FREUND CORPORATION(Securities code: 6312)

Results of Operations
for the First Half of the Fiscal
Year Ending February 28, 2023
October 25, 2022

Copyright(C) 2022 Freund Corp. All rights reserved.

Contents
 Consolidated Financial Summary for 1H of FY2/23

・・・

P.02

 Consolidated Earnings and Dividend Forecasts for FY2/23
・・・

P.16

Supplementary Materials

・・・

P.19

Fact Sheet・・・

Appendix

Copyright (C) 2022 Freund Corp. All rights reserved.

1

Consolidated Financial Summary for 1H of FY2/23

Copyright(C) 2022 Freund Corp. All rights reserved.

Consolidated Financial SummarySales were up and earnings were down YoY, resulting in an operating loss and a bottom‐
line loss.

Machinery business sales remained almost unchanged while chemicals business sales
increased driven by strong sales of both pharmaceutical excipients and food preservatives.

In the machinery business, earnings were down as shipping finished products delayed
mainly in the U.S. as a result of prolonging time to purchase parts/materials, and the costof raw materials increased due to rapid inflation.
(Millions of yen)

Net sales

FY2/22 1H

YoY change

FY2/23 1H％

Amount

8,048

8,534

+486

+6.0

Operating profit

293

(67)

(361)

-

Ordinary profit

314

32

(282)

(89.6)

Profit

204

(17)

(222)

-

Earnings per share (yen)12.24(1.02)(13.26)-

Orders received

7,695

8,409

+714

+9.3

Order backlog

9,034

14,275+5,241+58.0

Capital investment

239

329

+89

+37.4

Depreciation

299

275

(23)

(7.9)

R&D expenses

308

301

(6)

(2.2)

Copyright (C) 2022 Freund Corp. All rights reserved.

3

Machinery Business: OverviewNet sales







Basically no change in sales from 1H FY2/22.
In Japan, sales decreased because of delays in the timing of some sales and the longtime needed to purchase semiconductors and other parts/materials.
Higher sales at the U.S. subsidiary offset the sales decline in Japan.

Operating profitAn operating loss mainly due to the loss at the U.S. subsidiary for the following
reasons:
 Continuing delays in the procurement of parts and materials caused by U.S. labor

shortages and supply chain disruptions



Lower profit margins as inflation rapidly raises the cost of raw materials

Orders received and order backlog
Orders were strong, mainly in Japan, and the order backlog significantly increased toan all‐time high.

(Millions of yen)

Net sales

FY2/22

FY2/23

1H

1H

YoY change
%

5,366

5,420

54

+1.0

Operating profit

210

(268)

(478)

－

Orders received

7,695

8,409

＋714

+9.3

Order backlog

9,034

14,275＋5,241＋58.0

Copyright (C) 2022 Freund Corp. All rights reserved.

4

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

Freund Corporation: Sales and earnings in Japan were down as a result of delays in someprojects and sluggish overseas sales.



Freund‐Vector:

Despite the year‐on‐year increase in sales, operating loss was recorded
due to a decline in profit margin caused mainly by delayed shipments
and soaring raw material prices.



Freund‐Turbo:

While sales slightly decreased from the previous year, an operating loss
was recorded due to a decline in gross profit margin caused by a delayin the production of high‐margin products.

Cos.Mec:

An operating loss was recorded as fixed costs could not be absorbed
due to sluggish sales in 2Q. However, the deficit improved.

(Millions of yen)

Net sales

FY2/22

FY2/23

1H

1H

YoY change
%

5,366

5,420

+54

+1.0

FREUND CORPORATION

2,903

2,468

(434)

(15.0)

FREUND‐VECTOR

1,516

2,165

+648

+42.8

FREUND‐TURBO

773

739

(34)

(4.4)

Cos.Mec

422

439

+17

+4.1

210

(268)

(478)

－

FREUND CORPORATION

250

62

(187)

(74.9)

FREUND‐VECTOR

(3)

(252)

(248)

－

FREUND‐TURBO

56

(17)

(74)

－

(61)

(27)

+33

－

Operating profit

Cos.Mec

Copyright (C) 2022 Freund Corp. All rights reserved.

