Financial Results for the Second Quarter ended September 30, 2020
(Japan GAAP)
November 9, 2020
Company name:

HANWA Co.,Ltd.

Listed stock exchange: Tokyo

Stock exchange code:

8078(URL http://www.hanwa.co.jp)

Representative:
Hironari Furukawa President
Enquiries:
Yoichi Nakagawa Director, Senior Managing Executive Officer
Scheduled date of issue of audited financial statements: November 9, 2020
Scheduled date of payout of dividend: December 1, 2020

Phone +81-3-3544-2000(Amounts less than one million yen are rounded down)

１．Consolidated financial results for the Second Quarter ended September 30, 2020 (April 1, 2020 to September 30, 2020)(1) Consolidated operating results（Percentage indicate a change from the previous year）
Net sales
For the 2nd Quarter
ended September 30, 2020
ended September 30, 2019

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

Profit attributable toowners of the Company(％)(Millions of yen)

801,053(15.3)
11,077(18.7)
10,248(5.2)
946,024(5.9)
13,618
3.6
10,814(0.2)
Note: Comprehensive income
For the Fiscal Year ended September 30, 2020
4,820 million yen
For the Fiscal Year ended September 30, 2019
2,692 million yen
Net income
per share

For the 2nd Quarter
ended September 30, 2020
ended September 30, 2019

(％)

6,861
33.0
5,157
(21.4)
79.1 %(47.2) %Net income
per share(diluted)

(yen)

(yen)

168.84126.91－－(2) Consolidated financial position
Total assets(Millions of yen)
As of September 30, 2020
As of March 31, 2020

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

773,088798,442
As of September 30, 2020
As of March 31, 2020

Net assets
per share(％)

170,820
166,097
168,280 million yen
163,648 million yen

21.8
20.5

(yen)

4,140.99
4,027.01

２．Cash dividends
Cash dividends per share
1st Quarter 2nd Quarter 3rd Quarter
Year ended March 31, 2020
Year ended March 31, 2021
Year ending March 31, 2021
（estimated）

Year-end

Annual

(yen)

(yen)

(yen)

(yen)

(yen)

－
－

75.00
30.00

－

25.00

100.00

－

30.00

60.00

３．Forecast of consolidated financial results for fiscal year ending March 31, 2021 (April 1, 2020 to March 31, 2021)（Percentage indicate a change from the previous year）

Net sales

Operating income

Ordinary income(Millions of yen) (％)(Millions of yen) (％)(Millions of yen) (％)

Profit attributable toowners of the Company

Net income
per share(Millions of yen) (％)(yen)

Annual
1,700,000(10.9)
25,000(8.5)
23,000－15,500－381.42* For more information, please refer to "Notice Concerning Amendments to Forecasts of consolidated financial resultsfor FY2020" announced on November 9, 2020.
* The above forecasts reflect assumptions and prospects based on the information currently available. They are subject
to various risks and uncertainties that could cause actual results to differ materially from this information.

－1－

HANWA Co., Ltd.

Financial Results for the Second Quarter ended September 30, 2020

《Consolidated Balance Sheets》(Amounts less than one million yen are rounded down)

Millions of yen
March 31, 2020

September 30, 2020

AssetsCurrent assets;
Cash and deposits
Trade notes and accounts receivable
Electronically recorded monetary claims
Securities
Inventories
Other
Allowance for doubtful receivables
Total current assets

67,256
341,559
21,281
1,167
127,460
69,949(1,046)627,62980,001
311,395
27,682
1,134
122,41263,011(1,483)604,153

34,16540,99775,1626,331

33,75539,74373,4996,888

56,89233,496(1,070)89,318170,812
798,442

59,702
29,157(313)
88,546
168,934
773,088

Current liabilities;
Trade notes and accounts payable
Electronically record obligations
Short-term loans payable
Current portion of bonds payable
Income taxes payable
Accrued bonuses
Provision for product warranties
OthersTotal current liabilities

202,671
19,146
67,177
10,021
2,466
2,774
481
59,913364,653

188,684
18,40564,091
24
4,311
2,837
455
61,845
340,653

Long-term liabilities;
Bonds payable
Long-term loans payable
Retirement benefits liabilities
OthersTotal long-term liabilities
Total liabilities

40,013
212,372
6,162
9,142
267,691
632,344

40,000205,6886,242
9,682
261,613602,267

45,651
119,475(3,728)161,398

45,651
126,390(3,728)168,313

6,042
745
3,277
(2,434)(5,380)2,250
2,448
166,097
798,442

7,351
(88)
3,191
(5,471)(5,016)(32)
2,540
170,820
773,088

Fixed assets;
Property and equipment;
Land
OthersTotal property and equipment
Intangible assets
Investments and other assets;
Investment securities
OthersAllowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

Liabilities

Net assets;
Shareholders' equity;
Common stock
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Net unrealized holding gains on securities
Deferred hedge profit and loss
Land revaluation difference
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets－2－

HANWA Co., Ltd.

