Morito : Consolidated Financial Results for the First Nine Months of the Fiscal Year Ending November 30, 2022

Consolidated Financial Results for the First Nine Months of the Fiscal Year Ending

November 30, 2022 [Japanese GAAP]

					October 14, 2022
Company name:	Morito Co., Ltd.	Stock exchange listing: Tokyo Stock Exchange
Code number:	9837		URL https://www.morito.co.jp
Representative: Takaki Ichitsubo, Representative Director, CEO
	Kiyomi Akui, Director, Senior Executive Officer, Division
Contact:	Manager of Corporate Administrative Division and Division	(Phone) [phone]
	Manager of Business Management Division
Scheduled date of filing	October 17, 2022	Scheduled date of commencing	-
quarterly securities report:	dividend payments:
Availability of supplementary briefing material on quarterly financial results	: Available
Schedule of quarterly financial results briefing session	: None scheduled

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

1. Consolidated Financial Results for the First Nine Months of the Fiscal Year Ending November 30, 2022 (December 1, 2021 to August 31, 2022)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Million yen		%	Million yen	%	Million yen	%	Million yen	%
First Nine Months of	35,172		10.6	1,586	43.7	1,747	38.7	1,242	64.1
FY2022
First Nine Months of	31,802		6.2	1,104	163.7	1,259	201.9	757	352.1
FY2021

(Note) Comprehensive income:	First Nine Months ¥3,034 million [ 85.9%]
	of FY2022

First Nine Months ¥1,632 million [ -%] of FY2021

Basic earnings per

Diluted earnings per

share

share

Yen

Yen

First Nine Months of

46.08

-

FY2022

First Nine Months of

27.65

-

FY2021

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

First Nine Months of

48,448

35,649

73.5

FY2022

FY2021

45,938

33,914

73.7

(Reference) Equity: First Nine Months of FY2022

¥35,593 million

FY2021

¥33,858 million

2. Dividends

Annual dividends

1st quarter-

2nd quarter-

3rd quarter-

Year-end

Total

end

end

end

Yen

Yen

Yen

Yen

Yen

FY2021

-

9.00

-

17.00

26.00

FY2022

-

13.50

-

FY2022 (Forecast)

15.50

29.00

(Note) Revisions to the latest announcement of dividend forecast

: None

3. Consolidated Financial Results Forecast for the Fiscal Year Ending November 30, 2022 (December 1, 2021 to November 30, 2022)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	46,000		5.4	2,000	23.5	2,100	14.5	1,550	10.1	57.78
(Note) Revisions to the latest announcement of performance forecast	: None

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Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in the scope of consolidation)
2. Adoption of special accounting treatment for preparing quarterly consolidated financial statements

• No
• No

(3) Changes in accounting policies, changes in accounting estimates, and retrospective restatement

1)	Changes in accounting policies due to the revision of accounting standards	:	Yes
2)	Changes in accounting policies other than 1) above	:	No
3)	Changes in accounting estimates	:	No
4)	Retrospective restatement	:	No

1. Total number of issued shares (common shares)
2. 1. Total number of issued shares at the end of the period (including treasury shares): August 31, 2022: 30,000,000 shares
      FY2021: 30,800,000 shares
   2. Total number of treasury shares at the end of the period: August 31, 2022: 3,295,500 shares
      FY2021: 3,510,000 shares
   3. Average number of shares during the period: August 31, 2022: 26,960,430 shares
      3Q of the fiscal year ended November 30, 2021: 27,381,720 shares

• These quarterly consolidated financial results are outside the scope of audit by certified public accountants or audit firms.
• Explanation of the proper use of financial results forecast and other notes

The earnings forecasts and other forward-looking statements herein are based on information currently available and certain assumptions judged to be reasonable. Actual results may differ significantly from these forecasts due to a wide range of factors.

As for suppositions that form the assumptions for the forecast of financial results and cautionary notes concerning the use thereof, please refer to "(2) Forecast of Consolidated Business Results and other Forward-looking Information" in "1. Qualitative Information for the Period under Review" on page 5.

The Company and some of the Morito Group companies have introduced the "Japanese version of the employee stock ownership plan (J-ESOP)" and the "officer remuneration board incentive plan (BIP) trust." Consequently, the shares of the Company held by Custody Bank of Japan, Ltd. (trust account E) and The Master Trust Bank of Japan, Ltd. (officer remuneration BIP trust account), respectively, are included in treasury shares.

