November 9, 2023
Consolidated Financial Results (Under IFRS)
For the Second Quarter of the March 31, 2024 Fiscal Year
AIR WATER INC.
Head Office: 12-8, Minami semba 2-chome,
Chuo-ku, Osaka, Japan
(Note: All amounts are rounded down to the nearest million yen.)
1. Results for the Six Months Ended September 30, 2023
(1) Consolidated operating results
(% of change from previous year)
Profit | Total | |||||||||||||||
Revenue | Operating profit | Profit before tax | Profit | attributable to | comprehensive | |||||||||||
owners of parent | income | |||||||||||||||
Million | % | Million | % | Million | % | Million | % | Million | % | Million | % | |||||
yen | yen | yen | yen | yen | yen | |||||||||||
Six months | ||||||||||||||||
ended | 476,975 | 2.9 | 28,375 | 9.5 | 27,822 | 9.9 | 17,910 | 7.6 | 17,312 | 6.0 | 41,087 | 23.3 | ||||
September 30, | ||||||||||||||||
2023 | ||||||||||||||||
Six months | ||||||||||||||||
ended | 463,666 | 10.5 | 25,925 | -18.1 | 25,322 | -18.8 | 16,646 | -25.1 | 16,336 | -20.7 | 33,329 | 27.0 | ||||
September 30, | ||||||||||||||||
2022 | ||||||||||||||||
Basic earnings | Diluted earnings | |||||||||||||||
per share | per share | |||||||||||||||
Yen | Yen | |||||||||||||||
Six months ended | 76.05 | 75.99 | ||||||||||||||
September 30, 2023 | ||||||||||||||||
Six months ended | 72.05 | 71.97 | ||||||||||||||
September 30, 2022 | ||||||||||||||||
- Consolidated financial position
Ratio of equity | ||||
Total assets | Total equity | Equity attributable | attributable | |
to owners of parent | to owners of parent | |||
to total assets | ||||
Million yen | Million yen | Million yen | % | |
As of September 30, | 1,169,398 | 475,321 | 457,484 | 39.1 |
2023 | ||||
As of March 31, 2023 | 1,091,645 | 446,482 | 430,232 | 39.4 |
2. Dividends
Dividend per share | |||||||||||||
End of first | End of second | End of third | Year-end | Annual | |||||||||
quarter | quarter | quarter | |||||||||||
Yen | Yen | Yen | Yen | Yen | |||||||||
The fiscal year | - | 28.00 | - | 32.00 | 60.00 | ||||||||
ended March 31, 2023 | |||||||||||||
The fiscal year | - | 30.00 | |||||||||||
ending March 31, 2024 | |||||||||||||
The fiscal year | - | 30.00 | 60.00 | ||||||||||
ending March 31, 2024 | |||||||||||||
(Forecasts) |
(Note) Changes in forecast of dividends for the fiscal year ending March 31, 2024, from the latest disclosure: No
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3. Forecast of consolidated operating results for the fiscal year ending March 31, 2024
(% of change from previous year)
Revenue | Operating profit | Profit before tax | Profit attributable to | Basic earnings | ||||||
owners of parent | per share | |||||||||
Million | % | Million | % | Million | % | Million | % | Yen | ||
yen | yen | yen | yen | |||||||
The fiscal year | 1,080,000 | 7.5 | 72,000 | 15.8 | 70,000 | 14.8 | 44,000 | 9.6 | 193.20 | |
(Note) Changes in forecast of consolidated operating results for the fiscal year ending March 31, 2024, from the latest disclosure: No
Notes
- Significant changes in subsidiaries during the period (changes in specified subsidiaries with changes in the scope of consolidation): None
- Changes in accounting policies and changes in accounting estimates
a. Changes in accounting policies required by IFRS: | None |
b. Changes in accounting policies other than (a): | None |
c. Changes in accounting estimates: | None |
- Number of shares outstanding (ordinary shares)
a. Total number of shares outstanding (including treasury shares)
As of September 30, 2023: | 229,755,057 shares |
As of March 31, 2023: | 229,755,057 shares |
b. Number of shares of treasury shares | |
As of September 30, 2023: | 1,910,564 shares |
As of March 31, 2023: | 2,402,613 shares |
c. Average number of shares during the term | |
Six months of the fiscal year ending March 31, 2024: | 227,634,448 shares |
Six months of the fiscal year ended March 31, 2023: | 226,756,043 shares |
- This report is exempt from quarterly review procedure based on the Financial Instruments and Exchange Act.
