Financial Results for the Third Quarter ended December 31, 2018
(Japan GAAP)
February 13, 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: February 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 Third Quarter ended December 31, 2018 (April 1, 2018 to December 31, 2018)(1) Consolidated operating results（Percentage indicate a change from the corresponding period of the previous year）
Net sales
For the 3rd Quarter
ended December 31, 2018
ended December 31, 2017

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

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

1,558,271
19.3
21,334
13.5
18,746
3.4
11,331(7.5)
1,306,566
18.9
18,79915.1
18,13020.5
12,24826.0
Note: Comprehensive income
For the 3rd Quarter ended December 31, 2018
1,718 million yen(89.3) %For the 3rd Quarter ended December 31, 2017
16,051 million yen
26.9 %Net income
per share

For the 3rd Quarter
ended December 31, 2018
ended December 31, 2017

Net income
per share(diluted)

(yen)

(yen)

278.86－301.40－* 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.
* In the fiscal year ended March 31, 2018, HANWA finalized the provisional accounting treatment for the allocation of
acquisition costs of additional investment securities. Numbers for the 3rd Quarter ended December 31, 2017 arereflected such finalization of the provisional accounting treatment.

(2) Consolidated financial position
Total assets

Shareholders'equity ratio

Net assets(Millions of yen)

(Millions of yen)

Shareholders' equity
per share

(％)

(yen)

952,042
200,735
19.5
4,578.76
860,344
203,700
21.8
4,621.96
Note: Shareholders' equity
As of December 31, 2018 186,060 million yen
As of March 31, 2018
187,828 million yen* From the beginning of the 1st Quarter of the fiscal year ending March 31, 2019, HANWA adopted the “Partial
Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.28, February 16, 2018) and its
relevant Guidance. The results for the fiscal year ended March 31, 2018 are those after retrospective application.
As of December 31, 2018
As of March 31, 2018

２．Cash dividends
1st Quarter（effective date）

Cash dividends per share
2nd Quarter
3rd Quarter(yen)Year ended March 31, 2018Year ending March 31, 2019Year ending March 31, 2019
（estimated）

－
－

(yen)

Year-end

(yen)

10.00
75.00

－
－

Annual
(yen)

(yen)

75.00

－

75.00

150.00* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, theamount for the total annual dividends per share for the year ended March 31, 2018 is omitted and shown as a dash.
In case the share consolidation was taken into consideration, the 2nd Quarter dividend and annual dividend for the fiscal
year ended March 31, 2018 would be 50.00 yen and 125.00 yen, respectively.

３．Forecast of consolidated financial results for fiscal year ending March 31, 2019 (April 1, 2018 to March 31, 2019)（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)

Full year
2,000,000
11.7
31,00018.2
26,0002.0
16,800(3.2)
413.43* 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, 2018

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

Millions of yen
March 31, 2018

December 31, 2018

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

36,198400,317
25,416683
134,877
47,128(481)
644,140

39,036
396,046
29,649469
145,170
139,326(479)
749,22132,402
32,06664,4693,426

33,43634,557
67,994
4,830

109,781
39,429(902)
148,308
216,204
860,344

95,46535,654(1,123)
129,996
202,821952,042

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
OthersTotal current liabilities

266,595
116,245
10,00010,121
5,050
2,474
391
40,851
451,730

256,071
166,793
10,00010,121
1,977
1,479
390
87,385534,219

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

40,055
147,601
4,943
12,312204,913656,643

50,045
151,469
4,787
10,785217,087
751,306

45,651
131,045(3,726)
172,969

45,651
136,833(3,736)
178,748

14,342
(169)
2,963
3,110
(5,388)14,85815,872
203,700
860,344

8,178
843
2,963
202
(4,874)
7,312
14,674
200,735
952,042

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, 2018

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

Millions of yen
3rd Quarter ended
December 31, 2017

3rd Quarter ended
December 31, 2018

1,306,566
1,253,847
52,7191,558,271
1,499,359
58,911

33,92018,79937,577
21,334

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

3,172
1,317
―
871
5,360

2,454
1,158
―
537
759
4,909
18,130

3,566
604
2,380
405
991
7,948
18,746

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
Guarantee commission
OthersTotal other expenses
Ordinary income
Extraordinary income
Gain on sale of property and equipment
Reversal of allowance for business loss of affiliates
Total extraordinary income
Extraordinary loss;
Loss on sale of property and equipment
Loss on natural disaster
Loss on devaluation of investments securities
Loss on devaluation of investments in capital
Total extraordinary loss
Income before income taxes and minority interest

