Financial Results for the Third Quarter ended December 31, 2017
(Consolidated financial results have been prepared in accordance with accounting principles generally accepted in Japan)

February 9, 2018
Company name:

HANWA Co.,Ltd.

Listed stock exchange: Tokyo

Stock exchange code:

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

Representative:
Enquiries:

Hironari Furukawa
Yoichi Nakagawa

The date of issue of audited financial statements:

President
Director, Managing Executive Officer
TEL 81 - 3 - 3544 - 2000
February 14, 2018
The date of payout of dividend:―(Rounded down to millions of yen)

１．Consolidated financial results for the third quarter ended December 31, 2017
(1) Consolidated operating results（％ of change from the same period of previous year）
Net sales
For the third quarter
ended December 31, 2017
ended December 31, 2016

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

Net income attributableto owners of the parent(％)(Millions of yen)(％)

1,306,566
18.9
18,79915.1
17,37515.4
11,75020.9
1,098,828(6.3)
16,327
20.8
15,051
32.6
9,718
19.6
Note: Comprehensive income
For the third quarter ended December 31, 201715,486 million yen
22.5 ％For the third quarter ended December 31, 2016
12,646 million yen
120.9 ％Net income
per share

Net income
per share(diluted)

For the third quarter
(yen)
(yen)
ended December 31, 2017289.14－
ended December 31, 2016237.74－* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, net income
per share has been calculated as if the said share consolidation was conducted at the beginning of the previous fiscal year.

(2) Consolidated financial position
Total assets(Millions of yen)893,490694,232

December 31, 2017
March 31, 2017

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

196,655
171,637
As of December 31, 2017
As of March 31, 2017

Shareholders' equity
per share

(％)

(yen)

20.4
24.5
182,439 million yen
170,422 million yen

4,489.34
4,193.50* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, shareholders'equity per share has been calculated as if the said share consolidation was conducted at the beginning of the previous fiscal year.

２．Cash dividends
Cash dividends per shareFirst quarter
Second quarter
Third quarter
Year-end
(yen)
(yen)
(yen)
(yen)

（effective date）

Annual(yen)

Year ended March 31, 2017
－
9.00
－
10.00
19.00
－
10.00
－
Year ending March 31, 2018
（estimated）
50.00－* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, the impact of
this share consolidation is taken into consideration in the amount presented for the fiscal year-end dividend per share for theyear ending March 31, 2018 (estimated), and the amount for the total annual dividends per share for the same fiscal year isomitted and shown as a dash.

３．Forecast of consolidated financial results for fiscal year ending March 31, 2018 （％ of change from previous year）
Net sales

Operating income(Millions of yen) (％)

Annual

1,700,000

12.3(Millions of yen) (％)

25,5008.9

Net income attributableto owners of the parent(Millions of yen) (％) (Millions of yen) (％)

Ordinary income
24,0004.8

16,000(2.2)

Net income
per share(yen)

391.98* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, net income
per share reflects the impact of the said share consolidation.

* The above forecasts reflect assumptions and prospects based on the information currently available.They are subject
to a number of risks and uncertainties that could cause actual results to differ materially from this information.
－１－

HANWA co.,ltd.

Financial Results for the Third Quarter ended December 31, 2017

《Consolidated Balance Sheets》(Rounded down to millions of yen)

Millions of yen
March 31, 2017

December 31, 2017

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

28,465
307,853
30,742486
111,039
59,519(334)
537,773

53,553
391,413
36,218238
131,108
60,963(458)
673,038

29,64029,85259,492
2,034

32,42031,95764,3784,315

72,52422,912(504)
94,932
156,458
694,232

105,652
47,330(1,225)
151,757
220,452
893,490

Current liabilities;
Trade notes and accounts payable
Short-term loans payable
Commercial paper
Current portion of bonds payable
Income taxes payable
Accrued bonuses
Provision for product warranties
Provision for loss on business of subsidiaries and affiliates
OthersTotal current liabilities

191,989
107,262
5,000
21
6,752
2,306
146
512
45,068359,058

253,803150,424
20,00010,199
2,720
1,406
116
―
67,604506,274

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

40,076106,232
4,518
12,709163,536
522,595

40,450129,697
4,713
15,698
190,560
696,834

45,651
117,778(3,720)159,70945,651
125,439(3,726)167,364

12,580
142
2,966
1,062
(6,037)
10,713
1,214
171,637
694,232

17,235
(512)
2,966
864
(5,479)15,075
14,216
196,655
893,490

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 Third Quarter ended December 31, 2017

