SMC : Consolidated Financial Highlights for the First Quarter ended June 30, 2022

August 10, 2022

Consolidated Financial Highlights for the First Quarter ended

June 30, 2022 [under Japanese GAAP]

Company name :	SMC Corporation
Stock exchange listing :	Tokyo Stock Exchange, Prime Market
Security code :	6273
URL :	https://www.smcworld.com/ir/en/
Representative :	Yoshiki Takada,	President
Contact person :	Masahiro Ota,	Director and Executive Officer
Projected date of filing quarterly report :		August 10, 2022
Projected starting date of dividend payment :	−

1. Consolidated Financial Highlights for the First Quarter ended June 30, 2022 (April 1, 2022 to June 30, 2022)

(1) Consolidated Operating Results								(Millions of yen)
First Quarter	Net sales	Operating profit		Ordinary profit	Profit attributable to
ended June 30		owners of parent
2022	211,359	15.6%	67,975	18.5%		104,008	69.5%	75,403	64.1%
2021	182,774	42.7%	57,384	63.8%		61,366	66.9%	45,963	98.0%
(Note) Comprehensive income 1Q ended June 30, 2022 :	¥	134,359 million	152.3%
	1Q ended June 30, 2021 :	¥	53,260 million	86.8%
					(Yen)
First Quarter	Net income	Net income per share
ended June 30	per share	(diluted basis)
2022	1,154.01	−
2021	695.62	−

(2) Consolidated Financial Positions								(Millions of yen)
		Total assets					Net assets	Equity ratio
June 30, 2022	1,945,394					1,664,227			85.4%
March 31, 2022	1,769,951					1,559,274			87.9%
(Reference)	Shareholders' equity As of June 30, 2022 :	¥	1,660,590 million
		As of March 31, 2022 :	¥	1,555,628 million
2. Dividends										(Yen)
For the year					Dividend per share
ended March 31	1Q		2Q			3Q		4Q	Total
2022 (Actual)	−		300.00			−		450.00	750.00
2023 (Actual)	−		NA			NA		NA	NA
2023 (Projected)	NA		450.00			−		450.00	900.00
(Note)	Revision of dividends forecast during this period : None

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SMC Corporation

3. Forecasts of Consolidated Operating Results for the Year ending March 31, 2023

								(Millions of yen, except per share figures)
								Profit	Net income
		Net sales	Operating profit	Ordinary profit	attributable to	per share
								owners of parent	(Yen)
Half Year ending	402,500	12.2%	127,500	8.0%	132,500	5.1%	94,000	4.1%	1,438.62
September 30, 2022
Year ending	805,000	10.7%	255,000	11.9%	265,000	(2.9%)	188,000	(2.6%)	2,877.24
March 31, 2023
(Note)	Revision of forecasts of operating results during this period : None

• Notes

1. Changes in significant subsidiaries during the first quarter ended June 30, 2022 : None
2. Adoption of special accounting methods for presenting quarterly consolidated financial statements : Yes
3. Changes in accounting policies, changes in accounting estimates and retrospective restatement

1. Changes in accounting policies applied due to revisions of accounting standards : Yes
2. Changes in accounting policies other than the above : None
3. Changes in accounting estimates : None
4. Retrospective restatement : None

1. Number of shares issued

1. Number of common shares issued (including treasury shares)

	As of June 30, 2022		67,369,359
	As of March 31, 2022		67,369,359
2. Number of treasury shares
	As of June 30, 2022		2,029,049
	As of March 31, 2022		2,029,013
3. Average number of common shares for the three months ended
	April 1, 2022 to June 30, 2022		65,340,339
	April 1, 2021 to June 30, 2021		66,074,862

(Note) The company's shares held by the Board Benefit Trust (BBT) for the Directors' Stock Compensation Plan (3,000 shares as of June 30, 2021 and 2,600 shares as of March 31, 2022, and as of June 30, 2022) is included in the number of treasury shares, which is excluded in the calculation for the above: 2. Number of treasury shares and 3. Average number of common shares for the three months ended.

These quarterly consolidated financial highlights are not subject to quarterly review procedures by the independent accounting auditor.

Explanation of appropriate use of financial forecasts; other special items

Forecasts are based on information and certain premises that the Company considers to be reasonable at the time these consolidated quarterly financial highlights are released.

Some factors could cause actual results to differ from expectations.

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1. Qualitative Information about the Quarterly Results

(1) Operating Results

During the period up to the first quarter of the fiscal year 2022 (from April 1, 2022 to June 30, 2022), the global economy and capital investment demands within a wide range of industries have seen recoveries from the economic impacts due to the Coronavirus (COVID-19) outbreak. However, a high degree of future uncertainty has continued with supply chain disruptions mainly with the shortage of parts and raw materials in semi- conductors, a large-scale lockdowns in China with the zero-covid strategy, high price energy inflation triggered by the Russian invasion of Ukraine, and accelerating inflation in the U.S.

The demand for automatic control equipment within the semi-conductor and electronic industries has remained high within China, other regions in Asia, and in Japan. The demand within the automotive industry increased related to batteries for the electric vehicles in China and in the U.S. The demand for machine tools has also done well in the global market outside Japan, and the food, medical equipment manufacturing and other industries have remained strong in the market.

