Iwatani : Overview of Business Results for 3Q FY22

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 Nine Months Ended December 31, 2022

[Japanese GAAP]

February 08, 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: February 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 Nine Months Ended December 31, 2022 (April 01,2022 to December 31, 2022)

(1) Consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Nine months ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

December 31, 2022

655,788

36.8

23,781

(8.0)

29,628

(3.5)

19,266

(1.7)

December 31, 2021

479,424

22.0

25,853

76.7

30,715

66.3

19,600

61.5

(Note) Comprehensive income:	Nine months ended December 31, 2022:
	Nine months ended December 31, 2021:

¥	24,422 million	[	14.1%]
¥	21,394 million	[	1.5%]

		Basic earnings	Diluted earnings per
		per share		share
Nine months ended		Yen			Yen
December 31, 2022		334.94			-
December 31, 2021		340.78			-
(2) Consolidated Financial Position
		Total assets		Net assets	Capital adequacy ratio
As of		Million yen			Million yen	%
December 31, 2022		664,235			299,602	43.5
March 31, 2022		558,479			280,307	48.4
(Reference) Equity:	As of December 31, 2022:	¥	288,826 million
	As of March 31, 2022:	¥	270,128 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, 2022		-		-	-		85.00	85.00
Fiscal year ending March 31, 2023		-		-	-
Fiscal year ending March 31, 2023							85.00	85.00
(Forecast)
(Note) Revision to the forecast for dividends announced most recently:	No
(Note) Breakdown of the 3rd quarter dividend for the fiscal year ending March 31, 2023:
Commemorative dividend	-	yen
Special dividend	-	yen

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023(April 01,2022 to March 31, 2023)

(% 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

840,000

21.7

40,000

(0.2)

46,500

0.2

30,000

0.1

521.53

(Note) Revision to the financial results forecast announced most recently:

No

* Notes:

(1) Changes in significant subsidiaries during the nine months ended December 31, 2022

(Changes in specified subsidiaries resulting in changes in scope of consolidation):

No

(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):

December 31, 2022:	58,561,649	shares
March 31, 2022:	58,561,649	shares
2) Total number of treasury shares at the end of the period:
December 31, 2022:	1,036,728	shares
March 31, 2022:	1,045,396	shares

3) Average number of shares during the period:
Nine months ended December 31, 2022:	57,522,252	shares
Nine months ended December 31, 2021:	57,516,476	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・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・12

Consolidated Financial Results for the Nine Months Ended December 31, 2022・・・・・・・・12

1. Consolidated Statements of Income・・・・・・・・・・・・・・・・・・・・・・・・12
2. Ordinary Profit Except for Impact of LPG Import Price Fluctuation・・・・・・・・・・・12
3. LPG Import Price (CP)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・12
4. Segment Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・12
5. LPG and Industrial Gases Net Sales -Sales Volume・・・・・・・・・・・・・・・・・・13
6. Financial Position・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・13 (7)Capital Expenditure・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・13 (8)Key Business Indicators for PLAN23・・・・・・・・・・・・・・・・・・・・・・・13 (9)Non-consolidated・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・13

1

Qualitative Information of the Quarterly Consolidated Results

(1) Operating Results

During the cumulative third quarter of the current fiscal year, the Japanese economy showed a gradual recovery as consumer spending started to improve in line with an easing of restrictions on movement by countermeasures against COVID-19 infection and capital investment remained strong. However, there are still some uncertainties about the future due to sharp exchange rate fluctuations and rising prices.

Under these circumstances, Iwatani has been working on the basic policies of our medium-term management plan "PLAN23," which are "Enhancing strategic investment to establish a carbon-free society" and "Promotion of digitization".

To realize a carbon-free society, we have signed a basic agreement to explore a joint business in the Nagoya Port area, concerning low-carbon hydrogen production using waste plastic. We will promote resource recycling and build a supply chain that leads to the production of low-carbon hydrogen. In addition, to create demand for hydrogen, we have begun selling hydrogen co-firing burners with LPG and city gas, as well as steel plate cutting machine using hydrogen gas.

In the Integrated Energy Business, we are constructing a manufacturing plant of portable gas cooking stoves in Thailand and building a stable supply system to enhance sales in the Southeast Asian market as we expand our business overseas.

In the Industrial Gases and Machinery Business, Iwatani Group has acquired a leading manufacturer and distributor of bulk liquid industrial gases in Montana in the northwestern part of the U.S., and we enter the US industrial gases sector as well as expand our business area in the U.S.

With regards to the LPG market, LPG import price fluctuation caused a significant decline in profit, while import prices remained on a downward trend during the current quarter in comparison with the rising trend in the same quarter of the previous year.

As a result, for the cumulative third quarter of the consolidated fiscal year, net sales were 655.788 billion yen (+176.363 billion yen year-on-year), operating profit was 23.781 billion yen (-2.072 billion yen year-on-year), ordinary profit was 29.628 billion yen (-1.086 billion yen year-on-year), and profit attributable to owners of parent was 19.266 billion yen (-0.333 billion yen year-on-year).

Iwatani Group's business structure is centered on the sales of energy-related products, which tend to be significantly affected by seasonal fluctuations; LPG consumption is affected by temperatures, therefore, sales volume declines during summer and increases during winter. As a result, the Group has a structure in which profits are weighted in the second half of the year.

2

1. Segment Information Integrated Energy
   In the Integrated Energy Business, sales increased due to high LPG import prices as well as expansion of LPG sales volume for residential and industrial use attributed to the effect of new consolidations. However, profits decreased due to the significant impact of LPG import price fluctuation (-9.512 billion yen year-on-year) under the downward trend in import price, despite profitability improved in LPG retail sector.

As a result, net sales in this segment were 275.629 billion yen (+59.162 billion yen year-on-year), and operating profit was 5.784 billion yen (-7.815 billion yen year-on-year).

Industrial Gases & Machinery

In the Industrial Gases & Machinery Business, air-separation gases sales volume decreased mainly to the electronic component industry, and production costs of the gases increased due to higher electricity rates. In the Hydrogen Business, despite increase in sales volume of liquid hydrogen, operating expenses for hydrogen- refueling stations increased as increase of the stations.As for specialty gases, sales of semiconductor gas and other gases remained steady, and we worked to secure a stable supply of helium under higher market conditions due to the global tight supply-demand balance.

As a result, net sales in this segment were 170.784 billion yen (+35.811 billion yen year-on-year) and operating profit was 11.241 billion yen (+2.321 billion yen year-on-year).

Materials

In the Materials Business, sales of mineral sands increased as we worked to secure a stable supply under market conditions of remaining high prices due to the supply chain disruption. Sales of stainless steel increased to new customers, and sales of processed metal products remained steady, mainly for air conditioners. In addition, sales of environmental products such as eco-friendly PET resins, biomass fuels, and battery-related materials for next- generation vehicles increased.

As a result, net sales in this segment were 184.486 billion yen (+77.020 billion yen year-on-year), and operating profit was 9.107 billion yen (+4.423 billion yen year-on-year).

Agri-bio & Foods

In the Agri-bio & Foods Business, sales of frozen foods for commercial and consumers remained on a recovery trend. On the other hand, profits decreased due to sluggish sales of agricultural equipment as well as a decrease in the number of breeding pig shipments and increase in feed prices.

As a result, net sales in this segment were 21.530 billion yen (+4.423 billion yen year-on-year), and operating profit was 0.280 billion yen (-0.263 billion yen year-on-year).

3