2Q FY2014 Earnings Presentation - Furusato2Q FY2014 Earnings Presentation (April 1 to September 30, 2014) November 2014 Furusato Industries, Ltd. Always Pursuing the Best Service

2Q FY2014

Earnings Presentation(April 1 to September 30, 2014)

November 2014

Furusato Industries, Ltd.

Always Pursuing the Best Service

2

Contents

Copyright© Furusato Industries, Ltd. All Rights Reserved

２QFY14 Consolidated Results

・Consolidated results Ｐ. ４

・Sales by segment Ｐ. ６

・Gross profit by segment Ｐ. ８

・SG&A Expenses Ｐ. ９

・Operating income by segment Ｐ.１０

・Segment ①Equipment and Tools Ｐ.１１

・Segment ②Machine and Facility Ｐ.１３

・Segment ③Construction and Piping Products Ｐ.１５

・Operating income～net income Ｐ.１７

・Consolidated CF Ｐ.１８

・Consolidated B/S Ｐ.１９

・Capital investment and depreciation and amortization Ｐ.２１

・Returns to shareholders Ｐ.２２

FY2014 Forecasts

・Consolidated Forecast Ｐ.２４

・Segment①Equipment and Tools Ｐ.２５

・Segment②Machine and Facility Ｐ.２６

・Segment③Construction and Piping Products Ｐ.２７

Growth Strategy

・Industrial Equipment Ｐ.２９

・Housing Equipment Ｐ.３０

・Machine Tool・Factory Automation Ｐ.３１

・Steel Frame Building Supplies Ｐ.３２

・Piping Products Ｐ.３３

Reference Ｐ.３４

Non-consolidates results

Subsidiary results Ｐ.４１


3Copyright© Furusato Industries, Ltd. All Rights Reserved


2Q FY2014

Consolidated Results

4

+197

+230

+208

+227

+436

+3,170

Change

Y-o-Y

+28.2％

+19.1％

+19.4％

+5.1％

+7.9％

+8.4％

%

Change

780

1,300

1,160

4,604

5,764

39,500

1H Forecast

FY14

896

1,436

1,282

4,659

5,941

40,804

1H

FY14

110.5％Ordinary income

vs. 1H

Forecast

103.1％Gross profit

Net income

Operating income

SG&A expenses

Net sales

114.9％

110.5％

101.2％

103.3％



Consolidated Results

Sales growth ratio up, operating income doubleSales growth ratio up, operating income double--digit growthdigit growthRounded down to the nearest million yen

5

+29.5％

+15.1％

+14.8％

+5.4％

+7.9％

+11.9％

%

Change

Y-o-Y

+25.4％

+28.1％

+31.7％

+4.8％

+8.0％

+4.6％

%

Change

Y-o-Y

624

966

894

2,318

3,213

22,189

２Q

FY14

271

469

387

2,340

2,728

18,615

1Q

FY14

+105.7％Ordinary income

%

Change

+17.8％Gross profit

Net income

Operating income

SG&A expenses

Net sales

+129.7％

+130.6％

(0.9)％

+19.2％

vs. 1Q



Consolidated Results (Quarterly) by Segment

Rounded down to the nearest million yen

Sales and profit increase due to relatively favorable performancSales and profit increase due to relatively favorable performance e


9,404

(-3.6%)

10,160

(+8.0%)

11,158

(+9.8%)

12,196

(+9.3%)

13,597

(+11.5%)

4,129

(+28.5%)

6,054

(+46.6%)

7,391

(+22.1%)

6,412

(-13.2%)

6,932

(+8.1%)

20,274

(+6.6%)

19,025

(+0.8%)

18,869

(+3.8%)

18,173

(+9.7%)16,572

(+29.4%)

40,80440,80440,80440,804

(+8.4%)37,63437,63437,63437,634

(+0.6%)

37,42037,42037,42037,420

(+8.8%)34,38834,38834,38834,388

(+14.2%)30,11730,11730,11730,117

(+16.8%)

0

25,000

50,000

11/3 1H 12/3 1H 13/3 1H 14/3 1H 15/3 1H

Equipment and ToolsMachine and FacilityConstruction and Piping Products

+11.5％13,597（33.3％）Construction and Piping

+8.4％40,804（100％）Total

+8.1％6,932（17.0％）Machine and Facility

+6.6％20,274（49.7％）Equipment

and Tools

Y-o-YNet sales（% of total）15/3 2Q


Consolidated Sales (1H) by Segment


Sales increase in all segmentsSales increase in all segments

Figures in （）indicates % Y-o-Y


7,236

(+10.5%)

5,644

(+8.6%)

6,551

(+9.9%)

