Financial Results for the First Quarter ended June 30, 2019
(Japanese GAAP)
August 9, 2019
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: August 14, 2019
Scheduled date of payout of dividend: －Phone +81-3-3544-2000(Amounts less than one million yen are rounded down)

１．Consolidated financial results for the First Quarter ended June 30, 2019 (April 1, 2019 to June 30, 2019)(1) Consolidated operating results（Percentage indicate a change from the previous year）
Net sales
For the 1st Quarter
ended June 30, 2019
ended June 30, 2018

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

472,424
(5.0)
12.5
6,935
497,464
16.7
21.8
6,165
Note: Comprehensive income
For the Fiscal Year ended June 30, 2019
For the Fiscal Year ended June 30, 2018
Net income
per share

For the 1st Quarter
ended June 30, 2019
ended June 30, 2018

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

6,431
17.5
5,474(17.3)
1,899 million yen
2,202 million yen

(％)

4,140
16.0
3,569(19.5)(13.8) %(41.8) %Net income
per share(diluted)

(yen)

(yen)

101.8887.84－－(2) Consolidated financial position
Total assets(Millions of yen)
As of June 30, 2019
As of March 31, 2019

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

923,110933,307
As of June 30, 2019
As of March 31, 2019

Net assets
per share(％)

201,834
202,459
187,351 million yen
188,245 million yen

20.3
20.2

(yen)

4,160.27
4,632.55

２．Cash dividends
Cash dividends per share
1st Quarter 2nd Quarter 3rd Quarter
Year ended March 31, 2019Year ended March 31, 2020
Year ending March 31, 2020
（estimated）

Year-end

Annual

(yen)

(yen)

(yen)

(yen)

(yen)

－－

75.00

－75.00150.0075.00－75.00150.00３．Forecast of consolidated financial results for fiscal year ending March 31, 2020 (April 1, 2019 to March 31, 2020)（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)

Annual2,200,000
6.0
35,50022.8
28,00019.7
19,20038.0472.50* The above forecasts reflect assumptions and prospects based on the information currently available. They are subject
to a various risks and uncertainties that could cause actual results to differ materially from this information.

－1－HANWA Co., Ltd.

Financial Results for the First Quarter ended June 30, 2019

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

Millions of yen
March 31, 2019

June 30, 2019

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

59,307416,394
36,637
1,190
140,633
71,328(504)
724,987

63,494392,229
44,122
1,162
140,666
77,960(483)
719,151

Investments and noncurrent receivables;
Investment securities
Other
Allowance for doubtful receivables
Total investments and other assets

101,900
33,853(1,327)
134,426

92,91732,949(1,373)
124,493

Property and equipment;
Land
Other
Total property and equipment

33,86434,997
68,862

34,221
39,66173,883

Other assets
Intangible assets
Total other assets
Total

5,031
5,031
933,307

5,581
5,581
923,110

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

92,851
10,021
280,858
4,964
2,647
253
3,48659,833
454,916

111,506
10,021
230,176
18,582
1,503
248
2,222
71,508445,770

Noncurrent liabilities;
Long-term loans payable
Bonds payable
Retirement benefits liabilities
Other
Total noncurrent liabilities

208,936
50,034
5,950
11,010275,931

208,847
50,034
5,974
10,649275,506

Shareholders' equity;
Common stock
Retained earnings
Treasury stock
Total shareholders' equity

45,651
139,036(3,737)
180,949

45,651
140,128(3,727)
182,051

Accumulated other comprehensive income;
Valuation difference on available-for-sale securities, net of taxes
Deferred gains or losses on hedges, net of taxes
Land revaluation difference, net of taxes
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total

10,80061
3,343(1,435)(5,473)
7,295
14,214202,459
933,307

9,485
62
3,343
(2,290)(5,300)5,300
14,482201,834
923,110

Liabilities and Net Assets

Net assets－２－HANWA Co., Ltd.

