ダイセル（4202） – 3rd Quarter Consolidated Financial Results for the Year Ending March 31, 2022

Company name: DAICEL CORPORATIONStock Exchange on which the shares are listed: Tokyo Stock Exchange in JapanCode number: 4202URL: https://www.daicel.comRepresentative: Ｙｏｓｈｉｍｉ Ogawa, President and CEOContact person: Masahiko Hirokawa, General Manager-Investor Relations & Corporate Communications Phone +81-3-6711-8121Scheduled date for submitting financial statements: February 14, 2022Scheduled date for dividend payment: -The additional materials of the Financial Results: YesThe briefing session of the Financial Results: Yes (for institutional investors and analysts)1.Consolidated Financial Results for the Nine Months Ended December 31, 2021(Amounts are rounded down to the nearest million)(1)Consolidated Operating Results(% of change from previous year)Net salesOperating profitOrdinary profitProfit attributableto owners of parentMillions of Yen%Millions of Yen%Millions of Yen%Millions of Yen%Nine months ended Dec. 31, 2021342,97921.939,281109.843,181113.523,502109.2Nine months ended Dec. 31, 2020281,359(10.0)18,726(17.3)20,223(16.7)11,234141.7Profit per shareDiluted profitper shareYenYenNine months ended Dec. 31, 202178.02-Nine months ended Dec. 31, 202037.10-Total assetsNet assetsCapital adequacy ratioNet assets per shareMillions of YenMillions of Yen%YenAs of Dec. 31, 2021679,646268,96038.6877.12As of Mar. 31, 2021640,385245,00037.1789.34Cash dividends per share(Reference data)1st quarter2ｎd quarter3rd quarter4th quarterAnnualYenYenYenYenYenYear ended Mar. 31, 2021-16.00-16.0032.00Year ending Mar. 31, 2022-16.00-Year ending Mar. 31, 2022(Forecast)16.0032.00Net salesOperating profitOrdinary profitProfit attributableto owners of parentProfitper shareMillions of Yen%Millions of Yen%Millions of Yen%Millions of Yen%YenYear ending Mar. 31, 2022462,00017.449,50056.053,50054.329,00047.197.053rd Quarter Consolidated Financial Results for the Year Ending March 31, 2022(All financial information has been prepared in accordance with Generally Accepted Accounting Principles in Japan)February 2, 2022(Note)Comprehensive income: 36,664 millions of yen [66.9%] for the nine months ended December 31, 2021 and 21,974 millions of yen [165.5%] for the nine months ended December 31, 2020(2)Consolidated Financial Position(Reference)Shareholders’ equity: 262,108 millions of yen as of December 31, 2021 and 237,852 millions of yen as of March 31, 20212.Dividends(Note)Revisions to the latest announced dividend forecast: Not applicable3.Forecast of Consolidated Financial Results for the Year Ending March 31, 2022(% of change from same period of previous year)(Note)Revisions to the latest announced forecast of consolidated financial results: ApplicableⅰNumber of shares issued at the end of each period(including treasury shares)As of Dec. 31, 2021302,942,682sharesAs of Mar. 31, 2021302,942,682sharesⅱNumber of treasury shares at the end of each periodAs of Dec. 31, 20214,113,296sharesAs of Mar. 31, 20211,609,633sharesⅲAverage number of shares during the each period(Cumulative from the beginning of the fiscal year)Nine months endedDec. 31, 2021301,233,559sharesNine months endedDec. 31, 2020302,813,263shares*Notes(1)Changes in significant subsidiaries during the nine months ended Dec. 31, 2021: Not applicable(Note)Changes in specified subsidiaries that caused a change in the scope of consolidation(2)Adoption of specific accounting methods for presenting quarterly financial statements: Not applicable(3)Changes in accounting policies, changes in accounting estimates and restatementsⅰChanges in accounting policies due to revisions of accounting standards: ApplicableⅱChanges in accounting policies other than (3)-i: Not applicableⅲChanges in accounting estimates: Not applicableⅳRetrospective restatements: Not applicable(4)Number of shares issued (common share)*This Quarter Consolidated Financial Results report is not subject to quarterly review.