Tsuzuki Denki : Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2022 (JGAAP)

Consolidated Financial Results for the Third Quarter of

the Fiscal Year Ending March 31, 2022 (JGAAP)

		January 28, 2022
Company name:	Tsuzuki Denki Co., Ltd.	Listing Stock Exchange: Tokyo
Stock code:	8157	URL: https://www.tsuzuki.co.jp/
Representative (title):	Isao Emori, Representative Director, President and CEO
Contact (title):	Toshihiro Hirai, Director and Managing Executive Officer

Tel: [phone]
Scheduled date for quarterly report submission:	February 4, 2022
Scheduled date for dividend payment:	-
Preparation of supplemental explanatory materials:	None
Results briefing to be held:	None

1. Consolidated financial results for the Third quarter of the fiscal year ending March 31, 2022 (April 1, 2021, to December 31, 2021)

(1) Consolidated operating results

Millions of yen (rounded down), % figures are year-on-year change

								Quarterly profit
	Net sales		Operating income	Ordinary income	attributable to
								owners of parent
Third quarter,
year ending	80,941		1.4	1,339	389.6 %	1,545	268.4 %	941	367.0 %
March 31, 2022
Third quarter,
year ended	79,858		(6.3)	273	(82.8 %)	419	(75.6 %)	201	(82.0 %)
March 31, 2021

Note: Comprehensive income was 1,218 million yen (+62.1 %) in the third quarter of year ending March 31, 2022; 751 million yen (-39.2%) in third quarter of year ended March 31, 2021.

	Earnings per share	Diluted earnings per
	(yen)	share (yen)
Third quarter,
year ending	53.38	-
March 31, 2022
Third quarter,
year ended	11.53	-
March 31, 2021
(2) Consolidated financial position
	Total assets	Net assets	Shareholders'	Net assets per share
	(millions of yen)	(millions of yen)	equity ratio	(yen)
Third quarter,
year ending	73,409	31,587	42.6%	1,767.53
March 31, 2022
Year ended	76,200	31,171	40.6%	1,760.87
March 31, 2021

Reference: Shareholders' equity at the third quarter of year ending March 31, 2022; 31,288 million yen; in year ended March 31, 2021; 30,934 million yen.

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2. Dividends

Dividends per share for the fiscal year (yen)

End of

End of

End of

Year-

first

second

third

Total

end

quarter

quarter

quarter

Year ended

-

15.00

-

31.00

46.00

March 31, 2021

Year ending

-

23.00

March 31, 2022

Year ending

March 31, 2022

-

24.00

47.00

(forecast)

Note: Revisions to most recent dividend forecast: None

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2022 (April 1, 2021, to March 31, 2022)

• figures are year-on-year change

	Net sales	Operating income	Ordinary income	Profit attributable to	Earnings
	owners of parent	per share
	(millions of yen)	(millions of yen)	(millions of yen)
	(millions of yen)	(yen)
Full year	122,000	1.7%	4,000	24.9%	4,050	20.5%	2,700	15.1%	152.94

Note: Revisions to most recent earnings forecast: None

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*Notes

1. Changes in significant subsidiaries (which affected scope of consolidation) during the quarter: None Newly added ___ companies (names)
   No longer consolidated ___ companies (names)
2. Special accounting methods used in preparation of quarterly consolidated financial statements: Yes

Note: For details, please refer to Attachment page 13 "2. Consolidated financial statements and notes (3) Notes to quarterly consolidated financial statements (Application of special accounting methods in the preparation of quarterly consolidated financial statements)."

(3) Changes in accounting policies, changes in accounting estimates, and restatements

1.	Changes in accounting policies due to changes in accounting standards:	Yes
2.	Changes in accounting policies not due to changes in accounting standards:	None
3.	Changes in accounting estimates:	None
4.	Restatements:	None

(4) Number of shares outstanding (common stock)

1. Number of shares outstanding at year end (including treasury stock)
2. Number of shares at year end (treasury stock)
3. Average number of shares over the period

Third quarter,		Year ended
year ending	20,177,894	20,177,894
March 31, 2021
March 31, 2022
Third quarter,		Year ended
year ending	2,476,163	2,610,056
March 31, 2021
March 31, 2022
Third quarter,		Third quarter,
year ending	17,637,843	year ended	17,482,814
March 31, 2022		March 31, 2021

Note: The number of treasury shares includes those held in the Employee Stock Ownership Plan (ESOP) trust account (133,800 in the third quarter of year ending March 2022; 210,100 in year ended March 2021), Directors' Compensation Board Incentive Plan (BIP) trust account (346,034 in the third quarter of year ending March 2022; 380,905 in year ended March 2021); and Stock-grant ESOP trust account (463,576 in the third quarter of year ending March 2022; 486,750 in year ended March 2021).

