Topy Industries : 〔Delayed〕Consolidated Basis Results of the Third Quarter for Fiscal 2022

Consolidated Basis Results of the Third Quarter for Fiscal 2022

(April 1, 2022 - December 31, 2022)

			February 7, 2023
Registered Company name	TOPY INDUSTRIES, LIMITED	Stock listing: Tokyo, Nagoya stock exchanges
Code number:	7231		URL: http://www.topy.co.jp/
Representative:	Nobuhiko Takamatsu, Representative Director, President and CEO
Contact:	Tetsuya Sakai, Operating Officer, General Manager, General Affairs Department
	Telephone: [phone] / (Overseas) 81-3-3493-0777
Scheduled date for submission of securities report	February 10, 2023
Scheduled date for dividend payment	-
Preparation of supplementary explanatory materials:	No
Holding of quarterly financial results meeting:	No

(Figures of less than ¥1 million have been omitted)

1. Consolidated Financial and Operating Results of the Third Quarter for Fiscal 2022 (April 1, 2022 - December 31, 2022)

(1) Consolidated Operating Results (Cumulative)

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

	Net sales		Operating profit		Ordinary profit		Profit attributable to
				owners of parent
	Million yen		%	Million yen		%	Million yen		%	Million yen		%
Third Quarter of Fiscal 2022	248,801		26.3	5,355		-	6,255		-	4,666		-
Third Quarter of Fiscal 2021	196,974		22.3	(849)		-	(672)		-	(1,490)		-

Note: Comprehensive income

Third Quarter of Fiscal 2022

10,102 Million yen

(246.8%)

Third Quarter of Fiscal 2021

2,912 Million yen

－%

Profit per share

Profit per share after full

dilution

Yen

Yen

Third Quarter of Fiscal 2022

204.02

-

Third Quarter of Fiscal 2021

(63.96)

-

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

%

Yen

Third Quarter of Fiscal 2022

301,782

122,634

40.2

5,317.21

Fiscal 2021

282,195

113,703

39.9

4,902.25

(For reference) Shareholders' equity:

Third Quarter of Fiscal 2022

121,369 Million yen

Fiscal 2021

112,657 Million yen

2. Dividends

Dividends per share

1Q-end

2Q-end

3Q-end

End of FY

Full fiscal year

Yen

Yen

Yen

Yen

Yen

Fiscal 2021

-

0.00

-

20.00

20.00

Fiscal 2022

-

20.00

-

Fiscal 2022 (Forecasts)

50.00

70.00

Note: Whether changes to the latest dividend forecasts have been made: No

3. Consolidated Financial Forecasts for Fiscal 2022 (April 1, 2022- March 31, 2023)

(Percentage figures are changes from the previous fiscal year)

	Net sales		Operating profit		Ordinary profit		Profit attributable to	Profit per
				owners of parent	share
	Million yen		%	Million yen		%	Million yen		%	Million yen	%	Yen
Full year	352,000		29.8	6,600		-	7,500		-	5,000	-	217.57
Note: Whether changes to the latest forecasts for consolidated figures have been made: No

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• NOTE
  (1) Changes in the State of Material Subsidiaries during the Period: None

Newly included: - (Name) -

Excluded: - (Name) -

(2) Adoption of Special Accounting Methods for Preparation of Quarterly Consolidated Financial Statements: Yes

Note: For details, please refer to "(3) Notes Regarding Quarterly Consolidated Financial Results (Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)" under "2. Quarterly Consolidated Financial Statements and Important Notes" on page 10 of the attached materials.

1. Changes in Accounting Principles, Changes in Accounting Estimates, and Retrospective Restatements
2. 1. Changes in accounting principles accompanying the amendment of accounting standards: None
   2. Changes other than those in (a) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatements: None
3. Number of Shares Issued (Common shares)
4. 1. Number of shares issued at the end of the period (including treasury shares)

Third Quarter of Fiscal 2022	24,077,510 shares	Fiscal 2021	24,077,510 shares
(b) Number of treasury shares at the end of the period
Third Quarter of Fiscal 2022	1,251,810 shares	Fiscal 2021	1,096,640 shares
(c) Average number of shares issued during the period
Third Quarter of Fiscal 2022	22,871,336 shares	Third Quarter of Fiscal 2021	23,298,519 shares

• These consolidated financial results are not included in the scope of quarterly audits by certified public accountants or audit corporations.
• Explanation of the Appropriate Use of Performance Forecasts and Other Related Items

(Caution concerning future descriptions etc.)

