2Q FY2018 Earnings Presentation Oct. 2018 · Q1 FY16 Q2 Q3 Q4 Q1 FY17 Q2 Q3 Q4 Q1 FY18 Q2 Steel Frame Used for Buildings 99.3% 102.8% 102.7% 106.9% 104.5% 101.6% 101.4% 100.6% 97.8%

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


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




３．Forecasts



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


（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)


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


Equipment & Tools Seg.

２Q：-¥50M, -0.4％ Y-o-Y

H1：+¥838M, +3.6％ Y-o-Y


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


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


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


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


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


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


Machine Tools down Factory Automation substantial growth


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


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


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


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）


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


Construction & Piping Products SegmentQuarterly Sales Trend



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


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


SG&A Expenses Quarterly Trend



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


11,312 11,639

+1,649 -649

-672

Beginning Operating CF Investing CF Financing CF Year-end


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


Capital Investment Depreciation and Amortization

＊Cash and deposits at the year-end



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




３．Forecasts



（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


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％


Forecast

Equipment & Tools Segment

27


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)％


Forecast

Machine & Equipment Segment

28


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％


Forecast

Construction & Piping Products Segment




３．Forecasts


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％


Non-consolidated Results－Furusato

31


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％





Non-consolidated Results－G-net

32


Net sales 2,801 3,226 +425 +15.2％

Gross profit 436 512 +76 +17.4％

SG&A Ex. 283 296 +13 +4.6％





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.

Documents

2Q FY2018 Earnings Presentation Oct. 2018 · Q1 FY16 Q2 Q3 Q4 Q1 FY17 Q2 Q3 Q4 Q1 FY18 Q2 Steel Frame Used for Buildings 99.3% 102.8% 102.7% 106.9% 104.5% 101.6% 101.4% 100.6% 97.8%