7,369

(+17.7%)

6,882

(+26.8%)

6,360

(+12.7%)

4,489

(31.4%)

2,995

(-13.0%)

3,417

(-13.4%)

2,778

(-7.6%)

5,678

(+49.6%)

2,442

(-18.5%)

10,463

(+6.1%)

9,811

(+7.1%)

11,432

(+18.9%)

10,548

(+10.4%)

9,862

(+5.4%)

9,163

(-3.7%)

22,18922,18922,18922,189

(+11.9)

18,61518,61518,61518,615

(+4.6%)

23,99323,99323,99323,993

(+27.3%)

20,69620,69620,69620,696

(+10.0%)

19,83119,83119,83119,831

(+2.9%)

17,80317,80317,80317,803

(-1.9%)

0

10,000

20,000

30,000

14/3 1Q 14/3 2Q 14/3　3Q 14/3　4Q 15/3 1Q 15/3　2Q

Equipment and Tools

Machine and Facility

Construction and Piping Products


Consolidated Sales (Quarterly) by Segment



MachineMachine・・Facility: Sales turned to a YFacility: Sales turned to a Y--oo--Y increase in 2Q Y increase in 2Q

8

14.0%

14.5%

14.2%

14.6% 14.6%

Gross profit margin


3,011(+9.7%)2,744(+13.2%)2,424(+4.9%)2,310(+21.1%)1,908

607(+16.3%)522(-15.2%)

616(+24.2%)496(+41.9%)

349

1,936

2,182(+12.7%) 2,274(+4.2%) 2,238(-1.6%) 2,322(+3.7%)4,2034,2034,2034,203(+13.4%) 4,9884,9884,9884,988(+18.7%) 5,3155,3155,3155,315(+6.6%) 5,5055,5055,5055,505(+3.6%) 5,9415,9415,9415,941(+7.9%)

04,000

11/3 1H 12/3 1H 13/3 1H 14/3 1H 15/3 1H－0Adjustment

+9.7％3,011（22.1％）Construction and Piping

+7.9％5,941（14.6％）Total

+16.3％607（8.8％）Machine and Facility

+3.7％2,322（11.5％）Equipment and Tools

Y-o-YGrossProfit（%）15/3 2Q


Consolidated Gross Profit by Segment


Gross profit increase in all segmentsGross profit increase in all segments


Equipment and Tools Business

Machine and Facility Business

Construction and Piping Products Business

9

13.7% 11.9% 11.5% 11.8% 11.4%% of SG&A Ex.

510(+13.5%) 493(-3.2%) 550(+11.4%) 588(+7.0%) 685(+16.4%)

2,580

(-3.9%)

2,583

(+0.1%)

2,678

(+3.7%)

2,712

(+1.3%)

2,820

(+4.0%)

1,154

(+2.1%)

1,130

(+6.2%)

1,064

(+3.4%)

1,029

(+0.0%)

1,029

(-16.0%)

4,6594,6594,6594,659

(+5.1%)

4,4314,4314,4314,431

(+3.2%)

4,2934,2934,2934,293

(+4.5%)

4,1074,1074,1074,107

(-0.3%)

4,1214,1214,1214,121

(-5.5%)

0

4,000

11/3 1H 12/3 1H 13/3 1H 14/3 1H 15/3 1H

Sales expenses Personal expenses Other SG&A Ex.


+16.4％685（14.7％）Sales expenses

+5.1％4,659（100％）Total

+4.0％2,820（60.5％）Personal expenses

+2.1％1,154（24.8％）Other SG&A

Expenses

Y-o-YSG&A Ex.（%）15/3 2Q


Consolidated SG&A Expenses



Increase in freightage and packing exp. and provision of allowance for doubtful account


－56Adjustment

+24.4％772（5.7％）Construction and Piping

+19.4％1,282（3.1％）Total

+41.8％146（2.1％）Machine and Facility

(8.3)％306（1.5％）Equipment and Tools

Y-o-YOperating income（%）15/3 2Q

Always Pursuing the Best Service Consolidated Operating Income by Segment



Machine・Facility returned to profitability

-61

364

355

(-2.4%)

621

(+74.7%)

772

(+24.4%)

-38

92

191(+106.8%)

103(-46.2%)

146(+41.8%)

306

(-8.3%)

333

(-20.8%)421

(+14.1%)369

(+194.9%)

125

1,2821,2821,2821,282

(+19.4%)1,0731,0731,0731,073

(+5.0%)1,0221,0221,0221,022

(+16.1%)880880880880(+973%)

