July 11, 2023

Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 29, 2024
(Three Months Ended May 31, 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:
July 11, 2023
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 First Quarter (March 1, 2023 – May 31, 2023) of the
Fiscal Year Ending February 29, 2024
(Percentages represent year-on-year changes)(1) Consolidated results of operations
Net sales

Operating profit

Million yen

Three months ended May 31, 2023
Three months ended May 31, 2022
Note: Comprehensive income%

Million yen%

Million yen

%

4,200
18.8
(29)
(17)
3,535 (10.6)
(104)
(43)
Three months ended May 31, 2023: 71 million yen
Three months ended May 31, 2022: 334 million yen
Diluted net income
Net income per shareper share
Yen

Profit attributable toowners of parent

Ordinary profit

Million yen

%

(18)
(45)
(down 78.5%)(up 31.9%)-

Yen

Three months ended May 31, 2023
(1.12)
Three months ended May 31, 2022
(2.73)
Reference: Equity in earnings of affiliates Three months ended May 31, 2023: (3) million yen
Three months ended May 31, 2022: (4) million yen(2) Consolidated financial position
Total assets

Net assets

Million yen

As of May 31, 2023
As of Feb. 28, 2023
Reference:Equity capital

Equity ratio

Million yen

Net assets per share%

22,605
13,85422,758
14,117
As of May 31, 2023: 13,854 million yen

Yen

61.3
827.3962.0
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
Fiscal year ending Feb. 29, 2024
0.00
(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 attributableto owners of parent
share

Operating profit%

Million yen

Ordinary profit%

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 May 31, 2023:

18,400,000 shares

As of Feb. 28, 2023:

18,400,000 shares

As of Feb. 28, 2023:

1,655,480 shares

2) Number of treasury shares at the end of the period
As of May 31, 2023:

1,655,480 shares

3) Average number of shares outstanding during the period
Three months ended May 31, 2023: 16,744,520 shares

Three months ended May 31, 2022: 16,744,520 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 First 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 First Quarter of FY2/24

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
The Japanese economy slowly recovered during the first quarter of the current fiscal year as pandemic
restrictions on activities were eased and economic activity returned to normal. However, the outlook for the
economy remains uncertain because of the soaring energy prices and inflation caused by the prolonged Ukraine
conflict and ongoing global financial tightening. There are also concerns about the impact on the Japanese
economy of a downturn in overseas economies.
In the pharmaceutical industry, a key user of Freund Group products, companies face challenges such as dealing
with health insurance drug price revisions, reinforced measures to control healthcare expenditures and therapidly rising R&D expenses. In addition, many pharmaceutical companies need to build factories and replaceequipment due to aging facilities. In the generic drug industry, the effects of the government’s measures toincrease the use of generic drugs have run their course. Due to deficiencies of some manufacturers in their
manufacturing systems, the industry as a whole need to build a sound infrastructure for ensuring the quality andstable supply of generic drugs. Major generic drug manufacturers plan to expand their operations, such as bybuilding additional plants, to address this need.
The outlook is positive for the global pharmaceutical industry as expectations increase for growing demand forpharmaceuticals as the world’s population increases and ages, and living standards in emerging countries
improve. In June 2023, in addition to Japan, the United States, India and Italy, operations started at a businesssite in China, which gives the Freund Group its long-awaited five-pole global structure. With this structure, theFreund Group will take more actions to maximize synergies among group companies to enhance its presence inJapan and international markets.
In the chemicals business as well, there are activities for further strengthening sales capabilities andmanufacturing operations. The Group has established a framework for utilizing its technologies to meetcustomers’ true needs. All of these initiatives will create a sound base for even more product development,
manufacturing and sales activities worldwide.
In the current fiscal year, we are working on reaching the consolidated targets of sales of 20,000 million yen andan operating profit of 700 million yen.
In the first quarter of the fiscal year ending in February 2024, net sales increased 18.8% year-over-year to 4,200
million yen, there was an operating loss of 29 million yen compared with a loss of 104 million yen one year
earlier, the ordinary loss was 17 million yen compared with a loss of 43 million yen one year earlier, and there
was a loss attributable to owners of parent of 18 million yen compared with loss attributable to owners of parentof 45 million yen one year earlier.
Operating results by segment are as follows
Machinery Business Segment
Although orders in Japan remain strong, there have still not been any improvements regarding the long timerequired to purchase some parts and the increasing length of delivery lead times for finished products.
In the first quarter of the previous fiscal year, shipments were delayed due to the tight labor supply and long timerequired to procure parts/materials caused by supply chain disruptions at the U.S. subsidiary. Performancerecovered significantly in the first quarter of the current fiscal year due to steady progress with shipping
products to customers.
As a result, net sales increased 22.9% year-over-year to 2,556 million yen and segment loss was 76 million yen
compared with segment loss of 156 million yen in the same period of the previous fiscal year).

