Oki Electric Industry : Financial Results

(Translation)

Summary of Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending March 31, 2023 (J-GAAP)

Listed Company Name: Oki Electric Industry Co., Ltd.	August 10, 2022
Securities Code: 6703
Stock Exchange Listing: Tokyo Stock Exchange	URL: https://www.oki.com/
Representative: Takahiro Mori, Representative Director, Chief Operating Officer
Contact: Hideaki Sato, General Manager, Investor Relations	TEL: [phone]
Filing of Quarterly Securities Report (Scheduled): August 12, 2022
Commencement of Dividend Payment (Scheduled): -
Supplementary Document on Quarterly Financial Results: Yes
Quarterly Financial Results Briefing: Yes (for institutional investors)

(Amounts less than one million yen have been truncated)

1. Consolidated Financial Results for the Three Months Ended June 30, 2022 (from April 1, 2022 to June 30, 2022)

1. Consolidated operating results (cumulative)

(Percentage figures indicate year-on-year change)

	Net sales	Operating income		Ordinary income		Profit attributable to
			owners of parent
Three months ended	Millions of yen	%	Millions of yen	%		Millions of yen	%	Millions of yen	%
June 30, 2022	78,127	(2.2)	(3,001)	-		(3,082)	-	(3,186)	-
June 30, 2021	79,869	-	(2,911)	-		(2,647)	-	(3,695)	-
(Note) Comprehensive income	Three months ended June 30, 2022: ¥(3,342) million (-%)
	Three months ended June 30, 2021: ¥(4,438) million (-%)
	Basic earnings per	Diluted earnings per
	share		share
Three months ended		Yen		Yen
June 30, 2022		(36.78)		-
June 30, 2021		(42.68)		-

(Note) From the fourth quarter of the fiscal year ended March 31, 2022, overseas subsidiaries of the Company that apply International Financial Reporting Standards (IFRS) changed their accounting policies based on the "Configuration or Customization Costs in a Cloud Computing Arrangement (IAS 38)," an agenda decision announced by the IFRS Interpretations Committee (IFRI C) in April 2021. Accordingly, figures for the first quarter of the fiscal year ended March 31, 2022 have been retroactively adjusted to reflect these changes in accounting policies. In addition, year-on-year changes are not stated.

1. Consolidated financial position

Total assets

Net assets

Shareholders' equity ratio

Millions of yen

Millions of yen

%

As of June 30, 2022

371,619

101,694

27.3

As of March 31, 2022

369,170

107,635

29.1

(Reference) Shareholders' equity

As of June 30, 2022: ¥101,508 million

As of March 31, 2022: ¥107,437 million

2. Dividends

Dividend per share

First

Second

Third

Year-end

Total

quarter-end

quarter-end

quarter-end

Fiscal year ended

Yen

Yen

Yen

Yen

Yen

0.00

30.00

30.00

March 31, 2022

-

-

Fiscal year ending

-

March 31, 2023

Fiscal year ending

March 31, 2023

0.00

-

30.00

30.00

(Projection)

(Note) Revisions to dividend projection most recently announced: None

3. Consolidated Results Projection for the Fiscal Year Ending March 31, 2023 (from April 1, 2022 to March 31, 2023)

						(Percentage figures indicate year-on-year change)
	Net sales		Operating income	Ordinary income	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	425,000	20.7	9,000	53.5	8,000	4.0	3,000	45.2	34.64
(Note) Revisions to operating results projection most recently announced: None

Notes:

1. Changes in significant subsidiaries during the period
   (changes in specified subsidiaries resulting in changes in the scope of consolidation): None
2. Application of accounting procedures specific to quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates and restatements

1. Changes in accounting policies in accordance with revision of accounting standards, etc.: Yes
2. Any changes in accounting policies other than 1) above: None
3. Changes in accounting estimates: None
4. Restatements: None

(Note) For details, please refer to "(4) Notes to Consolidated Financial Statements (Changes in Accounting Policies)" of "2. Consolidated Financial Statements and Significant Notes Thereto" on page 9 of the Attachment.

