Iwatani : Overview of Business Results for 3Q FY24

About this update from Iwatani Corporation

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 Nine Months Ended December 31, 2024 [Japanese GAAP] February 13, 2025 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 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 Nine Months Ended December 31, 2024 (April 1, 2024 to December 31, 2024) (1) Consolidated Operating Results (% indicates changes from the previous corresponding period.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Nine months ended Million yen % Million yen % Million yen % Million yen % December 31, 2024 624,374 1.1 27,119 (15.0) 39,219 6.7 28,379 17.4 December 31, 2023 617,513 (5.8) 31,906 35.7 36,770 25.2 24,169 23.7 (Note) Comprehensive income: Nine months ended December 31, 2024: ¥ 27,313 million[ (17.5)%] Nine months ended December 31, 2023: ¥ 33,116 million[ 34.1 %] Basic earnings Diluted earnings per per share share Nine months ended Yen Yen December 31, 2024 123.32 - December 31, 2023 105.03 - (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 % December 31, 2024 877,337 392,578 43.5 March 31, 2024 834,391 372,930 43.4 (Reference) Equity: As of December 31, 2024: ¥ 381,460 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 3 Companies (Company name: ISG, Inc. and 2 other companies) Exclusion: 3 Companies (Note) For details, please refer to "Quarterly Consolidated Financial Statements and Notes (3) Explanatory Notes to Quarterly Consolidated Financial Statement (Notes on Business Combinations, Etc.)" on page 10 of the attached document. Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: No Changes in accounting policies, changes in accounting estimates and retrospective restatement Changes in accounting policies due to the revision of accounting standards: Yes Changes in accounting policies other than 1) above: No Changes in accounting estimates: No Retrospective restatement: No (Note) For details, please refer to "Quarterly Consolidated Financial Statements and Notes (3) Explanatory Notes to Quarterly Consolidated Financial Statement (Notes to Changes in Accounting Policies)" on page 8 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): December 31, 2024: 234,246,596 shares March 31, 2024: 234,246,596 shares 2) Number of treasury shares at the end of the period: December 31, 2024: 4,103,818 shares March 31, 2024: 4,133,300 shares 3) Average number of shares outstanding during the period: Nine months ended December 31, 2024: 230,131,824 shares Nine months ended December 31, 2023: 230,113,362 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. Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm: Yes (voluntary) *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 3. Contents Overview of Operating Results, Etc. …………………………………………………………………………… 2 Overview of Operating Results for the Nine Months Ended December 31, 2024 ………………………. 2 Segment Information …………………………….……………….……………….……………….……. 2 (3) Overview of Financial Position for the Nine Months Ended December 31, 2024 ……………………… 3 (4) Consolidated Financial Results Forecasts ………………………………………………………………... 3 Quarterly Consolidated Financial Statements and Notes ……………………………………………………….. 4 Quarterly Consolidated Balance Sheets …………………………………………………………………... 4 Quarterly Consolidated Statements of Income and Comprehensive Income …………………………….. 6 Explanatory Notes to Quarterly Consolidated Financial Statements …………………………………….. 8 (Notes to Changes in Accounting Policies) ………………………………………………………………. 8 (Notes to Segment Information, Etc.) …………………………………………………………………… 8 (Notes in the Event of Significant Changes in Shareholders' Equity) …………………………………… 9 (Notes on the Assumption of a Going Concern) …………………………………………………………. 9 (Notes to Quarterly Consolidated Statements of Cash Flows) …………………………………………… 9 (Notes on Business Combinations, Etc.) …………………………………………………………………. 10 (Notes to Significant Subsequent Events) ……………………………………………………………….. 11 Additional Information ………………………………………………………………………………………… 12 Results for 3Q FY2024 ………………………………………………………………………………………... 12 Consolidated Statements of Income ……………………………………………………………………… 12 Operating Profit Except for Impact of LPG Import Price Fluctuation …………………………………… 12 LPG Import Price (CP) …………………………………………………………………………………… 12 Segment Information ……………………………………………………………………………………... 12 LPG and Industrial Gases Net Sales -Sales Volume ……………………………………………………... 13 Financial Position ………………………………………………………………………………………… 13 Capital Expenditure ………………………………………………………………………………………. 13 Amount of share of profit or loss of Cosmo accounted for using equity method ………………………... 13 Non-consolidated …………………………………………………………………………….…………… 13 - 1 - Overview of Operating Results, Etc. (1) Overview of Operating Results for the Nine Months Ended December 31, 2024 During the cumulative third quarter of the current fiscal year, the Japanese economy continued to recover gradually, supported by an expansion in capital investment against the backdrop of robust corporate performance and a pick-up in personal consumption due to an improvement in the income environment, despite the uncertainty about the outlook due to geopolitical risks such as the stagnation of the Chinese economy and escalating tensions in the Middle East. 