Brother Industries : Consolidated Results for the 2nd Quarter of Fiscal Year ending March 31, 2018

Six months ended

September 30,

Six months ended

September 30,

Change

2017

2016

Revenue

Y 346,400

Y 310,270

11.6 %

Operating profit

31,310

36,164

(13.4) %

Profit before income taxes

31,588

37,062

(14.8) %

Profit for the period

22,967

26,990

(14.9) %

Profit for the period attributable to owners of the parent company

22,682

26,991

(16.0) %

Comprehensive income for the period

45,628

(31,233)

-

Basic earnings per share for the period (yen)

87.35

103.96

Diluted earnings per share for the period (yen)

87.10

103.67

Dividends per common share (yen)

24.00

18.00

As of

September 30,

As of March 31,

2017

2017

Total assets

Y 705,968

Y 674,107

Total equity

400,978

361,709

Equity attributable to owners of the parent company

384,067

345,061

Equity attributable to owners of the parent company ratio

54.4 %

51.2 %

Equity attributable to owners of the parent company per share (yen)

1,478.99

1,328.97

Consolidated Statement of Financial Position

Millions of yen

Thousands of

U.S. dollars

As of

As of

As of

March 31,

September 30,

September 30,

2017

2017

2017

Assets

Current assets

Cash and cash equivalents

Y

112,032

Y

105,985

$

937,920

Trade and other receivables

96,112

107,521

951,513

Other financial assets

9,701

9,232

81,699

Inventories

112,432

124,158

1,098,743

Other current assets

14,701

12,515

110,752

Subtotal

344,980

359,413

3,180,646

Non-current assets classified as held for sale

245

154

1,363

Total current assets

345,225

359,567

3,182,009

Non-current assets

Property, plant and equipment

120,767

119,874

1,060,832

Investment property

6,646

7,210

63,805

Goodwill and intangible assets

147,012

157,905

1,397,389

Investments accounted for using the equity method

1,506

1,448

12,814

Other financial assets

29,640

35,555

314,646

Deferred tax assets

16,691

17,902

158,425

Other non-current assets

6,617

6,505

57,566

Total non-current assets

328,881

346,401

3,065,496

Total assets

Y

674,107

Y

705,968

$

6,247,504

Equity and liabilities

Liabilities

Current liabilities

Trade and other payables

Y

66,268

Y

72,253

$

639,407

Bonds and borrowings

20,509

1,179

10,434

Other financial liabilities

3,053

7,467

66,080

Income taxes payable

6,461

7,117

62,982

Provisions

5,691

5,532

48,956

Other current liabilities

50,350

50,775

449,336

Subtotal

152,337

144,325

1,277,212

Liabilities directly associated with assets classified as held for sale

20

26

230

Total current liabilities

152,357

144,351

1,277,442

Non-current liabilities

Bonds and borrowings

117,082

117,186

1,037,044

Other financial liabilities

10,969

9,650

85,398

Retirement benefits liabilities

17,612

18,762

166,035

Provisions

3,376

3,282

29,044

Deferred tax liabilities

7,843

8,512

75,327

Other non-current liabilities

3,154

3,241

28,681

Total non-current liabilities

160,040

160,637

1,421,566

Total liabilities

312,398

304,989

2,699,018

Equity

Capital stock

19,209

19,209

169,991

Capital surplus

17,455

17,395

153,938

Retained earnings

407,843

404,389

3,578,664

Treasury stock

(24,230)

(2,792)

(24,708)

Other components of equity

(75,216)

(54,134)

(479,062)

Equity attributable to owners of the parent company

345,061

384,067

3,398,823

Non-controlling interests

16,647

16,910

149,646

Total equity

361,709

400,978

3,548,478

Total equity and liabilities

Y

674,107

Y

705,968

$

6,247,504

Consolidated Statement of Income

Millions of yen

Thousands of U.S. dollars

Six months ended

Six months ended

Six months ended

September 30,

September 30,

September 30,

2016

2017

2017

Revenue

Y

310,270

Y

346,400

$

3,065,487

Cost of sales

(172,612)

