Iwatani : Overview of Business Results for 1Q FY23

Note: This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Three Months Ended June 30, 2023

[Japanese GAAP]

August 7, 2023

Company name: IWATANI CORPORATION

Stock exchange listing: Tokyo

Code number: 8088

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

Representative:

Hiroshi Majima

President

Contact:

Tetsuo Matsuo

General Manager Accounting Dept.

Phone: [phone]

Scheduled date of filing quarterly securities report: August 10, 2023

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: Yes

(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Three Months Ended June 30, 2023 (April 1, 2023 to June 30, 2023)

(1) Consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Three months ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

June 30, 2023

201,909

(0.9)

8,512

(3.6)

10,614

(6.3)

7,172

(12.3)

June 30, 2022

203,803

40.1

8,828

12.7

11,330

21.5

8,180

36.0

(Note) Comprehensive income:	Three months ended June 30, 2023:
	Three months ended June 30, 2022:

¥	15,445 million	[	28.4%]
¥	12,031 million	[	103.7%]

	Basic earnings	Diluted earnings per
	per share	share
Three months ended	Yen	Yen
June 30, 2023	124.69	-
June 30, 2022	142.23	-

(Note) In the fiscal year ended March 31, 2023, we finalized provisional accounting treatment for a business combination. The finalization has been reflected in the figures for the three months ended June 30, 2022.

(2) Consolidated Financial Position

	Total assets	Net assets	Capital adequacy ratio
As of	Million yen		Million yen	%
June 30, 2023	654,672		321,919	47.6
March 31, 2023	656,003		312,230	46.0
(Reference) Equity: As of	June 30, 2023:	¥	311,592 million
As of	March 31, 2023:	¥	301,976 million

2. Dividends

					Annual dividends
		1st	2nd		3rd		Year-end	Total
	quarter-end	quarter-end	quarter-end
		Yen		Yen	Yen		Yen	Yen
Fiscal year ended March 31, 2023		-		-	-		95.00	95.00
Fiscal year ending March 31, 2024		-
Fiscal year ending March 31, 2024				-	-		95.00	95.00
(Forecast)
(Note) Revision to the forecast for dividends announced most recently:	No
(Note) Breakdown of the 1st quarter dividend for the fiscal year ending March 31, 2024 :
Commemorative dividend	-	yen
Special dividend	-	yen

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2024(April 1, 2023 to March 31, 2024)

(% indicates changes from the previous corresponding period.)

			Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
				owners of parent	per share
			Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year			907,000		0.1	45,000	12.4	50,300	7.0	33,500	4.6	582.36
(Note) Revision to the financial results forecast announced most recently:	No
* Notes:
(1) Changes in significant subsidiaries during the three months ended June 30, 2023
(changes in specified subsidiaries resulting in changes in scope of consolidation):	No
New	-	(Company name:								)
Exclusion:	-	(Company name:								)
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements:	No

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

June 30, 2023:	58,561,649	shares
March 31, 2023:	58,561,649	shares
2) Number of treasury shares at the end of the period:
June 30, 2023:	1,037,664	shares
March 31, 2023:	1,037,177	shares

3) Average number of shares outstanding during the period:
Three months ended June 30, 2023:	57,524,159	shares
Three months ended June 30, 2022:	57,515,964	shares

*1. This document is unaudited by certified public accountants or audit firms.

*2. Earnings forecasts in this release are based on currently available information and assumptions deemed rational. A variety of factors could cause actual results to differ materially from forecasts.

Contents

Qualitative Information of the Quarterly Consolidated Results ・・・・・・・・・・・・・・・2

1. Operating Results・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・2
2. Segment Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・3
3. Financial Position・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・4
4. Consolidated Financial Results Forecasts・・・・・・・・・・・・・・・・・・・・・・4

Quarterly Consolidated Financial Statements and Notes・・・・・・・・・・・・・・・・・・ 5

1. Quarterly Consolidated Balance Sheets・・・・・・・・・・・・・・・・・・・・・・ 5
2. Quarterly Consolidated Statements of Income and Comprehensive Income・・・・・・・・ 7
3. Explanatory Notes to Quarterly Consolidated Financial Statements・・・・・・・・・・・ 9 (Notes on the Assumption of a Going Concern)・・・・・・・・・・・・・・・・・・・・9 (Notes in the Event of Significant Changes in Shareholders' Equity)・・・・・・・・・・・ 9 (Segment Information)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9 (Business Combination)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・10

Additional Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・11

Results for 1Q FY2023・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・11

1. Consolidated Statements of Income・・・・・・・・・・・・・・・・・・・・・・・11
2. Operating Profit Except for Impact of LPG Import Price Fluctuation・・・・・・・・・・ 11
3. LPG Import Price (CP)・・・・・・・・・・・・・・・・・・・・・・・・・・・・11
4. Segment Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・11
5. LPG and Industrial Gases Net Sales -Sales Volume・・・・・・・・・・・・・・・・・12
6. Financial Position・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・12 (7)Capital Expenditure・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・12 (8)Non-consolidated・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・12

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Qualitative Information of the Quarterly Consolidated Results

(1) Operating Results

During the cumulative first quarter of the current fiscal year, the Japanese economy showed a gradual recovery as consumer spending and corporate earnings improved due to the revitalization of socioeconomic activities following the downgrading of COVID-19 to Category 5, despite rising prices and uncertainty over the outlook for overseas economies.

