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    5486   JP3786200000

HITACHI METALS, LTD.

(5486)
  Report
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Hitachi Metals : Consolidated Financial Report for the 6-month period ended September 30, 2019 (IFRS)(PDF: )

10/29/2019 | 06:37am EDT

Consolidated Financial Report [IFRS]

For the 6-month period ended September 30, 2019

October 29, 2019

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: Koji Sato, President and Chief Executive Officer

Contact: Tatsuya Minami, General Manager, Corporate Communications Dept. Tel: +81-3-6774-3077

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

1. Performance for the First Half Ended September 30, 2019 (April 1, 2019 to September 30, 2019)

(1) Operating Results

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

Revenues

Adjusted

Operating Income

Income before

Net Income

Operating Income

(loss)

Income Taxes

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Sept, 2019

456,888

(12.0)

5,932

(82.1)

(37,600)

(38,681)

(42,536)

Sept, 2018

518,958

7.6

33,079

2.8

35,775

33.5

37,237

32.9

28,056

42.8

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

Income

(Basic)

(Diluted)

of the Parent Company

Million yen

%

Million yen

%

Yen

Yen

Sept, 2019

(40,992)

(52,889)

(95.87)

Sept, 2018

28,138

43.3

39,282

66.2

65.81

(2) Financial Standing

Total Asset

Total Equity

Equity attributable to

Equity attributable

Equity per Share attributable

Shareholders of the

to Shareholders of the

to Shareholders

Parent Company

Parent Company Ratio

of the Parent Company

Million yen

Million yen

Million yen

%

Yen

Sept, 2019

1,024,091

533,356

529,438

51.7

1,238.25

March, 2019

1,099,252

595,211

587,979

53.5

1,375.16

2. Dividends

Dividends per Share

1Q

2Q

3Q

Term-end

Annual

Yen

Yen

Yen

Yen

Yen

March, 2019

17.00

17.00

34.00

March, 2020

13.00

March, 2020

13.00

26.00

(Forecast)

Note: 1. Revision

of the latest forecasts of results : Yes

2. For the details, please refer to "Notice Concerning the Recording of Impairment Losses, Revisions to Operating Forecast for the Year Ending March 31, 2020 and Revisions to Dividend Forecast" released today on October 29, 2019.

3. Business results forecast for the year ending March 31, 2020 (April 1, 2019 to March 31, 2020)

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

Adjusted

Income before

Net Income

Earnings per

Revenues

attributable to Shareholders

Share

Operating Income

Income Taxes

of the Parent Company

(Basic)

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full-year

895,000

(12.5)

14,000

(72.8)

(43,500)

(47,000)

(109.92)

Note: 1. Revision of the latest forecasts of results : Yes

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 (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.

  • 1 -

Other Notes

Numbers of shares issued (Common stock)

() Number of shares outstanding at end of period

(Including treasury stock)

Sept, 2019

428,904,352

March, 2019

428,904,352

() Number of treasury stock outstanding at end of period

Sept, 2019

1,335,666

March, 2019

1,334,441

() Average number of shares issued during the term

Sept, 2019 (2Q)

427,569,195

Sept, 2018 (2Q)

427,571,513

*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, 2020, including Consolidated Operating Forecasts" on page 7 for precondition and assumption as the basis of the above forecasts.

- 2 -

○ Table of Contents

1. Qualitative Information Regarding Financial Results for the Six Months Ended September 30, 2019………………………… 4

  1. Information Regarding Operating Results………………………………..……………………………………………… 4
  2. Analisys of Financial Condition…………………………………………………………………….…………………… 6

(3) Forecasts for the Fiscal Year Ending March 31, 2020, 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. Changes in Accounting Policies………………………………………………………………………………………..... 15
  6. Segment Information…………………………………………………………………………………………………….. 16

- 3 -

1. Qualitative Information Regarding Financial Results for the Six Months Ended September 30, 2019

  1. Information Regarding Operating Results

The global economy as a whole saw moderate growth during the six months ended September 30, 2019, but concerns over a slowdown in the future further deepened, mainly due to increasing trade disputes, the slowdown of the Chinese economy, and policy uncertainties in many countries. In the United States, steady economic recovery continued, underpinned by a continued improvement in the employment situation and an increase in individual consumption. Meanwhile, Chinese economic growth continued to slow down as a result of the trade conflict with the United States and a slowdown in domestic demand, which resulted in a slowdown in exports and a decline in production in Europe and weakened the performance of Asian emerging economies. Amid such circumstances, the Japanese economy was faced with a fall in business confidence, mainly in the manufacturing industry, largely due to a slowdown in industrial production and exports.

