Rinnai : Financial Statements (390KB)

Consolidated Financial Results for Fiscal 2023

(April 1, 2022 - March 31, 2023)

May 10, 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]

Date of the General Meeting of Shareholders: June 29, 2023

Anticipated date to begin distributing dividends: June 30, 2023

Anticipated date for releasing annual securities report: June 29, 2023

Supplemental information sheets of financial results: Yes

Information meeting of financial results: Yes (for analysts and institutional investors)

1. Performance for the Year Ended March 31, 2023

(April 1, 2022 to March 31, 2023; Amounts less than one million yen are omitted)

1. Consolidated Operating Results (Year ended March 31)
   (Percentage figures in columns indicate increase or decrease from the previous term.)

(¥ millions)

Net income

Net Sales

Operating Income

Ordinary Income

Attributable to

Owners of the

(% change)

(% change)

(% change)

Parent Company

(% change)

Fiscal 2023

425,229 (+16.1)

41,418 (+15.5)

44,565 (+14.1)

26,096

(+9.9)

Fiscal 2022

366,185 (+6.3)

35,864

(-11.9)

39,060 (-7.9)

23,748 (-13.9)

Note: Comprehensive income:

Year ended March 31, 2023: ¥46,633 million (+36.2%)

Year ended March 31, 2022: ¥34,240 million (-6.9%)

Net Income

Fully Diluted

Ratio of

Ratio of

Ratio of

Net Income per

Net Income

Ordinary

Operating Income

per Share

Share

to Equity Capital

Income to Total

to Net Sales

(¥)

(¥)

(%)

Assets (%)

(%)

Fiscal 2023

176.92

-

7.4

8.4

9.7

Fiscal 2022

156.80

-

6.9

7.7

9.8

References: Equity in earnings of companies accounted for using the equity method:

Year ended March 31, 2023: ¥- million

Year ended March 31, 2022: ¥- million

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 calculated on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

(2) Consolidated Financial Position (at March 31)		(¥ millions)
	Total Assets	Net Assets	Equity Ratio (%)	Net Assets per Share
				(¥)
Fiscal 2023	547,114	407,199	66.6	2,487.60
Fiscal 2022	512,867	378,856	66.9	2,296.59
(Reference) Equity capital:Year ended March 31, 2023; ¥364,151 million
	Year ended March 31, 2022; ¥343,120 million

Note: On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares of common stock. The above figure for "Net assets per share" is calculated on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

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(3) Consolidated Cash Flows (Years ended March 31) (¥ millions)

	Cash Flows from	Cash Flows from	Cash Flows from	Cash and Cash
	Operating	Investing	Financing	Equivalents at
	Activities	Activities	Activities	End of Year
Fiscal 2023	19,387	(30,087)	(21,313)	120,213
Fiscal 2022	28,696	(25,486)	(27,109)	147,972

2. Dividends

						Dividend per Share
	1st Quarter		Interim		3rd Quarter		Fiscal Year-	Full Year
					End
	(¥)			(¥)			(¥)				(¥)
						(¥)
Fiscal 2022	-			70.00			-		70.00		140.00
Fiscal 2023	-			75.00			-		85.00		160.00
Fiscal 2024	-			30.00			-		30.00		60.00
(anticipated)
	Total Dividends				Consolidated		Consolidated Ratio of
	(Full Year)				Payout Ratio			Dividends to
	(¥ millions)			(%)				Net Assets (%)
Fiscal 2022		6,972			29.8					2.1
Fiscal 2023		7,807			30.1					2.2
Fiscal 2024						32.7
(anticipated)

Note: 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, 2022 and 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.

