Interim report
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Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. Consolidated Financial Results for the Nine Months Ended December 31, 2024 [Japanese GAAP] January 31, 2025 Company name: YAMATO KOGYO CO.,LTD. Listing: Tokyo Securities code: 5444 URL: http://www.yamatokogyo.co.jp Representative: Mikio Kobayashi President Inquiries: Yoshikazu Kotera Managing Executive Officer Telephone: +81-79-273-1061 Scheduled date to commence dividend payments: - Preparation of supplementary material on financial results: Yes Holding of financial results briefing: None (Yen amounts are rounded down to millions, unless otherwise noted.) 1. Consolidated Financial Results for the Nine Months Ended December 31, 2024 (April 1, 2024 to December 31, 2024) (1) Consolidated Operating Results (Percentages indicate year-on-year changes.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Nine months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen % December 31, 2024 126,248 3.3 9,281 (27.3) 38,049 (48.1) 19,382 (62.6) December 31, 2023 122,205 (12.2) 12,773 (5.9) 73,351 0.8 51,861 (2.4) (Note) Comprehensive income: Nine months ended December 31, 2024: ¥ 25,874 million [ (74.6) %] Nine months ended December 31, 2023: ¥ 101,809 million [ (19.1) %] Basic earnings per share Diluted earnings per share Nine months ended Yen Yen December 31, 2024 304.71 - December 31, 2023 814.13 - (2) Consolidated Financial Position Total assets Net assets Capital adequacy ratio As of Millions of yen Millions of yen % December 31, 2024 617,536 555,714 83.0 March 31, 2024 608,783 554,941 85.9 (Reference) Equity: As of December 31, 2024: ¥ 512,433 million As of March 31, 2024: ¥ 522,873 million 2. Dividends Annual dividends 1st quarter-end 2nd quarter-end 3rd quarter-end Year-end Total Yen Yen Yen Yen Yen Fiscal year ended March 31, 2024 - 150.00 - 250.00 400.00 Fiscal year ending March 31, 2025 - 200.00 - Fiscal year ending March 31, 2025 (Forecast) 200.00 400.00 (Note) 1 Revision to the forecast for dividends announced most recently: None 2 The year-end dividend of 250 yen per share for the fiscal year ended March 31, 2024 included a special dividend of 100 yen per share. 3 The interim dividend for the second quarter and the year-end dividend for the fiscal year ending March 31, 2025 (forecast) each include a commemorative dividend of 50 yen per share (annually 100 yen per share).
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3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2025(April 1, 2024 to March 31, 2025) (Percentages indicate year-on-year changes.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Basic earnings per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full year 169,000 3.4 11,000 (36.4) 52,000 (47.6) 28,000 (60.0) 443.51 (Note) Revision to the financial results forecast announced most recently: Yes * Notes: (1) Significant changes in the scope of consolidation during the period: Yes Newly included: 1 (Company name: PT Garuda Yamato Steel ) Excluded: - (Company name: ) (2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: Yes (3) Changes in accounting policies, changes in accounting estimates, and restatement 1) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes 2) Changes in accounting policies due to other reasons: None 3) Changes in accounting estimates: None 4) Restatement: None (4) Number of issued shares (common shares) 1) Total number of issued shares at the end of the period (including treasury shares): December 31, 2024: 65,000,000 shares March 31, 2024: 65,000,000 shares 2) Number of treasury shares at the end of the period: December 31, 2024: 1,867,706 shares March 31, 2024: 1,294,676 shares 3) Average number of shares outstanding during the period: Nine months ended December 31, 2024: 63,609,489 shares Nine months ended December 31, 2023: 63,701,635 shares * Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm: Yes(voluntary) * Proper use of earnings forecasts, and other special matters The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Group and on certain assumptions deemed to be reasonable. Consequently, any statements herein do not constitute assurances regarding actual results by the Group. Actual business and other results may differ substantially due to various factors. Please refer to 1. Qualitative Information on Quarterly Results, (3) Overview of Consolidated Earnings Forecasts and Other Forward-Looking Statements on page 5 of the attached materials for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof.
