Investors Meeting - 月島機械株式会社 · PDF fileInvestors Meeting . ... Section2...

Investors Meeting for FY2008 2nd Quarter Financial Results

Nov.20,2008Tsukishima Kikai Co., Ltd.

© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.

2

《

Contents 》

Section1 General・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

P 3～10

Section2 FY2008 2nd Quarter Financial Results・

P11～20

Section3 Outlook beyond FY2008・・・・・・・・・・・・・・

P21～32

Appendices・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

P33～44


3

Section1: General


4

Corporate data①

Corporate name TSUKISHIMA KIKAI CO., LTD.President & CEO Kazuhiko YamadaFounded Started operations August 1905

Formally established May 1917Address 17-15,Tsukuda 2-chome,

Chuo-ku, TokyoCapital ¥6,646millionTotal shares issued 45,625,800Shares per unit 1,000Employees 2,039（consolidated）

633（non-consolidated）（As at Sep.30 2008）


5

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Water environmental business

Industrial business

△11

Corporate data②

Operating income change by segmentOperating income change by segment（（consolidatedconsolidated））

★Growth story by conversion of earnings structure

36

25

17

23

6

19

31

12

433

29

（×¥100million）

ResultsResultsResultsResults

Changing composition of

operating income

Surplus in Industrial Surplus in Industrial businessbusiness

■Water environmental business:

Switch to stable earning business from high earning business by structural reform

■Industrial business:

Growth by expansion of market and business fields

7

15

22

Estimate


6

Operations of the Tsukishima Group

Basic technologies

and applications

associated with

Sugar refining

Water Environmental Business Division

Industrial Business Division

Water :Filtration and purification, Wastewater treatment

Sewage :Sewage treatment, Sludge treatment Industrial plant equipment and machinery, sugar

and bio, incineration, vacuum processing

Core technologies

Reaction,Crystallization

Distillation,

Centrifuge separation

Filtration,Dehydration,

Incineration

Combustion,fusion

Vacuum processing

Public sectorPrivate sector

(domestic/overseas)

Samukawa Water Services

Tsukishima Techno Machinery

Sun Eco Thermal

Tsukishima Kankyo EngineeringTsukishima Tecnno Maintenance Services

Machinery and equipment

Applications

Tsukishima Kikai

Applications


7

Water Environmental Business①M a i n B u s i n e s s F i e l dM a i n B u s i n e s s F i e l d

◆Machinery and equipment sales・Tsukishima is TOP brand in sludge treatment equipment (dewatering/drying/incineration)・Most equipment can be produced internally・Large market share in the major cities

Plants and equipmentPlants and equipment

◆New business models based on reliability and advanced technology・Comprehensive O&M (operation & maintenance),multi-year agreements・PFI model (construction and long-term operation)・Construction and long-term operation of new energy-producing and energy-saving products

L i f e c y c l e b u s i n e s sL i f e c y c l e b u s i n e s s

◆Equipment operation and maintenance・Many contracts in Japan (around 100 sites)・High performance for operation and maintenance

M a i n t e n a n c e M a i n t e n a n c e

Filter Press Inclined disc dryer

Samukawa Water ServicesPressurized fluidized combustion system

Sludge recycling into fuel

See Appendices P35,37～40

control room Equipment maintenance

See Glossary P2

Tornado Press

Water purification and sewage treatment facilities, incineration facilities,machinery such as dewatering machine and dryersOperation and maintenance of water purification and sewage treatment equipment and facilities


8

Water Environmental Business②

050

100150200250300350400450500

Mar '06 Mar '07 Mar '08 Mar '09

MaintenanceLife cycle businessPlants&Equipment

050

100150200250300350400450500

06.3期 07.3期 08.3期 09.3期

210245

16

158 86

141

173

141

134384

472448

295 293

184

164

1 30

151

46

130

460 474

360

Results

・Value of orders received is declining after Mar’07.

・The new business model of “Life cycle business” is growing.

・Sales is declining on Mar’08.・

In the “Life cycle” category, several years worth of orders received are lumped together whereas the associated sales figures are shown annually, creating discrepancy between orders and sales in individual years.

