Financial Results for the Second Quarter ended September 30, 2023
(Japan GAAP)
November 8, 2023
Company name:

HANWA Co., Ltd.

Listed stock exchange: Tokyo

Stock exchange code:

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

Representative:
Yoichi Nakagawa President
Enquiries:
Hisashi Honda
Director, Executive Officer
Scheduled date of issue of audited financial statements: November 8, 2023
Scheduled date of payout of dividend: November 30, 2023

Phone +81-3-3544-2000(Amounts less than one million yen are rounded down)

１．Consolidated financial results for the Second Quarter ended September 30, 2023 (April 1, 2023 to September 30, 2023)(1) Consolidated operating results（Percentage indicate a change from the previous year）

Net sales
For the 2nd Quarter
ended September 30, 2023
ended September 30, 2022

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

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

1,201,276(10.3)
26,339(36.3)
27,444(48.2)
19,076(48.7)
1,338,965
36.6
41,37436.0
52,95873.0
37,18977.1
Note: Comprehensive income
For the Fiscal Year ended September 30, 2023
29,989 million yen(47.6) %For the Fiscal Year ended September 30, 2022
57,236 million yen
109.9 %Net income
per share

For the 2nd Quarter
ended September 30, 2023
ended September 30, 2022

Net income
per share(diluted)

(yen)

(yen)

469.32915.15－－(2) Consolidated financial position
Total assets(Millions of yen)
As of September 30, 2023
As of March 31, 2023

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)

1,183,200
1,157,747
As of September 30, 2023
As of March 31, 2023

Net assets
per share(％)

336,014308,807
330,751 million yen
303,127 million yen

28.0
26.2

(yen)

8,132.89
7,459.39

２．Cash dividends
Cash dividends per share
1st Quarter 2nd Quarter 3rd Quarter
Year ended March 31, 2023
Year ended March 31, 2024
Year ending March 31, 2024
（estimated）

Year-end

Annual

(yen)

(yen)

(yen)

(yen)

(yen)

－
－

50.00
85.00

－

80.00

130.00－85.00

170.00３．Forecast of consolidated financial results for fiscal year ending March 31, 2024 (April 1, 2023 to March 31, 2024)（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 parent(Millions of yen) (％)

Net income
per share(yen)

Annual
2,700,000
1.2
60,000(6.4)
50,000(22.2)
36,000(30.1)
885.89* 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 Second Quarter ended September 30, 2023

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

Millions of yen
March 31, 2023

September 30, 2023

Assets;Current assets;
Cash and deposits
Trade notes, accounts receivable and contract assets
Electronically recorded monetary claims
Inventories
OthersAllowance for doubtful receivables
Total current assets

84,187448,980
55,570253,964
87,333(1,295)
928,741

77,490453,051
103,557
254,054
53,930(1,678)940,405

36,78650,33087,117
10,80738,03952,86090,90010,423

99,60834,088(2,613)131,082
229,006
1,157,747

104,240
39,961(2,731)
141,470
242,794
1,183,200

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

278,823
36,701
83,12730,00010,00014,822
4,355
56
101,103558,990

308,536
39,90891,94040,000
－
7,708
3,624
124
50,049541,892

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

30,000224,843
4,285
30,820289,949
848,940

50,000213,054
4,323
37,915305,293
847,185

45,651
26
228,920(3,730)270,866

45,651
1,301
245,067(3,661)
288,357

23,972
673
1,975
8,360
(2,720)32,2605,680
308,807
1,157,747

26,662
2,337
1,975
13,942(2,523)42,393
5,263
336,0141,183,200

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
Capital surplus
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
Non-controlling interests
Total net assets
Total liabilities and net assets－2－

HANWA Co.,Ltd.
Financial Results for the Second Quarter ended September 30, 2023

《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
Foreign exchange gain
OthersTotal other income
Other expenses;
Interest expenses
Foreign exchange loss
OthersTotal other expenses
Ordinary income

