Gunze : Consolidated Financial Statements - Summary (Six months ended September 30, 2022)

November 2, 2022

Consolidated Financial Statements - Summary

(Six months ended September 30, 2022)

This document is an English translation of the Japanese-language original. All financial information has been prepared in accordance with accounting principles generally accepted in Japan.

Company Name:	GUNZE LIMITED
Securities Code:	3002
Stock Market Listings:	Tokyo
URL:	https://www.gunze.co.jp/
Representative:	Toshiyasu Saguchi, President and Representative Director
Contact:	Junko Nakashima, General Manager, Corporate Communications
Tel:	[phone]

Filing of Quarterly Securities Report (Shihanki hokokusho) (Scheduled):	November 11, 2022
Start of Distribution of Dividend (Scheduled):	-
Preparation of Supplementary Materials for Quarterly Financial Results:	Yes
Holding of Presentation of Quarterly Financial Results:	Yes (for institutional investors/analysts)

1. Consolidated Operating Results for the six months ended September 30, 2022 (April 1, 2022 to

September 30, 2022)

(1) Consolidated operating results				(Amounts less than one million yen are omitted)
							(Percentages represent year-over-year changes)
		Net sales	Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Six months ended	¥ millions	%	¥ millions	%	¥ millions	%	¥ millions	%
	September 30, 2022	67,350	13.4	2,806	(16.0)	3,087	(18.1)	2,206	(55.9)
	September 30, 2021	59,391	-	3,340	-	3,771		-	5,002	-
	Note: Comprehensive	income
Six months ended September 30, 2022: ¥4,703 million [(0.8)%]
Six months ended September 30, 2021: ¥4,740 million [-%]
			EPS			Diluted EPS
	Six months ended		¥				¥
	September 30, 2022	127.68			127.38
	September 30, 2021	285.63			284.79

Note: GUNZE has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and other related standards. Accordingly, year-over-year increases/decreases (%) of the figures for the six months ended September 30, 2021 are not provided.

(2) Consolidated financial position

		Total assets	Net assets	Equity ratio	Net assets per share
		¥ millions	¥ millions	%	¥
	As of September 30, 2022	164,217	117,080	70.1	6,654.01
	As of March 31, 2022	158,216	114,790	71.4	6,535.42
	Reference: Total equity
	As of September 30, 2022: ¥115,073 million	As of March 31, 2022: ¥112,903 million

2. Dividends

				Annual dividends per share (¥)
		1st quarter-end		2nd quarter-end		3rd quarter-end	Year-end	Total
	¥	¥		¥	¥		¥
FY2021		−		−		−	140.00		140.00
FY2022		−		−
FY2022 (projected)							−	145.00		145.00

(Note) Revision to the projected dividends announced most recently: None

3. Projected results for FY2022 (April 1, 2022 to March 31, 2023)

	Net sales		Operating profit	Ordinary profit
	¥ millions	%	¥ millions	%	¥ millions	%
FY2022 full year	136,000	9.4	6,000	23.0	6,000	11.1
	Profit		EPS
	¥ millions	%	¥
FY2022 full year	3,700	25.9	214.04

(Note) Revision to the projected results announced most recently: None

Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries during the period accompanied by changes in the scope of consolidation): No
2. Application of an accounting method specific to the preparation of quarterly consolidated financial statements: Yes
3. Changes in accounting policies, changes in accounting estimates, and restatement after error corrections
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: No
   2. Changes in accounting policies due to other reasons: No
   3. Changes in accounting estimates: No
   4. Restatement after error corrections: No
5. Number of shares issued and outstanding (common stock)
6. 1. Number of shares at the end of period (including treasury stock):

As of September 30, 2022: 18,293,516 shares

As of March 31, 2022: 18,293,516 shares

(b) Treasury stock at the end of period:

As of September 30, 2022: 999,718 shares

As of March 31, 2022: 1,017,897 shares

(c) Average number of shares during the period:

Six months ended September 30, 2022: 17,280,751 shares

Six months ended September 30, 2021: 17,512,340 shares

• This summary of quarterly consolidated results is exempt from the quarterly review procedures by certified public accountants or an audit corporation.
• Notes regarding the proper use of projections of the results and other matters
  Projections of results and future developments are based on information available to the Company at the current time, as well as certain assumptions judged by the Company to be reasonable. Various factors could cause actual results to differ materially from these projections. For the assumptions that form the basis of the projected results and notes regarding the use of projections, see "(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" of "1. Qualitative Information on Quarterly Financial Results for the Period under Review" on page 3 of attached materials.

