Suzumo Machinery : Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2023 (JGAAP)

Consolidated Financial Results for the First Three Months of

the Fiscal Year Ending March 31, 2023 (JGAAP)

August 10, 2022

Company name:	Suzumo Machinery Co., Ltd.
Listing:	Tokyo Stock Exchange
Stock code:	6405
URL:	https://www.suzumokikou.com/
Representative:	Minako Suzuki, President
Contact:	Toru Shiga, Executive Officer and General Manager of Administration Division
Phone:	[phone]

Scheduled date to file quarterly report:	August 10, 2022
Scheduled date for dividend payment:	-
Supplementary materials for quarterly financial statements:	None
Results briefing to be held:	None

(Amounts of less than one million yen are rounded down)

1. Consolidated financial results for the three months ended June 30, 2022 (April 1, 2022 to June 30, 2022)

(1) Consolidated Operating Results					(Percentages indicate year-on-year change)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Three months ended	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen	%
June 30, 2022	3,141		14.5	257		-29.2	266	-28.9	153	-45.8
June 30, 2021	2,743		39.1	363		655.0	374	678.0	284	860.7
(Note) Comprehensive income: Three months ended June 30, 2022: 231 million yen (-29.9%)
	Three months ended June 30, 2021: 329 million yen (746.2%)
	Earnings		Diluted earnings
	per share		per share
Three months ended			Yen			Yen
June 30, 2022			11.93			―
June 30, 2021			22.04			―

(Note) The Company split shares of common stock at a ratio of 2 for 1 on August 1, 2022.

Earnings per share are calculated based on the assumption that the stock split was implemented at the beginning of the previous fiscal year.

(2) Consolidated Financial Position
	Total assets	Net assets		Equity ratio
As of		Millions of yen		Millions of yen			%
June 30, 2022		16,442		13,226			80.3
March 31, 2022		16,416		13,254			80.6
(Reference) Shareholders' equity: As of June 30, 2022: 13,207 million yen
	As of March 31, 2022: 13,236 million yen
2. Dividends
					Annual dividend per share
			1st		2nd		3rd	Year-end	Total
			quarter		quarter	quarter
			Yen		Yen	Yen		Yen	Yen
Fiscal year ended March 31, 2022			―		0.00	―	40.00	40.00
Fiscal year ending March 31, 2023			―
Fiscal year ending March 31, 2023 (forecast)			15.00	―	16.00	31.00

(Note) Changes in dividend forecast from the most recent announcement: None

(Note) The Company split shares of common stock at a ratio of 2 for 1 on August 1, 2022.

For the fiscal year ended March 2022, the actual amount of dividends before the stock split is stated. For the fiscal year ending March 2023 (forecast), the amount of dividends after the stock split is stated.

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3. Consolidated earnings forecast for the fiscal year ending March 31, 2023 (April 1, 2022 to March 31, 2023)

(Percentages indicate year-on-year change)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Earnings per share
		owners of parent
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full-year	13,000		12.4	1,800	18.6	1,800	16.6	1,315	22.9	101.81

(Note) Changes in earnings forecast from the most recent announcement: None

(Note) The Company split shares of common stock at a ratio of 2 for 1 on August 1, 2022.

Earnings per share are calculated based on the assumption that the stock split was implemented at the beginning of the previous fiscal year.

Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in a change in the scope of consolidation): None

Newly included:	-
Excluded:	-

1. Application of special accounting treatment in preparing the quarterly financial statements: Yes
   (Note) For details, please see the attached materials on page 11, "2. Quarterly Consolidated Financial Statements and Primary Notes; (3) Notes to Quarterly Consolidated Financial Statements (Application of special accounting treatment in preparing the quarterly financial statements)."
2. Changes in accounting policies, changes in accounting estimates, and retrospective restatement

1)	Changes in accounting policies due to revision of accounting standards:	None
2)	Changes in accounting policies due to other reasons:	None
3)	Changes in accounting estimates:	None
4)	Retrospective restatement:	None

1. Total number of issued shares (common stock)
2. 1. Total number of issued shares at the end of the period (including treasury shares):

June 30, 2022:	12,960,000 shares
March 31, 2022:	12,960,000shares
2) Total number of treasury shares at the end of the period:
June 30, 2022:	58,198 shares
March 31, 2022:	56,900 shares
3) Average number of shares outstanding during the period:
Three months ended June 30, 2022:	12,902,425 shares
Three months ended June 30, 2021:	12,888,110 shares

(Note) Company split shares of common stock at a ratio of 2 for 1 on August 1, 2022.

The number of issued shares (common stock) is calculated based on the assumption that the stock split was implemented at the beginning of the previous fiscal year.