*Explanations or other special matters to appropriate use of the forecast of consolidated financial resultsThe forecast of consolidated financial results and certain other statements contained in this document are forward-looking statements, which are rationally determined based on information currently available to the company. For a variety of reasons, actual performance may differ substantially from these projections.4. Qualitative Information on the Period under Review (1) Overview of the operating results Looking at the world trends during the consolidated third quarter of the fiscal year ending March 2022 (nine months ended December 31, 2021), although economic stagnation caused by the spread of COVID-19 has been recovering to some extent, the global economy remained uncertain due to further spread of COVID-19 and has been affected by decline in automobile production because of the semiconductor shortage and by logistics disruption. Amid such circumstances, the Daicel Group has steadily seized sales opportunities offered by the recovery in demand and worked on sales price revisions and cost reductions. Compared to the same period last year which was affected by COVID-19, the sales revenue for the consolidated third quarter of the fiscal year under review totaled \342,979million (up 21.9% year-on-year). On the income front, operating income amounted to \39,281 million (up 109.8% year-on-year), ordinary income was \43,181 million (up 113.5% year-on-year) and net income attribute to owners of the parent was \23,502 million (up 109.2% year-on-year). Segment information is summarized as follows. [Medical / Healthcare] The healthcare business increased in sales revenue due to an increase in sales volume of cosmetic and health food ingredients. The chiral separation business also increased in sales revenue due to an increase in sales volume of optical resolution columns. The overall segment sales came to ¥14,585 million (up 21.9% year-on-year). Operating income amounted to ¥2,570 million (up 110.5% year-on-year) due to an increase of sales volume. The display business, such as cellulose acetate for optical films, and high-performance films, registered growth in sales revenue due to higher sales volume as a result of a strong demand in LCD panels. The IC/Semiconductor business, such as solvents for printed electronics and resist materials, increased in sales revenue driven by higher sales volume due to a strong demand in semiconductor market and sales price revisions. The overall segment sales came to ¥24,040 million (up 36.8% year-on-year). Operating income amounted to ¥4,868 million (up 134.0% year-on-year), due to an increase of sales volume and sales price revisions. As acquisition of new orders, the automobile airbag inflator (gas-generation device) and other mobility business increased in sales volume, resulting in higher revenue compared to the same period in the prior fiscal year despite the impact of lower automobile production due to the semiconductor shortage. Consequently, overall segment sales came to ¥50,348 million (up 7.8% year-on-year). Operating income also came to ¥4,352 million (up 671.7 % year-on-year) due to an increase of sales volume and recovery of utilization rate. [Smart] [Safety] [Material] Although there were changes in accounting standards resulting in decline in sales volume, acetic acid business registered growth in sales revenue due to rising market conditions. Sales revenue of acetic acid derivatives increased due to rising market conditions. Acetate tow sales revenue was flat due to the effect of foreign exchange although sales volume decreased slightly due to a change in accounting standards Caprolactone derivatives and alicyclic-epoxy-resin recorded higher sales revenue driven by higher sales volume due to recovery in demand for auto paint and electronic material applications. Consequently, overall segment sales amounted to ¥89,223 million (up 19.1 % year-on-year). Operating income amounted to ¥18,340 million (up 68.8% year-on-year), due to an increase of sales price. [Engineering Plastics] smartphones, and revised sales prices. In the business of Polyplastics Co., Ltd., such as polyacetal (POM), polybutylene terephthalate (PBT) resin, and liquid crystal polymer (LCP), sales revenue increased driven by higher sales volume due to the recovery of demand for automobiles and In the business of Daicel Miraizu Ltd., such as ABS and engineering plastic alloy resin, barriers for food and water-soluble polymers, sales volume increased due to a strong demand resulting in an increase in sales. Consequently, overall segment sales amounted to ¥156,755 million (up 29.4% year-on-year). Operating income was ¥19,530 million (up 39.1% year-on-year) due to an increase of sales volume sales price revisions. [Other Businesses] million (down 13.0% year-on-year). Sales revenue of other businesses decreased due to lower sales volume of