July 7, 2020

Consolidated Financial Results
for the First Quarter of the Fiscal Year Ending February 28, 2021
(Three Months Ended May 31, 2020)[Japanese GAAP]
Listing: Tokyo (JASDAQ)
Freund Corporation
6312
URL: http://www.freund.co.jp
Iwao Fusejima, President & CEO
Masao Wakai, Director, Division Director, Corporate Planning Division
Tel: +81-3-6890-0750
Scheduled date of filing of Quarterly Report:
July 7, 2020
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, 2020 – May 31, 2020) of the
Fiscal Year Ending February 28, 2021
(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Million yen

Three months ended May 31, 2020Three months ended May 31, 2019
Note: Comprehensive income%

Million yen%

Million yen

3,076
6.9
(165)
(154)
2,878 (40.6)
(214)
(217)
Three months ended May 31, 2020: (164) million yen
Three months ended May 31, 2019: (192) million yen
Net income per share Diluted net income per share

Three months ended May 31, 2020Three months ended May 31, 2019

Profit attributable toowners of parent

Ordinary profit

Yen

Yen

(7.28)(9.44)-%

Million yen

%

(-%)
(-%)

(121)
(158)

-

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of May 31, 2020
As of Feb. 29, 2020
Reference: Equity capital

Equity ratio

Million yen

17,706
12,74418,505
13,243As of May 31, 2020: 12,744 million yen

Net assets per share%Yen

761.1472.0
790.94
71.6
As of Feb. 29, 2020: 13,243 million yen

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

Yen

Year-end

Yen

Total

Yen

Yen

Fiscal year ended Feb. 29, 2020
0.00
20.00
Fiscal year ending Feb. 28, 2021
Fiscal year ending Feb. 28, 2021 (forecast)
Note: Revision to the most recently announced dividend forecast: None
Note: Dividend forecast for the fiscal year ending February 28, 2021 has not been determined at this time.

20.00
-

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2021 (March 1, 2020 – February 28, 2021)
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%

Million yen%

Yen

Full year
17,800
6.1
1,000
79.1
1,000
Note: Revision to the most recently announced consolidated forecast: None

%

71.6

700

83.5

41.80

* 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(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, 2020:

18,400,000 shares

As of Feb. 29, 2020:

18,400,000 shares

As of Feb. 29, 2020:

1,655,480 shares

2) Number of treasury shares at the end of the period
As of May 31, 2020:

1,655,480 shares

3) Average number of shares outstanding during the period
Three months ended May 31, 2020:

16,744,520 shares

Three months ended May 31, 2019: 16,744,520 shares

The current 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 FY2/21

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 FY2/21

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first quarter of the current fiscal year, there was a steep economic downturn in Japan because of the global
COVID-19 pandemic. Consumer spending plummeted as people stayed home and companies cut back businessactivities in response to Japan’s declaration of a state of emergency. There was also a big decrease in Japan’s
exports. Economic activity has started to recover since the state of emergency ended on May 25 but concerns
about a second wave make it impossible to determine the timing of a full-scale resumption of economic activity.
On a global scale, COVID-19 is having an economic impact of an unprecedented magnitude as economies
contract rapidly due to the actions of countries to stop the spread of infections.
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 revi sions and the increasing use ofgeneric drugs, and the rising cost of R&D programs as well as the associated risk. In addition, 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 ending in February 2021 is the first year of the Freund Group’s Eighth Medium -term Management
Plan covering the three-year period ending February 2023. This plan is centered on the themes of customers, newproducts, a global perspective and growth. In addition, the plan has the following seven goals.
1. Group solidarity and collaboration
2. Always use the customer’s perspective
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 17,800 million yen
and an operating profit of 1,000 million yen.
Net sales increased 6.9% year-over-year to 3,076 million yen, operating loss was 165 million yen (compared with
operating loss of 214 million yen in the same period of the previous fiscal year), ordinary loss was 154 million
yen (compared with ordinary loss of 217 million yen in the same period of the previous fiscal year), and loss
attributable to owners of parent was 121 million yen (compared with loss attributable to owners of parent of 158
million yen in the same period of the previous fiscal year).
Results by business segment were as follows.
Machinery Business Segment
In the machinery segment, where granulating and coating equipment are the main products, sales were higher
than one year earlier but there was an operating loss. The main reasons for the loss are delays in shipments ofproducts caused by COVID-19 and the inability to offset fixed expenses because the majority of deliveries tend to
take place in the second half of each fiscal year at U.S. subsidiary Freund-Vector Corporation and Freund-Turbo
Corporation, a subsidiary in Japan.
As a result, net sales increased 21.9% year-over-year to 1,689 million yen and segment loss was 125 million yen(compared with segment loss of 267 million yen in the same period of the previous fiscal year).

