Shimano : Summary of Financial Results FY2022-Q4

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Summary of Consolidated Financial Results for FY2022 (Unaudited)

	(January 1, 2022 - December 31, 2022) [Japanese Standard]	(Consolidated)	February 14, 2023
Company Name:	Shimano Inc.	Stock Exchange: Tokyo, Prime Market
Code Number:	7309	URL: https://www.shimano.com
Representative:	Taizo Shimano, President
Contact:	Takuma Kanai, Executive Officer, General Affairs Administration Dept.	Telephone: [phone]

		and Supervising of Accounting Dept.
Date of Shareholders' Meeting:		March 29, 2023		Scheduled payment date for dividends: March 30, 2023
Date of filing of annual report to Ministry of Finance:	March 30, 2023
Supplemental information:			Yes
Financial results briefing:			Yes
						(Amounts are rounded down to the nearest million yen.)
	1. Consolidated financial results for FY2022 (January 1, 2022 - December 31, 2022)
	(1) Consolidated income information	(The percentages represent the rates of increase (decrease) compared to the corresponding prior period.)
		Net sales	Operating income		Ordinary income		Net income attributable to
				owners of parent
		Million yen	%	Million yen	%	Million yen	%	Million yen	%
	FY2022	628,909	15.1	169,158	14.1	176,568	15.7	128,178	10.6
	FY2021	546,515	44.6	148,287	79.3	152,562	87.3	115,937	82.7

(Note) Comprehensive income	FY2022: 180,405 million yen (22.1%)	FY2021: 147,752 million yen (170.6%)
	Basic earnings	Diluted earnings	Return on	Ordinary income to	Operating income to
	per share	per share	shareholders' equity	total assets	net sales
	Yen	Yen	%	%	%
FY2022	1,408.22	－	18.9	23.1	26.9
FY2021	1,252.62	－	20.2	23.5	27.1

(Reference) Equity in earnings	FY2022: － million yen		FY2021: － million yen
(2) Consolidated balance sheet information
	Total assets		Net assets	Shareholders' equity ratio	Net assets per share
		Million yen			Million yen	%	Yen
FY2022		826,413			741,095	89.6	8,166.35
FY2021		705,370			616,651	87.3	6,697.82
(Reference) Shareholders	' equity	FY2022: 740,108 million yen	FY2021: 615,992 million yen
(3) Consolidated cash flow information
	Cash flows from operating	Cash flows from investing	Cash flows from financing	Cash and cash equivalents
	activities		activities	activities	at end of year
		Million yen			Million yen	Million yen	Million yen
FY2022		110,684			(33,378)	(58,422)	417,266
FY2021		112,439			(20,129)	(58,774)	357,773

2. Dividend information

		Dividend per share		Total dividend	Dividend payout ratio	Dividend per
	1st Quarter 2nd Quarter 3rd Quarter	Year-end	Total	shareholders' equity
	(Annual)	(Consolidated)	(Consolidated)
	Yen	Yen	Yen	Yen	Yen	Million yen	%	%
FY2021	－	117.50	－	117.50	235.00	21,698	18.8	3.8
FY2022	－	117.50	－	142.50	260.00	23,623	18.5	3.5
FY2023 (Forecast)	－	142.50	－	142.50	285.00		－

3. Forecasted consolidated business performance for FY2023 (January 1, 2023 - December 31, 2023)

(The percentages represent the rates of increase (decrease) compared to the corresponding prior period.)

							Net income	Basic earnings
	Net sales		Operating income	Ordinary income	attributable to
		per share
							owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
First half of FY2023	254,200	(16.3)	49,700	(38.6)	55,700	(39.5)	40,200	(41.4)	443.57
FY2023	500,000	(20.5)	105,000	(37.9)	119,500	(32.3)	86,500	(32.5)	954.44

*Notes

(1) Changes in significant subsidiaries during the year (Changes in specified subsidiaries due to changes in scope of consolidation): Yes

New inclusion: - (Company name)	Exclusion: 1	(Company name) DashAmerica, Inc. (Pearl Izumi USA)
(2) Changes in accounting policies, changes in accounting estimates, and retrospective restatement
① Changes in accounting policies in accordance with revision of accounting standards:	Yes
② Changes in accounting policies other than ① above:			None
③ Changes in accounting estimates:				None
④ Retrospective restatement:				None
(3) Number of shares of common stock issued
① Number of shares of common stock issued at year-end		FY2022	91,160,100	FY2021	92,390,000
(including treasury stock):				shares		shares
② Number of shares of treasury stock at year-end:			FY2022	531,034	FY2021	420,938
				shares		shares
③ Average number of shares during the year:			FY2022	91,021,710	FY2021	92,556,104
				shares		shares

(Reference) Summary of non-consolidated financial results

1. Non-consolidated financial results for FY2022 (January 1, 2022 - December 31, 2022)

(1) Non-consolidated income information (The percentages represent the rates of increase (decrease) compared to the corresponding prior period.)

