Gunze LimitedTSE: 3002

Consolidated Financial Statements - Summary (Three months ended June 30, 2024)

Aug 2, 2024 at 5:57 AM UTC · Issued by Gunze Limited

Note : 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.

August 2, 2024

Consolidated Financial Statements - Summary

(Three months ended June 30, 2024)

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, Corporate Officer, General Manager, Corporate
	Communications
Tel:	+81 (6) 6348-1314

Start of Distribution of Dividend (Scheduled):	-
Preparation of Supplementary Materials for Financial Results:	No
Holding of Presentation of Financial Results:	No

1. Consolidated Operating Results for the three months ended June 30, 2024 (April 1, 2024 to June 30,

2024)

(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

Three months ended	¥ millions	%	¥ millions	%		¥ millions	%	¥ millions	%
June 30, 2024	33,382	5.3	2,083	37.5		2,272	38.5	1,600	0.9
June 30, 2023	31,706	(0.5)	1,515	21.0		1,640	4.5	1,586	35.4
Note: Comprehensive	income
Three months ended June 30, 2024: ¥2,657 million [2.7%]
Three months ended June 30, 2023: ¥2,587 million [(2.1)%]

		EPS			Diluted EPS
Three months ended		¥				¥
June 30, 2024		95.98				95.75
June 30, 2023		93.05				92.84

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio	Net assets per share

	¥ millions	¥ millions	%	¥
As of June 30, 2024	165,028	120,565	71.9	7,114.32
As of March 31, 2024	161,971	120,467	73.2	7,112.73
Reference: Total equity
As of June 30, 2024: ¥118,665 million	As of March 31, 2024: ¥118,642 million

2. Dividends

			Annual dividends per share (¥)

	1st quarter-end	2nd quarter-end		3rd quarter-end	Year-end	Total

FY2023	−	−		−	153.00		153.00
FY2024	−
FY2024 (projected)			−		−	157.00		157.00

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

3. Projected results for FY2024 (April 1, 2024 to March 31, 2025)

(Percentages represent year-over-year changes)

	Net sales		Operating profit	Ordinary profit

	¥ millions	%	¥ millions	%	¥ millions	%
FY2024 full year	140,000	5.4	9,000	32.8	9,000	32.9

	Profit attributable to	EPS
	owners of parent

	¥ millions	%	¥
FY2024 full year	7,500	46.8	449.64

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

Notes

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

As of June 30, 2024: 17,293,516 shares

As of March 31, 2024: 17,293,516 shares

Treasury stock at the end of period: As of June 30, 2024: 613,644 shares As of March 31, 2024: 613,226 shares
Average number of shares during the period:

Three months ended June 30, 2024: 16,680,041 shares

Three months ended June 30, 2023: 17,048,701 shares

Review of the Japanese-language originals of the attached quarterly consolidated financial statements by certified public accountants or an audit corporation: Yes (voluntary)
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. Quarterly 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
	Quarterly Consolidated Statements of Income	6
	For the three months ended June 30	6
	Quarterly Consolidated Statements of Comprehensive Income	7
	For the three months ended June 30	7
(3)	Notes to Quarterly Consolidated Financial Statements	8
	(Notes regarding assumptions of continuing operations)	8
	(Notes in the case of significant changes in shareholders' equity)	8
	(Application of an accounting method specific to the preparation of quarterly consolidated financial
	statements)	8
	(Changes in accounting policies, changes in accounting estimates, and restatement after error
	corrections)	8
	(Segment information, etc.)	9
	(Notes regarding statements of cash flows)	10
	(Significant subsequent events)	10
Independent Auditor's Interim Review Report on the Quarterly Consolidated Financial Statements	11

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

Explanation of Business Results

(Overview of Results for the Period under Review)

During the three months ended June 30, 2024 (April 1, 2024 - June 30, 2024), the Japanese economy was on a moderate recovery path due to the improvement in business sentiment, movement toward increasing income and other factors. The economic outlook, however, remains unclear due to factors including the rise in prices associated with soaring labor and logistics costs in addition to raw material prices, and rapid exchange rate fluctuations, as well as the globally unstable political situation. Amid this operating environment, the GUNZE Group continued to pursue the four basic strategies of "Creation of new value," "Capital cost-focused management," "Evolution of corporate constitution," and "Environmentally responsible management" in the last year of its medium-term management plan, "VISION 2030 stage 1."