See Reference Materials P5

400

128

58

214

400

125

84

191


（×¥100million）（×¥100million）

Results Results Results Results ResultsEstimate Estimate

Value of orders receivedValue of orders received SalesSales

9

Industrial Business①

◆The only domestic supplier of large vacuum chambers for liquid crystal panel production・Film formation equipment for solar cells

Chemical and food manufacturing plants, biomass ethanol manufacturing plants, vacuum equipment, machinery such as dryers, centrifuge and gas tanks, waste treatment systems (liquid/solid/industrial/general waste)

Main business fieldMain business field

◆The only domestic supplier of sugar manufacturing plant and facilities and leading presence in the international sugar refining industry・Many installation experiences for sugar manufacturer in ASEAN region・Biomass ethanol manufacturing plant in Osaka and Thailand and Hokkaido

◆Core of industrial business using various machinery and product・Tsukishima Kikai has a 70% share of the dryer market (steam tube dryer) for terephthalic acid.

Industrial plants and equipmentIndustrial plants and equipment

◆Expanding after business integration with the former Nittetsu chemical engineering・Tsukishima Kikai has a 70% share in Japanese waste liquid

combustion

S u g a r / b i oS u g a r / b i o

I n c i n e r a t i o nI n c i n e r a t i o n

V a c u u mV a c u u m

Steam tube dryer（STD）

Biomass ethanol manufacturing plant

Waste liquid combustion facility

Electron beam welder(for large vacuum chamber

manufacturing)

Fully automatic centrifuge （for sugar production）

BPA plant

See Appendices P36,41

See Glossary P３


10

Industrial Business②

0

100

200

300

400

500

Mar '06 Mar '07 Mar '08 Mar '090

100

200

300

400

500

Mar '06 Mar '07 Mar '08 Mar '09

OtherVacuumIncinerationSugar/bioIndustrial plants&Equipment

171233

24

13111

15

28

104

1414352

393

181

156110

15

189

237714

14

209

24

160

1113

282317

417

SalesSalesValue of orders receivedValue of orders received・Value of orders received have risen favorably.・”Industrial plants & Equipment ” and ”Incineration” are core of Industrial business, constant scale of orders are secured.・”Sugar and bio” and “Vacuum” have risen orders gradually. But Mar’09 will be valley for orders.

・Sales increased to ¥40,000million.・”Industrial plants and Equipment” is core of

Industrial business, constant scale of sales are secured.・”Incineration” have achieved increasing of sales on

Mar’08, the scale of sales is over ¥10,000million.・”Sugar and bio” and “Vacuum” have risen sales with

steady progress.

38313

35

137

53

145

4351912

128

19

257

39012

40

122

61

155




ResultsResultsResults Results Results ResultsEstimate Estimate


11

Section 2: FY2008 2nd Quarter financial Results


12

Market trendsWater Environmental BusinessWater Environmental Business

Industrial BusinessIndustrial Business


■ Public sector budget continues to decline, reducing the size of the market and being hard competition for orders received

■ There is an increasing tendency toward orders contracted to the private sector, as well as “life cycle business” (Comprehensive O&M contracts and long-term O&M contracts).

■ There is an tendency that local governments choose technology and equipment can realize cost reduction and prevention global warming.

■ For business recession caused by financial crisis, plant and equipment investment are on the decline in the field of chemical and iron steel.

■ Increasing demand for biomass ethanol made from anti-food material, R&D of biomass ethanol manufacturing have developed.

■ Demands for liquid crystal panel is stagnant by inventory adjustment, but solar cells show activity.

13

FY2008 2nd Quarter financial Results

＊Previous expectation indicates estimation At FY2007 financial results statement on 23rd May. 2008

（×100 million）

FY2007Intermediate

FY20082nd Quarter Difference

FY20082nd Quarter

previous expectation

Difference withpreviousexpectation

Sales 279 257 (22) 270 (13)

Operating income (3) (11) (8) (7) (4)

Ratio of operating income to sales (1.1%) (4.4%) (3.3%) (2.6%) (1.8%)

Ordinary income 0 (9) (9) (6) (3)

Net income (7) (12) (5) (4) (8)

Net income per share (\14.49) (\25.82) (\11.33) (\8.79) (\17.03)

■Sales have decreased compared with “FY2007 Intermediate” and “ FY2008 2nd Quarter previous expectation” . The decreasing factor is a sales decreasing of “Industrial plants & Equipment” in industrial business.

■Operating income and ordinary income have decreased compared with “FY2007 Intermediate” and “ FY2008 2nd Quarter previous expectation” .

■Net income decreased by evaluation losses investment securities.