2

Freund Corporation (6312) Financial Results for the First Quarter of FY2/21

Chemicals Business Segment
Sales and operating profit for pharmaceutical excipients used for oral drugs declined in part because deliveries ofsome products were postponed to the second quarter or afterward.
Sales and operating profit of food preservatives also decreased. The main reason was lower sales of confectionery
products because of closings and reduced operating hours of amusement parks and department stores in order toprevent the spread of COVID-19.
As a result, net sales decreased 7.1% year-over-year to 1,386 million yen and segment profit decreased 58.5% to77 million yen.
(2) Explanation of Financial Position
Total assets decreased 799 million yen from the end of the previous fiscal year to 17,706 million yen at the end of
the first quarter. This mainly reflected decreases in notes and accounts receivable-trade of 1,194 million yen,merchandise and finished goods of 33 million yen and electronically recorded monetary claims-operating of 29
million yen, while there were increases in cash and deposits of 392 million yen and work in process of 152
million yen.
Total liabilities decreased 300 million yen from the end of the previous fiscal year to 4,961 million yen at the endof the first quarter. This mainly reflected decreases in notes and accounts payable-trade of 615 million yen,electronically recorded obligations-operating of 159 million yen and short-term borrowings of 32 million yen,while there were increases of long-term borrowings of 230 million yen, advances received of 159 million yen andprovision for bonuses of 102 million yen.
Net assets decreased 499 million yen from the end of the previous fiscal year to 12,744 million yen at the end of
the first quarter. This mainly reflected a decrease of 456 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 28, 2021, whichwere disclosed in the Consolidated Financial Results for the Fiscal Year Ended February 29, 2020 dated April 24,
2020.

3

Freund Corporation (6312) Financial Results for the First Quarter of FY2/21

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet
FY2/20(As of Feb. 29, 2020)(Thousands of yen)First quarter of FY2/21(As of May 31, 2020)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims-operating

4,314,123
5,013,789
417,513

4,707,055
3,819,487
387,884

Merchandise and finished goods
Work in process

647,754
1,390,426

614,055
1,542,974

Raw materials and supplies
Prepaid expenses
Other
Allowance for doubtful accounts

1,013,444
139,944
261,804(5,471)

1,004,754
133,845
134,005(5,376)

Total current assets

13,193,328

12,338,686

1,418,559

1,440,960

1,231,252
1,560,069

1,230,900
1,520,367

4,209,880

4,192,228

19,811
76,27019,20073,77096,081

92,970Investments and other assets
Deferred tax assets
Other
Allowance for doubtful accounts

208,497
802,939

257,084
830,648(5,400)(5,400)Total investments and other assets

1,006,036

1,082,333

5,311,999

5,367,532

18,505,327

17,706,219

Notes and accounts payable-trade

1,754,324

1,138,691

Electronically recorded obligations-operating
Short-term borrowings
Income taxes payable

1,367,537
32,82961,7291,208,139
29,528Advances received
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other775,289
237,693935,211340,175

6,000

7,500

788,516

824,266

5,023,920

4,483,513

165,114
31,683
40,661

230,426
162,948
46,391
38,092

Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Software
Other
Total intangible assets

Total non-current assets
Total assets
Liabilities
Current liabilities

Total current liabilities
Non-current liabilities
Long-term borrowings
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities

4237,458

477,858

5,261,378

4,961,371

Freund Corporation (6312) Financial Results for the First Quarter of FY2/21

FY2/20(As of Feb. 29, 2020)(Thousands of yen)First quarter of FY2/21(As of May 31, 2020)

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings

1,035,600
1,289,513
11,964,299

1,035,600
1,289,513
11,507,569

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

Total shareholders’ equity

13,516,050

13,059,320

13,680(298,749)
12,967

18,239(345,417)
12,705

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

5(272,101)(314,472)

13,243,948

12,744,848

18,505,327

17,706,219

Freund Corporation (6312) Financial Results for the First Quarter of FY2/21(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)First three months of FY2/20(Mar. 1, 2019 – May 31, 2019)(Thousands of yen)First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)

Net sales

2,878,390

3,076,175

Cost of sales

1,830,603

2,130,359

Gross profit

1,047,786

945,815

Selling, general and administrative expenses

1,262,594

1,111,740

Operating loss

(214,808)(165,924)