2

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

Chemicals Business Segment
First quarter sales were higher than one year earlier, which was a new record for quarterly sales, because ofstrong sales of both pharmaceutical excipients and food preservatives.
There were big increases in sales and operating profit of pharmaceutical excipients because some sales of certain
highly profitable products expected to be recognized in the first quarter of the previous fiscal year were pushed
back to the second quarter. First quarter sales of these products returned to normal in the current fiscal year.
Food preservative sales and operating profit increased. Demand remained strong because of strong e-commerce
sales of bread.
As a result, net sales increased 13.0% year-over-year to 1,643 million yen and segment profit increased 7.6% to
207 million yen.
(2) Explanation of Financial Position
Total assets decreased 153 million yen from the end of the previous fiscal year to 22,605 million yen at the endof the first quarter. This mainly reflected decreases of 656 million yen in notes and accounts receivable-trade andcontract assets and 634 million yen in cash and deposits, while there were increases of 819 million yen in workin process, 203 million yen in electronically recorded monetary claims-operating and 114 million yen in softwarein progress.
Total liabilities increased 109 million yen from the end of the previous fiscal year to 8,750 million yen at the endof the first quarter. This mainly reflected increases of 229 million yen in short-term borrowings, 108 million yen
in electronically recorded obligations-operating, and 106 million yen in provision for bonuses, while there weredecreases of 313 million yen in notes and accounts payable-trade and 25 million yen in contract liabilities.
Net assets decreased 262 million yen from the end of the previous fiscal year to 13,854 million yen at the end of
the first quarter. This mainly reflected a decrease of 353 million yen in retained earnings, while there was anincrease of 96 million yen in foreign currency translation adjustment.
(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 First 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 other officers)
Other
Total non-current liabilities
Total liabilities

4(Thousands of yen)First quarter of FY2/24(As of May 31, 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

3,283,012
4,259,498
823,072
764,7363,537,154
1,925,947
201,850
742,974(16,528)
15,521,719

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

2,019,820
1,146,159
1,314,200
4,480,179

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

29,538675,074
328,046
46,855
1,079,515

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

415,294
1,113,815(5,400)1,523,709
7,083,404
22,605,124

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

1,583,218
942,022
1,125,363
47,6692,887,954
327,194
7,900
1,008,116
7,929,439

408,206
267,351
67,26312,096
71,522
826,439
8,641,685

408,075
263,585
67,296
13,734
68,769821,461
8,750,901

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

FY2/23(As of Feb. 28, 2023)(Thousands of yen)First quarter of FY2/24(As of May 31, 2023)

Net assets
Shareholders’ equity
Share capital

1,035,600

1,035,600

Capital surplus

1,289,513

1,289,513

Retained earnings

11,899,999

11,546,319

Treasury shares(773,363)(773,363)

Total shareholders’ equity

13,451,750

13,098,070

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

32,992

27,924Foreign currency translation adjustment

612,727

709,135

Remeasurements of defined benefit plans

19,71919,091

Total accumulated other comprehensive income

665,439

756,152

14,117,189

13,854,222

22,758,875

22,605,124

Total net assets
Total liabilities and net assets

5Freund Corporation (6312) Financial Results for the First Quarter of FY2/24(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)First three months of FY2/23(Mar. 1, 2022 – May 31, 2022)(Thousands of yen)First three months of FY2/24(Mar. 1, 2023 – May 31, 2023)

Net sales

3,535,718

4,200,237

Cost of sales

2,331,587

2,858,637

Gross profit

1,204,131

1,341,599

Selling, general and administrative expenses

1,308,480

1,371,148

Operating loss

(104,349)(29,548)

Non-operating income
Interest income

140

Dividend income

3,949

4,198

Technical support fee income

5,098

5,137

Foreign exchange gains

52,198

8,670

Other

6,162

12,746

Total non-operating income

67,42330,753

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

1,841

14,720

4,917

3,256

140

383

Total non-operating expenses

6,899

18,360(43,825)(17,155)