defense-related business. Consequently, overall segment sales recorded \8,025 million (down 11.4% year-on-year). Operating income amounted to \1,119 (2) Overview of financial position for the fiscal year under review Total assets as of December 31, 2021 were \679,646 million, an increase of \39,261 million from March 31, 2021, due to increases in inventory and property, plant and equipment, despite a decrease in Cash and deposits. Total liabilities were \410,686 million, an increase of \15,302 million from March 31, 2021, due to an increase in bills payable and accounts payable. Total net assets were \268,960 million. Total shareholders’ equity, which is calculated as the net assets minus non-controlling interests, was \262,108 million. Shareholders’ equity ratio was38.6%. (3) Explanation regarding future forecast information of consolidated financial results Based on the business results for the consolidated third quarter of the current fiscal year, the Company has revised its consolidated earnings forecasts for the full fiscal year ending March 31, 2022 announced on November 5, 2021. For details, please refer to the ” Notice Regarding Recognition of Extraordinary Losses and Revision to Consolidated Financial Forecast for Fiscal Year ending March 31, 2022 ” released today. As of Mar. 31, 2021As of Dec. 31, 2021AssetsCurrent assetsCash and deposits90,82775,219Notes and accounts receivable – trade93,15999,697Securities7091,405Inventories108,659130,050Other19,20027,969Allowance for doubtful accounts(31)(40)Total current assets312,524334,302Non-current assetsProperty, plant and equipmentBuildings and structures, net61,99961,311Machinery, equipment and vehicles, net67,28970,931Land30,30631,378Construction in progress55,08259,521Other, net5,0424,693Total property, plant and equipment219,720227,837Intangible assetsGoodwill2,410482Other8,1979,763Total intangible assets10,60710,246Investments and other assetsInvestment securities75,35283,368Other22,23823,949Allowance for doubtful accounts(58)(57)Total investments and other assets97,532107,260Total non-current assets327,860345,344Total assets640,385679,6465.Consolidated Financial Statements(1)Consolidated Balance Sheets(Unit: Millions of Yen)As of Mar. 31, 2021As of Dec. 31, 2021LiabilitiesCurrent liabilitiesNotes and accounts payable – trade49,41957,742Short-term borrowings7,02416,435Current portion of bonds payable-10,000Current portion of long-term borrowings5,00312,181Income taxes payable4,5823,209Provision for repairs2,852-Other43,68444,366Total current liabilities112,566143,935Non-current liabilitiesBonds payable140,003130,003Long-term borrowings115,568105,679Deferred tax liabilities13,68418,506Provision for retirement benefits for directors8087Provision for repairs-610Provision for environmental measures195140Net defined benefit liability7,9237,495Asset retirement obligations1,2681,256Other4,0942,970Total non-current liabilities282,818266,750Total liabilities395,384410,686Net assetsShareholders’ equityShare capital36,27536,275Capital surplus-14Retained earnings152,816166,747Treasury shares(1,446)(3,436)Total shareholders’ equity187,645199,600Accumulated other comprehensive incomeValuation difference on available-for-sale securities36,88442,896Deferred gains or losses on hedges(27)15Foreign currency translation adjustment8,68915,213Remeasurements of defined benefit plans4,6604,382Total accumulated other comprehensive income50,20762,507Non-controlling interests7,1486,852Total net assets245,000268,960Total liabilities and net assets640,385679,646(Unit: Millions of Yen)Nine months endedDec. 31, 2020Nine months endedDec. 31, 2021Net sales281,359342,979Cost of sales204,728240,035Gross profit76,631102,944Selling, general and administrative expenses57,90463,663Operating profit18,72639,281Non-operating incomeInterest income171173Dividend income1,3891,612Share of profit of entities accounted for using equity method1,3831,550Net foreign exchange gains-694Other1,2091,422Total non-operating income4,1545,453Non-operating expensesInterest expenses8351,015Net foreign exchange losses624-Bond issuance costs457-Other741537Total non-operating expenses2,6581,553Ordinary profit20,22343,181Extraordinary incomeGain on disposal of non-current assets58206Gain on sales of investment securities1,345773Total extraordinary income1,404980Extraordinary lossesLoss on retirement of non-current assets7371,156Impairment losses1,7559,779Total extraordinary losses2,49210,935Profit before income taxes19,13433,226Income taxesIncome taxes – current3,8998,180Income taxes – deferred1,4231,065Total income taxes5,3239,245Profit13,81123,980Profit attributable to non-controlling interests2,576478Profit attributable to owners of parent11,23423,502(2)Consolidated Statements of Income(Unit: Millions of Yen)Nine months endedDec. 