Financial Results for the Second Quarter ended September 30, 2018
(Japan GAAP)
November 9, 2018
Company name:

HANWA Co.,Ltd.

Listed stock exchange: Tokyo

Stock exchange code:

8078(URL http://www.hanwa.co.jp)

Representative:
Hironari Furukawa President
Enquiries:
Yoichi Nakagawa Director, Senior Managing Executive Officer
Scheduled date of issue of audited financial statements: November 14, 2018
Scheduled date of payout of dividend: December 3, 2018

Phone +81-3-3544-2000(Amounts less than one million yen are rounded down)

１．Consolidated financial results for the Second Quarter ended September 30, 2018 (April 1, 2018 to September 30, 2018)(1) Consolidated operating results（Percentage indicate a change from the corresponding period of the previous year）
Net sales
For the 2nd Quarter
ended September 30, 2018
ended September 30, 2017

(Millions of yen)(％)

Operating income

Ordinary income(Millions of yen)

(Millions of yen)(％)

Profit attributable toowners of the Company(％)(Millions of yen)

1,004,927
20.1
13,147
14.7
10,839(17.3)
836,979
17.0
11,461
4.8
13,10632.1
Note: Comprehensive income
For the 2nd Quarter ended September 30, 2018
5,100 million yen
For the 2nd Quarter ended September 30, 2017
10,970 million yen
Net income
per share

For the 2nd Quarter
ended September 30, 2018
ended September 30, 2017

(％)

6,564
(23.2)
8,550
37.7(53.5) %165.1 %Net income
per share(diluted)

(yen)

(yen)

161.53－210.40－* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, net
income per share has been calculated as if the said share consolidation was conducted at the beginning of the previous
fiscal year.
* In the fiscal year ended March 31, 2018, HANWA finalized the provisional accounting treatment for the allocation of
acquisition cost of additional investment securities. Numbers for the 2nd Quarter ended September 30, 2017 arereflected the finalization of the provisional accounting treatment.

(2) Consolidated financial position
Total assets

Shareholders'equity ratio

Net assets(Millions of yen)

(Millions of yen)

Shareholders' equity
per share

(％)

(yen)

954,809
207,16520.2
4,737.13
860,344
203,700
21.8
4,621.96
Note: Shareholders' equity
As of September 30, 2018 192,496 million yen
As of March 31, 2018
187,828 million yen* From the beginning of the 1st Quarter of the fiscal year ending March 31, 2019, HANWA adopted the “Partial
Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.28, February 16, 2018) and its
relevant Guidance. The results for the fiscal year ended March 31, 2018 are those after retrospective application.
As of September 30, 2018
As of March 31, 2018

２．Cash dividends
1st Quarter（effective date）

Cash dividends per share
2nd Quarter
3rd Quarter(yen)Year ended March 31, 2018Year ending March 31, 2019Year ending March 31, 2019
（estimated）

－
－

(yen)

Year-end

(yen)

10.00
75.00

Annual
(yen)

(yen)

－

75.00

－

－

75.00

150.00* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, theamount for the total annual dividends per share for the year ended March 31, 2018 is omitted and shown as a dash.
In case the share consolidation was taken into consideration, the 2nd Quarter dividend and annual dividend for the fiscal
year ended March 31, 2018 would be 50.00 yen and 125.00 yen, respectively.

３．Forecast of consolidated financial results for fiscal year ending March 31, 2019 (April 1, 2018 to March 31, 2019)
Net sales

Operating income(Millions of yen) (％)(Millions of yen) (％)（Percentage indicate a change from the previous year）
Profit attributable to
Net income
Ordinary income
owners of theper share
Company(Millions of yen) (％) (Millionsof yen) (％)(yen)

Full year
2,000,000
11.7
31,00018.2
26,0002.0
16,800(3.2)
413.43* The above forecasts reflect assumptions and prospects based on the information currently available. They are subject
to a various risks and uncertainties that could cause actual results to differ materially from this information.

－１－

HANWA Co., Ltd.