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Appendix Table of Contents 1. Qualitative Information on Quarterly Results ........................................................................................ 2 (1) Overview of Operating Results ......................................................................................................... 2 (2) Overview of Financial Position ........................................................................................................ 3 (3) Overview of Consolidated Earnings Forecasts and Other Forward-Looking Statements ................ 5 2. Quarterly Consolidated Financial Statements and Notes ....................................................................... 7 (1) Quarterly Consolidated Balance Sheets ............................................................................................ 7 (2) Quarterly Consolidated Statements of Income and Comprehensive Income .................................... 9 (3) Quarterly Consolidated Statement of Cash Flows .......................................................................... 11 (4) Notes to Quarterly Consolidated Financial Statements .................................................................. 12 (Notes on Going Concern Assumptions) ........................................................................................... 12 (Notes on Significant Changes in the Amount of Shareholders’ Equity) .......................................... 12 (Application of Special Accounting Treatment for the Preparation of Quarterly Consolidated Financial Statements) ........................................................................................................................ 12 (Changes in Accounting Policies) ..................................................................................................... 12 (Additional Information) ................................................................................................................... 12 (Segment Information, etc.) .............................................................................................................. 13 (Significant Subsequent Events) ....................................................................................................... 14 YAMATO KOGYO CO., LTD. -1-
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1. Qualitative Information on Quarterly Results (1) Overview of Operating Results During the nine months ended December 31, 2024, the business environment surrounding the Group continued to deteriorate, affected by the protracted slump in domestic demand in China and intensifying competition with inexpensive Chinese products mainly in the ASEAN region. Additionally, demand for steel remained sluggish and structural steel market softened globally. Furthermore, in the Middle East business, the risk of an exponential increase in gas prices and others arose from circumstances pertaining to Bahrain’s gas reserve, leading to the recording of a large amount of equity in losses of affiliates associated with impairment loss. For these reasons, earnings decreased significantly year on year. Please refer to “Notice regarding Equity in Losses of Affiliates” announced today for details. Meanwhile, we secured high earnings in our business in the U.S., which is a core source of profits, and our new business base in Indonesia has made a significant contribution to consolidated performance. In Japan, demand for structural steel has been stagnant partly due to delays in construction schedule resulting from labor shortages in the industry and stubbornly high construction costs. The softening of steel market, including H-beams, has continued partly because of increasing import of inexpensive steel from China and others. At Yamato Steel Co., Ltd., efforts have been made to penetrate selling prices that incorporate higher costs amid electricity and logistics costs rising sharply. Nevertheless, the challenging environment for securing sales volumes and maintaining selling prices has continued, exacerbated by declining scrap prices. Both income and profits decreased year on year, affected by production suspension for a little more than one month for the renewal of a straightene r of the rolling line as well as by a decrease in sales volume due to stagnant demand. Results for the period from January to September 2024 for our consolidated subsidiary in Thailand and our equity-method affiliates in the U.S., Bahrain, Saudi Arabia, Vietnam, and South Korea have been incorporated into the consolidated accounts for the nine-month period under review. As announced in the “Notice Concerning the Completion of Acquisition of Shares of the Indonesian Company (to Make It a Subsidiary) and Change of Trade Name” dated May 31, 2024, PT Garuda Yamato Steel (GYS), our consolidated subsidiary in Indonesia whose fiscal year ends on December 31, has been included in the scope of consolidation from the end of the first quarter of the fiscal year under review, assuming that the deemed acquisition date was March 31, 2024. Therefore, financial results for the six months from April to September 2024 