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Table of Contents
1. Qualitative Information for the Period under Review .............................................................................................	4
(1)	Overview of Business Results for the Period under Review .........................................................................	4
(2)	Forecast of Consolidated Business Results and other Forward-looking Information....................................	5
2. Quarterly Consolidated Financial Statements and Primary Notes ........................................................................	6
(1)	Quarterly Consolidated Balance Sheets .......................................................................................................	6
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income................................................	8
	Quarterly Consolidated Statements of Income ................................................................................................	8
	Quarterly Consolidated Statements of Comprehensive Income ......................................................................	9
(3)	Notes to the Quarterly Consolidated Financial Statements ........................................................................	10
	(Notes on Going Concern Assumption) .........................................................................................................	10
	(Notes on Significant Changes in the Amount of Shareholders' Equity) ........................................................	10
	(Changes in Accounting Policies) ..................................................................................................................	11
	(Additional Information) .................................................................................................................................	12
	(Segment Information, Etc.)...........................................................................................................................	13

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1. Qualitative Information for the Period under Review

1. Overview of Business Results for the Period under Review
   After being hit hard by the COVID-19 pandemic, there were signs of an economic recovery in the operating environment during the first nine months of the fiscal year ending November 30, 2022 (December 1, 2021 to August 31, 2022). However, the outlook for the future remains uncertain due to a combination of various risks, such as soaring raw material costs associated with rising crude oil prices triggered by the situation in Ukraine and other factors as well as currency fluctuations caused by global monetary tightening.
   The Morito Group (the "Group"), which is mainly engaged in apparel-,product-, and transportation-related businesses, faced a number of hurdles that kept profits low, including soaring prices and difficulties in procuring raw materials for its mainstay products, production cutbacks and stoppages by automakers due to semiconductor shortages, delays in marine transportation, and rising transportation costs. On the other hand, the Group enjoyed favorable sales of accessories and products with superior functionality, including medical wear and working wear, which are unaffected by trends, as well as yoga, fishing, and other sporting goods, and medical device-related products. Under its newly coined "Rideeco" initiative aimed at realizing a sustainable society, the Group moved forward with the development and sales of environmentally friendly products, using discarded fishing nets and fabric scraps from garment factories, with a focus on winning new business contracts. The Group has also made ongoing efforts to cut transportation and other costs, which has substantially improved its profitability.
   As a result, for the first nine months of the fiscal year under review, net sales increased 10.6% year on year to ¥35,172 million. Operating profit was up 43.7% to ¥1,586 million, ordinary profit grew 38.7% to ¥1,747 million, and profit attributable to owners of the parent increased 64.1% to ¥1,242 million.
   The Group has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. effective as of the beginning of the first quarter of the fiscal year under review. This change resulted in a decrease of ¥252 million in net sales, ¥19 million in operating profit respectively and resulted in an increase of ¥24 million in ordinary profit and profit attributable to owners of the parent respectively for the first nine months of the fiscal year under review.
   Exchange rates used for the conversion of revenue and expenses of the Group's overseas subsidiaries during the preparation of consolidated financial statements for the first nine months of the fiscal year under review are as follows.

	1Q		2Q		3Q
USD	113.71	(104.51)	116.34	(106.09)	129.73	(109.52)
EUR	130.04	(124.58)	130.40	(127.80)	138.25	(131.93)
CNY	17.78	(15.81)	18.31	(16.38)	19.60	(16.96)
HKD	14.60	(13.48)	14.90	(13.68)	16.53	(14.10)
TWD	4.09	(3.67)	4.16	(3.78)	4.41	(3.91)
VND	0.0050	(0.0045)	0.0051	(0.0046)	0.0056	(0.0048)
THB	3.41	(3.42)	3.52	(3.50)	3.77	(3.50)
MXN	5.48	(5.08)	5.67	(5.21)	6.48	(5.47)

(Note) The exchange rate of the same period in the previous fiscal year is stated in parentheses.

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Business results by segment are as follows.

Japan

The Apparel Division saw increases in sales of accessories for working wear and medical wear sold in Europe and the U.S. as well as casual wear and sportswear accessories.

The Product Division enjoyed increases in sales of medical device-related products, products for one-coin shops (like 100-yen stores), construction safety products, and snowboarding, surfing, and outdoor products.

In the Transportation Division, sales of automotive interior components to Japanese automotive manufacturers increased.

As a result, net sales grew 9.9% year on year to total ¥24,139 million, and segment profit rose 24.0% year on year to reach ¥1,168 million.

Due to the adoption of the Accounting Standard for Revenue Recognition, etc., net sales and segment profit fell ¥252 million and ¥19 million respectively.

Asia

In China and Hong Kong apparel operations, sales of working wear accessories for the European and U.S. markets and accessories for casual wear were up while apparel operations in Vietnam enjoyed growing sales of athletic shoes accessories.

In the Transportation Division, sales of automotive interior components to Japanese automotive manufacturers decreased in China due to the semiconductor shortage.

As a result, net sales were up 5.3% year on year to total ¥6,277 million, and segment profit increased 107.1% year on year to reach ¥552 million.

Europe and the U.S.

In the Apparel Division, sales of accessories related to working wear and casual wear as well as accessories for high- end down wear increased.

In the Transportation Division, sales of automotive interior components to Japanese automotive manufacturers decreased due to the semiconductor shortage.

As a result, net sales increased 22.8% year on year to total ¥4,755 million, and segment profit jumped 214.7% year on year to reach ¥126 million.

1. Forecast of Consolidated Business Results and other Forward-looking Information
   No change has been made to the consolidated financial forecast figures for the fiscal year ending November 30, 2022, which were announced in the Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending November 30, 2022 (dated July 14, 2022).

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