Financial Results for the Second Quarter ended September 30, 2018

《Consolidated Balance Sheets》(Amounts less than one million yen are rounded down)

Millions of yen
March 31, 2018

September 30, 2018

AssetsCurrent assets;
Cash and deposits
Trade notes and accounts receivable
Electronically recorded monetary claims
Securities
Inventories
OthersAllowance for doubtful receivables
Total current assets

36,198400,317
25,416683
134,877
47,128(481)
644,140

38,887
399,607
27,687487
150,529
124,898(504)
741,593

32,402
32,06664,4693,426

33,42433,89467,318
4,193

109,781
39,429(902)
148,308
216,204
860,344

109,478
33,317(1,091)
141,704
213,215
954,809

Current liabilities;
Trade notes and accounts payable
Short-term loans payable
Commercial paper
Current portion of bonds payable
Income taxes payable
Accrued bonuses
Provision for product warranties
OthersTotal current liabilities

266,595
116,245
10,00010,121
5,050
2,474
391
40,851
451,730

270,058
156,298
20,00010,121
3,614
2,606
376
73,365
536,441

Long-term liabilities;
Bonds payable
Long-term loans payable
Retirement benefits liabilities
OthersTotal long-term liabilities
Total liabilities

40,055
147,601
4,943
12,312204,913656,643

50,045
141,896
4,804
14,456211,202
747,643

45,651
131,045(3,726)
172,969

45,651
135,152(3,736)
177,068

14,342
(169)
2,963
3,110
(5,388)14,85815,872
203,700
860,344

17,202
718
2,963
(404)
(5,051)
15,428
14,668207,165954,809

Fixed assets;
Property and equipment;
Land
OthersTotal property and equipment
Intangible assets
Investments and other assets;
Investment securities
OthersAllowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

Liabilities;

Net assets;
Shareholders' equity;
Common stock
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Net unrealized holding gains on securities
Deferred hedge profit and loss
Land revaluation difference
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets－２－

HANWA Co., Ltd.

Financial Results for the Second Quarter ended September 30, 2018

《Consolidated Statements of Income and Comprehensive Income》(Amounts less than one million yen are rounded down)

Millions of yen
2nd Quarter ended
September 30, 2017

2nd Quarter ended
September 30, 2018

Net sales
Cost of sales
Gross profit

836,979
803,393
33,585

1,004,927
966,984
37,942

Selling, general and administrative expenses
Operating income

22,124
11,461

24,795
13,147

848
846
985
457
1,029
4,167

1,635
863
―
―
694
3,193

1,563
―
―
324
634
2,522
13,106

2,067
172
2,418
278
563
5,501
10,839Other income;Interest income
Dividend income
Revenue from investment in affiliates
Foreign exchange gain
OthersTotal other income
Other expenses;
Interest expenses
Loss on investment in affiliates
Foreign exchange loss
Guarantee commission
OthersTotal other expenses
Ordinary income
Extraordinary income
Gain on sale of property and equipment
Reversal of allowance for business loss of affiliates
Total extraordinary income
Extraordinary loss;
Loss on impairment of long-lived assets
Loss on sale of property and equipment
Loss on natural disaster
Loss on devaluation of investments securities
Total extraordinary loss
Income before income taxes and minority interest

―
512
512

410
―
410

―
―
13,618

182
166
1,011
1,360
9,890

Income taxes
Net income

4,870
8,748

3,553
6,336

Net income attributable to
Net income attributable to owners of the Company
Net income(loss) attributable to non-controlling interests

8,550
197

6,564
(227)

Other Comprehensive Income
Net unrealized holding gains on securities
Deferred hedge profit and loss
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates
Total other comprehensive Income
Comprehensive Income

1,801
(255)
(407)
372
712
2,222
10,970

2,855
887
(671)
360
(4,668)(1,236)
5,100

Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income(loss) attributable to non-controlling interests

10,368602

7,127(2,027)－３－

HANWA co.,ltd.

Financial Results for the Second Quarter ended September 30, 2018

《Consolidated Statements of Cash Flows》(Amounts less than one million yen are rounded down)

Millions of yen
2nd Quarter
ended
September 30,
2017

2nd Quarter
ended
September 30,
2018

Cash flows from operating activities;
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Increase(decrease) in allowance for doubtful receivables
Interest and dividend income
Interest expense
Equity in earnings of affiliated companies (gain)
Gain on sale of property and equipment
Reversal of allowance for business loss of affiliates
Loss on sale of property and equipment
Loss on devaluation of investments securities
Loss on disaster(Increase)decrease in trade receivables(Increase)decrease in inventories
Increase(decrease) in trade notes and accounts payable(Increase)decrease in deposits received
Increase(decrease) in advanced payment
Increase(decrease) in retirement benefits
Other, net
Sub totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

13,618
1,996
199
(9)
(1,694)
1,563
(985)
―
(512)
―
―
―
(16,103)(12,030)
10,501
5,442(4,889)
483
2,080
(339)
1,153
(1,531)(6,556)(7,274)

