FREUND CORPORATION(Securities code: 6312)

Results of Operations
for the First Quarter of the Fiscal YearEnding February 29, 2024
July 14, 2023

Copyright(C) 2023 Freund Corp. All rights reserved.

Consolidated Financial Summary for the First Quarter of FY2/24

Copyright(C) 2023 Freund Corp. All rights reserved.

Consolidated Financial Summary
Net sales
Net sales increased significantly compared to the previous fiscal year.
 In the machinery business, Freund－Vector sales recovered.
 The chemicals business maintained a strong performance both in pharmaceutical excipientsand food preservatives.
Profit Following the previous fiscal year, a loss was recorded in the 1st quarter, but there was animprovement in the deficit.
 The primary reason for this improvement is the return to profitability and earnings recovery
at the U.S. subsidiary, which had been sluggish in the previous fiscal year.
(Millions of yen)

FY2/23
1Q

FY2/24
1Q

YoY change

FY2/24
Forecasts％

Net sales

3,535

4,200

664

18.8%

20,000Operating profit

(104)

(29)

74－

700

Ordinary profit

(43)

(17)

26－

650

Profit

(45)

(18)

26－

450

(2.73)(1.12)

1.61－26.87

Depreciation

133

120(13)(9.5)%－R&D expenses

143156139.1%－Earnings per share (yen)Copyright (C) 2023 Freund Corp. All rights reserved.

2

Machinery Business: Overview
Net sales In Japan, the business environment remained challenging as the delivery delays for certain
parts did not improve. Furthermore, some projects were carried over to the next quarter.
 In other countries, our U.S. subsidiary has consistently ramped up shipments, including
those carried over from the previous fiscal year. The substantial increase in overseas sales
has compensated for the decline in domestic sales.
Operating profit
 The deficit narrowed significantly as a result of the U.S. subsidiary's recovery and return toprofitability, after being in the red in the previous fiscal year.
Orders received and order backlog
 Orders received remained strong, driven by the substantial investments in large‐scaleequipment by generic drug manufacturers in Japan.
 The order backlog increased significantly compared to the previous fiscal year and remains
high.
(Millions of yen)

FY2/23
1Q

YoY change

FY2/24
1Q％

Net sales

2,0802,556

475

22.9%

Operating profit

(156)

(76)

80－Orders received

4,043

4,200

156

3.9%

Order backlog

13,026

14,607

1,581

12.1%

Copyright (C) 2023 Freund Corp. All rights reserved.

3Machinery Business: Group Company Performance (Sales/Operating Profit)
FreundCorporation

Despite a decrease in sales primarily due to the prolonged procurement of some parts inJapan, profitability showed a notable increase from the previous fiscal year, leading toan overall improvement in profit.

Freund‐Turbo

Both sales and profits declined sharply as recording of a scheduled project was carriedforward to the next quarter as a result of a delay in acceptance inspection.

Freund‐Vector

In the previous fiscal year, the company faced significant challenges, including delivery
delays of components and materials, shipping delays, and declining profitability due tosoaring raw material prices. However, in the current fiscal year, the company achieved
profitability once again, thanks to steady completion of projects and improved
profitability on projects carried over from the previous fiscal year.

Cos.Mec

Apart from the reactionary decline in sales from the previous year's record‐high, there
will be a significant concentration of major projects in the second half of the year, withthe 1st quarter experiencing sluggish growth.

(Millions of yen)
Before elimination for consolidation

Net sales
Freund Corporation
Freund‐Turbo
Freund‐Vector
Cos.Mec
Operating profit
Freund Corporation
Freund‐Turbo
Freund‐Vector
Cos.Mec

FY2/23
1Q

YoY change

FY2/24
1Q％

2,080

2,556

475

22.9%

1,146

1,107

(39)

(3.4)%

323

214

(108)

(33.7)%

446

1,155

708

159.0%

269

162(106)(39.5)%

(156)

(76)

80－122715

125.0%

(1)

(34)

(33)

(185)

30215

47(98)(145)－－－

Copyright (C) 2023 Freund Corp. All rights reserved.

