Consolidated Quarterly Financial Results (Japanese Accounting Standards) for the First Half of the Fiscal Year Ending December 31, 2017

Transcription

1 Consolidated Quarterly Financial Results (Japanese Accounting Standards) for the First Half of the Fiscal Year Ending December 31, 2017 November 7, 2017 Name of Listed Company: TOYO INK SC HOLDINGS CO., LTD. Listings: Tokyo Stock Exchange Code: 4634 URL: Representative: Katsumi Kitagawa, President, CEO Contact: Hiroya Aoyama, Senior Managing Director, CFO Tel: Scheduled date of submission of quarterly report: November 14, 2017 Scheduled date of commencement of dividend payments: December 1, 2017 Supplementary documents for quarterly results: Yes Quarterly results briefing: No (Amounts of less than million yen are omitted.) 1. Consolidated business results for the first half of fiscal 2017 ending December 31, 2017 (From April 1, 2017 to September 30, 2017) (1) results (cumulative totals) (Figures in percentages denote the year-on-year change.) Profit attributable to Net sales Operating profit Ordinary profit owners of parent Million yen % Million yen % Million yen % Million yen % First Half, Fiscal , , , , First Half, Fiscal , , , , (Note) Comprehensive income: First half, fiscal 2017: 11,189 million yen ( %) First half, fiscal 2016: -6,937 million yen ( %) Profit per share (Basic) Profit per share (Diluted) First Half, Fiscal First Half, Fiscal (2) Financial position Yen Total assets Net assets Net worth/total assets Million yen Million yen % First Half, Fiscal , , Fiscal , , (Note) Net worth: First half, fiscal 2017: 221,772 million yen Fiscal 2016: 213,263 million yen 2. Dividends Dividends per share End of Q1 End of Q2 End of Q3 Year-end Annual Yen Yen Yen Yen Yen Fiscal Fiscal Fiscal 2017 (Forecast) (Note) Revision to dividend forecasts published most recently: No 3. Forecasts for the year ending December 31, 2017 (From April 1, 2017 to December 31, 2017) (Figures in percentages denote the year-on-year change.) Profit attributable to Net sales Operating profit Ordinary profit Profit per share owners of parent Million yen % Million yen % Million yen % Million yen % Yen Full-year 235,000 16,300 16,600 10, (Note) Revision to consolidated business performance forecasts published most recently: No The Company has changed its fiscal year-end from March 31 to December 31 following the approval of the Partial Amendment to the Articles of Incorporation at the Ordinary General Meeting of Shareholders on June 29, Accordingly, with regard to the fiscal year ending December 31, 2017 that falls under the transitional period, the consolidated fiscal year of the Company and its domestic consolidated subsidiaries whose fiscal year-end date has been March 31 is the nine-month period from April 1, 2017 to December 31, For overseas consolidated subsidiaries that have already adopted a fiscal year-end date of December 31, the consolidated fiscal period is the 12-month period from January 1, 2017 to December 31, [Reference] The following percentages (increase-decrease rates after adjustment) are calculated by comparing the results for nine months (from April 1, 2016 to December 31, 2016) of the previous fiscal year of the Company and its domestic subsidiaries with the forecasts for the fiscal year under review. Net sales Operating profit Ordinary profit Profit attributable to owners of parent 235, % 16, % 16, % 10, % Yen

2 * Notes (1) Important changes of subsidiaries during the term (changes in specific subsidiaries accompanied by a change in the scope of consolidation): No (2) Application of special accounting treatment to the preparation of quarterly consolidated financial statements: No (3) Changes in accounting policies and changes or restatement of accounting estimates (i) Changes in accounting policies due to the modification in accounting methods: No (ii) Changes in accounting policies other than (i): No (iii) Changes in accounting estimates: No (iv) Restatement: No (4) Numbers of shares issued (common shares) (i) Numbers of shares issued at the end of the terms (including treasury shares): First half, fiscal 2017: 303,108,724 shares Fiscal 2016: 303,108,724 shares (ii) Numbers of treasury shares at the end of the terms: First half, fiscal 2017: 11,176,577 shares Fiscal 2016: 11,163,641 shares (iii) Average numbers of shares issued during the terms (consolidated accumulation periods): First half, fiscal 2017: 291,939,769 shares First half, fiscal 2016: 296,282,044 shares * This financial summary does not need to undergo a quarterly review. * Explanations about the proper use of financial forecasts and other important notes 1. The above forecasts are based on the information available on the date these materials are released and incorporate assumptions about uncertainties that may affect future earnings. The forecasts do not constitute an assurance that the Company promises to achieve the earnings. Actual earnings could differ materially from these forecasts due to various factors in the future. For notes about assumptions of earnings forecasts and the use of earnings forecasts, refer to (3) Information on the consolidated earnings forecasts and other future forecasts of 1. Qualitative Information on Financial Results, etc., for the First Half Ended September 30, 2017 on page 4 of the accompanying materials. 2. Supplementary documents for financial results will be posted on the Company s website on November 7, 2017 (Tuesday).

