(Percentages represent year-on-yearchanges.)

Member of Financial Accounting Standards Foundation (FASF)

Consolidated Financial Results (Japanese Accounting Standards)

for the First Nine Months of the Fiscal Year Ending December 31, 2023

October 27, 2023

Company name:

Okabe Co., Ltd.

Stock exchange listing: Prime Market of the Tokyo Stock Exchange

Stock code:

5959

URL: https://www.okabe.co.jp/

Representative:

Hirohide Kawase, Representative Director, President and Chief Executive Officer

Contact:

Yasushi Hosomichi, Director and Senior Managing Executive Officer in charge of Administrative Division and

International Division

Tel. +81-3-3624-5119

Scheduled date for filing of quarterly report:

November 14, 2023

Scheduled date of commencement of dividend payment:

‒

Supplementary documents for quarterly results:

None

Quarterly results briefing:

None

(Figures are rounded down to the nearest one million yen.)

1. Consolidated Financial Results for the First Nine Months Ended September 30, 2023 (January 1, 2023 - September 30, 2023)

(1) Consolidated Results of Operations (Accumulated Total)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Nine months ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

September 30, 2023

58,162

3.0

3,419

(12.8)

3,553

(12.9)

745

(76.6)

September 30, 2022

56,444

19.8

3,920

24.0

4,080

17.7

3,187

58.8

(Note) Comprehensive income:

2,311 million yen (-66.8%) for the nine months ended September 30, 2023

6,957 million yen (151.4%) for the nine months ended September 30, 2022

Profit per share

Profit per share

(basic)

(diluted)

Nine months ended

Yen

Yen

September 30, 2023

16.08

‒

September 30, 2022

67.23

‒

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

As of

Million yen

Million yen

%

September 30, 2023

99,709

67,768

67.9

December 31, 2022

103,894

67,111

64.6

(Reference) Shareholders' equity:

As of September 30, 2023:

67,749 million yen

As of December 31, 2022:

67,092 million yen

2. Dividends

Dividend per share

End of

End of

End of

Year-end

Annual

first quarter

second quarter

third quarter

Yen

Yen

Yen

Yen

Yen

Year ended December 31, 2022

‒

12.00

‒

12.00

24.00

Year ending December 31, 2023

‒

12.50

‒

Year ending December 31, 2023

12.50

25.00

(forecasts)

(Note) Revisions to dividend forecasts published most recently: None

3. Consolidated Forecasts for the Fiscal Year Ending December 31, 2023 (January 1, 2023 - December 31, 2023)

(Percentages represent year-on-year changes.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

Profit

owners of parent

per share

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full year

79,300

3.2

4,100

(22.2)

4,200

(23.2)

950

(75.3)

20.52

(Note) Revisions to financial forecasts published most recently: None

* Notes

  1. Changes in important subsidiaries during the period
    (changes of specific subsidiaries in accordance with changes in the scope of consolidation): None
  2. Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: Yes

(Note) Please refer to "Application of particular accounts procedures to the preparation of quarterly consolidated financial statements" on page 8 for details.

  1. Changes in accounting policies, accounting estimates and restatement

(i)

Changes in accounting policies caused by revision of accounting standards:

Yes

(ii)

Changes in accounting policies other than (i):

None

(iii) Changes in accounting estimates:

None

(iv) Restatement:

None

  1. Number of shares outstanding (common shares):
    1. Number of shares outstanding at end of period (including treasury shares)

As of September 30, 2023:

49,290,632 shares

As of December 31, 2022:

49,290,632 shares

(ii) Number of treasury shares at end of period

As of September 30, 2023:

3,131,416 shares

As of December 31, 2022:

2,453,507 shares

(iii) Average number of shares outstanding during the period

Nine months ended September 30, 2023:

46,328,785 shares

Nine months ended September 30, 2022:

47,401,558 shares

(Note) The number of treasury shares at the end of each period includes the shares of the Company held by the stock-granting ESOP trust (175,586 shares as of September 30, 2023, and 179,594 shares as of December 31, 2022). The shares of the Company held by the stock-granting ESOP trust are included in the treasury shares deducted in the calculation of the average number of shares outstanding during each period (nine months) (177,156 shares for the nine months ended September 30, 2023, and 183,451 shares for the nine months ended September 30, 2022).

  • This financial summary is not subject to the statutory quarterly review by a certified public accountant or an audit corporation. This financial summary is not subject to the statutory quarterly review by a certified public accountant or an audit corporation, and the review of the quarterly consolidated financial statements under the Financial Instruments and Exchange Act has not been completed at the time of the disclosure of this financial summary. Therefore, the figures of the financial statements may change.

