Iwatani : Overview of Business Results for 1st Half FY24

Published November 12, 2024 at 7:04 a.m. UTC

Source: MarketScreener

Note: This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Six Months Ended September 30, 2024

[Japanese GAAP]

													November 12, 2024
Company name: IWATANI CORPORATION
Stock exchange listing: Tokyo
Code number: 8088
URL: https://www.iwatani.co.jp/
Representative: Hiroshi Majima President
Contact:	Tetsuo Matsuo	General Manager Accounting Dept.
Phone: 06-7637-3325
Scheduled date of filing semi-annual securities report: November 13, 2024
Scheduled date of commencing dividend payments: -
Availability of supplementary briefing material on financial results: Yes
Schedule of financial results briefing session: Yes
									(Amounts of less than one million yen are rounded down)
1. Consolidated Financial Results for the Six Months Ended September 30, 2024 (April 1, 2024 to September 30, 2024)
(1) Consolidated Operating Results					(% indicates changes from the previous corresponding period.)

			Net sales			Operating profit	Ordinary profit		Profit attributable to
						owners of parent

Six months ended	Million yen		%		Million yen		%	Million yen		%	Million yen	%
September 30, 2024		400,004		1.5		16,140		10.6	22,283		22.5	15,085	25.1
September 30, 2023		394,211		(4.6)		14,591		1.9	18,187		(0.7)	12,062	(4.3)

(Note) Comprehensive income:	Six months ended September 30, 2024:	¥	19,256 million [ (18.0)%]
		Six months ended September 30, 2023:	¥	23,471 million [ 26.4%]

		Basic earnings	Diluted earnings per
		per share	share
Six months ended		Yen		Yen
September 30, 2024		65.55		-
September 30, 2023		52.42		-

(Note) The Company carried out a 4-for-1 share split of its common share with an effective date of October 1, 2024.

Basic earnings per share has been calculated as if this share split were carried out at the beginning of the previous fiscal year.

(2) Consolidated Financial Position

	Total assets		Net assets		Capital adequacy ratio

As of	Million yen		Million yen	%
September 30, 2024	836,046		384,664	44.7
March 31, 2024	834,391		372,930	43.4
(Reference) Equity:	As of September 30, 2024:	¥	373,629 million
	As of March 31, 2024:	¥	362,328 million

2. Dividends

			Annual dividends

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

	Yen	Yen	Yen	Yen	Yen
Fiscal year ended March 31, 2024	-	-	-	130.00	130.00
Fiscal year ending March 31, 2025	-

Fiscal year ending March 31, 2025		-	-	32.50	32.50
(Forecast)

(Note) 1. Revision to the forecast for dividends announced most recently: No

The Company carried out a 4-for-1 share split of its common share with an effective date of October 1, 2024.
The year-end dividend per share forecast for the fiscal year ending March 31, 2025 takes into account the impact of this share split. The year-end dividend forecast for the fiscal year ending March 31, 2025 that does not take into account the share split is 130.00 yen.
One of the company's divedend policies is to distribute 20% of profit of Cosmo Energy HD, excluding the impact of inventory valuation factors and multiplied by the shareholding ratio. Dividends under this policy are not included in annual dividends for the fiscal year ending March 31, 2025(Forecast).

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2025(April 1, 2024 to March 31, 2025)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share


	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	902,000		6.4	52,700	4.1	72,800	10.0	54,000	14.0	234.67

(Note) 1. Revision to the financial results forecast announced most recently: No

2. The Company carried out a 4-for-1 share split of its common share with an effective date of October 1, 2024.
The basic earnings per share in the consolidated financial results forecast for the fiscal year ending March 31, 2025 take into account the impact of this share split. The basic earnings per share for the fiscal year ending March 31, 2025 that do not take into account the share split is 938.67 yen.
Notes:

(1) Significant changes in the scope of consolidation during the period: Yes

New	2 Companies
Exclusion:	3 Companies

Accounting policies adopted specially for the preparation of semi-annual consolidated financial statements: No
Changes in accounting policies, changes in accounting estimates and retrospective restatement
1. Changes in accounting policies due to the revision of accounting standards: Yes
2. Changes in accounting policies other than 1) above: No
3. Changes in accounting estimates: No
4. Retrospective restatement: No

(Note) For details, please refer to "Semi-annual Consolidated Financial Statements and Notes (4) Explanatory Notes to Semi- annual Consolidated Financial Statement (Notes to Changes in Accounting Policies)" on page 11 of the attached document.