9,890
2,324
425
186
(2,498)
2,067
172
(410)
―
182
1,011
166
1,872
(14,375)
1,341
23,479(71,133)
494
10,677(34,123)
1,713(2,030)(4,854)(39,293)

Cash flows from investing activities;
Payment for time deposits
Proceeds from refund of time deposits
Payment for purchase of property and equipment
Proceeds from sale of property and equipment
Payment for purchase of investment securities
Proceeds from sale and redemption of investment securities
Net increase(decrease) from purchase of consolidated subsidiaries(Increase)decrease in short - term loans receivable, net
Increase in long - term loans receivableCollection of long-term loans receivable
Other, net
Net cash used in investing activities(1,822)
1,223(2,105)
113(30,475)
429
289
12,912(14,111)62(55)(33,538)(1,114)
1,260(3,418)1,018(2,263)255―(2,585)
(363)
853
(984)
(7,342)

Cash flows from financing activities;
Increase(decrease) in short-term loans, net
Increase(decrease) in commercial paper, net
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of bonds
Payment for redemption of bonds
Proceeds from stock issuance to minority shareholders
Payment for cash dividends
Cash dividends paid to minority interest in consolidated subsidiaries
Other, net
Net cash provided by (used in) financing activities

8,733(5,000)30,550(11,554)
9,950(10)
13,580(2,031)(28)(42)
44,14732,153
10,000295(833)
19,892(10,010)―(2,892)(48)(98)
48,457

Effect of exchange rate changes on cash and cash equivalents
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents from newly consolidated subsidiaries
Increase in cash and cash equivalents resulting from mergers with unconsolidated subsidiaries
Cash and cash equivalents at end of period

93,344
27,206
1,144―
31,694418
2,239
34,855576
25
37,696－４－

HANWA Co., Ltd.

Financial Results for the Second Quarter ended September 30, 2018

《Segment information》
Segment information by business category for the 2nd Quarter ended September 30, 2017 and 2018, is as follows:(Amounts less than one million yen are rounded down)

Millions of yen

2nd Quarter ended September 30, 2017
Reportable segment
Subtotal

Other

Total

Adjustment

Consolidated

82,541
28,317800,962
39,22036,016954

836,979
40,174―(40,174)

836,979―

106,312110,859

840,183

36,970877,153(40,174)

836,979673

217

14,958411

15,370(2,263)

13,106

Foods

Petroleum &chemicals

Overseas
sales
subsidiaries

45,265681

50,688
232

103,643
2,668

88,90545,94650,920

2,317

475

854

Steel

Metals& alloys

Non-ferrous

Customers
Inter-segment

431,847
5,390

86,976
1,929

Total

437,237
10,419metals

Net sales

Segment income(loss)

Millions of yen

2nd Quarter ended September 30, 2018
Reportable segment
Steel

Metals& alloys

Non-ferrous

487,763

140,328

49,273

metalsFoods

Petroleum &chemicals

Overseas
sales
subsidiaries

Subtotal

Other

Total

51,969120,574

116,868

966,779

38,1481,004,927

33,77550,826

1,158

51,985

150,644 1,017,605
673
11,43939,307451

1,056,912
11,890Adjustment

Consolidated

Net sales
Customers
Inter-segment

5,180

4,412

659

746

6,050

Total
Segment income(loss)

492,943
7,766

144,741678

49,933449

52,716
1,020

126,625850― 1,004,927(51,985)

Notes:
1. “Other” comprises businesses that are not included in reportable segments, such as lumber section and machinery section.
2. Adjustments for segment income include inter-segment elimination and Group costs that have not been distributed to reportable segments. These group
costs consist mainly of expenses of administrative departments.

3. Segment income or loss is adjusted between ordinary income on the consolidated statements of income and comprehensive income.
4. Segment income for the 2nd Quarter ended September 30, 2017 are reflected important revisions resulted from the finalization of the provisional
accounting treatment.

－５－―(51,985) 1,004,927(1,050)10,839November 9, 2018

Highlights of Consolidated Financial Results for the 2nd Quarter of FY2018(Japan GAAP)HANWA Co., Ltd.