14

Orders received ,sales and operating income by segment

0

100

200

300

400

115

142

257

-20

-15

-10

-5

0

5

10

15

13

(16)

(3)

0

100

200

300

400

500

600 Industr ial business

Water environmental business

212

213

425

93

186

279

＊Abroad sales

Mar’08

2Q resultsMar’09

2Q results

199

398

＊59

S a l e sS a l e s Operat ing incomeOperat ing incomeOrders rece ivedOrders rece ived

【Water environmental business】Orders received decreased compared with Mar’08 2Q, because “Life cycle business” is the valley for orders.【Industrial business】Orders received decreased compared with Mar’08 2Q, because “Industrial plants& Equipment” decreased.

199

＊55

1

(12)

(27)

(14)

(13)

【×¥100million】

(22)

(44)

＊(4)

+22

(11)

(8)

(12)

+4



【×¥100million】【×¥100million】

【Water environmental business】Sales increased compared with Mar’08 2Q, because “Plants& Equipment” and “Life cycle business” increased.【Industrial business】Sales decreased compared with Mar’08 2Q, because PJ delayed.

【Water environmental business】Operating income increased compared with Mar’08 2Q, because of sales increasing and reducing selling cost and general administration expenses.【Industrial business】Operating income decreased compared with Mar’08 2Q, because of sales decreasing and increasing selling cost and general administration expenses.

Mar’08

2Q results

Mar’08

2Q resultsMar’09

2Q results

Mar’09

2Q results

15

【Water environmental business】Operating income increased compared with Mar’08 2Q.The increasing factors are sales increasing and decreasing

selling cost / general administration expenses despite declining profitability.

【Industrial business】Operating income decreased compared with Mar’08 2Q.The decreasing factors are decreasing sales and increasing

selling cost / General administration expenses for sales activity.

Analysis of operating income by segment

-20-15-10

-505

(16)0

5

10

15

13(12)

1

(12)+4

【Key factors】Sales increasing/decreasing ：

+ 4Profitability：

(4)Increasing/decreasing for selling cost and general administration expenses：

+ 4

【Key factors】Sales increasing/decreasing：

(7)Profitability：

(1)Increasing/decreasing for selling costand general administration expenses (4)


Mar’08

2Q results

Mar’08

2Q results

Mar’09

2Q results

Mar’09

2Q results


Water Environmental BusinessWater Environmental Business Industrial BusinessIndustrial Business【×¥100million】【×¥100million】

16

Extraordinary income/loss

（×100million） Mar'08 2Q Mar'09 2Q

Extraordinary income 5 －

Gain on sales ofinvestment securities

5 －

Extraordinary loss 17 11

Marketable securities － 3

Evaluation losses investment securities － 7

Specific construction losses － 1

Transfer into accrued warranty

17 －

Other －－

Evaluation losses by falling stock price

■Extraordinary loss: Evaluation losses investment securities(¥700million)



17

Consolidated balance sheet ①Assets

Mar 31,2008 Sep 30, 2008

¥88.3billion （¥14.6billion）

Other current assets

¥41.1billion

(¥2.3billion)

(¥11.2billion)

(¥0.4billion)

(¥0.7billion)

Cash deposit+ securities¥16.1billion

Other current assets

¥52.3billion

Investment in securities¥16billion

Other fixed assets

¥18.5billion

¥102.9billion＋2.5billion Operating capital demand(2.3billion) Purchased of marketable

securities(0.4billion) Dividends payment(2.1billion) Tax payment

(14.4billion) Accounts receivable+3.2billion Inventory

(0.7billion) Evaluation losses by falling stock price

+0.3billion Difference with current price

■Total assets are reduced ¥14.6billion since Mar 31, 2008.

■The reduction in investment securities is for evaluation losses by falling stock price.



Cash deposit+ securities¥13.8billion

Investment in securities

¥15.6billionOther fixed

assets¥17.8billion

18

(¥13.0billion)

(¥0.3billion)

+¥0.1billion

(¥1.5billion)

¥88.3billion （¥14.6billion）Current liabilities

¥42.3billion

Fixed liabilities ¥13.9billion

Value of securities ¥1.8billion

Net assets(less discrepancies

in appraisal of securities)

¥44.9billion

¥102.9billion

(¥8.9billion) Bills accounts payable(¥4.1billion) Others

(¥0.3bilion) Long-term loans

(¥1.5billion) Earned surplus

■Reduction liabilities by reduction in note and account payable

■Reduction in total assets brings the equity ratio to 50.9%, improvement of 5.9pt over the Mar

31th. 2008


Consolidated balance sheet ②Liabilities and equity

Mar 31,2008 Sep 30, 2008

Current liabilities

¥29.3billion

Fixed liabilities ¥13.6billion

Value of securities ¥1.9billion

Net assets(less discrepancies

in appraisal of securities)

¥43.4billion


19

Consolidated cash flow results

020406080

100120140160180

¥15.7billion

(¥1.0billion)

(2.3billion)(0.7billion)

¥11.7billion

CF from

sales activities CF from

investing activities CF from

financing activities

(¥0.3billion) Repayment of long-term loans

(¥0.4billion) Dividends payment etc

+¥0.3billion Sales of securities(¥2.3billion) Acquisition of

securities(¥0.3billion) Acquisition of tangible

and intangible fixed assets etc

■Collection of accounts receivable and acquisition of securities resulted in ¥4.0billion decrease in

cash and equivalents since the end of the March 2008.

