Toho Titanium : Consolidated Financial Results for the Six Months Ended September 30, 2022 (Japanese GAAP)

Translation from the Original Japanese Version.

Consolidated Financial Results for the Six Months Ended September 30, 2022 (Japanese GAAP)

October 27, 2022

Company name: Toho Titanium Co., Ltd.

Code number: 5727

Stock Exchange Listings: Tokyo

URL: https://www.toho-titanium.co.jp/en/

Representative: Yasuji Yamao, Representative Director and President

Contact person: Hiromu Tomeba, General Manager, Planning, Corporate Management Division Telephone: [phone]

Scheduled date of filing of Securities Report: November 11, 2022

Scheduled date of commencement of dividend payments: December 1, 2022

Supplemental materials for the financial results: Yes

Quarterly financial results presentation: Yes (for institutional investors and analysts)

（Figures of less than ¥1 million are rounded off.）

1. Consolidated Results for the Six Months Ended September 30, 2022 (From April 1, 2022 to September 30, 2022)

(1) Consolidated Operating Results							(Percentage figures are changes from the same period in the previous fiscal year.)
						Net sales						Operating income				Ordinary income	Profit attributable to
														owners of parent
					Millions of yen		%		Millions of yen				%		Millions of	%	Millions of yen	%
																								yen
	Six months Ended			38,890		48.0				5,823			122.0		6,406	148.0	4,536	142.4
	September 30, 2022
	Six months Ended			26,280		58.4				2,622			143.9		2,583	-	1,871	-
	September 30, 2021
(Note) Comprehensive income	Six months ended September 30, 2022:	¥ 4,582 million [(148.2%)]
						Six months ended September 30, 2021:	¥1,846 million [(- %)]
					Net income	Diluted net income
					per share				per share
						Yen					Yen
	Six months Ended	63.74					-
	September 30, 2022
	Six months Ended	26.30					-
	September 30, 2021
(2) Consolidated Financial Position
					Total assets						Net assets				Shareholders' equity ratio
					Millions of yen						Millions of yen					%
	September 30, 2022				99,020							51,106						51.5
	March 31, 2022				98,095							47,166						47.9
	(For reference)	Shareholders' equity : September 30, 2022: ¥50,972 million	March 31, 2022: ¥47,031 million
2. Dividends
							Annual cash dividend per share
				End of 1Q	End of 2Q	End of 3Q	Year-End				Total
					Yen		Yen					Yen		Yen					Yen
	FY2021			-		6.00				-		9.00				15.00
	FY2022			-		11.00
	FY2023 (Forecast)										-		17.00			28.00

(Note) Revisions to the previously announced forecast of cash dividends: Yes

3. Consolidated Financial Forecasts for FY2022 (From April 1, 2022 to March 31, 2023)

(Percentage figures are changes from the same period in the previous fiscal year.)

	Net Sales		Operating income	Ordinary income	Profit attributable to	Net income
		owners of parent	per share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
FY2022	80,600		45.2	9,700	85.5	10,000	93.1	7,000	89.4	98.35

(Note) Revisions to the previously announced forecasts: Yes

For details, please see the release "Notice of Difference between Previous Forecast and Actual Results for the Six Months Ended September 30, 2022, Revision of Financial Forecasts for Fiscal Year 2022 and Revision of Dividend Forecast" dated October 27, 2022.

Notes

1. Changes in the scope of material subsidiaries during the period (i.e. changes in specified subsidiaries involving a change in the scope of consolidation): None.
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies or in accounting estimates, and restatement
4. 1. Changes in accounting policies owing to revisions in accounting rules and standards: Yes.
   2. Changes in accounting policies other than (i) above: None.
   3. Changes in accounting estimates: None.
   4. Restatement: None.
5. Number of shares issued (common stock)
6. 1. Number of issued shares at the end of the period (including treasury stock)

September 30, 2022:	71,270,910 shares
March 31, 2022:	71,270,910 shares

(ii) Number of shares of treasury stock at the end of the period

September 30, 2022:	98,409 shares
March 31, 2022:	98,309 shares

(iii) Average number of issued and outstanding shares during the period

September 30, 2022:	71,172,544 shares
September 30, 2021:	71,172,705 shares

This document is outside the scope of audit procedures.

Explanation concerning appropriate use of performance forecasts and other special notes

(Notes concerning forward-looking statements)

Business performance forecasts and other forward-looking statements contained in this document are based on the information available to the Company at the time of its announcement and on certain assumptions that the Company considers reasonable, and the Company makes no representations that they are achievable. Actual results may differ materially from the forecasts depending on a variety of factors.