(Attachment)
Table of Contents
1. Qualitative Information on Quarterly Financial Results for the Period under Review ...............................	2
(1)	Explanation of Business Results ..........................................................................................................	2
(2)	Explanation of Financial Position ........................................................................................................	3
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information	..... 3
2. Consolidated Financial Statements and Primary Notes ..............................................................................	4
(1)	Quarterly Consolidated Balance Sheets ...............................................................................................	4
(2)	Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of
	Comprehensive Income ........................................................................................................................	6
(3)	Quarterly Consolidated Statements of Cash Flows ..............................................................................	8
(4)	Notes to Quarterly Consolidated Financial Statements ......................................................................	10
	(Notes regarding assumptions of continuing operations) ................................................................	10
	(Notes in the case of significant changes in shareholders' equity) ..................................................	10
	(Application of an accounting method specific to the preparation of quarterly consolidated financial
	statements) .......................................................................................................................................	10
	(Changes in accounting policies, changes or restatement of accounting estimates) .......................	10
	(Additional information) .................................................................................................................	10
	(Segment information, etc.) ..............................................................................................................	11
	(Significant subsequent events) ........................................................................................................	11
3. Supplementary Information ......................................................................................................................	12

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1. Qualitative Information on Quarterly Financial Results for the Period under Review

1. Explanation of Business Results

(Overview of the period under review)

During the six months ended September 30, 2022 (April 1, 2022 - September 30, 2022), the Japanese economy was largely on a recovery track, as social and economic activities returned toward normal primarily owing to the progress of COVID-19 vaccinations. The economic outlook, however, remains unclear, what with rising prices due to the yen's rapid depreciation, on top of soaring raw material and fuel prices as the situation in Ukraine prolongs.

Amid this operating environment, the GUNZE Group set about pursuing four basic strategies of "Creation of new value," "Capital cost-focused management," "Evolution of corporate constitution," and "Environmentally responsible management" to kick off its new medium-term management plan, "VISION 2030 stage 1." By segment, the functional solutions business performed strongly overall, although the soaring raw material and fuel prices had an impact on the business. The apparel business experienced a decline in profitability on the back of the weak yen and skyrocketing raw material prices, despite the recovery trend in sales. The lifestyle creations business, on the other hand, posted an increase in sales thanks to the redevelopment of idle land.

As a result of the above, for the period under review, net sales increased by 13.4% year-on-year to ¥67,350 million, operating profit decreased by 16.0% year-on-year to ¥2,806 million, ordinary profit decreased by 18.1% year-on-year to ¥3,087 million, and profit attributable to owners of parent decreased by 55.9% year-on-year to ¥2,206 million on a consolidated basis. The substantial decline in profit attributable to owners of parent is attributable to the recording of ¥4,505 million in gain on sale of non-current assets (extraordinary income) following sales of real estate in the corresponding period of the previous fiscal year.

(Results by Business Segment)

[Functional Solutions]

In the plastic films subsector, sales of packaging films remained strong, although the soaring raw material and fuel prices had an impact on the business. The engineering plastics subsector, too, performed strongly, buoyed by increased demand for products aligned with the semiconductor market and a recovery in sales of products for office equipment as workers return to offices. In the electronic components subsector, touch screen sales were brisk in the Chinese market. Meanwhile, the medical materials subsector remained firm owing to new product launches and strong exports to the Chinese market.

As a result of the above, the functional solutions business recorded net sales of ¥30,389 million (up by 14.1% year-on-year) and operating profit of ¥4,193 million (up by 9.4% year-on-year).

[Apparel]

The apparel business saw its sales grow overall as the market began recovering after the end of the declared state of emergency and the lifting of all pandemic-related restrictions, as well as brisk sales in e-commerce and the SPA channel, but its profitability is deteriorating owing to the rising raw material prices and the yen's sharp depreciation. As such, the Company has begun revising its prices. In the innerwear subsector, the differentiated product line of foundation garments and Femtech ("female" + "technology") lines performed briskly. The legwear subsector, on the other hand, recorded a year-on-year sales growth, but its profitability still needs to be improved.

As a result of the above, the apparel business recorded net sales of ¥30,082 million (up by 9.6% year-on-year) and operating profit of ¥190 million (down by 75.1% year-on-year).

[Lifestyle Creations]

The real estate subsector recorded revenue growth as sales of an idle land redevelopment project were recorded.

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