Iwatani Corporation TSE:8088

Iwatani : Supplementary Explanation for 1st Half FY24 (with scripts)

Published

Source: MarketScreener

FY2024 1st Half Financial Results

(Results for the Six Months Ended September 30, 2024)

(Forward-Looking Statements)

This material contains forward-looking statements based on expectations and are not guarantees or assurances of future performance. Accordingly, please be fully aware that results may differ materially from those expectations.

Copyright © Iwatani Corporation. All rights reserved.

November 20, 2024 Iwatani Corporation

[Securities code 8088]

Contents

  1. FY2024 1st Half Overview -Highlights
    -Consolidated Operating Results
    -Consolidated Operating Results (Segment Analysis) -Operating Profit Analysis of Each Segment -Consolidated Balance Sheet
    -Consolidated Statements of Cash Flows
  2. FY2024 Forecasts

-Forecasts for the year ending March 31, 2025 -Forecasts of Each Segment

-Returns to Shareholders

  1. Progress of Medium-Term Management Plan: “PLAN27” -Progress of Priority Measures
  2. Capital and Business Alliance with Cosmo Energy Holdings Co., Ltd.

Copyright © Iwatani Corporation. All rights reserved.

1

1

FY2024 1st Half Overview

Copyright © Iwatani Corporation. All rights reserved.

2

2

Highlights

Increase in net sales and operating profit. Achieved record-high in all profit categories.

Summary of Financial Results for the 1st Half of FY2024

  • Despite the sluggish sales of rechargeable battery materials for next-generation vehicles, the high import prices of LPG led to increase in net sales.
  • Despite a decline in profits in the Industrial Gases & Machinery business and the Materials business, the Integrated Energy business achieved increased profits due to growth in the sales of portable gas cooking stoves and cassette gas canisters, as well as an improvement in the negative impact of LPG import price fluctuation on profits (+4billion yen year-on-year).
  • Full-yearfinancial forecasts: no change

400.0 billion yen

■Operating profit quarterly trends (100 million yen)

Net sales

YoY

+5.7 billion yen

+1.5%

173

187

Operating profit

16.1 billion yen

YoY

+1.5

billion yen

+10.6%

22.2 billion yen

85

60

84

77

Ordinary profit

YoY

+4.0

billion yen

+22.5%

Profit attributable to

15.0 billion yen

1Q

2Q 3Q

4Q

1Q 2Q 3Q 4Q

owners of parent

YoY +3.0

billion yen

+25.1%

FY2023

FY2024

Copyright © Iwatani Corporation. All rights reserved.

3

In the interim financial results for the fiscal year ending March 2025, net sales, as well as operating profit, ordinary profit, and interim net income increased YoY, reaching record highs in all profit categories.

3

Consolidated Operating Results

(100 million yen)

FY24 1H

FY23 1H

YoY

FY24

■Net sales

Results

Results

(A)-(B)

Progress

Forecasts

(A)

(B)

(A)/(B)

Materials

4,000

3,942

+57

9,020

44.3%

3,942

139

17

Others

4,000

Net Sales

+1.5%

Industrial

(5)

Integrated

(93)

Gases &

+57

Energy

Machinery

Gross profit

1,066

1,009

-

-

+5.7%

Operating profit

161

145

+15

527

30.6%

+10.6%

Operating profit

(25)

excluding

171

197

527

32.6%

FY23 1H

FY24 1H

impact of LPG

(12.8)%

import price

fluctuation

■Operating profit

+25

Non-operating

61

35

-

-

Industrial

profit

+70.8%

44

Gases &

Machinery

Equity gains of

+35

Materials

0

161

affiliated

35

-

159

-

145

companies

-

(28)

(1)

Others

related to Cosmo

Integrated

Energy HD

Energy

Ordinary profit

222

181

+40

728

30.6%

+22.5%

Profit

+30

attributable

150

120

540

27.9%

to owners of

+25.1%

FY23 1H

FY24 1H

parent

All rights reserved.

4

Copyright © Iwatani Corporation.

Net sales increased JPY5.7 billion, or 1.5%, YoY to JPY400 billion as a result of high LPG import prices, despite weak sales of EV-related battery materials for next-generation vehicles.

Gross profit increased 5.7%, or JPY5.7 billion, to JPY106.6 billion, reflecting the positive impact of LPG import price fluctuations and growth in sales of portable gas cooking stove and cassette gas canisters.