31, 2020Nine months endedDec. 31, 2021Profit13,81123,980Other comprehensive incomeValuation difference on available-for-sale securities6,4306,011Deferred gains or losses on hedges3342Foreign currency translation adjustment1,2536,479Remeasurements of defined benefit plans, net of tax(7)(274)Share of other comprehensive income of entities accounted for using equity method452424Total other comprehensive income8,16212,684Comprehensive income21,97436,664Comprehensive income attributable toowners of parent19,32335,802non-controlling interests2,650862(3)Consolidated Statements of Comprehensive Income(Unit: Millions of Yen)6.Notes to Consolidated Financial Statements(Change in the scope of consolidation or application of the equity method)(Significant change in the scope of consolidation)P Holdings, Inc. has been included in the scope of consolidation since it was newly established in the third quarter of the current fiscal year.(Adoption of Accounting Standard for Revenue Recognition)“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020, hereinafter “Accounting Standard for Revenue Recognition”) and “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 26, 2021) has been applied and recognized a revenue based on the amount estimated to be received in exchange for promised goods or services at the point when the control of such goods or services is transferred to the customer from the beginning of the fiscal year ending March 31, 2022.In accordance with the transitional treatment set forth in the proviso of “Accounting Standard for Revenue Recognition” paragraph 84, the cumulative effect applying the new accounting policy retrospectively before the beginning of the fiscal year ending March 31, 2022, is added to or subtracted from the retained earnings as of the beginning of the fiscal year ending March 31, 2022.However, hence applying “Accounting Standard for Revenue Recognition” paragraph 86, the new accounting standard is not applied retroactively before the beginning of the fiscal year ending March 31, 2022, to almost every contract which recognized revenue by previous treatment.As a result, “Net sales” decreased by ¥4,976 million, “Cost of sales” decreased by ¥4,643 million, and “Operating Profit,” “Ordinary profit” and “Profit before income taxes” decreased by ¥332 million. In addition, “Retained earnings” at the beginning of the fiscal year ending March 31, 2022, decreased by ¥26 million.(Adoption of Accounting Standard for Fair Value Measurement)“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019, hereinafter “Accounting Standard for Fair Value Measurement”) and other has been applied from the beginning of the fiscal year ending March 31, 2022, and, in accordance with transitional measures set forth in “Accounting Standard for Fair Value Measurement” paragraph 19 and “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019) paragraph 44-2, “Accounting Standard for Fair Value Measurement” and other has been decided to be applied into the future.These changes had no impact on the consolidated financial statements.Nine months ended Dec. 31, 2020(Unit: Millions of Yen)LocationUseClassificationAmountJapan(Tatsuno-shi, Hyogo)Manufacturing facilities for automobile airbag inflators and gas generantsBuildings and structures2Machinery, equipment and vehicles15Tools, furniture and fixtures20Construction in progress1,105Intangible assets and others52United States of AmericaManufacturing facilities for automobile airbag inflators and gas generantsConstruction in progress559Total1,755Nine months ended Dec. 31, 2021(Unit: Millions of Yen)LocationUseClassificationAmountJapan(Himeji-shi, Hyogo)Manufacturing facilities forcosmetic raw materialsConstruction in progress8,385-OthersGoodwill1,394Total9,779(Notes to Consolidated Statements of Income)(Impairment Losses)Daicel group has recognized impairment losses on the following asset groups.(Asset grouping method)Assets are grouped by the in-house company, SBU, or BU as a minimum unit.