○ Index for Supplementary Information

1. Qualitative Information Regarding Results of Operations for the First Nine Months Ended September 30, 2023

2

(1)

Explanation Regarding Results of Operations

2

(2)

Explanation Regarding Forecast for Fiscal Year Ending December 31, 2023

3

2. Quarterly Consolidated Financial Statements and Key Notes

4

(1)

Quarterly Consolidated Balance Sheet

4

(2)

Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income

6

Quarterly Consolidated Statement of Income

First nine-month period

6

Quarterly Consolidated Statement of Comprehensive Income

First nine-month period

7

(3)

Notes to Quarterly Consolidated Financial Statements

8

Note to going concern assumptions

8

Note to significant changes in shareholders' equity

8

Application of particular accounts procedures to the preparation of quarterly consolidated financial statements

8

Changes in accounting policies

8

Additional information

8

Segment information

9

- 1 -

1. Qualitative Information Regarding Results of Operations for the First Nine Months Ended September 30, 2023

  1. Explanation Regarding Results of Operations
    During the first nine months of the fiscal year under review (January 1, 2023 to September 30, 2023), the Japanese economy remained unpredictable chiefly due to unstable conditions overseas and trends in financial markets, despite the post-COVID-19 normalization of economic activities and a moderate economic recovery.
    In the Japanese construction industry, where the Okabe Group's core customers operate, public investment was stable and private investment continued to pick up, but the environment remained challenging chiefly due to soaring labor costs caused by a chronic shortage of construction workers and continued high steel material prices.
    In this business environment, the Okabe Group strove to achieve the sustainable growth of the Company and enhance corporate value, focusing on SDG-based management, including decarbonization, use of digital transformation, and acceleration of globalization, which are initiatives set out in the medium-term management plan, NEXT100- PHASE2.1, of which the final year is the year ending December 31, 2024.
    Results of operations by business segment are as follows:
    1. Construction-relatedproducts
      Sales of temporary building and formwork products and building structural products marketed under the house brand were buoyant chiefly as a result of a focus on capturing demand from redevelopment projects in urban areas. Sales of civil engineering products were also firm due to the appropriate response to demand for products used to prevent landslide disasters.
      Sales of building products and materials (overseas) increased due to the effect of the weaker yen on foreign exchange rates, although sales growth of construction materials was sluggish due to the slowdown in the U.S. housing market as a result of interest rate hikes. However, operating profit dropped due to increases in packing and transportation costs, sales commission and other factors.
      As a result, sales in the construction-related products segment increased 3.4% year on year, to 47,671 million yen, and operating profit decreased 14.7% year on year, to 3,315 million yen.
    2. Automotive products
      Net sales increased 1.7% year on year, to 7,621 million yen due to the effect of exchange rates reflecting the weaker yen, although growth in sales of automotive battery terminal products was sluggish in the United States. The operating loss was reduced to 61 million yen (from an operating loss of 178 million yen for the same period of the previous year) due to a focus on reducing fixed costs and labor costs.
    3. Other businesses
      Net sales rose 1.6% year on year, to 2,869 million yen mainly due to strong sales of industrial machinery products. Operating profit decreased 21.4% year on year, to 165 million yen, reflecting weak fishing sinker sales.

Consequently, consolidated net sales for the first nine months of the fiscal year under review increased 3.0% year on year, to 58,162 million yen, consolidated operating profit declined 12.8% year on year, to 3,419 million yen, and consolidated ordinary profit decreased 12.9% year on year, to 3,553 million yen. Non-current assets of the business manufacturing and selling battery terminal products in the automotive products business in the United States became subject to impairment due to the severe deterioration of its profitability in the first six months. Thus, impairment losses of 1,807 million yen were posted as extraordinary losses, resulting in a profit attributable to owners of parent of 745 million yen (down 76.6% year on year).

- 2 -

(For reference)

Net sales by business segments and product category (consolidated)

(Yen in millions, rounded down)

Previous consolidated

Consolidated first nine months

first nine months

under review

Change

(Jan. 1, 2022 ‒ Sep. 30, 2022)

(Jan. 1, 2023 ‒ Sep. 30, 2023)

Amount

Proportion

Amount

Proportion

Temporary building and

5,135

9.1

5,410

9.3

5.4

formwork products

Civil engineering

5,356

9.5

5,458

9.4

1.9

products

Building structural

14,485

25.7

15,447

26.6

6.6

Construction-

products

related

Building materials

8,934

15.8

8,752

15.0

(2.0)

products

Subtotal - Japan

33,911

60.1

35,069

60.3

3.4

Building products and

12,212

21.6

12,602

21.7

3.2

materials

Subtotal - overseas

12,212

21.6

12,602

21.7

3.2

Subtotal - segment

46,123

81.7

47,671

82.0

3.4

Automotive products

7,497

13.3

7,621

13.1

1.7

Other businesses (Note 2)

2,823

5.0

2,869

4.9

1.6

Total

56,444

100.0

58,162

100.0

3.0

(Notes) 1. For information about the main operations of each business segment, please refer to "Segment information" on page 9.

