Financial Results for the Third Quarter ended December 31, 2019
(Japanese GAAP)
February 12, 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: February 12, 2020
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 Third Quarter ended December 31, 2019 (April 1, 2019 to December 31, 2019)(1) Consolidated operating results（Percentage indicate a change from the previous year）
Net sales
For the 3rd Quarter
ended December 31, 2019
ended December 31, 2018

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

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

1,423,294(8.7)
20,417(4.3)
14,544(22.4)
9,929(12.4)
1,558,271
19.3
21,334
13.5
18,746
3.4
11,331(7.5)
Note: Comprehensive incomeFor the Fiscal Year ended December 31, 2019
6,797 million yen
295.5 %For the Fiscal Year ended December 31, 2018
1,718 million yen(89.3) %Net income
per share

For the 3rd Quarter
ended December 31, 2019
ended December 31, 2018

Net income
per share(diluted)

(yen)

(yen)

244.34278.86－－(2) Consolidated financial position
Total assets(Millions of yen)
As of December 31, 2019
As of March 31, 2019

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

897,468933,307
As of December 31, 2019
As of March 31, 2019

Net assets
per share(％)

202,868
202,459
190,300 million yen
188,245 million yen

21.2
20.2

(yen)

4,682.83
4,632.55

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

Year-end

Annual

(yen)

(yen)

(yen)(yen)

(yen)

－－

75.00
75.00

－－

75.00

150.0025.00

100.00* For more information, please refer to "Notice Concerning Amendment to Forecast of Dividend for FY2019" announced
on February 12, 2020.

３．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)

Annual2,000,000(3.6)
31,0007.3
18,500(20.9)
10,700(23.1)
263.30* 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 Third Quarter ended December 31, 2019

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

Millions of yen
March 31, 2019

December 31, 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

53,964
365,059
32,6991,174
142,335
99,123(483)
693,875

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

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

93,86831,247(1,509)123,605

Property and equipment;
Land
Other
Total property and equipment

33,86434,997
68,862

34,12640,04074,167

Other assets
Intangible assets
Total other assets
Total

5,031
5,031
933,307

5,820
5,820
897,468

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
3,486
59,833454,916

108,613
10,021
216,578
19,301
1,565
516
2,391
74,051
433,038

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

208,936
50,034
5,950
11,010275,931204,180
40,024
5,906
11,450261,561

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

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

45,651
143,074(3,728)
184,997

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
14,214202,459933,307

11,106363
3,277(4,482)(4,962)
5,302
12,567
202,867
897,468

Liabilities and Net Assets

Net assets－２－HANWA Co., Ltd.

Financial Results for the Third Quarter ended December 31, 2019

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

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income;Interest income
Dividend income
OtherTotal 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

3rd Quarter ended
December 31, 2018

3rd Quarter ended
December 31, 2019

1,558,271
1,499,359
58,911

1,423,294
1,363,454
59,83937,577
21,33439,421
20,417

3,172
1,317
871
5,360

1,616
1,655
937
4,209

3,566
604
2,380
1,396
7,948
18,746

4,149
2,609
2,355
968
10,082
14,544Extraordinary income;Gain on sales of property and equipment
Gain on sales of investment securities
Total extraordinary income
Extraordinary loss;
Loss on sale of property and equipment
Loss on impairment of property and equipment
Loss on natural disaster
Loss on valuation of investment securities
Provision of allowance for doubtful accounts of affiliates
Total extraordinary loss
Income before income taxes

412
―
412

208
806
1,014

191
―
43
1,846
―
2,081
17,078

―
298
―
426
149
873
14,685

Income taxes
Net income

6,004
11,073

5,880
8,805

11,331(258)

9,929(1,123)(6,173)
1,012
―
(206)
541

312
302
―
(560)
536

(4,529)(2,598)(9,354)
1,718(2,008)6,797

3,779(2,060)

8,738(1,941)

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
Land revaluation difference
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
Comprehensive income attributable to;
Owners of the parent
non-controlling interests－３－HANWA co.,ltd.

Financial Results for the Third Quarter ended December 31, 2019

《Segment information》
Segment information by business category for the 3rd Quarter ended December 31, 2018 and 2019, is as follows:(Amounts less than one million yen are rounded down)

Millions of yen

3rd Quarter ended December 31, 2018
Reportable segment

Net sales
Customers
Inter-segment
TotalSegment income(loss)

Metal

Primary
Metal

Recycling

758,019 229,441
8,101
6,326
766,121 235,767
11,9383,841

56,991
4,613
61,605
1,742

SteelFoods

Petroleum Overseassales& chemicals subsidiaries

Subtotal

79,333 182,274 193,430 1,499,491
978
8,731 47,707 76,458
80,311 191,005 241,137 1,575,949
1,509
1,629
906 21,568

