Hitachi Metals : Consolidated Financial Report for the First Quarter Ended June 30, 2017

Consolidated Financial Report [IFRS]

For the First Quarter Ended June 30, 2017

Listed Company: Hitachi Metals, Ltd. (URLhttp://www.hitachi-metals.co.jp/e/index.html) Listed Stock Exchanges: Tokyo Stock Exchange, Inc. (First Section, Code Number 5486)

Representative: Akitoshi Hiraki, President and Chief Executive Officer

Contact: Tatsuya Minami, General Manager, Corporate Communications Office Tel: [phone]

July 27, 2017

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

1. Performance for the First Quarter Ended June 30, 2017 (April 1, 2017 to June 30, 2017)

2. Operating Results (% indicates the rate of +/- compared with the same term of the previous fiscal year)

   Revenues		Adjusted Operating Income		Operating Income		Income before Income Taxes		Net Income
   Million yen	％	Million yen	％	Million yen	％	Million yen	％	Million yen	％
   241,312	6.6	17,664	8.4	17,083	11.6	18,055	45.2	13,892	44.4
   226,367	(14.6)	16,298	(17.7)	15,312	(68.6)	12,436	(74.9)	9,618	(72.8)

   June, 2017

   June, 2016

   Note: Adjusted operating income is the operating income recorded in the condensed interim 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 attributable to Shareholders of the Parent Company		Comprehensive Income		Earnings per Share Earnings per Share attributable to Shareholders attributable to Shareholders of the Parent Company of the Parent Company (Basic) (Diluted)
   Million yen 13,893 9,512	％ 46.1 (73.0)	Million yen 14,726 (12,397)	％ － －	Yen 32.49 22.25	Yen － －

   June, 2017

   June, 2016

3. ) Financial Standing

4. 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

   Million yen Million yen Million yen ％Yen

   June, 2017 1,049,884 557,890 545,698 52.0 1,276.26

   March, 2017 1,040,390 548,746 536,563 51.6 1,254.89

5. Dividends

   Dividends per Share

   1Q 2Q 3Q Term-end Annual

   Yen － －	Yen 13.00	Yen －	Yen 13.00	Yen 26.00
   13.00	－	13.00	26.00

   March, 2017

   March, 2018

   March, 2018 (Forecast)

   Note: Revision of the latest forecasts of results : No

6. Business results forecast for the year ending March 31, 2018 (April1, 2017 to March.31, 2018)

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

   Revenues Adjusted Operating Income

   Income before Income Taxes

   Net Income attributable to Shareholders

   of the Parent Company

   Basic Earnings per Share

   Million yen	%	Million yen	％	Million yen	%	Million yen	%	Yen
   Full-year	950,000	4.3	80,000	21.2	63,000	(4.6)	45,000	(11.1)	105.24

   Note: 1. Revision of the latest forecasts of results : No

   2. Adjusted operating income is the operating income recorded in the condensed interim 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

   June, 2017	428,904,352	March, 2017	428,904,352
   June, 2017	1,329,338	March, 2017	1,327,900
   June, 2017 (1Q)	427,575,573	June, 2016 (1Q)	427,579,601

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

   (ⅲ) Average number of shares issued during the term

   *This quarterly consolidated financial report is not subject to the quarterly review procedure.

   *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, 2018, including Consolidated Operating Forecasts" on page 6 for precondition and assumption as the basis of the above forecasts.

   • Table of contents

8. Qualitative Information Regarding Financial Results for the Three Months Ended June 30, 2017……………………………… 4

9. Information Regarding Operating Results……………………………………………………………………………..… 4 (2) Analysis of Financial Condition…………………………………………………………………………………………. 6

   (3) Forecasts for the Fiscal Year Ending March 31, 2018, including Consolidated Operating Forecasts…………………... 6

10. Condensed Interim Consolidated Financial Statements and Notes to Condensed Interim Consolidated Financial Statements… 7

11. Condensed Interim Consolidated Statement of Financial Position……………………………………………………… 7

12. Condensed Interim Consolidated Statement of Income and Condensed Interim Consolidated Statement of Comprehensive Income………………………………………………………………………………………………….. 9 [ Condensed Interim Consolidated Statement of Income ]……………………………………………………………… 9 [ Condensed Interim Consolidated Statement of Comprehensive Income ]………………………………………..…… 10