- Explanations and other special notes concerning the appropriate use of business performance forecasts
・The forward-looking statements such as result forecasts included in this document are based on the information available to AIR WATER INC. (hereinafter "the Company") at the time of the announcement and on certain assumptions considered reasonable. Actual results may differ materially from the forecast depending on a range of factors. For matters relating to the forecasts, please, refer to "1-(3) Explanation of future prediction information such as forecast of consolidated operating results".
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1.Qualitative Information relating to Second Quarter Settlement of Accounts
(1) Explanation of Operating Results
-
Operating results for the current period
During the cumulative second quarter of the current consolidated fiscal year, the Japanese economy saw a recovery in
the flow of people following the normalization of social and economic activity that had been impacted by the COVID-19 pandemic. However, the business sentiment of manufacturing companies lacked strength overall, and performance varied across industries. In addition, the future remained uncertain mainly due to the decline in global demand for semiconductors and the increasing risk of the slowdown of overseas economies including China.
In this business environment, the Group achieved revenue of ¥1 trillion in the year ended March 31, 2023 by facilitating business unit-based management across the Group as one team. In addition, in line with its two foundations for growth, the "global environment" and "wellness," the Group sought to produce synergies through the overall optimization of its management resources, specifically its diverse businesses, human resources and technologies. The Group moved forward with new businesses creation initiatives based on three basic strategies developed to achieve further growth: the expansion of growth areas, enhancement of the profitability of existing businesses and solution social issues.
In conjunction with the expansion of growth areas, the Group set up the Global & Engineering Group with an eye toward accelerating overseas expansion in a range of areas, including engineering functions, essential for the supply of industrial gases, while also beginning to gear up its core facility to produce gas supply plants. In North America, we have also acquired several gas dealers. And in New York State, began construction of a large gas plant that is the first North American production base of its own. In addition, it joined helium business. while in India, it received an order for on- site gas plant for a steel mill from SAIL, a state-ownedsteel-making company, thereby making steady progress in initiatives for future business expansion. Further, in the electronics-related businesses, the Group continued its aggressive capital investment in gas supply plants for major semiconductor factories, also, in the Kumamoto area, the Group proceeded with organizing its office complexes, specializing in electronics-related businesses by constructing warehouses for special gases and chemicals, etc.
To bolster the profitability of its existing businesses, the Group reformed integration and reorganization of Group companies in sectors including electronics and medical equipment, as well as agricultural processing and energy in Hokkaido. It also took steps to create Group synergies, such as the optimal deployment of staff members and improvements in operational efficiency. Also, the Group continue to revise prices to ensure profit levels with the value of products and services offered as well as their costs. It then simultaneously working in capping SG&A expenses and reviewing of low-profitability projects. As a result, steady progress was made in earnings capabilities, primarily at three regional operating companies.
In creating new businesses, by utilizing the gas purification/separation technology and regional facility in Hokkaido, the Group worked to build a supply chain model of methane, which is carbon neutral energy. In addition, recognizing that ensuring food security and improving self-sufficiency in food products are social issues, the Group Started a new distribution/processing business for fruits and vegetables based on capital and business alliances with the industry's two major companies in the agriculture/processing sectors. It also focused on initiatives to promote the business of supplying a land-based aquaculture platform by leveraging diverse products and technologies, such as those related to oxygen, artificial seawater and freshness preservation.
With a view toward creating corporate value over the medium and long terms, as part of efforts to facilitate investments in intangible assets such as intellectual property, the Group opened "Air Water in KENTO", in Settsu city, Osaka prefecture, a facility that creates new "wellness"-related businesses and offers relevant information. It also launched open innovation initiatives through industry-academia-government collaboration. The Group promoted simultaneously reforming its personnel system, including the introduction of an in-house recruitment program, to help employees achieve autonomous growth and improve their skills. By doing so, it worked to enhance human resources to drive sustainable growth going forward.
