FREUND CORPORATION(Securities code: 6312)

Results of Operations
for the First Half of the Fiscal
Year Ending February 29, 2024

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

Contents
 Consolidated Financial Summary for 1H of FY2/24

・・・

P.02

 Consolidated Earnings and Dividend Forecasts for FY2/24
 Topics

・・・

P.16

・・・

P.19

Supplementary Materials

・・・

P.21

Fact Sheet・・・

Appendix

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

1

Consolidated Financial Summary for 1H of FY2/24

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

Consolidated Financial Summary
Net salesIn the machinery business, sales in U.S. subsidiary Freund‐Vector, which had been sluggish in the previous fiscal
year, recovered.



The chemicals business maintained a strong performance both in pharmaceutical excipients and foodpreservatives.

Profit

There was an operating profit in the first half, returning to profitability from the loss recorded one year earlier.



The return to profitability was attributable mainly to the strong performance of the chemicals business and theearnings recovery of Freund‐Vector.

(Millions of yen)

YoY change

FY2/23 1H

FY2/24 1H

8,534

9,583

1,049

12.3%

Operating profit

(67)

177

245

－

Ordinary profit

32

195

163

499.9%

Profit

(17)

115

132

－

(1.02)

6.91

7.93

－

Depreciation

275

262

(13)

(4.8)%

R&D expenses

301

325

24

8.2%

Net sales

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

3

Machinery Business: Overview
Net sales

In Japan, first half sales decreased because most FY2/24 major orders will generate sales during the second half.
ln other countries, Freund‐Vector has consistently ramped up shipments, including those carried over from theprevious fiscal year. Higher sales has compensated for the decline in domestic sales.

Operating profitThe machinery business returned to profitability as a result of the Freund‐Vector s recovery after being in the redin the previous fiscal year.

Orders received and order backlog


Orders received remained strong, driven by the substantial investments in large‐scale equipment by genericdrug manufacturers in Japan.
The order backlog increased significantly to a record‐high.
(Millions of yen)

FY2/23
1H

FY2/24
1H

YoY change％

Net sales

5,420

6,246

825

15.2%

Operating profit

(268)

45

313

－

Orders received

8,409

9,246

837

10.0%

Order backlog

14,275

16,179

1,903

13.3%

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

4

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

Sales decreased primarily due to the prolonged procurement of some parts in Japan.
Profit improved partly because of strong sales of parts and maintenance services.

Freund‐Turbo

Became profitable after a loss one year earlier due to the receipt of large orders.

Freund‐Vector

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

Cos.MecWith major projects concentrated in the second half, the first half was challenging but showedsigns of improvement.

(Millions of yen)
Before elimination for consolidation

Net sales

FY2/23
1H

YoY change

FY2/24
1H

％

5,420

6,246

825

15.2%

2,468

2,116

(351)

(14.2)%

Freund‐Turbo

739

878

139

18.8%

Freund‐Vector

2,165

3,033

868

40.1%

439

412

(27)

(6.2)%

(268)

45

313

―

Freund Corporation

62

64

1

3.0%

Freund‐Turbo

(17)

38

55

―

Freund‐Vector

(252)

26

278

―

Cos.Mec

(27)

(95)

(67)

―

Freund Corporation

Cos.Mec
Operating profit

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

5

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

Many investments in large‐scale facilities by generic drug manufacturers in Japanaccounted for a large share of orders. The order backlog increased to a record high.

Freund‐TurboFirst half orders were lower than one year earlier when there were several large orders.
The order backlog decreased as products were delivered to customers.

Freund‐Vector

A significant downturn in orders because large orders expected in the first half were
delayed.

Cos.Mec

Orders increased significantly from one year earlier and the order backlog remained at
the level higher than one year earlier.