5

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

Freund Corporation:

The order backlog increased to an all‐time high due to the receiptof large orders from generic drug companies.



Freund‐Vector:

A big decline in orders compared to one year earlier, in which alarge order was received, but the order backlog remains high.



Freund‐Turbo:

Large volume of orders and order backlog,
mainly for the chemical industries.



Cos.Mec:

Big increase in the order backlog to the level exceeding sales in
the previous fiscal year.

(Millions of yen)Orders received

FY2/22

FY2/23

1H

1H

YoY change
%

7,695

8,409

+714

+9.3

FREUND CORPORATION

3,454

5,294

+1,839+53.2

FREUND‐VECTOR

3,382

1,993

(1,389)(41.1)

FREUND‐TURBO

659

908

+249

+37.9

Cos.Mec

365

349

(16)

(4.5)

Order backlog

9,034

14,275+5,241+58.0

FREUND CORPORATION

5,212

8,005

+2,793+53.6

FREUND‐VECTOR

2,838

4,248

+1,410+49.7

FREUND‐TURBO

518

969

+450

+86.9

Cos.Mec

619

1,176

+557

+89.9

Copyright (C) 2022 Freund Corp. All rights reserved.

6

Machinery Business: Sales by Region
 Japan:Sales down mainly because of a delay in the recognition of some sales.
 Overseas: A big increase in sales due to higher sales in the U.S. subsidiary to Latin
America and Asia.
In Latin America, sales in Brazil were strong and in Asia sales in China
and India were strong.

(Millions of yen)

FY2/22 1H
AmountFY2/23 1H

YoY change (%)

AmountYoY change (%)

Net sales

5,366

+30.1

5,420

+1.0

Japan

3,095

+3.5

2,574

(16.8)

Overseas

2,270

+99.8

2,846

+25.4

USA

777

+94.1

677

(12.8)

Latin America

442+269.5717+62.0

Europe396+185.2275(30.5)

Asia

513

+49.2

1,119

+117.9Others

139

+5.6

56

(59.8)

Copyright (C) 2022 Freund Corp. All rights reserved.

7

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

FY2/18(1,000)

Q4

Q1

Q2

Q3

FY2/19

Q4

Q1

Q2

Q3

FY2/20

Q4

Q1

Q2

Q3

FY2/21

Q4

Q1

Q2

Q3

FY2/22Q4Q1

Q2(15.0)%

FY2/23Copyright (C) 2022 Freund Corp. All rights reserved.

(20.0)%

8

Machinery Business: Quarterly Results (Net Sales, Orders Received/Order Backlog)(Millions of yen)
16,000Order backlog
14,000Net sales
Orders received

12,00010,000

8,000

6,000

4,000

2,000

0
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

Q3

FY2/22Q4Q1Q2

FY2/23Copyright (C) 2022 Freund Corp. All rights reserved.

9

Chemicals Business: OverviewNet salesPharmaceutical excipients:

Sales increased in Japan and other countries and are
growing at a pace that is expected to result in fiscal year
sales that surpass the prior fiscal year s all‐time high.



Food preservatives:

Higher sales driven by increasing demand in the confectionery
and e‐commerce bread sales categories.
Sales at a level that is expected to exceed the prior fiscal
year s all‐time high.



Dietary supplement:

Sales declined following the termination of a contract from amajor customer.

Export:Strong sales to customers in Europe and India.

Operating profit:(Millions of yen)

Increased due to sales growth and measures to improve
the profitability of food preservatives
FY2/22 1H
AmountNet sales

FY2/23 1H

YoY change (%)(8.1)

Pharmaceutical Excipients

2,682
1,461

Food Preservatives

AmountYoY change (%)
+16.1

+3.7

3,113
1,775

1,049

+21.5

1,241

+18.3

Dietary Supplement Products

171(73.4)

96(43.8)(Export sales)*1

123

+18.2

171

+38.5

+45.2
331
*1: Sales to Europe, India, South Korea, China and Taiwan, etc.

