-

January 12, 2024

Consolidated Financial Results
for the Third Quarter of the Fiscal Year Ending February 29, 2024
(Nine Months Ended November 30, 2023)
Company name:Securities code:
Representative:
Contact:[Japanese GAAP]
Listing: Tokyo Stock Exchange
URL: https://www.freund.co.jp

Freund Corporation

6312
Iwao Fusejima, President & CEO
Masao Wakai, Director, General Manager, Corporate Administration Division
Tel: +81-3-6890-0750
Scheduled date of filing of Quarterly Report:
January 12, 2024
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results: None
None
Holding of quarterly financial results meeting:(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Third Quarter (March 1, 2023 – November 30, 2023) of the
Fiscal Year Ending February 29, 2024
(Percentages represent year-on-year changes)(1) Consolidated results of operations
Net sales
Million yen

Nine months ended Nov. 30, 2023
Nine months ended Nov. 30, 2022
Note: Comprehensive income

Operating profit%

Million yen

Profit attributable toowners of parent

Ordinary profit

Million yen%

14,17013.3
118 161.5
125
(5.1)
54
12,5044.3
45 (90.1)
132 (73.1)
1
Nine months ended Nov. 30, 2023: 387 million yen(down 49.2%)
Nine months ended Nov. 30, 2022: 761 million yen(up 47.6%)
Diluted net income
Net income per shareper share%(99.6)

Yen

Nine months ended Nov. 30, 2023
Nine months ended Nov. 30, 2022
Reference: Equity in earnings of affiliates

Million yen

%

Yen

3.24
0.06
Nine months ended Nov. 30, 2023: (13) million yen
Nine months ended Nov. 30, 2022: (12) million yen(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Nov. 30, 2023
As of Feb. 28, 2023
Reference: Equity capital

Equity ratio

Million yen

Net assets per share%

23,85814,18722,758
14,117
As of Nov. 30, 2023: 14,187 million yen

Yen

59.5
839.4662.0
843.09As of Feb. 28, 2023: 14,117 million yen

2. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Year-end

Total

Yen

Yen

Yen

Yen

Fiscal year ended Feb. 28, 2023
0.00
Fiscal year ending Feb. 29, 2024
0.00
Fiscal year ending Feb. 29, 2024
(forecast)
Note: Revision to the most recently announced dividend forecast: None

-

20.00

20.00

20.00

20.00

3. Consolidated Forecast for the Fiscal Year Ending February 29, 2024 (March 1, 2023 – February 29, 2024)
Net sales
Million yen(Percentages represent year-on-year changes)
Net income per
Profit attributable
Ordinary profit
to owners of parent
share

Operating profit%

Million yen%

Million yen

Full year
20,000
1.7
700
55.0
650
Note: Revision to the most recently announced consolidated forecast: None%

Million yen

%

Yen

16.3

450

-

26.87

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes
in scope of consolidation): None
Newly added: -Excluded: -(2) Application of special accounting methods for presenting quarterly consolidated financial statements: Yes
Note: Please refer to page 8 “(3) Application of Special Accounting Methods for Presenting Quarterly Consolidated
Financial Statements” for details.

(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above:Yes3) Changes in accounting-based estimates:

None4) Restatements:

None(4) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of the period (including treasury shares)
As of Nov. 30, 2023:

18,400,000 shares

As of Feb. 28, 2023:

18,400,000 shares

As of Feb. 28, 2023:

1,655,480 shares

Nine months ended Nov. 30, 2022:

16,744,520 shares

2) Number of treasury shares at the end of the period
As of Nov. 30, 2023:

1,498,808 shares

3) Average number of shares outstanding during the period
Nine months ended Nov. 30, 2023:

16,805,071 sharesThis financial report is not subject to quarterly review by certified public accountants or auditing firms.
Cautionary statement with respect to forecasts of future performance and other special items
Statements about future performance, including forecasts in this document are based on certain assumptions that theCompany considers to be reasonable and relies on and the information currently available. Actual performance may
significantly differ due to various reasons. Please refer to the section “Explanation of Consolidated Forecast and Other
Forward-looking Statements” on page 3 of the attachments regarding preconditions or other related matters for forecasts
shown above.

Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statements of Income and Comprehensive Income

6(3) Notes to Quarterly Consolidated Financial Statements

8

Going Concern Assumption

8

Significant Changes in Shareholders’ Equity

8

Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements

8

Changes in Accounting Policies

8

Segment and Other Information

9

Revenue Recognition11

3. Others

12

Orders and Sales

121Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
The Japanese economy was supported by the recovery of consumer spending and the return of foreign tourists
during the first nine months of the current fiscal year. However, the outlook remains uncertain due to concerns
about a possible economic downturn. The main causes of this uncertainty are the prolonged Ukraine conflict,turmoil in the Middle East, monetary tightening by countries worldwide in response to inflation, and slowing
economic growth in China.
In the pharmaceutical industry, a key user of Freund Group products, there has been a prolonged shortage ofpharmaceuticals in Japan, especially generic drugs. As a result, there is consistently strong demand forequipment for new and expanded factories, particularly at generic drug manufacturers in Japan, to provide areliable supply of drugs.
The Freund Group is strongly committed to meeting the growing demand for pharmaceuticals by ensuring astable supply of its products. All group companies are determined to contribute to health care and healthy
lifestyles. In addition, the Group is pursuing and accelerating the development of group synergy through its
global five-pole framework, which includes Japan, the United States, India, Italy and China.
In the first nine months of the fiscal year ending in February 2024, net sales increased 13.3% year-over-year to
14,170 million yen, operating profit increased 161.5% to 118 million yen, ordinary profit decreased 5.1% to 125
million yen, and profit attributable to owners of parent was 54 million yen compared with profit attributable toowners of parent of 1 million yen one year earlier.
Operating results by segment are as follows
Machinery Business Segment
The order backlog increased to a record-high 18,012 million yen as orders in Japan remained strong, mainly due
to expenditures by generic drug manufacturers to increase production capacity. However, extended lead times forpurchasing certain parts and delivering finished products continue to affect the performance of this business.
In the first nine months of the previous fiscal year, sales and earnings were negatively impacted by significant
shipment delays due to the tight labor supply in the U.S. and extended lead times for parts/materials procurement
caused by supply chain disruptions at the U.S. subsidiary. In the first nine months of the current fiscal year, sales
and earnings have recovered steadily because of improvements involving shipments and other aspects ofoperations. Despite these improvements, there was a loss in this segment due to the negative impact on
profitability of delivery delays concerning prior orders.
As a result, net sales increased 16.4% year-over-year to 9,056 million yen and segment loss was 76 million yen
compared with segment loss of 263 million yen one year earlier.
Chemicals Business Segment
Sales of pharmaceutical excipients used for oral drugs are on track to surpass the previous fiscal year’s record
high. One reason is higher orders from major customers in Japan for increasing production.
In the food preservatives sector, sales are benefiting from the steady recovery of demand for confectionery
products that is backed by the recovery of trips and other outings, including by foreign tourists in Japan,
following the downgrading of the classification of COVID-19 by the Japanese government in May. As withpharmaceutical excipients, sales in the first nine months in this sector are on a pace to surpass the previous fiscal
year’s performance.
As a result, net sales increased 8.3% year-over-year to 5,113 million yen and segment profit decreased 0.7% to
736 million yen.

2

Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24(2) Explanation of Financial Position
Total assets increased 1,100 million yen from the end of the previous fiscal year to 23,858 million yen at the endof the third quarter. This mainly reflected increases of 1,700 million yen in work in process and 85 million yen
in raw materials and supplies, while there was a decrease of 694 million yen in notes and accounts receivabletrade, and contract assets.
Total liabilities increased 1,029 million yen from the end of the previous fiscal year to 9,671 million yen at theend of the third quarter. This mainly reflected increases of 818 million yen in contract liabilities, 365 million yen
in electronically recorded obligations-operating and 143 million yen in notes and accounts payable-trade, while
there was a decrease of 228 million yen in short-term borrowings.
Net assets increased 70 million yen from the end of the previous fiscal year to 14,187 million yen at the end of
the third quarter. This mainly reflected an increase of 320 million yen in foreign currency translation adjustment
and a decrease of 73 million yen in treasury shares, while there was a decrease of 335 million yen in retained
earnings.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements
There are no revisions to the full year consolidated forecasts for the fiscal year ending February 29, 2024, whichwere disclosed in the Consolidated Financial Results for the Fiscal Year Ended February 28, 2023 dated May 8,
2023.