82828282

-300

0

300

600

900

1,200

11/3 1H 12/3 1H 13/3 1H 14/3 1H 15/3 1H

Equipment and Tools Business

Machine and Facility Business

Construction and Piping Products Business

11

99.4％2,336

+3.7％+832,322

Gross profit103.3％

19,629+6.6％+1,249

20,274Total sales

(27)

+38

+26

+105

+61

+1,017

Change

Y-o-Y

(8.3)％

+8.9％

+33.9％

+4.3％

+2.5％

+7.5％

%

Change

361

434

435

2,483

2,698

13,579

1H Forecast

FY14

306

469

103

2,571

2,509

14,621

1H

FY14

108.1％Other

vs. 1H

Forecast

93.0％

Machine and Tools forAutomotive

Operating income

OverseasHousing Equipment

Industrial Equipment

84.7％

23.8％

103.6％

107.7％


Always Pursuing the Best Service Segment Breakdown①Equipment and Tools Business


Operating income decrease, impacted by loss on valuation of inventory


8,0127,3687,1526,450 +6.7%

7,629

+8.4%

6,991

0

5,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

1,6001,3911,2011,245 +6.9%

1,284

-1.7%

1,224

0

1,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

1,5541,5041,2361,229 +1.5%

1,254

+7.1%

1,317

0

1,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

The Indices of Industrial Production (vs. previous quarter)1Q:－3.9P, 2Q:－1.9P（Reference④）

Industrial Equipment Business2Q sales +6.7% Y-o-YEnded a drop following the last-minute rise in demand before consumption tax hike, but demand grew slowly and prospects remained uncertain.

Transport Equipment (vs. previous quarter)

1Q:－4.1P, 2Q:－5.9P （Reference④）

Machine and Tools for Auto Business2Q sales +6.9% Y-o-Y Turned positive from a Y-o-Y decrease in 1Q, still continued slow recovery

New housing and remodeling demand:Expected a drop following the last-minute rise in demand

Housing Equipment Business2Q sales +1.5% Y-o-YEnded to absorb demand carried forward

from FY13

Always Pursuing the Best Service Segment Breakdown①Equipment and Tools Business


Machine and Tools for Auto: Slow recovery, Housing Equip.: SlowdMachine and Tools for Auto: Slow recovery, Housing Equip.: Slowdownown


Machine and Tools for Automotive

Housing Equipment

13

95.8％634

+16.3％+84607

Gross profit94.0％

7,379+8.1％+519

6,932Total sales

+43

+245

+274

Change

Y-o-Y

+41.8％

+21.7％

+5.2％

%

Change

200

1,211

6,168

1H Forecast

FY14

146

1,374

5,558

1H

FY14

113.5％Factory Automation

vs. 1H

Forecast

Operating income

Machine Tool

73.0％

90.1％


Always Pursuing the Best Service Segment Breakdown②Machine and Facility Business


Machine Tool: Short of forecast despite rapid recovery in 2QMachine Tool: Short of forecast despite rapid recovery in 2Q


4,7332,1702,7502,532 +32.1%

3,634

-24.0%

1,923

0

2,500

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

944607666462 +28.4%

855

+12.1%

519

0

1,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

Domestic orders received by JMTBA (Y-o-Y)

1Q: +29.1%, 2Q: +27.1%（Reference⑤）

Machine Tool Business2Q sales +32.1% Y-o-Y due to recording sales smoothly

Machine Tool Business2Q orders received +27.7％Y-o-Y due to orders received at high level

2QE order backlog ¥4,936M（+40.8％ Y-o-Y）

Factory Automation Business (Y-o-Y)2Q sales +28.4% Y-o-Y, vs.1Q +64.8％

2QE order backlog ¥476M（－25.8％ Y-o-Y）

2,9803,6293,1132,574 +27.7%

3,974+23.8%

3,187

0

2,500

5,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

Always Pursuing the Best Service Segment Breakdown②Machine and Facility Business


High level of orders received recorded in 2Q

Machine Tool

（Net sales）

Machine Tool（Orders received）

Factory Automation

15

107.9％2,790

+9.7％+2663,011

Gross profit108.8％

12,492+11.5％+1,400

13,597Total sales

+151

+456

[+784][+159]+944

Change

Y-o-Y

+24.4％

+20.4％

(+10.6％)(+6.3％)+9.5％

%

Change

560

2,500

-

-

9,992

1H Forecast

FY14

772

2,690

[8,205]

[2,701]

10,906

1H

FY14

107.6％Piping Products

vs. 1H

Forecast

-[In-house products]

Operating income

[Purchasing supplies]

Steel Frame Building Supplies

138.0％

-109.2％


Always Pursuing the Best Service Segment Breakdown③Construction and Piping Products Business