+¥14.6billion Collection of accounts and receivable

(¥8.9billion) Reduction in notes payable(¥3.2billion) Increase in inventories(¥3.5billion) Tax payments and others




Mar 31,2008 Sep 30, 2008

20

Section3:Outlook beyond FY2008


21

Consolidated business outlook for FY2008

×100millionMar'08results

Mar'09expectation Difference

Mar'09previous

expectation

Difference withprevious

expectation

Sales 777 790 13 830 (40)

Operating income 33 22 (11) 35 (13)

Ratio of operatingincome

4.2% 2.8% (1.4%) 4.2% (1.4%)

Ordinary income 36 24.5 (11.5) 36 (11.5)

Net income 8 3 (5) 16 (13)

Net income per share

\18.18 \6.59 (\11.59) \35.16 (\28.57)

■Amendment for FY2008 business outlook on 31th Oct

■Sales is expected to increase to ¥79billion.

■Operating income is expected to decrease to ¥2.2billion, because of sales decrease in Industrial business.

■Net income is expected to decrease to ¥0.3billion, because evaluation loss of investment securities and marketable securities was counted on second quarter of FY2008.



＊Previous expectation indicates estimation At FY2007 financial results statement on 23rd May. 2008

220

100

200

300

400

500

600

700

800

900

1,000 Industri a l bus iness

Water env i ronmenta l bus iness

0

100

200

300

400

500

600

700

800

900

1,000

417

360400

390

777 790

0

5

10

15

20

25

30

35

40

4

2925

33 35

383

448 400

435

831 835

10

（196）（145）

400

470

870

395

435

830

（168）

15

22

7

【Water environmental business】Sales is expected to increase, because of increase in “Plants & equipment” and “Life cycle business”.

【Industrial business】Sales is expected to decrease, because of delay for orders received in “Industrial plant & equipment”

【Water environmental business】Orders received is expected to keep the previous expectation, because of orders received in “Plants & Equipment”.

【Industrial business】Orders received is expected to decrease, because of delay for orders in “Industrial plants & equipment”.

【Water environmental business】Operating income is expected to increase, because of sales increasing effect and decreasing selling cost / general administration expenses 【Industrial business】Operating income is expected to decrease, because of sales decreasing effect and increasing selling cost / general administration expenses for spread of business.

(35)

(35)

±0

(40)

+5

(45)＊(23)

(13)

(3)

(10)

+4

+52

(48)

+13

(27)

＊(51)

+40

＊Orange :compared with Mar’09 previous expectation

Green :compared with Mar’08 results

(11)

(14)

+3

Outlook for orders received ,sales and operating income by segment See Reference Materials P6

See Glossary P2

Orders rece ivedOrders rece ived S a l e sS a l e s Operat ing incomeOperat ing income


＊Abroad sales

ResultsMar’08 Mar’09

Previousexpectation

Mar’09

expectationPresent Results

Mar’08 Mar’09Previous

expectation

Mar’09

expectationPresent Results

Mar’08 Mar’09Previous

expectation

Mar’09

expectationPresent

23

0

5

10

15

20

25

30

0

5

10

15

20

25

30

47

29

15

■<Water environmental business>

Operating income is expected to increase compared with Mar’08 by increasing sales and decreasing

selling cost and general administration expenses.

■<Industrial business>

Operating income is expected to decrease compared with Mar’08 by decreasing sales and increasing

selling cost and general administration expenses.