4

Machinery Business: Group Company Performance (Orders Received/Order Backlog)
Freund Corporation

Order volume was almost the same level as the previous fiscal year, and the orderbacklog achieved record‐high due to many investments in large‐scale facilities bygeneric drug companies in Japan.

Freund‐TurboIn the current quarter, orders experienced a significant decrease compared to theprevious fiscal year, which had included large orders. However, the order backlog
remained nearly at the same level as the previous fiscal year.

Freund‐Vector

Despite progress in sales, there was a significant decline in order backlogs fromthe previous fiscal year.

Cos.Mec

There was a significant increase in orders received compared to the previous fiscal
year, while the order backlogs remained nearly at the same level as the previous
fiscal year.

(Millions of yen)
Before elimination for consolidation

Orders received

FY2/23
1Q

FY2/24
1Q

YoY change％

4,043

4,200

156

3.9%

2,359

2,395

36

1.5%

Freund‐Turbo613

337(276)(45.1)%

Freund‐Vector

1,005

1,091868.6%

191376185

97.0%

13,026

14,607

1,581

12.1%

Freund Corporation

6,399

9,133

2,733

42.7%

Freund‐Turbo

1,024

1,016(7)(0.7)%

Freund‐Vector

4,712

3,205(1,506)(32.0)%

Cos.Mec

1,152

1,252

99

8.6%

Freund Corporation

Cos.Mec
Order backlog

Copyright (C) 2023 Freund Corp. All rights reserved.

5

Machinery Business: Sales by Region
Japan

Sales revenue has been adversely impacted by both the lingering long leadtime for procuring certain parts and the postponement of projects to thenext quarter.

Overseas The increase in sales was significantly attributed to the sales growth ofU.S. subsidiaries both in the U.S. and outside U.S. like Africa and theMiddle East.
 Combined with the depreciaton of the yen, the overseas sales ratio of
the Machinery Business surged to approximately 60.

Europe133
6%
Latin
America363
18%
Overseas905
43％

Others
Asia
29289
1%
14%

FY2/23Q1¥2,080 million
USA894%

Japan
1,175
57%

Asia
333
13%
Europe133
5%
Latin
America372
15%Overseas
1,567
61％

Others136
5%

FY2/24
Q1Japan
989
39%¥2,556 million
USA59023%

Copyright (C) 2023 Freund Corp. All rights reserved.

6

Machinery Business: Quarterly Results
Net sales

Operatingprofit margin(Millions of yen)
6,000

Net sales（left axis）

20%

Operating profit margin（right axis）

15%
5,000
10%
4,000
5%

3,000

0%

‐5%
2,000
‐10%
1,000
‐15%

0‐20%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY2/19FY2/20FY2/21

FY2/22

FY2/23

FY2/24

Copyright (C) 2023 Freund Corp. All rights reserved.

7

Machinery Business: Quarterly Results (Net Sales/Orders Received/Order Backlog)(Millions of yen)
18,000Order backlog
16,000Net sales
Orders received

14,00012,00010,000

8,000

6,000

4,0002,00001Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY2/19FY2/20FY2/21

FY2/22

FY2/23

FY2/24

Copyright (C) 2023 Freund Corp. All rights reserved.

8

Chemicals Business: Overview
Net sales
Sales were steady surpassing the previous fiscal year s record high.
Pharmaceutical excipients：In the previous fiscal year, sales of major products weredeferred to the following quarter. However, in the current
fiscal year, those sales were on track, leading to a
substantial increase in overall sales.
Food preservatives：Sales remained strong due to increased demand in theon‐line bread sales sector.
Export: Sales decreased due to lower production by customers for some products
Operating profit:
Consistent year‐on‐year growth in both sales and profits.
(Millions of yen)

Net sales

FY2/23
1Q

YoY change

FY2/24
1Q％

1,455

1,643

188

13.0%

Pharmaceutical Excipients

834948114

13.7%

Food Preservatives

6206957512.1%（Export sales）

10776(31)(29.0)%

192207147.6%

Operating profit

Copyright (C) 2023 Freund Corp. All rights reserved.