―
512
512

412
―
412

―
―
―
198
198
18,443

191
43
1,846
―
2,081
17,078

Income taxes
Net income

6,637
11,806

6,004
11,073

Net income attributable to
Net income attributable to owners of the Company
Net income(loss) attributable to non-controlling interests

12,248(442)

11,331(258)

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

4,648
(654)
15
558
(320)
4,245
16,051(6,173)
1,012
(206)
541
(4,529)(9,354)
1,718

Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income(loss) attributable to non-controlling interests

16,515(463)

3,779(2,060)－３－

HANWA Co., Ltd.

Financial Results for the Third Quarter ended December 31, 2018

《Segment information》
Segment information by business category for the 3rd Quarter ended December 31, 2017 and 2018, is as follows:(Amounts less than one million yen are rounded down)

Millions of yen

3rd Quarter ended December 31, 2017
Reportable segment
Steel

Metals& alloys

Non-ferrous

Customers
Inter-segment

663,740
8,383

145,839
3,246

Total

672,123
15,356

Foods

Petroleum &chemicals

70,626973

79,198255

168,405
4,811

149,086

71,59979,454

173,217

2,016

922

1,288

1,495

metalsOverseas
sales
subsidiaries

Consolidated

Other

Total

122,778 1,250,588
39,992
57,662

55,9781,265

1,306,566
58,928― 1,306,566(58,928)―

162,770 1,308,250

57,244

1,365,494(58,928) 1,306,566

502

22,195

Subtotal

Adjustment

Net sales

Segment income(loss)

613

21,693(4,065)

18,130Millions of yen

3rd Quarter ended December 31, 2018
Reportable segment
Steel

Metals& alloys

Non-ferrous

758,019

212,937

73,495

metalsFoods

Petroleum &chemicals

79,333

182,274

Overseas
sales
subsidiaries

Subtotal

Other

Total

58,7801,558,271

Adjustment

Consolidated

Net sales
Customers
Inter-segment

8,101

6,488

951

978

8,731

Total
Segment income(loss)

766,121
11,938219,425
4,409

74,447
1,174

80,311
1,509

191,005
1,629

193,430 1,499,491
72,9582,095

75,053

241,137 1,572,449
906
21,56847,70760,875502

1,633,325
22,071― 1,558,271(75,053)

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. Segment income for the 3rd Quarter ended December 31, 2017 are reflected important revisions resulted from the finalization of the provisional
accounting treatment.

－４－―(75,053) 1,558,271(3,324)
18,746

February 13, 2019

Highlights of Consolidated Financial Results for the 3rd Quarter of FY2018(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 3rd Quarter of FY2018(Unit: billion yen, rounded down to 0.1 billions of yen)・ As for the 3rd Quarter result for this fiscal year, net sales have increased by 20% in the same period of the previous year, hence reached to 1,558.2 billion
yen, due to better markets of steel products and metal resources than the same period of previous year's level, as well as sales expansion of ferro-alloy andincrease in net sales in overseas subsidiaries. Net profit was 11.3 billion yen, decreased by 8%, due to increase in interest expenses, foreign exchange loss
as opposed to the gain in the same period of the previous year, and loss on devaluation of investments securities as extraordinary loss.
・ We paid 75 yen as the interim dividend and plan to pay additional 75 yen as the year-end dividend.
* Numbers for the 3rd Quarter of FY2017 are reflected important revisions resulted from the finalization of the provisional accounting treatment.