Among the industries in which the Group operates, the automobile industry in Japan saw an increase in sales of new vehicles, mainly light vehicles and medium-sized and large ordinary passenger vehicles. Meanwhile, China experienced a significant drop mainly in sales of passenger vehicles, and both the United States and Europe also saw a decrease in sales, leading to a drop in global automobile sales as a whole. Both domestic and overseas demand for industrial machinery were weak. Housing starts remained flat in the United States but declined in Japan. In the electronics field, smartphone shipments decreased.

Under the business circumstances described above, the Group's operating results for the six months ended September 30 were as follows.

Revenues decreased by 12.0% year on year to ¥456,888 million due to a fall in raw material prices (sliding-scale raw material price system), in addition to a decrease in demand mainly for the Group's mainstays.

Adjusted operating income* for the six months ended September 30, 2019 decreased by ¥27,147 million year on year to ¥5,932 million. This was attributable to a major production adjustment implemented in order to address a decrease in demand and to optimize inventories, as part of measures to improve operational efficiency, in addition to a slowdown in the electronics-related and semiconductor-related markets, a decline in demand for various manufacturing equipment and industrial machinery, and a decrease in sales of new vehicles, despite measures including a reduction in fixed costs.

Operating income for the six months ended September 30, 2019 decreased by ¥73,375 million year on year, resulting in an operating loss of ¥37,600 million. This was attributable to the recording of impairment losses amounting to ¥42,581 million in other operating expenses for the magnetic materials and applications business as a whole during the six months ended September 30, 2019, which was due mainly to the changes in the operating environment of the rare earth magnet business and the subsequent review of the future profitability of the magnetic materials and applications business. For the details, please refer to "Notice Concerning the Recording of Impairment Losses, Revisions to Operating Forecast for the Year Ending March 31, 2020 and Revisions to Dividend Forecast" released today. Income before income taxes decreased by ¥75,918 million year on year to a loss before income taxes of ¥38,681 million. Net income attributable to shareholders of the parent company decreased by ¥69,130 million from the same period of the previous year to a net loss attributable to shareholders of the parent company of ¥40,992 million.

The Group introduced business management based on Return on Invested Capital (ROIC) with the aim of improving cash flow and capital efficiency. As one of the measures to address these key management challenges in the fiscal year 2021 Medium-term Management Plan, the Group reduces the level of equity investment mainly by shortening the Cash Conversion Cycle (CCC) to reduce the risk of fluctuations in raw material prices. As a result, free cash flow for the six months ended September 30, 2019, improved by ¥33,290 million from the same period last year.

The results by business segment are as follows. Note that revenues for each segment include intersegment revenues. There were no significant changes to the businesses of the Group during the six months ended September 30, 2019.

The Company transferred soft magnetic components and materials from the Specialty Steel Products segment to the Magnetic Materials and Applications segment, and changed the segment name from the Magnetic Materials and Applications segment to the Magnetic Materials and Applications / Power Electronics Materials segment as of April 1, 2019. Due to this change, the results of soft magnetic components and materials for the six months ended September 30, 2018 (April 1, 2018 to September 30, 2018), have been recorded under the Magnetic Materials and Applications / Power Electronics Materials segment.

- 4 -

Specialty Steel Products

Revenues in the Specialty Steel Products segment for the six months ended September 30, 2019 were ¥127,320 million, a decrease of 9.4% as compared with those for the six months ended September 30, 2018.

Breaking down the revenues by business, sales of molds and tool steel, among the business of tool steel & roll, decreased year on year, due to a fall in raw material prices (sliding-scale raw material price system) as well as a decrease in demand in international markets especially in China and inventory adjustments in Japan. Both domestic sales and exports of rolls increased year on year. Sales of injection molding machine parts remained unchanged year on year as demand remained firm.

