August 2, 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), Recording ofNon-operating Income (Share of Profit of Entities Accounted for Using Equity Method) andRevisions to Financial Results Forecast
PACIFIC METALS CO., LTD. (the “Company”) hereby announces that it has recorded a write-down of
inventories under operating loss and share of profit of entities accounted for using equity method under
non-operating income for the three months ended June 30, 2023 (April 1, 2023 through June 30, 2023). The
Company also announces that, in light of the most recent performance trend, it has decided to revise theconsolidated financial results forecast for the six months ending September 30, 2023 (April 1, 2023 throughSeptember 30, 2023) and for the fiscal year ending March 31, 2024 (April 1, 2023 through March 31, 2024)
announced on May 9, 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 pigiron, 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. In light of thisenvironment, the selling prices of the Company’s products are set at the price level partially based on theprice of nickel pig iron. In addition, with regard to inventories, production costs are increasing because raw
material and fuel prices as well as the cost of electricity remain at a high level, among other factors, resulting
in an increase in the value of inventories. As a result, a decline in profitability of inventories (merchandiseand finished goods, work in process, raw materials and supplies) has been recognized, and the Company
expects to record a write-down of inventories amounting to 1,764 million yen under cost of sales.
● Details of non-operating income (share of profit of entities accounted for using equity method)
The Company expects to record share of profit of entities accounted for using equity method of 1,245
million yen for the three months ended June 30, 2023 due mainly to strong performance of entities
accounted for using equity method in the Philippines supported by strong demand.

1● Revisions to financial results forecast
1. Revisions to consolidated financial results forecast for the six months ending September 30, 2023 (April 1,2023 through September 30, 2023)
ProfitBasic
Operating
Ordinary
attributable toNet sales
earnings perprofit
profitowners ofshareparent
Million yen

Million yen

Million yen

Million yenYen(Announced on May 9, 2023)

8,910(4,198)(2,937)(2,961)(151.83)

Revised forecast (B)8,592(6,343)(3,712)(3,871)(198.49)

Change (B–A)(318)(2,145)

(775)

(910)

Change (%)(Reference) Actual results for theprevious six months ended
September 30, 2022

(3.6)

──

─

17,642(4,464)605

229

Previously announced forecast (A)

11.75

2. Revisions to consolidated financial results forecast for the fiscal year ending March 31, 2024 (April 1,2023 through March 31, 2024)
ProfitBasic
OperatingOrdinaryattributable to
Net salesearnings perprofit
profitowners ofshareparent
Million yen

Million yen

Million yen

Million yen

Yen(Announced on May 9, 2023)

20,899(7,299)(4,569)(4,778)(245.00)

Revised forecast (B)20,885(7,089)(2,891)(3,246)(166.44)

Change (B–A)

(14)

210

1,678

1,532

Change (%)(Reference) Actual results for theprevious fiscal year ended March
31, 2023

(0.1)

──

─

34,852(12,588)(4,960)(5,026)

Previously announced forecast (A)(257.75)

3. Reason for revisions
With regard to the consolidated financial results forecast, the protracted situation in Ukraine continues
to affect the Japanese and overseas economies. The economic slowdown primarily against the backdropof sharp interest rate increases in the U.S. and Europe and the delay in China’s economic recovery has
made the economic outlook even more uncertain.
On the volume front, the environment in which the Company operates has remained largely unchanged
and the Company expects results to be almost the same as the previously announced forecast.
In terms of profit and loss, on the selling price front, the Company also partially refers to the price ofnickel pig iron, which has a price advantage over ferronickel products, in addition to the applicable LME
nickel price and the applicable exchange 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 inferronickel products, continue to remain high, as do the prices of raw materials, fuel and electricity. Theseand other factors are expected to have a significant impact on procurement prices.
In other areas, regarding the impact of a write-down of inventories, while the Company expects torecord additional write-down of inventories for the first half, a reversal is expected to occur in the second
half because of a reduction in the write-down amount. Therefore, the earnings trend is expected to differ
for the first half and the second half.
Although the situation remains challenging, response measures against such business environment are2

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.

(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(May 9, 2023)

3,450

4,750

8,200

3,543

3,540

7,083

10.68

10.00

10.29

134.06134.10134.08

Revisedforecast

3,330

4,870

8,200

3,428

3,540

6,968

10.82

10.00

10.33

135.34134.10134.60(Reference)
Actual results
for the previous
fiscal year
ended March
31, 2023

5,668

6,725

12,3938,079

5,30113,380

12.12

11.11

11.57

131.49138.44135.263