Financial Results for the Second Quarter ended September 30, 2020

《Consolidated Statements of Income and Comprehensive Income》(Amounts less than one million yen are rounded down)

Millions of yen
2nd Quarter ended
September 30, 2019

2nd Quarter ended
September 30, 2020

Net sales
Cost of sales
Gross profit

946,024
906,316
39,707801,053765,620
35,433

Selling, general and administrative expenses
Operating income

26,08913,61824,355
11,077

1,051
1,181
―
710
2,944

1,151
1,370
294
726
3,543

2,880
551
1,619
697
5,748
10,814

1,986
―
1,645
739
4,372
10,248Other income;Interest income
Dividend income
Equity in earnings of affiliates
OthersTotal other income
Other expenses;
Interest expenses
Equity in losses of affiliates
Foreign exchange loss
OthersTotal other expenses
Ordinary income
Extraordinary income;Gain on sale of property and equipment
Gain on sale of investment securities
Total extraordinary income
Extraordinary loss;
Loss on impairment of property and equipment
Loss on devaluation of investment securities
Provision of allowance for doubtful accounts of affiliates
Total extraordinary loss
Income before income taxes and minority interest

201
780
981

578
―
578

163
3,718
101
3,983
7,812

―
―
100
100
10,726

Income taxes
Net income

2,971
4,840

3,814
6,912

5,157
(317)

6,861
50

(515)
(609)
(803)
357

1,316
(834)
(2,807)
395

(577)

(162)

(2,148)
2,692(2,091)
4,820

3,083

4,932

(391)

(112)

Net income attributable to
Net income attributable to owners of the Company
Net income(loss) attributable to non-controlling interests
Other Comprehensive Income
Net unrealized holding gains(loss) on securities
Deferred hedge profit and loss
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive Income
Comprehensive Income
Comprehensive income attributable to;Comprehensive income attributable to owners of the parent
Comprehensive income(loss) attributable to non-controllinginterests－3－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 2020

《Consolidated Statements of Cash Flows》(Amounts less than one million yen are rounded down)

Millions of yen
2nd Quarter ended 2nd Quarter ended
September 30, 2019 September 30, 2020
Cash flows from operating activities;
Income before income taxes
Depreciation and amortization
Loss on impairment of property and equipment
Amortization of goodwill
Increase(decrease) in allowance for doubtful receivables
Interest and dividend income
Interest expense
Equity in earnings of affiliated companies (gain)
Gain on sale of property and equipment
Gain on sale of investment securities of unconsolidated subsidiaries
Loss on devaluation of investments securities
Provision of allowance for doubtful accounts of affiliates(Increase)decrease in trade receivables(Increase)decrease in inventories
Increase(decrease) in trade notes and accounts payable
Increase(decrease) in advance received
Increase(decrease) in retirement benefits
Other, net
Sub totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

7,812
2,500
163
265
(70)
(2,233)
2,880
551
(201)
(780)
3,718
101
47,1795,420(53,402)6,592
496(2,718)18,2752,447(2,986)(3,387)
14,34910,726
2,659
―
259
(406)
(2,522)
1,986
(294)
(578)
―
―
100
22,936
4,668(14,070)
5,332
617
2,484
33,9022,065(2,007)(2,109)31,851

Cash flows from investing activities;
Payment for time deposits
Proceeds from refund of time deposits
Payment for purchase of property and equipment
Proceeds from sale of property and equipment
Payment for acquisition of investment securities
Proceeds from sale and redemption of investment securities(Increase)decrease in short - term loans receivable, net
Increase in long - term loans receivableCollection of long-term loans receivable
Other, net
Net cash provided by (used in) investing activities

(675)
1,600
(3,760)477(2,924)
22
224
(861)
2,112
(1,312)(5,096)―60(3,446)
1,223(1,023)
32
(860)
(0)
5,237
(76)
1,145

