Financial Results for the Second Quarter ended September 30, 2019
(Japanese GAAP)
November 11, 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: November 11, 2019
Scheduled date of payout of dividend: December 2, 2019

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, 2019 (April 1, 2019 to September 30, 2019)(1) Consolidated operating results（Percentage indicate a change from the previous year）
Net sales
For the 2nd Quarter
ended September 30, 2019
ended September 30, 2018

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

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

946,024(5.9)
13,618
3.6
10,814(0.2)
1,004,927
20.1
13,147
14.7
10,839(17.3)
Note: Comprehensive income
For the Fiscal Year ended September 30, 2019
2,692 million yen
For the Fiscal Year ended September 30, 2018
5,100 million yen
Net income
per share

For the 2nd Quarter
ended September 30, 2019
ended September 30, 2018

(％)

5,157
(21.4)
6,564(23.2)(48.5) %(53.5) %Net income
per share(diluted)

(yen)

(yen)

126.91161.53－－(2) Consolidated financial position
Total assets(Millions of yen)
As of September 30, 2019
As of March 31, 2019

Note: Shareholders' equity

Shareholders'equity ratio

Net assets(Millions of yen)892,732
933,307
As of September 30, 2019
As of March 31, 2019

Net assets
per share(％)

201,800
202,459
187,677 million yen
188,245 million yen

21.0
20.2

(yen)

4,618.28
4,632.55

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

Year-end

Annual

(yen)

(yen)

(yen)

(yen)

(yen)

－
－

75.00
75.00

－

75.00

150.00－－－* For more information, please refer to "Notice Concerning Amendments to Forecasts of consolidated financial resultsand Dividend for FY2019" announced on November 11, 2019.

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)
263.32* For more information, please refer to "Notice Concerning Amendments to Forecasts of consolidated financial resultsand Dividend for FY2019" announced on November 11, 2019.
* 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 Second Quarter ended September 30, 2019

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

Millions of yen
March 31, 2019

September 30, 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

59,148368,742
40,875
1,157
143,219
78,723(475)
691,390

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

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

92,64730,561(1,414)
121,794

Property and equipment;
Land
Other
Total property and equipment

33,86434,997
68,862

34,12839,73673,865

Other assets
Intangible assets
Total other assets
Total

5,031
5,031
933,307

5,682
5,682
892,732

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

103,898
10,021
219,641
17,862
2,699
150
3,085
73,503
430,862

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

208,936
50,034
5,950
11,010275,931203,367
40,024
5,951
10,726
260,069

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

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

45,651
141,277(3,727)183,200

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
14,214202,459
933,307

10,282(548)
3,277(3,407)(5,127)
4,476
14,123201,800
892,732

Liabilities and Net Assets

Net assets－２－

HANWA Co., Ltd.

Financial Results for the Second Quarter ended September 30, 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
Other
Total 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

2nd Quarter ended
September 30, 2018

2nd Quarter ended
September 30, 2019

1,004,927
966,984
37,942

946,024
906,316
39,707

24,795
13,14726,08913,618

1,635
863
694
3,193

1,051
1,181
710
2,944

2,067
172
2,418
842
5,501
10,839

2,880
551
1,619
697
5,748
10,814Extraordinary 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

410
―
410

201
780
981

182
―
166
1,011
―
1,360
9,890

―
163
―
3,718
101
3,983
7,812

Income taxes
Net income

3,553
6,336

2,971
4,840

6,564
(227)

5,157
(317)

2,855
887
―
(671)
360

(515)
(609)
(66)
(803)
357

(4,668)(577)(1,236)
5,100(2,214)
2,625

7,127
(2,027)

3,017
(391)

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 Second Quarter ended September 30, 2019

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

Millions of yen
2nd Quarter ended
2nd Quarter ended
September 30, 2018 September 30, 2019
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
Share of loss(profit) of entities accounted for using equity method
Gain on sale of property and equipment
Gain on sales of investment securities
Loss on sale of property and equipment
Loss on impairment of property and equipment
Loss on natural disaster
Loss on valuation of investments securities
Provision of allowance for doubtful accounts of affiliates(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 advance received(Increase)decrease in advance payments
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

