Financial Results for the Second Quarter ended September 30, 2017
(Consolidated financial results have been prepared in accordance with accounting principles generally accepted in Japan)

November 10, 2017
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, Senior Managing Executive Officer
TEL 81 - 3 - 3544 - 2000
November 14, 2017 The date of payout of dividend: December 5, 2017
(Rounded down to millions of yen)

１．Consolidated financial results for the second quarter ended September 30, 2017
(1) Consolidated operating results（％ of change from the same period of previous year）
Net sales
For the second quarter
ended September 30, 2017
ended September 30, 2016

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

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

836,979
17.0
11,461
4.8
12,270
23.7
8,154
31.4
715,619(9.2)
10,937
33.9
9,919
42.7
6,207
2.5
Note: Comprehensive income
For the second quarter ended September 30, 2017 10,336 million yen 149.8 ％For the second quarter ended September 30, 2016
4,137 million yen 197.0 ％Net income
per share

Net income
per share(diluted)

For the second quarter
(yen)
(yen)
ended September 30, 2017
200.66－
ended September 30, 2016
151.42－* 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)

764,653694,232

September 30, 2017
March 31, 2017

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

193,493
171,637
As of September 30, 2017
As of March 31, 2017

Shareholders' equity
per share

(％)

(yen)

23.3
24.5
178,317 million yen
170,422 million yen

4,387.83
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 numberof 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, 2017

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

Millions of yen
March 31, 2017

September 30, 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

33,641
324,767
32,506306
123,665
43,974(346)
558,515

29,64029,85259,492
2,034

31,97331,374
63,347
3,006

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

103,604
36,677(497)
139,784
206,138
764,653

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

205,865
107,383―
10,021
4,104
2,426
119
―
44,209374,129

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

40,166
138,090
4,533
14,240197,030
571,160

45,651
117,778(3,720)159,70945,651
123,875(3,722)
165,803

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

14,381
(113)
2,966
944
(5,665)
12,513
15,176
193,493764,653

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, 2017

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

Millions of yen
Second quarter
ended

Second quarter
ended

Net sales
Cost of sales
Gross profit

715,619684,823
30,795

836,979
803,393
33,585

Selling, general and administrative expenses
Operating income

19,857
10,937

22,124
11,461

522
541
―
―
728
1,792

848
846
149
457
1,029
3,331

1,281
24
831
672
2,810
9,919

1,563
―
―
958
2,522
12,270

Other income;Interest income
Dividend income
Revenue from investment in affiliates
Foreign exchange gain
OthersTotal other income
Other expenses;
Interest expenses
Loss on investment in affiliates
Foreign exchange loss
OthersTotal other expenses
Ordinary income
Extraordinary income;Gain on sales of investment securities
Reversal of allowance for business loss of affiliates
Total extraordinary income
Extraordinary loss;
Loss on liquidation of businessTotal extraordinary loss
Income before income taxes

126
―
126

―
512
512

209
209
9,836

―
―
12,782

Income taxes
Net income

3,609
6,226

4,642
8,140

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

6,207
19

8,154
(14)

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

104
13(2,318)389(277)(2,089)
4,137

1,801
(255)
(407)
372
686
2,196
10,336Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

4,297
(160)

9,954
381

－３－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 2017

《Consolidated Statements of Cash Flows》(Rounded down to millions of yen)

Millions of yen
Second quarter Second quarter
ended
ended
September 30, September 30,
2016
2017
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 sales of investment securities of unconsolidated subsidiaries
Reversal of allowance for business loss of affiliates
Loss on liquidation of business(Increase)decrease in trade receivables(Increase)decrease in inventories
Increase(decrease) in trade notes and accounts payable(Increase)decrease in deposits received
Increase(decrease) in advanced 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

9,836
2,001
115
(19)
(1,063)
1,281
24
(126)
―
209
(8,493)
10,911
7,431(9,732)
5,031
472
3,087
20,967758(1,224)
1,537
22,04012,782
1,996
199
(9)
(1,694)
1,563
(149)
―
(512)
―
(16,103)(12,030)
10,501
5,442(4,889)
483
2,080
(339)
1,153
(1,531)(6,556)(7,274)

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 purchase of investment securities
Proceeds from sale and redemption of investment securities
Net increase(decrease) from purchase of consolidated subsidiaries(Increase)decrease in short - term loans receivable, net
Increase in long - term loans receivableCollection of long-term loans receivable
Other, net
Net cash used in investing activities

(106)
1,177
(1,191)79(1,718)386―
182(1,545)1
1,428(1,308)(1,822)
1,223(2,105)
113(30,475)
429
289
12,912(14,111)62(55)(33,538)

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
Proceeds from issuance of bonds
Payment for redemption of bonds
Proceeds from stock issuance to minority shareholders
Purchase of treasury stock
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