3. Forecast for the Fiscal Year Ending March 31, 2024

(April 1, 2023, to March 31, 2024)

					(¥ millions)
				Net income	Net
		Operating	Ordinary	Attributable to
	Net Sales	Income
	Income	Income	Owners of the
	(% change)	per Share
	(% change)	(% change)	Parent Company
		(¥)
				(% change)
Two-quarter total	190,000 (-2.2)	15,000 (-21.4)	16,500 (-25.7)	9,500 (-29.0)	65.28
Full year	440,000 (+3.5)	43,000 (+3.8)	46,000 (+3.2)	26,500 (+1.5)	183.34

(Percentage figures in columns indicate increase or decrease from the previous term.)

Notes 1: 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" for the year ending March 31, 2024 (forecast) is for after the stock split.

• 1. At its meeting held on May 10, 2023, the Board of Directors of the Corporation resolved to conduct a share buyback totaling up to ¥10 billion. The above figure for "Net income per share" (forecast) is calculated taking into account the impact of the share buyback. For details of the share buyback, please refer to the "Notice Concerning Share Buyback and Cancellation" (released May 10, 2023). In addition, the figure for "Consolidated payout ratio" for the fiscal year ending March 31, 2024 (forecast) in the above "2. Dividends" table takes the effect of the share buyback into consideration.
• Notes

1. Changes in scope of consolidation of major subsidiaries during the period: None
   Newly included one company - (Company name: -): Excluded - (Company name: -)
2. Changes in accounting policies; changes in accounting estimates; retrospective restatement
3. 1. Changes due to revision of accounting standard: Yes
   2. Other changes than (a): None
   3. Changes in the rules for the accounting estimates: None
   4. 1. Retrospective restatement: None

Note: For more information, please refer to "Changes in accounting policies" on page 16 of this report.

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(3) Number of Outstanding Shares (Common Stock)

1. Number of outstanding shares at fiscal year-end (including treasury stock) Year ended March 31, 2023: 150,063,171 shares
   Year ended March 31, 2022: 150,063,171 shares
2. Number of treasury stock at fiscal year-end Year ended March 31, 2023: 3,676,692 shares Year ended March 31, 2022: 658,731 shares
3. Average number of shares during the term

Year ended March 31, 2023: 147,508,523 shares

Year ended March 31, 2022: 151,461,514 shares

Note: On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares of common stock. The above figure for "Number of outstanding shares at fiscal year-end," "Number of treasury stock at fiscal year-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.

References: Summary of Nonconsolidated Results

1. Nonconsolidated Performance for the Year Ended March 31, 2023

(April 1, 2022 to March 31, 2023; Amounts less than one million yen are omitted)

(1) Nonconsolidated Operating Results (Years ended March 31)	(¥ millions)
	Net Sales	Operating Income	Ordinary Income	Net Income
	(% change)	(% change)	(% change)	(% change)
Fiscal 2023	242,442 (+18.3)	19,871 (+39.2)	24,796 (+24.1)	18,530 (+20.0)
Fiscal 2022	204,929 (-3.5)	14,275 (-30.7)	19,975 (-15.1)	15,435 (-15.2)

(Percentage figures in columns indicate increase or decrease from the previous term.)

	Net Income	Fully Diluted
	per Share	Net Income per
	(¥)	Share (¥)
Fiscal 2023	125.62	-
Fiscal 2022	101.91	-

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 calculated on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

(2) Nonconsolidated Financial Position (at March 31)	(¥ millions)
	Total Assets	Net Assets	Equity Ratio (%)	Net Assets per Share
				(¥)
Fiscal 2023	286,227	226,544	79.1	1,547.58
Fiscal 2022	276,512	223,541	80.8	1,496.22

(Reference) Equity capital: Year ended March 31, 2023; ¥226,544 million Year ended March 31, 2022; ¥223,541 million

Note: On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares of common stock. The above figure for "Net assets per share" is calculated on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

• This report is exempt from an auditing 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, (4) Outlook for the Year Ending March 2024" on page 7 of this report.

*Supplemental information sheets of financial results are posted on the Corporation's website on Wednesday, May 10, 2023.