OtherTotal

58,780 1,558,271
2,095 78,553
60,875 1,636,825
502 22,071

Adjustment― 1,558,271(78,553)―(78,553) 1,558,271(3,324) 18,746

Millions of yen

3rd Quarter ended December 31, 2019
Reportable segment

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

Metal

Primary
Metal

Recycling

731,842 188,592
8,792
3,165
740,634 191,758
11,279(40)58,698854
59,553
1,514

Steel

Consolidated

Foods

Petroleum Overseas
sales& chemicals subsidiaries

Subtotal

79,079 145,652 156,495 1,360,359
1,001
5,804 35,012 54,631
80,080 151,456 191,507 1,414,990
884
2,832
414 16,886

OtherTotal

62,935 1,423,294
2,108 56,739
65,043 1,480,034
1,276 18,162

Adjustment

Consolidated― 1,423,294(56,739)―(56,739) 1,423,294(3,617) 14,544

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 method forbusiness segments and changed the reportable segments from "Metals & alloys" and "Non-ferrous metals" to "Primary Metal" and "MetalRecycling".
Segment information for the 3rd Quarter of the previous fiscal year has been recomposed by the new classification method.

－４－

February 12, 2020

Highlights of Consolidated Financial Results for the 3rd Quarter of FY2019(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 3rd Quarter of FY2019(Unit: billion yen, rounded down to 0.1 billions of yen)・As for the 3rd quarter result for this fiscal year, net sales have decreased by 9% in the same period of the previous year, hence reached to 1,423.2
billion yen, due to weak global market of nonferrous metals, ferroalloy products and petroleum, as well as decline of volumes and sales in reporting
segments. Operating profit declined 4% year on year, to 20.4 billion yen chiefly because profits decreased in the Steel business and Metals＆Alloys
business, and ordinary income stood at 14.5 billion yen, down 22% from the same period of the previous year mainly due to decrease in interest
income and increase of loss on investment in affiliates .
・We paid 75 yen as the interim dividend and plan to pay additional 25 yen as the year-end dividend.

Operating Results
Net sales
Gross profit
SG&A expenses

1Q-3Qof FY2019

1Q-3Q
of FY2018

1,423.2

1,558.2

Year-on-year
Change(134.9)

Main Factors

rate

59.8

58.9

0.92%

39.4

37.5

1.8

5%

Net sales have decreased by 9% from the same period of theprevious year. This was mainly due to weak global market of
nonferrous metals, ferroalloy products and petroleum, as well as
decline of volumes and sales in reporting segments.

20.4

21.3

(0.9)

-4% (SG&A expenses)

Non-operating income4.2

5.3(1.1)-21%

Non-operating expenses

10.0

7.9

2.1

27%

Ordinary income

14.5

18.7

(4.2)

-22% (Non-operating income/expenses)

Extraordinary gain

1.0

0.4

0.6

146%

Extraordinary loss

0.8

2.0

(1.2)

-58%

14.6

17.0

(2.3)

-14%

Income taxes

5.8

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

EPS (yen)

(0.1)

8.8

11.0

(2.2)

9.9
(1.1)
244.3411.3(0.2)
278.86(1.4)(0.8)(34.52)Comprehensive
incomeSegment
Information

6.0

6.7

1.7

5.0

rate1Q-3Q of
FY2019Net sales
1Q-3Q of
FY20191Q-3Q of
FY2018

SG & A expenses have increased 1.8 billion yen from the same
period of previous year. 1.0 out of 1.8 billion yen was
accounted for newly consolidated subsidiaries.
Our personnel expenses have increased 0.9 billion yen,including 0.3 billion yen from newly consolidated subsidiaries.
Non-operating income has decreased 1.1 billion yen and Nonoperating expenses have increased 2.1 billion yen. The
breakdown of the main causes is as follows.
Dividends: increase of 0.3 billion yen(YoY)
Interest income: decrease of 1.5 billion yen(YoY)
Loss on investment in affiliates: increase of 2.0 billionyen(YoY)-2%-20% (Extraordinary gain/loss)
Gain on sales of investment securities 0.8 billion yen : due to sales-12%of listed stocks
335%
Gain on sales of fixed assets 0.2 billion yen : due to sales of real
-12%
estate held by consolidated subsidiaries
296%

1Q-3Q ofFY2018

rate

766.1

-3%

11.2

11.9-6%

Primary Metal

191.7

235.7-19%(0)

3.8-101%

Metal Recycling

59.5

61.6

-3%

1.5

1.7

-13%

Petroleum & chemicals

Overseas sales
subsidiaries
Total for reportablesegments

Other

151.4
191.5

80.3
191.0
241.1

-0%
-21%
-21%

0.8
2.8
0.4

1.5
1.6
0.9

-41%
74%
-54%

1,414.9

1,575.9

-10%

16.8

21.5

-22%

65.0

60.8

7%

1.2

0.5

154%

Total

1,480.0

1,636.8

-10%

18.1

22.0

-18%

Adjustment(56.7)(78.5)

-28%

(3.6)

(3.3)

9%

Consolidated

1,423.2

1,558.2

-9%

14.5

18.7

-22%

Topics(35.8)-4%(Current assets)

