Financial Results for the Third Quarter ended December 31, 2017

(Consolidated financial results have been prepared in accordance with accounting principles generally accepted in Japan)

February 9, 2018

HANWA Co.,Ltd.

Company name:

Listed stock exchange: Tokyo

Stock exchange code:

8078

(URLhttp://www.hanwa.co.jp)

Representative:

Enquiries:

Hironari Furukawa Yoichi Nakagawa

President

Director, Managing Executive Officer

TEL 81 - 3 - 3544 - 2000

The date of issue of audited financial statements:

February 14, 2018 The date of payout of dividend:

―

(Rounded down to millions of yen)

１．Consolidated financial results for the third quarter ended December 31, 2017

(1) Consolidated operating results

（％ of change from the same period of previous year）

Net sales

Operating income

Ordinary income

Net income attributable to owners of the parent

For the third quarter ended December 31, 2017 ended December 31, 2016

(Millions of yen)

(％)

  • 1,306,566 18.9

  • 1,098,828 (6.3)

(Millions of yen)

(％)

  • 18,799 15.1

  • 16,327 20.8

(Millions of yen)

(％)

  • 17,375 15.4

  • 15,051 32.6

(Millions of yen)

(％)

  • 11,750 20.9

  • 9,718 19.6

Note: Comprehensive income

For the third quarter ended December31, 2017

15,486 million yen

22.5

％

For the third quarter ended December 31, 2016

12,646 million yen

120.9

％

Net income per share

Net income per share(diluted)

For the third quarter ended December 31, 2017 ended December 31, 2016

(yen)

289.14 237.74

(yen)

－ －

* 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.

(2) Consolidated financial position

Total assets

Net assets

Shareholders' equity ratio

Shareholders' equity per share

December 31, 2017

March 31, 2017

(Millions of yen)

893,490 694,232

(Millions of yen)

196,655 171,637

(％) 20.4

24.5

(yen)

4,489.34 4,193.50

As of December 31, 2017

Note: Shareholders' equity

As of March 31, 2017

182,439 million yen 170,422 million yen

* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, shareholders' equity per share has been calculated as if the said share consolidation was conducted at the beginning of the previous fiscal year.

２．Cash dividends

Cash dividends per share

（effective date）

First quarter

Second quarter

Third quarter

Year-end

Annual

Year ended March 31, 2017

(yen) －

(yen) 9.00

(yen) －

(yen) 10.00

(yen) 19.00

Year ending March 31, 2018

（estimated）

－

10.00

－

50.00

－

* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, the impact of this share consolidation is taken into consideration in the amount presented for the fiscal year-end dividend per share for the year ending March 31, 2018 (estimated), and the amount for the total annual dividends per share for the same fiscal year is omitted and shown as a dash.

３．Forecast of consolidated financial results for fiscal year ending March 31, 2018

（％ of change from previous year）

Net sales

Operating income

Ordinary income

Net income attributable to owners of the parent

Net income per share

Annual

(Millions of yen) (％)

1,700,000

12.3

(Millions of yen) (％)

25,500

8.9

(Millions of yen) (％)

24,000

4.8

(Millions of yen) (％)

16,000

(2.2)

(yen)

391.98

* Effective October 1, 2017, HANWA consolidated its common shares at the ratio of 5 shares to 1 share. Accordingly, net income per share reflects the impact of the said share consolidation.

* The above forecasts reflect assumptions and prospects based on the information currently available.They are subject to a number of risks and uncertainties that could cause actual results to differ materially from this information.

－１－

《Consolidated Balance Sheets》

(Rounded down to millions of yen)

Millions of yen

March 31, 2017

December 31, 2017

Assets

Current assets;

Cash and deposits

28,465

53,553

Trade notes and accounts receivable

307,853

391,413

Electronically recorded monetary claims

30,742

36,218

Securities

486

238

Inventories

111,039

131,108

Others

59,519

60,963

Allowance for doubtful receivables

(334)

(458)

Total current assets

537,773

673,038

Fixed assets;

Property and equipment;

Land

29,640

32,420

Others

29,852

31,957

Total property and equipment

59,492

64,378

Intangible assets

2,034

4,315

Investments and other assets;