(14)

+3



Analysis of operating income by segment

Water Environmental BusinessWater Environmental Business Industrial BusinessIndustrial Business

Sales increasing/decreasing ：

+ 7Profitability：

(15)Increasing/decreasing for selling cost and general administration expenses：

+ 11

Sales increasing/decreasing：

(5)Profitability：

(1)Increasing/decreasing for selling costand general administration expenses (8)

【Key factors】【Key factors】

Mar’09

Expectation

Mar’08

Results

Mar’08

Results

Mar’09

Expectation

【×¥100million】【×¥100million】

24

(×100million)Mar'08results

Mar'09estimate

Increase/decrease

Orders received 448 400 (48)

Plants & equipmenrt 173 214 41

Life cycle business 141 58 (83) ＊Comprehensive andlong-term O&M contracts

131 54 (77)

Maintenance 134 128 (6)

Sales 360 400 40

Plants & equipmenrt 184 191 7

Life cycle business 46 84 38 ＊Comprehensive and long-term O&M contracts

40 70 30

Maintenance 130 125 (5)

Operating income 4 7 3

Ratio of operating income to sales 1.0% 1.8% +0.8pt

Balane of orders 452 452 ±0

■Market reduction－”Plants & equipment” is increasing slightly, but

total market volume is reducing.

■”Life cycle business” is bottom period

－Large project in “Life cycle business” from local government is expected to decrease.

★Switch to stable earning business

－”Stock (assets)” based on lots

of experience

－Close to customers

Business environmentBusiness environment

Basic policy of businessBasic policy of business


Business strategies for Mar 09 period Water environmental business


See Glossary P2

25

◆Review of

business structure

◆New products/

New business

◆Profitability

of projects

・Cost reduction effect ¥100miilion until Sep.30 ’08⇒Execute until Mar’09 continuously

・Reduction of selling cost and general administration expenses⇒¥400million has been reduced until Sep.30 ’08. That reduction will execute until Mar’09 continuously.

Strategy for short-term: Maintain earnings

Strategy for medium, long-term ＝to earning structure for future by new products & business

・Participate in joint research with Tokyo metropolitan government・Acquisition official certification

・be in active to plural projects.

・Already got orders ¥3.4billion(18 projects) until Sep.30 ‘08


Business strategies for Mar 09 period Water environmental business See Glossary P2,3

・Standardize of design spec for plants and

equipment / Intensive procurement

・Intensification of selective order received

・Optimize sales and engineers

・In-house engineering

・Unite management of “Tsukishima Kikai”

and “Tsukishima Techno Maintenance

Services”

・

Intensification of sales promotion

for new dewatering machine

・Orders received of “Comprehensive O&M contracts”, ”Long-term O&M contracts”

・Orders received of “energy creation system”and “energy saving system”◆Sludge to fuel recycling sｙstem◆Pressurized fluidized combustion system

26

PFI business Comprehensive O&M contracts

①Samukawa PFI project

・Contract term：Dec.2003～Mar.2026・Contract amount：¥15billion

②Chiba Nogikuno-sato PFI projects

③Chiba-city south WWTP

comprehensive O&M

・Contract term：Apr.2008～Mar.2011

④Osaka prefecture waterworks waste-water & heat-electricity supply equipment O&M

Operation & Maintenance

Chemicals Measure Repair

Design

Comprehensive O&M contracts

DBO business

PFI business

Procurement Construction

Finance

To stable earning structure by PFI business and comprehensive O&M contracts


See Glossary P2,3Water environmental business Experience of “Life cycle business”

・Contract term：Mar.2005～Sep.2027 ・Contract term：Apr.2008～Mar.2015・Contract amount：¥8.9billion

・Contract amount：¥3.5billion

・Contract amount：¥4.2billion

27

(×100million)Mar'08results

Mar'09expectation

Increase/decrease

orders received 383 435 52 ＊Abroad 148 156 8 Industrial plants & equipment 145 257 112＊STD 68 40 (28)

Sugar/bio 53 19 (34) Incineration 137 128 (9) Vacuum 35 19 (16) Other 13 12 (1)Sales 417 390 (27) ＊Abroad 196 145 (51) Industrial plants & equipment 209 155 (54)＊STD 62 60 (2)

Sugar/bio 24 61 37 Incineration 160 122 (38) Vacuum 11 40 29 Other 13 12 (1)Operating income 29 15 (14) Ratio of operating income to sales 6.9% 3.8% (3.1pt)Balance of orders 321 366 45

★Adaptability against economic fluctuations◆ Improvement of profitability◆ Expansion of market－from domestic to abroad－new business (bio, vacuum) －expansion of application－plant business

■Reduction of plant and equipment investment in chemical field■Higher interest to biomass ethanol made of

anti-food material, because of global warming and the price of crude oil changing■Stable market condition in “Incineration”■Liquid crystal market got into adjustment

stage, but solar-cell technology is watched with keen interest for prevention of global warming in “Vacuum” field

