Ahresty : Consolidated Financial Results (Japanese Accounting Standards) for the First Three Quarters of the Fiscal Year Ending March 31, 2023

Consolidated Financial Results (Japanese Accounting Standards) for the First Three Quarters of the Fiscal Year Ending March 31, 2023

					February 13, 2023
Company Name: Ahresty Corporation			Stock Exchange Listing: Tokyo
Code Number:	5852	URL: https://www.ahresty.co.jp
Representative:	(Title)	President & CEO	(Name) Arata Takahashi
Contact for	(Title)	Executive Officer, Chief of	(Name) Hideki Nariya	TEL: [phone]
Inquiries:	Administrative Command
Planned date for filing of	February 14, 2023	Planned date for start	－
quarterly securities report:			of dividend payment:
Supplementary documents for	Yes
quarterly results:
Quarterly results briefing:		No

(Amounts of less than 1 million yen are rounded off)

1. Consolidated results for the first three quarters of the year ending March 2023 (from April 1, 2022 to December 31, 2022)

1. Consolidated operating results (for the nine months ended December 31, 2022) (% represents year-on-year change)

	Net sales		Operating income	Recurring income	Net income attributable
		to owners of parent
	million yen		%	million yen	%	million yen	%	million yen	%
First three quarters of	104,379		24.7	(466)	－	(118)	－	(475)	－
year ending March 2023
First three quarters of	83,711		29.8	(2,721)	－	(2,367)	－	(6,817)	－
year ended March 2022

(Note) 1. Comprehensive income: First three quarters of year ending March 2023: 6,151 million yen (－%) First three quarters of year ended March 2022 (4,024 million yen) (－%)

(Reference) EBITDA: First three quarters of year ending March 2023: 9,155 million yen (+43.3%) First three quarters of year ended March 2022: 6,390 million yen (-5.6%)

* EBITDA = Operating income + depreciation and amortization

Net income per share

Fully diluted net income per share

yen

yen

First three quarters of year ending March 2023

(18.36)

－

First three quarters of year ended March 2022

(264.49)

－

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

million yen

million yen

%

As of December 31, 2022

140,228

59,512

42.4

As of March 31, 2022

131,302

53,566

40.7

(Reference) Shareholders' equity: As of December 31, 2022:

59,390

million yen

As of March 31, 2022:

53,426 million yen

2. Dividend payments

Dividend per share

End of first quarter

End of second quarter

End of third quarter

End of year

Total

yen

yen

yen

yen

yen

Year ended March

－

5.00

－

5.00

10.00

2022

Year ending March

－

5.00

－

2023

Year ending March

5.00

10.00

2023 (Forecast)

(Note) Revisions to dividend forecast published most recently:

No

3. Forecast of consolidated results for year ending March 2023 (from April 1, 2022 to March 31, 2023)

(% represents year-on-year change)

							Net income		Net income per
	Net sales	Operating income	Recurring income	attributable to
	share
							owners of parent
	million yen	%	million yen	%	million yen	%	million yen		%	yen
Full year	146,100	25.6	1,500	－	1,600	－	1,000		－	38.62

(Note) 1. Revisions to consolidated results forecast published most recently: None

* Notes:

(1) Significant changes to subsidiaries during the fiscal term under review (changes in specified

subsidiaries accompanying a change in the scope of consolidation):

Yes

New: － (Company name) －; Excluded: 1 (Company name) Ahresty Pretech Corporation

(Note) For details, please see "2. Consolidated Quarterly Financial Statements and Key Notes (3) Notes (Significant Changes to Subsidiaries during the Fiscal Term under Review)" on page 8 of the accompanying materials.

(2) Application of specific accounting treatment to the preparation of quarterly consolidated financial statements: None

(3) Changes in accounting policies and changes in or restatement of accounting estimates

(i) Changes in accounting policies associated with	Yes
revision of accounting standards, etc.:
(ii) Changes in accounting policies other than (i):	None
(iii) Changes in accounting estimates:	None
(iv) Restatement:	None

(Note) For details, please see "2. Consolidated Quarterly Financial Statements and Key Notes (3) Notes (Changes in Accounting Policy)" on page 8 of the accompanying materials.

(4) Number of shares outstanding (Common stock)

1. Number of shares outstanding at end of period (including treasury shares)
2. Number of treasury shares at end of period
3. Average number of shares (for first three quarters)

3Q of year ending	26,076,717 shares	Year ended	26,076,717 shares
March 2023	March 2022
3Q of year ending	149,670 shares	Year ended	250,695 shares
March 2023	March 2022
3Q of year ending		3Q of year
25,906,263 shares	ended	25,775,256 shares
March 2023
	March 2022

• Quarterly Financial Results are not subject to quarterly reviews performed by a certified public accountant or an audit firm.
• Explanation for appropriate use of earnings forecasts and other special remarks
  Earnings forecasts and other forward-looking statements presented herein are based on information currently available to the Company and certain assumptions deemed reasonable by the Company. The actual results may differ significantly due to various factors. For the assumptions underlying the forecasts and notes on the use of earnings forecasts, please see "1. Qualitative Information on Consolidated Operating Results, etc. for the First Three Quarters (3) Explanation of Consolidated Earnings Forecasts and Other Forward-looking Information" on page 3 of the accompanying materials.

