Topy Industries : 〔Delayed〕Consolidated Basis Results of the First Quarter for FY2023

Consolidated Basis Results of the First Quarter for Fiscal 2023

(April 1, 2023 - June 30, 2023)

		August 4, 2023
Registered Company name:	TOPY INDUSTRIES, LIMITED	Stock listing: Tokyo, Nagoya stock exchanges
Code number:	7231	URL: http://www.topy.co.jp/en/index.html
Representative:	Hiromi Ishii, Representative Director, President and CEO
Contact:	Tetsuya Sakai, Managing Executive Officer and General Manager, General Affairs Department
	Telephone: [phone] / (Overseas) 81-3-3493-0777

Scheduled date for submission of quarterly report:	August 10, 2023	Scheduled date for dividend payment: －
Preparation of supplementary quarterly materials:	No
Holding of quarterly financial results meeting:	No

(Figures of less than ¥1 million have been omitted)

1. Consolidated Financial and Operating Results of the First Quarter for Fiscal 2023 (April 1, 2023 - June 30, 2023)

(1) Consolidated Operating Results (Cumulative)

(Percentage figures are changes from the same period of the previous fiscal year)

	Net sales		Operating profit		Ordinary profit	Profit attributable to
			owners of parent
	Million yen		%	Million yen		%	Million yen	%	Million yen	%
First Quarter of Fiscal 2023	81,522		8.7	1,567	－		2,358	557.5	1,734	346.4
First Quarter of Fiscal 2022	75,000		34.6	(569)	－		358	－	388	－

(Note) Comprehensive income:	First Quarter of Fiscal 2023	¥5,120 million	(140.0%)
		First Quarter of Fiscal 2022	¥2,134 million	(7.8%)
		Profit per share	Profit per share
		after full dilution
		Yen		Yen
First Quarter of Fiscal 2023		75.97		－
First Quarter of Fiscal 2022		16.93		－
(2) Consolidated Financial Position
		Total assets		Net assets	Equity ratio	Net assets per share
		Million yen		Million yen	%	Yen
First Quarter of Fiscal 2023		296,826		124,990	41.7	5,422.30
Fiscal 2022		292,322		121,425	41.1	5,268.92

(For reference) Shareholders' equity:

First Quarter of Fiscal 2023

¥123,765 million

Fiscal 2022

¥120,265 million

2. Dividends

Dividends per share

1Q-end

2Q-end

3Q-end

End of FY

Annual

Yen

Yen

Yen

Yen

Yen

Fiscal 2022

－

20.00

－

68.00

88.00

Fiscal 2023

－

Fiscal 2023 (Forecasts)

－

－

－

88.00

(Note) Whether changes to the latest dividend forecasts have been made: None

3. Consolidated Financial Forecasts for Fiscal 2023 (April 1, 2023- March 31, 2024)

(Percentage figures are changes from the previous fiscal year)

Net sales

Operating profit

Ordinary profit

Profit attributable to

Profit per share

owners of parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full year

342,000

2.2

9,500

32.4

9,600

19.4

6,500

2.8

284.77

(Note) Whether changes to the latest forecasts for consolidated figures have been made: None

• NOTE
• 1. Changes in the State of Material Subsidiaries during the Period: None

Newly included: - (Name) -

Excluded: - (Name) -

(2) Adoption of Special Accounting Methods for Preparation of Quarterly Consolidated Financial Statements: Yes

Note: For details, please refer to "(3) Notes Regarding Quarterly Consolidated Financial Results (Application of special accounting methods for presenting quarterly consolidated financial statements)" under "2. Quarterly Consolidated Financial Statement and Important Notes" on page 8 of the attached materials.

