August 8, 2018

Consolidated Financial Results
for the Three Months Ended June 30, 2018
(Japanese Accounting Standards)
Name of the Listed Company: Nitta Gelatin Inc.
Listing:First Section of Tokyo Stock Exchange
Stock code:
4977
URL:
http://www.nitta-gelatin.co.jp
Representative:
Koichi Ogata, Representative Director and President
Contact Person:
Norifumi Nagaoka, Director and Executive Officer;
General Manager of General Management Division
Tel: +81-72-949-5381
Scheduled date to file Quarterly Securities Report: August 9, 2018
Scheduled date to commence dividend payments: Supplementary explanatory materials prepared:No
Explanatory meeting:
No(Millions of yen with fractional amounts discarded, unless otherwise noted.)

1. Consolidated financial results for the three months ended June 30, 2018(from April 1, 2018 to June 30, 2018)(1) Consolidated operating results(Percentages indicate year-on-year changes.)
Net sales
Three months ended
June 30, 2018
June 30, 2017

Millions of yen%

Operating income

Ordinary income

Net income
attributable toowners of the parent

Millions of yen

Millions of yen%

Millions of yen

373
383

(2.4)
31.7

39
234

%

9,043
(2.1)
287
4.5
9,240
2.3
274
(43.6)
Note: Comprehensive income
For the three months ended June 30, 2018: ¥180 million, (39.3)%
For the three months ended June 30, 2017: ¥298 million, -%Net income
per share
Three months ended
June 30, 2018
June 30, 2017

Diluted net income
per share

Yen

Yen

2.14
12.77
Note: Diluted net income per share is not disclosed due to the absence of latent shares with dilution effect.

(2) Consolidated financial position
As ofJune 30, 2018
March 31, 2018

Total assets

Net assets

Millions of yen

Millions of yen

37,99737,851

17,264
17,197

Reference: Equity
As of June 30, 2018:¥15,281 million
As of March 31, 2018: ¥15,189 million

Equity ratio
%

40.2
40.1

%

(83.3)
33.4

2. Cash dividends
Cash dividends per shareFirst quarter

Second quarter

Yen

Fiscal year ended March 31,
2018
Fiscal year ending March 31,
2019

Third quarter

Yen-

Fiscal year-end

Yen

Annual

Yen

Yen

6.00

-

6.00

12.00

6.00

-

6.00

12.00

-

Fiscal year ending March 31,
2019 (Forecasts)

Note: Changes to most recent dividend forecasts: None

3. Consolidated financial forecasts for the fiscal year ending March 31, 2019(from April 1, 2018 to March 31, 2019)(Percentages indicate year-on-year changes.)
Net sales
Millionsof yen%Operating income

Ordinary income

Net income
attributable toowners of theparentMillionsof yenMillionsof yen%Millionsof yen%(17.4)

600

74.3

32.66

9.0

900

－

48.98

%

Six months ending
19,000
2.0
600
13.1
500
September 30, 2018
Fiscal year ending
38,200
1.1
1,300
18.7
1,100
March 31, 2019
Note: Changes to most recent consolidated financial forecasts: None

Net income
per share
Yen(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in achange in the scope of consolidation): None
New:
None
Excluded:None(2) Adoption of special accounting methods for the preparation of quarterly consolidated financial
statements: No(3) Changes in accounting policies, changes in accounting estimates, and restatement of revisions
a. Changes in accounting policies due to revisions to accounting standards and other guidelines: No
b. Changes in accounting policies due to reasons other than a. above: No
c. Changes in accounting estimates: No
d. Restatement of revisions: No(4) Number of common shares issued
a. Total number of issued shares at the end of the period (including treasury stock)
As of June 30, 2018
18,373,974 shares
As of March 31, 2018
18,373,974 sharesb. Number of shares of treasury stock at the end of the period
As of June 30, 2018
162 shares
As of March 31, 2018
162 sharesc. Average number of shares
For the three months ended June 30, 2018
For the three months ended June 30, 201718,373,812 shares
18,373,812 shares* This financial report falls outside the scope of quarterly review procedures by Certified Public Accountants or
the independent auditor.
* Proper use of earnings forecasts, and other special matters
The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available
to the Company and on certain assumptions deemed to be reasonable. These statements do not guarantee that the Company will achieve
its earnings forecasts. In addition, actual business and other results may differ substantially due to various factors. For details on theconditions assumed and the cautionary notes and items in the financial forecasts, please refer to “(3) Description of Consolidated
Business Forecasts and Other Forward-looking Information” in “1. Qualitative Information Concerning Quarterly Financial Statements”
on page 3 of the Attachment to this report.