Within this business environment, the SMC Group has continued to strive to avoid the impacts of part and raw material shortages on its production capabilities. At the same time, SMC has continued to make aggressive capital investments to secure its product supply capabilities in order to meet its customers' demands, and create multi- location production facilities to withstand disasters based on their BCP (Business Continuity Plan) initiatives. In addition, SMC has also continued to develop new products with highly environmentally friendly features which contribute to a significant CO2 emission reduction for its customers, and has strived to strengthen its global sales collaboration with its IT infrastructure.

As a result, the consolidated net sales of SMC were 211,359 million yen (increased by 15.6% from the previous corresponding period) mainly from increase in sales quantity and increase in revenue from the foreign exchange fluctuations for the sales in overseas. Operating profit was 67,975 million yen (increased by 18.5%) due to the revenue increase, in spite of the increases in selling, general and administrative expenses mainly from personnel cost increase. Ordinary profit was 104,008 million yen (increased by 69.5%), with the increase in interest income from the interest rate increase in the market and increase from depreciation of the yen. With the sale of investment securities, profit before income taxes was 106,182 million yen (increased by 72.9%), and profit attributable to owners of parent was 75,403 million yen (increased by 64.1%).

ROE became 4.7%, increased by 1.4 points from the previous corresponding period.

(2) Financial Positions

Total assets as of the end of the first quarter of the fiscal year 2022 were 1,945,394 million yen, a 175,443 million yen increase from the previous fiscal year end. Cash and deposits were 720,290 million yen, a 35,455 million yen increase from the previous fiscal year end due to the increase in profit and gains from the foreign exchange on the foreign currency deposits. Notes and accounts receivable-trade were 241,510 million yen, a 29,571 million yen increase resulted from the increase in revenue and revenue from the exchange fluctuations on the sales in overseas. Inventories were 338,871 million yen, a 35,325 million yen increase from the previous fiscal year end, by increasing product inventories to correspond to the high demands and by strategically increasing parts and raw material inventories to overcome recent constraints on supply chains. Property, plant and equipment was 298,886 million yen, a 28,301 million yen increase from the previous fiscal year end, by further increasing investments for the production and logistics facilities within and outside of Japan, from the perspectives to secure productions capabilities in order to correspond to the rising demands and to enforce BCP to enhance its sustainable capability of supplying its products. SMC also acquired land for the construction of the new building for SMC's core technical center in Tsukuba since it is becoming old as to further enhance its engineering functions and to attract talented engineering staffs.

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SMC Corporation

Total liabilities were 281,167 million yen, increased by 70,489 million yen from the previous fiscal year end. Notes and accounts payable-trade were 73,437 million yen, a 11,335 million yen increase from the previous fiscal year end, resulted from the procurement increase from the increase in sales. Other under current liabilities was 116,238 million yen, a 66,059 million yen increase from the increased outstanding balance on the purchase of securities.

Total net assets were 1,664,227 million yen, increased by 104,953 million yen from the previous fiscal year end, due to the increases in retained earnings resulted from the increase in profit, and 147,288 million yen, a 59,395 million yen increase in foreign currency translation adjustment from the depreciation of yen.

Equity ratio became 85.4%, decreased by 2.5 point from the previous fiscal year end.

(3) Consolidated Forecasts and Other Forward-Looking Information

Even though there is still an assumption that the Coronavirus (COVID-19) will re-expand, each and every factory within the SMC has been taking thorough measures to prevent the spread of infections and continuing its normal operations. In addition, our factories in China are out of the scope of the lockdown so the effect has been limited.

Regarding the Russian invasion of Ukraine, the business within the conflict region only consists 0.8% of the consolidated sales and the 0.6% of the consolidated assets and consolidated net assets respectively, that impact on the SMC's business is limited. As the G7 and its allies are tightening the sanctions against Russia, SMC have brought its exports to Russia to a complete standstill. SMC will continue to act cautiously in complying with each countries' laws and regulations.

There is no change to the consolidated forecast for the fiscal year 2023, announced in the "Consolidated Financial Highlights for the Year ended March 31, 2022 [under Japanese GAAP]" issued on May 13, 2022.

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2. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheet

			(Millions of yen)
		Year end	First Quarter end
		-Previous year	-Current year
		As of March 31, 2022	As of June 30, 2022
	[ASSETS]
	Current assets
	Cash and deposits	684,834	720,290
	Notes and accounts receivable-trade	211,939	241,510
	Securities	12,219	13,541
	Merchandise and finished goods	130,829	144,085
	Work in process	25,574	28,460
	Raw materials and supplies	147,141	166,325
	Other	46,769	33,474
	Allowance for doubtful accounts	(901)	(932)
	Total current assets	1,258,406	1,346,755
	Non-current assets
	Property, plant and equipment
	Buildings and structures, net	91,705	106,149
	Machinery, equipment and vehicles, net	41,988	44,203
	Land	74,775	83,631
	Other, net	62,115	64,901
	Total property, plant and equipment	270,584	298,886
	Intangible assets	15,183	16,417
	Investments and other assets
	Investment securities	58,750	113,455
	Insurance funds	150,797	152,439
	Other	17,892	19,179
	Allowance for doubtful accounts	(1,664)	(1,738)
	Total investments and other assets	225,776	283,335
	Total non-current assets	511,545	598,639
	Total assets	1,769,951	1,945,394

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