4q fy2019 earnings presentation7 rounded down to the nearest million yen sales by segment gross...
TRANSCRIPT
4Q FY2019
Earnings Presentation May 2020
The First Section of the Tokyo Stock Exchange:8087
Furusato Industries, Ltd.
Sales and profits down, reflecting weak business sentiment
Net sales
Operating income
Ordinary income
Net income attributable to
owners of parent
¥104,619M
YoY
¥3,973M
¥4,334M
¥2,808M
(3.0)%
(1.7)%
(1.9)%
(2.9)%
PPoint
Copyright© Furusato Industries, Ltd. All Rights Reserved
2
FY19 Financial Results Summary
Q4 FY19 Financial Results
3
Down v.s. forecast and YoY due to a rapidly deteriorating businessenvironment despite an effect of consolidation of Security Design
FY18(Actual)
FY19(Forecast)
FY19(Actual)
v.s. Forecast
YoY
Net sales 107,873 108,000 104,619 (3.1)% (3.0)%
Cost of sales
Gross profit
(%)
92,763
15,109
(14.0%)
92,100
15,900
(14.7%)
88,805
15,814
(15.1%)
(3.6)%
(0.5)%
(4.3)%
+4.7%
SG&A
Operating Income
(%)
11,069
4,040
(3.7%)
11,900
4,000
(3.7%)
11,841
3,973
(3.8%)
(0.5)%
(0.7)%
+7.0%
(1.7)%
Ordinary Income
(%)
4,416
(4.1%)
4,400
(4.1%)
4,334
(4.1%)
(1.5)% (1.9)%
Income taxes 1,463 1,450 1,468
Net income attributable to owners of parent
2,893 2,950 2,808 (4.8)% (2.9)%
PPoint
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4
FY19 Consolidated Financial Results
Rounded down to the nearest million yen
Machine & Tools:Down due to a substantial decrease in IndustrialEquipment despite an addition of Security Business
Machine & Facility: Double-digit decrease due to a substantialdecrease in orders
PPoint
Copyright© Furusato Industries, Ltd. All Rights Reserved
104,619
FY18
107,873
+425
(3,438)(240)
FY19
5
Changes in Net Sales by Factor
Rounded down to the nearest million yen
Construction & Piping
Equipment & Tools
Machine & Facility
Gross profit margin up, increase in personnel expenses andadministrative ex. & other ex. due to an addition of Security PPoint
Copyright© Furusato Industries, Ltd. All Rights Reserved
(607)
(455)
+1,160
(405) 3,9734,040
+241
FY18 FY19
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Rounded down to the nearest million yen
Changes in Operating Income by Factor
Sale
s
gro
wth
Change in
gro
ss
pro
fit marg
in
Sellin
g e
x.
Perso
nnel e
x.
Adm
inistra
tive e
x.
& O
ther e
x.
Op. income ratio3.7% Op. income ratio
3.8%
Industrial Equipment:Substantial decrease v.s. forecast and YoYMachine Tool:Substantial decrease in H2, reflecting sluggish orders
FY18(Actual)
FY19(Forecast)
FY19(Actual)
v.s. Forecast
YoY
Net sales 107,873 108,000 104,619 (3.1)% (3.0)%
Equipment & ToolsIndustrial Equip.
Machine & Tools For
Automotive
Housing Equipment
Security
Overseas・Other
49,873
37,055
6,745
5,275
-
796
52,600
37,100
6,780
5,100
3,300
320
49,633
34,031
6,825
5,600
2,779
395
(5.6)%
(8.3)%
+0.7%
+9.8%
(15.8)%
+23.7%
(0.5)%
(8.2)%
+1.2%
+6.2%
-
(50.3)%
Machine& FacilityMachine Tool
Factory Automation
24,145
20,565
3,580
21,200
17,700
3,500
20,706
18,611
2,095
(2.3)%
+5.1%
(40.1)%
(14.2)%
(9.5)%
(41.5)%
Construction & Piping ProductsBuilding Supplies
Piping Products
33,854
26,830
7,024
34,200
27,000
7,200
34,279
27,255
7,024
+0.2%
+0.9%
(2.4)%
+1.3%
+1.6%
(0.0)%
PPoint
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7
Rounded down to the nearest million yen
Sales by Segment
Gross profit margin:Industrial Equipment +1.6 pts. due to an additionof SecuritySG&A:Industrial Equipment double-digit growth
FY18(Actual)
FY19(Forecast)
FY19(Actual)
v.s. Forecast
YoY
Gross profit(%)Equipment & ToolsMachine& Facility
Construction & PipingProducts
15,109(14.0%)
5,715(11.5%)
1,922(18.0%)
7,469(22.1%)
15,900(14.7%)
6,680(12.7%)
1,700(18.0%)
7,520(22.0%)
15,814(15.1%)
6,518(13.1%)
1,666( 8.0%)
7,627(22.3%)
(0.5)%
(2.4)%
(2.0)%
+1.4%
+4.7%
+14.1%
(13.3)%
+2.1%
SG&A(%)Equipment & ToolsMachine& Facility
Construction & PipingProducts
11,069(10.3%)
4,417( 8.9%)
1,237( 5.1%)
5,541(16.4%)
11,900(11.0%)
5,200( 9.9%)
1,100( 5.2%)
5,600(16.4%)
11,841(11.3%)
5,288(10.7%)
1,064( 5.1%)
5,604(16.3%)
(0.5)%
+1.7%
(3.2)%
+0.1%
+7.0%
+19.7%
(14.0)%
+1.1%
Op. income(%)Equipment & ToolsMachine& Facility
Construction & PipingProducts
4,040( 3.7%)
1,297( 2.6%)
685( 2.8%)
1,928( 5.7%)
4,000( 3.7%)
1,480( 2.8%)
600( 2.8%)
1,920( 5.6%)
3,973( 3.8%)
1,229( 2.5%)
601( 2.9%)
2,022( 5.9%)
(0.7)%
(16.9)%
+0.3%
