Iwatani : Supplementary Explanation for FY23 (with scripts)

Financial Results for FY2023

(Results for the Fiscal Year Ended March 31, 2024)

May 23, 2024

Iwatani Corporation

(Forward-Looking Statements)	〔Security Code 8088〕
This material contains forward-looking statements based on expectations and are not guarantees or assurances of future performance.
Accordingly, please be fully aware that results may differ materially from those expectations.

Copyright © Iwatani Corporation. All rights reserved.

Contents

1.FY 2023 Overview -Highlights

-Consolidated Operating Results

-Consolidated Operating Results of each Segment -Operating Profit Analysis of each Segment -Balance Sheet (Consolidated)

2.FY 2024 Forecasts

-Forecasts for the Year Ending March 31, 2025 -Forecasts of each Segment

3.Progress of Medium-Term Management Plan "PLAN27"

-Progress of Management Targets

-Progress of Priority Measures

4.Capital and Business Alliance with Cosmo Energy Holdings Co., Ltd. (For Reference)

FY2023 Statement of Cash Flows

PLAN27 Progress by Business Segments

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1

FY 2023 Overview

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2

Highlights

Net sales decreased. Operating profit increased. Ordinary profit and profit attributable to owners of parent reached record highs for the ninth consecutive year.

Summary of Financial Results for FY2023

• Net sales decreased due to low import prices compared to the previous year and lower selling prices of LPG, as well as weak sales of rechargeable battery materials for next-generation automobiles.
  (FY2023 average CP in yen: 81,774 yen (CP: $569 USD Exchange rate: ¥143.50/$)
  (FY2022 average CP in yen: 96,106 yen (CP: $725 USD Exchange rate: ¥133.73/$)

■ Operating profit increased due to the efforts in Industrial Gases & Machinery business to reduce the increased production costs and positive impact of LPG price fluctuation versus the previous year. Ordinary profit and profit attributable to owners of parent increased, due in part to the recording of a gain on bargain purchase as non-operating profit resulting from accounting for Cosmo Energy Holdings(hereinafter Cosmo Energy HD) using the equity method.

Net sales

Operating profit

Ordinary profit

Profit attributable to owners of parent

847.8 billion yen	YoY (58.3) billion yen	(6.4)%
50.6 billion yen	YoY +10.6 billion yen	+26.5%
66.2 billion yen	YoY +19.1 billion yen	+40.8%
47.3 billion yen	YoY +15.3 billion yen	+47.9%

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■ Operating profit quarterly trends (100 million yen)

			165			173	187
88		91		85	60
	54
1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
	FY2022*		FY2023

*Reflects the finalization of provisional accounting treatment for business

combinations.

3

In the fiscal year ended March 31, 2024, sales declined YoY, but operating profit increased, and ordinary profit and net income reached new highs for the ninth consecutive year.

3

Consolidated Operating Results

(100 million yen)

■ Net sales

	FY23	FY22	YoY	FY23	9,062	Integrated
	Results	Results	(A)-(B)	Energy	217
	Forecasts	Materials	1
	(A)	(B)	(A)/(B)				8,478
Net Sales	8,478	9,062	(583)	9,070			(360)	Industrial	(441)	Others
(6.4)%				Gases &
							Machinery
Gross profit	2,294	2,129	+165	ー
			+7.8%
Operating	506	400	+106	450
profit	+26.5%
Operating profit
		+67			FY22					FY23
excluding impact of	498	431	450
LPG import price	+15.5%
fluctuation					■ Operating profit
Non-operating	155	69	+85	ー
profit	+123.1%
						51	Materials Others	506
Equity gains of			+93
	ー	ー					(2)	(1)
affiliated companies	93			58
related to Cosmo
Energy HD			ー		400		Industrial
	662	470	+191	503		Gases &
Ordinary profit			Integrated	Machinery
+40.8%			Energy
Profit attributable	473	320	+153	335
to owners of parent	+47.9%
						FY22					FY23

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Net sales decreased JPY58.3 billion, or 6.4%, from the previous fiscal year to JPY847.8 billion, mainly due to lower LPG import prices, which were lower than the previous fiscal year, and lower sales volumes of battery-related materials for next-generation vehicles.

