To whom it may concern:

January 31, 2023

Company name:
Sumitomo Heavy Industries, Ltd.
Representative:
President and CEO Shinji Shimomura(Securities code: 6302 TSE Prime)
Inquiries: Yoshitaka Shimamura
General Manager, Corporate
Communications Department(TEL. 03-6737-2333）

Notice Regarding the Recording of Extraordinary Losses
and Revision of the Earnings Forecast
Sumitomo Heavy Industries, Ltd. hereby announces that the following extraordinary
losses are expected to be recorded in its financial results for the fiscal year ended December
31, 2022 (April 1, 2022 to December 31, 2022) and it has accordingly revised its consolidated
earnings forecast for the full year ended December 31, 2022, announced on November 11,2022, as shown below.
1. Regarding the Recording of Extraordinary Losses(1) Impairment losses
In March 2017, with the aim of strengthening our circulating fluidized bed boiler business,
SHI acquired 100% of the issued shares of FW Energie B.V. (now known as Sumitomo SHIFW Energie B.V.; hereinafter “SFW”). However, with the trend of global decarbonization, wehave since determined that it will be difficult to realize the sales proceeds anticipated at thetime of the acquisition of SFW, as the market for solid fuel-fired boilers, one of SFW’s corebusinesses, has shrunk significantly, resulting in a business outlook that falls short of ouroriginal business plans. Resultingly, 17.7 billion yen (128 million euros) in fixed assets
including goodwill for SFW will be recorded as impairment losses under extraordinary losses.
In addition, in May 2020, our wholly owned representative office Nihon Spindle
Manufacturing Co., Ltd. acquired 100% of the issued shares of Leifeld Metal Spinning AG(currently, Leifeld Metal Spinning GmbH; hereinafter "LMS") with the aim of strengthening
its business base in the area of spinning/flow forming machines. However, due to a significant
drop in orders which has been slow to recover as a result of the Covid-19 pandemic, we havesince determined that it will be difficult to realize the sales proceeds anticipated at the timeof the acquisition of LMS, resulting in a business outlook that falls short of our original
business plans. Resultingly, 3.0 billion yen (22 million euros) in fixed assets including
goodwill for LMS will be recorded as impairment losses under extraordinary losses.
Furthermore, in addition to the two cases detailed above, we will also record 0.5 billion yen
in impairment losses pertaining to business assets and other assets.
(2) Losses on valuation of investment securities
In February 2020, in order to acquire energy storage technology, SHI invested 46 million
USD in Highview Enterprises Limited (hereinafter “Highview”), a UK company leading thedevelopment of liquid air energy storage (“LAES”). We believe LAES technology will play akey role in realizing a decarbonized society in the future. Despite this, Highview’s net assets
have been significantly damaged due to prior forward-looking investments at this point. As
a result, we are recording the amount of 5.2 billion yen invested in Highview as losses on
valuation of investment securities under extraordinary losses.

2. Regarding the Revision of the Consolidated Earnings Forecast for the Full Year Ended
December 31, 2022
(April 1, 2022 to December 31, 2022)(Amounts are rounded to the nearest 1 million yen)
Sales

Operatingprofit

OrdinaryprofitNet profit
attributableto owners ofparentPreviously
released
forecast (A)Millions ofyen
870,000

Millions ofyen
43,000Millions ofyen
44,000Millions ofyen
26,000Yen
212.25

Revisedforecast (B)854,000

44,00043,000

5,000

40.82

Change (B−A)
Change (%)(16,000)
(1.8)

1,000
2.3

(1,000)(2.3)(21,000)(80.8)――(Reference)
Actual results
last period(period ended
March 31, 2022)

943,979

65,67864,84744,053359.61

Net profit
per share

3. Rationale for Revising the Earnings Forecast
For the outlook for the full year, compared with the previous forecast (released on
November 11, 2022), sales are expected to decrease in Logistics & Construction and othersegments. We expect that operating profit will meet the full-year forecast but ordinary profit
will fall below the full-year estimate due partly to the unfavorable effect of exchange rates.
In addition, we will record impairment losses pertaining to SFW and LMS, and losses on
valuation of investment securities for the amount invested in Highview, under extraordinary
losses. As a result of the above, we decided to revise the previous forecast in regard to sales,operating profit, ordinary profit, and net profit.
For the expected year-end dividend, we are planning to pay a year-end dividend of 45 yen
per share (annual dividend of 90 yen per share) and there is no change to the previous
forecast.
Note: Since an audit of extraordinary losses stated in each item of this document has
currently not yet been completed by the accounting auditor, actual losses may differ from theforecasted figures.
In addition, the above forecasts were prepared based on information that was available atthe time of publishing this announcement. Actual results may differ from the forecasted
figures due to a variety of factors.
END