  1. 2. Other businesses include those for diversification that do not form part of the Company's core businesses, i.e., construction-related products and automotive products. This segment includes, among other things, the manufacture and sale of marine materials, the manufacture and sale of fishing sinkers in the United States, and the manufacture and sale of industrial machinery products.

  2. Explanation Regarding Forecast for Fiscal Year Ending December 31, 2023
    No changes have been made to the revised full-year forecasts of consolidated financial results for the fiscal year ending December 31, 2023 that were disclosed on July 28, 2023.
    Water Gremlin Company, a U.S. battery terminal business, and Water Gremlin Holdings, Inc. (formerly Okabe Holding USA, Inc.), the holding company of Water Gremlin Company, filed for Chapter 11 bankruptcy on October 27, 2023, to address a sharp decline in profitability in the U.S. battery terminal business, which the Company identified as an issue during the first six months of the fiscal year. For more information, please refer to the Notice of Filing for Chapter 11 by our US Subsidiaries on October 27, 2023.

- 3 -

2. Quarterly Consolidated Financial Statements and Key Notes

  1. Quarterly Consolidated Balance Sheet

(Million yen)

Fiscal year ended

Third quarter ended

December 31, 2022

September 30, 2023

(As of December 31, 2022)

(As of September 30, 2023)

ASSETS

Current assets

Cash and deposits

18,156

15,499

Notes and accounts receivable - trade, and contract

17,538

17,343

assets

Electronically recorded monetary claims -

5,864

6,234

operating

Merchandise and finished goods

13,799

12,188

Work in process

1,992

2,255

Raw materials and supplies

4,795

4,435

Other

1,395

1,292

Allowance for doubtful accounts

(28)

(25)

Total current assets

63,515

59,224

Non-current assets

Property, plant and equipment

Buildings and structures, net

15,013

14,283

Machinery, equipment and vehicles, net

5,365

4,016

Land

6,185

6,121

Other, net

1,403

1,512

Total property, plant and equipment

27,968

25,933

Intangible assets

Goodwill

3,811

3,525

Other

357

363

Total intangible assets

4,168

3,888

Investments and other assets

Investment securities

6,094

7,969

Other

2,158

2,709

Allowance for doubtful accounts

(43)

(43)

Total investments and other assets

8,209

10,635

Total non-current assets

40,347

40,458

Deferred assets

Bond issuance cost

32

26

Total deferred assets

32

26

Total assets

103,894

99,709

- 4 -

(Million yen)

Fiscal year ended

Third quarter ended

December 31, 2022

September 30, 2023

(As of December 31, 2022)

(As of September 30, 2023)

LIABILITIES

Current liabilities

Notes and accounts payable - trade

5,085

5,539

Electronically recorded obligations - operating

9,782

8,706

Short-term borrowings

5,865

3,762

Income taxes payable

1,245

299

Provision for bonuses

‒

410

Provision for loss on liquidation of subsidiaries and

21

‒

associates

Other

4,402

2,709

Total current liabilities

26,402

21,428

Non-current liabilities

Bonds payable

1,750

1,750

Long-term borrowings

4,605

4,246

Provision for share awards

149

170

Retirement benefit liability

2,141

2,184

Asset retirement obligations

54

55

Other

1,680

2,106

Total non-current liabilities

10,381

10,512

Total liabilities

36,783

31,941

NET ASSETS

Shareholders' equity

Share capital

6,911

6,911

Capital surplus

5,983

5,987

Retained earnings

48,536

48,138

Treasury shares

(1,774)

(2,289)

Total shareholders' equity

59,656

58,747

Accumulated other comprehensive income

Valuation difference on available-for-sale securities

1,443

2,684

Foreign currency translation adjustment

6,095

6,419

Remeasurements of defined benefit plans

(102)

(101)

Total accumulated other comprehensive income

7,436

9,002

Non-controlling interests

18

18

Total net assets

67,111

67,768

Total liabilities and net assets

103,894

99,709

- 5 -

  1. Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income
    (Quarterly Consolidated Statement of Income) (First nine-month period)

(Million yen)

First nine months ended

First nine months ended

September 30, 2022

September 30, 2023

(Jan. 1, 2022 - Sep. 30, 2022)

(Jan. 1, 2023 - Sep. 30, 2023)

