Topy Industries, LimitedTSE: 7231

Consolidated Basis Results of the First Quarter for FY2024

Aug 2, 2024 at 4:43 AM UTC · Issued by Topy Industries, Limited

(April 1, 2024 - June 30, 2024)

			August 2, 2024
Registered Company name:	TOPY INDUSTRIES, LIMITED	Stock listing: Tokyo, Nagoya stock exchanges
Code number:	7231		URL: http://www.topy.co.jp/en/index.html
Representative:	Hiromi Ishii, Representative Director, President and CEO
Contact:	Tomoki Oyaizu, Managing Executive Officer and General Manager, General Affairs Department
	Telephone: 03-3493-0777 / (Overseas) 81-3-3493-0777
Scheduled date for dividend payment:	－
Preparation of supplementary materials:	YES
Holding of financial results meeting:	No

(Figures of less than ¥1 million have been omitted)

1. Consolidated Financial and Operating Results of the First Quarter for Fiscal 2024 (April 1, 2024 - June 30, 2024)

(1) Consolidated Operating Results (Cumulative)

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

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

	Million yen		%	Million yen	%	Million yen	%	Million yen	%
First Quarter of Fiscal 2024	73,636		(9.7)	135	(91.3)	1,364	(42.2)	725	(58.2)
First Quarter of Fiscal 2023	81,522		8.7	1,567	－	2,358	557.5	1,734	346.4

(Note) Comprehensive income:

First Quarter of Fiscal 2024

¥1,857 million

(63.7)%

First Quarter of Fiscal 2023

¥5,120 million

140.0%

Profit per share

after full dilution

Yen

First Quarter of Fiscal 2024

31.77

－

First Quarter of Fiscal 2023

75.97

－

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Yen

First Quarter of Fiscal 2024

295,431

141,176

47.3

6,123.81

Fiscal 2023

298,291

140,988

46.8

6,119.46

(For reference) Shareholders' equity:

First Quarter of Fiscal 2024

¥139,780 million

Fiscal 2023

¥139,682 million

2. Dividends

Dividends per share

1Q-end

2Q-end

3Q-end

End of FY

Annual

Yen

Fiscal 2023

－

30.00

－

73.00

103.00

Fiscal 2024

－

Fiscal 2024 (Forecasts)

30.00

－

73.00

103.00

(Note) Whether changes to the latest dividend forecasts have been made: None

3. Consolidated Financial Forecasts for Fiscal 2024 (April 1, 2024- March 31, 2025)

(Percentage figures are changes from the previous fiscal year)

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

	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
First half of Fiscal 2024	154,000		(7.2)	1,800	(54.8)	1,900	(61.1)	1,900	(43.8)	83.24
Full year	317,000		(5.1)	8,600	(17.6)	9,000	(14.0)	7,200	54.0	315.43

(Note) Whether changes to the latest forecasts for consolidated figures have been made: None

NOTE
1. Changes in the State of Material Subsidiaries during the Period: None

Newly included: - (Name) -

Excluded: - (Name) -

(2) Adoption of Special Accounting Methods for Preparation of Quarterly Consolidated Financial Statements: Yes

Note: For details, please refer to "(3) Notes Regarding Quarterly Consolidated Financial Results (Application of special accounting methods for presenting quarterly consolidated financial statements)" under "2. Quarterly Consolidated Financial Statement and Important Notes" on page 8 of the attached materials.

Changes in Accounting Principles, Changes in Accounting Estimates, and Retrospective Restatements
1. Changes in accounting principles accompanying the amendment of accounting standards: None
2. Changes other than those in (a) above: None
3. Changes in accounting estimates: None
4. Retrospective restatements: None
Number of Shares Issued (Common shares)
1. Number of shares issued at the end of the period (including treasury shares)

First Quarter of Fiscal 2024	24,077,510 shares	Fiscal 2023	24,077,510 shares
(b) Number of treasury shares at the end of the period
First Quarter of Fiscal 2024	1,251,802 shares	Fiscal 20223	1,251,586 shares
(c) Average number of shares issued during the period
First Quarter of Fiscal 2024	22,825,790 shares	First Quarter of Fiscal 2023	22,825,392 shares

Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm: None

* Explanation of the Appropriate Use of Performance Forecasts and Other Related Items

(Caution concerning future descriptions etc.)

