Financial results for FY2018 Q3 Financial Summary · Overview 2. Consolidated performance 3....

Financial results for FY2018 Q3

Financial SummaryNov. 13, 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

Growing LNG demand in China and other Asian countries is driving up inquiries about

cryogenic pumps

Decided to construct test facilities at the Miyazaki Plant to increase production capacity

✓ Performance test facilities to be constructed at the Miyazaki Plant, slated to go on line in 2020

✓ Will enable us to offer performance testing using LNG or LPG at facilities in Las Vegas, U.S. or

Miyazaki, Japan and respond quickly to the needs of customers in China and other parts of Asia

✓ Total amount to be invested in the test facilities is approx. 4 billion yen

Cryogenic pump test facilities （Las Vegas USA）

Aerospace factory

Cryogenic pump factory

Land reserved for

future expansion

AdministrationCascade building

Composit building

Test

facilities

◆ Aerospace factory completed in October 2018

(Administrative building and cascade building completed at the end

of September; composite building to be completed in December)

◆ Cryogenic pump performance test facilities to be completed in 2020



Consolidated Performance

Millions of JPY

FY2017 Q3

Jan.2017 – Sep. 2017

FY2018 Q3

Jan. 2018 – Sep. 2018

YoY comparison

Change Change rate

Orders 99,016 122,745 ＋23,728 ＋24.0%

Revenue 97,199 115,437 ＋18,237 ＋18.8%

Operating profit 4,972 6,308 +1,335 +26.9%

Operating margin 5.1% 5.5%

Profit before tax 4,311 6,175 +1,863 +43.2%

Pretax profit margin 4.4% 5.3%

Profit for the yearattributable to owners of the company

2,535 4,296 +1,760 +69.5%

Profit marginattributable to owners of the company

2.6% 3.7%

Average foreign exchange rate

Against the US dollar (Yen) 111.89 109.60 △2.29 -

Against the euro (Yen) 124.58 130.87 +6.29 -

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

FY2017 Q3

Jan.2017 – Sep. 2017

FY2018 Q3

Jan. 2018 – Sep. 2018 Change Remarks

Gross profit 33,573 40,437 +6,863

- Selling, general and administrative expenses △30,482 △34,536 △4,053 Increase due to joining of CI Group

- Other income 2,020 493 △1,527Absence of proceeds from sale of assets

owned, etc.

- Other expenses △138 △85 +53

Operating profit 4,972 6,308 +1,335

- Financial income 397 524 +126

- Financial costs △1,180 △829 +351Increase in interest expenses(△194)

Decrease in foreign exchange loss due to

the depreciation of the yen(+584)

- Share of profit of associates and joint ventures accounted for using the equity method

