Ahresty : Consolidated Financial Results (Japanese Accounting Standards) for the Fiscal Year Ended March 31, 2023

Consolidated Financial Results (Japanese Accounting Standards) for the Fiscal Year Ended

March 31, 2023

May 18, 2023

Company name:

Ahresty Corporation

Stock Exchange Listing: Tokyo

Code Number:

5852

URL: https://www.ahresty.co.jp

Representative:

President & CEO

Arata Takahashi

Contact for inquiries:

Managing Executive Officer, Chief of

Hideki Nariya

TEL. [phone]

General Administrative Command

Planned date for annual shareholders' meeting: June 22, 2023

Planned date for start of dividend payment:

June 6, 2023

Planned date for filing of securities report:

June 22, 2023

Supplementary documents for financial results: Yes

Financial results briefing:

Yes (for securities analysts and institutional investors)

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

1. Consolidated results for year ended March 2023 (from April 1, 2022 to March 31, 2023)

(1) Consolidated operating results

(% shows the year-on-year change)

Net sales

Operating income

Recurring income

Net income attributable to

owners of parent

million yen

%

million yen

%

million yen

%

million yen

%

Year ended March 2023

140,938

21.2

23

－

94

－

(84)

－

Year ended March 2022

116,313

25.1

(2,422)

－

(2,032)

－

(5,189)

－

(Note) Comprehensive income

Year ended March 2023

3,288 million yen (_%)

Year ended March 2022

(2,267) million yen (_%)

(Reference) EBITDA Year ended March 2023 12,929 million yen (36.1%) * EBITDA = operating income + depreciation and amortization

Year ended March 2022 9,496 million yen (-8.2%)

Net income per share

Fully diluted net income per

Return on equity

Return on total

Operating income

share

assets

on sales

yen

yen

%

%

%

Year ended March 2023

(3.26)

－

(0.1)

0.1

0.0

Year ended March 2022

(201.23)

－

(9.5)

(1.5)

(2.1)

(Reference) Investment gain or loss under equity method Year ended March 2023 －million yen

Year ended March 2022

－million yen

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Net assets per share

million yen

million yen

%

yen

Year ended March 2023

137,069

56,649

41.2

2,180.28

Year ended March 2022

131,302

53,566

40.7

2,068.69

(Reference) Shareholders' equity

Year ended March 2023 56,527 million yen

Year ended March 2022 53,426 million yen

(3) Consolidated cash flows

Cash flows from

Cash flows from

Cash flows from financing

Year-end balance of cash

operating activities

investing activities

activities

and cash equivalents

million yen

million yen

million yen

million yen

Year ended March 2023

10,727

(6,331)

(1,534)

12,991

Year ended March 2022

8,259

(6,083)

(5,101)

9,356

2. Dividend payments

Dividend per share

Dividend

Dividend

Total dividend

ratio to net

End of first

End of second

End of third

payout ratio

End of year

For the year

(for year)

assets

quarter

quarter

quarter

(consolidated)

(consolidated)

yen

yen

yen

yen

yen

million yen

%

%

Year ended March 2022

－

5.00

－

5.00

10.00

258

(4.9)

0.5

Year ended March 2023

－

5.00

－

5.00

10.00

259

－

0.5

Year ending March 2024

－

5.00

－

10.00

15.00

35.4

(Forecast)

- 1 -

3. Forecast of consolidated results for year ending March 2024 (from April 1, 2023 to March 31, 2024)

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

								Net income		Net income per
	Net sales		Operating income	Recurring income	attributable to owners
		share
								of parent
	million yen		%	million yen	%	million yen	%	million yen		%	yen
First half	74,700		12.3	400	－	100	－	100		－	3.86
Full year	150,000		6.4	2,200	－	1,600	－	1,100		－	42.43

* Notes:

(1) Significant changes to subsidiaries during the current term (changes for a specified subsidiary	Yes
accompanying a change in the scope of consolidation):
New: , Exception: 1 company (Company name) Ahresty Pretech Corporation
(Note) For details, please see "3. Consolidated Financial Statements and Key Notes (5) Notes (Significant Changes to
Subsidiaries during the Consolidated Fiscal Year under Review)" on page 13 of the accompanying materials.
(2) Changes in accounting policies and changes in or restatement of accounting estimates
(i) Changes in accounting policies associated with revision of accounting standards, etc.:	Yes
(ii) Changes in accounting policies other than (i):	None
(iii) Changes in accounting estimates:	None
(iv) Restatement:	None

