Aug. 10, 2021
First Half, 2021 Consolidated Financial Results (Summary)
Ⅰ . First Half 2021 Results
1. Summary
(Unit: billions of yen, except for "per share" indicators) | ||||||||
Items | 1st half, 2020 | 1st half, 2021 | Increase/ | |||||
(Jan.-Jun.) | (Jan.-Jun.) | decrease | ||||||
Net Sales | 326.6 | 693.4 | 366.7 | |||||
Operating Income | -25.8 | 47.6 | 73.4 | |||||
Net income attributable to owners of the parent | -54.6 | -13.4 | 41.2 | |||||
Net income attributable to owners of the parent per share | ¥-374.11 | ¥-91.93 | ¥282.18 | |||||
Net assets per share | ¥2,890.71 | ¥2,806.14 | ¥-84.57 | |||||
Showa Denko K.K. made Showa Denko Materials Co., Ltd. (Showa Denko Materials) a consolidated subsidiary, and started on July 1, 2020 | ||||||||
to incorporate Showa Denko Materials' sales figures and incomes/losses into its consolidated financial statements. | ||||||||
2. Net Sales and Operating Income by Segment | (Unit: billions of yen) | |||||||
Segment | 1st half, 2020 | 1st half, 2021 | Increase/ | CQ1, 2021 | CQ2, 2021 | |||
(Jan.-Jun.) | (Jan.-Jun.) | decrease | (Jan. - Mar.) | (Apr. - Jun.) | ||||
Petrochemicals | Net Sales | 95.7 | 127.2 | 31.5 | 57.8 | 69.5 | ||
Op. Income | -3.7 | 11.7 | 15.4 | 5.5 | 6.2 | |||
Chemicals | Net Sales | 72.0 | 86.7 | 14.6 | 41.3 | 45.4 | ||
Op. Income | 5.0 | 10.6 | 5.6 | 4.9 | 5.8 | |||
Electronics | Net Sales | 44.6 | 49.3 | 4.8 | 21.7 | 27.7 | ||
Op. Income | 1.8 | 5.2 | 3.4 | 1.4 | 3.8 | |||
Inorganics | Net Sales | 43.0 | 46.4 | 3.4 | 21.2 | 25.2 | ||
Op. Income | -22.9 | 6.3 | 29.2 | 1.0 | 5.3 | |||
Aluminum | Net Sales | 38.8 | 47.7 | 8.9 | 22.5 | 25.2 | ||
Op. Income | -0.2 | 5.6 | 5.8 | 2.3 | 3.3 | |||
Showa Denko Materials | Net Sales | - | 320.2 | 320.2 | 159.6 | 160.6 | ||
Op. Income | - | 12.6 | 12.6 | 7.6 | 5.0 | |||
Others | Net Sales | 55.6 | 33.6 | -21.9 | 28.2 | 5.5 | ||
Op. Income | 0.5 | 0.1 | -0.4 | 0.2 | -0.1 | |||
Adjustments | Net Sales | -23.2 | -17.8 | 5.3 | -12.5 | -5.3 | ||
Op. Income | -6.3 | -4.5 | 1.7 | -2.0 | -2.5 | |||
Total | Net Sales | 326.6 | 693.4 | 366.7 | 339.7 | 353.7 | ||
Op. Income | -25.8 | 47.6 | 73.4 | 20.8 | 26.8 | |||
Showa Denko K.K. started on July 1, 2020 to incorporate Showa Denko Materials' sales figures and incomes/losses into its financial statements as "Showa Denko Materials segment."
3. Cash Flow
(Unit: billions of yen) | ||||
Cash Flows from: | 1st half, 2020 | 1st half, 2021 | Increase/ | |
(Jan.-Jun.) | (Jan.-Jun.) | decrease | ||
Operating Activities | 5.2 | 55.3 | 50.1 | |
Investing Activities | -792.6 | -10.4 | 782.2 | |
Free Cash Flow | -787.4 | 44.9 | 832.3 | |
Financing Activities | 864.7 | -73.6 | -938.4 | |
Others | -1.6 | 9.1 | 10.7 | |
Net increase in Cash | 75.8 | -19.6 | -95.4 |
4. Reference
(Unit: billions of yen, expect for total number of employees, exchange rate, and domestic naphtha price)
