KITO CORPORATION Annual Report 2018
Transcript of KITO CORPORATION Annual Report 2018
Annual Report 2018KITO CORPORATION
Six-Year Summary/Milestones during Fiscal 2017Years ended March 31
Financial Information
Results of Operations (Consolidated) Millions of yen
2013/3 2014/3 2015/3 2016/3 2017/3 2018/ 3
Net sales ¥35,501 ¥41,855 ¥49,968 ¥55,821 ¥51,141 ¥55,168 Operating income 2,510 4,006 3,395 5,221 4,208 4,698 Operating income ratio (%) 7.1 9.6 6.8 9.4 8.2 8.5 Ordinary income 2,440 4,094 3,423 4,576 3,249 3,791 Net income attributable to owners of parent 1,023 2,361 2,026 2,497 1,897 2,836 Total assets 34,760 41,108 63,183 60,639 60,137 61,854 Net assets 18,012 22,003 25,626 26,040 21,239 23,697 Shareholders’ equity ratio (%)*1 49.8 51.2 38.9 41.2 33.8 36.7 Return on equity (%) 6.3 12.3 8.9 10.1 8.4 13.2 Number of employees 1,898 2,094 2,495 2,365 2,364 2,169
Financial Soundness
Total assets ¥34,760 ¥41,108 ¥63,183 ¥60,639 ¥60,137 ¥61,854 Net assets 18,012 22,003 25,626 26,040 21,239 23,697 Interest-bearing debt 5,391 6,425 21,343 19,281 24,178 21,449 Shareholders’ equity ratio (%) 49.8 51.2 38.9 41.2 33.8 36.7 Debt/equity ratio (Times) 0.30 0.29 0.83 0.74 1.14 0.91 Cash flow from operating activities (515) 4,056 3,338 4,502 3,981 7,044 Interest paid 87 178 224 450 397 386 Interest coverage ratio (Times)*2 — 22.8 14.9 10.0 10.0 18.2
Valuation
Net assets per share (Yen)*3 ¥670.19 ¥806.32 ¥936.83 ¥952.43 ¥1,001.60 ¥1,114.03Net income per share (Yen) 39.71 91.25 77.52 95.13 82.38 139.52Cash dividends per share (Yen) 10.00 20.00 25.00 28.00 28.00 33.00Payout ratio (%)*4 25.2 21.9 32.3 29.4 34.0 23.7 Price/earnings ratio (Times)*5 13.0 11.6 15.7 8.8 14.4 14.2Price book value ratio (Times)*6 0.77 1.31 1.30 0.88 1.19 1.78Free cash flow (Millions of yen) (2,261) 1,327 (5,064) 930 1,839 4,853
Milestones during Fiscal 2017
U.S. subsidiary Peerless Industrial Group celebrates its 100th anniversaryMajor U.S. chain manufacturer Peerless Industrial Group, Inc., which became a Kito Group company in 2014, marked the 100th anniversary of its found-ing.
Global production of hoist chainsKito began local production of the chains for electric chain hoists used in wind power generation in the U.S.
Award as an excellent organization for employing the disabledKito received the top Ministry of Health, Labour and Welfare Minister’s Award, earning praise for its organizational and ongoing efforts, including individual and systematic support tailored to individual needs, and initiatives for mutual commu-nication and career advancement.
KITO Global One system goes into full operationKito completed a full-scale renewal of its IT infrastructure for the first time in 34 years, establishing a common founda-tion for the corporate group that will enhance customer service and opera-tional efficiency.
Kito University 2017 programKito University is a training program for all Group employees focused on instill-ing the “KITO Spirit,” the philosophy, and values of the Company. In 2017, 24 members participated in the “Global Leadership” program, representing 11 companies in 9 countries.
5 6 7 8 9 102017
Financial Information
Results of Operations (Consolidated) Millions of yen
2013/3 2014/3 2015/3 2016/3 2017/3 2018/ 3
Net sales ¥35,501 ¥41,855 ¥49,968 ¥55,821 ¥51,141 ¥55,168 Operating income 2,510 4,006 3,395 5,221 4,208 4,698 Operating income ratio (%) 7.1 9.6 6.8 9.4 8.2 8.5 Ordinary income 2,440 4,094 3,423 4,576 3,249 3,791 Net income attributable to owners of parent 1,023 2,361 2,026 2,497 1,897 2,836 Total assets 34,760 41,108 63,183 60,639 60,137 61,854 Net assets 18,012 22,003 25,626 26,040 21,239 23,697 Shareholders’ equity ratio (%)*1 49.8 51.2 38.9 41.2 33.8 36.7 Return on equity (%) 6.3 12.3 8.9 10.1 8.4 13.2 Number of employees 1,898 2,094 2,495 2,365 2,364 2,169
Financial Soundness
Total assets ¥34,760 ¥41,108 ¥63,183 ¥60,639 ¥60,137 ¥61,854 Net assets 18,012 22,003 25,626 26,040 21,239 23,697 Interest-bearing debt 5,391 6,425 21,343 19,281 24,178 21,449 Shareholders’ equity ratio (%) 49.8 51.2 38.9 41.2 33.8 36.7 Debt/equity ratio (Times) 0.30 0.29 0.83 0.74 1.14 0.91 Cash flow from operating activities (515) 4,056 3,338 4,502 3,981 7,044 Interest paid 87 178 224 450 397 386 Interest coverage ratio (Times)*2 — 22.8 14.9 10.0 10.0 18.2
Valuation
Net assets per share (Yen)*3 ¥670.19 ¥806.32 ¥936.83 ¥952.43 ¥1,001.60 ¥1,114.03Net income per share (Yen) 39.71 91.25 77.52 95.13 82.38 139.52Cash dividends per share (Yen) 10.00 20.00 25.00 28.00 28.00 33.00Payout ratio (%)*4 25.2 21.9 32.3 29.4 34.0 23.7 Price/earnings ratio (Times)*5 13.0 11.6 15.7 8.8 14.4 14.2Price book value ratio (Times)*6 0.77 1.31 1.30 0.88 1.19 1.78Free cash flow (Millions of yen) (2,261) 1,327 (5,064) 930 1,839 4,853
Trends in Stock Price
(Yen)
0
2,500
2,000
1,000
1,500
500
2018/32017/92017/32016/92016/32015/92015/32014/92014/32013/92013/3
*1 Net assets applicable to common stock/total assets × 100*2 Cash flow from operating activities/Interest paid*3 Net assets applicable to common stock/average outstanding shares*4 Cash dividends/net income (consolidated)*5 Stock price (year-end)/EPS*6 Stock price (year-end)/BPSNote: Effective April 1, 2013, Kito conducted a 100-for-1 stock split of its common stock and a 2-for-1 stock split on
October 1, 2014. Accordingly, the Net assets per share, the Net income per share, the Cash dividends per share, and stock price of all fiscal years are calculated the same way as after the stock split.
Thai subsidiary Siam Kito celebrates 20 yearsEstablished in 1997, Siam Kito marked the 20th anniversary of its establishment. The company current-ly has a staff of 240 employees, working together to explore new growth potential.
85th anniversary of Kito’s founding on November 8, 2017
Finnish light crane manufacturer ERIKKILA joins Kito GroupKito strengthened its business in Europe by acquiring ERIKKILA’s crane manufacturing function and sales network, while also expanding the line-up of crane products.
11 12 1 2 3 42018
About this reportThis report presents Kito Corporation’s management strategies, business performance, relationship with the environment and society, and other information to help stakeholders better understand the content of Kito’s business operations. Through our business operations, in the workplaces for material handling throughout the world, we will continually maintain a customer-oriented perspective, and by proposing new ideas and achieving them by providing products and services, gain the trust of the market, supporting cus-tomer safety and the efficient functioning of society.
DisclaimerThese materials are prepared for the purpose of providing information concerning Kito Corporation’s performance in fiscal 2017 ended March 31, 2018, and are not intended to solicit investment in securities issued by the Company. In addition, these materials have been compiled based principal-ly on data current as of March 31, 2018. All opinions, forecasts, and other forward-looking state-ments stated in the materials reflect the Company’s judgments at the time these materials were prepared. No guarantees or promises can be made with regard to the accuracy or completeness of the information, which may be revised at any time without prior notice.