(3) Number of shares outstanding (common stock)

(i) Number of shares outstanding at end

Year ended

26,076,717

shares

Year ended

26,076,717

shares

of period (including treasury shares)

March 2023

March 2022

(ii) Number of treasury shares at end of

Year ended

149,822

shares

Year ended

250,695

shares

period

March 2023

March 2022

(iii) Average number of shares during the

Year ended

25,911,370

shares

Year ended

25,787,788

shares

period

March 2023

March 2022

(Reference) Overview of nonconsolidated results

1. Nonconsolidated results for year ended March 2023 (from April 1, 2022 to March 31, 2023)

(1) Nonconsolidated operating results

(% shows the year-on-year change)

Net sales

Operating income

Recurring income

Net income

million yen

%

million yen

%

million yen

%

million yen

%

Year ended March 2023

46,176

16.5

660

－

1,054

－

(3,314)

－

Year ended March 2022

39,631

(26.3)

(706)

－

(67)

－

(6,555)

－

Net income per share

Fully diluted net income per share

yen

yen

Year ended March 2023

(127.93)

－

Year ended March 2022

(254.22)

－

(2) Nonconsolidated financial position

Total assets

Net assets

Equity ratio

Net assets per share

million yen

million yen

%

yen

Year ended March 2023

87,276

31,941

36.5

1,227.26

Year ended March 2022

87,369

35,472

40.4

1,368.08

(Reference) Shareholders' equity Year ended March 2023 31,819 million yen

Year ended March 2022

35,332 million yen

• This report on consolidated financial results is outside the scope of audits 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. Outline of Operating Results, etc. (3) Future Outlook" on page 4 of the accompanying materials.
• • 2 -

Accompanying Materials - Contents

1. Outline of Operating Results, etc.	4
(1)	Outline of Operating Results for the Fiscal Year under Review	4
(2)	Outline of Financial Position for the Fiscal Year under Review	5
(3)	Future Outlook	6
(4)	Basic Policy on Profit Distribution and Dividends for the Current and Next Fiscal Years	6
2. Basic Concept for Choice of Accounting Standards	6
3. Consolidated Financial Statements and Key Notes	7
(1)	Consolidated Balance Sheet	7
(2)	Consolidated Income Statement and Statement of Comprehensive Income	9
	Consolidated Income Statement	9
	Consolidated Statement of Comprehensive Income	10
(3)	Consolidated Statement of Changes in Net Assets	11
(4)	Consolidated Statement of Cash Flows	13
(5)	Notes	14
	(Notes on Going Concern Assumption)	14
	(Notes on Significant Change in the Amount of Shareholders' Equity)	14
	(Significant Changes to Subsidiaries during the Consolidated Fiscal Year under Review)	14
	(Changes in the Accounting Policy)	14
	(Additional Information)	14
	(Segment Information)	15
	(Per Share Information)	19
	(Important Subsequent Events)	19