(Circumstances causing impairment losses)It was considered difficult to recover the investment amounts due to the decline in the profitability of the inflator business in Japan and the U.S.A. Accordingly, we have written down the book value of the assets stated above at Harima Plant or in the U.S.A. to their recoverable value, and recorded the decreased amounts as “Impairment losses” under extraordinary losses.(Calculation method of recoverable value)The recoverable values were measured at the net selling price which was based on the appraisal value of real estate.(Asset grouping method)Assets are grouped by the in-house company, SBU, or BU as a minimum unit.(Circumstances causing impairment losses)1．Manufacturing facilities for cosmetic raw materialsIt was considered difficult to recover the investment amounts due to decline in the profitability of the healthcare business as the cosmetics market environment deteriorated on account of the impact of the COVID-19. Accordingly, we have written down the book value of the assets stated above, and recorded the decreased amounts as “Impairment losses” under extraordinary losses.2．OthersThe goodwill of Lomapharm GmbH, the consolidated subsidiary, which evaluation based on its excess earning power at the time of stock acquisition has been written down the entire unamortized balance due to the decline of its profitability. The decreased amount is recorded as “Impairment losses” under extraordinary losses.(Calculation method of recoverable value)The recoverable values were determined based on value in use.The value in use for Manufacturing facilities for cosmetic raw materials was calculated by discounting future cash flow at a rate of 8.4%, and Others at 12.0%.Nine months ended Dec. 31, 20201.Sales and Profit (Loss) by Reportable Segment(Unit: Millions of Yen)Medical /HealthcareSmartSafetyMaterialsEngineeringPlasticsOthersTotalCorporate andeliminationsConsolidatedNet salesOutside customers11,96417,57346,69874,901121,1619,061281,359-281,359Intersegment sales194112-6,3477599,50516,919(16,919)-Total12,15817,68546,69881,248121,92018,566298,278(16,919)281,359Operating profit1,2212,08056410,86414,0441,28730,063(11,336)18,726Medical /HealthcareSmartSafetyMaterialsEngineeringPlasticsOthersCorporate andeliminationsTotalImpairment losses–1,755—-1,755Nine months ended Dec. 31, 20211.Sales and Profit (Loss) by Reportable Segment(Unit: Millions of Yen)Medical /HealthcareSmartSafetyMaterialsEngineeringPlasticsOthersTotalCorporate andeliminationsConsolidatedNet salesOutside customers14,58524,04050,34889,223156,7558,025342,979-342,979Intersegment sales381364-8,1322008,91817,997(17,997)-Total14,96724,40550,34897,355156,95516,944360,977(17,997)342,979Operating profit2,5704,8684,35218,34019,5301,11950,782(11,501)39,2812.Information on Impairment Losses of Non-current Assets by Reportable Segment(Unit: Millions of Yen)Medical /HealthcareSmartSafetyMaterialsEngineeringPlasticsOthersCorporate andeliminationsTotalImpairment losses9,779——9,7797.Segment Information2.Information on Impairment Losses of Non-current Assets by Reportable Segment(Unit: Millions of Yen)(Note) Medical / Healthcare has determined that it could not expect to generate cash inflows sufficient to recover the invested capital in future and we recorded Impairment losses of noncurrent assets and goodwill by ¥9,779 million for the nine months ended December 31,2021.3.Matters Regarding the Changes in Reportable Segment(Application of the Accounting Standard for Revenue Recognition)As indicated in Accounting Policy Changes, “Accounting Standard for Revenue Recognition” and other has been applied from the beginning of the fiscal year ending March 31, 2022, and the measurement method for profit or loss in the Reportable Segment has changed due to the change of the accounting method for revenue recognition. As a result, in the nine months ended December 31, 2021, Net sales for the “Medical / Healthcare” segment decreased by ¥1 million, Net sales for the “Smart” segment decreased by ¥66 million and Operating profit decreased by ¥66 million, Net sales for the “Safety” segment decreased by ¥1 million, Net sales for the “Materials” segment decreased by ¥4,622 million and Operating profit decreased by ¥294 million, Net sales for the “Engineering Plastics” segment decreased by ¥270 million and Operating profit increased by ¥28 million, and Net sales for the “Others” segment decreased by ¥13 million and Operating profit decreased by ¥1 million compared using the previous accounting method.