FREUND CORPORATION
Selected by the Japanese Ministry of Economy, Tradeand Industry as a Global Niche Top 100 Company(Securities code: 6312)

Results of Operations
for the First Half of the Fiscal
Year Ending February 28, 2022
October 21, 2021

Copyright(C) 2021 Freund Corp. All rights reserved.

Contents
 Consolidated Financial Summary for 1H of FY2/22

・・・

P.02

 Consolidated Earnings and Dividend Forecasts for FY2/22
・・・

P.14

・・・

P.18

 Topics

Supplementary Materials

・・・

P.20

Fact Sheet・・・

Appendix

Copyright (C) 2021 Freund Corp. All rights reserved.

1

Consolidated Financial Summary for 1H of FY2/22

Copyright(C) 2021 Freund Corp. All rights reserved.

Consolidated Financial Summary






Sales and earnings increased YoY.
A big increase in machinery business sales as sales were higher at group companies andthe consolidation of Cos.Mec contributed to sales.
FY2/21 1H earnings include a subsidy of more than 200 million yen received by a U.S.
subsidiary. Operating and ordinary profit were up about 300 million yen after adjustingfor this one‐time income.
Machinery orders received and order backlog both exceeded the previous year's results.
(Millions of yen)

Net sales

FY2/21 1H

FY2/22 1H

ActualActualYoY change％

Amount

7,043

8,048

+1,004+14.3%

Operating profit

251

329

+78

+31.2%

Ordinary profit

271

350

+78

+29.1%

Profit

183

226

+42

+23.2%

Earnings per share (yen)

10.98

13.52

+2.54

-

Orders received

6,705

7,695

+989

+14.8%

Order backlog

7,330

9,034

+1,704+23.2%

Capital investment

171

239

+68

+39.8%

Depreciation

196

241

+45

+23.2%

R&D expenses

267

308

+40

+15.2%

ROA

1.0%

1.1%

-

-

ROE

1.4%

1.6%

-

-

Copyright (C) 2021 Freund Corp. All rights reserved.

3

Machinery Business: Group Company Performance Consolidated:

Sales increased and earnings were higher after adjusting for subsidy income one year earlier.
Orders received and order backlog both exceeded the previous year.
 Freund Corporation: Sales increased despite a delay in some export sales. Orders from customers in China were sluggish.
 Freund-Vector:
Sales increased and earnings were higher after adjusting for subsidy income one year earlier.
Orders are recovering from customers in the U.S., Brazil and other countries.
 Freund-Turbo:
Sales and earnings increased YoY. The chemical and battery machinery sectors are recovering.
 Cos.Mec:
First half sales were held down by the impact of the pandemic in emerging countries,
the primary market for this company.
(Millions of yen)

FY2/21 1H
AmountNet sales

FY2/22 1H

YoY change (%)

AmountYoY change (%)

4,125

+4.1

5,366

+30.1

FREUND CORPORATION

2,838

+17.7

2,903

+2.3

FREUND-VECTOR

1,018(16.0)

1,514

+48.7

FREUND-TURBO

629

+19.8

773

+23.0

ー

ー

422

ー

255

(313.3)

245

(4.0)

228

+142.5253+10.8

FREUND-VECTOR

30

ー

(3)

ー

FREUND-TURBO

(3)

ー

56

ー

Cos.Mec

ー

ー

(61)

ー

Cos.Mec
Operating profit
FREUND CORPORATION

Orders received

6,705

+26.3

7,695

+14.8

FREUND CORPORATION

4,156

+47.0

3,454

(16.9)

FREUND-VECTOR

2,019

+14.8

3,382

+67.5

FREUND-TURBO

529(26.9)

659

+24.4

ー

ー

365

ー

Cos.Mec
Order backlog

7,330

+7.1

9,034

+23.2

FREUND CORPORATION

5,228

+18.1

5,212

(0.3)

FREUND-VECTOR

1,685

(5.9)

2,838

+68.4

FREUND-TURBO

415(33.7)

518

+24.8

ー

ー

619

ー

Cos.Mec

Copyright (C) 2021 Freund Corp. All rights reserved.