Kito Annual Report 2018 1
Profile
Since its founding in 1932, Kito Corporation has been a
leading manufacturer of material handling equipment,
supplying safe and high quality products and service to
customers in a wide variety of industries. From basic prod-
ucts such as chain hoists, lever hoists, wire rope hoists,
and cranes, to chain slings and other below-the-hook
devices, Kito products enhance customer safety and
productivity at a wide range of worksites where heavy
objects are handled. Kito equipment plays vital roles in
many different workplaces, including construction sites,
industrial factories, power plants, and entertainment
facilities, as well as in the agriculture, forestry, and
fishery industries.
Global Business Development
Kito established a U.S. subsidiary, Harrington Hoists, Inc. in
1990, and has since expanded its business globally through
M&A and other means. The Group currently has 18 major
overseas subsidiaries in 14 countries, including in North
America, Asia, Europe, and South America, with a sales
network that extends to more than 50 countries. Non-
Japan sales accounted for 76.0% of revenue in fiscal 2017.
Japan 24.0%
The Americas 48.4%
Net sales of fiscal year ended
March 2018(Millions of yen)
55,168Sales from non- Japan markets 76.0%
Europe 3.7%
Others 4.4%
China 10.7%
Asia 8.8%
Kito Annual Report 20182
Kito Management (As of July 1, 2018)
President & CEO
Yoshio KitoChief Executive Officer
Executive Vice President
Edward W. HunterCo–Chief Market Officer KITO Americas, Inc. Chariman
Managing Director
Shigeki OsozawaSenior Executive Officer Chief Financial Officer General Manager of Corporate Management Division and General Manager of Financial Management Division
Managing Director
Tsuneo YuzuriharaSenior Executive Officer Chief Quality Officer Chief Manufacturing Officer General Manager of Quality Assurance Division
Outside Director
Katsumi NakamuraOutside Director
Keizo TannawaOutside Director
Takashi Hirai
Contents
Six-Year Summary/ Milestones during Fiscal 2017 1
Profile 2
Management 3
Message from the President 4
Corporate Governance 8
Sustainability
Innovation 10
Environment 11
Society 12
Financial Section
Management's Analysis of Financial Position and
Operating Results 14
Consolidated Balance Sheets 18
Consolidated Statements of Income 20
Consolidated Statements of Comprehensive Income 21
Consolidated Statements of Changes in Net Assets 22
Consolidated Statements of Cash Flows 24
Stock Information 26
Corporate Profile 27
Kito Annual Report 2018 3
Message from the President
We are accelerating our shift to the
growth phase through business
expansion and proactive investment.
Kito Annual Report 20184
Review of Fiscal 2017
The economies of Japan, U.S., Europe, and China re-
mained on a recovery track overall during fiscal 2017
(ended March 31, 2018), though the uncertainty continued
in relation to the U.S. administration and the situation in
East Asia. The business environment for Kito was positive,
with steady growth in infrastructure spending in Japan and
the U.S., along with private sector capital investment.
Kito completed a full-scale renewal of its IT infrastructure
for the first time in 34 years, upgrading everything from
order handling to production, shipping, and accounting,
resulting in enhanced productivity and greater efficiency
in business activities. Immediately after the new system
started operation in July 2017 we experienced temporary
delays in production and shipping, but through a concerted
effort to stabilize production, regular shipments were
restored by the close of the term. In March 2018, monthly
production volume reached record high levels.
As a result, net sales in the year ended March 31, 2018
increased 7.9% from the previous fiscal year to ¥55.2
billion amid proactive investment trends, with continued
steady increases in demand from public sector investment
for infrastructure both in Japan and overseas, and private
sector capital expenditure. In terms of earnings, as a result
of capturing rising global demand, and improved profitabili-
ty at overseas subsidiaries in China and other areas of
Asia, operating income was up 11.6% to ¥4.7 billion.
Ordinary income increased 16.7% to ¥3.8 billion, with net
income attributable to owners of parent rising 49.4% to
¥2.8 billion.
Assessing the Second Year of the Mid-Term Management Plan
Our current five-year business plan started from April 2016
with the aim of expanding EBITDA and operating income
by regaining a high-margin structure in existing business-
es, and broadening our business portfolio. Fiscal 2017, the
second year of the plan, was the “platform enhancement
phase,” during which we took proactive measures to
solidify our foundations for growth. In Japan, we complet-
ed the renewal of our IT infrastructure, which had been a
pending issue. In Thailand, where business had been
focused on large-scale crane projects, we concentrated
more on increasing the proportion of hoists sales. In India,
we shifted the focus from crane manufacturing to the
hoist business. In Europe, Kito strengthened its business
by expanding the product lineup and differentiation through
acquisition in January 2018 of light crane manufacturer
Three Key Directives
Operational Goals
1 Return to a high-margin business structure2 Growth through product portfolio expansion3 Evolve into a globally integrated enterprise
The Mid-Term Management Plan (Fiscal 2016 through Fiscal 2020)
Enhance Customer
Experience
Create Efficient
Organization
Invest in People
Kito Annual Report 2018 5
Message from the President
Financial Goal EBITDA (Billions of Yen)
Earnings before interest, tax, deprecia-tion and amortization (EBITDA) is the balance of operating profit and deprecia-tion costs, showing how much cash the firm can earn over a year through its operations.
7.4
13.0
FY2015 FY2020
ERIKKILA of Finland, followed in April by investment in
Van Leusden of the Netherlands, specializing in customiza-
tion technology, particularly anti-corrosion treatment of
hoists. In the United States, Kito utilized its chain produc-
tion capacity to strengthen sales of chain-related products,
and streamline the supply chain for hoist products. We
also completed a similar renewal of the IT infrastructure
previously conducted in Japan, and began utilizing the new
system to improve customer service.
Shift from the “Platform Enhancement” to “Full Growth” Stage
In the fiscal year ending March 31, 2019, the third year of
Kito’s five-year management plan, we will accelerate the shift
from platform enhancement to a full-fledged growth stage.
In March 2018, Kito achieved its highest monthly pro-
duction volume ever. We have since continued to increase
operating capacity and production in order to steadily
capture growing global demand. Going forward, in antici-
pation of future demand growth, we will make proactive
capital investments aimed at improving our supply chain,
enhancing production efficiency, and rebuilding our pro-
duction structure.
We will also utilize the fully renewed IT infrastructure as
an effective management system to support the future
expansion of production activities. We will shorten the
lead time to improve customer service, and expand pro-
ductivity through cost reductions and streamlining of the
supply chain.
While we expect the mainstay Japanese and U.S. busi-
nesses to provide stable growth, we are also positioning
the European business as a new growth area for the Kito
Group, and making up-front investments to increase brand
recognition, as well as taking steps to expand our product
lineup, and differentiate ourselves from the competition. In
January 2018 we concluded an M&A deal to add ERIKKILA
to our business portfolio, launching new products for the
Japanese market in August, with plans for expansion to
the U.S. and global markets in the future. Further, we will
fully utilize the Italian chain and below-the-hook business
acquired in 2016 to accelerate our European strategy by
improving the supply chain and expanding the product
lineup.
Capital Policy and Shareholder Returns
Kito’s policy for the distribution of management resources
is to maintain a balance of a stable financial base with
Approxi- mately double compared with
FY2015
Kito Annual Report 20186
continued growth investments to enhance future profit-
ability, including capital expenditures to implement the
production strategies outlined above.
For shareholder returns, our basic policy is to pay a stable
and sustained dividend, while ensuring sufficient retained
earnings to support future business expansion. In accordance
with this policy, Kito determines the dividend payment
through a comprehensive consideration of consolidated
results and the company’s financial condition, with a target
payout ratio of 20% or higher on a consolidated basis, while
striving to maintain and increase this level. Retained earnings
are utilized taking into consideration needs to strengthen
business foundations and future business expansion, as well
as investment efficiency from a longer term perspective in
accordance with the mid-term management plan.
Dividends for the fiscal year ended Mach 31, 2018, in
line with the increase in net income attributable to owners
of parent, was increased by three yen from the initial
forecast, comprising a year-end dividend of 18 yen per
share, which together with the interim dividend of 15 yen,
makes an annual dividend of 33 yen. This makes the
consolidated payout ratio 23.7%.
