Q2 Financial Results

Makita Corporation

Consolidated Financial Results

for the six months

ended September 30, 202１

(IFRS Financial Information)

(English translation of "KESSAN TANSHIN"

originally issued in Japanese)

CONSOLIDATED FINANCIAL RESULTS

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (Unaudited)

October 28, 2021

Makita Corporation

Stock code: 6586

URL: https://www.makita.co.jp/

Munetoshi Goto, President, Representative Director

1. Summary operating results of the six months ended September 30, 2021 (From April 1, 2021 to September 30, 2021)

(1) CONSOLIDATED OPERATING RESULTS

		Yen (millions)
	For the six months ended		For the six months ended
	September 30, 2020		September 30, 2021
		(%)			(%)
................................................................Revenue	283,156	16.3		364,230	28.6
....................................................Operating profit	38,165	17.7		52,160	36.7
Profit before income taxes ....................................	38,273	11.0		52,600	37.4
Profit .....................................................................	27,352	8.8		38,165	39.5
Profit attributable to owners of the parent ............	27,141	8.7		37,820	39.3
Comprehensive income ........................................	35,225	-		42,198	19.8
Profit attributable to			Yen
owners of the parent per share
(Basic)..................................................................	99.96		139.29
(Diluted) ..............................................................	-		-

Notes:

1. Amounts of less than one million yen have been rounded.
2. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes, profit, profit attributable to owners of the parent, and comprehensive income against the corresponding period of the previous year.

1. SELECTED CONSOLIDATED FINANCIAL POSITION

	Yen (millions)
	As of March 31, 2021			As of September 30, 2021
Total assets............................................................	812,878		850,842
Total equity ...........................................................	663,326			689,518
Equity attributable to owners of the parent...........	657,855			683,657
Ratio of equity attributable to owners of the	80.9%
parent to total assets (%).......................................			80.4%
2. Dividend Information
		Yen
	For the year ended			For the year ending
			March 31, 2022
	March 31, 2021
			(Forecast)
Cash dividend per share:
Interim.................................................................	10.00	10.00
Year-end ..............................................................	59.00			(Note)
Total ....................................................................	69.00			(Note)

Notes:

1. The forecast for cash dividend announced formerly has not been revised.
2. The projected amount of dividends for the year ending March 31, 2022 has not been determined yet. For further details, refer to "Explanation regarding proper use of business forecast, and other significant matters" on page 2.

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English translation of "KESSAN TANSHIN" originally issued in Japanese

3. Consolidated Financial Performance Forecast for the year ending March 31, 2022 (From April 1, 2021 to March 31, 2022)

	Yen (millions)
	For the year ending
	March 31, 2022
		(%)
Revenue..................................................................................................................	690,000	13.4
Operating profit......................................................................................................	90,000	1.7
Profit before income taxes .....................................................................................	90,000	3.2
Profit attributable to owners of the parent..............................................................	65,000	4.8
	Yen
Profit attributable to owners of the parent per share ..............................................	239.38

Notes:

1. Changes of the forecasts from the most recent disclosure: Yes
2. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes and profit attributable to owners of the parent against the previous year.

4. Other

1. Changes in important subsidiaries during the period (Changes in specified subsidiaries accompanied by changes in scope of consolidation during the quarter): None
2. Changes in accounting policies and accounting estimates:
3. 1. Changes in accounting policies required by IFRS: None
   2. Changes in accounting policies other than 1: None
   3. Changes in accounting estimate: None
4. Number of shares outstanding (common stock)

1.	Number of shares issued (including treasury stock):	As of September 30, 2021:	280,017,520
		As of March 31, 2021:	280,017,520
2.	Number of treasury stock:	As of September 30, 2021:	8,484,811
		As of March 31, 2021:	8,490,396
3. Average number of shares outstanding:	For the six months ended
		September 30, 2021:	271,529,324
		For the six months ended
		September 30, 2020:	271,521,377

This consolidated financial report is not subject to audit procedures by certified public accountants or an auditing firm.