The above estimate has been compiled based on information available at the time this disclosure was made. The actual earnings are subject to change from the estimated values due to various factors. For assumed conditions underlying the earnings forecast and cautionary statements in using the earnings forecast, please refer to "Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates" on page 3.

Index of Attached Documents
1. Overview of Operating Results	2
(1)	Overview of Quarterly Operating Results	2
(2)	Overview of Quarterly Financial Position	3
(3)	Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates	3
2. Quarterly Consolidated Financial Statements and Important 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
	(For the Three-month Period)	6
	Quarterly Consolidated Statements of Comprehensive Income
	(For the Three-month Period)	7
(3)	Notes Regarding Quarterly Consolidated Financial Results	8
		8
	(Accounting treatment specific to the preparation of quarterly consolidated financial statements)…………………….
	(Segment information) …………………………………………………………………………………………………
		8
	(Note on significant changes in the amount of shareholders' equity)	10
	(Note related to going-concern assumption)	10
	(Quarterly Consolidated Cash Flow Statements) ………………………………………………………………………..	10

Note: This document has been translated from the original Japanese version for reference purposes only. In the event of any discrepancy between this translated document and the original Japanese version, the original shall prevail.

The original disclosure in Japanese was released on August 2, 2024 at 13:30 (GMT+9).

The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

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1. Overview of Operating Results

(1) Overview of Quarterly Operating Results

A challenging situation continued within the Group business environment for the end of first quarter of the fiscal year due to decreased demand in the construction machinery on a global level, production halt from the certification issues among domestic car manufacturers and a surge in prices of raw materials.

Under this business environment, we have set four key areas-promote segment management, strengthen overseas profitability, strengthen domestic business base, and contribute to decarbonization-for our Group Basic Strategy, and we are steadily implementing the Medium-term Management Plan "TOPY Active & Challenge 2025". As part of the plan, the Group decided to revise its organization that strengthen the consolidation of the Wheel Operation's manufacturing, sales and development for the purpose of enhancing productivity and competitivity.

Net sales for the end of first quarter of the fiscal year decreased by 73,636 million (down 9.7% year on year) due to the effect from the decrease of demand in construction machinery on a global level. As for the statements of income, in addition to decrease in sales, operating profit decreased by ¥135 million (down 91.3 % year on year), ordinary profit decreased by ¥1,364 million (down 42.2% year on year) and profit attributable to owners of parent came to ¥725 million (down 58.2% year on year) mainly due to the difference between the steel scrap price and the steel sales price from the surge in steel scrap prices and increased cost.

Performance by Segment

Reportable segments have been revised from the consolidated fiscal year for the first quarter. For details, please refer to "(3) Notes Regarding Quarterly Consolidated Financial Results (Segment information)" under "2. Quarterly Consolidated Financial Statements and Important Notes". The following comparison and analysis are based on figures in the first quarter of the previous fiscal year after changes are made in the segment classification.

(Steel Business)

In the steel industry, demand for construction, manufacturing sectors remained stagnant and the production of domestic crude steel production decreased year on year. Also, prices for steel scrap rised from the level in the previous fiscal year.

Given these circumstances, the Group worked to optimize steel sales prices as the price gap with purchase prices of steel scrap, the raw material for such products, narrowed. However, net sales decreased to ¥26,630 million (down 3.9% year on year), and operating profit decreased to ¥1,898 million (down 21.9% year on year).

(Automotive & Industrial Machinery Components Business)

In the automobile industry, production volume decreased from the level in the previous fiscal year in Japan due to the effect from the certification issues among other factors. While production volume increased in the overseas market including North America and China, the share for the Japanese manufacturers in China declined. In the construction machinery industry, worldwide demand for hydraulic shovels continued to decline. Furthermore, demand for mining machinery remained stagnant in some regions.

Under the circumstances, the Group net sales were ¥45,184 million (down 8.5% year on year) and operating loss was ¥527 million (in comparison to operating profit of ¥859 million in the previous fiscal year) due mainly from the drastic decrease in sales volume of undercarriage parts for construction machinery, reduction of sales volume of wheels for passenger vehicles by the effect of certification issues among domestic car manufacturers and the fluctuating prices of raw materials in the overseas market and decrease in sales volume beside other factors.