9,890
2,324
425
186
(2,498)
2,067
172
(410)
―
182
―
166
1,011
―
1,872
(14,375)
1,341
2,093
23,479(71,133)
494
8,584(34,123)
1,713(2,030)(4,854)(39,293)

7,812
2,500
265
31
(2,233)
2,880
551
(201)
(780)
―
163
―
3,718
101
47,1795,420(53,402)
9,284
6,592
(8,219)496(3,885)
18,2752,447(2,986)(3,387)
14,349Cash 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(1,114)
1,260(3,418)1,018(2,263)255(2,585)
(363)
853
(984)
(7,342)

(675)
1,600
(3,760)477(2,924)
22
224
(861)
2,112
(1,312)(5,096)

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 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

32,153
10,000295(833)
19,892(10,010)(2,892)(48)―(98)
48,457

4,184
―
5,374
(6,745)―(10,010)(3,046)
(79)
(187)
(150)
(10,661)

418
2,239
34,855576
25
37,696(303)(1,711)
58,3842,460―
59,133

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
Increase in cash and cash equivalents resulting from mergers with unconsolidated subsidiaries

Cash and cash equivalents at end of period－４－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 2019

《Segment information》
Segment information by business category for the 2nd Quarter ended September 30, 2018 and 2019, is as follows:(Amounts less than one million yen are rounded down)

Millions of yen

2nd Quarter ended September 30, 2018
Reportable segment

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

Metal

Primary
Metal

Recycling

487,763 151,560
5,180
4,317
492,943 155,878
7,766
96

38,041
3,327
41,369
1,031

Steel

Foods

Petroleum Overseas
sales& chemicals subsidiaries

Subtotal

51,969 120,574 116,868 966,779
746
6,050 33,775 53,399
52,716 126,625 150,644 1,020,178
1,020
850
673 11,439

Other

Total

38,148 1,004,927
1,158 54,558
39,307 1,059,485
451 11,890

Adjustment― 1,004,927(54,558)―(54,558) 1,004,927(1,050) 10,839

Millions of yen

2nd Quarter ended September 30, 2019
Reportable segment

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

Metal

Primary
Metal

Recycling

489,225 120,846
5,502
2,207
494,727 123,054
7,838
1,343

39,973579
40,552848

SteelConsolidated

Foods
51,481821
52,302
510

Petroleum Overseas
sales& chemicals subsidiaries

Subtotal

94,036 107,533 903,097
2,841 24,131 36,082
96,877 131,665 939,179
1,703
33 12,278

Other

Total

42,927 946,024
1,487 37,570
44,415 983,595
978 13,256

Adjustment

Consolidated― 946,024(37,570)―(37,570) 946,024(2,442) 10,814

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 "Metal
Recycling".
Segment information for the 2nd Quarter of the previous fiscal year has been recomposed by the new classification method.

－５－

November 11, 2019

Highlights of Consolidated Financial Results for the 2nd Quarter of FY2019(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 2nd Quarter of FY2019
・As for the interim result for this fiscal year, net sales have decreased by 6% in the same period of the previous year, hence reached to 946.0
billion yen, due to weak global market of metals and petroleum, as well as decline of volumes and sales in reporting segments.
・Regarding profit, operating profits have increased thanks to profit contributions from Petroleum & chemicals business, and also from Other
business. However, ordinary income was 10.8 billion yen, decreased by 0.2%, mainly due to increase in interest payments and loss on
investment in affiliates.
・We plan to pay 75 yen as the interim dividend, but the year-end dividend will be disclosed as soon as such forecast becomes available.