1. Changes in Accounting Principles, Changes in Accounting Estimates, and Retrospective Restatements
2. 1. Changes in accounting principles accompanying the amendment of accounting standards: None
   2. Changes other than those in (a) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatements: None
3. Number of Shares Issued (Common shares)
4. 1. Number of shares issued at the end of the period (including treasury shares)

First Quarter of Fiscal 2023	24,077,510 shares	Fiscal 2022	24,077,510 shares
(b) Number of treasury shares at the end of the period
First Quarter of Fiscal 2023	1,252,174 shares	Fiscal 2022	1,252,026 shares
(c) Average number of shares issued during the period
First Quarter of Fiscal 2023	22,825,392 shares	First Quarter of Fiscal 2022	22,940,753 shares

• These consolidated financial results are not included in the scope of quarterly audits by certified public accountants or audit corporations.

* Explanation of the Appropriate Use of Performance Forecasts and Other Related Items

(Caution concerning future descriptions etc.)

The above estimate has been compiled based on information available at the time this disclosure was made. The actual earnings are subject to change from the estimated values due to various factors. For assumed conditions underlying the earnings forecast and cautionary statements in using the earnings forecast, please refer to "Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates" on page 3.

Index of Attached Documents
1. Qualitative Information Regarding Results of the First Quarter for Fiscal 2023	2
(1)	Explanation Regarding Consolidated Operating Results	2
(2)	Explanation Regarding Financial Position	3
(3)	Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates	3
2. Quarterly Consolidated Financial Statements and Important Notes	4
(1)	Quarterly Consolidated Balance Sheets	4
(2)	Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income	6
	Quarterly Consolidated Statements of Income
	(For the Three-month Period)	6
	Quarterly Consolidated Statements of Comprehensive Income
	(For the Three-month Period)	7
(3)	Notes Regarding Quarterly Consolidated Financial Results	8
	(Note related to going-concern assumption)	8
	(Note on significant changes in the amount of shareholders' equity)	8
	(Application of special accounting methods for presenting quarterly consolidated financial statements)	8

Note: This document has been translated from the original Japanese version for reference purposes only. In the event of any discrepancy between this translated document and the original Japanese version, the original shall prevail.

The original disclosure in Japanese was released on August 4, 2023 at 13:30 (GMT+9).

The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

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1. Qualitative Information Regarding Results of the First Quarter for Fiscal 2023

(1) Explanation Regarding Consolidated Operating Results

During the first three months of the fiscal year under review, the global economy experienced an overall recovery, despite geopolitical risks from the protraction of the situation in Ukraine and unstable market conditions caused by monetary tightening around the world. There was a gradual recovery in the Japanese economy, as consumer spending recovered due to the easing of behavioral restrictions, and capital investment was strong. Despite the recovering trend in production as impacts from semiconductor and other parts shortages in the automotive industry are alleviated, the business environment surrounding TOPY INDUSTRIES, LIMITED (the "Group") remained uncertain due to factors such as an economic slump in China, in addition to cost increases for coal, electricity, other raw materials, and logistics.

Under this business environment, we have set four key areas-promote segment management, strengthen overseas profitability, strengthen domestic business base, and contribute to decarbonization-for our Group Basic Strategy, and we are steadily implementing the Medium-term Management Plan "TOPY Active & Challenge 2025". As one part of this, we newly established the Overseas Business Strategy Department, and are proceeding with discussions on initiatives to strengthen alliances and develop new markets. In addition, we have introduced an internal carbon pricing system, and use it as one of the criteria for environmental investment decisions, thereby strengthening our sustainable management base and promoting efforts for the realization of carbon neutrality.

The financial results for the first three months of the fiscal year under review include consolidated net sales of ¥81,522 million (up 8.7% year on year), mainly due to increased automobile wheel sales due to the recovery trend in automobile production. As for profit, operating profit was ¥1,567 million (compared to an operating loss of ¥569 million in the same period of the previous year) due to the increase in price difference from the sales price of steel products due to a decline in steel scrap prices, and in addition to foreign exchange gains due to depreciation of the yen, ordinary profit was ¥2,358 million (up 557.5% year on year), and profit attributable to owners of parent was ¥1,734 million (up 346.4% year on year), showing significant improvements.

