Financial Results for theThird Quarter ended December 31, 2020
(Japan GAAP)
February 12, 2021
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, 2021
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, 2020 (April 1, 2020 to December 31, 2020)(1) Consolidated operating results（Percentage indicate a change from the previous year）
Net sales
For the 3rd Quarter
ended December 31, 2020
ended December 31, 2019

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

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

1,244,969(12.5)
18,749(8.2)
17,93023.3
12,27123,6
1,423,294(8.7)
20,417(4.3)
14,544(22.4)
9,929(12.4)
Note: Comprehensive income
For the Fiscal Year ended December 31, 2020
14,758 million yen
117.1 %For the Fiscal Year ended December 31, 2019
6,797 million yen
295.5 %Net income
per share

For the 3rd Quarter
ended December 31, 2020
ended December 31, 2019

Net income
per share(diluted)

(yen)

(yen)

301.96244.34－－(2) Consolidated financial position
Total assets(Millions of yen)
As of December 31, 2020
As of March 31, 2020

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

823,934
798,442
As of December 31, 2020
As of March 31, 2020

Net assets
per share(％)

179,513
166,097
176,869 million yen
163,648 million yen

21.5
20.5

(yen)

4,352.36
4,027.01

２．Cash dividends
Cash dividends per share
1st Quarter 2nd Quarter 3rd Quarter
Year ended March 31, 2020
Year ended March 31, 2021
Year ending March 31, 2021
（estimated）

Year-end

Annual

(yen)

(yen)

(yen)

(yen)

(yen)

－
－

75.00
30.00

－
－

25.00

100.00

30.00

60.00

３．Forecast of consolidated financial results for fiscal year ending March 31, 2021 (April 1, 2020 to March 31, 2021)（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)

Annual
1,700,000(10.9)
25,000(8.5)
23,000－15,500－381.42* The above forecasts reflect assumptions and prospects based on the information currently available. They are subject
to 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, 2020

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

Millions of yen
March 31, 2020

December 31, 2020

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

67,256
341,559
21,281
1,167
127,460
69,949(1,046)627,629

62,950337,546
27,5581,109
117,861
89,969(1,418)635,578

34,16540,99775,162
6,331

33,74738,901
72,6497,149

56,89233,496(1,070)89,318170,812
798,442

67,00242,040(485)
108,557
188,355
823,934

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

202,671
19,146
67,177
10,021
2,466
2,774
481
59,913364,653

217,387
22,35754,926
10,024
4,000
1,745
415
80,068
390,925

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

40,013
212,372
6,162
9,142
267,691
632,344

30,000205,573
6,257
11,664
253,495
644,42045,651
119,475(3,728)161,398

45,651
130,580(3,728)172,503

6,042
745
3,277
(2,434)(5,380)2,250
2,448
166,097
798,442

11,786(110)
3,191(5,684)(4,816)
4,366
2,643
179,513
823,934

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, 2020

《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
Equity in earnings of affiliates
OthersTotal other income
Other expenses;
Interest expenses
Equity in losses of affiliates
Foreign exchange loss
OthersTotal other expenses
Ordinary income

3rd Quarter ended
December 31, 2019

3rd Quarter ended
December 31, 2020

1,423,294
1,363,454
59,8391,244,969
1,189,140
55,82939,421
20,41737,08018,749

1,616
1,655
―
937
4,209

1,524
1,622
477
1,107
4,731

4,149
2,609
2,355
968
10,082
14,544

2,880
―
1,550
1,118
5,550
17,930Extraordinary income;Gain on sale of property and equipment
Gain on sale of investment securities
Total extraordinary income
Extraordinary loss;
Loss on impairment of property and equipment
Loss on devaluation of investment securities
Provision of allowance for doubtful accounts of affiliates
Total extraordinary loss
Income before income taxes and minority interest

208
806
1,014

580
114
694

298
426
149
873
14,685――148
148
18,476

Income taxes
Net income

5,880
8,805

6,039
12,437

9,929(1,123)

12,271
166

312
302
(560)
536

5,744
(856)
(2,980)593(2,598)(181)(2,008)
6,797

2,320
14,758

8,738

14,741(1,941)

16

Net income attributable to
Net income attributable to owners of the Company
Net income(loss) attributable to non-controlling interests
Other Comprehensive Income
Net unrealized holding gains(loss) on securities
Deferred hedge profit and loss
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive Income
Comprehensive Income
Comprehensive income attributable to;Comprehensive income attributable to owners of the parent
Comprehensive income(loss) attributable to non-controllinginterests－3－

HANWA co.,ltd.

