Part 1: FY2006 Interim Financial Summary and FY2006 Projections Yukio Kinoshita Executive Vice President

Transcription

1 November, 2006 Part 1: Interim Financial Summary and Projections Yukio Kinoshita Executive Vice President

2 Medium-Term Performance Evaluation 1-1 Summary Targets for the three-year Medium-Term Management Plan, Leap to Excellence 07, are expected to be met one year ahead of schedule Higher earnings and sales for the fourth straight year (medium-term net income) New records for orders received, sales, operating income, ordinary income, and medium-term net income Performance : billion yen (forecasted: 260 billion yen) Operating income: 26.8 billion yen (forecasted: 19.5 billion yen) Ordinary income: 27.7 billion yen (forecasted: 19.5 billion yen) Medium-term net income: 16.7 billion yen (forecasted: 12.5 billion yen) Interest-bearing debt: 95 billion yen

3 Financial Summary for the 1 st half of 1-2 Units: JPY billion Orders received Increase in all four segments, with the exception of Ship segment Increased sales in Mass-Produced Machinery, Ship, and Construction Machinery segments Operating income Increased income in Ship, Industrial Machinery and Construction Machinery segments Orders received Operating income Operating income ratio Ordinary income Ordinary income ratio 1 st half of % % 1 st half of FY % % Change % % Ordinary income Improved return on equity and financial account balance Extraordinary income or loss Worsened due to factors such as transfer of business operations Extraordinary income or loss Medium-term net income Medium-term net income ratio (1.6) % 5.1% (1.7) %

4 by Segment 1-3 Units: JPY billion Mass-produced machinery Growth here, and especially in power transmission control, helped cover the decrease in plastic injection machine. Environmental protection facilities, plants, and others Maintained a similar level as previous term. Ship, steel structures and other specialized equipment Further progress in reducing cost of new ships as well as an improvement in steel structures. Industrial machinery Mass-produced machinery Environmental protection facilities, plants, and others Ship, steel structures and other specialized equipment Industrial machinery 1 st half of 14.0 (0.1) st half of FY (1.9) 3.1 Change 0.2 (0.1) Upturn in material handling systems, turbines, and pumps. Construction machinery Construction machinery Improved results from our US crane subsidiary. A rise in sales was accompanied by increased income. Total

5 Balance Sheets 1-4 Units: JPY billion September March Change September March Change Current Assets Cash and Deposits Notes and Accounts Receivable Inventories Other Fixed Assets Tangible Assets Intangible Assets Investments and Other Assets (14.8) Liabilities (28.0) Notes and Accounts (10.1) Payable (6.0) Advance Payments (15.2) Interest-Bearing Debt (30.5) 9.4 Other (2.8) 1.0 Minority Interests 3.8 (1.6) Stockholders Equity Paid in Capital 30.9 Capital Surplus Retained Earnings 68.8 Revaluation Reserve for (3.4) Land 42.1 Other 9.1 Net Assets Common Equity Variations in Estimates and Exchanges 46.2 Minority Interests 3.5 TOTAL (16.4) TOTAL Ratio of Interest-Bearing Debt Stockholders Equity Ratio % 31.9% (16.4) 21.7% 29.0% (4.8%) 2.9%

6 Statements of Cash Flow 1-5 Units: JPY billion Category 1 st half of 1 st half of FY2005 Change Cash Flows from Operating Activities (2.2) Working Capital Before Interest Payment Other (17.5) (9.1) (3.1) 9.2 (8.4) Cash Flows from Investing Activities (2.5) (2.0) (0.5) Free Cash Flow (2.7) Cash Flows from Financing Activities (32.1) (25.9) (6.1) Increase or Decrease in Cash and Cash Equivalents (10.5) (2.2) (8.3) Cash and Cash Equivalents at the End of the Year (13.3)

7 Change in Interest-Bearing Debt 1-6 Units: JPY billion Interest-Bearing Debt (Net Interest-Bearing Debt) Free Cash Flow FY2002 FY2003 FY2004 FY2005 September,

8 Forecast of Operating Results 1-7 Units: JPY billion 1st Half of Actual 1st Half of FY2005 Actual Forecast FY2005 Actual Orders Received Ratio 9.8% 7.5% 10.1% 8.6% Ordinary Income Ordinary Income Ratio 10.1% 7.5% 10.1% 8.6% Extraordinary Gain or Loss (1.6) 0.1 (5.0) (1.5) Net Income Net Income Ratio 6.1% 5.1% 5.5% 5.4% ROIC (After tax) Projected Exchange Rate (US dollar) 11.0 % 8.8% 110 yen 112 yen

9 Forecast of and by Segment 1-8 Unit: JPY billion 1 st half of Actual 1 st half of FY2005 Actual Change Forecast FY2005 Actual Change Mass-Produced Machinery Ratio % % (0.1%) % % % Environmental Protection Facilities, Plants and Others Ratio 31.6 (0.1) (0.2%) % 0.1 (0.1) (0.2%) % % (3.1) % Ship, Steel Structure, and Other Specialized Equipment Ratio % 23.6 (1.9) (8.0%) % % 65.9 (1.0) (1.5%) % Industrial Machinery Ratio % % % % % % Construction Machinery Ratio % % % % % % TOTAL Ratio % % 2.3% 10.1% 8.6% 1.5%