4

Machinery Business: Sales by Region

Small sales increase in Japan but overseas sales doubled.



USA:



Latin America: Sales are recovering from the pandemic downturn one year earlier.
The consolidation of Cos.Mec. contributed to sales.

Europe:Sales benefited from a large order in Ireland and the consolidation of Cos.Mec.



Asia:

Increase in sales to India and Bangladesh

Sales increased compared to the first half of the previous fiscal year as theeffects of COVID‐19 are gradually declining.

(Millions of yen)

FY2/21 1H
AmountFY2/22 1H

YoY change (%)

AmountYoY change (%)

Net sales

4,125

+4.1%

5,366

+30.1%

Japan

2,989

+16.9%

3,095

+3.5%

Overseas

1,136(19.3)%

2,270+99.8%

USA

400(47.1)%

777+94.1%

Latin America

119(49.2)%

442+269.5%

Europe139(7.4)%

396+185.2%

Asia

344＋75.0%

513+49.2%

Others132＋97.5%

139+5.6%

Copyright (C) 2021 Freund Corp. All rights reserved.

5

Machinery Business: Quarterly Results
Net sales

Operating profit margin(Millions of yen)
5,000

20.0%

Net sales
Operating profit margin

15.0%
4,000

10.0%

3,000
5.0%

2,000

0.0%

(5.0)%
1,000(10.0)%

0
Q1

Q2

Q3

FY2/17

Q4

Q1

Q2

Q3

FY2/18

Q4

Q1

Q2

Q3

FY2/19

Q4

Q1

Q2

Q3

FY2/20

Q4

Q1

Q2

Q3

FY2/21Q4

Q1

Q2(15.0)%

FY
2/22(20.0)%(1,000)

Copyright (C) 2021 Freund Corp. All rights reserved.

6

Machinery Business: Quarterly Results (Net Sales/Orders Received/Order Backlog)(Millions of yen)
10,000Order backlog
Net sales
Orders received

8,000

6,000

4,000

2,000

0
Q1

Q2

Q3

FY2/17

Q4

Q1

Q2

Q3

FY2/18

Q4

Q1

Q2

Q3

FY2/19

Q4

Q1

Q2

Q3

FY2/20

Q4

Q1

Q2

Q3

Q4

Q1

Q2

FY2/21FY
2/22
Copyright (C) 2021 Freund Corp. All rights reserved.

7

Chemicals Business: Overview
 Net Sales








Pharmaceutical excipients:

Sales increased despite the negative effects of quality
and supply problems in the generic drug industry.
Food preservatives:
Year‐on‐year increase in sales due to an increase in
confectionery
sales at supermarkets and convenience stores
Dietary supplement products: Significant sales decline due to the termination of orders
from high‐volume customers
Export:Almost as planned Segment Profit:

Earnings increased because of higher sales of pharmaceutical excipients and preservatives,and cost cutting measures. Lower dietary supplement sales had a minor effect on earnings
because of the low profit margins of these products.
(Millions of yen)

FY2/21 1H
AmountNet sales

FY2/22 1H

YoY change (%)

2,917
1,409

Food Preservatives

AmountYoY change (%)
(8.1)

(2.3)

2,682
1,461

863

(16.9)

1,049

+21.5

Dietary Supplement Products

644

+73.8

171

(73.4)(Export sales)*1

104

+29.5

123

+18.2

(40.2)

331+45.2

Pharmaceutical Excipients

Operating profit
228*1: Sales to Europe, India, South Korea, China and Taiwan, etc.

+2.3

+3.7

Copyright (C) 2021 Freund Corp. All rights reserved.