Gain on sale of non-current assets

13,506142

Total extraordinary income

13,506142

Non-operating expenses

Ordinary loss
Extraordinary income

Extraordinary losses
Loss on sale of non-current assets

1,309

-

Loss on retirement of non-current assets

18

3,936

Loss on valuation of investment securities

1,929

6,285

Total extraordinary losses

3,257

10,221(33,576)(27,235)

Loss before income taxes
Income taxes

12,057(8,446)Loss(45,633)(18,789)

Loss attributable to owners of parent(45,633)(18,789)6Freund Corporation (6312) Financial Results for the First Quarter of FY2/24

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY2/23(Mar. 1, 2022 – May 31, 2022)(Thousands of yen)First three months of FY2/24(Mar. 1, 2023 – May 31, 2023)(45,633)(18,789)(15,159)(5,068)385,662

97,665

2,529

(627)

7,209

(1,257)

380,241

90,712

334,607

71,923334,607

71,923Loss
Other 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 First 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 First Quarter of FY2/24

Segment and Other Information
Segment information
I First three months of FY2/23 (Mar. 1, 2022 – May 31, 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

2,080,664

1,455,054

3,535,718-

3,535,718

-

-

-

-

-

2,080,664

1,455,054

3,535,718-

3,535,718

Segment profit (loss)(156,911)
Notes: 1. Contents of adjustments are as follows.

192,542

35,631(139,980)(104,349)(2) Inter-segment sales andtransfers
Total

The negative adjustment of 139,980 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 loss 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

2,522,956
89,890363,519
190,918
339,388
29,045
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

Total
3,535,718

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

II First three months of FY2/24 (Mar. 1, 2023 – May 31, 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

2,556,527

1,643,710

4,200,237-

4,200,237

-

-

-

-

-

Total

2,556,527

1,643,710

4,200,237-

4,200,237

Segment profit (loss)(76,259)
Notes: 1. Contents of adjustments are as follows.

207,094130,834(160,383)(29,548)

The negative adjustment of 160,383 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

2,556,808
590,951
372,746
155,132
387,041
137,557
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, Mexico, etc.

(2) Europe:

France, Italy, UK, etc.

(3) Asia:

China, India, etc.

(4) Other:

Middle East, Africa, etc.

10

Total
4,200,237

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

Revenue Recognition
Information of breakdown on revenue from contracts with customers
First three months of FY2/23 (Mar. 1, 2022 – May 31, 2022)(Thousands of yen)
Reportable segments

Machinery BusinessJapan

Chemicals Business

Total

1,175,430

1,347,525

United States

89,770120

89,890Latin America

363,519-

363,519

Europe133,474

57,444

190,918

Asia

289,423

49,964

339,388

Other

2,522,956

29,045-29,045

Revenue from contracts with customers

2,080,664

1,455,054

3,535,718

External sales

2,080,664

1,455,054

3,535,718

First three months of FY2/24 (Mar. 1, 2023 – May 31, 2023)(Thousands of yen)
Reportable segments

Machinery Business

Chemicals Business

Total

Japan

989,534

1,567,273

2,556,808

United States

590,951-

590,951

Latin America

372,746-

372,746

Europe133,035

22,097

155,132

Asia

333,61453,427

387,041

Other

136,645912

137,557

Revenue from contracts with customers

2,556,527

1,643,710

4,200,237

External sales

2,556,527

1,643,710

4,200,237

11

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

3. Others
Orders and Sales(1) Orders received
Operating segment(Thousands of yen)First three months of FY2/23(Mar. 1, 2022 – May 31, 2022)

First three months of FY2/24(Mar. 1, 2023 – May 31, 2023)

AmountAmountYear-on-year (%)

Year-on-year (%)

Machinery Business
4,043,512
129.1
4,200,255
103.9
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 three months of FY2/23(Mar. 1, 2022 – May 31, 2022)

First three months of FY2/24(Mar. 1, 2023 – May 31, 2023)

AmountAmountYear-on-year (%)

Year-on-year (%)

Machinery Business
181.5
14,607,614
112.1
13,026,352
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 three months of FY2/23(Mar. 1, 2022 – May 31, 2022)

First three months of FY2/24(Mar. 1, 2023 – May 31, 2023)

AmountAmountComposition (%)

Composition (%)

Machinery Business

2,080,664

58.8

2,556,527

60.9

Chemicals Business

1,455,054

41.2

1,643,710

39.1

4,200,237

100.0

Total
3,535,718
100.0
Note: Sales are based on selling prices; inter-segment transactions have been eliminated.

This 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