Operating Results
Net sales
Gross profit

1Q-3Q
of FY2018

1Q-3Q
of FY2017

1,558.2

1,306.5

Year-on-year
Change251.7

Main Factors

rate

19% (Net sales)
Net sales have increased by 19% from the same period of theprevious year. This was due to market of steel products being
higher than the same period of previous year's level, increase insales amounts of stainless steel and ferro-alloy and increase insales in overseas subsidiaries.

58.9

52.7

6.1

12%

SG&A expenses

37.5

33.9

3.6

11%

Operating income

21.3

18.7

2.5

14% (SG&A expenses)

Non-operating income

5.3

4.2

1.1

26%

Non-operating expenses

7.9

4.9

3.0

62%

Ordinary income

18.7

18.1

0.6

3%

Mar. 2018

952.0

860.3

91.6

11%

749.2
202.8

644.1
216.2

105.0
(13.3)

16%-6%

Total liabilities

751.3

656.6

94.6

14%

(Interest-bearing debt)

Net DER

389.8
350.8
189%

325.5
289.3
154%

64.3
61.5
35pt

20%
21%
―

Total net assets

200.7

203.7

(2.9)

-2%

178.7
7.3
14.6
4,578.76
186.0
19.5%

172.9
14.8
15.8
4,621.96
187.8
21.8%

5.7
(7.5)
(1.1)
(43.20)(1.7)-2.3pt

3%
-51%
-8%
-1%
-1%
―

Total assets(Current assets)(Fixed assets)(Net interest-bearing debt)(Equity capital)(Valuation & translation
adjustments)

SG & A expenses have increased 3.6 billion yen from the same
period of the previous year. This was mainly due to increase in
number of consolidated subsidiaries.
Our personnel expenses have increased 2.4 billion yen, including
0.6 billion yen from newly consolidated subsidiaries.

Comparison with Mar. 2018

Dec. 2018

Financial Position(Minority interests)
BPS (yen)
Shareholders' equity
Shareholders' equity ratio

ChangeMain Factors

rate(Total Assets)

Total assets increased by 11% from the end of the previous year, due
to increase in inventories and advance payment.
inventories: 145.1 billion yen (+8% from the end of the previous
year)
advance payment: 95.1 billion yen (+399% from the end of theprevious year)(Liabilities)
Total liabilities increased by 14% from the end of the previous year,
due to increase in short term loans and deposit received. As interestbearing debt increased by 20%, net debt-equity ratio was turned into
189%.

(Net assets)
Total net assets decreased 2.9 billion yen from the end of theprevious year, due to the carryover of retained earnings,
appropriation of surplus for interim dividend and decrease in net
unrealized holding gains on securities.
Meanwhile shareholders' equity ratio was 19.5%, which is 2.3
percentage points lower than the end of the previous year.

(Non-operating income/expenses)

Extraordinary gain

0.4

0.5

(0.0)

-19%

Extraordinary loss

2.0

0.1

1.8

947%

17.0

18.4

(1.3)

-7%

Income before income
taxes and others

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

EPS (yen)Comprehensive
incomeSegment
Information

6.0

6.6

(0.6)

-10%

11.0

11.8

(0.7)

-6%

11.3
(0.2)
278.8612.2(0.4)
301.40(0.9)
0.1(22.54)

-8%
-42%
-7%

1.7

16.0

(14.3)-89%

Net sales
1Q-3Q
of FY2018

1Q-3Q
of FY2017

Steel

766.1

672.1

Metals & alloys

219.4

Non-ferrous metals

74.4

Foods
Petroleum & chemicals

Overseas sales
subsidiaries
Total for reportablesegments
Other

80.3

Non-operating income has increased 1.1 billion yen and Nonoperating expenses increased 3.0 billion yen. The breakdown of
the main causes is as follows.
interest income: increase of 1.8 billion yen
interest expenses: increase of 1.1 billion yen
foreign exchange gain/loss:
gain of 0.3 billion yen (last year)
loss of 2.3 billion yen (this year)
・Loss on devaluation of investments securities 1.8 billion yen ：mainly due to decline in listed stocks
・Gain on sale of building 0.4 billion yen and loss on sale of property
0.1 billion yen ：due to sale of company dormitory
・Loss on natural disaster 0.04 billion yen