Outline of Financial Results for the 2nd Quarter of FY2018
・ As for the interim result for this fiscal year, net sales have increased by 20% in the same period of the previous year, hence reached to 1,004.9
billion yen, due to market of steel products and metal resources being higher than the same period of previous year's level and sales expansionof ferro-alloy. Net profit was 6.5 billion yen, decreased by 23%, due to foreign exchange loss and loss on investment in affiliates as opposed to
the gain or revenue in the same period of the previous year, and loss on devaluation of investments securities as extraordinary loss.
・ We plan to pay 150 yen as the annual (75 yen as the interim and 75 yen as the year-end) dividend.
* Numbers for the 2nd Quarter of FY2017 are reflected important revisions resulted from the finalization of the provisional accounting treatment.

Operating Results
Net sales
Gross profit

1Q-2Q
of FY2018

1Q-2Q
of FY2017

1,004.9

836.9

Year-on-year
Change167.9

Main Factors

rate

20% (Net sales)
Net sales have increased by 20% from the same period of theprevious year. This was due to market of steel products being
higher than the same period of previous year's level andincrease of sales amounts of stainless steel and ferroalloy.

37.9

33.5

4.3

13%

SG&A expenses

24.7

22.1

2.6

12%

Operating income

13.1

11.4

1.6

15% (SG&A expenses)
SG & A expenses have increased 2.6 billion yen from the same
period of previous year. This was mainly due to increase of
number of consolidated subsidiaries.
Our personnel expenses have increased 1.7 billion yen,including 0.4 billion yen from newly consolidated subsidiaries.

3.1

4.1

(0.9)

-23%

Non-operating expenses

5.5

2.5

2.9

118%

Ordinary income

10.8

13.1

(2.2)

-17% (Non-operating income/expenses)

Extraordinary gain

0.4

0.5

(0.1)

-20%

1.3

―

1.3

―

Income before income
taxes and others

9.8

13.6

(3.7)

-27%

Income taxes
Net income
Owners of the Company(loss)
Non-controlling interests(loss)

EPS (yen)Comprehensive
incomeSegment
Information

3.5

4.8

(1.3)

-27%

6.3

8.7

(2.4)

-28%

6.5
(0.2)
161.538.5
0.1
210.40(1.9)(0.4)(48.87)

-23%
―
-23%

5.1

10.9

(5.8)

-54%

Net sales
1Q-2Q
of FY2018

1Q-2Q
of FY2017

Non-operating income has decreased 0.9 billion yen and Nonoperating expenses increased 2.9 billion yen. The breakdown of
the main causes is as follows.
Foreign exchange gain/loss:
gain of 0.4 billion yen (last year)
loss of 2.4 billion yen (this year)
Profit/loss on investment in affiliates:
Profit of 0.9 billion yen (last year)
loss of 0.1 billion yen (this year)(Extraordinary gain/loss)
・Loss on devaluation of investments securities 10 billion yen ：mainly due to decline in listed stocks in foreign countries
・Gain on sale of building 4 billion yen and loss on sale of property
1 billion yen ：due to sale of company dormitory
・Loss on natural disaster 1 billion yen

rate

1Q-2Q
of FY2018

1Q-2Q
of FY2017

rate

Steel

492.9

437.2

13%

7.7

10.4

-26%

Metals & alloys

144.7

88.9

63%

0.6

2.3

-71%

Non-ferrous metals

49.9

45.9

9%

0.4

0.4

-6%

Foods
Petroleum & chemicals

Overseas sales
subsidiaries
Total for reportablesegments
Other

52.7
126.6
150.6

50.9
106.3
110.8

4%
19%
36%

1.0
0.8
0.6

0.8
0.6
0.2

20%
26%
210%

1,017.6

840.1

21%

11.4

14.9

-24%

39.3

36.9

6%

0.4

0.4

10%

Total

1,056.9

877.1

21%

11.8

15.3

-23%

Adjustment(51.9)(40.1)

-29%

(1.0)

(2.2)

54%

Consolidated

1,004.9

836.9

20%

10.8

13.1

-17%

TopicsMar. 2018

954.8

860.3

94.4

11%

741.5
213.2

644.1
216.2

97.4
(2.9)

15%
-1%

Total liabilities

747.6

656.6

91.0

14%

(Interest-bearing debt)

Net DER

379.8
340.9
180%

325.5
289.3
154%

54.2
51.6
26pt

17%
18%
―

Total net assets

207.1

203.7

3.4

2%

177.0
15.4
14.6
4,737.13
192.4
20.2%

172.9
14.8
15.8
4,621.96
187.8
21.8%

4.0
0.5
(1.2)
115.174.6-1.6pt

2%
4%
-8%
2%
2%
―

1Q-2Q
of FY2018

1Q-2Q
of FY2017(39.2)(7.2)

