Topy Industries, LimitedTSE: 7231

Consolidated Basis Results of the Third Quarter for FY2024

Feb 4, 2025 at 4:51 AM UTC · Issued by Topy Industries, Limited

(April 1, 2024 - December 31, 2024)

			February 4, 2025
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, Operating 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 Third Quarter for Fiscal 2024 (April 1, 2024 - December 31, 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	%
Third Quarter of Fiscal 2024	223,028		(13.0)	2,970	(66.9)	3,798	(60.8)	3,723	(13.1)
Third Quarter of Fiscal 2023	256,285		3.0	8,969	67.5	9,696	55.0	4,286	(8.1)

(Note) Comprehensive income:	Third Quarter of Fiscal 2024	¥1,100 million	[-91.6%]
	Third Quarter of Fiscal 2023	¥13,047 million	[29.1%]

	Profit per share	Diluted earnings
		per share

	Yen		Yen
Third Quarter of Fiscal 2024	163.02		－
Third Quarter of Fiscal 2023	187.80		－

(2) Consolidated Financial Position

	Total assets		Net assets	Equity ratio	Net assets per share

	Million yen		Million yen	%	Yen
Third Quarter of Fiscal 2024	285,039		139,742	48.5	6,054.77
Fiscal 2023	298,291		140,988	46.8	6,119.46

(For reference) Shareholders' equity:

Third Quarter of Fiscal 2024

¥138,363 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

－

30.00

－

Fiscal 2024 (Forecasts)

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

Yen

Full year

301,000

(9.9)

6,200

(40.6)

6,500

(37.9)

5,100

9.1

223.36

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

NOTE
1. Significant changes in the scope of consolidation during the Period: None

Newly included: - (Name) -

Excluded: - (Name) -

(2) Adoption of accounting treatment specific to the preparation of Quarterly Consolidated Financial Statements: Yes

Note: For details, please refer to "(3) Important Notes on Quarterly Consolidated Financial Results (Note on application of special accounting policies 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 Policies, Changes in Accounting Estimates, and Retrospective Restatements
1. Changes in accounting policies accompanying the amendment of accounting standards: Yes
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)

Third 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
Third Quarter of Fiscal 2024	1,225,598 shares	Fiscal 2023	1,251,586 shares
(c) Average number of shares issued during the period
Third Quarter of Fiscal 2024	22,838,907 shares	Third Quarter of Fiscal 2023 22,825,934 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 Nine-month Period)	6
	Quarterly Consolidated Statements of Comprehensive Income

(For the Nine-month Period) ....................................................................................................................................

(3) Important Notes on Quarterly Consolidated Financial Results ...........................................................................................

(Note on changes in accounting policies)……………………………………………………………………………….

(Note on application of special accounting policies for presenting Quarterly consolidated financial statements) ……

(Note on Segment information).........................................................................................................................................

(Note on significant changes in the amount of shareholders' equity) ...............................................................................

(Note on going-concern assumption) …………………………………………………………………………………..

(Note to Quarterly Consolidated Cash Flow Statements) ……………………………………………………………..

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 February 4, 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.

- 1 -

1. Overview of Operating Results

(1) Overview of Quarterly Operating Results

A challenging situation continued within the Group business environment for the end of the first nine months of the fiscal year due to sluggish domestic demand for steel products

decreased demand for construction machinery on a global level, production halt from the certification issues among domestic car manufacturers and a decrease in automobile production in some overseas regions.
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."
In addition, in order to implement management that is conscious of cost of capital and stock price, we have set a target to reduce the total market value of cross-shareholdings to less than 10% of consolidated net assets by the end of March 2026, and we are proceeding with this reduction.
Net sales for the first nine months of the fiscal year were ¥223,028 million (down 13.0% year on year), operating profit was ¥2,970 million (down 66.9% year on year), ordinary profit was ¥3,798 million (down 60.8% year on year), and profit attributable to owners of parent was ¥3,723 million (down 13.1% year on year). This was mainly due to the impact of sluggish domestic demand for steel products and a decrease in sales volume of undercarriage parts for construction machinery and wheels for passenger vehicles.

Performance by Segment

(Steel Business)

In the steel industry, domestic demand for steel products remained weak due to construction project delays. Also, prices for steel scrap, a raw material, fell year on year.

Given these circumstances, despite cost improvements from lower steel scrap prices, sluggish demand caused a decrease in both sales volumes and sales prices of steel products. This resulted in the Group net sales decreasing to ¥76,893 million (down 7.4% year on year) and operating profit decreasing to ¥4,563 million (down 40.6% 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. Overseas, passenger car production volume in the U.S. declined and the share for the Japanese manufacturers in China declined. Automobile production volume also declined in the Southeast Asia region. In the construction machinery industry, worldwide demand for hydraulic shovels continued to decline. Furthermore, demand for mining machinery remained stagnant.