(Millions of yen)
Before elimination for consolidation

Orders received

FY2/23
1H

YoY change

FY2/24
1H

％

8,409

9,246

837

10.0%

5,294

6,264

970

18.3%

Freund‐Turbo

908

647

(261)

(28.7)%

Freund‐Vector

1,993

1,684

(309)

(15.5)%

349

689

340

97.5%

14,275

16,179

1,903

13.3%

8,005

12,157

4,152

51.9%

Freund‐Turbo

969

699

(270)

(27.9)%

Freund‐Vector

4,248

2,022

(2,226)(52.4)%

Cos.Mec

1,176

1,414

237

20.2%

Freund Corporation

Cos.Mec
Order backlog
Freund Corporation

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

6

Machinery Business: Sales by Region
Japan Sales decreased because there are still delays in procuring certain partsand many major orders will generate sales in the second half.
 Sales ratio of in Japan decreased to 40% because of the sales recovery
at the U.S. subsidiary.

Overseas

 U.S. and Latin American sales growth at Freund‐Vector made a big
contribution to overseas sales growth.
 The overseas sales ratio of the machinery business surged to 60%, driven
by the depreciation of the yen.

Asia
1,119
21%

Others561%EuropeFY2/23 1H
275
5%¥5,420 million
Latin
America717
13%
USA
Overseas
677
2,846
12%
53％

Europe
390
6%
Japan
2,574
48%

Latin
America
1,641
26%
Overseas
3,77060％

Others181
Asia 3%427
7%

FY2/24 1H

Japan
2,476
40%

¥6,246 million

USA
1,129
18%

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

7

Machinery Business: Quarterly Results
Net sales

Operatingprofit margin(Millions of yen)

20%

6,000

Net sales（left axis）

Operating profit margin（right axis）
15%

5,000
10%
4,000
5%

3,000

0%

‐5%
2,000
‐10%
1,000
‐15%

0

‐20%

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

FY2/22

FY2/23

FY2/24

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

8

Machinery Business: Quarterly Results (Net Sales/Orders Received/Order Backlog)(Millions of yen)

(Millions of yen)

6,000

18,000Order backlog (left axis)
16,000Net sales (right axis)
Orders received (right axis)

5,000

14,0004,000

12,00010,000

3,000
8,000

2,000

6,000

4,000

1,000
2,000

0

0

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

FY2/22

FY2/23

FY2/24

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

9

Chemicals Business: Overview
Net sales
Sales remained steady surpassing the previous fiscal year s record high.
Pharmaceutical excipients：In the previous fiscal year, sales of major products were deferred to thefollowing quarter. However, in the current fiscal year, those sales were on
track, leading to an increase in overall sales.
Food preservatives：Sales continued to increase due to strong demand for preservatives in the online
bread sales sector.
Export: Sales decreased due to lower production by customers for some products
Operating profit
Although the gross profit increased as the gross profit margin remained almost the same as one year
earlier, operating profit was unchanged due to an increase in common expenses.
(Millions of yen)

FY2/23
1H

FY2/24
1H

YoY change
％

3,113

3,337

223

7.2%

Pharmaceutical Excipients

1,872

1,995

123

6.6%

Food Preservatives

1,241

1,341

100

8.1%

Dietary Supplement Products

171

131

(39)

(23.2)%（Export sales）

478

479

1

0.2%

Net sales

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

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

Net sales(Millions of yen)
2,000

20.0%

Food Preservatives
Pharmaceutical Excipients
Operating profit margin

1,500

15.0%

1,000

10.0%

500

5.0%

0

0.0%

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

FY2/22

FY2/23

FY2/24

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

11Summary of Consolidated Statement of Income Improvements in sales and earnings due to the performance recovery at Freund‐Vector
resulted in positive operating profit and profit for the quarter.
 Smaller net non‐operating income because of the 95 million yen foreign exchange gain in
the first half of FY2/23(Millions of yen)

FY2/22Composition
ratio

AmountNet sales
Cost of sales
Gross proﬁt
SG&A expenses
Operation proﬁt
Non‐operating income
and expenses
Ordinary proﬁt
Extraordinary income
and losses
Proﬁt before income taxes
ProfitFY2/23
AmountYoY change

Composition
ratio

Amount

％

8,534

100.0

9,583

100.0

1,049

12.3%

5,853

68.6

6,610

69.0

756

12.9%

2,681

31.4

2,973

31.0

292

10.9%

2,748

32.2

2,796

29.2

47

1.7%

(67)

(0.8)

177

1.8

245

―

100

1.2

18

0.2

(81)

(81.8)%

32

0.4

195

2.0

163

499.9%

8

0.1

(16)

(0.2)

(24)

―

40

0.5

179

1.9

138

339.2%

(17)

(0.2)

115

1.2

132

―

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

12

Analysis of Change in Consolidated Operating ProfitThere was a substantial year‐on‐year increase in gross profit, primarily driven by the revenue
growth, mainly at Freund‐Vector.