Financial Results for the First Quarter ended June 30, 2019

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

Millions of yen
Year ended
June 30, 2018Year ended
June 30, 2019

Net sales
Cost of sales
Gross profit

497,464
479,028
18,436472,424
452,479
19,945

Selling, general and administrative expenses
Operating income

12,2706,165

13,010
6,935

482
787
―
345
1,615

521
1,069
24
328
1,943

1,018
357
539
390
2,306
5,474

1,476
―
610
359
2,446
6,431

Other income;Interest income
Dividend income
Share of profit of entities accounted for using equity methodOther
Total other income
Other expenses;
Interest expense
Share of loss of entities accounted for using equity method
Foreign exchange loss
Other
Total other expenses
Ordinary income
Extraordinary income;Gain on sales of property and equipment
Total extraordinary income
Extraordinary loss;
Loss on valuation of investment securities
Total extraordinary loss
Income before income taxes

――

162
162

137
137
5,337

334
334
6,260

Income taxes
Net income

1,997
3,340

2,141
4,119

3,569(229)

4,140(21)202
14(830)180(1,313)
1(859)
178

Net income attributable to
Owners of the parent
non-controlling interests
Other Comprehensive Income
Valuation difference on available-for-sale securities, net of taxes
Deferred gains or losses on hedges, net of taxes
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of taxes
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Comprehensive Income

(704)

(227)

(1,137)2,203(2,219)1,899

Comprehensive income attributable to;
Owners of the parent
non-controlling interests

2,694(491)1,977(78)－３－HANWA co.,ltd.

Financial Results for the First Quarter ended June 30, 2019

《Segment information》
Segment information by business category for the 1st Quarter ended June 30, 2018 and 2019, is as follows:(Amounts less than one million yen are rounded down)

Millions of yen

1st Quarter ended June 30, 2018
Reportable segment
Steel
Net sales
Customers
Inter-segment
TotalSegment income(loss)

241,167
2,286
243,454
4,418

Primary
Metal
Metal Recycling

Foods

76,7702,345
79,115(566)27,187294
27,482580

19,542
1,682
21,224
630

Petroleum Overseas& chemicals

56,9632,544
59,508471

sales

subsidiaries

Subtotal

57,125 478,758
12,920 22,073
70,046 500,831
411
5,945

OtherTotal

18,706 497,464
493 22,566
19,199 520,031
71
6,017

Adjustment― 497,464(22,566)―(22,566) 497,464
(542)
5,474

Millions of yen

1st Quarter ended June 30, 2019
Reportable segment
Steel
Net sales
Customers
Inter-segment
Total
Segment income(loss)

Consolidated

238,686
2,504
241,191

3,979

Primary
Metal
Metal Recycling

Foods

59,292
1,021
60,313
1,567

26,392
312
26,704
225

21,118381
21,499998Petroleum Overseas& chemicals

48,027
1,643
49,670700

sales

subsidiaries

Subtotal

58,299 451,816
10,078 15,941
68,377 467,758
165
7,637

OtherTotal

20,608 472,424
649 16,591
21,258 489,016
242
7,880

Adjustment

Consolidated― 472,424(16,591)―(16,591) 472,424(1,448)
6,431

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, following the organizational change on April 1, 2019, Company reviewed the classification methodfor business segments and changed the reportable segments from "Metals & alloys" and "Non-ferrous metals" to "Primary Metal" and"Metal Recycling".
Segment information for the 1st Quarter of the previous fiscal year has been recomposed by the new classification method.

－４－August 9, 2019

Highlights of Consolidated Financial Results for the 1st Quarter of FY2019(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 1st Quarter of FY2019
・As for the 1st quarter result for this fiscal year, net sales have decreased by 5% in the same period of the previous year, hence reached to 472.4
billion yen, due to weak global market of nonferrous metals and petroleum, as well as decline of volumes and sales for domestic and export in・steel business.
Ordinary income was 6.4 billion yen, increased by 18%, mainly due to dividend income from strategically invested companies and decrease in・loss on investment in affiliates in the same period of the previous year.
We plan to pay 150 yen as the annual (75 yen as the interim and 75 yen as the year-end) dividend.