(Others)

The Group is involved in the manufacture and sale of synthetic mica, civil engineering and construction, real estate leasing, and the operation of a sports club. Due to influence from the elimination of Power Generation Business, net sales decreased to ¥1,821 million (down 58.8% year on year) and operating profit was ¥228 million (compared to an operating loss of ¥353 million in the previous fiscal year)

- 2 -

(2) Overview of Quarterly Financial Position

Total assets at the end of the first quarter of the consolidated fiscal year under review stood at ¥295,431 million, a decrease of ¥2,860 million from the end of the previous consolidated fiscal year. This was mainly due to a decrease of ¥4,076 million in notes and accounts receivable trade and contract assets, an increase of ¥3,093 million in merchandise and finished goods, and a decrease of ¥1,686 million in investment securities.

Total liabilities were ¥154,254 million, a decrease of ¥3,048 million compared with the end of the previous consolidated fiscal year. This was mainly due to a decrease of ¥1,351 million in income taxes payable, a decrease of ¥1,103 million in long-term borrowings and a decrease of ¥561 million in deferred tax liabilities.

Total net assets came to ¥141,176 million, an increase of ¥188 million from the end of the previous consolidated fiscal year. This was mainly due to an increase of ¥2,305 million in foreign currency translation adjustments, a decrease of ¥1,168 million in valuation difference on available-for-sale securities, and a decrease of ¥943 million in retained earnings.

(3) Explanation Regarding Future Estimate Information such as Consolidated Financial Performance Estimates

The future business environment ahead for the Group may continue to face challenges from decrease in the demand of construction machinery, rise of raw material prices, possible reduction in sales volume of wheel for passenger vehicles in the overseas, and further labor and logistic costs. The Group keeps setting fair sales prices and by developing optimal business portfolios, we will strive to maintain profits.

The consolidated financial forecasts for the fiscal year ending March 31, 2025 (April 1, 2024 to March 31, 2025) have not been changed from those announced on May 10, 2024. This decision has been made based on information available to the Group as of the date of issuance of this release. The actual results may vary from the forecast due to various factors that will arise in the future.

- 3 -

2. Quarterly Consolidated Financial Statements and Important Notes

(1) Quarterly Consolidated Balance Sheets

		(Millions of yen)

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

Assets
Current assets

Cash and deposits	25,014	24,954
Notes and accounts receivable - trade, and contract	70,408	66,332
assets


Merchandise and finished goods	27,117	30,211
Work in process	8,005	8,283

Raw materials and supplies	19,715	19,648
Other	6,991	6,261

Allowance for doubtful accounts	(40)	(40)
Total current assets	157,212	155,652

Non-current assets
Property, plant and equipment

Buildings and structures	97,745	98,783
Accumulated depreciation	(72,354)	(73,414)

Buildings and structures, net	25,391	25,369
Machinery, equipment and vehicles	229,588	232,472
Accumulated depreciation	(190,739)	(194,369)
Machinery, equipment and vehicles, net	38,848	38,103

Land	15,684	15,853
Leased assets	1,613	1,606

Accumulated depreciation	(850)	(851)
Leased assets, net	762	755

Construction in progress	1,957	2,485
Other	43,421	44,282
Accumulated depreciation	(41,509)	(42,377)
Other, net	1,912	1,905
Total property, plant and equipment	84,558	84,471
Intangible assets

Other	3,400	3,399
Total intangible assets	3,400	3,399
Investments and other assets
Investment securities	42,580	40,894
Long-term loans receivable	204	204
Deferred tax assets	613	641
Retirement benefit asset	529	529
Other	9,274	9,720
Allowance for doubtful accounts	(81)	(81)
Total investments and other assets	53,119	51,908

Total non-current assets	141,079	139,779
Total assets	298,291	295,431

- 4 -

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

Liabilities
Current liabilities

Notes and accounts payable - trade	31,494	31,319
Electronically recorded obligations - operating	20,889	20,759

Short-term borrowings	21,059	21,103
Current portion of bonds payable	5,000	5,000

Lease liabilities	162	153
Income taxes payable	2,152	801

Other	15,465	15,522
Total current liabilities	96,223	94,658

Non-current liabilities
Bonds payable	30,000	30,000

Long-term borrowings	18,381	17,278
Lease liabilities	379	365

Deferred tax liabilities	5,932	5,371
Provision for corporate officers' retirement benefits	197	148

Provision for share awards for directors (and other	51	97
officers)

Provision for retirement benefits for directors (and	15	16
other officers)


Reserve for repairs	225	236
Retirement benefit liability	4,198	4,392

Asset retirement obligations	268	258
Other	1,428	1,429

Total non-current liabilities	61,079	59,596
Total liabilities	157,303	154,254
Net assets
Shareholders' equity