2021 Revised forecast (Jan.-Dec.)
120.0
12.0
132.0 -160.0-7.0-35.0
announced on Aug. 10, 2021
Items | 1st half, 2020 | 1st half, 2021 | Increase/ | |
(Jan.-Jun.) | (Jan.-Jun.) | decrease | ||
Capital expenditures | 24.8 | 35.4 | 10.6 | |
Depreciation and amortization | 19.4 | 41.4 | 22.0 | |
R&D expenditures | 9.7 | 23.7 | 14.0 | |
Gap between interest/dividend income | -0.9 | -3.9 | -3.0 | |
and interest expense | ||||
Total number of employees | 33,805 | 32,373 | -1,432 | |
Exchange rate (yen/US$) | 108.3 | 107.7 | 0.6 | Yen appreciated |
Domestic naphtha price (yen/kl) | 34,850 | 43,250 | 8,400 | |
Items | Dec. 31, 2020 | Jun. 30, 2021 | Increase/ | |
decrease | ||||
Total assets | 2,203.6 | 2,142.3 | -61.3 | |
Interest-bearing debt | 1,060.1 | 984.8 | -75.4 |
Showa Denko K.K. made Showa Denko Materials a consolidated subsidiary, considered June 30, 2020 as acquisition date, and started to incorporate Showa Denko Material's financial results into its consolidated financial statements.
Ⅱ. Forecast for 2021
1. Summary
(Unit: billions of yen, except for "per share" indicators) | ||||||
Items | 2020 | 2021 Revised | Increase/ | * announced on Aug. 3, 2021 | ||
forecast * | decrease | |||||
Net Sales | 973.7 | 1,400.0 | 426.3 | |||
Operating Income | -19.4 | 85.0 | 104.4 | |||
Net income attributable to owners of the parent | -76.3 | -25.0 | 51.3 | |||
Net income attributable to owners of the parent per share | ¥-523.06 | ¥-171.37 | ¥351.69 | |||
Cash dividends per share | ¥65.00 | ¥65.00 | ¥0.00 | 2020 | ||
Showa Denko K.K. made Showa Denko Materials Co., Ltd. (Showa Denko Materials) | a consolidated subsidiary, | and started on July 1, | ||||
to incorporate Showa Denko Materials' sales figures and incomes/losses into its consolidated financial statements. | ||||||
2. Net sales and Operating Income by Segment | (Unit: billions of yen) | |||||
Segment | 2020 | 2021 Revised | Increase/ | * announced on Aug. 3, 2021 | ||
forecast * | decrease | |||||
Petrochemicals | Net Sales | 193.4 | 265.0 | 71.6 | ||
Op. Income | 4.9 | 17.0 | 12.1 | |||
Chemicals | Net Sales | 155.8 | 180.0 | 24.2 | ||
Op. Income | 13.5 | 19.5 | 6.0 | |||
Electronics | Net Sales | 97.4 | 115.0 | 17.6 | ||
Op. Income | 9.1 | 15.5 | 6.4 | |||
Inorganics | Net Sales | 82.9 | 100.0 | 17.1 | ||
Op. Income | -32.3 | 12.0 | 44.3 | |||
Aluminum | Net Sales | 80.2 | 75.0 | -5.2 | ||
Op. Income | 0.4 | 7.5 | 7.1 | |||
Showa Denko Materials | Net Sales | 302.7 | 650.0 | 347.3 | ||
Op. Income | -6.3 | 26.5 | 32.8 | |||
Others | Net Sales | 107.3 | 40.0 | -67.3 | ||
Op. Income | 1.2 | 0.2 | -1.0 | |||
Adjustments | Net Sales | -46.0 | -25.0 | 21.0 | ||
Op. Income | -10.0 | -13.2 | -3.2 | |||
Total | Net Sales | 973.7 | 1,400.0 | 426.3 | ||
Op. Income | -19.4 | 85.0 | 104.4 | |||
Showa Denko K.K. started on July 1, 2020 to incorporate Showa Denko Materials' sales figures and incomes/losses into its financial statements as "Showa Denko Materials segment."
Ⅲ. Reference
(Unit: billions of yen, expect for exchange rate and domestic naphtha price)
Items | 2020 | 2021 Revised | Increase/ | * details announced |
forecast * | decrease | on Aug. 10, 2021 | ||
Capital expenditures | 69.1 | 93.8 | 24.8 | |
Depreciation and amortization | 60.6 | 83.9 | 23.3 | |
R&D expenditures | 34.4 | 49.6 | 15.3 | |
Gap between interest / dividend income and | -4.6 | -8.1 | -3.5 | |
interest expense | ||||
Interest-bearing debt | 1,060.1 | 890.0 | -170.1 | |
Exchange rate (yen/US$) | (1st half) 108.3 | (1st half) 107.7 | (1st half) 0.6 | Yen appreciated |
(2nd half) 105.4 | (2nd half) 108.0 | (2nd half) 2.6 | Yen depreciated | |
Domestic naphtha price (yen/kl) | (1st half) 34,850 | (1st half) 43,250 | (1st half) 8,400 | |
(2nd half) 30,750 | (2nd half) 53,000 | (2nd half) 22,250 | ||
Showa Denko K.K. made Showa Denko Materials a consolidated subsidiary, considered June 30, 2020 as acquisition date, and started to incorporate Showa Denko Materals' financial results into its financial statements.
