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The First Section of the Tokyo Stock Exchange:8087
2Q FY2018Earnings Presentation Oct. 2018
Furusato Industries, Ltd.
2Copyright© Furusato Industries, Ltd. All Rights Reserved
1.Group Overview
2.Financial Results
3.Forecasts
4.Non-consolidated Financial Results
[Headquarters] Minato-ku, Tokyo[No. of Bases] 6 Sapporo, Sendai, Nagoya, Osaka, Hiroshima, Fukuoka[Established] 1999 [Capital] ¥100M
Retra[Established] China/Suzhou(2012) Thailand/Bangkok(2012)
Vietnam/Ho Chi Ming(2018)
RTC Hyogo(Nishinomiya-city) RTC Tokyo(Ota-ku)
Company Overview
[Headquarters] Chuo-ku, Osaka-city/Ota-ku, Tokyo
[No. of Bases] 51(Sales Base)10(Production Base)2(Distribution Base)
[No. of Employees] 998(Consolidated)502(Non-consolidated)
[Established] 1959 [Capital] ¥5,232M
[Listed] Tokyo 1st [Account Settlement] March
[Headquarters] Chuo-ku, Osaka-city
[Branch] Tokyo(Ota-ku), Nagoya(Naka-ku), Osaka(Chuo-ku)
[No. of Bases] 46(Sales Base) 3(Distribution Base)
[No. of Employees] 433(Non-consolidated)
[Established] 1947 [Capital] ¥420M
[Headquarters] Gifu-city
[No.of Bases] 3 Kariya Branch, Hamamatsu Branch, Kita-kyushu subbranch
[No. of Bases] 63(Non-consolidated)[Established] 1934 [Capital] ¥10M
Copyright© Furusato Industries, Ltd. All Rights Reserved 3
Group Overview
Consolidated company
Local Company
Robot Technical Center
Unconsolidated
Consolidated company
Company Business Business overview Operating structure
Steel Frame Building Supplies
Sale of construction hardware, fastening products, welding supplies, machine & tools, consumable supplies, etc.
Direct sale to steel fabricators
Piping ProductsSale of pipes, pipe fittings, valves, machine and tools, fastening products, etc.
Direct sale to piping contractors
Industrial Equipment
Sale of consumable tools, built-in tools, physical distribution machine, facility equipment, consumable supplies, etc.
Wholesale to machine and tools dealers
Machine ToolSale of machine tools, industrial robots, etc.
Wholesale to machine dealers
Factory Automation
Sale of machine tools, industrial robots, specialized machine, etc. Direct sale to suppliers
Housing Equipment
Sale of kitchen, bathroom, wash room, toilet, boilers, etc.
Wholesale to hosing equipment dealers
Machine and Tools for Automotive
Sale of cutting tools, hardware-related tools, machine tools, etc.
Direct sale to automotive industry
Copyright© Furusato Industries, Ltd. All Rights Reserved 4
Introduction of crime prevention monitoring system and access control service, sale of security devices
Direct sale to security companies and building maintenance companies
Sale of cutting tools, machine tools & peripherals, equipment for production line automation
Direct sale to local Japanese companies and local companies
Providing test trial and consulting of industrial robotic system, and operator training
For companies that have already introduced or are considering to introduce robots
Group Overview
Local Company
Retra
Robot Technical Center
Copyright© Furusato Industries, Ltd. All Rights Reserved 5
1.Group Overview
2.Financial Results
3.Forecasts
4.Non-consolidated Financial Results
Copyright© Furusato Industries, Ltd. All Rights Reserved 6
2Q FY18 Financial Results Summary
Net sales✓+¥3,924M, +8.3% Y-o-Y
✓Double-digit growth in Machine & Facility Seg.
and Construction & Piping Products Seg.