Construction ・Piping Products: Double-digit sales increase


1,2831,4761,3381,203 +8.6%

1,453+3.7%

1,248

0

1,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

1,4761,4401,2121,021 +16.7%

1,415

+24.8%

1,275

0

1,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

Demand for steel frame used for building

1H －0.4％ Y-o-YSteel product price (H-beam) flat （Reference⑥）

Steel Frame Building Supplies (In-house)2Q +8.6% Y-o-Y due to full production of brace

Steel Frame Build. Supplies (Purchasing)2Q sales +9.2％ Y-o-Y due to strong demand for order-made products and machine & tools despite sluggish demand for consumable products following the last-minute rise in demand in FY13

Piping Products Business2Q sales +16.7% Y-o-Y due to favorable sales in pipe fittings, flanges, valves and machine tools

4,1234,4524,0013,419 +9.2%

4,367

+12.2%

3,837

0

3,000

１Ｑ２Ｑ３Ｑ４Ｑ14/3 15/3

Always Pursuing the Best Service Segment Breakdown③Construction and Piping Products Business


Both businesses: Favorable machine and tools salesBoth businesses: Favorable machine and tools sales

Steel Frame Building Supplies（Purchasing）Piping Products

Steel Frame Building Supplies （In-house）

17

Income taxes

Gain on sale of

investment securities

Loss on sale of

investment securities

Purchase discount

Sales discount

Item

Major item

599+33(0)+27(18)

Change

+197

+269

+38

+230

+21

+208

Change

Y-o-Y

896

1,495

59

1,436

153

1,282

1H

FY14

+21.9％Income before

income taxes

% change

+16.4％Non-operating

income/expenses

Net income

Extraordinary

income/loss

Ordinary income

Operating income

+28.2％

+118.7％

+19.1％

+19.4％


Always Pursuing the Best Service Consolidated Operating Income～Net Income


Net income + 28.2%Net income + 28.2%


9,2759,2759,2759,2759,7309,7309,7309,730

+1,284+1,284+1,284+1,284

+145+145+145+145

-974-974-974-974

Beginning Operating CF Investing CF Financing CF Year-end


Consolidated Cash Flow


＋454M in cash and cash equivalents

Income before income

taxes ＋1,495

Depreciation and

amortization ＋ 154

Increase in provision

for bonuses ＋21

Decrease in notes and

accounts receivable ＋2,532

Increase in notes and

accounts payable－1,750

Income taxes paid－906

Withdrawal of time

deposits －460

Proceeds from

withdrawal of time

deposits ＋187

Purchase of property,

plant and equipment－525

Purchase of

investment securities－234

Long-term loans

payable ＋500

Cash dividends paid－354


2,5402,268 2,314

2,884

9,7959,436 9,176

9,521

4,023

4,014 4,126

4,297

20,003

24,028

22,093

25,634

6,861

7,016

8,439

9,393

3,247(+12.6%)9,879(+3.8%)4,757(+10.7%)23,336(-9.0%)10,121(+7.8%)52,85652,85652,85652,856(-0.5%)

47,53247,53247,53247,53247,97847,97847,97847,978

44,53644,53644,53644,536

53,14753,14753,14753,147

0

25,000

50,000

11/3 12/3 13/3 14/3 15/3 2Q

全社Cash and deposits

Notes and accounts

receivable

Other curent assets

Property, plant and

equipment

Investment

securities

Other noncurrent

assets


Consolidated B/S Assets


Notes and accounts receivable down vs. Notes and accounts receivable down vs. FY13FY13E due to special factors in 4Q FY13E due to special factors in 4Q FY13

Figures in （）indicates % Y-o-Y ＊Notes and accounts receivable include Electronically recorded monetary claims in FY12, FY13, 2QFY14.


28,31529,186

30,040

31,514

13,456

15,577 14,714

18,298

32,211(+2.2%)1,258

966838

960

1,332(+38.7%)1,505

2,249

1,940

2,3742,521(+6.2%)16,791(-8.2%)52,85652,85652,85652,856(-0.5%)

47,53247,53247,53247,53247,97847,97847,97847,978

44,53644,53644,53644,536

53,14753,14753,14753,147

0

25,000

50,000

11/3 12/3 13/3 14/3 15/3 2Q

全社Notes and accounts

payable

Other current

liabilities

Noncurrent liabilities

Net assets

Always Pursuing the Best Service Consolidated B/SLiabilities and Net Assets


Net assets to total assets 60.9% due to net assets increaseNet assets to total assets 60.9% due to net assets increase



