Hitachi Metals : Consolidated Financial Report for the First Quarter Ended June 30, 2022 (IFRS)（PDF：）

Consolidated Financial Report [IFRS]

For the 3-month period ended June 30, 2022

July 27, 2022

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

Listed Stock Exchanges: Tokyo Stock Exchange, Inc. (Prime Market, 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 Quarter Ended June 30, 2022 (April 1 to June 30, 2022)
(1) Operating Results		(% indicates the rate of +/- compared with the same term of the previous fiscal year)
	Revenues		Adjusted		Operating Income	Income		Net Income
		Operating Income	before Income Taxes
	Million yen		%	Million yen		%	Million yen	%	Million yen		%	Million yen	%
June, 2022	276,811		22.0	11,829		38.6	9,781	130.7	19,870		363.9	15,110	429.1
June, 2021	226,852		46.6	8,533		－	4,239	－	4,283		－	2,856	－

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 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 attributable to	Comprehensive Income		Earnings per Share	Earnings per Share
	Shareholders of the Parent Company		(Basic)	(Diluted)
	Million yen	%	Million yen		%	Yen	Yen
June, 2022	15,067	402.6	38,965		－	35.24	－
June, 2021	2,998	－	3,104		－	7.01	－

(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
June, 2022	1,149,478	570,032	566,286	49.3	1,324.48
March, 2022	1,069,695	531,118	527,563	49.3	1,233.91

2. Dividends

				Dividends per Share
	1Q		2Q	3Q	Term-end	Annual
	Yen		Yen	Yen	Yen	Yen
March, 2022	－		0.00	－	0.00	0.00
March, 2023	－
March, 2023			0.00	－	0.00	0.00
(Forecast)
Note: Revision of	the latest forecasts of results:	No

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

						(% indicates the rate of +/- compared with the previous fiscal year)
				Adjusted		Income		Net Income
	Revenues				attributable to Shareholders
		Operating Income	before Income Taxes
				of the Parent Company
	Million yen		%	Million yen		%	Million yen	%	Million yen		%
Full-year	1,100,000		16.7	70,000		161.1	41,500	26.8	30,000		149.4

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

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)	June, 2022	428,904,352	March, 2022	428,904,352
(ⅱ) Number of treasury stock outstanding at end of period	June, 2022	1,350,484	March, 2022	1,349,888
(ⅲ) Average number of shares issued during the term	June, 2022 (1Q)	427,554,073	June, 2021 (1Q)	427,561,153

*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, 2023, 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 Three Months Ended June 30, 2022……………………………… 4

1. Information Regarding Operating Results……………………………..………………………………………………... 4
2. Analysis of Financial Condition………………………………………………………………….…………………….... 6
3. Forecasts for the Fiscal Year Ending March 31, 2023, 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 Three Months Ended June 30, 2022

1. Information Regarding Operating Results

The Group's operating results for the three months ended June 30, 2022 were as followings.

During the three months ended June 30, 2022, the global economy slowed down due to the impact of factors such as the supply shortages of components and materials, disruptions in international logistics, lockdowns resulting from the reinforcement of China's zero-COVID policy, and the situation in Ukraine. In the business fields of the Group, the automotive-related area was affected by the impact of production adjustments implemented by automobile manufacturers and demand declined year on year. On the other hand, in the FA/robot-related area, capital investment demand related to the manufacture of automobiles and semiconductors increased. In the semiconductor-related area, demand remained at a high level as a result of a rise in demand for use in telecommunication devices and automobiles. 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 22.0% year on year to ¥276,811 million. In terms of profit, while there was a negative impact of increases in expenses and energy costs due to soaring material prices, the Group promoted various cost reduction measures and revised the sales prices in the areas where the cost increases exceeded the level that could be absorbed through its corporate efforts. Adjusted operating income* increased by ¥3,296 million year on year to ¥11,829 million, due to an increase in profit as a result of the depreciation of the yen, additionally. Operating income increased by ¥5,542 million year on year to ¥9,781 million due to an increase of adjusted operating income. Income before income taxes increased by ¥15,587 million year on year to ¥19,870 million and net income attributable to shareholders of the parent company increased by ¥12,069 million year on year to ¥15,067 million.