Aiming to Be a Globally Integrated Enterprise
As Kito pursues its proactive program of international
business expansion, strengthening corporate governance is
an important matter in terms of achieving growth over the
longer term. Auditing teams from within and outside Kito
conduct regular operational and accounting audits of over-
seas subsidiaries, but we also enhance the effectiveness of
group governance overall through regular, close communi-
cation with local management. We also focus on instilling
the KITO Spirit, our corporate philosophy and values, in all
group employees, and are working to prevent misconduct
through employee education as well as corporate systems.
We also consider securing human assets to be an
important issue. We focus on retaining and developing
talented personnel globally, both Japanese and non-Japa-
nese, who share our corporate vision, and will work hard
for the customers.
Kito’s business centers on products closely related to
the “old economy,” but so long as gravity continues to be
a factor on Earth, the need for these products will not
cease. We seek to be the most trusted anti-gravity equip-
ment manufacturer in every market, eagerly capturing the
needs of the global market to counter this relentless force.
Kito has a long future ahead.
Yoshio Kito President & CEO
Cash Dividends per Share (Yen)/Dividend Payout Ratio (%)
28
33
FY2015 FY2017
28
FY2016
29.4
23.7
34.0
An increase of ¥3 from
initial forecast
Kito Annual Report 2018 7
Basic Concept
The Company will, with the aim of achieving sustainable
growth and improvement of corporate value on a medium to
long-term basis, make efforts to enhance corporate gover-
nance based on the belief that the essence of corporate gov-
ernance lies in increasing the dynamism of management by
securing the transparency and fairness thereof and making
management decisions in a prompt and decisive manner.
Kito Corporation is working to establish corporate gover-
nance in accordance with the following basic concepts:
respect the rights of shareholders and secure equality
among them; consider the interests of stakeholders,
including shareholders and cooperate with them in an
appropriate manner; disclose corporate information in an
appropriate manner and secure transparency of manage-
ment; strengthen management supervision functions by
separating the execution and management roles of man-
agement and by electing outside directors; hold construc-
tive dialogue with shareholders.
Corporate Governance Structure
Kito Corporation has adopted the Company with a Board
of Company Auditors system as its governance system
under the Companies Act.
The Board of Directors comprises seven members (three
of whom are outside directors), and makes decisions on
material matters. Kito has also introduced an executive offi-
cer system to provide for the flexible conduct of duties by
separating the decision-making and oversight function from
business execution. The Board of Corporate Auditors, as an
organization independent from the Board of Directors, con-
ducts audits of the execution of duties by directors.
In addition, the Nominating and Compensation
Committee, comprising five directors (three of whom are
outside directors), has been established as an advisory body
to the Board of Directors. This committee reviews the can-
didates for director, auditor, and senior executive officer,
and makes recommendations to the Board of Directors.
Effectiveness Evaluations of the Board of Directors
Kito conducts an opinion survey of ten directors and audi-
tors, including a five-grade evaluation for each question,
and space for free comment. The evaluation conducted in
December 2017 gave high marks overall for the structure
of the Board of Directors and the systems that support it,
affirming sufficient effectiveness. However, the survey
also identified issues for consideration, such as the diversi-
ty of the Board of Directors in terms of nationality, gender,
and other aspects, and the need to focus on discussions
regarding longer-term themes. Kito is working to make
improvements regarding these issues, in order to further
enhance the deliberations of the Board of Directors.
Compensation of Directors and Auditors
Compensation for directors is determined by the Board of
Directors, apportioned from the total amount for directors’
remunerations (¥300 million or less (including ¥30 million
or less for outside directors)), approved at the General
Meeting of Shareholders held on June 26, 2007.
Compensation for auditors is determined through consul-
tation among the corporate auditors, apportioned from the
total amount for corporate auditors’ remuneration (¥80 mil-
lion or less) approved at the General Meeting of
Shareholders held on June 26, 2007.
Amounts of Compensation of Directors and Auditors
Position Number of persons Amount (¥ million)
Directors (Outside Directors) 8 (4) 179 (21)
Auditors (Outside Auditors) 3 (2) 28 (14)
Total 11 208
* There were seven directors and three auditors as of March 31, 2018. The staff allow-ance for the above directors and auditors includes one outside director who retired at the conclusion of the 73rd General Meeting of Shareholders held on June 21, 2017.
Corporate Governance
Kito Annual Report 20188
Basic Policy of Officers’ Compensation System and Method of Determining Compensation 1) The Company positions officers’ compensation as one of the
important means to achieve sustainable growth and an increase in medium and long-term corporate value of the Group.
2) The compensation for Directors, excluding Outside Directors, and Executive Officers shall reflect the level of achievement of consolidated business performance targets and level of the indi-vidual officer’s contribution to the business performance of the Company. The higher the position and responsibility of an officer, the greater the ratio of the officer’s performance-based compen-sation to his/her total compensation.
3) The Company ensures the transparency and objectivity of the compensation of Directors and Executive Officers by deliberating on the compensation of Directors and Executive Officers at the Nomination & Compensation Committee, a voluntary committee which a majority of the members are Outside Directors, and making recommendations to the Board of Directors.
4) Based on the above recommendations by the Nomination & Compensation Committee, the officers’ compensation will be approved by the Board of Directors.
Fixed compensation (base com-pensation)
The Company determines an appropriate level of base compensation, comprehensively taking into account the size of the Company and the duties of Officers, referring to external databases, etc.
Performance-based compen-sation (annual bonuses)
The Company calculates the standard annual bonuses by position, with a range of 25 to 50% of base com-pensation for each position. Then we determine bonus-es for individual Director/Executive Officers within a range of 0 to 200% of standard annual bonus by com-prehensively evaluating individual Director/Executive Officer’s level of achievement of his/her targets and the level of his/her contribution to the business perfor-mance of the Company, using consolidated net sales and EBITDA (income before income taxes, to which extraordinary income, interest expenses and deprecia-tion and amortization are added) of the Company as the evaluation indicators.
Performance-based compen-sation (retirement benefits for Directors)
The Company calculates the standard annual reserve for retirement benefits for each position, within a range of 10 to 25% of base compensation. Then, the Company determines annual reserves for retirement benefits for individual Directors/Executive Officers with a range of 50 to 200% of the standard annual reserves by comprehensively evaluating the level of achieve-ment of their targets and the level of their contribution to the business performance of the Company, using consolidated net sales and EBITDA of the Company as the evaluation indicators.
Outside Directors
Kito’s outside directors oversee the execution of duties by
directors, offer opinions regarding business policies and
plans, and monitor transactions involving conflict of interest
with directors or major shareholders. In the execution of
their duties, outside directors hold regular meetings among
themselves, and strive to exchange and share information
from an objective perspective. In addition, as the principal
members of the Nominating and Compensation
Committee, outside directors make recommendations to
the Board of Directors regarding compensation based on
evaluations of the performance of the president, directors,
and executive officers, and recommend candidates for
director, auditor, and senior executive officers.
Selection of outside directors, in accordance with separately
determined “Standards for the Independence of Out side
Direc tors,” is based on personality, judgement, and experience.
Recommendations for outside director are made to the Board
of Directors by the Nominating and Com pensation Com mittee,
in an effort to ensure highly transparent management.
Reasons for the Selection of Outside Directors and the Number of Directors’ Meetings Attended
Title NameAttendance at Board of
Directors’ Meetings
Outside Director Keizo Tannawa 11 of 12Reasons for Selection: Mr. Tannawa has extensive experience as a management con-sultant on organizational and personnel matters as well as in corporate management. He was selected by the Company based on these qualifications.
Title NameAttendance at Board of
Directors’ Meetings
Outside Director Katsumi Nakamura 12 of 12Reasons for Selection: Mr. Nakamura has served and gained experience for many years as a technician and member of management in the rapidly globalizing automo-bile industry. He was selected by the Company based on these qualifications.
Title NameAttendance at Board of
Directors’ Meetings
Outside Director Takashi Hirai*1 10 of 10Reasons for Selection: Mr. Hirai has experience as a consultant in an international consulting firm, and as a member of management in U.S. and Japanese business companies. He was selected by the Company based on these qualifications.
Note: The Company has notified the Tokyo Stock Exchange of the independent status of all outside directors.
*1 Takashi Hirai was appointed at the General Meeting of Shareholders held June 21, 2017.
