Post on 17-Mar-2020
証券コード:6237
Results of Operations for the First Half of the Fiscal Year Ending March 31, 2020
(FY3/20)November 14, 2019
IWAKI CO.,LTD. Stock code: 6237Trade name: Iwaki Pump
2
Contents
I. Summary of 1H FY3/20 Financial Results ・・・・P 3
II. Outlook for FY3/20 ・・・・P12
III. Medium-term Management PlanBusiness Development and Growth ・・・・P20
1H FY3/19 1H FY3/20
Amount Amount YoY change
Net sales 14,704 14,086 -4.2%
Gross profit 5,135 4,846 -5.6%
(Gross margin) (34.9%) (34.4%) (-0.5pt)
Operating profit 1,209 1,041 -13.9%
(Operating margin) (8.2%) (7.4%) (-0.8pt)
Ordinary profit 1,533 1,243 -18.9%
Profit attributable to owners of parent 1,068 1,024 -4.1%
Net income per share (Yen) 47.55 46.22 -2.8%
Exchange rate(average)
USD/JPY (Yen) 108.68 110.06
EUR/JPY (Yen) 131.55 124.32
(Millions of yen)
• Financial Summary
4
1
5
Sales and Earnings Highlights
1
2
3
Sales recovered in the second quarter but first half sales were down 4.2% from one year earlier✔ Sales in the medical equipment and water treatment markets increased but did
not offset the downturn in sales in the semiconductor/liquid crystal and surface treatment equipment markets
✔ Double-digit U.S. sales growth but lower sales in Japan and a big downturn in Asia
Operating profit was over 10% lower than one year earlier✔ Earnings benefited from cost cutting but total earnings decreased because
of lower sales
Ordinary profit decreased but the bottom-line profit decline was smaller✔ Equity-method income was down because of the weak performance of
affiliates, mostly in Asia. Larger decrease in ordinary profit (-18.9%)✔ Gain on sales of investment securities of about 150 million yen and positive
consolidation adjustment (for 2Q earnings) resulted in a smaller bottom-line profit decline (-4.1%)
2
6
3 Net Sales and Operating Profit (Quarterly)
0
200
400
600
800
1,000
1,200
5,500
5,750
6,000
6,250
6,500
6,750
7,000
7,250
7,500
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q-4Q
売上
営業利益
経常利益
(左目盛)
(右目盛)
(右目盛)
(Millions of yen) FY3/20FY3/18 FY3/19 (Millions of yen)
Big improvement in second quarter earnings because of sales growth in the medical equipment and water treatment markets and cost reductions
Net sales (left)
Operating profit (right)
Ordinary profit (right)
7
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
40%
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q-4Q
販管費
売上総利益率
販管費率
Gross Margin and SG&A Expense Ratio (Quarterly)
FY3/20FY3/18 FY3/19(Millions of yen)
(左目盛)
(右目盛)
(右目盛)
4
Sales growth raised the second quarter gross margin and the SG&A expenses ratio decreased because of cost reductions
SG&A expenses (left)
Gross margin (right)
SG&A expenses ratio (right)
8
9.9% 10.6% 9.5% 12.0% 12.2% 12.9%
8.0% 8.2% 8.9% 7.6% 7.7%9.6%
4.1% 4.7% 3.7% 5.3% 4.0%4.8%4.9%
5.1% 5.5%5.5%
5.3%
5.7%10.0%9.4% 10.2%
9.8%9.2%
10.1%11.3%
10.9%9.4% 6.4%
6.3%
6.3%
16.4%16.9%
17.8% 18.4%
17.7%
17.2%
35.4%34.1%
35.0% 35.1%
37.6%
33.3%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q-4Q
マグネットポンプ
定量ポンプ
空気駆動ポンプ
回転容積ポンプ
エアーポンプ
システム製品
仕入商品
その他
Product Category Sales
(Millions of yen) FY3/20FY3/19
-2.4%
+0.2%
-45.7%
-4.5%
+5.3%
-3.7%
+3.0%
+17.2%
4,985
2,455
889
1,359
777
626
1,224
1,768
5
Slow sales of pneumatic drive pumps in the semiconductor/liquid crystal market, no change in metering pump sales and higher sales of air pumps
Magnetic drive pumps
Metering pumps
Pneumatic drive pumps
Rotary displacement pumps
Air pumps
System products
Purchased products
Others
1H FY3/20 sales(Millions of yen)
YoY change
-35.3%
+4.2%
-7.0%
+6.7%
+5.8%
+6.8%
-0.8%
9
