Consolidated Financial Results for the Nine Months Ended December 31, 2022 [JGAAP]
Company Name:

February 10, 2023
Stock Exchange Listing: Tokyo

Kanto Denka Kogyo Co., Ltd.

Code Number: 4047 https://www.kantodenka.co.jp/english/
Representative: Jun’ichi Hasegawa, President
Contact: Masanobu Shirokura, General Manager, Legal & General Affairs
Dept.
Scheduled date for submitting the Quarterly Securities Report:
February 10, 2023
Availability of supplementary briefing material on financial results: None
Financial results briefing session: None

Phone: +81-3-4236-8801
Scheduled date to commence dividend payments:—

1. Consolidated financial results for the third quarter of the fiscal year ending March 31, 2023 (April 1, 2022–December 31,2022)(Amounts are rounded down to the nearest million yen)

(1) Consolidated operating results(% figures are the rate of year-on-year increase or decrease)

Net sales

Operating profit

Millions of yen%

Millions of yen

27.8
Nine months ended December 31, 2022
57,207
19.6
Nine months ended December 31, 2021
44,764(Note) Comprehensive income:Nine months ended December 31, 2022: ¥9,198 million (59.9%)
Nine months ended December 31, 2021: ¥5,753 million (78.6%)%

Millions of yen

9,895 23.5
8,013 122.2

Basic earnings per share%

Millions of yen%

10,917 36.4
8,001 129.5

7,860
5,616

40.0
183.9

Diluted basic earnings per share
Yen

Nine months ended December 31, 2022
Nine months ended December 31, 2021

Profit attributable toowners of parent

Ordinary profit

Yen——

136.82
97.76(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%Yen

As of December 31, 2022
129,239
As of March 31, 2022
109,902(Note) Equity capital:
As of December 31, 2022: ¥66,043 million
As of March 31, 2022: ¥58,254 million

67,26859,90851.1
53.0

1,149.52
1,014.01

2. Dividends
End of 1Q

End of 2Q
Yen

Fiscal year ended March 31, 2022
Fiscal year ending March 31, 2023

End of 3Q
Yen——

Year-end
Yen

8.00

—

10.00

—

Fiscal year ending March 31, 2023
(Forecast)(Note) Revision of dividend forecast from the latest announcement: NoneTotal
Yen

Yen

14.0022.00

22.00

32.00

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2023 (April 1, 2022–March 31, 2023)(% figures are the rate of year-on-year increase or decrease)

Net sales
Millions of yen

Operating profit%

Millions of yen

Profit attributable toowners of parent

Ordinary profit%

Full year
80,00028.4
12,300 10.2(Note) Revision of performance forecast from the latest announcement: Yes

Basic earnings pershare

Millions of yen%

Millions of yen%

Yen

13,400

20.2

9,300

19.8

161.87

Notes:(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation):
Not applicable
New: ― companies (company names); Removed: ― companies (company names)(2) Application of special accounting for preparing quarterly consolidated financial statements: Yes(3) Changes in accounting policies, changes in accounting estimates and retrospective restatementi. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i.: Noneiii. Changes in accounting estimates: Noneiv. Retrospective restatement: None
(4) Number of shares issued (common stock)i. Number of shares issued at the end of the period
As of December 31, 2022
57,546,050 shares As of March 31, 2022
57,546,050 shares(including treasury shares)
93,137 shares As of March 31, 2022
96,900 shares
ii. Number of treasury shares at the end of the period As of December 31, 2022
iii. Average number of shares during the period
As of December 31, 2022
57,451,016 shares As of December 31, 2021 57,448,354 shares
Notes:- Summary of financial results are not subject to audit by a certified public accountant or an auditing firm.
- Proper use of performance forecasts, and other special matters(Notes to forward-looking statements)
The performance outlooks and other forward-looking statements in this document are based on information currently available to the Company and certain assumptions
that the Company deems reasonable, and are not intended to be a promise by the Company that they will be realized. Actual results may differ significantly due tovarious factors. Please refer to "Consolidated earnings forecasts" on page 3 of the attached materials for information on the performance forecasts.
.

Contents

1. Qualitative information on the first nine months ended December 31, 2022 ...................................................................2(1) Operating results .....................................................................................................................................................2(2) Financial position ....................................................................................................................................................2(3) Consolidated earnings forecasts ..............................................................................................................................3
2． Consolidated financial statements and notes..................................................................................................................4(1) Consolidated balance sheet .....................................................................................................................................4(2) Consolidated statement of income and consolidated statement of comprehensive income ....................................6(Consolidated statement of income) .........................................................................................................................6(Consolidated Statement of Comprehensive Income)...............................................................................................7(3) Notes to the consolidated financial statements........................................................................................................8(Notes on premise of going concern) ........................................................................................................................8(Notes on significant changes in the amount of shareholders’ equity) .....................................................................8(Application of special accounting for preparing quarterly consolidated financial statements) ...............................8(Segment information) ..............................................................................................................................................81