3 Accompanying Materials Contents 1. Qualitative Information on Financial Results, etc. for the First Half Ended September 30, (1) Details of operating results... 2 (2) Details of financial position... 3 (3) Information on the consolidated earnings forecasts and other future forecasts Consolidated Financial Statements and Primary Notes... 5 (1) Consolidated balance sheet... 5 (2) Consolidated statements of income and consolidated statements of comprehensive income... 7 (3) Consolidated statements of cash flows... 9 (4) Notes to consolidated quarterly financial statements (Notes on assumption of going business) (Notes on significant changes in the amount of shareholders equity) (Segment information, etc.)

4 1. Qualitative Information on Financial Results, etc., for the First Half Ended September 30, 2017 (1) Details of operating results In the global economy during the first half of the consolidated fiscal year under review, the U.S. economy continued to recover on the back of strong personal consumption, and China and other countries in Asia maintained growth, albeit at a slower pace. The economic outlook, however, remained uncertain due to concerns over an economic downturn caused by political, financial market, and geopolitical risks. In Japan, consumer spending continued to be sluggish despite the trend of economic recovery. The Tokyo Ink Group faced a challenging business environment due to sluggish growth in demand and rising prices of raw materials. In this environment, the Group advanced its businesses under the following policies: to execute its new growth strategy through expansion of the value chains in all corporate activities, to evolve supply chain management (SCM) through manufacturing from a viewpoint with an awareness of innovation, and to promote the reform of the culture by reviewing the management foundation (management resources and governance). Consequently, net sales for the first half under review increased to 135,598 million yen (up 1.9% year on year). Profits also rose with operating profit of 9,535 million yen (up 7.6% year on year), ordinary profit of 9,995 million yen (up 27.0% year on year), and profit attributable to owners of parent of 7,433 million yen (up 41.5% year on year). Results by segment are as follows: (i) Colorants and Functional Materials Sales of high-function pigments and materials for LCD color filters increased based on strong demand for high-definition, large TV sets as end products and recovering demand for smartphones. Sales promotions in China and Taiwan have also led to positive results. While domestic sales of commodity-type pigments, particularly offset printing inks, remained weak, sales of commodity-type pigments for coatings and plastic grew in China and other regions. Domestic sales of plastic colorants for caps for beverage and toiletry containers were strong, and sales of plastic colorants for office equipment recovered in China and Southeast Asia. However, sales of plastic colorants for automobiles were unexpectedly weak in Europe and the United States. As a result, net sales and operating profit in the overall Colorants and Functional Materials rose. Net sales stood at 34,720 million yen (up 8.0% year on year) and operating profit was 3,432 million yen (up 130.0% year on year). (ii) Polymers and Coatings In the coating materials segment, although sales of electromagnetic shielding films struggled, sales of higher-quality conducting adhesive sheets for smartphones increased. Sales of adhesive films related to electronics grew, and the medicated patch business launched in July last year remained strong. In the adhesives segment, demand for use in the packaging of food and other products increased in Japan, South Korea, Southeast Asia, and other regions. In the adhesive compounds segment, sales were strong for use in electronics in Japan and South Korea; profit was reduced, however, by sluggish sales of those for use in labels and rising prices of raw materials. Sales of can coatings (finishes) for coffee cans remained weak and those for beer cans also struggled due to unseasonable weather in the summer. As a result, both net sales and operating profit rose in the overall Polymers and Coatings. Net sales came to 29,780 million yen (up 2.4% year on year) and operating profit was 3,239 million yen (up 1.4% year on year). 2

