Sojitz : Summary of Consolidated Financial Results for the First Quarter Ended June 30, 2022

Summary of Consolidated Financial Results for the First Quarter Ended June 30, 2022 (IFRS)

															August 2, 2022
Sojitz Corporation
( URL https://www.sojitz.com )
Listed stock exchange:	Prime section of Tokyo
Security code:	2768
Company representative:	Masayoshi Fujimoto, President & CEO
Contact information:	Yoichi Yanagisawa, GM, Public Relations Dept. TEL [phone]
Scheduled filing date of quarterly financial report: August 10, 2022
Scheduled date of delivery of dividends: -
Supplementary materials for the quarterly financial results: Yes
Investor conference for the quarterly financial results: Yes
													(Rounded down to millions of Japanese Yen)
1. Consolidated Financial Results for the First Quarter Ended June 30, 2022	(April 1, 2022 - June 30, 2022)
(1) Consolidated Operating Results			Description of % is indicated as the change rate compared with the same period last year.
													Profit for the period	Total comprehensive
		Revenue			Profit before tax		Profit for the period	attributable to owners
					income for the period
													of the Company
For the first quarter ended	Millions of Yen		%		Millions of Yen	%		Millions of Yen	%		Millions of Yen	%	Millions of Yen	%
June 30, 2022		618,511		25.5		60,538	160.8		46,030	155.6	45,150	166.8	92,686	146.0
June 30, 2021		492,842		41.1		23,213	801.5		18,008	559.6	16,924	610.1	37,681	766.6
		Basic earnings		Diluted earnings
				per share			per share
For the first quarter ended			Yen					Yen
June 30, 2022			195.61				195.61
June 30, 2021			70.90				70.90

Note1: Basic earnings per share and Diluted earnings per share are calculated based on Profit for the period attributable to owners of the Company.

Note2: The Company conducted a five-for-one share consolidation of shares of common stock effective October 1, 2021. Basic earnings per share for the first quarter ended June 30, 2021 and Diluted earnings per share for the first quarter ended June 30, 2021 have been calculated based on the assumption that the share consolidation had been conducted on October 1, 2021.

(2) Consolidated Financial Position

Total assets

Total equity

Total equity attributable

Total equity attributable to

to owners of the

owners of the Company

Company

ratio

As of

Millions of Yen

Millions of Yen

Millions of Yen

%

June 30, 2022

2,841,927

840,982

801,365

28.2

March 31, 2022

2,661,680

763,878

728,012

27.4

2.Cash Dividends

Cash dividend per share

First

Second

Third

Year

Annual

quarter

quarter

quarter

end

For the year ended

Yen

Yen

Yen

Yen

Yen

March 31, 2022

-

9.00

-

61.00

-

March 31, 2023

-

March 31, 2023 (forecast)

56.00

-

56.00

112.00

Note1: Changes in cash dividend forecast : No

Note2: The Company conducted a five-for-one share consolidation of shares of common stock effective October 1, 2021.

No figure is displayed for the annual dividend for the year ended March 31, 2022, as an appropriate figure cannot be arrived

at through simple addition. If the share consolidation is accounted for, the interim dividend for the year ended March 31, 2022, would be ¥45.00 and annual dividend for the year ended March 31, 2022 would be ¥106.00.

3. Consolidated Earnings Forecast for the Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

Description of % is indicated as the change rate compared with the same period last year.

Profit attributable to owners of the Company	Basic earnings
per share

For the Year Ending	Millions of Yen	%	Yen
March 31, 2023
Full-year	85,000	3.2	368.24

Note1 : Changes in full-year earnings forecast : No

Note2 : Basic earnings per share is calculated based on Profit attributable to owners of the Company.

Note

(1) Changes in major subsidiaries during the period

(Changes in specified subsidiaries accompanying changes in scope of consolidation) : No

1. Accounting policy changes and accounting estimate changes
2. 1. Changes in accounting policies required by IFRS : No
   2. Changes due to other reasons : No
   3. Accounting estimate change : No
3. Number of outstanding shares at the end of the periods (Common Stock):
4. 1. Number of issued shares at the end of the periods (Including treasury shares):

As of June 30, 2022: 250,299,900

As of March 31, 2022:

250,299,900

2. Number of treasury stock at the end of the periods:

As of June 30, 2022 :

19,475,184

As of March 31, 2022 :

19,470,556

3. Average number of issued shares during the periods:

For the first quarter ended June 30, 2022 (accumulative): 230,821,799

For the first quarter ended June 30, 2021 (accumulative): 238,716,216

Note1: The Company conducted a five-for-one share consolidation of shares of common stock effective October 1, 2021. Average number of issued shares during the periods for the first quarter ended June 30, 2021 (accumulative) have been calculated based on the assumption that the share consolidation had been conducted on October 1, 2021.

