FY2023 Second Quarter Financial Results

Supplementary Briefing Materials

Fuji Seal International, Inc.

November 9, 2023

Copyright 2023 Fuji Seal Group

Table of Contents

  1. Financial Results for the Second Quarter of FY 2023
  2. Shift to management based on cost of capital
  3. Initiatives for Sustainable Growth
    • Our Strength + Solid business foundation →Sustainable growth strategy
    • Steadily strengthen four businesses
    • Expansion of product markets and target areas
    • Creation of next generation business model

Copyright 2023 Fuji Seal Group

2

Key Points of FY2023 2Q Financial Results and

Progress toward Full-Year Earnings Forecasts

  • Net sales and profit at each stage increased in 1st half compared to the same period of the previous year. Both sales and profit decreased excluding the effect of foreign exchange rate fluctuations.
  • Operating profit compared to the full-year forecast was generally in line with the plan.

Increase/Decrease

FY2023

Vs. Announcement

FY2022

FY2023

Annouced full

(Millions of yen)

2nd quarter

2nd quarter

(Amount)

(%)

year

Progress rate

Net sales

90,909

94,852

+3,943

+4.3%

191,000

49.7%

Operating profits

4,729

5,623

+18.9%

10,600

53.0%

(Operating Profit

+893

Margin)

(5.2%)

(5.9%)

(+0.7pt)

(5.5%)

(+0.4pt)

Ordinary profits

5,106

7,074

+38.5%

10,300

68.7%

(Ordinary Profit

+1,968

Margin)

(5.6%)

(7.5%)

(+1.8pt)

(5.4%)

(+2.1pt)

Net profits

3,486

5,337

+1,850

+53.1%

6,200

86.1%

(Net Profit Margin)

(3.8%)

(5.6%)

(+1.8pt)

(3.2%)

(+2.4pt)

Foreign Currency

USD

123.14

135.00

+9.6%

125.00

+8.0%

Translation

134.39

145.93

+8.6%

135.00

+8.1%

Rate (average) EUR

Copyright 2023 Fuji Seal Group

3

FY2023 2Q Financial Results (1) Net Sales by Region

  • Consolidated net sales declined slightly excluding the effect of foreign exchange rates. By region, sales in Japan increased YoY, while sales outside of Japan declined.

Copyright 2023 Fuji Seal Group

4

FY2023 2Q Financial Results (2) Net Sales by Segment by Region

FY2022

FY2023

Year-on-year change

Excluding forex

(Millions of yen)

2nd quarter

2nd quarter

Change

Rate of change

impact

Rate of change

Japan

49,172

49,350

177

+0.4%

-

Shrink label

25,387

26,107

719

+2.8%

-

PS label

4,998

4,308

△690

△13.8%

-

Soft pouch

10,348

10,340

△7

△0.1%

-

Machinery

2,343

2,229

△113

△4.9%

-

Others

6,094

6,363

+269

+4.4%

-

Americas

23,914

25,855

1,940

+8.1%

△1.4%

Shrink label

19,733

21,645

1,911

+9.7%

+0.1%

PS label

943

897

△46

△4.9%

△13.3%

Soft pouch

142

148

6

+4.4%

△4.8%

Machinery

2,265

2,779

514

+22.7%

+11.9%

Others

829

384

△445 △53.7% △57.7%

Europe

13,858

14,785

926

+6.7%

△1.8%

Shrink label

7,544

8,480

936

+12.4%

+3.5%

PS label

2,672

2,976

303

+11.4%

+2.6%

Soft pouch

66

0

△66

△100.0%

-

Machinery

3,575

3,328

△247

△6.9%

△14.3%

ASEAN

8,317

8,777

459

+5.5%

△3.7%

Shrink label

4,001

4,238

237

+5.9%

△3.4%

PS label

67

94

27

+40.5%

+28.1%

Soft pouch

4,036

4,134

98

+2.4%

△6.6%

Machinery

96

263

167

+172.4%

+148.5%

Others

115

45

△70 △60.6% △64.0%

Eliminations

△4,355

△3,916

438

△10.1%

Consolidated net

90,909

94,852

3,943

+4.3%

Japan

The Americas

Europe ASEAN

• Shrink Sleeve Label (SSL) sales increased due to a recovery in the beverage sector as a result of the extremely hot summer and the effect of price revisions.

• Sales of Pressure sensitive labels (PSL) decreased due to the continued impact of sluggish demand.

• Spouted pouch (SPT) sales were at the same level as the previous year, despite a decrease in refill of daily necessities due to energy saving measures, due to an increase in pouch sales for beverage due to an increase in human flow.

• Other: Sales increased due to the contribution of contract packaging.

• SSL sales were at the same level as the previous year as customers' inventory adjustments continued through the second quarter.

• Machinery sales increased due to strong sales of machine bodies as well as parts services.

• Other labels continued to make progress in reducing unprofitable products.

• SSLand PSL sales increased due to price revisions, despite a decline in demand caused by inflation.

• Sales of machinery decreased due to sluggish demand for medium- and low- speed machines, despite strong sales to the pharmaceutical industry.

• SSL and SPT sales declined due to consumers' reluctance to buy.

Copyright 2023 Fuji Seal Group

  • Machinery sales increased due to strong sales of services and parts

5

FY2023 2Q Financial Results (3) Operating Profits by Region

  • Consolidated operating profit increased due to the recovery of performance in the European region and ASEAN region.
    • Shrink Sleeve Label (SSL) sales are on the road to

FY2022

FY2023

Year-on-year

Excluding forex impact

Japan

recovery due to improved productivity, while orders for

(Millions of yen)

2nd quarter

2nd quarter

change

pressure sensitive label (PSL) have continued to decline

since the previous fiscal year, resulting in lower profits.

