Sojitz Corp Unsp/Adr

Good afternoon. This is Seiichi Tanaka, CFO of Solis Corporation. Thank you very much for joining us for the earnings briefing for the quarter that ended December 31st, 2021 of Solis Corporation. I would like to refer to two sheets titled highlights of consolidated results for the third quarter ended December 31st, 2021. And that also says supplementary materials. They have been available on our website. Before going to the financial statements, let me say that As stated in the bottom part of the leftmost block that says Results Highlights, we have revised our earnings forecast for the full year ending March 31st, 2022. As announced, given the results after Q3 and the current market outlook, we have yet again upward revised the full year forecast as we did after Q2. This time, the revision for the full year profit is from 70 billion yen to 80 billion yen, up 10 billion yen. In relation, the year-end dividend is also upward revised from the previously planned 45 yen per share to 58 yen per share, up 13 yen per share, pending approval at the shareholder meeting in June. Moving on to the profit or loss statement. Revenue, which corresponds to IFRS sales. Metals, mineral resources and recycling segment was up thanks to higher prices of coal and other resources. The segment revenue was up 158.4 billion yen year on year to 412.8 billion yen. Chemicals was also up thanks to plastic resin transaction volume increase in Asia and the higher prices and increase in transaction volume of Revenue was up 109.2 billion yen year-on-year to 397.7 billion yen. Automotive was also up at the reaction to suppressed levels for overseas automotive business a year ago due to lockdowns. The revenue was up year-on-year by 51.4 billion yen to 180.1 billion yen. Total consolidated revenue increased year-on-year by 388.9 billion yen to 1,548.6 billion yen. Gross profit also increased thanks to the same three segments. The consolidated gross profit figure was up year-on-year by 58.2 billion yen to 190.7 billion yen. down to SG&A expenses. Personal expenses increased due to a bonus increase and the transaction volume increase. And outsourcing expenses for development of new investments and loans also increased. And SG&A also increased in relation to newly consolidated subsidiaries. Total SG&A increased year-on-year by 10.6 billion yen to 130.1 billion yen. Further down to other income and expenses, these are non-recurring items. In relation to the gain on sales of non-ferrous melting and refining company, after Q2, the net figure was an income of 1.9 billion yen. However, because of a loss in relation to the divestiture of industrial machinery related company and the absence of gains related to the sale of shopping mall and solar power generation business in the previous year, The total other income and expenses that came to net expenses of 2.6 billion yen, that's an increase in expenses by 8.6 billion yen. Financial income and costs came to a net income of 1.6 billion yen. That's an improvement by 4.4 billion yen. Net interest expenses came to 3 billion yen. That's an improvement of 1.9 billion yen. Dividends received came to 4.1 billion yen. That's an improvement of 1.8 billion yen, thanks to increased dividends at investees. The share of profit or loss of investments accounted for using the equity method came to 25.4 billion yen, up 17.5 billion yen thanks to a steel operating company. Profit before tax came to 85 billion yen, that's up 60.9 billion yen from the same period last year. After income tax expenses, profit for the period came to 65.1 billion yen. One line down and the highlighted line, profit attributable to owners of the company, came to 62 billion yen. That's up 45.3 billion yen year on year. As mentioned earlier, we have upward revised the full year forecast, which is now 80 billion yen. Against that figure, the Q3 figure stands at 78%. Moving on to the right block, which shows the financial position or the balance sheet. At the end of December 2021, total assets came to 2 trillion 509.2 billion yen. That's up 209 billion yen from the end of March 2021. And I have marked four line items that have had a great impact. In a nutshell, resources, chemicals and plastic resins markets improved and lifestyle products transaction volume increased and that's pushed up trade and other receivables. And then the evaluation of investment-related assets increased thanks to new investments and loans and higher stock prices. Total liabilities at the end of December came to 1,800,000,000,000 yen. That's up 154.6 billion yen from the end of March 2021. Further down, if you could look at the underlying line item, total equity attributable to owners of the company. At the end of December, this figure came to 674.7 billion yen, up 55.7 billion yen during the period. Retained earnings increased by 45.3 billion yen, that's profit for the period less dividend paid. And one line up, the other components of equity, the weaker yen led to foreign currency translation adjustments and stronger or higher stock prices led to valuation gains. Further down, we have listed six key financial indicators. The third one, the net debt to equity ratio at the end of December stood at 1.08 times, that's up 0.09 from the end of March last year. And now to cash flows. Cash flows from operating activities The net operating assets meant that we had a lot of outflow, but the core operating cash flow, as you can see, was a net inflow of 81.3 billion yen. And all in total, the cash flows from operating activities was a net inflow of 42.2 billion yen. Cash flows from investing activities came to a net cash out or outflow of 104.2 billion yen. free cash flow came to a net outflow of 62 billion yen. So after adjusted investment cash flow and shareholder returns, the core cash flow came to an outflow of 8.9 billion yen. That's for the three quarters accumulated. Now to the next page, the second sheet that says supplementary materials. Here, I would like to focus on the middle part where we are showing segment performance focused on profit for the period. This time, I would like to just highlight the segments for which we have revised the four-year outlook, meaning automotive, metals, mineral resources, and recycling, consumer industry and agriculture business, and others. First on auto. Due to the semiconductor shortage, we have had to downward revise the four-year sales outlook for the number of cars sold by more than 10%. But through efforts such as improving inventory turnover and reducing sales incentives, We have been able to boost margins, and therefore the results have been steady. By the end of Q3, we have actually exceeded the previous full-year forecast, and that's why we have upward revised the forecast by 1 billion yen, but this is a conservative upward revision due to concerns we have over Russia. Now to metals, mineral resources, and recycling. In Q3, in Australia, we suffered from lost production due to flooding, but there are higher prices and that more than offset the impact. And after Q3, we have come to 91% of the November forecast of 31 billion yen for the full year. And for Q4 cold sales, we have already completed or finalized the contracts, and the prices have been fixed for more than 80%. And with that, we have upward revised the four-year forecast to 44 billion yen. Now to consumer industry and agricultural business. For overseas fertilizer business, raw material prices are higher, and the papermaking business in Vietnam has been hard hit by the COVID-19 pandemic. With that, after Q2, we downward revised the full year forecast by 1 billion yen. But now we have reverted to the original figure of 5 billion yen, thanks to the strength in construction materials and imported plywood market status. However, the fertilizer raw materials are still expensive and inventory levels at local fertilizer dealers are still high. So the situation is still challenging and for Q4 alone, we are still expecting a loss. Last but not lost for the others part, Given the upward revision of the full-year profit figures, to ensure good implementation of our decarbonization policy and to avoid the stranding of interests such as the thermal coal interests, we intend to book structural reform expenses And therefore, the November forecast was 3 billion yen, but we are now downward revising that to a loss of 2 billion yen. That's down by 5 billion yen. That's all from myself. Thank you very much for your attention.