Rinnai : Financial Statements (232KB)

Consolidated Financial Results

First Quarter of the Fiscal Year Ending March 2024

(April 1-June 30, 2023)

August 4, 2023

Listed Company Name: Rinnai Corporation

Listings: Prime Section of the Tokyo Stock Exchange, and Premiere Section of Nagoya Stock

Exchange (Securities Code: 5947)

Website: https://www.rinnai.co.jp

Representative: Hiroyasu Naito, President

Contact: Takuya Ogawa, Managing Executive Officer, General Manager of Corporate Planning Headquarters

TEL: [phone]

Scheduled date for release of quarterly securities report: August 9, 2023

Anticipated date to begin distributing dividends: ―

Supplemental information sheets of quarterly results: Yes

Information meeting of quarterly results: None

I. Performance in the First Quarter of the Fiscal Year Ending March 31, 2024

(April 1- June 30, 2023; amounts less than one million yen are omitted)

1. Consolidated Operating Results
   Percentage figures in parentheses indicate increase or decrease from the previous term.

				(¥ millions; %)
				Net income
	Net Sales	Operating	Ordinary	attributable to
	Income	Income	owners of the
				parent company
First Quarter to	¥89,853 [-5.4%]	¥3,113 [-69.1%]	¥5,895 [-48.4%]	¥3,288 [-53.1%]
June 2023
First Quarter to	¥95,006 [+12.4%]	¥10,079 [+9.8%]	¥11,437 [+15.2%]	¥7,014 [+13.3%]
June 2022

Notes: Comprehensive income: First quarter of the year ending March 31, 2024; ¥7,873 million [-57.3%] First quarter of the year ended March 31, 2023; ¥18,452 million [+49.3%]

(¥)

	Net Income	Fully Diluted Net
	per Share	Income per Share
First Quarter to June 2023	¥22.49	-
First Quarter to June 2022	46.99	-

Note: On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares of common stock. The above figure for "Net income per share" is for after the stock split.

(2) Consolidated Financial Position

			(¥ millions; %)
	Total Assets	Net Assets	Equity Ratio (%)
June 30, 2023	¥539,062	¥404,044	67.2%
March 31, 2023	547,114	407,199	66.6

(Reference) Equity capital: First quarter of the year ending March 31, 2024: ¥362,397 million Year ended March 31, 2023: ¥364,151 million

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II. Dividends

								Dividend per Share
		1st Quarter		Interim		3rd Quarter		Fiscal		Full Year
					Year-End
	(¥)		(¥)		(¥)			(¥)
					(¥)
March 2023		-	¥ 75.00			-		¥85.00		¥160.00
June 2023		-
March 2024				30.00			-		30.00		60.00
(anticipated)
Notes: 1. Revision of dividend forecast in period under review: None

1. 2. On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares of common stock. The above figures for "Dividends" in the fiscal years ended March 31, 2023 are actual dividends declared before the stock split. The figure for the year ending March 31, 2024 (forecast) is for after the stock split.

2. Forecast for the Fiscal Year Ending March 31, 2024 (Consolidated)

(April 1, 2023, to March 31, 2024)				(¥ millions/%)
					Net income
			Operating	Ordinary	attributable to	Net Income
	Net Sales		owners of the	per Share
		Income	Income
			parent	(¥)
					company
First half	¥190,000 [-2.2%]		¥10,000 [-47.6%]	¥14,000 [-37.0%]	¥7,500 [-44.0%]	¥51.54
Full year	440,000 [+3.5]		39,000 [-5.8]	44,000 [-1.3]	25,000 [-4.2]	172.96

Note: Percentage figures in parentheses indicate increase or decrease from the previous fiscal year.

Notes: 1. Revision of fiscal year forecast in period under review: Yes

2. As its meeting held on May 10, 2023, the Board of Directors resolved to undertake a share buyback. The above forecasts for "Net income per share" take into account this buyback.