5 (iii) Packaging Materials Although domestic demand for gravure inks for publication continued to decline, domestic sales of mainstay gravure inks for packaging mainly for private brand applications and convenience stores were strong, and domestic sales of gravure inks for construction materials also increased. Overseas sales increased in North America, Central and South America, India, and other regions; growth in Southeast Asia and China, however, remained low, and profit was also reduced by rising prices of raw materials. In the gravure cylinder platemaking segment, while sales from general platemaking for packaging were weak, sales from special precision platemaking increased. As a result, net sales remained virtually unchanged year on year while operating profit decreased in the overall Packaging Materials. Net sales stood at 31,849 million yen (up 0.0% year on year) and operating profit came to 1,259 million yen (down 20.4% year on year). (iv) Printing and Information Given the shrinking domestic information-related print market associated with the progress of digitization, the Group sought to optimize its business scale by product line and streamlined products in Japan, while bolstering sales overseas by expanding global bases. Meanwhile, the Group focused on the development and sale of highly sensitive UV ink using leading-edge technology and other products such as inkjet ink for on-demand printing, thereby facilitating business growth. Meanwhile, domestic demand for inks for commercial printing of circulars and other materials, existing information publications including newspapers and magazines, and related materials remained weaker than expected. A decline in capacity utilization at printing companies in China and Southeast Asia due to an economic slowdown and environmental regulations also caused a fall in sales. As a result, both net sales and operating profit in the overall Printing and Information decreased. Net sales amounted to 39,041 million yen (down 3.6% year on year) and operating profit was 1,321 million yen (down 16.3% year on year). (v) Others This segment covers businesses not included in the above segments and services provided mainly by TOYO INK SC HOLDINGS CO., LTD. Net sales in this segment increased to 3,073 million yen (up 3.2% year on year). Operating profit, however, decreased to 294 million yen (down 71.1% year on year), due primarily to an increase in development expenses for the integrated global systems at the Holdings. (2) Details of financial position Total assets at the end of the first half under review stood at 373,360 million yen, up 8,145 million yen from the end of the previous consolidated fiscal year. Liabilities totaled 144,795 million yen, up 728 million yen from the end of the previous consolidated fiscal year. Net assets came to 228,564 million yen, up 8,873 million yen from the end of the previous consolidated fiscal year. The last day of the first half under review fell on a public holiday in Japan, which resulted in an increase in accounts receivable-trade and accounts payable-trade. Additionally, investment securities, deferred tax liabilities, and a valuation difference on available-for-sale securities rose, reflecting increased stock prices in Japan. Short-term loans payable decreased and long-term loans payable increased due to refinancing after reducing the amount by appropriating funds on hand as loans payable reached maturity. 3

6 (Status of cash flow) Cash and cash equivalents ( cash ) at the end of the first half of the fiscal year under review stood at 44,875 million yen, up 742 million yen from the balance at the beginning of the fiscal year under review. Cash provided by operating activities stood at 11,931 million yen, an increase of 3,796 million yen year on year. This was primarily attributable to an increase in cash flows from income before income taxes and a decline in cash flows from income taxes paid. Cash used in investment activities was 2,827 million yen, a fall of 2,931 million yen year on year, largely as a result of a cash outflow from purchases of property, plant, and equipment. Cash used in financing activities came to 8,164 million yen, an increase of 5,323 million yen year on year due chiefly to cash outflows from the repayment of loans payable and dividends paid. (3) Information on the consolidated earnings forecasts and other future forecasts No changes have been made to the full-year forecasts of consolidated financial results for the fiscal year ending December 31, 2017 announced on May 12,