(4) Total number of issued shares (common shares)
1)	Total number of issued shares at the end of the period (including treasury shares):
	September 30, 2024:	234,246,596 shares
	March 31, 2024:	234,246,596 shares
2)	Number of treasury shares at the end of the period:
	September 30, 2024:	4,102,322 shares
	March 31, 2024:	4,133,300 shares
3)	Average number of shares outstanding during the period:
	Six months ended September 30, 2024:	230,126,104 shares
	Six months ended September 30, 2023:	230,109,926 shares

(Note) The Company carried out a 4-for-1 share split of its common share with an effective date of October 1, 2024.

The total number of issued shares (common shares) has been calculated as if this share split were carried out at the beginning of the previous fiscal year.

*1. Semi-annual financial results reports are exempt from review conducted by certified public accountants or an audit firm.

*2. Cautionary Statement with Respect to Forward-Looking Statements, and Other Information (Caution regarding forward-looking statements)

The forward-looking statements, such as results forecasts, included in this document are based on information currently available to the Company and assumptions considered reasonable, and do not purport to be a promise by the Company to achieve such results. Actual results may differ materially, depending on a range of factors. For the assumptions prerequisite to the results forecasts and the points to be noted in the use of the results forecasts, please see "Overview of Operating Results, Etc. (4) Consolidated Financial Results Forecasts" on page 4.

Contents

Overview of Operating Results, Etc. ……………………………………………………………………………	2
(1)	Overview of Operating Results for the Six Months Ended September 30, 2024 ….………………………	2
(2)	Segment Information …………………………….……………….……………….……………….……...	2
(3)	Overview of Financial Position for the Six Months Ended September 30, 2024…………………………	3
(4)	Consolidated Financial Results Forecasts ………………………………………………………………..	4
Semi-annual Consolidated Financial Statements and Notes .……………………………………………………	5

Semi-annualConsolidated Balance Sheets ………………………………………………………………. 5
Semi-annualConsolidated Statements of Income and Comprehensive Income …………………………. 7

(3) Semi-annual Consolidated Statements of Cash Flows …………………………………………………… 9

Explanatory Notes to Semi-annual Consolidated Financial Statements …………………………………. 11 (Notes to Changes in Accounting Policies) ………………………………………………………………. 11 (Notes to Segment Information, Etc.) …………………………………………………………………… 11 (Notes in the Event of Significant Changes in Shareholders' Equity) …………………………………… 12 (Notes on the Assumption of a Going Concern) ………………………………………………………… 12 (Notes to Significant Subsequent Events) ……………………………………………………………….. 13

Additional Information ………………………………………………………………………………………….. 14

Results for 1H FY2024 ……………………………………………………………………………………….... 14

Consolidated Statements of Income ………………………………………………………………………. 14
Operating Profit Except for Impact of LPG Import Price Fluctuation ……………………………………. 14
LPG Import Price (CP) ……………………………………………………………………………………. 14
Segment Information …………………………………………………………………………………….... 14
LPG and Industrial Gases Net Sales -Sales Volume …………………………………………………….... 15
Financial Position …………………………………………………………………………………………. 15
Capital Expenditure ……………………………………………………………………………………….. 15
Cash Flows ………………………………………………………………………………………………... 15
Amount of share of profit or loss of Cosmo accounted for using equity method ………………………... 15
Non-consolidated…………………………………………………………………………….…………… 15

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Overview of Operating Results, Etc.