8

Chemicals Business: Quarterly Results (by Product Field)
Net sales

Operating profit margin(Millions of yen)

20.0%

2,500
Pharmaceutical Excipients
Food Preservatives
Dietary Supplem ent Products
2,000Operating profit margin
15.0%

1,500

10.0%

1,000

5.0%
500

0

0.0%
Q1

Q2

Q3

FY2/17

Q4

Q1

Q2

Q3

FY2/18

Q4

Q1

Q2

Q3

FY2/19

Q4

Q1

Q2

Q3

FY2/20

Q4

Q1

Q2

Q3

FY2/21

Q4

Q1

Q2

FY
2/22

Copyright (C) 2021 Freund Corp. All rights reserved.

9

Summary of Consolidated Statement of Income(Millions of yen)

FY2/21 1H

FY2/22 1H

YoY change

AmountComposition
ratio

AmountComposition
ratio

Amount7,043

100.0%

8,048

100.0%+1,004+14.3%

4,779

67.9%

5,243

65.2%

+463

+9.7%

2,263

32.1%

2,804

34.8%

+540

+23.9%

2,012

28.6%

2,475

30.8%

+462

+23.0%

251

3.6%

329

4.1%

+78

+31.2%

Non-operating income andexpenses

20

0.3%

20

0.3%

+0

+2.6%

Ordinary profit

271

3.9%

350

4.4%

+78

+29.1%

(4)

-

(2)

0.0%

+2

-

266

3.8%

347

4.3%

+81

+30.6%

183

2.6%

226

2.8%

+42

+23.2%Net sales
Cost of sales
Gross profit
SG&A expenses
Operation profit

Extraordinary income andlossesProfit before income taxes
Profit％Copyright (C) 2021 Freund Corp. All rights reserved.

10Change in Consolidated Operating ProfitHigher gross profit due to sales growth was the primary component of the increase inoperating profit
SG&A expenses increased 460 million yen because (1) these expenses were reduced by
230 million yen one year earlier by a subsidy received by a U.S. subsidiary and (2) these
expenses include newly consolidated Cos.Mec.
After excluding the effect of the subsidy at a U.S. subsidiary, operating profit was about
300 million yen higher than one year earlier.

(Millions of yen)

Gross profit
Traveling

Positive factors

expenses(7)
540

Advertisingexpenses(19)

Depreciation

(24)

Other

(41)

(28)

R&D

(60)

expenses Goodwill

amortization(65)

FY2/21 1H

expensesSales
commission

251

Personnel

(218)

329

FY2/22 1H

Copyright (C) 2021 Freund Corp. All rights reserved.

11Summary of Consolidated Balance Sheet(Millions of yen)

FY2/21-End
Current assets

FY2/22-1H

Change13,558

13,204(354)

Cash and depodits

4,498

4,258

(239)

Accounts receivable

4,870

4,077

(793)

Inventories

3,473

4,209

+736

Non-current assets

6,941

7,002

+61

Property, plant and equipment

4,734

4,690

(44)

Intangible assets

1,189

1,268

+79

Investments and other assets

1,017

1,043

+26

Total assets

20,49920,206(293)

Current liabilities

5,817

5,464

(353)

Accounts payable

2,966

2,140

(825)

Advances received

1,170

2,011

+841

797

797

+0

280

284

+4

Total liabilities

6,614

6,262

(352)

Total net assets

13,884

13,944+59

Non-current liabilities
Retirement benefit liability

Copyright (C) 2021 Freund Corp. All rights reserved.

12Summary of Consolidated Statement of Cash Flows(Millions of yen)

FY2/22
1H

FY2/21
Cash flows from operating activities

2,280

504

1,323

347

Depreciation

414

241

Decrease (increase) in notes and accounts receivable - trade

674

824

Decrease (increase) in inventories

(112)

(680)

Increase (decrease) in notes and accounts payable - trade

(340)

(762)

Income taxes paid

(174)

(196)

(1,726)

(351)

(469)

(310)

(8)

(67)

Cash flows from financing activities

(371)

(416)

Repayments of lease obligations

(9)

(19)

(333)

(334)

184

(239)

4,498

4,258

554

153

Profit before income taxes

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets

Cash dividends paid
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at end of period
Free cash flow

Copyright (C) 2021 Freund Corp. All rights reserved.