10 FY2007 Plan and Changes in and by Segment FY2007 Plan Unit: JPY billion JPY billion Operating Income (11.1%) Construction Machinery Industrial Machinery Ship, Steel Structures and Other Specialized Equipment Environmental Protection Facilities, Plants and Others Ordinary Income 70.0 (11.1%) Mass-Produced Machinery Extraordinary Gain or Loss Net Income ROIC (After tax) (2.0) 40.0 (6.3%) 12.0% FY2005 Actual Forecast JPY billion FY2007 Plan Construction Machinery Industrial Machinery Ship, Steel Structures and Other Specialized Equipment Environmental Protection Facilities, Plants and Others Mass-Produced Machinery (0.1) Ship, Steel Structures and Other Specialized Equipment

11 Part 2: Management Strategy Progress of Medium-Term Management Plan Yoshio Hinoh, President and CEO

12 Position and its Meaning in FY From a period of conversion to development and expansion of top-line growth Major Reforms Value Chain Value Creation Performance Downturn Conversion period Restructuring plan 04 Our current position Performance Stability and Recovery Conversion Conversion period period Leap to Excellence Growth and Expansion Leap towards becoming a globally excellent company Top Technology Top Technology Global Presence Global Presence Strong Cost Structure Strong Cost Structure A company that systematically creates knowledge Bringing to the market top quality products Vertical integration of business Key components business expansion End of FY1998 (at the start of C21) ROIC 1.6% End of FY2001 (at the start of the previous mediumterm plan) ROIC 2.3 End of FY2004 (at the end of the previous mediumterm plan) ROIC 8.5 End of FY2007 (at the end of Leap to Excellence 07) ROIC 10.0

13 Performance Transition 2-2 The goals of the medium-term plan were achieved one year ahead of schedule, and target values for operating income in FY2007 were revised upward by 70 billion yen and Interest-Bearing Debt and ROIC Billion yen Invested Capital billion yen billion yen billion yen Billion yen billion yen (Interest-Bearing Debt) billion yen Previous medium-term plan Leap to Excellence billion yen ROIC 8.8% 9.7% 10% 15% 10% 5% Actual ForecTarget ast Actual Forec Target ast 0%

14 FY2007 Revised Plan Income 221 Billion Yen Billion Yen 244 Mass- Produced Machinery Plan162 Forecast154 Forecast Environmental Billion Yen Plan (1) Forecast Ship, Steel Structure Industrial Machinery Construction Machinery 60 Forecast 630 Total 70 Plan Plan47.5 Billion Yen 2-3 CFB boilers Gear reducers for infrastructure Mechatronics, cryogenics, quantum equipment Steam turbines Material handling systems for shipyards Forging presses for automobile High priced ships sale Pressure vessels for oil industries Hydraulic excavators Mobile cranes

15 Mass-Produced Machinery 2-4 expansion to China and Europe. Improve each area s price competi -tiveness. Enhance Motion Control Device business. Increase share of general-use plastic injection molding machines. Expand sales of medium-size machines for automotive industries. Expand sales of cyclotron for PET in China. Cryo-pump business expansion. Enhance mechatronics components business. Circulating fluidized bed boiler export to Asia markets. Improve project management ability. of higher priced oil tankers. Serial shipbuilding of middle size tanker model. Expand sales of material handling systems for shipbuilding and steel industries. Global presence of small steam turbines. Enhance forging press business for auto -motive industries. Introduction of fuel efficient, low emission, next generation machines. Increase sales in China and Asia. Expand sales of mobile crane. Unit: billion yen 2006 forecast 2007 plan Segment Market Strategy Power Transmission & Control Plastic Machinery Precision Control Machinery Environmental Protection Facilities, Others Ship, Steel Structures Industrial Machinery Construction Machinery Total Total

16 Industrial Machinery (Shin Nippon Machinery) Core products: Topics Construction Machinery (Excavator) 2-5 Global expansion of the small-scale steam turbine sector Launch of the superior LEGEST Increased orders for small-scale multi-stage turbines to meet rising demand for biomass generated power Providing high reliability and optimal operation Increased overseas expansion aimed at the North American and European high value added power market Entry of a machine that meets third-generation exhaust emission regulations Excellent durability and fuel efficiency (20% reduction) Reduction in maintenance cost and time High performance transmitted to all five senses that s impossible to describe in the specs A new product that makes excellent use of hydraulic and electrical control technology, basic factor technology and 3DCAD-CAE

17 Core products: Topics Environmental Protection Facilities, Plants and Others (Energy plant) Aiming to be the Asian leader in CFB B boilers that meet new energy needs Mass-Produced Machinery (Quantum equipment) Launch of small-scale cyclotron for PET 2-6 Increased growth in CFB boilers that meet the needs of new energy Business expansion of approximately 50 billion yen Moving from domestic leader to the leading Asian company in this sector Differentiation of fuel reforming and ash treatment by high-level and diversified technology development Product launch of small-scale cyclotron for PET Eliminates the need for a pit by reducing installation space, weight, and height with self-shielding function and miniaturization Achieves appropriate performance with simple operation Excellent reliability, easy maintenance

18 Next Medium-Term Plan 2-7 Significant steps to the next medium-term plan (Billion yen) (Billion yen) Growth and expansion of top line growth Global expansion High-quality products M&A FY2005 Actual Forecast FY2007 Target FY2010 Medium-term plan Leap to Excellence 07 Next medium-term plan