(131)
―
250
(900)
―
(28)
―
(2,266)(2,070)
(29)
(217)
(109)
(5,503)

8,733(5,000)30,550(11,554)
9,950(10)
13,580(2)(2,031)(28)―(40)
44,147

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
Cash and cash equivalents from newly consolidated subsidiaries
Cash and cash equivalents at end of period(1,417)
13,81225,804791
40,4089
3,344
27,206
1,144
31,694－４－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 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 and solar cell-related materials and products
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 second quarter ended September 30, 2016 and 2017, is as follows:(Rounded down to millions of yen)

Second quarter ended September 30, 2016

Millions of yen

Reportable segment

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

Steel

Metals Non-ferrous
Foods& alloys metals

364,446
6,593
371,040
8,597

60,1401,586
61,727(188)

36,375764
37,140517

Petroleum Overseas

sales& chemicals subsidiarie

44,492 121,771
233
3,302
44,726 125,074
1,009
938

Subtotal

49,632 676,860
33,003 45,483
82,635 722,343
19 10,893

Other

Total

38,759 715,619
874 46,357
39,633 761,976
983 11,876

Adjustment― 715,619(46,357)―(46,357) 715,619(1,957)
9,919

Second quarter ended September 30, 2017

Millions of yen

Reportable segment

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

Consolidated

Steel

Metals Non-ferrous
Foods& alloys metals

431,8475,390
437,237
10,41986,976
1,929
88,905
1,481

45,265681
45,946475

Petroleum Overseas

sales& chemicals subsidiarie

Subtotal

50,688 103,643 82,541 800,962
232
2,668 28,317 39,220
50,920 106,312 110,859 840,183854
673
217 14,122

Other

Total

36,016 836,979
954 40,174
36,970 877,153
411 14,534

Adjustment

Consolidated― 836,979(40,174)―(40,174) 836,979(2,263) 12,270

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 allocated 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.

－５－

November 10, 2017

Highlights of Consolidated Financial Results for the 2nd Quarter of FY2017
HANWA Co., Ltd.
Outline of Financial Results for the 2nd Quarter of FY2017
・As for the interim result for this fiscal year, net sales have increased by 17% in the same period of the previous year, hence reached to 836.9
billion yen, as the price of steel products and metal resources had higher than the same period of previous year's level. Net profit was 8.1 billion
yen, increased by 31%, due to increase in operating income of matals/alloys business and foreign exchange loss in the same period of theprevious year turned to foreign exchange gain.
・We pay 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-2Q
of FY2017

1Q-2Q
of FY2016

836.9

715.6

Year-on-year
Change121.3

Main Factors

rate

17% (Net sales)

33.5

30.7

2.7

9%

SG&A expenses

22.1

19.8

2.2

11%

Operating income

11.4

10.9

0.5

5%

Net sales have increased by 17% from the same period of theprevious year. This was due to higher price level of steel
products and metal resources than the same period of theprevious year from recovery market prices from the second halfof the previous fiscal year.

Non-operating income

3.3

1.7

1.5

86%

Non-operating expenses

2.5

2.8

(0.2)

-10%

Ordinary income

12.2

9.9

2.3

24%

Extraordinary gain

5.0

1.0

3.0

305%

-100% (Non-operating income/expenses)

―

2.0

(2.0)

Income before income
taxes and others

12.7

9.8

2.9

30%

4.6

3.6

1.0

29%

8.1

6.2

1.9

31%

8.1
(0.0)
200.666.2
0.0
151.42

1.9
(0.0)
49.24

Income taxes
Net income
Owners of the Company(loss)

Minority interests(loss)

EPS (yen)Comprehensive
incomeSegment
Information
Steel

10.3

4.1

Net sales
1Q-2Q
of FY2017

1Q-2Q
of FY2016

437.2

371.0

6.1

SG & A expenses have increased by 11% compared with thesame period of previous year and reached to 2.2 billion yen. 0.7
out of 2.2 billion yen was accounted for newly consolidated
subsidiaries.
Our personnel expenses have increased 0.8 billion yen,including 0.3 billion yen from newly consolidated subsidiaries.

Non-operating income has increased by 86% from the same
period of the previous year, mainly due to increase in interest
income, dividend income and foreign exchange gain.
Even with the increased interest expenses due to increase bankloan, non-operating expenses have decreased by 10%, due tothe reduced exchange losses .