+5.3%
(1.7)%
(5.2)%
(12.2)%
+4.9%
PPoint
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8
Rounded down to the nearest million yen
Profit by Segment / SG&A
Equipment & Tools Segment Main Points
◼Industrial Equipment・Decreased sales of both machine tool peripherals and industrial built-in equipment
due to slowdown in production
・Canceled the Machining System Exhibition(Osaka/Chubu) due to the outbreak of Covid-19
◼Machine & Tools For Automotive・Expanded new focus areas (inspection and processing jigs and molds)
・Strengthened the approach to automation lines by Factory Automation Div.
◼Housing Equipment・Launched a business in the renovation market
◼Security・Down in Q1 due to sluggish sales of HIKVISION→Tried to offset it by PB(GFDesign)
・Investing aggressively aimed at its business expansion
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9
Machine and Facility Main Points
◼Machine Tool
・Machine Tool orders -35.8% YoY
・Q4E backlog -51.2% YoY, ¥4,736M
◼Factory Automation
・Factory Automation orders -20.4% YoY
・Q4E backlog +78.0% YoY, ¥1,321M
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10,327 9,706 9,524
7,141
5,774 4,736
761 742 815 1,012 1,056 1,321
0
5,000
10,000
FY18Q3 FY18Q4 FY19Q1 FY19Q2 FY19Q3 FY19Q4
Machine Tool Factory AutomationBacklog
10
Construction & Piping Products Main Points
◼Building Supplies・In-house products:Turnbuckle brace sales down(-2.5% YoY)
→Volume -5.9% YoY、Ave. unit price +3.6% YoY
→Improved productivity with the new production system
・Purchasing supplies:High strength bolts sales up(+19.0% YoY)
→Volume -1.1% YoY, Ave. unit price +20.2% YoY
◼Piping Products ・Effect of strategy by targeting based on industry classification of users
・Operating the Seibu Contact Center as a demonstration base for improving businessproductivity
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11
B/S(Consolidated)
March 31, 2019 March 31, 2020 Change
Current assets 48,150 45,069 (3,080)
Noncurrent assets 18,838 21,819 2,980
Total assets 66,988 66,888 (99)
Current liabilities 25,578 24,050 (1,527)
Noncurrent liabilities 719 535 (183)
Total liabilities 26,297 24,586 (1,710)
Shareholders' equity 39,340 41,365 2,024Accumulated othercomprehensive income 1,349 798 (551)
Non-controlling interests - 138 138
Total net assets 40,690 42,302 1,611
Total liabilities and net assets 66,988 66,888 (99)
Equity Ratio 60.7% 63.0%
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12
Rounded down to the nearest million yen
Cash Flows (Consolidated)
FY18 FY19 Change
Cash flows from operating activities
3,757 4,750 992
Cash flows from investing activities
(1,216) (3,550) (2,334)
Free cash flows 2,540 1,199 (1,341)
Cash flows from financing activities
(796) (1,520) (723)
Cash and cash equivalents at end of the period
13,056 12,883 (172)
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13
Rounded down to the nearest million yen
Business InvestmentDepreciation & Amortization
Recording amortization of goodwill due to consolidation of Security Design
FY15 FY16 FY17 FY18 FY19
Business investment 1,663
・New ShigaPlant (Buildings,
Machines)・Facilities
renewal atbranches
1,710・New
productionsystem
・Shiga PlantFacilities
・Facilitiesrenewal atbranches
1,157・G-NET
Nagoya・New
productionsystem
・Facilitiesrenewal atbranches
1,193・G-NET
Nagoya・Gifu Shoji
HQ・Facilities
renewalat branches
1,827・Shiga Plant Ⅱ
land,etc. ・Machines for
production・Gifu Shoji
HQ・Facilities
renewal atbranches
Depreciation &amortization 392 533 666 611 698
Amortization of goodwill - - - - 54
PPoint
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14
Rounded down to the nearest million yen
Returns to shareholders
Dividend down based on dividend payout ratio of 30% due to a decrease in consolidated net income
FY15 FY16 FY17 FY18 FY19
EPS 166.69 161.06 159.44 199.57 193.71
Dividend per
share50.50 48.50 48.00 60.00 58.50
Share price
(Fiscal year-end)1,685 1,687 1,825 1,612 1,442
PPoint
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15
Rounded down to the nearest million yen
FY20 Earnings Forecasts
Regarding the consolidated earnings forecast for FY20, ending March 31, 2021, Furusato has not determined as it is difficult to reasonably estimate any impact of Covid-19 at this point. We will promptly announce it as soon as the estimate can be made.