Investment securities

72,524

105,652

Others

22,912

47,330

Allowance for doubtful receivables

(504)

(1,225)

Total investments and other assets

94,932

151,757

Total fixed assets

156,458

220,452

Total assets

694,232

893,490

Liabilities;

Current liabilities;

Trade notes and accounts payable

191,989

253,803

Short-term loans payable

107,262

150,424

Commercial paper

5,000

20,000

Current portion of bonds payable

21

10,199

Income taxes payable

6,752

2,720

Accrued bonuses

2,306

1,406

Provision for product warranties

146

116

Provision for loss on business of subsidiaries and affiliates

512

―

Others

45,068

67,604

Total current liabilities

359,058

506,274

Long-term liabilities;

Bonds payable

40,076

40,450

Long-term loans payable

106,232

129,697

Retirement benefits liabilities

4,518

4,713

Others

12,709

15,698

Total long-term liabilities

163,536

190,560

Total liabilities

522,595

696,834

Net assets;

Shareholders' equity;

Common stock

45,651

45,651

Retained earnings

117,778

125,439

Treasury stock

(3,720)

(3,726)

Total shareholders' equity

159,709

167,364

Accumulated other comprehensive income;

Net unrealized holding gains on securities

12,580

17,235

Deferred hedge profit and loss

142

(512)

Land revaluation difference

2,966

2,966

Foreign currency translation adjustments

1,062

864

Remeasurements of defined benefit plans

(6,037)

(5,479)

Total accumulated other comprehensive income

10,713

15,075

Minority interests

1,214

14,216

Total net assets

171,637

196,655

Total liabilities and net assets

694,232

893,490

－２－

《Consolidated Statements of Income and Comprehensive Income》

(Rounded down to millions of yen)

Millions of yen

Third quarter ended

Third quarter ended

December 31, 2016

December 31, 2017

Net sales

1,098,828

1,306,566

Cost of sales

1,052,513

1,253,847

Gross profit

46,315

52,719

Selling, general and administrative expenses

29,987

33,920

Operating income

16,327

18,799

Other income;

Interest income

883

1,328

Dividend income

689

1,081

Foreign exchange gain

―

399

Others

1,012

1,431

Total other income

2,586

4,240

Other expenses;

Interest expenses

1,941

2,454

Loss on investment in affiliates

154

1,913

Foreign exchange loss

702

―

Others

1,063

1,296

Total other expenses

3,862

5,664

Ordinary income

15,051

17,375

Extraordinary income

Gain on sales of investment securities

522

―

Reversal of allowance for business loss of affiliates

―

512

Total extraordinary income

522

512

Extraordinary loss;

Loss on devaluation of investments securities

135

―

Loss on devaluation of investments in capital

―

198

Business loss of affiliates

222

―

Total extraordinary loss

358

198

Income before income taxes

15,215

17,688

Income taxes

5,443

6,637

Net income

9,772

11,051

Net income attributable to

Net income attributable to owners of the parent

9,718

11,750

Net income(loss) attributable to minority interests

54

(699)

Other Comprehensive Income

Net unrealized holding gains on securities

4,727

4,648

Deferred hedge profit and loss

523

(654)

Foreign currency translation adjustments

(2,616)

15

Remeasurements of defined benefit plans

583

558

Share of other comprehensive income of affiliates

(344)

(130)

Total other comprehensive Income

2,874

4,435

Comprehensive Income

12,646

15,486

Comprehensive income attributable to

Comprehensive income attributable to owners of the parent

12,792

16,111

Comprehensive income attributable to minority interests

(146)

(625)

－３－

HANWA co.,ltd.