Kito Annual Report 2018 9
Sustainability
Innovation
R&D Policy
In the field of material handling, the Kito Group regards the
delivering of unmatched satisfaction to customers on an
ongoing basis as the reason for its existence as a compa-
ny and is constantly searching to make enhancements in
terms of quality, price, customer service, and innovation to
achieve that purpose. In its R&D activities, the Company is
constantly striving for technological innovation and ener-
getically taking on the challenges involved in the develop-
ment of original products that offer benefits to its
customers.
Promotion Framework
Mainly consisting of the Development Department, the
R&D framework efficiently responds to conditions, for
example, by adopting a project structure in cases where,
depending on the nature of the development theme, a
cross-organizational structure is required. Development
themes are divided into elemental research and product
development themes, the former being undertaken prior
to the latter. Research on what will become the core tech-
nologies of products has an important role to play in under-
pinning the Company’s future.
Innovation Efforts
Kito’s R&D activities in fiscal 2017 focused on improving
the cost performance of existing core products, as well as
basic and applied research to support product develop-
ment and the upgrades to current models, with a view to
future business expansion.
As a result, for the Japanese market, Kito launched a
double-rail type model of its RY Wire-rope Hoist, as well as
Kito Lifting Point, connecting fittings offering exceptional
safety and a wide range of applications, and the PK Radio
Remote Control System Series, incorporating a more-com-
pact receiver, and transmitter with significantly improved
time of continuous use compared to the previous model.
For the North American market, Kito launched EQ Electric
Chain Hoists for three-phase and single-phase power sup-
plies.
We believe that engaging in socially-responsible activities, at both the local and inter-national levels, is essential to build and contribute to a more harmonious world.
The Kito Lifting Point features a structurally indepen-dent bolt and shackle, allowing the shackle to move freely without loosening the bolt. This construction provides greater safety, and allows for the product’s use in a wide range of rigging applications.
The PK Radio Remote Control System Series features a compact receiver one-third the size and weight of the previous version, allowing for fewer restrictions on installation.
Kito Annual Report 201810
Environment
Basic Policy
Kito strives for clean manufacturing with minimum envi-
ronmental impact in our comprehensive in house produc-
tion of everything from parts to final products. An action
principle in our effort to protect the environment is to
reduce our carbon footprint and prevent pollution in daily
operations and throughout the lifecycles of our products
through goal directed management systems. This is how
we contribute to help build a rich, sustainable society in
harmony with the earth.
Code of Conduct
1. Response to climate change We reduce energy consumption and greenhouse-gas emis-sions.
2. Chemical management We continuously reduce the use of substances that have a sig-nificant effect on people and the earth, and replace them with non-toxic alternatives.
3. Sustainable use of resources We understand the limits of natural resources and apply con-servation and recycling to use them more effectively.
4. Attention to biodiversity We work to reduce impact on species diversity and preserve the biosphere.
5. Legal compliance We strictly comply with all environment-related laws and other rules we have agreed to follow.
Environmental Efforts
Our Main Plant in Japan and our plant in Jiangyin, China
achieved international ISO 14001 certification for environ-
mental management. At our Main Plant we promote pro-
duction processes that are efficient and have minimal
impact on the environment. This is achieved through
improving production equipment and waste procedures
and through the establishment of in-house regulations for
harmful substances and green procurement guidelines.
A good example of our results in this area is the intro-
duction of our powder coating system in the period ended
March 2018. This system enabled us to successfully cut
the use of organic solvents by 90% compared to the vol-
ume in fiscal 2015 (see data below). One of our main prod-
ucts, the EQ hoist (capacity: 980kg), acquired the EcoLeaf
environmental label. Under this program the Japan
Environmental Management Association for Industry
(JEMAI) quantifies the environmental impact of a given
product throughout its life cycle, publishes the data and
certifies products considered environment friendly.
Kito is a member of the Nijumaru Project, which works
to achieve the Aichi Biodiversity Targets, a world goal
adopted at the tenth Conference of the Parties (COP 10)
to the Convention on Biological Diversity. Throughout
our operations, Kito works continuously to preserve
biodiversity.
The powder coating system introduced in the period ended March 2018
Kito Annual Report 2018 11
Sustainability
Kito utilizes UDTalk software as a secure, barrier-free means of sharing information with people with hearing disabilities.
Society
Initiatives on Quality
To provide products and services that can deliver
unmatched satisfaction to all its customers, the Kito Group
strives to improve the level of quality assurance through-
out the Group as a whole based on its Quality Policy.
Quality Policy
1. Further enhance product safety, durability, and operability, while engaging in production and sales activities that prioritize improvements in quality and function,
2. Satisfy the demands of society, in areas such as laws and regu-lations, and create well-balanced, superior products,
3. Ensure that each and every Kito employee remains aware of his or her role and responsibility with regard to quality and cre-ates products imbued with quality in a wholehearted manner.
Efforts to Obtain ISO 9001 Certification
To improve the quality assurance level of the Group as a whole, each company is promoting the acquisition of ISO 9001 international quali-ty assurance certification. Including Kito Corporation, we have already obtained certification at 10 bases, and the plan is to gain cer-tification across all our other bases.
Initiatives for the Employment of People with Disabilities
Kito focuses particularly on employing people with disabili-
ties. Based on our policy to “create a corporate culture
where the disabled work alongside others in a completely
natural way, and establish a workplace environment open to
people of different individual personalities,” we endeavor to
be an easy place to work for everyone. In September 2017,
Kito received first prize in the Ministry of Health, Labour and
Welfare Minister’s Award for a positive example of a dis-
abled-friendly work environment. Kito’s employment rate
for people with disabilities is 6.79% as of April 2018, greatly
exceeding the statutory employment rate of 2.2%.
Sponsorship Agreement with the Japan Para-Ski Federation
Kito has concluded a sponsorship agreement with the
Japan Para-Ski Federation, an organization that supports
public participation for persons with disabilities through
efforts to popularize and promote skiing for the disabled,
and organizing competitive ski events. As an official spon-
sor of the JPS Alpine Ski Team, Kito is supporting athletes
competing on the world stage.
Contributing to Local Communities
The Kito Group, as a good corporate citizen, contributes to
the development of society through its social contribution
activities in a proactive and on-going manner with distinc-
tively Kito businesses and in a spirit of appreciation for
everything that surrounds us. Business offices in other
countries also conduct activities adapted to the conditions
in their country or region.
Kito has been supporting Japanese skiers since 2016.
Kito Annual Report 201812
Siam Kito – Mangrove Tree Planting Event
Thailand subsidiary Siam Kito held a tree planting event in
a mangrove forest around five kilometers from its
Chonburi Factory. Mangrove forests are home to many
organisms and support diverse ecosystems, while also
serving as breakwaters and windbreaks during periods of
high waves or tropical cyclones. Around 60 employees and
family members participated in the event, working togeth-
er to plant mangrove trees.
Kito Europe – Donation to NPO Supporting Childhood
Cancer Patients
Kito Europe in Germany has made a donation to
Elterninitiative Kinderkrebsklinik e.V., an NPO that has
been supporting to childhood cancer patients and their
families for nearly 40 years. This donation is scheduled for
winter 2018, and will be used to take children with cancer
on a ski trip.
Factory Tours for Elementary and Junior High
Students
Kito Japan held summer break factory tours for children of
employees. High students visited the factory in
Yamanashi, and participated in a workshop for assembly
and disassembly. The children enjoyed this unique experi-
ence, and had an opportunity to better understand the Kito
products that lift heavy objects.
Classes for Making Planters and Planting Bitter Melon
Kito Japan has held classes for making planters and planting
bitter melon (Momordica charantia). The planters are made
of recycled wood from wooden crates shipped from
abroad. The bitter melon grown in the planters will create
“green curtains” to reduce the effects of climate change.