1. Number of shares issued (common stock)

1. Number of shares issued at the end of the period (including treasury shares) As of June 30, 2022: 87,217,602 shares
   As of March 31, 2022: 87,217,602 shares
2. Number of treasury shares at the end of the period

As of June 30, 2022: 597,759 shares

As of March 31, 2022: 617,937 shares 3) Average number of shares during the period

Three months ended June 30, 2022: 86,619,897 shares

Three months ended June 30, 2021: 86,600,990 shares

Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.

Explanation regarding appropriate use of results projection and other special notes(Warning on forward-looking statements)

The forward-looking statements including the projection for the financial results contained in this document are based on information currently available to the Company and certain assumptions that the Company deems to be reasonable, and actual results may differ from such statements due to a variety of factors. For the conditions assumed for the results projection and notes on the use of such projections, please refer to "(3) Forward-Looking Statements Including Projection for Consolidated Operating Results and Other" of "1. Qualitative Information on Financial Results for the Period" on page 4 of the Attachment.

(How to obtain supplementary document on financial results)

The Company is scheduled to hold a financial results briefing for institutional investors on August 10, 2022 (Wednesday). The document on financial results is disclosed on TDNet at the same time as this Summary of Consolidated Financial Results and is also made available on the Company's website on the same day.

Contents of the Attachment
1. Qualitative Information on Financial Results for the Period .............................................................................	2
(1)	Operating Results.......................................................................................................................................	2
(2)	Financial Position ......................................................................................................................................	3
(3)	Forward-Looking Statements Including Projection for Consolidated Operating Results and Other .........	4
2. Consolidated Financial Statements and Significant Notes Thereto ...................................................................	5
(1)	Consolidated Balance Sheets .....................................................................................................................	5
(2)	Consolidated Statements of Income and Comprehensive Income .............................................................	6
	Consolidated Statements of Income
	(For the Three Months Ended June 30, 2021 and 2022) ........................................................................	6
	Consolidated Statements of Comprehensive Income
	(For the Three Months Ended June 30, 2021and 2022) .........................................................................	7
(3)	Consolidated Statements of Cash Flows....................................................................................................	8
(4)	Notes to Consolidated Financial Statements..............................................................................................	9
	(Going Concern Assumption) ....................................................................................................................	9
	(Significant Changes in Shareholders' Equity) ..........................................................................................	9
	(Changes in Accounting Policies) ............................................................................................................	9
	(Segment Information).............................................................................................................................	10

- 1 -

1. Qualitative Information on Financial Results for the Period

1. Operating Results

1. Overview of the first quarter of the fiscal year ending March 31, 2023 (April 1, 2022 to June 30, 2022)

In addition to new outbreaks of COVID-19 largely involving variant strains, rising geopolitical risks due to the prolonged conflict between Russia and Ukraine, and the continued precipitous drop in the yen have contributed to a future that still remains uncertain. In addition, supply chain disruptions such as soaring raw material prices and material shortages - especially for semiconductors - have continued into the current fiscal year.

Given this state of affairs, OKI considers strengthening its ability to respond to the above risks to be an urgent priority and aims to build a strong foundation for realizing sustainable growth by resolving social issues. Based on the materiality of the OKI Group, we are working on ways to resolve seven social issues (aging of infrastructure, natural disasters, traffic congestion, environmental problems, labor shortages, labor productivity, and the spread of infectious diseases).

Net sales for the first quarter of the fiscal year ending March 31, 2023 were ¥78.1 billion, a ¥1.8 billion, or 2.2%, decrease year-on-year. Although the exchange rate provided a small bump to net sales, decreased production due to shortages of materials such as semiconductors were impactful, resulting in an overall drop in net sales.

In terms of profits, there was a ¥3.0 billion operating loss (a deterioration of ¥100 million year-on- year) resulting from supplementing the supply chain impact with positive factors such as fixed cost reductions and project composition differences. Negative effects on operating income due to supply chain impacts are expected to be approximately ¥3.2 billion.

Ordinary loss worsened by ¥500 million year-on-year, coming in at ¥3.1 billion due to factors such as a decrease in non-operating foreign exchange gains.

Net loss attributable to owners of parent was ¥3.2 billion, an improvement of ¥500 million year-on- year. This improvement was due to a decrease in extraordinary losses accompanying structural reforms.