The above estimate has been compiled based on information available at the time this disclosure was made. The actual earnings are subject to change from the estimated values due to various factors.

For assumed conditions underlying the earnings forecast and cautionary statements in using the earnings forecast, please refer to "Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates" on page 5.

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Index of Attached Documents
1. Qualitative Information Regarding Results of the Third Quarter for Fiscal 2022	4
(1)	Explanation Regarding Consolidated Operating Results	4
(2)	Explanation Regarding Financial Position	5
(3)	Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates	5
2. Quarterly Consolidated Financial Statements and Important Notes	6
(1)	Quarterly Consolidated Balance Sheets	6
(2)	Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income	8
	Quarterly Consolidated Statements of Income
	Third Quarter Consolidated Cumulative Accounting Term	8
	Quarterly Consolidated Statements of Comprehensive Income
	Third Quarter Consolidated Cumulative Accounting Term	9
(3)	Notes Regarding Quarterly Consolidated Financial Results	10
	(Note Related to Going Concern Assumption)	10
	(Note on Significant Changes in the Amount of Shareholders' Equity)	10
	(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)	10

Note: This document has been translated from the original Japanese version for reference purposes only. In the event of any discrepancy between this translated document and the original Japanese version, the original shall prevail.

The original disclosure in Japanese was released on February 7, 2023 at 13:30 (GMT+9).

The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

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1. Qualitative Information Regarding Results of the Third Quarter for Fiscal 2022

(1) Explanation Regarding Consolidated Operating Results

During the first nine months of the fiscal year under review, the global economy overall experienced a moderate recovery, despite geopolitical risks from the protraction of the situation in Ukraine and unstable market conditions caused by monetary tightening around the world. Amid the normalization of economic activities, the Japanese economy also saw signs of moderate improvement, although it did not result in a full-scale recovery from the COVID-19 pandemic. However, the business environment surrounding TOPY INDUSTRIES, LIMITED (the "Group") remained uncertain, as cost increases continued for coal, electricity, other raw materials, and logistics, etc., in addition to the impacts from reduced production of automakers caused by semiconductor and other parts shortages and weaker economic activities in China.

Under these circumstances, the Group launched its new Medium-term Management Plan, TOPY Active & Challenge 2025, which will cover the period from FY2022 to 2025. We have set the four areas of promote segment management, strengthen overseas profitability, strengthen domestic business base, and contribute to decarbonization as the Group Basic Strategy, and we are steadily implementing measures to strengthen profitability utilizing the business foundation established in the previous Medium-term Management Plan. Moreover, we are working to promote sustainability management that leverages the Group's strengths to create new value and solve social issues, through TOPY Sustainable Green Vision 2050, a long-term sustainability vision aiming for carbon neutrality by 2050.

The financial results for the first nine months of the fiscal year under review include consolidated net sales of ¥248,801 million (up 26.3% year on year), operating profit of ¥5,355 million (compared to an operating loss of ¥849 million in the same period of the previous year), ordinary profit of ¥6,255 million (compared to an ordinary loss of ¥672 million in the same period of the previous year), and profit attributable to owners of parent was ¥4,666 million (compared to loss attributable to owners of parent of ¥1,490 million in the same period of the previous year). This was attributed to large increases in net sales and profits compared to the same period of the previous fiscal year owing to cost improvements from structural reforms, optimization of selling prices in line with cost increases for raw materials and electricity, and supplementing the strong demand for ultra-large wheels for mining equipment.

Performance by Segment

(Steel Segment)

In the steel industry, demand for steel materials for construction and manufacturing remained strong. The price of steel scrap, the main raw material, remained at elevated levels, while the prices of electricity and other raw materials also remained high.