《Consolidated Statements of Income and Comprehensive Income》(Rounded down to millions of yen)

Millions of yen
Third quarter ended Third quarter ended
December 31, 2016 December 31, 2017
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income;Interest income
Dividend income
Foreign exchange gain
OthersTotal other income
Other expenses;
Interest expenses
Loss on investment in affiliates
Foreign exchange loss
OthersTotal other expenses
Ordinary income

1,098,828
1,052,513
46,315

1,306,566
1,253,847
52,71929,987
16,32733,92018,799

883
689
―
1,012
2,586

1,328
1,081
399
1,431
4,240

1,941
154
702
1,063
3,862
15,051

2,454
1,913
―
1,296
5,664
17,375Extraordinary income
Gain on sales of investment securities
Reversal of allowance for business loss of affiliates
Total extraordinary income
Extraordinary loss;
Loss on devaluation of investments securities
Loss on devaluation of investments in capitalBusiness loss of affiliates
Total extraordinary loss
Income before income taxes

522
―
522

―
512
512

135
―
222
358
15,215―
198―
198
17,688

Income taxes
Net income

5,443
9,772

6,637
11,051

Net income attributable to
Net income attributable to owners of the parent
Net income(loss) attributable to minority interests

9,718
54

11,750(699)

Other Comprehensive Income
Net unrealized holding gains on securities
Deferred hedge profit and loss
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates
Total other comprehensive Income
Comprehensive Income

4,727
523
(2,616)
583
(344)
2,874
12,646

4,648
(654)
15
558
(130)
4,435
15,486Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

12,792(146)

16,111(625)－３－

HANWA co.,ltd.

Financial Results for the Third Quarter ended December 31, 2017

《Segment information》
Business segment information
The Companies' operations are classified into five business segments as follows:
Steel: Steel bars and shapes, steel plates and sheets, special steels, wire products, steel pipes,
and steelmaking raw materials
Metals and alloys: Nickel, chromium, stainless scrap, silicon, manganese and steel alloys
Non-ferrous metals: Copper, aluminium, lead, zinc, tin, antimony and other metals
Foods: Frozen seafoods and meat products
Petroleum and chemicals : Petroleum products, chemical products, and cement
Overseas sales subsidiaries： Wholesale trade, general merchandise
Segment information by business category for the third quarter ended December 31, 2016 and 2017, is as follows:(Rounded down to millions of yen)

Third quarter ended December 31, 2016

Millions of yen

Reportable segment
Steel

Metals Non-ferrous
Foods& alloys metals

557,697

92,96755,925

9,066

2,375

1,129

566,763

95,342

57,055

13,080(855)

184

Petroleum Overseas

sales& chemicals subsidiaries

Subtotal

Other

Total

Adjustment

Consolidated

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

70,087 189,666
292

5,070

77,743 1,044,088

54,739 1,098,828

46,7701,265

64,70465,970― 1,098,828(65,970)―

70,379 194,737 124,513 1,108,793

56,005 1,164,798(65,970) 1,098,828

2,326

1,444

(2,204)

1,855

(779)

15,812

17,256

Third quarter ended December 31, 201715,051Millions of yen

Reportable segment
Steel

Metals Non-ferrous
Foods& alloys metals

Petroleum Overseas

sales& chemicals subsidiaries

Subtotal

Other

Total

Adjustment

Consolidated

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

663,740 145,839
8,383

70,626

3,246

973

672,123 149,086

71,59915,356

1,261

922

79,198 168,405 122,778 1,250,588
255

4,811

39,992

57,66279,454 173,217 162,770 1,308,250
1,288

1,495

613

20,93855,978 1,306,566
1,265

58,92857,244 1,365,494
502

21,440― 1,306,566(58,928)―(58,928) 1,306,566(4,065)

17,375

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 intersegment elimination and Group costs that have not been distributed to reportablesegments. 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－February 9, 2018

Highlights of Consolidated Financial Results for the 3rd Quarter of FY2017
HANWA Co., Ltd.
Outline of Financial Results for the 3rd Quarter of FY2017
・As for the 3ｒｄ quater result for this fiscal year, net sales have increased by 19% in the same period of the previous year, hence reached to1,306.5 billion yen, as market of steel products and metal resources being higher than the same period of previous year's level. Net profit was
11.7 billion yen, increased by 21%, due to increase in operating income of matals/alloys business and foreign exchange gain as opposed to theloss in the same period of the previous year.
・We paid 10 yen as interim dividend and plan to pay additional *50 yen as the end of this fiscal year dividend. (*:Display change of 10 yen
forecast due to stock consolidation with 5 shares as 1 share on October 1.)