Gross profit increased JPY16.5 billion, or 7.8%, to JPY229.4 billion as a result of improved profitability in the LPG retail sector and the industrial gases & machinery business' response to higher production costs from the previous fiscal year.

Operating profit increased JPY10.6 billion or 26.5% to JPY50.6 billion due to higher gross profit, despite a JPY5.9 billion increase in SG&A expenses due to higher personnel and depreciation costs.

Non-operating income increased by JPY8.5 billion from the previous year due to a gain on bargain purchase of JPY9.3 billion resulting from accounting for Cosmo Energy Holdings (hereinafter Cosmo Energy HD) using the equity method.

As a result, ordinary profit increased by JPY19.1 billion or 40.8% to JPY66.2 billion, and net profit increased by JPY15.3 billion or 47.9% to JPY47.3 billion.

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Consolidated Operating Results (Segment Analysis)

(100 million yen)

	FY23	FY22	YoY	YoY
	Results (A)	Results (B)	(A)-(B)	(A)/(B)
Net sales	8,478	9,062	(583)	(6.4)%
■ Integrated Energy	3,571	3,932	(360)	(9.2)%
■ Industrial Gases & Machinery	2,621	2,404	+217	+9.1%
■ Materials	1,982	2,424	(441)	(18.2)%
■ Others	303	302	+1	+0.4%
Operating profit	506	400	+106	+26.5%
■ Integrated Energy	201	143	+58	+41.1%
■ Industrial Gases & Machinery	217	165	+51	+31.1%
■ Materials	123	126	(2)	(2.4)%
■ Others, Adjustments	(35)	(34)	(1)	ー
Operating profit excluding impact of LPG import
498	431	+67	+15.5%
price fluctuation
Ordinary profit	662	470	+191	+40.8%
Profit attributable to owners of parent	473	320	+153	+47.9%

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5

Impact of LPG Import Price Fluctuations

Assumption

Wholesale price is linked to LPG import price.

Assumption

Term from import to sale is

①

②

approx. three months.

Approx. three months

LPG import price

linked to

Wholesale price

-LPG from Middle East(CP)

-LPG from the US(MB)

Gas-producing country

Iwatani's LPG

LPG users

import & storage terminal

Legally required reserves:40 days

LPG import

Produces short-term impact on performance(due to market fluctuations)

price

(If LPG import prices return to original levels, impact will be zero*.)

fluctuation

Rising phase

Cheap inventory sold at high price

Falling phase

Expensive inventory sold at low price

Basis for selling price

Cost basis

Earnings

Earnings

Cost basis

booster effect

depressor effect

Basis for selling price

*Actual impact on performance varies depending on inventory volume, time of sale, sales volume, etc.	6
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I will briefly explain the impact of LPG import price fluctuations on our business performance.

The Company imports LPG from the Middle East and the US, and in order to smooth out import price fluctuations, with many of our wholesale partners, we have a pricing structure that links the selling price to the import price.

On the other hand, the "first-in,first-out" method is used for inventory valuation. However, since it takes approximately three months from the importation of LPG to its sale, plus the 40-day legal stockpiling period, at the time of sale, the inventory purchased approximately three months earlier is sold.

While this results in selling low cost inventory at a higher price when LPG import prices rise, in the event of a decline, high cost inventory will be sold at a lower price. These effects are referred to as the impact of LPG import price fluctuations.

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Operating Profit Analysis of Integrated Energy

Results												(100 million yen)
			FY23		FY22		YoY			YoY		FY23	Achievement
			Results		Results					Forecasts	rate
					(A)-(B)		(A)／(B)
			(A)		(B)				(C)	(A)/(C)
Net sales		3,571		3,932		(360)		(9.2)%			3,980	89.7%
Operating profit		201		143		+58		+41.1%			180	112.1%
Operating profit		194		174		+19		+11.3%			180	107.9%
excluding impact of LPG
import price fluctuation
Analysis of changes in operating profit					(million yen)
			1,120	330					760	20,173
3,890
				(230)
14,301

Main factors

(million yen)

• Impact of LPG import price fluctuation +3,890

(100 million	1Q	2Q	1H	3Q	4Q	Full
yen)	year
FY23	(17.3)	(34.0)	(51.3)	+32.6	+26.3	+7.5
FY22	+20.4	(15.0)	+5.3	(29.3)	(7.3)	(31.3)
Changes	(37.7)	(19.0)	(56.7)	+61.9	+33.7	+38.9

• Retail +1,120

-improvement in profitability of LPG

• Wholesale +330

-improvement in profitability by reducing procurement costs and revising selling prices

• Industrial (230)

-decrease in LPG demand for calorific adjustment for city gas

• Others +760

-solid sales of cassette gas canisters and gas- related safety equipment

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In the integrated energy business, sales decreased by JPY36 billion to JPY357.1 billion due to lower LPG import prices compared to the previous year and lower LPG sales in the industrial sector, mainly to large customers.

