Consolidated Financial Results for the Three Months Ended June 30, 2023 [JGAAP]
Company Name:

August 10, 2023
Stock Exchange Listing: Tokyo

Kanto Denka Kogyo Co., Ltd.

Code Number: 4047 URL: https://www.kantodenka.co.jp/english/
Representative:
Jun’ichi Hasegawa, President
Contact: Masanobu Shirokura, General Manager, Public Relations & Investor Relations Dept.
Scheduled date for submitting the Quarterly Securities Report: August 10, 2023
Scheduled date to commence dividend payments:―
Availability of supplementary briefing material on financial results: NoneFinancial results briefing session: None

Phone: +81-3-4236-8801

1. Consolidated financial results for the first quarter of the fiscal year ending March 31, 2024 (April 1, 2023–June 30, 2023)(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

Profit attributable toowners of parent

Ordinary profit%

Millions of yen%

Millions of yen%

Millions of yen%Three months ended June 30, 2023
16,301–11.3
Three months ended June 30, 202218,375
33.3(Note) Comprehensive income:Three months ended June 30, 2023: - ¥22 million (―%)
Three months ended June 30, 2022: ¥3,707 million (121.8%)–1,411
3,625

—
58.1

–859
4,221

—
76.3

–310
2,931

—
73.5

Basic earnings per share

Diluted basic earnings per share
Yen

Yen

–5.40
51.03

Three months ended June 30, 2023
Three months ended June 30, 2022

(2) Consolidated financial position

Total assets——Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

125,743
As of June 30, 2023
130,762
As of March 31, 2023
(Reference) Equity capital:
As of June 30, 2023: ¥66,066 million
As of March 31, 2023: ¥67,480 million

67,402
68,77452.5
51.6

1,149.93
1,174.54

2. Dividends
Annual dividends per share
End of 1Q

End of 2Q
Yen

End of 3Q
Yen—
Fiscal year ended March 31, 2023—
Fiscal year ending March 31, 2024
Fiscal year ending March 31, 2024
(Forecast)(Note) Revision of dividend forecast from the latest announcement: NoneYear-end
Yen

TotalYen

Yen

10.00

—

23.00

33.00

7.00

—

7.00

14.00

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2024 (April 1, 2023–March 31, 2024)(% figures are the rate of year-on-year increase or decrease)

Net sales
Millions of yen

First half
Full year

Operating profit%

Millions of yen

Profit attributable toowners of parent

Ordinary profit%

35,500–4.80—
77,500
–1.5
4,500
–65.2
(Note) Revision of performance forecast from the latest announcement: Yes

Basic earnings
per share

Millions of yen%

Millions of yen%

Yen

100
4,300–98.6
–68.6

250
3,150–95.2–66.4

4.3554.83

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: None
(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: None
iv. Retrospective restatement: None
(4) Number of shares issued (common stock)i. Number of shares issued at the end of the period(including treasury shares)
ii. Number of treasury shares at the end of the periodiii. Average number of shares during the period

As of June 30, 2023
As of June 30, 2023
As of June 30, 2023

57,546,050 shares As of March 31, 2023
93,137 shares As of March 31, 2023
57,452,913 shares As of June 30, 2022

57,546,050 shares
93,137 shares
57,449,150 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 to various 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 three months ended June 30, 2023 .................................................... 2(1) Operating results................................................................................................................................. 2(2) Financial position ............................................................................................................................... 3(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(Special accounting for preparing quarterly consolidated financial statements) ................................ 8(Segment information)........................................................................................................................ 91

