November 14, 2022

Consolidated Financial Highlights for the Second Quarter ended September 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 :

November 14, 2022

Projected starting date of dividend payment :

December 1, 2022

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

(1) Consolidated Operating Results

(Millions of yen)

Second Quarter

Net sales

Operating profit

Ordinary profit

Profit attributable to

ended September 30

owners of parent

2022

421,529

17.5%

133,649

13.2%

180,725

43.3%

133,054

47.4%

2021

358,691

42.3%

118,035

81.5%

126,074

84.7%

90,269

95.0%

(Note) Comprehensive income 2Q ended September 30, 2022 :

¥

202,662 million

104.8%

2Q ended September 30, 2021 :

¥

98,966 million

75.8%

(Yen)

Second Quarter

Net income

Net income per share

ended September 30

per share

(diluted basis)

2022

2,036.32

2021

1,366.16

(2) Consolidated Financial Positions

(Millions of yen)

Total assets

Net assets

Equity ratio

September 30, 2022

1,963,266

1,732,514

88.1%

March 31, 2022

1,769,951

1,559,274

87.9%

(Reference)

Shareholders' equity As of September 30, 2022 :

¥

1,728,841 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)

450.00

NA

NA

NA

2023 (Projected)

NA

NA

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)

Year ending

824,000

13.3%

248,500

9.1%

302,000

10.6%

220,000

14.0%

3,366.98

March 31, 2023

(Note)

Revision of forecasts of operating results during this period : Yes

  • Notes
  1. Changes in significant subsidiaries during the second quarter ended September 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 September 30, 2022

67,369,359

As of March 31, 2022

67,369,359

2. Number of treasury shares

As of September 30, 2022

2,029,283

As of March 31, 2022

2,029,013

3. Average number of common shares for the six months ended

April 1, 2022 to September 30, 2022

65,340,286

April 1, 2021 to September 30, 2021

66,075,009

(Note) The company's shares held by the Board Benefit Trust (BBT) for the Directors' Stock Compensation Plan (2,600 shares as of September 30, 2021 and as of March 31, 2022, and as of September 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 six 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

  1. The revised forecasts of operating results for the fiscal year ending March 31, 2023 (consolidated) are shown in this release.
  2. 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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SMC Corporation

1.Qualitative Information about the Quarterly Results

(1) Operating Results

During the period up to the second quarter of the fiscal year 2022 (from April 1, 2022 to September 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, the stagnation of economic activity in China due to its zero-covid strategy, the prolonged Russian military invasion of Ukraine, accelerating inflation, and sharp exchange rate fluctuations.

The demand for automation control equipment within the semi-conductor and electronic industries in the first half of period has remained high within China, other regions in Asia, and in Japan, however, from July onward, the growth was sluggish, partly due to seasonal factors. The demand within the automotive industry increased for the electric vehicle batteries in each region, despite the continued adverse effects on production from the shortage of semi-conductors.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, due to the post- covid's new demand for labor-savingautomation.

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 to meet its customers' demands and create multi-location production facilities to withstand disasters based on SMC's 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 421,529 million yen (increased by 17.5% 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 133,649 million yen (increased by 13.2%) due to the revenue increase, in spite of the increases in selling, general and administrative expenses mainly from increases in logistics, personnel, and IT related costs. Ordinary profit was 180,725 million yen (increased by 43.3%), with the increases in interest income from the interest rate increase in the market and in foreign exchange gains from depreciation of the yen. With the sale of investment securities, profit before income taxes was 183,498 million yen (increased by 45.8%), and profit attributable to owners of parent was 133,054 million yen (increased by 47.4%).

ROE became 8.1%, increased by 1.7 points from the previous corresponding period.

(2) Financial Positions

Total assets as of the end of the second quarter of the fiscal year 2022 were 1,963,266 million yen, a 193,314 million yen increase from the previous fiscal year end. Cash and deposits were 705,107 million yen, a 20,273 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 235,716 million yen, a 23,777 million yen increase from the previous fiscal year end, resulted from the increase in revenue and revenue from the exchange fluctuations on the sales in overseas. Inventories were 367,289 million yen, a 63,743 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 314,939 million yen, a 44,355 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 relocation of the SMC's core technical center in Tsukuba as to further enhance its engineering functions and to attract talented engineering staffs.

