Organo Corporation Report on the Second Quarter Financial Results for the Term Ending March 31, 211 (Date: November 9, 21 Hours: 16. ~ ) 1
Report on the Second Quarter Financial Results and Forecasts for FY21 Kazuo Kito, Senior Managing Director 2
The Consolidated Organo Group ORGANO CORPORATION (Nine domestic subsidiaries) Organo Hokkaido Corporation Organo Tohoku Corporation Organo Tokyo Corporation Organo Chubu Corporation Organo Kansai Corporation Organo Kyushu Corporation Organo Plant Service Corporation Organo Food Tech Corporation Organo Acty Co., Ltd. (Three overseas subsidiaries) Organo (Asia) Sdn.Bhd. <Malaysia> Organo (Suzhou) Water Treatment Co., Ltd. <China> Organo Technology Co., Ltd <Taiwan> 3
Summary of the Second Quarter Financial Results, FY21 (Consolidated) Capital spending related to the electronics sector in China, Taiwan, and the other region of Asia was strong and expanded significantly. In Japan, the solution business grew year on year, primarily for maintenance and reconstruction work. New or additional capital spending in Japan was weak, about of general industry and the electronics sector in particular. With fewer inquiries, competition for orders was intensifying. We are continuing to lower costs, reducing fixed costs. 4
Review of Business Segment Starting in the fiscal year ending March 211, a recombination of business segment was implemented, along with a restructuring of domestic and overseas sales/production systems. Sales categories were changed from existing water treatment equipment/chemicals to water treatment engineering/functional product. Water treatment Large water treatment facilities engineering Maintenance and management services for delivered facilities Functional Standard water treatment equipment product Water treatment chemicals and food processing materials 5
Financial Results of the Second Quarter, FY21(Consolidated) '9.9 '1.9 '1.9 Result Plan Result (unit:millions of yen) from Initial Plan Orders received 24,44 3, 32,761 +8,717 +2,761 Net sales 23,557 25, 25,719 +2,162 +719 Gross profit 5,72 5,7 6,957 +1,255 +1,257 (%) (24.2%) (22.8%) (27.1%) (+2.9pt) (+4.3pt) SG&A 6,99 6,2 6,58 +41 +142 Operating income 397 5 898 +1,294 +1,398 Ordinary income 469 6 751 +1,219 +1,351 Net income 356 4 366 +722 +766 6 6
Financial Results of the Second Quarter FY21 (by Business Segment) Orders received Net sales Operating income 3, 2, 9,42 32,761 24,44 11,544 +2,142 3, 2, 23,557 9,288 25,719 9,888 +6 5 397 74 898 797 11 +93 +1,22 1, 14,642 21,216 +6,574 1, 14,268 15,83 +1,562-5 1,11 '9.9 '1.9 '9.9 '1.9-1,5 '9.9 '1.9 Water treatment engineering Functional product 7
2, 23,557 14,268 Sales by Business Segment ( Water treatment engineering) Net sales +1,562 25,719 15,83 Sales by Business Segment 14,268 5,54 551 15,83 4,989 15, 1, 1, Functional product 9,288 9,888 +6 '9.9 '1.9 Water treatment engineering 8,728 '9.9 +2,113 Solution business 1,841 5, '1.9 Plant business 8 8
Sales by Customer ( Water treatment engineering) Net sales Sales by Customer 23,557 25,719 14,268 15,83 15, 2, 14,268 +1,562 15,83 6,657 +1,211 7,968 1, 1, +6 9,288 9,888 +352 7,611 7,963 5, '9.9 Functional product '1.9 Water treatment engineering '9.9 General industory '1.9 Electoronics industory 9 9
Sales by Region Domestic and overseas sales Sales by overseas region 2, 23,557 1,116 25,719 4,52 4, +2,936 (%) 2. 4,52 299 +1 1, 22,441 21,667 4.7 15.8 '9.9 '1.9 774 1.. 2, 2,926 1,116 289 515 827 312 9.9 1.9 +2,411 +515 Domestic Overseas Overseas Ratio Southeast Asia Taiwan China1 1