Explanation regarding proper use of business forecasts, and other significant matters

1. The financial forecast given above is based on information as available at the present time, and includes potential risks and uncertainties. As a consequence of the factors above and other, actual results may vary from the forecasts provided above. Regarding the assumptions for the forecasts and other matters, refer to "SUPPLEMENT INFORMATION (CONSOLIDATED)", "(3). Outlook for the fiscal year ending March 31, 2022" on page 4.
2. Makita's basic policy on the distribution of profits is to maintain a consolidated dividend payout ratio of 30% or greater, with a lower limit on annual cash dividends of 10 yen per share. However, in the event special circumstances arise, computation of the amount of dividends will be based on profit attributable to owners of the parent per share after certain adjustments.
   The Board of Directors plans to meet in April 2022 for a report on earnings for the year ending March 31, 2022. At the time, in accordance with the basic policy regarding profit distribution mentioned above, the Board of Directors plans to propose a dividend equivalent to at least 30% of profit attributable to owners of the parent. The Board of Directors will submit this proposal to the General Meeting of Shareholders scheduled for June 2022.

The consolidated dividend payout ratio is calculated as annual dividends per share divided by consolidated profit attributable to owners of the parent per share (after adjustments for special circumstances) and multiplied by 100.

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English translation of "KESSAN TANSHIN" originally issued in Japanese

SUPPLEMENT INFORMATION (CONSOLIDATED) 1. Overview of operating results

(1) Explanation of Consolidated Operating Results

Looking at the global economic situation during the six-month period (the "period") ended September 30, 2021, economic recovery progressed in the U.S., China and elsewhere as COVID-19 vaccinations spread and behavioral restrictions were gradually eased in many countries. The outlook for the future remains uncertain, however, due to a resurgence of new cases caused by coronavirus variants and the intensifying conflict between the U.S. and China.

In this situation, the Makita Group focused on expanding its lineup of cordless products including power tools and outdoor power equipment in the "40Vmax Lithium-ion Battery" series.

We worked to multipolarize global production and enhance production capacity in response to the diversification of product groups and the expansion of demand.

We also work to increase the level of the community-based and customer-oriented service framework and deepen and develop the market centered on cordless products.

Our consolidated revenue for this period increased by 28.6% to 364,230 million yen compared with the same period of previous year with strong sales both in Japan and overseas. Operating profit also increased by 36.7% to 52,160 million yen (operating profit ratio: 14.3%) owing to the increase in revenue and the impact of foreign exchange rates although costs increased due to soaring transportation costs. Profit before income taxes increased by 37.4% to 52,600 million yen (profit before income taxes ratio: 14.4%) and profit attributable to owners of the parent increased by 39.3% to 37,820 million yen (ratio of profit attributable to owners of the parent: 10.4%).

Revenue results by region were as follows:

In Japan, sales of both power tools and outdoor power equipment, particularly lithium-ion battery products, were strong and increased by 8.7% compared with the same period of previous year to 60,611 million yen.

In Europe, while stay-at-home demand slowed down, demand for tools at active building and construction sites and sales of cordless outdoor power equipment continued to be strong, resulting in an increase in sales of 35.9% year on year to 177,829 million yen.

In North America, sales of power tools accompanied by strong housing demand and sales of cordless outdoor power equipment were strong, resulting in an increase in sales of 25.6% year on year to 52,259 million yen.

In Asia, COVID-19 cases increased again in various regions affecting our sales activities, but sales in China and Taiwan were strong, resulting in an increase in sales of 19.5% year on year to 22,430 million yen.

In Central and South America, the situation of the spread of COVID-19 infection calmed down and demand for tools at increasingly active building and construction sites increased in each country, resulting in an increase in sales of 68.2% year on year to 21,205 million yen.

In Oceania, sales increased by 21.4% year on year to 23,265 million yen due to strong demand for tools at building and construction sites despite the impact of lockdowns due to the resurgence of new cases of infection in major cities.