Under these circumstances, Iwatani announced its five-yearmedium-term management plan "PLAN27," which would begin in the fiscal year ending March 31, 2024, and has been working to expand its business to achieve its basic policies of "Solutions to social issues" and "Sustained growth."

With the aim of realizing a hydrogen energy-based society, we promoted the construction of CO2-free hydrogen supply chains utilizing Australian lignite coal and began basic design work on a project for large-scale production of green hydrogen derived from renewable energy in Queensland, Australia. We also strived for the realization of a large-capacity hydrogen supply system for power generation and other large-volume demand and promoted collaboration with other companies, signing a memorandum of understanding with Mitsubishi Heavy Industries, Ltd. for the development and sale of liquid hydrogen cryopumps and a joint development agreement with Sumitomo Precision Products Co., Ltd. for a large-scale liquid hydrogen vaporizer.

In the Integrated Energy Business, we began constructing a cylinder filling station at NEGISHI LIQUEFIED GAS TERMINAL CORPORATION as part of its efforts to strengthen and streamline the LPG supply system in the Kanto and Tokyo metropolitan areas. We started a project certified under the government's J-Credit Scheme to generate credits (environmental value) from the CO2 reduction effect achieved by installing high-efficiency gas water heaters in ordinary homes, etc. We also started a demonstration test of a 100% hydrogen combustion water heater in Kitakyushu Hydrogen Town to promote the low-/zero-carbonization of households.

In the Industrial Gases & Machinery Business, we expanded its air-separation gas production facilities, in addition to hydrogen plants, to further expand its business in response to strong demand in the East China region.

In the Materials Business, the metal processing business in Thailand steadily expanded manufacturing and sales in response to increased demand for air-conditioning equipment.

As a result, for the first quarter of the current fiscal year, net sales were 201.909 billion yen (-1.894 billion yen year-on-year), operating profit was 8.512 billion yen (-0.315 billion yen year-on-year), ordinary profit was 10.614 billion yen (-0.715 billion yen year-on-year), and profit attributable to owners of parent was 7.172 billion yen (- 1.007 billion yen year-on-year).

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(2) Segment Information

Effective from the first quarter of FY2023, the business segmentation changed in accordance with changes in the organization of the Company, and comparisons and analyses for the first quarter of FY2023 are based on the new segmentation.

Integrated Energy

In the Integrated Energy Business, sales decreased due to such factors as falling LPG import prices and higher temperatures. Profits decreased significantly due to negative LPG import price fluctuation (-3.773 billion yen year-on-year), despite an improvement in the profitability of the LPG retail sector.

As a result, net sales in this segment were 76.961 billion yen (-14.551 billion yen year-on-year), and operating profit was 1.600 billion yen (-3.662 billion yen year-on-year).

Industrial Gases & Machinery

In the Industrial Gases & Machinery Business, sales volumes of air-separation gas and hydrogen gas decreased mainly for the semiconductor and electronic components industries, but profitability improved due to efforts to cope with increased production costs. In addition, sales of hydrogen-related equipment remained strong. Regarding specialty gases, we strove to maintain steady supply of helium amid rising market prices due to the global tight supply-demand balance. Sales of machinery and equipment increased, especially automobile-related equipment and gas supply facilities.

As a result, net sales in this segment were 62.183 billion yen (+13.771 billion yen year-on-year) and operating profit was 4.899 billion yen (+3.422 billion yen year-on-year).

Materials

In the Materials Business, sales volumes of mineral sands and rechargeable battery materials for next-generation automobiles decreased due in part to inventory adjustments at sales destinations. Meanwhile, sales of biomass fuels and PET resin for beverage bottles grew, and sales of processed metal products mainly for air conditioners and imported stainless steel were also strong.

As a result, net sales in this segment were 55.320 billion yen (-0.963 billion yen year-on-year), and operating profit was 2.769 billion yen (+0.054 billion yen year-on-year).

Others, Adjustments

Net sales were 7.443 billion yen (-0.150 billion yen year-on-year), and operating profit was 0.610 billion yen (+0.290 billion yen year-on-year).

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