3

Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet
FY2/23(As of Feb. 28, 2023)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade, and contract assets
Electronically recorded monetary claims-operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Software
Software in progress
Customer relationship
Other
Total intangible assets
Investments and other assets
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term borrowings
Income taxes payable
Contract liabilities
Provision for bonuses
Provision for bonuses for directors (and other officers)
Other
Total current liabilities
Non-current liabilities
Lease liabilities
Retirement benefit liability
Asset retirement obligations
Provision for retirement benefits for directors (and otherofficers)
Other
Total non-current liabilities
Total liabilities

4(Thousands of yen)
Third quarter of FY2/24(As of Nov. 30, 2023)

3,917,128
4,915,548
619,666
760,326
2,717,692
2,108,285
199,546
647,052(15,226)
15,870,019

3,229,230
4,220,685
669,240
913,7454,418,501
2,193,671
176,937
703,928(17,840)
16,508,100

2,005,809
1,145,522
1,290,121
4,441,453

2,042,341
1,147,510
1,275,177
4,465,029

32,499560,486
324,848
49,621
967,456

24,444
886,006
341,464
41,2401,293,156

366,398
1,118,946(5,400)1,479,946
6,888,855
22,758,875

453,131
1,144,979(5,400)1,592,711
7,350,897
23,858,997

1,896,836
833,521896,092
130,135
2,913,026
220,553
17,185907,894
7,815,246

2,040,494
1,199,212
667,260
8,946
3,731,356
129,957
23,7001,018,681
8,819,609

408,206
267,351
67,263414,866
275,980
67,362

12,096

17,656

71,522
826,439
8,641,685

75,613
851,480
9,671,089

Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

FY2/23(As of Feb. 28, 2023)(Thousands of yen)
Third quarter of FY2/24(As of Nov. 30, 2023)

Net assets
Shareholders’ equity
1,035,600

Share capital

1,035,600

Capital surplus

1,289,513

1,289,513

Retained earnings

11,899,999

11,564,886

Treasury shares(773,363)(700,173)

Total shareholders’ equity

13,451,750

13,189,826

Valuation difference on available-for-sale securities

32,99247,191

Foreign currency translation adjustment

612,727

933,070

Accumulated other comprehensive income

Remeasurements of defined benefit plans

19,71917,819Total accumulated other comprehensive income

665,439

998,081

14,117,189

14,187,908

22,758,875

23,858,997

Total net assets
Total liabilities and net assets

5Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Nine-month Period)First nine months of FY2/23(Mar. 1, 2022 – Nov. 30, 2022)(Thousands of yen)First nine months of FY2/24(Mar. 1, 2023 – Nov. 30, 2023)

Net sales

12,504,922

14,170,273

Cost of sales

8,365,442

9,817,856

Gross profit

4,139,479

4,352,417

Selling, general and administrative expenses

4,094,193

4,233,989

45,286

118,427

Interest income

55

2,246

Dividend income

5,809

6,015

Technical support fee income

13,731

11,277

Foreign exchange gains

81,472

29,590Other

26,162

24,083

Total non-operating income

127,229

73,213

Interest expenses
Share of loss of entities accounted for using
equity method
Other

19,891

51,31812,192

13,663

7,792

811

Total non-operating expenses

39,876

65,793

132,640

125,847

Gain on sale of non-current assets

13,967

149

Total extraordinary income

13,967

149

Impairment losses

6,693

-

Loss on sale of non-current assets

1,124

-

Loss on retirement of non-current assets

37,672

17,282

Loss on valuation of investment securities

27,812

6,240

Total extraordinary losses

73,303

23,522

Profit before income taxes

73,304102,474

Income taxes

72,28748,078

Profit1,017

54,396

Profit attributable to owners of parent

1,017

54,396

Operating profit
Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary losses

6Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

Quarterly Consolidated Statement of Comprehensive Income(For the Nine-month Period)First nine months of FY2/23(Mar. 1, 2022 – Nov. 30, 2022)(Thousands of yen)First nine months of FY2/24(Mar. 1, 2023 – Nov. 30, 2023)

