Komori : Financial Report 2023

KOMORI CORPORATION

Financial Report 2023

Fiscal year ended March 31, 2023

Six-Year Summary of Consolidated Financial Data

Komori Corporation and Consolidated Subsidiaries

										Thousands of
										U.S. dollars
								Millions of yen		(Note 1)
Years ended March 31	2018	2019	2020	2021	2022	2023	2023
Net sales			¥  94,168	¥  90,242	¥  77,646	¥  71,825	¥  87,623	¥  97,914		$   733,274
Cost of sales	64,882	61,966	55,396	51,473	59,595	64,173	480,593
Selling, general and administrative	25,556	25,573	25,654	22,684	25,759	28,020	209,846
expenses
Operating profit (loss)	3,732	2,706	(3,404)	(2,332)	2,267	5,719	42,834
Profit (loss)	before income taxes	4,152	2,458	(21,176)	(1,522)	6,990	6,604	49,460
Profit (loss)	attributable to owners	3,074	1,427	(25,473)	(2,068)	6,158	5,716	42,813
of parent
Capital expenditure	1,201	1,334	1,677	1,392	2,371	2,302	17,246
Depreciation and amortization	1,888	1,964	2,304	1,604	1,877	1,895	14,198
R&D expenses	4,784	4,740	4,898	4,002	4,050	3,653	27,361
Total assets		181,199	167,370	135,697	144,443	157,081	165,523	1,239,596
Total net assets	132,451	130,184	97,979	97,736	103,382	107,133	802,317
Interest-bearing debt	10,198	39	34	11,312	11,208	10,616	79,504
										U.S. dollars
								Yen		(Note 1)

Per share:

Net income (loss)-primary

Net assets

Cash dividends

Financial indicators:

Return on sales (Note 2)

Equity ratio

Return on total assets (Note 3) Return on equity (Note 4) Payout ratio (Consolidated basis)

Debt-to-equity ratio (Note 5)

Number of employees at fiscal year-end

Number of shares outstanding at fiscal year-end (Note 6)

¥     52.81	¥     24.52	¥  (450.11)	¥    (36.99)	¥   110.67	¥   104.85
2,274.80	2,234.61	1,750.80	1,746.55	1,894.34	1,961.88
40.00	40.00	30.00	20.00	56.00	45.00
					%
4.0%	3.0%	(4.4)%	(3.2)%	2.6%	5.8%
73.1	77.7	72.2	67.6	65.8	64.6
1.7	0.8	(18.8)	(1.5)	4.1	3.5
2.3	1.1	(22.3)	(2.1)	6.1	5.4
75.7	163.1	-	-	50.6	42.9
					Times
0.08	0.00	0.00	0.12	0.11	0.10
2,227	2,335	2,363	2,686	2,613	2,567
58,225,619	58,224,957	55,924,335	55,924,001	54,524,100	54,521,760

$  0.79

14.69

0.34

Notes: 1. U.S. dollar amounts are converted from Japanese yen for convenience only at the rate of ¥133.53 = US$1.00.

1. Return on sales = Operating income/Net sales X 100
2. Return on total assets = Profit attributable to owners of parent/Average total assets X 100
3. Return on equity = Profit attributable to owners of parent/Average net assets X 100
4. Debt-to-equityratio = Interest-bearing debt/Equity
5. Number of shares outstanding at fiscal year-end does not include treasury shares.

1 KOMORI CORPORATION

Financial Review

SCOPE OF CONSOLIDATION

The Komori Group consists of Komori Corporation and 25 subsidiaries. As of March 31, 2023, the consolidated financial statements included the accounts of the parent company and 24majority-owned subsidiaries.

BUSINESS ENVIRONMENT

During the fiscal year ended March 31, 2023 (fiscal 2023), the global economy continued to recover, reflecting the normalization of economic activity amid efforts to live with COVID-19. However, the outlook for the global economy remains unclear amid persistently high energy costs linked to prolonged geopolitical issues, shortages of semiconductors and other parts due to demand recovery, and exchange rate fluctuations caused by monetary tightening in many countries.

REVENUES AND EARNINGS

In fiscal 2023, consolidated net sales increased 11.7% compared with the previous fiscal year to ¥97,914 million. Overseas sales increased 3.1% year on year to ¥65,638 million. This represented 67.0% of total net sales, a decrease of 5.6 percentage points from the previous fiscal year.

The cost of sales represented 65.5% of total net sales, an improvement of 2.5 percentage points year on year, primarily due to exchange rate fluctuations.

Selling, general and administrative (SG&A) expenses increased 8.8% year on year to ¥28,020 million, due mainly to growth in shipping and other expenses in step with higher net sales, as well as corporate spending on advertising due to an international exhibition held in November. The ratio of SG&A expenses to net sales decreased 0.8 of a percentage point to 28.6%.

As a result, Komori posted operating income totaling ¥5,719 million, compared with operating income of ¥2,267 million in the previous fiscal year.

Ordinary income was ¥6,611 million, compared with ordinary income of ¥3,408 million in the previous fiscal year. This was partially attributable to the recording of foreign exchange gains arising from favorable movements in exchange rates.