Note2: The Company established the Executive Compensation Board Incentive Plan Trust. The trust account associated with this trust holds shares of the Company's stock, which are treated as treasury shares; 988,099 stocks in the first quarter ended June 30, 2022 and 1,003,203 stocks in the financial year ended March 2022.

* This summary of consolidated financial results is not subject to quarterly reviews.

*䚷Important Note Concerning the Appropriate Use of Business Forecasts and other

This document contains forward-looking statements based on information available to the company at the time of disclosure and certain assumptions that management believes to be reasonable. Sojitz makes no assurances as to the actual results and/or other outcomes, which may differ substantially from those expressed or implied by forward-looking statements due to various factors including changes in economic conditions in key markets, both in and outside of Japan, and exchange rate movements. The Company will provide timely disclosure of any material changes, events, or other relevant issues.

1. Analysis of Business Results

1. Overview of the Three-Month Period Ended June 30, 2022

Economic Environment

In the three-month period ended June 30, 2022, increasingly strong downward pressure was placed on the global economy by factors including Russia's military invasion of Ukraine, the economic sanctions placed on Russia in response to this act, and the lockdowns instituted in cities in China associated with the COVID-19 spread. Ongoing need to monitor impact factors such as resumed increase in COVID-19 cases and concern for economic recession due to reduced demand stemming from monetary tightening of central banks worldwide and continuously high inflation.

In the United States, the Federal Reserve Board is accelerating interest rate hikes in response to rising inflation, and it is projected that an interest increase of 1.75 percentage points will be announced at the Federal Open Market Committee scheduled after July 2022. These rapid interest rate hikes, instituted over a short period of time, have led to a "reverse yield" situation under which short-term interest rates surpass long-term interest rates. This situation is creating concern for a potential recession in the second half of the year ending March 31, 2023, and this trend must be monitored carefully.

In Europe, the European Central Bank is taking a proactive stance in its response toward inflation. It is also expected that additional interest rates hikes will be instituted in September 2022, adding to those hikes scheduled for implementation in July. Meanwhile, European countries are instituting increasingly harsh sanctions on Russia. At the same time, however, these countries are also highly dependent on crude oil and gas produced in Russia, a situation that is expected to have an adverse impact on the value chains of the manufacturing industry and a wide range of other industries.

China's Zero-COVID strategy placed great pressure on economic activities during the three-month period ended June 30, 2022. However, lockdowns are currently being canceled, and economic activities have resumed along with massive improvements in economic indicators like the Purchasing Managers Index of China. Regardless, ongoing caution is required in relation to risks of economic downturns that might result from the potential reinstatement of lockdowns in major Chinese cities. At the same time, careful attention is warranted with regard to the economic stimulus measures including infrastructure investments and tax breaks for small and medium-sized enterprises to be implemented leading up to the meeting of the National Congress of the Chinese Communist Party scheduled for November 2022.

In Asia, production and exports continue to recover with the resumption of economic activities, but the pace of economic recovery is slow. Under the situation, inflation is not expected to significantly surpass the targets of the central banks of Asian countries, and the levels of inflation of these Asian countries currently differ from certain resource-producing countries. ASEAN countries, with the exception of Thailand, are expected to raise interest rates at least once leading up to December 31, 2022.

Production and exports in Japan were heavily impacted by the lockdowns instituted in China over the period from April to May 2022, but a recovery trend was seen emerging in June. However, the Bank of Japan has decided that it will continue its prior monetary easing measures, even amid the global monetary tightening trend. Accordingly, there is concern that further yen depreciation may continue due to the ongoing widening of the gap in interest widening rates between the United States and Japan. Caution is warranted with regard to this trend.

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Financial Performance

Sojitz Corporation's consolidated business results for the first quarter ended June 30, 2022, are presented

below.

RevenueRevenue was up 25.5% year on year, to ¥618,511 million, due to higher revenue in the Metals, Mineral Resources & Recycling Division, a result of higher prices for coal; in the Consumer Industry & Agriculture Business Division, a result of higher lumber prices as well as growth in its transactions; and in the Chemicals Division, a result of higher methanol prices, etc.