121 171 +50

Profit before tax 4,311 6,175 +1,863

Exchange rate for the conversion of the performance of overseas subsidiaries

- Against the US dollar (Yen) 111.89 109.60 △2.29

- Against the euro (Yen) 124.58 130.87 +6.294


Breakdown of Profit/Loss

Millions of JPY


FY2017 Q3

Jan.2017 – Sep. 2017

FY2018 Q3

Jan. 2018 – Sep. 2018

YoY comparison

Change Change rate

Industrial Business

Orders 58,818 79,997 ＋21,178 ＋36.0%

Revenue 57,600 72,703 +15,103 +26.2%

Operating profit 4,288 5,6827.8%

+1,393 +32.5%

Operating margin 7.4%

Industrial DivisionOrders 39,724 58,634 +18,910 +47.6%

Revenue 39,272 53,337 +14,064 +35.8%

Precision Equipment

Division

Orders 7,604 9,368 +1,763 +23.2%

Revenue 6,868 7,343 +475 +6.9%

Aerospace DivisionOrders 11,378 11,912 +533 +4.7%

Revenue 11,348 11,929 +580 +5.1%

Medical Business

Orders 40,197 42,747 +2,549 +6.3%

Revenue 39,599 42,734 +3,134 +7.9%

Operating profit 2,580 3,2337.6%

+653 +25.3%

Operating margin 6.5%

Corporate expenses, etc. Operating profit △1,896 △2,607 △711 -

5


Performance by Business Segment

Millions of JPY



Industrial Division

FY2017 Q3Jan.2017 – Sep. 2017

FY2018 Q3Jan. 2018 – Sep. 2018 YoY comparison

Change Change rate

Orders 39,724 58,634 ＋18,910 ＋47.6％

Revenue 39,272 53,337 ＋14,064 ＋35.8％

1. Overview

2. Consolidated performance 3. Revenue Composition ratio by Product

Millions of JPY

✓ The booming cryogenic pump business kept the Industrial Division’s overall performance up, leading to higher

revenue and profit.

✓ We are seeing orders climb at LEWA and the Cryogenic Industries (CI) Group against the backdrop of a moderate

capital expenditure recovery in the oil industry as well as an expanding natural gas market fueled by the increasing use of natural gas for ships, etc.

✓ We decided to build cryogenic pump performance test facilities at the Miyazaki Plant in anticipation of further

LNG market growth mainly in Asia.

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%

7%

23%

4%

FY2018

Q3


2017 YTD 2018 YTD

7

195 194 204

220 236 232

51

105

151

200

58

132

197 211

148

189

217 217 224

219

46

107

170

236

46

94

153

217

1727 30 31 28

21

3 918

28

1 411 17

98 103 91 95

107 120 125

119

101

84

106

133 138

-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）

18(Forecast)Q1 Q4Q3Q2

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


Performance trend of LEWA


310 13 18

0 2

2030

10

20

30

41

12

30

43

45

18

35

48

65

15

34

50

73

49 11 14

15

1116

0

50

100

0

50

100

150

FY2017 Q1 FY2017 Q2 FY2017 Q3 FY2017 Q4 FY2018 Q1 FY2018 Q2 FY2018 Q3 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）

8

31

65

124

28

67

148

92

113


Performance trend of Cryogenic Industries Group

Revenue (Left axis) Revenue (Left axis) Revenue (Left axis) (Right axis)

Millions of ＄

FY2018 Q4 (Forecast)

FY2017 ※unaudited FY2018



Precision Equipment Division

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

✓ Increasing automotive applications spurred investments in the electronic component manufacturing industry. This significantly boosted orders for our new warm isostatic laminator, and we are currently bolstering our production and supply capability.

✓ In the power plant business, inquiries about water-conditioning systems for the Southeast Asian market were on the rise, and we are currently making marketing efforts to secure orders.


FY2017 Q3Jan.2017 – Sep. 2017


Change Change rate

Orders 7,604 9,368 ＋1,763 ＋23.2％

Revenue 6,868 7,343 ＋475 ＋6.9％

Water conditioning system

Precision equipment

Fine ceramics

Others

28%

43%

23%

6%

FY2018

Q3


FY2017 Q3Jan.2017 – Sep. 2017


Change Change rate

Orders 11,378 11,912 +533 +4.7％

Revenue 11,348 11,929 +580 +5.1％

10


Aerospace Division

1. Overview


Millions of JPY

✓ The shipment volume increased year on year as cascade demand gradually picked up.Revenue increased year on year as shipments of items produced at the first plant in Hanoi, Vietnam remained steady.

✓ Operating profit remained at last year’s level as expenses incurred in advance for the Miyazaki Plant were offset by cost cuts made through in-house production of some parts and getting production of engine parts into full gear at the Higashimurayama Plant and thus stabilizing shipments.

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

44%

15%

25%

12%

4%

FY2018

Q3


FY2017 Q3Jan.2017 – Sep. 2017


Change Change rate

Orders 40,197 42,747 +2,549 +6.3％

Revenue 39,599 42,734 +3,134 +7.9％

11

(Japan) Dialysis machines

(Overseas) Dialysis machines

(Japan) Disposable

(Overseas) Disposable

Maintenance

CRRT

Others


Medical Division


1. Overview

Millions of JPY

✓ The hemodialysis business saw overall sales of blood tubing lines and other disposables increase as demand for dialysis machines stayed on track for recovery in the domestic market. In the overseas market, sales of knock-down kits for Chinese market kept revenue and profit up for the entire hemodialysis business.