As a result of these and other factors, income before income taxes amounted to ¥6,604 million, compared with income before income taxes of ¥6,990 million in the previous fiscal year. This was due mainly to extraordinary income related to measures to reinforce the Company's business structure recorded in the previous fiscal year. Profit attributable to owners of the parent totaled ¥5,716 million, compared with profit attributable to owners of the parent of ¥6,158 million in the previous fiscal year.

Net income per share amounted to ¥104.85, compared with net income per share of ¥110.67 in the previous fiscal year.

DIVIDENDS

While considering the level of retained earnings required to prudently secure a robust operating platform and ensure future business growth from a long-term perspective, Komori positions maintaining the robust and stable return of profits to its shareholders as a key management priority. Moreover, Komori has stipulated in its Articles of Incorporation that it may carry out the payment of interim dividends in accordance with Article 454, Paragraph 5 of the Japanese Corporate Code. Accordingly, the Company maintains a basic policy of paying both an interim and a fiscal year-end dividend as a vehicle for the distribution of surplus. The interim dividend is determined by the Board of Directors, while the fiscal year-end dividend is determined at Komori's Annual General Meeting of Shareholders.

Giving comprehensive consideration to the Company's most recent operating results, Komori paid a full-year dividend of ¥45 per share for fiscal 2023, made up of the interim dividend of ¥15 per share and the fiscal year-end dividend of ¥30 per share.

FINANCIAL POSITION

Total assets as of March 31, 2023 stood at ¥165,523 million, an increase of ¥8,441 million, or 5.4%, compared with March 31, 2022.

Key positive factors leading to the increase in total assets included a ¥5,021 million increase in inventories and a ¥2,133 million increase in notes and accounts receivable-trade, and contract

Domestic Sales and

Overseas Sales

(Billions of yen)

100					97.9
	90.2			87.6	32.3
	36.4
75	77.6		24.0
	29.0	71.8
50		29.7	63.6	65.6
53.8
	48.6	42.1
25
0
	19	20	21	22	23	(FY)

Domestic sales

Overseas sales

Ratio of Operating Income

to Net Sales, and Ratio of Profit Attributable to Owners of Parent to Net Sales

(%)

8

7.0

5.8

5.8

4
	3.0	2.6
0	1.6
		(2.9)
-4		(3.2)

(4.4)

-40

(32.8)

19 20 21 22 23 (FY)

Ratio of operating income to net sales

Ratio of profit attributable to owners of parent to net sales

FINANCIAL REPORT 2023 2

Return on Equity and

Return on Total Assets

(%)

8

6.1

5.4

4

4.1

3.5

0

1.1

0.8

-4

(1.5)

(2.1)

	(18.8)
-25	(22.3)

19 20 21 22 23 (FY)

Return on equity

Return on total assets

Total Net Assets and

Equity Ratio

(Billions of yen)					(%)
150					80
77.7
130.2
	72.2		103.4	107.1
100	98.0	97.7	70
		67.6	65.8	64.6
50					60
0					50
19	20	21	22	23	(FY)

Total net assets

Equity ratio

assets. Key negative factors affecting total assets included a ¥653 million decrease in cash and deposits.

Total liabilities were ¥58,389 million, an increase of ¥4,691 million, or 8.7%, compared with March 31, 2022.

The primary factors leading to the increase in total liabilities included a ¥3,307 million increase in electronically recorded obligations-operating and a ¥1,721 million increase in notes and accounts payable-trade. The primary factors that decreased total liabilities included a ¥473 million decrease in short-term loans payable and a ¥459 million decrease in deferred tax liabilities.

As of March 31, 2023, total net assets amounted to ¥107,133 million, an increase of ¥3,750 million, or 3.6% year on year.

Key positive factors affecting net assets included a ¥1,370 million decrease in treasury shares, a ¥1,276 million increase in retained earnings, and a ¥1,024 million increase in foreign currency translation adjustment. Key negative factors affecting net assets included a ¥661 million decrease in remeasurements of defined benefit plans.

Taking these factors into account, the equity ratio stood at 64.6%, down 1.2 percentage points from 65.8% as of March 31, 2022. Net assets per share rose ¥67.54 to ¥1,961.88 from ¥1,894.34 at March 31, 2022.

RESEARCH AND DEVELOPMENT EXPENSES

In the Komori Group's R&D activities, efforts are prioritized in accordance with its business ­strategies and, therefore, focused on the following subjects due to their higher importance:

1. Developing technologies to increase the productivity and quality of offset printing; (2) Developing technologies related to security printing presses; (3) Developing a digital printing system (DPS) employing the Nanographic Printing® process capable of realizing high production efficiency and

profitability; (4) Developing an innovative printed electronics (PE) technology; and (5) Developing environmentally friendly elemental technologies. The Group has made remarkable accomplishments in each subject.

The principal R&D activities conducted during the fiscal year under review are set out below.