Profits, on the other hand, increased 41.1% to JPY20.1 billion due to improved profitability in the LPG retail sector and the impact of LPG import price fluctuations that added about JPY3.8 billion versus the previous year.

Operating profit excluding the impact of LPG import price fluctuations was JPY19.4 billion, an increase of JPY1.9 billion.

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Operating Profit Analysis of Industrial Gases & Machinery

	Results								(100 million yen)
			FY23	FY22	YoY			YoY	FY23	Achievement
			Results	Results			Forecasts	rate
			(A)-(B)		(A)／(B)
			(A)	(B)		(C)	(A)/(C)
	Net sales	2,621	2,404	+217		+9.1%	2,592	101.1%
	Operating profit	217	165	+51		+31.1%	175	124.0%
	Analysis of changes in operating profit			(million yen)
					1,880		570	21,705
				1,220

1,470

16,561

FY22	Air separation	Hydrogen	Specialty	Gas-related	FY23
	gases	Business	gases	equipment

Main factors	(million yen)
■ Air separation gases	+1,470

-decrease in sales volume mainly for the electronic component industry

-took an action toward growing production cost

■ Hydrogen Business +1,220

-decrease in sales volume mainly for the semiconductor industry

-took an action toward growing production cost

■ Specialty gases +1,880

-stable procurement and supply of helium and carbon dioxide

■ Gas-related equipment +570

-increase in sales of power semiconductors- related equipment and gas-related equipment

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In the industrial gases & machinery business, sales volumes of air separation gas and hydrogen gas declined due to a drop in demand, mainly from the semiconductor and electronic components industries, but profitability improved as a result of efforts to address rising production costs.

For specialty gases, we worked to ensure a stable supply of helium gas and carbon dioxide gas, and for machinery and equipment, sales of equipment for power semiconductors, a growing field, and gas supply facilities increased.

As a result, net sales increased JPY21.7 billion to JPY262.1 billion, and operating profit increased by 31.1% to JPY21.7 billion.

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Operating Profit Analysis of Materials

Results

(100 million yen)

Main factors

(million yen)

FY23

FY22

YoY

YoY

FY23

Achievement

Results

Results

Forecasts

rate

(A)-(B)

(A)／(B)

(A)

(B)

(C)

(A)/(C)

■ Functional plastics products

+150

Net sales

1,982

2,424

(441)

(18.2)%

2,202

90.0%

-increase in sales of PET resin for beverage

bottles

Operating profit

123

126

(2)

(2.4)%

123

100.0%

■ Resources & advanced materials (60)

-increase in sales of biomass fuel

Analysis of changes in operating profit

(million yen)

-mineral sands sales declined in Japan despite

strong production and sales at our own

overseas mining sites

150

150

■ Metals + 150

12,604

(60)

-solid sales of stainless steel and overseas

12,305

processed metal business

(530)

■ Electronic Materials (530)

-sluggish sales of battery-related materials

for next-generation vehicles due in part to

inventory adjustments at sales destinations

-strong sales of functional films for smartphones

FY22

Functional

Resources &

Metals

Electronic

FY23

Plastics

Advanced

Materials

Products

Materials

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9

In the materials business, sales of PET resins for beverage bottles, biomass fuels, and high-performance film materials for smartphones were strong. Sales of stainless steel remained steady.

As for mineral sands, production and sales at our own overseas mining sites were strong, but domestic sales to titanium dioxide manufacturers, our major customer, declined.

Sales of battery-related materials for next-generation vehicles were sluggish due to declining market conditions and inventory adjustments for customers.

As a result, net sales decreased JPY44.1 billion to JPY198.2 billion, and operating profit decreased by 2.4% to JPY12.3 billion.

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