2Q FY2018 Earnings Presentation Oct. 2018

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1 2Q FY2018 Earnings Presentation Oct Furusato Industries, Ltd. The First Section of the Tokyo Stock Exchange:8087

3 Group Overview 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 Consolidated company Consolidated company [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 Unconsolidated [Headquarters] Minato-ku, Tokyo [No. of Bases] 6 Sapporo, Sendai, Nagoya, Osaka, Hiroshima, Fukuoka [Established] 1999 [Capital] 100M Local Company Retra [Established] China/Suzhou(2012) Thailand/Bangkok(2012) Vietnam/Ho Chi Ming(2018) Robot Technical Center RTC Hyogo(Nishinomiya-city) RTC Tokyo(Ota-ku) Copyright Furusato Industries, Ltd. All Rights Reserved 3

4 Group Overview Company Business Business overview Operating structure Steel Frame Building Supplies Piping Products Industrial Equipment Machine Tool Factory Automation Housing Equipment Machine and Tools for Automotive Sale of construction hardware, fastening products, welding supplies, machine & tools, consumable supplies, etc. Sale of pipes, pipe fittings, valves, machine and tools, fastening products, etc. Sale of consumable tools, built-in tools, physical distribution machine, facility equipment, consumable supplies, etc. Sale of machine tools, industrial robots, etc. Sale of machine tools, industrial robots, specialized machine, etc. Sale of kitchen, bathroom, wash room, toilet, boilers, etc. Sale of cutting tools, hardware-related tools, machine tools, etc. Direct sale to steel fabricators Direct sale to piping contractors Wholesale to machine and tools dealers Wholesale to machine dealers Direct sale to suppliers Wholesale to hosing equipment dealers Direct sale to automotive industry Local Company Retra Robot Technical Center Introduction of crime prevention monitoring system and access control service, sale of security devices Sale of cutting tools, machine tools & peripherals, equipment for production line automation Providing test trial and consulting of industrial robotic system, and operator training Direct sale to security companies and building maintenance companies Direct sale to local Japanese companies and local companies For companies that have already introduced or are considering to introduce robots Copyright Furusato Industries, Ltd. All Rights Reserved 4

6 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, 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 Copyright Furusato Industries, Ltd. All Rights Reserved 6

7 P/L (Consolidated) (Millions of yen) H1 FY17 H1 FY18 H1 FY18 Forecast Progress Net sales 47,418 51, , Gross profit 6,498 7, , SG&A Ex. 5,280 5, , Operating income 1,217 1, , Ordinary income 1,378 1, , Net income attributable to owners of parent 867 1, Copyright Furusato Industries, Ltd. All Rights Reserved 7

8 Quarterly Sales Net Sales Rounded down to the nearest million yen 25,676 24,373 25,496 26,050 25,413 24,665 26,677 Construction & Piping Products Seg. 21,050 6,599 23,008 7,476 7,862 7,034 21,921 7,123 7,586 8,333 7,321 7,898 8,598 Q2:+ 1,011M, Y-o-Y H1:+ 1,786M, Y-o-Y Achievement in H Machine & Facility Seg. 3,586 4,466 6,221 5,058 3,586 5,676 5,165 5,260 4,666 5,896 Q2:+ 220M, +3.9 Y-o-Y H1:+ 1,299M, Y-o-Y Achievement in H Equipment & Tools Seg. 10,864 11,065 11,593 12,280 11,212 12,233 12,551 12,831 12,100 12,182 2Q:- 50M, -0.4 Y-o-Y H1:+ 838M, +3.6 Y-o-Y Achievement in H Q1 FY16 FY17 Equipment & Tools Seg. Construction & Piping Products Seg. FY18 Machine & Facility Seg. Equipment & Tools slightly down Construction & Piping Products steady Copyright Furusato Industries, Ltd. All Rights Reserved 8 Q2

9 Equipment & Tools Segment Business Environment Industrial Production Index Year 2010= Industrial Production Index (Transport equipment) Y-o-Y Industrial Production Index(Overall) -0.2 Y-o-Y Q1 FY16 FY17 FY18 Q2 Industrial Production Transport Equipment Showing signs of softening Copyright Furusato Industries, Ltd. All Rights Reserved 9

10 Equipment & Tools Segment Business Environment New Construction Starts of Houses Unit:Unit 247, , , , , , , , , , New Construction Starts of Houses 99.8 Y-o-Y The fifth consecutive quarterly decrease Q1 FY16 FY FY18 Q2 Y-o-Y Upward trend despite continued Y-o-Y decrease Copyright Furusato Industries, Ltd. All Rights Reserved 10

