Krosaki Harima : Summary of Consolidated Financial Statements for the Fiscal Year Ended March 2023

Note: This document has been translated from part of the original Japanese version into English for reference purposes only. If there are conflicts between this translated document and the original Japanese version, the original Japanese version shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from this translation.

Summary of Consolidated Financial Statements for the Fiscal Year Ended March 2023

[Japanese Standards]

		May 12, 2023
Listed Company Name: KROSAKI HARIMA CORPORATION
	Listed on the Tokyo Stock Exchange and the Fukuoka Stock Exchange
Securities Code:	5352	URL: https://www.krosaki.co.jp/
Representative:	Kazuhiro Egawa, President

Date to hold the Ordinary General Meeting of Shareholders to approve results:	June 29, 2023
Date to start distributing dividends:	June 30, 2023
Date to submit the Securities Report:	June 29, 2023

Supplementary documents for this summary of financial statements: Yes

Explanation meeting for institutional investors and analysts on this summary of financial statements: Yes

(Figures shown are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022, to March 31, 2023)

(1) Consolidated Business Results						(Percentages indicate changes from the same period of the previous fiscal year.)
						Net sales					Operating profit					Ordinary profit
				Millions of yen	%	Millions of yen	%		Millions of yen	%
Fiscal Year Ended March 2023			165,202	23.5	11,173	47.7				12,083	39.2
Fiscal Year Ended March 2022			133,778	17.7	7,566	52.9				8,679	36.4
				Profit attributable to owners		Profit per share			Diluted profit per share
						of parent
				Millions of yen	%					Yen							Yen
Fiscal Year Ended March 2023			8,282	50.8					983.46							-
Fiscal Year Ended March 2022			5,490	26.7					651.91							-
Note: Comprehensive income was		¥12,168 million (55.7%) for the	fiscal year ended March 2023 and	¥7,815 million (3.1%) for the
fiscal year ended March 2022.
				Rate of return on equity	Ordinary profit to total assets		Operating profit to net sales
																						%
							%					%
Fiscal Year Ended March 2023						11.9					7.9							6.8
Fiscal Year Ended March 2022						8.8					6.4							5.7
Reference: Share of profit of entities accounted for using equity method was ¥423 million for the fiscal year ended March 2023 and
¥444 million for the fiscal year ended March 2022.
(2) Consolidated Financial Position
				Total assets				Net assets		Equity ratio				Net assets per share
				Millions of yen				Millions of yen					%				Yen
	March 31, 2023		163,340				77,858					45.0				8,731.68
	March 31, 2022		142,694				69,084					45.8				7,759.14
Reference: Equity capital was ¥73,528 million as of March 31, 2023, and ¥65,344 million as of March 31, 2022.
(3) Consolidated cash flows
				Cash flows from			Cash flows from		Cash flows from		Cash and cash
								equivalents at end of
				operating activities		investing activities		financing activities
								period
				Millions of yen				Millions of yen		Millions of yen			Millions of yen
	Fiscal Year Ended March 2023		1,001				(4,514)		2,863				4,425
	Fiscal Year Ended March 2022		4,120				(3,608)		(1,022)			5,012
2.	Dividends
													Dividend
						1Q End		2Q End		3Q End			Year-End		Annual
						Yen			Yen		Yen					Yen		Yen
Fiscal Year Ended March 2022				-		100.00			-				100.00		200.00
Fiscal Year Ended March 2023				-		110.00			-				180.00		290.00
Fiscal Year Ending March 2024 (Forecast)		-			-		-					-		300.00
						Total dividends			Payout ratio		Dividends to	net assets
						(annual)			(consolidated)				(consolidated)
						Millions of yen		%						%
Fiscal Year Ended March 2022							1,684				30.7						2.7
Fiscal Year Ended March 2023							2,442				29.5						3.5
Fiscal Year Ending March 2024 (Forecast)									29.7

*The forecast of the interim and year-end dividends for the fiscal year ending March 2024 have not yet been determined because a decision will be made by closely observing the trends of business results. Each of these dividend forecasts will be disclosed when it becomes possible to do so.

3. Forecast of Consolidated Business Results for the Fiscal Year Ending March 31, 2024 (April 1, 2023, to March 31, 2024)

(The percentages indicate the rates of increase or decrease compared with the preceding fiscal year.)

	Net sales		Operating profit		Ordinary profit
Full Year	Millions of yen	%	Millions of yen	%	Millions of yen	%
170,000	2.9	12,500	11.9	12, 500	3.4
	Profit attributable to owners	Profit per share
	of parent
Full Year	Millions of yen	%		Yen
8,500	2.6	1,009.34

* For details, see "(4) Outlook for the Future" under "1. Overview of Business Results, etc." on page 4 of the attachment.

