Toho Titanium Company, LimitedTSE: 5727

Consolidated Financial Results for the Three Months Ended June 30, 2024 (Japanese GAAP)

Aug 5, 2024 at 6:29 AM UTC · Issued by Toho Titanium Company, Limited

Translation from the Original Japanese Version.

August 5, 2024

Company name: Toho Titanium Co., Ltd.

Code number: 5727

Stock Exchange Listings: Tokyo

URL: https://www.toho-titanium.co.jp/

Representative: Yasuji Yamao, Representative Director and President

Contact person: Hiromu Tomeba, General Manager, Planning, Corporate Management Division Telephone: +81-45-394-5521

Scheduled date of commencement of dividend payments: -

Supplemental materials for the financial results: Yes

Quarterly financial results presentation: None

（Figures of less than ¥1 million are rounded off.）

1. Consolidated Results for the Three Months Ended June 30, 2024 (From April 1, 2024 to June 30, 2024)

(1) Consolidated Operating Results

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

Net sales

Operating income

Ordinary income

Profit attributable to

owners of parent

Millions of yen

％

Three months Ended

21,355

32.2

1,430

110.9

1,846

44.7

1,252

31.4

June 30, 2024

Three months Ended

16,155

(19.5)

678

(74.1)

1,276

(56.8)

953

(52.8)

June 30, 2023

(Note) Comprehensive income Three months ended June 30, 2024:

¥1,263 million [37.5%]

Three months ended June 30, 2023:

¥918 million [(57.5%)]

Net income

Diluted net income

per share

Yen

Three months Ended

17.60

―

June 30, 2024

Three months Ended

13.39

―

June 30, 2023

(2) Consolidated Financial Position

Total assets

Net assets

Shareholders' equity ratio

Millions of yen

June 30, 2024

121,736

56,529

46.4

March 31, 2024

126,002

56,547

47.7

(For reference) Shareholders' equity

June 30, 2024: ¥56,529 million

March 31, 2024: ¥56,547 million

2. Dividends

Annual cash dividend per share

End of 1Q

End of 2Q

End of 3Q

Year-End

Total

Yen

FY2023

―

6.00

―

18.00

24.00

FY2024

―

FY2024 (Forecast)

8.00

―

8.00

16.00

(Note) Revisions to the previously announced forecast of cash dividends: None

3. Consolidated Financial Forecasts for FY2024 (From April 1, 2024 to March 31, 2025)

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

	Net Sales		Operating income	Ordinary income	Profit attributable to	Net income
		owners of parent	per share

	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
FY 2024
2nd half	45,300		23.6	1,900	(18.9)	1,400	(56.0)	700	(71.3)	9.84
(Cumulative)
FY2024	95,300		21.5	5,700	1.3	5,000	(20.3)	3,700	(25.3)	51.99

(Note) Revisions to the previously announced forecasts: None

Notes

Significant changes in scope of consolidation during the period: None
Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
Changes in accounting policies or in accounting estimates, and restatement
1. Changes in accounting policies owing to revisions in accounting rules and standards: Yes
2. Changes in accounting policies other than (i) above: None
3. Changes in accounting estimates: None
4. Restatement: None
Number of shares issued (common stock)
1. Number of issued shares at the end of the period (including treasury stock)

June 30, 2024:	71,270,910 shares
March 31, 2024:	71,270,910 shares

(ii) Number of shares of treasury stock at the end of the period

June 30, 2024:	98,836 shares
March 31, 2024:	98,836 shares

(iii) Average number of issued and outstanding shares during the period

June 30, 2024:	71,172,074 shares
June 30, 2023:	71,172,297 shares

Attached review(s) of quarterly consolidated financial statements by certified public accountant or audit firm: None

Explanation concerning appropriate use of performance forecasts and other special notes

(Notes concerning forward-looking statements)

・Business performance forecasts and other forward-looking statements contained in this document are based on the information available to the Company at the time of its announcement and on certain assumptions that the Company considers reasonable. The Company makes no representations that they are achievable. Actual results may differ materially from the forecasts depending on a variety of factors.