13. Condensed Interim Consolidated Statement of Changes in Equity……………………………………………………… 11

14. Condensed Interim Consolidated Statement of Cash Flows………………………………………………………...…… 12 (5) Segment Information………………………………………………………………………………………………..…… 14

15. Qualitative Information Regarding Financial Results for the Three Months Ended June 30, 2017
16. Information Regarding Operating Results

17. The global economy during the three months ended June 30, 2017, remained on a modest rebound track primarily in advanced countries. The United States maintained steady economic growth, backed by an improvement in the employment situation and an increase in individual consumption and capital expenditures. European economies continued a moderate recovery due to an improvement in capital investment and productivity. The Chinese economy showed some signs of a partial rally in the market due to the effects of the government's various economic measures, and economic growth in emerging countries also remained on a recovery track. Amid these conditions, the Japanese economy continued to recover gradually as a result of the ongoing improvement in the employment and income environment and increased exports and capital investment supported by a steady recovery of the global economy.

    Among the industries in which Hitachi Metals Group (the "Group") operates, in the automobile industry, sales in Japan significantly increased, led by strong demand for new models; and Europe and China also showed steady demand, while sales in new vehicles decreased in the United States compared with those for the three months ended June 30, 2016. Demand for steel increased mainly in the manufacturing sector, including automobile and industrial machinery. The number of new housing starts remained at the same level. In the electronics industry, mobile device shipments significantly increased.

    Under the business circumstances described above, for the three months ended June 30, 2017, revenues of the Group increased by 6.6% to ¥241,312 million, compared with those for the three months ended June 30, 2016. This result was influenced mainly by a rise in raw materials prices (a sliding-scale raw material price system) and the depreciation of the yen, in addition to an increase in demand for mainstays. Adjusted operating income* increased by ¥1,366 million to ¥17,664 million, and operating income increased by ¥1,771 million to ¥17,083 million, compared with those for the three months ended June 30, 2016, mainly due to an increase in income associated with increased revenue and effects of cost reduction activities, despite a rise in costs associated with active investment. For the three months ended June 30, 2017, income before income taxes increased by ¥5,619 million to ¥18,055 million and net income attributable to shareholders of the parent company increased by ¥4,381 million to

    ¥13,893 million, compared with those for the three months ended June 30, 2016.

    *Adjusted operating income is the operating income recorded in the condensed interim 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.

    Results by business segment are as follows. Note that revenues for each segment include intersegment revenues. There were no changes to the businesses of the Group during the three month ended June 30, 2017.

    The Group has changed its segment names from "High-Grade Metal Products and Materials" to "Specialty Steel Products" and from "High-Grade Functional Components and Equipment" to "Functional Components and Equipment" effective from April 1, 2017. This change in segment names does not affect the segment information.

    Specialty Steel Products

    Revenues in the Specialty Steel Products segment for the three months ended June 30, 2017, were ¥61,295 million, an increase of 4.6%, and adjusted operating income increased by ¥670 million to ¥6,984 million,as compared with those for the three months ended June 30, 2016. Operating income of the segment increased by ¥719 million to ¥6,906 million for the same period.

    Sales of molds and tool steel exceeded those for three months ended June 30, 2016, due to a recovery in demand for both Japan and Asia. Sales of industrial equipment materials increased overall compared with those for the three months ended June 30, 2016, as sales of environmentally friendly products related to automobiles as well as other industrial components, in particular, components for semiconductor-related equipment, increased. Sales of alloys for electronic products significantly increased compared with those for the three months ended June 30, 2016, due to strong sales in semiconductor package components and battery-related components. Aircraft-related and energy-related materials showed weak sales.

    Sales of injection molding machine parts showed recovery resulting from an increase in demand for mobile devices. Meanwhile, in September 2016, the Group discontinued production of rolls at a Chinese subsidiary for the purpose of concentrating management resources in high value-added products. As a result, sales of rolls as a whole fell year on year.