Konoike Transport : Consolidated Financial Results for the Nine Months Ended December 31, 2023 (Under Japanese GAAP)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

March 14, 2024

Consolidated Financial Results

for the Nine Months Ended December 31, 2023

(Under Japanese GAAP)

Company name:	Konoike Transport Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	9025
URL:	https://www.konoike.net/
Representative:	Tadahiko Konoike, Representative Director, Chairman, President and Chief Executive Officer
Inquiries:	Yoshihito Nakanishi, Executive Officer, Executive General Manager, Finance/Accounting
	Division
Telephone:	[phone]

Scheduled date to file Quarterly Securities Report:	March 14, 2024
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the nine months ended December 31, 2023 (from April 1, 2023 to December 31, 2023)

(1) Consolidated operating results (cumulative)			(Percentages indicate year-on-year changes.)
		Net sales		Operating profit		Ordinary profit	Profit attributable to
				owners of parent
Nine months ended	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen	%
December 31, 2023		235,875		(0.5)	13,253		22.9		13,450	15.7	8,559	23.6
December 31, 2022		237,119		6.2	10,781		26.5		11,624	20.3	6,926	(2.6)
Note: Comprehensive income	For the nine months ended December 31, 2023:	¥12,561 million	[7.8%]
		For the nine months ended December 31, 2022:	¥11,648 million	[48.5%]
	Basic earnings	Diluted earnings
		per share		per share
Nine months ended				Yen			Yen
December 31, 2023				161.46			-
December 31, 2022				130.80			-

(2) Consolidated financial position

	Total assets		Net assets
As of	Millions of yen	Millions of yen
December 31, 2023	273,854		133,965
March 31, 2023	266,022		123,793
Reference: Equity
As of December 31, 2023:	¥131,287 million
As of March 31, 2023:	¥121,295 million

Equity-to-asset ratio

%

47.9

45.6

Net assets per share

Yen

2,475.39

2,289.00

2. Cash dividends

		Annual dividends per share
	First quarter-end	Second quarter-end		Third quarter-end		Fiscal year-end	Total
	Yen	Yen		Yen		Yen	Yen
Fiscal year ended	-	18.00		-			24.00		42.00
March 31, 2023
Fiscal year ending	-	24.00		-
March 31, 2024
Fiscal year ending
March 31, 2024							38.00		62.00
(Forecast)
Note: Revisions to the forecast of cash dividends most recently announced: Yes

3. Forecast of consolidated financial results for the year ending March 31, 2024 (from April 1, 2023 to March 31, 2024)

							(Percentages indicate year-on-year changes.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Millions of		%	Millions of	%	Millions of	%	Millions of	%	Yen
	yen		yen	yen	yen
Full year	313,500		0.5	16,400	23.8	16,600	16.2	10,800	30.1	203.72
Note: Revisions to the forecast of financial results most recently announced: Yes

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
   Newly included: - companies (Company name)
   Excluded: - companies (Company name)
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares)

As of December 31, 2023

As of March 31, 2023

56,952,442 shares

56,952,442 shares

(ii) Number of treasury shares at the end of the period

As of December 31, 2023

As of March 31, 2023

3,915,506 shares

3,961,817 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Nine months ended December 31, 2023

Nine months ended December 31, 2022

53,015,039 shares

52,955,195 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters (Caution regarding forward-looking statements and others)
• • The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. Any statements herein do not constitute assurances regarding actual results by the Company. Actual business and other results may differ substantially due to various factors. For the suppositions that form the assumptions for the forecast of financial results and cautions concerning the use thereof, please refer to the section of "(3) Explanation of the forecast of consolidated financial results and other forward-looking statements" of "1. Qualitative information on financial results for the period" on page 4 of the attached materials.
  • The supplementary material on quarterly financial results will be posted to the Company's website promptly after the earnings results announcement.