Notes:

1. Changes in important subsidiaries involving a change in the scope of consolidation during the period: None (Changes in specified subsidiaries involving a change in the scope of consolidation)
2. Changes in accounting policies or estimates and retrospective restatements
3. 1. Changes in accounting policies in accordance with revision of accounting standards: Yes
   2. Changes in accounting policies other than above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatements: None

(Note)

For details, see "(5) Notes to the Consolidated Financial Statements" under "3. Consolidated Financial Statements and Major Notes" on page 12 of the attachment.

(3) Number of shares issued and outstanding (common stock)
1.	Number of shares issued and outstanding as of the period-end (including treasury shares):
	Fiscal Year ended March 2023:	9,114,528	Fiscal Year ended March 2022:	9,114,528
2.	Number of treasury shares as of the period-end:
	Fiscal Year ended March 2023:	693,629	Fiscal Year ended March 2022:	692,845
3. Average number of shares outstanding:
	Fiscal Year ended March 2023:	8,421,363	Fiscal Year ended March 2022:	8,422,186

(Reference) Summary of Non-Consolidated Financial Results

1. Non-Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022, to March 31, 2023)

1. Non-ConsolidatedBusiness Results (The percentages indicate the rates of increase or decrease compared with the preceding fiscal year.)

	Net sales		Operating profit		Ordinary profit
	Millions of yen	%	Millions of yen	%	Millions of yen	%
Fiscal Year Ended March 2023	100,357	11.4	4,806	23.1	6,591	14.6
Fiscal Year Ended March 2022	90,097	12.0	3,904	17.2	5,753	(2.6)
	Profit		Profit per share		Diluted profit per share
	Millions of yen	%		Yen		Yen
Fiscal Year Ended March 2023	5,223	(12.5)		620.23		-
Fiscal Year Ended March 2022	5,972	29.4		709.15		-

(2) Non-Consolidated Financial Position

	Total assets	Net assets	Equity ratio	Net assets per share
	Millions of yen	Millions of yen	%	Yen
March 31, 2023	125,673	63,625	50.6	7,555.71
March 31, 2022	110,994	58,504	52.7	6,946.90

Reference: Equity capital was ¥63,625 million as of March 31, 2023, and ¥58,504 million as of March 31, 2022.

The Summary of Consolidated Financial Statements is exempt from auditing by Certified Public Accountants or an Audit Corporation.

Statement regarding the proper use of financial forecasts and other special remarks:

Forward-looking statements, including the forecast of business results, in this Summary are based on information that has been obtained by the Company to date and certain assumptions that are deemed as reasonable, and the Company does not guarantee the realization of these statements. Please understand that actual results may differ significantly from those statements due to various factors. For details of the forecast of business results, see "(4) Outlook for the Future" under "1. Overview of Business Results, etc." on page 4 of the attachment.

Contents of the Attachment
1. Overview of Business Results, etc	2
(1)	Overview of Business Results for the Fiscal Year under Review	2
(2)	Overview of Financial Position for the Fiscal Year under Review	3
(3)	Overview of Cash Flows for the Fiscal Year under Review	4
(4)	Outlook for the Future	4
2. Basic Policy on the Selection of Accounting Standards	4
3. Consolidated Financial Statements and Major Notes	5
(1)	Consolidated Balance Sheets	5
(2)	Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ..	7
(3)	Consolidated Statements of Changes in Net Assets	9
(4)	Consolidated Statements of Cash Flows	11
(5)	Notes to the Consolidated Financial Statements	12
	(Notes on Going Concern Assumption)	12
	(Changes in Accounting Policies)	12
	(Changes in Presentation)	12
	(Segments of an Enterprise and Related Information)	12
	(Per Share Information)	15
	(Significant Subsequent Events)	15
4. Others	15

1

1. Overview of Business Results, etc.

(1) Overview of Business Results for the Fiscal Year under Review

During the fiscal year ended March 31, 2023 (April 1, 2022 to March 31, 2023), the Japanese economy continued to face uncertain outlook due to the ongoing high prices of raw materials around the world as well as inflation, rising interest rates and the yen's sharp fall arising from the hike in energy and food prices, which was triggered by Russia's invasion of Ukraine, among other factors.

The steel industry, the Group's main customers, also saw a decline in demand for steel both in Japan and overseas, with the exception of some regions, mainly due to the continued cuts in automobile production against the backdrop of semiconductor shortages and other disruptions in the parts supply chain. Domestic total crude steel output in the fiscal year ended March 31, 2023 decreased by 8.1% year on year to 87.85 million tons. Worldwide crude steel output from January to December 2022, as announced by the World Steel Association, decreased by 4.2% year on year to 1,878.50 million tons, despite an increase of 5.5% year on year to 124.70 million tons in India.

