Kanematsu Corporation · TSE:8020

Kanematsu — FY2016 Earnings Presentation

38 slides from Kanematsu's earnings presentation, May 17, 2016

  1. Slide 1: May 17, 2016

    Note: The forward-looking statements in this material, including plans, forecasts, and strategies of the Group, reflect judgments that the Company made based on information available at the time the material was prepared and include risks and uncertainties. May 17, 2016 Because of changes in the bus

  2. Slide 2: Overview of results for FY2016

    Overview of results for FY2016 © KANEMATSU CORPORATION All Rights Reserved 2

  3. Slide 3: 1-1. FY2016 Highlight (P/L)

    1-1. FY2016 Highlight (P/L) ✔ Net income declined 18.1% year on year. ✔ Net income reached 9.4 billion yen, despite declines in sales and profits. Year-on-year (Unit: billion yen) FY2015 FY2016 change Net Sales 1,117.1 1,062.8 (54.3) Gross trading profit 91.4 88.9 (2.6) Operating income 22.1 17.2 (4

  4. Slide 4: 1-2. FY2016 Highlight (Segment margin)

    1-2. FY2016 Highlight (Segment margin) ✔ Operating income declined as Foods & Grain and Steel, Materials & Plant remained sluggish. Segment margin Electronics & Devices Almost unchanged 25.0 (Foods & Grain segment includes foreign exchange gain） The ICT solutions business experienced a smooth growth

  5. Slide 5: 1-3. FY2016 Highlight (B/S)

    1-3. FY2016 Highlight (B/S) ✔ Shareholdersʼ equity increased, attributable to accumulated earnings. The equity ratio exceeded 21%. ✔ The net D/E ratio fell to 0.5 times. 3/2015 3/2016 3/2015 3/2016 (Unit:billion yen) (Unit:billion yen) results results results results Gross interest-bearing Total ass

  6. Slide 6: FY2017 forecasts

    FY2017 forecasts © KANEMATSU CORPORATION All Rights Reserved 6

  7. Slide 7: 2-1. FY2017 forecasts (P/L)

    2-1. FY2017 forecasts (P/L) ✔ Both sales and profits are expected to increase in the IFRS and Japanese accounting standards. ✔ Income from operating activities will improve 1.0 billion yen from operating income based on Japanese accounting standards. This increase is mainly due to the termination of

  8. Slide 8: 2-2. FY2017 forecasts (Segments)

    2-2. FY2017 forecasts（Segments） ✔ Operating income is expected to remain firm in Electronics & Devices partly due to the effects of acquisitions. ✔ In Foods & Grain, which was sluggish in the previous fiscal year, the meat products business is expected to recover. Segment margin Electronics & Device

  9. Slide 9: VISION-130 / forecasts and progress

    VISION-130／forecasts and progress © KANEMATSU CORPORATION All Rights Reserved 9

  10. Slide 10: 3-1. Revision of VISION-130

    ３-１. Revision of VISION-130 ✔ The target income is combined with profit from operating activities associated with the introduction of the IFRS. ✔ Review shareholdersʼ equity and the net D/E ratio in line with the progress for two years. ✔ Specify the target value of the dividend payout ratio. Announ

  11. Slide 11: 3-2. Progress in VISION-130 (P/L)

    3-2. Progress in VISION-130 (P/L) ✔ Steady progress was made in FY2016 (second year), but both operating income and net income came to a temporary lull. ✔ In FY2017 (third year), we aim to take steady steps forward. billion 25 yen Operating income 22.1 22.0 Net income 19.8 ＊ For operating income, pr

  12. Slide 12: 3-3. Progress in VISION-130 (Segment margin)

    3-3. Progress in VISION-130 (Segment margin） ✔ Operating income* will be expanded mainly in Electronics & Deices. Billion yen 30.0 Electronics & Devices Foods & Grain Steel, Materials & Plant Motor Vehicles & Aerospace 25.0 20.0 9.9 7.8 15.0 12.5 9.8 3.9 3.4 10.0 1.3 3.5 7.3 5.0 8.1 3.7 3.3 2.8 3.1

  13. Slide 13: 3-4. Progress in VISION-130 (B/S)

    ３-4. Progress in VISION-130 (B/S) VISION-130 targets FY2015 FY2016 FY2019 (results of 1st year) (results of 2nd year) （targets of 5th year） Consolidated Shareholders' Equity 90.1 93.3 120.0 Net D/E ratio 0.8 times 0.5 times Less than 1.0 time ROE 14.2% 10.2% 12.0% Billion yen 120 （VISION) 120.0 20.0

  14. Slide 14: 3-5. Progress in VISION-130 (C/F)

    ３-５.Progress in VISION-130（C/F） ✔ Made new investments within the scope of operating cash flows, just as was done in the previous fiscal year. ✔ Net interest-bearing debt improved significantly due to a decline in working capital resulting from a reduction in inventory, etc. Billion yen ■Operating C