Consolidated

4,729

5,623

+893

+756

+16.0%

operating profits

•

Continued to promote simplification of organization,

Japan

4,398

4,259

△139

△139

△3.2%

portfolio replacement, and price confirmation

Americas

1,414

1,206

△208

△314

△22.2%

the

•

The decline in profit improved from -60.7% in the first

Americas

quarter to -22.2% in the cumulative second quarter.

Europe

△749

194

+943

+928

-

• Since bottoming out in the fourth quarter of last year, it has

ASEAN

△137

163

+300

+286

-

continued to improve in the first and second quarters.

Eliminations

△196

△200

△4

△4

+2.0%

Europe

•

Increase due to structural reforms and the effect of price

revisions

ASEAN

• Return to profitability in 2Q

•

Increase due to price revisions, productivity improvements,

and fixed cost reductions

Copyright 2023 Fuji Seal Group

6

FY2023 2Q Financial Results (4) Non-operating Income (Expenses), Ordinary Profits, and Net Profits

Increase/Decrease

FY2022

FY2023

(Millions of yen)

2nd quarter

2nd quarter

(Amount)

(%)

Net sales

90,909

94,852

+3,943

+4.3%

Operating profits

4,729

5,623

+893

+18.9%

・Non-operating incom

469

1,666

+1,197

+255.1%

・Non-operating expen

92

215

+122

+133.4%

Ordinary profits

5,106

7,074

+1,968

+38.5%

・Extraordinary income

19

13

△ 6

△32.7%

・Extraordinary losses

74

21

△ 52

△71.0%

Before income taxes

5,051

7,066

+2,014

+39.9%

Net profits

・Income taxes

1,564

1,728

+163

+10.5%

Net profits

3,486

5,337

+1,850

+53.1%

Foreign Currency

USD

123.14

135.00

+9.6%

Translation

EUR

134.39

145.93

+8.6%

Rate (average)

【Non-operating income】

  • Foreign exchange gains mainly due to the effect of exchange rate changes on cash and cash equivalents of time deposits denominated in foreign currencies and loans to foreign subsidiaries

【Non-operating expenses】

  • Increase in interest expenses due to higher interest rates in the European region

Income taxes

  • Effective tax rate decreased (-6.5pt YoY) due to the recognition of tax benefits from the foreign exchange effects of the Mexican subsidiary in the Americas region.

Copyright 2023 Fuji Seal Group

7

FY2023 2Q Financial Results (5) B/S

(million-yen)

  • Working capital increased due to foreign exchange effects and the end of the second quarter being a holiday for financial institutions. Tangible fixed assets increased with the start of operations of the new North Carolina plant in the Americas.

Current assets

118,112

(+8,089 compared to the end of

the previous period)

Major Points of Increase/Decrease Cash and bank deposits

+2,223

Notes and accounts

receivable +4,317

Inventories +1,867

Fixed assets

74,970

(+4,989 compared to the end of

the previous period)

Major Points of Increase/Decrease Tangible fixed assets

+3,473

Goodwill +1,008

total assets

193,083

(+13,079 compared to the end of the previous period)

End of

FY2023 End of

Rate of

FY2022

2nd quarter

change

Equity ratio

67.0%

67.5%

+0.5pt

Interest-bearing debt

12,578

11,958

△4.9%

D/E ratio

10.4%

9.2%

△1.3pt

Foreign

USD

132.70

144.99

+9.3%

Currency

EUR

141.47

157.60

+11.4%

Translation

Liabilities

62,760

(+3,328 compared to the end of

the previous period)

Major Points of Increase/Decrease

Trade payables

+1,736

Debts

△614

Other Current liabilities

+2,054

Net assets

130,322

(+9,751 compared to the end of

the previous period)

Major Points of Increase/Decrease

Retained earnings

+4,351

Foreign currency translation

adjustment

+ 5,670

Copyright 2023 Fuji Seal Group

8

FY2023 2Q Financial Results (6) Cash flows and depreciation

(million-yen)

  • Free cash flow turned positive from negative in the same period of the previous year as business performance recovered, Cash flows from operating activities exceeded those of the second quarter of FY2021.

Cash flows from operating activities

Cash flows from investing activities

FCF

Cash flows from operating activities

9,939

•

Net income before tax

7,066

•

Depreciation breakdown

4,001

8,700

7,548

8,200

•

Change in working capital △1,449

•

Income taxes

△1,360

6,514

6,652

Cash flows from investing activities

5,700

•

Acquisition of Noncurrent assets

3,452

2,966

△3,652

3,252

•

Changes in the Scope of Consolidation

2,700

payments for acquisition of subsidiaries

1,752

△1,204

△300

△3,300

△3,062

△3,287

△3,281

△6,300

△5,796

△6,247

△4,948

2019Q2

2020Q2

2021Q2

2022Q2

2023Q2

End of FY2022

FY2023 End of

Reason for Increase/Decrease

2nd quarter

Capital expenditures

5,851

3,596

Depreciation and amortization

3,745

4,001

Copyright 2023 Fuji Seal Group

9

Dividends from surplus

The interim dividend will be paid at the end of the second quarter as originally planned.

  • Interim dividend 17 yen per share
  • Total amount of dividends paid 931 million yen
  • Payment start date December 1, 2023

Basic Policy on Profit Distribution

• Investments for continuous growth (technology development, human capital development, capital expenditures, M&A)

• Target Consolidated dividend payout ratio of 20-25%

• Stable and continuous increase in dividend per share

• Establishment of a stable financial base for contingency planning and flexible acquisition and disposal of Treasury stock

Copyright 2023 Fuji Seal Group

10

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Fuji Seal International Inc. published this content on 09 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2023 14:50:55 UTC.