Operating Results
Net sales
Gross profit
SG&A expenses
Operating income

1Q-2Q
of FY2019

1Q-2Q
of FY2018

946.0

1,004.9

Year-on-year
Change(58.9)

37.9

1.7

5%

26.0

24.7

1.2

5%

13.1

0.4

2.9

3.1

(0.2)

-8%

Non-operating expenses

5.7

5.5

0.2

4%

Ordinary income

10.8

10.8

(0.0)

-0%

Extraordinary gain

0.9

0.4

0.5

―

Extraordinary loss

3.9

1.3

2.6

―

Income before income
taxes and others

7.8

9.8

(2.0)

-21%

2.9

3.5

(0.5)

-16%

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

EPS (yen)

4.8

6.3

(1.4)

-24%

5.1
(0.3)
126.916.5(0.2)
161.53(1.4)(0.0)(34.62)

-21%
39%
-21%

2.6

5.1

(2.4)

-47%

Comprehensive
incomeSegment
Information
Steel

Net sales
1Q-2Q of
FY2019494.7

1Q-2Q of
FY2018492.9

Net sales have decreased by 6% from the same period of theprevious year. This was mainly due to weak global market ofmetals and petroleum, as well as decline of volumes and sales inreporting segments.

(Non-operating income/expenses)
Non-operating income have decreased 0.2 billion yen and nonoperating expenses have increased 0.2 billion yen. The
breakdown of the main causes is as follows.
Dividends: increase of 0.3 billion yen(YoY)
Interest income: decrease of 0.5 billion yen(YoY)
Interest expenses: increase of 0.8 billion yen(YoY)
Foreign exchange loss : decrease of 0.7 billion yen(YoY)(Extraordinary gain/loss)
Gain on sales of investment securities 0.7 billion yen : due to salesof securities
Loss on devaluation of investments securities 3.7billion yen :mainly due to decline in listed stocks

0%

1Q-2Q of
FY20197.8

1Q-2Q of
FY2018

7.7

rate

1%

123.0

155.8

-21%

1.3

0.0

―

Metal Recycling

40.5

41.3

-2%

0.8

1.0

-18%

Foods

52.3

52.7

-1%

0.5

1.0

-50%

Overseas sales
subsidiaries

96.8
131.6

126.6
150.6

-23%
-13%

1.7
0.0

0.8
0.6

―
-95%

Total for reportablesegments

939.1

1,020.1

-8%

12.2

11.4

7%

Other

44.4

39.3

13%

0.9

0.4

―

Total

983.5

1,059.4

-7%

13.2

11.8

11%

Adjustment(37.5)(54.5)

31%

(2.4)

(1.0)

―

Consolidated

946.0

1,004.9

-6%

10.8

10.8

-0%

Topics933.3(40.5)-4%(Total Assets)

691.3
201.3

724.9
208.3

(33.5)
(6.9)

-5%
-3%

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 368.7 billion yen (-11% fromthe end of the previous period)

690.9

730.8

(39.9)

-5%

358.6
299.5
*
160%/130%

363.2
303.9
*
161%/131%

(4.6)
(4.4)
-1pt

-1%
-1%
-1%

201.8

202.4

(0.6)

-0%

183.2
180.9
4.4
7.2
14.1
14.2
4,618.28
4,632.55
187.6
188.2
*
21.0/23.8 % 20.2/22.8*%

2.2
(2.8)
(0.0)
(14.27)
(0.5)
0.9pt

1%
-39%
-1%
-0%
-0%
―

1Q-2Q
of FY2019

1Q-2Q
of FY2018

Change14.3(39.2)

53.6

―

(5.0)

(7.3)

2.2

-31%

(10.6)

48.4(59.1)

―

59.1

37.6

21.4

57%

Total net assets(Valuation & translation
adjustments)(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(Steel business)
Despite decrease in the sales volume, segment income increased due torevenue from large-scale property construction projects as well as highlevel of market price of steel products.
(Primary metals business)
Despite the increase of loss on investment in affiliates especially in
SAMANCOR CHROME HOLDINGS PROPRIETARY LTD., segment
income increased by the turnaround from foreign exchange losses in thesame period of previous year to foreign exchange gains in this fiscal year.
(Metal recycling business)
Segment income decreased due to decline of base metal prices in the same
period of the previous year as well as decrease in the volume of bothstainless and copper scrap.
(Foods business)
Segment income decreased due to shrinking margins of consolidated
subsidiaries by stagnant market condition for shrimp and foreignexchange losses.
(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 downturn in metal and nonferrous
metal and volume decrease, mainly in the U.S.and ASEAN region.

