Consolidated Basis Results of the Second Quarter for Fiscal 2019
(April 1, 2019 – September 30, 2019)
November 1, 2019
TOPY INDUSTRIES, LIMITED
Stock listing: Tokyo, Nagoya stock exchanges
7231
URL: http://www.topy.co.jp/en/index.html
Nobuhiko Takamatsu, President and CEO
Shuichi Tachibana, Operating Officer, General Manager, General Affairs Department
Telephone: 03-3493-0777 / (Overseas) 81-3-3493-0777
Scheduled date for submission of securities report: November 8, 2019
Scheduled date for dividend payment:
December 3, 2019
Preparation of supplementary explanatory materials: Yes
Holding of quarterly financial results meeting:Yes (for institutional investors and analysts)
Registered Company name:
Code number:
Representative:
Contact:(Figures of less than ¥1 million have been omitted)
1. Consolidated Financial and Operating Results of the Second Quarter for Fiscal 2019 (April 1, 2019 - September 30, 2019)(1) Consolidated Operating Results (Cumulative)(Percentage figures are changes from the same period of the previous fiscal year)
Profit attributable to
Net sales
Operating profit
Ordinary profit
owners of parent
Million yen

Second Quarter of Fiscal 2019
Second Quarter of Fiscal 2018
(Note) Comprehensive income:

137,196
135,173%

Million yen%

Million yen%

Million yen

1.5
2,325
(30.6)
1,552(54.1)
26.1
3,348
(7.1)
3,381
(15.5)
Second Quarter of Fiscal 2019
¥999 million -58.5%
Second Quarter of Fiscal 2018
¥2,406 million -42.6%

858
2,245

%

(61.8)(18.9)

Profit per shareafter full dilution

Profit per share
Yen

Yen

Second Quarter of Fiscal 2019
36.52–
Second Quarter of Fiscal 2018
95.60–
(Note) The figures indicated above reflect material adjustments made to the initial allocations of historical costs based on theprovisional accounting treatment used for business combinations.
(2) Consolidated Financial Results
Total assets
Million yen

Second Quarter of Fiscal 2019
Fiscal 2018
(For reference) Shareholders’ equity:

Ratio of shareholders’equity to total assets

Net assets
Million yen

Net assets per share%

269,559
111,676
284,198
112,362
Second Quarter of Fiscal 2019 ¥110,633 million

Yen

41.0
4,708.86
39.2
4,737.26
Fiscal 2018 ¥111,304 million

2. Dividends
Dividends per share
Base date

End of second
quarter

End of first quarter

Fiscal 2018
Fiscal 2019

End of third quarterEnd of fiscal year

Full fiscal year

Yen

Yen

Yen

Yen

Yen

–
–

20.00
40.00

–

70.00

90.00

–

20.00

60.00

Fiscal 2019 (Forecasts)(Note) Whether changes to the latest dividend forecasts have been made: Yes

3. Consolidated Financial Forecasts for Fiscal 2019 (April 1, 2019 - March 31, 2020)(Percentage figures are changes from the same period of the previous fiscal year)
Profit attributable toProfit per
Net sales
Operating profit
Ordinary profit
owners of parent
share%Million yen%

Fiscal 2019
270,000(5.7)
6,500 (13.4)
7,000 (25.2)(Note) Whether changes to the latest forecasts for consolidated figures have been made: Yes

