SPK : Summary of Consolidated Financial Results For the First Half Ended September 2022

Summary of Consolidated Financial Results

For the First Half Ended September 2022 [Japan GAAP]

				October 31, 2022
Name of Company:	SPK CORPORATION
Stock Code:	7466	URL: https://www.spk.co.jp/
Stock Exchange Listing:	Tokyo Stock Exchange, Prime Market
Representative	Title: President and Representative Director	Name: Kyoichiro Oki
Contact Person	Title: Senior Managing Director and General	Name: Shuji Fujii
		Manager of Administration Division
Phone:	[phone]
Date of filing of quarterly securities report:	November 10, 2022 (tentative)
Date of commencement of dividend payment:	December 1, 2022 (tentative)
Supplementary explanatory documents:	None
Earnings presentation:			Yes

(Yen in millions, rounded down)

1. Financial results for the first half ended September 2022 (April 1, 2022 - September 30, 2022)

1. Results of Operations (Consolidated)

(Percentage figures represent year on year changes)

								Profit attributable
	Net sales		Operating profit	Ordinary profit	to owners of
								parent
	Million yen		%	Million yen	%	Million yen	%	Million yen		%
First half ended September 2022	25,761		12.5	1,049	6.3	1,185	6.8	816		2.2
First half ended September 2021	22,899		18.2	987	22.6	1,110	39.7	799		49.3

Note: Comprehensive income:

1H FY3/23:

1,194 million yen [33.2%]

1H FY3/22:

896 million yen

[69.5%]

Earnings per share

Earnings per share fully

diluted

Yen

Yen

First half ended September 2022

81.35

-

First half ended September 2021

79.59

-

(2) Financial Position (Consolidated)

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

As of September 30, 2022

31,384

21,197

67.5

As of March 31, 2022

30,014

20,223

67.4

Reference: Shareholders' equity:

As of Sep. 30, 2022: 21,197 million yen As of Mar. 31, 2022: 20,223 million yen

2. Dividends

Dividend per share

End of 1Q

End of 2Q

End of 3Q

End of FY

Total

Yen

Yen

Yen

Yen

Yen

FY3/22

-

18.00

-

22.00

40.00

FY3/23

-

20.00

FY3/23 (estimated)

-

24.00

44.00

Note: Change in the estimation of dividend from the latest announcement: None

3. Forecast for the fiscal year ending March 2023 (Consolidated, April 1, 2022 - March 31, 2023)

(Percentage figures represent year on year changes)

Net sales

Operating profit

Ordinary profit

Profit attributable to

Earnings per

owners of parent

share

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full year

50,000

4.9

2,170

6.6

2,300

0.6

1,700

4.6

169.29

Note: Change in the forecast from the latest announcement: None

• Notes
• 1. Changes in significant subsidiaries (Changes in specific subsidiaries accompanied by changes in the scope of consolidation): None
  2. Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
  3. Changes in accounting principles and estimates, and retrospective restatement
  4. 1. Changes due to revision of accounting standards: Yes
     2. Changes other than in (a): None
     3. Changes in accounting estimates: None
     4. Retrospective restatement: None

(Note) For more information, please see "2. Quarterly Consolidated Financial Statements and Important Notes

(3) Notes to quarterly consolidated financial statements (Change in accounting policy)" on page 7 of Supplementary Information.

(4) Number of shares outstanding (common stock)
(a) Shares outstanding (including treasury shares)	End of 1H	FY3/23:	10,453,800	End of FY3/22:	10,453,800
(b) Treasury shares	End of 1H	FY3/23:	411,712	End of FY3/22:	411,712
(c) Average number of shares outstanding	1H	FY3/23:	10,042,088	1H FY3/22:	10,042,088

* This report is exempt from the audit procedure by certified public accountants or accounting firms.

* Cautionary statement regarding forecasts of operating results and special notes

Forward-looking statements in these materials are based on information available to management at the time this report was prepared and assumptions that management believes are reasonable. Actual results may differ significantly from these statements for a number of reasons. For more information about the forecasts, please see "1. Results of Operations (3) Outlook" on page 3 of Supplementary Information.

Index for Supplementary Information
1.	Results of Operations ................................................................................................................................................	2
(1)	Overview on consolidated business performance .................................................................................................	2
(2)	Financial condition ................................................................................................................................................	3
(3)	Outlook..................................................................................................................................................................	3
2.	Quarterly Consolidated Financial Statements and Important Notes ..........................................................................	4
(1)	Quarterly consolidated balance sheet ...................................................................................................................	4
(2)	Quarterly consolidated statements of income and comprehensive income...........................................................	6
	(Quarterly consolidated statement of income)
	(For the first half)...................................................................................................................................................	6
	(Quarterly consolidated statement of comprehensive income)
	(For the first half)...................................................................................................................................................	6
(3)	Notes to quarterly consolidated financial statements ............................................................................................	7
	(Notes on going concern assumptions) .....................................................................................................................	7
	(Notes on significant change in shareholders' equity)................................................................................................	7
	(Change in accounting policy) ...................................................................................................................................	7
	(Business combination) .............................................................................................................................................	7
	(Significant subsequent event) ..................................................................................................................................	7