Among the business of industrial, aerospace & energy materials, sales of industrial materials decreased year on year, on the back of a decline in demand for products related to automobiles and a fall in raw material prices (sliding-scale raw material price system). Sales of aerospace and energy materials increased year on year due to an increase in demand for aircraft-related components and materials.

Overall sales of alloys for electronic products decreased year on year, due to a decline in demand for smartphone-related materials, and semiconductor package components, although sales of organic EL panel-related components increased and sales of battery related components remained firm.

Adjusted operating income decreased by ¥14,843 million to ¥360 million compared with the six months ended September 30, 2018, due to a decline in demand for the Company's mainstays including molds and tool steel and alloys for electronic products, a fall in raw material prices, and an active reduction of work in process. Operating income of the segment decreased by ¥14,086 million year on year to ¥386 million.

Functional Components and Equipment

Revenues in the Functional Components and Equipment segment for the six months ended September 30, 2019 were ¥157,473 million, a decrease of 14.6% year on year.

Breaking down the revenues by business, sales of casting components for automobiles in the United States decreased year on year. This was attributable to a decrease in demand for light truck and passenger vehicles and a fall in raw material prices (sliding-scale raw material price system), despite an increase in demand for casting components for commercial vehicles. Meanwhile in Asia, sales decreased year on year driven by a fall in demand in the Indian market. Sales of heat-resistant exhaust casting components decreased year on year, mainly reflecting a decrease in sales of new vehicles in China and Europe. It has been determined to withdraw from the aluminum wheels business. Therefore, in March 2019, the Company sold a consolidated subsidiary manufacturing aluminum wheels in the United States, and the termination of production in Japan is also progressing as planned towards the end of September 2020. As a result, overall sales of casting components for automobiles decreased year on year.

Among piping components, overall sales of pipe fittings in the six months ended September 30, 2019 decreased from the those of the six months ended September 30, 2018, due to a decline in exports to the United States and the Middle East although sales in Japan remained unchanged year on year. Sales of semiconductor manufacturing equipment decreased year on year due to the delay of some capital investment projects. As a result, overall sales of piping components decreased year on year.

Adjusted operating income decreased by ¥5,686 million year on year to ¥1,204 million, largely due to a decrease in sales from the automotive casting components business in the United States which is the Company's core business as well as a continued slump in sales of semiconductor manufacturing equipment. Operating income decreased by ¥4,240 million year on year to ¥646 million.

Magnetic Materials and Applications / Power Electronics

Revenues in the Magnetic Materials and Applications / Power Electronics segment for the six months ended September 30, 2019 were ¥60,595 million, a decrease of 16.0% year on year.

Breaking down the revenues by business, sales of rare earth magnets among magnetic materials and applications decreased year on year. This was because sales of industrial equipment-related rare earth magnets decreased year on year due to a slowdown in the electronics-related and semiconductor-related markets and a significant decline in demand for various manufacturing equipment and industrial machinery, and sales of automotive electronic components also decreased year on year. Sales of ferrite magnets decreased year on year due to a decrease in automotive electronic components. As a result, overall sales of magnetic materials and applications decreased year on year.

Among power electronics materials, sales of soft magnetic materials and their applied products decreased year on year due to a decline in demand for amorphous metals for transformers and some components for consumer equipment, despite an increase in demand for the use of automotive electronic components. Meanwhile, sales of ceramic components increased year on year due to an increase in demand mainly for the use of automotive electronic components. As a result, sales of power electronics materials as a whole remained at the same level as the same period last year.

- 5 -

Adjusted operating income decreased by ¥3,819 million year on year to an adjusted operating loss of ¥674 million, due to a decrease in demand for magnetic materials and applications. Operating income decreased by ¥52,199 million year on year to an operating loss of ¥43,385 million, compared with the six months ended September 30, 2018. This was attributable to the recording of impairment losses amounting to ¥42,581 million in other operating expenses for the magnetic materials and applications business as a whole during the six months ended September 30, 2019, which was due mainly to the changes in the operating environment of the rare earth magnet business and the subsequent review of the future profitability of the magnetic materials and applications business.

Wires, Cables, and Related Products

Revenues in the Wires, Cables, and Related Products segment for the six months ended September 30, 2019, were ¥110,988 million, a decrease of 8.3% year on year.