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Verification of the medium-term management planDesign the Future2020
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876 948 941 988
1,078 1,080
32 35 31 3140 40
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3
Consolidate net sales
Consolidated operating income
Mid-term Management Plan Overview(Apr. 2017~Mar. 2020)
Copyright© Furusato Industries, Ltd. All Rights Reserved
Aiming for further growth by gathering the power of the group
■ Numerical target
・FY19
・Net sales ¥108B
・Operating income ¥4B
■Business strategy with clear
priority subjects in each business
・Setting priority subjects of each
business and completing initiatives
through regular follow-up meetings
■Realizing M&A strategy
・Collaborating with partners who can
maximize synergies
■Working style reform
・Aiming for realizing workplace
environment with high job satisfaction
Corporate slogan Design the Future 2020One step ahead, pursuing the value customers never experience
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Current plan Next plan
*~2019/3 Actual results
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Performance(100 million yen)
FY16 FY17 FY18 FY19 Plan
Net sales 941 988 1,078 1,046 1,080
Gross profit 131 136 151 158 159
SG&A 99 104 110 118 119
Op. income 31 31 40 39 40
850
900
950
1,000
1,050
1,100
FY16 FY17 FY18 FY19 Plan
●Net sales
0
10
20
30
40
50
FY16 FY17 FY18 FY19 Plan
●Operating income
Summary
■ In FY18, net sales record high (¥107.8B)operating income achieved the target ahead of schedule(¥4.04B)
■In FY19, the final year, fell short of the target due toslowdown in domestic production
●I.E:Developed private brand products and strengthened proposal-basedmarketing by exhibition and sales promotion
●M.T.A: Sold measurement and processing jigs, and automation and heattreatment equipment to Tier 1 of automobile manufacturers in the Chubu area
●H.E.: Strengthened construction functions to meet renovation demand●M.T.: Strengthened proposals for machine and equipment to end users by
door-to-door business●B.S. :Developed new products centered on building materials and proposed
them through visits to design officesImproved production efficiency with a new production system mainly at theShiga Plant
●P.P.: Expanded sales of fittings and valves to plants and set manufacturersStrengthened the service system in the Kyushu area through the launch of theContact Center
●S.:Strengthened sales with synergies by consolidation of Security Design andformer Security System Division of G-net
Achievement
Challenge
●I.E.: Improving margin and sales efficiency●M.T.A.: Proposing and selling mold-related products, strengthening to
collect information on facility projects ●H.E.: Logistics and design functions for renovation●M.T.: Strengthening system proposals for design and manufacturing
processes ●F.A.: Strengthening engineering function●B.S.: Launching new products and PB products in the market and
stocking themImproved production efficiency at small factories
●P.P.: Sharing sales know-how by industry and fostering humanresources
●S.: Sharing know-how of security products and services establishing training system
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Mid-term Management Plan Summary(Apr. 2017~Mar. 2020)
Note:I.E.=Industrial Equipment, M.T.A.=Machine & Tools for Automotive,H.E.=Housing Equipment, M.T.=Machine ToolB.S.=Building Supplies, P.P.=Piping Products, S.=Security
Mid-term Management Plan Growth Strategy 1Improving Productivity by Introducing New Production System
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■New production system
・Improving planned production
・Trained personnel in charge of facilities
・Improved quality, decreased in claims
・Improved special production
(hot-dip galvanized products, etc.)