*The financial information in this quarterly report is not subject to review by certified public accountants or auditing firms.

*Appropriate use of earnings forecast and other special notes.

(Note on forward-looking statements)

The earnings forecasts and other forward-looking statements contained in this document are based on information currently available to the Company, and certain assumptions it considers reasonable, but are not intended to be a promise that the Company will make. Actual results may vary materially from forecasts due to a variety of factors.

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Content of attachment
1. Qualitative information on quarterly results..............................................................................................	5
(1)	Earnings ..............................................................................................................................................................	5
(2)	Financial position ...............................................................................................................................................	8
2. Consolidated financial statements and notes ...........................................................................................	9
(1)	Quarterly consolidated balance sheet ............................................................................................................	9
(2)	Quarterly consolidated statements of income and comprehensive income ...........................................	11
(3)	Notes to quarterly consolidated financial statements.................................................................................	13
(Notes on premise of going concern)..............................................................................................................	13
(Notes on significant changes in the amount of shareholders equity).......................................................	13
(Application of special accounting methods in the preparation of quarterly consolidated financial
statements) .........................................................................................................................................................	13
(Changes in accounting policies) ....................................................................................................................	13
(Segment and other information).....................................................................................................................	15

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1. Qualitative information on quarterly results

(1) Earnings

In the first nine months of the fiscal year ending March 2022, the Japanese economy showed signs of recovery from the impact of the COVID-19 pandemic, but the situation continued to be severe due partly to the spread of virus variants. The outlook remains uncertain, and downside risks to the economy posed by supply-side constraints must continue to be monitored closely.

Our group belongs to the information and communications services industry. While we expect ICT demand to continue to grow driven by various digital transformation (DX) initiatives, including pandemic-induced changes in work practices, there is no room for optimism as some companies continue to constrain their ICT capex due to deteriorating earnings. The electronic device industry performed well as semiconductor demand grew further due to a shift toward electric vehicles in the automobile industry and growing investment in data centers.

In these circumstances, our group is carrying out the initiatives outlined in our medium-term management plan ending in the year ending March 2023, titled Innovation 2023, as part of our aim to support the DX efforts of client companies and to be more competitive by becoming an innovation service provider. We see the COVID-19 pandemic as a turning point, and are continuing with initiatives aimed at sustainable growth and enhancing corporate value by reforming our business structure and strengthening our management base. During the third quarter of the current fiscal year, our group announced the Total SolutionService Framework (TSF), a new service framework aimed at helping customers rapidly achieve digital transformation. Under this new framework, we released three new services, including DagreeX, an integrated management service for electronic contracts and vouchers. In addition, we have started collaborations with JIG-SAW Inc. and Nextgen, Inc.

In the first nine months of the fiscal year, the Group posted net sales of ¥80,941 million (up 1.4% year-on-year), operating income of ¥1,339 million (up 389.6 % year-on-year), ordinary income of ¥1,545 million (up 268.4 % year-on-year), and profit attributable to owners of parent of ¥941 million (up 367.0 % year-on-year).

In the Information Network Solutions segment, the service business including cloud services grew steadily, while the development and construction business also remained firm. However, orders and net sales were below year-earlier levels as large projects and GIGA School Concept-related orders that contributed in the previous year dropped out, and computer orders declined as remote working related demand ran its course. Furthermore, delivery delays caused by semiconductor shortages dragged performance. Meanwhile, profit grew significantly year-on-year on improved cost of sales for development and construction projects and equipment orders as well as on profit from growing service sales.

In the Electronic Devices segment, both orders and net sales significantly exceeded year-earlier levels. Following on from the second quarter, robust demand in the factory automation (FA) equipment, industrial equipment, and automotive industries continued to drive strong results. Demand was especially strong for semiconductors, as well as onboard automotive information devices and HDDs used in consumer electronics. Profit also rose substantially year-on-year due to sales growth and cost cuts.

The following section discusses earnings by segment in the third quarter.

*Note regarding quarterly earnings for the Group

Many of the Group's customers have business years from April through March of the following year. Further, fulfilment obligations for many transactions are judged to be satisfied at a certain point, so the Group's sales and profit tend to be concentrated in September and March, the halfway and endpoints of the fiscal year.

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