2nd Quarter ended
September 30, 2022

2nd Quarter ended
September 30, 2023

1,338,965
1,267,834
71,131

1,201,276
1,140,980
60,29529,756
41,37433,95526,339

1,875
6,421
7,141
1,763
1,076
18,278

2,734
1,759
2,080
－
903
7,477

4,503
－
2,190
6,693
52,958

4,408
100
1,864
6,373
27,444Extraordinary income;Gain on sale of investment securities
Arbitration related income
Total extraordinary income
Extraordinary loss;
Loss on devaluation of investment securities
Value added taxes for prior periods
Total extraordinary loss
Income before income taxes and non-controlling interests

541
259
800

－
－
－

251
57
309
53,450623－
623
26,821

Income taxes
Net income

14,09639,353

7,147
19,67337,1892,164

19,076
596

3,692
2,019
10,103
326

2,606
1,663
4,941
218

1,741

885

17,882
57,236

10,31629,98954,513
2,723

29,209779

Net income attributable to
Owners of the parent
Non-controlling interests
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 associates 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 Second Quarter ended September 30, 2023

《Consolidated Statements of Cash Flows》(Amounts less than one million yen are rounded down)

Millions of yen
2nd Quarter ended
September 30, 2022

2nd Quarter ended
September 30, 2023

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 sale of investment securities
Loss on devaluation of investment securities
Arbitration related income
Value added taxes for prior periods(Increase)decrease in trade receivables and contract assets(Increase)decrease in inventories(Increase)decrease in accounts receivable-other(Increase)decrease in advance payment
Increase(decrease) in trade notes and accounts payable
Increase(decrease) in accounts payable-other
Increase(decrease) in deposits received
Increase(decrease) in retirement benefits
Other, net
Sub totalInterest and dividends received
Interest paid
Income taxes (paid) refund
Arbitration related income
Net cash provided by (used in) operating activities

53,450
3,333
152
(451)
(8,297)
4,503(7,141)
(541)
251
(259)
57
91,559(23,201)
127,589
8,669(135,602)
9,369(24,963)476
23,947
122,903
7,956(4,438)(16,566)259
110,114

26,821
4,546
37
293(4,494)
4,408(2,080)－623－－(45,274)
6,886
21,817
7,431
26,996(32,709)(12,811)334(2,550)276
3,616(3,851)(15,163)－(15,122)

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

(16)
369
(5,573)425(3,961)
1,164
(258)
(301)
51
(508)
(8,609)(3)
3(6,938)
259
(428)
2,009
(959)
(101)
5,382
(1,180)(1,957)(130,745)
30,0005,050(14,245)－(10,000)(2,031)(136)(5,603)
10,0005,000(5,276)
19,909(10,000)(3,245)
(93)

－

(46)

(485)
(122,593)(411)
10,231(6,647)(27,736)
165,083
464
137,811(135)(6,983)84,121
286
77,423

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
Payment for cash dividends
Cash dividends paid to non-controlling interests 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
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
Increase in cash and cash equivalents from newly consolidated subsidiaries
Cash and cash equivalents at end of period－4－

HANWA Co.,Ltd.
Financial Results for the Second Quarter ended September 30, 2023

《Segment information》
Segment information by business category for the 2nd Quarter ended September 30, 2022 and 2023, is as follows:(Amounts less than one million yen are rounded down)