Kito Annual Report 2018 13
Financial SectionManagement’s Analysis of Financial Position and Operating ResultsYears ended March 31
Net Sales
(Billions of yen)60.0
40.0
30.0
20.0
0
50.0
10.0
55.849.9 51.1
55.1
41.8
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
Selling, General and Administrative Expenses(Billions of yen)16.0
8.0
4.0
0
12.0
13.414.7 15.115.0
10.8
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
Research and Development Expenses(Billions of yen)
1.0
0.5
0.25
0
0.75
0.870.77 0.79
0.940.9
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
Financial Report (All figures presented on a consolidated basis)
Net Sales(This page provides information on the Company and its subsidiar-ies by geographical segment.) Net sales in fiscal 2017 (ended March 31, 2018) amounted to ¥55,168 million, up 7.9% from ¥51,141 million in fiscal 2016. Net sales in Japan totaled ¥24,886 million, up 3.5% from ¥24,036 mil-lion in the previous fiscal year, while net sales overseas amounted to ¥41,694 million, up 10.2% from ¥37,823 million.
Cost of Sales, Selling, General and Administrative ExpensesCost of sales rose ¥3,114 million from the previous fiscal year, to ¥35,286 million. The ratio to net sales increased 1.1 percentage points, to 64.0%, from 62.9% in fiscal 2016. Selling, general and administrative (SG&A) expenses rose ¥423 million, to ¥15,182 million, with the ratio to net sales decreasing to 27.5%, from 28.9% in the previous fiscal year. Total research and development (R&D) expenditures during fis-cal 2017 amounted to ¥793 million, comprising ¥705 million in Japan, ¥26 million in the Americas, and ¥61 million in China. Research activities focused on maximizing the cost performance of existing mainstay products, along with basic and applied research through to product development and the renewal of existing models with a view to future business expansion.
Segment Information• JapanDemand remained robust for both infrastructure-related invest-ments and private-sector capital investment in both the domestic and export markets. Production activities declined temporarily in the second quarter due to the introduction of core systems, but produc-tion was stabilized from the third quarter to meet robust demand.
As a result, net sales in Japan amounted to ¥24,886 million (an increase of 3.5% from the same period of the previous fiscal year). Operating income was ¥4,639 million (a decrease of 3.9%), due mainly to depreciation and other costs associated with introduction of the new IT infrastructure, and a temporary increase in costs to catch up production and shipment delays.• The Americas:The U.S. economy, despite the lack of clarity in government poli-cy, was marked by firm private-sector capital expenditure, while investment demand related to natural resources improved on an upturn in market conditions. As a result, net sales in theAmericas amounted to ¥26,785 million (an increase of 8.0% from the same period of the previous fiscal year). Operating income, because of the increase in selling costs due to sales expansion measures, amounted to ¥1,242 million (a decrease of 5.7%).• ChinaDeceleration of the Chinese economy came to a halt, and demand bottomed out. As a result, net sales in China amounted to ¥6,264 million (an increase of 13.4% from the same period of the previ-ous fiscal year), with operating income of ¥695 million (an increase of 27.4%).• Asia (excluding Japan and China):Demand continued in South Korea for clean room cranes and other products, and in Thailand and other regions the Company focused on meeting firm demand and improving earnings. As a result, while net sales in Asia (excluding Japan and China) were mostly on a par with the previous fiscal year at ¥4,681 million (a decrease of 1.3% from the same period of the previous fiscal year), operating income improved to ¥504 million (an increase of 100.0%).• Europe:Net sales amounted to ¥1,916 million (an increase of 37.9% from the same period of the previous fiscal year) as a result of proac-tive sales promotion measures to capture rising demand for capi-
Kito Annual Report 201814
Cash Dividends per Share
(Yen)35
25
10
0
30
20
5
15
2828 282825
3333
20
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018Note: Effective April 1, 2013, Kito conducted a 100-for-
1 stock split of its common stock and a 2-for-1 stock split on October 1, 2014. Accordingly, the Cash dividends per share of all fiscal years are calculated the same way as after the stock split.
Operating Income Operating Income Ratio(Billions of yen) (%)6.0
4.0
3.0
2.0
0
5.0
1.0
18.0
12.0
9.0
6.0
0
15.0
3.0
5.2
3.3
4.24.6
4.0
9.4
6.88.2 8.5
9.6
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
L Operating Income P Operating Income Ratio
Net Income Attributable to Owners of Parent (Billions of yen)3.0
1.5
1.0
0.5
0
2.0
2.5 2.4
2.01.8
2.82.8
2.3
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
tal investment throughout the region. In terms of earnings, the segment posted an operating loss of ¥104 million (compared to an operating loss of ¥27 million in the previous fiscal year), mainly due to the increase in sales-related costs.• Other:Net sales amounted to ¥2,048 million (an increase of 51.1% from the same period of the previous fiscal year), with an operating loss of ¥52 million (compared to an operating loss of ¥29 million in the previous fiscal year). In Australia, Kito Australia Pty. Ltd. and its sub-sidiaries were acquired and included in the scope of consolidation at the end of June 2016 (results included from July 1, 2016).
Operating IncomeOperating income amounted to ¥4,698 million, up 11.6% from ¥4,208 million in the previous fiscal year. The operating margin was 8.5%, up 0.3 percentage points from 8.2% in fiscal 2016.
Income before Income TaxesAs a result, income before income taxes amounted to ¥3,791 mil-lion, a increase of ¥213 million from ¥3,578 million in the previous fiscal year.
Income TaxesIncome taxes decreased ¥850 million from the previous fiscal year, to ¥845 million. The ratio of income taxes to income before income taxes was 22.3%.
Net Income Attributable to Owners of ParentAs a result, net income attributable to owners of the parent com-pany increased ¥939 million, or 49.5%, to ¥2,836 million.
Dividend PolicyKito Corporation’s basic shareholder returns goal is to maintain a consolidated dividend payout ratio of 20%. In determining its basic policy on profit distribution, the Company takes into consideration such factors as paying an appropriate return to shareholders in con-
sideration of performance and the need for sufficient internal reserves to strengthen its operations and pursue future business growth and development. For fiscal 2017, Kito Corporation declared an annual dividend of ¥33 per share, comprising an interim dividend of ¥15 per share and a year-end dividend of ¥18 per share, which represented a dividend payout ratio of 23.7%.
Outlook for the Fiscal Year Ending March 31, 2019The business environment for the Company contained concerns over U.S. government policies, a geopolitical risk observed in many areas around the world, and the prospect for structural reform in the Chinese economy. Despite these concerns, the global economy overall is expected to continue to expand at a moderate pace, supported by the economies of developed coun-tries. In Japan and the North American market, infrastructure- related investment and corporate capital investment demand are expected to grow steadily. In China, demand has already bottomed out, and, in the Asian region overall, a moderate tone of recovery is expected. Amid such business environment, the Company, during the third year of its five-year mid-term management plan, will acceler-ate a shift from a platform enhancement phase to a full growth phase. It will continue to broaden its business operations through expansion in products and services, enhance the productivity and efficiency of existing businesses, and maximize earnings and cash flow. To increase the synergistic effect among the Kito Group, the Company will enforce measures to improve its supply chain, to reduce costs through streamlining operations, and expanding its product lineup with the addition of chain products, below-hook devices, and other lifting equipment. It will also invest proactively to enhance product and regional strategies.
Kito Annual Report 2018 15
Financial Section
> Management’s Analysis of Financial Position and Operating Results
The Company has mostly settled the issues related to the intro-duction of new IT infrastructure, and, going forward, will enhance productivity through stabilizing the system’s operations to firmly capture steady global demand. As a result, for the fiscal year end-ing March 31, 2019, the Company is forecasting consolidated net sales of ¥58,000 million, with operating income of ¥5,500 million, ordinary income of ¥5,100 million, and net income attributable to owners of the parent company of ¥3,500 million. The foreign cur-rency exchange rate assumption for these forecasts is US$1=¥105.0.
Financial PositionAssets, Liabilities, and Net AssetsTotal assets amounted to ¥61,854 million, an increase of ¥1,717 million compared to the end of the previous fiscal year. The main factors were a ¥1,711 million increase in cash and deposits; a ¥572 million increase in investment securities; and a ¥436 million decrease in goodwill. Total liabilities amounted to ¥38,157 million, a decrease of ¥740 million compared to the end of the previous fiscal year. The main factors were a ¥5,223 million decrease in short-term loans pay-able; a ¥1,063 million increase in current portion of long-term loans payable within one year; and a ¥1,432 million increase in long-term loans payable. Net assets amounted to ¥23,697 million, an increase of ¥2,457 million compared to the end of the previous fiscal year. The main factor was a ¥2,246million increase in retained earnings. As a result, the Company’s shareholders’ equity ratio increased to 36.7%. Return on equity increased 4.8 percentage points, from 8.4% at the end of the previous fiscal year to 13.2% as of March 31, 2018.