24.6% 24.8% 24.4% 25.0% 25.9% 25.3%
3.1% 2.6% 2.0% 2.4% 3.1% 3.2%
8.5% 9.8%9.4% 9.8% 10.2%
10.1%
19.7%20.9%
21.6%23.4% 22.0%
23.2%
8.7%7.8%
7.4%8.5%
8.1%
7.9%
17.7%16.5% 19.1%
18.5%18.6%
18.6%
17.8%17.5% 16.0% 12.4%
12.1%
11.7%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q-4Q
半導体・液晶
医療機器
表面処理装置
水処理
化学
新エネルギー
その他
Market Category Sales
(Millions of yen)FY3/19 FY3/20
6
1,681
2,616
1,127
3,185
1,427
445
3,602
1H FY3/20 sales(Millions of yen)
YoY change
Surface treatment equipment
Water treatment
Semiconductor/liquid crystal
Medical equipment
Chemicals
New energy
Others
Sluggish sales in the semiconductor/liquid crystal market and weak sales in the surface treatment equipment market, but higher sales in the medical equipment, water treatment and chemicals markets
10
3.2% 3.1% 2.8% 4.2% 3.2% 3.0%3.7% 4.0% 5.1% 4.0% 4.1% 4.1%
10.2% 8.1% 8.0% 5.9% 7.6% 6.7%
11.3% 13.2% 13.8% 13.8% 15.0% 14.1%
9.7% 9.7% 8.6%8.5% 10.9% 9.4%
61.9% 61.8% 61.7% 63.7% 59.2%62.6%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q-4Q
日本
海外計
ヨーロッパ
米国
アジア
中国
その他
8 Regional Sales
(Millions of yen) FY3/19 FY3/20
Overseas sales ratio 39.0%
8,586 -5.6%
1,423 -0.3%
2,050 +13.7%
1,004 -25.3%
583 +2.9%
437 -5.9%
5,500 -1.9%
7
Sales remained strong in America and steadily increased in China
1H FY3/20 sales(Millions of yen)
YoY change
Japan
Overseas total
Europe
America
Asia
China
Others
11
8
0
50
100
150
200
250
300
350
400
450
500
550
2Q 4Q 2Q 4Q 2Q 4Q
設備投資
研究開発費
減価償却費
FY3/19FY3/18 FY3/20
3,050
Capital Expenditures, R&D Expenses and Depreciation (Semi-annual)
-2,825
+35
+33
244
323
305
(Millions of yen)
3,100
1H FY3/20 sales(Millions of yen)
YoY change
Capital expenditures
R&D expenses
Depreciation
*Capital expenditures in 1H FY3/19 includes expenses of ¥2,862 million at the new technology center
FY3/19 FY3/20 (forecast)
Amount Amount YoY change
Net sales 29,171 29,067 -0.4%
Gross profit 10,374 10,066 -3.0%
(Gross margin) (35.6%) (34.6%) (-1.0pt)
Operating profit 2,337 2,116 -9.5%
(Operating margin) (8.0%) (7.3%) (-0.7pt)
Ordinary profit 2,847 2,551 -10.4%
Profit attributable to owners of parent 2,163 1,977 -8.6%
Net income per share (Yen) 96.25 89.49 -7.0%
Exchange rate(average)
USD/JPY (Yen) 110.45 *107.00
EUR/JPY (Yen) 130.35 *119.00
(Millions of yen)
FY3/20 Forecast (Announced on November 8, 2019, except for some figures)
13
1
*Exchange rate forecast was used for the second half
10,133 -0.4%
5,049 -0.3%
2,355 -15.1%
2,875 +0.2%
1,542 +0.9%
1,330 +1.8%
2,416 +1.4%
3,363 +9.8%
14
2
10.5% 11.6%
8.2% 8.3%4.5% 4.6%5.2% 5.3%
9.8% 9.9%
9.5% 8.1%
17.4% 17.4%
34.9% 34.9%
0
5,000
10,000
15,000
20,000
25,000
30,000
2019.3期 2020.3期(予)
マグネットポンプ
定量ポンプ
空気駆動ポンプ
回転容積ポンプ
エアーポンプ
システム製品
仕入商品
その他
(Millions of yen)
Product Category Sales Forecast
FY3/20 sales (forecast)(Millions of yen)
YoY change
Magnetic drive pumps
Metering pumps
Pneumatic drive pumps
Rotary displacement pumps
Air pumps
System products
Purchased products
Others
FY3/20 (forecast)FY3/19
3 Market Category Sales Forecast
24.7% 25.2%
2.5% 2.8%
9.4% 10.3%
21.4%22.6%
8.1%7.8%
17.9%18.1%
15.9% 13.3%
0
5,000
10,000
15,000
20,000
25,000
30,000
2019.3期 2020.3期(予)
半導体・液晶
医療機器
表面処理装置
水処理
化学
新エネルギー
その他
(Millions of yen)
3,854 -17.1%
5,249 +0.3%
2,258 -4.5%
6,567 +5.2%
2,987 +9.1%
827 +12.5%
7,322 +1.6%
15
FY3/20 (forecast)FY3/19
Surface treatment equipment
Water treatment
Semiconductor/liquid crystal
Medical equipment
Chemicals
New energy
Others
FY3/20 sales (forecast)(Millions of yen)
YoY change
Forecast lower ordinary, pre-tax and bottom-line profit✔ Double-digit ordinary profit decrease because of lower equity-method