2nd Quarter ended September 30, 2022

Millions of yen

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

Primary
Metal
Metal Recycling

595,927 122,476
14,8852,740
610,813 125,216
17,968 12,576

76,366
1,482
77,848
5,421

Foods

Energy& Living
Materials

61,005 173,989
473
7,641
61,478 181,631
(225)
6,663

Overseas
sales
subsidiaries

Subtotal

231,613 1,261,379
23,38450,607
254,998 1,311,986
5,431
47,835

Other

Total

77,586 1,338,965
2,375
52,982
79,961 1,391,948
2,282
50,117

2nd Quarter ended September 30, 2023

Adjustment－ 1,338,965(52,982)－(52,982) 1,338,965
2,840
52,958Millions of yen

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

Consolidated

Primary
Metal
Metal Recycling

614,596 107,790
13,975
2,974
628,571 110,764
13,354
7,070

56,854
1,331
58,185824

Foods

Energy& Living
Materials

61,045 146,962
290
3,350
61,336 150,313
(122)
1,458

Overseas
sales
subsidiaries

Subtotal

156,491 1,143,740
13,82235,745
170,314 1,179,486
4,485
27,070

Other

Total

57,536 1,201,276
4,168
39,91461,704 1,241,190
1,863
28,934

Adjustment

Consolidated－ 1,201,276(39,914)－(39,914) 1,201,276(1,489)27,444

Notes:
1. “Other” comprises businesses that are not included in reportable segments, such as lumber section and machinery section.
2. Adjustments for segment income or loss 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 or loss on the consolidated statements of income and comprehensive income.

－5－November 8, 2023

Highlights of Consolidated Financial Results for the 2nd Quarter of FY2023(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 2nd Quarter of FY2023(Unit： billion yen, rounded down to 0.1 billions yen)・ During the 2nd quarter of fiscal year, net sales decreased by 10% YoY, to 1,201.2 billion yen, because prices of the products represented by steel, non-ferrous metal and crude oil were at lower
levels on a year-on-year comparison and demand for steel and scrap decreased. Operating income decreased by 36% YoY, to 26.3 billion yen, due to income decreases in all the businesssegments except the Food business, and ordinary income decreased by 48% YoY, to 27.4 billion yen, mainly because foreign exchange loss was reported after reported gain in the previous
term, and equity in earnings of affiliates shrunk mainly in the Primary metals business, dividend income from strategic investments decreased. Net income attributable to owners of the parent
decreased by 49% to 19.0 billion yen.
・ We plan to pay 170 yen as the annual (85 yen as the interim and 85 yen as the year-end) dividend.

YoY

1Q-2Q
of FY2022

1Q-2Q
of FY2023

1,338.9

1,201.2(137.6)(10%) (Net sales)

71.1

60.2

(10.8)(15%)

SG&A expenses

29.7

33.9

4.1

14%

Operating income

41.3

26.3

(15.0)(36%) (SG&A expenses)

Non-operating income

18.2

7.4

(10.8)(59%)

Non-operating expenses

6.6

6.3

(0.3)

(5%)

Ordinary income

52.9

27.4

(25.5)

Extraordinary gain

0.8

―

(0.8)

Operating Results
Net sales
Gross profit

ChangeMain Factors

rate

Net sales decreased by 10% YoY, to 1,201.2 billion yen, because prices of the
products represented by steel, non-ferrous metal and crude oil were at lower levels
on a year-on-year comparison and demand for steel and scrap decreased.

Sep. 2023

1,157.7

1,183.2

25.4

2%

928.7
229.0

940.4
242.7

11.6
13.7

1%
6%

Total liabilities

848.9

847.1

(1.7)

(0%)

(Interest-bearing debt)

380.9
296.7

398.3
320.8

98%/83*%

97%/83*%

17.3
24.0
(1pt)

5%
8%
(1%)

Liabilities decreased by 0.2% from the end of the previous fiscal year, mainly
because of redemption of current portion of bonds payable, as well as adecrease in accrued income taxes after payment of taxes including corporate
tax in which the business results of the previous fiscal year were reflected.Asinterest-bearing debt increased by 5%, net debt-equity ratio was turned into
97%（*83%).

308.8

336.0

27.2

9%

(Net assets)

270.8
288.3
32.2
42.3
5.6
5.2
7,459.39
8,132.89
303.1
330.7
26.2/28.3*% 28.0/30.1*%

17.4
10.1
(0.4)
673.50
27.6
1.8pt

6%
31%
(7%)
9%
9%
7%

Total net assets increased 9% from the end of the previous fiscal year becauseof accumulation of retained earnings from net income attributable to ownersof parent as well as a fluctuation in foreign currency translation adjustments.
Shareholders' equity ratio was 28.0% (*30.1%), which is 1.8 percentage points
higher than at the end of the previous fiscal year.