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* Notes

1. Changes in scope of consolidation of major subsidiaries during the period: None
   Newly included - (Company name: -): Excluded - (Company name: -)
2. Application of special accounting method for quarterly consolidated financial reporting: None
3. Changes in accounting policies; changes in accounting estimates; retrospective restatement

1. Changes due to revision of accounting standard: None
2. Other changes than (a): None
3. Changes in the rules for the accounting estimates: None
4. Retrospective restatement: None

1. Number of Outstanding Shares (Common Stock)

1. Number of outstanding shares at term-end (including treasury stock)
   June 30, 2023: 150,063,171 shares
   March 31, 2023: 150,063,171 shares
2. Number of treasury stock shares at term-end

June 30, 2023: 4,788,520 shares

March 31, 2023: 3,676,692 shares

(c) Average number of shares during the term

First quarter of the fiscal year ending March 2023: 146,234,057 shares

First quarter of the fiscal year ended March 2023: 149,277,960 shares

Note: On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares of common stock. The above figures for "Number of outstanding shares at term-end," "Number of treasury stock shares at term-end," and "Average number of shares during the term" are calculated on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

• This report is exempt from a quarterly review process.
• Note on appropriate use of performance forecasts, and other specified notes Performance forecasts contained in this document are based on information currently available and certain judgments deemed by the Corporation to be reasonable. No intent is implied of promise by the Corporation to achieve such forward-looking statements. Actual results may differ significantly from such forecasts due to various factors. For more information, please refer to "1. Consolidated Performance, (3) Consolidated Performance Forecasts" on page 6 of this report.

Supplemental information sheets of quarterly results:

Please refer to Supplemental information sheets of quarterly results, which will be posted on the Corporation's website on Friday, August 4, 2023.

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1. Consolidated Performance

(1) Operating Results

In the first quarter under review, world economic conditions remained difficult as global price hikesincreasesand monetary tightening cause business confidence to deteriorate, while the situation in Ukraine became more protracted. In Japan, consumer spending and corporate earnings showed signs of recovery thanks to easing of restrictions on economic and social activities to address COVID-19. However, prices continue to rise against a backdrop of soaring raw material and energy costs and rapid exchange rate fluctuations, making the situation unpredictable.

In the domestic housing-related industry, new housing starts remained weak, especially for owner-occupied housing, which continued to decline slowly, and the household appliance sector showed signs of stagnation in both the new construction and renovation categories.

Under these circumstances, the Rinnai Group pursued three key strategies under its medium-term business plan, New ERA 2025: "Advancement in addressing social challenges," "Expansion of business scale," and "Revolution of corporate structure." During the period under review, we sought to improve quality of life and help protect the global environment. For example, we undertook a full model change of our Kantakun Deluxe gas clothes dryers and expanded our ECO ONE X5 lineup of hybrid water heaters with heating systems. In these and other ways, we made steady progress in fulfilling our promise to our customers ("Creating a healthier way of living") and achieving sustainable and solid long-term growth.

For the quarter, we reported a decline in net sales compared with the previous corresponding period, when revenue was bolstered by efforts to resolve supply delays. Sales were also affected by a slowdown in demand due to rising prices and interest rates. On the earnings side, we posted a year-on-year decrease in operating income due to the decline in sales volume and a slowdown in sales of high-value-added products. This was despite a lull in raw material price and other cost increases.

As a result, consolidated net sales for the period amounted to ¥89,853 million, down 5.4% from the previous corresponding period. Operating income fell 69.1%, to ¥3,113 million, and ordinary income declined 48.4%, to ¥5,895 million. Net income attributable to owners of the parent company fell 53.1%, to ¥3,288 million.

Our results by geographical segment were as follows:

Japan

Sales of all products, especially water heaters, declined compared with the previous year, when production and sales were bolstered by efforts to resolve supply delays. As a result, sales in Japan were down 6.8% year on year, to ¥42,146 million. The decline in sales volume, as well as a slowdown in sales of high-value-added products, and high prices of raw materials and parts, resulted in a 71.4% fall in operating income, to ¥1,818 million.