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1. Consolidated Performance

(1) Fiscal Year in Review

In the period under review, the global economy continued facing challenging conditions, including rising global prices, supply chain disruptions, the protracted situation in Ukraine, and deteriorating business confidence, as the spread of COVID-19 became increasingly normalized. In the domestic economy, conditions remained unpredictable as consumer spending and corporate earnings stagnated against a backdrop of sharp exchange rate fluctuations and rising prices of raw materials, energy, and other commodities.

In the domestic housing-related industry, new housing starts weakened, especially for owner-occupied dwellings, but the household appliance sector remained firm, particularly in the renovation category.

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, for example, we launched products that improve quality of life and help protect the global environment, such as the Ultra Fine Bubble water heater and ECO ONE X5 hybrid water heater with heating system. We also commissioned a new plant in the growing U.S. market and expanded our business through the development of 100% hydrogen combustion technology for residential water heaters. 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 period, domestic sales of water heaters increased year on year thanks to Groupwide efforts to resolve supply delays, while higher sales of mainstay products, particularly in the United States and China, led to a year-on-year increase in overseas sales, which also benefited from foreign exchange factors. On the earnings side, we posted an increase in operating income thanks to the increase in revenue and growth in sales of high- value-added products. This was despite soaring raw material prices, distribution costs, and energy costs, as well as higher expenses associated with the commissioning of a new plant in the United States.

As a result, consolidated net sales for the year amounted to ¥425,229 million, up 16.1% from the previous year. Operating income rose 15.5%, to ¥ 41,418 million, and ordinary income climbed 14.1%, to ¥44,565 million. Net income attributable to owners of the parent company grew 9.9%, to ¥26,096 million.

Our results by geographical segment were as follows:

Japan

In Japan, we posted a substantial increase in sales of mainstay water heaters, centered on hybrid and other models with heating systems, as we worked to strengthen our production

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system to eliminate supply delays. Despite continued high costs of procuring raw materials and parts, as well as distribution and energy costs, we reported higher sales of mainstay products and benefited from the weaker yen and cost reduction efforts. As a result, sales in Japan rose 14.8%, to ¥196,838 million, and operating income jumped 35.3%, to ¥23,597 million.

United States

Despite temporary delays in the supply of tankless water heaters from Japan due to tight parts procurement and disruptions in international logistics, local sales of water heaters increased thanks to the commissioning of a new plant in April 2022 and increased supply from Japan. Although worsening housing market conditions led to stagnation in demand in the second half of the year, total U.S. sales increased 24.6%, to ¥55,750 million. However, these factors did not fully compensate for higher expenses and logistics costs associated with the new plant. Consequently, operating income fell 85.1%, to ¥313 million.

Australia

Sales in Australia increased 7.3%, to ¥27,655 million, due to growth in sales of commercial air conditioners and tank-based water heaters, as well as foreign exchange factors. This was despite lower sales of mainstay products due to delays in the supply of tankless water heaters and room heaters from Japan amid inflation and weak housing market conditions. However, the decline in sales (in local-currency terms) and soaring raw material prices and logistics costs led to a 27.2% fall in operating income, to ¥1,180 million.

China

In China, our business was affected by temporary restrictions on production and sales activities due to the stagnant housing market caused by stricter policies for developers and lockdowns in Shanghai related to COVID-19. After the lockdowns were lifted, however, we benefited from a rebound in production and sales activities, as well as growth in sales of high-value-added products, such as gas water heaters with built-inquick-heating units. Accordingly, sales in China, increased 25.3% to ¥66,150 million, and operating income jumped 56.5% to ¥10,569 million.

South Korea

In South Korea, weakening market sentiment due to rising prices and interest rates, as well as a decrease in housing sales and a reduction in government subsidies for eco-friendly products, caused the market to contract and led to a decline in sales of mainstay boilers. Consequently, sales in South Korea edged down 0.1%, to ¥32,094 million. Operating income fell 32.3%, to ¥705 million, due to lower sales of mainstay products and repair and inspection expenses for commercial fryers.

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