Cash flows from financing activities;
Increase(decrease) in short-term loans, net
Proceeds from long-term debt
Repayments of long-term debt
Payment for redemption of bonds
Payment for cash dividends
Cash dividends paid to minority interest in consolidated subsidiaries
Purchase of investments in subsidiaries resulting in no change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities

4,184
5,374
(6,745)(10,010)(3,046)
(79)
(187)
(150)
(10,661)(4,669)13(6,361)(10,010)(1,020)
(2)
(31)
(108)
(22,191)(303)(1,711)
58,3842,460―
59,133

1,283
12,08967,243632
22
79,987

Effect of exchange rate changes on cash and cash equivalents
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiaries
Increase in cash and cash equivalents resulting from mergers with unconsolidated subsidiaries

Cash and cash equivalents at end of period－4－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 2020

《Segment information》
Segment information by business category for the 2nd Quarter ended September 30, 2019 and 2020, is as follows:(Amounts less than one million yen are rounded down)

2nd Quarter ended September 30, 2019

Millions of yen

Reportable segment
Steel
Net sales
Customers
Inter-segment
Total
Segment income(loss)

Primary
Metal
Metal Recycling

489,225 120,846
5,502
2,207
494,727 123,054
7,838
1,343

39,973579
40,552848

Foods
51,481821
52,302
510

Energy& Living
Materials

Overseas
sales
subsidiaries

Subtotal

94,036 107,533 903,097
2,841 24,131 36,082
96,877 131,665 939,179
1,703
33 12,278

Other

Total

42,927 946,024
1,487 37,570
44,415 983,595
978 13,256

2nd Quarter ended September 30, 2020

Adjustment― 946,024(37,570)―(37,570) 946,024(2,442) 10,814

Millions of yen

Reportable segment
Steel
Net sales
Customers
Inter-segment
Total
Segment income(loss)

Consolidated

Primary
Metal
Metal Recycling

421,588 105,920
4,099
1,266
425,688 107,186
6,641
2,106

33,205917
34,123(23)

Foods
49,517228
49,746
368

Energy& Living
Materials

79,031
3,427
82,4593,056

Overseas
sales
subsidiaries

Subtotal

72,830 762,094
14,647 24,586
87,478 786,681
699 12,848

Other

Total

38,958 801,053
1,469 26,056
40,428 827,110
207 13,055

Adjustment

Consolidated― 801,053(26,056)―(26,056) 801,053(2,807) 10,248

Notes:
1. “Other” comprises businesses that are not included in reportable segments, such as lumber section and machinery section.
2. Adjustments for segment income include inter-segment elimination and Group costs that have not been distributed to reportable segments. These
group costs consist mainly of expenses of administrative departments.

3. Segment income or loss is adjusted between ordinary income on the consolidated statements of income and comprehensive income.
4. Since the 1st Quarter of the fiscal year, Company reviewed the name of segment in order to express more appropriately the business, andchanged the reportable segments from "Petroleum & chemicals" to "Energy & Living Materials".
The change was only name change, and segment information had no effect from the change.
Segment information for the 2nd Quarter of the previous fiscal year has been mentioned after name change.

－5－

November 9, 2020

Highlights of Consolidated Financial Results for the 2nd Quarter of FY2020(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 2nd Quarter of FY2020(Unit: billion yen, rounded down to 0.1 billions yen)・As for the 2nd quarter result for this fiscal year, net sales have decreased by 15% year on year, hence reached to 801.0 billion yen, due to decline in commodity
prices including non-ferrous metal, as well as decrease in transaction volume due to decline in demand for steel materials and self-restraint of sales activities, as
economic activities in each country shrink caused by the novel coronavirus outbreak. Operating income decreased 19% year on year, to 11.0 billion yen chiefly
because profits declined in Primary metal, Metal Recycling business. Ordinary income decreased 5% year on year, to 10.2 billion yen, although interest expenses
decreased and equity in losses of affiliates turned profitable. Net income attributable to owners of the company increased by 33% year on year to 6.8 billion yen
partly because there were no loss on devaluation of investments securities that made in the previous fiscal year.
・We plan to pay 60 yen as the annual (30 yen as the interim and 30 yen as the year-end) dividend.

