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    5486   JP3786200000

HITACHI METALS, LTD.

(5486)
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Hitachi Metals : Reorganization of Sales System in Japan (Transfer of Business Divisions of Wholly-owned Subsidiary through Demerger)

05/26/2021 | 02:03am EDT

May 26, 2021

To whom it may concern:

Company Name: Hitachi Metals, Ltd.

Name of Representative: Mitsuaki Nishiyama

Chairperson, President, and CEO

(Code: 5486; First Section of the Tokyo Stock Exchange)

Contact: Izumi Tsubouchi

General Manager, Corporate Communications Dept.

(Phone: +81-3-6774-3077)

Announcement of Reorganization of Sales System in Japan

(Transfer of Business Divisions of Wholly-owned Subsidiary through Demerger

[Simplified Absorption-type Demerger])

Hitachi Metals, Ltd. (the "Company") hereby announces that it has decided to transfer the majority of the sales division, etc. of Hitachi Metals Trading, Ltd. ("Hitachi Metals Trading"), a wholly-owned subsidiary of the Company, to the Company through a demerger (simplified absorption-type demerger) and to transfer the advanced metals processing business, etc., of Hitachi Metals Trading to Hitachi Metals Tool Steel, Ltd. ("Hitachi Metals Tool Steel"), a wholly-owned subsidiary of the Company, through a demerger (absorption-type demerger).

Since said demerger is a simplified absorption-type demerger between the Company and its wholly-owned subsidiary, some of the matters and details are omitted from this disclosure.

  1. Overview
  1. Purpose
    While Hitachi Metals Trading had been responsible for the Hitachi Metals Group's sales functions in Japan, the demerger is aimed at establishing a new system that can reflect customers' opinions in the development and improvement of products and services on an even more timely basis by enhancing sales capabilities through the integration of sales functions of the Company and Hitachi Metals Trading and to provide fine-tuned services by leveraging the sales resources of the Company's dealers.
    The Company has been reviewing its sales system in Japan as part of ongoing cost structure reforms and structural reforms to secure capital for investing in future growth to achieve an early improvement in operating performance.
  2. Details
  1. The majority of the sales division, etc. of Hitachi Metals Trading will be transferred to the Company by means of a demerger (simplified absorption-type demerger) (the "Sales Division, etc. Absorption-type Demerger").
  2. The advanced metals processing business, etc. of Hitachi Metals Trading will be transferred to Hitachi Metals Tool Steel

by means of a demerger (absorption-type demerger).

Businesses concerning customers and business areas that can leverage the strengths of the Company's dealers will be sold to dealers. Hitachi Metals Trading will specialize in the marketing of wires and cables for construction and industrial cables.

Hitachi Metals

Trading

Demerger DemergerSale

Hitachi Metals

Hitachi Metals

Dealers

Hitachi Metals

Tool Steel

Trading

1

3. Schedule

The schedule of the demerger is as follows. Since the absorption-type demerger falls under a simplified absorption-type demerger pursuant to Article 796, paragraph 3 of the Companies Act, a general shareholders' meeting of the Company in relation to the approval of the absorption-type demerger will not be held.

Date of resolution of Board of

May 26, 2021

Directors

Date of conclusion of absorption-

May 26, 2021

type demerger agreement

Effective date of absorption-type

October 1, 2021 (planned)

demerger

4. Impact on Operating Performance

The impact of the demerger on the Company's consolidated operating performance will be minor.

II. Sales Division, etc. Absorption-type Demerger

1. Summary of the Sales Division, etc. Absorption-type Demerger

(1) Method of the Sales Division, etc. Absorption-type Demerger

It is an absorption-type demerger (simplified absorption-type demerger) with Hitachi Metals Trading as the demerger company and the Company as the successor company.