- 3 -

1. Outline of Operating Results, etc.

1. Outline of Operating Results for the Fiscal Year under Review (Operating results)
   During the consolidated fiscal year under review, the uncertainty in the world economy continued due mainly to high energy and food prices resulting from the Russian invasion of Ukraine, tightening supply of labor and worsening inflation mainly in the U.S., and the zero-COVID policy and subsequent lifting of the policy in China. The 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, the economies of Europe and the U.S. are expected to enter a recession phase due to the impact of inflation and rising interest rates resulting from high energy and food prices. The Chinese economy, with the lifting of the zero-COVID policy, is expected to recover gradually mainly from service consumption, though the real estate market will remain stagnant. In Japan, although high commodity prices and the slowdown in the overseas economy are negative factors, the Japanese economy is expected to recover mainly from service consumption and inbound demand and maintain positive growth, while other major advanced countries will suffer negative growth.
   Under these economic circumstances, the Ahresty Group made 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 orders received from automobile companies in each country or region, and the utilization of idle internal facilities to reduce capital investment. However, the shortage in supply of semiconductors and China's zero-COVID policy associated with confusion in supply chains resulted in a significant decline in automobile production, leading to a decrease in the volume of orders received. Moreover, the soaring energy prices boosted production costs. Mainly due to these factors, the first half of the fiscal year under review recorded an operating loss. In the second half of the fiscal year, due to the effect of efforts to improve efficiency in production systems, as well as improvement in the semiconductor supply condition and the settlement of negotiations with major customers on price revisions and cost compensation in response to soaring energy prices, we were able to recover profit, and recorded slight surpluses for operating income and recurring income on a consolidated full-year basis. Moving ahead, although attention needs to be paid to possible risks, such as resurgence of the shortage of semiconductors, intensification of competition between Japanese automobile companies with local manufacturers in the Chinese market, and the impact of the economic slowdown in the U.S. market, we predict that the recovery trend of our business performance will continue.
   Starting from the consolidated fiscal year under review, the Ahresty Group has promoted 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 our earnings strength.
   As a result, the Group recorded consolidated net sales of ¥140,938 million (up 21.2% year on year), operating income of ¥23 million (compared to an operating loss of ¥2,422 million for the previous year), and recurring income of ¥94 million (compared to a recurring loss of ¥2,032 million for the previous year). Due to the occurrence of an impairment loss on fixed assets and other factors, net loss attributable to owners of parent turned out to be ¥84 million. (The previous year recorded a net loss attributable to owners of parent of ¥5,189 million.)

Operating results by segment are as follows:

1. Die Casting Business: Japan
   In the Japanese automobile market, despite the ongoing reduction in car production due to the shortage in supply of semiconductors and parts, our net sales increased to ¥59,019 million (up 14.1% year on year) due to recovery in the volume of orders received by the Group and a rise in aluminum market prices. On the profitability side, despite the impact of the rise in various costs, such as energy and logistics, we recorded a segment profit of ¥250 million (a segment loss of ¥1,372 million was recorded a year earlier) due to a recovery in the volume of orders received, as well as the advancement of efforts to improve production efficiency and reduce costs, and also in the shift of the rise in raw material prices to selling prices.
2. Die Casting Business: North America
   In the automobile market in North America, due to the shortage of semiconductors associated with supply chain disruptions and the temporary wild fluctuations in the volume of orders received, the total volume of orders received by the Mexico Plant, which settles its accounts in December, decreased year by year. However, net sales increased to ¥36,995 million (up 31.6% year on year) due to the gradual recovery in the volume of orders received by the U.S. plant, as well as a rise in aluminum market prices and the weaker yen. On the profitability side, although the effects of structural reform and cost reduction activities were seen, the segment recorded a loss of ¥676 million (a segment loss of ¥1,096 million was recorded a year earlier) due to sluggish recovery in the volume of 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, while signs of recovery in the volume of car sales began to be seen partly due to the effects of the significant reduction of automobile-related taxes and fees in China, orders received by our plants in China, which settle their accounts in December, decreased significantly in the second quarter due to the impact of the lockdown in Shanghai under the zero-COVID policy. However, from the third quarter, the volume of orders gradually recovered, and the segment recorded net sales of ¥33,676 million (up 27.1% year on year). On the profitability side, the segment recorded a profit of ¥8 million despite wild fluctuations in the volume of orders received. (A segment loss of ¥547 million was recorded for the previous year.)
4. Aluminum Business
   In the Aluminum Business, while the sales weight remained about the same level as the previous year, net sales increased 23.4% year on year to ¥7,975 million due to a rise in aluminum prices. On the profitability side, the segment recorded a profit of ¥274 million (up 3.4% year on year) due to the increase in net sales associated with soaring aluminum prices.
5. • 4 -