1,514.0

1,172.6

1,000

Net sales

600

2,000.0

Operating income

400

995.1

200

788.2

715.6

836.9

FY2015FY2016FY2017

7

6.9

5

6.1

6.1

1,004.9

507.4
8.1

7.4

7.3

9

553.3

428.6

408.3

954.1

798.4

497.4

484.5

469.5

1,306.5

1,098.8

723.5

500

3rd quarter
1,791.1

1,558.2

1,511.8

1,500

2nd half【Quarterly Operating Results】

5.2
3

0

0

FY20181
2017/1Q

2Q

3Q

4Q

2018/1Q

2Q

3Q

Segment income
1Q-3Q
of FY2017

14%

11.9

15.3

-22%

149.0

47%

4.4

2.0

119%

71.5

4%

1.1

0.9

27%

rate

1%

1.5

1.2

rate

17%

191.0

173.2

10%

1.6

1.4

9%

241.1

162.7

48%

0.9

0.6

48%

1,572.4

1,308.2

20%

21.5

21.6

-1%

60.8

57.2

6%

0.5

0.5

0%

Total

1,633.3

1,365.4

20%

22.0

22.1

-1%

Adjustment(75.0)(58.9)

－

(3.3)

(4.0)

－

Consolidated

1,558.2

1,306.5

19%

18.7

18.1

3%

Topics

1st half

2,000(Extraordinary gain/loss)

1Q-3Q
of FY2018

79.4【Changes in Net Sales】

Main Factors(Steel business)
While strong steel demands increased net sales, segment income
decreased due to the pace of the market rise being slowed down andtaking time to shift cost price onto selling price.
(Metals & alloys business)
Net sales and segment income increased due to rising price level ofnickel and silicon and sales expansion of stainless steel and ferro-alloy.
(Non-ferrous metals business)
While international commodity markets have remained on a level withthe same period of the previous year, due to increase in copper andaluminum sales volume, net sales and segment income increased.
(Foods business)
Rising price of salmon and crab and strong sales of chicken increased
net sales and segment income.
(Petroleum & chemicals business)
Due to high market of petroleum products, net sales and segment
income increased.
(Overseas sales subsidiaries)
Revenue increased due to rising price and sales expansion of bunker
fuel and metal scrap in Singapore, and increase in net sales of steel
products in Indonesia. Improvement of the profitability in US steelbusiness contributed to segment income as well.

・ May. Acquired additional stocks of and made our subsidiary the steel processing center in Malaysia, Tatt Giap Steel Centre Sdn. Bhd.
・ Jul. Succeeded business of insulation thermal and billing from Bridgestone Diversified Products Japan Co.,Ltd.

【Changes in Net Income】
1st half

30

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

Interest-bearing debt

400

25.4

Net DER

3.0

389.8
325.5

300

20

17.3

16.3
19.4
8.1

10

16.8

11.7
10.1
9.7

6.0

6.2

FY2015FY2016

8.8

11.3

200

10.2

100

8.5

6.5

FY2017FY2018

0

2.0

259.6

237.5

1.9

1.4

1.4

1.5

FY2015FY2016FY20171.00Forecast(Annual)

FY2018FY2017change0.0

Cash Dividends

FY2018/3Q

FY2017FY2018FY2018(estimated)

2,000.0

1,791.1

12%

Interim (yen)

50.00

75.00

―

Operating income

31.0

26.2

18%

Year-end (yen)

75.00

―

75.00

Ordinary income

26.0

25.5

2%

Annual (yen)125.00―150.00Net income attributableto owners of parent

16.8

17.3

-3%

Dividend payout ratio

29%

―

36%

Net sales