Attachment Contents
1. Qualitative Information Concerning Quarterly Financial Statements ······························ 2(1) Description of Business Results ··············································································· 2(2) Description of Financial Position ············································································· 3(3) Description of Consolidated Business Forecasts and Other Forward-looking Information ··········· 3

2. Quarterly Consolidated Financial Statements and Key Notes ······································· 4(1) Consolidated Balance Sheets ·················································································· 4(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ······ 6Consolidated Statements of Income(First quarter consolidated cumulative accounting period) ················································ 6Consolidated Statements of Comprehensive Income(First quarter consolidated cumulative accounting period) ················································ 7(3) Notes to Quarterly Consolidated Financial Statements ···················································· 8(Note Concerning Going Concern Assumption) ···························································· 8(Note Concerning Significant Changes in Shareholders’ Equity) ········································· 8(Additional Information) ······················································································· 8(Segment Information) ························································································· 9(Significant Subsequent Events) ·············································································10

11. Qualitative Information Concerning Quarterly Financial Statements(1) Description of Business Results
In the first quarter of the fiscal year ending March 31, 2019, the global economy continued to recovergradually, supported partly by major tax cuts in the U.S. and accelerated growth in the Indian
economy.
The Japanese economy continued on a moderate recovery trend, owing to an increase in exports
driven by global economic growth and firm internal demand reflecting factors such as capital
expenditures. The outlook has become increasingly uncertain based in part on concerns about trade
friction due to the protectionist trade policies of the U.S., and the risk of an economic downturn inJapan due to the deceleration of the Chinese economy.
In this environment, the Nitta Gelatin Group launched a new three-year Medium-Term
Management Plan in April 2018. Under the new Medium-Term Management Plan, the Group will
implement the following management policies:
1. Our three core areas will be food solutions, health support, and biomedical.
2. We will globally optimize our production system in Japan, Asia, and North America in
response to an era of completely free trade.
3. We will promote selection and concentration and create high-value added products and services
to recreate the company as a higher-profit enterprise.
Guided by these management policies, the Group actively worked to conduct research and develop
new products in its three core areas. The Group strove to enhance productivity and reduce costs ateach of its manufacturing sites. Moreover, as part of efforts to promote selection and concentration,
the Company decided to have Bostik-Nitta Co., Ltd., an equity-method affiliate, succeed to theAdhesive Business through a company split.
As a result, for the first quarter of the fiscal year ending March 31, 2019, net sales decreased 2.1%
year on year to ¥9,043 million. However, operating income rose 4.5% to ¥287 million as profits were
restored at an overseas subsidiary. Ordinary income decreased 2.4% to ¥373 million, mainlyreflecting a decline in foreign exchange gains. The Company recorded expenses related to
Bostik-Nitta Co., Ltd.’s succession of the Adhesives Business through a company stock split andrelated items as an extraordinary loss. Consequently, net income attributable to owners of the parent
decreased 83.3% to ¥39 million.
Business performance in each segment was as follows:(a) Collagen Material BusinessIn the gelatin field, sales of gelatin for capsules were firm, supported by increased demand for healthfoods. This demand was mainly driven by heightened health consciousness and an increase in thenumber of drugstores. Meanwhile, sales of gelatin for use in food such as microwaveable delicatessen
items and confectionery were mostly unchanged from the previous fiscal year. In North America,
sales decreased, reflecting continuing fierce competition in the market for gelatin for capsules. Profits
increased owing to a positive contribution from the shift to stable production at plants in North
2

America and India.
In the collagen peptide field, overall sales decreased owing to lower sales year on year to corecustomers in Japan, and a decrease in sales to Asia. Profits increased due to reduced manufacturingcosts through measures including cost-cutting initiatives.
In the collagen casing field, sales and profits were mostly on par with the previous year, as sales
trended firmly in the U.S.
As a result, net sales in this segment decreased 2.6% to ¥6,519 million, while segment profit(operating income) increased 43.6% to ¥383 million.
(b) Formula Solution BusinessIn food materials, overall sales were mostly unchanged from the previous fiscal year, as sales ofstabilizers for processed meat products largely offset the decline in sales of food materials forconfectionery and desserts. Profits decreased due to the impact of rising raw materials prices.
In adhesives, sales and profits both decreased from the previous fiscal year, mainly due to theimpact of inventory adjustments at core customers in adhesives for use in hygiene materials.
As a result, net sales in the segment were down 0.8% year on year to ¥2,523 million and segment
profit (operating income) decreased 17.0% year on year to ¥281 million.