Under the circumstances, the Group net sales were ¥140,737 million (down 10.5% year on year) and operating profit was ¥2,253 million (down 53.8% year on year) due mainly to 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 decrease in sales volume at overseas bases 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 ¥5,397 million (down 66.4% year on year) and operating profit was ¥703 million (up 4.6% year on year)

- 2 -

(2) Overview of Quarterly Financial Position

Total assets at the end of the third quarter of the consolidated fiscal year under review stood at ¥285,039 million, a decrease of ¥13,251 million from the end of the previous consolidated fiscal year. This was mainly due to a decrease of ¥6,813 million in notes and accounts receivable - trade, and contract assets, a decrease of ¥5,989 million in investment securities, and an increase of ¥3,581 million in cash and deposits.

Total liabilities were ¥145,297 million, a decrease of ¥12,005 million compared with the end of the previous consolidated fiscal year. This was mainly due to a decrease of ¥5,000 million in bonds payable, a decrease of ¥4,736 million in long-term borrowings, an increase of ¥4,713 million in short-term borrowings, and a decrease of ¥3,725 million in notes and accounts payable - trade.

Total net assets came to ¥139,742 million, a decrease of ¥1,246 million from the end of the previous consolidated fiscal year. This was mainly due to a decrease of ¥3,928 million in valuation difference on available-for-sale securities, an increase of ¥1,367 million in retained earnings, and an increase of ¥1,462 million in foreign currency translation adjustment.

(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 sluggish domestic demand for steel products, decrease in the global demand for construction machinery, and further labor and logistic costs.

In order to achieve our consolidated earnings forecast for the full fiscal year, we will ensure our efforts to optimize sales pricing while striving to secure sales volumes, among other measures.

The consolidated earnings forecasts for the fiscal year ending March 31, 2025 (from April 1, 2024 to March 31, 2025) have not been changed from those announced on November 6, 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 December 31, 2024

Assets
Current assets

Cash and deposits	25,014	28,596
Notes and accounts receivable - trade, and contract	70,408	63,594
assets


Merchandise and finished goods	27,117	26,598
Work in process	8,005	7,280

Raw materials and supplies	19,715	19,348
Other	6,991	7,253

Allowance for doubtful accounts	(40)	(80)
Total current assets	157,212	152,591

Non-current assets
Property, plant and equipment

Buildings and structures	97,745	98,293
Accumulated depreciation	(72,354)	(73,921)

Buildings and structures, net	25,391	24,371
Machinery, equipment and vehicles	229,588	233,009
Accumulated depreciation	(190,739)	(196,548)
Machinery, equipment and vehicles, net	38,848	36,461

Land	15,684	15,781
Leased assets	1,613	1,498

Accumulated depreciation	(850)	(873)
Leased assets, net	762	625

Construction in progress	1,957	2,683
Other	43,421	44,240
Accumulated depreciation	(41,509)	(42,423)
Other, net	1,912	1,817
Total property, plant and equipment	84,558	81,740
Intangible assets

Other	3,400	3,404
Total intangible assets	3,400	3,404
Investments and other assets
Investment securities	42,580	36,590
Long-term loans receivable	204	219
Deferred tax assets	613	647
Retirement benefit asset	529	529
Other	9,274	9,397
Allowance for doubtful accounts	(81)	(81)
Total investments and other assets	53,119	47,303

Total non-current assets	141,079	132,448
Total assets	298,291	285,039

- 4 -

		(Millions of yen)
	As of March 31, 2024	As of December 31, 2024

Liabilities
Current liabilities

Notes and accounts payable - trade	31,494	27,769
Electronically recorded obligations - operating	20,889	21,413

Short-term borrowings	21,059	25,773
Current portion of bonds payable	5,000	5,000

Lease liabilities	162	115
Income taxes payable	2,152	1,761

Provision for surcharge	－	285
Other	15,465	14,354

Total current liabilities	96,223	96,472
Non-current liabilities

Bonds payable	30,000	25,000
Long-term borrowings	18,381	13,645

Lease liabilities	379	303
Deferred tax liabilities	5,932	3,201

Provision for corporate officers' retirement benefits	197	184
Provision for share awards for directors (and other	51	42
officers)


Provision for retirement benefits for directors (and	15	18
other officers)

Reserve for repairs	225	254

Retirement benefit liability	4,198	4,500
Asset retirement obligations	268	260

Other	1,428	1,414
Total non-current liabilities	61,079	48,825

Total liabilities	157,303	145,297
Net assets

Shareholders' equity
Share capital	20,983	20,983
Capital surplus	18,606	18,622
Retained earnings	69,953	71,320
Treasury shares	(2,503)	(2,465)
Total shareholders' equity	107,040	108,460

Accumulated other comprehensive income
Valuation difference on available-for-sale	20,545	16,617
securities


Deferred gains or losses on hedges	1	8
Foreign currency translation adjustment	7,319	8,782

Remeasurements of defined benefit plans	4,774	4,493
Total accumulated other comprehensive income	32,641	29,902
Non-controlling interests	1,306	1,378
Total net assets	140,988	139,742
Total liabilities and net assets	298,291	285,039