✓ In the CRRT business, one-time expenses incurred for reorganizing R&D, etc. as well as underperforming business locations in Europe and elsewhere put a damper on operating profit despite an increase in revenue due to successful measures such as the reorganization of the Chinese sales force.

14%

13%

31%

3%

11%

9%

19%

FY2018

Q3


Financial forecast for FY2018

Consolidated Performance

12

Millions of JPYFY2017

Actual record

FY2018

Performance forecast

YoY comparison

Change Change rate

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

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



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)

112.16

126.70

108.00

132.00

△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

Performance forecast for FY2018 ending December remains unchanged


FY2017

Actual recordFY2018


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%

Operating profit 7,539 7,900 +360 +4.8%


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

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

Precision Equipment

Division

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%



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

Financial forecast for FY2018

Performance by Business Segment

13

Millions of JPY

Appendix


＋474

Orders Analysis (vs FY2017 Q3)

Millions of JPY

< Medical >< Aerospace >< Industrial and Precision

Equipment >

＋19,820

Simple

increase

FY2018 Q3(Jan.2017-Sep.2018)

Orders

122,745Impact of FX

Simple

increase Impact of FX

✓ Increase in LEWA due to improved

market conditions

✓ Joining of CI group, improved market conditions

✓ Increase in new warm isostatic laminators

✓ Increase in products from

Vietnam Hanoi First Plant and

Higashimurayama Plant

＋824 ＋780 ▲246＋2,067 ＋481Impact of FX

Simple

increase

FY2017 Q3(Jan.2017-Sep.2018)

Orders

99,016

✓ 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


Analysis (vs FY2017 Q3)Revenue

Millions of JPY

< Medical >< Aerospace >< Industrial and Precision

Equipment >FY2018 Q3

(Jan.2018-Sep.2018)

Revenue

115,437

＋769

Simple

increaseImpact of FX

Simple


＋826 ▲246

Simple


＋431+2,703

＋13,753

✓ Strong performance in the

cryogenic pump business

✓ Joining of CI group

✓ 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 Q3(Jan.2017-Sep.2018)

Revenue

97,199

✓ Shipment growth from Vietnam

Hanoi First Plant and

Higashimurayama Plant


<Industrial and Precision

Equipment >

< Aerospace > < Medical >

17

＋29

Simple


Simple


+163 ▲142

Simple

increaseImpact of FX

＋99+553

+1,343

Increase in

corporate

expenses, etc.

▲711

✓ Strong performance in

the cryogenic pump

business

✓ Cost reductions through in-

house parts manufacture

✓ Shipment growth of Jet

engine parts

✓ Growth of hemodialysis

businesses✓ Absence of

proceeds from sale

of assets owned

Operating profit Analysis (vs FY2017 Q3)

Millions of JPY

FY2017 Q3(Jan.2017-Sep.2018)

Operating profit

4,972

FY2018 Q3(Jan.2018-Sep.2018)