Forecasts for Fiscal Ending March 211 Uncertainty about future business trends against the backdrop of the rapid appreciation of the yen, etc. Particularly in Japan, a recovery in capital spending is unlikely. Although demand from overseas will likely remain strong, a temporary pause is anticipated in capital spending in the future. Redeployment of manpower, reviewing of systems, etc. are being implemented as Group-wide initiatives, aimed at strengthening sales operations and improving productivity. Continue to lower costs and cut fixed costs. 11
Forecasts for the Term Ending March 211 '1.3 '11.3 '11.3 Result Initial Plan Full Projection (unit:millions of yen) from Initial Plan Orders received 58,777 6, 6, + 1,223 ± Net sales 53,515 6, 6, + 6,485 ± Gross profit 13,921 14,5 14,5 + 579 ± (%) (26.%) (24.2%) (24.2%) (-1.8pt) (±.pt) SG&A 12,76 12, 12, 76 ± Operating income 1,845 2,5 2,5 + 655 ± Ordinary income 1,551 2,3 2,3 + 749 ± (%) (2.9%) (3.8%) (3.8%) (+.9pt) (±.pt) Net Income 646 1,3 1,3 + 654 ± 12
Forecasts for the Term Ending March 211 ( by Business Segment ) Orders received Net sales Operating income 6, 58,777 19,15 4, 6, 21, +1,85 6, 4, 53,515 19,579 6, 21, +1,421 2,5 1,5 1,845 2,5 2,1 +99 2,1 2, 39,627 39, 627 2, 33,935 39, +5,65 5 155 4 +554 '1.3 '11.3 '1.3 '11.3-5 1.3 11.3 Water treatment engineering Functional product 13
Sales by Business Segment (Water treatment engineering business) Net sales Sales by Business Segment 6, 53,515 6, 33,935 39, 4, 3, 33,935 +5,65 39, 13,2 +1,98 15, 2, Functional product 19,579 21, '1.3 +1,421 '11.3 Water treatment engineering 2,915 +3,85 24, 1.3 11.3 Solution business Plant business 14 14
Sales by Customer( Water treatment engineering business) Net sales Sales by Customer 6, 53,515 6, 39, 4, 33,935 3, 33,935 +5,65 39, 12,126 +5,874 18, 2, Functional product 19,579 21, '1.3 +1,421 '11.3 Water treatment engineering 21,89 21, '1.3 89 General industory '11.3 Electoronics industory 15 15
Sales by Region Domestic and overseas sales Sales by overseas region 6, 53,515 3,22 6, 9, 15. (%) 2. +5,78 1, 9, 1,5 +572 3, 5,295 51, 6. '1.3 '11.3 1. + 75. Domestic Overseas Overseas Ratio 5, 3,22 928 1,591 71 '1.3 5,2 2,3 '11.3 Southeast Asia Taiwan China 16 +3,69 +1,599 16
Orders received /Net sales 8, Progress of Orders Received, Net Sales and Orders on Hand (Consolidated) 73,118 Orders received Net sales Orders on hand Orders on hand 5, 64,888 6, 58,777 3,817 31,463 4, 24,44 23,557 2, 6, 36,162 43,35 6, 53,515 36,162 32,761 25,719 4, 3, 2, 1, 9.3 9.9 1.3 1.9 11.3 (Projection) 17
Balance Sheet Assets Liabilities and Net assets 13,249 32,173 (unit:millions of yen) 71,464 73,51 71,464 73,51 Cash on hand and deposits Current assets and others 15,341 (+2,92) 32,562 (+39) Current liabilities 24,42 Long-term liabilities 7,672 (unit:millions of yen) 25,329 (+1,287) 8,334 (+662) Fixed assets 26,42 25,66 ( 436) Net assets 39,749 39,846 (+97) '1.3 '1.9 '1.3 1.9 18
Major Indicators (Consolidated) (unit:millions of yen) FY29 1 st Half FY21 1 st Half FY21 Full year (Projection) Capital investment 147 187 1, Technological development costs 861 855 1,9 Depreciation 692 592 1,25 Interest-bearing borrowings 14,155 12,675 11,5 Number of employees 1,78 1,681 1,67 Interim Dividend / Dividend per share (yen) 4. 4. 8. 19
Organo Corporation Group Management Policies November 9, 21 President Kiyoshi Hashimoto 2
Corporate Philosophy Ecologically Clean Medium-Term Management Plan Creating Customer Value The Organo Group strives to contribute to customers through its products, technologies and services, creating a better future for people (industry and life) and the Earth. The Group seeks not only to meet the needs of customers by responding to the market and customers and by honing its products, technologies and services, but also to create customer value and satisfaction. 21