	Net sales		Operating income	Ordinary income		Net income
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
FY2022	368,070	18.0	75,017	18.9	85,199	31.6	63,920	35.7
FY2021	311,823	43.0	63,083	101.0	64,744	(8.4)	47,107	(27.2)
	Basic earnings	Diluted earnings
	per share		per share
		Yen		Yen
FY2022		702.25		－
FY2021		508.96		－
(2) Non-consolidated balance sheet information
	Total assets		Net assets		Shareholders' equity ratio	Net assets per share
	Million yen	Million yen		%		Yen
FY2022		268,115		209,751		78.2		2,314.39
FY2021		257,233		200,912		78.1		2,184.56
(Reference) Shareholders	' equity FY2022: 209,751	million yen	FY2021:	200,912 million yen

This financial report is outside the scope of audit by certified public accountants or audit corporations.

Explanation regarding the appropriate use of forecasts of business performance and other special items

The forecasts of consolidated business performance and other forward-looking statements contained in this document are based on information currently available to the Company and certain assumptions that management believes reasonable and actual business performance may differ materially from those described in such statements due to various factors. For details of assumptions for the forecasts and other related items, please refer to page 4 of the attached document. Shimano Inc. accepts no liability whatsoever for any direct or consequential loss arising from any use of this document.

Shimano Inc. (7309) Summary of Consolidated Financial Results for FY2022

○
Table of contents of the attached document
1. Overview of Business Results	2
(1)	Overview of Operations for FY2022	2
(2)	Overview of Financial Position for FY2022	3
(3)	Overview of Cash Flows for FY2022	3
(4)	Forecast for the Future	4
(5)	Dividend Policy and Cash Dividends for FY2022 and FY2023	5
2. Basic Approach to the Selection of Accounting Standards	5
3. Consolidated Financial Statements and Primary Notes	6
(1)	Consolidated Balance Sheets	6
(2)	Consolidated Statements of Income and Comprehensive Income	8
(3)	Consolidated Statements of Shareholders' Equity	10
(4)	Consolidated Statements of Cash Flows	12
(5)	Notes relating to Consolidated Financial Statements	14
	(Note concerning Assumption of Going Concern)	14
	(Note on Significant Change in the Amount of Shareholders' Equity)	14
	(Preparation of the Consolidated Financial Statements - Significant Matters)	14
	(Changes in Accounting Policies)	14
	(Notes relating to Consolidated Statements of Income)	15
	(Segment Information)	16
	(Per Share Data)	18
	(Significant Subsequent Events)	18

1

Shimano Inc. (7309) Summary of Consolidated Financial Results for FY2022

1. Overview of Business Results

1. Overview of Operations for FY2022

During fiscal year 2022, while restrictions on activities to tackle the spread of the novel coronavirus (COVID-

1. were eased, the outlook for the global economy remained uncertain due to soaring resource and commodity prices caused by the prolonged situation in Ukraine and monetary tightening measures aimed at curbing inflation taken by central banks in various countries, among other factors.
   In Europe, consumer sentiment was sluggish against a backdrop of concerns about resource and energy supply, rising prices, the prolonged high inflation and other factors, which increased fears of an economic slowdown.
   In the U.S., while rises in policy rates to tame high inflation put downward pressure on economy, personal consumption remained firm backed by a solid employment environment.
   In China, intermittent restrictions on economic activities under the zero-COVID policy slowed down a pickup in personal consumption, and economic recovery remained lackluster.
   In Japan, rising prices caused by soaring resource prices and the depreciation of the yen put downward pressure on personal consumption, but signs of a gradual recovery in economy were seen as the normalization of economic activities progressed under the with-COVID policy.
   In this environment, demand for bicycles and fishing tackle remained firm, although showing signs of cooling down, and for fiscal year 2022, net sales increased 15.1% from the previous year to 628,909 million yen. Operating income increased 14.1% to 169,158 million yen, ordinary income increased 15.7% to 176,568 million yen, and net income attributable to owners of parent increased 10.6% to 128,178 million yen.

Reportable Segment Overview

Bicycle Components

Although the strong interest in bicycles during the COVID-19 pandemic showed signs of cooling down, demand for bicycles remained above the pre-COVID-19 levels. In terms of market inventories of completed bicycles, those of high-end class bicycles remained at a low level. Meanwhile, inventory levels of middle- class bicycles rose, following those of entry-class bicycles.

Overseas, in the European market, sales of bicycles and bicycle-related products remained firm, partly backed by strong interest in bicycles. Despite shortages in inventories of completed bicycles, especially e- bikes and high-end class road bikes, market inventories remained somewhat high.

In the North American market, although demand for bicycles was firm, market inventories remained higher than appropriate levels due to the supply adjustment of completed bicycles.

In the Asian and South and Central American markets, consumer sentiment declined due to high inflation and interest in bicycles cooled off. However, in the Chinese market, market inventories of sport bikes remained at a low level, with a growing interest in cycling under the zero-COVID policy, especially in road bikes.

In the Japanese market, although demand for sport bikes and e-bikes remained firm, market inventories of general completed bicycles remained high.