11 Equipment & Tools Segment Quarterly Sales Trend Net Sales Rounded down to the nearest million yen 10,864 1,352 1,444 11,065 11,593 1,566 1,354 1,501 1,379 12,280 1,379 1,565 11,212 1,286 1,325 12,233 12,551 12,831 12,100 12,182 1,438 1,515 1,234 1,259 1,270 1,690 1,475 1,660 1,547 1,678 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, Y-o-Y H1: + 424M, Y-o-Y 7,752 8,044 8,279 8,937 8,200 9,124 9,087 9,399 9,052 9,040 Equipment & Tools Business (Equipment & Tools, G-net) Q2: - 83M, -0.9 Y-o-Y H1: +768M, +4.4 Y-o-Y Q1 FY16 FY17 Industrial Equipment Housing Equipment FY18 Machine & Tools for Automotive Others Equipment & Tools slightly down, Machine & Tools for Automotive continued double-digit increase Copyright Furusato Industries, Ltd. All Rights Reserved 11 Q2

12 Machine & Facility Segment Business Environment Machine Tools Orders Recieved Rounded down to the nearest million yen , , , , , , , , ,343248,269 Orders Received for Machine Tool (Japan Machine Tool Builders Association) Y-o-Y Domestic demand Y-o-Y Overseas demand Y-o-Y 128, , , , , , , , , ,217 Q1 FY16 FY17 Overseas Demand Domestic Demand FY18 Y-o-Y Q2 Slowdown in Y-o-Y growth rate Copyright Furusato Industries, Ltd. All Rights Reserved 12

13 Machine & Facility Segment Quarterly Sales Trend Net Sales Rounded down to the nearest million yen 3,586 4, , , ,586 5, ,165 5, , , Factory Automation Business (FA, G-net) Q2: + 317M, Y-o-Y Recording 72.9 of backlog at 1QE FY18 as sales H1: + 427M, Y-o-Y 3,015 3,576 5,526 4,244 3,040 5,026 4,376 4,352 4,009 4,929 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, Y-o-Y Q1 FY16 FY17 FY18 Q2 Machine Tools Factory Automation Machine Tools down Factory Automation substantial growth Copyright Furusato Industries, Ltd. All Rights Reserved 13

14 Machine & Facility Segment Quarterly Orders Received Orders Received Rounded down to the nearest million yen , Factory Automation Business (FA, G-net) Q2: - 104M, Y-o-Y Backlog at 2QE 1,235M - 92M, -6.9 vs. 1QE 4,517 4,132 3,877 3,667 5,658 4,815 6,019 5,850 5,407 6,376 Machine Tool Business (Machine, G-net) Q2: + 1,561M, Y-o-Y Backlog at 2QE 11,997M + 1,656M, vs. 1QE Q1 FY16 FY17 FY18 Q2 Machine Tools Factory Automation Machine tools orders received and backlog up Copyright Furusato Industries, Ltd. All Rights Reserved 14

15 Construction & Piping Products Segment Business Environment Steel Frame Used for Buildings Unit:t 1,342,033 1,378,208 1,356,566 1,363,990 1,318,773 1,347,662 1,241,998 1,259,833 1,200,816 1,207, Steel frame used for building 99.5 Y-o-Y FY16 5,103Kt FY17 5,209Kt Q1 FY16 FY17 Copyright Furusato Industries, Ltd. All Rights Reserved FY18 Q2 Y-o-Y Steel frame remained at high level/ FY18 estimated 5.2~5.3Mt 15

16 Construction & Piping Products Segment Business Environment Steel Product Price Unit:Yen/ t 87,000 87,000 84,000 81,000 71,000 71,000 74,000 76,000 78,000 Steel Product Price Y-o-Y 69,000 Flat from Q1 Q1 FY16 FY17 FY18 Q2 (H-beam200x100; High price in Tokyo market) Remained flat at high level Copyright Furusato Industries, Ltd. All Rights Reserved 16

17 Construction & Piping Products Segment Quarterly Sales Trend Net Sales Rounded down to the nearest million yen 6,599 1,401 7,476 1,551 7,862 1,627 7,034 7,123 1,744 1,657 7,586 1,637 8,333 1,775 7,321 1,812 7,898 1,681 8,598 1,762 Piping Products Business (Piping Products, Furusato) Q2:+ 124M, +7.6 Y-o-Y H1:+ 148M, +4.5 Y-o-Y Steel Frame Building Supplies Business (Steel Frame Building Supplies, Furusato) Q2:+ 886M, Y-o-Y 5,198 5,924 6,234 5,289 5,465 5,949 6,557 5,508 6,217 6,836 In-house product +8.0 Y-o-Y Turnbuckle brace:volume +0.5, Ave. unit price +8.1 Y-o-Y Purchasing supplies Y-o-Y High strength bolts:volume +16.0, Ave. unit price +4.6 Y-o-Y Q1 FY16 FY17 FY18 Q2 H1:+ 1,638M, Y-o-Y Steel Frame Building Supplies Piping Products Steel Frame double-digit growth/piping products up Copyright Furusato Industries, Ltd. All Rights Reserved 17

18 Gross Profit by Segment (Millions of yen) H1 FY17 H1 FY18 H1 FY18 Forecast Progress Equipment & Tools 2,667 2, , Margin P Machine & Facility Margin P Construction & Piping Products 3,134 3, , Margin P Margin up in all segments Copyright Furusato Industries, Ltd. All Rights Reserved 18