Interest income

2,190

154

Dividend income

4,783

4,101

Technical support fee income

1,219

2,819

Non-operating income

Compensation income

-

3,183

Other

3,170

3,118

Total non-operating income

11,364

13,377

Interest expenses

3,091

190

Foreign exchange losses

5,675

2,067

Other

5,145

123

Total non-operating expenses

13,9132,381(217,357)(154,928)

Gain on sales of non-current assets

8,180

-

Total extraordinary income

8,180

-

Non-operating expenses

Ordinary loss
Extraordinary income

Extraordinary losses
Impairment loss

95-

Loss on retirement of non-current assets

7232

Loss on valuation of investment securities

825-

Total extraordinary losses

927

232

(210,104)(155,161)

Loss before income taxes
Income taxes(52,065)(33,321)

Loss(158,038)(121,839)

Loss attributable to owners of parent(158,038)(121,839)6

Freund Corporation (6312) Financial Results for the First Quarter of FY2/21

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY2/20(Mar. 1, 2019 – May 31, 2019)(Thousands of yen)First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)(158,038)(121,839)(5,917)

4,559(28,160)(46,668)

(284)

(261)

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(34,362)(42,370)(192,401)(164,210)(192,401)(164,210)

Freund Corporation (6312) Financial Results for the First Quarter of FY2/21(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 app lication 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
The COVID-19 pandemic is affecting the Freund Group’s operations as shipments of products in the Machinery
Business were delayed and sales of food preservatives in the Chemicals Business declined because of slow salesof confectionery products associated with closings and reduced operating hours of amusement parks anddepartment stores.
Accounting estimates for the impairment losses on non-current assets, recoverability of deferred tax assets andother items are based on the assumption that the impact of COVID-19 will slowly decline during the current fiscal
year.

8

Freund Corporation (6312) Financial Results for the First Quarter of FY2/21

Segment and Other Information
Segment information
I First three months of FY2/20 (Mar. 1, 2019 – May 31, 2019)
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

1,386,636

1,491,753

2,878,390-

2,878,390

-

-

-

-

-

1,386,636

1,491,753

2,878,390-

2,878,390

Segment profit (loss)(267,263)
Notes: 1. Contents of adjustments are as follows.

187,563(79,700)(135,107)(214,808)

The negative adjustment of 135,107 thousand yen to segment profit (loss) 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 (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
In the Machinery Business segment, the Company has recognized impairment losses related to non -current assetsof 95 thousand yen.
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

North America

Latin America

233,691

67,2802,348,108Europe108,437

Other
120,872

Total
2,878,390

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, UK, etc.

(3) Other:

Asia, etc.

9Freund Corporation (6312) Financial Results for the First Quarter of FY2/21

II 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

1,689,928

1,386,247

3,076,175-

3,076,175

-

-

-

-

-

Total

1,689,928

1,386,247

3,076,175-

3,076,175

Segment profit (loss)(125,388)
Notes: 1. Contents of adjustments are as follows.

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

The negative adjustment of 118,461 thousand yen to segment profit (loss) 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 (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

EuropeOther

2,685,463
158,363
28,775
54,107
149,466
Notes: 1. Classification of net sales is based on the location of the client and categorized by country or region.

Total
3,076,175

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, UK, etc.

(3) Other:

Asia, etc.

10Freund Corporation (6312) Financial Results for the First Quarter of FY2/21

3. Others
Orders and Sales(1) Orders received
Operating segment
Machinery Business(Thousands of yen)First three months of FY2/20(Mar. 1, 2019 – May 31, 2019)
AmountYear-on-year (%)
2,583,632

101.2

First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)
AmountYear-on-year (%)
3,268,876

126.5

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 FY2/20(Mar. 1, 2019 – May 31, 2019)(Thousands of yen)First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)

AmountAmountYear-on-year (%)

Year-on-year (%)

Machinery Business

6,657,884
135.1
6,295,241
94.6
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 FY2/20(Mar. 1, 2019 – May 31, 2019)(Thousands of yen)First three months of FY2/21(Mar. 1, 2020 – May 31, 2020)

AmountAmountComposition (%)

Composition (%)

Machinery Business

1,386,636

48.2

1,689,928

54.9

Chemicals Business

1,491,753

51.8

1,386,247

45.1

Total
2,878,390
100.0
3,076,175
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 ofreaders who prefer an English translation.

11