• Table of contents of attached materials

	Index
1. Qualitative information on financial results for the period	2
(1)	Explanation of operating results	2
(2)	Explanation of financial position	3
(3)	Explanation of the forecast of consolidated financial results and other forward-looking statements 4
(4)	Basic policy for profit allocation, and dividends for the current fiscal year	4
2. Quarterly consolidated financial statements and significant notes thereto	5
(1)	Quarterly consolidated balance sheets	5
(2)	Quarterly consolidated statements of income and comprehensive income	7
	Quarterly consolidated statements of income (cumulative)	7
	Quarterly consolidated statements of comprehensive income (cumulative)	8
(3)	Notes to quarterly consolidated financial statements	9
	(Notes on premise of going concern)	9
	(Notes on significant changes in the amount of shareholders' equity)	9
	(Additional information)	9
	(Segment information)	10

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1. Qualitative information on financial results for the period

Forward-looking statements presented in this report reflect judgments made as of the end of the current quarterly accounting period and accordingly are not guarantees of future performance.

1. Explanation of operating results
   During the nine months ended December 31, 2023, the Japanese economy as a whole was on a gradual recovery trend. This was due to noticeable factors boosting the economy such as progress in normalization of economic and social activity, as well as a resurgence in demand from inbound travelers, despite higher prices due to factors such as manpower shortages, higher personnel expenses, and persistently high raw material prices against a backdrop of yen depreciation.
   In this business environment, in the second year of its medium-term management plan concluding in the fiscal year ending March 31, 2025, the Group has accordingly newly established contracting and logistics strategy committees in April 2023, which are to serve as advisory bodies to the Board of Directors. The Group strives to further expand business and enhance profitability through addressing the so-called 2024 problem in Japan's logistics industry and other prevailing Company-wide challenges, providing high value-added services, clarifying medium- to long-term contracting and logistics business strategies including development of new business models, and optimally devoting management resources. In addition, we have made substantial progress with increasing profitability in the airport-related business due to factors such as a rebound in international passenger flights, revision of unit prices and area expansion. The Group will continue to endeavor to reinforce the structure and expand its domain for further resumption of international passenger flights and sustained development of the ground handling business.
   With respect to financial results for the nine months ended December 31, 2023, net sales decreased to ¥235,875 million (0.5% decrease year on year). This result was mainly attributable to the significant negative impact of a downturn in demand for maritime and air cargo along with a decrease in freight rates, despite factors that include gains in transaction volume due to resumption of international passenger flights in the airport-related business, unit price hikes mainly in production contract work, ongoing acquisition of major spot work, recovering production among the Company's customers, a production boost by its customers in part because of extreme heat, and orders for large projects in the engineering-related business.
   In terms of profits, the Company reported operating profit of ¥13,253 million (22.9% increase), ordinary profit of ¥13,450 million (15.7% increase), and profit attributable to owners of parent of ¥8,559 million (23.6% increase), despite having encountered persistently high fuel prices and electricity fees. The increases in profits were partially attributable to effects of increasing profitability centered on the airport-related business, and also attributable to progress achieved with ongoing efforts to improve profitability, which constitutes a basic policy under the New Medium-Term Management Plan FY3/2023 - FY3/2025, launched in April 2022, as well as progress achieved in receiving appropriate unit prices and streamlining operations.
   Financial results by segment are as follows. Note that segment profit represents operating profit before deducting general and administrative expenses.
2. 1. Integrated Solutions Business
      Net sales increased 6.6% year on year to ¥151,999 million due to contributions from the resumption of international passenger flights in its airport-related business, ongoing acquisition of major spot work and unit price hikes associated with production contract work in its steel-related business, increases in transaction volume resulting from a production boost by the Company's customers due to factors such as extreme heat as well as operations at new business sites in its food products-related business, and orders for large-scale construction projects in its engineering-related business, although earthquake reconstruction work was completed in September 2022 and the Company no longer has business dealings with some customers.
      Profit rose 29.1% year on year to ¥13,264 million mainly due to the effects of increasing profitability in the airport-related business as well as due to receiving appropriate unit prices and thorough operational streamlining, despite having encountered persistently high fuel prices and
   2. • 2 -

electricity fees and having incurred expenses for substantial repairs of a distribution center warehouse.

