Financial results for FY2018 Q2 Financial Summary...FY2017 Q2 Jan.2017 –Jun. 2017 FY2018 Q2 Jan....

Financial results for FY2018 Q2

Financial Summary

Aug. 10, 2018

NIKKISO CO., LTD.

Securities code: 6376

Disclaimer

This material contains forward-looking statements about future business performance. These statements by definition involve risks and uncertainties and are not intended to guarantee future performance. Actual results in the future may differ from the

estimates presented in the material herein due to changes in the business environment and other factors.

Copyright © 2018 NIKKISO CO., LTD. All rights reserved. 2


News Topic

Total investment (planned): ¥17 billion*by the end of 2021

-Aerospace plant + administrative building: ¥11.2 bn-Industrial and other business: ¥4.5 bn-Land: ¥1.3 bn

Aims of the new plant

◆ Schedule

The new plant is intended to expand productivity, yield advanced technologies and optimize manufacturing, and ultimately establish a company-wide quality control system.

Aerospace plant starts

operation

Autumn 2018

Construction of

cryogenic pump test

facilities

Cryogenic pump

plant starts operation

Establishment of quality

control system and of

development with advanced

technologies in all business

fields

2021202020192018

Phase I of construction work of Miyazaki plant completed at the end of July 2018



Consolidated Performance

Millions of JPY

FY2017 Q2Jan.2017 – Jun. 2017

FY2018 Q2Jan. 2018 – Jun. 2018

YoY comparison

Change Change rate

Orders 64,547 84,730 ＋20,183 ＋31.3%

Revenue 62,910 75,578 ＋12,668 ＋20.1%

Operating profit 2,441 3,168 +726 +29.7%

Operating margin 3.9% 4.2%

Profit before tax 2,316 2,762 +445 +19.2%

Pretax profit margin 3.7% 3.7%

Profit for the yearattributable to owners of the company 1,762 2,033 +270 +15.4%

Profit marginattributable to owners of the company

2.8% 2.7%

Average foreign exchange rate

Against the US dollar (Yen) 112.34 108.67 △3.67 -

Against the euro (Yen) 121.66 131.55 +9.89 -



Breakdown of Profit/Loss

Millions of JPY FY2017 Q2Jan.2017 – Jun. 2017

FY2018 Q2Jan. 2018 – Jun. 2018 Change Remarks

Gross profit 21,685 25,772 +4,087

- Selling, general and administrative expenses △19,830 △22,967 △3,136 Increase due to joining of CI Group

- Other income 685 430 △255

- Other expenses △97 △67 +30

Operating profit 2,441 3,168 +726

- Financial income 346 342 △3

- Financial costs △554 △864 △310Increase in interest expenses(△158)Increase in foreign exchange loss due to the appreciation of the yen(-132)

- Share of profit of associates and joint ventures accounted for using the equity method 82 116 +33

Profit before tax 2,316 2,762 +445

Exchange rate for the conversion of the performance of overseas subsidiaries

- Against the US dollar (Yen) 112.34 108.67 △3.67

- Against the euro (Yen) 121.66 131.55 +9.89



Performance by Business Segment

Millions of JPY FY2017 Q2Jan.2017 – Jun. 2017

FY2018 Q2Jan. 2018 – Jun. 2018

YoY comparison

Change Change rate

Industrial Business

Orders 38,360 54,598 ＋16,238 ＋42.3%

Revenue 36,424 46,786 +10,362 +28.5%



Industrial DivisionOrders 25,592 39,826 +14,234 +55.6%

Revenue 23,998 33,567 +9,568 +39.9%

Precision Equipment Division

Orders 4,996 6,705 +1,709 +34.2%

Revenue 4,798 5,156 +358 +7.5%

Aerospace DivisionOrders 7,675 8,016 +340 +4.4%

Revenue 7,569 8,005 +435 +5.8%

Medical Business

Orders 26,187 30,132 +3,944 +15.1%

Revenue 26,485 28,791 +2,305 +8.7%



Corporate expenses, etc. Operating profit △1,985 △1,663 +322 -



Industrial Division

FY2017 Q2Jan.2017 – Jun. 2017

FY2018 Q2Jan. 2018 – Jun. 2018 YoY comparison

Change Change rate

Orders 25,592 39,826＋

14,234＋55.6％

Revenue 23,998 33,567 ＋9,568 ＋39.9％

1. Overview

2. Consolidated performance 3. Revenue Composition ratio by Product

Millions of JPY

✓ The petroleum and natural gas markets are expected to recover and expand as evidenced by a rise in crude oil prices and a worldwide expansion in the LNG market both from supply and demand perspectives. This increased orders received by LEWA and CI Group, which thus are on a recovery track.

