Ahresty : Consolidated Financial Results (Japanese Accounting Standards) for the First Half of the Fiscal Year Ending March 31, 2023

Consolidated Financial Results (Japanese Accounting Standards) for the First Half of

the Fiscal Year Ending March 31, 2023

			November 14, 2022
Company Name: Ahresty Corporation	Stock Exchange Listing: Tokyo
Code Number:	5852	URL: https://www.ahresty.co.jp
Representative:	(Title)	President & CEO	(Name) Arata Takahashi
Contact for	(Title)	Executive Officer, Chief of	(Name) Hideki Nariya TEL [phone]
inquiries:	General Administrative Command

Planned date for filing of quarterly	November 14, 2022	Planned date for start of dividend	December 5,
securities report:	payment:	2022
Supplementary documents for quarterly	Yes
results:
Quarterly results briefing:		Yes (for securities analysts and institutional investors)

(Amounts of less than 1 million yen are rounded off)

1. Consolidated results for the first half of the year ending March 2023 (from April 1, 2022 to September 30, 2022)

1. Consolidated operating results (for the six months ended September 30, 2022)

(% shows year-on-year change from previous year)

Net sales

Operating income

Recurring income

Net income attributable

to owners of parent

First half of year ending

million yen

%

million yen

%

million yen

%

million yen

%

66,536

21.8

(1,198)

－

(820)

－

(830)

－

March 2023

First half of year ended

54,647

48.4

(1,943)

－

(1,680)

－

(1,780)

－

March 2022

(Note) 1. Comprehensive income

First half of year ending March 2023: 5,335 million yen (_%)

First half of year ended March 2022: 856 million yen (_%)

(Reference) EBITDA: First half of year ending March 2023: 5,019 million yen (23.7%)

First half of year ended March 2022: 4,057 million yen

(75.2%)

* EBITDA = operating income + depreciation and amortization

Net income per share

Fully diluted net income per share

Yen

yen

First half of year ending March 2023

(32.08)

－

First half of year ended March 2022

(69.16)

－

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

million yen

million yen

%

First half of year ending March 2023

139,597

58,826

42.1

Year ended March 2022

131,302

53,566

40.7

(Reference) Shareholders' equity: First half of year ending March 2023: 58,704 million yen

Year ended March 2022: 53,426 million yen

2. Dividend payments

Dividend per share

End of first

End of second

End of third quarter

End of year

For the year

quarter

quarter

yen

yen

yen

yen

yen

Year ended March 2022

－

5.00

－

5.00

10.00

Year ending March 2023

－

5.00

Year ending March 2023

－

5.00

10.00

(Forecast)

(Note) Revisions to dividend forecast published most recently:

No

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3. Forecast of consolidated results for year ending March 2023 (from April 1, 2022 to March 31, 2023)

(% shows the year-on-year change)

								Net income		Net income per
	Net sales	Operating income		Recurring income	attributable to
		share
		owners of parent
	million yen	%	million yen	%		million yen	%	million yen		%	yen
Full year	146,100	25.6	1,500	－		1,600	－	1,000		－	38.62
(Notes) 1. Revisions to consolidated results forecast published most recently:		Yes

• Notes:
• 1. Significant changes to subsidiaries during the current term (changes for a specified subsidiary accompanying a change in the scope of consolidation): Yes
     New: Excluded: 1 company (Company name) Ahresty Pretech Corporation
     (Note) For details, please see "2. Consolidated Quarterly Financial Statements and Key Notes (4) Notes (Significant Changes to Subsidiaries during the Current Term)" on page 12 of the accompanying materials.

1. Application of specific accounting treatment to the preparation of quarterly consolidated financial statements:
2. Changes in accounting principles and changes in or restatement of accounting estimates
3. 1. Changes in accounting principles associated with revision of accounting standards, etc.:
   2. Changes in accounting principles other than (i):
   3. Changes in accounting estimates:

None

Yes

None

None

(iv) Restatement:None

(Note) For details, please see "2. Consolidated Quarterly Financial Statements and Key Notes (4) Notes (Changes in Accounting Policy)" on page 12 of the accompanying materials.