Total assets(Current assets)(Fixed assets)(Net interest-bearing debt)(Valuation & translation
adjustments)(Minority interests)
BPS (yen)
Shareholders' equity
Shareholders' equity ratio

Cash Flow
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalents
at end of period

Main Factors

1st half

2,000
1,000
500

(Steel business)
While strong steel demands increased net sales, segment income
decreased due to the pace of the market rise being slowed down.
(Metals & alloys business)
Net sales increased due to rising price level and sales expansion ofstainless steel and ferro-alloy. Segment income decreased due toimpacts of foreign exchange loss and loss on investment in affiliates.
(Non-ferrous metals business)
Due to rise in international commodity markets and increase in copperand aluminum sales volume, revenue increased. On the other hand,
Segment income decreased due to the reduction of margin understabilization of prices and foreign exchange loss.
(Foods business)
Rising price of salmon and strong sales of chicken increased net sales
and Segment income.
(Petroleum & chemicals business)
Due to high market of petroleum products, net sales and Segment
income increased.
(Overseas sales subsidiaries)
Revenue increased due to rising level of bunker fuel price andincreased sales of metal scrap in Singapore and steel in Indonesia.
Improvement of the profitability in US steel business contributed to
Segment income.

・ May. Acquired additional stocks of and made our subsidiary the coil center in Malaysia, Tatt Giap Steel Centre Sdn. Bhd.
・ Jul. Succeed to business of insulation construction from Bridgestone Diversified Products Japan Co.,Ltd.

ChangeMain Factors

rate(Total Assets)

Total assets increased by 11% from the end of the previous year, due
to increase in Inventories and Advanced payment.
Inventories: 150.5 billion yen (+12% from the end of the previous
year)
Advanced payment: 90.7 billion yen (+376% from the end of theprevious year)(Liabilities)

Total liabilities increased by 9% from the end of the previous year,
due to the increase in decrease in trade payables and long term loans.
As interest-bearing debt increased by 14%, net debt-equity ratio wasturned into 147%.

(Net assets)
Total net assets increased 3.4 billion yen from the end of the previous
year, due to the carryover of retained earnings.
Meanwhile shareholders' equity ratio was 20.2%, which is 1.6
percentage points lower than the end of the previous year.

Year-on-year
ChangeMain Factors

rate(31.9)

440%

(7.3)

(33.5)

26.1

△78%

48.4

44.1

4.3

10%

37.6

31.6

6.0

19%

(Operating cash flows)
Due to increase in Inventories and Advanced payments.

(Investment cash flows)
Due to decrease in payment for purchase of investment securities andlong-term loans receivable.

(Financial cash flows)
Due to increase in short-term loans and commercial paper.

【Changes in Net Sales】

1,500

Segment income

Comparison with Mar. 2018

Sep. 2018

Financial Position(Equity capital)

Non-operating income

Extraordinary loss

(Unit: billion yen, rounded down to 0.1 billions of yen)

2nd half

1,511.8

1,514.0

723.5

798.4

【Quarterly Operating Results】
2,000.0

1,791.1

600

995.1

954.1

788.2

715.6

836.9

1,004.9

FY2015FY2016FY2017FY2018(E)

400
200

0

Net sales

Operating income

428.6

408.3

6.1

5.2

469.5

484.5

7.3

7.4

497.4

9

507.4

7
6.9

6.1

5
3

0

【Changes in Net Income】
30
20

10.1

8.8

6.0

6.2

8.5

6.5

FY2015FY2016FY2017FY2018(E)Forecast(Annual)

400
300

17.3

10
0

2nd half

16.3

19.4

16.8

3Q

4Q

2018/1Q

10.2

FY2017

Interest-bearing debt

2Q

237.5

Net DER 379.8
325.5

3

259.6

2

200
100

FY20182Q【Changes in Interest-bearing Debt】

1st half

25.4

1
2017/1Q

1.8
1.4

1.4

1.5

FY2015FY2016FY20171

0change0Cash Dividends

FY2018/1H

FY2017FY2018FY2018(estimated)

2,000.0

1,791.1

12%

Interim (yen)

50.00

75.00

―

Operating income

31.0

26.2

18%

Year-end (yen)

75.00

―

75.00

Ordinary income

26.0

25.5

2%

Annual (yen)125.00――Net income attributableto owners of parent

16.8

17.3

-4%

Dividend payout ratio

29%

―

36%

Net sales