Business environmentBusiness environment

Basic policy of businessBasic policy of business


Business strategies for Mar 09 period Industrial business


28

◆Expansion of application ・Expansion of application for STD

・Terephthalic acid drying for chemical industry

⇒ coal drying for steel industry

◆Maintain volume of orders

◆New business

◆Profitability of projects

《Biomass ethanol》・Development biomass manufacturing

technology made from anti-food materials ・Development new process

《Vacuum》・Establishment of deposition technology

・Maintain stable profits by complete project management

・Completion of existing projects

・Establishment of new process、and new technology

・Completion project management

・Improvement of profitability

Strategy for short-term ＝maintain volume of orders and minimize decreasing earnings

・Maintain volume of orders to improve resource operation

＝


See Glossary P2,3

See Appendices P42～44

Business strategies for Mar 09 period Industrial business

・Take in active demands in Asia

・Take in low-profitability projects to maintain volume of orders

Strategy for medium/long-term

not to depend on specific business field, to minimize the effect of economic fluctuations

29

0

20

40

60

80

100

120

140

160

180

Mar'03 Mar'04 Mar'05 Mar'06 Mar'07 Mar'08 Mar'09

Equipment

Plants

1218

30

8

8251

48

3

75

44

88

69

53

9590

119

157148

70

86

156

expectation


Industrial business（Orders received from abroad）


《Characteristic of Tsukishima Kikai’s abroad plants business》

・Only E (Engineering）、P (Procurement）

portion, excluding C (Construction) portion

・Scope of project is generally limited to supply machinery and associated facilities (not being responsible for an entire projects as the prime contractor).

★Continuing plant & equipment investment demand in Asian region include middle-east region

★Exchange fluctuation －Ordered projects are almost contracted in calculated in yen. So exchange fluctuation risk is small.－Projects before order are affected in competitiveness.

30

Mar'07 Mar'08 Mar'09

results result plan

Net income(consolidated)in current period \1.0billion \0.8billion \0.3billion

Return value \0.68billion \0.68billion 0.68billion

Dividend payments \0.68billion \0.68billion \0.68billion

(Annual dividend payment per share) \15 \15 \15

(Intermediate period dividend payment per share)

\7 \7 \7

Treasury stock purchases \0 \0 \0

Return to stockholders(consolidated) 67.7% 82.5% 226.6%

■Based on basic principle (stable and continuous return to stockholders),

the current plan for Mar’09 is to maintain the dividend of ¥15 per share


Return to stockholders

31

TSK’s core technologyCore technologies developed by sugar manufacturing technologies （reaction、crystallization、distillation、separation、filtration、drying、incineration、vacuum etc）

Evolution to environment technologiesEvolution to environment technologiesStrength of Tsukishima Kikai is Strength of Tsukishima Kikai is

keeping environment technologies keeping environment technologies Converting earnings

structure

Water environmental

business

Industrial business

◆To stock business－Life cycle business

PFI and comprehensive O&M contracts

⇒ Converting stable earning structure

◆Utilization of waste, popularization energy-saving facility

◆Incineration technology－Waste liquid combustion system－Solid waste combustion system◆Waste gas/waste water treatment technology－Flue gas desulfurization facility

◆Biomass ethanol technology

◆Expansion of market－from domestic to abroad⇒China, south east Asia, Middle east region◆Expansion of business domain－Biomass ethanol manufacturing process －Strengthening vacuum business

⇒Building up stable earning structure by new business

To new growth storyTo new growth story

－Waste water treatment system

－Abroad water environmental business by accumulated technologies


Development of business in future

－Tornado press－Sludge recycling into fuel－Pressurized fluidized combustion system

AppendicesAppendices


33

Appendices

Water environmental business (water purification)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

'02 '03 '04 '05 '06

Subsidies Bond issues

(×¥100million）

Reservoir7%

Intake3%

Aqueduct2%

Other17%

Purification

14%

Supply8%

Distribution49%

Water purification-subsidies and bond issuesWater purification-subsidies and bond issues Expenditure by facility type（2005）Expenditure by facility type（2005）

◆As part of government cost-cutting measures, budget for public works are declining from 1999

◆Tsukishima Kikai boasts considerable experience and expertise in waste-water treatment

at water purification facilities

（Source: Ministry of internal affairs and communications）

Business target of Tsukishima Kikai


34

Appendices

Water environmental business (sewage)


下水道普及率

Source: Ministry of Land, Infrastructure, Transport and Tourism

Sew

age

budg

ets

0

10,000

20,000

30,000

40,000

50,000

60,000

'92 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '080%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

◆Sewage budget are shrinking in inverse proportion to coverage ratios

◆Tsukishima Kikai boasts considerable experience and expertise in sludge treatment at processing plant

（plan）

Sew

age

cove

rage

ratio

Coverage ratio for sewage


35（Source: Tsukishima Kikai data modified from Japan sewage maintenance association data ）

780

840

903 916 928 945 947 952 970 981 9891,017

650688

744809

852928

971 1,001 1,021 1,053 1,072 1,078

0

200

400

600

800

1,000

1,200

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

0

200

400

600

800

1,000

1,200

1,400

Contract amount Number of contract sites

Water environmental business（Sewage facility O&M contracts ）

◆Japanese sewage treatment sites are about 1,800 sites. O&M by private sectors is growing gradually.

