Morito : Consolidated Financial Results for the First Quarter of the Fiscal Year Ended November 30, 2023

Consolidated Financial Results for the First Quarter of the Fiscal Year

Ending November 30, 2023 [Japanese GAAP]

					April 13, 2023
			Stock		Tokyo Stock
Company name:	Morito Co., Ltd.	exchange
	Exchange
			listing:
Code number:	9837		URL https://www.morito.co.jp
Representative: Takaki Ichitsubo, Representative Director, CEO
	Kiyomi Akui, Director, Senior Executive Officer, Division		+81-6-6252-
Contact:	Manager of Corporate Administrative Division and Division	Phone:
3551
	Manager of Business Management Division
Scheduled date of filing	April 14, 2023	Scheduled date of commencing -
quarterly securities report:		dividend payments:
Availability of supplementary briefing material on quarterly financial results:	Available
Schedule of quarterly financial results briefing session:	None scheduled

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending November 30, 2023 (December 1, 2022 to February 28, 2023)

(1)	Consolidated Operating Results	(% indicates changes from the previous corresponding period.)
											Profit attributable
			Net sales	Operating profit		Ordinary profit	to owners of
											parent
			Million yen		%	Million yen	%		Million yen	%	Million yen		%
1Q of FY 2023		11,804		2.1	619	1.5		661	0.9	516		14.9
1Q of FY 2022		11,561		8.8	610	28.9		655	35.0	449		55.6
(Note) Comprehensive income: 1Q of FY 2023 ¥(150) million [-%]	1Q of FY 2022 ¥537 million yen [97.8%]
			Basic earnings per	Diluted earnings per
			share	share
					Yen		Yen
1Q of FY 2023				19.31		-
1Q of FY 2022				16.53		-
(2)	Consolidated Financial Position
			Total assets	Net assets		Equity ratio
					Million yen		Million yen			%
1Q of FY 2023				48,272		36,083			74.6
FY 2022				50,271		36,684			72.9
(Reference) Equity:	1Q of FY 2023			¥36,034 million FY 2022	¥36,628 million

2. Dividends

			Annual dividends
		1st quarter-	2nd quarter-	3rd quarter-		Year-end		Total
		end	end	end
		Yen	Yen	Yen			Yen		Yen
FY 2022	-	13.50	-			18.50		32.00
FY 2023	-
FY 2023 (Forecast)		27.00	-			27.00		54.00
(Note)	Revisions to the latest announcement of dividend forecast	:	None

3. Consolidated Financial Results Forecast for the Fiscal Year Ending November 30, 2023 (December 1, 2022 to November 30, 2023)

(% indicates changes from the previous corresponding period.)

									Profit attributable	Basic
		Net sales		Operating profit	Ordinary profit	to owners of	earnings per
									parent		share
		Million yen		%	Million yen	%	Million yen	%	Million yen		%	Yen
Full year	50,000		3.1	2,300	8.6	2,450	4.6	1,800		7.5	67.40
(Note)	Revisions to the latest announcement of performance forecast	:	None

: No

: Yes

* Notes:

(1) Changes in significant subsidiaries during the period under : No review

(changes in specified subsidiaries resulting in changes in the scope of consolidation)

(2) Adoption of special accounting treatment for preparing	: No
quarterly consolidated financial statements

(3) Changes in accounting policies, changes in accounting estimates, and retrospective restatement 1) Changes in accounting policies due to the revision of

accounting standards

2) Changes in accounting policies other than 1) above

3)	Changes in accounting estimates		:	No
4)	Retrospective restatement		:	No
(4) Total number of issued shares (common shares)
1)	Total number of issued shares at the end	February 28, 2023:	30,000,000	November 30, 2022:		30,000,000
	of the period (including treasury shares):
2)	Total number of treasury shares at the	February 28, 2023:	3,232,200	November 30, 2022:		3,295,500
	end of the period:
3)	Average number of shares during the	1Q of the fiscal year			1Q of the fiscal year
ending November	26,731,150	ended November		27,184,425
	period:
	30, 2023:			30, 2022
*	These quarterly consolidated financial results are outside	the scope of audit by	certified public
accountants or audit firms.

* Explanation of the proper use of financial results forecast and other notes

The earnings forecasts and other forward-looking statements herein are based on information currently available and certain assumptions judged to be reasonable. Actual results may differ significantly from these forecasts due to a wide range of factors.

As for suppositions that form the assumptions for the forecast of financial results and cautionary notes concerning the use thereof, please refer to "(2) Forecast of Consolidated Business Results and other Forward-looking Information" in "1. Qualitative Information for the Period under Review" on page 3.

The Company and some of the Morito Group companies have introduced the "Japanese version of the employee stock ownership plan (J-ESOP)" and the "officer remuneration board incentive plan (BIP) trust." Consequently, the shares of the Company held by Custody Bank of Japan, Ltd. (trust account E) and The Master Trust Bank of Japan, Ltd. (officer remuneration BIP trust account), respectively, are included in treasury shares.