(Supplementary information on financial results and financial briefing)

The Company will hold a financial briefing for institutional investors and analysts on November 14, 2022, after which materials used at the briefing will be posted on the Company's web site promptly.

Attached Materials: Table of Contents
1.	Qualitative Information on the Quarterly Results .............................................................................................	2
(1)	Explanations on Operating Results .........................................................................................................................	2
(2)	Explanations on Financial Position .........................................................................................................................	4
(3)	Explanations on Consolidated Financial Forecasts and Other Future Forecast Information ..................................	4
2.	Consolidated Financial Statements......................................................................................................................	6
(1)	Consolidated Balance Sheets...................................................................................................................................	6
(2)	Consolidated Statements of Operations and Comprehensive Income (Loss)..........................................................	8
	Consolidated Statements of Operations
	Six Months Ended September 30, 2022 ............................................................................................................	7
	Consolidated Statements of Comprehensive Income (Loss)
	Six Months Ended September 30, 2022............................................................................................................	7
(3)	Consolidated Statements of Cash flows ................................................................................................................	11
(4)	Explanatory Notes to Consolidated Financial Statements.....................................................................................	11
	Notes on the Assumption of a Going Concern....................................................................................................	11
	Notes on Significant Changes in Shareholders' Equity.......................................................................................	11
	Change in accounting policies ............................................................................................................................	11
	Segment Information etc. ....................................................................................................................................	12

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1. Qualitative Information on the Quarterly Results

1. Explanations on Operating Results

During the six months ended September 30, 2022 (from April 1, 2022 to September 30, 2022), the Japanese economy showed signs of a gradual recovery as restrictions on action due to COVID-19 eased.

The global economy continues to experience high raw material and energy prices due to Russia's invasion of Ukraine, the rate of price increases remained high, and policy rate hikes by national central banks to curb inflation, all of which have raised concerns about a stagnant economic recovery.

In the business environment surrounding our group, while sales of titanium products remained strong, high prices of raw and auxiliary materials, rising energy and transportation costs, and other factors put pressure on earnings.

Under such circumstances, consolidated net sales for the period were 38,890 million yen (a 48.0% increase as compared to the corresponding period of the previous year), the operating income was 5,823 million yen (a 122.0% increase). The ordinary income was 6,406 million yen (a 148.0% increase) and the net income attributable to owners of the parent was 4,536 million yen (compared to a 142.4% increase in the same period of the previous fiscal year).

Results by business segment are as stated below.

From the three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022), in order to better evaluate and manage the performance of each reportable segment, the Company has changed its method of allocating company-wide general and administrative expenses. Excluding general and administrative expenses related to research and development mainly for the creation and promotion of new businesses, to each segment based on reasonable standards. Segment information for the six months ended September 30, 2021(from April 1, 2021 to September 30, 2021) is described based on the calculation method after the change.

Titanium Metal Business

Sales of titanium metals during the six months ended September 30, 2022 remained strong due to robust demand for both aircraft and general industrial applications. Demand for aircraft applications has increased on the back of a recovery trend in passenger demand, which has been supplemented by demand for substitutes for Russian-made expanded products, and demand for high-purity titanium for general industrial applications and semiconductor applications remains strong.

We are responding by supplying from our joint venture in Saudi Arabia in addition to shipments from Japan, including inventory. On the earnings front, the situation continues to be unpredictable as cost increases due to soaring raw material ore and subsidiary material costs have begun to become apparent. However, due to factors such as increased shipment volume, price revisions by some customers, yen depreciation, and a time lag in reflecting rising costs in cost of sales, net sales of the Titanium Metal Business for the period were 26,682 million yen, (an increase 87.2%, as compared to the corresponding period of the previous year) and the operating income of the Titanium Metal Business for the period was 3,469 million yen, (a loss of 521 million yen).

Catalysts Business

Sales of catalysts during the six months ended September 30, 2022 were lower than the same period of the previous fiscal year due to softening demand for polyolefin catalysts in Asia, reflecting the economic slowdown in China.

Under such circumstances, due to price correction and the impact of yen depreciation, despite lower sales volume, net sales of the Catalysts Business for the period increased by 10.1% amounting to 4,368 million yen, and the operating income of the business for the period was 1,640 million yen, a 21.5% increase.

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Chemicals Business

Sales of chemicals during the six months ended September 30, 2022 were lower than in the same period of the previous year due to a decline in demand for multilayer ceramic capacitors (MLCC), which is the main application for ultra-fine nickel powder, and economic stagnation caused by the U.S. interest rate hike and the lockdown in China.

Under such circumstances, net sales of the Chemical Business for the period were 7,839 million yen (a decrease 2.7%, as compared to the corresponding period of the previous year), and the operating income of the business for the period was 1,313 million yen, a 40.7% decrease.

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