Nichireki : Consolidated Financial Results for the Three Months Ended June 30, 2023

Consolidated Financial Results

for the Three Months Ended June 30, 2023

[Japanese GAAP]

August 8, 2023

Company name: Nichireki Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange

Code number: 5011

URL: https://www.nichireki.co.jp/english/

Representative: Manabu Obata, President and Representative Director

Contact: Takeshi Goto, Executive Officer and General Manager of Finance and Accounting Department

Phone: [phone]

Scheduled date of filing quarterly securities report: August 10, 2023

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on quarterly financial results: Not available

Schedule of quarterly financial results briefing session: Not scheduled

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

1. Consolidated Financial Results for the Three Months Ended June 30, 2023 (April 1, 2023 to June 30, 2023)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
							Profit attributable to
	Net sales		Operating profit	Ordinary profit	owners of the parent
							company
Three months ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
June 30, 2023	13,670	(7.5)	116	(81.9)	535	(46.4)	288	(82.9)
June 30, 2022	14,773	4.5	643	(4.0)	997	30.8	1,685	338.8

(Note) Comprehensive income: Three months ended June 30, 2023: ¥1,022 million [(30.8)%] Three months ended June 30, 2022: ¥1,477 million [164.3%]

		Basic earnings		Diluted earnings
		per share		per share
Three months ended			Yen				Yen
June 30, 2023		9.66				-
June 30, 2022		55.14				-
(2) Consolidated Financial Position
			Total assets		Net assets	Equity ratio
				Million yen			Million yen	%
As of June 30, 2023			85,569		70,705	82.6
As of March 31, 2023			91,474		72,470	79.2

(Reference) Equity: As of June 30, 2023: ¥70,705 million As of March 31, 2023: ¥72,470 million

2. Dividends

					Annual dividends
		1st		2nd		3rd		Year-end		Total
		quarter-end		quarter-end		quarter-end
Fiscal year ended		Yen		Yen		Yen		Yen		Yen
	-		-		-		50.00	50.00
March 31, 2023
Fiscal year ending		-
March 31, 2024
Fiscal year ending			35.00		-		35.00	70.00
March 31, 2024 (Forecast)
(Note) Revision to the dividends forecast announced most recently: No

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

(% indicates changes from the previous corresponding period.)

							Profit attributable	Basic earnings
	Net sales		Operating profit	Ordinary profit	to owners of the
		per share
							parent company
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	34,000	1.0	2,500	14.8	2,600	6.5	1,700	(35.8)	55.65
Full year	80,000	2.0	8,200	8.4	8,400	3.6	5,500	(12.5)	180.04

(Note) Revision to the financial results forecast announced most recently: No

*Notes:

1. Changes in significant subsidiaries during the three months ended June 30, 2023 (changes in specified subsidiaries resulting in changes in scope of consolidation): No
2. Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: No

Notes to the Accounting policies adopted specially for the preparation of quarterly consolidated financial statements

1. Changes in accounting policies, changes in accounting estimates, and restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares): As of June 30, 2023: 31,685,955 shares
      As of March 31, 2023: 31,685,955 shares
   2. Total number of treasury shares at the end of the period:

As of June 30, 2023: 2,174,933 shares

As of March 31, 2023: 1,423,907 shares

1. Average number of shares during the period (cumulative from the beginning of the fiscal year) Three months ended June 30, 2023: 29,867,454 shares
   Three months ended June 30, 2022: 30,568,596 shares

*These quarterly consolidated financial results are outside the scope of quarterly review 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 to the Company and certain assumptions deemed reasonable as of the date of publication of this document. Actual results may differ significantly from these forecasts due to a wide range of factors.

For assumptions of the forecasts of the financial results and precautions in using the forecasts, please refer to "(3) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking Information" in "1. Qualitative Information on Quarterly Financial Results for the Period under Review" on page 3 of these quarterly consolidated financial results (Appendix).

Table of Contents
1. Qualitative Information on Quarterly Financial Results for the Period under Review	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Consolidated Financial Results Forecast 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
(3)	Notes to the Quarterly Consolidated Financial Statements	8
(Notes on Going Concern Assumption)	8
(Notes in the Case of Significant Changes in Shareholders' Equity)	8
(Segment Information, etc.)	8
(Revenue Recognition)	9

1

1. Qualitative Information on Quarterly Financial Results for the Period under Review

(1) Explanation of Operating Results

In the three months ended June 30, 2023, the Japanese economy experienced a gradual recovery trend due to increased inbound tourism demand accompanied by the growing number of foreign visitors to Japan, increased consumer spending on passenger cars, eating out, etc. and increased capital investment in digital transformation- related and other areas.

The business environment surrounding the Nichireki Group (hereinafter referred to as the "Group") saw some areas where the business progress was slow due to the impact of the nationwide local elections and unseasonable weather, etc. despite generally steady levels of public investment against the backdrop of growing construction demand for preventing and mitigating disasters, national resilience measures, etc. In addition, as raw material prices remain in the high range due to factors such as continuing depreciation of the yen, a close watch is continuously required on trends in crude oil prices and the exchange rate, etc.

In this environment, the Group has implemented various measures aimed at growing into a sustainable corporate group with the entire organization working as one under quick and accurate decision-making, in the third year of its Medium-term Management Plan "Resilience 2025 (Shinayaka 2025)."

In the three months ended June 30, 2023, the Group posted net sales of ¥13,670 million (down 7.5% year on year), operating profit of ¥116 million (down 81.9% year on year), and ordinary profit of ¥535 million (down 46.4% year on year). Profit attributable to owners of the parent company decreased by 82.9% to ¥288 million.

Results by business segment were as follows.

Applied and Processed Asphalt Products Business

In the Applied and Processed Asphalt Products Business, in addition to coping with raw material prices that continue to remain in the high range, we worked on increasing sales by further strengthening design and marketing activities for high value-added products aiming for "longer life and higher performance of paved roads" and "reduction of environmental load."

Net sales for the segment were ¥5,538 million (down 4.5% year on year) and segment profit was ¥901 million (down 24.8% year on year) in the three months ended June 30, 2023.

Road Paving Business

In the Road Paving Business, we worked on marketing activities by providing proposals on construction methods related to preventing and mitigating disasters and national resilience measures and the steady execution of construction work.

Net sales for the segment were ¥8,053 million (down 9.5% year on year) and segment profit was ¥81 million (down 65.8% year on year) in the three months ended June 30, 2023.

Other Business

In the Other Business, net sales for the segment were ¥78 million (up 0.9% year on year) and segment profit was ¥58 million (up 0.3% year on year) mainly due to real estate lease revenue.

2