income, mainly at affiliates in Asia (semiconductor/liquid crystal and surface treatment equipment markets)
✔ Smaller decrease in bottom-line profit due to a gain on sales of investment securities 16
Highlights of FY3/20 Forecast
1
2
3
Forecast a small decrease in sales✔ Expect higher sales in the water treatment market and growth in the
chemicals market too✔ Sales are expected to be weak in the semiconductor/liquid crystal market as
well as in the sectors of the surface treatment equipment market associated with this market
✔ A recovery is expected in the semiconductor/liquid crystal market in the second half
Forecast a lower gross margin due to the sales decrease but a smaller decrease in the operating margin because of cost cutting and other reasons✔ 9.5% decrease in operating profit because of lower sales✔ 0.2 pct. point decrease in the SG&A expense ratio because of cost reductions
and other reasons
4
5 FY3/20 Forecast – Factors Affecting Profitability
17
Effect of ¥1 exchange rate change USD EUR
Net sales 25,318 9,977
Operating profit 7,432 4,688
(Thousands of yen)
(for only the second half)
(Millions of yen)
2,337
-33-274
113
-26
2,116
FY3/19Operating profit
Increase/decrease in sales, change in cost of sales ratio
Gross profit Foreign
exchange impact
SG&A expenses Foreign exchange
impact
SG&A expenses Higher R&D and
other costs
FY3/20Operating profit
(forecast)
6 Market Assumptions
18
Japan Overseas
Water treatment market
・For food safety, steady demand for ionized water production and equipment for agriculture using hydroponics and soil・Steady demand for hot bathing facilities・No change in private/public-sector demand in
the water treatment plant category
・Steady demand in ballast water control
products
・Strong demand in Asia involving water quality management
Semiconductor/liquid crystal market
・Soft demand at manufacturers of production equipment because of declining capital expenditures in Asia
・First signs of a resumption of capital expenditures for memory devices
Medical equipment market
・Steady growth in clinical testing equipment and endoscope sterilization equipment・Weak sales for dialysis equipment due to some
inventory reductions
・Steady growth in biological and immunology analyzers used in China
New energy market ・Steady demand in the rechargeable battery
market・No change in sales of household fuel cells
・Strong capital investments in the rechargeable battery industry in China and South Korea
Chemicals market・Continuation of steady demand related to
development of value-added products and investments by pharmaceutical companies
・Steady demand for materials used to make lithium-ion batteries
Surface treatment equipment market
・Increasing demand for value-added electronic components used in automotive components, IoT applications and other markets・Soft demand in the smartphone market
・Continuation of steady demand for products used in automotive and telecommunication applications
Market environment assumptions
*Bold indicates priority markets targeted for growth.*Orange indicates negative outlooks.
7
30.130.0 30.0 34.1
0
5
10
15
20
25
30
35
0
10
20
30
40
2017/3 2018/3 2019/3 2020/3(予)
1株当たり配当金 配当性向(連結)
Basic policy
• Dividend payout ratio: more than 30%
• Consistent distribution of dividends(Yen)
(¥27.53)
(¥22.66)
(¥30.50)(¥28.90)
Return to Shareholders
19
FY3/17 FY3/18 FY3/19 FY3/20 (forecast)
Dividend per share Dividend payout ratio (consolidated) (%)
Note: Dividends for FY3/17 and FY3/18 are adjusted (with fractions after the hundredths place dropped) to reflect the 3-for-1 common stock split on July 1, 2018.