Capital Expenditure and DepreciationCapital expenditure totaled ¥1,607 million in fiscal 2017. The Group spent ¥796 million of this in Japan, mainly on renewal of power distribution equipment and metal molds.
Cash FlowsNet cash provided by operating activities amounted to ¥7,044 mil-lion, an increase of ¥3,063 million compared to the previous fiscal year. The main factors were ¥3,791 million in income before income taxes; ¥2,116 million in depreciation and amortization; and ¥732 million in changes in trade payables. Net cash used in investing activities amounted to ¥2,191 mil-lion, an increase of ¥48 million compared to the previous fiscal year. The main factors were ¥1,030 million in payments for the acquisition of property and equipment; ¥380 million in payments for the acquisition of intangible assets; and ¥498 million in pay-ments of stocks of subsidiaries and affiliates. Net cash used in financing activities amounted to ¥3,083 mil-lion, an increase of ¥1,934 million compared to the previous fiscal year. The main factors were ¥8,600 million in repayments of short-term loans payable and ¥6,723 million in proceeds from long-term loans payable. As a result of these activities, as of March 31, 2018, cash and cash equivalents stood at ¥10,769 million, an increase of ¥1,710 million from March 31, 2017. Free cash flow was ¥4,853 million, an increase of ¥3,014 mil-lion from the end of the previous fiscal year.
Risk FactorsRisk factors that have the potential to affect the Kito Group’s operating performance and financial position are as follows.
Working Capital* Current Ratio(Billions of yen) (%)25.0
15.0
10.0
5.0
0
20.0
300
180
120
60
0
240
249236
17.921515.3
22.523.323.3
189
21.5222
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
L Working Capital P Current Ratio* Current assets minus current liabilities
Total Net Assets Shareholders’ Equity Ratio(Billions of yen) (%)30.0
18.0
12.0
6.0
0
24.0
60
36
24
12
0
4826.025.6
21.2
36.7
22.0
41.238.933.8
23.623.651.2
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
L Total Net Assets P Shareholders’ Equity Ratio
Interest-Bearing Debt Debt/Equity Ratio(Billions of yen) (Times)25.0
15.0
10.0
5.0
0
20.0
1.5
0.9
0.6
0.3
0
1.219.221.3
24.1
6.4
0.74
0.83
1.1421.4
0.91
0.29
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
L Interest-Bearing Debt P Debt/Equity Ratio
Kito Annual Report 201816
Trends in Economic Conditions and the Operating EnvironmentDemand for the Group’s products is substantially affected by changes in economic conditions, including capital investment. Not only in Japan, but also in the Americas and Asia, including China, where the Group generates considerable sales, trends in the operating environment have the potential to impact the Group’s operating performance and financial position.
The Kito Group’s Sales StructureAlthough Kito sells certain of its specialty and other products direct-ly to end users, it is dependent on sales agents for the marketing and sale of its other products and provides these agents with com-missions and other incentive payments. The Kito Group has main-tained fruitful and cooperative ties with sales agencies for many years, and, thereby, has created sales and service networks cover-ing many countries. Kito understands the customer base using its products, which comprises a range of companies in many indus-tries. The Kito Group is confident in its ability to build and maintain positive relationships with these agents. However, since the Company’s sales are highly dependent on the marketing activities of its agents, in the event that relationships with these agents dete-riorate or there are difficulties in maintaining ongoing ties, the potential exists for the Group’s financial position and operating per-formance to be negatively affected. Please note, however, that, during fiscal 2017, there were no sales agents that accounted for more than 10% of the Group’s consolidated net sales.
Country RiskThe Kito Group conducts business in many countries around the world in addition to Japan, including in the Americas, China and other parts of Asia, and Europe. These foreign countries and regions encompass different economic, social, and political fac-tors than those in Japan.
Accordingly, there is a possibility for unforeseeable situations to occur, due not only to foreign currency exchange risk, but risks arising from trade friction and other economic factors, social risks such as labor problems caused by differences in culture or cus-toms, or endemic illnesses, and risks related to international poli-tics such as war and terrorism, as well as unexpected risks in building relationships with trading partners due to differences in business practices. Should these risks become manifest, there could be an impact from such factors as productivity decline in the manufacturing pro-cess or suspension of sales activities, with the possibility of a nega-tive effect on the Group’s business results or financial condition.
Percentage of Overseas SalesThe ratio of the Group’s overseas sales to consolidated net sales was 76.0%. Dependence for sales on the Americas and the Asian region, including China, is high, with 48.4% of sales made in the Americas and 19.5% in Asia. In the event that sales in these regions stagnate, the potential exists for the Group’s financial position and operating performance to be negatively affected.
The Impact of Factors such as Foreign Currency Exchange RatesWhile the principal production centers of the Kito Group are locat-ed in Japan, in recent years, sales in overseas markets have expanded. Since the Group includes overseas subsidiaries with sales and assets denominated in foreign currencies, the potential exists for fluctuations in foreign currency values to have a major impact on the Group’s performance and financial condition. In addition, the potential also exists for fluctuations in foreign curren-cy rates to have an effect on the prices of materials that the Group procures from overseas. Other risks are identified as follows.• Competition • Product defects• Impact attributable to the procurement of principal raw materials
and components, etc.
ROA
(%)6
4
3
2
0
5
1
4.1
3.2 3.2
5.7
4.6
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
Capital Expenditure Depreciation
(Billions of yen)2.5
1.5
1.0
0.5
0
2.0 2.0
1.4
2.42.2
2.1
1.61.8
1.3
1.7
0.9
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
L Capital Expenditure L Depreciation
Free Cash Flow*
(Billions of yen)6.0
2.0
4.0
-4.0
-6.0
0
-2.0
Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
-5.0
1.31.3 1.81.80.9
4.8
* Cash flow from operating activities + Cash flow from investing activities
Kito Annual Report 2018 17
Financial Section
Consolidated Balance SheetsAs of March 31
Millions of yen
2017 2018
(Assets)
Current assets Cash and deposits ¥ 9,069 ¥10,780
Notes and accounts receivable—trade 11,139 11,447
Merchandise and finished goods 12,130 12,209
Work in process 2,019 1,815
Raw materials and supplies 1,251 1,478
Deferred tax assets 1,099 1,155
Other current assets 1,309 1,287
Allowance for doubtful receivables (60) (43)
Total current assets 37,960 40,130
Fixed assets Property and equipment Buildings and structures 10,560 10,833
Accumulated depreciation (6,052) (6,359)
Buildings and structures (net) 4,507 4,473
Machinery, equipment, and vehicles 18,179 18,403
Accumulated depreciation (12,955) (13,579)
Machinery, equipment, and vehicles (net) 5,224 4,823
Land 1,484 1,497
Construction in progress 266 284
Others 6,162 6,264
Accumulated depreciation (5,697) (5,795)
Others (net) 465 469
Total property and equipment 11,948 11,549
Intangible assets Goodwill 2,363 1,926
Software 1,731 1,705
Other intangible assets 3,564 3,209
Total intangible assets 7,658 6,841
Investments and other assets Investment securities 739 1,312
