Consolidated Financial Results for the year ended March 31, 2023 (IFRS Financial Information) (English translation of "KESSAN TANSHIN" originally issued in Japanese)
April 27, 2023 Makita Corporation Stock code: 6586 URL: https://www.makita.biz/ Munetoshi Goto, President, Representative Director 1. Summary operating results of the year ended March 31, 2023 (From April 1, 2022 to March 31, 2023)
1. Amounts of less than one million yen have been rounded. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income 2. taxes, profit, profit attributable to owners of the parent, and comprehensive income against the previous year.
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the payment of dividend shall be the last day of a relevant period, at the present time, the projected amount of dividends as of the said record date has not been determined yet. For further details, refer to "(5) Basic policy regarding profit distribution and cash dividend for fiscal 2023 and 2024" on page 7.
Note: The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes and profit attributable to owners of the parent against the previous year. 4. Others (1)Changes in important subsidiaries for the fiscal year (Changes in specified subsidiaries accompanied by changes in scope of consolidation): None (2)Changes in accounting policies and accounting estimates: 1. Changes in accounting policies required by IFRS: None 2. Changes in accounting policies other than 1: None 3. Changes in accounting estimate: None (3)Number of shares outstanding (common stock)
Makita's earnings releases (KESSAN TANSHIN) are not subject to an audit. Explanation regarding proper use of business forecasts, and other significant matters The financial forecast given above is based on assumptions, judgments and beliefs in light of the information currently available to it. Therefore, these statements should not be interpreted as representation where such objectives will be achieved. As a consequence of the factors above and other, actual results may vary materially from the forecasts provided above. Regarding the assumptions for the forecasts and cautions, refer to "(4) Outlook for the fiscal year ending March 31, 2024" on page 5.
1. Overview of operating results (1)Overview of operating results of the year Looking at the international economic situation during the fiscal year, concerns over a global economic downturn have heightened against the backdrop of factors including high inflation, monetary tightening in various countries and the energy crisis associated with the prolongation of the war in Ukraine. In this situation, the Makita Group focused on expanding its lineup of cordless products including power tools and outdoor power equipment in the "40Vmax Lithium-ion Battery" series. With respect to production, we worked on building a production system and strengthening management functions to flexibly address changes in the demand environment and geopolitical risks, and improve the efficiency of the Group as a whole. We also work to increase the level of the community-based and customer-oriented service framework in order to further strengthen trusting relationships with customers around the world. We strive to deepen and develop the market centered on cordless products. Although sales were sluggish in Europe and North America, our group's consolidated financial results for the fiscal year set a new record high, increased 3.4% year on year to 764,702 million yen due to strong sales in Japan and Oceania, as well as the impact of the yen's depreciation and strong local currencies. In terms of profit, operating profit decreased by 69.2% year on year to 28,246 million yen (operating profit ratio 3.7%) due to a worsening cost ratio as a result of the impact of foreign exchange rates and soaring raw material prices, along with an increase in selling, general, administrative and others expense. Profit before income taxes decreased by 74.2% year on year to 23,887 million yen (profit before income taxes ratio: 3.1%), and profit attributable to owners of the parent decreased by 81.9% to 11,705 million yen (ratio of profit attributable to owners of the parent: 1.5%).
Revenue by region are as follows:
In Japan, although stay-at-home demand subsided, we mainly secured sales of cordless outdoor power equipment and the new XGT series of products, resulting in a 4.2% increase year on year to 122,978 million yen. In Europe, as sales decreased by 1.0% year on year to 348,994 million yen due to deteriorating business confidence caused by high inflation, monetary tightening, and uncertainty concerning energy supply. In North America, while sales decreased as stay-at-home demand subsided and monetary tightening created wariness of a recession, revenue increased 6.1% year on year to 119,064 million yen due to the depreciation of the yen against local currencies. In Asia, although there was market turmoil around China's zero COVID-19 policy and impacts from monetary tightening in various countries, sales were strong in Taiwan and other countries and the depreciation of the yen against local currencies contributed to revenue increasing by 8.3% year-on-year to 53,276 million yen. In Central and South America, while sales decreased due to accelerating inflation and increased uncertainty concerning the future in each country, revenue increased 13.1% year on year to 47,256 million yen due to the depreciation of the yen against local currencies. In Oceania, despite negative economic factors such as surging construction material prices and monetary tightening, strong sales of new products and outdoor power equipment resulted in a 13.6% year on year increase to 58,593 million yen. In the Middle East and Africa, despite continuing unstable political and economic conditions, revenue increased 4.2% year on year to 14,541 million yen due to the depreciation of the yen against local currencies.