39 116 146 1791,190

600395 341 318 357 281 3306,905 6,861 7,016 8,439 9,393

0500

1,0001,500

10/3 11/3 12/3 13/3 14/3 15/3 （Forecast） 02,5005,0007,50010,000Capital investment Depreciation and amortization

Cash and deposits

Always Pursuing the Best Service Capital Investment Depreciation and Amortization


Capital investment: Increase mainly by GCapital investment: Increase mainly by G--net Tokyo Branch buildingnet Tokyo Branch building

＊Cash and deposits at the year-end

□□□□ Increase in capital investment (FY13)

G-net Tokyo Branch building and other (¥735M) , Acquiring commercial premises (¥235M)

□□□□ Tokyo Branch Depreciation ¥60M (FY14)

□□□□ Plan in FY14: Tokyo branch unpaid expenses (¥450M), Operating base renovation（¥150M）□□□□

22

□□□□ Dividend payout ratio: 30% of consolidated net income

□□□□ （Previous：Dividend payout ratio 25% or minimum annual dividend ¥10 ）

□□□□ FY13 annual dividend per share ¥29.5 □□□□ （2QE：¥5, Year-end: ¥24.5）

□□□□ FY14 forecast: EPS ¥125.52, annual dividend ¥38

□□□□

Returns to Shareholders

Unit：Yen


37.55 78.82 88.10 97.68 125.5210.0 20.0 22.5 29.5 38.0

26.6% 25.4% 25.5% 30.2% 30.3%

0.00100.00200.00

11/3 12/3 13/3 14/3 15/3（Forecast） 15.0%20.0%25.0%30.0%ＥＰＳDividendDividend payout ratioAlways Pursuing the Best Service

Dividend policy changeDividend policy change：：Dividend payout ratio Dividend payout ratio ２５％⇒３０％２５％⇒３０％



FY2014 Forecasts

24

1,820

3,180

2,880

9,221

12,101

82,300

Full-yearForecast

FY14

+205

(435)

(436)

+15

(420)

(3,195)

Change

Y-o-Y

+28.7%

(20.0)%

(21.4)%

+0.3%

(6.4)%

(7.1)%

% change

+403

(204)

(227)

+243

+15

(25)

Change

ｖｓ. Full-year FY13

923

1,743

1,597

4,561

6,159

41,495

2H Forecast（Full-year forecastー1H actual）FY14

(6.1)%Ordinary income

% change

+0.1%Gross profit

Net income

Operating income

SG&A Expenses

Net sales

+28.4%

(7.3)%

+2.7%

(0.0)%


40,80437,63437,42034,38830,117 -7.1%

41,495

+18.7%

44,690-4.0%

37,664

+14.3%

39,237+22.7%

34,337

0

25,000

11/3 12/3 13/3 14/3 15/31H 2H（Net sales）


Consolidated Forecast


Sales decrease in 2HSales decrease in 2H due to special factors in 2H FY13 due to special factors in 2H FY13

25

(0.9)%(367)40,639

(7.4)%(1,616)20,364

Total sales

855

903

902

5,149

5,496

28,189

Full-year

Forecast

FY14

(126)

(14)

+697

(481)

(5)

(1,812)

Change

Y-o-Y

(18.8)%

(3.2)%

+688.3%

(15.7)%

(0.2)%

(11.8)%

% change

(154)

+23

+723

(375)

+56

(795)

Change


549

433

798

2,577

2,986

13,567

2H Forecast（Full-year Forecastー1H Actual）FY14

+2.7%Other

% change

+1.0%

Machine and Tools for

Automotive

Operating income

Overseas

Housing Equipment


(15.3)%

+405.2%

(6.8)%

(2.7)%


20,27419,02518,86918,17316,572 -7.4%

20,364

+14.7%

21,981

-6.2%

19,169

+13.0%

20,427

+19.5%

18,080

0

15,000

11/3 12/3 13/3 14/3 15/31H 2H（Total Net Sales）

Always Pursuing the Best Service Consolidated Forecast by Segment①Equipment and Tools Business


Sales decrease in 2H due to special factors in 2H FY13 Sales decrease in 2H due to special factors in 2H FY13

26

+2.1%+30715,177

(2.5)%(212)8,244

Total sales

432

2,513

12,664

Full-year

Forecast

FY14

+28

(414)

+201

Change

Y-o-Y

+10.9%

(26.7)%

+2.9%

% change

+71

(168)

+476

Change


286

1,138

7,105


(6.3)%Factory Automation

% change

Operating income

Machine Tool

+19.7%

+3.9%


6,9326,4127,3916,0544,129-2.5%

8,244

+24.3%

8,456-12.4%

6,802

+31.0%

7,760

+50.0%

5,924

0

5,000


Always Pursuing the Best Service Consolidated Forecast by Segment②Machine and Facility Business