(199,753)

(1,767,726)

Gross profit

137,657

146,647

1,297,761

Selling, general and administrative expenses

(102,986)

(107,532)

(951,611)

Other income

5,172

1,136

10,053

Other expenses

(3,679)

(8,940)

(79,115)

Operating profit

36,164

31,310

277,080

Finance income

7,216

1,403

12,416

Finance expenses

(6,386)

(1,135)

(10,044)

Share of profit/(loss) of investments accounted for using the equity method

67

9

80

Profit before income taxes

37,062

31,588

279,540

Income tax expenses

(10,072)

(8,620)

(76,283)

Profit for the period

26,990

22,967

203,248

Profit for the period attributable to:

Owners of the parent company

26,991

22,682

200,726

Non-controlling interests

(0)

285

2,522

Profit for the period

Y

26,990

Y

22,967

$

203,248

Earnings per share:

Yen

Yen

U.S. dollars

Basic earnings per share

Y

103.96

Y

87.35

$

0.77

Diluted earnings per share

103.67

87.10

0.77

Consolidated Statement of Income

Millions of yen

Thousands of U.S. dollars

Three months ended

Three months ended

Three months ended

September 30,

September 30,

September 30,

2016

2017

2017

Revenue

Y

152,742

Y

178,672

$

1,581,168

Cost of sales

(86,966)

(102,407)

(906,257)

Gross profit

65,775

76,264

674,903

Selling, general and administrative expenses

(51,244)

(54,647)

(483,602)

Other income

2,608

335

2,965

Other expenses

(2,083)

(3,246)

(28,726)

Operating profit

15,056

18,706

165,540

Finance income

1,317

750

6,637

Finance expenses

(492)

(792)

(7,009)

Share of profit/(loss) of investments accounted for using the equity method

66

(61)

(540)

Profit before income taxes

15,948

18,603

164,628

Income tax expenses

(4,283)

(4,958)

(43,876)

Profit for the period

11,665

13,645

120,752

Profit for the period attributable to:

Owners of the parent company

11,652

13,535

119,779

Non-controlling interests

12

109

965

Profit for the period

Y

11,665

Y

13,645

$

120,752

Earnings per share:

Yen

Yen

U.S. dollars

Basic earnings per share

Y

44.88

Y

52.12

$

0.46

Diluted earnings per share

44.76

51.98

0.46

Consolidated Statement of Comprehensive Income

Millions of yen

Thousands of U.S. dollars

Six months ended

Six months ended

Six months ended

September 30,

September 30,

September 30,

2016

2017

2017

Profit for the period

Y

26,990

Y

22,967

$

203,248

Other comprehensive income, net of income tax

Items that will not be reclassified subsequently to profit or loss

Gains/(Losses) on investments in equity instruments designated as FVTOCI

519

1,569

13,885

Total of items that will not be reclassified

subsequently to profit or loss

519

1,569

13,885

Items that may be reclassified subsequently to profit or loss

Cash flow hedges

(70)

149

1,319

Exchange differences on translating foreign operations

(58,673)

20,942

185,327

Total of items that may be reclassified

subsequently to profit or loss

(58,744)

21,091

186,646

Other comprehensive income for the period, net of

income tax

(58,224)

22,660

200,531

Comprehensive income for the period

(31,233)

45,628

403,788

Comprehensive income for the period attributable to:

Owners of the parent company

(31,163)

45,249

400,434

Non-controlling interests

(70)

379

3,354

Comprehensive income for the period

Y

(31,233)

Y

45,628

$

403,788

Consolidated Statement of Comprehensive Income

Millions of yen

Thousands of U.S. dollars

Three months ended

Three months ended

Three months ended

September 30,

September 30,

September 30,

2016

2017

2017

Profit for the period

Y

11,665

Y

13,645

$

120,752

Other comprehensive income, net of income tax

Items that will not be reclassified subsequently to profit or loss

Gains/(Losses) on investments in equity instruments designated as FVTOCI

1,363

552

4,885

Total of items that will not be reclassified

subsequently to profit or loss

1,363

552

4,885

Items that may be reclassified subsequently to profit or loss

Cash flow hedges

(45)