Medium-term Management PlanBusiness Development and Growth
20
III
1 Overview of the 10-Year Vision
Nu
me
rical targets
157 159 174 181 178 182 187 200
91 92106 110 113 124 136
200
¥40.0 billion
Consolidated sales
¥24.8 billion
FY3/16
6.1% 10.0%
Overseas
Japan
Qu
alitative
targets
Operating margin
FY3/17
¥25.1 billion
FY3/18
¥28.0 billion
5.8% 7.5%
FY3/19
¥29.1 billion
8.0%
FY3/20 Forecast
¥29.1 billion
FY3/25FY3/19FY3/18FY3/17FY3/16
7.3%
*Orange figures show forecasts.
21
FY3/21 Forecast
¥30.6 billion
FY3/22 Forecast
¥32.3 billion
8.2% 9.0%
Medium-term Management Plan FY3/20–FY3/22
Business development and growth
To supply the world’s best products as All Iwaki– We will work together to supply the world’s best products, quality, value, and services –
“Change & Challenge” is our stance for accomplishing this goal- We will firmly establish a corporate culture of never being afraid of change and new challenges -
13.612.411.311.010.69.29.1
15.7 15.9 17.4 18.1 17.8 18.2 18.7
20.0
20.0
2
FY3/21FY3/17 FY3/18 FY3/19 FY3/20 FY3/22 FY3/24FY3/23 FY3/25
Key goals
Business development and growthPlanting seeds
Specific initiatives for reaching the numerical targets of the 10-year vision
1) Rebuild the manufacturing infrastructure 2) Improve accuracy of production and sales plans
3) Eliminate product defects and other problems 4) Raise productivity in all aspects of operations
Manage operations with the goal of consistently increasing corporate value
1) Reexamine every part of personnel systems 2) Update core IT systems
3) Fully utilize the IoT 4) A commitment to CSR
Reaping benefits
22
●Steps for achieving the 10-year vision
Business development and growthgoals achieved
Business development and growth are the priorities of this plan to build a base for achieving the 10-year vision
Goals of the Medium-term Management Plan (FY3/20–FY3/22)Business Development and Growth
3
23
3
Japan
Major goals and progress Level Upcoming actionsReplace competitors’ products by sharing competitive SWOT analysis with all associated departments ○ Continue and strengthen these activities
To firmly establish the solutions business, increase system sales and differentiate IWAKI by using cooperation with its maintenance division ○ Continue and strengthen these activities
Take actions to meet customer demands for faster deliveries ○ Speed up deliveries in more product categories
Investm
en
ts
Make investments in production facilities at IWAKI Europe; make investments to start using an enterprise resource planning system;increase outsourced manufacturing companies in China and expand procurement channels for parts
△Continue IWAKI Europe capital expenditures; in China, add more outsourced production companies and procurement channels
Establish alliances and seek M&A opportunities in sectors peripheral to the pump business ▲ Continue to examine opportunities for alliances
and M&A
Ove
rseas K
ey marke
t secto
rs (an
d n
ew
bu
sine
sses)
AmericaExpand presence in the water treatment market (drinking water, food industry) and in the aquatic (water tank system for small fish) business, and start activities in Europe
○Build stronger sales channels for controllers (Europe, Asia and emerging countries)
EuropeTarget opportunities in the chemical/chemical manufacturing equipment plant market ▲
Use the IWAKI Europe sales strategy throughout EuropeOvercome competition in the water treatment market
ASEANStart using a single model for the entire ASEAN region,establish a business control headquarters, and build/developlocations to control logistics within ASEAN
×
Create sales regions and build a sales organizationContinue to build a stronger presence in the ASEAN region
China Target opportunities in the medical equipment market △Strengthen marketing activities in the new energy and water treatment markets
Business Development and Growth Phase– Major Accomplishments of the Medium-term Management Plan
Progress level ○: 70%+ △: 50% to 69% ▲: 20% to 49% ×: Under 20%
24
4
FY3/20 FY3/21 (plan) FY3/22 (plan)
Forecast Change Change Change
Net sales 29,067 -0.4% 30,593 +5.3% 32,305 +5.6%
Gross profit 10,066 -3.0% 10,699 +6.3% 11,366 +6.2%
Operating profit 2,116 -9.5% 2,509 +18.6% 2,915 +16.2%
Ordinary profit 2,551 -10.4% 2,930 +14.9% 3,336 +13.8%
Profit attributable to owners of parent
1,977 -8.6% 2,196 +11.1% 2,477 +12.8%
(Millions of yen)
1The FY3/20 sales forecast has been lowered slightly due mainly to the postponement of capital expenditures by client companies in the semiconductor/liquid crystal market. Forecast sales growth of almost 3% in Japan and almost 10% overseas in FY3/21 and FY3/22.