Deferred tax assets 598 572
Net defined benefit assets 28 81
Other investments and other assets 1,203 1,366
Total investments and other assets 2,569 3,332
Total fixed assets 22,177 21,724
Total assets ¥60,137 ¥61,854
Kito Annual Report 201818
Millions of yen
2017 2018
(Liabilities)
Current liabilities Notes and accounts payable—trade ¥ 5,438 ¥ 6,143
Short-term loans payable 6,730 1,506
Current portion of long-term debts payable within one year 3,149 4,212
Accrued expenses 2,411 2,949
Income taxes payable 128 795
Provision for bonuses for employees 601 803
Provision for product warranties 34 33
Provision for sales returns 309 290
Other current liabilities 1,221 1,884
Total current liabilities 20,023 18,619
Long-term liabilities Long-term loans payable 14,298 15,731
Provision for directors’ retirement benefits 190 211
Net defined benefit liabilities 2,441 2,407
Deferred tax liabilities 1,795 1,083
Other long-term liabilities 147 103
Total long-term liabilities 18,874 19,537
Total liabilities 38,897 38,157
Net assetsShareholders’ equity Capital stock 3,976 3,976
Capital surplus 5,226 5,210
Retained earnings 16,427 18,674
Treasury stock (5,816) (5,749)
Total shareholders’ equity 19,814 22,111
Accumulated other comprehensive income Valuation difference on other available-for-sale securities 0 0
Deferred gains or losses on hedges 33 106
Foreign currency translation adjustment 847 724
Remeasurements of defined benefit plans (351) (228)
Total accumulated other comprehensive income 529 602
Subscription rights to shares 45 48
Non-controlling interests 850 935
Total net assets 21,239 23,697
Total liabilities and net assets ¥60,137 ¥61,854
Kito Annual Report 2018 19
Financial Section
Consolidated Statements of IncomeYears ended March 31
Millions of yen
2017 2018
Net sales ¥51,141 ¥55,168
Cost of sales 32,172 35,286
Gross profit 18,968 19,881
Selling, general, and administrative expenses Selling expense 10,631 11,440
General and administrative expense 4,128 3,742
Total selling, general, and administrative expenses 14,759 15,182
Operating income 4,208 4,698
Non-operating income Interest income 20 29
Rents received 32 31
Proceeds from the sales of scrap 34 52
Debt status of limitations gain 20 —
Other 91 90
Total non-operating income 199 204
Non-operating expenses Interest expense 392 395
Equity in losses of affiliates 422 245
Foreign exchange losses 118 212
Other 225 257
Total non-operating expenses 1,158 1,111
Ordinary income 3,249 3,791
Extraordinary income Gain on negative goodwill 489 —
Total extraordinary income 489 —
Extraordinary loss Impairment loss 161 —
Total extraordinary loss 161 —
Income before income taxes 3,578 3,791
Income taxes – current 1,106 1,124
Income taxes – deferred 589 (278)
Income taxes (current and deferred) 1,695 845
Net income 1,882 2,945
Net income attributable to non-controlling interests (15) 109
Net income attributable to owners of parent 1,897 2,836
Kito Annual Report 201820
Financial Section
Consolidated Statements of Comprehensive Income Years ended March 31
Millions of yen
2017 2018
Net income ¥1,882 ¥2,945
Other comprehensive income Valuation difference on other available-for-sale securities 0 (0)
Deferred gains or losses on hedges 166 72
Foreign currency translation adjustment (660) (160)
Remeasurements of defined benefit plans 144 122
Share of other comprehensive income of entities accounted for using equity method (77) 74
Total other comprehensive income (426) 109
Comprehensive income ¥1,456 ¥3,054
(Comprehensive income attributable to) Owners of the parent 1,544 2,908
Non-controlling interests (87) 146
Kito Annual Report 2018 21
Financial Section
Consolidated Statements of Changes in Net AssetsYears ended March 31
Millions of yen
Shareholders’ equity Accumulated other comprehensive income
Capital stock Capital surplus Retained earnings Treasury stockTotal shareholders’
equity
Valuation difference on
other available-for-sale securities
Deferred gains or losses
on hedges
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Total accumulated other
comprehensive income
Stock acquisition
rights to sharesNon-controlling
interests Total net assets
Fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)
Balance as of the beginning of the period ¥3,976 ¥5,226 ¥15,279 ¥ (354) ¥24,128 ¥0 ¥(132) ¥1,512 ¥(496) ¥883 ¥36 ¥991 ¥26,040
Changes during the period Dividends from surplus (652) (652) (652)
Net income attributable to owners of parent 1,897 1,897 1,897
Purchase of treasury stock (5,462) (5,462) (5,462)
Disposal of treasury stock — —
Change of scope of equity method (98) (98) (98)
Changes of items other than shareholders’ equity during the period (net) 0 166 (665) 144 (353) 8 (141) (486)
Total changes during the period 1,147 (5,462) (4,314) 0 166 (665) 144 (353) 8 (141) (4,800)
Balance as of the end of the period ¥3,976 ¥5,226 ¥16,427 ¥(5,816) ¥19,814 ¥0 ¥ 33 ¥ 847 ¥(351) ¥529 ¥45 ¥850 ¥21,239
Millions of yen
Shareholders’ equity Accumulated other comprehensive income
Capital stock Capital surplus Retained earnings Treasury stockTotal shareholders’
equity
Valuation difference on
other available-for-sale securities
Deferred gains or losses
on hedges
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Total accumulated other
comprehensive income
Stock acquisition
rights to sharesNon-controlling
interests Total net assets
Fiscal year ended March 31, 2018 (April 1, 2017 to March 31, 2018)Balance as of the beginning of the period ¥3,976 ¥5,226 ¥16,427 ¥(5,816) ¥19,814 ¥0 ¥ 33 ¥847 ¥(351) ¥529 ¥45 ¥850 ¥21,239
Changes during the period Dividends from surplus (589) (589) (589)
Net income attributable to owners of parent 2,836 2,836 2,836
Purchase of treasury stock (0) (0) (0)
Disposal of treasury stock (16) 67 51 51
Change of scope of equity method — —
Changes of items other than shareholders’ equity during the period (net) (0) 72 (122) 122 72 2 84 160
Total changes during the period (16) 2,246 67 2,297 (0) 72 (122) 122 72 2 84 2,457
Balance as of the end of the period ¥3,976 ¥5,210 ¥18,674 ¥(5,749) ¥22,111 ¥0 ¥106 ¥724 ¥(228) ¥602 ¥48 ¥935 ¥23,697
Kito Annual Report 201822
Millions of yen
Shareholders’ equity Accumulated other comprehensive income
Capital stock Capital surplus Retained earnings Treasury stockTotal shareholders’
equity
Valuation difference on
other available-for-sale securities
Deferred gains or losses
on hedges
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Total accumulated other
comprehensive income
Stock acquisition
rights to sharesNon-controlling
interests Total net assets
Fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)
Balance as of the beginning of the period ¥3,976 ¥5,226 ¥15,279 ¥ (354) ¥24,128 ¥0 ¥(132) ¥1,512 ¥(496) ¥883 ¥36 ¥991 ¥26,040
Changes during the period Dividends from surplus (652) (652) (652)
Net income attributable to owners of parent 1,897 1,897 1,897
Purchase of treasury stock (5,462) (5,462) (5,462)
Disposal of treasury stock — —
Change of scope of equity method (98) (98) (98)
Changes of items other than shareholders’ equity during the period (net) 0 166 (665) 144 (353) 8 (141) (486)
Total changes during the period 1,147 (5,462) (4,314) 0 166 (665) 144 (353) 8 (141) (4,800)
Balance as of the end of the period ¥3,976 ¥5,226 ¥16,427 ¥(5,816) ¥19,814 ¥0 ¥ 33 ¥ 847 ¥(351) ¥529 ¥45 ¥850 ¥21,239
Millions of yen
Shareholders’ equity Accumulated other comprehensive income
Capital stock Capital surplus Retained earnings Treasury stockTotal shareholders’
equity
Valuation difference on
other available-for-sale securities
Deferred gains or losses
on hedges
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Total accumulated other
comprehensive income
Stock acquisition
rights to sharesNon-controlling
interests Total net assets