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SMC Corporation

Total liabilities were 230,751 million yen, increased by 20,074 million yen from the previous fiscal year end. Notes and accounts payable-trade were 71,354 million yen, a 9,253 million yen increase from the previous fiscal year end, resulted from the purchase increase from the increase in sales and strategically increasing parts and raw materials procurements. Other under current liabilities was 59,412 million yen, a 9,232 million yen increase from the increased bonus related accrued expenses.

Total net assets were 1,732,514 million yen, increased by 173,240 million yen from the previous fiscal year end, due to the increases in retained earnings resulted from the increase in profit, and 156,751 million yen, a 68,857 million yen increase in foreign currency translation adjustment from the depreciation of yen.

Equity ratio became 88.1%, increased by 0.2 point from the previous fiscal year end.

(3) Consolidated Forecasts and Other Forward-Looking Information

Based on recent trends in orders and foreign exchange rates, revisions to the consolidated forecast for the fiscal year 2022, announced in the "Consolidated Financial Highlights for the Year ended March 31, 2022 [under Japanese GAAP]" issued on May 13, 2022 are made as below.

The average exchange rates for the fiscal year based on the revised forecasts:

1 US$ = 138 yen (previous forecast 123 yen), 1 EUR = 139 yen (133 yen), and 1 CNY = 19.80 yen (18.50 yen). For further detail, please refer to "Difference between Consolidated Forecasts and Actual Results for the Accumulated Second Quarter, and the Revision to Consolidated Forecasts for FY 2022", disclosed today,

November 14, 2022.

Revision to consolidated financial forecasts for the fiscal year ending March 31, 2023

(Period from April 1, 2022 through March 31, 2023)

Net Sales

Operating

Ordinary

Profit attributable

Net Income

Profit

Profit

to owners of parent

per share

Previous Forecasts (A)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Yen)

805,000

255,000

265,000

188,000

2,877.24

Revised Forecasts (B)

824,000

248,500

302,000

220,000

3,366.98

Increased / Decreased Amount

19,000

(6,500)

37,000

32,000

(B-A)

Rate of Change (%)

2.4

(2.5)

14.0

17.0

Results of the FY 2021

727,397

227,857

272,981

192,991

2,923.76

(Year ended March 31, 2022)

Since June of 2022, SMC has frozen all exports to and new investments at its Russian subsidiaries. If SMC were to complete a full withdrawal from the Russian market in the future, there is a risk that SMC will not be able to obtain the required permits and approvals from the local authorities to recover SMC's remaining assets within the country. As such, the SMC group may see damages of up to 13 billion yen from the loss of these assets.

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SMC Corporation

2. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheet

(Millions of yen)

Year end

Second Quarter end

-Previous year

-Current year

As of March 31, 2022 As of September 30, 2022

[ASSETS]

Current assets

Cash and deposits

684,834

705,107

Notes and accounts receivable-trade

211,939

235,716

Securities

12,219

14,316

Merchandise and finished goods

130,829

152,691

Work in process

25,574

28,861

Raw materials and supplies

147,141

185,736

Other

46,769

32,186

Allowance for doubtful accounts

(901)

(886)

Total current assets

1,258,406

1,353,729

Non-current assets

Property, plant and equipment

Buildings and structures, net

91,705

118,184

Machinery, equipment and vehicles, net

41,988

48,934

Land

74,775

83,822

Other, net

62,115

63,997

Total property, plant and equipment

270,584

314,939

Intangible assets

15,183

17,275

Investments and other assets

Investment securities

58,750

112,943

Insurance funds

150,797

146,393

Other

17,892

19,585

Allowance for doubtful accounts

(1,664)

(1,601)

Total investments and other assets

225,776

277,321

Total non-current assets

511,545

609,536

Total assets

1,769,951

1,963,266

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SMC Corporation

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SMC Corporation published this content on 14 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2022 06:11:26 UTC.