Operating Results
Net sales
Gross profit

1Q-3Q
of FY2017

1Q-3Q
of FY2016

1,306.5

1,098.8

Year-on-year
Change207.7

Main Factors

rate

19% (Net sales)
Net sales have increased by 19% from the same period of
the previous year. This was due to market recovery of steel
products and metal resources from the second half of theprevious fiscal year.

52.7

46.3

6.4

14%

SG&A expenses

33.9

29.9

3.9

13%

Operating income

18.7

16.3

2.4

15% (SG&A expenses)
SG & A expenses have increased 3.9 billion yen from thesame period of previous year. 1.5 out of 3.9 billion yen was
accounted for newly consolidated subsidiaries.
Our personnel expenses have increased 1.5 billion yen,including 0.6 billion yen from newly consolidated
subsidiaries.

Non-operating income

4.2

2.5

1.6

64%

Non-operating expenses

5.6

3.8

1.8

47%

Ordinary income

17.3

15.0

2.3

15%

Extraordinary gain

0.5

0.5

(0.0)

-2% (Non-operating income/expenses)

Extraordinary loss

0.1

0.3

(0.1)

-45%

17.6

15.2

2.4

16%

Income before income
taxes and others

Income taxes
Net income
Owners of the Company(loss)

Minority interests(loss)

EPS (yen)Comprehensive
incomeSegment
Information

6.6

5.4

1.1

11.0

9.7

1.2

11.7
(0.6)
289.149.7
0.0
237.74

2.0
(0.7)
51.40

15.4

12.6

2.8

Net sales
1Q-3Q
of FY2017

1Q-3Q
of FY201622%

Non-operating income has increased by 64% from the same
period of the previous year, mainly due to increase in interest
income, dividend income and foreign exchange gain.
Non-operating expenses have increased by 47%, due toincrease in equity in losses of affiliates and interest expenses.

13% (Extraordinary gain/loss)
21% Reversal of allowance in previous year was recorded in― extraordinary income, because the expected loss fromrestructuring of subsidiary was less.
22%
23%(Unit: billion yen, rounded down to 0.1 billions of yen)Mar. 2017

893.4

694.2

199.2

29%

673.0
220.4

537.7
156.4

135.2
63.9

25%
41%

Total assets increased by 29% from the end of the previous year, due toincrease in trade receivables and investment securities .
Inventories : 131.1 billion yen (+18% from the end of the previous year)
Investment securities : 105.6 billion yen (+46% from the end of the

Total liabilities

696.8

522.5

174.2

33%

previous year)(Interest-bearing debt)

Net DER

352.1
298.5
164%

259.6
231.2
136%

92.4
67.3
28pt

36%
29%
―

Total net assets

196.6

171.6

25.0

15%

167.3
15.0
14.2
4,489.34
182.4
20.4%

159.7
10.7
1.2
4,193.50
170.4
24.5%

7.6
4.3
13.0
295.8412.0-4.1pt

5%
41%
―
7%
7%
―

Total assets(Current assets)(Fixed assets)(Net interest-bearing debt)(Equity capital)(Valuation & translation
adjustments)(Minority interests)
BPS (yen)
Shareholders' equity
Shareholders' equity ratio

rate

1Q-3Q
of FY2016

1st half

2,000

1,500

672.1

566.7

19%

15.3

13.0

17%

Metals & alloys

149.0

95.3

56%

1.2

△0.8

―

Non-ferrous metals

Foods

71.5
79.4

57.0
70.3

26%
13%

0.9
1.2

0.1
2.3

401%
-45%

Petroleum & chemicals

173.2

194.7

-11%

1.4

1.8

-19%

Overseas sales
subsidiaries

162.7

124.5

31%

0.6

(0.7)

―

Total for reportablesegments

1,308.2

1,108.7

18%

20.9

15.8

32%

Other

57.2

56.0

2%

0.5

1.4

-65%

Total

1,365.4

1,164.7

17%

21.4

17.2

24%

Adjustment(58.9)(65.9)

-11%

(4.0)

(2.2)

-84%

Consolidated

1,306.5

1,098.8

19%

17.3

15.0

15%

Topics・ Apr. Acquired minority shares of the lithium carbonate producer, Bacanora Minerals Ltd.
・ May. Acquired additional stocks of the Chromite miner and Ferro-Chromium producer, Samancor Chrome Holdings.
・ Oct. Acquired the producer of metal hardware products for use in architectural and civil construction.