Selling, general and administrative (SG&A) expenses rose due to higher office outsourcing
expenses and personnel expenses at Freund Corporation and higher sales commissions,
including those at overseas subsidiaries. However, higher sales offset the rise in expenses,
leading to a return to operating profit.

(Millions of yen)

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

13

Summary of Consolidated Balance Sheet Inventories (work in process) and contract liabilities increased, mainly at Freund
Corporation, because of the large volume of new orders.
 Net assets increased only slightly, partly due to dividend payments, yet the equity ratio
remains high at 61.6%.
 The total assets increased, significantly affected by the yen s depreciation.

AssetsLiabilities and Shareholders' Equity
2,730

2,380

Accounts payable

2,913

3,551

Contract Liabilities

896
1,275
826

750
1,311
859

Short‐term debt
Other liabilities
Non‐current
liabilities

14,117

14,213

Net assets

FY2/24 1H

FY2/23

FY2/24 1H\23,067 million\22,758 million\23,067 million

3,241

Cash anddeposits

3,917

Accounts
receivable

5,535

Inventories

5,586

Other assets

831

876

Non‐current
assets

6,888

7,241

FY2/23\22,758 million

5,515

6,192

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

14

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

FY2/23 1H(946)

FY2/24 1H
225

Profit before income taxes

40

179

Depreciation

275

262

Decrease (increase) in notes andaccounts receivable ‐ trade

884

131

Decrease (increase) in inventories

(717)

(348)

Increase (decrease) in notes andaccounts payable ‐ trade

(674)

(379)

Income taxes paid

(236)

(112)

(270)

(364)

Purchase of property, plant and equipment

(130)

(180)

Purchase of intangible assets

(160)

(179)

541

(575)

Short‐term debt

900

(199)

Cash dividends paid

(334)

(332)

Net increase (decrease) in cash and cash equivalents

(506)

(675)

Cash and cash equivalents at end of period

3,638

3,241

(1,217)(139)

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Free cash flow

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

15

Consolidated Earnings and Dividend Forecasts for FY2/24

Copyright(C) 2023 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.
We will strive to maintain/expand the strong performance of the chemicals business. In
addition, we will focus on the successful completion of the machinery business, as
major projects both in Japan and other countries will be concentrated in the fiscal year s
second half.

(Millions of yen)

Net sales

FY2/23

FY2/24

YoY change

ActualForecast％

19,65820,000

+342

+1.7%

Operating profit

451

700

+249

+55.2%

Ordinary profit

559

650

+91

+16.3%

Profit

(538)

450

+988

―

(32.15)26.87+59.02―

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

17

Summary of Dividend Forecasts
No change in the 20 yen dividend forecast, which is the same as in the previous
fiscal year, because of the basic policy of long‐term dividend stability.
Dividend
payout ratio
50

Ordinary year‐end dividend (Yen)Dividend payout ratio (%)

45
40
35

37.2

22.4

32.4

23.3

Commemorative dividend (Yen)

87.8

39.9

74.4

61.6

100
80
60

34.5

40

30

20

25

0

Dividend per share

20
15
10
5
0

5.0

2.5
12.5

12.5

FY2/15

FY2/16

‐20

20.0

20.0

20.0

20.0

20.0

20.0

20.0

15.0

‐40
‐60
‐80

FY2/17

FY2/18

FY2/19FY2/20FY2/21

FY2/22

FY2/23‐100
FY2/23（Forecast）（Note: Dividend payout ratio for FY2/23 is not available due to loss attributable to owners of parent.
Freund conducted a 2‐for‐1 common stock split on March 1, 2016. The dividends per share for FY2/16
and earlier have been adjusted to reflect the stock split.
Commemorative dividends were paid in FY2/15 for Freund s 50th anniversary and in FY2/17 for the 20th
anniversary of the exchange listing of Freund stock.
Copyright (C) 2023 Freund Corp. All rights reserved.