✓ In domestic pump business, cryogenic pump business for LPG facilities demonstrated strong performance, which improved the performance of overall industrial business.

往復動ポンプ

キャンドモータポンプ

クライオジェニックポンプ

その他

Geveke

CI グループ

Reciprocating pump

Canned motor pump

Cryogenics pump

CI Group

Others

40%

7%19%

8%

22%

4%

FY2018

Q2



Performance trend of LEWA

2017 YTD 2018 YTD7

195 194 204

220 236 232

51

105

151

200

58

132

211

148

189

217 217 224

219

46

107

170

236

46

94

217

1727 30 31 28

21

3 918

28

1 417

98 103 91 95

107 120 125

119

101

84

106

133

-200

-150

-100

-50

0

50

100

150

0

50

100

150

200

250

300

350

11 12 13 14 15 16 Q1 Q2 Q3 Q4 Q12 Q23 Q34 Q45 18計画

受注高（左軸）売上収益（左軸） EBITDA（左軸）受注残高（右軸）

Q1 Q4Q3Q2

Orders (Left axis) Revenue (Left axis) EBITDA (Left axis) Orders backlog (Right axis)Millions of €

(Forecast)



Performance trend of Cryogenic Industries Group

FY2017 ※unaudited FY2018

Millions of ＄

310

18

0 2

3010

20

41

12

30

45

18

35

65

15

34

73

49

14

15

16

0

50

100

0

50

100

150

FY2017 Q1 FY2017 Q2 FY2017 Q4 FY2018 Q1 FY2018 Q2 FY2018 Q4(計画）

百万

ACD 売上収益（左軸） Cryoquip 売上収益（左軸） Cosmodyne 売上収益（左軸） EBITDA（右軸）Revenue (Left axis) Revenue (Left axis) Revenue (Left axis) (Right axis)

(Forecast)

31

65

124

28

67

148




水質調整システム

ファインセラミック

その他

粉体計測

1. Overview

Millions of JPY

✓ In power plant business, inquiries about water-conditioning system for Southeast Asia were on an increasing trend. We will strive for a steady increase in orders received in the second half of FY2018.

✓ Due to an expansion in usage of electronic components, investment in the relevant manufacturing industry is buoyant, which considerably increased orders received of the new warm isostatic laminator.


FY2017 Q2Jan.2017 – Jun. 2017


Change Change rate

Orders 4,996 6,705 ＋1,709 ＋34.2％

Revenue 4,798 5,156 ＋358 ＋7.5％

Water conditioning system

Precision equipment

Fine ceramics

Others

30%

41%

23%

6%

0

FY2018

Q2



Aerospace Division

1. Overview


Millions of JPY

✓ Although a partial decline in cascade demand continued from FY2018 Q1 and slightly reduced revenue compared to the initial plan, business saw an increase in revenue year-on-year due to steady growth in shipments of items produced at the first plant in Hanoi, Vietnam.

✓ We will implement the growth strategy for further profitability by re-establishing the production system including the new plant in Miyazaki to be put into operation this autumn and the second plant in Hanoi, Vietnam, to be completed this autumn.

FY2017 Q2Jan.2017 – Jun. 2017


Change Change rate

Orders 7,675 8,016 +340 +4.4％

Revenue 7,569 8,005 +435 +5.8％

カスケード

翼部品

その他

エンジン部品

ナセル部品

Cascade

Nacelle parts

Wing parts

Jet engine parts

Others

45%

17%

25%

9%

4%

FY2018

Q2


(Japan) Dialysis machines

(Overseas) Dialysis machines

(Japan) Disposable

(Overseas) Disposable

Maintenance

CRRT

Others


Medical Division


1. Overview

Millions of JPY

✓ In the hemodialysis-related business, the demand for hemodialysis equipment recovered in the domestic market, which led to an increase in sales of disposables such as blood tubing lines.

