Consolidated Financial Report for the 9-month period ended December 31, 2016 (IFRS) (PDF: 294KB )

Consolidated Financial Report [IFRS]

For the 9-month period ended December 31, 2016

Listed Company: Hitachi Metals, Ltd. (URLhttp://www.hitachi-metals.co.jp/e/index.html) Listed Stock Exchanges: Tokyo Stock Exchange, Inc. (First Section, Code Number 5486)

Representative: Hideaki Takahashi, President and Chief Executive Officer

Contact: Tatsuya Minami, General Manager, Corporate Communications Dept. Tel: [phone]

January 26, 2017

Note: Figures are rounded off to the nearest million yen.

1. Performance for the Third Quarter Ended December 31, 2016 (April 1, 2016 to December 31, 2016)

2. Operating Results (% indicates the rate of +/- compared with the previous fiscal year)

   Revenues		Operating Income		Income before Income Taxes		Net Income		Net Income attributable to Shareholders of the Parent Company		Comprehensive Income
   Million yen	％	Million yen	％	Million yen	％	Million yen	％	Million yen	％	Million yen	％
   666,536	(13.8)	47,179	(12.9)	47,642	(38.7)	36,123	(35.5)	36,193	(34.9)	41,696	(14.8)
   772,898	7.9	54,197	(8.0)	77,727	25.8	55,977	14.9	55,583	16.3	48,913	(34.1)

   Dec., 2016

   Dec., 2015

   Earnings per Share attributable to Shareholders of the Parent Company (Basic)

   Earnings per Share attributable to Shareholders of the Parent Company (Diluted)

   Yen Yen

   Dec., 2016 84.65 －

   Dec., 2015 129.99 －

   Note: In order to give a true view of the condition of the business of Hitachi Metals, Ltd. (the "Company") without the effects of business restructuring, adjusted operating income is presented as "operating income" in the table above, wherein said adjusted operating income is the operating income recorded in the condensed interim consolidated statement of income, excluding non-operating income and expenses, and extraordinary income and losses. Adjusted operating income is a unified profit indicator for the Hitachi Group, including Hitachi, Ltd. Operating income in Condensed Interim Consolidated Statement of Comprehensive Income for the nine months ended December 31, 2015 was ¥79,200 million, and the nine months ended December 31, 2016 was ¥49,571 million.

3. ) Financial Standing

4. Total Asset Total Equity

   Equity attributable to Shareholders of the Parent Company

   Equity attributable to Shareholders of the Parent Company Ratio

   Equity per Share attributable to Shareholders of the Parent Company

   Million yen Million yen Million yen ％ Yen

   Dec., 2016 1,033,136 538,117 526,282 50.9 1,230.85

   Mar., 2016 1,033,311 504,675 495,865 48.0 1,159.70

5. Dividends

   Dividends per Share

   1Q 2Q 3Q Term-end Annual

   Yen － －	Yen 13.00 13.00	Yen － －	Yen 13.00	Yen 26.00
   13.00	26.00

   Mar., 2016

   Mar., 2017

   Mar., 2017

   （Forecast）

   Note: Revision of the latest forecasts of results : No

6. Business results forecast for the year ending March 31, 2017 (April 1, 2016 to March 31, 2017)

7. (% indicates the rate of +/- compared with the same term of the previous fiscal year)

   Net Income

   Revenues Operating Income Incomebefore

   Income Taxes

   attributable to Shareholders of the Parent Company

   Basic Earnings per Share

   Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
   Full-year	880,000	(13.5)	67,000	(11.9)	63,000	(34.5)	45,000	(34.8)	105.24

   Note: Revision of the latest forecasts of results : No

   In order to give a true view of the condition of the Company's business without the effects of business restructuring, adjusted operating income is presented as "operating income" in the table above, wherein said adjusted operating income is the operating income recorded in the condensed interim consolidated statement of income, excluding non-operating income and expenses, and extraordinary income and losses. Adjusted operating income is a unified profit indicator for the Hitachi Group, including Hitachi, Ltd.

   * Other Notes

   (1)	Changes in major subsidiaries during the period under review: Yes Newly included : Hitachi Metals San Huan Magnetic Materials (Nantong) Co., Ltd. Excluded : Hitachi Metals Automotive Components USA, LLC
   (2)	Changes in accounting policies and accounting estimates

8. Changes in accounting policies requested by IFRS: None

9. Changes other than those in (i): None

10. Changes in accounting estimates: None

(3)

Numbers of shares issued (Common stock)

(i) Number of shares outstanding at end of period

(Including treasury stock) Dec., 2016 428,904,352

March, 2016

428,904,352

(ii) Number of treasury stock outstanding at end of period Dec., 2016 1,326,767

March, 2016

1,324,420

(iii) Average number of shares issued during the term Dec., 2016 (3Q) 427,578,988

Dec., 2015 (3Q)

427,584,643

*This quarterly consolidated financial report is not subject to the quarterly review procedure by external auditors that are based on Financial Instruments and Exchange Act. The quarterly review procedure has not yet finished at the point of releasing this financial summary.

*The forecast figures, with the exception of actual results, are based on certain assumptions and predictions of the management at the time of preparation. Changes in business conditions or underlying assumptions may cause actual results may differ from those projected. Please refer to "(3) Forecasts for the Fiscal Year Ending March 31, 2017, including Consolidated Operating Forecasts " on page 6 for precondition and assumption as the basis of the above forecasts.