9Chemicals Business: Quarterly Results (by Product Field)
Operatingprofit margin

Net sales(Millions of yen)
2,000

Food Preservatives

Pharmaceutical Excipients

Operating profit margin

20.0%

1,500

15.0%

1,000

10.0%

500

5.0%

00.0%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY2/19FY2/20FY2/21

FY2/22

FY2/23FY2/24

Copyright (C) 2023 Freund Corp. All rights reserved.

10Analysis of Change in Consolidated Operating Profit
 There was a substantial year‐on‐year increase in gross profit, primarily driven by therevenue growth, mainly at the U.S. subsidiary.
 Selling, General, and Administrative (SG&A) expenses rose due to increased officeoutsourcing expenses and personnel expenses at Freund Corporation. The increase ingross profit successfully absorbed the rise in SG&A expenses, leading to animprovement in the operating loss.
(Millions of yen)

Positive factors
Copyright (C) 2023 Freund Corp. All rights reserved.

11Summary of Consolidated Balance Sheet Work in progress I Inventories (work in process) increased across all group companies,
while trade receivables were successfully collected.
 In Japan, there was a reversal in cash and deposits, while short‐term borrowings wereobtained and utilized overseas.
 The decrease in net assets was primarily due to dividend payments, yet the equity
ratio remained high at 61.3%.

AssetsLiabilities and Shareholders' Equity
3,283

Cash anddeposits

3,917

Accounts
receivable

5,535

Inventories

5,5866,227

Other assets

831

928

Non‐currentassets

6,888

7,083

FY2/23\22,758 million

2,730

2,525

2,913

2,887

896
1,275
826

1,125
1,390821

14,117

13,854

FY2/24 1Q

FY2/23

FY2/24 1Q\22,605 million\22,758 million\22,605 million

5,083

Accounts payable
Contract Liabilities(Advances received)
Short‐term debt
Other liabilities
Non‐current
liabilities

Net assets

Copyright (C) 2023 Freund Corp. All rights reserved.

12Topics: Inauguration of Shanghai FC Center (China Technology Development Institute)

The inauguration took place on June 6‐7, 2023, at the Shanghai FC Center.
In China, the world's second‐largest pharmaceutical market, adherence to GMP(Good Manufacturing Practice) and the incorporation of highly functional additives
have become vital requirements as part of the Chinese government's pharmaceuticalsystem reform initiated in 2015. Consequently, Chinese pharmaceuticalmanufacturers are experiencing a growing demand for new machinery.
In response to this trend, we founded the Shanghai FC Center in 2021 incollaboration with Chineway ("CW"), a local company boasting blue‐chip Chinese
pharmaceutical clients.
Functioning as a research facility for both our machinery and pharmaceutical
additives, our objective is to enhance the recognition and visibility of our products.
Top: Exterior view of Shanghai FC Center
Bottom: Commemorative Opening Ceremony(Center: Sherry Fang, Managing Director ofShanghai FC Center)

Key Features of the Shanghai FC Center
1. Shanghai, a hub for numerous Chinese
pharmaceutical companies, now offers local testing
facilities, eliminating the need for them to travel toJapan. Additionally, testing can be conducted incompliance with local regulations.
2. Equipped for prototype testing and performance
evaluation of both formulation machinery andpharmaceutical additives
3. Expanding the pen and ink business model that has
been developed since the Company s founding into
China, with support from the formulation
technology cultivated over the past 60 years.
Copyright (C) 2023 Freund Corp. All rights reserved.

13Inquiries:

Freund Corporation
Corporate Administration Division
Finance & Accounting Department
Tel: +81-3-6890-0747
Fax: +81-3-6890-0870
Email: ir@freund.co.jp

IR website: https: //www.freund.co.jp
This presentation contains forward-looking statements involving plans, outlooks, strategies and policies. Thesestatements reflect the judgments of management and assumptions based on information available at the time ofthis presentation. Actual results of operations may differ from these statements for a number of reasons.
Consequently, forecasts and other forward-looking statements are not guarantees about future performance.
Although Freund has checked this presentation carefully, there is still a possibility of errors in this information.

Copyright (C) 2023 Freund Corp. All rights reserved.

14