Although SG&A expenses increased by JPY4.1 billion due to higher personnel and distribution costs, operating profit increased by JPY1.5 billion, or 10.6%, to JPY16.1 billion.

Non-operating profit improved by JPY2.5 billion YoY, mainly due to JPY3.5 billion of equity gains of Cosmo Energy HD, despite an increase in interest expenses.

As a result, ordinary profit increased by JPY4 billion or 22.5% to JPY22.2 billion, and interim net profit increased by JPY3 billion or 25.1% to JPY15 billion.

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Consolidated Operating Results (Segment Analysis)

(100 million yen)

FY24 1H

FY23 1H

YoY

YoY

FY24

Progress

Results (A)

Results (B)

(A)-(B)

(A)/(B)

Forecasts

Net sales

4,000

3,942

+57

+1.5%

9,020

44.3%

■Integrated Energy

1,572

1,433

+139

+9.7%

3,840

41.0%

■Industrial Gases & Machinery

1,285

1,268

+17

+1.4%

2,750

46.8%

■Materials

991

1,085

(93)

(8.6)%

2,105

47.1%

■Others

150

155

(5)

(3.2)%

325

46.2%

Operating profit

161

145

+15

+10.6%

527

30.6%

■Integrated Energy

32

(11)

+44

-

210

15.6%

■Industrial Gases & Machinery

79

108

(28)

(26.4)%

220

36.3%

■Materials

61

62

(1)

(2.0)%

128

47.9%

■Others, Adjustments

(12)

(13)

+0

-

(31)

-

Operating profit excluding impact of LPG

171

197

(25)

(12.8)%

527

32.6%

import price fluctuation

Equity gains of affiliated companies

35

-

+35

-

159

-

related to Cosmo Energy HD

Ordinary profit

222

181

+40

+22.5%

728

30.6%

Profit attributable to owners of parent

150

120

+30

+25.1%

540

27.9%

Copyright © Iwatani Corporation. All rights reserved.

5

5

Impact of LPG Import Price Fluctuations

Assumption

Wholesale price is linked to LPG import price.

①

LPG import price

linked to

Wholesale price

Assumption Term from import to sale is

  • approx. three months.
    Approx. three months

-LPG from Middle East(CP) -LPG from the US(MB)

Gas-producing country

import & storage terminal

LPG users

Legally required reserves:40 days

LPG import

price

fluctuation

Produces short-term impact on performance(due to market fluctuations) (If LPG import prices return to original levels, impact will be zero.)

Rising phase

Cheap inventory sold at high price

Falling phase Expensive inventory sold at low price

Basis for selling price

Cost basis

Earnings

Earnings

booster effect

depressor effect

Cost basis

Basis for selling price

Copyright © Iwatani Corporation. All rights reserved.

6

First, I will briefly explain the impact of LPG import price fluctuations on our business performance.

The Company imports LPG from the Middle East and the US, and in order to smooth out import price fluctuations, with many of our wholesale partners, we have a pricing structure that links the selling price to the import price.

On the other hand, the "first-in, first-out" method is used for inventory valuation. However, since it takes approximately three months from the importation of LPG to its sale, including the 40-day legal stockpiling period, at the time of sale, the inventory purchased approximately three months earlier is sold.

While this results in selling low cost inventory at a higher price when LPG import prices rise, in the event of a decline, high cost inventory will be sold at a lower price. These effects are referred to as the impact of LPG import price fluctuations.

6

Operating Profit Analysis of Integrated Energy

Results

(100 million yen)

FY24 1H

FY23 1H

YoY

YoY

FY24

Progress

Results (A) Results (B)

(A)-(B)

(A)/(B)

Forecasts

Net Sales

1,572

1,433

+139

+9.7%

3,840

41.0%

Operating

32

(11)

+44

-

210

15.6%

Profit

Operating profit

43

39

+3

+9.9%

210

20.6%

of LPG import

excluding impact

price fluctuation

Analysis of Changes in Operating Profit

(million yen)

4,080

200

680

3,270

330

(820)

(1,199)

Impact of LPG

Others

FY23 1H import price Retail Wholesale

Industrial

FY24 1H

fluctuation

Main factors(million yen) ■Impact of LPG import price fluctuation +4,080

(100 million

1Q

2Q

1H

3Q

4Q

Full year

yen)

FY24

(0.7)

(9.8)

(10.5)

-

-

-

FY23

(17.3)

(34.0)

(51.3)

+32.6

+26.3

+7.5

Changes

+16.6

+24.2

+40.8

-

-

-

■Retail

(820)

-decline in profitability due to rising LPG import

prices

■Wholesale

+330

-improved profitability of LPG through logistics

optimization and other measures

■Industrial

+200

-increase in LPG demand for calorific adjustment

for city gas

■Others

+680

-steady sales of portable gas cooking stoves, cassette gas canisters in Japan and overseas

-increase in sales of energy-related equipment

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7

In the Integrated Energy Business, net sales increased JPY13.9 billion to JPY157.2 billion due to high LPG import prices and strong sales of LPG for industrial use.