(1) Overview of Operating Results for the Six Months Ended September 30, 2024

During the first half of the current fiscal year, the Japanese economy continued to recover gradually, with an increase in capital investment against the backdrop of robust corporate earnings, despite the risk of a downturn associated with the uncertainty about the outlook for the U.S., China, and other overseas economies.

Under these circumstances, Iwatani (hereinafter referred to as the "Company") expanded its business to achieve its basic policies of "solutions to social issues" and "sustained growth" in accordance with its medium-term management plan, "PLAN27," which ends in the fiscal year ending March 31, 2028.

In order to realize a hydrogen energy-based society, the Company concluded a contract to invest in the Japan Hydrogen Fund, Japan's first fund specializing in hydrogen-related fields. Through this fund, we will accelerate efforts to build a hydrogen supply chain.

In the Integrated Energy Business, we continued to engage in developing a disaster-resistant Core LPG center. We also expanded the number of direct sales customers and strengthened our business infrastructure.

In the Industrial Gases & Machinery Business, we expanded sales of refrigerants for air conditioners and automobiles in Southeast Asia and pushed ahead with our initiative to recover and recycle used fluorocarbon, expanding the business.

In the Materials Business, construction of a mining plant in Norway, where we hold rights to titanium ore, a rare resource, progressed smoothly. We engaged in establishing logistics and other aspects of the supply system, aiming to begin sales in the first half of 2025.

As a result, for the first half of the current fiscal year, net sales were 400.004 billion yen (+5.792 billion yen year- on-year), operating profit was 16.140 billion yen (+1.549 billion yen year-on-year), ordinary profit was 22.283 billion yen (+4.095 billion yen year-on-year), and profit attributable to owners of parent was 15.085 billion yen (+3.022 billion yen year-on-year).

Segment Information Integrated Energy
In the Integrated Energy Business, LPG import prices remained high and sales of industrial LPG remained strong, resulting in an increase in revenue. Profits increased as the profitability of LPG remained strong in the wholesale sector while declining in the retail sector, and the negative impact of LPG import price fluctuation improved (+4.081 billion yen year-on-year). We also experienced growth in the sales of portable gas cooking stoves, cassette gas canisters, and energy-related equipment.

As a result, net sales in this segment were 157.263 billion yen (+13.933 billion yen year-on-year), and operating profit was 3.270 billion yen (+4.469 billion yen year-on-year).

Industrial Gases & Machinery

In the Industrial Gases & Machinery Business, we saw growth in the sales volume of air separation gas, mainly for the electronic components industries. In the hydrogen business, sales of liquid hydrogen remained strong, mainly for space development. The profitability of specialty gases declined due to the weakening of helium markets, mainly in China, and an increase in procurement costs for carbon dioxide, despite the expansion of the refrigerant business resulting from the acquisition of a business company in Malaysia. In machinery and equipment, sales of disaster prevention gas equipment increased but sales of automobile-related equipment decreased.

As a result, net sales in this segment were 128.583 billion yen (+1.742 billion yen year-on-year) and operating profit was 7.988 billion yen (-2.863 billion yen year-on-year).

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Materials

In the Materials Business, sales of molded products for air conditions and consumer resin products grew. In the mineral sands business, production at our own mining sites in Australia remained strong and sales volumes increased in Japan and overseas. On the other hand, sales of stainless steel and rechargeable battery materials for next-generation automobiles were slow due to falling market prices and inventory adjustments at sales destinations.

As a result, net sales in this segment were 99.155 billion yen (-9.381 billion yen year-on-year), and operating profit was 6.133 billion yen (-0.125 billion yen year-on-year).

Others, Adjustments

Net sales were 15.001 billion yen (-0.502 billion yen year-on-year), and operating profit was 1.694 billion yen (+0.359 billion yen year-on-year).