(Initiatives toward carbon neutrality)
The impact of climate change on society, such as frequent wind and flood disasters, is becoming more serious, and companies are playing an increasingly important role in realizing a decarbonized society. We have identified contributing to a decarbonized society as a material issue that should be prioritized and are stepping up our efforts. Therefore, the Group is currently working on the realization of a decarbonized society by focusing on cordless outdoor power equipment that does not emit exhaust gases during use as the next pillar of our future business in addition to power tools. In addition, with the goal of reducing our greenhouse gas (GHG) emissions, we have set targets for reducing GHG emissions from our business activities (Scope 1 and 2) by 50% by FY2030 from the FY2020 level and to net zero by FY2040, and reducing GHG emissions from the entire supply chain (Scope 3) to net zero by FY2050. During the fiscal year ended March 2023, solar panels were installed at the Okinawa Branch in Japan and at multiple overseas locations, including the Thailand Plant, Austria, and Taiwan, and we promoted the use of renewable energy. We will continue to work on the use of renewable energy and energy conservation in our business activities to achieve GHG emission reduction targets.
(2) Overview of financial situation for the fiscal year ended March 31, 2023
Total assets as of the end of the year increased by 91,854 million yen to 1,099,351 million yen compared to the balance as of March 31, 2022. This increase was mainly due to the rise in "Cash and cash equivalents ". Total liabilities increased by 68,685 million yen to 323,652 million yen compared to the balance as of March 31, 2022. This increase was mainly due to the rise in "Borrowings." Total equity increased by 23,169 million yen to 775,699 million yen compared to the balance as of March 31, 2022. This increase was mainly due to exchange gain or loss recognized in "Exchange differences on translating foreign operations" included in the "Other components of equity".
(3) Overview of cash flow situation for the fiscal year ended March 31, 2023
Total cash and cash equivalents amounted to 162,720 million yen, increased by 91,663 million yen compared to the end of the previous year. Net cash provided by operating activities amounted to 44,430 million yen (net cash used in operating activities amounted to 103,660 million yen in the previous year), due mainly to a decrease in inventories. Net cash used in investing activities increased by 9,789 million yen from the previous period to 37,680 million yen (27,891 million yen in the previous period), due to income reduction after withdrawal of time deposit, sale and redemption of investment. Consequently, free cash flows (the sum of cash flows from operating activities and investing activities) amounted to 6,750 million yen (-131,551 million yen in the previous year). Net cash provided by financing activities amounted to 80,970 million yen (net cash used in financing activities amounted to 52,626 million yen in the previous year), up 28,344 million yen over the previous year, due to proceeds from short-term loans.
(4) Outlook for the fiscal year ending March 31, 2024
In the future, the Makita Group expects that the prospect for the global economy will continue to be uncertain. Meanwhile, the Group believes that demand for environmental and human friendly tools that contribute to the solution of social issues, such as the labor shortage and environment conservation by increased efficiency of works, will continue to increase further both in emerging and developed countries. To cope with these assumed conditions, Makita will: Strengthen its R&D and product development capabilities, mainly for the technologies of motors and technologies for discharge/charge of batteries, to take the initiative in cordless products market; • Next to power tools, we will work to develop and market products, mainly cordless outdoor power equipment and cleaning products, as the mainstay of future business. • Work to strengthen a multipolar production and procurement system that is not overly dependent on any specific country, region, or supplier. Strive to raise its brand power by promoting the establishment of a sales and after-sales service network to . offer community-based and fine-tuned response to needs of customers around the world. On the basis of these factors, the Group will strive to maintain a solid presence in the industry and contribute to achieve a sustainable society as a global supplier of a comprehensive range of tools for creating comfortable homes and living environments. (Consolidated Financial Performance Forecast for the Year Ending March 31, 2024) The global economy is expected to continue to slow as inflation remains high and monetary policy continues to be tightened to cope. In addition, the environment surrounding our group is expected to remain uncertain due to rising prices of commodities and increasing international tension over the Ukraine issue. Based on these assumptions, the consolidated results for the fiscal year ending March 2024 are estimated below. We will continue to work to strengthen our profit structure by eliminating waste and inventory optimization.