has been incorporated in the consolidated financial results. Meanwhile, the costs associated with this share acquisition (approximately ¥1.1 billion) were recorded under selling, general and administrative expenses in the consolidated statements of income for the three months ended June 30, 2024. At the Thailand consolidated subsidiary, Siam Yamato Steel Co., Ltd. (SYS), domestic sales volume decreased year on year due to further increasing influx of inexpensive Chinese products in an environment where private- sector projects continued to take wait-and-see stances though the implementation of government budget started in the second half of the year. We secured export sales volume comparable to the same period of the previous fiscal year, while intense competition with Chinese manufacturers and others continued. Profit decreased year on year as structural steel market tended to be softening in both the domestic and export markets and selling prices declined, which led to a deterioration in the metal margin. At our Indonesian consolidated subsidiary PT Garuda Yamato Steel, demand for structural steel remained sluggish due to the temporary stagnation of government-led infrastructure investment and large-scale private-sector projects before the inauguration of a new government in October, 2024. On the other hand, factors such as trade barriers attributable to curtailed influx of inexpensive products have led to high prices in the structural steel market, allowing us to secure high metal margins continuously. Segment income of ¥3,447 million includes ¥601 million in amortization of goodwill. For details, please refer to “(4) Notes to Quarterly Consolidated Financial Statements (Segment Information, etc.)” in “2. Quarterly Consolidated Financial Statements and Notes.” At Nucor-Yamato Steel Company (NYS), our equity-method affiliate in the U.S., demand remained solid mainly for large-scale construction projects for semiconductor and EV-related industries, data centers, and other fields. On the other hand, some distributors refrained from purchasing while waiting for the result of the presidential election in November 2024. Although structural steel market continued to be softening partly affected by imported products, the metal margin remained high with minor shrinking. We are remaining in a condition of constantly securing high levels of earnings, although profits declined compared to the same period of the previous fiscal year. At SULB Company BSC (c) (SULB), our equity-method affiliate in the Middle East, production and sales volume remained at a high level on the back of solid demand for structural steel in the Middle East, especially from infrastructure investments. On the other hand, price competition with manufacturers in the region has been YAMATO KOGYO CO., LTD. -2-
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intensifying affected by the influx of inexpensive Chinese products, and selling prices has continued to decline. Profits decreased year on year, even excluding the impairment loss from income. At POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (PY VINA), our equity-method affiliate in Vietnam, sales volume increased year on year partly resulting from capturing demand for power transmission towers. However, selling prices have significantly plunged due to intensifying competition with imported products, including construction materials processed using Chinese steel sheets/plates. In addition, a downturn in South Korea, our major export market, has also adversely affected the earnings. As a result, profits decreased year on year. At YK Steel Corporation (YKS), our equity-method affiliate in South Korea, sales continued to be sluggish as stagnant conditions in the construction and real estate industries worsened and demand for rebars cooled down. Profits decreased year on year as a result of deterioration in the metal margin, stemming from falling sales volume and selling prices. As a result of the above, consolidate d net sales for the first nine months of the current fiscal year increased by ¥4,042 million year on year to ¥126,248 million. Consolidated operating profit decreased by ¥3,492 million year on year to ¥9,281 million, ordinary profit decreased by ¥35,301 million to ¥38,049 million (including impairment loss in the Middle East business), and profit attributable to owners of parent decreased by ¥32,479 million to ¥19,382 million. Please note that the average foreign exchange rates for the first nine months of the fiscal year under review that were used in the preparation of the consolidated financial statements from the financial statements of overseas subsidiaries and affiliates were as follows. (For all overseas companies excluding GYS, the first nine months of the fiscal year under review ran from January to September 2024) 151.63 yen/U.S. dollar, 4.26 yen/baht, 8.92 won/yen (For GYS, the first nine months of the fiscal year under review ran from April to September 2024) 152.50 yen/U.S. dollar Average foreign exchange rates for the first nine months of the previous fiscal year were as follows: (For all overseas companies, the first nine