(16)

(142)

Exchange differences on translating foreign operations

(10,164)

10,518

93,080

Total of items that may be reclassified

subsequently to profit or loss

(10,209)

10,502

92,938

Other comprehensive income for the period, net of

income tax

(8,846)

11,054

97,823

Comprehensive income for the period

2,819

24,700

218,584

Comprehensive income for the period attributable to:

Owners of the parent company

2,760

24,536

217,133

Non-controlling interests

58

163

1,442

Comprehensive income for the period

Y

2,819

Y

24,700

$

218,584

19,209

17,321

363,864

(24,225)

(46,083)

(200)

3,554

-

(42,729)

333,440

16,545

349,986

-

- 3,420

-

-

-

(3,554)

-

(3,554)

(133)

44

(88)

19,209

17,321

367,285

(24,225)

(46,083)

(200)

-

-

(46,284)

333,307

16,589

349,897

-

- 26,991

-

-

-

-

-

-

26,991

(0)

26,990

-

- -

-

(58,604)

(70)

-

521

(58,154)

(58,154)

(69)

(58,224)

-

- 26,991

-

(58,604)

(70)

-

521

(58,154)

(31,163)

(70)

(31,233)

-

- -

(2)

-

-

-

-

-

(2)

-

(2)

-

- -

-

-

-

-

-

-

-

-

-

-

- (4,679)

-

-

-

-

-

-

(4,679)

(101)

(4,780)

-

- 521

-

-

-

-

(521)

(521)

-

-

-

-

- -

-

-

-

-

-

-

-

(3)

(3)

-

- (4,158)

(2)

-

-

-

(521)

(521)

(4,681)

(104)

(4,786)

19,209

17,321

390,118

(24,227)

(104,687)

(271)

-

-

(104,959)

297,463

16,414

313,878

19,209

17,455

407,843

(24,230)

(75,055)

(161)

-

(75,216)

345,061

16,647

361,709

-

- 22,682

-

-

-

-

-

22,682

285

22,967

-

- -

-

20,932

149

1,484

22,566

22,566

93

22,660

-

- 22,682

-

20,932

149

1,484

22,566

45,249

379

45,628

- -

-

(7)

-

-

-

-

(7)

-

(7)

- (36)

(11)

47

-

-

-

-

0

-

0

- (21)

(21,369)

21,391

-

-

-

-

-

-

-

- -

(6,239)

-

-

-

-

-

(6,239)

(111)

(6,351)

- (2)

-

6

-

-

-

-

3

(3)

-

- -

1,484

-

-

-

(1,484)

(1,484)

-

-

-

- (59)

(26,136)

21,437

-

-

(1,484)

(1,484)

(6,243)

(115)

(6,358)

19,209

17,395

404,389

(2,792)

(54,122)

(12)

-

(54,134)

384,067

16,910

400,978

Balance as of April 1, 2017

169,991

154,469

3,609,230

(214,425)

(664,204)

(1,425)

- (665,628)

3,053,637

147,319

3,200,965

Profit for the period

-

- 200,726

-

-

-

- -

200,726

2,522

203,248

Other comprehensive income

-

-

- -

185,239

1,319

13,133

199,699

199,699

823

200,531

Total comprehensive income for the period

-

- 200,726

-

185,239

1,319

13,133

199,699

400,434

3,354

403,788

Acquisition of treasury stock

- -

-

(62)

- - -

-

(62)

-

(62)

Disposal of treasury stock

- (319)

(97)

416

- - -

-

0

-

0

Cancellation of treasury stock

- (186)

(189,106)

189,301

- - -

-

-

-

-

Dividends paid

- -

(55,212)

-

- - -

-

(55,212)

(982)

(56,204)

Change due to stock swap

- (18)

-

53

- - -

-

27

(27)

-

Reclassification to retained earnings

- -

13,133

-

- - (13,133)

(13,133)