1. 1. Domestic Logistics Business
      Net sales increased 2.7% year on year to ¥40,863 million due in part to higher transaction volume in the food-related (temperature controlled) business largely associated with operations of new temperature-controlled warehouses, and also due to higher transaction volume in the life-related business particularly with respect to gas appliances and souvenirs.
      Profit rose 2.9% year on year to ¥2,586 million due to the effects of the increase in net sales as well as our efforts to increase profitability by receiving appropriate unit prices and thorough operational streamlining, despite having encountered persistently high fuel prices and electricity fees.
   2. International Logistics Business
      Net sales decreased 21.5% year on year to ¥42,992 million, mainly due to the significant negative impact of a downturn in demand for maritime and air cargo along with a decrease in freight rates, despite higher warehousing and transportation volume in the United States, India, Thailand and elsewhere.
      Profit decreased 11.9% year on year to ¥2,334 million in part due to lower transaction volume.
2. Explanation of financial position
3. 1. Total assets
      As of December 31, 2023, total assets amounted to ¥273,854 million, an increase of ¥7,832 million in comparison with total assets as of March 31, 2023.
   2. Current assets
      As of December 31, 2023, current assets amounted to ¥137,836 million, an increase of ¥5,582 million compared to current assets as of March 31, 2023. This result is mainly attributable to an increase of ¥4,548 million in notes and accounts receivable - trade, and contract assets and an increase of ¥983 million in other under current assets.
   3. Non-currentassets
      As of December 31, 2023, non-current assets amounted to ¥136,017 million, an increase of ¥2,250 million in comparison with non-current assets as of March 31, 2023. This result is mainly attributable to an increase of ¥1,993 million in land, an increase of ¥1,195 million in construction in progress, an increase of ¥1,083 million in investment securities, and a decrease of ¥1,543 million in deferred tax assets.
   4. Current liabilities
      As of December 31, 2023, current liabilities amounted to ¥50,444 million, a decrease of ¥2,082 million compared to current liabilities as of March 31, 2023. This result is mainly attributable to a decrease of ¥2,704 million in income taxes payable, a decrease of ¥2,555 million in accrued expenses, a decrease of ¥1,743 million in current portion of long-term borrowings, and an increase of ¥4,262 million in other under current liabilities.
   5. • 3 -

1. 1. Non-currentliabilities
      As of December 31, 2023, non-current liabilities amounted to ¥89,444 million, a decrease of ¥256 million compared to non-current liabilities as of March 31, 2023. This result is mainly attributable to a decrease of ¥637 million in long-term borrowings, an increase of ¥260 million in retirement benefit liability, and an increase of ¥98 million in deferred tax liabilities.
   2. Net assets
      As of December 31, 2023, net assets amounted to ¥133,965 million, an increase of ¥10,171 million in comparison with net assets as of March 31, 2023. This result is mainly attributable to an increase of ¥6,130 million in retained earnings and an increase of ¥3,029 million in foreign currency translation adjustment.
2. Explanation of the forecast of consolidated financial results and other forward-looking statements
   With respect to the forecast of consolidated financial results for the fiscal year ending March 31, 2024, net sales are expected to be higher than the figure in the previously announced forecast mainly due to a higher-than-expected percentage resumption of international passenger flights in the airport-related business and the acquisition of spot work in the steel-related and engineering-related businesses. Although non-operating income has decreased mainly due to lower-than-expected foreign exchange gains as a result of fluctuations in currency exchange rates, the Company expects operating profit, ordinary profit and profit attributable to owners of parent to exceed the figures in the previously announced forecast due to the effects of the increase in net sales. Accordingly, the Company has revised figures in the forecast of consolidated financial results for the fiscal year.
   For details, please refer to the "Notice Concerning Revisions to Forecast of Financial Results and Dividend Forecast" (in Japanese) announced today (March 14, 2024).
3. Basic policy for profit allocation, and dividends for the current fiscal year
   The Company's basic policy is to aim to realize dividends in a continuous and stable manner and in response to financial results and earnings conditions while enhancing internal reserves, comprehensively taking into account financial results in each fiscal year, strengthening of financial structure, medium- to long-term business strategies, and other matters. Based on this policy, the Company plans to pay dividends of ¥62 (consisting of ¥24 in interim dividend and ¥38 in year-end dividend) per share for the fiscal year ending March 31, 2024.