✓ In overseas markets, sales of knock-down kits continued strong in China, and sales grew in Asia, which led to an increase in revenue and profit year-on-year in the hemodialysis-related business as a whole.

✓ In the CRRT business, temporary expenses were posted to restructure the development system. However, strong sales of equipment in our mainstay Chinese market made up for slow sales in other countries, which led to an increase in revenue year-on-year.

FY2017 Q2Jan.2017 – Jun. 2017


Change Change rate

Orders 26,187 30,132 +3,944 +15.1％

Revenue 26,485 28,791 +2,305 +8.7％

16%

13%

29%

3%

12%

8%

19%

FY2018

Q2

Copyright © 2018 NIKKISO CO., LTD. All rights reserved.

Financial forecast for FY2018

Consolidated Performance

12

Millions of JPYFY2017

Actual recordFY2018

Performance forecastYoY comparison

Change Change rate

Orders 140,412 162,000 +21,587 +15.4%

Revenue 140,912 162,000 +21,087 +15.0%

Operating profit 8,718 10,000 +1,281 +14.7%


Profit before tax 8,310 9,000 +689 +8.3%

Pretax profit margin 5.9% 5.6%

attributable to owners of the company

Profit for the year 5,182 5,900 +717 +13.8%

Profit margin attributable to owners of the company

3.7% 3.6%

Average/Forecast

Against the US dollar (Yen)Against the euro (Yen)

112.16126.70

108.00132.00

△4.16+5.30

--

Forex sensitivity for FY2018 (When yen was depreciated by 1 yen)

US dollar (Yen)

Euro (Yen)Revenue +460 million yen Operating profit +80 million yen

Revenue +390 million yen Operating profit +50 million yen


Financial forecast for FY2018

Performance by Business Segment

13

Millions of JPY

FY2017Actual record

FY2018Performance forecast

YoY comparison

Change Change rate

Industrial Business

Orders 85,406 101,900 ＋16,493 ＋19.3%

Revenue 85,228 101,800 +16,571 +19.4%



Industrial DivisionOrders 58,827 72,300 +13,472 +22.9%

Revenue 59,715 71,700 +11,984 +20.1%


Orders 10,731 11,100 +368 +3.4%

Revenue 9,843 11,600 +1,756 +17.8%

Aerospace DivisionOrders 15,712 17,000 +1,287 +8.2%

Revenue 15,550 17,000 +1,449 +9.3%

Medical Business

Orders 55,005 60,100 +5,094 +9.3%

Revenue 55,684 60,200 +4,515 +8.1%

Operating profit 3,950 5,800 +1,849 +46.8%


Corporate expenses, etc. Operating profit △2,771 △3,700 △928 -

Appendix


< Medical >< Aerospace >< Industrial and Precision Equipment >

15

＋474

＋14,899

Simpleincrease

FY2018 Q2(Jan.2018-Jun.2018)

Orders

84,730Impact of FX

Simpleincrease Impact of FX

✓ Increase in LEWA due to improved market conditions

✓ Increase in new warm isostatic laminators

✓ Joining of CI group (+9,446)

✓ Increase in products from Vietnam

＋998 ＋586 ▲246

＋3,422 ＋522Impact of FX

Simpleincrease

FY2017 Q2(Jan.2017-Jun.2018)

Orders

64,547

Orders Analysis (vs FY2017 Q2)

Millions of JPY

✓ Recovery of demand for hemodialysis equipment and growth of disposables sales in domestic market

✓ Strong performance of overseas hemodialysis business

✓ Sales growth of CRRT business in the mainstay Chinese market


< Medical >< Aerospace >< Industrial and Precision Equipment >

16

FY2018 Q2(Jan.2018-Jun.2018)

Revenue

75,578

＋771

Simpleincrease

Impact of FX


＋680 ▲244


＋421+1,883

＋9,155

✓ Strong performance in the domestic pump business

✓ Joining of CI group (+7,289)

✓ Shipment growth from Vietnam Hanoi First Plant

✓ Recovery of demand for hemodialysis equipment and growth of disposables sales in domestic market

✓ Strong performance of overseas hemodialysis business

✓ Sales growth of CRRT business in the mainstay Chinese market

FY2017 Q2(Jan.2017-Jun.2017)

Revenue

62,910

Analysis (vs FY2017 Q2)Revenue

Millions of JPY


< Industrial and Precision Equipment >

< Aerospace > < Medical>

17

FY2017 Q2(Jan.2017-Jun.2017)

Operatingprofit

2,441

FY2018 Q2(Jan.2018-Jun.2018)

Operatingprofit

3,168

＋0


Simpledecrease Impact of FX

▲1 ▲140

Simpleincrease

Impact of FX

＋102+245

+197

Increase incorporate

expenses, etc.