-

-

-

Total transactions with owners

- (522)

(231,292)

189,708

- - (13,133)

(13,133)

(55,248)

(1,018)

(56,265)

Consolidated Statement of Cash Flows

Millions of yen

Thousands of

U.S. dollars

Six months ended

Six months ended

Six months ended

September 30,

September 30,

September 30,

2016

2017

2017

Cash flows from operating activities

Profit before income taxes

Y

37,062

Y

31,588

$

279,540

Depreciation and amortization

17,037

16,966

150,142

Finance expenses/(income)

(830)

(268)

(2,372)

Share of loss/(profit) of investments accounted for using the equity method

(67)

(9)

(80)

Losses/(gains) on sale and disposal of fixed assets

329

280

2,478

Decrease/(increase) in trade and other receivables

(3,789)

(8,241)

(72,929)

Decrease/(increase) in inventories

(658)

(7,963)

(70,469)

Increase/(decrease) in trade and other payables

130

6,437

56,965

Decrease/(increase) in retirement benefit assets

124

543

4,805

Increase/(decrease) in retirement benefit liabilities

(73)

(78)

(690)

Other

(1,376)

7,632

67,540

Subtotal

47,889

46,886

414,920

Interest received

447

483

4,274

Dividends received

236

214

1,894

Interest paid

(314)

(268)

(2,372)

Income taxes paid

(5,146)

(9,461)

(83,726)

Net cash provided by operating activities

Y

43,112

Y

37,853

$

334,982

Cash flows from investing activities

Purchases of property, plant and equipment

(11,312)

(11,138)

(98,566)

Proceeds from sales of property, plant and equipment

289

417

3,690

Purchases of intangible assets

(3,458)

(4,515)

(39,956)

Purchases of investments in equity instruments

(361)

(353)

(3,124)

Proceeds from sales of investments in equity instruments

327

422

3,735

Purchase of investments in debt instruments

(2,290)

(6,589)

(58,310)

Proceeds from sales or redemption of investments in debt instruments

5,761

2,938

26,000

Payments for acquisition of business

(140)

(617)

(5,460)

Other

(313)

(339)

(3,000)

Net cash provided by (used in) investing activities

Y

(11,498)

Y

(19,775)

$

(175,000)

Cash flows from financing activities

Repayment of short-term borrowings

(468)

(423)

(3,743)

Repayment of long-term borrowings

(10,605)

(20,289)

(179,549)

Repayment of lease obligations

(1,034)

(917)

(8,115)

Dividends paid

(4,679)

(6,239)

(55,212)

Dividends paid to non-controlling interests

(101)

(111)

(982)

Other

(1)

(64)

(566)

Net cash provided by (used in) financing activities

Y

(16,890)

Y

(28,045)

$

(248,186)

Effect of exchange rate changes on cash and cash equivalents

(4,354)

3,920

34,690

Net increase/(decrease) in cash and cash equivalents

10,369

(6,047)

(53,513)

Cash and cash equivalents at the beginning of the period

67,387

112,032

991,434

Cash and cash equivalents at the end of the period

Y

77,757

Y

105,985

$

937,920

Customers

186,798

20,592

43,639

24,553

28,155

6,531

310,270

-

310,270

Intersegment

- -

- -

- 9,080

9,080

(9,080)

-

Total

186,798

20,592

43,639

24,553

28,155

15,611

319,350

(9,080)

310,270

Business segment profit

28,149

459

2,901

982

1,926

395

34,815

(143)

34,671

Other income and

expenses

Operating profit Finance income and

30,296

496

3,127

12

1,912

461

36,308

(143)

36,164

expenses

830

Share of profit/(loss) of

investments accounted for

67

using the equity method

Profit before income taxes

37,062

Customers

199,230

20,726

63,482

23,982

33,004

5,973

346,400

-

346,400

Intersegment

-

-

-

-

- 6,154

6,154

(6,154)

-

Total

199,230

20,726

63,482

23,982

33,004

12,127

352,555

(6,154)

346,400

Business segment profit/(loss)