Overview of Financial Position for the Six Months Ended September 30, 2024 Total Assets
Total assets at the end of the first half of the current fiscal year increased by 1.655 billion yen from the end of the previous fiscal year to 836.046 billion yen. This was mainly due to increases of 10.358 billion yen in property, plant and equipment, 7.847 billion yen in merchandise and finished goods, and 4.250 billion yen in intangible assets, respectively, despite a decrease of 18.759 billion yen in notes and accounts receivable - trade, and contract assets.

Total Liabilities

Total liabilities at the end of the first half of the current fiscal year decreased by 10.079 billion yen from the end of the previous fiscal year to 451.381 billion yen. This was mainly due to decreases of 18.228 billion yen in short-term borrowings, 10.301 billion yen in other under current liabilities including equipment and electronically recorded obligations - operating, 10.189 billion yen in notes and accounts payable - trade, 5.782 billion yen in income taxes payable, and 5.057 billion yen in electronically recorded obligations - operating, respectively, despite increases of 30.000 billion yen in bonds payable and 10.171 billion yen in long-term borrowings, respectively.

Interest-bearing debt, including lease liabilities, etc., at the end of the first half increased by 20.837 billion yen to 275.358 billion yen from the end of the previous fiscal year.

Total Net Assets

Total net assets at the end of the first half of the current fiscal year increased by 11.734 billion yen from the end of the previous fiscal year to 384.664 billion yen. This was mainly due to increases of 7.729 billion yen in retained earnings and 7.008 billion yen in foreign currency translation adjustment, respectively.

Cash Flows

Cash and cash equivalents (hereinafter referred to as "cash") at the end of the first half of the current fiscal year decreased by 5.354 billion yen from the end of the previous fiscal year to 28.260 billion yen.

(Operating Activities)

Net cash provided by operating activities in the first half of the current fiscal year increased in revenue by 3.449 billion yen from the same period of the previous fiscal year to 13.258 billion yen. This was mainly due to an increase in cash resulting from profit before income taxes of 23.966 billion yen, a decrease in trade receivables and contract assets of 23.802 billion yen, and depreciation of 13.456 billion yen and a decrease in cash resulting from a decrease in trade payables of 16.905 billion yen, income taxes paid of 13.603 billion yen, an increase in inventories of 10.658 billion yen, and share of profit of entities accounted for using equity method of 3.923 billion yen.

- 3 -

(Investing Activities)

Net cash used in investing activities in the first half of the current fiscal year increased in expenditure by 1.049 billion yen from the same period of the previous fiscal year to 30.871 billion yen. This was mainly due to a decrease in cash resulting from purchase of property, plant and equipment of 24.767 billion yen and purchase of intangible assets of 5.569 billion yen.

(Financing Activities)

Net cash provided by financing activities in the first half of the current fiscal year decreased in revenue by 2.429 billion yen from the same period of the previous fiscal year to 10.163 billion yen. This was mainly due to an increase in cash resulting from proceeds from issuance of bonds of 29.839 billion yen and a decrease in cash resulting from a net decrease in borrowings of 11.051 billion yen and dividends paid of 7.464 billion yen.

(4) Consolidated Financial Results Forecasts

Although economic trends, fluctuations in LPG import prices, and other factors may affect our business performance, we have not changed our consolidated earnings forecast announced on May 13, 2024, for the first half of the current fiscal year.

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Semi-annual Consolidated Financial Statements and Notes

(1) Semi-annual Consolidated Balance Sheets

		(Million yen)
	As of March 31, 2024 As of September 30, 2024

Assets
Current assets
Cash and deposits	33,937	28,580
Notes and accounts receivable - trade, and contract assets	145,981	127,221
Electronically recorded monetary claims - operating	26,852	24,557
Merchandise and finished goods	58,510	66,358
Work in process	5,204	9,037
Raw materials and supplies	10,749	11,937

Other	28,515	27,678
Allowance for doubtful accounts	(177)	(170)
Total current assets	309,573	295,200
Non-current assets
Property, plant and equipment
Land	73,937	78,914
Other, net	151,474	156,855
Total property, plant and equipment	225,412	235,770
Intangible assets
Goodwill	19,569	20,126
Other	16,932	20,626
Total intangible assets	36,502	40,753
Investments and other assets
Investment securities	225,427	223,233