Financial Results for the Third Quarter ended December 31, 2020

《Segment information》
Segment information by business category for the 3rd Quarter ended December 31, 2019 and 2020, is as follows:(Amounts less than one million yen are rounded down)

3rd Quarter ended December 31, 2019

Millions of yen

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

Primary
Metal
Metal Recycling

731,842 188,592
8,792
3,165
740,634 191,758
11,279(40)

58,698854
59,553
1,514

Foods

Energy& Living
Materials

Overseas
sales
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

Other

Total

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

3rd Quarter ended December 31, 2020

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

Millions of yen

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

Consolidated

Primary
Metal
Metal Recycling

643,997 158,012
8,220
1,927
652,217 159,940
11,251
3,203

54,593
1,291
55,885379

Foods

Energy& Living
Materials

Overseas
sales
subsidiaries

Subtotal

79,520 124,168 123,039 1,183,331
484
5,140 22,501 39,565
80,005 129,308 145,540 1,222,897
1,710
4,375
947 21,867

Other

Total

61,637 1,244,969
2,169 41,734
63,807 1,286,704
453 22,321

Adjustment

Consolidated― 1,244,969(41,734)―(41,734) 1,244,969(4,391) 17,930

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, Company reviewed the name of segment in order to express more appropriately the business, andchanged the reportable segments from "Petroleum & chemicals" to "Energy & Living Materials".
The change was only name change, and segment information had no effect from the change.
Segment information for the 3rd Quarter of the previous fiscal year has been mentioned after name change.

－4－February 12, 2021

Highlights of Consolidated Financial Results for the 3rd Quarter of FY2020(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 3rd Quarter of FY2020(Unit: billion yen, rounded down to 0.1 billions yen)

As for the 3rd quarter result for this fiscal year, in the tendency to a restraint of economic activities caused by the outbreak of COVID-19, net sales have decreased
by 13% year on year, hence reached to 1,244.9 billion yen, due to decrease in transaction volume mainly in the 1st half of the fiscal year under weak demands ofthe steel and other products, as well as commodity prices of non-ferrous metal and petroleum products remained at a low level compared to the same period of theprevious year. Operating income decreased by 8% year on year, to 18.7 billion yen chiefly because profits declined in Primary metal, Metal Recycling business.
Ordinary income increased by 23% year on year, to 17.9 billion yen, because interest expenses decreased and equity in losses of affiliates turned profitable. Net
income attributable to owners of the company increased by 24% year on year, to 12.2 billion yen, partly because there was no loss on a devaluation of investment
securities made in the previous fiscal year. We paid 30 yen as the interim dividend and plan to pay additional 30 yen as the year-end dividend.

Operating Results
Net sales
Gross profit
SG&A expenses

1Q-3Q
of FY2020

1Q-3Q
of FY2019

1,244.9

1,423.2

Year-on-year
Change(178.3)Main Factors

rate

55.8

59.8

(4.0)

-7%

37.0

39.4

(2.3)

-6%

Net sales have decreased by 13% from the same period of theprevious year, due to a decrease in transaction volume mainly in the
1st half of the fiscal year under weak demands of the steel and otherproducts, as well as commodity prices of non-ferrous metal andpetroleum products remained at a low level compared to the same
period of the previous year.

Operating income

18.7

20.4

(1.6)

-8%

Non-operating income

4.7

4.2

0.5

12% (SG&A expenses)
SG & A expenses have decreased by approximately 2.3 billion yen
from the same period of the previous year mainly due to a decreasein travel expenses and entertaining expenses under self-restraint ofsales activities. Personnel expenses have increased 0.4 billion yen,including 0.1 billion yen from newly consolidated subsidiaries.