In terms of results for the first six months of the current consolidated fiscal year, profit increased significantly in the second quarter compared with the first quarter, reflecting a general recovery trend thanks to group-wide efforts to improve the revenue structure producing effects as expected in response to rises in a range of costs.
With respect to industrial gases and salt for industrial use, which had been affected by rising energy costs, profitability
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improved thanks to the effects of cost reductions through improvements in the efficiency of production and distribution, as well as price revision. Further, the overseas engineering business remained on an expansion trend, mainly against the backdrop of brisk demand for liquefied hydrogen tanks. Meanwhile, the woody biomass power generation business, which had a significant impact on the previous fiscal year's performance, continued to recover with a decline in the marine transportation cost of power generation fuels.
As a result, for cumulative second quarter of the current fiscal year, the group's revenue was ¥476,975million (102.9% that of the corresponding period of the previous year), operating profit was ¥28,375million (109.5%), and profit attributable to owners of parent was ¥17,312million (106.0%).
2) Consolidated results by segment for this period
From the first quarter of the current consolidated fiscal year, the engineering business in Japan and the overseas and engineering business including the industrial gas business in India, which were previously included in Digital & Industry, are included in the Other Business. Similarly, the carbonic acid gas and hydrogen business, which was previously included in Energy solutions, is now a part of Digital & Industry.
The segment information for the cumulative second quarter of the previous consolidated fiscal year shown here was prepared based on the revised reporting segments.
(Million yen) | |||||
Revenue | Operating profit | ||||
FY 2023.2Q | YoY Growth | FY2023.2Q | YoY Growth | ||
Digital & Industry | 166,251 | 105.3% | 13,525 | 116.7% | |
Energy Solutions | 25,266 | 91.0% | 533 | 45.7% | |
Health & Safety | 107,866 | 98.4% | 5,750 | 98.4% | |
Agriculture & Foods | 80,060 | 105.6% | 3,852 | 112.0% | |
Other Business | 97,529 | 105.3% | 3,916 | 202.1% | |
(Adjustment) | - | - % | 797 | 41.0% | |
Total | 476,975 | 102.9% | 28,375 | 109.5% | |
(Note) The adjustment to operating profit is due to costs incurred at the company's headquarters division which was not allocated to any reporting segment.
<Digital & Industry>
Revenue in this segment was ¥166,251million (105.3% that of the corresponding period of the previous year), and operating profit was ¥13,525 million (116.7%).
In the business as a whole, there was significant progress in the improvement of profitability, reflecting the steady progress in the revision of industrial gas prices despite a year-on-year decrease in gas sales volume. The on-site supply of gas for large semiconductor manufacturers was carried out steadily. Meanwhile, affected by stock adjustments attributable to sluggish semiconductor market conditions, sales of functional materials and semiconductor-related equipment and devices remained poor.
The electronics business remained firm, reflecting high operating rates in the on-site supply of gas for large semiconductor manufacturers. In the business dedicated to the sale of materials for semiconductor plants, sales of high purity chemicals, coating materials and other items remained steady. On the other hand, sales of gas-related devices and thermal control-related equipment for semiconductor manufacturing equipment and their parts were slow, reflecting the impact of stock adjustments attributable to sluggish semiconductor market conditions.
In the functional materials business, sales of products such as magnesia for electromagnetic steel sheets and functional food ingredients that have the largest share of their respective markets remained solid, aided by stable demand. However, due to sluggish semiconductor market conditions, semiconductor related products including precision polishing pads and sales of naphthoquinone for agricultural chemicals remained weak, reflecting the slowdown of the Chinese
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economy.
In the industrial gas business, revenue increased due to the continued implementation of measures such as price revisions in response to cost increases. In addition, the supply of carbon dioxide was trending toward recovery, reflecting the elimination of raw material gas shortages that had affected the first quarter results. At the same time, progress was made in the improvement of profitability partly due to the effects of the efficiency of logistics and the reduction of costs.