Operating profit

6,308


As of end of December 2017 As of end of September 2018

AmountComposition

ratio AmountComposition

ratio Change

Total assets 244,692 100.0％ 252,120 100.0％ +7,428

Current assets 119,103 48.7% 123,204 48.9% +4,100

Cash and cash equivalents 34,095 13.9% 32,541 12.9% △1,553

Trade and other receivables 50,434 20.6% 48,165 19.1% △2,268

Inventories 30,363 12.4% 37,147 14.7% +6,784

Non-current assets 125,588 51.3% 128,916 51.1% +3,327

Property, plant and equipment 38,454 15.7% 42,722 16.9% +4,268

Goodwill and Intangible assets 67,792 27.7% 66,080 26.2% △1,712

Total assets 167,905 68.6% 173,263 68.7% +5,358

Trade and other payables 22,624 9.2% 26,402 10.5% +3,778

Bonds and borrowings 122,528 50.1% 120,262 47.7% △2,266

Total equity 76,787 31.4% 78,857 31.3% +2,069

Consolidated Statement of Financial Position

Millions of JPY


Japan

37%

Asia

25%

North

America

17%

Europe

18%

Others

3%

18%

35%19%

25%

3%

FY2018

Q3

日本

アジア

北米

欧州

その他69%

15%

1% 12%3%

19

FY2018

Q3

Overseas

revenue ratio

63%

FY2018

Q3

16%

8%

2%

FY2018

Q3

Revenue Composit ion Rat io by Region

Nikkiso group total Revenue trend by overseas region

MedicalAerospaceIndustrial and Precision

Equipment

(9months)JGAPP IFRS

Asia North America

Europe Other

Overseas revenue ratio (right axis)

Millions of JPY

Japan

Asia

North America

Europe

Other


Breakdown of forex sensitivity

20

FY2018


Against the US dollar Against the euro

RevenueOperating

profitRevenue

Operating

profit

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

21

Millions of JPY

Company Information


Consolidated Net Sales

130.0

140.9

8.18.7

0

1,500

16/12 17/12

Net Sales by SegmentTrend in Net Sales /Operating Income

( billion yen )Industrial business60%

Medical business40%

Industrial Division

42%Medical Division

40%

Aerospace Division

11%

FY2017

Precision Equipment Division

7%

72.3

78.0 83.1

90.1

103.6

121.5

129.2

110.2

132.8

4.7

5.6 5.3

6.5

7.4

9.4

6.1

3.8

4.8

0

1,500

09/3 10/3 11/3 12/3 13/3 14/3 15/3 15/12 16/12

Net sales Operating income

JGAAP IFRS


Footsteps of the NIKKISO Group

History

69 71 74 75 83 87 95 01 09 1053 54 56 60 61 67

Medical Division

1285

Aerospace Division

00

Industrial Division

13 14

Completes construction of Higashimurayama Plant.

Listing on the second section of the Tokyo Stock Exchange.

Listing on the first section of the Tokyo Stock Exchange.

Completes construction of Shizuoka Plant.

Completes construction ofKanazawa Plant.

Acquires the LEWA Group of Germany.

Establishes a joint venture with the China-based Weigaofor the manufacture and maintenance of dialysis machine

Accepts transfer of a German Fresenius Medical Care’s dialyzer and peritoneal dialysis product selling in Japan.

Decides to transfer the production function from Shizuoka Plant to Kanazawa Plant as part of the anti-disaster measure.

Acquires Geveke B.V. of the Netherland

Acquires CRRT business of Baxter International Inc.

Acquires Cryogenic pump business of Atlas Copco.

Company is established for the purpose of import and sales of reciprocating metering pumps.

Develops a water conditioning system for power plants and begins production and sales of systems.

Introduces Japan’s first leak-free canned motor pump technology and begins production and sales of pumps.

Begins import and sales of artificial dialysis machines for the first time in Japan.

Completes Japan’s first hemodialysis machine and begins production and sales of machines.

Begins production and sales of dialyzers for hemodialysis.

Begins production and sales of cascades made of carbon fiber reinforced plastic as components for commercial aircraft.

Begins manufacturing and sales of cryogenic pumps.

Begins production of blood tubing lines for hemodialysis in Vietnam.

Obtains a license for the technology to manufacture Microtrac particle size analyzers from Honeywell Inc. of the U.S.

17

Acquires the Cryogenic Industries Group of U.S.A.

15


Industrial Division

LNG -Global Strategy-

Transport Consumption

Gas stationGas fuel

vehicle/LNG train

Tanker

LNG fuel shipBunkering

Small liquefaction

plant

Regasification plant

Adding core technologies of the CI Group contributes to covering a wide range of the LNG value chain. Building cryogenic product lines, including the industrial gas field.