months of the previous fiscal year ran from January to September 2023) 139.56 yen/U.S. dollar, 4.02 yen/baht, 9.32 won/yen (2) Overview of Financial Position (i) Changes in financial position At the end of the third quarter of the current fiscal year, total assets were ¥617,536 million, an increase of ¥8,753 million over the end of the previous fiscal year. This was mainly due to the consolidation of GYS from the end of the first quarter. The goodwill of approximately ¥15,500million yen (initially recognized amount) associated with the acquisition of shares of GYS is a provisional amount because the allocation of the cost of acquisition has not yet been finalized. Total liabilities were ¥61,822 million, an increase of ¥7,980 million over the end of the previous fiscal year. Total net assets at the end of the third quarter of the current fiscal year increased ¥772 million over the end of the previous fiscal year to ¥555,714 million. The main factors behind this were an increase due to profit attributable to owners of parent and a decline caused by dividend payments. Please note that the foreign exchange rates used in the preparation of the consolidated financial statements and translating the assets and liabilities of the domestic companies from the financial statements of overseas subsidiaries and affiliates at the end of the third quarter of the fiscal year under review were as follows. (For all overseas companies, the end of the third quarter of the fiscal year under review was September 30, 2024) 142.82 yen/U.S. dollar, 4.41 yen/baht, 9.24 won/yen (For all domestic companies, the end of the third quarter of the fiscal year under review was December 31, 2024) 158.17 yen/U.S. dollar Also, exchange rates for the end of the previous fiscal year are as follows: (For all overseas companies, the end of the previous fiscal year was December 31, 2023) YAMATO KOGYO CO., LTD. -3-
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141.82 yen/U.S. dollar, 4.13 yen/baht, 9.09 won/yen (For all domestic companies, the end of the previous fiscal year was March 31, 2024) 151.40 yen/U.S. dollar (ii) Cash flows (Cash flows from operating activities) Net cash provided by operating activities was ¥60,029 million, due mainly to profit before income taxes, and cash distributions from the equity-method affiliate in the U.S. (Cash flows from investing activities) Net cash used in investing activities was ¥117,853 million, due mainly to payments into time deposits and purchase of shares of subsidiaries resulting in change in scope of consolidation. (Cash flows from financing activities) Net cash used in financing activities was ¥35,201 million, due mainly to the acquisition of treasury stock and dividends paid. Taking into account the effect of exchange rate changes on cash and cash equivalents of ¥6,524 million, cash and cash equivalents at the end of the third quarter of the current fiscal year decreased ¥86,500 million over the end of the previous fiscal year, to ¥82,194 million. YAMATO KOGYO CO., LTD. -4-
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(3) Overview of Consolidated Earnings Forecasts and Other Forward-Looking Statements With regard to the future outlook, the global slump in steel demand and the softening of steel market conditions are expected to continue. This is because exports of inexpensive steel products by China are picking up steam, as crude steel production remains at a high level despite the further slowdown in the Chinese economy. With demand for H-beams, the Group’s main product, and other steel products used in civil engineering and construction lacking momentum overall, the competitive environment is intensifying. At each of our locations, we will implement measures against Chinese products and continuously endeavor to secure sales volume, maintain the metal margin, and lower costs, among others. As we recorded a large amount of equity in losses of affiliates associated with impairment loss in the Middle East business mainly during the third quarter of the fiscal year under review, we have revised our forecasts downward as follows. For the fiscal year ending March 31, 2025, we forecast consolidated net sales of ¥169,000 million (down ¥1,000 million from the previous forecast), operating profit of ¥11,000 million (unchanged from the previous forecast), ordinary profit of ¥52,000 million (down ¥23,000 million from the previous forecast), and profit attributable to owners of parent of ¥28,000 million (down ¥24,500 million from the previous forecast). There is no revision to the forecast for year-end dividends of the fiscal year ending March 31, 2025. Please refer to “Notice regarding Revision in Forecasts of Performance” announced today for details. Our current assumptions regarding business conditions in the various countries and regions are as follows. Japan Demand for both large and middle-to-small projects in the construction-related field has been weak, as labor shortages have become chronic. We are striving to secure orders by shortening delivery times through the integration of manufacturing and sales and capturing demand for civil engineering-related