Gross Profit✓+¥737M, +11.3% Y-o-Y
✓Margin up in all segments
Selling, general and administrative expenses✓+¥277M, +5.3% Y-o-Y
✓Increase in provision of allowance for doubtful accounts
Copyright© Furusato Industries, Ltd. All Rights Reserved 7
(Millions of yen) H1 FY17 H1 FY18YoY%
H1 FY18Forecast
Progress%
Net sales 47,418 51,343 +8.3% 48,600 105.6%
Gross profit 6,498 7,235 +11.3% 6,870 105.3%
SG&A Ex. 5,280 5,558 +5.3% 5,470 101.6%
Operating income 1,217 1,677 +37.7% 1,400 119.8%
Ordinary income 1,378 1,882 +36.5% 1,500 125.5%
Net income attributable to owners of parent 867 1,236 +42.6% 950 130.2%
P/L (Consolidated)
Copyright© Furusato Industries, Ltd. All Rights Reserved 8
Construction & Piping Products Seg.
Q2:+¥1,011M, +13.3% Y-o-Y
H1:+¥1,786M, +12.1% Y-o-Y
Achievement in H1 109.6%
21,050
23,008
25,676 24,373
21,921
25,496 26,050 25,413
24,665
26,677
10,864 11,065 11,593 12,280 11,212
12,233 12,551 12,831 12,100 12,182
3,586 4,466
6,221 5,058
3,586
5,676 5,165 5,260 4,666
5,896
6,599
7,476
7,862 7,034
7,123
7,586 8,333 7,321 7,898
8,598
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
■Net Sales
Equipment & Tools Seg. Machine & Facility Seg.
Construction & Piping Products Seg.
Machine & Facility Seg.
Q2:+¥220M, +3.9% Y-o-Y
H1:+¥1,299M, +14.0% Y-o-Y
Achievement in H1 111.8%
Equipment & Tools Seg.
2Q:-¥50M, -0.4% Y-o-Y
H1:+¥838M, +3.6% Y-o-Y
Achievement in H1 100.8%
Equipment & Tools slightly down Construction & Piping Products steady
Quarterly Sales
Rounded down to the nearest million yen
Copyright© Furusato Industries, Ltd. All Rights Reserved
96.5 98.0
99.8 100.0
101.8 102.3 103.9
102.5 103.8
102.1 98.0
101.5
105.3
101.9
106.0 105.5
108.9
106.2
110.1
104.9
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Industrial Production Index
Industrial Production Transport Equipment
9
Year 2010=100
Showing signs of softening
Equipment & Tools SegmentBusiness Environment
Industrial Production Index(Overall)
•-0.2% Y-o-Y
Industrial Production Index
(Transport equipment)
•-0.6% Y-o-Y
Copyright© Furusato Industries, Ltd. All Rights Reserved 10
247,079 253,072
250,696
223,290
249,916 246,924 244,511
207,997
245,040 246,378
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□New Construction Starts of Houses
Unit:Unit
104.9%
107.1% 107.9%103.2%
101.1%
97.6% 97.5%
93.2%
98.0%99.8%
Y-o-Y %
Upward trend despite continued Y-o-Y decrease
Equipment & Tools SegmentBusiness Environment
New Construction Starts of Houses
•99.8% Y-o-Y
•The fifth consecutive quarterly
decrease
Copyright© Furusato Industries, Ltd. All Rights Reserved 11
10,864 11,065 11,593
12,280
11,212
12,233 12,551 12,831
12,100 12,182
7,752 8,044 8,279 8,937
8,200 9,124 9,087 9,399 9,052 9,040
1,444 1,379
1,501
1,565
1,325
1,475 1,660 1,690
1,547 1,678 1,352 1,354
1,566
1,379
1,286
1,234 1,515
1,438
1,259 1,270
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Net Sales
