July 7, 2021

Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 28, 2022
(Three Months Ended May 31, 2021)[Japanese GAAP]
Listing: Tokyo (JASDAQ)
Freund Corporation
6312
URL: https://www.freund.co.jp
Iwao Fusejima, President & CEO
Masao Wakai, Managing Director, Division Director, Corporate Planning Division
Tel: +81-3-6890-0750
Scheduled date of filing of Quarterly Report:
July 7, 2021
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results: None
None
Holding of quarterly financial results meeting:Company name:Securities code:
Representative:
Contact:(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter (March 1, 2021 – May 31, 2021) of the
Fiscal Year Ending February 28, 2022
(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Million yen

Three months ended May 31, 2021
Three months ended May 31, 2020
Note: Comprehensive income%

Million yen%

Million yen

3,957
28.6
195
206
3,076
6.9
(165)
(154)
Three months ended May 31, 2021:
280 million yen
Three months ended May 31, 2020: (164) million yen
Net income per share Diluted net income per share

Three months ended May 31, 2021
Three months ended May 31, 2020

Profit attributable toowners of parent

Ordinary profit

Yen

Yen

8.69
(7.28)-%

Million yen

%

(-%)
(-%)

145
(121)

-

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of May 31, 2021
As of Feb. 28, 2021
Reference: Equity capital

Equity ratio

Million yen

20,00013,83020,49913,884As of May 31, 2021: 13,830 million yen

Net assets per share
%

Yen

69.2
825.96829.21
67.7
As of Feb. 28, 2021: 13,884 million yen

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

Year-end

Total

Yen

Yen

Yen

Yen

Fiscal year ended Feb. 28, 2021
0.00
Fiscal year ending Feb. 28, 2022
Fiscal year ending Feb. 28, 2022 (forecast)
0.00
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 28, 2022 (March 1, 2021 – February 28, 2022)
Net sales
Million yen

Operating profit%

Million yen(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
share

Ordinary profit%

Million yen%

Yen

Full year
18,500 10.3
1,100
(4.2)
1,130 (16.0)
Note: Revision to the most recently announced consolidated forecast: None%

Million yen

790(20.7)

47.18

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope 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:None2) Changes in accounting policies other than 1) above:None3) 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, 2021:

18,400,000 shares

As of Feb. 28, 2021:

18,400,000 shares

As of Feb. 28, 2021:

1,655,480 shares

2) Number of treasury shares at the end of the period
As of May 31, 2021:

1,655,480 shares

3) Average number of shares outstanding during the period
Three months ended May 31, 2021:

16,744,520 shares

Three months ended May 31, 2020: 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
Forecasts regarding future performance in these materials are based on certain assumptions judged to be valid and information
currently available to the Company. Actual performance may differ significantly from these forecasts for a number of reasons.
Please refer to the section “Explanation of Consolidated Forecast and Other Forward-looking Statements” on page 3 of theattachments regarding preconditions or other related matters for forecasts shown above.

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

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

8Additional Information

8

Segment and Other Information

9

3. Others

11

Orders and Sales

111Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first quarter of the current fiscal year, COVID-19 cases started increasing rapidly in the middle of March,
mainly in the Kansai area, partly because of a new, highly infectious variant. A third state o f emergency was
declared on April 25, creating worries about a slower pace of the economic recovery.
The COVID-19 pandemic is declining in many areas of the world, mainly in affluent countries, because of
vaccinations. This improvement is producing expectations for a broad-based economic recovery as restrictions on
various activities are lifted in stages. However, the pace of vaccinations is slow in emerging countries, other thanChina, and these countries are still struggling to hold down the spread of infections. As a result, the outlook
concerning a global economic recovery is still uncertain.
In the pharmaceutical industry, which is the primary source of demand for Freund Group products, companies
must take actions in response to changes in the business climate. Changes include heightened measures to holddown healthcare expenditures, such as national health insurance drug price revisions and the increasing use ofgeneric drugs, and the rising cost of R&D programs as well as the associated risk. In additi on, the benefits ofmeasures by the Japanese government to increase the use of generic drugs are declining, resulting in a slow
decline in the growth rate of the generic drug market.
The fiscal year ended in February 2021 was the first year of the Freund Group’s Eighth Medium-termManagement Plan covering the three-year period ending February 2023. This plan is centered on the themes ofcustomers, new products, a global perspective and growth. In addition, the plan has the following seven goals.
1. Group solidarity and collaboration
2. Putting clients’ views 1st
3. Make innovation a priority
4. Global management of the Freund Group
5. Progress based on a strategy for growth
6. Business process and working style reforms
7. Make compliance/governance a priority
While focusing on these goals, the overall objective is to structure business operations so that performance is notvulnerable to a change in conditions in any particular market where the Freund Group operates. In the current
fiscal year, all group companies are working on reaching the consolidated targets of sales of 18,500 million yen
and an operating profit of 1,100 million yen.
Net sales increased 28.6% year-over-year to 3,957 million yen, operating profit was 195 million yen (comparedwith operating loss of 165 million yen in the same period of the previous fiscal year), ordinary profit was 206
million yen (compared with ordinary loss of 154 million yen in the same period of the previous fiscal year), andprofit attributable to owners of parent was 145 million yen (compared with loss attributable to owners of parent of
121 million yen in the same period of the previous fiscal year).
Results by business segment were as follows.
Machinery Business Segment
Granulating and coating equipment are the main products of this segment. In the first quarter, segment sales forthe entire Freund Group, including U.S. subsidiary Freund-Vector Corporation and Japanese subsidiary
Freund-Turbo Corporation, were higher than one year earlier despite delays in some export shipments. The recent
consolidation of Italian subsidiary Cos.Mec S.r.l. also contributed to first quarter growth of sales and theoperating profit.
As a result, net sales increased 56.9% year-over-year to 2,651 million yen and segment profit was 112 million yen(compared with segment loss of 125 million yen in the same period of the previous fiscal year).