projects, which has been relatively robust. Considering factors such as the continued softening of the structural steel market, however, sales environments are expected to continue to be tough. Although the price of steel scrap has trended lower than the previous forecast, there are signs of a bottoming out. Meanwhile, costs are likely to remain high, with rising energy and logistics costs, as well as higher depreciation expenses. We expect the Company’s performance to be at the same level as the previous forecast, with profits decreasing year on year. Thailand The Thai economy is on a recovery trend as the implementation of government budgets has begun to move forward. However, it is expected to take some time before private-sector projects contribute to the recovery of demand for structural steel. Meanwhile, Chinese manufacturers are boosting their export drive, which leads to an ever harsher competition in both the Thai and the ASEAN export market against inexpensive Chinese products and puts us difficult sales environments. We expect the Company’s performance to be at the same level as the previous forecast, with profits decreasing year on year. Currently, H-beams that are imported to Thailand from China are under antidumping investigation by the Thai Ministry of Commerce. Indonesia Although the Indonesian economy has remained solid, sales volume is held down as a temporary slowdown in construction activities has been prolonged. This is partly affected by the reorganization of government offices under the new administration, which is expected to delay the full-scale implementation of government budgets. However, an improvement in demand is anticipated for the following period. On the other hand, while the prices of steel scrap are lower than predicted, sales prices are remaining at high levels. We expect the Company’s performance to be at the same level as the previous forecast. In October 2024, a decision was made to extend antidumping tariffs (11.93%) on H-beams imported from China to Indonesia for five years. United States The U.S. economy remains strong, driven mainly by domestic demand. We project that orders for large-sized H-beams and sheet piles continue to be stable, supported by the construction of plants such as semiconductor factories to return to the U.S., increasing demand for data centers, and infrastructure investment, etc. As the metal margin remains at a high level, we expect profit to be at the same level as the previous forecast, while still decreasing year on year. Middle East Demand for structural steel for construction projects, etc., has remained firm, primarily in Saudi Arabia. However, the structural steel market tends to be softening due to the influx of inexpensive Chinese products YAMATO KOGYO CO., LTD. -5-
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together with uncertainty about the economic outlook, and the competitive environment is becoming increasingly severe. We expect profit to be lower than the previous forecast and to decrease year on year, even excluding the impairment loss from income. We have now decided to withdraw from the Middle East business and are currently discussing with Foulath, our joint venture partner in the Middle East business, to conclude share transfer agreement. Please refer to “Notice regarding Decision to Withdraw from Middle East Business” announce d today for details. Vietnam Although the economy in Vietnam is now in a recovery phase, construction activities lack strength affected by severe damage from typhoon in September 2024, which has resulted in continued sluggish demand for structural steel. In addition, competition with imported products has further intensified partly because of lowered antidumping tariffs on some H-beams imported from China. As a result, the downward trend in the structural steel market is intensifying. We expect profits to at the same level as the previous forecast, while decreasing year on year. South Korea Amid a prolonged economic slump, economic uncertainty in the South Korea has increased owing to political unrest though there was some hope for government measures to stimulate domestic demand. The business environment is becoming increasingly challenging, despite our efforts to improve market conditions by adapting our production in line with demand. We expect the Company’s performance to be lower than the previous forecast, with profits decreasing year on year. Please note that for the January to December 2024 period we applied the exchange rates for translating into Japanese yen revenues generated and costs incurred by our overseas subsidiaries and affiliates on the basis of the following: (Average rates for the period) 152.27 yen/U.S. dollar, 4.32 yen/baht, and 8.96 won/yen We applied the following exchange rates for translating the year-end (meaning the end of December 2024 for overseas subsidiaries and affiliates and the end of March 2025 for domestic subsidiaries and affiliates) assets and liabilities of each subsidiary and affiliate: (End of period rates for all overseas subsidiaries and affiliates) 158.17 yen/U.S. dollar, 4.65 yen/baht, 9.29 won/yen (End of period for all domestic subsidiaries and affiliates) 145.00 yen/U.S. dollar (Reference) Assumptions of the previous forecast (Average rates for the period) 148.72 yen/U.S. dollar, 4.24 yen/baht, 9.10 won/yen (End of period rates for all overseas subsidiaries and affiliates) 140.00 yen/U.S. dollar, 4.19 yen/baht, 9.62 won/yen (End of period rates for all domestic subsidiaries and affiliates) 135.00 yen/U.S. dollar Previous fiscal year’s results (Average rates for the period) 141.20 yen/U.S. dollar, 4.06 yen/baht, 9.25 won/yen (End of period rates for all overseas subsidiaries and affiliates) 141.82 yen/U.S. dollar, 4.13 yen/baht, 9.09 won/yen (End of period rates for all domestic subsidiaries and affiliates) 151.40 yen/U.S. dollar YAMATO KOGYO CO., LTD. -6-
