Kanematsu : Supplementary Material 2Q Earnings for FY2024 TSE

Supplementary Material 2Q Earnings for FY2024

Disclaimer:

The forward-looking statements, including results forecasts, included in this material are based on information that Kanematsu Corporation (the Company) has obtained and certain assumptions that the Company considers reasonable. The Company does not promise to achieve them. Actual results may differ materially from forecasts due to a number of factors. This information is subject to change without notice and users are, therefore, advised to use this information and material, together with information obtained by other means, and to exercise their own judgment. The Company does not assume any liability or responsibility for any loss or damage arising from use of this material. Since the figures shown are rounded off to the nearest 1 billion yen, the sum of each item and the total may differ.

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2Q Earnings Summary for FY2024

• Both revenue and profit increased year on year, breaking the past April-September profit record.
• Progress rate of profit attributable to owners of the parent against the full-year projection was 53%, progressing well.

2Q Earnings Result
	FY2023	FY2024		Growth
(Unit: Bn JPY)	2Q	2Q	YoY	Rate
Revenue	449.5	474.1	+24.7	+6%
Operating Profit	22.1	22.4	+0.4	+2%
Net Profit1)	12.2	12.3	+0.1	+1%
CF from Operating Activities	(1.8)	1.8	+3.6
CF from Investing Activities	(5.5)	(1.8)	+3.7
	End of	End of	Increase/
	Mar 2023	Sep 2023	Decrease
Net Debt-Equity Ratio2）	1.15x	1.19x	+0.04x
Equity Ratio3）	19.0%	20.9%	+1.9%

Forecast
	FY2024	2Q
(Unit: Bn JPY)	Forecast	Progress
Revenue	960.0	49%
Operating Profit	40.5	55%
Net Profit1)	23.5	53%
ROE	17.2%
Annual Dividend
Per Share (in Yen)	90
Dividend Payout Ratio	32.0%

1)	Net Profit = Profit attributable to owners of the parent
2)	Net Debt-Equity Ratio ＝ Net interest-bearing debt ÷ total equity attributable to owners of the parent	1
3)	Equity Ratio ＝ Shareholders' equity ÷ total assets
© KANEMATSU CORPORATION. All Rights Reserved.

Profit and Loss Statement

FY2024 2Q Earnings Result

	FY2023	FY2024		Growth
(Unit: Bn JPY)	2Q	2Q	YoY	Rate

FY2024 Forecast

(Unit: Bn JPY)	FY2024
Forecast	Progress

Revenue

Gross Profit

Selling, General and Administrative Expenses

Other Income (Expenses)

Operating Profit

Interest Income (Expenses)

Dividend Income

Other Finance Income (Costs)

Finance Income (Costs)

Share of Profit (Loss) of Investments Accounted for Using the Equity Method

Profit Before Tax

Income Tax Expense

Profit for the Period

Profit Attributable to Owners of the Parent

449.5 474.1 24.7

62.1 68.4 6.3

(45.3) (50.9) (5.6)

5.3 5.0 (0.3)

22.1

22.4

0.4

(1.4) (2.6) (1.2)

0.6 0.9 0.3

0.2 0.1 (0.2)

(0.6) (1.6) (1.1)

(0.1) (0.4) (0.3)

21.4 20.4 (1.0)

(6.5) (6.9) (0.4)

14.9 13.5 (1.5)

12.2

12.3

0.1

+6%  Revenue

• Increased 24.7 billion yen year on

+10% year centered on the Steel, Materials & Plant segment and the Electronics

• & Devices segment.

-

+2%  Operating Profit

• • Posted a record high 22.4-billion-
• yen profit.

-	 Profit Before Tax
-
	• Decreased 1.0 billion yen mainly
-	due to an increase in interest
	expenses caused by the impact of a

• rise in borrowings and the higher interest rates.