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 obtained a ship inspection certificate and commenced test operations for the hydrogen fuel cell ship Mahoroba, which is planned to operate as a passenger ship at Expo 2025 Osaka, Kansai, Japan. We will promote the use of hydrogen for mobility applications through smooth operations at Expo 2025. In the Integrated Energy Business, the Company acquired all shares of ISG, Inc., which operates an LPG business primarily in Chiba and Ibaraki prefectures, and made it a consolidated subsidiary. In addition to expanding the scale of our business, we will strive to enhance profitability through rationalization by strengthening collaboration between the logistics functions of the two companies and improvement of our operating efficiency. In the Industrial Gases & Machinery Business, we promoted initiatives for the new field of onshore aquaculture. The Company will meet the growing demand by leveraging its strength of its broad product lineup, which includes LPG, boilers, emergency generators and fiberglass-reinforced plastic (FRP) cultivation tanks, in addition to the oxygen solutions equipment and oxygen that enable highly efficient and stable growth. In the Materials Business, we pushed ahead with initiatives for the recycling of used plastics through our joint venture, R Plus Japan. In addition, amid rising demand for raw materials for general-purpose resins, mainly from manufacturers of daily household goods and films, the Company worked to strengthen its supply capabilities from overseas. As a result, for the cumulative third quarter of the current fiscal year, net sales were 624.374 billion yen (+6.860 billion yen year-on-year), operating profit was 27.119 billion yen (-4.787 billion yen year-on-year), ordinary profit was 39.219 billion yen (+2.448 billion yen year-on-year), and profit attributable to owners of parent was 28.379 billion yen (+4.210 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. As for profits, although there was a contraction in the negative impact of LPG import price fluctuations (+1.181 billion yen year-on-year), profitability declined in addition to a decrease in the volume of sales. On the other hand, profit increased due to robust sales of portable gas cooking stoves, cassette gas canisters, and energy-related equipment. As a result, net sales in this segment were 255.811 billion yen (+13.756 billion yen year-on-year), and operating profit was 7.673 billion yen (+0.356 billion yen year-on-year). - 2 - Industrial Gases & Machinery In the Industrial Gases & Machinery Business, we saw an increase in the sales volume of air separation gas, mainly for the electronic components industry. In the hydrogen business, the sales volume of liquid hydrogen for space development and the semiconductor industry remained strong. The profitability of specialty gases declined due to the weakening of helium markets, mainly in China, despite growth in the sales of semiconductor gases and the expansion of the refrigerant business in Japan and overseas. In machinery and equipment, shipments of gas supply facilities and automobile-related equipment decreased. As a result, net sales in this segment were 195.797 billion yen (+2.016 billion yen year-on-year) and operating profit was 12.232 billion yen (-4.724 billion yen year-on-year). Materials In the Materials Business, sales of molded products for air conditioners and consumer resin products were strong, and sales of resin raw materials, mainly for daily household goods, increased as well. On the other hand, with regard to mineral sands, the profitability of titanium declined due to the weakening of the market. In addition, sale prices of stainless steel and rechargeable battery materials for next-generation automobiles fell due to sluggish demand, and sales volumes of functional films declined. As a result, net sales in this segment were 149.067 billion yen (-9.905 billion yen year-on-year) and operating profit was 8.757 billion yen (-0.456 billion yen year-on-year). Others, Adjustments Net sales were 23.698 billion yen (+0.993 billion yen year-on-year), and operating profit was 2.743 billion yen (+0.432 billion yen year-on-year). Overview of Financial Position for the Nine Months Ended December 31, 2024 Total Assets Total assets at the end of the third quarter of the current fiscal year increased by 42.946 billion yen from the end of the previous fiscal year to 877.337 billion yen. This was mainly due to increases of 14.372 billion yen in property, plant and equipment, 9.726 billion yen in merchandise and finished goods, 9.626 billion yen in intangible assets, and 5.826 billion yen in work in process, respectively. Total Liabilities Total Liabilities at the end of the third quarter of the current fiscal year increased by 23.298 billion yen from the end of the previous fiscal year to 484.759 billion yen. This was mainly due to increases of 45.175 billion yen in long-term borrowings, 43.245 billion yen in "Other" under "Current liabilities," including commercial paper, and 30.000 billion yen in bonds payable, despite a decrease of 93.302 billion yen in short-term borrowings. Interest-bearing debt, including lease liabilities, etc., at the end of the third quarter increased by 27.009 billion yen to 281.531 billion yen from the end of the previous fiscal year. Total Net Assets Total net assets at the end of the third quarter of the current fiscal year increased by 19.648 billion yen from the end of the previous fiscal year to 392.578 billion yen. This was mainly