Operating Results
Net sales
Gross profit
SG&A expenses

1Qof FY2019

1Qof FY2018

472.4

497.4

Year-on-year
Change(25.0)

18.4

1.5

8%

13.0

12.2

0.7

6%

6.9

6.1

0.7

Net sales have decreased by 5% from the same period of theprevious year. This was mainly due to weak global market of
nonferrous metals and petroleum, as well as decline of volumes
and sales for domestic and export in steel business.

13% (SG&A expenses)
SG & A expenses have increased 0.7 billion yen from the same
period of previous year. 0.3 out of 0.7 billion yen wasaccounted for newly consolidated subsidiaries.
Our personnel expenses have increased 0.3 billion yen,including 0.1 billion yen from newly consolidated subsidiaries.

1.9

1.6

0.320%

Non-operating expenses

2.4

2.3

0.16%Ordinary income

6.4

5.4

0.9

18% (Non-operating income/expenses)

Extraordinary gain

0.1―

0.1―

Extraordinary loss

0.3

0.1

0.1

144%

6.2

Income taxes

2.1

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

EPS (yen)

SteelPrimary Metal

1.9

4.1

3.3

0.9
0.1
0.7

17%
7%

3.5(0.2)
87.84

0.5
0.2
14.04

16%
-91%
16%

1.8

2.2

(0.3)

-14%

Net sales
1Q of
FY20191Q ofFY2018

241.1

243.4

60.3

79.1

933.3

(10.1)-1%(Total Assets)

719.1
203.9

724.9
208.3(5.8)
(4.3)

-1%
-2%

Total assets decreased by 1% from the end of the previous year, due
to decrease in trade receivables along with sales decline.
Trade notes and accounts receivables 392.2 billion yen (-6% fromthe end of the previous period)

721.2

730.8

(9.5)

-1%

381.8
318.3
*
170%/138%

363.2
303.9
161%/131%

18.5
14.4
9pt

5%
5%
5%

201.8

202.4

(0.6)

-0%

182.0
180.9
5.3
7.2
14.4
14.2
4,610.27
4,632.55
187.3
188.2
*
20.3/23.0 % 20.2/22.8*%

1.1(1.9)
0.2(22.28)
(0.8)
0.1pt

1%-27%
2%-0%-0%―

Total net assets(Valuation & translationadjustments)(Minority interests)
BPS (yen)
Shareholders' equity
Shareholders' equity ratio

Gain on sales of fixed assets 0.1 billion yen : mainly due to sales ofreal estate by consolidated subsidiaries
Loss on devaluation of investments securities 0.3 billion yen ：mainly due to decline in listed stocks

ChangeMain Factors

rate(Liabilities)
Total liabilities decreased by 1% from the end of the previous year,
due to the decrease in trade payables. As interest-bearing debt
increased by 5%, net debt-equity ratio was turned into 170%（*138%).

(Net assets)
Total net assets decreased by 0.3% from the end of the previous year,
due to the appropriation of surplus for year-end dividend and decreasein net unrealized holding gains on securities.
Meanwhile shareholders' equity ratio was 20.3%(*23.0%), which is0.1 percentage points higher than the end of the previous year.
*Reflecting equity credit attributes of the subordinated loan