Industrial Equipment Machine & Tools for Automotive
Housing Equipment Others
Equipment & Tools slightly down, Machine & Tools for Automotive continued double-digit increase
Rounded down to the nearest million yen
Equipment & Tools SegmentQuarterly Sales Trend
Housing Equipment Business
(Housing Equipment, G-net )
Q2: +¥36M, +2.9% Y-o-Y
H1: +¥10M, +0.4% Y-o-Y
Machine & Tools for Automotive
Business (Gifu Shoji)
Q2: +¥202M, +13.8% Y-o-Y
H1: +¥424M, +15.2% Y-o-Y
Equipment & Tools Business
(Equipment & Tools, G-net)
Q2: -¥83M, -0.9% Y-o-Y
H1: +768M, +4.4% Y-o-Y
128,589 139,942 132,295 130,749 156,212 168,011 174,358 189,355 194,388 194,217
184,064 165,361 181,399 226,911
250,343 248,269 290,663
303,090 277,212 250,763
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Machine Tools Orders Recieved
Overseas Demand Domestic Demand
Copyright© Furusato Industries, Ltd. All Rights Reserved 12
76.4%82.1%
96.6%
112.3%
130.0%136.4%
148.2%
137.7%
116.0%
106.8%
Y-o-Y %
Slowdown in Y-o-Y growth rate
Rounded down to the nearest million yen
Machine & Facility SegmentBusiness Environment
Orders Received for Machine Tool
(Japan Machine Tool Builders Association)
•106.9% Y-o-Y
•Domestic demand 115.6% Y-o-Y
•Overseas demand 101.0% Y-o-Y
Copyright© Furusato Industries, Ltd. All Rights Reserved 13
Machine Tools down Factory Automation substantial growth
Rounded down to the nearest million yen
Machine & Facility SegmentQuarterly Sales Trend
Factory Automation Business
(FA, G-net)
Q2: +¥317M, +48.9% Y-o-Y
•Recording 72.9% of backlog at 1QE
FY18 as sales
H1: +¥427M, +35.8% Y-o-Y
Machine Tool Business
(Machine, G-net)
Q2: -¥97M, -1.9% Y-o-Y
•Recording 47.7% of backlog at 1QE
FY18 as sales
H1: +¥871M, +10.8% Y-o-Y
3,586
4,466
6,221
5,058
3,586
5,676
5,165 5,260
4,666
5,896
3,015
3,576
5,526
4,244
3,040
5,026
4,376 4,352 4,009
4,929
570
889
695
814
546
649
789 908
656
967
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
■Net Sales
Machine Tools Factory Automation
Copyright© Furusato Industries, Ltd. All Rights Reserved 14
4,517 4,132
3,877 3,667
5,658
4,815
6,019 5,850 5,407
6,376
586 800
625 765
906
846
981 892
1,006
742
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Orders Received
Machine Tools Factory Automation
Machine tools orders received and backlog up
Rounded down to the nearest million yen
Machine & Facility SegmentQuarterly Orders Received
Factory Automation Business
(FA, G-net)
Q2: -¥104M, -12.3% Y-o-Y
•Backlog at 2QE ¥1,235M
➢-¥92M, -6.9% vs. 1QE
Machine Tool Business
(Machine, G-net)
Q2: +¥1,561M, +32.4% Y-o-Y
•Backlog at 2QE ¥11,997M
➢+¥1,656M, +16.0% vs. 1QE
Copyright© Furusato Industries, Ltd. All Rights Reserved
1,318,773 1,342,033
1,241,998 1,200,816
1,378,208 1,363,990
1,259,833 1,207,689
1,347,662 1,356,566
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Steel Frame Used for Buildings