1. 1. Proprietary Products Business
      In the Proprietary Products Business, net sales decreased 6.6% year on year to ¥3,271 million because some of the projects of the main customers, such as a clean room at a semiconductor-related company, were postponed to the next year, although the volume of orders increased. On the profitability front, the segment achieved a stable profit of ¥285 million (down 8.7% year on year), though the profitability differs among individual projects.
2. Outline of Financial Position for the Fiscal Year under Review
3. 1. Assets, liabilities and net assets (Assets)
      Total assets at the end of the consolidated fiscal year under review increased ¥5,766 million from the end of the previous consolidated fiscal year to ¥137,069 million. Current assets stood at ¥61,299 million, an increase of ¥7,880 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥3,635 million in cash and time deposits, ¥1,418 million in notes and accounts receivable, and ¥2,490 million in inventories. Fixed assets were ¥75,769 million, down ¥2,113 million from the end of the previous fiscal year. This was due chiefly to a decrease of ¥2,425 million in tangible fixed assets.
      (Liabilities)
      Liabilities at the end of the consolidated fiscal year under review increased ¥2,683 million from the end of the previous consolidated fiscal year to ¥80,419 million. Current liabilities stood at ¥59,277 million, an increase of ¥6,015 million from the end of the previous consolidated fiscal year. The principal factors contributing to this result included increases of ¥1,132 million in notes and accounts payable, ¥1,885 million in short-term loans payable, ¥643 million in accrued expenses, ¥2,218 million in the current portion of long-term loans, and ¥107 million in accounts payable. Long-term liabilities stood at ¥21,142 million, a decrease of ¥3,332 million from the end of the previous consolidated fiscal year. This was mainly due to a decrease of ¥3,501 million in long-term loans payable.
      (Net assets)

Net assets at the end of the consolidated fiscal year under review increased ¥3,083 million from the end of the previous consolidated fiscal year to ¥56,649 million. This was attributable primarily to an increase of ¥3,433 million in foreign currency translation adjustments despite a decrease of ¥379 million in retained earnings.

As a result, the equity ratio was up from 40.7% at the end of the previous consolidated fiscal year to 41.2%.

1. Cash flows
   Cash and cash equivalents ("cash") increased ¥3,635 million from the end of the previous fiscal year during the consolidated fiscal year under review, coming to ¥12,991 million.
   The status of each of the cash flow segments and the contributing factors for the consolidated fiscal year under review are as follows.

(Cash flows from operating activities)

Net cash provided by operating activities totaled ¥10,727 million (compared to net cash provided of ¥8,259 million in the previous fiscal year). This result was mainly due to factors decreasing cash, such as an increase in notes and accounts receivable of ¥234 million, an increase in inventories of ¥1,835 million, and income taxes paid of ¥862 million, as well as factors increasing cash, such as income before income taxes and others of ¥24 million, depreciation and amortization of ¥12,906 million, impairment loss of ¥2,378 million, and an increase in notes and accounts payable of ¥718 million.

(Cash flows from investing activities)

Net cash used in investing activities was ¥6,331 million (compared to net cash used of ¥6,083 million in the previous fiscal year). This was chiefly due to factors increasing cash, such as proceeds from sales of tangible fixed assets of ¥3,648 million, and factors decreasing cash, such as expenditures on purchases of tangible fixed assets of ¥9,888 million.

(Cash flows from financing activities)

Net cash used in financing activities totaled ¥1,534 million (compared to net cash used of ¥5,101 million in the previous year). This result was primarily due to factors increasing cash, such as proceeds from short-term loans of ¥150,982 million and long-term loans of ¥6,940 million, in comparison to factors decreasing cash, such as expenditures for repayments of short-term loans of ¥149,745 million and long-term loans of ¥9,137 million.

(Reference) Transition of indexes related to cash flows

	Year ended March	Year ended March	Year ended March	Year ended March	Year ended March
	2019	2020	2021	2022	2023
Equity ratio (%)	47.7	46.5	41.9	40.7	41.2
Market-value-based equity ratio	12.8	7.3	9.4	7.4	9.8
(%)
Ratio of interest-bearing debt to	191.9	204.5	578.2	519.6	405.7
cash flows (%)
Interest coverage ratio	29.4	38.2	16.7	15.7	15.3
Equity ratio: Shareholders' equity / Total assets
Market value-based equity ratio: Market capitalization / Total assets
Ratio of interest-bearing debt to cash flows: Interest-bearing debt / Cash flows

Interest coverage ratio: Cash flows / Interest paid

(Notes) 1. Each indicator is calculated based on consolidated figures.

1. Market capitalization is calculated based on the number of shares issued excluding treasury stock.
2. Cash flows mean cash provided from operating activities.
3. • 5 -