Tsuzuki Denki : Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023 (JGAAP)

Consolidated Financial Results for the First Quarter of

the Fiscal Year Ending March 31, 2023 (JGAAP)

		July 29, 2022
Company name:	Tsuzuki Denki Co., Ltd.	Listing Stock Exchange: Tokyo
Stock code:	8157	URL: https://www.tsuzuki.co.jp/
Representative (title):	Isao Emori, Representative Director, President and CEO
Contact (title):	Toshihiro Hirai, Managing Executive Officer

Tel: [phone]
Scheduled date for quarterly report submission:	August 3, 2022
Scheduled date for dividend payment:	-
Preparation of supplemental explanatory materials:	No
Results briefing to be held:	No

1. Consolidated financial results for the first quarter of the fiscal year ending March 31, 2023 (April 1, 2022, to June 30, 2022)

(1) Consolidated operating results

Millions of yen (rounded down), % figures are year-on-year change

								Quarterly profit
	Net sales		Operating income	Ordinary income	attributable to
								owners of parent
First quarter,
year ending	24,609		(0.9)	(202)	-	(109)	-	(147)		-
March 31, 2023
First quarter,
year ended	24,821		5.0%	(262)	-	(230)	-	(244)		-
March 31, 2022

Note: Comprehensive income was (100) million yen (-%) in first quarter of year ending March 31, 2023; (75) million yen (-%) in first quarter of year ended March 31, 2022.

	Earnings per share	Diluted earnings per
	(yen)	share (yen)
First quarter,
year ending	(8.30)	-
March 31, 2023
First quarter,
year ended	(13.89)	-
March 31, 2022
(2) Consolidated financial position
	Total assets	Net assets	Shareholders'	Net assets per share
	(millions of yen)	(millions of yen)	equity ratio	(yen)
First quarter,
year ending	73,243	32,558	44.1%	1,818.21
March 31, 2023
Year ended	79,226	33,199	41.5%	1,853.68
March 31, 2022

Reference: Shareholders' equity at first quarter, year ending March 31, 2023; 32,280 million yen; in year ended March 31, 2022; 32,847 million yen.

1

2. Dividends

Dividends per share for the fiscal year (yen)

End of

End of

End of

Year-

first

second

third

Total

end

quarter

quarter

quarter

Year ended

-

23.00

-

25.00

48.00

March 31, 2022

Year ending

-

March 31, 2023

Year ending

March 31, 2023

25.00

-

25.00

50.00

(forecast)

Note:

1.Revisions to most recent dividend forecast: None

2.The interim dividend for the year ended March 31, 2023 included a commemorative dividend of 2.0 yen per share to celebrate 90th Anniversary of its founding.

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2023 (April 1, 2022, to March 31, 2023)

• figures are year-on-year change

	Net sales	Operating income	Ordinary income	Profit attributable to	Earnings
	owners of parent	per share
	(millions of yen)	(millions of yen)	(millions of yen)
	(millions of yen)	(yen)
Full year	120,000	0.6%	4,000	(0.3%)	4,130	(2.3%)	2,760	(1.4%)	155.49

Note: Revisions to most recent earnings forecast: None

2

*Notes

1. Changes in significant subsidiaries (which affected scope of consolidation) during the quarter: None Newly added ___ companies (names)
   No longer consolidated ___ companies (names)
2. Special accounting methods used in preparation of quarterly consolidated financial statements: Yes Note: For details, please refer to Attachment page 13: "2. Consolidated financial statements and notes (3)
   Notes to quarterly consolidated financial statements (Application of special accounting methods in the preparation of quarterly consolidated financial statements)."
3. Changes in accounting policies, changes in accounting estimates, and restatements

1.	Changes in accounting policies due to changes in accounting standards:	None
2.	Changes in accounting policies not due to changes in accounting standards:	None
3.	Changes in accounting estimates:	None
4.	Restatements:	None

(4) Number of shares outstanding (common stock)

1. Number of shares outstanding at year end (including treasury stock)
2. Number of shares at year end (treasury stock)
3. Average number of shares over the period

First quarter,		Year ended
year ending	20,177,894	20,177,894
March 31, 2022
March 31, 2023
First quarter,		Year ended
year ending	2,423,670	2,457,908
March 31, 2022
March 31, 2023
First quarter,		First quarter,
year ending	17,737,271	year ended	17,582,961
March 31, 2023		March 31, 2022

Note: The number of treasury shares includes those held in the Employee Stock Ownership Plan (ESOP) trust account (92,800 in first quarter, year ending March 2023; 121,000 in year ended March 2022), Directors' Compensation Board Incentive Plan (BIP) trust account (346,034 in first quarter, year ending March 2023; 346,034 in year ended March 2022); and Stock-grant ESOP trust account (452,018in first quarter, year ending March 2023; 458,056 in year ended March 2022).