99.3%
102.8%102.7%
106.9%104.5%
101.6% 101.4%100.6% 97.8%
99.5%
Y-o-Y %
15
Unit:t
Construction & Piping Products SegmentBusiness Environment
Steel frame used for building
•99.5% Y-o-Y
•FY16 5,103Kt
•FY17 5,209Kt
Steel frame remained at high level/FY18 estimated 5.2~5.3Mt
71,000
69,000
71,000
74,000 76,000
78,000
81,000
84,000
87,000 87,000
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Steel Product Price
16
Unit:Yen/ t
Remained flat at high levelCopyright© Furusato Industries, Ltd. All Rights Reserved
Construction & Piping Products SegmentBusiness Environment
Steel Product Price
•111.5% Y-o-Y
•Flat from Q1
(H-beam200x100; High price in Tokyo market)
Copyright© Furusato Industries, Ltd. All Rights Reserved 17
Piping Products Business
(Piping Products, Furusato)
Q2:+¥124M, +7.6% Y-o-Y
H1:+¥148M, +4.5% Y-o-Y6,599
7,476 7,862
7,034 7,123
7,586
8,333
7,321
7,898
8,598
5,198 5,924 6,234
5,289 5,465 5,949
6,557
5,508 6,217
6,836
1,401
1,551 1,627
1,744 1,657
1,637
1,775
1,812
1,681
1,762
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Net Sales
Steel Frame Building Supplies Piping Products
Steel Frame Building Supplies Business
(Steel Frame Building Supplies,
Furusato)
Q2:+¥886M, +14.9% Y-o-Y
•In-house product +8.0% Y-o-Y
➢Turnbuckle brace:Volume +0.5%,
Ave. unit price +8.1% Y-o-Y
•Purchasing supplies +17.1% Y-o-Y
➢High strength bolts:Volume +16.0%,
Ave. unit price +4.6% Y-o-Y
H1:+¥1,638M, +14.4% Y-o-Y
Steel Frame double-digit growth/Piping products up
Rounded down to the nearest million yen
Construction & Piping Products SegmentQuarterly Sales Trend
Copyright© Furusato Industries, Ltd. All Rights Reserved 18
(Millions of yen) H1 FY17 H1 FY18YoY%
H1 FY18Forecast
Progress%
Equipment & Tools 2,667 2,793 +4.7% 2,835 98.5%
Margin 11.4% 11.5% +0.1P 11.8% -
Machine & Facility 696 837 +20.2% 725 115.6%
Margin 7.5% 7.9% +0.4P 7.7% -
Construction &Piping Products 3,134 3,603 +15.0% 3,310 108.9%
Margin 21.3% 21.8% +0.5P 22.0% -
Margin up in all segments
Gross Profit by Segment
Copyright© Furusato Industries, Ltd. All Rights Reserved
2,475 2,459 2,493 2,518 2,638 2,642 2,585 2,626
2,716 2,842
19
Selling expenses
Q2:+¥171M, +40.3% Y-o-Y
Provision of allowance for doubtful
accounts ¥185M
H1:+¥182M, +22.4% Y-o-Y
General administrative ex. & others
Q2:-¥14M, -2.2% Y-o-Y
H1:+¥1M, +0.1% Y-o-Y
Personnel expenses
Q2:+¥42M, +2.8% Y-o-Y
No. of employees +14
H1:+¥93M, +3.0% Y-o-Y
1,518 1,479 1,491 1,521 1,566 1,528 1,562 1,570 1,616 1,571
598 681 614 626 683 686 592 647
700 671
358 361 387 369 388 427
430 408
399 599
Q1FY16
Q2 Q3 Q4 Q1FY17
Q2 Q3 Q4 Q1FY18
Q2
□Selling, General & Administrative Expenses
Personnel expenses General administrative ex. & Others
Selling expenses
103.0%
101.2%102.6% 101.3%
106.6%107.4%
103.7% 104.3%102.9%
107.6%
Y-o-Y% (Total)
+7.6% due mainly to provision of allowance for doubtful accounts
