Organo Corporation Report on the Second Quarter Financial Results for the Term Ending March 31, 215 November 1, 214 1
Report on the Second Quarter Financial Results and Forecasts for FY214 Hiroyuki Uchida, President 2
The Consolidated Organo Group Organo (Suzhou) Water Treatment Co., Ltd. < China > Organo Corporation Organo Plant Service Corporation Organo Food Tech Corporation Organo Acty Corporation Organo Eco Tech Corporation < Japan > Organo (Thailand) Co., Ltd. < Thailand > Organo (Asia) Sdn. Bhd. < Malaysia > Ref ; Non-consolidated Companies Organo (Singapore) Pte Ltd <Singapore> Organo (Vietnam) Co., Ltd. <Vietnam> PT Lautan Organo Water <Indonesia> Organo Technology Co., Ltd. < Taiwan > 3
Financial Results of the Second Quarter, FY214 9/213 9/214 9/214 on f rom Result Plan Result Initial Plan Orders Receiv ed 32,354 35, 35,74 + 3,35 + 74 Net Sales 26,791 3, 28,633 1,842 1,367 Gross Prof it 6,447 6,3 6,115 332 185 (%) 24.1 21. 21.4 2.7 pt +.4 pt SG&A 6,877 6,8 6,547 33 253 Operating Income 429 5 432 3 + 68 Ordinary Income 229 55 444 215 + 16 Net Income 134 3 583 449 283 4
4, 3, 2, 32,354 Financial Results of the Second Quarter FY214 (by Business Segment) Orders Received 9,521 35,74 9,881 on + 36 4, 3, 2, Net Sales 26,791 9,326 28,633 9,385 on + 59 1,5 1, 5 Operating Income 429 432 57 597 on + 27 1, 22,833 25,823 on + 2,99 1, 17,464 19,248 on + 1,784-5 -1, -1, -1,29 on 29 9/213 9/214 9/213 9/214-1,5 9/213 9/214 Water Treatment Engineering Functional Product [Water Treatment Engineering] Orders increased, primarily for plants in the domestic electronics industries and municipal water and sewage treatment. Sales climbed in the domestic electronics industries and general industries, despite a decline in the overseas electronics industries. Operating income decreased, mainly due to a decline in profitability, despite decreased SG&A expenses. [Functional Products] Both orders and sales remained unchanged from the same period of the previous year. Operating income increased due to decrease in SG&A expenses. 5
Sales by Business Segment and Customer ( Water Treatment Engineering ) Sales by Business Segment Sales by Customer 2, 17,464 19,248 2, 17,464 19,248 1, 1,85 1,747 on + 662 1, 8,787 9,642 on + 855 7,379 8,52 on + 1,123 8,677 9,66 on + 929 9/213 9/214 9/213 9/214 Plant Business Solution Business Electronics Industry General Industry [Plant Business] Sales increased, primarily for plants in the domestic electronics industries. [Solution Business] Sales grew in overall industries in Japan and overseas. [Electronics Industry] Sales increased in both plants and maintenance business in Japan, despite declined in the overseas. [General Industry] Sales increased, chiefly in plants for domestic pharmaceuticals industry and wastewater treatment plants in Japan. 6
Sales by Region Domestic and Overseas Sales Sales by Overseas Region 35, 4.% 7, 3, 25, 2, 15, 1, 3,223 29,566 4,59 3,732 26,164 25,834 13.4% 12.6% 26,791 6,9 22.4% 2,782 28,633 4,316 24,317 15.1% on 1,693 2.% on + 3,535 6, 5, 4, 3, 2, 4,59 636 1,95 3,732 574 2,23 6,9 7 3,732 4,316 539 2,659 on 161 on 1,73 5, 9/211 9/212 9/213 9/214.% 1, 1,518 1,576 954 1,119 9/211 9/212 9/213 9/214 on 457 Domestic Overseas Overseas Ratio Southeast Asia Taiwan China 7
Analysis of Operating Income of the Second Quarter, FY 214 (by Factor) Increase in Sales 9/213 + 443 9/214 SG&A Decrease + 33 429 432 Profit Ratio Decrease 776 *The sales increase and profit ratio decrease are calculated using the gross profit margin. 8
Balance Sheet Assets Liabilities and Net Assets Cash on Hand and Deposits 76,852 1,268 Current Assets and Others 74,88 5,591 ( 4.677) Long-term Liabilities 76,852 Current Liabilities 74,88 24,742 24,297 ( 445) 41,415 44,237 (+ 2,822) 7,857 7,17 ( 687) Net Assets Fixed Assets 25,169 24,98 ( 189) 44,252 43,34 ( 912) 3/214 9/214 3/214 9/214 9