Share capital	20,983	20,983
Capital surplus	18,606	18,622
Retained earnings	69,953	69,010
Treasury shares	(2,503)	(2,519)
Total shareholders' equity	107,040	106,096
Accumulated other comprehensive income

Valuation difference on available-for-sale	20,545	19,377
securities

Deferred gains or losses on hedges	1	0

Foreign currency translation adjustment	7,319	9,625
Remeasurements of defined benefit plans	4,774	4,680

Total accumulated other comprehensive income	32,641	33,683
Non-controlling interests	1,306	1,396
Total net assets	140,988	141,176
Total liabilities and net assets	298,291	295,431

- 5 -

Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income Quarterly Consolidated Statements of Income
(For the Three-month Period)

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

Net sales	81,522	73,636
Cost of sales	71,276	64,431

Gross profit	10,246	9,205
Selling, general and administrative expenses	8,679	9,069

Operating profit	1,567	135
Non-operating income

Interest income	38	51
Dividend income	405	489

Foreign exchange gains	505	400
Share of profit of entities accounted for using equity	114	88
method


Compensation income	－	513
Other	81	64

Total non-operating income	1,145	1,607
Non-operating expenses

Interest expenses	240	171
facilities relocation expenses	－	104

Other	114	103
Total non-operating expenses	354	379

Ordinary profit	2,358	1,364
Extraordinary income

Gain on sale of non-current assets	165	6
Total extraordinary income	165	6

Extraordinary losses
Loss on sale of non-current assets	0	0

Loss on retirement of non-current assets	23	21
Total extraordinary losses	24	22

Profit before income taxes	2,499	1,348
Income taxes	736	588

Profit	1,762	760
Profit attributable to non-controlling interests	28	35

Profit attributable to owners of parent	1,734	725

- 6 -

Quarterly Consolidated Statements of Comprehensive Income

(For the Three-month Period)

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

Profit	1,762	760
Other comprehensive income

Valuation difference on available-for-sale securities	2,579	(1,192)
Deferred gains or losses on hedges	51	(0)

Foreign currency translation adjustment	575	2,073
Remeasurements of defined benefit plans, net of tax	(1)	(93)

Share of other comprehensive income of entities	153	310
accounted for using equity method

Total other comprehensive income	3,358	1,097

Comprehensive income	5,120	1,857
Comprehensive income attributable to

Comprehensive income attributable to owners of	5,055	1,767
parent

Comprehensive income attributable to non-controlling	65	90
interests

- 7 -

(3) Notes Regarding Quarterly Consolidated Financial Results

(Accounting treatment specific to the preparation of quarterly consolidated financial statements)

(Calculation of tax expenses)

Tax expenses were calculated by multiplying the rationally estimated effective tax rate after applying tax effect accounting to profit before income taxes for the consolidated fiscal year, which includes the current first quarter under review, by profit before income taxes for the first quarter.

(Segment information)

I Three months ended June 30, 2023 (April 1, 2023 - June 30, 2023)

1. Information regarding amounts of net sales, profits or losses, assets and other items by reportable segment

(Millions of yen)

	Reportable segment					Amount
					recorded in

		Automotive			Others	Full fiscal	Amount of	the quarterly
				adjustment	consolidated
	Steel	& Industrial		Total	(Note) 1	year
		(Note) 2	financial
	Machinery
							statements
		Components
							(Note) 3

Net sales
Net sales to
outside	27,699	49,397		77,096	4,425	81,522	－	81,522
customers
Internal sales or
transfer between	6,285	－		6,285	－	6,285	(6,285)	－
segments

Total	33,984	49,397		83,382	4,425	87,808	(6,285)	81,522

Segment profit	2,432	859		3,291	(353)	2,938	(1,371)	1,567
(loss)

(Notes) 1. The category "Others" includes the business segment not included in the reportable segments and includes wholesale power supply, synthetic mica, indoor and outdoor sign systems, civil engineering and construction, real estate leasing, and the operation of a sports club.

Profits of segment in an amount of a loss of ¥1,371 million are common corporate expenses, etc. not allocated to the respective reportable segments. The common corporate expenses are mainly the expenses related to the administrative divisions of the Company that are not attributable to the reportable segments.
Segment profit (loss) is adjusted with operating profit recorded under the quarterly consolidated financial statements.

2. Information regarding impairment losses or goodwill of non-current assets by reportable segment

Not applicable.

- 8 -