Hitachi Metals : Consolidated Financial Report for the 12-month period ended March 31, 2017 (IFRS)

Consolidated Financial Report [IFRS]

For the Year Ended March 31, 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] Date of the Ordinary General Meeting of Shareholders: June 27, 2017

April 28, 2017

1. Performance over the year under review (Apr. 1, 2016 - Mar. 31, 2017)

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

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

   Revenues		Adjusted Operating Income		Operating Income		Income before Income Taxes		Net Income		Net Income attributable to Shareholders of the Parent Company
   Million yen 910,486 1,017,584	％ (10.5) 1.3	Million yen 65,983 76,061	％ (13.2) (9.9)	Million yen 68,267 99,954	％ (31.7) 18.4	Million yen 66,016 96,233	％ (31.4) 11.4	Million yen 50,692 68,980	％ (26.5) (4.1)	Million yen 50,593 69,056	％ (26.7) (2.1)

   March, 2017

   March, 2016

   Comprehensive Income		Earnings per Share attributable to Shareholders of theParent Company (Basic)	Earnings per Share attributable to Shareholders of the ParentCompany (Diluted)	Net Income Ratio to Equity attributable to Shareholders of the Parent Company	Income before Income Taxes Ratio to Assets	Operating Income Ratio to Revenues
   Million yen	％	Yen	Yen	％	％	％
   51,965	29.6	118.32	－	9.8	6.4	7.5
   40,082	(61.6)	161.50	－	14.4	9.1	9.8

   (Note) Adjusted operating income 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.

   March, 2017

   March, 2016

   Reference: Share of profit of investments accounted for using the equity method March, 2017 ¥1,154millions March, 2016 ¥428millions

3. ) Financial Standing

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

   March, 2016 1,033,311 504,675 495,865 48.0 1,159.70

4. ) Statement of Cash Flows

   Cash Flows from Operating Activities

   Cash Flows from Investment Activities

   Cash Flows from Financing Activities

   Cash and Cash Equivalents at the End of Period

   Million yen Million yen Million yen Million yen March, 2017 89,391 (35,864) (34,192) 139,411

   March, 2016 115,742 (32,147) (37,872) 120,300

5. Dividends

   Dividends per Share

   1Q 2Q 3Q Term-end Annual

   Total Dividends (Annual)

   Dividend Payout Ratio (Consolidated)

   Dividends on Equity attributable to Shareholders of the

   Parent Company (Consolidated)

   Yen	Yen	Yen	Yen	Yen	Million yen	％	％
   －	13.00	－	13.00	26.00	11,118	16.1	2.3
   －	13.00	－	13.00	26.00	11,118	22.0	2.2
   －	13.00	－	13.00	26.00	24.7

   March, 2016

   March, 2017

   March, 2018 (Forecast)

6. Business results forecast for the year ending March 31, 2018 (Apr.1, 2017 - Mar.31, 2018)

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

   Net Income

   Revenues Adjusted Operating Income Incomebefore

   Income Taxes

   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) Adjusted operating income 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.

   *This financial report is outside the scope of audit procedures.

   *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 to differ from those projected. Please refer to "1. (1)Overview of Operating Results" on page 4 for precondition and assumption as the basis of the above forecasts.

   【Appendix】

   Table of Contents

   1. Overview of Operating Results ………………………………………………………………………………………………… 4

   (1) Overview of Operating Results……………………………………………………………………………………………… 4

   (2) Overview of Financial Condition………………………………………...………………..………………..………………… 7

   (3) Business Risks………………………………………………………………………………………………………………… 8

8. Basic Views of Selecting Accounting Standards………………………………………………………………………………… 8

9. Consolidated Financial Statements and Notes to Consolidated Financial Statements…………………………………………… 9

10. Consolidated Statements of Financial Position……………………………………………………………………………… 9

11. Consolidated Statements of Income and Comprehensive Income…………………………………………………………… 11

    [ Consolidated Statements of Income ]………………………………………………………………………………………… 11

    [ Consolidated Statements of Comprehensive Income ]……………………………………………………………………… 12