Non-operating expenses

5.5

10.0

(4.5)

-45%

Ordinary income

17.9

14.5

3.3

23%

Extraordinary gain

0.6

1.0

(0.3)

-32%

Extraordinary loss

0.1

0.8

(0.7)

-83% (Non-operating income/expenses)

Income before income
taxes and others

18.4

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

EPS (yen)Comprehensive
incomeSegment
Information
Steel
Primary Metal

14.6

6.0

5.8

3.7
0.1

12.4

8.8

3.6

12.2
0.1
301.969.9(1.1)
244.34

2.3
1.2
57.62

14.7

6.7

7.9

26%
3%
41%

Non-operating income have increased 0.5 billion yen, and Nonoperating expenses have decreased 4.5 billion yen, respectively.
The breakdown of the main causes is as follows.
Interest expenses: decrease of 1.2 billion yen(YoY)
Foreign exchange loss: decrease of 0.8 billion yen(YoY)
Equity in earnings (losses) of affiliates:
losses of 2.6 billion yen in FY2019
earnings of 0.4 billion yen in FY2020

24%― (Extraordinary gain/loss)
Gain on sales of fixed assets 0.5 billion yen : mainly due to sales of
24%
property by consolidated subsidiaries.

Net sales
1Q-3Q
1Q-3Q
of FY2020 of FY2019

652.2
159.9

740.6
191.7

117%

rate

-12%
-17%

11.2
3.2

11.2
(0)

rate

-0%
―

59.5

-6%

0.3

1.5

-75%

Foods

80.0

80.0

-0%

1.7

0.8

93%

Other

129.3

151.4

-15%

4.3

2.8

54%

145.5

191.5

-24%

0.9

0.4

129%

1,222.8

1,414.9

-14%

21.8

16.8

29%

63.8

65.0

-2%

0.4

1.2

-64%

Total

1,286.7

1,480.0

-13%

22.3

18.1

23%

Adjustment(41.7)(56.7)

-26%

(4.3)

(3.6)

21%

Consolidated

1,244.9

1,423.2

-13%

17.9

14.5

23%

25.4

3%

(Current assets)

635.5

627.6

7.9

1%

(Fixed assets)

188.3

170.8

17.5

10%

644.4

632.3

12.0

2%

302.0
239.1
*
135%/106%

331.1
263.8
*
161%/127%(29.0)(24.7)-26.0pt

-9%
-9%
-16%

179.5

166.0

13.4

8%

172.5
161.3
4.3
2.2
2.6
2.4
4,352.36
4,027.01
176.8
163.6
*
21.5/24.5 % 20.5/23.6*%

11.1
2.1
0.1
325.35
13.2
1.0pt

7%
94%
8%
8%
8%
5%

Total liabilities(Net interest-bearing debt)

Net DER
Total net assets(Equity capital)(Valuation & translation
adjustments)(Minority interests)
BPS (yen)
Shareholders' equity
Shareholders' equity ratio(Steel business)
Net sales and segment income decreased mainly due to decline intransaction volumes caused by lower demand for steel products despite
progress in construction work and recovery of manufacturing activities, andreflecting foreign exchange loss from local currency depreciation.
(Primary metals business)
Net sales decreased due to decline in transaction volume caused bydecreasing steel and non-ferrous metals manufacturers operating rate.
Whereas, segment income increased because there weren't equity in losses
of affiliates and interest expenses were decreased.
(Metal recycling business)
Net sales and segment income decreased due to decline in transaction
volumes caused by a reduction of production activities in the manufacturingindustry, as well as a loss on the market value of the derivative transactions
that hedge the risk of price fluctuations in our inventories.
(Foods business)
Net sales decreased due to lower commodity prices than the same period of
the previous year. Whereas, segment income increased due to improved
profitability at a sales subsidiary in U.S. and an increase in the number ofdomestic consolidated subsidiaries.
(Energy & Living Materials business)
Segment income increased due to securing margin of petroleum products
under upward trend of the price and expansion of the price difference
between domestic and overseas, increasing sales of PKS & daily goods.
(Overseas sales subsidiaries)
Segment income increased due to improved profitability of non-ferrous
metal trading in Thailand, and decreasing of interest expenses.