[Preconditions] The above forecast is based on the assumption of exchange rates of 130 yen to the U.S. dollar, 140 yen to the euro and 19.0 yen to the renminbi. [Reference] The actual exchange rate for the year ended March 31, 2023 was 135.50 yen to the U.S. dollar, 140.99 yen to the euro and 19.75yen to the renminbi. FORWARD-LOOKING STATEMENTS This document contains forward-looking statements based on assumptions, judgments and beliefs in light of the information currently available to it., and includes potential risks and uncertainties. As a consequence of the factors above and other, actual results may vary materially from the forecast provided. Therefore, these statements should not be interpreted as representation where such objectives will be achieved.
(5) Basic policy regarding profit distribution and cash dividend for the fiscal 2023 and 2024
Makita's basic profit distribution policy has been to pay a minimum annual dividend of 10 yen per share and a consolidated dividend payout ratio of 30% or more (however, if there are special factors, the dividend amount will be determined based on adjusted basic earnings per share after adding or subtracting such factors). However, from the viewpoint of strengthening shareholder returns, we have reviewed this policy and decided to set the minimum annual dividend at 20 yen and the total return ratio(*) at 35% or more (taking special factors into consideration, if any), starting from the fiscal year ended March 31, 2023. Of these, we will consider purchasing of treasury shares in view of stock price level and free cash flow and so on, in order to increase shareholder returns through the implementation of a flexible capital policy and improvement of capital efficiency.
×100 Profit attributable to owners of the parent per share (Excluding special factors) We intend to use retained earnings to invest in environmental initiatives, which will become increasingly important, and to expand our business globally, while maintaining a financial structure that can withstand any changes in the business environment.
suspension of factory operations in China due to a lockdown that occurred in the first quarter. In determining the dividend amount, an after-tax impact of approximately 3.9 billion yen was added. 2.  At a meeting of the Board of Directors to be held in April 2024, in accordance with the basic policy on profit distribution described above, the amount of dividends will be determined so that the total return ratio is at least 35%, and the decision will be submitted to the General Meeting of Shareholders to be held the following June. However, if certain special circumstances arise, computation of the amount of dividends will be based on profit attributable to owners of the parent after certain adjustments.
2. Basic Rationale for Selection of Accounting Standards
Makita has voluntarily adopted International Financial Reporting Standards (IFRS) from the fiscal year ended March 31, 2019 in order to improve global comparability in financial market.

(3) Consolidated Statement of Changes in Equity

(5) Notes to Consolidated Financial Statements Notes on the assumptions for a going concern: None Segment Information
1. Profit attributable to owners of the parent per share (Basic) is calculated on the basis of the average number of shares outstanding during the year. Average number of shares outstanding is as follows: For the year ended March 31, 2022:271,530,966 For the year ended March 31, 2023:271,539,104 2. The amount of profit attributable to owners of the parent per diluted per share are not shown as diluted shares do not exist.
Significant Subsequent Events: None
4. SUPPORT DOCUMENTATION (CONSOLIDATED)
on page 5. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income 2. taxes, and profit attributable to owners of the parent compared to the previous year.
for the periods presented. Accordingly, it differs from "Segment Information" on page 14. 2. The table shows the changes in the percentage ratio of revenue compared to the previous year.