Sales increase in fullSales increase in full--year FY14 based on backlog of ordersyear FY14 based on backlog of orders


%

change

+0.1%+3426,484

(9.6)%(1,366)12,886

Total sales

1,520

5,500

20,984

Full-year

Forecast

FY14

(322)

(107)

(1,258)

Change

Y-o-Y

(30.2)%

(3.7)%

(11.1)%

%

change

(171)

+348

(313)

Change


747

2,809

10,077


+6.8%Piping Products

Operating income

Steel Frame Building Supplies

(10.1)%

(1.5)%

13,59712,19611,15810,1609,404 -9.6%

12,886

+21.9%

14,252+5.8%

11,692

+7.0%

11,048

+16.1%

10,322

0

10,000


Always Pursuing the Best Service Consolidated Forecast by Segment③Construction and Piping Products Business


Operating loss due to lowering margin in inOperating loss due to lowering margin in in--house products house products


Growth Strategy


29

Growth Strategy

Industrial EquipmentIndustrial Equipment：：Demand expansion by providing addedDemand expansion by providing added--valuevalue


Differentiation by business development with original proposal methods and enhancing convenience for users

Expanding sales area by establishing resident

offices

FY14 FY15

Promoting sales efficiency by improvement in

function of distribution centers

Expanding business fields covered with solution

proposal method

Enclosing end-users by launching EGPARTS

Reinforcing PB sales by developing overseas

manufacturers

Growing volume by fostering main dealers and

increasing transactions per customer

Tactic・measure

Differentiation by system

introduction

Advancing strategic

inventory

Differentiation by original

proposals

Market share up

FY16Strategy


30

Housing EquipmentHousing Equipment：：Tokyo fullTokyo full--fledged operation, differentiation with original methodfledged operation, differentiation with original methodss


Differentiation by item diversification and market development

FY14 FY15

Enhancing options for customers by offering new

brands and categories

Enhancing added-value by in-house construction

Expanding profit structure by making Tokyo base

profitable

Tactic・measure

Market expansion

Developing new

manufacturers

Reinforcing construction function

FY16Strategy

Growth StrategyAlways Pursuing the Best Service

31

Machine ToolMachine Tool・・Factory AutomationFactory Automation：：Demand expansion by market developmentDemand expansion by market development


Differentiation by reinforcement of comprehensive proposal and original approach⇒Market share up

Expanding sales area by establishing resident

offices

FY14 FY15

Expanding business fields covered by solution

proposal method

Enclosing end-users by launching EGPARTS

Increasing the number of sales staff

Tactic・measure

Differentiation by original

proposal

Differentiation by system

introduction

Reinforcing sales function

FY16Strategy


32

Steel Frame Building SuppliesSteel Frame Building Supplies：：Securing stable earningsSecuring stable earnings


Starting new product proposal system

FY14 FY15

Reinforcing inventory management efficiency by

utilizing inventory system

Improving production capabilities by renewal of

aging facilities

Development and sales of PB products

Launching wholesale＞Alliance with retailers in

uncovered area

Reinforcing marketing to upstream industry＞

market development in metropolitan area

⇒Setting up Tokyo sales office (FY14)

Tactic・measure

Providing new products

Developing distribution

channels to remote area

Reinforcing system

operation

Reinforcing production

capacity

Improving brand

recognition

FY16Strategy

Securing market share by restructuring added-value as core business


33

Piping Products Piping Products ・・New FieldNew Field：：Establishing profit structure for sustainable growthEstablishing profit structure for sustainable growth


Reinforcing sales structure 3.Allocating sales

support staff

Reinforcing sales of machine and tools to piping

dealers

FY14 FY15

Fostering the 3rd pillar by the project team

Increasing inventory to respond to market needs

Reinforcing sales structure 2.Increasing the

number of specialized stuff for sale of piping

products

Reinforcing sales structure 1.Establishing sales

base

Tactic・measure

Researching and

fostering new business by

utilizing management

resources

Improving sales structure

of piping products by

marketing reinforcement

FY16Strategy

Realizing growth by increasing sales in Piping Products Business

and by fostering new business



Reference



225 234 211 175 176 194 225 207 167 166 185 166 155 166 205 223 233 223 241 152 159 170 1836 13 25 38 46 46 34 37 41 45484 379 364 451 533 599 641 625 507 331 415 487 48761 46 27 46 47

213 21051 55504 5175439 5582382382382382382382382375075075075073673673673664464464464453753753753783183183183192092092092090390390390384184184184174774774774762062062062051851851851854554554554543243243243202004006008001000