• The quarterly financial statements are outside the scope of quarterly reviews by certified public accountants and auditing firms.
• Explanation of the proper use of financial results forecast and other notes
  Forward-looking statements in this document, including outlook on future performance, are based on currently available information and certain assumptions that the Company regards as reasonable, and the Company does not in any way guarantee their achievement. Actual results may differ substantially from the projections herein depending on various factors. For the preconditions of and precautions in using the financial results forecast, please refer to "1. Qualitative Information on Quarterly Financial Results, (3) Explanation of Consolidated Financial Earnings Forecast and Other Forward-Looking Information" on page 4 of the Attachment.

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Contents of Attached Materials
1. Qualitative Information on Quarterly Financial Results ..................................................................................................	2
(1)	Explanation of Business Results ..................................................................................................................................	2
(2)	Explanation of Financial Condition ...............................................................................................................................	4
(3)	Explanation of Consolidated Financial Earnings Forecast and Other Forward-Looking Information ............................	4
2. Quarterly Consolidated Financial Statements and Primary Notes .................................................................................	5
(1)	Consolidated Balance Sheet ........................................................................................................................................	5
(2)	Consolidated Statement of Income and Consolidated Statement of Comprehensive Income......................................	7
(3)	Notes to Quarterly Consolidated Financial Statements ................................................................................................	9
(Notes on going concern assumption)............................................................................................................................	9
(Notes in the event of significant changes in shareholders' equity) ................................................................................	9
(Application of special accounting treatment in preparing the quarterly financial statements) .......................................	9
(Subsequent Material Events) ......................................................................................................................................	10

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Business Results

In the first three months of the fiscal year ending March 31, 2023 (April 1, 2022-June 30, 2022), increased raw material prices due to rising resource prices and stagnation in supply chains caused by the urban lockdown in China combined to suppress business confidence in Japan's manufacturing sector. Meanwhile, the non-manufacturing sector showed a recovery trend on the back of improvements in personal services and accommodation and food services, which had been impacted by COVID-19. On an all-industry basis, corporate earnings remained high, and capital investment continued to be proactive.

However, the economy presently faces numerous downside risks, including the outbreak of a new variant of COVID-19, Russia's invasion of Ukraine, China's zero-COVID policy, the depreciation of the yen, and increasing resource prices.

Under these conditions, during the three months ended June 30, 2022, demand for our products remained high as the food service and retail industries advanced their mechanization and laborsaving initiatives at an accelerated pace. On the other hand, the semiconductor and material supply shortage continued to affect our manufacturing activities, and we responded to the growing demand by securing new material and part vendors and changing product designs to enable the use of alternative parts.

In the domestic market, while the business environment surrounding the restaurant and retail industries remained challenging due to soaring raw material prices and utility costs, the full lifting of priority preventative measures against the spread of COVID-19 in March 2022 resulted in a recovery trend in demand for restaurant services, and the spread of takeout and delivery services and the continued movement toward laborsaving continued. By business category, while demand for products from supermarkets and others declined as stay-at-home demand normalized, demand for the Fuwarica rice serving machine from restaurants and cafeterias expanded, and demand for sushi robots from major conveyor belt sushi chains remained robust. In addition, domestic sales rose year on year since sales from Japan System Project Co., Ltd. (JSP), which joined our group in October 2021, contributed from the first quarter of the current fiscal year.

Overseas, demand for our products expanded as the intensified labor shortage and rising labor costs in the food service and retail industries accelerated the move to mechanization. By region, overseas sales were up year on year due to the growing demand for sushi robot products from food service operators and supermarkets, especially in North America.

As a result, net sales in the three months ended June 30, 2022 stood at 3,141 million yen (+14.5% YoY). Of the total, domestic sales were 2,041 million yen (+12.3% YoY) and overseas sales were 1,099 million yen (+18.8% YoY).

Summary of results in the first three months of the fiscal year ending March 31, 2023

			Three months ended	Three months ended	Amount of	Percentage
			June 30, 2021	June 30, 2022	change	change
			Millions of yen	% of net sales	Millions of yen	% of net sales	Millions of yen	%
Net sales		2,743	100.0	3,141	100.0	397	14.5
	Domestic		1,817	66.3	2,041	65.0	223	12.3
	Overseas		925	33.7	1,099	35.0	174	18.8
Gross profit		1,330	48.5	1,497	47.7	166	12.5
Operating profit		363	13.3	257	8.2	-106	-29.2
Ordinary profit		374	13.7	266	8.5	-108	-28.9
Profit attributable	to	284	10.4	153	4.9	-130	-45.8
owners of parent

On the profit front, gross profit was up 12.5% to 1,497 million yen owing to the increase in net sales. Operating profit decreased 29.2% to 257 million yen as a result of the addition of JSP to the group, an increase in packing and transportation

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costs driven by soaring logistics costs, and selling, general and administrative expenses remaining generally in line with plans, centered on costs for the establishment of various systems and human resource investments toward business growth. Ordinary profit was down 28.9% to 266 million yen, and profit attributable to owners of parent was down 45.8% to 153 million yen attributable to an extraordinary loss of 25 million yen on the extinguishment of tie-in shares resulting from the absorption- type merger of Suzumo Maintenance Co., Ltd.

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