(including 47.6 billion yen of securities of subsidiaries and affiliates(+247%))(Liabilities)
Total liabilities increased by 33% from the end of the previous
year, due to the increase in trade payables and long and shortterm loans. As interest-bearing debt increased by 36%, net debtequity ratio was turned into 164%.

(Net assets)
Total net assets increased by 15% from the end of the previous
year, due to increase in minority interests of Japan South Africa
Chrome Co., Ltd. and the carryover of retained earnings.
Shareholders' equity ratio was 20.4%, which is a 4.1 percentage
points lower than the end of the previous year.

2nd half

3rd quarter

1,000

Net sales

600

1,511.8

1,514.0

Operating income

91,172.6

1,098.8

469.5

7.0

1,306.5

876.2

400

723.5

408.3

383.2

365.0

350.5

428.6

7
7.4

415.2

863.1

6.1

5.9

798.4

5.3

4.9

5

5.2

200

500

3

861.1

788.2

715.6

836.9

FY2014FY2015FY2016FY201700

1st half

2nd half1
2016/1Q【Changes in Net Income】
30

Steel

(Total Assets)

1,700.0

1,307.8

Main Factors(Steel business)
Recovery trend of steel demand has been kept. Better market price resulted
increased net sales due to high raw material prices and tightening
supply/demand. Better margins in long term contracts pushed up the profit.
(Metals & alloys business)
Net sales increased due to rising price level and sales expansion of stainlesssteel and ferro-alloy. Increase in profit on sale and recovery of Showa
Metal's profit, which was a loss in the previous year, pushed up profit.
(Non-ferrous metals business)
Due to rise in international commodity markets and increase in copper sales
amount, revenue increased. In addition, foreign exchange loss in the same
period of the previous year turned to foreign exchange gain.
(Foods business)
Rising price and strong sales due to reduction of overseas catch and low
inventories increased net sales. Segment profit margin was shrunken byhigher purchase costs.
(Petroleum & chemicals business)
Despite slow gain on petroleum products price, net sales decreased due toreduction of spot transactions. Segment income decreased, due to delay inpass-through of purchase cost increase and margin reduction of imported
plastic products.
(Overseas sales subsidiaries)
Revenue increased because of increased sales of bunker fuel in Singapore,
metal scrap in Thailand and Singapore, and steel products in Indonesia,
China and US.

Main Factors

rate【Quarterly Operating Results】

1,737.3

For extraordinary losses, we recorded loss on valuation of
investments of sale of subsidiary.

rate

Change【Changes in Net Sales】

Segment income
1Q-3Q
of FY2017

Comparison with Mar. 2017

Dec. 2017

Financial Position

2Q

3Q

4Q

2017/1Q

2Q【Changes in Interest-bearing Debt】
3rd quarter

400

Interest-bearing debt

Net DER

300
20

16.3
19.4

9.7

8.1

259.6

272.5

2

237.5

16.0
7.9
11.7

10.1

9.0

200

1.8

1.6
1.4

1

1.4

100

5.6
5.1
3.9

3
352.1

25.4

10

3Q

8.1

6.2

6.0

0

0
FY2014

Forecast(Annual)

FY2015FY2016FY2017FY2017FY20160
FY2014changeFY2015

Cash Dividends

FY2016FY2017/3Q

FY2016FY2017FY2017(estimated)

1,700.0

1,514.0

12%Interim (yen)

9.00

10.00

―

Operating income

25.5

23.4

9%

Year-end (yen)

10.00

―

50.00

Ordinary income

24.0

22.9

5%

Annual (yen)

19.00

―

―

Net income attributableto owners of parent

16.0

16.3

-2%

Dividend payout ratio

24%

―

25%

Net sales