91/3 92/3 93/3 94/3 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3

Gifu Shoji

G-net

Piping Products Business

Steel Frame Building Supplies Business

24 23 16 7 5 7 13 8 1 1 7 4 1 8 19 23 24 20 28 1 7 93 7 17 21 25 20 104 11 101 10.8 2 2 2.4 2.610101010 3333 0000 15151515 38383838 46464646 50505050 43434343 373737377777 22222222 22222222 31313131 2828282816.9 15.211.2 10.2020

4091/3 92/3 93/3 94/3 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3

Furusato G-net Gifu Shoji 全体Forecast

-７

Reference①

Net Sales and Operating Income Trend

Net sales（Non-consolidated base，but total net sales after FY2000 on consolidated base）

＊G-net was consolidated from the second half of FY00 （¥24.6B）, Gifu Shoji was consolidated from the second half of FY07 （¥3.2B）

Operating income（Non-consolidated base, but total operating income after FY2000 on consolidated base）



Aiming to recovery to the level before the Lehman’s fall

Forecast

36

4,311 5,092 5,447 4,874 4,684 5,476 5,836 5,212 5,199 5,959 6,263 5,428 5,644 6,551 7,369 6,882 6,360 7,2361,802 2,327 2,624 3,300 2,834 3,220 3,334 4,426 3,444 3,947 3,005 3,796 2,995 3,417 2,778 5,678 2,442 4,4897,749 8,822 8,709 9,370 8,744 9,429 10,228 10,198 9,513 9,356 9,553 9,615 9,163 9,862 10,548 11,432 9,811 10,46313,86913,86913,86913,86916,24716,24716,24716,24716,78816,78816,78816,78817,54917,54917,54917,54916,26216,26216,26216,26218,12518,12518,12518,12519,39919,39919,39919,39919,83719,83719,83719,83718,15618,15618,15618,15619,26319,26319,26319,26318,82318,82318,82318,82318,84118,84118,84118,84117,80317,80317,80317,80319,83119,83119,83119,83120,69620,69620,69620,69623,99323,99323,99323,99318,61518,61518,61518,61522,18922,18922,18922,189

05,00010,00015,00020,00025,000

11/3 1Ｑ 2Ｑ 3Ｑ 4Ｑ 12/3 1Ｑ 2Ｑ 3Ｑ 4Ｑ 13/3 1Ｑ 2Ｑ 3Ｑ 4Ｑ 14/3　1Ｑ 2Ｑ 3Ｑ 4Ｑ 15/3　1Ｑ 2Ｑ

Equipment and Tools BusinessMachine and Facility BusinessConstruction and Piping Products Business


-159 98 140 51 122 241 248 170 51 304 361 222 196 425 564 505 292 480-50 11 21 73 16 75 57 124 57 133 50 142 7 95 22 235-33 179

-26 152 101 242 120 249 277 400 173 248 200 275 90 243 230 445 102 204289289289289 288288288288 396396396396 286286286286 593593593593 609609609609 724724724724 308308308308 713713713713 621621621621 569569569569 294294294294 779779779779 832832832832 1,2011,2011,2011,201387387387387 894894894894

-207-207-207-207-25002505007501,0001,25011/3 1Ｑ 2Ｑ 3Ｑ 4Ｑ 12/3 1Ｑ 2Ｑ 3Ｑ 4Ｑ 13/3 1Ｑ 2Ｑ 3Ｑ 4Ｑ 14/3 1Ｑ 2Ｑ 3Ｑ 4Ｑ 15/3 1Ｑ 2Ｑ

AdjustmentEquipment and Tools BusinessMachine and Facility BusinessConstruction and Piping Products Business

Reference②Net Sales・Operating Income Quarterly Trend

Net sales

Operating income



EquipmentEquipment・・Tools and ConstructionTools and Construction・・Piping Products: Sales and profit increasePiping Products: Sales and profit increase


29,208 28,372 28,750 29,613 30,777-1,407 569 1,171 1,288 1,4164.4%4.1%2.0%

-4.8%4.6%

-30,000-15,000015,00030,00045,000

10/3 11/3 12/3 13/3 14/3-10.0%-5.0%0.0%5.0%10.0%15.0%Average shareholders equityNet incomeROE

ROE slight increaseROE slight increase

Reference③ ROE




99.1

95.9

94.6

96.1

97.8

99.6

102.5

98.6

96.7

98.4

99.0

100.7 100.8

103.6

104.0

94.1

98.1

108.1

107.9

93.4

80.0

90.0

100.0

110.0

FY12 1Ｑ 2Ｑ 3Ｑ 4Ｑ FY13 1Ｑ 2Ｑ 3Ｑ 4Ｑ FY14 1Ｑ 2Ｑ

Industrial Production Transport Equipment

Year 2010＝100

Reference④Indices of Industrial Production


Production down following the lastProduction down following the last--minute rise in demand in 4Q FY13minute rise in demand in 4Q FY13