+322

✓ Strong performance in the domestic pump business

✓ Partial decline in cascade demand

✓ Cost reductions through in-house parts manufacture

✓ Growth of domestic and overseas hemodialysis businesses

✓ Write-off of temporary expenses for acquisition of CI group

Analysis (vs FY2017 Q2)Operating

profit

Millions of JPY


As of end of December 2017 As of end of June 2018

AmountComposition

ratio AmountComposition

ratio Change

Total assets 244,692 100.0％ 249,372 100.0％ +4,680

Current assets 119,103 48.7% 124,900 50.1% +5,796

Cash and cash equivalents 34,095 13.9% 35,794 14.4% +1,698

Trade and other receivables 50,434 20.6% 49,698 19.9% △736

Inventories 30,363 12.4% 33,987 13.6% +3,623

Non-current assets 125,588 51.3% 124,472 49.9% △1,116

Property, plant and equipment 38,454 15.7% 39,532 15.9% +1,077

Goodwill and Intangible assets 67,792 27.7% 65,102 26.1% △2,689

Total assets 167,905 68.6% 174,711 70.1% +6,806

Trade and other payables 22,624 9.2% 23,727 9.5% +1,102

Bonds and borrowings 122,528 50.1% 122,562 49.1% +33

Total equity 76,787 31.4% 74,661 29.9% △2,126

Consolidated Statement of Financial Position

Millions of JPY


Consolidated Statement of Cash Flows

Millions of JPY

FY2017Q2（Jan.2017-Jun.2017）

FY2018Q2（Jan.2018-Jun.2018）

Change

Cash flows from operating activities 2,634 7,124 +4,490

income before income taxes 2,316 2,762 +445

Depreciation and amortization 2,394 3,092 +697

Increase(decrease) of working capital 29 2,740 △2,770

Cash flows from investment activities 4,634 4,764 △129

Purchase of property, plant and equipment 2,227 4,233 △2,006

Balance of the transfer/acquisition of business - - -

Free cash flows △2,000 2,360 +4,360

Cash flows from financing activities 18,270 283 △17,986

increase of bank loan 18,956 1,095 △17,860

Cash dividends paid 569 569 +0

Cash and cash equivalents at the end of year 42,092 35,794 △6,297


Japan

38%

Asia

23%

North

America

17%

Europe

19%

Others

3%

MedicalAerospaceIndustrial and Precision

Equipment

20%

32%17%

28%

3%

FY2018

Q2

Japan

Asia

North America

Europe

Other

13%

7%

78%

2%

69%

16%

1% 11%3%

20

Nikkiso group total Revenue trend by overseas region

FY2018

Q2

Overseasrevenue ratio

62%(9months)

Revenue Composit ion Ratio by Region

JGAPP IFRS

FY2018

Q2

FY2018

Q2

Asia North America

Europe Other

Overseas revenue ratio (right axis)

Millions of JPY


Breakdown of forex sensitivity

21

FY2018Performance forecast

Against the US dollar Against the euro

RevenueOperating

profitRevenue

Operatingprofit

Industrial Division/Precision Equipment Division

+210 +30 +280 +20

Aerospace Division +200 +80 +0 +0

Medical Division +50 △30 +110 +20

Total +460 +80 +390 +50

Average/Forecast (Yen） 108.00 132.00

※When yen was depreciated by 1 yen

Millions of JPY


FY2016- IFRS -

FY2017- IFRS -

Earnings per share (Basic) 66.08 yen 71.82 yen

Return on equity (ROE) 7.2% 7.3%

Return on asset (ROA) 3.8% 3.9%


Equity ratio 37.4% 30.7%

Debt/equity ratio 1.05 times 1.63 times

FY2016- IFRS -

FY20172017

- IFRS -

Capital expenditure 7,635 7,508

Research and development expenditure 1,679 2,435

Depreciation and amortization 4,766 5,246

Financial data IFRS

22

Millions of JPY

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