The GUNZE Group's operating results for the period under review are as follows:

Net sales:	¥33,382 million
Operating profit:	¥2,083 million
Ordinary profit:	¥2,272 million
Profit attributable to owners of parent:	¥1,600 million

(up by 5.3% year-on-year) (up by 37.5% year-on-year) (up by 38.5% year-on-year) (up by 0.9% year-on-year)

Net sales increased due to the strong performance of the functional solutions business where the materials category was on a recovery trend and the medical business where new products and products for China expanded. Operating profit and ordinary profit increased primarily owing to the profit increase in the functional solutions business and the medical business, as well as the restructuring in the sports club field. Profit attributable to owners of parent slightly increased mainly due to a decrease in gain on sale of investment securities

(Results by Business Segment)

[Functional Solutions]

The functional solutions business recorded net sales of ¥12,650 million (up by 11.7% year-on-year) and an operating profit of ¥1,665 million (up by 17.0% year-on-year).

In plastic films, sales in Japan remained strong, although the business was impacted by stagnant demand overseas.
In engineering plastics, in addition to the recovery of the office equipment market, products for semiconductors performed strongly.

[Medical]

The medical business recorded net sales of ¥3,109 million (up by 28.5% year-on-year) and an operating profit of ¥594 million (up by 28.2% year-on-year).

Market penetration of new products including adhesion prevention agent progressed in Japan.
Sales of products for China, with a focus on the tissue reinforcement felt, expanded.

[Apparel]

The apparel business recorded net sales of ¥14,795 million (up by 1.5% year-on-year). Operating profit was ¥563 million (up by 64.0% year-on-year) due to the effect of business restructuring and other factors, despite an unfavorable impact of exchange rates.

In the apparel business, although sales of products sold throughout the year stagnated, seasonal items performed strongly.
Sales through the e-commerce and the Direct to Consumer channel of company-owned stores continued to perform strongly.

[Lifestyle Creations]

The lifestyle creation business recorded net sales of ¥3,024 million (down by 15.0% year-on-year) and an operating profit of ¥150 million (down by 13.0% year-on-year).

The real estate category recorded a decline in both revenue and profit due to the impact of sales of idle land redevelopment in the previous fiscal year and the increased burden of depreciation for shopping centers.
The sports club business improved the profitability, although its sales decreased due to the re-examining of unprofitable stores.

(2) Explanation of Financial Position

As of June 30, 2024, total assets were ¥165,028 million, an increase of ¥3,057 million compared to the end of the previous fiscal year. The main components of the increase included a ¥2,111 million increase in other, net in property, plant and equipment (construction in progress, etc.) and a ¥749 million increase in merchandise and finished goods.

Total liabilities were ¥44,463 million, an increase of ¥2,959 million compared to the end of the previous fiscal year. The main components of the increase included a ¥4,007 million increase in long- and short-term borrowings including commercial papers, while the main components of a decrease included a ¥844 million decrease in provision for bonuses.

Net assets were ¥120,565 million, an increase of ¥98 million compared to the end of the previous fiscal year. The main components of the increase included the recording of profit attributable to owners of parent amounting to ¥1,600 million and a ¥1,117 million increase in foreign currency translation adjustment, while the main components of a decrease included dividends paid of ¥2,552 million.

(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information

Because the consolidated financial results for the period under review have been almost in line with expectations, the Company has decided not to change its earlier consolidated financial results forecast for the fiscal year ending March 31, 2025, which was announced on May 14, 2024.