12. Consolidated Statements of Changes in Equity……………………………………………………………………………… 13

13. Consolidated Statements of Cash Flows……………………………………………………………………………………… 14

14. Notes to the Consolidated Financial Statements……………………………………………………………………………… 16

15. [ Segment Information ]……………………………………………………………………………………………………… 16

    [ Net Income per Share ]……………………………………………………………………………………………………… 21

    [ Subsequent Events ]………………………………………………………………………………………………………… 21

16. Overview of Operating Results
17. Overview of Operating Results
18. Overview of Fiscal 2016 (fiscal year ended March 31, 2017)

19. During the year ended March 31, 2017, the global economy remained on a modest recovery path primarily in advanced countries. The United States maintained stable economic growth, backed by an increase in individual consumption and a favorable employment situation. European economies continued a moderate recovery despite a slowdown in improvements in some corporate sectors. 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 situations, the Japanese economy showed some signs of a gradual recovery thanks to the improvement in employment and income environments despite weak exports and production due to the impact of an economic slowdown in emerging countries.

    Among the industries in which Hitachi Metals Group (the "Group") operates, sales in the automobile industry have increased overall compared with the fiscal year ended March 31, 2016. This is mainly due to increased demand in the Japanese market since the end of 2016 and steady demand in Europe and China, although the sales of new vehicles have reached their peak level in the United States. Supply and demand of steel showed positive signs in the construction sector in the Japanese market since the beginning of 2017, although demand for steel continued to experience challenges on a global basis affected by the economic slowdown in emerging countries. The number of new housing starts increased both in the United States and Japan. In the electronics industry, mobile devices started to show a recovery before the end of the fiscal year, and demand for household appliances increased mainly in Japan during the latter half of the fiscal year ended March 31, 2017.

    Under the business circumstances described above, for the fiscal year ended March 31, 2017, revenues of the Group decreased by 10.5% to ¥910,486 million, adjusted operating income decreased by ¥10,078 million to ¥65,983 million, and operating income decreased by ¥31,687million to ¥68,267 million, compared with those for the fiscal year ended March 31, 2016. These results were influenced mainly by a reduction in raw material prices (a sliding-scale raw material price system), the appreciation of the yen, and a decline in demand. Further, operating income decreased mainly due to a decrease in gross profit and gains on business reorganization and others of ¥30,232 million in other income arising from a transfer of shares equivalent to 51% of the issued shares of Hitachi Tool Engineering, Ltd. (currently named Mitsubishi Hitachi Tool Engineering, Ltd.) to Mitsubishi Materials Corporation as of April 1, 2015, during the fiscal year ended March 31, 2016. For the fiscal year ended March 31, 2017, income before income taxes decreased by ¥30,217 million to ¥66,016 million and net income attributable to owners of the parent company decreased by ¥18,463 million to ¥50,593 million, compared with the year ended March 31, 2016.

    Results by business segment are as follows. Note that sales for each segment include intersegment sales and transfers. There were no changes to the businesses of the Group during the tyear ended March 31, 2017.

    Effective from the three months ended June 30, 2016, the Group changed part of its internal managerial categories of businesses and consolidated subsidiaries related to reportable segments. It also changed treatment for certain corporate general and administrative expenses, such as research expenses and other such expenses, which were previously treated as adjustments, to allocate them to applicable reporting segments based on the budget. Refer to "3. Consolidated Financial Statements and Notes to Consolidated Financial Statements (5)Notes to the Consolidated Financial Statements [Segment Information]" for details.

    Comparable year-on-year information presented below reflects the above changes to the categories of the reportable segments and treatment for certain corporate general and administrative expenses.

    High-Grade Metal Products and Materials

    Revenues in the High-Grade Metal Products and Materials segment for the fiscal year ended March 31, 2017, were ¥234,725 million, a decrease of 8.5%, and adjusted operating income decreased by ¥3,525 million to ¥23,503 million, as compared with those for the fiscal year ended March 31, 2016. Operating income of the segment decreased by ¥31,793 million to ¥21,277 million for the same period due to the effects of the decrease in revenues as well as gains on business reorganization and others of ¥25,931 million arising from the transfer of shares of Hitachi Tool Engineering, Ltd. (currently named Mitsubishi Hitachi Tool Engineering, Ltd.) during the three months ended June 30, 2015.