478

+44.1

Operating profit+21.6

Copyright (C) 2022 Freund Corp. All rights reserved.

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

Operating profit margin(Millions of yen)
2,500

20.0%

Pharmaceutical Excipients
Food Preservatives
Dietary Supplement Products

2,000Operating profit margin
15.0%

1,500

10.0%

1,000

5.0%
500

0

0.0%
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

Q3

FY2/22Q4Q1Q2

FY2/23Copyright (C) 2022 Freund Corp. All rights reserved.

11Summary of Consolidated Statement of Income

An operating loss as a result of higher SG&A expenses and a lower gross profit due tothe higher cost of sales ratio as prices of raw materials rose in Japan and other countries.

An ordinary profit because of a foreign exchange gain of 95 million yen, which is non‐operating income.
(Millions of yen)

FY2/22 1H

FY2/23 1H

YoY change

AmountComposition
ratio

AmountComposition
ratio

Amount

8,048

100.0

8,534

100.0

+486

+6.0

5,243

65.2

5,853

68.6

+609

+11.6

2,804

34.8

2,681

31.4

(123)

(4.4)

2,510

31.2

2,748

32.2

+238

+9.5

293

3.7

(67)

(0.8)

(361)

-

20

0.3

100

1.2

+79

+383.3

314

3.9

32

0.4

(282)

(89.6)

(2)

‐

8

0.1

+10

-

Profit before income taxes

312

3.9

40

0.5

(271)

(86.9)

Profit

204

2.5

(17)

(0.2)

(222)

-

Net sales
Cost of sales
Gross profit
SG&A expenses
Operation profit
Non-operating income andexpenses
Ordinary profit
Extraordinary income andlosses％Copyright (C) 2022 Freund Corp. All rights reserved.

12

Analysis of Change in Consolidated Operating ProfitThe main reason for the operating loss was a smaller gross profit caused by rising pricesof raw materials.
SG&A expenses increased 238 million yen primarily because of higher overseas expenses
due to the yen s depreciation and an increase in promotional expenses as the pandemic
continues as well as an increase in personnel expenses.

(Millions of yen)

Positive factors

293
Depreciation+13

Entertainment

Sales

Personnel

expensescommission

expenses+6

FY2/22

R&D

1H

expenses

(123)

(16)

(29)

Advertisingexpenses

Gross profit

(29)

Other

(67)
(40)
Traveling
expenses(75)(67) FY2/23
1H

Copyright (C) 2022 Freund Corp. All rights reserved.

13

Summary of Consolidated Balance SheetInventories and short‐term loans payable increased because of delays in shipments at
the U.S. subsidiary caused by the long time needed to purchase parts and materials.
(Millions of yen)

FY2/22-End
Current assets

FY2/23 1H

Change15,004

15,296+291

Cash and depodits

4,145

3,638

(506)

Accounts receivable

5,228

4,508

(720)

Inventories

5,090

6,344

+1,254Non-current assets

7,269

7,735

+465

Property, plant and equipment

4,562

4,710

+147

Intangible assets

1,434

1,649

+214

Investments and other assets

1,271

1,375

+103

Total assets

22,27323,031+757

Current liabilities

7,035

7,450

+414

2,743

2,138

(605)

27

990

+963

2,805

2,962

+156

883

886

+3

Total liabilities

7,919

8,337

+418

Total net assets

14,354

14,694+339

Total liabilities and net assets

22,27323,031+757

Accounts payable
Short-term loans payable
Contract liabilities(Advances received)
Non-current liabilities

Copyright (C) 2022 Freund Corp. All rights reserved.