18

Topics

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

Restricted Stock Compensation Plan

Freund established a restricted stock compensation plan for the purposes of providing an
incentive for achieving the sustained growth of corporate value and aligning the interestsof directors, executive officers and others with those of shareholders.
Directors and executive officers as well as employees are eligible to receive restricted
stock.
In particular, distributing this stock to employees enables those to think like shareholders
by using the same viewpoint and increases engagement with employees, which is a key
element of human resource management.
Individuals
subject to thecompensation
plan(1) Directors and Executive Officers (excluding Outside Directors
and Corporate Auditors)(2) 221 employees (including temporary employees and contract
employees)

Number ofshares(1) 23,173 shares
4 Directors 18,673 shares 3 Executive Officers 4,500 shares(2) 133,500 shares (500 or 1,000 shares per person)

Date of payment(1) June 30, 2023
(2) August 25, 2023

Date of releaseof transfer
restriction(1) Date of retirement as Director or Executive officer(2) June 10, 2026
Copyright (C) 2023 Freund Corp. All rights reserved.

20

(Supplementary Materials)
・ Company Overview
・ Segment Information

Copyright(C) 2023 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 (Fiscal year ended February 28, 2023, consolidated)●Sales： 19,600 million yen (As of February 28, 2023)●Number of employees ： 482 (As of February 28, 2023, consolidated)●Business： Machinery business‐ Manufacturing and sales of granulation andcoating 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) 2023 Freund Corp. All rights reserved.

22

The Freund Group and R&D Facilities
Using innovative technologies for rapid growth outside Japan
Evolving

Machinery
Development Manufacturing Sales

Freund Corporation

Joined the Group in
2020

MachineryChemicals

Development Manufacturing Sales Laboratory

Freund‐Turbo Corporation

Machinery (Nonchemical product)

Development Manufacturing Sales Laboratory
Machinery

Joined the Group in 2010

Sales Laboratory

Opened in 2014
Machinery
Development Manufacturing Sales Laboratory
Machinery

Machinery Chemicals

Manufacturing Laboratory

Sales Laboratory

Established a joint venture in 2019

Shanghai FC Center openedin 2023

Joined the Group in 1997

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

23

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

24

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

1. Machinery Business Segment

Pen Manufacturing and sales of granulation and coating
equipment for the pharmaceutical, food, and fine chemicalindustries.
 For coating equipment, Freund is ranked first in Japan andsales growth is accelerating in Asia and in Freund-Vector’s
US and European operations. Freund is the only company inthe world that has expertise both in drug formulation
technologies and the associated machinery.
 Aiming to increase sales of industrial machinery too byintegrating granulating and coating technologies withmilling and sieving technologies.

Composition of Net Sales
and Profit by Segment
Chemicals

32%

6%

FY2/23

2. Chemicals Business Segment

Ink Manufacturing and sales of pharmaceutical excipients,
68%
94%
food preservatives, nutritional supplements, and others.
利益 Freund uses Good Manufacturing Practice (GMP) compliant
equipment for the production of pharmaceutical
excipients.
売上高 Freund’s food preservatives contribute to ensuring the
Machinerysafety of food by maintaining the quality of various
products.
Consolidated sales:¥19.65 billion
 Through the utilization of its granulating and coating
Consolidated operating profit: ¥0.45 billion
technologies, Freund collaborated with customers todevelop and commercialize nutritional supplements andseamless mini-capsules.
Copyright (C) 2023 Freund Corp. All rights reserved.

25

Freund Group s Business Fields


FREUND Group s business fields based upon pharmaceutical products manufacturing
processes
FREUND Group Business Fields

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

26

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

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

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

29