Net sales

56,444

58,162

Cost of sales

41,253

42,166

Gross profit

15,190

15,996

Selling, general and administrative expenses

11,270

12,577

Operating profit

3,920

3,419

Non-operating income

Interest income

6

37

Dividend income

148

183

Proceeds from sale of scrap

89

98

Other

56

84

Total non-operating income

301

404

Non-operating expenses

Interest expenses

87

232

Other

53

37

Total non-operating expenses

141

270

Ordinary profit

4,080

3,553

Extraordinary income

Gain on sale of non-current assets

75

3

Gain on sale of investment securities

709

‒

Reversal of provision for loss on liquidation of

‒

8

subsidiaries and associates

Total extraordinary income

784

12

Extraordinary losses

Impairment losses

204

1,807

Other

66

377

Total extraordinary losses

270

2,185

Profit before income taxes

4,594

1,380

Income taxes - current

1,491

1,221

Income taxes - deferred

(83)

(586)

Total income taxes

1,408

635

Profit

3,186

744

Loss attributable to non-controlling interests

(0)

(0)

Profit attributable to owners of parent

3,187

745

- 6 -

(Quarterly Consolidated Statements of Comprehensive Income)

(First nine-month period)

(Million yen)

First nine months ended

First nine months ended

September 30, 2022

September 30, 2023

(Jan. 1, 2022 - Sep. 30, 2022)

(Jan. 1, 2023 - Sep. 30, 2023)

Profit

3,186

744

Other comprehensive income

Valuation difference on available-for-sale securities

(407)

1,241

Foreign currency translation adjustment

4,181

324

Remeasurements of defined benefit plans, net of tax

(2)

0

Total other comprehensive income

3,771

1,566

Comprehensive income

6,957

2,311

Comprehensive income attributable to

Comprehensive income attributable to owners of

6,955

2,311

parent

Comprehensive income attributable to non-controlling

2

0

interests

- 7 -

  1. Notes to Quarterly Consolidated Financial Statements (Note to going concern assumptions)
    None
    (Note to significant changes in shareholders' equity) None
    (Application of particular accounts procedures to the preparation of quarterly consolidated financial statements) (Calculation of tax expenses)
    Taxes are calculated by multiplying profit before income taxes by a reasonable estimate of the effective tax rate after adjustments for tax-effect accounting for profit before income taxes in the current fiscal year.
    (Changes in accounting policies)
    (Application of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 842 "Leases")
    ASC 842 "Leases" has been applied from the beginning of the first three months of the fiscal year at overseas consolidated subsidiaries that have adopted US GAAP. As a result, all lease transactions of lessees at overseas consolidated subsidiaries are, in principle, recorded as assets and liabilities on the balance sheet.
    Consequently, "Other (net)" in "Property, plant and equipment" increased 197 million yen, "Other" in "Current liabilities" increased 64 million yen, and "Other" in "Non-current liabilities" increased 137 million yen in the quarterly consolidated balance sheet as of the end of the first nine months of the fiscal year under review. The effect of this change on the quarterly consolidated statement of income for the first nine months of the fiscal year under review is minor.

(Application of Implementation Guidance on Accounting Standard for Fair Value Measurement)

The Company adopted the Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Statement No. 31, June 17, 2021; "Guidance") at the beginning of the first three months of the fiscal year under review, and decided to apply the new accounting policies described in the Guidance in future periods in accordance with the transitional procedures set out in Paragraph 27-2 of the Guidance. There is no effect of the application of this accounting standard on the quarterly consolidated financial statements.

(Additional information)

(Accounting estimates associated with the COVID-19 pandemic)

There is no significant change in the assumptions for the accounting estimate on the impact of the COVID-19 pandemic stated in (Additional Information) in the annual securities report for the previous fiscal year.

(Transactions of Delivering the Company's Own Stock to Employees, etc. through Trusts)

The Company has introduced the stock-granting ESOP trust system, a trust-type employee incentive plan under which the Company's own shares are issued to its employees for the purpose of encouraging the motivation of the employees of the Company and the Okabe Group and enhancing the welfare program.

(i) Transaction overview

This program adopts the system called the stock-granting employee stock ownership plan ("ESOP Trust"). The ESOP Trust is an employee incentive plan inspired by the U.S. ESOP system, under which shares bought back by the ESOP Trust are issued to employees who have met the requirements prescribed in the Shares Issuance Regulations established in advance.

The "Practical Solution on Transactions of Delivering the Company's Own Stock to Employees etc. through Trusts (ASBJ Practical Issue Task Force (PITF) No. 30, March 26, 2015)" applies to the accounting treatment of this program.

(ii) Treasury shares remaining in the trust

The Company's shares remaining in the trust are recorded at the book value (excluding all incidental expenses) in the section of net assets as treasury shares in the trust. The book value of the treasury shares is 161 million yen for the previous consolidated fiscal year and 157 million yen for the first nine months of the fiscal year under review. The number of treasury shares at the end of the term is 179,594 shares for the previous consolidated fiscal year and 175,586 shares for the first nine months of the fiscal year under review.

- 8 -

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OKABE Co. Ltd. published this content on 27 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2023 06:03:02 UTC.