Attached Materials: Table of Contents
1.	Qualitative Information on the Quarterly Results	2
(1)	Explanations on Operating Results	2
(2)	Explanations on Financial Position	4
(3)	Explanations on Consolidated Financial Forecasts and Other Future Forecast Information	4
2.	Consolidated Financial Statements	5
(1)	Consolidated Balance Sheets	5
(2)	Consolidated Statements of Operations and Comprehensive Income (Loss)	7
	Consolidated Statements of Operations
	Three Months Ended June 30, 2024	7
	Consolidated Statements of Comprehensive Income (Loss)
	Three Months Ended June 30, 2024	8
(3)	Explanatory Notes to Consolidated Financial Statements	9
	Notes on the Assumption of a Going Concern	9
	Notes on Significant Changes in Shareholders' Equity	9
	Changes in Accounting Policies	9
	Segment Information, etc	10
	Notes on Statement of Cash Flows	10

1. Qualitative Information on the Quarterly Results

Explanations on Operating Results

During the three months ended June 30, 2024 (April 1, 2024 to June 30, 2024), the Japanese economy saw moderate recovery thanks in large part to improving conditions for employment and income despite a stall in personal consumption due to rising prices.

Globally, the US economy remained firm. Signs of recovery were visible in China and Europe. Nevertheless, for various reasons, the outlook for the world economy remains uncertain due to continued impact of high interest rates in Western economies and lingering concerns about the future of the Chinese economy and the situation in the Middle East.

In the titanium business, product sales held firm due to recovery in demand for aviation applications and restrictions on procurement from Russia due to the conflict in Ukraine. However, the cost of imported raw materials and secondary materials remained high. In the foreign exchange market, the yen continued to depreciate, reaching levels well below those in the corresponding period of the previous year.

Under these conditions, consolidated net sales for the period were 21,355 million yen (a 32.2% increase compared to the corresponding period of the previous year), operating income was 1,430 million yen (a 110.9% increase), ordinary income was 1,846 million yen (a 44.7% increase), and profit attributable to owners of parent was 1,252 million yen (a 31.4% increase).

Results by business segment were as follows.

Titanium Metal Business

Sales in the titanium metal business during the first quarter of the current fiscal year remained at a level comparable to the corresponding period of the previous year. Demand for both aviation and general industrial applications remained steady. In addition, with a rebound in demand, sales of high-purity titanium for use in semiconductors exceeded sales during the corresponding period of the previous year.

In terms of earnings, the titanium metal business posted net sales of 15,935 million yen (a 37.4% increase) and operating income of 1,264 million yen (a 616.8% increase), due mainly to the weaker yen and sale price corrections.

Catalysts Business

Regarding sales in the catalysts business in the first quarter of the current fiscal year, excess capacity due to the construction of new polyolefin manufacturing facilities in China made China a net polyolefin exporter. This development led to delays in the recovery of volumes produced by the Company's customers in surrounding countries.

However, as new lines came online and with the launch of new projects by the Company's Chinese customers, the catalyst business posted net sales of 2,488 million yen (a 69.7% increase) and operating income of 700 million yen (a 75.1% increase).

Chemicals Business

Sales volumes in the chemicals business during the first quarter of the current fiscal year were slightly higher than in the corresponding period of the previous year as the impact of higher interest rates in the US and prolonged stagnation in the Chinese economy more or less bottomed out. Demand for multilayer ceramic capacitors (MLCCs), the main application for ultra-fine nickel powder, a key product, began to recover slightly.

However, as a result of lower sale prices due to declining international nickel prices (London Metals Exchange price), and adjustments in the production of ultra-fine nickel powder to improve the inventory balance, the chemical business posted net sales of 2,931 million yen (a decrease of 5.2%) and an operating loss of 80 million yen (compared to profits of 525 million yen in the corresponding period of the previous year).

Net Sales by Segment

			(Millions of yen)
Business Segment		Three month	Three month	Change
	ended June 30, 2024	ended June 30, 2023


Titanium Metal		15,935	11,598	37.4%

Catalysts		2,488	1,466	69.7%

Chemicals		2,931	3,091	(5.2%)

Consolidated Total		21,355	16,155	32.2%

Operating Income by Segment
			(Millions of yen)
Business Segment		Three month	Three month	Change
	ended June 30, 2024	ended June 30, 2023


Titanium Metal		1,264	176	616.8%

Catalysts		700	400	75.1%

Chemicals		(80)	525	－

Common Costs and Expenses Not		(455)	(423)	－
Allocated to the Individual Segments


Total		1,430	678	110.9%

Explanations on Financial Position

Balance Sheet

Total assets as of June 30, 2024 fell by 4,265 million yen from March 31, 2024 to 121,736 million yen, with lower trade receivables and inventories among the major contributing factors.

Total liabilities as of June 30, 2024 amounted to 65,206 million yen, a decrease of 4,247 million yen from March 31, 2024, which is mainly attributable to decrease in loans payable.

Total net assets as of June 30, 2024 amounted to 56,529 million yen, a decrease of 18 million yen from March 31, 2024, as a result of the decrease in retaining earnings.