(5%)

•  Profit Attributable to

(10%)	Owners of the Parent
• See page 4 on net profit by segment.
+1%

Revenue	960.0		49%
Operating Profit	40.5		55%
Profit Before Tax	36.0		57%
Profit Attributable to	23.5		53%
Owners of the Parent
Dividend Payout Ratio	32.0%
Net Profit Forecast
Annual Forecast	2Q Progress
23.5

3Q~4Q

11.2

53%

2Q

12.3

1)	Assumptions for the forecast: Exchange rate 1USD＝135JPY, interest rates in Japan are expected to remain unchanged, interest rates overseas are expected to rise.
2)	Net Profit = Profit attributable to owners of the parent	2
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Segment Information

(Unit: Bn JPY)	FY2023
2Q
Electronics & Devices
	Revenue	134.5
	Operating Profit	10.4
	Net Profit2)	4.7
Foods, Meat & Grain
	Revenue	172.8
	Operating Profit	4.7
	Net Profit2)	3.3
Steel, Materials & Plant
	Revenue	92.2
	Operating Profit	5.7
	Net Profit2)	3.3
Motor Vehicles & Aerospace
	Revenue	42.7
	Operating Profit	0.7
	Net Profit2)	0.5
Other(Including Adjustment)
	Revenue	7.3
	Operating Profit	0.5
	Net Profit2)	0.4
Total
	Revenue	449.5
	Operating Profit	22.1
	Net Profit2)	12.2

FY2024

2Q

147.6

9.8

6.2

170.6

5.3

2.5

105.6

5.1

2.1

44.2

1.7

1.1

6.1

0.4

0.4

474.1

22.4

12.3

	Growth	FY2024
YoY	Rate	Forecast	Progress	(Unit: Bn JPY)
+13.1	+10%	290.0	51%
(0.6)	(6%)	21.5	46%
+1.5	+33%	14.1	44%
(2.2)	(1%)	365.0	47%
+0.6	+13%	6.9	77%
(0.8)	(25%)	2.6	97%
+13.4	+15%	200.0	53%
(0.6)	(11%)	9.1	56%
(1.2)	(36%)	4.9	43%
+1.6	+4%	90.0	49%
+1.0	+150%	2.0	85%
+0.6	+128%	1.2	93%
(1.2)	(16%)	15.0	41%
(0.1)	(10%)	1.0	45%
+0.0	+1%	0.7	56%
+24.7	+6%	960.0	49%
+0.4	+2%	40.5	55%
+0.1	+1%	23.5	53%

Revenue

Operating Profit

1. Assumptions for the forecast: Exchange rate 1USD＝135JPY, interest rates in Japan are expected to remain unchanged, interest rates overseas are expected to rise.
2. Net Profit = Profit attributable to owners of the parent

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3

Net Profit by Segment

Profit Attributable to Owners of the Parent

■ Electronics & Devices ■ Foods, Meat & Grain ■ Steel, Materials & Plant ■ Motor Vehicles & Aerospace ■ Other(Including Adjustment)

(Unit: Bn JPY)

Electronics & Devices

+1.5 Bn

• ICT Solutions: Increased mainly due to the impact of the acquisition of all the shares of Kanematsu Electronics and solid network and security related transactions against the background of the growing demands for security measures and DX.
• Mobile: Increased year on year mainly thanks to branch restructuring.

Foods, Meat & Grain

(0.8) Bn

4.7 +1.5

3.3 (0.8)

3.3 (1.2)

	+0.6
0.5
0.4
FY2023 2Q

1) Net Profit = Profit attributable to owners of the parent

6.2

2.5

2.1

1.1

0.4

FY2024 2Q

• Meat Products: Decreased compared to the same period last year when a strong performance was recorded, mainly due to the impact of higher market prices in overseas and weaker yen.
• Grain, Oilseeds & Feedstuff: Major grain prices remained weak, and profits decreased compared to the same period of the previous year, which performed well.

Steel, Materials & Plant

(1.2) Bn

• Steel Tubing: Increased on the back of strong transactions in North America due to solid demand for energy.
• Energy: Decreased from the same period of the previous year when a strong performance was recorded, due to the falling domestic demand.
• Machine Tools & Industrial Machinery: Decreased from the same period of the previous year due to the rising purchase cost and selling, general and administrative expenses.

Motor Vehicles & Aerospace

+0.6 Bn

• Aerospace: Increased year-on-year due to a growth in sales of aircraft-related parts.
• Motor Vehicles & Parts: Increased year-on-year due to the improved market conditions.