Gross profit	Gross profit was up ¥40,442 million year on year, to ¥96,888 million, due to higher
	profit in the Metals, Mineral Resources & Recycling Division, a result of higher
	prices for coal; in the Automotive Division, a result of increased sales volumes in
	overseas automotive operations; in the Chemicals Division, a result of higher
	methanol prices, etc.
Profit before tax	Profit before tax was up ¥37,325 million year on year, to ¥60,538 million, as a
	result of increases in gross profit and share of profit of investments accounted for
	using the equity method, etc. despite an increase of selling, general and
	administrative expenses of the acquisition of consolidated subsidiaries.

Profit for the period After deducting income tax expenses of ¥14,508 million from profit before tax of ¥60,538 million, profit for the period amounted to ¥46,030 million, up ¥28,022 million year on year. Profit for the period (attributable to owners of the Company) increased ¥28,226 million year on year, to ¥45,150 million.

Comprehensive Comprehensive income for the period of ¥92,686 million was recorded, up income for the period ¥55,005 million year on year, following an increase in financial assets at fair

value through other comprehensive income along with more beneficial foreign currency translation differences for foreign operations, etc. Comprehensive income for the period (attributable to owners of the Company) was ¥87,584 million, an increase of ¥51,043 million.

				(In Millions of Yen)
	Fiscal Year	Fiscal Year	Difference		Percentage
	2022 Q1	2021 Q1		difference
	(A)-(B)
	Results(A)	Results (B)		(%)
Revenue	618,511	492,842	125,669		25.5
Gross profit	96,888	56,446	40,442		71.6
Profit before tax	60,538	23,213	37,325		160.8
Profit for the period	46,030	18,008	28,022		155.6
Profit for the period
attributable to owners of	45,150	16,924	28,226		166.8
the Company
Comprehensive income	92,696	37,681	55,005		146.0
for the period

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Results for the three-month period ended June 30, 2022, are summarized by segment below.

Effective April 1, 2022, Sojitz Group reorganized its Consumer Industry & Agriculture Business and Retail & Consumer Service segments and changed its reporting segment classification method.

Automotive

Revenue was up 29.4% year on year, to ¥73,584 million, due to higher sales volumes in overseas automobile operations, etc. Profit for the period (attributable to owners of the Company) rose ¥860 million, to ¥1,973 million, as a result of an increase in gross profit, etc.

Aerospace & Transportation Project

Revenue was up 52.9% year on year, to ¥9,671 million, due to the increase of transactions related to defense systems and the acquisition of in-flight catering business, etc. Profit for the period (attributable to owners of the Company) increased ¥618 million, to ¥764 million, as a result of an increase in gross profit, etc.

Infrastructure & Healthcare

Revenue was up 44.7% year on year, to ¥21,665 million, due to the acquisition of energy conservation business in the U.S., etc. Profit for the period (attributable to owners of the Company) increased ¥5,380 million, to ¥6,198 million, as a result of an increase in gross profit, an increase in share of profit of investments accounted for using the equity method in overseas wind power generation businesses and an increase in other income (expenses) by a partial sale of an overseas telecommunications tower operating company, etc.

Metals, Mineral Resources & Recycling

Revenue was up 34.4% year on year, to ¥166,868 million, due to higher prices for coal, etc. Profit for the period (attributable to owners of the Company) increased ¥18,701 million, to ¥24,673 million, as a result of an increase in gross profit, etc.

Chemicals

Revenue was up 17.2% year on year, to ¥156,585 million, due to higher methanol prices, etc. Profit for the period (attributable to owners of the Company) increased ¥1,590 million, to ¥5,599 million, as a result of an increase in gross profit, etc.

Consumer Industry & Agriculture Business

Revenue was up 37.5% year on year, to ¥96,737 million, due to the higher prices and sales volumes in lumber transactions. Profit for the period (attributable to owners of the Company) increased ¥232 million, to ¥3,246 million, as a result of an increase in gross profit.

Retail & Consumer Service

Revenue was up 36.4% year on year, to ¥71,989 million, due to the acquisition of aquaculture food product manufacturing and processing company, etc. Profit for the period (attributable to owners of the Company) decreased ¥128 million, to ¥453 million, despite an increase in gross profit, as an increase of selling, general and administrative expenses of aquaculture food product manufacturing and processing company and a decrease of share of profit of investments accounted for using the equity method, etc.

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