13

Consolidated Earnings and Dividend Forecasts for FY2/22

Copyright(C) 2021 Freund Corp. All rights reserved.

Summary of Consolidated Forecasts


The full year consolidated forecasts remain unchanged from the forecast announced at
the beginning of the fiscal yearFirst half earnings were in line with the fiscal year forecast

Forecasting higher earnings after adjusting for the subsidiary received by a U.S.
subsidiary in FY2/21.
(Millions of yen)

FY2/21

FY2/22(Actual)(Forecast)

YoY change％

AmountNet sales

16,76518,500+1,734+10.3

Operating profit

1,147

1,100

(47)

(4.2)

Ordinary profit

1,344

1,130

(214)

(16.0)

995

790

(205)

(20.7)

Earnings per share (yen)

59.47

47.18

(12.29)(20.7)

Yen/dollar rate(+ is yen depreciation)

105.98105.00--Capital investment

637

-

-

-

Depreciation

414

-

-

-

R&D expenses

526

-

-

-

ProfitCopyright (C) 2021 Freund Corp. All rights reserved.

15

Summary of Segment Forecasts
 Machinery: Strengthen activities for capturing new orders and enhance global
coverage, including emerging countries, with a four‐pole systemcomprising Japan, the U.S., Italy, and India
 Chemicals: Growth in sales of pharmaceutical excipients and food preservatives
offsets a decline in dietary supplements sales due to the terminationof orders from high‐volume customers(Millions of yen)

FY2/21
AmountConsolidated net sales

YoY change

FY2/22 (Forecast)Composition
ratio (%)

Composition
ratio (%)

AmountAmount

％16,765100.0

18,500100.0+1,734+10.3

Machinery Business Segment

11,171

66.6

13,10070.8+1,928+17.3

Chemicals Business Segment

5,593

33.4

5,400

29.2

(193)

(3.5)

1,147

100.0

1,100

100.0

(47)

(4.2)

Machinery Business Segment

1,084

94.5

-

-

-

-

Chemicals Business Segment

546

47.6

-

-

-

-

Adjustments(482)(42.1)----

105.98-105.00---

Segment profit

Yen/dollar rate(+ is yen depreciation)

Copyright (C) 2021 Freund Corp. All rights reserved.

16

Summary of Dividend Forecasts


FY2/21 dividend: 20 yen per share

FY2/22 dividend forecast: 20 yen per share
100.0%
90.0%

Consolidated dividend payout ratio

80.0%

87.8%

70.0%
60.0%
50.0%
37.2%

40.0%
30.0%

21.2%

22.5%

27.4%

42.4%

39.9%
33.6%

32.4%
23.3%

22.4%

20.0%
10.0%

FY2/12

FY2/13

FY2/14

FY2/15

FY2/16

FY2/17

FY2/18

FY2/19FY2/20FY2/21

FY2/22(Forecast)Profit (\ million)

608

765

787

695

961

1,064

1,477

843

381

995

790

Dividend per share (yen)

7.5

10.0

12.5

15.0

12.5

20.0

20.0

20.0

20.0

20.0

20.0

9,200

9,200

9,200

9,200

9,200

18,40018,40018,40018,40018,40018,400

Number of shares outstanding(Thousand shares)

Note: Freund conducted a 2‐for‐1 common stock split on June 1, 2009 and March 1, 2016.
The dividends per share for FY2/16 and earlier have been adjusted to reflect the stock split.
Copyright (C) 2021 Freund Corp. All rights reserved.

17

Topics

Copyright(C) 2021 Freund Corp. All rights reserved.

The New HICOATER V Automated Tablet Coater*Patent pending HICOATER V, Freund s fifth‐generation automated tablet coater, launchedin September 2021.







Labor‐saving coating process with an innovative mechanism and software,both developed by Freund
Faster than the previous model and maintains consistent quality
Much less time workload required for replacement, cleansing and other tasks
involving the coater s components
Designed for even greater ease of use

Copyright (C) 2021 Freund Corp. All rights reserved.

19

(Supplementary Materials)
・ Company Overview
・ Segment Information

Copyright(C) 2021 Freund Corp. All rights reserved.