The above forecast is based on the information available as of today and assumptions as of today regarding risk factors that could affect our future performance. Actual results may differ materially from the forecast due to a variety of risk factors, including, but not limited to, the influence of the coronavirus disease 2019 (COVID-19) on the world economy, the economic conditions, costs of naphtha and other raw materials, demand or market conditions for our products such as graphite electrodes and other commodities, and foreign exchange rates. We undertake no obligation to update the forward-looking statements unless required by law.
SHOWA DENKO K.K.
Consolidated Financial Statements
For the first half year (January 1 to June 30, 2021)
Ⅰ. Consolidated Financial Results
August 10th, 2021 | |||||||
(1) Results of operations: | ( in millions, US$ in thousands, except for | ||||||
net income attributable to owners of the parent per share) | |||||||
Results for the first half year (Jan.1-Jun.30) | |||||||
2020 | 2021 | Increase | 2021 | ||||
(Decrease) | |||||||
% | $ | ||||||
Net sales | 326,621 | 693,358 | 112.3 | 6,270,193 | |||
Operating income | (25,795) | 47,566 | ― | 430,154 | |||
Ordinary income | (43,225) | 50,206 | ― | 454,021 | |||
Net income attributable to owners of the parent | (54,575) | (13,412) | ― | (121,284) | |||
Net income attributable to owners of the parent per share: Basic | (374.11) | (91.93) | ― | (0.83) | |||
Net income attributable to owners of the parent per share: Diluted | ― | ― | ― | ― |
Showa Denko K.K. made Showa Denko Materials Co., Ltd. (Showa Denko Materials) a consolidated subsidiary, and started on July 1, 2020 to incorporate Showa Denko Materials' sales figures and incomes/losses into its consolidated financial statements.
Notes
Important changes in accounting policies : not applicable Comprehensive income :
Results for the year ended January 1 to June 30, 2021 21,926 million Results for the year ended January 1 to June 30, 2020 (63,129) million
(2) Financial position:
( in millions, US$ in thousands, except for stockholders' equity ratio)
Dec.31, 2020 | Jun.30, 2021 | Jun.30, 2021 | |
$ | |||
Total assets | 2,203,606 | 2,142,322 | 19,373,502 |
Total equity | 718,080 | 712,931 | 6,447,193 |
% | % | % | |
Stockholders' equity ratio | 18.4 | 19.1 | 19.1 |
(3) Dividends: | |||
2020 | 2021 Forecast | ||
Q1 dividends per share () | ― | ― | |
Q2 dividends per share () | 0.00 | 0.00 | |
Q3 dividends per share () | ― | ― | |
End of Term dividends per share () | 65.00 | 65.00 | |
Annual dividends per share () | 65.00 | 65.00 |
Ⅱ. Forecast of performance for the year ending December 31, 2021
( in millions, US$ in thousands, except for net income attributable to owners of the parent per share)
fiscal year | |||
$ | |||
Net sales | 1,400,000 | 12,660,517 | |
Operating income | 85,000 | 768,674 | |
Ordinary income | 82,000 | 741,545 | |
Net income attributable to owners of the parent | (25,000) | (226,081) | |
Net income attributable to owners of the parent per share: Basic | (171.37) | (1.55) |
*There is no change from the full-year 2021 performance forecast announced on August 3, 2021.
The above forecast is based on the information available at this point of time. Actual results may differ materially due to a variety of reasons, including such economic factors as fluctuations in foreign currency exchange rates as well as market supply and demand conditions.
Note
The U.S. dollar is valued at 110.58 throughout this statement for convenience only.
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[Business Results and Financial Conditions] 1. Analysis of business results
(1) Summary
With regard to the global economy in the first half of 2021 (January 1 - June 30), it was stagnant due to the global restraint on economic activities caused by the pandemic of coronavirus disease 2019 (COVID-19), although there was a sign of recovery in manufacturing industries including the semiconductor-related industry, whose market remained strong. As for the Japanese economy, although consumer spending kept bearish tendency, corporate business sentiment was bottoming out due to an increase in export and business recovery centering on manufacturing industries.
As for the business environment of the Showa Denko Group, although there were some uncertain factors such as continued spread of COVID-19, a global argument over policy on carbon-neutrality, and US-China trade friction, the semiconductor-related industry remained strong, and car production showed a sign of recovery. However, a part of the car industry was negatively affected by short supply of semiconductor integrated circuits.
