Morito : Consolidated Financial Results for the Six Months of the Fiscal Year Ending November 30, 2023

Note: This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results for the Six Months of the Fiscal Year Ending

November 30, 2023 [Japanese GAAP]

		July 13, 2023
Company name:	MORITO CO., LTD.	Stock exchange listing: Tokyo Stock Exchange
Code number:	9837	URL: https://www.morito.co.jp
Representative:	Takaki Ichitsubo, Representative Director, CEO
	Kiyomi Akui, Director, Senior Executive Officer, Division Manager of
Contact:	Corporate Administrative Division and Division Manager of Business (Phone) [phone]
	Management Division

Scheduled date of filing	July 14, 2023	Scheduled date of commencing	August 8, 2023
quarterly securities report:		dividend payments:
Availability of supplementary briefing material on quarterly financial results	: Available

Schedule of quarterly financial results briefing session : Yes (for securities analysts and institutional investors) (Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Six Months of the Fiscal Year Ending November 30, 2023 (December 1, 2022 to May 31, 2023)

(1) Consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Six months ended May

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

24,148

4.1

1,305

16.8

1,459

19.6

1,308

48.7

31, 2023

Six months ended May

23,207

9.3

1,117

44.1

1,219

37.8

879

64.9

31, 2022

(Note) Comprehensive income:

Six months ended

781 million yen[ (50.5) %]

Six months ended

1,577 million yen[

12.7%]

May 31, 2023

May 31, 2022

Basic earnings per

Diluted earnings per

share

share

Six months ended May

Yen

Yen

48.93

48.85

31, 2023

Six months ended May

32.51

－

31, 2022

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Six months ended May

Millions of yen

Millions of yen

%

48,546

37,007

76.2

31, 2023

FY2022

50,271

36,684

72.9

(Reference) Equity:

Six months ended

36,975 million yen

FY2022

36,628 million yen

May 31, 2023

2. Dividends

Annual dividends

1st quarter-

2nd quarter-

3rd quarter-

Year-end

Total

end

end

end

Yen

Yen

Yen

Yen

Yen

FY2022

－

13.50

－

18.50

32.00

FY2023

－

27.00

FY2023 (Forecast)

－

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.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of 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

― 1 ―

Notes:
(1) Changes in significant subsidiaries during the period under review (changes in	:	No
specified subsidiaries resulting in changes in the scope of consolidation)
(2) Adoption of special accounting treatment for preparing quarterly consolidated	:	No
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	:	Yes
2)	Changes in accounting policies other than 1) above	:	No
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	May 31, 2023:	30,000,000	November 30, 2022:	30,000,000
	of the period (including treasury shares):
2)	Total number of treasury shares at the	May 31, 2023:	3,212,300	November 30, 2022:	3,295,500
	end of the period:
3)	Average number of shares during the	For the six months of		For the six months of
	period:	the fiscal year ending	26,746,214	the fiscal year ended	27,064,114
		November 30, 2023:		November 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 5.

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.

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Table of Contents
1. Qualitative Information for the Period under Review	4
(1)	Overview of Business Results for the Period under Review	4
(2)	Forecast of Consolidated Business Results and other Forward-looking Information	5
2. Quarterly Consolidated Financial Statements and Primary Notes	6
(1)	Quarterly Consolidated Balance Sheets	6
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	8
	Quarterly Consolidated Statements of Income	8
	Quarterly Consolidated Statements of Comprehensive Income	9
(3)	Consolidated Statements of Cash Flows	10
(4)	Notes to the Quarterly Consolidated Financial Statements	12
	(Notes on Going Concern Assumption)	12
	(Notes on Significant Changes in the Amount of Shareholders'Equity)	12
	(Changes in Accounting Policies)	12
	(Segment Information, Etc.)	13

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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 six months of the fiscal year ending November 30, 2023 (December 1, 2022, to May 31, 2023) remained on a recovery track due to the effects of various measures for 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, the possibility of a downturn in overseas economies (mainly Europe and the U.S.), and currency fluctuations.

Working against this backdrop, the Morito Group (the "Group"), which is mainly engaged in the 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, and other factors, 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, medical-device-related products, and outdoor 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. The Group also enjoyed higher operating profit thanks to the improved gross profit ratio due to increased sales of high-value-added products and the enhanced efficiency of logistics operations.

As a result, for the six months of the fiscal year under review, net sales increased 4.1% year on year to 24,148 million yen. Operating profit was up 16.8% to 1,305 million yen, ordinary profit grew 19.6% to 1,459 million yen, and profit attributable to owners of the parent increased 48.7% to 1,308 million yen.

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 six months of the fiscal year under review are as follows.

	1Q		2Q
USD	141.39	(113.71)	132.43	(116.34)
EUR	144.26	(130.04)	142.17	(130.40)
CNY	19.85	(17.78)	19.35	(18.31)
HKD	18.07	(14.60)	16.89	(14.90)
TWD	4.51	(4.09)	4.36	(4.16)
VND	0.0058	(0.0050)	0.0056	(0.0051)
THB	3.89	(3.41)	3.91	(3.52)
MXN	7.19	(5.48)	7.11	(5.67)

(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

The Apparel Division saw increases in sales of accessories for working wear and athletic shoes as well as for bags although sales of medical wear accessories for the European and the U.S. markets declined.

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 7.6% year on year to total 17,328 million yen, and segment profit rose 28.6% year on year to reach 1,112 million yen.

Asia

The Apparel Division enjoyed growing sales of baby wear accessories in China and Hong Kong as well as athletic shoe accessories and working-wear-related products in Vietnam although sales of casual wear and working wear accessories for the European and U.S. markets declined in China and Hong Kong.

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 12.5% year on year to total 3,583 million yen while segment profit rose 19.1% year on year to total 374 million yen.

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 increased 7.9% year on year to total 3,236 million yen while segment loss came to 31 million yen (segment profit for the same period in the previous fiscal year was 85 million yen).

(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 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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