Company Overview● Company name：Freund Corporation● Established：

April 1964

● Representative：

Iwao Fusejima, President & CEO● Location：

6‐25‐13 Nishi‐shinjuku, Shinjuku‐ku, Tokyo, Japan● Paid‐in capital： 1,035,600,000 yen (As of August 31, 2021)● Sales： 16,700 million yen (Fiscal year ended February 2021, consolidated)● Number of employees： 475 (As of August 31, 2021, consolidated)● Business： Machinery business‐ Manufacturing and sales of granulationand coating equipment and others
Chemicals business‐ Manufacturing and sales of pharmaceutical
excipients, food preservatives, and others● Group companies： Freund‐Vector Corporation, Freund‐Turbo Corporation,
Cos.Mec s.r.l., Parle Freund Machinery Private Limited

Copyright (C) 2021 Freund Corp. All rights reserved.

21

The Freund Group and R&D Facilities

Using innovative technologies
for rapid growth outside Japan
FreundCorporation
Freund‐Turbo
Corporation
Yokosuka, Kanagawa

Tokyo, Osaka, Shizuoka, Aichi

Cos.Mec s.r.l.

Freund‐Vector
Corporation
Iowa, USA

Milan, Italy

Research and Development
Laboratory(Hamamatsu, Shizuoka)

Domestic
users

Marion Laboratory (Iowa, USA)

Sales of machineryand chemical products

Sales of machineryand chemical products

Parle Freund (India)

Overseas
users

Milan Laboratory (Milan, Italy)
Copyright (C) 2021 Freund Corp. All rights reserved.

22

Our Pen (Machinery) and Ink (Chemicals) Business Model

1. Machinery Business Segment

 Manufacturing and sales of granulation and coating
equipment for the pharmaceutical, food, and fine chemicalindustries.
 For coating equipment, Freund ranks first in Japan and sales
growth is accelerating in Asian market and in FreundVector’s US and European operations. No other company inthe world has expertise in both drug formulation
technologies and the associated machinery.
 Aiming to increase sales of machinery for industrial
applications too by combining granulating and coating
technologies with milling and sieving technologies.

Composition of Net
Sales and Profit bySegment
Chemicals

33%
33%

FY2/21

2. Chemicals Business Segment
 Manufacturing and sales of pharmaceutical excipients, food67%
preservatives, nutritional supplements, and others.
Operating profit
 Freund uses Good Manufacturing Practice (GMP) compliant
67%
equipment to produce pharmaceutical excipients.
 Food preservatives made by Freund help ensure the safety
Net salesof food by maintaining the quality of many types of
Machinery
products.
 By using its granulating and coating technologies, Freund¥16.76 billion
has worked with customers to develop and commercialize Consolidated sales:
Consolidated operating profit: ¥1.14 billion
nutritional supplements and seamless mini-capsules.
Copyright (C) 2021 Freund Corp. All rights reserved.

23

Freund Group s Business Fields
 FREUND Group’s business fields based upon pharmaceutical products manufacturing processes
FREUND Group Business Fields
ActivePharmaceutical
Ingredients

Grinding/
Classifying

Blending/
Kneading

Granulating

Drying/
Grading

TabletingCoating

TabletPrinting

Packing

Using core competences in Machinery and Chemicals Divisions to provide unique products
Grinding/Classifying
Equipment

Granulating
Equipment

Coating Equipment

Printing Equipment

Fine Chemicals

Excipient

Coating Liquids

Ink

Domestic

Overseas （）

Strengthen Non-Pharmaceutical
Fortify
Product Field
Global Operations

Enter into
New Business Fields
Copyright (C) 2021 Freund Corp. All rights reserved.

