Financial Results for the Second Quarter ended September 30, 2021
(Japan GAAP)
November 10, 2021
Company name:

HANWA Co.,Ltd.

Listed stock exchange: Tokyo

Stock exchange code:

8078(URL https://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 10, 2021
Scheduled date of payout of dividend: December 2, 2021

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, 2021 (April 1, 2021 to September 30, 2021)(1) Consolidated operating results（Percentage indicate a change from the previous year）
Net sales
For the 2nd Quarter
ended September 30, 2021
ended September 30, 2020

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

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

980,342－
30,426174.7
30,615198.7
20,996206.0
801,053(15.3)
11,077(18.7)
10,248
(5.2)
6,861
33.0
Note: Comprehensive income
For the Fiscal Year ended September 30, 2021
27,266 million yen
465.6 %For the Fiscal Year ended September 30, 2020
4,820 million yen
79.1 %Net income
per share

For the 2nd Quarter
ended September 30, 2021
ended September 30, 2020

Net income
per share(diluted)

(yen)

(yen)

516.69－168.84－From
thebeginningofthefiscalyear
ending
March
31,
2022,
the Company applies the Accounting Standard for*
Revenue Recognition (Accounting Standards Board of Japan Statement No. 29). As a result, the figures for the 2nd
quarter ended September 30,2021 in the above consolidated operating results constitute the figures after applicationof said accounting standard. For this reason, rates of increase/decrease YoY are not shown for net sales.

(2) Consolidated financial position
Total assets(Millions of yen)
As of September 30, 2021
As of March 31, 2021

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

983,893
824,590
As of September 30, 2021
As of March 31, 2021

Net assets
per share(％)

219,738
191,857
216,608 million yen
189,214 million yen

22.0
22.9

(yen)

5,330.29
4,656.17

２．Cash dividends
Cash dividends per share
1st Quarter 2nd Quarter 3rd Quarter
Year ended March 31, 2021
Year ended March 31, 2022
Year ending March 31, 2022
（estimated）

Year-end

Annual

(yen)

(yen)

(yen)

(yen)

(yen)

－
－

30.00
50.00

－

30.00

60.00

－

50.00

100.00* For more information, please refer to "Notice Concerning Amendments to Forecasts of consolidated financial
results, Distribution of Interim Dividend and Dividend Forecast for FY2021" announced on November 10, 2021.

３．Forecast of consolidated financial results for fiscal year ending March 31, 2022 (April 1, 2021 to March 31, 2022)（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)

Annual2,000,000
52,00077.9
50,00073.5
34,50075.9
848.97* For more information, please refer to "Notice Concerning Amendments to Forecasts of consolidated financial
results, Distribution of Interim Dividend and Dividend Forecast for FY2021" announced on November 10, 2021.Theabove forecasts reflect assumptions and prospects based on the information currently available. They are subject tovarious risks and uncertainties that could cause actual results to differ materially from this information.
* From the beginning of the fiscal year ending March 31, 2022, the Company applies the Accounting Standard for
Revenue Recognition (Accounting Standards Board of Japan Statement No. 29). As a result, the figures in the above
forecast of consolidated financial results constitute the figures after application of said accounting standard. For
this reason, rates of increase/decrease YoY are not shown for net sales.

－1－

HANWA Co., Ltd.