<Energy solutions>
Revenue in this segment was ¥ 25,266 million (91.0%), and operating profit was ¥ 533million (45.7%).
In the energy business, the sales volume of industrial LP gas increased as a result of fuel conversion carried out amid the growing demand for low-carbon and decarbonized products. Further, the Group integrated and reorganized group companies in Hokkaido, the main area where it conducts business, while also taking measures to increase the ratio of direct sales of LP gas for home use. Through these and other initiatives, it sought to enhance profitability. However, revenue decreased, reflecting a sharp decline in the unit selling price of LP gas in tandem with their import prices, and profit declined year on year due to the impact of losses on inventory valuation recorded chiefly in the first quarter.
In the green innovation business, the Group toward the creation of new businesses which will help establish a decarbonized society, implemented various demonstrations related to the ReCO2 STATION small CO2 collection device and liquefied biomethane which is a fuel usable as an alternative to LNG
<Health & Safety>
Revenue in this segment was ¥ 107,866 million (98.4%), and operating profit was ¥ 5,750 million (98.4%).
In the business as a whole, sales were affected by the termination of contracts for the lease of oxygen concentrators and a decline in demand for infection control products which was a result of the reclassification of COVID-19 as a class 5 infectious disease. Meanwhile, the safety services business and consumer health business remained steady. The Group streamlined production to address surging raw material prices and rising personnel expenses while also revising prices at appropriate times, which resulted in profit recovering to almost the level in the previous year.
In the medical products business, it sought to improve profitability mainly by revising prices and reviewing low- profitability projects in the medical gas area. However, the business was affected by the termination of contracts for leasing oxygen concentrators to local governments at the end of the previous fiscal year.
The safety services business was affected by increases in the prices of construction materials and personnel expenses, however sales from the renovation of hospitals and the construction of gas-based fire extinguishing systems for data centers remained firm. In addition, sales from the construction of hospital facilities in Singapore were trending toward a recovery.
In the medical service business, the Group succeeded in acquiring new customers by proposing measures to improve the efficiency of hospital management, but the business was affected by the termination of a contracts with some large hospitals.
In the consumer health business, sales of hygiene materials were affected by a decline in demand for infection control products such as masks and hand sanitizer. Even so, the business remained solid and achieved a year-on-year increase in sales, reflecting the growth of the contract manufacturing of liquid filling products due to a rise in the number of opportunities consumers have to go out and the implementation of active sales to cosmetics manufacturers, coupled with a rise in sales of cosmetic acupuncture and dental needles.
<Agriculture & Foods>
Revenue in this segment was ¥ 80,060 million (105.6%), and operating profit was ¥ 3,852 million (112.0%).
In the business as a whole, the Group proceeded with initiatives to enhance profitability, such as price revisions and the improvement of production efficiency, amid the prices of materials such as pork and eggs were rising. there was a delay in the price pass-through in the ham and delicatessen sector. Nevertheless, both sales and profit increased overall, driven by an increase in the contract manufacturing of tea beverages and fruit drinks and the effect of the opening of new farm stands.
In the foods business, sales remained firm, reflecting the broader adoption by expand sales of frozen foods for home use and prepared foods at convenience stores. However, on the profit front, the sector was affected by the delay in the
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timing of price revisions attributable to rising raw materials costs. The performance of the sweets sector was poor mainly in the first quarter, reflecting the suspension of the sale of mainstay products due to the shortage of eggs.
The natural food business performed strongly, due to investments for the augment of production lines for beverage filling equipment, as well as the results of a range of initiatives such as the expansion of products with in-house brands coupled with an increase in the contract manufacturing of tea beverages and fruit drinks attributable to a recovery in the flow of people and the continued high temperatures during summer.
The agriculture business was affected by losses due to the excess inventory of agricultural products harvested in the previous year in the agriculture and processing sector which is operated mainly in Hokkaido. Nevertheless, the business as a whole remained at the level of the previous year, aided by the effect of the opening of new farm stands promoted, as well as profitability improvement measures, chiefly the review of unprofitable stores in the fruit and vegetable sector.