Under these market conditions, order-taking was brisk for a wide range of products, including the new product SHIMANO 105 that is a high-end model for road bikes, and sport e-bike components, SHIMANO STEPS series.

As a result, net sales from this segment increased 16.6% from the previous year to 517,436 million yen, and operating income increased 15.9% to 144,994 million yen.

Fishing Tackle

While interest in fishing that had grown globally showed signs of cooling down, robust demand for fishing tackle was seen in some areas.

In the Japanese market, sales of mid- to high-priced products remained strong with fishing styles going diversified, although sales of popularly priced products for families and beginners slowed down.

Overseas, in the North American market, demand for fishing tackle showed signs of cooling down as a whole. However, demand for saltwater products remained firm and sales remained strong.

In the European market, while high inflation and other factors caused a sense of stagnation in the market in the U.K., sales remained strong in the areas of Southern and Eastern Europe.

In the Asian market, sales were favorable in tandem with market growth fueled by robust demand for fishing tackle. In the Chinese market, there remained impacts from stringent lockdown measures. However, after the lifting of restrictions, vigorous movements were seen in demand for fishing tackle.

In the Australian market, demand for fishing tackle remained strong and sales remained firm, despite some impacts from unfavorable weather conditions.

2

Shimano Inc. (7309) Summary of Consolidated Financial Results for FY2022

Under these market conditions, new products such as spinning reels MIRAVEL were well-received in the market. In addition, spinning reels STELLA and ULTEGRA XTE, as well as electric reels BEASTMASTER MD and other products continued to earn popularity.

As a result, net sales from this segment increased 8.4% from the previous year to 110,993 million yen, and operating income increased 4.5% to 24,163 million yen.

Others

Net sales from this segment increased 7.2% from the previous year to 479 million yen and operating income of 1 million yen was recorded, following an operating income of 20 million yen for the previous year.

(2) Overview of Financial Position for FY2022

Total assets as of the end of fiscal year 2022 amounted to 826,413 million yen, an increase of 121,043 million yen compared with the figure as of the previous fiscal year-end. The principal factors included an increase of 65,909 million yen in cash and time deposits, an increase of 24,438 million yen in merchandise and finished goods, an increase of 9,490 million yen in buildings and structures, an increase of 5,633 million yen in investment securities, an increase of 4,302 million yen in machinery and vehicles, and a decrease of 7,402 million yen in construction in progress.

Total liabilities amounted to 85,318 million yen, a decrease of 3,401 million yen compared with the figure as of the previous fiscal year-end. The principal factors included a decrease of 3,757 million yen in accounts payable-trade.

Net assets amounted to 741,095 million yen, an increase of 124,444 million yen compared with the figure as of the previous fiscal year-end. The principal factors included an increase of 71,877 million yen in retained earnings and an increase of 51,945 million yen in foreign currency translation adjustments.

As a result, the shareholders' equity ratio was 89.6% compared with 87.3% as of the previous fiscal year-end, and net assets per share were 8,166.35 yen compared with 6,697.82 yen as of the previous fiscal year-end.

(3) Overview of Cash Flows for FY2022

Net cash provided by operating activities amounted to 110,684 million yen compared with 112,439 million yen provided for the previous year. The main cash inflows included income before income taxes amounting to 174,112 million yen. The main cash outflows included income taxes paid amounting to 49,445 million yen, and inventories amounting to 23,939 million yen.

Net cash used in investing activities amounted to 33,378 million yen compared with 20,129 million yen used for the previous year. The main cash inflows included proceeds from sales of shares of subsidiaries resulting in change in scope of consolidation amounting to 5,307 million yen. The main cash outflows included acquisition of property, plant and equipment amounting to 20,247 million yen, purchases of time deposits amounting to 8,118 million yen, and acquisition of intangible assets amounting to 7,265 million yen.

Net cash used in financing activities amounted to 58,422 million yen compared with 58,774 million yen used for the previous year. The main cash outflows included acquisition of treasury stock amounting to 34,412 million yen and cash dividends to shareholders amounting to 21,497 million yen.

As a result, cash and cash equivalents at the end of the year were 417,266 million yen.

Cash flow indicators are shown in the following table.

	FY2018	FY2019	FY2020	FY2021	FY2022
Equity ratio (%)	90.0	90.8	89.6	87.3	89.6
Market value equity ratio (%)	285.5	305.8	378.1	399.8	229.4
Interest-bearing debt to cash flow ratio (years)	0.04	0.08	0.04	0.06	0.05
Interest coverage ratio (times)	253.4	610.3	793.5	908.2	658.2

(Notes)

1. Each indicator is calculated using the consolidated results based on the formula indicated below:

Equity ratio:	Shareholders' equity / Total assets
Market value equity ratio:	Total market capitalization / Total assets
Interest-bearing debt to cash flow ratio:	Interest-bearing debt / Operating cash flow
Interest coverage ratio:	Operating cash flow / Interest paid

2. Total market capitalization is calculated by:

Closing stock price on the last day of the fiscal year × The number of shares of common stock issued and outstanding at the end of the fiscal year, less treasury stock.

3