Financial Results for the Second Quarter ended September 30, 2021

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

Millions of yen
March 31, 2021

September 30, 2021

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

50,907356,059―
27,895
127,378
69,532(1,679)630,093

56,645―450,346
29,264
170,882
68,678(1,541)
774,276

34,45739,34973,806
7,893

34,688
41,10375,792
8,828

72,472
40,779(454)
112,796
194,497824,590

78,69347,408(1,104)
124,997
209,617
983,893

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

213,436
21,77265,85910,013
6,985
3,281
324
67,549389,222

270,104
27,399118,160
40,00020,000
9,379
3,112
270
47,415535,842

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

30,000193,999
5,326
14,184
243,510
632,733

20,000186,422
5,439
16,451
228,313764,155

45,651
137,825(3,729)179,747

45,651
159,446(3,729)201,367

15,193372
3,191(4,906)(4,384)
9,467
2,642
191,857
824,590

17,844612
3,191(2,419)(3,988)15,241
3,129
219,738
983,893

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 and Net Assets

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, 2021

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

Millions of yen
2nd Quarter ended
September 30, 2020

2nd Quarter ended
September 30, 2021

Net sales
Cost of sales
Gross profit

801,053765,620
35,433980,342922,80957,532

Selling, general and administrative expenses
Operating income

24,355
11,077

27,10530,426

1,151
1,370
294
726
3,543

734
1,020
1,384
727
3,866

1,986
1,645
739
4,372
10,248

1,854
747
1,076
3,678
30,615

Other income;Interest income
Dividend income
Equity in earnings of affiliates
OthersTotal other income
Other expenses;
Interest expenses
Foreign exchange loss
OthersTotal other expenses
Ordinary income
Extraordinary income;Gain on sale of property and equipment
Total extraordinary income
Extraordinary loss;
Provision of allowance for doubtful accounts of affiliates
Total extraordinary loss
Income before income taxes and minority interest

578
578

―
―

100
100
10,726――30,615

Income taxes
Net income

3,814
6,912

9,295
21,3196,861
50

20,996
323

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

2,648
240
2,361
382

(162)

314

(2,091)
4,820

5,946
27,266

4,932

26,770(112)

496

Net income attributable to
Owners of the parent
Non-controlling interests
Other Comprehensive Income
Valuation difference on available-for-sale securities
Deferred hedge profit and loss
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive Income
Comprehensive Income
Comprehensive income attributable to;
Owners of the parent
Non-controlling interests－3－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 2021

《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, 2020 September 30, 2021
Cash flows from operating activities;
Income before income taxes
Depreciation and amortization
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
Provision of allowance for doubtful accounts of affiliates(Increase)decrease in trade receivables(Increase)decrease in trade receivables and contract assets(Increase)decrease in inventories
Increase(decrease) in trade notes and accounts payable
Increase(decrease) in advance payment
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

10,726
2,659
259
(406)
(2,522)
1,986
(294)
(578)
100
22,936―
4,668(14,070)
(277)
617
8,094
33,9022,065(2,007)(2,109)31,851

30,615
2,900
196
490
(1,754)
1,854(1,384)―――(81,171)(41,581)
52,947(11,706)604(11,229)(59,219)
1,531(1,798)(6,695)(66,182)

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―
60(3,446)
1,223(1,023)
32
(860)
(0)
5,237
(76)
1,145

(24)
12
(3,064)21(3,317)25(5,410)(238)
4,522(1,075)(8,549)Cash flows from financing activities;
Increase(decrease) in short-term loans, net
Increase(decrease) in commercial paper, 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(4,669)―13(6,361)(10,010)(1,020)
(2)
(31)
(108)
(22,191)

40,61040,0006,605(6,882)(13)(1,223)
(12)
―
(438)
78,644

1,283
12,08967,243632
22
79,987(429)
3,482
50,8921,842
956,226

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, 2021

《Segment information》
Segment information by business category for the 2nd Quarter ended September 30, 2020 and 2021, is as follows:(Amounts less than one million yen are rounded down)

2nd Quarter ended September 30, 2020

Millions of yen

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

Primary
Metal
Metal Recycling

418,768 108,740
4,104
1,403
422,873 110,144
6,752
2,172

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 24,729
87,478 786,824
699 13,025

Other

Total

38,958 801,053
1,469 26,199
40,428 827,253
207 13,232

2nd Quarter ended September 30, 2021

Adjustment― 801,053(26,199)―(26,199) 801,053(2,984) 10,248

Millions of yen

Reportable segment
Steel
Net sales
Customers
Inter-segment
Total
Segment income

438,1939,724
447,918

18,213

Consolidated

Energy& Living
Materials

Overseas
sales

Subtotal

Primary
Metal
Metal Recycling

Foods

92,5942,800
95,395
3,519

57,837 122,182 155,939 928,414
420
4,904
7,547 26,955
58,258 127,087 163,487 955,370
1,545
3,065
2,564 32,143