14

Summary of Consolidated Statement of Cash Flows Negative operating cash flows because of higher inventories; internal cash
and loans were used to offset the negative free cash flow.
(Millions of yen)

FY2/22
1H

Cash flows from operating activities

FY2/23
1H

504

(946)

Profit before income taxes

312

40

Depreciation

299

275

Decrease (increase) in notes and accounts receivable - trade

824

884

Decrease (increase) in inventories

(680)

(717)

Increase (decrease) in notes and accounts payable - trade

(762)

(674)

Income taxes paid

(196)

(236)

(351)

(270)

Purchase of property, plant and equipment

(310)

(130)

Purchase of intangible assets

(67)

(160)

(416)

541

Short-term loans payable

(43)

900

Cash dividends paid

(334)

(334)

Net increase (decrease) in cash and cash equivalents

(239)

(506)

Cash and cash equivalents at end of period

4,258

3,638

153

(1,217)

Cash flows from investing activities

Cash flows from financing activities

Free cash flow

Copyright (C) 2022 Freund Corp. All rights reserved.

15

Consolidated Earnings and Dividend Forecasts for FY2/23

Copyright(C) 2022 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.
 Focusing on deliveries and closings of existing orders during the second half astight supplies of parts/materials in Japan and other countries extend leadtimes and prices of parts/materials are expected to remain high.

(Millions of yen)

Net sales

FY2/22

FY2/23(Actual)(Forecast)

YoY change
Amount％17,632

18,500+867+4.9Operating profit

981

700

(281)

(28.7)

Ordinary profit

1,032

720

(312)

(30.3)

543

450

(93)

(17.2)

32.46

26.87

(5.59)(17.2)

ProfitEarnings per share (yen)Copyright (C) 2022 Freund Corp. All rights reserved.

17

Summary of Dividend Forecasts
 Dividend per share for FY2/22 was 20 yen.
 To maintain dividend stability, forecast no change in the dividend for FY2/23.

100.0%

Consolidated dividend payout ratio

90.0%
80.0%

74.4%

87.8%
61.6%

70.0%
60.0%
50.0%
40.0%
30.0%

39.9%

37.2%
21.2%

22.5%

27.4%

34.5%

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

FY2/23(Forecast)Profit (\ million)

608

765

787

695

961

1,064

1,477

843

381

970

543

450

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

20.0

9,200

9,200

9,200

9,200

9,200

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

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) 2022 Freund Corp. All rights reserved.

18

(Supplementary Materials)
・ Company Overview
・ Segment Information

Copyright(C) 2022 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, 2022)● Sales： 17,600 million yen (Fiscal year ended February 2022, consolidated)● Number of employees： 482 (As of August 31, 2022, 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
Freund‐Chineway Pharmaceutical Technology Center Co.,Ltd.

Copyright (C) 2022 Freund Corp. All rights reserved.

20

フロイントグループのグローバルネットワーク

Using innovative technologies
for rapid growth outside Japan
Dedicated to creating new value unique to the Freund Group while basing operations on thegroup’s “ONE FREUND” philosophy for our values.

Shanghai FC Center will start operations 2023

Copyright (C) 2022 Freund Corp. All rights reserved.

21

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.

2. Chemicals Business Segment

Composition of Net
Sales and Profit bySegment
Chemicals

33%
41%
FY2/22

 Manufacturing and sales of pharmaceutical excipients, food59%
preservatives, nutritional supplements, and others.
 Freund uses Good Manufacturing Practice (GMP) compliant
67%
equipment to produce pharmaceutical excipients.
 Food preservatives made by Freund help ensure the safetyof food by maintaining the quality of many types of
Machinery
products.
 By using its granulating and coating technologies, Freund¥17.63 billion
has worked with customers to develop and commercialize Consolidated sales:
Consolidated operating profit: ¥0.98 billion
nutritional supplements and seamless mini-capsules.
Copyright (C) 2022 Freund Corp. All rights reserved.

22

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) 2022 Freund Corp. All rights reserved.

23

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.

Copyright (C) 2022 Freund Corp. All rights reserved.

26