Breaking down the revenues by business, sales of medical use increased year on year due to an increase in demand for both tubes and cables. Sales of wires and cables for rolling stock decreased year on year as large-scale projects entered the offseason. Sales of magnet wires decreased year on year due to a decrease in their demand for both automotive and industrial applications. Sales of electronic wires also decreased year on year due to a decline in their demand mainly for FA / robots. As a result, overall sales of wires, cables, and related products decreased year on year.

Sales of automotive components decreased year on year, reflecting a decline in demand for automotive electronic components and brake hoses due to a decrease in global new vehicle sales.

Adjusted operating income decreased by ¥3,457 million to ¥3,743 million, as compared with the six months ended September 30, 2018, led in part by a decline in demand. Operating income of the segment decreased by ¥3,160 million year on year to ¥3,719 million for the same period.

Other

Revenues in the Other segment for the six months ended September 30, 2019, were ¥1,708 million, a decrease of 22.8%, and adjusted operating income increased by ¥80 million to ¥380 million, as compared with those for the six months ended September 30, 2018. Operating income of the segment decreased by ¥229 million to ¥153 million for the same period.

*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 (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.

  1. Analysis of Financial Condition
  1. Assets, liabilities, and equity

The analysis of changes in the Group's condensed interim consolidated statement of financial position as of the end of the period ended September 30, 2019, is as follows:

Total assets were ¥1,024,091 million, a decrease of ¥75,161 million compared with the end of the fiscal year ended March 31, 2019. Current assets were ¥449,645 million, a decrease of ¥30,686 million compared with the end of the fiscal year ended March 31, 2019. This was mainly attributable to a decrease in inventories of ¥22,196 million. Non-current assets were ¥574,446 million, a decrease of ¥44,475 million compared with the end of the fiscal year ended March 31, 2019. Property, plant and equipment decreased by ¥12,186 million, which was mainly attributable to an increase of ¥16,150 million in right-of-use assets arising from the application of IFRS 16 "Leases" and decrease due to impairment losses of ¥22,479 million for the magnetic materials and applications business. In addition, goodwill and intangible assets decreased by ¥24,676 million, which resulted primarily from impairment losses of ¥20,102 million for the magnetic materials and applications business.

Total liabilities were ¥490,735 million, a decrease of ¥13,306 million compared with the end of the fiscal year ended March 31, 2019. Short-term debt, and the current portion of long-term debt and long-term debt increased by ¥16,386 million and ¥8,475 million, respectively. The increase of the current portion of long-term debt and long-term debt was mainly attributable to an increase of ¥15,771 million in lease liabilities arising from the application of IFRS 16 "Leases," and the current portion of long- term debt and long-term debt, less the incremental effect of the lease liabilities, decreased by ¥7,296 million compared with the end of the fiscal year ended March 31, 2019. Trade payables and other financial liabilities (current liabilities) decreased by ¥22,034 million and ¥13,377 million, respectively. Total equity was ¥533,356 million, a decrease of ¥61,855 million compared with the end of the fiscal year ended March 31, 2019. This was mainly attributable to decreases in retained earnings of ¥48,857 million and accumulated other comprehensive income of ¥9,981 million.

- 6 -

2) Cash flows

Cash and cash equivalents as of the end of the six months ended September 30, 2019, were ¥44,262 million, an increase of ¥3,164 million compared with the end of the fiscal year ended March 31, 2019, as a result of cash provided by operating activities and financing activities exceeding net cash used in investing activities. The analysis of cash flows for each category as of September 30, 2019, is as follows:

Net cash provided by operating activities was ¥40,521 million. This was mainly attributable to the net effect of net loss of ¥42,536 million, despite of the impairment losses of ¥42,741 million and the depreciation and amortization of ¥28,105 million among others.

Net cash used in investing activities was ¥36,419 million. This was mainly attributable to payment of ¥35,745 million for the purchase of property, plant and equipment.

Net cash provided by financing activities was ¥1,623 million. This was mainly attributable to a net increase in short-term debt of ¥17,744 million, despite of the repayment of long-term debt of ¥8,261 million and the payment of dividends of ¥7,274 million.