◆Tsukishima Kikai group has been entrusted about 100sites (water purification and sewage treatment)

Appendices

（×¥100million）（number of sites)

See Glossary P2


36

UtilizationIncineration

UtilizationDrying

Wat

er p

uri

fica

tio

nW

ater

pu

rifi

cati

on

Wa

ste

-wa

ter

tre

atm

en

tW

as

te-w

ate

r tr

ea

tme

nt

Water supplyFiltrationSettlingInlet

Samukawa water-servicesFilter-press

DewateringThickening

Waste-water

Drying

sludge sludge

Inclined disc dryer

Incinerator

Dewatering脱水DigestionThickening

Tornado Press

Aeration

Gas-holder

Water environmental business (Products)

Thickening-drying system

First settling Second settling

Sludge to fuel recycling systems

See Glossary P2Appendices


37

Orders OrdersMar 2008

SalesOrdersMar 2009

SalesOrdersMar 2010

SalesMar 2011

Sales

◆“Comprehensive O&M contracts”, ”Long-term O&M contracts

★

Future sales image for “life-cycle business”

◆PFI model★

Contribution to stable profits by long O&M execution and construction of facilities

（Samukawa W.S. / Edogawa W.S.）

◆Product differentiation through technological superiority

★ Construction of new business model by acceptance orders including new technologies/products and long-O&M （Sludge to fuel recycling system / Pressurized fluidized combustion system）

SalesOrdersMar 2007

Stable earnings base

Effe

ctEf

fect ★

Stable profits by acquisition multi-year O&M contracts

★

“Long-term O&M” and “PFI scheme projects” need high technologies and credit stability, so its bids are adopted ‘synthetic evaluation method’ by local governments

Water environmental business ”Life cycle business ”See Glossary P２Appendices


38

Hokkaido area

Water purification plant：

1site

Waste water treatment plant：1site

Water environmental business “stocks”（maintenance sites）

Tohoku areaWater purification plant ：6sites Waste water treatment plant ：2sites

Chubu/Hokuriku area


3sites

Waste water treatment plant：

6sites

Kansai/Tyugoku area


10sites

Waste water treatment plant：

7sites

Kyushu areaWater purification plant

：3sites

Waste water treatment plant

：

3sites

Kanto area

Water purification plant ：15sites Waste water treatment plant ：26sites

Many stocks

⇒To stable earning structure by “Life cycle business”

© 2008 Tsukishima Kikai Co., Ltd.

All Rights Reserved.

Appendices

39

Water environmental business（Market share and competitors）＊Based on in-house research

M a i n t e n a n c eM a i n t e n a n c e

Plants and equipmentPlants and equipment Market share In Japan Main competitors

Li fe cyc le businessLi fe cyc le business

Dew

ater

ing

mac

hine

s

１８％

Ebara environmental engineering,

Kobelco eco-solutions, Kubota, Sanki engineering,

JFE engineering, Metawater

Kawasaki heavy industries, Kubota

Hitachi plant technologies, Ishigaki, Takuma, Tomoe engineering, Mitsubishi kakoki,

【Main products】Tornado press(New machine)

【Major achievements】Samukawa Water Services

（PFI facility）

【Main products】Inclined disc dryer

【Main products】Fluidized

incinerator

【Main products】Cokes bed

melting furnace

２５％

２２％

５３％

PFI：2 of 4（waste-water treatment at water purification facility）

Contract to:45 water purification facilities48 sewage facilities 4 other facilities

Equipment operation and maintenance

Nihon hels industry, Ebara engineering services, Kubota environmental services, Meiden environmental services, Veolia(France)