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2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheets (Millions of yen) As of March 31, 2024 As o f December 31, 2024 Assets Current assets Cash and deposits 237,223 211,590 Notes and accounts receivable - trade 31,372 30,928 Merchandise and finished goods 17,904 20,238 Work in process 861 866 Raw materials and supplies 19,895 27,317 Other 4,218 7,217 Allowance for doubtful accounts (26) (33) Total current assets 311,449 298,124 Non-current assets Property, plant and equipment Buildings and structures, net 11,571 20,466 Machinery, equipment and veh icles, net 27,576 53,153 Land 19,655 28,690 Construction in progress 7,178 4,468 Other, net 2,504 2,934 Total property, plant and equipment 68,486 109,712 Intangible assets Goodwill 605 14,605 Other 1,303 1,454 Total intangible assets 1,909 16,060 Investments and other assets Investment securities 91,426 69,061 Investments in capital 104,575 94,620 Long-term loans receivable from subsidiaries and associates 22,913 22,925 Long-term time deposits 6,037 - Retirement benefit asset 1,375 1,382 Other 911 5,722 Allowance for doubtful accounts (301) (74) Total investments and other assets 226,937 193,638 Total non-current assets 297,333 319,411 Total assets 608,783 617,536 YAMATO KOGYO CO., LTD. -7-
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(Millions of yen) As of March 31, 2024 As o f December 31, 2024 Liabilities Current liabilities Notes and accounts payable - trade 10,851 10,869 Current portion of long-term borrowings - 1,132 Accounts payable - other 4,694 7,474 Accrued expenses 2,982 4,162 Income taxes payable 4,057 1,795 Advances received - 1,924 Provision for bonuses 789 798 Other 1,875 3,003 Total current liabilities 25,250 31,160 Non-current liabilities Long-term borrowings - 1,037 Deferred tax liabilities 20,842 20,540 Retirement benefit liability 2,126 3,130 Other 5,621 5,953 Total non-current liabilities 28,591 30,661 Total liabilities 53,841 61,822 Net assets Shareholders' equity Share capital 7,996 7,996 Capital surplus 41 72 Retained earnings 421,207 412,018 Treasury shares (1,354) (5,823) Total shareholders' equity 427,890 414,264 Accumulated other comprehensive income Valuation difference on available-for-sale securities 11,072 10,202 Foreign currency translation adjustment 83,678 87,755 Remeasurements of defined benefit plans 231 211 Total accumulated other comprehensive income 94,982 98,168 Non-controlling interests 32,068 43,280 Total net assets 554,941 555,714 Total liabilities and net assets 608,783 617,536 YAMATO KOGYO CO., LTD. -8-
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(2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statements of Income (For the nine months) (Millions of yen) For the nine months ended December 31, 2023 For the nine months ended December 31, 2024 Net sales 122,205 126,248 Cost of sales 98,723 103,693 Gross profit 23,482 22,555 Selling, general and administrative expenses Packing and transportation costs 4,220 3,948 Salaries and allowances 1,640 2,083 Provision for bonuses 273 256 Retirement benefit expenses 119 162 Subsidiary stock acquisition-related cost - 1,171 Other 4,454 5,651 Total selling, general and administrative expenses 10,708 13,273 Operating profit 12,773 9,281 Non-operating income Interest income 8,470 9,536 Dividend income 488 604 Equity in earnings of affiliates 48,875 15,885 Foreign exchange gains 2,527 2,200 Other 505 875 Total non-operating income 60,867 29,102 Non-operating expenses Interest expenses 68 182 Loss on valuation of derivatives 184 - Loss on disaster 16 19 Other 20 131 Total non-operating expenses 289 333 Ordinary profit 73,351 38,049 Extraordinary income Gain on sale of non-current assets 3 13 Gain on sale of investment securities 6 - Total extraordinary income 10 13 Extraordinary losses Loss on retirement of non-current assets 294 223 Provision for loss on litigation 1,276 88 Value added taxes for prior periods 905 - Other 11 13 Total extraordinary losses 2,488 324 Profit before income taxes 70,873 37,738 Income taxes - current 16,658 15,742 Income taxes - deferred 1,097 819 Total income taxes 17,756 16,562 Profit 53,117 21,176 Profit attributable to non-controlling interests 1,255 1,794 Profit attributable to owners of parent 51,861 19,382 YAMATO KOGYO CO., LTD. -9-