・ Apr. Acquire 100% of the shares of TATSUTA CO., LTD. which is a steel material distributor in Osaka.
・ Oct. Acquire 100% of the shares of TEKKEN Industry CO., LTD. which is a steel fabricator in Fukui.

ChangeMain Factors

rate(Total Assets)

Assets increased by 3% from the end of the previous year, due to anincrease in advance payments on uncompleted construction
contracts and investment securities. Advance payment 49.5 billion
yen (+33% from the end of the previous year). Investment securities
67.0 billion yen (+18% from the end of the previous year).

(Liabilities)
Liabilities increased by 2% from the end of the previous year, due toan increase in notes and accounts payable-trade and advance receipts
for uncompleted construction contracts. As interest-bearing debt
decreased by 9%, net debt-equity ratio was turned into 135%（*106%).

(Net assets)
Net assets increased by 8% from the end of the previous year, due toan accumulation of net income attributable to owners of thecompany and an increase in valuation difference on available-forsale securities. Shareholders' equity ratio was 21.5%(*24.5%),
which is 1.0 percentage points higher than the end of the previous
year.
*Reflecting equity credit attributes of the subordinated loan

【Changes in Net Sales】
1st half

2,500.0

2nd half【Quarterly Operating Results】
3st quarter

800.0

Net sales

Operating income

6.6

6.9

10

2,074.6
2,000.0
1,500.0

1,791.1

500.0

600.0

1,700.0

961.4

6.7

8

6.6

1,423.2

1,306.5

6

4.4

400.0
1,244.9

4
200.0

836.9

1,004.9

946.0

801.0

FY2017FY2018FY2019FY2020(E)

0.0

472.4

473.5

477.2

484.2
375.6

443.9

425.4

2

0.0

17.3
8.8

12.2
8.5

1st half

2nd half

3st quarter

13.9
7.3

8.7

11.3

12.2

9.9
5.1

400.0
300.0
200.0

-10.0

-20.0

-13.6

Forecast(Annual)

FY2018

3.0

1.6

331.1
1.6

1.3

1.3

302.0
1.4

2.0

1.5
1.0

1.1

100.0
0.0

FY2019FY2020(estimated)

3Q

363.2
325.5

6.8

-18.8

4Q FY2020/1Q 2Q

Interest-bearing debt
Net DER
Reflecting subordinated loan
折れ線 3

500.0

15.5

6.5

3Q

【Changes in Interest-bearing Debt】

0.0

FY20170
FY2019/1Q 2Q【Changes in Net Income】

10.0

6.9

899.0
1,558.2

1,000.0

7.6

1,907.4

1,069.6

954.1

Main Factors* Since the 1st Quarter of the fiscal year, Company changed the reportable segments from "Petroleum & chemicals" to "Energy & Living Materials".
Topics

798.4

20.0

55.8

Living Materials
Overseas sales
subsidiaries
Total for reportablesegments

823.9

Total assets

Segment income
1Q-3Q
1Q-3Q
of FY2020 of FY2019

Metal Recycling* Energy&Mar. 2020(Interest-bearing debt)-13% (Net sales)

Comparison with Mar. 2020

Dec. 2020

Financial Position

FY2017

FY2020(E)FY20190.0changeFY2018Cash Dividends

FY2019FY2020/3Q

FY2019FY2020

FY2020(estimated)

1,700.0

1,907.4-11%

Interim (yen)

75.00

30.00

―

Operating income

25.0

27.3

-9%

Year-end (yen)

25.00

―

30.00

Ordinary income

23.0(12.5)―

Annual (yen)100.00―60.00

Net income attributableto owners of parent

15.5(13.6)―

Dividend payout ratio

―

―

16%

Net sales