Sumitomo Riko : Financial Statements 2022

SUMITOMO RIKO COMPANY LTD.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MARCH 31, 2022 AND FY2021

Disclaimer: This document is a translation of the Japanese original Annual Securities Report ("Yukashoken Hokokusho") and prepared and provided for the reader's convenience only.The Japanese original has been audited by independent auditor and disclosed in Japan in accordance with International Financial Reporting Standards (IFRS) and the Financial Instruments and Exchange Act.

This document does not contain or constitute any guarantee and the Company will not compensate any losses and/or damage stemming from actions taken based on this document. In the case that there is any discrepancy between the Japanese original and this document, the Japanese original is assumed to be correct.

1. Consolidated Financial Highlights

Fiscal year					IFRS
	130th	131st	132nd	133rd		134th
Year end		March 2018	March 2019	March 2020	March 2021		March 2022
Net sales	Millions	462,885	469,705	445,148	397,940	445,985	Thousands of	3,643,371
	of yen						U.S. dollars
Profit or loss before	Millions	11,285	700	7,435	(608)	387	Thousands of	3,162
income taxes	of yen						U.S. dollars
Profit or loss
attributable to	Millions	3,528	(5,022)	881	(4,957)	(6,357)	Thousands of	(51,932)
owners of the parent	of yen						U.S. dollars
company
Comprehensive
income for the year	Millions						Thousands of
attributable to	5,162	(5,585)	(6,551)	3,031	6,629	54,154
owners of the parent	of yen						U.S. dollars
company
Equity attributable to	Millions	164,379	158,319	150,625	152,636	157,876	Thousands of	1,289,732
owners of the parent	of yen						U.S. dollars
Total assets	Millions	414,233	397,279	373,262	379,502	408,280	Thousands of	3,335,350
	of yen						U.S. dollars
Equity attributable to
owners of the parent	Yen	1,583.17	1,524.82	1,450.72	1,470.11	1,520.60	U.S. dollars	12.42
per share
Profit or loss
attributable to
owners of the parent	Yen	33.98	(48.37)	8.48	(47.74)	(61.23)	U.S. dollars	(0.50)
company per share
(basic)
Profit attributable to
owners of the parent	Yen	―	―	―	―	―	U.S. dollars	―
company per share
(diluted)
Equity attributable to
owners of the parent	%	39.7	39.9	40.4	40.2	38.7
ratio
Profit to equity
attributable to	%	2.1	(3.1)	0.6	(3.3)	(4.1)
owners of the parent
ratio
Price earnings ratio	Times	31.7	―	69.0	(14.9)	(9.8)
Net cash provided by	Millions	31,622	31,462	36,302	29,830	14,149	Thousands of	115,588
operating activities	of yen						U.S. dollars
Net cash used in	Millions	(27,445)	(28,251)	(28,645)	(26,126)	(24,956)	Thousands of	(203,872)
investing activities	of yen						U.S. dollars
Net cash provided by	Millions	(6,127)	(8,368)	(12,584)	(6,032)	6,937	Thousands of	56,669
(used in) financing	of yen	U.S. dollars
activities
Cash and cash	Millions						Thousands of
equivalents at end of	41,973	38,371	33,212	31,080	28,475	232,620
year	of yen						U.S. dollars
Number of		25,689	26,156	26,109	25,796	25,519
employees
Persons
[average number of
	[1,633]	[1,770]	[1,714]	[1,646]	[1,632]
temporary workers]

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(Notes) 1. Consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS").

1. Profit attributable to owners of the parent company per share (diluted) is not stated here because there were no residual shares.
2. The amounts shown are rounded to the nearest whole unit.

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2. Summary of Results

(1) Business Results

During the fiscal year under review, the global economy gradually recovered owing to an upturn in economic activity associated with the progress of vaccination and other factors, even though abatement of the COVID-19 pandemic was not yet in prospect. On the other hand, the outlook for the global economy remains uncertain due to prolonged parts supply constraints and the spread of mutant strains of COVID-19, as well as instability in the international situation caused by Russia's invasion of Ukraine.

In industry related to the Sumitomo Riko Group, although a gradual resumption of economic activity led to a revival of demand, conditions remained severe as customers reduced production owing to the spread of COVID-19 and supply chain disruptions, and furthermore, soaring raw material prices and logistics costs had adverse impacts.

In these circumstances, the Sumitomo Riko Group is continuing its efforts to improve profitability through optimization of its production system by integration and consolidation of sites as well as through further cost reduction activities undertaken with the aim of building a solid business structure capable of securing stable profits while responding flexibly to rapid changes in the external environment.

Consolidated net sales in the fiscal year under review increased 12.1% year on year to ¥445,985 million, but business profit decreased 17.7% year on year to ¥6,467 million. The Company recorded an impairment loss on fixed assets of subsidiaries overseas due to a decline in profitability in line with changes in the business environment. As a result, operating profit increased 389.2% year on year to ¥1,110 million, profit before income taxes amounted to ¥387 million (compared with loss before income taxes amounting to ¥608 million for the previous fiscal year), and loss attributable to owners of the parent company was ¥6,357 million compared with loss attributable to owners of the parent company of ¥4,957 million for the previous fiscal year.

Business results by segment are described below.

1) Automotive Products

Sales to external customers increased 12.4% year on year to ¥386,843 million, reflecting increased vehicle production volumes of major customers in many regions compared to the previous year and the effect of foreign currency translation due to the weaker yen, despite the impact of automobile production cuts due to the prolonged COVID-19 pandemic and supply chain disruptions.

Business profit decreased 59.5% year on year to ¥2,014 million, due primarily to soaring raw material prices and logistics costs mainly in North America and China, despite an increase in sales.

2) General Industrial Products

Sales to external customers increased 10.1% year on year to ¥59,142 million.

Although demand for functional components for printers is trending downward to a certain extent in view of the ongoing transition to the paperless office and changes in the working environment, demand increased compared with the previous fiscal year, resulting in higher sales.

Demand for high-pressure hoses rose in Japan, mainly for customers in emerging-market countries, Europe, and the United States, as a resumption of economic activity in various countries led to vigorous housing and infrastructure investment. In China, sales decreased from the previous fiscal year due to a decline in demand for construction machinery in China. However, overall sales of the high-pressure hose business increased.

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Business profit increased 54.4% year on year to ¥4,453 million mainly owing to higher sales.

Consolidation

The consolidated financial statements include the accounts of the Company and its 75 subsidiaries. Investments in 8 associates meeting the significant influence requirement were accounted for by the equity method. There were no unconsolidated subsidiaries or associates to which the equity method was applied.

Research and development costs

Expenses related to research and development of new products and basic research are charged to income when incurred. The Companies' research and development expenses for the year ended March 31, 2022 were ¥14,302 million.

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