Million yen%

Million yen

%

4,500

(36.7)–1–Million yen

Yen

191.53

* NOTE(1) Changes in the State of Material Subsidiaries during the Period: No
Newly included: – (Name) –Excluded: –(Name) –(2) Adoption of Special Accounting Methods for the Preparation of Quarterly Consolidated Financial Statements: Yes
Note: For details, please refer to “Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements.”(3) Changes in Accounting Principles, Changes in Accounting Estimates, and Retrospective Restatements(a) Changes in accounting principles accompanying the amendment of accounting standards: None(b) Changes other than those in (a) above: None(c) Changes in accounting estimates: None(d) Retrospective restatements: None
(4) Number of Shares Issued (Common shares)(a) Number of shares issued at the end of the period (including treasury stock)
Second Quarter of Fiscal 201924,077,510 sharesFiscal 2018(b) Number of treasury stock at the end of the period
Second Quarter of Fiscal 2019582,676 sharesFiscal 2018(c) Average number of shares issued during the period
Second Quarter of Fiscal 201923,495,180 shares
Second Quarter of Fiscal 201824,077,510 shares
582,007 shares
23,486,041 shares* These consolidated financial results are not included in the scope of quarterly audits by certified public accountants or audit
corporations.
* Explanation of the Appropriate Use of Performance Forecasts and Other Related Items(Caution concerning future descriptions etc.)
The above estimate has been compiled based on information available at the time this disclosure was made. The actual earnings
are subject to change from the estimated values due to various factors. For assumed conditions underlying the earnings forecast
and cautionary statements in using the earnings forecast, please refer to “Explanation Regarding Future Estimate Information
Such as Consolidated Financial Performance Estimates.”(Method for acquiring supplementary briefing material on quarterly financial results)
The Company plans to hold a briefing session for institutional investors and securities analysts. A video of this briefing session
and briefing material will be posted on the Company’s website promptly after the briefing session.

–2–

Index of Attached Documents
1. Qualitative Information Regarding Results of the Second Quarter for Fiscal 2019..................................................................

4(1) Explanation Regarding Consolidated Operating Results ....................................................................................................

4(2) Explanation Regarding Financial Status .............................................................................................................................

4(3) Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates ..................

5

2. Quarterly Consolidated Financial Statements and Important Notes .........................................................................................

6(1) Quarterly Consolidated Balance Sheets ..............................................................................................................................

6(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income ..........

8

Quarterly Consolidated Statements of Income
Second Quarter Consolidated Cumulative Accounting Term....................................................................................

8

Quarterly Consolidated Statements of Comprehensive Income
Second Quarter Consolidated Cumulative Accounting Term....................................................................................

9(3) Notes Regarding Quarterly Consolidated Financial Results ............................................................................................... 10(Note Related to Going Concern) ..................................................................................................................................... 10(Note on Significant Changes in the Amount of Shareholders’ Equity) ............................................................................ 10(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements) .................. 10

Note: This document has been translated from the original Japanese version for reference purposes only. In the event of any
discrepancy between this translated document and the original Japanese version, the original shall prevail.
The original disclosure in Japanese was released on November 1st, 2019 at 13:30 (GMT+9).
The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from thetranslation.