Financial Results for the Third Quarter ended December 31, 2017

《Segment information》

Business segment information

The Companies' operations are classified into five business segments as follows:

Steel: Steel bars and shapes, steel plates and sheets, special steels, wire products, steel pipes, and steelmaking raw materials

Metals and alloys: Nickel, chromium, stainless scrap, silicon, manganese and steel alloys Non-ferrous metals: Copper, aluminium, lead, zinc, tin, antimony and other metals Foods: Frozen seafoods and meat products

Petroleum and chemicals : Petroleum products, chemical products, and cement Overseas sales subsidiaries： Wholesale trade, general merchandise

Segment information by business category for the third quarter ended December 31, 2016 and 2017, is as follows:

(Rounded down to millions of yen)

Third quarter ended December 31, 2016

Millions of yen

Reportable segment

Other

Total

Adjustment

Consoli-dated

Steel

Metals & alloys

Non-ferrous

metals

Foods

Petroleum & chemicals

Overseas sales subsidiaries

Sub-total

Net sales

Customers Inter-segment

557,697 9,066

92,967 2,375

55,925 1,129

70,087 292

189,666 5,070

77,743 46,770

1,044,088 64,704

54,739 1,265

1,098,828 65,970

― (65,970)

1,098,828 ―

Total

566,763

95,342

57,055

70,379

194,737

124,513

1,108,793

56,005

1,164,798

(65,970)

1,098,828

Segment income(loss)

13,080

(855)

184

2,326

1,855

(779)

15,812

1,444

17,256

(2,204)

15,051

Third quarter ended December 31, 2017

Millions of yen

Reportable segment

Other

Total

Adjustment

Consoli-dated

Steel

Metals & alloys

Non-ferrous

metals

Foods

Petroleum & chemicals

Overseas sales subsidiaries

Sub-total

Net sales

Customers Inter-segment

663,740 8,383

145,839 3,246

70,626 973

79,198 255

168,405 4,811

122,778 39,992

1,250,588 57,662

55,978 1,265

1,306,566 58,928

― (58,928)

1,306,566 ―

Total

672,123

149,086

71,599

79,454

173,217

162,770

1,308,250

57,244

1,365,494

(58,928)

1,306,566

Segment income(loss)

15,356

1,261

922

1,288

1,495

613

20,938

502

21,440

(4,065)

17,375

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 intersegment 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－

November 10, 2017

Highlights of Consolidated Financial Results for the 3rd Quarter of FY2017

Outline of Financial Results for the 3rd Quarter of FY2017

・As for the 3ｒｄ quater result for this fiscal year, net sales have increased by 19% in the same period of the previous year, hence reached to 1,306.5 billion yen, as market of steel products and metal resources being higher than the same period of previous year's level. Net profit was 11.7 billion yen, increased by 21%, due to increase in operating income of matals/alloys business and foreign exchange gain as opposed to the loss in the same period of the previous year.

・We paid 10 yen as interim dividend and plan to pay additional *50 yen as the end of this fiscal year dividend. (*:Display change of 10 yen forecast due to stock consolidation with 5 shares as 1 share on October 1.)

Segment Information

1Q-3Q of FY2016

Year-on-year

Changerate

Net sales

1Q-3Q of FY2017

1Q-3Q of FY2016

rate

1,098.8

46.3

207.7

6.4

19% 14%

29.9

3.9

13%

16.3

2.4

15%

2.5

3.8

1.6

1.8

64% 47%

15.0

2.3

15%

0.5

0.3

(0.0)

(0.1)

-2%

-45%

15.2

2.4

16%

5.4

1.1

22%

9.7

9.7 0.0

1.2

2.0 (0.7)

13%

21% ―

237.74

51.40

22%

12.6

2.8

23%

672.1

149.0

71.5

79.4

173.2

162.7

566.7

95.3

57.0

70.3

194.7

124.5

19%

56%

26%

13%

-11%

31%

1,308.2

1,108.7

18%

57.2

56.0

2%

1,365.4

1,164.7

17%

(58.9)

(65.9)

-11%

1,306.5

1,098.8

19%

・ ・ ・

Segment income

1Q-3Q of FY2017

1Q-3Q of FY2016

rate

(Net sales)

Net sales have increased by 19% from the same period of the previous year. This was due to market recovery of steel products and metal resources from the second half of the previous fiscal year.

(SG&A expenses)

SG & A expenses have increased 3.9 billion yen from the same period of previous year. 1.5 out of 3.9 billion yen was accounted for newly consolidated subsidiaries.

Our personnel expenses have increased 1.5 billion yen, including 0.6 billion yen from newly consolidated subsidiaries.