Major Efforts in the First Half of FY214 Launched new slime control chemical containing non-chlorinated oxidant (sales commenced in July 214) Contains oxidant uniquely developed by the Company High safety Superb disinfect and algicidal effect Low-level metal corrosiveness and degradation effect to RO membranes High stability Low environmental impact For Cooling water; ORBLADE J Series For RO membrane; ORPERSION E Series 1
Major Efforts in the First Half of FY214 Succeeded in developing technology that continuously purifies ceramide from rice bran New Simulated Moving-Bed System Organo s unique chromatographic separation technology that can separate more than three ingredients Used in numerous production facilities for processing sugar Applications Development of technology that continuously purifies ceramide (Joint development with the National Agriculture and Food Research Organization (NARO) and Nippon Flour Mills Co., Ltd.) Conventional natural ceramide Material with low purity of approx. 1% Uses are limited due to its color and smell inherent in impurities Continuous production of highly refined materials with purity of 95% or higher is possible New applications are expected for cosmetics, pharmaceuticals, and R&D 11
Major Efforts in the First Half of FY214 Reinforcement of business of soil and groundwater investigation and remediation Businesses were consolidated into Organo (from October 214) Soil and Groundwater Group was set up in the Plant Division, and dedicated staffs were deployed in all domestic branches. Strengthen sales capabilities leveraging the network of the Organo Group Objectives Outlook for market expansion Work for the improvement of circular routes in Tokyo Tokyo Olympics in 22 Maglev train project Strengthen sales and technical organizations to deal appropriately with projects that are expected to increase Strengthen and promote One Stop Solutions to respond to customers diverse needs in relation to water treatment 12
Forecasts for the Term Ending March 215 3/214 3/215 3/215 on from Result Initial Plan Revised Plan Initial Plan Orders Received 65,51 75, 75, + 9,499 - Net Sales 62,96 7, 7, + 7,94 - Gross Profit 14,553 15,4 14,7 + 147 7 (%) (23.4) (22.) (21.) 2.4pt 1.pt SG&A 13,72 13,9 13,2 52 7 Operating Income 833 1,5 1,5 + 667 - Ordinary Income 1,17 1,4 1,4 + 23 - (%) (1.9) (2.) (2.) +.1pt - Net Income 664 9 9 + 236-13
75, 8, 7, 6, 5, 4, 3, 2, 1, 65,51 19,686 45,814 Forecasts for the Term Ending March 215 ( by Business Segment ) Orders Received 2,9 54,1 on + 1,214 on + 8,286 8, 7, 6, 5, 4, 3, 2, 1, Net Sales 62,96 19,983 42,112 7, 2,9 49,1 on + 917 on + 6,988 2, 1, Operating Income 833 1,524 1,6-691 1,5-1 on + 76 on + 591 3/214 3/215 (Plan) 3/214 3/215 (Plan) -1, 3/214 3/215 (Plan) Water Treatment Engineering Functional Product [Water Treatment Engineering] Orders are expected to increase in plants in the general industries, both in Japan and overseas, and the domestic electronics industries. Sales are expected to increase, mainly due to the growth of plants in the domestic electronics industries, the pharmaceuticals industries, and the wastewater treatment business. Operating income is expected to improve due to sales expansion. [Functional Products] Sales are expected to grow based on development and renewal of products. 14