Under these unfavorable circumstances, the Group has worked on various measures with a view to establishing itself as one of the world's finest ceramic companies, which is the basic policy of the Krosaki Harima Group 2025 Management Plan. As a result, the Group achieved a record high in both net sales and profit.

The business performance of the Group in the fiscal year under review was as follows. [Net Sales]

The Group's consolidated net sales increased by 23.5% from a year earlier to ¥165,202 million. This was mainly attributable to steadily passing the cost increases on to selling prices as well as domestic and overseas expansion of business in the Refractories segment, and orders received for large-scale construction projects in the Furnace segment.

[Profit/Loss]

Due to the Group's self‐help efforts for the productivity improvement and the manufacturing cost reduction in addition to the increase in net sales, its consolidated operating profit increased by 47.7% from a year earlier to ¥11,173 million, ordinary profit increased by 39.2% to ¥12,083 million. The Group's consolidated profit attributable to owners of parent increased by 50.8% to ¥8,282 million.

Operating results for each business segment are as follows.

The net sales of each segment represent sales to external customers and do not include inter-segment sales or transfers. The amounts of segment profit are based on operating profit.

[Refractories] (Manufacturing and sale of overall refractories used for various industrial furnaces)

Net sales in the Refractories segment increased by 27.0% from a year earlier to ¥140,538 million and segment profit increased by 64.2% from a year earlier to ¥8,458 million. This was mainly attributable to the Group's efforts to expand business in the strong Indian steel market and to expand sales to non-ferrous metals fields, in addition to steady efforts to pass the rising price of raw material and other cost increases on to selling prices both in Japan and overseas.

[Furnace] (Design, construction and repairs of various furnaces)

Net sales in the Furnace segment increased by 10.6% from a year earlier to ¥14,627 million and segment

2

profit increased by 51.1% from a year earlier to ¥1,009 million owing to orders received for large-scale construction projects including a boiler project for biomass power generation as well as to cost reduction and other efforts, although there was a decline in orders received for maintenance work for steel manufacturing facilities resulting from a drop in crude steel output.

[Ceramics] (Manufacturing and sale of ceramics for various industries and sale of landscape materials)

Net sales in the Ceramics segment decreased by 0.2% from a year earlier to ¥8,471 million and segment profit decreased by 5.5% from a year earlier to ¥1,063 million. This was mainly attributable to the decline in orders received for ceramic materials for electronic components as customers worked to adjust their supply and demand.

[Real Estate] (Renting out stores and warehouses, etc.)

Net sales in the Real Estate segment remained unchanged from a year earlier at ¥737 million. Segment profit increased by 0.5% from a year earlier to ¥595 million.

[Others] (Manufacturing and sale of lime for iron mills)

Net sales in Others segment increased by 23.7% from a year earlier to ¥826 million. Segment profit increased by 13.3% from a year earlier to ¥40 million.

1. Overview of Financial Position for the Fiscal Year under Review
2. 1. Assets

The Group's consolidated total assets at the end of the fiscal year ended March 2023 increased by ¥20,646 million from the previous year-end to ¥163,340 million. Current assets increased by ¥16,895 million to ¥108,224 million, and non-current assets increased by ¥3,750 million to ¥55,116 million.

A primary factor for the increase in current assets was an increase in notes and accounts receivable - trade, and contract assets mainly due to an increase in net sales. The main factors for the increase in non-current assets were an increase in buildings and structures due to acquisition of warehouses, etc. and an increase in machinery, equipment and vehicles due to acquisition of manufacturing facilities, etc.

2) Liabilities

The Group's consolidated total liabilities at the end of the fiscal year ended March 2023 increased by ¥11,872 million from the previous year-end to ¥85,481 million. Current liabilities increased by ¥12,766 million to ¥61,177 million, and non-current liabilities decreased by ¥894 million to ¥24,304 million.

A primary factor for the increase in current liabilities was an increase in commercial papers. The main factor for the decrease in non-current liabilities was a decrease in long-term borrowings.

3) Net assets

The Group's consolidated net assets at the end of the fiscal year ended March 2023 increased by ¥8,774 million from the previous year-end to ¥77,858 million.

A primary factor for the increase in net assets was an increase in retained earnings due to the recording of profit attributable to owners of parent.

As a result, the Group's equity ratio at the end of the fiscal year ended March 2023 was 45.0%. Net assets per share increased from ¥7,759.14 at the previous year-end to ¥8,731.68.

3