1,017

54,396(7,426)

14,199753,441

305,160

1,967(1,900)12,90915,182760,892

332,641

761,909

387,038

761,909

387,038

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparent7

Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements
The tax expenses are calculated by first estimating the effective tax rate after the application of tax effectaccounting with respect to profit before income taxes during the fiscal year in which the period falls, andmultiplying that rate by the profit before income taxes for the period. However, Freund uses the statutory
effective tax rate to calculate tax expenses for cases in which using the estimated effective tax rate gives a
noticeably irrational result.
Changes in Accounting Policies
Change in valuation method for inventories
Beginning with the first quarter of the current fiscal year, some foreign consolidated subsidiaries have changed
the valuation method for inventories from the lower of cost or market method with cost determined by the firstin first-out method to the lower of cost or market method with cost determined by the gross average method.
This change was made as part of a reexamination of valuation methods that was performed due to a change in IT
system. The new valuation method was not applied retroactively because its monetary effect is negligible.

8

Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

Segment and Other Information
Segment information
I First nine months of FY2/23 (Mar. 1, 2022 – Nov. 30, 2022)
1. Information related to net sales and profit or loss for each reportable segment
MachineryBusiness

Chemicals
Business(Thousands of yen)Amounts shown onquarterly consolidated
statement of income(Note 2)Adjustment(Note 1)Total

Net sales(1) External sales(2) Inter-segment sales andtransfers

7,783,433

4,721,488

12,504,922-

12,504,922

-

-

-

-

-

Total

7,783,433

4,721,488

12,504,922-

12,504,922

Segment profit (loss)(263,334)
Notes: 1. Contents of adjustments are as follows.

742,190

478,856(433,569)

45,286

The negative adjustment of 433,569 thousand yen to segment profit (loss) includes corporate expenses that are notallocated to any of the reportable segments. Corporate expenses mainly consist of selling, general andadministrative expenses that are not attributable to any of the reportable segments.
2. Segment profit (loss) is adjusted to be consistent with operating profit recorded in the quarterly consolidated
statement of income.

2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Omitted due to immateriality.
3. Information by region
Net sales
In addition to the disclosure of information required by the “Accounting Standard for Quarterly Financial
Statements,” the Company provides information by region (net sales) based on the “Accounting Standard forDisclosures about Segments of an Enterprise and Related Information” for the purpose of providing investors
with useful information.
(Thousands of yen)Japan

United States

Latin America

1,068,220

937,467

8,167,784

Europe761,099

Asia
1,439,415

Other130,935

Total
12,504,922

Notes: 1. Classification of net sales is based on the location of the client and categorized by country or region.
2. Groupings of countries and regions other than Japan are determined by geographic proximity and mutual
operational relationships. Major countries and regions in each geographic segment are as follows.
(1) Latin America:

Brazil, etc.

(2) Europe:

France, Italy, UK, etc.

(3) Asia:

China, India, etc.

(4) Other:

Middle East, etc.

9Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

II First nine months of FY2/24 (Mar. 1, 2023 – Nov. 30, 2023)
1. Information related to net sales and profit or loss for each reportable segment
MachineryBusiness

Chemicals
Business(Thousands of yen)Amounts shown onquarterly consolidated
statement of income(Note 2)Adjustment(Note 1)Total

Net sales(1) External sales(2) Inter-segment sales andtransfers

9,056,788

5,113,485

14,170,273-

14,170,273

-

-

-

-

-

Total

9,056,788

5,113,485

14,170,273-

14,170,273

Segment profit (loss)(76,653)
Notes: 1. Contents of adjustments are as follows.

736,637

659,984(541,556)

118,427

The negative adjustment of 541,556 thousand yen to segment profit (loss) includes corporate expenses that are notallocated to any of the reportable segments. Corporate expenses mainly consist of selling, general andadministrative expenses that are not attributable to any of the reportable segments.
2. Segment profit (loss) is adjusted to be consistent with operating profit recorded in the quarterly consolidated
statement of income.