2

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

Chemicals Business Segment
Sales of pharmaceutical excipients used for oral drugs were unchanged from one year earlier even thoughdeliveries of some products were postponed to the second quarter. The operating profit was higher because of cost
reduction measures.
As in the previous fiscal year, sales and earnings of food preservatives were impacted by sluggish sales ofconfectionery products at department stores and theme parks because of COVID-19. However, sales and theoperating profit were higher than one year earlier because of an increase in sales of confectionery products at
supermarkets and convenience stores.
Sales and operating profit for health food products for other companies decreased because of a smaller volume oforders from some large customers.
As a result, net sales decreased 5.8 % year-over-year to 1,305 million yen and segment profit increased 148.0% to
193 million yen.
(2) Explanation of Financial Position
Total assets decreased 499 million yen from the end of the previous fiscal year to 20,000 million yen at the end of
the first quarter. This mainly reflected a decrease of 950 million yen in cash and deposits, while there was anincrease of 404 million yen in work in process.
Total liabilities decreased 444 million yen from the end of the previous fiscal year to 6,170 million yen at the endof the first quarter. This mainly reflected decreases of 554 million yen in notes and accounts payable-trade and
115 million yen in income taxes payable, while there was an increase of 312 million yen in advances received.
Net assets decreased 54 million yen from the end of the previous fiscal year to 13,830 million yen at the end of
the first quarter. This mainly reflected a decrease of 189 million yen in retained earnings, while there was anincrease of 125 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 28, 202 2, whichwere disclosed in the Consolidated Financial Results for the Fiscal Year Ended February 2 8, 2021 dated April 13,
2021.

3

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet
FY2/21(As of Feb. 28, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims-operating
Securities
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
Goodwill
Software
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
Advances received
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other
Total current liabilities
Non-current liabilities
Lease obligations
Retirement benefit liability
Asset retirement obligations
Provision for retirement benefits for directors (andother officers)
Other
Total non-current liabilities
Total liabilities

4(Thousands of yen)First quarter of FY2/22(As of May 31, 2021)

4,498,482
4,659,895
210,221212,500
798,624
1,457,682
1,217,155
151,597
362,421(10,342)
13,558,237

3,547,764
4,493,234
351,943
219,520
812,443
1,861,842
1,190,656
158,892
344,809(11,304)
12,969,801

2,015,990
1,159,307
1,559,328
4,734,626

2,024,486
1,140,604
1,542,104
4,707,196

1,089,741
24,13875,6591,189,539

1,123,794
22,559139,651
1,286,004

214,482
808,102(5,400)1,017,185
6,941,351
20,499,588

233,219809,500(5,400)1,037,320
7,030,520
20,000,322

1,754,454
1,212,083
55,793245,299
1,170,091
258,586

1,199,968
1,115,074
34,880129,488
1,482,738
346,298

43,156

17,5181,077,963
5,817,429

1,045,186
5,371,154

394,370
280,598
46,472393,832
285,019
46,501

23,697

3,147

52,338797,476
6,614,905

70,435
798,936
6,170,090

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

FY2/21(As of Feb. 28, 2021)
Net assets
Shareholders’ equity
Share capital
Capital surplus(Thousands of yen)First quarter of FY2/22(As of May 31, 2021)

1,035,600

1,035,600

1,289,513

1,289,513

Retained earnings
Treasury shares

12,625,221(773,363)

12,435,881(773,363)

Total shareholders’ equity

14,176,972

13,987,632

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

22,14930,878Foreign currency translation adjustment(330,168)(204,450)

Remeasurements of defined benefit plans

15,72916,171

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

5(292,289)(157,400)

13,884,682

13,830,231

20,499,588

20,000,322

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)(Thousands of yen)First three months of FY2/22(Mar. 1, 2021 – May 31, 2021)

Net sales

3,076,175

3,957,087

Cost of sales

2,130,359

2,528,616

Gross profit

945,815

1,428,471

Selling, general and administrative expenses

1,111,740

1,233,317

Operating profit (loss)(165,924)