United States

The market for tankless water heaters remained sluggish as rising interest rates caused slowdowns in both new housing construction and large-scale renovations. Despite a decline in sales of mainstay water heaters, mainly high-efficiency models, our performance benefited from foreign exchange movements. As result, sales in the United States increased 12.8%, to ¥12,555 million. However, increasing logistics and storage costs associated with an expansion of inventories, as well as a deteriorating product mix, resulted in an operating loss of ¥1,748 million.

Australia

In Australia, we reported growth in sales of mainstay gas tankless water heaters compared with the previous year, when sales were affected by supply delays from Japan, while sales of electric tank-based water heaters and heat-pump-based water heaters also rose. Thanks also to increased sales of high-value-added products, sales in Australia climbed 19.5%, to

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¥6,770 million, and operating income surged 408.8%, to ¥214 million.

China

In China, sales of various products, particularly water heaters, declined as a result of inventory adjustments due to a drop in consumer confidence caused by the weakening economy and an increase in distribution inventories. In addition, sales and production activities were temporarily restricted due to the rapid spread COVID-19 after the government's zero-COVID policy was lifted. As a result, sales in China declined 23.8%, to ¥9,994 million, and operating income fell 36.7%, to ¥1,427 million.

South Korea

In South Korea, business confidence continued to deteriorate amid rising prices and interest rates, while housing transactions and personal consumption remained sluggish, leading to declines in sales of mainstay boilers and kitchen appliances. Moreover, the market slowdown caused competition to intensify. As a result, sales in South Korea decreased 7.6%, to ¥8,004 million, and operating income fell 81.7%, to ¥133 million.

Indonesia

Due to contraction of the market for mainstay tabletop stoves caused by sluggish personal consumption associated with rising prices, sales in Indonesia were down 13.4%, to ¥3,322 million. However, cost reductions and other operational improvements, as well as firm demand for built-in products (which have high added value) and a lull in raw material price hikes, led to a 15.2% increase in operating income, to ¥529 million.

(For references 1)

Sales Composition by Business Segment

(¥ millions; %)

	First Quarter to	First Quarter to	Change	Year to
	June 30, 2022	June 30, 2023			March 31, 2023
	Amount	Amount	Amount	% of	Amount	%	Amount	% of
				total				total
Water heaters	¥55,565	58.5%	¥53,722	59.8%	¥(1,843)	(3.3)%	¥258,658	60.8%
Kitchen appliances	22,167	23.3	20,336	22.6	(1,831)	(8.3)	91,780	21.6
Air conditioning	3,543	3.7	3,587	4.0	43	1.2	21,941	5.2
appliances
Commercial-use	2,427	2.6	2,506	2.8	78	3.2	10,669	2.5
equipment
Others	11,301	11.9	9,701	10.8	(1,600)	(14.2)	42,179	9.9
Total	¥95,006	100.0%	¥89,853	100.0%	¥(5,153)	(5.4)%	¥425,229	100.0%

(For references 2)

Overseas Sales

(¥ millions; %)

		First Quarter to			First Quarter to
			June 30, 2022				June 30, 2023
	Asia		Others		Total	Asia		Others		Total
I. Overseas sales	¥30,853		¥21,054		¥51,908	¥26,516		¥23,004		¥49,520
II. Consolidated net sales	-		-		95,006	-		-		89,853
III. Composition ratio of
overseas sales to	32.5%		22.2%		54.6%	29.5%		25.6%		55.1%
consolidated net sales

Note: Above indicates sales of the Corporation and consolidated subsidiaries in overseas countries or regions.

(2) Financial Position

As of June 30, 2023, Rinnai had total assets of ¥539,062 million, down ¥8,052 million from March 31, 2023. Total liabilities decreased ¥4,896 million, to ¥135,017 million. Net assets were down ¥3,155 million, to ¥404,044 million. The equity ratio at the end of the period was 67.2%.

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