  1. Allotment pertaining to the Sales Division, etc. Absorption-type Demerger
    Since the Sales Division, etc. Absorption-type Demerger will be carried out between the parent company and its wholly- owned subsidiary, the Company will not deliver share allotments or other consideration.
  2. Treatment of stock options and corporate bonds with stock options following the Sales Division, etc. Absorption-type Demerger
    Not applicable.
  3. Changes in common stock due to the Sales Division, etc. Absorption-type Demerger There will be no increase or decrease of the common stock of the Company.
  4. Rights and obligations assumed by the successor company
    Upon the Sales Division, etc. Absorption-type Demerger, the Company will succeed to those assets, rights and obligations related to the sales divisions on the effective date stipulated in the absorption-type demerger agreement.
  5. Prospect of performance of obligations

The Company deems that the debt obligations to be assumed by the Company are likely to be performed on or after the effective date of the demerger.

2

2. Overview of Parties to the Sales Division, etc. Absorption-type Demerger

Demerger company

Successor company

(Hitachi Metals Trading)

(The Company)

(1)

Name

Hitachi Metals Trading, Ltd.

Hitachi Metals, Ltd.

(2)

Address

2-70, Konan 1-chome,Minato-ku, Tokyo

2-70, Konan 1-chome,Minato-ku, Tokyo

108-8224, Japan

108-8224, Japan

(3)

Name and title of

Takehisa Seo

Mitsuaki Nishiyama

representative

President, CEO

Chairperson, President and CEO

Marketing of specialty steel products;

Manufacture and marketing of specialty

(4)

Products and

functional components and equipment;

steel products; functional components and

magnetic materials, applications and power

equipment; magnetic materials, applications

businesses

electronics; and wires, cables and related

and power electronics; and wires, cables and

products

related products

(5)

Capital

¥350 million (As of March 31, 2021)

¥26,284 million (As of March 31, 2021)

(6)

Establishment

April 1950

April 1956

(7)

Number of outstanding

7,383,200 shares (As of March 31, 2021)

428,904,352 shares (As of March 31, 2021)

shares

(8)

Accounting date

March 31

March 31

(9)

Major shareholders

Hitachi Metals, Ltd. 100%

Hitachi, Ltd. 53.4%

and shareholding ratio

(As of March 31, 2021)

(As of March 31, 2021)

  1. Operating performance and financial position of demerger company in most recent fiscal year (fiscal year ended March 31, 2021; Japanese GAAP)

Net assets

¥18,449 million

Total assets

¥52,153 million

Net assets per share

¥2,498

Net sales

¥112,812 million

Operating profit

¥2,009 million

Ordinary profit

¥2,125 million

Profit

¥1,018 million

Profit per share

¥137

  1. Operating performance and financial position of successor company in most recent fiscal year (fiscal year ended March 31, 2021; consolidated; IFRS)

Total assets

¥972,249 million

Total equity

¥492,118 million

Equity per share attributable to shareholders of

¥1,145.26

the parent company

Revenues

¥761,615 million

Adjusted operating income*

(¥4,977 million)

Income before income taxes

(¥50,588 million)

Net income attributable to shareholders of the

(¥42,285 million)

parent company

Earnings per share (basic)

(¥98.90)

*Adjusted operating income = Revenues - Cost of sales - Selling, general & administrative expenses

3. Overview of Sales Division, etc. to be Transferred from Hitachi Metals Trading to the Company

(1) Products and businesses of sales division, etc. to be transferred

Marketing of specialty steel products; functional components and equipment; magnetic materials, applications and power electronics; and wires, cables and related products

(2) Operating performance of sales division, etc. to be transferred (fiscal year ended March 31, 2021; Japanese GAAP)

Net sales of businesses to be

Non-consolidated net sales of the

Percentage (A/B)

transferred (A)

Company

¥11,671 million

¥409,931 million

2.8%

Note: Does not include transaction amounts of Hitachi Metals and Hitachi Metals Trading.

(3) Items and book value of assets and liabilities to be transferred (fiscal year ended March 31, 2021)

Assets

Liabilities

Item

Book value

Item

Book value

Current assets

¥2,166 million

Current liabilities

¥179 million

Non-current assets

¥1,169 million

Non-current liabilities

-

Total

¥3,335 million

Total

¥179 million

3

  1. Status after the absorption-type demerger Demerger company (Hitachi Metals Trading)

Name

Hitachi Metals Trading, Ltd.

