Sumitomo Riko : Financial Results for 2nd Quarter of FY2020

Financial Results for 2nd Quarter of FY2020 October 30, 2020

Sumitomo Riko Company Limited

1. Consolidated Statements 〔IFRS〕 (from April 1, 2020 to September 30, 2020)

1) Consolidated Profit/loss			(100 millions of yen)
	Q2 FY2019	Q2 FY2020	Year on year
	(Six-month period)	(Six-month period)	grow th
Net sales	2,293	1,672	-620	-27.1%
Business profit	52	△75	-128	－
Other income and expenses	△2	△48	-46	－
Operating profit	50	△123	-174	－
Financial income and expenses	△6	△5	+1	－
Profit before income taxes	45	△128	-173	－
Income tax expense	△40	2	+42	－
Profit for the period	5	△126	-131	－
Profit attributable to ow ners of the parent company	△3	△127	-124	－
Non-controlling interests	8	0	-8	－

(Note) Business profit is presented by subtracting Cost of sales and Selling, general and administrative expenses from Net sales, and by adding Equity in earnings/losses of associates.

2) Results by Business Segment			(100 millions of yen)
		Q2 FY2019	Q2 FY2020	Year on year
		(Six-month period)	(Six-month period)	grow th
	Automotive Products	2,003	1,431	-573	-28.6%
Net sales	General Industrial Products	289	242	-48	-16.5%
	Consolidated Total	2,293	1,672	-620	-27.1%
Business	Automotive Products	45	△77	-122	－
General Industrial Products	7	1	-6	-83.6%
profit
Consolidated Total	52	△75	-128	-

(Note) From this fiscal year, the company has integrated its "Automotive Products" business by transferring Sealing rubber business from the "General Industrial Products" segment to the "Automotive Products" segment. The reportable segment for the previous fiscal year is prepared and disclosed based on this transfer/change.

3) Results by Geographical Segment			(100 millions of yen)
		Q2 FY2019	Q2 FY2020	Year on year
		(Six-month period)	(Six-month period)	grow th
	Japan	1,066	744	-322	-30.2%
	Americas	519	328	-191	-36.7%
Net sales	Asia	708	605	-103	-14.5%
Europe and Others	274	183	-91	-33.3%
	Eliminations or Corporate	△274	△188	+86	－
	Consolidated Total	2,293	1,672	-620	-27.1%
	Japan	6	△60	-66	－
	Americas	△5	△38	-33	－
Business	Asia	58	40	-17	-29.9%
profit	Europe and Others	△2	△19	-16	－
	Eliminations or Corporate	△4	1	+5	－
	Consolidated Total	52	△75	-128	-

(Note) Before elimination of intersegment transactions. Monetary amounts and percentage figures are rounded off to the nearest specified unit.

4) Exchange Rate (Average Rate)

	Q2 FY2019	Q2 FY2020	Year on year
	(Six-month period)	(Six-month period)	grow th
Yen/USD	108.63	106.92	-1.71	-1.6%
Yen/EUR	121.42	121.30	-0.12	-0.1%
Yen/RMB	15.68	15.26	-0.42	-2.7%
Yen/THB	3.49	3.38	-0.11	-3.2%
Yen/MXN	5.64	4.72	-0.92	-16.3%
Yen/BRL	27.55	19.91	-7.64	-27.7%

(Note) Monetary amounts and percentage figures are rounded off to the nearest specified unit.

2. Review of Financial Results

1. General Overview
2. • Due to the restart of economic activity that had stalled because of the impact of the novel coronavirus pandemic, the number of automobiles produced has recovered more than originally expected, but Q2 FY2020 consolidated performance posted a loss for the profit indicators in the table below (from Business Profit to the right) due to a large drop in sales from Q1.
   • Recovering sales and taking action to improve profitability pushed Q2 business profit into the black.
   • Working toward a transformation into a stronger business structure capable of ensuring a profit even during slow operations, the group will endeavor to strengthen earning power through restructuring and further action to cut cost prices and reduce expenses.
3. Performance by Business Segment

Net sales 167.2 billion yen (down 27.1% YoY)

1. Automotive Products 143.1 billion yen (down 28.6% YoY)

• In Japan, revenues fell due to fewer vehicles being produced and weak consumer confidence attributable to last-minute demand prior to last year's consumption tax hike and this year's novel coronavirus pandemic.
• In the Americas and Europe, vehicle production by volume observably recovered more than originally expected due to the lift of lockdown restrictions, but fewer vehicles being produced led to decreased revenues.
• In China revenues increased due to a higher number of vehicles sold, especially by Japanese car manufacturer. Meanwhile, revenues in Thailand fell due to the lower number of vehicles produced for export.

1. General Industrial Products 24.2 billion yen (down 16.5% YoY)

• Functional parts for printers and copy machines experienced fewer items shipped for office printers, copy machines, etc. and lower revenues due to such factors as diversifying work styles and work environments with corona.
• Production volume and revenues for high-pressure hoses increased due to higher demand in China for public works projects funded by economic stimulus measures.

Business Profit -7.5 billion yen (compared to 5.2 billion yen in the same period last year)

1. Automotive Products -7.7 billion yen (compared to 4.5 billion yen in the same period last year)

• Excluding China, profit fell due to lower sales. In Thailand, meanwhile, the first half business profit turned into the black.
• In China, profit increased due to the effects of higher sales and action to improve profitability.

1. General Industrial Products 0.1 billion yen (down 83.6% YoY)

• Profits from printer and copy machine functional parts fell due to lower sales.
• Profits from high-pressure hoses rose due to increased sales in China.

3. Revision to figures in FY2020 consolidated results forecast (from April 1, 2020 to March 31, 2021)

Previous forecast FY2020 Q2 (Six-month period)

Full year (A)

Revised forecast FY2020 (B)

Changed amount (B-A)

Prior period results (FY2019)

			Profit
Net sales	Business	Operating	before
profit	profit	income
			taxes
100 millions	100 millions	100 millions	100 millions
of yen	of yen	of yen	of yen
1,600	△99	△133	△137
3,600	△72	△129	△139
3,750	△20	△85	△95
+150	+52	+44	+44
4,451	113	89	74

	Profit
Profit	attributable
for	to ow ners of
the year	the parent
	company
100 millions	100 millions
of yen	of yen
△133	△131
△150	△151
△117	△125
+33	+26
25	9

Profit attributable to ow ners of the parent company per share (basic)

Yen

△126.17 △145.43 △120.39 +25.04 8.48

Although concerns remain about lower demand due to the further spread of the novel coronavirus, net sales have been revised upward based on the gradual resumption of economic activity as determined from sources such as currently available information and forecasts.

For business profit, efforts will be made to revive earning power such as increasing sales volume, realigning business locations, cutting cost prices, and reducing expenses.

Mid-year dividends will not be paid out due to the losses for profit indicators under business profit in the chart. On the other hand, based on the aforementioned revision to the consolidated performance forecast, the end-of-year dividend payout will be an estimated 7 yen per share.