The shareholders' equity ratio as of June 30, 2024 decreased to 46.4% from the 44.9% as of March 31, 2023.

Explanations on Consolidated Financial Forecasts and Other Future Forecast Information

The consolidated earnings forecast remains unchanged from the previous forecast (May 8, 2024)

Those forecasts are based on the information that is available to the Company as of the date of release of this document. The actual financial results may differ from the forecasts due to various factors.

2. Consolidated Financial Statements

(1) Consolidated Balance Sheets

		(Millions of yen)
	March 31, 2024	June 30, 2024
Assets
Current assets:

Cash and deposits	1,880	2,036
Notes and accounts receivable-trade	18,752	16,462

Electronically recorded monetary claims	289	430
Merchandise and finished goods	27,555	27,110

Work in process	10,804	10,437
Raw materials and supplies	14,212	12,896

Accounts receivable-other	876	984
Others	1,371	820
Total current assets	75,743	71,178
Non-current assets:
Property, plant and equipment:
Buildings and structures, net	16,664	17,505
Machinery, equipment and vehicles, net	17,953	17,501
Tools, furniture and fixtures, net	560	697
Land	2,449	2,449
Lease assets, net	1,597	1,547
Construction in progress	7,962	8,484
Total property, plant and equipment	47,188	48,186
Intangible assets:
Software	776	749
Software in progress	34	-
Others	16	14
Total intangible assets	826	763
Investments and other assets:

Stocks of affiliated companies	91	97
Deferred tax assets	675	-

Net defined benefit asset	810	814
Others	668	696

Allowance for doubtful accounts	(1)	(1)
Total investments and other assets	2,244	1,606
Total non-current assets	50,258	50,557
Total assets	126,002	121,736

	(Millions of yen)
March 31, 2024	June 30, 2024

Liabilities

Current liabilities:

Notes and accounts payable-trade

Short-term loans payable

Lease obligations

Income taxes payable

Provision for bonuses

Provision for directors' bonuses

Others

Total current liabilities

Non-current liabilities:

3,989		3,920
36,142	34,292

212		1,558
1,100	73

1,790		560
187	38

4,170		4,777
47,592	45,221

Long-term loans payable

Lease obligations

Asset retirement obligations

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Shareholders' equity:

Common stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders' equity

Accumulated other comprehensive income: Deferred gains or losses on hedges Foreign currency translation adjustment

Retirement benefits liability adjustment

Total accumulated other comprehensive income

Total net assets

Total liabilities and net assets

18,372	17,742

1,401		2
2,088	2,097

-		144
21,861	19,985

69,454		65,206


11,963	11,963

13,023		13,023
31,642	31,613

(78)		(78)
56,550	56,521


-		(0)
(361)		(331)
358	339
(2)		7
56,547	56,529

126,002		121,736

Consolidated Statements of Operations and Comprehensive Income (Loss) Consolidated Statements of Operations

		(Millions of yen)
	Three months ended	Three months ended
	June 30, 2023	June 30, 2024
Net sales	16,155	21,355
Cost of sales	13,243	17,426
Gross profit	2,912	3,929
Selling, general and administrative expenses	2,234	2,499
Operating income	678	1,430
Non-operating income:

Foreign currency exchange gain	599	514
Gain on sales of goods	10	9

Equity in gains of affiliates	4	5
Others	35	3

Total non-operating income	649	532
Non-operating expenses:
Interest expenses	48	71
Loss on disaster	-	34
Others	3	10
Total non-operating expenses	51	116

Ordinary income (loss)	1,276	1,846
Special income:
Gain on sales of fixed assets	-	0
Total special income	-	0
Special loss:
Loss on retirement of non-current assets	20	35

Total special loss	20	35
Income (loss) before income taxes	1,256	1,811
Income taxes-current	44	4
Income taxes-deferred	260	554
Total income taxes	304	558
Profit (loss)	951	1,252

Loss attributable to non-controlling interests	(2)	-
Profit attributable to owners of parent	953	1,252

Consolidated Statements of Comprehensive Income (Loss)

	(Millions of yen)
Three months ended	Three months ended
June 30, 2023	June 30, 2024

Profit

Other comprehensive income (loss): Deferred gains or losses on hedges Foreign currency translation adjustment Retirement benefits liability adjustment Total other comprehensive income (loss) Comprehensive income (loss) Attributable to owners of parent Attributable to non-controlling interests

951	1,252

(40)	(0)
14	30
(6)	(19)
(32)	10
918	1,263
920	1,263

(2)	-