1. Qualitative information on the first three months ended June 30, 2023
(1) Operating results
In the first quarter of the fiscal year ending March 31, 2024, the Japanese economy showed signs of a
gradual recovery due to the positive effects of various government policies under an improving
employment and income environment. However, severe conditions continued to prevail. Overseas,
outlooks remained uncertain due to the need for caution amid downside risks from such factors ascontinued global monetary tightening and fluctuations in financial and capital markets.
Amid this business environment, net sales for the first quarter of the fiscal year ending March 31, 2024
amounted to ¥16,301 million, down ¥2,074 million or 11.3% year on year, mainly due to the substantial
decline in demand in the Fine Chemicals Division, despite the Group’s active efforts in marketing. On theprofit front, the Group recorded an ordinary loss of ¥859 million and a loss attributable to owners of parentof ¥310 million (compared to ordinary profit of ¥4,221 million and profit attributable to owners of parentof ¥2,931 million in the first quarter of the previous fiscal year). These losses were mainly due to the costof sales remaining at a high level due to an inventory balance affected by the surge in the price of raw
materials for batteries and a loss on valuation of inventories to reflect the deterioration in selling prices
since the end of the previous period, in addition to the decrease in net sales.
The following provides an overview for each segment.
a. Fundamental Chemicals Division
Caustic soda sales volume decreased, but the positive effects of price revision resulted in a year on yearincrease in sales. Hydrochloric acid sales volume was down and sales decreased despite the positiveeffects of price revisions.
For organic products, a decline in trichloroethylene sales volume caused sales to decline year on year.
An increase in perchloroethylene sales volume led to year on year growth in sales.
As a result of the above, net sales in the Fundamental Chemicals Division amounted to ¥2,412 million,up ¥5 million or 0.2% year on year. Operating profit amounted to ¥76 million, down ¥163 million or
68.3% year on year. This decline was mainly due to the rise in raw material and fuel prices.
b. Fine Chemicals Division
Sales of fluorochemicals for semiconductors decreased due to a decline in sales volume for nitrogen
trifluoride and tungsten hexafluoride. Sales of hexafluoro 1,3-butadiene were up due to the higher sales
volume.
Sales of lithium hexafluorophosphate, a battery material, were down due to a decrease in sales volume.
As a result of the above, net sales in the Fine Chemicals Division amounted to ¥12,743 million, down
¥1,883 million or 12.9% year on year. An operating loss of ¥1,720 million was recorded (compared tooperating profit of ¥2,994 million in the first quarter of the previous fiscal year). The loss was mainly
due to the persistent high cost of sales for battery materials and recognition of a loss on valuation ofinventories, in addition to the decline in net sales.
c. Ferrochemicals Division
Sales of reprographic carriers, used in developers for copiers and printers, were down year on year due
to lower sales volumes. Sales of iron oxide were down year on year due to lower sales of colorants.
As a result of the above, net sales in the Ferrochemicals Division amounted to ¥448 million, down ¥257million or 36.5% year on year. Operating profit amounted to ¥46 million, down ¥142 million or 75.3%
year on year.
d. Commercial Business Division
Commercial business sales were up due to higher sales of industrial chemicals.
As a result of the above, net sales in the Commercial Business Division amounted to ¥173 million, up¥8 million or 5.0% year on year. Operating profit amounted to ¥80 million, up ¥27 million or 50.7%
year on year.
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 ¥523 million, up ¥53 million
or 11.3% year on year. Operating profit amounted to ¥62 million, down ¥86 million or 57.9% year onyear. The decline was mainly due to higher material prices.

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(2) Financial position
As of the end of the first quarter of the fiscal year ending March 31, 2024, total assets amounted to¥125,743 million, down ¥5,019 million from the end of the previous consolidated fiscal year, mainly due
to decreases in notes and accounts receivable—trade, and contract assets, and cash and deposits.
Total liabilities amounted to ¥58,341 million, down ¥3,647 million, mainly due to decreases in income
taxes payable and borrowings.
Net assets amounted to ¥67,402 million, down ¥1,372 million, mainly due to a decrease in retained
earnings. The equity ratio was 52.5%, versus 51.6% at the end of the previous fiscal year.
(3) Consolidated earnings forecastsThe consolidated earnings forecast for the fiscal year ending March 31, 2024 has been revised from theprevious forecast announced on May 15, 2023. For details, please refer to the "Notice of Revision ofEarnings Forecasts" (in Japanese only) released separately.
The above forecasts were created based on information available as of the date of this document'spublishing, 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, 2023

As of June 30, 2023

Assets:Current assets
Cash and deposits
Notes and accounts receivable—trade, and contract
assetsElectronically recorded monetary claims—
operatingMerchandise and finished goods
Work in process

22,355

20,764

20,56016,208

1,130

1,101

7,055
9,332

8,534
9,225

Raw materials and supplies
Other

7,516
5,030

5,931
5,534

Allowance for doubtful accounts

(62)

(51)

72,91967,24910,93010,771

Machinery and equipment, net
Construction in progress
Other, net

19,291
10,512
6,669

18,145
12,153
6,595

Total property, plant and equipment

47,40447,666

676

670

7,399
14
1,404
950

7,741
15
1,478
929

(7)
9,762

(7)
10,157

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net

Intangible assets
Investments and other assets
Investment securities
Retirement benefit assets
Deferred tax assets
OtherAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