- 5 -

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

		(Millions of yen)
	Nine months ended	Nine months ended
	December 31, 2023	December 31, 2024

Net sales	256,285	223,028
Cost of sales	220,816	192,506

Gross profit	35,468	30,521
Selling, general and administrative expenses	26,499	27,551

Operating profit	8,969	2,970
Non-operating income

Interest income	80	127
Dividend income	782	954

Foreign exchange gains	252	－
Share of profit of entities accounted for using equity	368	118
method


Compensation income	－	513
Other	262	257

Total non-operating income	1,747	1,971
Non-operating expenses

Interest expenses	668	547
Foreign exchange losses	－	148

facilities relocation expenses	－	106
Other	351	340

Total non-operating expenses	1,020	1,142
Ordinary profit	9,696	3,798

Extraordinary income
Gain on sale of non-current assets	184	219

Gain on sale of investment securities	0	3,011
Subsidy income	－	79

Total extraordinary income	184	3,310
Extraordinary losses

Loss on sale of non-current assets	27	25
Loss on retirement of non-current assets	189	168

Impairment losses	2,443	15
Loss on valuation of investment securities	－	18

Loss on tax purpose reduction entry of non-current	－	79
assets

Loss on business restructuring	－	740

Provision for surcharge	－	285
Total extraordinary losses	2,660	1,332

Profit before income taxes	7,219	5,776
Income taxes	2,823	1,968

Profit	4,395	3,808
Profit attributable to non-controlling interests	109	85

Profit attributable to owners of parent	4,286	3,723

- 6 -

Quarterly Consolidated Statements of Comprehensive Income

(For the Nine-month Period)

		(Millions of yen)
	Nine months ended	Nine months ended
	December 31, 2023	December 31, 2024

Profit	4,395	3,808
Other comprehensive income

Valuation difference on available-for-sale securities	4,324	(4,004)
Deferred gains or losses on hedges	2	7

Foreign currency translation adjustment	3,742	1,324
Remeasurements of defined benefit plans, net of tax	(4)	(278)

Share of other comprehensive income of entities	587	243
accounted for using equity method

Total other comprehensive income	8,651	(2,707)

Comprehensive income	13,047	1,100
Comprehensive income attributable to

Comprehensive income attributable to owners of	12,815	983
parent

Comprehensive income attributable to non-controlling	232	117
interests

- 7 -

Important Notes on Quarterly Consolidated Financial Results (Note on changes in accounting policies)
(Application of accounting standard for current income taxes, etc.)
The "Accounting Standard for Current Income Taxes" (ASBJ Statement No. 27, October 28, 2022; "2022 Revised Accounting Standard") has been applied from the beginning of the first quarter of the fiscal year.
With regard to the revisions concerning the accounting classification of income taxes (taxation on other comprehensive income), these are subject to the provisional treatment set forth in the proviso of paragraph 20-3 of the 2022 Revised Accounting Standard and the provisional treatment set forth in the proviso of paragraph 65-2 (2) of the "Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ Guidance No. 28, October 28, 2022; "2022 Revised Guidance"). This change has no impact on the quarterly consolidated financial statements.
In addition, the Company has adopted the 2022 Revised Guidance for the revisions related to the review of the treatment in consolidated financial statements deferring gains or losses on sales of investments in subsidiaries among consolidated companies for tax purposes, effective from the beginning of the first quarter of the fiscal year. The change in accounting policy has been applied retrospectively, and the quarterly consolidated financial statements of the previous fiscal year and the consolidated financial statements of the previous fiscal year have been prepared on a retrospective basis. This change has no impact on the quarterly consolidated financial statements of the previous fiscal year or the consolidated financial statements of the previous fiscal year.

(Note on application of special accounting policies for presenting quarterly consolidated financial statements) (Calculation of tax expenses)

Tax expenses are calculated by reasonably estimating the effective tax rate reflecting the tax effect to be applied to profit before income taxes for the consolidated fiscal year, including the third quarter under review, and then multiplying profit before income taxes for the third quarter under review by such estimated effective tax rate.

(Note on segment information)

I Nine months ended December 31, 2023 (April 1, 2023 - December 31, 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		Amount of	the quarterly
				Total	adjustment	consolidated
	Steel	& Industrial		Total	(Note) 1
			(Note) 2	financial
	Machinery
							statements
		Components
							(Note) 3

Net sales
Net sales to	83,018	157,196		240,214	16,070	256,285	－	256,285
outside
customers
Internal sales or	17,257	－		17,257	－	17,257	(17,257)	－
transfer between
segments

Total	100,275	157,196		257,472	16,070	273,542	(17,257)	256,285

Segment profit	7,679	4,874		12,553	672	13,225	(4,256)	8,969
(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 ¥4,256 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

(Significant impairment losses on non-current assets)

In the "Others" segment, the Company recorded impairment losses due to a decline in profitability. The amount of impairment losses recorded for the first nine months of the fiscal year was 2,443 million yen.

- 8 -