Address

2-70, Konan 1-chome,Minato-ku, Tokyo 108-8224, Japan

Name and title of

Takehisa Seo, President, CEO

representative

Products and businesses

Marketing of wires and cables for construction and industrial cables

Share capital

¥350 million (As of March 31, 2021)

Accounting date

March 31

Successor company (the Company)

Name

Hitachi Metals, Ltd.

Address

2-70, Konan 1-chome,Minato-ku, Tokyo 108-8224, Japan

Name and title of

Mitsuaki Nishiyama, Chairperson, President and CEO

representative

Manufacture and marketing of specialty steel products; functional

Products and businesses

components and equipment; magnetic materials, applications and power

electronics; and wires, cables and related products

Common stock

¥26,284 million (As of March 31, 2021)

Accounting date

March 31

  1. Business Division Absorption-type Demerger from Hitachi Metals Trading to Hitachi Metals Tool Steel and Sale to Dealers
    1. Overview of Business Division to be Transferred from Hitachi Metals Trading to Hitachi Metals Tool Steel
    (1) Products and businesses of business division to be transferred Advanced metals processing business, etc.

(2) Items and book value of assets and liabilities to be transferred (fiscal year ended March 31, 2021)

Assets

Liabilities

Item

Book value

Item

Book value

Current assets

¥580 million

Current liabilities

-

Non-current assets

¥13 million

Non-current liabilities

-

Total

¥593 million

Total

-

(3) Status after the absorption-type demerger

Demerger company (Hitachi Metals Trading)

Name

Hitachi Metals Trading, Ltd.

Address

2-70, Konan 1-chome,Minato-ku, Tokyo 108-8224, Japan

Name and title of

Takehisa Seo, President, CEO

representative

Products and businesses

Marketing of wires and cables for construction and industrial cables

Share capital

¥350 million (As of March 31, 2021)

Accounting date

March 31

Successor company (Hitachi Metals Tool Steel)

Name

Hitachi Metals Tool Steel, Ltd.

Address

2-70, Konan 1-chome,Minato-ku, Tokyo 108-8224, Japan

Name and title of

Fumihito Kobayashi, Chairperson, President and CEO

representative

Products and businesses

Sale, thermal treatment and processing of specialty steel, etc.

Share capital

¥100 million (As of March 31, 2021)

Accounting date

March 31

2. Assets to be Sold to Dealers

Current assets, etc. However, the amount is expected to be substantially smaller in comparison to the total equity of the Company.

Ends

4

Forecast of consolidated results for current fiscal year (published April 26, 2021) and actual consolidated results for previous fiscal year(Unit: million yen)

Net income

Revenue

Adjusted

Profit before

attributable to

operating profit

income taxes

shareholders of the

parent company

Consolidated results

forecast for current

850,000

34,000

17,000

12,000

fiscal year

(Fiscal year ending

March 31, 2022)

Actual consolidated

results for the previous

fiscal year

761,615

(4,977)

(50,588)

(42,285)

(Fiscal year ended

March 31, 2021)

Contact: Corporate Communications Dept., Hitachi Metals, Ltd. Phone: +81-3-6774-3077

5

Disclaimer

Hitachi Metals Ltd. published this content on 26 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 May 2021 06:02:05 UTC.


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Sales 2022 878 B 7 968 M 7 968 M
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Mean consensus HOLD
Number of Analysts 4
Last Close Price 2 142,00 JPY
Average target price 1 994,25 JPY
Spread / Average Target -6,90%
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Mitsuaki Nishiyama Co-Chairman, CEO & Executive President
Hiroaki Nishioka Chief Financial Officer & Head-Administration
Kenichi Nishiie Co-Chairman
Kazuya Murakami Managing Executive Officer, General Manager-R&D
Ryoichi Aida Chief Quality Officer & Head-Technology
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