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

Summary of 1H FY3/20 Financial Results

3

I

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

Outlook for FY3/20

12

II

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