Accompanying Materials - Contents

1. Qualitative Information on Consolidated Operating Results, etc. for the First Three Quarters……………………	2
(1)	Explanation of Operating Results……………………………………………………………………………………	2
(2)	Explanation of Financial Position……………………………………………………………………………………	3
(3)	Explanation of Consolidated Earnings Forecasts and Other Forward-looking Information …………………	3
2. Consolidated Quarterly Financial Statements and Key Notes ………………………………………………………	4
(1)	Quarterly Consolidated Balance Sheet……………………………………………………………………………	4
(2)	Quarterly Consolidated Income Statement and Quarterly Consolidated Statement of Comprehensive	6
	Income ………………………………………………………………………………………………………………
	Quarterly Consolidated Income Statement
	First Three Quarters ……………………………………………………………………………………………	6
	Quarterly Consolidated Statement of Comprehensive Income
	First Three Quarters ……………………………………………………………………………………………	7
(3)	Notes …………………………………………………………………………………………………………………	8
	(Notes on Going Concern Assumption) ……………………………………………………………………………	8
	(Notes on Significant Change in Amount of Shareholders' Equity) ……………………………………………	8
	(Significant Changes to Subsidiaries during the Fiscal Term under Review) …………………………………	8
	(Additional Information) ………………………………………………………………………………………………	8
	(Changes in Accounting Policy) ……………………………………………………………………………………	8
	(Segment Information, etc.) …………………………………………………………………………………………	9

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1. Qualitative Information on Consolidated Operating Results, etc. for the First Three Quarters

(1) Explanation of Operating Results

During the first three quarters of the consolidated fiscal year under review, uncertainty in the world economy increased due mainly to high energy and food prices resulting from the invasion of Ukraine by Russia, tightening labor supply and worsening inflation mainly in the U.S., and the impact of the zero-COVID policy and its lifting in China. Central banks of various countries focused their efforts on tightening their monetary policy to suppress inflation. In the U.S., in particular, the FRB has been continuing to raise the policy interest rate. Regarding the future outlook, the European and U.S. economies are likely to enter a recession due to inflation resulting from high energy and food prices and rising interest rates. The Chinese economy, which is suffering from sluggishness due to the zero- COVID policy, is likely to pick up following the lifting of the zero-COVID policy, albeit at a slow pace due to the continued impact of a slowdown in exports on the back of the spread of infection and the weak European and U.S. economies. In Japan, although high prices and the slowdown in the overseas economy are causes of downward pressure, the Japanese economy is expected to maintain positive growth on the back of a recovery in service consumption as infection concerns recede, and a recovery in demand from inbound tourists due to the easing of quarantine policies.

Under these circumstances, the Ahresty Group has been making continuous efforts to improve production efficiency, such as through flexible adjustment of the number of operating days and personnel placement according to fluctuations in the volume of sales for automobile companies in different countries and regions, and the utilization of idle internal facilities to reduce capital investment. During the nine-month period ended December 31, 2022, however, the effects of these efforts could not fully absorb the impact of a decrease in orders resulting from a decline in automobile production due to the shortage in supply of semiconductors worldwide and supply chain disruptions associated with China's zero-COVID policy, as well as an increase in production costs due mainly to soaring energy prices, resulting in the recording of an operating loss. However, the Company's earnings have returned to profit in the third quarter of the consolidated fiscal year under review due to the alleviation of semiconductor shortages and a recovery in automobile production after the lifting of China's lockdown (April to May 2022). We expect this profitability trend to continue.

In the consolidated fiscal year under review, the Ahresty Group embarked on its 10-year Business Plan, a long- term management plan toward fiscal 2030, and the 22-24Medium-Term Management Plan, the milestone plan for the first three years of the 10-year Business Plan. Under the 22-24Medium-Term Management Plan, in response to changes in the external environment, such as the acceleration of electrification of automobiles and moves toward carbon neutrality, we set "establishing low-cost, highly productive MONOZUKURI," "reducing CO2 emissions in production," and "shifting the business portfolio to predominantly parts for electric vehicles" as the pillars of our strategy. Based on these pillars, we are making efforts to secure net sales, improve productivity, and enhance earnings strength.

Consequently, for the first three quarters of the consolidated fiscal year under review, the Group recorded consolidated net sales of ¥104,379 million (up 24.7% year on year), operating loss of ¥466 million (an operating loss of ¥2,721 million was recorded a year earlier), recurring loss of ¥118 million (a recurring loss of ¥2,367 million was recorded a year earlier) and net loss attributable to owners of parent of ¥475 million (a net loss attributable to owners of parent of ¥6,817 million was recorded a year earlier).