19 SG&A Expenses Quarterly Trend Selling, General & Administrative Expenses Rounded down to the nearest million yen 2,638 2,642 2,585 2,626 2,475 2,459 2,493 2, ,842 2, ,518 1,479 1,491 1,521 1,566 1,528 1,562 1,570 1,616 1,571 Selling expenses Q2:+ 171M, Y-o-Y Provision of allowance for doubtful accounts 185M H1:+ 182M, 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 Q1 FY16 FY17 Personnel expenses Selling expenses Copyright Furusato Industries, Ltd. All Rights Reserved FY18 Q2 General administrative ex. & Others Y-o-Y (Total) +7.6 due mainly to provision of allowance for doubtful accounts 19

20 Operating Income by Segment (Millions of yen) H1 FY17 H1 FY18 H1 FY18 Forecast Progress Equipment & Tools Margin P Machine & Facility (15.7) Margin (0.6)P Construction & Piping Products Margin P Machine & Facility double-digit decrease, but double-digit growth overall Copyright Furusato Industries, Ltd. All Rights Reserved 20

21 Cash Flows (Consolidated) Rounded down to the nearest million yen +1, ,312 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 11,639 Beginning Operating CF Investing CF Financing CF Year-end Cash and cash equivalents + 327M Copyright Furusato Industries, Ltd. All Rights Reserved 21

22 Capital Investment Depreciation and Amortization Rounded down to the nearest million yen Capital investment Depreciation and amortization Cash and deposits 2,500 11,170 10,957 11,437 11,112 12,500 2,000 9,393 10,000 1,663 1,710 1,500 7,500 1,000 1,190 1,157 1,000 5, ,500 0 FY13 FY14 FY15 FY16 FY17 FY18 Scheduled *Cash and deposits at the year-end 0 Copyright Furusato Industries, Ltd. All Rights Reserved 22

25 Forecast Financial Summary (Millions of yen) H1 Actual H2 FULL YEAR Net sales 51, , , Gross profit 7, , , SG&A Ex. 5, , , Operating income 1, , , Ordinary income 1, , , Net income attributable to owners of parent 1, , , Revised on Oct. 31 Copyright Furusato Industries, Ltd. All Rights Reserved 25

26 Forecast Equipment & Tools Segment (Millions of yen) H1 Actual H2 FULL YEAR Net sales 24, , , Industrial Equipment 18, , , Machine and Tools for Automotive 3, , , Housing Equipment 2, , , Others 433 (45.7) ,250 (10.0) Gross profit 2, , , SG&A expenses 2,195 (0.7) 2, , Operating income , Copyright Furusato Industries, Ltd. All Rights Reserved 26

27 Forecast Machine & Equipment Segment (Millions of yen) H1 Actual H2 FULL YEAR Net sales 10, , , Machine Tool 8, , , Factory Automation 1, , , Gross profit , SG&A expenses (0.3) 1, Operating income 160 (15.7) (4.2) Copyright Furusato Industries, Ltd. All Rights Reserved 27

28 Forecast Construction & Piping Products Segment (Millions of yen) H1 Actual H2 FULL YEAR Net sales 16, , , Steel Frame Building Supplies 13, , , Piping Products 3, , , Gross profit 3, , , SG&A expenses 2, , , Operating income , Copyright Furusato Industries, Ltd. All Rights Reserved 28

30 Non-consolidated Results-Furusato (Millions of yen) H1 FY17 H1 FY18 Net sales 14,714 16,503 +1, Gross profit 3,134 3, SG&A Ex. 2,545 2, Operating income Ordinary income Net income attributable to owners of parent Copyright Furusato Industries, Ltd. All Rights Reserved 30

31 Non-consolidated Results-G-net (Millions of yen) H1 FY17 H1 FY18 Net sales 30,607 32,383 +1, Gross profit 2,927 3, SG&A Ex. 2,435 2, Operating income Ordinary income Net income attributable to owners of parent Copyright Furusato Industries, Ltd. All Rights Reserved 31

32 Non-consolidated Results-Gifu Shoji (Millions of yen) H1 FY17 H1 FY18 Net sales 2,801 3, Gross profit SG&A Ex Operating income Ordinary income Net income attributable to owners of parent Copyright Furusato Industries, Ltd. All Rights Reserved 32

33 This material contains forward-looking statements that reflects Furusato s plans and expectations. These forwardlooking 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. Furusato Industries, Ltd. Corporate Planning Division TEL : FAX :info-ir@furusato.co.jp Copyright Furusato Industries, Ltd. All Rights Reserved 33

Consolidated Financial Results for the Second Quarter, Fiscal 2018

Consolidated Financial Results for the Second Quarter, Fiscal 2018 Ⅰ. Consolidated Financial Results for the First Half, Fiscal 2018 Consolidated Financial Results for Fiscal 2018 Ⅱ. Supplementary Data