial Standing

Equity attributable to

Equity attributable to

Equity per Share attributable

Total Asset

Total Equity

Shareholders of the

Shareholders of the Parent

to Shareholders of the Parent

Parent Company

Company Ratio

Company

Million yen

Million yen

Million yen

%

Yen

Dec, 2021

1,020,670

512,908

510,895

50.1

1,194.92

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

930,000

22.1

26,000

－

20,000

－

13,000

－

30.41

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)	Dec, 2021	428,904,352	March, 2021	428,904,352
(ⅱ) Number of treasury stock outstanding at end of period	Dec, 2021	1,349,157	March, 2021	1,340,710
(ⅲ) Average number of shares issued during the term	Dec, 2021 (3Q)	427,558,270	Dec, 2020 (3Q)	427,565,831

*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 Nine Months Ended December 31, 2021…………………………	4
(1) Information Regarding Operating Results……………………………..………………………………………………	4

1. 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 Nine Months Ended December 31, 2021

1. Information Regarding Operating Results

The Group's operating results for the nine months ended December 31, 2021 were as followings.

During the nine months ended December 31, 2021, 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 27.6% year on year to ¥690,849 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 ¥29,213 million year on year to ¥20,628 million. Operating income rose ¥56,887 million year on year to ¥18,960 million. This reflects mainly the posting of ¥24,956 million in impairment losses, recorded under other operating expenses, for the nine months ended December 31, 2020. Income before income taxes increased by ¥59,902 million year on year to ¥20,500 million and net income attributable to shareholders of the parent company increased by ¥47,263 million year on year to ¥13,544 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

1. BCJ-52for 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 December 31, 2021.

Specialty Steel Products

Revenues in the Specialty Steel Products segment for the nine months ended December 31, 2021 were ¥193,728 million, an increase of 22.1% as compared with those for the nine months ended December 31, 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 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 decreased year on year, sales of steel-frame joints for construction increased year on year for the nine months ended December 31, 2021 due to the recovery in demand during this third quarter, and sales of injection molding machine parts remained brisk. As a result, overall sales of rolls increased year on year.

Adjusted operating income increased by ¥14,023 million year on year to ¥12,416 million, due in part to an increase in demand for our mainstay products. Meanwhile, operating income climbed ¥19,695 million year on year to ¥11,743 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 nine months ended December 31, 2021 were ¥227,251 million, an increase of 32.5% year on year.

Breaking down the revenues by business, among automotive casting product sales, sales of heat-resistant exhaust casting

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components saw a year-on-year decrease owing to the changes in product mix and the impact of international logistics disruption. 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 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 ¥5,016 million year on year as a whole, resulting in a loss of ¥6,276 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. Operating loss was ¥7,265 million, an improvement of ¥6,090 million year on year.

Magnetic Materials and Applications / Power Electronics

Revenues in the Magnetic Materials and Applications / Power Electronics segment for the nine months ended December 31, 2021 were ¥99,067 million, an increase of 31.2% 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 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 ¥8,563 million year on year to ¥9,198 million, due to an increase in demand for both magnetic materials and power electronics materials. Meanwhile, operating income climbed ¥24,988 million year on year to ¥9,769 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 nine months ended December 31, 2021, were ¥170,420 million, an increase of 26.2% 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, 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 the same period last year. Although the recovery trend had grown sluggish since the second quarter ended September 30, 2021 due to production adjustments implemented by automobile manufacturers, the demand increased year on year.

Adjusted operating income increased by ¥1,846 million year on year to ¥3,821 million, due to an increase in demand for both electric wires and cables and automotive components. Meanwhile, operating income climbed ¥3,127 million year on year to ¥3,502 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 nine months ended December 31, 2021, were ¥1,548 million, a decrease of 23.7%, and adjusted operating income decreased by ¥570 million to ¥203 million, as compared with those for the nine months ended December 31, 2020. Operating income of the segment increased by ¥4,876 million year on year, resulting in ¥5,746 million.

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