7315 7,208

4,113

1,890

3,5354,188

3,6284,220

7429

8,730

5,576

3,581

7,600

8,922

7,769

7,828

14,74514,74514,74514,745

12,04812,04812,04812,04811,39811,39811,39811,398

13,11113,11113,11113,111

11,13611,13611,13611,136

5,4715,4715,4715,471

9,6909,6909,6909,690

15,93915,93915,93915,939

0

5000

10000

15000

20000

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Domestic order Overseas order縦棒 3

1,338(+21.2%)1,142(+29.1%)1,061(+25.0%)1,169(+40.5%)1,104(+18.9%)884(-13.1%)849(-13.2%)832(-20.5%)928(-14.7%)1,017(-5.2%)0

1,000

FY12 1Q 2Q 3Q 4Q FY13 1Q 2Q 3Q 4Q FY14 1Q 2QDomestic order

Reference⑤Orders Received for Machine Tool


Rounded down to the nearest 10 million yen

Orders received continues to recover


40

653653653653 616616616616 410410410410 420420420420 426426426426 459459459459 532532532532 255255255255

99,00082,000 82,000

68,00080,00063,000

75,000 74,000

0500

10001500

2007 2008 2009 2010 2011 2012 2013 2014 40,00050,00060,00070,00080,00090,000100,000Steel frame used for building H-beam price


Unit：10Kt

158158158158 146146146146 119119119119 99999999 97979797 102102102102 119119119119 127127127127220220220220 164164164164 95959595 102102102102 113113113113 114114114114 138138138138 128128128128118118118118 165165165165 99999999 113113113113 111111111111 122122122122 140140140140158158158158 141141141141 97979797 106106106106 105105105105 121121121121 1361361361360

50010001500 1Q 2Q 3Q 4Q

Reference⑥Steel Frame Demand and Product Price Trend


Demand steady recovery / Price flatDemand steady recovery / Price flat

Unit：Yen

＊H-beam price: Tokyo high price in Dec. (Price in FY14 as of the end of Sep.)

41

+6.3％+4627,809

Liabilities

+2.1％+62229,632

Total assets

+0.7％+15921,823

Net assets

+29.7％+121529

Net income

[（1.1）Ｐ]

+184

+151

+114

+266

+1,397

Change

Y-o-Y

73.6％

870

772

2,238

3,011

13,609

1H

FY14


% change

+9.7％Gross profit

Net assets to total assets

Operating income

SG&A Expenses

Net sales

+24.4％

+5.4％

+11.4％


Non-consolidated ResultsFurusato Industries



＊Y-o-Y in Ｂ/Ｓ items indicates figures vs. FY13E.

42

(10.9)％(1,382)11,304

Liabilities

(4.3)％(1,001)22,298

Total assets

+3.6％+38010,993

Net assets

+21.3％+47268

Net income

[+3.8Ｐ]

+66

+57

+151

+208

+1,671

Change

Y-o-Y

49.3％

469

389

2,211

2,601

25,260

1H

FY14


% change

+8.7％Gross profit


Operating income

SG&A Expenses

Net sales

+17.3％

+7.3％

+7.1％


Non-consolidated ResultsG-net




43

(7.9)％(145)1,682

Liabilities

(0.4)％(19)4,242

Total assets

+5.2％+1252,559

Net assets

+34.3％+27107

Net income

[（0.6）％]

(37)

(41)

+1

(40)

+60

Change

Y-o-Y

60.3％

94

62

266

329

2,509

1H

FY14

(28.6)％Ordinary income

% change

(10.8)％Gross profit


Operating income

SG&A Expenses

Net sales

(40.0)％

+0.7％

+2.5％


Non-consolidated ResultsGifu Shoji




44

Corporate Planning Division

ＴＥＬ：０６－６９４６－９６０８

ＦＡＸ：０６－６９４６－９７８０

E-mail ：[email protected]


This material is solely for information purposes and should not be construed as a solicitation. Although this material

(including the financial forecasts ) has been prepared based

on information currently available, Furusato does not take responsibilities for any errors and omissions pertaining to the

inherent risks and uncertainties of the material presented.

FURUSATO INDUSTRIES, LTD.


Documents

2Q FY2014 Earnings Presentation - Furusato2Q FY2014 Earnings Presentation (April 1 to September 30, 2014) November 2014 Furusato Industries, Ltd. Always Pursuing the Best Service