FY2015 Results Presentation - AWI · up：sales under： ordinary ... about concurrent global...

FY2015 Results Presentation

2016.05.16

New medium-term management plan（FY2016～18）

NEXT-2020 Ver.3

Contents

FY2015 Results1

FY２０１３～２０１５Review of mid-term business plan “NEXT-2020 Ver.2”2

FY２０１６～２０１８New medium-term management plan

NEXT-2020 Ver.33

FY2016 Earnings Forecast５

2

Investment plan / Shareholder return4

3

① FY2015 Results

② FY2015 Business results by segment

1 FY2015 Results



NEXT-2020 Ver.33



4

①FY2015 Results

Recurring margin 5.8％ 5.3％ＲＯＥ 9.6% 8.7％

ＥＰＳ(JPY) 105.75円 102.73円Equity capital ratio 41.3％ 40.8％

Net D/E ratio 0.58 0.57

FY2014 FY2015 Difference（Growth Rate）

Net sales 6,605 6,606 ＋ 1 （100.0％）Operating income 361 395 ＋ 34 （109.4％）Ordinary income 382 351 ▲ 31 （ 91.9％）

Net income 207 201 ▲ 6 （ 97.3％）

Interest-bearing debt 1,549 1,578 ＋ 29 （101.9％）Equity capital 2,264 2,347 + 84 （103.7％）Total assets 5,476 5,758 + 282 （105.1％）

（Unit: hundred million yen）

Despite ordinary income decline affected by equity in net losses, operating income rose significantly

5

②FY2015 Business results by segment

FY2014 FY2015 FY2014Comparison

Results Margin Results Margin Difference Growth rate

Industrial GasNet sales 2,031 - 1,948 - ▲83 95.9％Ordinary income 127 6.3％ 142 7.3％＋15 111.9％

ChemicalNet sales 1,026 - 870 - ▲157 84.8％Ordinary income 25 2.5％ ▲49 ― ▲74 ―

MedicalNet sales 1,183 - 1,245 - ＋62 105.3％Ordinary income 76 6.5％ 87 7.0％＋10 113.6％

EnergyNet sales 528 - 464 - ▲65 87.8％Ordinary income 32 6.0％ 36 7.8％＋4 113.3％

Agriculture &Food Products

Net sales 714 - 916 - ＋202 128.2％Ordinary income 21 2.9％ 30 3.3％＋9 143.1％

OthersNet sales 1,122 - 1,164 - ＋42 103.7％Ordinary income 80 7.1％ 91 7.8％＋11 114.1％

（Adjustment） Ordinary income 20 - 14 - ▲7 ―

TotalNet sales 6,605 - 6,606 - ＋1 100.0％Ordinary income 382 5.8％ 351 5.3％ ▲31 91.9％

5 segments excluding chemical achieved profit growth of 12%（Unit: hundred million yen）

6

① Look Back of “NEXT-2020 Ver.1”② Management issues of NEXT-2020 Ver.2 and

progress summary for each business③ Major achievements based on 3 basic policies④ NEXT-2020 Ver.2 Trend in consolidated results

1 FY2015 Results



NEXT-2020 Ver.33



7

① Look Back of “NEXT-2020 Ver.1”

Final year of previous mid-

term plan

Medium-term management plan“NEXT-2020 Ver.2”

Growth over 3-year period(Compared to FY2009)

FY2012 FY2015Plan

FY2015 Result Dfference Growth rate

Net Sales 5,400 7,000 6,606 ＋1,206 122.3％

Operating income 279 400 395 ＋116 141.7％

Ordinary income 352 420 351 ▲ 1 99.7％

Net income 184 230 201 ＋18 109.7％

Recurring margin 6.5％ 6.0％ 5.3％

ＲＯＥ 10.3% 10.2％ 8.7％

ＥＰＳ(JPY) 94.04円 117.68円 102.73円

Equity capital ratio 38.3％ 39.4％ 40.8％

Net Ｄ/Ｅratio 0.65 0.74 0.57

Despite chemical business’s significant profitability deterioration due to impairment of C-Chem, other 5 segments performed well, secured annual growth of 8%

*Ordinary income excluding chemical was ¥32.1 billion for FY2012 and ¥40.0 billion for FY2015. Growth for the 3-year period was 24.6%.


8

Segment Result

up：sales

under：

ordinary income

②Management issues of NEXT-2020 Ver.2 and progress summary for each business

Basic Policy

Business Challenge

【Industrial-related businesses】

Rebuilding profitability

[Person-related businesses]

Driving high growth by focusing on M&A

Demonstration of collective strengths through pursuing synergies

（Driving force for growth and evolution）

Expansion of person-related businesses

（ Challenges to growing fields ）

Acceleration of structural reform

（Rebuilding core businesses）

20121,734

136

Industrial GasEnhancement of local businesses progressed due to promotion of industrial gas infrastructure development

20151,948

142

2012934

31

2015870▲49

2012789

64

20151,245

87

2012461

13

2015916

30

2012541

31

2015464

36

2012942

57

OthresWe built a foundation for sea water industry based on one-of-a-kind technology and products. We will make a strategic move for further growth.