The Showa Denko Group has been giving the highest priority to all stakeholders' safety and health including that of our customers, business acquaintances and employees, and implementing various measures to prevent further spread of COVID-19. To be specific, we are taking various measures including companywide introduction of teleworking. Especially in the head office, through thoroughgoing improvement in business process, the ratio of teleworking has been maintained at the level exceeding the target required by the Japanese government. The Group continues implementing measures which give highest priority to the security of employees' safety and prevention of infection of COVID -19, including grant of special leave when infection is suspected, prohibition on overseas business trip in principle, restrictions on domestic business trip, faithful practice of off-peak commuting through introduction of complete flextime, and prohibition of eating together in principle. At the same time, in our production bases, we are making utmost efforts to fulfill our corporate social responsibility to continue providing our customers with products essential for infrastructural functions of society. Furthermore, the Group has been implementing measures to support employees' vaccination including workplace vaccination at major plants and offices.
Since the beginning of the pandemic of COVID-19 in 2020, the Showa Denko Group has been giving the highest priority to all stakeholders' safety and health, and implementing various measures to prevent further spread of the infectious disease. To be specific, we are taking various measures to give the highest priority to keeping our employees' health and preventing the spread of COVID-19, including teleworking implemented by employees belonging to major plants, divisions and departments, and grant of special holidays. At the same time, in our production bases, we are making utmost efforts to fulfill our corporate social responsibility to continue providing our customers with products essential for infrastructural functions of society.
The Showa Denko Group set up its long-term vision and has been promoting its medium- term consolidated business plan "The TOP 2021" since 2019. It is very important for the Showa Denko Group to enhance the value of the Group and satisfy all stakeholders including shareholders, customers, suppliers, local communities and employees in order that the Group continuously grows and becomes trusted and acclaimed by society. The Showa Denko Group defines this idea as the Group's business philosophy, thereby promoting management to maximize shareholders', customers' and social value.
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The Group will strengthen its earning power and reduce the range of fluctuation in income and enhance the value of the Group through successful execution of "The TOP 2021." Furthermore, aiming to realize integration of legal personalities with Showa Denko Materials Co., Ltd. in January 2023, SDK realized substantial integration of the chain of command and corporate functions in July 2021, and will integrate management organizations in January 2022, which will be one year earlier than the original plan. In December 2020, SDK announced "Long-term Vision (2021-2030) for Newly Integrated Company," which aims to establish the basis of business growth far into the future through integration of SDK and SDMC. In terms of the meaning of the Newly Integrated Company's existence (purpose), SDK and SDMC will cooperatively seek to "change society through the power of chemistry." This includes contributing to the sustainable development of global society by creating functions required of the times as an advanced material partner. In addition, the Newly Integrated Company will strive to become "a company that can win the global competition" and "a company that contributes to a sustainable global society," which are the two things the Company aims to achieve in terms of its ideal state in order to fulfill its purpose.
In the first half of 2021, the Group recorded consolidated net sales of ¥693,358 million, a substantial increase of 112.3% from the same period of the previous year. The sales in the Others segment significantly decreased due to unconsolidation of SHOKO CO., LTD. resulting from transfer of shares in the company. However, the sales in the Petrochemicals segment increased due to a rise in market prices of products. The sales in the Chemicals, Electronics, Inorganics, and Aluminum segments increased due to recovery of sales volumes from those in the same period of the previous year which were substantially lowered by the spread of COVID-19. The sales in the Showa Denko Materials segment significantly increased due to new consolidation of the segment which started at the beginning of the third quarter of 2020. Operating income of the Group in the first half of 2021 significantly increased by ¥73,361million, to ¥47,566 million. Operating income in the Others segment decreased. However, operating income in the Petrochemicals increased due to a significant improvement in the raw naphtha price factor. Operating income in the Showa Denko Materials segment increased due to consolidation throughout the first half of the year. Operating income in the Chemicals, Electronics, Inorganics and Aluminum segments also increased. Ordinary income of the Group increased ¥93,430 million, to ¥50,206 million due to non-incurrence of the temporary cost of acquisition of shares in former Hitachi Chemical Company, Ltd., which took place in 2020, and increases in foreign exchange gain and equity in earnings of affiliates, despite an increase in interest expenses.
The Group recorded net loss attributable to owners of the parent of ¥13,412 million in the first half of 2021, an improvement of ¥41,163 million from the same period of the previous year. We recorded extraordinary losses resulting from recording of expenses for execution of environmental measures amounting to ¥9 billion and an expenditure to cover the cost of structural reform related to the transfer of energy storage devices and systems business amounting to ¥30.1 billion.
(Unit: millions of yen) | |||
1H 2020 | 1H 2021 | Increase/decrease | |
Sales | 326,621 | 693,358 | 366,737 |
Operating income | -25,795 | 47,566 | 73,361 |
Ordinary income | -43,225 | 50,206 | 93,430 |
Net income | |||
attributable to | |||
owners of the parent | -54,575 | -13,412 | 41,163 |
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Showa Denko KK published this content on 10 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2021 06:29:40 UTC.