Medium-Term Projection of Net sales and Operating income(consolidated) Net sales 1, Net sales Operating income Operating income 1, 2, 78,467 73,592 73,118 7, 75, 5, 53,515 6, 1, 1, 7,522 3,915 3,6 1,845 2,5 4, 5, 7.3 8.3 9.3 1.3 11.3 12.3 13.3 (Plan) (Plan) (Mid-Term Projection) 2nd Step 22
Medium-Term Projection of Net sales Domestic and overseas sales Sales by Domestic Customer 73,118 4,853 6, 4, 68,265 2, 6.6 53,515 3,22 9, 5,295 51, 6. 6, 15. 75, 12, 16. 63, (%) 2. 1. 68,265 6, 23,95 4, 11,58 2, 32,87 5,295 51, 1,9 11, 11,2 1,5 28,195 29,5 63, 13, 13, 37,. '9.3 '1.3 '11.3 '13.3 (Target) Domestic Oversea Oversea Ratio '9.3 '1.3 '11.3 '13.3 (Target) Electoronics industory Power plant/government demand 23 General industory 23
Activities in the First Half of the Fiscal Ending March 211 Summary Capital spending was strong overseas, especially in the electronics sector. In Japan, demand for solution business expanded. A significant improvement year on year both in sales and operating income Improvement of systems Reviewing sales systems: Restructuring of sales division Establishment of new maintenance/sales bases Overseas business expansion: Establishment of Organo (Vietnam) Co., Ltd. Establishment of Organo (Suzhou) Research Center Improving productivity: Restructuring of planning/design division Strengthening of inspection/purchasing systems 24
Activities in the Second Half of the Fiscal Ending March 211 Assumptions Economy at a standstill with a sense of uncertainty Capital spending in Japan is likely to remain weak, while stronger capital spending overseas appears set to enter a temporary pause in the future. Sales and profit forecasts are maintained. Priority issues in the second half Improving productivity: Strengthening of sales/production systems Strengthening overseas systems: Deploying personnel, strengthening systems Continuing to lower costs and cut fixed costs Strengthening human resource development/education 25
Actions for New Technologies and Products Wastewater treatment and resource recovery technologies Resources reconversion system for Fluorine: ECOCRYSTA Collection and removal of fluoride in wastewater in the form of crystal pellet by using crystallization reaction Recycling as high purity calcium fluoride (CaF 2 ) is possible High-speed nitrogen removal process (Aerobic granular sludge technology ) The performance of nitrogen removal rate is three to five times faster than the conventional method This technology contribute to reducing footprint and costs of wastewater treatment system High-rate dissolved air flotation unit Cost cutting was made possible by accelerating and streamlining treatment processes Oil Skimmers : PetroXtractor Efficient collection of oil from groundwater Exclusive distribution of equipments made by ABANAKI in the United States 26
Actions for New Technologies and Products Strengthening Functional Product Lineups PURIC-ω and PURELABO flex UV Ultrapure water production system for laboratories High purity ultrapure water contributs to nano-level advanced analysis Strengthening functional product lineups Amberlite XAD series Polymeric adsorbent for food and medical and pharmaceutical industries Amberlite IRP series Ion exchange resin for medical and pharmaceutical industries Toward retail consumers Air Washer Residential air purifying equipment Purifies air and removes of SOx, NOx and pollen by the power of water Contributed to extraction and purification of functional food materials and pharmaceutical ingredients 27
Thank you for your attendance today. (Inquiries) Organo Corporation Corporate Planning Department, Planning Group 2-8, Shinsuna 1-Chome, Koto-ku, Tokyo, Japan 136-8631 TEL 3-5635-5111 FAX 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. 28