20151,164

91

Growth rate

12％

4％

Growth rate

58％

35％

Growth rate

▲14％

15％

Growth rate

23％

59％

Growth rate

98％

137％

Growth rate

▲７％

ー

ChemicalDespite rebuilding of growth strategies for coal chemicals by adding Kawasaki Kasei Chemicals into our group, deterioration of companies under equity method had large adverse effects.

MedicalConstructing the pillars of 5 businesses, a system dedicated to growing fields is in place.

Agriculture&FoodStrengthening businesses from upstream to downstream by promoting M&A, we built a foundation for further growth.

EnergyWe built a business structure that can tolerate changes in business environment by strengthening measures to increase customers and volume.

9

③Major achievements based on 3 basic policies

Business growth was driven by promoting M&A

●MedicalUsing M&A, home-care and medical services were enhanced and a foundation for general programs for hospitals was strengthened.

●AgricultureM&A from upstream to downstream was accelerated with an eye to building our own supply chain

●EnergyEnvironmental impact was compensated by acquisition of trade rights and complete sales expansion measures.

●ChemicalAttempted to enhance businesses by adding Kawasaki Kasei Chemicals into our group

●M＆A ResultsNumber of companies: 14

New consolidation total net sales：689 Million yen

●Industrial GasPromotion of proper gas pricing associated with rise in electricity prices

Local supply system improved by actively promoting VSU, establishing new filling stations and replacing plants. Cost improved

●ChemicalFine chemicals promoted shifting production in China

Despite promotion of structural reform, affiliates accounted for by the equity method faced with deteriorating performances, affected by a sharp fall in crude oil prices

●OverseasStart-up of Vietnam plant using VSU technology

Acquired Ellenbarrie and entered Indian market

Monetized metal surface processing business overseas. The R&D outcomes

●Electric generation businessNihonkaisui Wood-based biomass electricity generator started

Azumino Started construction of energy center utilizing wood-based biomass

Yamaguchi biomass and coal mixed firing electricity generation Environmental assessment started

Strengthening corporate structure by structural reform Development of growth drivers

④NEXT-2020 Ver.2 Trend in consolidated results

Despite significant negative growth in chemical business, operating income surpassed previous year

10

0

2,000

4,000

6,000

8,000

10,000

2009年度 2010年度 2011年度 2012年度 2013年度 2014年度 2015年度

Net salesOperating income

Ordinary income

Net income

NEXT-2020 Ver.1 NEXT-2020 Ver.2

139

117

172184

192 201207

6,6066,413

4,7184,264

282 290 313 330 350 363395

351

4,9275,400

6,605

317 336279

352 361382

200

400

600

800

1000（Unit: hundred million yen）

11

① Recognition of business environment② Goals of Air Water group③ Management issues of Air Water group ④ Ver.3 Performance objectives⑤ Ver.3 Portfolio to be achieved⑥ Ver.3 Growth analysis

1 FY2015 Results



NEXT-2020 Ver.33



12

①Recognition of business environment

Current situation

Domestic business confidence is showing indications of decline, e.g. financial market turmoil since the beginning of the year, continuing strong yen and stagnation of personal consumption

Downside risks are limited to steel, machinery, etc. as corporate profit levels are high

Mid- and long-term outlook

Crude oil price is expected to remain at low level, which is a positive factor for domestic economy

Despite factors of economic downturn such as moderate appreciation of the Yen, impact of the great earthquake and stagnation of personal consumption, domestic economy will continue to grow steadily toward 2020, backed by demands for the Olympics.

Due to the uncertainty over future economic prospects of other countries, there are concerns about concurrent global recession from overseas, especially by China’s economic slowdown

13

Actively challenge to various issues with the entrepreneurial spirit in mind

①Recognition of business environment

● Sluggish growth in emerging countries● Economic slowdown in Chinese economy● Fluctuation of exchange rates● Sharp fall in crude oil prices● TPP● Competition to secure resources, food and water● Increase in geopolitical risks● Frequent abnormal weather affected by climate change● Changes in population structure

Restoration of manufacturing business

Stable supply of industrial materials Efficient management using outsourcing Manufacturing products with high added value

Daily life and medical care

Decreasing birthrate and aging of the population Needs for advanced medical care Shortage of medical care providers Extension of healthy life expectancy

Safety and security of food

Traceability Domestic raw materials/food self-sufficiency Sustainable agriculture