1. Technologies to increase offset printing quality and productivity

Komori developed a new inline PDF Comparator as an optional Autopilot printing job automation function. This function compares the source PDF data with the image of the printed materials, eliminating image comparison work for operators.

Komori also developed the GLX-40P-advance, a high-speeddouble-sided offset printing press equipped with a sheet-reversing unit. Compared to previous models, this system offers larger maximum paper size, higher maximum printing speed and improved front/back registration during double-sided printing, simultaneously achieving improvements in both productivity and quality.

2. Technologies related to security printing presses

Komori advanced the development of a new security printing press that incorporates cutting-edge technologies used in commercial printing presses. This press increases productivity with higher printing speed while also offering improved environmental performance, using power-saving motors and technologies that eliminate the need for lubrication throughout. We also successfully developed a new inspection algorithm for intaglio printing inspection equipment, significantly enhancing inspection accuracy.

3. Digital printing system (DPS) employing the Nanographic Printing® process

Komori is developing a new DPS capable of realizing high production efficiency and profitability. Using image transfer blankets and aqueous Nanoink®, the system has achieved a printing speed of 6,500 sheets per hour on B1-size paper. In addition, Komori is advancing the development of inline quality management equipment for DPSs with the aim of establishing automated technology for printing quality adjustment.

3 KOMORI CORPORATION

4. Innovative printed electronics (PE) technology

SERIA CORPORATION, a Komori Group subsidiary specializing in the PE and other precision equipment-related businesses, advanced the development of elemental technologies related to commercial production, including units for continuous operation, pasting and platemaking, with the aim of expanding sales of the PEPIOF12-SEhigh-precision gravure offset printing system.

5. Environmentally friendly elemental technologies

Komori is proactively engaged in R&D centered on countering climate change.

Specifically, Komori is advancing the development of elemental technologies. These include technologies to optimize and save energy in air control for printing press sheet feeding; reduce the burden on plant air conditioning by reducing waste heat from sheet feeding air and motors; and improve sheet feeding and output performance and printability through static electricity countermeasures.

Total R&D expenses in the fiscal year under review amounted to ¥3,653 million, a decrease of 9.8% year on year. This was equivalent to 3.7% of total net sales.

CAPITAL EXPENDITURE, DEPRECIATION AND AMORTIZATION

Total capital expenditure in fiscal 2023 was ¥2,302 million, a decrease of ¥68 million compared with the previous fiscal year. Komori conducted capital expenditure aimed mainly at developing new businesses. Depreciation and amortization increased ¥18 million to ¥1,895 million.

Looking ahead, Komori plans to engage in capital expenditure totaling ¥4,718 million in fiscal 2024.

CASH FLOWS

Net cash provided by operating activities in the fiscal 2023 amounted to ¥4,475 million, a decrease of ¥4,805 million from net cash provided by operating activities of ¥9,281 million in the previous fiscal year.

Major cash inflows were the posting of profit before income taxes totaling ¥6,604 million,

a ¥4,713 million increase in trade payables and a ¥1,895 million adjustment for depreciation and amortization. Principal cash outflows included a ¥4,169 million increase in inventories and a ¥3,153 million increase in trade receivables.

Net cash used in investing activities was ¥526 million, a narrowing of ¥853 million from ¥1,379

million used in investing activities in the previous fiscal	year.
Principal cash outflows included ¥1,713 million in	purchase of property, plant and equipment
and intangible assets. Main cash inflows included a	¥850 million net increase in securities and
¥533 million in proceeds from withdrawal of time deposits.
Net cash used in financing activities totaled	¥4,077	million,	an increase of ¥1,137 million from
¥2,940 million used in financing activities in the	previous fiscal	year.
The principal components of cash outflows	were ¥3,064 million in cash dividends paid,

Capital Expenditure, Depreciation and Amortization

(Billions of yen)

2.5				2.4
		2.3		2.3
2.0	2.0			1.9	1.9
		1.7	1.6
1.5
		1.4
	1.3
1.0
0.5
0
	19	20	21	22	23	(FY)

Capital expenditure

Depreciation and amortization

Cash Flows
(Billions of yen)
10			9.3 9.3
		8.2
5					4.5
		1.8
0	0.1
	(0.4)			(1.4)	(0.5)
		(2.2)
		(2.9)
(5)		(3.6)
			(4.1)
		(5.1)
(10)

a ¥513 million net decrease in short-term loans payable, and ¥358 million in repayments of

(15)

(12.8)

lease obligations.

As a result of the aforementioned activities, cash and cash equivalents at March 31, 2023 stood at ¥60,945 million, an increase of ¥623 million, or 1.0%, compared with March 31, 2022.

BUSINESS AND OTHER RISKS

In analyzing matters associated with its operational and financial status, Komori's management has identified primary risks that could materially impact the Company's financial position, business performance and cash flows. These risks are discussed below. In addition, forward-looking statements included in the following descriptions are compiled based on the Komori Group's judgment as of the end of the fiscal year under review.

19 20 21 22 23 (FY)

Cash flows from operating activities

Cash flows from investing activities Cash flows from financing activities

FINANCIAL REPORT 2023 4