–3–

1. Qualitative Information Regarding Results of the Second Quarter for Fiscal 2019(1) Explanation Regarding Consolidated Operating Results
During the first half of the consolidated fiscal year under review, the U.S. economy continued to grow while further uncertainties
surrounded the global economy amid the intensifying U.S.-China trade tensions followed by an economic slowdown in China.
The Japanese economy continued to see improvements in employment and individual income, while exports and industrial
production remained rather weak.
Under these circumstances, the Group launched Growth & Change 2021, the final stage in the series of medium-term
management plans, at the beginning of the current fiscal year to achieve growth in the global arena as well as innovative changes
for high earnings power with a focus on the prioritized agenda, including: (1) increase in earnings power; (2) manifestation of
the Group synergies; (3) enhancement of strategic products; (4) taking on the challenge of innovation; and (5) further
strengthening of the management foundation.
The financial results for the first half of the fiscal year under review include consolidated net sales of ¥137,196 million (up 1.5%
year on year), aided by Asahi Tec Corporation, an aluminum wheel manufacturer that has recently become a wholly owned
subsidiary of the Company. Meanwhile, operating profit declined to ¥2,325 million (down 30.6% year on year), ordinary profit
declined to ¥1,552 million (down 54.1% year on year) and profit attributable to owners of parent declined to ¥858 million (down
61.8% year on year), primarily reflecting a lower sales volume of parts for the undercarriages of construction machinery,
partially offset by the improved metal trading spreads and the contributions from newly consolidated subsidiaries.
Performance by Segment(Steel Business)
In the electric furnace industry, demand for steel materials declined among both construction and manufacturing companies.
Auxiliary materials and energy prices remained high, while prices for steel scrap, a key raw material, declined.
Given these circumstances, the Group’s net sales declined to ¥36,975 million (down 9.8% year on year), reflecting the lower
sales volume. Operating profit increased to ¥2,139 million (up 65.0% year on year) due to the consistent cost reduction
initiatives along with an expansion in the price spread aided by the efforts to sustain selling prices of products against steel scrap.
(Automotive & Industrial Machinery Components Business)
In the automotive industry, the volume of domestic automobile production increased year on year, while the volume of
production in North America and China declined. In the construction machinery industry, Japanese manufacturers experienced
lower unit sales of hydraulic shovels in China and Southeast Asia, followed by some inventory adjustments. Demand for mining
machinery experienced a decline primarily in Southeast Asia, reflecting lower resource prices.
Given these conditions, the Group achieved net sales of ¥92,264 million (up 7.5% year on year) by taking advantage of the newconsolidation of aluminum wheel manufacturer Asahi Tec Corporation, partially offset by the sales volume decline in parts forthe undercarriages of construction machinery and mining machinery wheels. Meanwhile, operating profit was limited to ¥1,993
million (down 45.6% year on year), primarily reflecting lower sales volumes for parts for the undercarriages of construction
machinery.
(Power Business)
The Group endeavored to maintain the stable supply of electricity in line with its business plan.
Net sales came to ¥4,609 million (down 6.1% year on year) with operating profit of ¥129 million (down 64.9% year on year),given the challenging business environment amid lower demand for electric power and intensifying price competition on thedomestic front.
(Others)
The Group worked to prepare for the commercial production of synthetic mica used in cosmetics and other products, while
focusing on the expansion of overseas and domestic sales. For crawler robots, the Group took steps to launch full-fledged
marketing of a crawler mechanism for back/forth and left/right movements. Consequently, net sales for the period under review
came to ¥3,346 million (down 2.2% year on year) with operating profit limited to ¥603 million (down 25.8% year on year),primarily reflecting heavy upfront investment for synthetic mica.
(2) Explanation Regarding Financial Status
Total assets at the end of the second quarter of the consolidated fiscal year under review stood at ¥269,559 million, a decrease of¥14,639 million from the end of the previous consolidated fiscal year. This was mainly due to decreases of ¥8,642 million and¥7,044 million in notes and accounts receivable - trade and cash and deposits, respectively.
Total liabilities were ¥157,882 million, or a decrease of ¥13,953 million compared with the end of the previous consolidated
fiscal year, primarily reflecting a decrease in electronically recorded obligations-operating of ¥6,490 million and a decrease innotes and accounts payable - trade of ¥5,091 million.
Total net assets came to ¥111,676 million, or a decrease of ¥685 million from the end of the previous consolidated fiscal year,
primarily reflecting a decrease in retained earnings of ¥790 million.
–4–(3) Explanation Regarding Future Estimate Information Such as Consolidated Financial Performance Estimates
The global economy is expected to continue to face concerns about setbacks, given the protracted trade tensions between the
United States and China along with China’s economic slowdown. The Japanese economy is also expected to continue being
exposed to the risk of economic setbacks with slowing export demand due to uncertainties in the global economy. Given thissituation, it is expected that the business conditions surrounding the Group will remain unforeseeable.
The full-year consolidated financial forecast for the period from April 1, 2019 through March 31, 2020 (announced on May 10,2019) has been updated. The Group expects that net sales will be ¥270,000 million with operating profit of ¥6,500 million,
ordinary profit of ¥7,000 million, and profit attributable to the owners of parent of ¥4,500 million. For details, refer to theAnnouncement Regarding the Difference between the Cumulative Second Quarter Financial Forecast and Actual Results, and
the Adjustment of the Consolidated Financial Forecast and Dividends Forecasts for Fiscal 2019, announced today.