Given these circumstances, the Group worked to optimize steel sales prices in response to the costs of steel scrap, electricity, and other raw materials and to sell products with high profit margins, and to win orders with an emphasis on profitability. As a result, net sales increased to ¥78,555 million (up 18.8% year on year), and operating profit increased to ¥6,026 million (compared to an operating loss of ¥323 million in the same period of the previous year).

(Automotive & Industrial Machinery Components Segment)

In the automotive industry, the production volume in Japan moderately recovered from the level in the same period of the previous year due to shortages of semiconductors and other parts as well as a slower than anticipated recovery in automobile production due to the impacts of weaker economic activities in China. In the construction machinery industry, there was strong demand in the United States and Southeast Asia, but currently, impacts on construction machinery production due to parts shortages have begun to materialize. Demand for mining machinery remained strong amid robust demand for resources.

Given these conditions, the Group worked to optimize sales prices in response to the rises in the costs of electricity, and other raw materials in addition to steadily winning demand for parts for the undercarriages of construction machinery and ultra-large wheels for mining equipment. As a result, net sales totaled ¥150,723 million (up 25.6% year on year). However, operating profit totaled ¥3,098 million (down 18.8% year on year), impacted significantly by the decrease in sales volume of models using our wheels for passenger vehicles and substantially higher costs for marine transport and electricity.

(Power Segment)

The business environment remained more challenging than expected in the power business due to elevated coal prices, a fuel for power generation, and delayed improvement in electricity selling prices owing to higher costs caused by yen weakness. Given these circumstances, the Group worked to optimize electricity selling prices, but could not keep pace with rising costs. As a result, net sales stood at ¥14,746 million (up 132.3% year on year) and the operating loss was ¥802 million (compared to an operating loss of ¥1,463 million in the same period of the previous year).

(Business Development Segment)

The Group manufactures and sells synthetic mica used in cosmetics and other products. In the synthetic mica business, the Group steadily captured the recovery in demand for cosmetics domestically and internationally. Reflecting this situation, net sales rose 7.1% year on year, to ¥748 million with an operating profit amounting to ¥97 million (compared to an operating loss of ¥163 million in the same period of the previous fiscal year).

(Leasing Segment)

In the leasing business, operating profit was ¥534 million (up 1.5% year on year).

(Others)

The Group operates a civil engineering and construction business, sports club OSSO, and other businesses. Net sales came to ¥4,027 million (up 7.3% year on year) and operating profit was ¥367 million (up 21.0% year on year).

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(2) Explanation Regarding Financial Position

Total assets at the end of the third quarter of the consolidated fiscal year under review stood at ¥301,782 million, an increase of ¥19,586 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥15,161 million in notes and accounts receivable - trade, and contract assets, ¥2,614 million in raw materials and supplies, and ¥2,058 million in cash and deposits.

Total liabilities were ¥179,148 million, an increase of ¥10,655 million compared with the end of the previous consolidated fiscal year. This was caused mainly by increases of ¥9,543 million in electronically recorded obligations - operating and of ¥5,803 million in long-term borrowings, compared to a decrease of ¥4,107 million in short-term borrowings.

Total net assets came to ¥122,634 million, an increase of ¥8,931 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥6,358 million in foreign currency translation adjustments and of ¥3,748 million in retained earnings.

(3) Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates

Despite expectations for the moderate recovery to continue, the outlook for the global economy is forecast to remain uncertain, a rise in geopolitical risks, including the prolonged situation in Ukraine, inflation, and fluctuations in financial and capital markets amid monetary tightening among other factors.

As for the business environment surrounding the Group, the uncertain situation is expected to continue, amid elevated prices of steel scrap, coal, electricity, and other raw materials and concerns that the impacts of semiconductor and other parts shortages could affect not only automobile production, but also construction machinery as well.

The consolidated financial forecasts for the fiscal year ending March 31, 2023 (April 1, 2022 to March 31, 2023) have not been changed from those announced on May 11, 2022. This decision has been made based on information available to the Group as of the date of issuance of this release. The actual results may vary from the forecast due to various factors that will arise in the future.

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