April 26, 2024
To whom it may concern,
Company name:
Representative:

Contact:

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

Notice Concerning Recording of Cost of Sales (Reversal of Write-down of Inventories),
Recording of Non-operating Income (Share of Profit of Entities Accounted for Using
Equity Method) and Revisions to Financial Results Forecast
PACIFIC METALS CO., LTD. (the “Company”) hereby announces that it has recorded a reversal of write-downof inventories under cost of sales and share of profit of entities accounted for using equity method under nonoperating income for the fiscal year ended March 31, 2024 (April 1, 2023 through March 31, 2024). The Company
also announces that, in light of the most recent performance trend, it has decided to revise the consolidated financial
results forecast for the fiscal year ended March 31, 2024 (April 1, 2023 through March 31, 2024) announced onFebruary 2, 2024.
● Details of cost of sales (reversal of 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 someof their procurement to nickel pig iron, which has a price advantage. In light of this environment, the selling
prices of the Company’s products are set at the price level partially based on the price of nickel pig iron. Inaddition, the value of inventories of raw materials and other items is increasing because raw material and fuelprices as well as the cost of electricity remain at high levels, among other factors. As a result, with regard to thefull-year consolidated financial results, a decline in profitability of inventories (merchandise and finishedgoods, work in process, raw materials and supplies) was recognized for the nine months ended December 31,2023, and the Company recorded a write-down of inventories amounting to 2,581 million yen under cost ofsales. However, due to a decrease in inventory volume and other factors, the Company expects to reverse anamount of 1,598 million yen under cost of sales (decrease in cost of sales), and a full-year net write-down of
inventories is expected to be 982 million yen.
● Details of non-operating income (share of profit of entities accounted for using equity method)
With regard to the full-year consolidated financial results, the Company expects to record share of profit ofentities accounted for using equity method of 1,506 million yen due mainly to strong performance of entities
accounted for using equity method in the Philippines supported by strong demand, in addition to the 4,546
million yen already recorded, and accordingly a total share of profit of entities accounted for using
equity method is expected to be 6,053 million yen.

1

● Revisions to financial results forecast
1. Revisions to consolidated financial results forecast for the fiscal year ended March 31, 2024 (April 1, 2023
through March 31, 2024)
ProfitBasic
Operating
Ordinary
attributable
Net salesearnings perprofit
profitto owners ofshareparent
Million yen

Million yen

Million yen

Million yen

Yen(Announced on February 2, 2024)

15,586(8,740)(3,242)(1,138)(58.35)

Revised forecast (B)15,521(9,114)(2,119)(1,074)(55.10)Change (B–A)

(64)

(374)

1,122

63

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

(0.4)

－－－

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

Previously announced forecast (A)(257.75)

2. Reason for revisions
With regard to the consolidated financial results forecast, the economic outlook remains highly uncertain,
mainly affected by severe real estate market conditions in China, global monetary tightening, growing
tensions in the Middle East and Ukraine, and the remaining high level of inflation rate.
On the volume front of the Company’s ferronickel products, the environment in which the Company
operates has remained largely unchanged. Accordingly, the Company has continued with the policy ofcontrolling volume from the viewpoint of profitability and expects results to be almost the same as thepreviously announced forecast.
In terms of profit and loss, on the selling price front of ferronickel products, the Company also partiallyrefers to the price of nickel pig iron, which has a price advantage over ferronickel products, in addition tothe applicable LME nickel price in setting the selling price of the Company’s products. Therefore, income
was restrained to a certain extent. Moreover, on the procurement front, prices of nickel ore, which is themain raw material, continue to remain high, as do the prices of raw materials, fuel and electricity. These andother factors are expected to have a significant impact on procurement prices. With regard to the operating
profit, the amount of loss is expected to increase due to a decrease in reversal of write-down of inventories
compared to the previously announced forecast. On the other hand, with regard to the ordinary profit, theamount of loss is expected to decrease due to an increase in share of profit of entities accounted for using
equity method.
In other areas, regarding a write-down of inventories, while the Company recorded additional write-downof inventories for the first half, a reversal has occurred in the second half because of a reduction in the writedown amount. Therefore, the earnings trend is expected to differ from quarter to quarter. In addition, theCompany expects to record a gain on sale of investment securities under extraordinary income, andimpairment losses under extraordinary losses.
Although the situation remains challenging, response measures against such business environment areconsistent 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 above. For theunderlying assumptions, please refer to “(Reference) Revisions to underlying assumptions,” on thefollowing page.
(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

Applicable exchange rate

price ($/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 2,2024)

3,052

2,998

6,050

3,210

2,805

6,015

10.78

8.43

9.61

140.18146.29143.21

Revisedforecast

3,052

2,973

6,025

3,210

2,825

6,035

10.78

8.42

9.62

140.18148.85144.46(Reference)
Actual results
for the previous
fiscal year
ended March
31, 2023

5,668

6,725

12,393

8,079

5,301

13,380

12.12

11.11

11.57

131.49138.44135.263