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Quarterly Consolidated Statements of Comprehensive Income (For the nine months) (Millions of yen) For the nine months ended December 31, 2023 For the nine months ended December 31, 2024 Profit 53,117 21,176 Other comprehensive income Valuation difference on available-for-sale securities 3,167 (868) Foreign currency translation adjustment 25,979 1,153 Remeasurements of defined benefit plans, net of tax 4 (19) Share of other comprehensive income of entities accounted for using equity method 19,541 4,432 Total other comprehensive income 48,692 4,697 Comprehensive income 101,809 25,874 Comprehensive income attributable to Comprehensive income attributable to owners of parent 98,342 22,568 Comprehensive income attributable to non-controlling interests 3,466 3,306 YAMATO KOGYO CO., LTD. -10-
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(3) Quarterly Consolidated Statements of Cash Flows (Millions of yen) For the nine months ended December 31, 2023 For the nine months ended December 31, 2024 Cash flows from operating activities Profit before income taxes 70,873 37,738 Depreciation 4,795 6,538 Interest and dividend income (8,958) (10,140) Interest expenses 68 182 Equity in (earnings) losses of affiliates (48,875) (15,885) Decrease (increase) in trade receivables (4,373) 871 Decrease (increase) in inventories 3,102 4,243 Increase (decrease) in trade payables 324 (1,801) Other, net 2,294 (3,185) Subtotal 19,252 18,561 Interest and dividends received 67,319 62,064 Interest paid - (121) Income taxes paid (16,472) (20,474) Net cash provided by (used in) operating activities 70,099 60,029 Cash flows from investing activities Payments into time deposits (41,881) (229,825) Proceeds from withdrawal of time deposits 18,931 172,342 Purchase of property, plant and equipment (3,835) (10,256) Purchase of shares of subsidiaries resulting in change in scope of consolidation - (50,576) Other, net 956 463 Net cash provided by (used in) investing activities (25,827) (117,853) Cash flows from financing activities Repayments of long-term borrowings - (1,532) Purchase of treasury shares (1) (4,489) Dividends paid (18,139) (27,355) Dividends paid to non-controlling interests (1,994) (1,596) Other, net (213) (227) Net cash provided by (used in) financing activities (20,348) (35,201) Effect of exchange rate change on cash and cash equivalents 16,540 6,524 Net increase (decrease) in cash and cash equivalents 40,463 (86,500) Cash and cash equivalents at beginning of period 133,859 168,695 Cash and cash equivalents at end of period 174,323 82,194 YAMATO KOGYO CO., LTD. -11-
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(4) Notes to Quarterly Consolidated Financial Statements (Notes on Going Concern Assumptions) Not applicable. (Notes on Significant Changes in the Amount of Shareholders’ Equity) At the meeting of the Board of Directors held on October 31, 2024, the Company resolved on the acquisition of its own shares in accordance with Article 156 of the Companies Act, applied by replacement under Article 165, paragraph (3) of the same Act. Based on the resolution, the Company has been acquiring its own shares with the maximum of 3,000,000 shares and ¥ 25,500 million in total during the period from November 1, 2024 to October 31, 2025. The Company acquired 579,600 of its own shares during the nine months ended December 31, 2024, and treasury shares increased by ¥4,489 million. As a result, treasury shares were ¥5,823 million at the end of the third quarter of the fiscal year under review. (Application of Special Accounting Treatment for the Preparation of Quarterly Consolidated Financial Statements) (Calculation of tax expenses) Tax expenses are calculated by reasonably estimating the effective tax rate after applying tax effect accounting to profit before income taxes for the fiscal year ending March 31, 2025, excluding certain subsidiaries, and multiplying profit before income taxes for the third quarter by the estimated effective tax rate. (Changes in Accounting Policies) (Application of the Accounting Standard for Current Income Taxes) The Accounting Standard for Current Income Taxes (ASBJ Statement No. 27, October 28, 2022; hereinafter referred to as the “Revised Accounting Standard 2022”), etc. have been applied from the beginning of the first quarter of the current fiscal year. The amendment to categories in which current income taxes should be recorded (taxation on other comprehensive income) follows the transitional treatment prescribed in the proviso to paragraph 20-3 of the Revised Accounting Standard 2022 and the transitional treatment prescribed in the proviso to (2) of paragraph 65-2 of the Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No.28, October 28, 2022; hereinafter referred to as the “Revised Guidance 2022”). These changes in accounting policies have n o impact on the quarterly consolidated financial statements. For the amendment related to the revised accounting treatment for consolidated financial statements when gains or losses on sale of shares in subsidiaries resulting from transactions between consolidated companies were deferred for tax purposes, the Revised Guidance 