*The financial information in this quarterly report is not subject to review by certified public accountants or auditing firms.

*Appropriate use of earnings forecast and other special notes.

(Note on forward-looking statements)

The earnings forecasts and other forward-looking statements contained in this document are based on information currently available to the Company, and certain assumptions it considers reasonable, but are not intended to be a promise that the Company will achieve. Actual results may vary materially from forecasts due to a variety of factors.

3

Content of attachment
1. Qualitative information on quarterly results..............................................................................................	5
(1)	Earnings ..............................................................................................................................................................	5
(2)	Financial position ...............................................................................................................................................	8
(3)	Consolidated earnings forecasts and other information concerning the outlook .....................................	8
2. Consolidated financial statements and notes ...........................................................................................	9
(1)	Quarterly consolidated balance sheet ............................................................................................................	9
(2)	Quarterly consolidated statements of income and comprehensive income ...........................................	11
(3)	Notes to quarterly consolidated financial statements.................................................................................	13
(Notes on premise of going concern)..............................................................................................................	13
(Notes on significant changes in the amount of shareholders equity.)......................................................	13
(Application of special accounting methods in the preparation of quarterly consolidated financial
statements) .........................................................................................................................................................	13
(Segment and other information).....................................................................................................................	14

4

1. Qualitative information on quarterly results

(1) Earnings

In the first quarter of the fiscal year ending March 2023, while the Japanese economy continued to recover from the impact of the COVID-19 pandemic, uncertainty about the outlook persisted as the extended Ukraine conflict and constraints on economic activities in China led to rises in raw material prices and supply bottlenecks.

Our group belongs to the information and communications (ICT) services industry. We expect ICT demand to remain strong as companies step up their digital transformation (DX) initiatives in the wake of the pandemic, but some companies continued to curtail their ICT capex due to the delay in recovery in business performance. The electronic device industry performed well as semiconductor demand continued to expand, driven by growing investment in data centers and accelerated efforts in decarbonization and use of renewable energy in the automotive, industrial, and infrastructure sectors.

In these circumstances, our group is carrying out the initiatives outlined in our medium-term management plan ending in the year ending March 2023, titled Innovation 2023, as part of our aim to support the DX efforts of client companies and to be more competitive by becoming an innovation service provider. We are reforming our business structure and strengthening our management base to tap into growing digital transformation needs with a view to sustainable growth and improvements in corporate value.

In the first quarter of the final year of our plan, the Group posted net sales of ¥24,609 million (down 0.9% year- on-year), operating loss of ¥202 million (operating loss of ¥262 million in year earlier), ordinary loss of ¥109 million(ordinary loss of ¥230 million in year earlier), and loss attributable to owners of parent of ¥147 million (loss of ¥244 million in year earlier).

In the Information Network Solutions segment, while orders were strong and above year-earlier levels, sales were lower than the first quarter of the previous year as the semiconductor shortage delayed project deliveries. However this also caused an increase in order backlog, which was significantly above year-earlier levels. Profit declined slightly due to an increase in SG&A expenses and lower sales.

In the Electronic Devices segment, orders and sales were above year-earlier levels, driven by continued frontloading of orders from customers accompanying the semiconductor shortage and strong demand from the factory automation (FA) equipment and industrial equipment industries and electric vehicle industry, aimed at decarbonization. The order backlog increased significantly as many orders were aimed at securing parts from a longer term perspective. Despite an increase in SG&A expenses, profit increased significantly on the year earlier due to higher sales.

The following section discusses earnings by segment in the first quarter.

*Note regarding quarterly earnings for the Group

Many of the Group's customers have business years from April through March the following year. Further, fulfilment obligations for many transactions are judged to be satisfied at a certain point, so the Group's sales and profit tend to be concentrated in September and March, the halfway and endpoints of the fiscal year

5