195,153

Interest income

154

1,420

Dividend income

4,101

3,998

Technical support fee income

2,819

2,019

Compensation income

3,183

-

Non-operating income

Other

3,118

6,915

Total non-operating income

13,377

14,354

190

2,846

2,067

556

Non-operating expenses
Interest expenses
Foreign exchange losses
Other

123

26

2,381

3,430

(154,928)

206,076

Gain on sales of non-current assets-

839

Gain on sales of investment securities

-

1,298

Total extraordinary income

-

2,137

Total non-operating expenses
Ordinary profit (loss)
Extraordinary income

Extraordinary losses
Loss on sales of non-current assets-

795

Loss on retirement of non-current assets

232

0

Total extraordinary losses

232

795

Profit (loss) before income taxes(155,161)

207,418

Income taxes(33,321)61,868

Profit (loss)(121,839)

145,550

Profit (loss) attributable to owners of parent(121,839)

145,5506

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)(Thousands of yen)First three months of FY2/22(Mar. 1, 2021 – May 31, 2021)(121,839)

145,550

4,559

8,729

(46,668)

125,718

(261)

441

(42,370)

134,888(164,210)

280,438(164,210)

280,438

Profit (loss)
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparent7

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22(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, the Company uses the statutory
effective tax rate to calculate tax expenses for cases in which using the estimated tax rate gives a noticeably
irrational result.
Additional Information
Effect of COVID-19 on accounting estimates
There are no significant changes in the assumptions concerning COVID-19, including the expected end of thispandemic, used for accounting estimates that are in the supplementary information section of the S ecurities
Report for the previous fiscal year.

8Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

Segment and Other Information
Segment information
I First three months of FY2/21 (Mar. 1, 2020 – May 31, 2020)
1. Information related to net sales and profit or loss for each reportable segment
MachineryBusiness

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

Net sales(1) External sales(2) Inter-segment sales andtransfers
Total
Segment profit (loss)

1,689,928

1,386,247

3,076,175-

3,076,175

-

-

-

-

-

1,689,928

1,386,247

3,076,175-

3,076,175(125,388)

77,925(47,462)(118,461)(165,924)

Notes: 1. Contents of adjustments are as follows.
The negative adjustment of 118,461 thousand yen to segment profit (loss) incl udes corporate expenses that are notallocated to any of the reportable segments. Corporate expenses mainly consist of general and administrative
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

158,363

28,7752,685,463

Europe54,107

Asia
99,053

Other50,413

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
3,076,175

Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

II First three months of FY2/22 (Mar. 1, 2021 – May 31, 2021)
1. Information related to net sales and profit or loss for each reportable segment
MachineryBusiness

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

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

2,651,364

1,305,722

3,957,087-

3,957,087

-

-

-

-

-

Total

2,651,364

1,305,722

3,957,087-

3,957,087

Segment profit
112,996
Notes: 1. Contents of adjustments are as follows.

193,278306,274(111,121)

195,153

The negative adjustment of 111,121 thousand yen to segment profit includes corporate expenses that are notallocated to any of the reportable segments. Corporate expenses mainly consist of general and administrative
expenses that are not attributable to any of the reportable segments.
2. Segment profit is adjusted to be consistent with operating profit recorded in the quarterly consolidated statement ofincome.

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

Europe

Asia

Other

2,952,865
412,436
99,99590,408323,415
77,967
Notes: 1. Classification of net sales is based on the location of the client and categorized by country or region.

Total
3,957,087

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.

In the first three months of FY2/22, net sales included in “Other” in prior periods were reclassified into “ Asia” and“Other” in association with revisions to administrative segments. For consistency with these changes, figures
presented in “3. Information by region (Net sales)” for the first three months of FY2/21 have been revised.
As a result, “Other” of 149,466 thousand yen previously presented in information by region (net sales) for the first
three months of FY2/21 is reclassified and divided into “Asia” of 99,053 thousand yen and “Other” of 50,413
thousand yen.

10Freund Corporation (6312) Financial Results for the First Quarter of FY2/22

3. Others
Orders and Sales(1) Orders received
Operating segment

First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)
AmountYear-on-year (%)(Thousands of yen)First three months of FY2/22(Mar. 1, 2021 – May 31, 2021)
AmountYear-on-year (%)

Machinery Business
3,268,876
126.5
3,132,809
95.8
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.
3. Orders received do not include consumption taxes.

(2) Order backlog
Operating segment

First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)(Thousands of yen)First three months of FY2/22(Mar. 1, 2021 – May 31, 2021)

AmountAmountYear-on-year (%)

Year-on-year (%)

Machinery Business
6,295,241
94.6
7,175,760
114.0
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. Order backlog does not include consumption taxes.

(3) Sales
Operating segment

First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)
AmountComposition (%)(Thousands of yen)First three months of FY2/22(Mar. 1, 2021 – May 31, 2021)
AmountComposition (%)

Machinery Business

1,689,928

54.9

2,651,364

67.0

Chemicals Business

1,386,247

45.1

1,305,722

33.0

Total
3,076,175
100.0
3,957,087
Notes: 1. Sales are based on selling prices; inter-segment transactions have been eliminated.

100.0

2. Sales do not include consumption taxes.

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 of readers
who prefer an English translation.

11