–5–2. Quarterly Consolidated Financial Statements and Important Notes(1) Quarterly Consolidated Balance Sheets(Million yen)Previous Consolidated
Accounting Term
(March 31, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts

Second Quarter Consolidated
Accounting Term
(September 30, 2019)29,671
59,81822,327
7,413
15,1697,417(66)

22,626
51,17523,194
6,906
14,3626,867(62)141,751

125,071

93,166(62,636)

93,976(63,608)

Buildings and structures, net

30,53030,367

Machinery, equipment and vehicles
Accumulated depreciation

204,197(157,286)

207,377(160,128)

46,911

47,24915,287
5,089(3,290)15,363
5,072(3,366)

1,799

1,706

3,696
42,392(40,630)

4,820
42,912(40,944)

1,761

1,968

99,986

101,474

5,160

4,883

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation

Machinery, equipment and vehicles, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Other

5,160

4,883

Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts

Total intangible assets

27,093
478
2,340
345
7,100
(58)

28,137
486
2,122
345
7,087
(48)

Total investments and other assets

37,30038,130142,447

144,487

284,198

269,559

Total non-current assets
Total assets–6–

(Million yen)Previous Consolidated
Accounting Term
(March 31, 2019)
Liabilities
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans payable
Current portion of bonds
Lease obligations
Income taxes payable
Other

Second Quarter Consolidated
Accounting Term
(September 30, 2019)

31,88020,26819,414
5,000
878
2,170
18,293

26,78913,77815,393
5,000
709
699
16,436

97,90778,80622,80032,461
888
1,093
162
21
41
371
12,617373
3,096

27,80032,684
614
1,092
197
39
39
235
12,931
368
3,073

73,92979,075

Total liabilities

171,836

157,882

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares

20,98318,606
68,532(1,708)20,98318,60667,742(1,710)Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for corporate officers’ retirement benefits
Provision for officers’ stock benefits
Provision for directors’ retirement benefits
Reserve for repairs
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities

Total shareholders’ equity

106,413

105,621

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans

6,284
(5)
(1,023)
(365)

6,916
(3)
(1,492)(408)

Total accumulated other comprehensive income

4,890

5,012

1,057

1,042

Non-controlling interests
Total net assets
Total liabilities and net assets–7–

112,362

111,676

284,198

269,559(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Second Quarter Consolidated Cumulative Accounting Term)(Million yen)Previous Second Quarter
Second Quarter Consolidated
Consolidated Cumulative
Cumulative Accounting Term
Accounting Term(April 1, 2019 - September 30, 2019)(April 1, 2018 - September 30, 2018)
Net sales
Cost of sales

135,173
114,809

137,196
117,927

Gross profit
Selling, general and administrative expenses

20,36317,015

19,268
16,943Operating profit
Non-operating income
Interest income
Dividends income
Foreign exchange gains
Share of profit of entities accounted for using equity
method
Other

3,348

2,325

48
382
23

39
385
–

153

270

189

210

796

905

324
–
439

313
490
875

Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Other
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

–8–

763

1,678

3,381

1,552

3
0

15
–

3

15

3
138
0

0
108
1

142

109

3,242

1,457

926

578

2,316

879

70

21

2,245

858

(Quarterly Consolidated Statements of Comprehensive Income)(Second Quarter Consolidated Cumulative Accounting Term)(Million yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates
accounted for using equity method

Previous Second Quarter
Second Quarter Consolidated
Consolidated Cumulative
Cumulative Accounting Term
Accounting Term(April 1, 2019 - September 30, 2019)(April 1, 2018 - September 30, 2018)
2,316
879

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests

–9–

795
13
(718)
40

647
1
(345)
(43)

(40)

(140)

90

119

2,406

999

2,384

979

21

19

(3) Notes Regarding Quarterly Consolidated Financial Results(Note Related to Going-Concern Assumption)
None(Note on Significant Changes in the Amount of Shareholders’ Equity)
None(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)
Tax expenses were calculated by multiplying the rationally estimated effective tax rate after applying tax effect accounting to
profit before income taxes for the consolidated fiscal year, which includes the current second quarter under review, by profit
before income taxes for the second quarter.

– 10 –