<Other business>
Revenue in this segment was ¥ 97,529 million (105.3%), and operating profit was ¥ 3,916 million (202.1%).
In the logistics business, demand for trunk transportation continued to steady progress to handle EC related transactions. However, the business was a decline in the volume of infectious waste transactions which had been strong in the previous year. The Group moved forward steadily with price revisions commensurate with the increasing personnel expenses and the rising cost of energy. However, the business was affected by costs incurred up until the newly constructed low- temperature logistics center fully started operations.
NIHON KAISUI CO., LTD. overcame the impact of the coal prices that had increased due to effect of the revision of the prices of salt for industrial use, thereby securing stable profits. Also, progress was steady reflecting a decline in marine transportation costs for power generation fuels, coupled with the Kanda biomass power generation plant (Kanda-machi, Fukuoka) starting commercial operation in August 2023.
In the global & engineering business, the industrial gas business in India performed strongly for both on-site gas supply services for steel manufacturers and off-site gas supply services. In the industrial gas sector in North America, sales of liquefied hydrogen tanks and carbon dioxide-related equipment continued to trend toward a recovery due to the resolution of production stagnation attributed mainly to materials procurement. In addition, sales of industrial gas remained strong in New York in the United States. The Group implemented several M&A activities to expand the industrial gas business, and the effects of consolidation are expected to be seen in the third quarter and beyond.
In the electric power business, results improved sharply due to the continuous stable operation of the Onahama woody biomass power generation plant and a downward trend in marine transportation costs for power generation fuels, coupled with the progress in measures to reduce demurrage at port unloading facilities.
- Explanation of financial position for the current period
Total assets at the end of the current second quarter consolidated fiscal year stood at ¥1,169,398 million, an increase of ¥77,753 million from the end of the previous consolidated fiscal year due mainly to an increase in property, plant and equipment and other financial assets. Liabilities stood at ¥694,076 million, an increase of ¥48,914 million from the end of the previous consolidated fiscal year due mainly to an increase in bonds and borrowings. Equity stood at ¥475,321 million, an increase of ¥28,839 million from the end of the previous consolidated fiscal year, due mainly to an increase in other components of equity and an accumulation of profit attributable to owners of the parent.
Equity attributable to owners of parent per share grew from ¥1,892.36 at the end of the previous consolidated fiscal year to ¥2,007.88, and ratio of equity attributable to owners of parent to total assets changed to 39.1% from 39.4% at the end of the previous consolidated fiscal year.
Cash flows from operating activities for the second quarter of the current fiscal year was an inflow of ¥34,595 million, reflecting an increase of ¥6,105 million from the same period of the previous fiscal year, after deducting income taxes paid from profit before tax, depreciation and others.
Cash flows from investing activities for the second quarter of the current fiscal year was an outflow of ¥64,235 million, reflecting an increase in outflow by ¥30,019 million from the same period of the previous fiscal year, due mainly to an increase in expenditures resulting from purchase of property, plant and equipment and purchase of investment securities.
Cash flows from financing activities for the second quarter of the current fiscal year was an inflow of ¥24,374 million, reflecting an increase of ¥20,307 million from the same period of the previous fiscal year, due mainly to an increase proceeds from issuance of bonds.
As a result, cash and cash equivalents at the end of the second quarter of the current fiscal year stood at ¥63,250 million,
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an increase of ¥3,143 million from the end of the second quarter of the previous consolidated fiscal year.
(3) Explanation of future prediction information such as forecast of consolidated operating results
Our full-year operating results forecasts remain unchanged from the forecasts announced on May 10, 2023.