PlantHomesPower plant

Offshore gas field

Gas field

Liquefaction plant

Floating offshore natural gas

liquefaction facility

LNG conveyance

Floating LNG storage

regasification facility

LNG receiving base

C C

N Nikkiso C CI group

Peak shaving

N N C N C

Production

C

Production Liquefaction Conveyance Receipt Storage/Distribution

Power source usage

Nikkiso Group’s area of coverage

CI Group’s area of coverage

Fuel supply device for LNG fuel ship

LNG peak shaving plant

✓ Highly efficient and stable fluid control technology for ultra-low temperatures

✓ Heat exchange process in gasification and liquefaction✓ Highly efficient small and medium-scale process/plant

technology

CI Group’s core technologies

Electricityusage

Heat source usage


Overview of Cryogenic Industries group

Business Segment Business area/Products Market demand Growth strategy

ACD

✓ Supplying pumps and related equipment

used for manufacturing industrial gases

as well as transporting, storing, and

distributing LNG

・Cryogenic pumps

（Centrifugal Pump/

Reciprocating pumps）

・Turbo Expanders

✓ Growing demand for turbo expanders for

industrial gas industries in Taiwan,

China, etc. (semiconductor, medical,

etc.)

✓ Increasing LNG-fueled ships due to

stricter environmental regulations for

vessels

✓ Increasing use of liquefied gases (LNG,

hydrogen, etc.) aimed at promoting next-

generation energy

✓ Use the Nikkiso Group’s global

production and sales network

✓ Provide after-sales services, ACD’s

forte, across the globe

✓ Expand the product lineup for LNG-

fueled ships

✓ Work with Nikkiso Cryo, Inc. (based in

Las Vegas), which has an advantage in

FSRU

Cryoquip

✓ Supplying vaporizers for industrial gas

and LNG gasification

・Vaporizers

（Ambient, Electric, Water

Bath, Water Pot, Shell and

Tube, etc.）

✓ Growing demand due to the shift from

coal-fired thermal power plants to LNG-

fueled plants

✓ Growing demand for industrial gas

vaporizers in Taiwan, China, etc.

✓ Increasing LNG receiving terminals and

FSRUs

✓ Increasing LNG-fueled ships due to

stricter environmental regulations for

vessels slated to go into effect in 2020

✓ Use the Nikkiso Group’s global

production and sales network

✓ Leverage Nikkiso’s track record to

launch vaporizers for receiving terminals

and FSRUs

✓ Strengthen products and sales targeting

LNG-fueled ships

Cosmodyne✓ Providing plant engineering solutions for

air separation, gas generation, and

liquefaction of natural gas

・Small LNG plants

・Air Separation Plants

✓ Growing demand for peak shaving

plants

✓ Growing demand for virtual pipelines

✓ Strengthen sales of small liquefaction

and regasification plants in Asia and

Central America

✓ Tap into replacement demand for peak

shaving plants in the U.S.

Peak shaving plant: a facility that stores energy to be used during periods of peak demandVirtual pipeline: a gas transport network that distributes gas, via LNG trailers and other means of transportation, to locations not equipped with pipelines

FSRU：floating storage and regasification unit


(For Reference) LNG-related Markets

●Increasing LNG-fueled ships

Fuel gas supply system（FGSS)

✓ The number of LNG-fueled ships is expected to increase in anticipation of the implementation of SOx emissions

regulations slated for 2020 and CO2 emissions regulations slated for 2025.

✓ The number of LNG-fueled ships will reach 500 by 2020, with 121 ships currently in operation, or 247 ships if you

include those for which orders have been placed.

Source: DNV GL

2020: Limit on SOx emissions from exhaust - To 0.5% or lower

from 3.5% or lower

2020: CO2 emissions regulations for new shipbuilding - To 20% reduction from 10%

2025: To 30% reduction from 20%

Regulations for preventing air pollution Regulations for curbing global warming

New fuel gas

supply system

Financial results for FY2018 Q3 Financial Summary · Overview 2. Consolidated performance 3....

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