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4

Cash Flows

• Cash Flows from Operating Activities
• Net cash provided by operating activities was 1.8 billion yen mainly due to the accumulation of operating revenue.
• Cash Flows from Investing Activities
• Net cash used in investing activities was 1.8 billion yen mainly due to investments in new businesses, although cash was provided mainly through the sale of plant, property and equipment.
• Cash Flows from Financing Activities
• Net cash used in financing activities was 32.0 billion yen mainly due to the repayment of short-term borrowings obtained for the TOB of Kanematsu Electronics Ltd. and payments to acquire its shares to make the company a wholly owned subsidiary.

		FY2023	FY2024						FY2023 2Q	FY2024 2Q
(Unit: Bn JPY)		2Q	2Q	YoY
	5.0	1.8
CF from Operating Activities		(1.8)	1.8	+3.6	(5.0)	(1.8) (5.5) (3.3)	(1.8)
CF from Investing Activities	(5.5)	(1.8)	+3.7	(15.0)
					(25.0)
Free Cash Flows	(7.3)	(0.0)	+7.3	(35.0)				(32.0)
CF from Financing Activities		(3.3)	(32.0)	(28.7)				CF from Operating Activities		CF from Investing Activities		CF from Financing Activities

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5

Financial Position

• Total Assets
• Increased 25.8 billion yen mainly due to increases in trade receivables and inventory assets reflecting the rallying commodity prices and the depreciation of the yen.
• Net Interest-bearing Debt
• Net interest-bearing debt increased 26.6 billion yen mainly due to payments to purchase shares of a company acquired through a TOB to make it a wholly owned subsidiary and an increase in operating capital.
• Shareholders' Equity
• Increased 18.2 billion yen mainly due to the accumulation of profit attributable to owners of the parent and increases in other components of equity following the depreciation of the yen.
• The equity ratio was 19.7%. The net debt-equity ratio (net DER) was 1.11x.

(Unit: Bn JPY)

End of

End of

Increase/

677.6

703.3

174.5

Mar 2023

Sep 2023

Decrease

147.9

146.7

677.6

703.3

+25.8

Total Assets

128.5

Net Interest-bearing Debt

147.9

174.5

+26.6

19.0%

20.9%

1.15x

1.19x

Shareholders' Equity1)

128.5

146.7

+18.2

Equity Ratio2)

19.0%

20.9%

+1.9%

128.5

146.7

Net DER3)

1.15x

1.19x

+0.04x

PBR

1.08x

1.19x

+0.11x

End of Mar 2023

End of Sep 2023

End of Mar 2023

End of Sep 2023

Total Assets

Shareholders' Equity

Equity Ratio

Net Interest Bearing Debt

Shareholders' Equity

Net DER

1) Shareholders' Equity = Total equity attribute to owners of the parent

4) PBR=期末時点の時価総額（期末株価×発行済み株式数）÷自己資本

2) Net Debt-Equity Ratio ＝ Net interest-bearing debt ÷ total equity attributable to owners of the parent

6

3) Equity Ratio ＝ Shareholders' equity ÷ total assets

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Annual Net Profit

• Profit attributable to owners of the parent is projected to exceed the target 20 billion yen in the current fiscal year, which is the final year of the medium-term vision future 135.

					Profit Attributable to Owners of the Parent	23.5
16.6										16.0			18.6
14.4		13.3							17.2%
13.8%									12.9%
11.2%						10.5%
			9.7%
6.4%
5.6%
5.3%						5.6%
4.9%
8.1	7.8	5.9	7.3	12.2	12.3
FY2019	FY2020		FY2021	FY2022		FY2023	FY2024 (Forecast)
						Annual			2Q(Accumulate)				ROE		ROIC

1)	Assumptions for the forecast: Exchange rate 1USD＝135JPY, interest rates in Japan are expected to remain unchanged, interest rates overseas are expected to rise.
2)	Net Profit = Profit attributable to owners of the parent	7
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Dividends

• The basic policy is to provide continuous and stable dividends.
• The target of total return ratio is set at 30-35% under the medium- term vision future 135.

					90
			65	75
60	60	60
30.3%	34.8%	37.6%	34.0%	33.7%	32.0%

Medium-term vision future 135 (April 2018 to March 2024)

Target Dividend Payout Ratio：30.0 - 35.0%

FY2019	FY2020	FY2021	FY2022	FY2023	FY2024 (Forecast)
		Dividend per Share		Dividend PayOut Ratio

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8

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