61,665
1,557
63,223
3,234

subsidiaries

Other

Total

51,928 980,342
1,529 28,484
53,457 1,008,827
1,201 33,344

Adjustment

Consolidated― 980,342(28,484)―(28,484) 980,342(2,728) 30,615

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 2021, the Company has changed its method of classification of business segments, integrating apart of the Steel business into the Primary Metal business. The classification change also applies to segment information for the 2nd quarterof the previous fiscal year.
5. From the beginning of the fiscal year ending March 31, 2022, the Company applies the Accounting Standard for Revenue Recognition(Accounting Standards Board of Japan Statement No. 29). For this reason, we change the method of calculating revenue for businesssegments as well.
As a result of this change, compared to the previous method, net sales for the 2nd quarter of this fiscal year decreased by 101,166 million
yen in the Steel segment, 108,988 million yen in the Primary metal segment, 443 million yen in the Metal recycling segment, 33 million yen in
the Foods segment, 229 million yen in the Energy & Living Materials segment, 25,533 million yen in overseas sales subsidiaries anddecreased 667 million yen in the Other segment. In addition, segment income in the Steel segment increased by 1,828 million yen.

－5－

November 10, 2021

Highlights of Consolidated Financial Results for the 2nd Quarter of FY2021(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 2nd Quarter of FY2021(Unit: billion yen, rounded down to 0.1 billions yen)・ During the 2nd quarter of the fiscal year, economic activity progressed on a recovery trend. Net sales increased to 980.3 billion yen, as transaction volume increasedin Steel businesses, and prices of steel and non-ferrous metals trended upward. Profits expanded in all business segments. Operating income increased by 175% YoY,
to 30.4 billion yen, while ordinary income rose by 199% YoY, to 30.6 billion yen, as equity in earnings of affiliates expanded, mainly in the Steel business andforeign-exchange losses at overseas consolidated subsidiaries shrank, and net income attributable to owners of the parent increased by 206% to 20.9 billion yen.
・ We plan to pay 100 yen as the annual (50 yen as the interim and 50 yen as the year-end) dividend.

Operating Results

1Q-2Q
of FY2020

Net sales

1Q-2Q
of FY2021

801.0

Gross profit
SG&A expenses

980.3

―*

Main Factors

rate

57.5

22.0

62%

24.3

27.1

2.7

11%

Operating income

11.0

30.4

19.3

175%

Non-operating income

3.5

3.8

0.3

9%

Non-operating expenses

4.3

3.6

(0.6)

-16%

Ordinary income

10.2

30.6

20.3

199%

Extraordinary gain

0.5

―

(0.5)

-100%

Net sales increased to 980.3 billion yen, as transaction volume
swelled in Steel businesses, and prices of steel and nonferrous metals
trended upward.
( *From the beginning of the fiscal year ending March 31, 2022, theCompany applies the Accounting Standard for Revenue Recognition(Accounting Standards Board of Japan Statement No. 29). For thisreason, rates of increase/decrease YoY are not shown for net sales.)(SG&A expenses)

(0.1)

-100%

SG & A expenses increased by 2.7 billion yen YoY, with newly
consolidated subsidiaries contributing 0.3 billion yen to this figure.
Personnel expenses rose by 1.3 billion yen YoY, with 0.2 billion yenof this figure deriving from newly consolidated subsidiaries.

Income before income taxes
and others

10.7

30.6

19.8

185% (Non-operating income/expenses)

Income taxes

3.8

9.2

5.4

144%

Net income

6.9

21.3

14.4

208%

Owners of the parent(loss)

6.8
0.0

20.9
0.3

14.1
0.2

EPS (yen)

168.84516.69347.85

206%
538%
206%

Comprehensive
income

4.8

27.2

22.4

466%

Non-controlling interests(loss)