(4) Number of shares outstanding (Common stock)

1. Number of shares outstanding at end of period (including treasury shares)
2. Number of treasury shares at end of period
3. Average number of shares (for first half)

2Q of year ending	26,076,717	shares	Year ended March	26,076,717	shares
March 2023	2022
2Q of year ending	149,543	shares	Year ended March	250,695	shares
March 2023	2022
2Q of year ending	25,895,763	shares	2Q of year ended	25,749,657	shares
March 2023	March 2022

• Quarterly consolidated financial statements are placed outside the scope of quarterly reviews performed by a certified public accountant or an audit corporation.
• Explanation for appropriate use of financial forecasts and other special remarks
  The forecasts presented herein are based on information currently available and certain assumptions deemed reasonable by the Company, and actual results may differ significantly from these forecasts due to various factors. For notes on the use of the results forecasts and assumptions as the basis for the results forecasts, please see "1. Qualitative Information on Consolidated Operating Results, etc. for First Half (3) Explanation of Consolidated Earnings Forecasts and Other Information for Future Outlook" on page 5 of the accompanying materials.

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Accompanying Materials - Contents

1. Qualitative Information on Consolidated Operating Results, etc. for First Half	4
(1)	Explanation of Operating Results	4
(2)	Explanation of Financial Position	5
(3)	Explanation of Consolidated Earnings Forecasts and Other Information for Future Outlook	5
2. Consolidated Quarterly Financial Statements and Key Notes	7
(1)	Quarterly Consolidated Balance Sheet	7
(2)	Quarterly Consolidated Income Statement and Quarterly Consolidated Statement of Comprehensive	9
	Income
	Quarterly Consolidated Income Statement
	First Half	9
	Quarterly Consolidated Statement of Comprehensive Income
	First Half	10
(3)	Quarterly Consolidated Statement of Cash Flows	11
(4)	Notes	12
	(Notes on Going Concern Assumption)	12
	(Notes on Significant Change in Amount of Shareholders' Equity)	12
	(Significant Changes to Subsidiaries during the Current Term)	12
	(Additional Information)	12
	(Changes in Accounting Policy)	12
	(Segment Information, etc.)	13

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1. Qualitative Information on Consolidated Operating Results, etc. for First Half