26,909

431

7,610

1,067

2,520

633

39,172

(56)

39,115

Other income and

expenses (6,567) (447) (154) (135) (582) 83 (7,804) - (7,804)

Operating profit/(loss) Finance income and

20,341

(16)

7,455

931

1,938

716

31,367

(56)

31,310

expenses

268

Share of profit/(loss) of

investments accounted for

9

using the equity method

Profit before income taxes

31,588

Customers

1,763,097

183,416

561,788

212,230

292,071

52,858

3,065,487

-

3,065,487

Intersegment

-

-

-

-

- 54,460

54,460

(54,460)

-

Total

1,763,097

183,416

561,788

212,230

292,071

107,319

3,119,956

(54,460)

3,065,487

Business segment profit/(loss)

238,133

3,814

67,345

9,442

22,301

5,602

346,655

(496)

346,150

Other income and

expenses (58,115) (3,956) (1,363) (1,195) (5,150) 735 (69,062) - (69,062)

Operating profit/(loss)

180,009

(142)

65,973

8,239

17,150

6,336

277,584

(496)

277,080

Finance income and

expenses

2,372

Share of profit/(loss) of

investments accounted for

80

using the equity method

Customers

91,500

11,093

20,676

11,967

13,740

3,763

152,742

-

152,742

Intersegment

- -

-

-

- 2,548

2,548

(2,548)

-

Total

91,500

11,093

20,676

11,967

13,740

6,312

155,290

(2,548)

152,742

Business segment profit

11,214

479

1,022

570

1,065

196

14,549

(18)

14,531

Other income and

expenses

Operating profit Finance income and

12,387

485

1,179

(264)

1,055

230

15,074

(18)

15,056

expenses

825

Share of profit/(loss) of

investments accounted for

66

using the equity method

Profit before income taxes

15,948

Customers

100,430

11,377

34,426

12,764

16,556

3,117

178,672

-

178,672

Intersegment

-

-

-

-

- 3,514

3,514

(3,514)

-

Total

100,430

11,377

34,426

12,764

16,556

6,632

182,186

(3,514)

178,672

Business segment profit

13,548

594

5,066

1,127

927

397

21,661

(44)

21,617

Customers

888,761

100,681

304,655

112,956

146,513

27,584

1,581,168

-

1,581,168

Intersegment

-

-

-

-

- 31,097

31,097

(31,097)

-

Total

888,761

100,681

304,655

112,956

146,513

58,690

1,612,265

(31,097)

1,581,168

Business segment profit

119,894

5,257

44,832

9,973

8,204

3,513

191,690

(389)

191,301

Finance income and

expenses

(372)

Share of profit/(loss) of

investments accounted for

(540)

using the equity method

FY ended Mar 31, 2017

(Apr to Sep 2016)

FY ending Mar 31, 2018

(Apr to Sep 2017)

Change

( w/o fx impact )

Sales Revenue

310,270

346,400

11.6%

(+8.3%)

Business Segment Profit

34,671

39,115

12.8%

Operating profit

36,164

31,310

-13.4%

Net Income

26,991

22,682

-16.0%

Exchange rates

Yen-USD

106.43

111.42

-

Yen-EUR

119.12

126.63

-

Operating profit ratio (%)

11.7%

9.0%

-

FY ended Mar 31, 2017

(Apr to Sep 2016)

FY ending Mar 31, 2018

(Apr to Sep 2017)

Change

Change

( w/o fx impact )

Printing & Solutions

Communication and Printing equipment

164,791

176,188

6.9%

2.2%

Electronic stationery

22,007

23,041

4.7%

-0.1%

Total

186,798

199,230

6.7%

2.0%

Personal & Home

20,592

20,726

0.6%

-4.2%

Machinery

Industrial sewing machines

12,638

14,012

10.9%

6.3%

Machine tools

21,957

39,558

80.2%

78.9%

Industrial Parts

9,043

9,912

9.6%

8.5%

Total

43,639

63,482

45.5%

43.3%

Network & Contents

24,553

23,982

-2.3%

-2.4%

Domino

28,155

33,004

17.2%

18.8%

Others

6,531

5,973

-8.5%

-8.5%

G. total

310,270

346,400

11.6%

8.3%

FY ended Mar 31, 2017

1st Quarter

(Apr to Jun 2016)