2. Quarterly Consolidated Financial Statements and Primary Notes

(1) Quarterly Consolidated Balance Sheets

					(Million yen)

			As of March 31, 2024		As of June 30, 2024

Assets
Current assets
Cash and deposits			10,818		11,308
Notes and accounts receivable - trade, and contract	27,588	27,365
assets

Merchandise and finished goods	24,706	25,456
Work in process	7,425	7,751
Raw materials and supplies			6,026		6,324
Other	4,245	4,129
Allowance for doubtful accounts	(13)	(13)
Total current assets			80,796	82,322
Non-current assets
Property, plant and equipment
Buildings and structures, net			36,191		35,955
Machinery, equipment and vehicles, net	13,601	13,366
Land			10,479		10,509
Other, net	3,325	5,436
Total property, plant and equipment			63,597		65,268
Intangible assets			1,928	1,846
Investments and other assets
Investment securities			6,833		6,525
Other			8,884		9,108
Allowance for doubtful accounts		(69)	(43)
Total investments and other assets	15,648	15,590
Total non-current assets			81,174	82,706
Total assets		161,971	165,028

					(Million yen)

			As of March 31, 2024		As of June 30, 2024

Liabilities
Current liabilities
Notes and accounts payable - trade	8,286	8,547
Short-term borrowings			252		457
Commercial papers			−		4,200
Current portion of long-term borrowings	462	491
Income taxes payable			1,357		810
Provision for bonuses	1,405	560
Provision for business restructuring	1,783	1,603
Other			11,342		11,591
Total current liabilities			24,890		28,262
Non-current liabilities
Long-term borrowings	8,230	7,805
Retirement benefit liability			3,937		3,920
Long-term leasehold and guarantee deposits received			3,986		4,018
Other	458	456
Total non-current liabilities			16,613		16,200
Total liabilities			41,503	44,463
Net assets
Shareholders' equity
Share capital			26,071		26,071
Capital surplus	6,565	6,565
Retained earnings	81,576	80,624
Treasury shares			(2,974)		(2,976)
Total shareholders' equity			111,239		110,285
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	2,438	2,267
Deferred gains or losses on hedges	156	221
Revaluation reserve for land			(13)		(13)
Foreign currency translation adjustment	4,118	5,236
Remeasurements of defined benefit plans	702	667
Total accumulated other comprehensive income			7,403	8,380
Share acquisition rights	124	124
Non-controlling interests			1,700		1,775
Total net assets			120,467		120,565
Total liabilities and net assets			161,971	165,028

Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income

Quarterly Consolidated Statements of Income

For the three months ended June 30

					(Million yen)

			For the three months ended		For the three months ended
			June 30, 2023		June 30, 2024
Net sales	31,706	33,382
Cost of sales			21,708		22,636
Gross profit			9,997		10,745
Selling, general and administrative expenses			8,482	8,662
Operating profit	1,515	2,083
Non-operating income
Interest income	18	8
Dividend income	218	135
Rental income from non-current assets			146		168
Foreign exchange gains	35	70
Other	36	46
Total non-operating income			456	429
Non-operating expenses
Interest expenses	94	22
Rental expenses on non-current assets	140	161
Other			95		55
Total non-operating expenses			330		239
Ordinary profit			1,640	2,272
Extraordinary income
Gain on sale of non-current assets			3		0
Gain on sale of investment securities			657		144
Total extraordinary income			661	145
Extraordinary losses
Loss on sale and retirement of non-current assets		49	48
Total extraordinary losses	49	48
Profit before income taxes			2,252	2,369
Income taxes	646	726
Profit			1,606	1,642
Profit attributable to non-controlling interests	20	41
Profit attributable to owners of parent			1,586	1,600

Quarterly Consolidated Statements of Comprehensive Income

For the three months ended June 30

				(Million yen)

		For the three months ended		For the three months ended
		June 30, 2023		June 30, 2024
Profit		1,606		1,642
Other comprehensive income
Valuation difference on available-for-sale securities	462	(171)
Deferred gains or losses on hedges		253		65
Foreign currency translation adjustment		254		1,155
Remeasurements of defined benefit plans, net of tax		11	(34)
Total other comprehensive income	981	1,014
Comprehensive income		2,587	2,657
Comprehensive income attributable to
Comprehensive income attributable to owners of parent	2,537	2,577
Comprehensive income attributable to non-controlling		49		79
interests