Operating Results
Net sales
Gross profit
SG&A expenses
Operating income

1Q-2Q
of FY2020

1Q-2Q
of FY2019

801.0

946.0

Year-on-year
Change(144.9)

39.7

(4.2)

-11%

24.3

26.0

(1.7)

-7%

13.6

(2.5)

Net sales have decreased by 15% from the same period of theprevious year. This was mainly due to decrease of transaction
volume under weak demands and self-restraint of sales activities
and decline in commodity prices including non-ferrous metal andpetroleum.

-19% (SG&A expenses)
SG & A expenses have decreased by approximately 1.7 billion yen
from the same period of the previous year mainly due to decreasein travel expenses and entertaining expenses under self-restraint ofsales activities.
Our personnel expenses have increased 0.2 billion yen, including
0.1 billion yen from newly consolidated subsidiaries.

Non-operating income

3.5

2.9

0.5

20%

Non-operating expenses

4.3

5.7

(1.3)

-24%

Ordinary income

10.2

10.8

(0.5)

-5%

Extraordinary gain

0.5

0.9

(0.4)

-41% (Non-operating income/expenses)

Extraordinary loss
Income before income
taxes and others

Income taxes
Net income
Owners of the Company(loss)
Non-controlling interests(loss)

EPS (yen)Comprehensive
incomeSegment
Information

0.1

3.9

(3.8)

-97%

10.7

7.8

2.9

37%

3.8

2.9

0.8

28%

6.9

4.8

2.0

6.8
0.0
168.845.1(0.3)
126.91

1.7
0.3
41.93

4.8

2.6

2.1

Non-operating income have increased 0.5 billion yen, and Nonoperating expenses have decreased 1.3 billion yen, respectively.
The breakdown of the main causes is as follows.
Dividend income: increase of 0.2 billion yen(YoY)
Equity in earnings of affiliates: increase of 0.3 billion yen(YoY)
Interest expenses: decrease of 0.9 billion yen(YoY)
Equity in losses of affiliates: decrease of 0.6 billion yen(YoY)

43% (Extraordinary gain/loss)
Gain on sales of fixed assets 0.5 billion yen : mainly due to sales
33%
of property by consolidated subsidiaries.
―
33%

773.0

798.4

(25.3)-3%(Current assets)

604.1

627.6

(23.4)-4%(Fixed assets)

168.9

170.8

(1.8)

-1%

602.2

632.3

(30.0)

-5%

311.3
231.3
*
137%/107%

331.1
263.8
*
161%/127%(19.7)(32.4)-24.0pt

-6%
-12%
-13%

170.8

166.0

4.7

3%

168.3
161.3
(0.0)
2.2
2.5
2.4
4,140.99
4,027.01
168.2
163.6
21.8/25.0*% 20.5/23.6*%

6.9
(2.2)
0.0
113.98
4.6
1.3pt

4%
―
4%
3%
3%
6%

1Q-2Q
of FY2020

1Q-2Q
of FY2019Year-on-year

31.8

14.3

17.5

122%

1.1

(5.0)

6.2

―

(22.1)(10.6)(11.5)

108%(Investment cash flows)Due mainly to collect long-term debts.

79.9

59.1

20.8

35%

(Financial cash flows)Due mainly to redemption of bonds and repayment of debt.

Total assets

Total liabilities(Net interest-bearing debt)

Net DER
Total net assets(Equity capital)(Valuation & translation
adjustments)(Minority interests)
BPS (yen)
Shareholders' equity
Shareholders' equity ratio

Cash Flow
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalents
at end of period

2,000.0

Net sales
1Q-2Q
1Q-2Q
of FY2020 of FY2019

Segment income
rate

1Q-2Q
1Q-2Q
of FY2020 of FY2019

rate

Main Factors

・ Apr. Acquire 100% of the shares of TATSUTA CO., LTD. which is a steel material distributor in Osaka.
・ Oct. Acquire 100% of the shares of TEKKEN Industry CO., LTD. which is a fabricator in Fukui.

ChangeMain Factors

rateChange(Total Assets)
Total assets decreased by 3% from the end of the previous year, due
to decrease in trade receivables along with sales decline.
Trade notes and accounts receivables 311.3 billion yen (-9% fromthe end of the previous year). Investment securities 59.7 billion yen(+5% from the end of the previous year).

(Liabilities)
Total liabilities decreased by 5% from the end of the previous year,
due to decrease in trade payables and interest-bearing debt. As
interest-bearing debt decreased by 6%, net debt-equity ratio wasturned into 137%（*107%).