• Table of Contents

1. Qualitative Information Regarding Financial Results for the Nine Months Ended December 31, 2016………………………… 4

2. Information Regarding Operating Results……………………………………………………………………………… 4 (2) Analisys of Financial Condition………………………………………………………………………………………… 6

   (3) Forecasts for the Fiscal Year Ending March 31, 2017, including Consolidated Operating Forecasts………………… 6

3. Matters Relating to Summary Information (Notes)……………………………………………………………………………… 7

4. Changes in Major Subsidiaries during the Nine Months Ended December 31, 2016…………………………………… 7

5. Changes in Accounting Policies and Accounting Estimates…………………………………………………………… 7 (3) Additional Information………………………………………………………………………………………………… 7

6. Condensed Interim Consolidated Financial Statements………………………………………………………………………… 8

7. Condensed Interim Consolidated Statement of Financial Position……………………………………………………… 8

8. Condensed Interim Consolidated Statement of Income and Condensed Interim Consolidated Statement of Comprehensive Income………………………………………………………………………………………………… 10 [ Condensed Interim Consolidated Statement of Income ]……………………………………………………………… 10 [ Condensed Interim Consolidated Statement of Comprehensive Income ]…………………………………………… 11

9. Condensed Interim Consolidated Statement of Changes in Equity……………………………………………………… 12

10. Condensed Interim Consolidated Statement of Cash Flows…………………………………………………………… 13 (5) Segment Information…………………………………………………………………………………………………… 15

12. Qualitative Information Regarding Financial Results for the Nine Months Ended December 31, 2016
13. Information Regarding Operating Results

14. During the nine months ended December 31, 2016, the global economy remained on a modest rebound track primarily in advanced countries. The United States had continuous stable economic growth, backed by an increased individual consumption. European economies continued to gradually recover despite weak movements in some indicators used by corporations. Chinese economy showed some signs of a partial rally in the market due to the effects of the government's various economic measures, while economic growth in emerging countries was still stagnant. Amid these situations, the Japanese economy remained unclear along with weak exports and production due to an economic slowdown in emerging countries, despite an upswing in individual consumption due to the improvement in the employment and income environment.

    Among the industries in which Hitachi Metals Group (the "Group") operates, the automobile industry experienced a continued slump in sales of light vehicles in the domestic market, and a sign that the strong sales of new vehicles are reaching its peak was seen in the United States. However, sales have increased overall compared with those for the nine months ended December 31, 2016, since demand has increased in Europe and China. Supply and demand of steel continued to experience challenges due to weak global demand affected by the economic slowdown in emerging countries. The number of new housing starts increased both in the United States and Japan. In the electronics industry, while mobile devices in emerging countries suffered from stagnant growth, demand for household appliances increased, mainly in Japan, from October 2016 onward.

    Under the business circumstances described above, for the nine months ended December 31, 2016, revenues of the Group decreased by 13.8% to ¥666,536 million and operating income decreased by ¥29,629 million to ¥49,571 million, compared with those for the nine months ended December 31, 2015. These results were influenced by a reduction in raw material prices (a sliding-scale raw material price system), the appreciation of the yen, and a decline in demand. Further, operating income decreased mainly due to a decrease in gross profit and gains on business reorganisation and others of ¥30,232 million in other income arising from a transfer of shares equivalent to 51% of the issued shares of Hitachi Tool Engineering, Ltd. (currently named Mitsubishi Hitachi Tool Engineering, Ltd.) to Mitsubishi Materials Corporation as of April 1, 2015, during the nine months ended December 31, 2015. Income before income taxes decreased by ¥30,085 million to ¥47,642 million, and net income attributable to shareholders of the parent company decreased by ¥19,390 million to ¥36,193 million, compared with the same period of the prior year.

    Results by business segment are as follows. Note that revenues for each segment include intersegment revenues. There were no changes to the businesses of the Group during the nine months ended December 31, 2016.

    Effective from the three months ended June 30, 2016, the Group changed part of its internal managerial categories of businesses and consolidated subsidiaries related to reportable segments. It also changed treatment for certain corporate general and administrative expenses, such as research expenses and other such expenses, which were previously treated as adjustments, to allocate them to applicable reporting segments based on the budget. Refer to "3. Condensed interim consolidated financial statements, (5) Segment information" for details.

    Comparable year-on-year information presented below reflects the above changes to the categories of the reportable segments and treatment for certain corporate general and administrative expenses.

    High-Grade Metal Products and Materials

    Revenues in the High-Grade Metal Products and Materials segment for the nine months ended December 31, 2016, were

    ¥174,002 million, a decrease of 10.4% as compared with those for the nine months ended December 31, 2015. Operating income of the segment decreased by ¥30,781 million to ¥15,907 million for the same period due to the effects of the decrease in revenues as well as gains on business reorganization and others of ¥25,931 million arising from the transfer of shares of Hitachi Tool Engineering, Ltd. (currently named Mitsubishi Hitachi Tool Engineering, Ltd.) during the three months ended June 30, 2015.

    Sales of molds and tool steel fell below those for the nine months ended December 31, 2015, due to inventory adjustments of molds and tool steel affected by an economic slowdown mainly in Asia during the three months ended June 30, 2016. In industrial equipment materials, demand for environment-friendly products related to automobiles increased, and sales of other industrial components were strong. Sales of aircraft-related and energy-related materials faced an in-between season of demand. In alloys for electronic products, sales of display-related materials were stagnant.