457,842

58,494

130,762

125,743

(Millions of yen)
As of March 31, 2023

As of June 30, 2023

Liabilities:Current liabilities
Notes and accounts payable—trade

9,620

10,029

Electronically recorded obligations—operating
Short-term borrowings

1,022
4,516

1,147
4,642

Current portion of long-term borrowings
Income taxes payable

6,914
2,701

7,226
194

134

82

Provision for bonuses for directors (and otherofficers)
Other

8,769

8,815

Total current liabilities

33,68032,137

Non-current liabilities
Long-term borrowings

25,591

23,470

143

143

18

21

1,805

1,825

Provision for retirement benefits for directors (andother officers)
Provision for share awards for directors (and otherofficers)
Retirement benefit liability
Other748

742

28,30826,203

61,98858,341

CapitalCapital surplus

2,877
1,859

2,877
1,859

Retained earnings
Treasury shares

58,486(65)

56,852(65)

Total shareholders' equity

63,157

61,524

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans

2,512
1,534
275

2,833
1,437
271

Total accumulated other comprehensive income

4,323

4,542

Total non-current liabilities
Total liabilities
Net assets:
Shareholders' equity

Non-controlling interests

1,293

1,335

Total net assets
Total liabilities and net assets

68,774

67,402

130,762

125,7435

(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income(Millions of yen)
From April 1, 2022
to June 30, 2022

From April 1, 2023
to June 30, 2023

Net sales
Cost of sales

18,375
12,461Gross profit
Selling, general and administrative expenses

5,914

808

2,288
3,625

2,220
(1,411)

3
143

13
179

528
11852336793753

89
104
477

Operating profit (loss)
Non-operating profit
Interest income
Dividend income
Foreign exchange gains
Other
Total non-operating profit
Non-operating expenses
Interest expenses
Loss on valuation of derivatives
Other
Total non-operating expenses
Ordinary profit (loss)
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

16,301
15,492

111
13197

202

4,221(859)

—

449—

449

31
1725—

Total extraordinary losses

48

25

Profit (Loss) before income taxes

4,172(436)

Income taxes payable

1,177
2,994(166)
(269)

63
2,931

40(310)

Profit (Loss)
Profit attributable to non-controlling interests
Profit (Loss) attributable to owners of parent

6

Consolidated Statement of Comprehensive Income(Millions of yen)
From April 1, 2022
to June 30, 2022
Profit (Loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans

From April 1, 2023
to June 30, 2023
2,994(269)

(251)
805

346
(95)

157

(4)

Total other comprehensive income
Comprehensive income

712
3,707247(22)

Comprehensive income attributable to:
Owners of parent
Non-controlling interests

3,654
52(91)
687

(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.
(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 applicationof tax effect accounting to profit before income taxes for the fiscal year ending March 31, 2024, including the first quarter. However, incases where calculating tax expenses using the estimated effective tax rate would significantly lack rationality, tax expenses are calculatedusing the statutory effective tax rate.

8

(Segment information)[Segment information]
I. From April 1, 2022 to June 30, 2022
1. Information on net sales, profit or loss by reportable segment(Millions of yen)

Reportable segment

Amount recorded
Adjustment on the statement(Note 1)of incomeFundamental
Chemicals

Fine
Chemicals

Ferrochemicals

CommercialBusiness

Facilities(1) Net sales to externalcustomers

2,406

14,627

705

165

470

18,375—

18,375(2) Inter-segment net sales
or transfers

—

—

0315

823

1,139

(1,139)

—

Total

2,406

14,627

705

481

1,294

19,515(1,139)18,375

Segment profit

239

2,994

189

53

149

3,627

(2)

3,625

Total

(Note 2)

Net sales(Notes) 1. The segment profit adjustment of - ¥2 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.
II. From April 1, 2023 to June 30, 2023
1. Information on net sales, profit or loss by reportable segment(Millions of yen)

Reportable segment

Amount recorded
Adjustment on the statementof income(Note 1)
(Note 2)Fundamental
Chemicals

Fine
Chemicals

Ferrochemicals

Commercial
Business

Facilities(1) Net sales to externalcustomers

2,412

12,743

448

173

523

16,301—16,301(2) Inter-segment net salesor transfers

——

0416

827

1,243(1,243)

—

Total

2,412

12,743

448

590

1,350

17,545(1,243)

16,30176(1,720)

46

80

62(1,454)

42(1,411)

Total

Net sales

Segment profit (loss)(Notes) 1. The segment profit (loss) adjustment of ¥42 million is elimination of inter-segment transactions.
2. Segment profit (loss) is adjusted with operating loss in the consolidated statement of income.

2. Information about impairment loss and goodwill on non-current assets by reportable segment
Not applicable.

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