Rounded down to the nearest million yen
SG&A Expenses Quarterly Trend
Copyright© Furusato Industries, Ltd. All Rights Reserved 20
(Millions of yen) H1 FY17 H1 FY18YoY%
H1 FY18Forecast
Progress%
Equipment & Tools 454 597 +31.4% 525 113.9%
Margin 1.9% 2.5% +0.6P 2.2% -
Machine & Facility 190 160 (15.7)% 205 78.4%
Margin 2.1% 1.5% (0.6)P 2.2% -
Construction &
Piping Products 589 860 +46.0% 670 128.4%
Margin 4.0% 5.2% +1.2P 4.5% -
Machine & Facility double-digit decrease, but double-digit growth overall
Operating Income by Segment
Copyright© Furusato Industries, Ltd. All Rights Reserved 21
11,312 11,639
+1,649 -649
-672
Beginning Operating CF Investing CF Financing CF Year-end
Rounded down to the nearest million yen
Cash Flows (Consolidated)
Cash and cash equivalents +¥327M
Operating CF
Income before income tax
+1,905
Depreciation and
Amortization +279
Decrease (increase) in
notes and accounts
receivable -883
Increase (decrease) in
notes and accounts
payable +737
Income taxes paid -579
Others
Investing CF
Purchase of property,
plant and equipment -597
Payments for removal
of noncurrent assets -16
Purchase of investment
securities -6
Proceeds from sales of
investment securities +43
Payments for guarantee
deposits -61
Others
Financing CF
Repayments of long-term
loans payable -50
Cash dividends paid -622
Others
22
1,190
735
1,663 1,710
1,157 1,000
281 323 392
533
666 650
9,393
11,170 10,957 11,437 11,112
0
2,500
5,000
7,500
10,000
12,500
0
500
1,000
1,500
2,000
2,500
FY13 FY14 FY15 FY16 FY17 FY18 Scheduled
Capital investment Depreciation and amortization Cash and deposits
Rounded down to the nearest million yen
Capital Investment Depreciation and Amortization
*Cash and deposits at the year-end
Copyright© Furusato Industries, Ltd. All Rights Reserved
Copyright© Furusato Industries, Ltd. All Rights Reserved 23
97.68
153.81
166.69161.06 159.44
186.25
29.5
46.5 50.5 48.5 48.0 56.0
30.2% 30.2% 30.3% 30.1%30.1%
30.1%
15.0%
20.0%
25.0%
30.0%
0.00
100.00
200.00
FY13 FY14 FY15 FY16 FY17 FY18Scheduled
EPS Dividend Dividend payout ratio
Returns to ShareholdersUnit:Yen
Copyright© Furusato Industries, Ltd. All Rights Reserved 24
1.Group Overview
2.Financial Results
3.Forecasts
4.Non-consolidated Financial Results
Copyright© Furusato Industries, Ltd. All Rights Reserved 25
(Millions of yen)H1
ActualYoY%
H2YoY%
FULLYEAR
YoY%
Net sales 51,343 +8.3% 52,957 +2.9% 104,300 +5.5%
Gross profit 7,235 +11.3% 7,464 +4.8% 14,700 +7.9%
SG&A Ex. 5,558 +5.3% 5,442 +4.4% 11,000 +4.8%
Operating income 1,677 +37.7% 2,023 +6.1% 3,700 +18.4%
Ordinary income 1,882 +36.5% 2,218 +6.3% 4,100 +18.3%
Net income attributable to owners of parent 1,236 +42.6% 1,464 +1.4% 2,700 +16.8%
Revised on Oct. 31
Forecast
Financial Summary
26
(Millions of yen)H1
ActualYoY%
H2YoY%
FULLYEAR
YoY%
Net sales 24,283 +3.6% 26,316 +3.7% 50,600 +3.6%
Industrial Equipment 18,093 +4.4% 19,087 +3.2% 37,180 +3.8%