Other	38,017	41,621
Allowance for doubtful accounts	(541)	(532)
Total investments and other assets	262,903	264,321
Total non-current assets	524,817	540,845
Total assets	834,391	836,046

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		(Million yen)
	As of March 31, 2024 As of September 30, 2024

Liabilities
Current liabilities

Notes and accounts payable - trade	66,067	55,878
Electronically recorded obligations - operating	34,935	29,877
Short-term borrowings	129,161	110,932
Income taxes payable	12,542	6,759
Contract liabilities	7,201	7,107
Provision for bonuses	6,765	7,204
Provision for loss on liquidation of subsidiaries and associates	68	22
Other	55,771	45,469
Total current liabilities	312,513	263,252
Non-current liabilities

Bonds payable	40,000	70,000
Long-term borrowings	70,100	80,272
Provision for retirement benefits for directors (and other officers)	1,385	1,355
Retirement benefit liability	5,884	6,027

Other	31,576	30,474
Total non-current liabilities	148,947	188,129
Total liabilities	461,461	451,381
Net assets
Shareholders' equity
Share capital	35,096	35,096

Capital surplus	32,043	32,116
Retained earnings	245,694	253,424
Treasury shares	(1,546)	(1,548)
Total shareholders' equity	311,288	319,088
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	37,375	35,405
Deferred gains or losses on hedges	4,317	2,919
Foreign currency translation adjustment	8,201	15,209
Remeasurements of defined benefit plans	1,145	1,005
Total accumulated other comprehensive income	51,039	54,540
Non-controlling interests	10,601	11,035
Total net assets	372,930	384,664
Total liabilities and net assets	834,391	836,046

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Semi-annualConsolidated Statements of Income and Comprehensive Income Semi-annual Consolidated Statements of Income (For the six months)

		(Million yen)
	For the six months ended	For the six months ended
	September 30, 2023	September 30, 2024

Net sales	394,211	400,004
Cost of sales	293,256	293,326
Gross profit	100,955	106,677
Selling, general and administrative expenses

Transportation costs	14,366	15,376
Provision of allowance for doubtful accounts	31	(2)
Salaries, allowances and bonuses	20,858	22,094
Provision for bonuses	5,603	6,008

Retirement benefit expenses	896	1,012
Provision for retirement benefits for directors (and other officers)	81	78
Other	44,524	45,968
Total selling, general and administrative expenses	86,363	90,536
Operating profit	14,591	16,140
Non-operating income
Interest income	246	186
Dividend income	846	881
Foreign exchange gains	328	－
Share of profit of entities accounted for using equity method	455	3,923
Subsidy income	1,062	1,092
Other	1,920	1,974
Total non-operating income	4,860	8,057
Non-operating expenses

Interest expenses	825	1,248
Foreign exchange losses	－	173
Other	438	492
Total non-operating expenses	1,264	1,914
Ordinary profit	18,187	22,283
Extraordinary income

Gain on sale of non-current assets	1,064	339
Gain on receipt of donated non-current assets	49	－
Gain on sale of investment securities	387	1,691
Subsidy income	23	5
Gain on revision of retirement benefit plan	128	－
Total extraordinary income	1,652	2,036
Extraordinary losses
Loss on sale of non-current assets	335	155
Loss on retirement of non-current assets	175	189
Impairment losses	24	－
Loss on sale of investment securities	0	1
Loss on valuation of investment securities	1	－
Loss on liquidation of subsidiaries and associates	－	1
Loss on tax purpose reduction entry of non-current assets	65	5
Total extraordinary losses	603	353
Profit before income taxes	19,236	23,966
Income taxes	6,668	8,327
Profit	12,568	15,638
Profit attributable to non-controlling interests	505	553
Profit attributable to owners of parent	12,062	15,085

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