due to an increase of 21.023 billion yen in retained earnings, despite a decrease of 1.946 billion yen in the valuation difference on available-for-sale securities. (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 nine months of the current fiscal year. - 3 - Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheets (Million yen) As of March 31, 2024 As of December 31, 2024 Assets Current assets Cash and deposits 33,937 26,333 Notes and accounts receivable - trade, and contract assets 145,981 148,899 Electronically recorded monetary claims - operating 26,852 28,453 Merchandise and finished goods 58,510 68,237 Work in process 5,204 11,030 Raw materials and supplies 10,749 12,421 Other 28,515 31,967 Allowance for doubtful accounts (177) (231) Total current assets 309,573 327,111 Non-current assets Property, plant and equipment Land 73,937 78,544 Other, net 151,474 161,240 Total property, plant and equipment 225,412 239,784 Intangible assets Goodwill 19,569 23,253 Other 16,932 22,875 Total intangible assets 36,502 46,128 Investments and other assets Investment securities 225,427 222,857 Other 38,017 41,990 Allowance for doubtful accounts (541) (535) Total investments and other assets 262,903 264,313 Total non-current assets 524,817 550,226 Total assets 834,391 877,337 - 4 - (Million yen) As of March 31, 2024 As of December 31, 2024 Liabilities Current liabilities Notes and accounts payable - trade 66,067 74,463 Electronically recorded obligations - operating 34,935 34,573 Short-term borrowings 129,161 35,858 Income taxes payable 12,542 3,400 Contract liabilities 7,201 7,845 Provision for bonuses 6,765 3,628 Provision for loss on liquidation of subsidiaries and associates 68 - Other 55,771 99,017 Total current liabilities 312,513 258,787 Non-current liabilities Bonds payable 40,000 70,000 Long-term borrowings 70,100 115,276 Provision for retirement benefits for directors (and other officers) 1,385 1,489 Retirement benefit liability 5,884 6,557 Other 31,576 32,648 Total non-current liabilities 148,947 225,972 Total liabilities 461,461 484,759 Net assets Shareholders' equity Share capital 35,096 35,096 Capital surplus 32,043 32,111 Retained earnings 245,694 266,718 Treasury shares (1,546) (1,551) Total shareholders' equity 311,288 332,374 Accumulated other comprehensive income Valuation difference on available-for-sale securities 37,375 35,428 Deferred gains or losses on hedges 4,317 4,291 Foreign currency translation adjustment 8,201 8,428 Remeasurements of defined benefit plans 1,145 936 Total accumulated other comprehensive income 51,039 49,085 Non-controlling interests 10,601 11,118 Total net assets 372,930 392,578 Total liabilities and net assets 834,391 877,337 - 5 - Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statements of Income (For the nine months) (Million yen) For the nine months ended For the nine months ended December 31, 2023 December 31, 2024 Net sales 617,513 624,374 Cost of sales 454,236 459,551 Gross profit 163,277 164,823 Selling, general and administrative expenses Transportation costs 22,379 24,003 Provision of allowance for doubtful accounts 59 8 Salaries, allowances and bonuses 36,292 38,519 Provision for bonuses 3,468 3,383 Retirement benefit expenses 1,377 1,471 Provision for retirement benefits for directors (and other officers) 125 125 Other 67,666 70,191 Total selling, general and administrative expenses 131,371 137,703 Operating profit 31,906 27,119 Non-operating income Interest income 328 277 Dividend income 1,490 1,641 Foreign exchange gains 126 185 Share of profit of entities accounted for using equity method 625 8,698 Subsidy income 1,572 1,556 Other 2,664 2,685 Total non-operating income 6,807 15,045 Non-operating expenses Interest expenses 1,334 2,007 Other 609 938 Total non-operating expenses 1,944 2,946 Ordinary profit 36,770 39,219 Extraordinary income Gain on sale of non-current assets 1,152 462 Gain on receipt of donated non-current assets 49 - Gain on sale of investment securities 558 3,415 Subsidy income 51 196 Gain on revision of retirement benefit plan 128 - Total extraordinary income 1,939 4,074 Extraordinary losses Loss on sale of non-current assets 351 177 Loss on retirement of non-current assets 261 311 Impairment losses 658 3 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 94 196 Total extraordinary losses 1,367 692 Profit before income taxes 37,342 42,601 Income taxes 12,532 13,394 Profit 24,810 29,207 Profit attributable to non-controlling interests 641 827 Profit attributable to owners of parent 24,169 28,379 - 6 - Quarterly Consolidated Statements of Comprehensive Income (For the nine months) (Million yen) For the nine For the nine months ended months ended December 31, 2023 December 31, 2024 Profit 24,810 29,207 Other comprehensive income Valuation difference on available-for-sale securities 3,865 (2,174) Deferred gains or losses on hedges (206) (164) Foreign currency translation adjustment 4,313 2,263 Remeasurements of defined benefit plans, net of tax (27) (110) Share of other comprehensive income of entities accounted for using equity method 360 (1,708) Total other comprehensive income 8,306 (1,894) Comprehensive income 33,116 27,313 Comprehensive income attributable to Comprehensive income attributable to owners of parent 32,247 26,425 Comprehensive income attributable to non-controlling interests 869 887 - 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