(2) Description of Financial Position(Assets)
Total assets amounted to ¥37,997 million at June 30, 2018, ¥145 million higher than at March 31,
2018. This was mainly attributable to increases in inventories and property, plant and equipment.
(Liabilities)
Total liabilities stood at ¥20,733 million at June 30, 2018, ¥79 million higher than at March 31, 2018.
This was mainly attributable to increases in notes and accounts payable-trade and short-term loans
payable.
(Net assets)
Net assets amounted to ¥17,264 million at June 30, 2018, ¥66 million higher than at March 31, 2018.
This was mainly attributable to increases in valuation difference on other available-for-sale securities
and foreign currency translation adjustments.
As a result, the equity ratio stood at 40.2% at June 30, 2018, compared to 40.1% at March 31,
2018.

(3) Description of Consolidated Business Forecasts and Other Forward-looking
Information
The consolidated earnings forecast for the fiscal year ending March 31, 2019 is unchanged from theconsolidated earnings forecast announced on May 17, 2018 in the “Notice Concerning Revision ofConsolidated Business Forecasts.”
Actual business and other results may differ substantially from projections due to various factors.

3

2. Quarterly Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheets(Millions of yen)

Fiscal 2018
(As of March 31, 2018)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

4

1Q Fiscal 2019
(As of June 30, 2018)

1,626
8,966
5,152
1,240
2,944
338
(11)
20,256

1,463
8,362
5,443
1,239
3,248
383
(10)
20,130

3,621
4,809
3,819
12,251

3,620
4,851
4,017
12,489

384
395
780

387
388
775

3,451
1,174
(63)
4,563
17,59537,851

3,458
1,211
(68)
4,601
17,86637,997

(Millions of yen)

Fiscal 2018
(As of March 31, 2018)
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Net defined benefit liability
Other
Total noncurrent liabilities
Total liabilities
Net Assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on other available-for-salesecurities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

5

1Q Fiscal 2019
(As of June 30, 2018)

4,159
2,504
2,497
95
249
2,550
12,056

4,463
2,857
2,410
108
397
2,508
12,745

4,684
2,709
1,203
8,597
20,654

4,158
2,693
1,135
7,987
20,733

3,144
2,966
9,206
(0)
15,317

3,144
2,966
9,135
(0)
15,246

1,331

1,413

(43)
142
(1,558)(127)
2,008
17,19737,851(21)
227(1,584)34
1,982
17,26437,997

(2) Consolidated Statements of Income and Consolidated Statements ofComprehensive Income
Consolidated Statements of Income(First quarter consolidated cumulative accounting period)(Millions of yen)Three Months Ended
June 30, 2017
(From April 1, 2017
to June 30, 2017)
9,240
7,351

Net sales
Cost of sales

Three Months Ended
June 30, 2018
(From April 1, 2018
to June 30, 2018)
9,043
7,066

Gross profit on sales

1,888

1,976

Selling, general and administrative expenses

1,614

1,689

Operating income

274

287

Non-operating income
Interest income
Dividend income
Foreign exchange gains
Equity in earnings of affiliates
Other

0
27
85
39
21

2
18
69
37
23

Total non-operating income

174

151

57
8

58
5

Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary losses
Disposal costs for noncurrent assets
Loss on retirement of noncurrent assets
Advisory fees
Total extraordinary losses

66

64

383

373

-

0
91
180

-

272

Income before provision for income taxes

383

101

Income taxes

127

42

Net income

255

58

Net income attributable to non-controlling interests20

19

Net income attributable to owners of the parent

234

39

6

Consolidated Statements of Comprehensive Income(First quarter consolidated cumulative accounting period)(Millions of yen)Three Months Ended
June 30, 2017
(From April 1, 2017
to June 30, 2017)255

Net income
Other comprehensive income
Valuation difference on other available-for-salesecurities
Deferred gains (losses) on hedges

Three Months Ended
June 30, 2018
(From April 1, 2018
to June 30, 2018)
58

103

81

(69)

15

Foreign currency translation adjustments

1471

Pension liability adjustment
Share of other comprehensive loss of associates
accounted for using equity method
Total other comprehensive income

19

(25)

(23)

(20)

42

122

298

180

Owners of the parent

320

202

Non-controlling interests

(22)

(21)

Total comprehensive income
Comprehensive income attributable to:7(3) Notes to Quarterly Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None(Note Concerning Significant Changes in Shareholders’ Equity)
None(Additional Information)
Adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.”
The Company has adopted “Partial Amendments to Accounting Standard for Tax EffectAccounting, etc.” (Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16,2018) from the beginning of the first quarter of the fiscal year ending March 31, 2019.
Accordingly, deferred tax assets have been presented under investments and other assets anddeferred tax liabilities have been presented under noncurrent liabilities.