2022 has been applied from the beginning of the first quarter of the current fiscal year. This change in accounting policies has been applied retrospectivel y, and the quarterly consolidated financial statements for the same period of the previous fiscal year and the consolidated financial statements for the previous fiscal year have been prepared reflecting the retrospective application. This change in accounting policies has no impact on the quarterly consolidated financial statements for the same period of the previous fiscal year and the consolidated financial statements for the previous fiscal year. (Additional Information) (Recording of equity in losses of affiliates for Middle East business) We have decided to withdraw from the Middle East business, and have therefore additionally recorded ¥25,871 million of equity in losses of affiliates, including impairment losses. YAMATO KOGYO CO., LTD. -12-
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(Segment Information, etc.) Ⅰ. Nine months ended December 31, 2023 (April 1, 2023 to December 31, 2023) Information about Operating Revenues and Profit (Loss) for Each Reportable Segment (Millions of yen) Reportable segment Other (Note 1) Total Reconcilia tions (Note 2) Consolidated (Note 3) Steel (Japan) Steel (Thailand) Trackwork materials Subtotal Net sales (1) Sales to customers 55,476 58,989 5,498 119,965 2,240 122,205 – 122,205 (2) Inter-segment sales and transfers 352 – – 352 – 352 (352) – Total 55,828 58,989 5,498 120,317 2,240 122,557 (352) 122,205 Segment profit 8,565 5,921 699 15,186 55 15,241 (2,468) 12,773 (Notes) 1. The “Other” category consists of business segments not included in reportable segments, and includes manufacture and sale of counterweights, transportation, medical waste treatment, and real estate leasing. 2. The reconciliations of segment profit included corporate general expenses of ¥ (2,468) million which were not allocated to the reportable segments. Corporate general expenses consist mainly of general expenses that are not attributable to the reportable segments. 3. Certain reconciliations were made between segment profit and operating profit in the quarterly consolidated statements of income. Ⅱ. Nine months ended December 31, 2024 (April 1, 2024 to December 31, 2024) 1. Information about Operating Revenues and Profit (Loss) for Each Reportable Segment (Millions of yen) Reportable segment Other (Note 1) Total Reconcilia tions (Note 2) Consolidated (Note 3) Steel (Japan) Steel (Thailand) Steel (Indonesia) Trackwork materials Subtotal Net sales (1) Sales to customers 44,912 53,477 19,333 6,279 124,003 2,245 126,248 － 126,248 (2) Inter- segment sales and transfers 518 167 – – 686 – 686 (686) – Total 45,431 53,644 19,333 6,279 124,689 2,245 126,934 (686) 126,248 Segment profit 4,334 4,313 3,447 960 13,055 244 13,300 (4,019) 9,281 (Notes) 1. The “Other” category consists of business segments not included in reportable segments, and includes manufacture and sale of counterweights, transportation, medical waste treatment, and real estate leasing. 2. The reconciliations of segment profit included corporate general expenses of ¥ (4,019) million which were not allocated to the reportable segments. Corporate general expenses consist mainly of general expenses that are not attributable to the reportable segments, and include subsidiary stock acquisition- related cost. 3. Certain reconciliations were made between segment profit and operating profit in the quarterly consolidated statements of income. 2. Changes in Reportable Segments The Company and its subsidiary Siam Yamato Steel Co., Ltd. Jointly acquired 80% of the shares of PT Nusantara Baja Profil (“NBP”) of Indonesia effective May 31, 2024. NBP changed its trade name to PT Garuda YAMATO KOGYO CO., LTD. -13-
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Yamato Steel (“GYS”) as of the same date. As the Group consists of reportable segments categorized by business or region, with each based on a production and sales structure, we added “Steel (Indonesia)” as a new reportable segment. Since GYS has been included in the scope of consolidation from the end of the first quarter, its financial results will bel incorporated in the consolidated financial results from the second quarter (mid-term) of the consolidated fiscal year ending March 31. 2025. 3. Disclosure of Impairment Losses on Non-current Assets or Goodwill, etc. for Each Reportable Segment (Significant Change in the Amount of Goodwill) The “Steel (Indonesia)” segment recorded goodwill of ¥14,076 million (a provisionally calculated amount because the allocation of acquisition cost has not been finalized as of the end of the third quarter. 4. Information on Assets for Each Reportable Segment (Significant Increase in Assets Due to Acquisition of a Subsidiary) The assets of the “Steel (Indonesia)” segment increased by ¥69,273 million in the third quarter of the fiscal year under review from the end of the previous fiscal year due to the acquisition of GYS, our new consolidated subsidiary, at the end of the first quarter. (Significant Subsequent Events) Not applicable. YAMATO KOGYO CO., LTD. -14-