693.8

724.9

(31.1)-4%(Fixed assets)

203.5

208.3

(4.7)

-2%

694.6

730.8

(36.2)

-5%

364.1
310.1
*163%/132%

363.2
303.9
*
161%/131%

0.8
6.2
2.0pt

0%
2%
1%

202.8

202.4

0.4

0%

184.9
5.3
12.5
4,682.83
190.3
21.2/24.0*%

180.9
7.2
14.2
4,632.55
188.2
20.2/22.8*%

4.0
(1.9)
(1.6)
50.28
2.0
1.0pt

2%
-27%
-12%
1%
1%
5%

Total liabilities(Net interest-bearing debt)

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

1st half

2,500

・ Aug. Acquired 65% of the stocks of the SMC HA NOI ONE MEMBER CO.,LTD.(and changed name to HANWA SMC STEELSERVICE HA NOI CO., LTD.) We have published our first integrated report to replace our Annual Report.
・ Nov. Start full-scale operation of the comprehensive steel processing center with Daming International Holdings in China.

Main Factors

rate(Total Assets)

Total assets decreased by 4% from the end of the previous year, due
to decrease in trade receivables along with sales decline.
Trade notes and accounts receivables 365.0 billion yen (-12% fromthe end of the previous period).

(Liabilities)
Total liabilities decreased by 5% from the end of the previous year,
due to the decrease in trade payables. As interest-bearing debt
increased by 0.2%, net debt-equity ratio was turned into 163%（*132%).

(Net assets)
Total net assets increased by 0.2% from the end of the previous year,
due to the carryover of retained earnings, the appropriation of surplus
for year-end dividend and decrease of foreign currency translationadjustments.
Meanwhile shareholders' equity ratio was 21.2%(*24.0%), which is
1.0 percentage point higher than the end of the previous year.
*Reflecting equity credit attributes of the subordinated loan

2nd half【Quarterly Operating Results】
3st quarter

2,074.6

2,000

1,791.1
1,514.0

1,500

954.1

600

1,423.2

400

715.6

500

1,004.9

836.9

7.5

6.9

6.9

6.1

108

6.7

6.6

6

1,558.2

1,098.8

Operating income

8.1

1,053.9

1,306.5

1,000

Net sales

800

2,000.0

1,069.6

798.4

200

946.0

507.4497.4

4553.3

516.3

472.4

473.5

477.2
200

FY2016FY2017FY2018

1st half

25.0

2nd half0
2018/1Q

FY2019(E)【Changes in Net Income】

Main Factors(Steel business)
Both net sales and volumes declined due to sluggish demand, andsegment income decreased mainly due to declining profit margins atdomestic subsidiaries in sluggish domestic steel market.
(Primary metals business)
Segment income decreased mainly due to decrease in interest income
and the increase of loss on investment in affiliates especially inSAMANCOR CHROME HOLDINGS PROPRIETARY LTD..
(Metal recycling business)
Segment income decreased due to decline of base metal prices in thesame period of the previous year as well as decrease in the volume ofboth aluminum and stainless scrap.
(Foods business)
Segment income decreased reflecting stagnant market condition formarine products, shrinking margins of newly consolidated subsidiary
Maruhon Honma Suisan Co.,Ltd. and a decrease in foreign exchange
gains.
(Petroleum & chemicals business)
Despite decreased volume by weak market of petroleum products,
segment income increased mainly due to the expansion of profit
margins of bunker fuel oil and 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.

Change【Changes in Net Sales】

Segment income

740.6

80.0

933.3

Loss on devaluation of investments securities 0.4billion yen :mainly due to decline in listed stocks

SteelFoods

897.4

Total assets(Equity capital)

Operating income

Income before income
taxes and othersMar. 2019

(Interest-bearing debt)-9% (Net sales)

Comparison with Mar. 2019

Dec. 2019

Financial Position

2Q

3Q

4Q

2019/1Q

2Q

3Q【Changes in Interest-bearing Debt】

3st quarter

500

Interest-bearing debt

Net DER

3

Reflecting subordinated loan
20.0

16.3
15.0

10.1

400

17.3
13.9

8.8

10.7
5.5

7.3

12.2

10.0

9.7
5.0

363.2

364.1

1.6

1.6

1.3

1.3

FY2018FY2019/3Q

325.5

11.3

300

259.6

200

1.4

1.5

1

9.9

8.5

6.5

6.2

2100
5.1
00.0
FY2016

Forecast(Annual)

FY2017FY2018FY2019FY20180FY2016

FY2019(E)changeCash Dividends

FY2017FY2018FY2019FY2019(estimated)

2,000.0

2,074.6-4%

Interim (yen)

75.00

75.00

―

Operating income

31.0

28.97%

Year-end (yen)

75.00

―

25.00

Ordinary income

18.5

23.3

-21%

Annual (yen)150.00―100.00Net income attributableto owners of parent

10.7

13.9

-23%

Dividend payout ratio

44%

―

38%

Net sales