Operating results by segment are as follows:

(i) Die Casting Business: Japan

In the Japanese automobile market, while automobile production has continued to decrease due to the supply shortage of components such as semiconductors, our net sales increased to ¥43,986 million (up 15.9% year on year) due to the recovery trend in the volume of orders compared to the same quarter of the previous year and the rise in aluminum market prices. In terms of profitability, segment profit amounted to ¥163 million (a segment loss of ¥1,306 million was recorded a year earlier) due to factors including a recovery in orders received, efforts to improve production efficiency and reduce costs, and the rise in raw material prices passed on to selling prices, despite the impact of the rise in various costs, such as energy and logistics. On a quarterly basis, while the first quarter saw a substantial decline in profit, affected by production adjustments by car manufacturers on the back of supply chain disruptions resulting from the lockdown in China, the second and third quarters saw an increase in profit due to the recovery in the volume of orders.

(ii) Die Casting Business: North America

In the automobile market in North America, the continued supply chain disruptions due to the shortage of semiconductors and the impact of a temporary fluctuation in the order volume resulted in a year-on-year decrease in orders received at our Mexico plant, which settles its accounts in December (its third quarter is from July to September). However, our net sales rose to ¥26,809 million (up 28.8% year on year) due to a gradual recovery in orders received at our U.S. plant, as well as the rise in aluminum market prices and the depreciation of the yen. In terms of profitability, although the effects of structural reform and cost reduction activities were seen, the segment recorded a loss of ¥926 million (a segment loss of ¥1,048 million was recorded a year earlier) due to the decrease in orders received, as well as an increase in production costs associated with rises in energy and labor costs.

(iii) Die Casting Business: Asia

In the automobile market in Asia, amid signs of recovery in the volume of car sales partly due to the effects of a significant reduction of automobile-related taxes and fees in China, orders received by our plants in China, which settle their accounts in December, decreased temporarily due to the impact of the lockdown in Shanghai because of COVID-19, but gradually recovered in the third quarter (from July to September). Due also to a rise in aluminum market prices, net sales rose to ¥24,981 million (up 36.7% year on year). In terms of profitability, we recorded a segment profit of ¥23 million (a segment loss of ¥765 million was recorded a year earlier) due to the recovery in order volume.

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(iv) Aluminum Business

In the Aluminum Business, sales weight increased by 3.0% year on year. In value terms, net sales rose to ¥6,027 million (up 37.5% year on year) on the back of a rise in aluminum market prices. In terms of profitability, we recorded a segment profit of ¥235 million (up 16.9% year on year) thanks to the increase in net sales following the rise in aluminum prices, and cost reduction efforts.

1. Proprietary Products Business
   In the Proprietary Products Business, net sales increased 13.0% year on year to ¥2,574 million, reflecting an

increase in orders for projects of main customers, such as a clean room for a semiconductor-related company. In terms of profitability, segment profit ended at ¥157 million (down 15.1% year on year). The segment achieved a stable profit, though profitability varied among individual projects.

1. Explanation of Financial Position
2. 1. Assets, liabilities and net assets (Assets)
      Total assets at the end of the consolidated third quarter under review increased by ¥8,926 million from the end of the previous consolidated fiscal year, to ¥140,228 million. Current assets stood at ¥58,336 million, an increase of ¥4,917 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥3,682 million in trade receivables and ¥2,573 million in inventories, which offset a decrease of ¥1,718 million in cash and deposits. Fixed assets were ¥81,891 million, up ¥4,008 million from the end of the previous consolidated fiscal year. This was due chiefly to an increase of ¥3,706 million in tangible fixed assets.

(Liabilities)

Liabilities at the end of the consolidated third quarter under review increased by ¥2,979 million from the end of the previous consolidated fiscal year to ¥80,715 million. Current liabilities stood at ¥57,373 million, an increase of ¥4,111 million from the end of the previous consolidated fiscal year. The principal factors contributing to this result included a decrease of ¥1,738 million in short-term borrowings, in contrast to increases of ¥2,628 million in trade payables, ¥2,324 million in the current portion of long-term loans, ¥367 million in obligations for equipment, and ¥842 million in accounts payable-other.Long-term liabilities stood at ¥23,342 million, down ¥1,131 million from the end of the preceding consolidated fiscal year. The main factors included a decrease of ¥1,155 million in long-term borrowings.

(Net assets)

Net assets at the end of the consolidated third quarter under review increased ¥5,946 million from the end of the previous consolidated fiscal year, to ¥59,512 million. This was attributable primarily to an increase of ¥6,621 million in foreign currency translation adjustments, offsetting a decrease of ¥770 million in retained earnings.

As a result, the equity ratio was up from 40.69% at the end of the previous consolidated fiscal year to 42.35%.

(3) Explanation of Consolidated Earnings Forecasts and Other Forward-looking Information

There are no changes to the full-year earnings forecasts for the fiscal year ending March 2023 released on November 14, 2022.

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