Fiscal year ended March 31, 2018 (April 1, 2017 to March 31, 2018)Balance as of the beginning of the period ¥3,976 ¥5,226 ¥16,427 ¥(5,816) ¥19,814 ¥0 ¥ 33 ¥847 ¥(351) ¥529 ¥45 ¥850 ¥21,239
Changes during the period Dividends from surplus (589) (589) (589)
Net income attributable to owners of parent 2,836 2,836 2,836
Purchase of treasury stock (0) (0) (0)
Disposal of treasury stock (16) 67 51 51
Change of scope of equity method — —
Changes of items other than shareholders’ equity during the period (net) (0) 72 (122) 122 72 2 84 160
Total changes during the period (16) 2,246 67 2,297 (0) 72 (122) 122 72 2 84 2,457
Balance as of the end of the period ¥3,976 ¥5,210 ¥18,674 ¥(5,749) ¥22,111 ¥0 ¥106 ¥724 ¥(228) ¥602 ¥48 ¥935 ¥23,697
Kito Annual Report 2018 23
Financial Section
Consolidated Statements of Cash FlowsYears ended March 31
Millions of yen
2017 2018
Cash flows from operating activities
Income before income taxes ¥3,578 ¥3,791
Depreciation and amortization 1,792 2,116
Impairment loss 161 —
Depreciation of goodwill 338 327
Gain on negative goodwill (489) —
Changes in allowance for doubtful receivables (8) (17)
Changes in reserve for bonuses for employees 115 138
Changes in reserve for retirement benefits for officers 13 21
Changes in net defined benefit liabilities (80) 86
Interest and dividends income (20) (29)
Interest expense 392 395
Equity in earnings of affiliates 422 245
Loss on the retirement of noncurrent assets 10 17
Gain on sales of noncurrent assets (4) (5)
Changes in trade receivables 633 (441)
Changes in inventories (855) (445)
Changes in accounts receivable 64 (36)
Changes in prepaid expense (152) 13
Changes in trade payables 0 732
Changes in accrued expenses (413) 717
Changes in advances received 322 354
Others 199 91
Subtotal 6,021 8,073
Cash received from interest and dividends 20 29
Interest paid (397) (386)
Income taxes paid (1,662) (672)
Net cash provided by operating activities 3,981 7,044
Kito Annual Report 201824
Millions of yen
2017 2018
Cash flows from investing activities Payments for the acquisition of property and equipment ¥ (1,740) ¥ (1,030)
Proceeds from the sales of property and equipment 58 27
Payments for the acquisition of intangible assets (653) (380)
Payments of stocks of subsidiaries and affiliates — (498)
Payments for investments in capital of subsidiaries and affiliates — (178)
Proceeds from the collection of guarantee money deposited 7 16
Changes in investments and other assets 160 (134)
Purchase of investments in subsidiaries resulting in change in scope of consolidation 33 —
Others (7) (11)
Net cash used in investing activities (2,142) (2,191)
Cash flows from financing activities Proceeds from short-term loans payable ¥10,169 ¥ 3,421
Repayments of short-term loans payable (5,112) (8,600)
Proceeds from long-term loans payable 3,000 6,723
Repayments of long-term loans payable (2,973) (3,779)
Cash dividends paid by parent company (651) (588)
Cash dividends paid for non-controlling interests (53) (96)
Purchase of treasury stock (5,462) (0)
Others (64) (162)
Net cash used in financing activities (1,148) (3,083)
Effect of exchange rate change on cash and cash equivalents (152) (59)
Net increase (decrease) in cash and cash equivalents 538 1,710
Cash and cash equivalents at the beginning of the year 8,521 9,059
Cash and cash equivalents at the end of the year 9,059 10,769
Kito Annual Report 2018 25
Stock Information
Stock Code 6409 Total Number of Shares Issued 27,048,200
Date of Listing August 9, 2007 Trading Unit of Shares 100
Stock Exchange Listing Tokyo Stock Exchange, First Section Number of Shareholders 4,404, excluding one treasury stockholderTransfer Agent and
Administrator of Special Account
Sumitomo Mitsui Trust Bank, Limited 1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Major Shareholders (top 10) (As of March 31, 2018)
Name of shareholdersNumber of shares (shares)
Percentage of owner-ship (%)
MISAKI ENGAGEMENT MASTER FUND 2,019,500 9.91
The Master Trust Bank of Japan, Ltd. (Trust Account) 1,573,800 7.72
Japan Trustee Services Bank, Ltd. (Trust Account 9) 1,309,200 6.42
Japan Trustee Services Bank, Ltd. (Trust Account) 1,188,200 5.83
THE BANK OF NEW YORK MELON 140042 794,800 3.90
YK Capital Co., Ltd. 740,000 3.63
Sumitomo Mitsui Banking Corporation 670,400 3.29
GOVERNMENT OF NORWAY 514,100 2.52
GOLDMAN, SACHS & CO REG 507,500 2.49
Trust & Custody Services Bank, Ltd.( Securities Investment Trust Account) 476,400 2.34
Notes: 1. Share ownership percentages were calculated after the deduction of treasury shares (6,659,133 shares).
2. The names of shareholders have been adjusted to those shown on the Company’s Shareholder Registry which is maintained by the Administrator of Shareholder Registry as of the end of fiscal 2017.
Trends in Kito’s Stock PriceStock Price (Yen)
0
4,500
3,000
1,500
2,500
2,000
1,500
1,000
500
0
2018/12017/102017/72017/42017/12016/102016/72016/42016/12015/102015/72015/42015/12014/102014/72014/4
2017/12016/102016/72016/42016/12015/102015/72015/42015/12014/102014/72014/42014/12013/102013/72013/4
2-for-1 stock split
Note: Effective October 1, 2014, Kito conducted a 2-for-1 stock split of its common stock. Accordingly, the past stock prices of all fiscal years are calculated the same way as after the stock split.
Individuals, etc.15.71%
Treasury stock24.62%
Foreign-Affiliated Corporations and Foreigners 26.91%
Other Corporations
4.76%
Securities Firms 0.84%
Shareholders’ Composition by Category (As of March 31, 2018)
Trading Volume (Thousands of shares)
Financial Institutions 27.14%
Kito Annual Report 201826
Corporate Profile
Company Name KITO CORPORATION
Head Office & Factory 2000, Tsuijiarai, Showa-cho, Nakakoma-gun, Yamanashi 409-3853, Japan
Tokyo Head Office SHINJUKU NS Building 9F, 2-4-1, Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-0809, JAPAN Tel: +81-3-5908-0155
President & CEO Yoshio Kito
Established July 1944 (started Nov. 1932)
Number of Employees (March 31, 2018)
Consolidated: 2,169Non-consolidated: 673
Capital ¥3,976 million
Net Sales (March 31, 2018)
Consolidated: ¥55,168 millionNon-consolidated: ¥24,886 million
Principal Offices and Factories (As of July 1, 2018)
L Domestic Offices/Factories and Bases of Subsidiaries
Name of Business Office Location
Head Office & Factory Showa-cho, Nakakoma-gun, Yamanashi
Tokyo Head Office Shinjuku-ku, Tokyo
Sapporo Office Sapporo, Hokkaido
Sendai Office Sendai, Miyagi
Shin’etsu Office Niigata, Niigata
Kita Kanto Office Ota, Gunma
Yokohama Office Yokohama, Kanagawa
Nagoya Sales Group Nagoya, Aichi
Shizuoka Office Hamamatsu, Shizuoka
Hokuriku Office Toyama, Toyama
Osaka Sales Group Moriguchi, Osaka
Chubu and Shikoku Office Okayama, Okayama
Fukuoka Office Fukuoka, Fukuoka
SCC Japan Godo Kaisha Kashiwa, Chiba
L Bases of Overseas Subsidiaries
Company Name Country
KITO Americas, Inc. U.S.A.
Harrington Hoists, Inc. U.S.A.
Har Ki, Inc. U.S.A.
PEERLESS INDUSTRIAL GROUP, INC. U.S.A.
Peerless Chain Co., Inc. U.S.A.
KITO CANADA INC. Canada
KITO DO BRASIL COMÉRCIO DE TALHAS E GUINDASTES LTDA.
Brazil
Kito Europe GmbH Germany
Kito Chain Italia S.r.l. Italy
JIANGYIN KITO CRANE CO., LTD. China
KITO HOISTS & CRANES (SHANGHAI) CO., LTD. China
KITO TAIWAN CO., LTD. Taiwan
KITO KOREA CO., LTD. Korea
SIAM KITO CO., LTD. Thailand
SUKIT BUSINESS CO., LTD. Thailand
KITO PHILIPPINES, INC. Philippines
PT. KITO INDONESIA Indonesia
KITO HOISTS & CRANES ASIA PTE. LTD.
Singapore
ARMSEL MHE PVT. LTD. India
Kito Australia Pty. Ltd. Australia
Anchor Nominees Pty. Ltd. Australia
PWB Anchor Ltd. Australia
ERIKKILA OY Finland
Note: KITO PHILIPPINES, INC. ceased operations as of March 31, 2014 and is currently undergoing liquidation proceedings.
Kito Annual Report 2018 27
KITO CORPORATIONSHINJUKU NS Building 9F, 2-4-1, Nishi-Shinjuku,
Shinjuku-ku, Tokyo 163-0809, JAPAN
https://kito.com
Printed in Japan