1. Qualitative information on the first nine months ended December 31, 2022
(1) Operating results
In the first nine months of the fiscal year ending March 31, 2023, while the Japanese economy showedsigns of recovery due to effects of various government policies, severe conditions continued to prevailamid factors such as rising raw material and fuel prices, and sharp fluctuations in exchange rates.
Overseas, outlooks remained uncertain due to the need for caution amid downside risks from such factors
as the prolonged situation in Ukraine and fluctuations in financial and capital markets.
Amid this business environment, net sales for the first nine months ended December 31, 2022
amounted to ¥57,207 million, up ¥12,442 million or 27.8% year on year, due to significantly higher sales
in the Fine Chemicals Division supported by strong demand. For profits, ordinary profit amounted to¥10,917 million, up ¥2,915 million or 36.4%, mainly due to higher sales in the Fine Chemicals Division
despite increased raw material and fuel prices. Profit attributable to owners of parent amounted to ¥7,860
million, up ¥2,244 million or 40.0%.
The following provides an overview for each segment.
a. Fundamental Chemicals Division
Sales of caustic soda and hydrochloric acid were up due to effects from price revisions, despite lowersales volumes.
For organic products, sales of trichloroethylene were up due to effects from price revisions, despite
lower sales volumes. Sales of perchloroethylene were up due to effects from price revisions.
As a result of the above, net sales in the Fundamental Chemicals Division amounted to ¥6,469 million,up ¥781 million or 13.7% year on year. Operating profit totaled ¥128 million (versus operating loss of¥55 million in the previous nine months).
b. Fine Chemicals Division
For fluorochemicals for semiconductors and liquid crystals, sales of nitrogen trifluoride were up year
on year due to effects from price revisions, despite lower sales volumes. Sales of tungsten hexafluoride
and hexafluoro-1,3-butadiene were up due to higher sales volumes.
Sales of lithium hexafluorophosphate, a battery material, were up due to higher sales volumes andeffects from price revisions.
As a result of the above, net sales in the Fine Chemicals Division amounted to ¥46,736 million, up¥11,581 million or 32.9% year on year. Operating profit amounted to ¥8,984 million, up ¥1,895 million
or 26.7%.
c. Ferrochemicals Division
Sales of reprographic carriers, used in developers for copiers and printers, were up year on year due tohigher sales volumes. Sales of iron oxide were down due to lower sales of colorants.
As a result of the above, net sales in the Ferrochemicals Division amounted to ¥2,016 million, up ¥98
million or 5.1% year on year. Operating profit amounted to ¥510 million, up ¥107 million or 26.7%.
d. Commercial Business Division
Commercial business sales were down due to lower sales of chemical products.
As a result of the above, net sales in the Commercial Business Division amounted to ¥565 million,
down ¥29 million or 4.9% year on year. Operating profit amounted to ¥153 million, up ¥8 million or5.6%.
e. Facilities Division
Net sales in chemical facility plant and general industrial plant construction were up year on year due
to an increase in contract work.
As a result of the above, net sales in the Facilities Division amounted to ¥1,419 million, up ¥10 million
or 0.7% year on year. Operating profit amounted to ¥470 million, up ¥96 million or 26.0%.
(2) Financial position
As of the end of the third quarter of the fiscal year ending March 31, 2023, assets amounted to ¥129,239
million, up ¥19,337 million from the end of the previous consolidated fiscal year, mainly due toincreases in inventories, property, plant and equipment, notes and accounts receivable—trade, andcontract assets, despite a decrease in cash and deposits.
Liabilities totaled ¥61,971 million, up ¥11,978 million, mainly due to increases in borrowings andnotes and accounts payable—trade.
Net assets amounted to ¥67,268 million, up ¥7,359 million, mainly due to an increase in retained2earnings. The equity ratio was 51.1%, versus 53.0% at the end of the previous fiscal year.
(3) Consolidated earnings forecasts
The consolidated earnings forecast for the fiscal year ending March 31, 2023 has been revised from theprevious forecast announced on November 11, 2022. For details, please refer to the "Notice of Revisionof Earnings Forecasts" (in Japanese only) released separately.
The above forecasts were created based on information available as of the date of this document's
publishing, and actual results may differ versus forecast figures due to a variety of factors arising in thefuture.

32． Consolidated financial statements and notes(1) Consolidated balance sheet(Millions of yen)
As of March
31, 2022
Assets:Current assets
Cash and deposits
Notes and accounts receivable—trade, and contract
assetsElectronically recorded monetary claims—operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets

As of December
31, 2022

26,72816,921

22,891
21,428

1,101
5,182
4,416
3,526
3,896
(68)
61,705

1,510
6,545
9,337
6,186
5,903
(64)
73,739

8,872

9,979

Machinery and equipment, net
Construction in progress
Other, net

11,655
11,001
6,692

18,203
10,313
6,766

Total property, plant and equipment

38,22145,264Non-current assets
Property, plant and equipment
Buildings and structures, net

Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts

728

730

7,464
1,165
621
(4)

7,254
1,289
966
(6)

