SMC : Consolidated Financial Highlights for the First Quarter ended June 30, 2023

August 9, 2023

Consolidated Financial Highlights for the First Quarter ended

June 30, 2023 [under Japanese GAAP]

Company name :	SMC Corporation
Stock exchange listing :	Tokyo Stock Exchange, Prime Market
Security code :	6273
URL :	https://www.smcworld.com/ir/en/
Representative :	Yoshiki Takada,	President
Contact person :	Masahiro Ota,	Director and Executive Officer
Projected date of filing quarterly report :		August 9, 2023
Projected starting date of dividend payment :	−

1. Consolidated Financial Highlights for the First Quarter ended June 30, 2023 (April 1, 2023 to June 30, 2023)

(1) Consolidated Operating Results								(Millions of yen)
First Quarter	Net sales	Operating profit		Ordinary profit	Profit attributable to
ended June 30		owners of parent
2023	198,970	(5.9%)	56,105 (17.5%)		74,801 (28.1%)	52,148 (30.8%)
2022	211,359	15.6%	67,975	18.5%		104,008	69.5%	75,403	64.1%
(Note) Comprehensive income 1Q ended June 30, 2023 :	¥	109,618 million	(18.4%)
	1Q ended June 30, 2022 :	¥	134,359 million	152.3%
					(Yen)
First Quarter	Net income	Net income per share
ended June 30	per share	(diluted basis)
2023	808.49	−
2022	1,154.01	−

(2) Consolidated Financial Positions								(Millions of yen)
		Total assets					Net assets	Equity ratio
June 30, 2023	2,014,705					1,782,885			88.3%
March 31, 2023	1,927,940					1,702,325			88.1%
(Reference)	Shareholders' equity As of June 30, 2023 :	¥	1,778,888 million
		As of March 31, 2023 :	¥	1,698,413 million
2. Dividends										(Yen)
For the year					Dividend per share
ended March 31	1Q		2Q			3Q		4Q	Total
2023 (Actual)	−		450.00			−		450.00	900.00
2024 (Actual)	−		NA			NA		NA	NA
2024 (Projected)	NA		450.00			−		450.00	900.00
(Note)	Revision of dividends forecast during this period : None

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SMC Corporation

3. Forecasts of Consolidated Operating Results for the Year ending March 31, 2024

								(Millions of yen, except per share figures)
								Profit	Net income
		Net sales	Operating profit	Ordinary profit	attributable to	per share
								owners of parent	(Yen)
Half Year ending	387,000	(8.2%)	109,000	(18.4%)	118,000	(34.7%)	85,000	(36.1%)	1,317.81
September 30, 2023
Year ending	807,000	(2.2%)	233,000	(9.8%)	253,000	(17.3%)	183,000	(18.5%)	2,837.18
March 31, 2024
(Note)	Revision of forecasts of operating results during this period : None

• Notes

1. Changes in significant subsidiaries during the first quarter ended June 30, 2023 : None
2. Adoption of special accounting methods for presenting quarterly consolidated financial statements : Yes
3. Changes in accounting policies, changes in accounting estimates and retrospective restatement

1. Changes in accounting policies applied due to revisions of accounting standards : None
2. Changes in accounting policies other than the above : None
3. Changes in accounting estimates : None
4. Retrospective restatement : None

1. Number of shares issued

1. Number of common shares issued (including treasury shares)

As of June 30, 2023

As of March 31, 2023

67,369,359

67,369,359

2. Number of treasury shares

As of June 30, 2023

As of March 31, 2023

2,868,732

2,868,732

3. Average number of common shares for the three months ended

April 1, 2023 to June 30, 2023

April 1, 2022 to June 30, 2022

64,500,627

65,340,339

(Note) The company's shares held by the Board Benefit Trust (BBT) for the Directors' Stock Compensation Plan (2,600 shares as of June 30, 2022 and as of March 31, 2023, and as of June 30, 2023) is included in the number of treasury shares, which is excluded in the calculation for the above: 2. Number of treasury shares and 3. Average number of common shares for the three months ended.

These quarterly consolidated financial highlights are not subject to quarterly review procedures by the independent accounting auditor.

Explanation of appropriate use of financial forecasts; other special items

Forecasts are based on information and certain premises that the Company considers to be reasonable at the time these consolidated quarterly financial highlights are released.

Some factors could cause actual results to differ from expectations.

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SMC Corporation

1. Qualitative Information about the Quarterly Results

(1) Operating Results

During the first quarter of this fiscal year (April 1, 2023 to June 30, 2023), the normalization of economic activity from the Coronavirus (COVID-19) pandemic has progressed, but the future remains uncertain due to the continued turmoil in Ukraine, concerns of recession due to the prolonged inflation and rising interest rates in the U.S. and Europe, and concerns of slowdown in economic growth in China after the lifting of the zero-covid strategy.