(Billions of yen)	Three months ended	Three months ended	Year-on-year change rate
June 30, 2022	June 30, 2021
Net sales	78.1	79.9	(2.2) %
Operating income (loss)	(3.0)	(2.9)	-
Ordinary income (loss)	(3.1)	(2.6)	-
Profit (loss) attributable to owners	(3.2)	(3.7)	-
of parent

Net sales to external customers and operating income by business segment were as follows.

1. Results by business segment
   Net sales came to ¥36.1 billion (a year-on-year increase of 6.4%, or ¥2.2 billion). Net sales were up - mainly in the enterprise solution business area - after projects that were delayed from the previous fiscal year because of difficulties in procuring parts and materials shifted to the quarter under review.
   Operating loss came to ¥1.2 billion, a ¥1.1 billion deterioration year-on-year. These were due to the significant negative impacts of soaring component prices.

(Billions of yen)	Three months ended	Three months ended	Year-on-year change rate
June 30, 2022	June 30, 2021
Net sales	36.1	33.9	6.4 %
Operating income(loss)	(1.2)	(0.1)	-

- 2 -

Net sales were ¥41.9 billion (a year-on-year decrease of ¥4.0 billion, or 8.6%). In the Mono-zukuri Platforms business field, FA/semiconductor manufacturing equipment sales remained strong, a continuation from the previous fiscal year. In the Component business field, production and sales were greatly impacted by shortages of materials for semiconductors and others, resulting in a decline in net sales.

Operating loss came to ¥0.8 billion (an improvement of ¥0.7 billion year-on-year) due to fixed cost reduction effects from structural reforms and project mix differences.

(Billions of yen)	Three months ended	Three months ended	Year-on-year change rate
June 30, 2022	June 30, 2021
Net sales	41.9	45.9	(8.6) %
Operating income(loss)	(0.8)	(1.5)	-

Net sales were ¥0.1 billion (unchanged year-on-year, an increase of 29.4%) and operating income was ¥0.1 billion (unchanged year-on-year).

(Billions of yen)	Three months ended	Three months ended	Year-on-year change rate
June 30, 2022	June 30, 2021
Net sales	0.1	0.1	29.4 %
Operating income(loss)	0.1	0.1	170.0%

1. Financial Position

1. Assets, liabilities, net assets, etc., at the end of the first quarter of the fiscal year ending March 31, 2023 As of June 30, 2022, total assets were ¥371.6 billion, up ¥2.4 billion from the end of the previous fiscal year. Shareholders' equity decreased ¥5.9 billion from the end of the previous fiscal year to ¥101.5 billion mainly due to the recording of a ¥3.2 billion quarterly net loss attributable to owners of parent and the payment of ¥2.6 billion in ordinary dividends. As a result, the shareholders' equity ratio stood at 27.3%.
   Major changes in assets included an increase of ¥16.6 billion in inventories. Meanwhile, notes and accounts receivable-trade, and contract assets decreased by ¥19.2 billion.
   In terms of liabilities, borrowings mainly increased, and totaled ¥96.1 billion, an increase of ¥8.9 billion from ¥87.2 billion at the end of the previous fiscal year.
2. Cash flow for the first quarter of the fiscal year ending March 31, 2023

For the period under review, net cash provided by operating activities amounted to ¥0 billion (¥21.4 billion of cash inflow for the same period of the previous fiscal year), due mainly to a decrease in working capital.

Net cash used in investing activities came to ¥4.9 billion (versus ¥4.3 billion), mainly because of purchases of property, plant, and equipment.

As a result, free cash flow (operating cash flow plus investing cash flow) was a negative ¥4.9 billion (versus a positive ¥17.1 billion).

Net cash provided by financing activities was ¥4.3 billion (compared with ¥6.6 billion used in these activities in the previous year). Proceeds from borrowings were the main source of cash.

Owing to these factors, plus the ¥1.3 billion positive impact of exchange rate changes on cash and cash equivalents, the balance of cash and cash equivalents at the end of the first quarter of the fiscal year ending March 31, 2023 amounted to ¥34.2 billion, up from ¥33.4 billion at the end of the previous fiscal year.

- 3 -