Total investments and other assetsTotal non-current assets
Total assets

9,246
48,196109,9029,505
55,500129,2394

(Millions of yen)
As of March
31, 2022
Liabilities:
Current liabilities
Notes and accounts payable—trade
Electronically recorded obligations—operating
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses for directors (and other officers)
OtherTotal current liabilities

As of December
31, 2022

8,068
835
4,200
5,886
2,600
134
5,540
27,265

10,435
1,724
4,533
7,029
1,432
75
6,909
32,140Non-current liabilities
Long-term borrowings
Provision for retirement benefits for directors (and other officers)
Provision for share awards for directors (and other officers)
Retirement benefit liability
Other
Total non-current liabilities

20,166
137
11
1,754
657
22,72727,257
137
16
1,650
768
29,830Total liabilities

49,993

61,971

Net assets:
Shareholders' equity
CapitalCapital surplus
Retained earnings
Treasury shares
Total shareholders' equity

2,877
1,829
50,483(68)
55,122

2,877
1,859
56,963(65)
61,634

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

2,527
413
191
3,132
1,654
59,908109,902

2,446
1,617
344
4,408
1,225
67,268129,2395

(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income(Millions of yen)
From April 1, 2021
to December 31, 2021
Net sales
Cost of sales
Gross profitSelling, general and administrative expenses
Operating profit

From April 1, 2022
to December 31, 2022

44,76430,404
14,3606,346
8,013

57,20740,241
16,965
7,069
9,895

Non-operating profit
Interest income
Dividend income
Foreign exchange gains
Gain on sale of trial products
Other
Total non-operating profit

2203
94
212
513

12243
618
271
194
1,340

Non-operating expenses
Interest expenses
Loss on valuation of derivatives
Loss on sale of trial products
Other
Total non-operating expenses
Ordinary profit

20688
179
49524
8,001

232
47
39
319
10,917131-131-

29
29
8,103
2,294
5,808
192
5,616

163
17180
10,736
2,810
7,926
65
7,860

Extraordinary income
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on valuation of investment securities
Total extraordinary losses
Profit before income taxes
Income taxes payable
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

6

Consolidated Statement of Comprehensive Income(Millions of yen)
From April 1, 2021
to December 31, 2021
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

7

From April 1, 2022
to December 31, 2022

5,808

7,926

(202)
149
(2)
(54)
5,753

(133)
1,251
153
1,272
9,198

5,491
262

9,136
61

(3) Notes to the consolidated financial statements(Notes on premise of going concern)
Not applicable.
(Notes on significant changes in the amount of shareholders’ equity)
Not applicable.
(Application of special accounting for preparing quarterly consolidated financial statements)
Tax expenses are calculated by multiplying profit before income taxes by the reasonably estimated effective tax rate after the application oftax effect accounting to profit before income taxes for the fiscal year ending March 31, 2023, including the third quarter under review.
However, in cases where calculating tax expenses using the estimated effective tax rate would significantly lack rationality, tax expenses arecalculated using the statutory effective tax rate.

(Segment information)
I. From April 1, 2021 to December 31, 2021
1. Information on net sales, profit or loss by reportable segment(Millions of yen)

Reportable segment

Amount recorded onthe statement ofAdjustment
income(Note 1)
(Note 2)Fundamental
Chemicals

Fine
Chemicals

Ferrochemicals

Commercial
Business

Facilities

Total

5,688

35,154

1,917

594

1,409

44,764—44,764

—

—

0

1,010

2,255

3,266

(3,266)—

5,688

35,154

1,917

1,605

3,665

48,030(3,266)44,764

(55)

7,089

402

145

373

7,95558

8,013

Net sales(1) Net sales to externalcustomers(2) Inter-segment netsales or transfers
Total
Segment profit (loss)(Notes) 1. The segment profit (loss) adjustment of ¥58 million is elimination of inter-segment transactions.
2. Segment profit (loss) is adjusted with operating profit in the consolidated statement of income.
2. Information about impairment loss and goodwill on non-current assets by reportable segment
Not applicable.
II. From April 1, 2022 to December 31, 2022
1. Information on net sales, profit or loss by reportable segment(Millions of yen)
Reportable segment

Amount recorded on
the statement ofAdjustment
income(Note 1)(Note 2)Fundamental
Chemicals

Fine
Chemicals

Ferrochemicals

Commercial
Business

Facilities

Total

6,469

46,736

2,016

565

1,419

57,207—57,207

—

—

0

1,075

2,782

3,858

(3,858)

—

Total

6,469

46,736

2,016

1,641

4,202

61,065(3,858)57,207

Segment profit

128

8,984510

153

470

10,246(350)9,895

Net sales(1) Net sales to externalcustomers(2) Inter-segment netsales or transfers(Notes) 1. The segment profit adjustment of ¥350 million is elimination of inter-segment transactions.
2. Segment profit is adjusted with operating profit in the consolidated statement of income.
2. Information about impairment loss and goodwill on non-current assets by reportable segment
Not applicable.

8