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

Net DER
Total net assets(Equity capital)(Valuation & translation
adjustments)

SG & A expenses increased by 4.1 billion yen YoY, with 0.1 billion yen of thisfigure deriving from newly consolidated subsidiaries.

(Non-operating income/expenses)
Non-operating income decreased by 10.8 billion yen and non-operating expenses
decreased by 0.3 billion yen.
(100%)The main impacts on ordinary income were as follows.
Interest income：increase of 0.8 billion yen(YoY)
101%

(48%)

Extraordinary loss

0.3

0.6

0.3

Income before income taxes
and others

53.4

26.8

(26.6)(50%)

Equity in earnings of affiliates：decrease of 5.0 billion yen(YoY)

Income taxes

14.0

7.1

(6.9)

(49%)

Foreign exchange gain：decrease of 1.8 billion yen(YoY)

Net income

39.3

19.6

(19.6)(50%)

Owners of the parent(loss)
Non-controlling interests(loss)

37.1
2.1

19.0
0.5

(18.1)(1.5)

EPS (yen)915.15469.32(445.83)(49%)(Extraordinary gain/loss)(72%)
Gain on sale of investment securities：decrease of 0.5 billion yen(YoY)(49%)

Comprehensive
income57.2

29.9(27.2)

Segment
Information
Steel

Dividend income：decrease of 4.6 billion yen(YoY)

Net sales
1Q-2Q
of FY2022

610.8

1Q-2Q
of FY2023

628.5Interest expenses：decrease of 95 million yen(YoY)

(48%)

rate

3%

17.9

1Q-2Q
of FY2023

13.3

rate

(26%)

(12%)

12.5

7.0

(44%)

Metal Recycling

77.8

58.1

(25%)

5.4

0.8

(85%)

Energy&Living Materials
Overseas sales
subsidiaries

181.6
254.9

150.3
170.3

(0%)
(17%)
(33%)

(0.2)
6.6
5.4

(0.1) (45%)
1.4
4.4

(78%)
(17%)

Total for reportablesegments

1,311.9

Other

79.9

61.7

(23%)

2.2

1.8

(18%)

Total

1,391.9

1,241.1

(11%)

50.1

28.9

(42%)

Adjustment(52.9)(39.9) (25%)

2.8

(1.4)

―

Consolidated

Topics1,338.9

1,179.4

1,201.2

(10%)

(10%)

47.8

52.9

27.0

27.4

Cash Flow

(43%)

(48%)

Main Factors(Steel business)
Net sales increased. The number of the projects handled increased thanks to enhanced ability toprovide solutions mainly in the domestic construction industry, and good business performance of
Tanaka Steel Trading Co., Ltd. that became a consolidated subsidiary in the third quarter inprevious financial year contributed to the overall business performance of the Company. On theother hand, segment income decreased, because profit margin shrunk at some overseas sales
subsidiaries due to price declines of steel products.
(Primary metals business)
Net sales decreased, because the transaction volume of stainless steel products decreased due to
weak demand, as well as current adjustment phase of various merchandises. On the other hand,segment income decreased due to falls in dividend income from strategic investments and equity inearnings of affiliates from SAMANCOR CHROME HOLDINGS PROPRIETARY LTD.
(Metal recycling business)
Net sales decreased, because prices of base metal were at a lower level on a global basis on a yearon-year comparison as the result of the concerns about economic slowdown in each country, andtransaction volume decreased due to weak demand for mainly stainless scrap. In addition, segment
income decreased due to appraisal gain from commodity forwards contracts in hedge transactions
shrunk.
(Foods business)
Although the crab market prices had continued to decrease from the previous fiscal year, thepurchase cost risings of salmon, prawns and chickens started to be sufficiently reflected in the
selling prices.
(Energy & Living Materials business)
Net sales and segment income decreased. Although transaction volume of the products such as palm
kernel shells (PKS) and wood pellet increased, sharp decrease in petroleum products had affected
greatly on the business performance.
(Overseas sales subsidiaries)
Net sales and segment income decreased. Transaction volume at sales subsidiaries mainly inIndonesia and U.S. decreased due to sluggish demand for steel in overseas markets. In addition,
decreases in market prices of steel products and non-ferrous metal products put downward pressure
on profit margins of overseas sales subsidiaries as a whole.