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2. Quarterly consolidated financial statements and significant notes thereto

(1) Quarterly consolidated balance sheets

		(Millions of yen)
	As of March 31, 2023	As of December 31, 2023
Assets
Current assets
Cash and deposits	69,381	69,522
Notes and accounts receivable - trade, and contract	57,586	62,134
assets
Costs on construction contracts in progress	91	155
Supplies	1,843	2,000
Other	3,576	4,559
Allowance for doubtful accounts	(224)	(536)
Total current assets	132,254	137,836
Non-current assets
Property, plant and equipment
Buildings and structures	119,509	122,284
Accumulated depreciation	(76,114)	(79,358)
Buildings and structures, net	43,394	42,925
Machinery, equipment and vehicles	52,757	53,888
Accumulated depreciation	(41,547)	(42,767)
Machinery, equipment and vehicles, net	11,209	11,121

Land

Leased assets

Accumulated depreciation

Leased assets, net

Construction in progress

Other

Accumulated depreciation

Other, net

Total property, plant and equipment

Intangible assets

Goodwill

Other

Total intangible assets

Investments and other assets

Investment securities

Long-term loans receivable

Deferred tax assets

Retirement benefit asset

Other

Allowance for doubtful accounts Total investments and other assets

Total non-current assets

Total assets

41,798	43,792
5,471	5,890
(2,741)	(3,043)
2,729	2,847
869	2,064
9,686	10,003
(7,798)	(8,086)
1,887	1,916
101,889	104,668
1,568	1,394
4,528	4,164
6,097	5,558
12,610	13,694
304	282
5,593	4,049
147	165
7,280	7,754
(155)	(156)
25,781	25,790
133,767	136,017
266,022	273,854

- 5 -

			(Millions of yen)
		As of March 31, 2023	As of December 31, 2023
Liabilities
Current liabilities
Notes and accounts payable - trade	15,110	14,000
Short-term borrowings	6,636	8,630
Current portion of long-term borrowings	3,869	2,125
Provision for bonuses for directors (and other	387	164
officers)
Accrued expenses	11,875	9,320
Income taxes payable	3,501	796
Other	11,145	15,407
Total current liabilities	52,526	50,444
Non-current liabilities
Bonds payable	55,000	55,000
Long-term borrowings	5,737	5,100
Lease liabilities	2,488	2,509
Deferred tax liabilities	581	679
Deferred tax liabilities for land revaluation	1,087	1,087
Retirement benefit liability	21,244	21,504
Retirement allowance for directors	118	78
Long-term accounts payable - other	640	630
Other	2,802	2,855
Total non-current liabilities	89,701	89,444
Total liabilities	142,228	139,889
Net assets
Shareholders' equity
Share capital	1,723	1,723
Capital surplus	1,908	1,914
Retained earnings	121,235	127,365
Treasury shares	(6,475)	(6,400)
Total shareholders' equity	118,391	124,603
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	4,284	4,895
Revaluation reserve for land	(5,482)	(5,482)
Foreign currency translation adjustment	4,086	7,115
Remeasurements of defined benefit plans	14	154
Total accumulated other comprehensive income	2,903	6,683
Non-controlling interests	2,498	2,677
Total net assets	123,793	133,965
Total liabilities and net assets		266,022	273,854

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1. Quarterly consolidated statements of income and comprehensive income Quarterly consolidated statements of income (cumulative)

			(Millions of yen)
		Nine months ended	Nine months ended
		December 31, 2022	December 31, 2023
Net sales	237,119	235,875
Cost of sales	215,445	210,268
Gross profit	21,673	25,607
Selling, general and administrative expenses	10,892	12,354
Operating profit	10,781	13,253
Non-operating income
Interest income	60	110
Dividend income	427	408
Foreign exchange gains	185	270
Subsidies for employment adjustment	302	5
Other	347	160
Total non-operating income	1,323	955
Non-operating expenses
Interest expenses	201	213
Share of loss of entities accounted for using equity	188	167
method
Provision of allowance for doubtful accounts	7	307
Other	81	68
Total non-operating expenses	479	758
Ordinary profit	11,624	13,450
Extraordinary income
Gain on sale of non-current assets	163	17
Gain on sale of investment securities	4	-
Total extraordinary income	167	17
Extraordinary losses
Loss on sale and retirement of non-current assets	233	27
Loss on valuation of investment securities	1	2
Impairment losses	340	-
Loss on revision of retirement benefit plan	-	48
Other	0	-
Total extraordinary losses	576	78
Profit before income taxes	11,215	13,389
Income taxes - current	3,135	3,442
Income taxes - deferred	1,104	1,266
Total income taxes	4,240	4,709
Profit	6,975	8,679
Profit attributable to non-controlling interests	48	120
Profit attributable to owners of parent		6,926	8,559

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