7 2. Consolidated Financial Statements and Primary Notes (1) Consolidated balance sheet Current assets (Assets) End of the previous consolidated fiscal year (As of March 31, 2017) End of the consolidated first half accounting period (As of September 30, 2017) Cash and deposits 44,903 45,580 Notes and accounts receivable - trade 89,049 90,552 Securities Merchandise and finished goods 27,562 27,982 Work in process 1,312 1,436 Raw materials and supplies 14,337 15,389 Deferred tax assets 1,908 1,816 Other 3,852 4,091 Allowance for doubtful accounts -1,086-1,080 Total current assets 181, ,265 Non-current assets Property, plant and equipment Buildings and structures 99,161 99,198 Accumulated depreciation -58,453-59,219 Buildings and structures, net 40,708 39,978 Machinery, equipment and vehicles 148, ,995 Accumulated depreciation -122, ,429 Machinery, equipment and vehicles, net 25,453 24,566 Tools, furniture and fixtures 23,824 23,876 Accumulated depreciation -20,987-21,167 Tools, furniture and fixtures, net 2,837 2,708 Land 30,003 29,855 Leased assets Accumulated depreciation Leased assets, net Construction in progress 2,607 2,515 Total property, plant and equipment 101,806 99,832 Intangible assets 4,487 4,294 Investments and other assets Investment securities 66,718 72,451 Net defined benefit asset 5,927 6,190 Deferred tax assets Other 3,904 3,931 Allowance for doubtful accounts Total investments and other assets 76,964 82,967 Total non-current assets 183, ,094 Total assets 365, ,360 5

8 Current liabilities (Liabilities) End of the previous consolidated fiscal year (As of March 31, 2017) End of the consolidated first half accounting period (As of September 30, 2017) Notes and accounts payable - trade 49,320 52,824 Short-term loans payable 29,364 18,446 Income taxes payable 3,088 2,127 Other 14,175 14,484 Total current liabilities 95,949 87,883 Non-current liabilities Long-term loans payable 33,262 38,683 Deferred tax liabilities 10,884 12,759 Provision for environmental measures 2,504 2,377 Net defined benefit liability 1,865 1,968 Asset retirement obligations Other 1,027 1,095 Total non-current liabilities 49,573 56,912 Total liabilities 145, ,795 Shareholders' equity (Net assets) Capital stock 31,733 31,733 Capital surplus 32,918 32,710 Retained earnings 133, ,213 Treasury shares -4,992-5,000 Total shareholders' equity 192, ,656 Accumulated other comprehensive income Valuation difference on available-for-sale securities 17,726 22,080 Foreign currency translation adjustment 1, Remeasurements of defined benefit plans 1,653 1,622 Total accumulated other comprehensive income 20,488 24,115 Subscription rights to shares Non-controlling interests 6,332 6,627 Total net assets 219, ,564 Total liabilities and net assets 365, ,360 6

9 (2) Consolidated statements of income and consolidated statements of comprehensive income Consolidated statements of income Consolidated first half Previous first half period (From April 1, 2016 to September 30, 2016) First half under review (From April 1, 2017 to September 30, 2017) Net sales 133, ,598 Cost of sales 101, ,676 Gross profit 31,878 32,921 Selling, general and administrative expenses Packing and transportation expenses 3,162 3,090 Salaries and allowances 5,907 5,901 Bonuses 1,363 1,373 Welfare expenses 1,498 1,510 Depreciation Research and development expenses 1,389 1,747 Other 8,895 8,829 Total selling, general and administrative expenses 23,015 23,386 Operating profit 8,863 9,535 Non-operating income Interest income Dividend income Share of profit of entities accounted for using equity method Other Total non-operating income 878 1,085 Non-operating expenses Interest expenses Foreign exchange losses 1,215 0 Other Total non-operating expenses 1, Ordinary profit 7,871 9,995 Extraordinary income Gain on sales of non-current assets Gain on sales of investment securities Gain on step acquisitions 14 Total extraordinary income Extraordinary losses Loss on sales and retirement of non-current assets Loss on valuation of investment securities 139 Other 7 Total extraordinary losses Profit before income taxes 7,599 10,468 Income taxes - current 2,049 2,672 Income taxes - deferred Total income taxes 2,059 2,804 Profit 5,540 7,663 Profit attributable to non-controlling interests Profit attributable to owners of parent 5,254 7,433 7

10 Consolidated statements of comprehensive income Consolidated first half Previous first half period (From April 1, 2016 to September 30, 2016) First half under review (From April 1, 2017 to September 30, 2017) Profit 5,540 7,663 Other comprehensive income Valuation difference on available-for-sale securities ,354 Foreign currency translation adjustment -10, Remeasurements of defined benefit plans, net of tax Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income -12,477 3,525 Comprehensive income -6,937 11,189 Comprehensive income attributable to Comprehensive income attributable to owners of parent -6,213 11,060 Comprehensive income attributable to non-controlling interests