Energy/Resources Liberalization of energy Rise in electricity costs Fall in crude oil prices Recycling society

Environmental measures

Water resource management Effective utilization of unused resources Efforts to prevent global warming

Social challenges that we should addressTrends surrounding management

14

② Goals of Air Water group

We dedicate ourselves and our resources backed by the entrepreneurial spirits and pride in creation and development of

business linking air, water, the earth, and human

Management Philosophy

Know YourselfUnderstanding of management environment

Analysis of business structureDevelopment of growth strategies

Implementation of action

guidelines

Cross-Over DiscussionNew business creation through synergies among businessesBusiness model creation using group’s collective strengths

All businesses make efforts with the mainstay business spirit

Realizing the Vision for 1-trillion Company by maximizing group synergies

All Wetaher SystemConsistent implementation of

Air Water style management

Order Rodentia StyleOrder Rodentia Style of Business that pursues All Weather Management System by focusing on next generation's needs and balancing industrial-related businesses and person-related businesses and that realizes sustainable growth by all group businesses collaborating quickly and flexibly and creating synergies.

③ Management issues of Air Water group

Challenges for structural reform and sustainable growthNurture “earning power” and create a highly profitable business structure to achieve sustainable growth and development

中期経営計画Ver3 基本コンセプト

15

Pursuit of ultimate solution services and realization of innovation● Pursuit of best products and services that meet customers’ needs

● Realization of business innovation by mobilizing group’s collective strengths● Enhancement of business structure centering on local businesses

Strengthening of corporate structure by implementing business structural reform● Strategic investment to strengthen a business foundation

● Establishment of support system for each department

● Thorough efficiency and rationalization in all department

● Full compliance

Challenges towards issues for post 2020● Overseas ● Strategic technology

3 implementation measures

Basic concept for the mid-term management plan “NEXT-2020 Ver.3”

“Establishing a structure for achieving the Vision for 1-trillion Company”“Building a foundation for post 2020”

16

④ Ver.3 Performance objectives

Final year of previous mid-

term plan

Medium-term management plan“NEXT-2020 Ver.3”

Growth over 3-year period(Compared to FY2015)

2015 2016 2017 2018 Difference Growth rate

Net sales 6,606 7,000 7,700 8,500 1,894 128.7％

Operating income 395 425 460 510 115 129.0％

Ordinary income 351 420 460 510 159 145.4％

Net income 201 230 260 290 89 144.0%

Management Indicator

Recurring margin More than 6％

R O E More than 10％

Equity capital ratio 40％

Net D/E ratio 0.75 or less


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

2,500

5,000

7,500

10,000

2015年度 2018年度

⑤ Ver.3 Portfolio to be achieved

[Businesses that support profit base by steady growth]

Industrial gas, Energy, Chemical

Ratio of industrial-related businesses and person-related businesses (Net sales)

[Businesses that drive overall company results by high growth potential]

Medical/agriculture/food products, Independent businesses (Order Rodentia Style)

[Businesses for next-generation growth]

Overseas, Electric power business, R&D

2,818

（43％）

3,789

（57％）

5,300

（62％）

3,200

（38％）

Portfolio for growth (Net sales) Portfolio to be achived（Net Sales）

【 Industrial-related businesses 】

【 Person-related businesses 】（Medical・Energy・Agriculture & Food ・other）

（Industrial gas・Chemical）

17

Industrial gas and energy grew consistently and contributed to earningsMedical care and agriculture/food products drove overall company results by high growthWe will back on the growth path by maximizing collective strengths of various businesses

億円


⑥Ver.3 Growth analysis

Accelerate growth by active M&A and new synergistic effects

（composition）

Growth of existing businesses Synergy growth

Ｍ＆Ａ

【sales】

【Ordinary income】

Ordinary income growth

+16 billion yen

Sales growth ＋190 billion yen

※Extension amount in three years of the company that carried out the M & A in Ver.1 ~ 2

50％

12％

38％

44％

19％

38％

18

＜3-year growth analysis diagram of Ver.3＞

19

① Investment plan ② Cash flow and financial measures③ Pay out ratio

1 FY2015 Results



NEXT-2020 Ver.33



0

1,000

2,000

3,000

Ｖｅｒ.1 Ｖｅｒ.2 Ｖｅｒ.3

20

① Investment plan

Ｖｅｒ.１Ｖｅｒ.２Ｖｅｒ.３ plan

Capital investment ９０８１，０５１１，4００

（Depreciation cost）（６１９）（７６２）（９０５）

M&A investment ３０7 ２８３６００

Strategy investment（Electric power） ―― １５ 4００

Total １，２１5 １，３４９２，４００

Ｍ＆Ａinvest,emt

Capital investment

Strategy Investumt

Segment Ｖｅｒ.２Ｖｅｒ.３Plan

◆ Industrial gas ４１３５２０

◆ Chemical ５８８０

Industrial-related businesses ４７１６００

◆ Medical ５７１２０

◆ Energy ８４７０

◆ Agriculture&Food ９５１４０

◆ Other ３４４４７０

Person-related businesses ５８０８００

Total １,０５１１,４００

Conduct investment to create sustainable corporate value（Unit: hundred million yen）