As for the demand for automatic control equipment, in the semi-conductor and electrical machinery-related industries, smart phones and PC related demand was sluggish, and regions, including Japan, U.S., China and other Asian countries, showed signs of curbing or postponing capital investment, particularly in memory-related industry. The automotive-related demand was relatively firm as the impact of production cutbacks due to shortages of semi-conductors and other components eased, but the growth rate of EV battery-related demand slowed, especially in China. Machine tool-related demand continued to be in an adjustment phase due to the economic slowdown in China and other factors. Sales to medical equipment-related, food machinery-related, and other industries were sluggish, despite new post-covid demand for labor-saving and automation.

Under these circumstances, the SMC Group has continued to strive achieving its medium-term sales target of "JPY 1 Trillion by FY2026" by making aggressive capital investments within and outside of Japan, developing new products which contribute to a significant CO2 emission reduction for its customers, and establishing a BCP system as to improve on its parts procurement capability, and strengthen its global sales collaboration with its IT infrastructure.

Within the business environment described above, the summary of consolidated business results for the first quarter of this fiscal year is as follows.

The consolidated net sales of SMC Group were 198,970 million yen (decreased by 5.9%, yoy), decreased due to the deteriorating market conditions in the semi-conductor market, in spite of increase in revenue from yen depreciation.

Operating profit was 56,105 million yen (decreased by 17.5%, yoy) due to the revenue decrease resulted from decrease in sales volume, increase in personnel costs, increase in depreciation costs in response to increase in investments, and increase in selling, general and administrative expenses resulted from the increased sales activities following the lifting of the Coronavirus restrictions.

Despite the progression of yen depreciation, ordinary profit was 74,801 million yen (decreased by 28.1%, yoy), due to the decreased foreign exchange gains from the relatively slow progression of yen depreciation compared to the same quarter of the previous year. Profit before income taxes was 74,907 million yen (decreased by 29.5%, yoy), and profit attributable to owners of parent was 52,148 million yen (decreased by 30.8%, yoy).

(2) Financial Positions

Total capital in SMC Group's consolidated balance sheet as of the end of the first quarter of this fiscal year was 2,014,705 million yen (an 86,765 million yen increase from the previous fiscal year end). Retained earnings (a 23,121 million yen increase) and foreign currency translation adjustments (a 50,973 million yen increase) have increased within the net assets.

Within the assets, cash and deposits were 565,938 million yen (a 37,632 million yen decrease from the previous fiscal year end), inventories were 465,359 million yen (a 46,757 million yen increase), property, plant and equipment was 348,325 million yen (a 21,330 million yen increase), and investment securities was 165,417 million yen (a 72,996 million yen increase).

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SMC Corporation

(3) Consolidated Forecasts and Other Forward-Looking Information

There is no change to the consolidated forecast for the fiscal year 2023, announced in the "Consolidated Financial Highlights for the Year ended March 31, 2023 [under Japanese GAAP]" issued on May 15, 2023.

Since June of 2022, SMC has frozen all exports to and new investments at its Russian subsidiaries. If SMC were to complete a full withdrawal from the Russian market in the future, there is a risk that SMC will not be able to obtain the required permits and approvals from the local authorities to recover SMC's remaining assets within the country. As such, the SMC Group may see damages of up to 11.6 billion yen from the loss of these assets.

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SMC Corporation

2. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheet

			(Millions of yen)
		Year end	First Quarter end
		-Previous year	-Current year
		As of March 31, 2023	As of June 30, 2023
	[ASSETS]
	Current assets
	Cash and deposits	603,570	565,938
	Notes and accounts receivable-trade	228,848	232,266
	Securities	19,926	21,278
	Merchandise and finished goods	165,288	184,426
	Work in process	31,388	34,450
	Raw materials and supplies	221,925	246,482
	Other	53,641	28,806
	Allowance for doubtful accounts	(740)	(830)
	Total current assets	1,323,848	1,312,819
	Non-current assets
	Property, plant and equipment
	Buildings and structures, net	123,752	135,480
	Machinery, equipment and vehicles, net	52,097	57,081
	Land	87,746	89,131
	Other, net	63,399	66,631
	Total property, plant and equipment	326,995	348,325
	Intangible assets	16,591	17,784
	Investments and other assets
	Investment securities	92,420	165,417
	Insurance funds	143,902	144,090
	Other	25,636	27,834
	Allowance for doubtful accounts	(1,454)	(1,565)
	Total investments and other assets	260,505	335,776
	Total non-current assets	604,092	701,886
	Total assets	1,927,940	2,014,705

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SMC Corporation