  15. Slide 15: 3-6. VISION-130 Results of Business Investment

    ３-６. VISION-130 Results of Business Investment ✔ Made active business investments in predominantly the six key strategic business areas and for innovation. VISION-130 ICT Solutions （Unit： billion yen） Medium Term Business Plan  FY2015: Nippon Office Systems Ltd. (which became a consolidated subsidi

  16. Slide 16: 3-7. VISION-130 Dividends

    ３-７．VISION-130 Dividends ✔ Pay dividends stably and continuously, with the consolidated dividend payout ratio of 25% as a goal. ✔ Plan to pay an annual cash dividend of 6 yen per share, an increase of 1 yen, in FY2017. Yen 10 40 Yen 9 Year‐end Interim EPS（right axis） 35 6 yen per 8 year 28.1 5 yen p

  17. Slide 17: 3-8. Initiatives for key business areas

    ３-８. Progress in VISION-130（ Initiatives for key business areas ） ✔ Promote the horizontal development and deepening of businesses, with a focus on specialty areas with strengths. Major 4 Division Key strategic 6 business area + Innovation Electronics & ICT Solutions Mobile Devices Food market in As

  18. Slide 18: 3-9. Initiatives: ICT Solutions

    ３-９. Progress in VISION-130（ Initiatives for key business areas ） ICT Solutions ✔ Promote more efficient management by implementing structural reforms at Nippon Office Systems Ltd. (NOS).  Kanematsu Electronics Ltd. (KEL), a major subsidiary, made NOS its subsidiary in November 2012 through a TOB.

  19. Slide 19: 3-10. Initiatives: Mobile

    ３-10. Progress in VISION-130（ Initiatives for key business areas ） Mobile ✔ Acquired Diamondtelecom, Inc. for 17.4 billion yen to make it a wholly-owned subsidiary.  A subsidiary of the Company merged with Diamondtelecom, Inc., a wholly-owned subsidiary of Mitsubishi Electric Corporation, on April

  20. Slide 20: 3-11. Initiatives: North American shale market

    ３-11. Progress in VISION-130（ Initiatives for key business areas ） North American shale market ✔ The oilfield tubing business remained weak due to falling crude oil prices.  The oilfield tubing business for the North American shale market suffered a significant decline in income due to the large dr

  21. Slide 21: 3-12. Initiatives: Aerospace business

    ３-12. Progress in VISION-130（ Initiatives for key business areas ） Aerospace business ✔ Acquired the sales agency rights of Cessna Citation series for public offices in Japan.  Acquired the sales agency rights for the Citation series, the best- selling jets made by Cessna Aircraft Company, for publ

  22. Slide 22: 3-13. Initiatives: Overseas expansion of Japanese manufacturers

    ３-13.Progress in VISION-130（ Initiatives for key business areas ） Overseas expansion of Japanese manufacturers, etc. ✔ Establishment of Corporate Investment Fund for Business Expansion in Asia, and the implementation of the first investment project Fund for first project （6.8 billion yen） Implementa

  23. Slide 23: 3-14. Initiatives: Technological support / Camera related business

    ３-14.Progress in VISION-130（ Initiatives for key business areas ） Technological support／Camera related business ✔ Security monitoring system (Kanematsu-NKK Corp.) expanded. ✔ The micro lens unit business (Kantatsu Co., Ltd.) expanded. ●The first section of the Tokyo Stock exchange（Security code:7961

  24. Slide 24: 3-15. TPP Response

    ３-15. Progress in VISION-130（ Initiatives for key business areas ） TPP Response ✔ Participating in the Be Smile Project, the sixth sector industry.  Be Smile Project is a sixth sector business company that was established by Kamichiku, a company engaging in the livestock business in Kyushu, A-Five,

  25. Slide 25: 3-16. Progress in VISION-130 (Governance)

    ３-16. Progress in VISION-130 (Governance) ✔ The Head Office and the Group companies are strengthening governance. Efforts to strengthen governance The Audit and Supervisory Committee established (Group companies) (Head Office) 2015/6 Director Outside Director Executive officer Kanematsu Electronics

  26. Slide 26: 3-17. Direct financing from the market

    3-17. Progress in VISION-130 （ Direct financing from the market ） ✔ Issued straight bonds for the first time in nearly 22 years in March 2016. First series of unsecured bonds of Second series of unsecured bonds of Name Kanematsu Corporation Kanematsu Corporation (with special agreement on limited eq

  27. Slide 27: Appendix

    Appendix © KANEMATSU CORPORATION All Rights Reserved 27

  28. Slide 28: Appendix 1-1. Consolidated Ordinary income (from FY1978)

    Appendix 1-1. Consolidated Ordinary income (from FY1978） Billion yen VISION-130 30.0 Bankruptcy of Lehman 25.0 Brothers 23.0 The best 22.9 gain 21.5 20.0 The Gulf War 15.0 10.0 Structural Reporting on a reform plan consolidated basis started. 5.0 0.0 FY1978 FY1979 FY1980 FY1981 FY1982 FY1983 FY1984