1. Explanation of Operating Results
   During the first half of the consolidated fiscal year under review, the uncertainty in the world economy increased due mainly to high energy and food prices resulting from the invasion of Ukraine by Russia, tightening supply of labor and worsening inflation mainly in the U.S., and the zero-COVID policy in China. Central banks of various countries focused their efforts on tightening their monetary policy to suppress inflation. In the U.S., in particular, the FRB has been continuing to raise the policy interest rate. Regarding the future outlook, further slowdown in the economy is likely in the Europe and the U.S. due to inflation and rising interest rates, as well as reduction in gas supply from Russia to Europe, while in Asia, as countries are recovering from COVID-19, rising prices are likely to suppress internal demand and slow down external demand, placing downward pressure on their growth. In Japan, although high commodity prices in line with the weakening yen and soaring energy prices and the slowdown in the overseas economy are negative factors, supported by relaxation of the anti-COVID measures and entry restrictions aimed at balancing them with the economy, the Japanese economy is expected to recover mainly from service consumption, leading to a steady overall recovery.
   Under these circumstances, the Ahresty Group has been making continuous efforts to improve production efficiency, such as flexible adjustment of the number of operating days and personnel placement according to fluctuations in the volume of sales for automobile companies in different countries and regions, and the utilization of idle internal facilities to reduce capital investment. During the six-month period ended September 30, 2022, however, the effects of these efforts could not fully absorb the impact of the decline in automobile production due to the shortage in supply of semiconductors worldwide and China's zero-COVID policy associated with confusion in supply chains, and an increase in production costs due mainly to soaring energy prices, resulting in the recording of an operating loss. Although the impact of the shortage of semiconductors will remain for a while, the recovery trend in automobile production is expected to continue, leading to an increase in the volume of orders we will receive.
   From the consolidated fiscal year under review, the Ahresty Group started its 10-year Business Plan, a long- term management plan toward fiscal 2030, and the 2224 Medium-Term Management Plan, the milestone plan for the first three years of the 10-year Business Plan. Under the 2224 Medium-Term Management Plan, in response to changes in the external environment, such as the acceleration of electrification of automobiles and moves toward carbon neutrality, we set "establishing low-cost, highly productive MONOZUKURI," "reducing CO2 emissions in production," and "shifting the business portfolio to predominantly parts for electric vehicles" as the pillars of our strategy. Based on these pillars, we are making efforts to secure net sales, improve productivity, and enhance earnings strength.
   Consequently, for the first half of the consolidated fiscal year under review, the Group recorded consolidated net sales of ¥66,536 million (up 21.8% year on year), operating loss of ¥1,198 million (operating loss of ¥1,943 million for the first half of the previous year), recurring loss of ¥820 million (recurring loss of ¥1,680 million for the first half of the previous year) and net loss attributable to owners of parent of ¥830 million (net loss attributable to owners of parent of ¥1,780 million in the first half of the previous year).
   Operating results by segment are as follows:
2. 1. Die Casting Business: Japan
      In the Japanese automobile market, while the volume of orders received decreased slightly year on year, our net sales increased to ¥28,109 million (up 14.2% year on year) due to a rise in aluminum market prices. On the profitability side, despite the impact of the rise in various costs, such as energy and logistics, in addition to the decrease in orders received, the segment loss was reduced to ¥423 million (a segment loss of ¥1,012 million was recorded a year earlier) due to the advancement in efforts to improve production efficiency and reduce costs, as well as in the shift of the rise in raw material prices into selling prices. On a quarterly basis, sales declined substantially in the first quarter, affected by production adjustments by car manufacturers due to confusion in supply chains resulting from lockdowns in China. In the second quarter, with a recovery in the volume of orders received, income returned to the black.
   2. Die Casting Business: North America
      In the automobile market in North America, car manufacturers decreased production at their production sites in the North America region due to the global shortage of semiconductors, which resulted in an ongoing decrease year on year in our orders received. Meanwhile, net sales came to ¥17,016 million (up 19.9% year on year), due to the rise in aluminum market prices and the rapid fall in the yen's exchange rate. On the profitability side, although the effects of structural reform and cost reduction activities were seen, the segment recorded a loss of ¥713 million (a segment loss of ¥553 million was recorded a year earlier) due to the decrease in orders received, as well as an increase in production costs associated with rises in costs of energy and labor, etc.
   3. Die Casting Business: Asia
      In the automobile market in Asia, partly due to the effects of the significant reduction of automobile-related taxes and fees in China, signs of recovery in the volume of car sales began to be seen. However, orders received by our plants in China, which settle their accounts in December (the second quarter under review is from April to June), decreased temporarily due to the impact of the lockdown in Shanghai because of COVID-
      19. As a result, although net sales for the consolidated first half under review recovered to ¥15,695 million (up 33.8% year on year), the segment recorded a loss of ¥250 million (a segment loss of ¥643 million was recorded a year earlier) due to the impact of the substantial decrease in the volume of orders received during the second quarter under review.
   4. • 4 -

