April 28, 2023
To whom it may concern,
Company name:Representative:

Contact:

PACIFIC METALS CO., LTD.
Masayuki Aoyama, President
and Representative Director(Securities code: 5541
TSE Prime Market)
Terunobu Matsuyama,
Managing Executive Officerand Director(Telephone: +81-3-3201-6681)

Notice Concerning Recording of Operating Loss (Write-down of Inventories) and Revisions toFinancial Results Forecast
PACIFIC METALS CO., LTD. (the “Company”) hereby announces that it will record a write-down ofinventories under operating losses for the fiscal year ended March 31, 2023 (April 1, 2022 through March 31,2023). The Company also announces that, in light of the most recent performance trend, it has decided to revise
the financial results forecast for the fiscal year ended March 31, 2023 (April 1, 2022 through March 31, 2023)
announced on February 8, 2023.
● Details of operating loss (write-down of inventories)
In the nickel business, the LME nickel price applicable to the Company is higher than that of nickel pig
iron, which is mass-produced overseas and supplied to the market, and producers of stainless steel are
shifting some of their procurement to nickel pig iron, which has a price advantage including with respect toproduction costs. In light of this environment, the selling prices of the Company’s products are set at the pricelevel partially based on the price of nickel pig iron. In addition, with regard to inventories, the rate of theincrease in production costs has been increasing because of sharp rises in prices of raw materials and fuel, thecost of electricity and other factors, which collectively have a significant impact on the book value ofinventories. As a result, a decline in profitability of inventories (merchandise and finished goods, work inprocess, raw materials and supplies) has been recognized, and the Company expects to record a write-downof inventories under cost of sales. In the financial results for the fiscal year, the Company expects to record anadditional 3,401 million yen on top of the 5,504 million yen already recorded, for a total expected
write-down of inventories under cost of sales of 8,905 million yen.

1

● Revisions to financial results forecast
1. Revisions to consolidated financial results forecast for the fiscal year ended March 31, 2023 (April 1, 2022
through March 31, 2023)
ProfitBasic
OperatingOrdinary
attributable toNet sales
earnings perprofit
profitowners ofshareparent
Million yen

Million yen

Million yen

Million yen

Yen(Announced on February 8, 2023)

35,318(9,736)(2,664)(3,061)(156.96)

Revised forecast (B)34,852(12,588)(4,960)(5,026)(257.75)

Change (B–A)(465)(2,852)(2,296)(1,965)

Change (%)(Reference) Actual results for theprevious fiscal year ended March31, 2022

(1.3)

───

57,1294,806

12,99911,368Previously announced forecast (A)582.93

2. Reason for revisions
With regard to the consolidated financial results forecast, the economic outlook remains highly
uncertain as COVID-19 and the situation in Ukraine continue to affect the domestic and overseas
economies.
On the volume front, the Company expects results to be almost the same as the previously announced
forecast. In addition to the impact of the molten material leakage accident at an electric furnace that
occurred in one of the three ferronickel manufacturing facilities just before the end of the previous fiscal
year, this is because the Company changed its policy with the objective of strategically controllingvolume to a certain level so as not to impair profitability. This decision reflects easing of the nickel
supply-demand balance, as well as the fact that producers of stainless steel are shifting some of theirprocurement to nickel pig iron, which has a price advantage, including with respect to production costs,
and the price of nickel pig iron is also affecting the selling price of the Company’s products.
In terms of profit and loss, on the selling price front, as described above, the Company also partiallyrefers to the price of nickel pig iron in addition to the applicable LME nickel price and the applicableexchange rate in setting the selling price of the Company’s products. Moreover, on the procurement front,
prices of nickel ore, which is the main raw material used in ferronickel products, remain high, as do theprices of raw materials, fuel and electricity due to high resources prices. These and other factors areexpected to have a significant impact on procurement prices.
In other areas, the Company expects to record the write-down of inventories under cost of sales, cash
bonuses in extraordinary income as the benefit of reducing power consumption by participating in thepower company’s winter power-saving challenge campaign, and restoration costs from the moltenmaterial leakage accident at an electric furnace in extraordinary losses.
Although the impacts of COVID-19 and the situation in Ukraine are expected to continue during thefiscal year ending March 31, 2024, response measures against such business environment are consistent
with activities to be undertaken under the basic policies set forth in the Group’s Medium-termManagement Plan, and the Company will continue to strongly push forward with these measures.
Accordingly, the consolidated financial results forecast has been revised as described in the previouspage. For the underlying assumptions, please refer to “(Reference) Revisions to underlying
assumptions.”(Note) The forward-looking statements including the financial results forecast contained herein are based on information
currently available to the Company, as well as certain assumptions deemed reasonable by the Company. Actual
results may differ significantly from these forecasts due to various factors.

2(Reference) Revisions to underlying assumptions
Sales volume (t)Production volume (t)Applicable LME nickel priceApplicable exchange rate($/lb)

(¥/$)

1st

2nd

Full

1st

2nd

Full

1st

2nd

Full

1st

2nd

Full

half

half

year

half

half

year

half

half

year

half

half

year

Previously
announced
forecast(February 8,2023)

5,668

6,832

12,500

8,079

5,405

13,484

12.12

10.95

11.48

131.49138.88135.53

Revisedforecast

5,668

6,725

12,393

8,079

5,301

13,380

12.12

11.11

11.57

131.49138.44135.26(Reference)
Actual results
for the previous
fiscal year
ended March
31, 2022

12,957

14,10327,06011,874

14,37526,249

8.12

9.33

8.75

109.16113.97111.673