(3) Forecasts for the Fiscal Year Ending March 31, 2020, including Consolidated Operating Forecasts

In light of the business performance for the six months ended September 30, 2019 as well as the operating environment, the Company has revised the operating forecast for the year ending March 31, 2020 (April 1, 2019 through March 31, 2020) released on July 26, 2019 as shown in the table below. For the details, please refer to "Notice Concerning the Recording of Impairment Losses, Revisions to Operating Forecast for the Year Ending March 31, 2020 and Revisions to Dividend Forecast" released today.

Revisions to Consolidated Operating Forecast for the Year Ending March 31, 2020 (April 1, 2019 through March 31, 2020)

Net Income

Adjusted

Income before

attributable to

Basic Earnings

Revenues

Shareholders

Operating Income

Income Taxes

per Share

(million yen)

of the Parent

(million yen)

(million yen)

(yen)

Company

(million yen)

Forecasts announced

on July 26, 2019

1,000,000

54,000

38,000

28,500

66.66

(A)

Revised forecasts

895,000

14,000

(43,500)

(47,000)

(109.92)

(B)

Differences

(105,000)

(40,000)

(81,500)

(75,500)

(B) - (A)

Changes (%)

(10.5)

(74.1)

(Reference)

Results

1,023,421

51,427

43,039

31,370

73.37

for the fiscal year

ended March 31, 2019

Note: 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 (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.

- 7 -

2. Condensed Interim Consolidated Financial Statements

and Notes to Condensed Interim Consolidated Financial Statements

  1. Condensed Interim Consolidated Statement of Financial Position

(Millions of yen)

As of

As of

March 31, 2019

September 30, 2019

Assets

Current assets

Cash and cash equivalents

41,098

44,262

Trade receivables

195,306

188,622

Inventories

214,805

192,609

Other current assets

29,122

24,152

Total current assets

480,331

449,645

Non-current assets

Investments accounted for using the equity method

28,563

27,632

Investments in securities and other financial assets

19,978

14,053

Property, plant and equipment

402,160

389,974

Goodwill and intangible assets

143,558

118,882

Deferred tax assets

9,652

10,489

Other non-current assets

15,010

13,416

Total non-current assets

618,921

574,446

Total assets

1,099,252

1,024,091

- 8 -

(Millions of yen)

As of

As of

March 31, 2019

September 30, 2019

Liabilities

Current liabilities

Short-term debt

48,844

65,230

Current portion of long-term debt

34,268

35,860

Other financial liabilities

37,730

24,353

Trade payables

155,251

133,217

Accrued expenses

38,018

35,406

Contract liabilities

534

580

Other current liabilities

2,739

2,994

Total current liabilities

317,384

297,640

Non-current liabilities

Long-term debt

118,986

125,869

Other financial liabilities

923

1,075

Retirement and severance benefits

58,124

57,946

Deferred tax liabilities

4,964

4,888

Other non-current liabilities

3,660

3,317

Total non-current liabilities

186,657

193,095

Total liabilities

504,041

490,735

Equity

Equity attributable to shareholders of the parent company

Common stock

26,284

26,284

Capital surplus

115,045

115,343

Retained earnings

425,886

377,029

Accumulated other comprehensive income

21,925

11,944

Treasury stock, at cost

(1,161)

(1,162)

Total equity attributable to shareholders of the parent

587,979

529,438

company

Non-controlling interests

7,232

3,918

Total equity

595,211

533,356

Total liabilities and equity

1,099,252

1,024,091

- 9 -

(2) Condensed Interim Consolidated Statement of Income

and Condensed Interim Consolidated Statement of Comprehensive Income

[ Condensed Interim Consolidated Statement of Income ] [ For the six months ended September 30, 2019 ]

(Millions of yen)

Note

For the first half ended

For the first half ended

September 30, 2018

September 30, 2019

Revenues

518,958

456,888

Cost of sales

(424,196)

(394,639)

Gross profit

94,762

62,249

Selling, general and administrative expenses

(61,683)

(56,317)

Other income

7,678

1,776

Other expenses

(4,982)

(45,308)

Operating income (loss)

1

35,775

(37,600)

Interest income

159

222

Other financial income

1,620

72

Interest charges

(1,161)

(1,424)

Other financial expenses

(2)

(767)

Share of (losses) profits of investments accounted

846

816

for using the equity method

Income (loss) before income taxes

37,237

(38,681)

Income taxes

(9,181)

(3,855)

Net income (loss)

28,056

(42,536)

Net income (loss) attributable to:

Shareholders of the parent company

28,138

(40,992)

Non-controlling interests

(82)

(1,544)

Net income (loss)

28,056

(42,536)

Earnings per share

Basic

¥65.81

¥(95.87)

Diluted

Note: 1. Adjusted operating income, which is the operating income (loss) presented in the condensed interim consolidated statement of income, excluding other income and other expenses, is ¥33,079 million and ¥5,932 million for the six months ended September 30, 2018 and 2019, respectively.