1. 1. Aluminum Business
      In the Aluminum Business, although the sales weight decreased by 4.0% year on year due to the production decrease of car manufacturers attributable mainly to the shortage of semiconductors, net sales increased 38.4% year on year to ¥3,920 million. On the profitability side, the segment recorded a profit of ¥152 million (up 5.6% year on year) mainly due to the increase in net sales associated with soaring aluminum prices and cost reduction efforts.
   2. Proprietary Products Business
      In the Proprietary Products Business, net sales increased 39.2% year on year to ¥1,794 million, mainly reflecting an increase in orders for projects of the main customers, namely, a clean room at a semiconductor- related company and a data center at a telecommunications company. On the profitability front, the segment achieved a stable profit of ¥111 million (down 0.8% year on year) though the profitability differs among individual projects.
2. Explanation of Financial Position
3. 1. Assets, liabilities and net assets (Assets)
      Total assets at the end of the consolidated first half under review increased by ¥8,294 million from the end of the previous consolidated fiscal year, to ¥139,597 million. Current assets stood at ¥55,926 million, an increase of ¥2,507 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥1,430 million in trade notes and accounts receivable and ¥904 million in inventories. Fixed assets were ¥83,670 million, up ¥5,787 million from the end of the previous consolidated fiscal year. This was due chiefly to an increase of ¥5,396 million in tangible fixed assets.
      (Liabilities)
      Liabilities at the end of the consolidated first half under review increased by ¥3,034 million from the end of the previous consolidated fiscal year to ¥80,770 million. Current liabilities stood at ¥55,159 million, an increase of ¥1,897 million from the end of the previous consolidated fiscal year. The principal factors contributing to this result included a decrease of ¥2,138 million in short-term loans payable, in contrast to increases of ¥548 million in electronically recorded obligations, ¥2,578 million in the current portion of long-term loans, and ¥725 million in obligations for equipment. Long-term liabilities stood at ¥25,611 million, up ¥1,137 million from the end of the preceding consolidated fiscal year. The main factors included an increase of ¥1,132 million in long-term loans payable.
      (Net assets)
      Net assets at the end of the consolidated first half under review increased ¥5,260 million from the end of the previous consolidated fiscal year, to ¥58,826 million. This was attributable primarily to an increase of ¥6,230 million in foreign currency translation adjustments despite a decrease of ¥996 million in retained earnings.
      As a result, the equity ratio was up from 40.69% at the end of the previous consolidated fiscal year to 42.05%.
   2. Cash flows
      Cash and cash equivalents ("cash") decreased ¥346 million during the first half of the consolidated fiscal year under review from the end of the previous consolidated fiscal year, coming to ¥9,009 million at the end of the consolidated first half under review.
      The status of each of the cash flow segments and contributing factors for the first half of the consolidated fiscal year under review are as follows.
      (Cash flows from operating activities)
      Net cash provided by operating activities totaled ¥4,265 million (net cash provided of ¥4,397 million in the same period of the previous year). This result was mainly due to factors decreasing cash such as loss before income taxes and others of ¥759 million, foreign currency exchange gain of ¥415 million, a decrease in accrued consumption taxes and others of ¥344 million, a decrease in notes and accounts payable of ¥302 million, and income taxes paid of ¥319 million, as well as factors increasing cash such as depreciation and amortization of ¥6,217 million and a decrease in notes and accounts receivable of ¥265 million.
      (Cash flows from investing activities)
      Net cash used in investing activities was ¥4,457 million (net cash used of ¥4,523 million in the same period of the previous year). This was chiefly due to factors decreasing cash such as expenditures on purchases of tangible fixed assets of ¥4,465 million.
      (Cash flows from financing activities)
      Net cash used in financing activities was ¥1,091 million (net cash used of ¥8,203 million in the same period of the previous year). This result was primarily due to factors increasing cash such as proceeds from short-term loans of ¥79,703 million and long-term loans of ¥6,440 million, in comparison to factors decreasing cash such as expenditures for repayments of short-term loans of ¥82,532 million and long-term loans of ¥4,439 million.
4. Explanation of Consolidated Earnings Forecasts and Other Information for Future Outlook
   In view of recent economic trends and other factors, the Company has revised its consolidated full-year business forecasts released on September 30, 2022. For details, please refer to the "Notice on Recording of Non-operating
5. • 5 -