2nd Quarter

(Jul to Sep 2016)

3rd Quarter

(Oct to Dec 2016)

4th Quarter

(Jan to Mar 2017)

Total

Printing & Solutions

17,908

12,387

5,752

9,471

45,520

Personal & Home

10

485

1,033

349

1,880

Machinery

1,948

1,179

1,392

1,459

5,980

Network & Contents

276

-264

808

34

854

Domino

857

1,055

2,009

444

4,366

Others

231

230

209

78

749

Adjutment

-125

-18

-31

-24

-199

G. total

21,107

15,056

11,174

11,813

59,152

FY ending Mar 31, 2018

1st Quarter

(Apr to Jun 2017)

2nd Quarter

(Jul to Sep 2017)

1st half

(Apr to Sep 2017)

9,144

11,197

20,341

-452

436

-16

2,511

4,943

7,455

-102

1,033

931

1,242

695

1,938

271

444

716

-12

-44

-56

12,603

18,706

31,310

J-GAAP

IFRS

FY ended Mar 31, 2012

FY ended Mar 31, 2013

FY ended Mar 31, 2014

FY ended Mar 31, 2015

FY ended Mar 31, 2016

FY ended Mar 31, 2016

FY ended Mar 31,2017

FY ending Mar 31,2018

forecast

Capital expenditure

27,833

30,237

34,858

34,064

39,976

41,469

28,644

35,000

Depreciation and amortization

23,069

24,476

27,613

28,205

34,341

34,934

33,811

34,600

IFRS

IFRS

FY ended March 31, 2017

FY ending Mar 31, 2018

1st Quarter

(Apr to Jun 2016)

2nd Quarter

(Jul to sep 2016)

3rd Quarter

(Oct to Dec 2016)

4th Quarter

(Jan to Mar 2017)

1st Quarter

(Apr to Jun 2017)

2nd Quarter

(Jul to sep 2017)

Capital expenditure

6,656

6,200

6,586

9,201

6,387

8,608

Depreciation and amortization

8,633

8,402

8,316

8,457

8,399

8,567

J-GAAP

IFRS

FY ended Mar 31, 2012

FY ended Mar 31, 2013

FY ended Mar 31, 2014

FY ended Mar 31, 2015

FY ended Mar 31, 2016

FY ended Mar 31, 2016

FY ended Mar 31,2017

FY ending Mar 31,2018

Forect

R&D expenses

39,232

37,514

40,137

42,523

46,017

44,639

42,547

46,000

R&D expenses per sales (%)

7.9%

7.3%

6.5%

6.0%

6.2%

6.5%

6.6%

6.6%

IFRS

IFRS

FY ended March 31, 2017

FY ending Mar 31, 2018

1st Quarter

(Apr to Jun 2016)

2nd Quarter

(Jul to sep 2016)

3rd Quarter

(Oct to Dec 2016)

4th Quarter

(Jan to Mar 2017)

1st Quarter

(Apr to Jun 2017)

2nd Quarter

(Jul to sep 2017)

R&D expenses

9,740

11,060

10,351

11,394

10,729

12,225

J-GAAP

IFRS

IFRS

FY ended Mar 31, 2012

FY ended Mar 31, 2013

FY ended Mar 31, 2014

FY ended Mar 31, 2015

FY ended Mar 31, 2016

FY ended Mar 31, 2016

FY ended Mar 31,2017

FY ending Mar 31, 2018

2nd Quarter

as of Sep 30, 2017

Total assets

370,906

421,494

469,973

567,230

667,811

675,301

674,107

705,968

Owners' equity

231,001

262,837

291,164

350,162

322,146

333,440

345,061

384,067

Owners' equity ratio (%)

62.3%

62.4%

62.0%

61.7%

48.2%

49.4%

51.2%

54.4%