○ Table of Contents
1. Qualitative Information for the Period under Review	2
(1)	Overview of Business Results for the Period under Review	2
(2)	Forecast of Consolidated Business Results and other Forward-looking Information	3
2. Quarterly Consolidated Financial Statements and Primary Notes	4
(1)	Quarterly Consolidated Balance Sheets	4
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	6
Quarterly Consolidated Statements of Income	6
Quarterly Consolidated Statements of Comprehensive Income	7
(3)	Notes to the Quarterly Consolidated Financial Statements	8
(Notes on Going Concern Assumption)	8
(Notes on Significant Changes in the Amount of Shareholders' Equity)	8
(Changes in Accounting Policies)	8
(Segment Information, etc.)	9

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1. Qualitative Information for the Period under Review

1. Overview of Business Results for the Period under Review

The operating environment during the first quarter of the fiscal year ending November 30, 2023 (from December 1, 2022 to February 28, 2023) showed signs of a gradual recovery due to the effects of various measures implemented under the "living with COVID-19" policy. However, the outlook for the future remains uncertain due to soaring raw material costs triggered by the situation in Ukraine and other factors, accelerating inflation across the globe, and currency fluctuations.

Working against this backdrop, the Morito Group (the "Group"), which is mainly engaged in apparel, product, and transportation businesses, faced difficult conditions, including soaring raw material prices for its mainstay products, production cutbacks by automakers due to semiconductor shortages, delays in marine transportation, and rising transportation costs, which all kept profits low, as well as stagnant demand caused by slowing consumption in Europe, the U.S., and China. On the other hand, the Group enjoyed favorable sales of accessories and products with superior functionality, including athletic shoes and medical device-related products, which are unaffected by trends. Under its "Rideeco" initiative aimed at realizing a sustainable society, the Group moved forward with the development and sales of environmentally friendly products, using discarded fishing nets and fabric scraps from garment factories, with a focus on winning new business contracts. In addition, the gross profit ratio improved significantly due to an improvement in the cost of sales ratio through price negotiations and an increase in sales of high value-added products. The Group expects profitability to continue to improve in the second quarter and beyond as it makes ongoing efforts to improve the efficiency of logistics operations.

As a result, for the first quarter of the fiscal year under review, net sales increased 2.1% year on year to ¥11,804 million. Operating profit was up 1.5% to ¥619 million, ordinary profit grew 0.9% to ¥661 million, and profit attributable to owners of the parent increased 14.9% to ¥516 million.

Exchange rates used for the conversion of revenue and expenses of the Group's overseas subsidiaries during the preparation of consolidated financial statements for the first quarter of the fiscal year under review are as follows.

	1Q
USD	141.39	(113.71)
EUR	144.26	(130.04)
CNY	19.85	(17.78)
HKD	18.07	(14.60)
TWD	4.51	(4.09)
VND	0.0058	(0.0050)
THB	3.89	(3.41)
MXN	7.19	(5.48)

(Note) The exchange rate of the same period in the previous fiscal year is stated in parentheses.

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Business results by segment are as follows.

Japan

In the Apparel Division, sales of accessories related to working wear and athletic shoes increased.

The Product Division enjoyed increases in sales of medical device-related products, products for one-coin shops (like 100-yen stores), and snowboarding and outdoor products, as well as higher revenues for the kitchen appliance rental, sales, and cleaning business.

In the Transportation Division, sales of automotive interior components to Japanese automotive manufacturers increased.

As a result, net sales grew 7.5% year on year to total ¥8,502 million, and segment profit rose 10.3% year on year to reach ¥527 million.

Asia

In the Apparel Division, sales of accessories for casual wear and working wear sold in the European and U.S. markets declined in China and Hong Kong due to China's zero-COVID policy despite growing sales of baby wear accessories in China and Hong Kong and athletic shoes accessories in Vietnam.

In the Transportation Division, sales of automotive interior components to Japanese automotive manufacturers decreased in China due to the semiconductor shortage and China's zero-COVID policy. As a result, net sales decreased 22.3% year on year to total ¥1,719 million, and segment profit dropped 0.3% year on year to total ¥219 million.

Europe and the U.S.

In the Apparel Division, sales of accessories related to casual wear declined while sales of accessories for leisure products increased.

In the Transportation Division, sales of automotive interior components to Japanese automotive manufacturers increased.

As a result, net sales were up 10.2% year on year to total ¥1,582 million while segment loss came to ¥46 million (segment loss for the same period in the previous fiscal year was ¥18 million).

(2) Forecast of Consolidated Business Results and other Forward-looking Information

The consolidated financial forecast for the fiscal year ending November 30, 2023 remains unchanged from what was announced on January 13, 2023. In the event that COVID-19 or the situation in Ukraine is expected to affect the Group's business performance, information about such an impact will be disclosed as soon as it becomes evident.

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