Forecast 34.6% gross margin and 27.3% SG&A expense ratio in FY3/20 and annual improvements of 0.2pt to 0.4pt in the gross margin and 0.5pt to 0.6pt in the SG&A expense ratio in the following two years.
Anticipate no change in income from equity-method affiliates during all three years of the management plan. But forecast double-digit growth in operating and ordinary profit and profit attributable to owners of parent as the benefit of sales growth in FY3/21 and FY3/22.
2
3
4Medium-term Management Plan (FY3/20–FY3/22) Business Development and Growth Phase
5
Achieving the 10-year vision
Concentrate resources on markets targeted for reinforcement
Basic Policy 1
・ASEAN project Continue progress with this project・Recruit marketing personnel in all countries and regions・IT infrastructure Use the core IT system renovation process as
an opportunity to optimize the entire IT infrastructure
Unified operation of strategic overseas regions
Basic Policy 4
・Improve customer services → More products for faster deliveries・Solutions business → Proposals for actual fluid simulation tests・Use of IoT → Study and establish new business models
Expand business activities that provide solutions
Basic Policy 2
・Aquatic business Continue promotion of Europe and China
sales activities, aim for growth in Japan and U.S.・Provide technology/maintenance support to customers
→ Sales activity support from IJ engineersTrain maintenance personnel with knowledge of their local markets
Basic Policy 3
25
Build a business model for new activities
• Water treatment market Synergies with Walchem (U.S.)• Medical equipment market New overseas OEM customers,
new products• New energy market Rechargeable battery production, large
storage battery equipment
Business Development and Growth Phase– Basic Policies of the Medium-term Management Plan
Target demand for the replacement of products of competitors
Continue to strengthen the solutions business
Focus on IoT products and solutions for customers
Continue to improve customer satisfaction
Meet customers’ demands involving products, parts, delivery, etc.
26
Country/region Key overseas markets for growth Targeted applications
America Water treatment, medical equipmentIndustrial water treatment, medical analysis, aquatic business
EuropeWater treatment, chemicals/chemical manufacturing equipment, cooling equipment, new energy
Systems products, wind power generation, equipment used in ships
ASEANWater treatment, surface treatment equipment, chemicals, medical equipment
Water quality management, surface treatment equipment
ChinaMedical equipment, new energy, water treatment
Medical analysis, rechargeable batteries, water treatment plants
South Korea/Taiwan Water treatment, new energyWater quality management, rechargeable batteries, surface treatment equipment
6
1. Japan
Business Development and Growth Phase– Major Initiatives of the Medium-term Management Plan
2. Overseas
3. Investments Make more investments in production facilities in Europe and strengthen logistics Consider alliances and M&A for the expansion of business operations
27
Disclaimer and Precautions Concerning Forward-looking Statements
This presentation was prepared by IWAKI to provide information to investors about business operations.
Information in this presentation is based on reasonable judgments by IWAKI using generally accepted views of economic, social and other factors as of November 14, 2019. This information may have to be revised without prior notice in the event of a change in the business climate or some other event.
The information in this presentation includes forward-looking statements. These statements are current outlooks, forecasts and assumptions that include risk and incorporate uncertainties that may cause actual performance to differ from these statements.
Risk factors and other uncertainties include but are not limited to items related to the Japanese and global economies, such as changes in business and market conditions and in interest rates and exchange rates.
IWAKI has no obligation to update or revise the forward-looking statements in this presentation even if there is new information, a significant event or some other reason for a change.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.
IWAKI assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.
For more information:E-mail: ir@iwakipumps.jpTelephone: +81-3-3254-2931Operating hours: 9:00 to 17:30
28
(Reference) The New Iwaki Corporate Website
Iwaki unveiled its new corporate website on October 1, 2019.
The website has a large volume of financial and other information for shareholders and other investors along with a variety of information to give visitors to the website a better understanding of Iwaki.
The previous website (https://www.iwakipumps.jp/) has a new look and has been renamed the product website.
https://www.iwakipumps.co.jp
Iwaki website QR code IR Information