1

1. Results of Operations

1. Overview on consolidated business performance
   During the first half of the current fiscal year, Japanese economy slowly began to show signs of recovery as a new phase of living with Covid-19 has been prepared such as the restart of the nation-wide travel support and the removal of the restrictions for foreign tourists entering into Japan both from October. As for the outlook, downturn of overseas economies are downside risks to the Japanese economy as the worldwide monetary tightening continues, and we need to carefully look at the inflation, supply-side restrictions and the capital market fluctuations.
   Our sales have been strong on the back of the robust exports. Profit is steadily recovering because the positive effects from the revisions of selling prices have been gradually realized, although it has been challenged by the higher input costs and logistic expenses due to the rapid depreciation of the Yen and substantial increases in raw material prices.
   First half sales of the SPK Group (SPK and its consolidated subsidiaries) were 25,761 million yen, up 12.5% from one year earlier. Operating profit increased 6.3% to 1,049 million yen, ordinary profit increased 6.8% to 1,185 million yen and profit attributable to owners of parent increased 2.2% to 816 million yen.
   Business segment performance was as follows.
   (Domestic Sales Division)
   Although we saw notable impacts from significant increases in product prices due to the steep rises of raw materials globally, supply shortages and rapid depreciation of the yen, sales increased thanks to the higher purchases among our customers in response to the rapid rises in their purchase prices and some concerns on the supply. As a result, sales were 12,886 million yen, 6.6% higher than one year earlier. Although global economic and political conditions are expected to be unstable, we will prioritize to work closely with suppliers and customers to ensure a reliable supply of replacement parts for automobiles. In addition, we will develop new products and our brand products to enhance our competitiveness, rebuild our logistic network, and further enhance our cooperation with our group companies to strengthen synergies with them.
   (Overseas Business Division)
   This division generally has stayed strong. The demand of the replacement parts for the owned vehicle maintenance is elevated due to the global supply shortages of new and used vehicles. Under such circumstances, orders received by the parent are trending higher than those in last year, which were the record high, and strong orders result in higher sales despite of the longer delivery time by suppliers and disruptions in ship allocation schedule. By region, sales in Asia and Latin America are strong, while import restrictions by several countries in Middle East and Africa in response to the shortages of foreign reserves slightly impacted sales. Sales of subsidiaries in Singapore and the US were also strong. Segment sales were 8,518 million yen, up 21.9% from a year ago.
   (Machinery Equipment Division)
   While global shortages of semiconductors and other components are gradually easing, industrial vehicle manufacturers, our customers, are aiming at the recovery from the production declines although they have not experienced full-fledged recovery yet. On the other hand, we have to continue to pass higher costs of components from production partners in Japan, Europe and Asia due to higher energy, parts and raw material costs arising from the conflict and the lower Yen, to our selling prices with consent of our customers. Segment sales were 2,776 million yen, up 4.9% from a year ago. As efforts toward decarbonization (electrification), autonomous driving and safety works are accelerating in the global market, we will continue working on products development with higher environmental and safety performance.
   (CUSPA Division)
   While cancellations of events due to the COVID-19 and semiconductor shortages continue, we continue to participate in the TOYOTA GAZOO Racing Rally Challenge and the Japanese Rally Championship as the D- SPORT Racing Team. In August, we hosted the D-SPORT & DAIHATSU Challenge Cup, a driving event jointly with DAIHATSU MOTOR CO., LTD.. We actively promoted to users through such events. We were able to continue expanding sales of our own branded products as well as other brands and products which this division boasts strength with the sole agency rights and the sole import rights, exemplified as the D-SPORT brand was published in the brochure of the special edition of Daihatsu Copen launched in September. Segment sales were 1,580 million yen, up 34.3% from a year ago.

2

1. Financial condition
   Total assets were 31,384 million yen at the end of the first half, 1,369 million yen more than at the end of the previous fiscal year. Current assets increased 683 million yen to 24,783 million yen. There were decrease of 445 million yen in cash and deposits and increase of 1,114 million yen in inventories. Non-current assets increased 686 million yen to 6,600 million yen. Current liabilities increased 519 million yen to 8,439 million yen. Non-current liabilities decreased 124 million yen to 1,746 million yen. This was mainly due to decrease of 232 million yen in long-term borrowings. Net assets increased 973 million yen to 21,197 million yen and the equity ratio was 67.5% at the end of the first half.
2. Outlook
   There are no revisions to the forecast announced on 2 May, 2022 for the fiscal year ending in March 2023.

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