Segment
Information

Net sales
1Q-2Q
of FY2020

Steel

422.8

1Q-2Q
of FY2021

447.9

Non-operating income increased by 0.3 billion yen andnon-operating expenses decreased by 0.6 billion yen.
The main impacts on ordinary income were as follows.
Interest income ：decrease of 0.4 billion yen(YoY)
Dividend income: decrease of 0.3 billion yen(YoY)
Equity in earnings of affiliates:：increase of 1.0 billion yen(YoY)
Interest expenses：decrease of 0.1 billion yen(YoY)
Foreign exchange loss: decrease of 0.8 billion yen (YoY)

―

1Q-2Q
of FY2020

6.7

1Q-2Q
of FY2021

18.2

rate

170%

95.3

―

2.1

3.5

62%

Metal Recycling

34.1

63.2

―

(0.0)

3.2

―

49.7

58.2

―

0.3

1.5

319%

82.4

127.0

―

3.0

3.0

0%

87.4

163.4

―

0.6

2.5

267%

786.8

955.3

―

13.0

32.1

147%

Other

40.4

53.4

―

0.2

1.2

479%

Total

827.2

1,008.8

―

13.2

33.3

152%

Adjustment(26.1)(28.4)

―

(2.9)

(2.7)

-9%

Main Factors

801.0

・

Topics

・

980.3

―

10.2

19%

(Total Assets)

630.0
194.4

774.2
209.6

144.1
15.1

23%
8%

Total assets increased by 19% from the end of the previous fiscal
year, mainly because of an increase in trade receivables resulting
from a sales increase.

632.7

764.1

131.4

21%

301.6
250.7
*
133%/105%

386.2
329.6
*
152%/126%

84.6
78.8
19pt

28%
31%
―

191.8

219.7

27.8

15%

(Net assets)(Minority interests)
BPS (yen)
Shareholders' equity

179.7
9.4
2.6
4656.17
189.2

201.3
15.2
3.1
5330.29216.6

22.9/26.0*%

22.0/24.6*%

12%
61%
18%
14%
14%
-4%

Total net assets increased 15% from the end of the previous fiscal
year because of accumulation of retained earnings from net income
attributable to owners of parent as well as an increase in valuationdifference on available-for- sale securities .
Shareholders' equity ratio was 22.0% (*24.6%), which is 0.9
percentage points lower than at the end of the previous fiscal year.

Shareholders' equity ratio

21.6
5.7
0.4
674.1227.3-0.9ptCash Flow

1Q-2Q
of FY2020

1Q-2Q
of FY2021

31.8(66.1)(98.0)―(Operating cash flows)Due mainly to increase in trade receivables and inventories.

1.1

(8.5)

(9.6)

―

(22.1)

78.6

100.8

―

(Investment cash flows)Due mainly to execution of short-term loans receivable and purchase ofinvestment securities.

79.9

56.2

(23.7)-30%(Steel business)
Segment income and profit margin grew. Transaction volume rose amid an upward
trend in demand for steel. Steel prices continued to rise amid mounting rawmaterial costs and tightening supply.
(Primary metals business)
Segment income increased as steel and non-ferrous-metal manufacturers resumed
operation, transaction volume in stainless-steel base metals and alloys increased
and nickel prices rose. As a result, profit margin expanded.
(Metal recycling business)
Segment income increased. With a rising trend in base metal, profit margin was
secured by expansion of copper and aluminum sales, while transaction volume
increased through utilization of the cargo-collection and inventory functions ofconsolidated subsidiaries.
(Foods business)
Profit margin expanded as transaction volume with volume retailers increased andthe product prices followed a rising trend. Segment income also increased amid
improved profitability at consolidated subsidiaries in the U.S..
(Energy & Living Materials business)
With prices for crude oil and petroleum products on a rising trend, stable revenues
were secured for these products, while transaction volumes in daily necessities andhousehold goods increased.On the other hand, an export tariff hike in Indonesia
applied downward pressure on sales of palm kernel shells (PKS).

30.6

ChangeMain Factors

rate

Trade receivables

Total liabilities(Net interest-bearing debt)

Net DER
Total net assets(Equity capital)(Valuation & translation
adjustments)

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

1st half
2,074.6

Liabilities increased by 21% from the end of the previous fiscal year,
mainly as a result of increases in short-term debt and trade payables.
As interest-bearing debt increased by 28%, net debt-equity ratio wasturned into 152%（*126%).