・Apr Established HANWA AUSTRALIA PTY LTD. as a subsidiary of the Company.
Established HANWA PHILIPPINES CORPORATION as a subsidiary of the Company.
Acquired 80% of the shares of TOHO METAL Co., Ltd. and made it a subsidiary of the Company.

ChangeMain Factors

rate(Total Assets)

Total assets increased by 2% from the end of the previous fiscal year, mainly
because of increases in trade receivables and investment securities.

(Liabilities)*Reflecting equity credit attributes of the subordinated loan

YoY

1Q-2Q
of FY2022

1Q-2Q
of FY2023

110.1(15.1)(125.2)

―

(8.6)

(1.9)

6.6

(77%)

(122.5)

10.2

132.8

―

137.8

77.4

(60.3)(44%)

Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalents
at end of period

ChangeMain Factors

rate(Operating cash flows)Due mainly to increase in trade receivables and contract assets, decrease in accounts
payable-other.

(Investment cash flows)Due mainly to purchase of tangible fixed assets.
(Financial cash flows)Due mainly to issuance of bonds and commercial paper.

【Changes in Net Sales】
3,000.0

110.7

61.3

Shareholders' equity ratio

3,500.0

125.2

61.4

BPS (yen)
Shareholders' equity

Loss on devaluation of investment securities：increase of 0.3 billion yen(YoY)

Primary Metal

Foods(Non-controlling interests)

Arbitration related income：decrease of 0.2 billion yen(YoY)

Segment income
1Q-2Q
of FY2022

Comparison with Mar. 2023

Mar. 2023

Financial Position

1st half

2,500.0
2,000.0

2nd half
2,164.0

1,745.5

1,500.0
1,000.0

1,183.7
Applying the
AccountingStandard for
Revenue
Recognition

944.4

500.0
0.0

【Quarterly Operating Results】

801.0

980.3

FY20201,000.0

2,668.2

2,700.0

1,329.3

1,498.8

Applying the
AccountingStandard for
Revenue
Recognition

Applying the
AccountingStandard for
Revenue
Recognition

1,338.9

1,201.2

800.0
600.0

Net sales

665.5

1st half

FY2021

FY2022

FY2023

592.5

40.0
30.0

14.7

20.0

10.1

8.1

10.0
0.0
FY2022/1Q

2Q

3Q

4Q

2Q

Interest-bearing debt
Net DER
722.9
Net DER
Reflecting subordinated loan

5.0

Reflecting subordinated loan

14.4

600.0

36.0

300.0

37.1
20.9

19.0

380.9

398.3

1 .0

1.0

0 .8

0 .8

FY2022

FY2023/2Q

1 .3
2 .0

1.0

0.0

FY2022

2.0

1 .1

6.8

FY2020

FY2023

4.0
3.0

2 .4

301.6

17.0

19.6

FY2021

FY2023/1Q【Changes in Interest-bearing Debt】

22.7

FY2020

50.0

608.7
16.2

200.0

51.5
43.6

0.0

644.8

17.2

400.0

900.0

2nd half

12.8

684.5

0.0

40.0

20.0

673.4

24.1

【Changes in Net Income】
60.0

60.0

Operating income

Applyng the Accounting Standard for Revenue Recognition

FY2021

0.0

FY2023(estimated)change2,668.2

2,700.0

1%Interim (yen)

50.00

50.00

85.00

Operating income

64.1

60.0

(6%)

Year-end (yen)

50.00

80.00

85.00

Ordinary income

64.2

50.0

(22%)

Annual (yen)100.00130.00170.00Net income attributable toowners of parent

51.5

36.0

(30%)

Dividend payout ratio

―

―

2.5%

Forecast(Annual)

Net sales

FY2022

Cash Dividends

FY2021

FY2022

FY2023(estimated)