Performance by Segment

From the first quarter of the current fiscal year, the reportable segment previously referred to as Business Development has been included under Other, as its quantitative importance decreased. The following comparisons are comparative analyses based on figures for the first three months of the previous fiscal year, which have been reclassified to the segment classifications after the change.

(Steel Business)

In the steel industry, domestic crude steel production volume decreased year on year due to a decline in demand for steel materials for construction and manufacturing, which are the main markets. In addition, the price of steel scrap, the main raw material, declined, even though the prices of energy and other raw materials remained high.

Given these circumstances, the Group worked to optimize steel sales prices as the price gap with purchase prices of steel scrap, the raw material for such products, widened, and optimized the product mix with a focus on profit. As a result, net sales increased to ¥27,699 million (up 5.0% year on year), and operating profit increased to ¥2,432 million (up 1,119.5% year on year).

(Automotive & Industrial Machinery Components Business)

In the automotive industry, automobile production volume increased year on year in Japan as impacts from the supply shortage of semiconductors and other parts lessened. In the construction machinery industry, while demand for hydraulic excavators declined significantly in China, demand was firm overall in other regions. Demand for mining machinery remained strong amid robust demand for resources.

Under these circumstances, sales for automotive wheels increased and the Group worked to optimize sales pricing in accordance with the cost of raw materials. As a result, net sales increased to ¥49,397 million (up 12.4% year on year), and operating profit increased to ¥859 million (up 41.5% year on year).

(Power Business)

While the marked rise in the price of coal, which is fuel for power generation, has calmed down, planned outages due to inspections and maintenance for statutory periodic inspections and increased repair costs, in addition to regular annual repairs, resulted in net sales decreasing to ¥2,663 million (down 13.8% year on year), and an operating loss of ¥761 million (compared to an operating loss of ¥557 million in the same period of the previous year).

(Leasing Business)

In the leasing business, operating profit was ¥178 million (down 0.3% year on year).

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(Others)

The Group is involved in the manufacture and sale of synthetic mica, and operates a civil engineering and construction business, sports club OSSO, and other businesses. Net sales came to ¥1,762 million (up 11.9% year on year) and operating profit was ¥230 million (up 21.1% year on year).

(2) Explanation Regarding Financial Position

Total assets at the end of the first quarter of the consolidated fiscal year under review stood at ¥296,826 million, an increase of ¥4,504 million from the end of the previous consolidated fiscal year. This was mainly due to an increase of ¥3,576 million in investment securities, a decrease of ¥756 million in merchandise and finished goods, and an increase of ¥582 million in work in process.

Total liabilities were ¥171,835 million, an increase of ¥938 million compared with the end of the previous consolidated fiscal year. This was caused mainly by a decrease of ¥3,624 million in notes and accounts payable - trade, an increase of ¥1,863 million in short-term borrowings, an increase of ¥1,427 million in electronically recorded obligations - operating, and an increase of ¥1,149 million in deferred tax liabilities.

Total net assets came to ¥124,990 million, an increase of ¥3,565 million from the end of the previous consolidated fiscal year. This was mainly due to an increase of ¥2,586 million in valuation difference on available-for-sale securities, and an increase of ¥684 million in foreign currency translation adjustments.

(3) Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates

Despite expectations for the recovery to continue, the outlook for the global economy is forecast to remain uncertain, due to the downside risk of the impact of monetary tightening, price increases, and other factors. While the business environment surrounding the Group is expected to remain uncertain due to factors such as raw materials and energy prices, and the "2024 problem" in Japan's logistics industry, we will continue working to steadily leverage the recovery in automobile production, optimize sales pricing, and accumulate profits.

The consolidated financial forecasts for the fiscal year ending March 31, 2024 (April 1, 2023 to March 31, 2024) have not been changed from those announced on May 10, 2023. This decision has been made based on information available to the Group as of the date of issuance of this release. The actual results may vary from the forecast due to various factors that will arise in the future.

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