(Net assets)
Total net assets increased by 3% from the end of the previous year,
due to accumulation from net income attributable to owners of thecompany.
Shareholders' equity ratio was 21.8%(*25.0%), which is 1.3
percentage points higher than the end of the previous year.
*Reflecting equity credit attributes of the subordinated loan

Main Factors

rate(Operating cash flows)Due mainly to decrease in net sales and trade receivables.

【Changes in Net Sales】
1st half
2,074.6

2,500.0

79%(Steel business)
Steel
425.6
494.7 -14%
6.6
7.8 -15% Net sales and segment income decreased mainly due to transaction
volumes declined due to delay in the recovery of manufacturing
Primary Metal
107.1
123.0 -13%
2.1
1.3
57% production and reflecting foreign exchange loss from local currency
depreciation.
Metal Recycling
34.1
40.5 -16%(0.0)
0.8― (Primary metals business)
Net sales decreased due to transaction volume declined caused bysteel and non-ferrous metals manufacturers operating rate.
Foods
49.7
52.3
-5%
0.3
0.5 -28% decreasing
On the other hand, segment income increased because there weren't
equity in losses of affiliates and interest expenses were decreased.
* Energy&
82.4
96.8 -15%
3.0
1.7
79% (Metal recycling business)
Living Materials
Net sales and segment income decreased due to decline of base metal
Overseas sales
87.4
131.6
-34%
0.6
0.0
― prices in the same period of the previous year as well as decrease insubsidiaries
the volume due to reduction of production activities of manufacturers.
Total for reportable
786.6
939.1 -16%
12.8
12.2
5% (Foods business)segments
Net sales and segment income decreased due to decline in market
prices of salmon, as well as decrease in the transaction volume of
Other
40.4
44.4
-9%
0.2
0.9
-79% processed goods due to self-restraint of the food‐service industry.
(Energy & Living Materials business)
Total
827.1
983.5 -16%
13.0
13.2
-2% Segment income increased due to securing profit margin of petroleum
products by coordinated production cut, and increasing revenue of
Adjustment(26.0)(37.5) -31%
(2.8)
(2.4)
15% the trading of the palm kernel shells(PKS) due to the long-term
contract for biomass power plant.
(Overseas sales subsidiaries)
Consolidated
801.0
946.0 -15%
10.2
10.8
-5% Segment income increased due to improved profitability of nonferrous metal trading in Thailand, and decreasing of interest expenses.
* Since the 1st Quarter of the fiscal year, Company changed the reportable segments from "Petroleum & chemicals" to "Energy & Living Materials".

TopicsMar. 2020(Interest-bearing debt)-15% (Net sales)

35.4

11.0

Main Factors

rateComparison with Mar. 2020

Sep. 2020

Financial Position

1,500.0

2nd half

1,069.6

1,700.0

600.0

899.0

400.0

961.4

1,000.0
500.0

200.0
1,004.9

836.9

946.0

801.0

FY2018FY2019FY2020(E)

17.3

8.8
8.5

1st half

2nd half

13.9

15.5

7.3
6.5

8.7
6.8

5.1

Forecast(Annual)
Net sales(13.6)FY2019FY2018FY2020(estimated)

10.0

6.6

8.0

6.9

6.0
4.0

4.4
472.4

473.5

484.2

477.2

425.4

375.6

2.0
0.0

2Q

3Q

4Q

FY2020/1Q

2Q【Changes in Interest-bearing Debt】
500.0
400.0
300.0
200.0
100.0
0.0

(18.8)FY20176.7

6.6

FY2019/1Q【Changes in Net Income】
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0

6.9

Operating income

0.0

0.0
FY2017

Net sales

800.0

1,907.4

1,791.1
954.1【Quarterly Operating Results】

1.5

changeReflecting subordinated loan 3.0

331.1
1.6

331.3

1.6
1.3

1.3

1.1

2.0

1.4
1.0
0.0

FY2017

FY2020(E)FY2019325.5Interest-bearing debt
Net DER
363.2

FY2018Cash Dividends

FY2019FY2020/2Q

FY2018FY2019FY2020(estimated)

1,700.0

1,907.4-11%

Interim (yen)

75.00

75.00

30.00

Operating income

25.0

27.3

-9%

Year-end (yen)

75.00

25.00

30.00

Ordinary income

23.0(12.5)―

Annual (yen)150.00100.0060.00

Net income attributableto owners of parent

15.5(13.6)―

Dividend payout ratio

44%

―

16%