In the Middle East and Africa, sales increased by 52.7% year on year to 6,631 million yen as the demand for tools at building and construction sites in each country was captured although unstable political and economic conditions continued.

(Efforts for carbon neutrality)

As the impact of climate change on society such as frequent wind and flood damage is getting enormous, the role that companies must play in realizing a decarbonized society is becoming more important. Based on these circumstances, we will accelerate our efforts for carbon neutrality. We have strengthened efforts to reduce greenhouse gas emissions such as the use of renewable energy and have established a framework to promote carbon neutrality by setting up a new Sustainability Committee chaired by the President. We are also currently working to set reduction targets in order to steadily implement efforts to reduce greenhouse gas emissions.

Furthermore, we expressed our support for the recommendations of the "Task Force on Climate-related Financial Disclosures (TCFD)." This is based on the recognition that it is important to engage in dialogue with our stakeholders by analyzing climate change risks and opportunities related to our business and disclosing information on the impact of such risks and opportunities on our business activities.

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English translation of "KESSAN TANSHIN" originally issued in Japanese

We will continue to consider response to environmental issues such as decarbonization as an important theme, promote reduction of environmental burden, contribute to the realization of a sustainable society and strengthen information disclosure such as disclosure based on the TCFD recommendations.

(2) Explanation of Consolidated Financial Position

Total assets increased 37,964 million yen from the end of the previous fiscal year to 850,842 million yen. This increase was mainly due to the rise in "Inventories."

Total liabilities increased 11,772 million yen from the end of the previous fiscal year to 161,324 million yen. This increase was mainly due to the rise in "Borrowings."

Total equity increased 26,192 million yen from the end of the previous fiscal year to 689,518 million yen. This increase was mainly due to the rise in "Retained earnings."

(3) Outlook for the fiscal year ending March 31, 2022

We have revised our consolidated financial forecast because sales in the period were stronger than expected in response to demand for tools at building and construction sites and the exchange rate against the yen was weaker than the assumption announced on July 30, 2021. On the other hand, we anticipate that the cost-of-sales ratio will deteriorate due to soaring transportation costs as well as the influence of foreign exchange rates.

Revised forecast for consolidated performance of the fiscal year ending March 31, 2022 (From April 1, 2021 to March 31, 2022)

			Yen (millions)				Yen
									Profit
							Profit		attributable to
	Revenue		Operating		Profit before		attributable		owners of the
			profit		income taxes		to owners of		parent per
							the parent		share (Basic)
Forecast announced previously (A) ......	650,000	88,500	88,000	63,200	232.76
Revised forecast (B) ............................	690,000	90,000	90,000	65,000	239.38
Changes (B-A)......................................	40,000	1,500	2,000	1,800	-
Percentage change ................................	6.2%	1.7%	2.3%	2.8%	-
Actual results for the previous year
ended March 31, 2021 ..........................	608,331	88,464	87,199	62,018	228.41

The above forecasts are based on the assumption that economic activities will not stagnate again due to restrictions in response to the spread of the COVID-19. In addition, the assumed exchange rates applied in the forecast calculation are as follows;

[Preconditions]

The above forecast is based on the assumption of exchange rates of 110 yen to the U.S. dollar, 130 yen to the euro and 17.2 yen to the renminbi for the remaining six months period ending March 31, 2022.

The above forecast is based on the assumption of exchange rates of 110 yen to the U.S. dollar, 130 yen to the euro and 17.1 yen to the renminbi for the year ending March 31, 2022.

[Reference]

The exchange rates for previously announced forecasts that we announced on July 30, 2021 were 106 yen to the U.S. dollar, 127 yen to the euro and 16.4 yen to the renminbi for the year ending March 31, 2022.

(Note)

The above forecasts are made based on the information available at this time and include potential risks and uncertainties, so the actual results may differ from the forecast due to various factors such as the timing of the COVID-19 comes to an end.

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English translation of "KESSAN TANSHIN" originally issued in Japanese