【Changes in Net Sales】
1st half

2,500

2nd half
1,791.1

1,514.0
1,500【Quarterly Operating Results】
1st quarter

Operating income
8.1

600

954.1

107.5

6.9

6.9

86.1
6798.4400
1,004.9

836.9

715.6

500

Net sales

800

2,200.0

2,074.6
1,069.6

1,000

200

350.5

408.3

FY2016FY2017

497.4

472.4

FY2018FY2019(E)4553.3

507.4

497.4

516.3

472.4
2000
2018/1Q

2Q

3Q

4Q

2019/1Q

Segment income
rate

-1%
-24%

1Q of
FY20191Q of
FY2018

3.9

4.4

1.5

△0.5

rate-10%―21.4

21.21%0.9

0.6

58%

Foods

26.7

27.4

-3%

0.2

0.5-61%Petroleum & chemicals

49.6

59.5

-17%

0.7

0.4

49%

Overseas sales
subsidiaries

68.3

70.0

-2%

0.1

0.4

-60%

Total for reportablesegments

467.7

500.8

-7%

7.6

5.9

28%

Other

21.2

19.1

11%

0.2

0.0

238%

Total

489.0

520.0

-6%

7.8

6.0

Adjustment(16.5)(22.5)

27%(1.4)(0.5) -167%

Consolidated

472.4

497.4

-5%

6.4

5.4

31%

17%

Main Factors(Steel business)
While the market price of steel products remained at high levels,
segment income decreased due to difficuities in passing costs increase
to end-users, so it ended decline of profit margins.
(Primary metals business)
Segment income increased mainly due to the reduction of loss on
investment in affiliates especially in SAMANCOR CHROMEHOLDINGS PROPRIETARY LTD. and the turnaround from foreignexchange losses in the same period of previous year to foreignexchange gains in this fiscal year.
(Metal recycling business)
Segment income increased mainly due to high-profit margin sales on
copper business by low procurement costs and foreign exchange gains.
(Foods business)
Segment income decreased due to stagnant market condition for shrimp
and foreign exchange losses.
(Petroleum & chemicals business)
Despite decreased volume by weak market condition of petroleum
products, segment income increased mainly due to the expansion ofsales of biomass fuels such as palm kernel shells (PKS).
(Overseas sales subsidiaries)
Segment income decreased due to price douwnturn in metal andnonferrous metal and volume decrease, mainly in the U.S.and ASEAN
region.

・ May. Decided to acquire 65% of the stocks of the SMC HA NOI ONE MEMBER CO., LTD .which is a coil service center inVietnam.

Net DER(Extraordinary gain/loss)

Metal Recycling

Topics923.1

Total liabilities

2,000Interest expenses: increase of 0.4 billion yen(YoY)
Loss on investment in affiliates: decrease of 0.3 billion

23%

4.1
(0.0)
101.88Comprehensive
incomeSegment
Information

5.3

Non-operating income and expenses have increased 0.3 billion
yen and 0.1 billion yen, respectively. The breakdown of themain causes is as follows.
Dividends: increase of 0.3 billion yen(YoY)

Mar. 2019(Current assets)(Fixed assets)(Net interest-bearing debt)

Comparison with Mar. 2019

Jun. 2019

Total assets(Equity capital)

Non-operating income

Income before income
taxes and others

Financial Position(Interest-bearing debt)-5% (Net sales)

19.9

Operating income

Main Factors

rate(Unit: billion yen, rounded down to 0.1 billions of yen)

【Changes in Net Income】
1st half

25.0

2nd half【Changes in Interest-bearing Debt】

1st quarter

500
19.2

20.0

16.3
15.0

10.1

13.9

8.8

8.5

6.5

6.2
2.8
FY2016300259.6

2001.4

Forecast(Annual)
Net sales

1.72

1.3

1.4

1FY2018

FY2018/1Q

4.1

3.50

FY2018FY2019

1.6

1.5

100

4.4
FY20173381.8

363.2
325.5

7.3

0.0

Net DER

400

17.3

10.0
5.0

Interest-bearing debt
Reflecting subordinated loan

FY20180
FY2016FY2019(E)changeCash Dividends

FY2017FY2017FY2018FY2019(estimated)

2,200.0

2,074.6

6%

Interim (yen)

50.00

75.00

75.00

Operating income

35.5

28.9

23%

Year-end (yen)

75.00

75.00

75.00

Ordinary income

28.0

23.3

20%

Annual (yen)125.00150.00150.00Net income attributableto owners of parent

19.2

13.9

38%

Dividend payout ratio

29%

44%

32%