8

(Segment Information)
I. First three months of the fiscal year ended March 31, 2018 (From April 1, 2017 to June 30,
2017)
1. Information on net sales, income and loss by reporting segment
Reporting segment
Collagenmaterial
business
Net sales
Sales to third parties
Inter-segment sales andtransfers
Total
Segment income(Notes)(Millions of yen)Amounts in the
consolidated
financialstatements*2

Formulasolutionbusiness

Total

Adjustments*1

6,694

2,545

9,240

-

9,240

401

3

405

(405)

-

7,096

2,549

9,646

339

606

(405)
(331)

9,240

267

274

1. Adjustment for segment income of ¥(331) million comprises elimination of intersegment
transactions of ¥(0) million and unallocated expenses of ¥(331) million.
2. Segment income is adjusted against the operating income recorded in the consolidated
income statement.

2. Information on impairment loss on noncurrent assets and goodwill by reporting segments
None
II. First three months of the fiscal year ending March 31, 2019 (From April 1, 2018 to June 30,
2018)
1. Information on net sales, income and loss by reporting segment
Reporting segment
Collagenmaterial
business
Net sales
Sales to third parties
Inter-segment sales andtransfers
Total
Segment income(Notes)(Millions of yen)Amounts in the
consolidated
financialstatements*2

Formulasolutionbusiness

Total

Adjustments*1

6,519

2,523

9,043

-

9,043

453

3

456

(456)

-

6,973

2,527

9,500

9,043

383

281

665

(456)
(378)

287

1. Adjustment for segment income of ¥(378) million comprises elimination of intersegment
transactions of ¥0 million and unallocated expenses of ¥(378) million.
2. Segment income is adjusted against the operating income recorded in the consolidated
income statement.

2. Information on impairment loss on noncurrent assets and goodwill by reporting segmentsNone9(Significant Subsequent Events)(Capital increase in equity-method affiliate)
On August 1, 2018, Bostik-Nitta Co., Ltd., an equity-method affiliate of the Company, conducteda capital increase of ¥2,665 million and Arkema Asie SAS underwrote the capital increase.
As a result, the Company’s equity interest in Bostik-Nitta Co., Ltd. decreased from 34.0% to
20.0%. Accordingly, the Company expects to record a gain on change in equity of ¥410 million as
an extraordinary gain for the three months ending September 30, 2018.
(Company split)
Pursuant to a resolution passed at a meeting of the board of directors held on May 17, 2018, theCompany conducted a company split on August 1, 2018, with the Company (Adhesive Business(excluding manufacturing)) as the splitting company and Bostik-Nitta Co., Ltd. as the succeedingcompany.
1. Outline of Business Divestiture(1) Name of company that succeeded the divested business
Bostik-Nitta Co., Ltd.
(2) Business description of divested business
Adhesive Business (excluding manufacturing)(3) Primary reason for business divestiture
In the Adhesive Business field, the business environment is changing at an accelerated
pace. In this environment, the Company is set to make intensive investments to pursue its
strategy for the core businesses and new businesses according to its new corporate vision.
With this in mind, the Company believes that it will be able to realize further growth in the
covered business by having Bostik-Nitta Co., Ltd., an equity-method affiliate of theCompany, succeed the covered business.
(4) Date of business divestiture
August 1, 2018(5) Outline of the transaction including legal format
An absorption-type split with only cash and equivalent assets provided as consideration
2. Outline of Accounting Treatment Applied (Estimate)(1) Gain on transfer of business¥650 million(2) Appropriate book values of assets and liabilities of business transferred and major
components
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities¥23 million¥23 million¥11 million¥169 million¥180 million

10(3) Accounting treatment
The Company plans to recognize the difference between the consideration for the transfer
and an amount equivalent to the shareholders’ equity corresponding to the transferredbusiness, net of advisory fees for the company split, as a “Transfer gain on businessdivestiture” in the consolidated statement of income for the six months ending September
30, 2018. The Company has recorded advisory fees related to the company split that wereincurred in the three months ended June 30, 2018 as “Advisory fees” in the consolidated
statement of income for the three months ended June 30, 2018.
3. Reportable segment in which the divested business was included
Formula solution business
4. Estimated net sales and operating income attributable to the divested business recorded on thequarterly consolidated statement of income for the quarterly period under review
Net sales¥1,106 million
Operating income¥43 million
Note: The above amounts represent the net sales and operating income of the entire Adhesive Business,
as it is impractical to determine the net sales and operating income of the Adhesive Business (excluding
manufacturing).

5. Outline of continued involvement
The Company has entered into a business outsourcing agreement with Bostik-Nitta Co., Ltd.

11