21

② Cash flow and financial measures

Free cash flows

▲ 720億円Free CF（Total）

Investment cash flows

Operating cash flows

■ Net income■ Depreciation cost■ Other

780980

▲ 80

Operating CF（total） 1,680

■ Capital investment■ M&A investment■ strategy investment

1,400600400

Investment CF（total） 2,400

Improved ability to generate cash flows

Consolidated operating CF for FY201560 billion yen or higher

Maintenance and improvment of efficiency in asset utilization and efficiency in capital utilization

ＲＯＡ：7％ ROE：10％ or higer

Maintenance of financial stability

Equity ratio ：40％Net D/E ratio：0.75 or less

3-year free cash flow Managing both Prior investment and financial balance


22

③ Pay out ratio

Air Water has the basic policy of paying stable dividends appropriate to business results long into the future, aiming for 30% of consolidated net income for a reporting period.

Basic policy regarding dividend payments

Changes in consolidated net income per share for the reporting periods

FY2015 FY2016 FY2017 FY2018

Consolidated net income per share（EPS） 102.73 117.3 132.6 147.9


23

① FY2016 full-year consolidated business forecasts② FY2016 earning forecast according to the segment consolidated business forecasts③Summary of FY2016 management objectives

1 FY2015 Results



NEXT-2020 Ver.33



24

Recurring margin 5.3％ 6.0％ＲＯＥ 8.7％ 9.4％

ＥＰＳ(JPY) 102.73yen 117.3yenEquity capital ratio 40.8％ 41.3％

Net D/E ratio 0.57 0.60

2015 2016 Difference(Rate)Net sales 6,606 7,000 ＋ 394 （106.0％）

Operating income 395 425 ＋ 30 （107.5％）Ordinary income 351 420 ＋ 69 （119.7％）

Net income 201 230 ＋ 29 （114.2％）

Interest-bearing debt 1,578 1,757 ＋ 179 （111.3％）Equity capital 2,347 2,540 + 193 （108.2％）Total assets 5,758 6,150 + 392 （106.8％）

① FY2016 full-year consolidated business forecasts

Aim to achieve sales of ¥700 billion and ordinary income of ¥42 billion（Unit: hundred million yen）

25

② FY2016 earning forecast according to the segment consolidated business forecasts

FY2015 FY2016 FY2015Comparison

Results Margin Results Margin Difference Growth rate

Industrial GasNet sales 1,948 - 2,050 - +102 105.2％Ordinary income 142 7.3％ 152 7.4％ +10 106.9％

ChemicalNet sales 870 - 830 - ▲40 95.4％Ordinary income ▲49 ― 4 0.5％ +53 ―

MedicalNet sales 1,245 - 1,350 - +105 108.4％Ordinary income 87 7.0％ 100 7.4％ +13 115.4％

EnergyNet sales 464 - 510 - +46 110.0％Ordinary income 36 7.8％ 37 7.3％ +1 102.9％

Agriculture &Food Products

Net sales 916 - 1,010 - +94 110.3％Ordinary income 30 3.3％ 32 3.2％ +2 106.1％

OthersNet sales 1,164 - 1,250 - +86 107.4％Ordinary income 91 7.5％ 86 6.9％ ▲5 94.6％

（Adjustment） Ordinary income 14 - 9 - ▲5 -

TotalNet sales 6,606 - 7,000 - +394 106.0％Ordinary income 351 5.3％ 420 6.0％ +69 119.7％


0

2,000

4,000

6,000

8,000

10,000

2009年度 2010年度 2011年度 2012年度 2013年度 2014年度 2015年度 2016年度 2017年度 2018年度 2019年度 2020年度

26

③ Summary of FY2016 management objectives

NEXT-2020 Ver.1 NEXT-2020 Ver.2 NEXT-2020 Ver.3

Constantly move one-step forward with pride and confidence of Air Water

8,5007,700

7,000

510460

6,606

10,000

4,264

351282

395

290

425420

（億円）

200

400

600

800

1000


Ordinary income


Ordinary income

Net income

The numerical targets and forecasts contained in this document arebased on currently available information and are subject to hiddenrisks and uncertainties.

Please note, therefore, that the actual results of Air Water coulddiffer materially from these projections, due to changes in variousfactors.

FY2015 Results Presentation - AWI · up：sales under： ordinary ... about concurrent global...

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