Sales by Business Area and Customer ( Water Treatment Engineering ) Sales by Business Area Sales by Customer 5, 49,1 5, 49,1 42,112 42,112 25,3 25,91 on + 88 22,837 27,3 on + 4,463 25, 25, 17,83 23,19 on + 6,17 19,275 21,8 on + 2,525 3/214 3/215(Plan) 3/214 3/215(Plan) Solution Business Plant Business General Industry Electronics Industry [Plant Business] Sales are expected to increase, mainly as a result of the growth of plants in the domestic electronics industries, pharmaceuticals and food industries, and the wastewater treatment business. [Solution Business] Sales are predicted to increase, largely due to the growth of maintenance in overall industries in Japan. [Electronics Industry] Sales are expected to increase due to the growth of plant business in Japan. [General Industry] Sales are expected to increase, primarily due to the growth of plants in the domestic pharmaceuticals industry and wastewater treatment business, and the growth of plants for overseas thermal power stations. 15
Sales by Region Domestic and Overseas Sales Sales by Overseas Region 8, 68,52 8,671 66,718 1,792 62,96 14,9 7, 12, on 2,9 15, 1,792 14,9 1,993 12, 2, on + 7 4, 59,831 12.7% 55,926 16.2% 22.7% 48,6 58, 17.1% on + 9,994 1, 5, 8,671 1,738 4,718 1,519 7,39 2,216 2,234 8,352 3,745 5,7 4,3 on 2,652 on + 555 3/212 3/213 3/214 3/215(plan) 3/212 3/213 3/214 3/215(plan) Domestic Overseas Overseas Ratio Southeast Asia Taiwan China 16
Progress of Orders Received and Net Sales from the Electronics Industry Orders Received Net Sales 3, 3, 2, 17,354 19,88 4,871 9,9 22,7 21,149 19,745 19,723 2, 19,275 8,9 6,84 9,24 8,817 1,33 119 21,8 7,2 1, 1, 12,483 1,79 1,55 13,8 14,345 1,96 9,242 14,6 3/212 3/213 3/214 3/215 (Plan) 3/212 3/213 3/214 3/215 (Plan) Domestic Overseas Domestic Overseas 17
Orders received / Net sales Progress of Orders Received, Net Sales and Orders on Hand Orders on Hand 1, Orders Received Net Sales Orders on Hand 7, 6, 8, 6, 66,74 68,41 68,52 61,97 4,964 4,145 6,238 66,718 65,51 39,212 62,96 75, 44,212 7, 5, 4, 4, 34,645 3, 2, 2, 1, 3/211 3/212 3/213 3/214 3/215 (plan) 18
Major Indicators FY213 Full FY214 Full (Initial Plan) FY214 Full (Revised Plan) Capital Investment 358 8 7 Technological Development Costs 1,49 1,6 1,55 Depreciation 1,65 1, 1, Interest-bearing Borrowings 1,23 11,2 12, Number of Employees 1,896 1,91 1,92 Dividend per Share (yen/year) 8 8 8 19
Major Efforts for Expansion of Domestic Business Water Treatment Engineering Electronics Industry Secure orders in the electronics industry segment Functional Products Continuation of new products development and product renewal General Industries Pharmaceuticals, food, chemicals: Strengthen the pure water/wastewater business Water supply business: Increase orders through cooperation with Meidensha Corporation Power plant: Strengthen the responsiveness to coal and LNG thermal plant projects Expand the soil and groundwater investigation and remediation business Standard Water Treatment Equipments Water Treatment Chemicals Promote sales of new products Collaboration with Katayama Nalco Inc. Solution Business Further expand sales for reconstruction and maintenance Food Processing Materials Strengthen cost reduction and construction capabilities 2
Major Efforts for Expansion of Overseas Business Acceleration of Globalization Strengthen business promotion targeting non-japanese customers Leverage the ASEAN Engineering Center (Thailand) to promote technology and product development according to the market characteristics of the region Leverage the ASIA Procurement Center (Thailand) to strengthen purchasing capability and promote cost reduction Strengthen sales capabilities to address projects for power plants Enhance responsiveness to the projects for the electronics industries Strengthen the structure of overseas business bases 21
Organo Corporation Corporate Planning Department 1-2-8, Shinsuna, Koto-ku, Tokyo 136-8631, Japan TEL +81-3-5635-5111 FAX +81-3-3699-724 URL http://www.organo.co.jp This document includes forecasts of future developments made by management based on their assumptions, forecasts and plans at the time of writing. Actual performance may differ materially from the above projections due to a variety of factors. 22