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. By becoming independent from the Hitachi Group, it will be possible for the Company to develop its own growth strategy without being constrained by Hitachi, Ltd.'s portfolio strategy. Going private also allows the Company to plan strategies from a long-term perspective, make large-scale investments, and implement bold reforms with a sense of speed. The Company aims to regain its competitiveness and profitability and achieve sustainable growth and increase corporate value by responding to rapid changes in the market environment more speedily at a higher level through the search for investment opportunities, the acquisition of funds, and the formulation and execution of growth strategies, taking advantage of the global insights and networks of 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 three months ended June 30, 2022.

Specialty Steel Products

Revenues in the Specialty Steel Products segment for the three months ended June 30, 2022 were ¥74,647 million, an increase of 16.9% as compared with those for the three months ended June 30, 2021.

Breaking down the revenues by business, while demand for molds and tool steel remained virtually flat year on year both in Japan and internationally, sales increased year on year reflecting the impact of the rise in raw material prices (sliding-scale raw material price system) among other factors. Sales of materials for industrial equipment remained virtually unchanged year on year due to an increase in demand for materials for other industrial equipment and the impact of the rise in raw material prices (sliding-scale raw material price system) among other factors, despite a decline in demand for mainstay products related to automobiles. Sales of aircraft and energy-related materials significantly increased year on year as demand for energy-related materials remained firm in addition to the fact that demand related to small- and medium-sized passenger aircraft rebounded markedly among mainstay aircraft-related materials. 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 injection molding machine parts and steel-frame joints for construction remained virtually unchanged year on year, sales of various rolls increased year on year. As a result, sales of rolls on the whole increased on a year-on-year basis. Adjusted operating income increased by ¥3,050 million year on year to ¥7,456 million, due in part to an increase in demand for aircraft and energy-related materials and electronic materials; additionally, the depreciation of the yen and the promotion of various cost reduction measures etc. contributed to increasing the income. Operating income increased by ¥2,958 million to ¥7,570 million year on year.

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Functional Components and Equipment

Revenues in the Functional Components and Equipment segment for the three months ended June 30, 2022 were ¥104,690 million, an increase of 37.5% year on year.

Breaking down the revenues by business, among automotive casting products, demand for 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. However, sales of automotive casting products remained virtually flat year on year due to the impact of the rise in raw material prices (sliding-scale raw material price system). 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) and the depreciation of the yen as well as an increase in demand for components for commercial vehicles and construction and agricultural equipment in the North American 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, as housing starts in the U.S. remained at a high level, despite a decline in demand in Japan. 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 income improved by ¥419 million year on year to ¥280 million as a whole, due in part to an increase in demand for components used in commercial vehicles and construction and agricultural equipment in the North American market, despite downward pressure on profit such as a decrease in demand for heat-resistant exhaust casting components in addition to the fact that raw material and sub-material prices as well as energy and transportation costs, etc., soared at a pace and scale exceeding forecast. Operating loss was ¥135 million, an improvement of ¥997 million year on year.

Magnetic Materials and Applications / Power Electronics

Revenues in the Magnetic Materials and Applications / Power Electronics segment for the three months ended June 30, 2022 were ¥38,549 million, an increase of 21.3% year on year.

Breaking down the revenues by business, in magnetic materials, demand for rare earth magnets for the use in automotive electronic components decreased and demand related to industrial equipment such as FA/robots also remained sluggish. In addition, demand for ferrite magnets used in automotive electronic components also raw a decline. However, sales of magnetic materials on the whole increased year on year due to the impact from the rise in raw material prices (sliding-scale raw material price system) for both rare earth magnets and ferrite magnets.

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 in Asia and Americas. 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 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 ¥983 million year on year to ¥3,360 million, due partly to an increase in demand for power electronics materials as well as gains resulting from the depreciation of the yen and the promotion of various cost reduction measures. Operating income increased by ¥911 million year on year to ¥3,405 million.

Wires, Cables, and Related Products

Revenues in the Wires, Cables, and Related Products segment for the three months ended June 30, 2022, were ¥59,008 million, an increase of 7.3% 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 reflecting mainly a decline in demand among users in China. In wires and cables for medical devices, revenues overall increased due to the demand increased year on year. Sales of magnet wires increased year on year due to the impact from the rise in raw material prices (sliding-scale raw material price system), despite a decline demand for use in automobiles. Sales of electronic wires increased year on year due to an increase in demand for FA/robot applications. As a result, sales of wires, cables, and related products as a whole increased year on year.

Sales of automotive components overall rose year on year due to the effect of the depreciation of the yen among other factors, despite a decline in demand for mainstay electronic components reflecting production adjustments implemented by automobile manufacturers.

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