Metawater, Sanki engineering, Maezawa industriesMeiden environmental services

Appendices

Dry

ers

Inci

nera

tors

Mel

ting

furn

aces

See Glossary P2


40

Liqu

id-

was

te

Molasses

Crystallization

Bagasse

Coking

BPA

Ch

em

ica

l in

du

st

ry

Ch

em

ica

l in

du

st

ry

Naphtha Para-xyleneXylene PTA

PC

POM

Blast furnace RollingConverter ProductsMaterials

St

ee

l in

du

st

ry

St

ee

l in

du

st

ry

Affination centrifuge concentration FiltrationRaw

sugar

Su

ga

r ･

bio

Su

ga

r ･

bio

Parts for liquid crystal panel

manufacturing equipment

Pre

cis

ion

ma

ch

ine

Pre

cis

ion

ma

ch

ine

パラキシレン

製造プラント

BPA PlantsLiquid-waste

incineration system

Agglomeration

Gas-holder

Drying Products


Centrifuge

STD

STDCentrifuge

Deposition equipments

Crystallizer

Flue gas desulfurization

system

Steam tube dryer（STD）Para- xylene

Plants

Fluidized dryer

See Glossary P3

Industrial business (Products)Appendices


41

Material: wheat ,corn

Material：wheat、sugar beetCapacity：15,000KL/年

Material：riceCapacity：1,000KL/year

Material：sawmill waste Capacity：0.25KL/year

Material：waste woodsCapacity：1,400KL/yearContractor：Tsukishima Kikai,

Taisei Corporation ,Marubeni Corporation

Material：riceCapacity：15,000KL/yearContractor：Tsukishima Kikai

Material：Capacity：750KL/year

Material：High biomass sugarcane Capacity：1.1KL/year

Tsukishima Kikai experiences


Appendices

Industrial business (Biomass ethanol plants experiences)

42

Thailand saraburi prefecture

Company :TRE


・Material :Bagasse、Molasses

・Capacity :36,000KL/year

・Contractor :Tsukishima Kikai,

Marubeni corporation

Sapporo breweries Ethanol plant

Tsukishima Kikai is developing to the demands for biomass ethanol made from anti-food material, based on plural construction experiences.


Industrial business (Biomass ethanol plants experiences)Appendices

43

Industrial business (Market share and competitors）＊Based on in-house researchS T DS T D

【Main product】Steam tube dryer

（STD）

I n c i n e r a t i o nI n c i n e r a t i o n

Was

te-li

quid

co

mbu

stio

n

Solid

in

dust

ries

was

te

【Main product】

Liquid-waste incineration

system

【Main product】Melting kiln

S u g a r P l a n t sS u g a r P l a n t s【Main product】Fully automatic sugar centrifuge

B i o m a s s e t h a n o lB i o m a s s e t h a n o l【Main product】


Large vacuum chambersLarge vacuum chambers【Main product】

Large vacuum chamber for liquid crystal panel

70％（¥12billion）

Mitsui engineering and shipbuilding, Louisville(US) （PTA dryers）

Market share

(Market value)

In Japan, the only domestic supplier for plant and

equipment, one of engineering companies for

sugar plant in the world

70％ of domestic marketDomestic:¥3billion

Overseas:¥15billion

30％(Domestic¥15billion）

ＪＧＣ、Mitsui engineering and shipbuilding

(cellulose ethanol system)

Asahi Kasei engineering, Volcano, John Zink (US),Callidus technologies (US)

Mitsubishi heavy industries(large electron beam welding)

Hitachi Zosen, Sumitomo heavy industry (leading heavy industry manufacturers / shipbuilding firms)Takuma, Ebara (leading environmental solution firms

Appendices

Hakko engineering, Sintanakakikai,BMA (Germany), Fifs cail (France)

Three orders

Oligopolyin Japan

See Glossary P3


44

Note

Inquiries

Tsukishima Kikai Co., Ltd.

Corporate Management Planning Department, PR & IR Group

17-15, Tsukuda

2-chome, Chuo-ku, Tokyo, 104-0051 Japan

Phone:+81-(0)3-5560-6982

Fax :+81-(0)3-5560-6591

URL: http://www.tsk-g.co.jp

1. Numerical projections and estimates, future outlook descriptions and associated statements and declarations in this document and the accompanying presentation are based in judgments and assumptions made in accordance with the best information available to Tsukishima Kikai at the present point in time. Actual outcomes may differ from such predictions due to uncertainties inherent in underlying judgments and assumptions, operational and management developments, and changes in internal and external conditions. Tsukishima Kikai makes no warranties whatsoever in relation to future predictions shown herein.

2. This documents is intended purely as a source of information and does not constitute an instrument of solicitation or inducement on the part of Tsukishima Kikai.

3. No part of this document may be copied or quoted for any purpose without permission.


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