  29. Slide 29: Appendix 1-2. Consolidated Net income (from FY1999)

    Appendix１-2. Consolidated Net income（from FY1999) Billion yen 20.0 VISION-130 Sold the last interests owned 15.0 15.0 11.5 Recorded deferred tax assets 9.4 10.0 5.0 0.0 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY201

  30. Slide 30: Appendix 1-3. Shareholders' Equity & Equity Ratio

    Appendix１-３．Shareholdersʼ Equity & Equity Ratio Billion yen 120 30.0% 120.0 Shareholders' Equity Equity ratio（right axis) 100 25.0% 93.3 90.1 80 21.2% 20.0% 71.7 19.6% 60 16.7% 15.0% 54.5 45.6 13.7% 39.0 40 9.1% 10.0% 33.0 33.1 9.8% 28.9 24.9 8.5% 7.3% 20 5.9% 6.0% 5.0% 0 0.0% FY2007 FY2008 FY2009 F

  31. Slide 31: Appendix 1-4. Interest-bearing debt & Net debt-equity ratio

    Appendix１-4. Interest-bearing debt & Net debt-equity ratio billion yen times 300.0 10.0 270.7 9.0 Gross interest‐bearing debt Net interest‐bearing debt Net debt‐equity ratio 250.0 8.0 223.7 213.6 6.2 7.0 200.0 193.1 173.6 6.0 160.8 5.4 146.9 150.0 141.9 5.0 136.1 135.2 148.9 3.8 4.0 134.6 3.2 204.9

  32. Slide 32: Appendix 2. Outline of Kanematsu Group

    Appendix 2. Outline of Kanematsu Group Segment Main business Main products Major subsidiaries Electronics & Semiconductor Parts & Equipment Semiconductor / electronics parts, Electronic modules / materials, Devices Semiconductor Industrial electronics & Printer equipment, Electronic modules Kanemats

  33. Slide 33: Appendix 3. Subsidiaries and Affiliates (Net sales and Ordinary income)

    Appendix３．Subsidiaries and Affiliates（Net sales and Ordinary income） Ownership FY2015 FY2016 (Unit: billion yen) Business ratio Net sales Ordinary incom Net sales Ordinary income Kanematsu Electronics Ltd ICT solution 58.28% 59.9 6.1 60.0 6.3 Kanematsu Communications Ltd. Mobile 100% 134.0 3.0 139.7

  34. Slide 34: Appendix 4. Subsidiaries

    Appendix４．Subsidiaries Number of Profitable and Non-Profitable Consolidated Subsidiaries and Affiliates FY2015 FY2016 Year on （Companies） Subsidiaries Affiliates Subsidiaries Affiliates Total Total year Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Number of profitable 28 3

  35. Slide 35: Appendix 5-1. Segments (Electronics & Devices)

    Appendix5-1. Segments（Electronics & Devices） FY2015 FY2016 FY2017 Comparison with FY2016 (Unit: billion yen) results results forecasts Change Change (%) Net sales 276.9 277.9 400.0 ＋122.1 ＋ 44.0% Operating 9.9 9.8 12.5 ＋2.7 ＋ 27.0% income* Billion Segment margin yen （Operating income)* FY2016 result

  36. Slide 36: Appendix 5-2. Segments (Foods & Grain)

    Appendix5-２. Segments（Foods & Grain） FY2015 FY2016 FY2017 Comparison with FY2016 (Unit: billion yen) results results forecasts Change Change (%) Net sales 307.7 323.1 370.0 ＋ 46.9 ＋ 14.5% Operating 3.4 1.3 3.5 ＋2.2 ＋ 169.2% income* Billion Segment margin yen 6.0 （Operating income)* FY2016 results *

  37. Slide 37: Appendix 5-3. Segments (Steel, Materials & Plant)

    Appendix５-３. Segments (Steel, Materials & Plant) FY2015 FY2016 FY2017 Comparison with FY2016 (Unit: billion yen) results results forecasts Change Change (%) Net sales 468.0 378.9 380.0 ＋ 1.1 +0.3% Operating 7.3 3.7 3.3 (0.4) (11.3%) income* Billion yen Segment margin FY2016 results 9.0 （Operating in

  38. Slide 38: Appendix 5-4. Segments (Motor Vehicles & Aerospace)

    Appendix５-4. Segments (Motor Vehicles & Aerospace) FY2015 FY2016 FY2017 Comparison with FY2016 (Unit: billion yen) results results forecasts Change Change (%) Net sales 59.7 71.2 80.0 ＋8.8 + 12.3% Operating 2.8 3.1 2.7 (0.4) △ 13.2% income* Billion yen FY2016 results 10.0 The motor vehicles and part

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