*Reflecting equity credit attributes of the subordinated loan

YoY
ChangeMain Factors

rate(Financial cash flows)Due mainly to increase in short-term loans and commercial paper.

1,500.0
500.0【Quarterly Operating Results】

1,069.6

1,745.5

961.4

1,004.9

944.4

946.0

801.0

FY20192,000.0
1,019.7

600.0

Applying the
AccountingStandard for
Revenue
Recognition

400.0

FY20200.0

FY2021（E）

1st half

20.0

19.6

13.9
7.3

10.0

6.5

0.0

12.8

△20.0
FY2018

6.6

7.6

4.4

500.0

13.6

400.0

363.2

300.0

1 .6

20.9

200.0

15.0

527.7

452.6
Applying the
AccountingStandard for
Revenue
Recognition

18.0
12.0

Applying the
AccountingStandard for
Revenue
Recognition

9.0
6.0
3.0
0.0

3Q

4Q FY2021/1Q 2Q

Interest-bearing debt
Reflecting subordinated loan
Net DER
DER
Net
386.2
331.1 subordinated loan
Reflecting
301.6
1.5
1 .6
1 .3

1 .3

1 .3

FY2018FY2019

100.0

-18.8

△10.0

500.5
10.4

34.5

6.8

5.1

443.9

16.9
13.5

【Changes in Interest-bearing Debt】

2nd half

30.0

425.4

FY2020/1Q 2Q【Changes in Net Income】
40.0

375.6

200.0

980.3

0.0

FY2018Net sales
Operating income

800.0

2nd half
1,907.4

479.6 billion yen (+25% from the end of the previous period)(Liabilities)【Changes in Net Sales】

1,000.0(Overseas sales subsidiaries)
Segment income increased. Transaction volume in steel increased in somecountries, including Indonesia and Singapore, while profitability in the Foodbusiness in the U.S. rose.
Since the 1st Quarter of the fiscal year 2021, the Company has changed its method of classification of business segments, integrating a part of the Steel business into the Primary Metal business. Please note that comparison on a
YoY basis is made in accordance with the classification method after the changing.

Consolidated

159.3

2,000.0

110.1

Energy&Living Materials
Overseas sales
subsidiaries
Total for reportablesegments

983.8

2,500.0

Segment income
rate

824.5

Total assets

3,000.0*Primary Metal

Foods

*

―

0.1

Sep. 2021(Interest-bearing debt)―* (Net sales)

35.4

Extraordinary loss

Mar. 2021

Financial Position(Current assets)(Fixed assets)

YoY
ChangeComparison with Mar. 2021

3.0
2.0

1 .3

1.0

1 .1

0.0

-13.6
FY2019FY2020

FY2021（E）

0.0

FY2020

FY2021/2Q

FY2021(estimated)change1,745.5

2,000.0―

Interim (yen)

75.00

30.00

50.00

Operating income

29.2

52.0

78%

Year-end (yen)

25.00

30.00

50.00

Ordinary income

28.8

50.0

74%

Annual (yen)100.0060.00

100.00Net income attributable toowners of parent

19.6

34.5

76%

Dividend payout ratio

―

12%

12%

Forecast(Annual)
Net sales

FY2020Cash Dividends

FY2019FY2020

FY2021(estimated)

199%

Apr. Acquire the shares in Suzuki-Sumiden Wire Products Guangzhou Co., Ltd. (SWPG), a manufacturer of high-quality stainless wirein China.
Sep. Acquire the shares in Da Ming International Holdings Limited, a holding company of Daming Group which is one of China’s
largest distributor of steel products and also a comprehensive steel service center.

* From the beginning of the fiscal year ending March 31, 2022, the Company applies the Accounting Standard for Revenue Recognition(Accounting Standards Board of Japan Statement No. 29). As a result, the figures in the above forecast of consolidated businessresults constitute the figures after application of said accounting standard. For this reason, rates of increase/decrease YoY are not shown for net sales.