Machine and Toolsfor Automotive 3,225 +15.2% 3,414 +1.9% 6,640 +7.9%
Housing Equipment 2,530 +0.4% 2,999 +1.5% 5,530 +1.0%
Others 433 (45.7)% 816 +38.4% 1,250 (10.0)%
Gross profit 2,793 +4.7% 3,096 +6.2% 5,890 +5.5%
SG&A expenses 2,195 (0.7)% 2,304 +3.5% 4,500 +1.4%
Operating income 597 +31.4% 782 +13.6% 1,380 +20.7%
Copyright© Furusato Industries, Ltd. All Rights Reserved
Forecast
Equipment & Tools Segment
27
(Millions of yen)H1
ActualYoY%
H2YoY%
FULLYEAR
YoY%
Net sales 10,562 +14.0% 10,537 +1.1% 21,100 +7.2%
Machine Tool 8,938 +10.8% 8,801 +0.8% 17,740 +5.6%
Factory Automation 1,624 +35.8% 1,736 +2.2% 3,360 +16.1%
Gross profit 837 +20.2% 862 +1.9% 1,700 +10.2%
SG&A expenses 677 +33.7% 503 (0.3)% 1,180 +16.8%
Operating income 160 (15.7)% 349 +2.1% 510 (4.2)%
Copyright© Furusato Industries, Ltd. All Rights Reserved
Forecast
Machine & Equipment Segment
28
(Millions of yen)H1
ActualYoY%
H2YoY%
FULLYEAR
YoY%
Net sales 16,496 +12.1% 16,104 +2.9% 32,600 +7.4%
Steel FrameBuilding Supplies 13,053 +14.4% 12,247 +1.5% 25,300 +7.7%
Piping Products 3,443 +4.5% 3,857 +7.5% 7,300 +6.1%
Gross profit 3,603 +15.0% 3,506 +4.4% 7,110 +9.5%
SG&A expenses 2,743 +7.8% 2,676 +4.2% 5,420 +6.0%
Operating income 860 +46.0% 870 +10.3% 1,730 +25.5%
Copyright© Furusato Industries, Ltd. All Rights Reserved
Forecast
Construction & Piping Products Segment
Copyright© Furusato Industries, Ltd. All Rights Reserved 29
1.Group Overview
2.Financial Results
3.Forecasts
4.Non-consolidated Financial Results
30
(Millions of yen) H1 FY17 H1 FY18 YoYYoY%
Net sales 14,714 16,503 +1,789 +12.2%
Gross profit 3,134 3,603 +469 +15.0%
SG&A Ex. 2,545 2,743 +198 +7.8%
Operating income 589 860 +270 +46.0%
Ordinary income 689 992 +303 +44.0%
Net income attributable to owners of parent 379 660 +281 +74.0%
Copyright© Furusato Industries, Ltd. All Rights Reserved
Non-consolidated Results-Furusato
31
(Millions of yen) H1 FY17 H1 FY18 YoYYoY%
Net sales 30,607 32,383 +1,775 +5.8%
Gross profit 2,927 3,119 +191 +6.5%
SG&A Ex. 2,435 2,576 +141 +5.8%
Operating income 492 542 +50 +10.2%
Ordinary income 580 638 +57 +9.8%
Net income attributable to owners of parent 369 412 +42 +11.6%
Copyright© Furusato Industries, Ltd. All Rights Reserved
Non-consolidated Results-G-net
32
(Millions of yen) H1 FY17 H1 FY18 YoYYoY%
Net sales 2,801 3,226 +425 +15.2%
Gross profit 436 512 +76 +17.4%
SG&A Ex. 283 296 +13 +4.6%
Operating income 153 216 +62 +41.0%
Ordinary income 184 250 +66 +35.8%
Net income attributable to owners of parent 118 163 +44 +37.7%
Copyright© Furusato Industries, Ltd. All Rights Reserved
Non-consolidated Results-Gifu Shoji
33Copyright© Furusato Industries, Ltd. All Rights Reserved
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.
Corporate Planning Division
TEL :06-6946-9621
FAX :06-6946-1934
E-mail :[email protected]
Furusato Industries, Ltd.