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2. Condensed Quarterly Consolidated Financial Statements and Significant Notes
(1) Condensed Quarterly Consolidated Statement of Financial Position
(Unit:Million yen)
End of the previous fiscal year | End of the second quarter | |
of fiscal year | ||
(As of March 31, 2023) | ||
(As of September 30, 2023) | ||
Assets | ||
Current assets | ||
Cash and cash equivalents | 65,944 | 63,250 |
Trade and other receivables | 229,276 | 214,199 |
Inventories | 92,014 | 103,757 |
Other financial assets | 6,151 | 7,329 |
Income taxes receivable | 4,307 | 2,194 |
Other current assets | 33,444 | 35,541 |
Total current assets | 431,139 | 426,273 |
Non-current assets | ||
Property, plant and equipment | 443,443 | 478,423 |
Goodwill | 65,130 | 69,484 |
Intangible assets | 32,568 | 33,223 |
Investments accounted for using equity method | 32,630 | 33,832 |
Retirement benefit asset | 3,836 | 3,856 |
Other financial assets | 78,182 | 117,688 |
Deferred tax assets | 2,184 | 2,285 |
Other non-current assets | 2,528 | 4,330 |
Total non-current assets | 660,505 | 743,125 |
Total assets | 1,091,645 | 1,169,398 |
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End of the previous fiscal year | End of the second quarter | |
of fiscal year | ||
(As of March 31, 2023) | ||
(As of September 30, 2023) | ||
Liabilities and equity | ||
Liabilities | ||
Current liabilities | ||
Trade and other payables | 166,601 | 155,023 |
Bonds and borrowings | 83,340 | 82,121 |
Other financial liabilities | 5,035 | 13,613 |
Income taxes payable | 10,127 | 9,615 |
Provisions | 901 | 919 |
Other current liabilities | 33,691 | 37,254 |
Total current liabilities | 299,697 | 298,548 |
Non-current liabilities | ||
Bonds and borrowings | 283,385 | 334,018 |
Other financial liabilities | 30,192 | 23,848 |
Retirement benefit liability | 6,365 | 6,668 |
Provisions | 3,157 | 3,533 |
Deferred tax liabilities | 14,601 | 20,570 |
Other non-current liabilities | 7,762 | 6,890 |
Total non-current liabilities | 345,465 | 395,528 |
Total liabilities | 645,162 | 694,076 |
Equity | ||
Share capital | 55,855 | 55,855 |
Capital surplus | 49,962 | 49,662 |
Treasury shares | (3,532) | (2,799) |
Retained earnings | 303,680 | 312,968 |
Other components of equity | 24,266 | 41,797 |
Total equity attributable to owners of parent | 430,232 | 457,484 |
Non-controlling interests | 16,249 | 17,836 |
Total equity | 446,482 | 475,321 |
Total liabilities and equity | 1,091,645 | 1,169,398 |
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- Condensed quarterly Consolidated Statement of Profit or Loss and Condensed Quarterly Consolidated Statement of Comprehensive Income
Condensed quarterly consolidated statement of profit or loss
Cumulative second quarter of the consolidated fiscal year
(Unit:Million yen) | ||
Six months ended September 30, | Six months ended September 30, | |
2022 | 2023 | |
Continuing operations | ||
Revenue | 463,666 | 476,975 |
Cost of sales | (367,746) | (374,800) |
Gross profit | 95,919 | 102,174 |
Selling, general and administrative expenses | (72,939) | (76,447) |
Other income | 3,892 | 3,035 |
Other expenses | (2,093) | (1,623) |
Share of profit of investments accounted | 1,145 | 1,237 |
for using equity method | ||
Operating profit | 25,925 | 28,375 |
Finance income | 858 | 1,406 |
Finance costs | (1,461) | (1,959) |
Profit before tax | 25,322 | 27,822 |
Income tax expense | (8,672) | (9,910) |
Profit from continuing operations | 16,649 | 17,912 |
Discontinued operations | ||
Profit (loss) from discontinued operations | (3) | (2) |
Profit | 16,646 | 17,910 |
Profit attributable to | ||
Owners of parent | 16,336 | 17,312 |
Non-controlling interests | 309 | 597 |
Profit | 16,646 | 17,910 |
(Unit:Yen)
Earnings per share
Basic earnings (loss) per share Continuing operations Discontinued operations Basic earnings per share
Diluted earnings (loss) per share Continuing operations Discontinued operations Diluted earnings per share
72.06
(0.01)
72.05
71.98
(0.01)
71.97
76.06
(0.01)
76.05
76.00
(0.01)
75.99
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AIR WATER Inc. published this content on 21 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 November 2023 06:58:18 UTC.