・ May Decided to acquire 65% of the stocks of the SMC HA NOI ONE MEMBER CO., LTD. which is a steel service center in
Vietnam.(By August 21, transaction was completed and changed name to HANWA SMC STEEL SERVICE HA NOI CO., LTD..)・ Aug We have published our first integrated report to replace our Annual Report.

ChangeMain Factors

rate(Liabilities)
Total liabilities decreased by 5% from the end of the previous year,
due to the decrease in trade payables. As interest-bearing debt
decreased by 1%, net debt-equity ratio was turned into 160%（*130%).

(Net assets)
Total net assets decreased by 0.3% from the end of the previous year,
mainly due to decrease in accumulated other comprehensive income
including foreign currency translation adjustments.
Meanwhile shareholders' equity ratio was 21.0%(*23.8%), which is
0.9 percentage points higher than the end of the previous year.
*Reflecting equity credit attributes of the subordinated loan

Year-on-year

Main Factors

rate(Operating cash flows)
Due to increase in Deposits received and a smaller increase inworking capital.
(Investment cash flows)
Due to purchase of investment securities and tangible fixed assets.
(Financial cash flows)Due mainly to the redemption of bonds.

【Changes in Net Sales】
1st half

2nd half

2,000

Primary Metal

Petroleum & chemicals

Net DER

2,500

Segment income
rate

892.7

Total liabilities(Equity capital)

SG & A expenses have increased 1.2 billion yen from the same
period of previous year. 0.6 out of 1.2 billion yen was
accounted for newly consolidated subsidiaries.
Our personnel expenses have increased 0.7 billion yen,including 0.2 billion yen from newly consolidated subsidiaries.

Mar. 2019(Current assets)(Fixed assets)(Net interest-bearing debt)

Comparison with Mar. 2019

Sep. 2019

Total assets

4% (SG&A expenses)

Non-operating income

Income taxes

Financial Position(Interest-bearing debt)-6% (Net sales)

39.7

13.6

Main Factors

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

2,074.6

2,000.0

1,791.1

1,514.0

1,500【Quarterly Operating Results】

1,069.6

954.1

800

Net sales

600

6.9

1,054.0

6.1

8.1

Operating income
7.5
6.9

6.7

400

1,000

798.4

500

715.6

836.9

1,004.9

946.0

FY2016FY2017FY2018FY2019(E)

200

0

497.4

507.4

553.3

516.3

472.4

473.6

2018/1Q

2Q

3Q

4Q

2019/1Q

2Q

0【Changes in Net Income】
1st half

25.0
20.0

16.3

15.0

10.1

10.0
5.0

【Changes in Interest-bearing Debt】

2nd half

500
400
300
200
100
0

17.3
13.9

8.8

10.7

7.3

5.6

6.2

8.5

6.5

5.1

FY2016FY2017FY2018FY2019(E)Forecast(Annual)Previous

Revised

2,200.0

2,000.0

2,074.6-4%

Operating income

35.5

31.0

28.9

Ordinary income

28.0

18.5

Net income attributableto owners of parent

19.2

10.7

0.0

Net sales

FY2019

10
8
6
4
2
0

FY2018Interest-bearing debt

Net DER

Reflecting subordinated loan 363.2

1.6

2

1.3

1.3

1

FY2018FY2019/1H

325.5

259.6
1.4

1.5

FY2016FY20170

FY2018FY2019Interim (yen)

75.00

75.00

7%

Year-end (yen)

75.00

23.3

-21%

Annual (yen)150.0013.9-23%

Dividend payout ratiochange

3

358.6
1.6

Cash Dividends

44%

FY2019(estimated)

―
To be
―
determined
―
―
To be
―
determined