■Result of improvement
・Output /hour (all plants):+24%
・Output/hour(Shiga plant):+70%
◆ Establishing automatic production system, not depending on manpower toovercome the shortage of labor amid the low birthrate and aging population
◆Generating stable earnings by establishing a production system to survivethe period of sluggish demand
Achievement Challenge
・Staffing plan (not achieved)
・Degree of improvement in
production efficiency
(except Shiga Plant)
・Efficiency of in-process transfer
・Quick delivery
・Improving small factories
・Improving coating process
・Improving press process
・Environmental measures
Vision・Improving efficiency by reviewing
the production system・Increasing efficiency through
the consolidation of production sites・Increasing efficiency through
automation of facilities
Point➡Promoting a new production system
➡Increasing production at the Shiga Plant
➡Reducing workforce through increasedefficiency on automated lines
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◆Strengthening our capability to respond to the needs for manpower saving,automation and improvement of efficiency in the SMEs
◆Establishing a collaborative system between the company's technical salesand engineering functions and system integrators
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Vision・Utilizing the Robot Technical
Center (RTC)
・Improving network of system integrator
・Complementing required competencies
・Improving recognition among end-users
Point➡Effective use of RTC with three functions: robot school,
consulting, and trial
➡Developing sales through follow-up approach to robot
school trainees
➡Developing a network by function and area to build an
order system through collaboration with systemintegrators nationwide
➡Covering the shortage of technical sales staff for
meetings at the planning and conceptualization stage
➡Leveraging talented foreign personnel through offshore
development
➡Creating an image drawing of an automation plan by
using 3D CAD
➡Selling robot-based packaging systems directly to end
users as a manufacturer
➡Creating opportunities for proposal sales through direct
visits
Mid-term Management Plan Growth Strategy 2Pursuing Expertise to Strengthen Engineering Capabilities
Copyright© Furusato Industries, Ltd. All Rights Reserved
◆Positioning Security Business as one of the drivers of growth in consolidated earnings
◆Optimizing the business structure through development of the servicebusiness and to expand and stabilize the earnings structure
・Strengthened sales with synergies by
consolidation of Security Design and
former Security System Division of G-net
・Established new sales branches in Hiroshima,
Nagoya, Sendai and Sapporo
・Launched S-DOC (support center) to fulfill user
support
・Established QMC (Quality Management Center)
to improve product quality
Vision
・Expanding the service business
・Enclosing business partnerswith a full support system
Point
➡Stabilizing the earnings structure by increasing thecomposition of the service business
➡Developing and expanding new subscription businesses➡Widely expanding to areas other than security, such as
production facilities and disaster prevention monitoring
➡Setting up a help desk mainly for technology, constructionand operations
➡Tests and inspection by professional staff to maintainquality
➡On-site service by specialized maintenance staff
・Expanding areas other than security, such as
production facilities and disaster prevention
monitoring
→Developing monitoring function, etc.
・Minimizing risk from external environmental
factors, such as overseas products
22
Mid-term Management Plan Growth Strategy 3Demonstrating Synergies Through Collaboration in Security Business
Achievement Challenge
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Toward the realization of a sustainable environment and society, we manage our businesses with an awareness of our responsibilities for the impact to the society as a company
■Working style reform
・Reducing overtime work hours
・Creating flexible working environment:
Launching telework and staggered working hours
・ Improving working productivity:
Expanding adoption of RPA, providing mobile devices,
introducing groupware service
・Promoting diversity:Child care support,
support for a balanced life between treatment and work(LTD),
career path support, hiring foreign personnel
23
Mid-term Management Plan Growth Strategy 4
Revising salary levelLaunching telework Career path supportIntroducing RPA
(Reference)FY19 Non-consolidated Results
FY18(Actual)
FY19(Actual)
V.S. Forecast
YoY
Net sales 33,873 34,289 +415 +1.2%
Cost of sales
Gross profit
(%)
26,403
7,469
(22.1%)
26,661
7,627
(22.2%)
+258
+157
+1.0%
+2.1%
SG&A
Operating Income
(%)
5,541
1,928
(5.7%)
5,604
2,022
(5.9%)
+63
+94
+1.1%
+4.9%
Ordinary Income
(%)
2,167
(6.4%)
2,219
(6.5%)
+52 +2.4%
Income taxes 716 730 +14 +2.0%
Net income 1,469 1,469 (0) (0.1)%
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24
Rounded down to the nearest million yen
Disclaimer
Copyright© Furusato Industries, Ltd. All Rights Reserved
This material is prepared for the sole purpose of providing information to use as reference in making investment decisions, and is not intended as a solicitation for investment.
This material contains forward-looking statements that reflects Furusato’s plans and expectations. These forward-looking statements are based on information currently available and a rational evaluation based on certain assumptions that may cause Furusato’s future results to be materially different from any future results expressed or implied by these forward-looking statements due to a number of factors including change of business environment, market trend and others.
Furusato Group Corporate Planning Dept.
25