31%(Extraordinary gain/loss)―
Reversal of allowance in previous year was recorded in
33%
extraordinary income, because the loss on business of150%

subsidiaries was less than expected.

rate

18%

1Q-2Q
of FY2017

1Q-2Q
of FY2016

10.4

8.5

rate

21%

Metals & alloys

88.9

61.7

44%

1.4

△0.1

―

Non-ferrous metals

45.9

37.1

24%

0.4

0.5

-8%

Foods
Petroleum & chemicals

Overseas sales
subsidiaries
Total for reportablesegments
Other

50.9
106.3
110.8

44.7
125.0
82.6

14%
-15%
34%

0.8
0.6
0.2

1.0
0.9
0.0

-15%
-28%
―

840.1

722.3

16%

14.1

10.8

30%

36.9

39.6

-7%

0.4

0.9

-58%

Total

877.1

761.9

15%

14.5

11.8

22%

Adjustment(40.1)(46.3)

13%

(2.2)

(1.9)

-16%

Consolidated

836.9

715.6

17%

12.2

9.9

24%

TopicsMar. 2017

764.6

694.2

70.4

10%

558.5
206.1

537.7
156.4

20.7
49.6

4%
32%

Total liabilities

571.1

522.5

48.5

9%

(Interest-bearing debt)

Net DER

296.7
263.0
147.5%

259.6
231.2
135.7%

37.0
31.8
11.9pt14%
14%―

Total net assets

193.4

171.6

21.8

13%

165.8
12.5
15.1
4387.83
178.3
23.3%

159.7
10.7
1.2
4193.50
170.4
24.5%

6.0
1.7
13.9
194.337.9-1.2pt

4%
17%
―
5%
5%
―

1Q-2Q
of FY2017

1Q-2Q
of FY2016

(7.2)

22.0

(29.3)(33.5)(1.3)(32.2) ―

44.1

(5.5)

49.6

―

31.6

40.4

(8.7)

-22%

Total assets(Current assets)(Fixed assets)(Net interest-bearing debt)(Equity capital)(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

Main Factors

2,000・ Apr. Acquired the steel distributor, Kamei Co., Ltd. and Sanyo Kouzai Co.,Ltd.
・ 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

1st half

1,737.3
876.2

1,000
500

(Steel business)
Steel demand remained steady without significant upsurge. Better market
price resulted increased net sales and 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, net sales increased. However, foreign exchange losses pushed
down segment profit.
(Foods business)
Rising price and strong sales due to reduction of overseas catch anddecrease in inventories increased net sales. Segment profit was down due toshrinking profit margin due to highed purchase costs.
(Petroleum & chemicals business)
Despite gently rising petroleum products price, net sales decreased due toreduction of intermarket resale transactions and supply-demand adjustment
transactions. Segment income decreased, due to delay in pass-through ofpurchase cost increase and margin reduction of imported plastic products.
(Overseas sales subsidiaries)
Net sales increased because of increased sales of bunker fuel in Singapore
and metal scrap in Thailand, Singapore and US. Improvement of equity inearnings of affiliates from subsidiaries in North China contributed tosegment income.

ChangeMain Factors

rate(Total Assets)

Total assets increased by 10% from the end of the previous
year, due to increase in investment securities and tradereceivables.
Inventories : 123.6 billion yen (+11% from the end of theprevious period)(Liabilities)
Total liabilities increased by 9% from the end of the previous
year, due to the increase in decrease in trade payables and longterm loans. As interest-bearing debt increased by 14%, net debtequity ratio was turned into 147%.

(Net assets)
Total net assets increased by 13% 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 23.3%, which is a 1.2 percentage
points lower than the end of the previous year.

Year-on-year
ChangeMain Factors

rate

―

(Operating cash flows)
Due to increase in capital requirement as a sales increase.
(Investment cash flows)
Due to purchase of investment securities and execution of long-term loan.

(Financial cash flows)
Due to increase in long term loans.

【Changes in Net Sales】

1,500

Segment income

Comparison with Mar. 2017

Sep. 2017

Financial Position(Valuation & translation
adjustments)(SG&A expenses)

Extraordinary loss

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

【Quarterly Operating Results】

2nd half

1,511.8

1,514.0

723.5

798.4

Net sales

600

1,700.0

Operating income

5.9

4.9

5.3

7.0

5.2

400

863.1

365.0

350.5

383.2

408.3

415.2

6.1

7

428.6

5

200

861.1

788.2

715.6

836.9

FY2014FY2015FY2016FY2017030【Changes in Net Income】
2nd half

25.4

20
19.4
9.0

10
0

16.3

16.0

10.1

7.9

6.0

6.2

8.1

FY2014FY2015FY2016FY2017FY2017

3Q

4Q

Interest-bearing debt

400
300

272.5

2017/1Q

2Q

200

1.8

FY2016

Net DER

3
296.7

237.5

259.6

1.4

1.4

1.5

FY2015FY2016FY2017/1H

100

5.1
3.9

Forecast(Annual)2Q【Changes in Interest-bearing Debt】

1st half

30

1
2016/1Q2
1

0

0
FY2014changeCash Dividends

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