24

The Freund Group Disclosure Policy
1. Basic disclosure policy
Freund positions the transparency of management as an important responsibility in order to be a company that can be a trusted
member of society. To maintain this transparency, we always disclose information about the company in a manner that is fair and timely
from the standpoint of all stakeholders.
2. Standard for disclosure
Freund discloses information in compliance with the Companies Act, Financial Instruments and Exchange Act, and other applicable laws
and regulations. Disclosure also complies with the timely disclosure rules of securities exchanges where the company’s stock is traded.
In addition, Freund discloses information that is not covered by these laws and regulations and exchange rules in cases where theinformation is believed to be necessary for investment decisions.
3. Disclosure methods
Freund discloses information by using the Timely Disclosure network (TDnet) of the Tokyo Stock Exchange. To ensure the timeliness andfairness of information announced using TDnet, this information is posted promptly on Freund’s website.
In addition, press releases and other information are promptly posted on Freund’s website and made available in other ways to ensuredisclosure fairness and speed. Furthermore, information in Japanese is supplied in English as much as possible to make information
available to a large number of stakeholders.
4. Prevention of insider trading
For the prevention of insider trading, Freund’s internal rules include provisions concerning basic items that must be observed regarding
the proper management of internal information, Freund stock transactions and other matters. There are also activities for ensuring that
Freund personnel understand insider trading restrictions and for overseeing stock and other transactions.
5. Silent period
To prevent leaks of information about earnings announcements, as well as to comply with laws and regulations and ensure the fairnessof these announcements, Freund has a “silent period” that begins on the day following the end of each fiscal year quarter and ends onthe day of the earnings announcement for that quarter. Freund will not reply to any questions concerning results of operations during
this period. However, in the event of the possibility that results of operations will differ significantly from the forecast, Freund may
disclose this information in accordance with timely disclosure rules.
6. Forward-looking statements
Information disclosed by Freund may contain information about the future other than sales and earnings forecasts, such as information
about strategies and business plans. This information is based on the decisions of management by using information that was available
at that time. As a result, actual performance may differ significantly from forward-looking statements due to changes in the economy
and market conditions and other reasons.
(Established on March 27, 2017)

Investor Relations Policy
Policy concerning constructive dialogues with shareholders and other investors
Freund has a strong commitment to conducting constructive dialogues with shareholders and other investors in order tocontribute to the company’s sustained growth and mid- to long-term growth in corporate value. By providing clear explanationsof management policies, business operations and the corporate culture, Freund aims to earn the understanding of shareholders
and other investors in order to continue to receive their support as “Freund fans.”
1. Investor relations framework – The Corporate Planning Division responsible for investor relations oversees dialogues withshareholders and other investors under the direct supervision of the company’s president. In addition, the president is
assisted by a director who is in charge of investor relations.
To support these dialogues, Freund departments involved with dialogues cooperate, such as by preparing and checking
disclosure materials and, as needed, sharing information, so that information is disclosed with fairness and speed.
2. Stakeholder dialogues – Freund holds information meetings about results of operations and other subjects following theend of the second quarter and fiscal year. Small meetings are held after the first and third quarters. Information provided atthese meetings is posted on Freund’s website. When a medium or long-term management plan is established, the company
provides a clear explanation of strategic goals and business plans. In addition, Freund frequently visits institutional investors
to explain its goals and performance. Freund also participates in investor forums held by securities companies, holds
information meetings for individual investors, and conducts other activities for stakeholder dialogues.
The FREUND Integrated Report and other IR documents are distributed to shareholders and posted on Freund’s website.
This publication contains business and financial information as well as about the company’s strengths that do not appear in
the financial statements. By providing more information about the Freund Group, this publication aims to help the public
understand the true corporate value of the group.
3. Feedback of shareholder/investor opinions – Opinions and other statements by shareholders and other investors at
dialogues are passed on to the president, directors and others and the information is shared as needed.
4. Management of insider information – There are no shareholder/investor dialogues during each silent period, which begins
on the day following the end of each fiscal year quarter and ends on the day of the earnings announcement for that quarter.
Freund handles insider information strictly in compliance with internal rules concerning the management of internal
information and restrictions on transactions by Freund personnel.

Inquiries:

Freund Corporation
Corporate Planning Division
Investor Relations and Public Relations OfficeTel: +81-3-6890-0767
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.

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