- 10 -

[ Condensed Interim Consolidated Statement of Comprehensive Income ] [ For the six months ended September 30, 2019 ]

(Millions of yen)

For the first half ended

For the first half ended

September 30, 2018

September 30, 2019

Net income (loss)

28,056

(42,536)

Other comprehensive income

Items not to be reclassified into net income

Net change in fair value of financial assets measured at fair

196

(99)

value through other comprehensive income

Share of other comprehensive income of investments

(131)

28

accounted for using the equity method

Total items not to be reclassified into net income

65

(71)

Items that can be reclassified into net income

Foreign currency translation adjustments

11,088

(10,086)

Net change in fair value of cash flow hedges

207

(142)

Share of other comprehensive income of investments

(134)

(54)

accounted for using the equity method

Total items that can be reclassified into net income

11,161

(10,282)

Total other comprehensive income

11,226

(10,353)

Comprehensive income

39,282

(52,889)

Comprehensive income attributable to:

Shareholders of the parent company

39,325

(50,962)

Non-controlling interests

(43)

(1,927)

Comprehensive income

39,282

(52,889)

- 11 -

(3) Condensed Interim Consolidated Statement of Changes in Equity

(Millions of yen)

Accumulated

Total equity

Treasury

attributable to

Common

Capital

Retained

other

Non-controlling

stock,

shareholders

Total equity

stock

surplus

earnings

comprehensive

at cost

of the parent

interests

income

company

Balance at April 1, 2018

26,284

113,518

407,180

16,896

(1,158)

562,720

7,472

570,192

Changes in equity

Net income

28,138

28,138

(82)

28,056

Other comprehensive income

11,187

11,187

39

11,226

Dividends to shareholders of

(5,558)

(5,558)

(5,558)

the parent company

Dividends to non-controlling

(137)

(137)

interests

Acquisition of treasury stock

(2)

(2)

(2)

Sales of treasury stock

0

0

0

0

Transactions with non-

1,527

1,527

46

1,573

controlling interests

Transfer to retained earnings

(24)

24

Total changes in equity

1,527

22,556

11,211

(2)

35,292

(134)

35,158

Balance at Sept. 30, 2018

26,284

115,045

429,736

28,107

(1,160)

598,012

7,338

605,350

Accumulated

Total equity

Treasury

attributable to

Common

Capital

Retained

other

Non-controlling

stock,

shareholders

Total equity

stock

surplus

earnings

comprehensive

at cost

of the parent

interests

income

company

Balance at April 1, 2019

26,284

115,045

425,886

21,925

(1,161)

587,979

7,232

595,211

Cumulative effect of

(607)

(607)

(607)

accounting change

Restated balance

26,284

115,045

425,279

21,925

(1,161)

587,372

7,232

594,604

Changes in equity

Net income (loss)

(40,992)

(40,992)

(1,544)

(42,536)

Other comprehensive income

(9,970)

(9,970)

(383)

(10,353)

Dividends to shareholders of

(7,269)

(7,269)

(7,269)

the parent company

Dividends to non-controlling

(5)

(5)

interests

Acquisition of treasury stock

(1)

(1)

(1)

Sales of treasury stock

0

0

0

0

Transactions with non-

298

298

(1,382)

(1,084)

controlling interests

Transfer to retained earnings

11

(11)

Total changes in equity

298

(48,250)

(9,981)

(1)

(57,934)

(3,314)

(61,248)

Balance at Sept. 30, 2019

26,284

115,343

377,029

11,944

(1,162)

529,438

3,918

533,356

- 12 -

(4) Condensed Interim Consolidated Statement of Cash Flows

(Millions of yen)

For the first half ended

For the first half ended

September 30, 2018

September 30, 2019

Cash flows from operating activities:

Net income (loss)

28,056

(42,536)

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation and amortization

24,802

28,105

Impairment losses

403

42,741

Share of losses (profits) of investments accounted

(846)

(816)

for using the equity method

Financial income and expenses

(616)

1,897

Losses (profits) on sale of property, plant and equipment

1,527

998

Structural reform expenses

3

Net loss (gain) on business reorganization and others

(5,621)

Income taxes

9,181

3,855

(Increase) decrease in trade receivables

(3,657)

2,471

(Increase) decrease in inventories

(21,721)

19,349

(Increase) decrease in accounts receivable - other

5,305

8,979

Increase (decrease) in trade payables

(6,328)

(18,888)

Increase (decrease) in accrued expenses

802

(2,060)

Increase (decrease) in retirement and severance benefits

(51)

441

Other

(3,144)

(6,680)

Subtotal

28,095

37,856

Interest and dividends received

1,889

2,047

Interest paid

(1,181)

(1,389)

Payments for structural reforms

(3)

Income taxes refund (paid)

(6,790)

2,007

Net cash provided by operating activities

22,010

40,521

- 13 -

(Millions of yen)

For the first half ended

For the first half ended

September 30, 2018

September 30, 2019

Cash flows from investing activities:

Purchase of property, plant and equipment

(52,620)

(35,745)

Purchase of intangible assets

(692)

(691)

Proceeds from sales of property, plant and equipment

332

171

Purchase of investments in securities and other financial

assets

266

(104)

(including investments in subsidiaries and investments

accounted for using the equity method)

Proceeds from sale of investments in securities and other

financial assets (including investments in subsidiaries and

431

122

investments accounted for using the equity method)

Other

1,085

(172)

Net cash used in investing activities

(51,198)

(36,419)

Cash flows from financing activities:

Increase (decrease) in short-term debt, net

45,623

17,744

Proceeds from long-term debt

3,272

499

Repayment of long-term debt

(20,062)

(8,261)

Purchase of shares of consolidated subsidiaries

(1,362)

(1,084)

from non-controlling interests

Dividends paid to shareholders

(5,558)

(7,269)

Dividends paid to non-controlling interests

(137)

(5)

Acquisition of common stock for treasury

(2)

(1)

Proceeds from sales of treasury stock

0

0

Net cash used in financing activities

21,774

1,623

Effect of exchange rate changes on cash and cash equivalents

2,682

(2,561)

Net increase (decrease) in cash and cash equivalents

(4,732)

3,164

Cash and cash equivalents at the beginning of the first quarter

54,912

41,098

Cash and cash equivalents at the end of the second quarter

50,180

44,262

- 14 -

(5) Changes in Accounting Policies

Adoption of IFRS 16 "Leases"

From the beginning of the full-year ending March 31, 2020, the Group has adopted IFRS 16 "Leases." IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. This standard introduces a single accounting model under which lessees recognize all leases in the statement of consolidated financial position.

As a transitional measure upon the adoption of IFRS 16, the Group applies this standard with the cumulative effect of initially applying this standard recognized as an adjustment to the beginning balance of retained earnings for the full-year ending March 31, 2020.

The leases held by the Group are mainly real estate leases, and the effect of the adoption of IFRS 16 on the condensed statement of consolidated financial position as of the beginning of the full-year ending March 31, 2020 are minor and include: an increase of ¥16,693 million in assets mainly due to recognizing right-of-use assets, an increase of ¥17,300 million in liabilities mainly due to recognizing lease liabilities, and a decrease of ¥607 million in equity due to the adjustment to the beginning balance of retained earnings. Additionally, under IFRS 16, the depreciation adjustment of right-of-use assets is included in cash flows from operating activities instead of the payment of operating lease expense, and the payment of lease liabilities is included in cash flows from financing activities, in the condensed cash flow statement for the six months ended September 30, 2019. This resulted in an increase in cash flows from operating activities and a decrease in cash flows from financing activities, compared to those under the old accounting standard.