11 (3) Consolidated statements of cash flows Previous first half period (From April 1, 2016 to September 30, 2016) First half under review (From April 1, 2017 to September 30, 2017) Cash flows from operating activities Profit before income taxes 7,599 10,468 Depreciation 5,070 5,119 Amortization of goodwill Interest and dividend income Interest expenses Share of (profit) loss of entities accounted for using equity method Loss (gain) on sales of property, plant and equipment Loss on retirement of property, plant and equipment Loss (gain) on sales of investment securities Loss (gain) on valuation of investment securities 139 Loss (gain) on step acquisitions -14 Increase (decrease) in provision for environmental measures Decrease (increase) in notes and accounts receivable - trade ,663 Decrease (increase) in inventories ,789 Increase (decrease) in notes and accounts payable - trade 1,398 4,706 Other, net -2, Subtotal 10,456 15,324 Interest and dividend income received Interest expenses paid Income taxes paid -2,502-3,585 Net cash provided by (used in) operating activities 8,134 11,931 Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment -5,284-3,656 Proceeds from sales of property, plant and equipment Purchase of intangible assets Purchase of short-term and long-term investment securities Proceeds from sales and redemption of short-term and long-term investment securities Other, net Net cash provided by (used in) investing activities -5,759-2,827 Cash flows from financing activities Net increase (decrease) in short-term loans payable 1,059 1,112 Proceeds from long-term loans payable 6,000 Repayments of long-term loans payable ,832 Purchase of treasury shares -1,040-8 Cash dividends paid -2,385-2,335 Dividends paid to non-controlling interests Other, net Net cash provided by (used in) financing activities -2,841-8,164 Effect of exchange rate change on cash and cash equivalents -2, Net increase (decrease) in cash and cash equivalents -3, Cash and cash equivalents at beginning of period 43,744 44,132 Cash and cash equivalents at end of period 40,339 44,875 9

12 (4) Notes to consolidated quarterly financial statements (Notes on assumption of going business) Not applicable (Notes on significant changes in the amount of shareholders equity) Not applicable (Segment information, etc.) I. From April 1, 2016 to September 30, Information on net sales and profits or losses by reported segment Net sales Colorants and Functional Materials Polymers and Coatings Reported segments Packaging Materials Printing and Information Total Others (Note) 1 Total Adjustment (Note) 2 Amount recorded in consolidated statements of income (Note) 3 Sales to customers 30,815 28,195 31,549 40, ,007 2, , ,113 Intersegment sales 1, , ,420-3,420 Total 32,142 29,083 31,845 40, ,556 2, ,534-3, ,113 Segment profits 1,492 3,194 1,581 1,577 7,846 1,018 8, ,863 (Notes) 1. The Others segment comprises business segments that are not included in the reportable segments, which include sales of raw materials, other profit-earning business activities carried out by the Company as a parent, and delivery of services. 2. An adjustment of -1 million yen in segment profits mainly represents the deduction of intersegment transactions. 3. Segment profits have been adjusted with operating profit recorded in the consolidated quarterly income statement. II. From April 1, 2017 to September 30, Information on net sales and profits or losses by reported segment Colorants and Functional Materials Polymers and Coatings Reported segments Packaging Materials Printing and Information Total Others (Note) 1 Total Adjustment (Note) 2 Amount recorded in consolidated statements of income (Note) 3 Net sales Sales to customers 33,521 29,263 31,551 39, ,356 2, , ,598 Intersegment sales 1, , ,867-2,867 Total 34,720 29,780 31,849 39, ,392 3, ,466-2, ,598 Segment profits 3,432 3,239 1,259 1,321 9, , ,535 (Notes) 1. The Others segment comprises business segments that are not included in the reportable segments, which include sales of raw materials, other profit-earning business activities carried out by the Company as a parent, and delivery of services. 2. An adjustment of -12 million yen in segment profits mainly represents the deduction of intersegment transactions. 3. Segment profits have been adjusted with operating profit recorded in the consolidated quarterly income statement. 10