On the profit side, profitability of LPG declined in the retail sector, but remained strong in the wholesale sector, and impact of LPG import price fluctuations contributed JPY4 billion to the YoY increase.

In addition, sales of portable gas cooking stove, cassette gas canisters and energy-related equipment grew, resulting in an increase in profit of JPY4.4 billion to JPY3.2 billion.

Operating profit excluding impact of LPG import price fluctuations was JPY4.3 billion, an increase of JPY0.3 billion.

7

Operating Profit Analysis of Industrial Gases & Machinery

Results

(100 million yen)

FY24 1H

FY23 1H

YoY

YoY

FY24

Progress

Results (A)

Results (B)

(A)-(B)

(A)/(B)

Forecasts

Net Sales

1,285

1,268

+17

+1.4%

2,750

46.8%

Operating

79

108

(28)

(26.4)%

220

36.3%

Profit

Analysis of Changes in Operating Profit

(million yen)

10,852 490 120

7,988

(3,400) (70)

Main factors

(million yen)

■Air separation gases

+490

-increase in sales volume mainly for the electronic

component industry

■Hydrogen Business

+120

-steady sales of liquid hydrogen, mainly for the space development industry

■Specialty gases (3,400)

-expansion of the refrigerant business resulting from the acquisition of a business company in Malaysia

-helium market weakened mainly in China, resulting in lower profitability

-increase in procurement costs for carbon dioxide

■Gas-related equipment (70)

-despite sales of disaster prevention gas equipment increased, sales of automobile-related equipment decreased

FY23 1H

Air separation

Hydrogen

Specialty

Gas-related

FY24 1H

gases

Business

gases

equipment

8

Copyright © Iwatani Corporation. All rights reserved.

In the Industrial Gases & Machinery Business, sales volume of air separation gases mainly to the electronic components industry grew, and in the hydrogen business, sales of liquid hydrogen remained strong, mainly to the space development industry.

In specialty gases, although the refrigerant business expanded with the acquisition of a "industrial company" in Malaysia, profitability of helium declined due to weakening market conditions, especially in China, and increased procurement costs for carbon dioxide gas.

For gas-related equipment, sales of gas-related equipment increased, but sales of equipment for the vehicles industry decreased.

As a result, net sales increased JPY1.7 billion to JPY128.5 billion, and operating profit decreased by 26.4% to JPY7.9 billion.

8

Operating Profit Analysis of Materials

Results

(100 million yen)

FY24 1H

FY23 1H

YoY

YoY

FY24

Progress

Results (A) Results (B)

(A)-(B)

(A)/(B)

Forecasts

Net Sales

991

1,085

(93)

(8.6)%

2,105

47.1%

Operating

61

62

(1)

(2.0)%

128

47.9%

Profit

Analysis of Changes in Operating Profit

(million yen)

120 260

6,259(200)

6,133

(300)

Main factors(million yen)

■Functional Plastics Products +260

-increase in sales of molded products for air- conditioners and resin products for consumer

■Resources & Advanced Materials +120

-Production of mineral sands at our own mining sites in Australia remained steady and sales volumes increased in Japan and overseas

■Metals (200)

-decline in sales price of stainless steel

■Electronic Materials (300)

-sluggish sales of battery-related materials for next-generation vehicles due in part to inventory adjustments at sales destinations

FY23 1H

Functional

Resources &

Metals

Electronic

FY24 1H

Plastics

Advanced

Materials

9

Products

Materials

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In the Materials Business, sales of molded products for air conditioners and consumer plastic products "I-WRAP" grew, and sales volume of mineral sands increased both in Japan and overseas due to steady production at the Company's own mining operations in Australia.

On the other hand, sales of stainless steel and EV-related battery materials for next-generation vehicles were weak due to falling market prices and inventory adjustments by customers.

As a result, net sales decreased JPY9.3 billion to JPY99.1 billion, and operating profit decreased by 2% to JPY6.1 billion.

9