(Non-operating income/expenses)

Non-operating income has increased by 64% from the same period of the previous year, mainly due to increase in interest income, dividend income and foreign exchange gain. Non-operating expenses have increased by 47%, due to increase in equity in losses of affiliates and interest expenses.

(Extraordinary gain/loss)

Reversal of allowance in previous year was recorded in extraordinary income, because the expected loss from restructuring of subsidiary was less.

For extraordinary losses, we recorded loss on valuation of investments of sale of subsidiary.

15.3

1.2

0.9

1.2

1.4

0.6

13.0

△0.8

0.1

2.3

1.8

(0.7)

17%

―

401%

-45%

-19%

―

20.9

15.8

32%

0.5

1.4

-65%

21.4

17.2

24%

(4.0)

(2.2)

-84%

17.3

15.0

15%

Main Factors

(Steel business)

Recovery trend of steel demand has been kept. Better market price resulted increased net sales due to high raw material prices and tightening supply/demand. Better margins in long term contracts pushed up the profit. (Metals & alloys business)

Net sales increased due to rising price level and sales expansion of stainless steel and ferro-alloy. Increase in profit on sale and recovery of Showa Metal's profit, which was a loss in the previous year, pushed up profit. (Non-ferrous metals business)

Due to rise in international commodity markets and increase in copper sales amount, revenue increased. In addition, foreign exchange loss in the same period of the previous year turned to foreign exchange gain.

(Foods business)

Rising price and strong sales due to reduction of overseas catch and low inventories increased net sales. Segment profit margin was shrunken by higher purchase costs.

(Petroleum & chemicals business)

Despite slow gain on petroleum products price, net sales decreased due to reduction of spot transactions. Segment income decreased, due to delay in pass-through of purchase cost increase and margin reduction of imported plastic products.

(Overseas sales subsidiaries)

Revenue increased because of increased sales of bunker fuel in Singapore, metal scrap in Thailand and Singapore, and steel products in Indonesia, China and US.

Apr. Acquired minority shares of the lithium carbonate producer, Bacanora Minerals Ltd.

May. Acquired additional stocks of the Chromite miner and Ferro-Chromium producer, Samancor Chrome Holdings. Oct. Acquired the producer of metal hardware products for use in architectural and civil construction.

Financial PositionDec. 2017

Mar. 2017

Comparison with Mar. 2017

Changerate

694.2

537.7 156.4

199.2

135.2 63.9

29%

25% 41%

522.5 259.6 231.2 136%

174.2 92.4 67.3 28pt

33% 36% 29% ―

171.6 159.7 10.7 1.2 4,193.50

25.0 7.6 4.3 13.0 295.84

15% 5% 41% ― 7%

170.4 24.5%

12.0 -4.1pt

7% ―

HANWA Co., Ltd.

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

(Total Assets)

Total assets increased by 29% from the end of the previous year, due to increase in trade receivables and investment securities .

Inventories : 131.1 billion yen (+18% from the end of the previous year) Investment securities : 105.6 billion yen (+46% from the end of the previous year)

(including 47.6 billion yen of securities of subsidiaries and affiliates (+247%))

(Liabilities)

Total liabilities increased by 33% from the end of the previous year, due to the increase in trade payables and long and short term loans. As interest-bearing debt increased by 36%, net debt-equity ratio was turned into 164%.

(Net assets)

Total net assets increased by 15% from the end of the previous year, due to increase in minority interests of Japan South Africa Chrome Co., Ltd. and the carryover of retained earnings. Shareholders' equity ratio was 20.4%, which is a 4.1 percentage points lower than the end of the previous year.

【Changes in Net Sales】

【Quarterly Operating Results】

【Changes in Net Income】

【Changes in Interest-bearing Debt】

FY2016

change

1,514.0

23.4

22.9

16.3

12% 9% 5% -2%

FY2016

FY2017

FY2017

(estimated)

9.00 10.00

10.00

―

―

50.00

19.00 24%

― ―

―

25%

Hanwa Co. Ltd. published this content on 09 February 2018 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 09 February 2018 04:10:03 UTC.

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