- 15 -

  1. Segment Information
  • The primary products and services included in each segment are as follows:

Reportable segment

Major products and services

< Tool Steel & Roll >

Specialty Steel Products

Functional

Components and

Equipment

Magnetic Materials

and Applications

/ Power Electronics

Wires, Cables, and Related Products

·Molds and tool steel,Rolls for steel mills, Injection molding machine parts, Structural ceramic products, and Steel-frame joints for construction

< Industrial, Aerospace & Energy Materials >

·Automobile-related materials, Razor and blade materials, Precision cast components, and Aircraft- and energy-related materials

·Display-related materials, Semiconductor and other package materials, and Battery-related materials

< Automotive Casting >

·HNMTMhigh-grade ductile cast iron products, Cast iron products for transportation equipment, HERCUNITETMheat-resistant exhaust casting components, and Aluminum components

< Piping Components >

·Piping and infrastructure components (TMGourd brand pipe fittings, valves, stainless steel and plastic piping components, water cooling equipment, precision mass flow control devices and sealed expansion tanks)

< Magnetic Materials >

·NEOMAX®rare-earth magnets, Ferrite magnets, and Other magnets and applied products

< Power Electronics Materials >

·Soft magnetic materials (Metglas®amorphous metals; FINEMET®nanocrystalline magnetic material; and soft ferrite) and applied products, and Ceramic components

< Electric Wire & Cable >

·Industrial cables, Electronic wires, Electric equipment materials, Cable assemblies, and Industrial rubber products

< Automotive Components >

·Automotive electronic components and Brake hoses

- 16 -

  • Last consolidated fiscal year (from April 1 to September 30, 2018)

(Millions of yen)

Business Segment

Condensed

Magnetic

Wires,

Interim

Functional

Materials

Specialty

Cables,

Others

Total

Adjustments

Consolidated

Components

and

Steel

and

Subtotal

Statement of

and

Applications

Products

Related

Income

Equipment

/Power

Products

Electronics

Revenues

External customers

140,461

184,373

72,136

120,717

517,687

1,271

518,958

518,958

Intersegment

92

291

383

941

1,324

(1,324)

transactions

Total revenues

140,553

184,373

72,136

121,008

518,070

2,212

520,282

(1,324)

518,958

Segment profit

14,472

4,886

8,814

6,879

35,051

382

35,433

342

35,775

Financial income

1,779

Financial expenses

(1,163)

Share of (losses) profits of

investments accounted for

846

using the equity method

Income before

37,237

income taxes

Note: 1. Segment profit is based on operating income.

  • 2. Intersegment transactions are recorded at the same prices used in transactions with third parties. Adjustments represent mainly allocation variances of general and administrative expenses for corporate assets, which are not allocated to each reportable segment.

  • Current year (from April 1 to September 30, 2019)

(Millions of yen)

Business Segment

Condensed

Magnetic

Wires,

Interim

Functional

Materials

Specialty

Cables,

Others

Total

Adjustments

Consolidated

Components

and

Steel

and

Subtotal

Statement of

and

Applications

Products

Related

Income

Equipment

/Power

Products

Electronics

Revenues

External customers

127,248

157,473

60,591

110,795

456,107

781

456,888

456,888

Intersegment

72

4

193

269

927

1,196

(1,196)

transactions

Total revenues

127,320

157,473

60,595

110,988

456,376

1,708

458,084

(1,196)

456,888

Segment profit (loss)

386

646

(43,385)

3,719

(38,634)

153

(38,481)

881

(37,600)

Financial income

294

Financial expenses

(2,191)

Share of (losses) profits of

investments accounted for

816

using the equity method

Income before

(38,681)

income taxes

Note: 1. Segment profit (loss) is based on operating income.

2. Intersegment transactions are recorded at the same prices used in transactions with third parties. Adjustments represent mainly allocation variances of general and administrative expenses for corporate assets, which are not allocated to each reportable segment.

The Company transferred soft magnetic components and materials from the Specialty Steel Products segment to the Magnetic Materials and Applications segment, and changed the segment name from the Magnetic Materials and Applications segment to the Magnetic Materials and Applications / Power Electronics Materials segment as of April 1, 2019. Due to this change, the results of soft magnetic components and materials for the six months ended September 30, 2018 (April 1, 2018 to September 30, 2018), have been recorded under the Magnetic Materials and Applications / Power Electronics Materials segment.

- 17 -

Disclaimer

Hitachi Metals Ltd. published this content on 29 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 October 2019 11:36:07 UTC


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