2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Not applicable.
3. Information by region
Net sales
In addition to the disclosure of information required by the “Accounting Standard for Quarterly Financial
Statements,” the Company provides information by region (net sales) based on the “Accounting Standard forDisclosures about Segments of an Enterprise and Related Information” for the purpose of providing investors
with useful information.
(Thousands of yen)Japan

United States

Latin America

Europe

Asia

Other

8,418,772
1,259,034
1,929,435
807,363
1,154,213
601,453
Notes: 1. Classification of net sales is based on the location of the client and categorized by country or region.

Total
14,170,273

2. Groupings of countries and regions other than Japan are determined by geographic proximity and mutual
operational relationships. Major countries and regions in each geographic segment are as follows.
(1) Latin America:

Brazil, Mexico, etc.

(2) Europe:

France, Italy, UK, etc.

(3) Asia:

China, India, etc.

(4) Other:

Middle East, Africa, etc.

10Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

Revenue Recognition
Information of breakdown on revenue from contracts with customers
First nine months of FY2/23 (Mar. 1, 2022 – Nov. 30, 2022)(Thousands of yen)
Reportable segments

Machinery Business

Chemicals Business

Total

Japan

3,716,114

4,451,670

8,167,784

United States

1,068,100

120

1,068,220

Latin America

937,467-

937,467

Europe590,053

171,045

761,099

Asia

1,340,763

98,652

1,439,415

Other130,935-

130,935

Revenue from contracts with customers

7,783,433

4,721,488

12,504,922

External sales

7,783,433

4,721,488

12,504,922

First nine months of FY2/24 (Mar. 1, 2023 – Nov. 30, 2023)(Thousands of yen)
Reportable segments

Machinery Business

Chemicals Business

Total

Japan

3,508,025

4,910,747

8,418,772

United States

1,259,034-

1,259,034

Latin America

1,929,435-

1,929,435

Europe728,625

78,737807,363

Asia

1,035,008

119,205

1,154,213

Other

596,658

4,795

601,453

Revenue from contracts with customers

9,056,788

5,113,485

14,170,273

External sales

9,056,788

5,113,485

14,170,273

11Freund Corporation (6312) Financial Results for the Third Quarter of FY2/24

3. Others
Orders and Sales(1) Orders received
Operating segment(Thousands of yen)First nine months of FY2/23(Mar. 1, 2022 – Nov. 30, 2022)

First nine months of FY2/24(Mar. 1, 2023 – Nov. 30, 2023)

AmountAmountYear-on-year (%)

Year-on-year (%)

11,655,332
109.8
Machinery Business
13,747,604
118.0
Notes: 1. No orders received are shown for the Chemicals Business because production is based on sales plans rather thanspecific orders.
2. Orders received are based on selling prices; inter-segment transactions have been eliminated.

(2) Order backlog
Operating segment(Thousands of yen)First nine months of FY2/23(Mar. 1, 2022 – Nov. 30, 2022)

First nine months of FY2/24(Mar. 1, 2023 – Nov. 30, 2023)

AmountAmountYear-on-year (%)

Year-on-year (%)

159.6
15,365,269
Machinery Business
18,012,587
117.2
Notes: 1. No order backlog is shown for the Chemicals Business because production is based on sales plans rather thanspecific orders.
2. Order backlog is based on selling prices; inter-segment transactions have been eliminated.

(3) Sales
Operating segment(Thousands of yen)First nine months of FY2/23(Mar. 1, 2022 – Nov. 30, 2022)
AmountFirst nine months of FY2/24(Mar. 1, 2023 – Nov. 30, 2023)

Composition (%)

AmountComposition (%)

Machinery Business

7,783,433

62.2

9,056,788

63.9

Chemicals Business

4,721,488

37.8

5,113,485

36.1

12,504,922
100.0
Total
14,170,273
Note: Sales are based on selling prices; inter-segment transactions have been eliminated.

100.0This summary report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been
prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience ofreaders who prefer an English translation.

12