4q fy2019 earnings presentation7 rounded down to the nearest million yen sales by segment gross...

4Q FY2019

Earnings Presentation May 2020

The First Section of the Tokyo Stock Exchange：8087

Furusato Industries, Ltd.

Sales and profits down, reflecting weak business sentiment

Net sales

Operating income

Ordinary income

Net income attributable to

owners of parent

¥104,619M

YoY

¥3,973M

¥4,334M

¥2,808M

(3.0)％

(1.7)％

(1.9)％

(2.9)％

PPoint

Copyright© Furusato Industries, Ltd. All Rights Reserved

2

FY19 Financial Results Summary

Q4 FY19 Financial Results

3

Down v.s. forecast and YoY due to a rapidly deteriorating businessenvironment despite an effect of consolidation of Security Design

FY18（Actual）

FY19（Forecast）

FY19（Actual）

v.s. Forecast

YoY

Net sales 107,873 108,000 104,619 (3.1)％ (3.0)％

Cost of sales

Gross profit

（%）

92,763

15,109

（14.0％）

92,100

15,900

（14.7％）

88,805

15,814

（15.1％）

(3.6)％

(0.5)％

(4.3)％

+4.7％

SG&A

Operating Income

（%）

11,069

4,040

（3.7％）

11,900

4,000

（3.7％）

11,841

3,973

（3.8％）

(0.5)％

(0.7)％

+7.0％

(1.7)％

Ordinary Income

（%）

4,416

（4.1％）

4,400

（4.1％）

4,334

（4.1％）

(1.5)％ (1.9)％

Income taxes 1,463 1,450 1,468

Net income attributable to owners of parent

2,893 2,950 2,808 (4.8)％ (2.9)％

PPoint


4

FY19 Consolidated Financial Results

Rounded down to the nearest million yen

Machine & Tools：Down due to a substantial decrease in IndustrialEquipment despite an addition of Security Business

Machine & Facility: Double-digit decrease due to a substantialdecrease in orders

PPoint


104,619

FY18

107,873

+425

(3,438)(240)

FY19

5

Changes in Net Sales by Factor


Construction & Piping

Equipment & Tools

Machine & Facility

Gross profit margin up, increase in personnel expenses andadministrative ex. & other ex. due to an addition of Security PPoint


(607)

(455)

+1,160

(405) 3,9734,040

+241

FY18 FY19

6


Changes in Operating Income by Factor

Sale

s

gro

wth

Change in

gro

ss

pro

fit marg

in

Sellin

g e

x.

Perso

nnel e

x.

Adm

inistra

tive e

x.

& O

ther e

x.

Op. income ratio3.7% Op. income ratio

3.8%

Industrial Equipment：Substantial decrease v.s. forecast and YoYMachine Tool：Substantial decrease in H2, reflecting sluggish orders

FY18（Actual）

FY19（Forecast）

FY19（Actual）

v.s. Forecast

YoY

Net sales 107,873 108,000 104,619 (3.1)％ (3.0)％

Equipment & ToolsIndustrial Equip.

Machine & Tools For

Automotive

Housing Equipment

Security

Overseas・Other

49,873

37,055

6,745

5,275

-

796

52,600

37,100

6,780

5,100

3,300

320

49,633

34,031

6,825

5,600

2,779

395

(5.6)%

(8.3)%

+0.7%

+9.8%

(15.8)%

+23.7%

(0.5)％

(8.2)％

+1.2%

+6.2%

-

(50.3)%

Machine& FacilityMachine Tool

Factory Automation

24,145

20,565

3,580

21,200

17,700

3,500

20,706

18,611

2,095

(2.3)％

+5.1%

(40.1)%

(14.2)％

(9.5)%

(41.5)%

Construction & Piping ProductsBuilding Supplies

Piping Products

33,854

26,830

7,024

34,200

27,000

7,200

34,279

27,255

7,024

+0.2%

+0.9%

(2.4)%

+1.3％

+1.6%

(0.0)%

PPoint


7


Sales by Segment

Gross profit margin：Industrial Equipment +1.6 pts. due to an additionof SecuritySG&A：Industrial Equipment double-digit growth

FY18（Actual）

FY19（Forecast）

FY19（Actual）

v.s. Forecast

YoY

Gross profit（%）Equipment & ToolsMachine& Facility

Construction & PipingProducts

15,109(14.0%)

5,715(11.5%)

1,922(18.0%)

7,469(22.1%)

15,900(14.7%)

6,680(12.7%)

1,700(18.0%)

7,520(22.0%)

15,814(15.1%)

6,518(13.1%)

1,666( 8.0%)

7,627(22.3%)

(0.5)%

(2.4)%

(2.0)%

+1.4%

+4.7％

+14.1％

(13.3)%

+2.1%

SG&A(%)Equipment & ToolsMachine& Facility


11,069(10.3%)

4,417( 8.9%)

1,237( 5.1%)

5,541(16.4%)

11,900(11.0%)

5,200( 9.9%)

1,100( 5.2%)

5,600(16.4%)

11,841(11.3%)

5,288(10.7%)

1,064( 5.1%)

5,604(16.3%)

(0.5)％

+1.7%

(3.2)%

+0.1%

+7.0％

+19.7%

(14.0)%

+1.1%

Op. income（%）Equipment & ToolsMachine& Facility


4,040( 3.7%)

1,297( 2.6%)

685( 2.8%)

1,928( 5.7%)

4,000( 3.7%)

1,480( 2.8%)

600( 2.8%)

1,920( 5.6%)

3,973( 3.8%)

1,229( 2.5%)

601( 2.9%)

2,022( 5.9%)

(0.7)%

(16.9)%

+0.3%

+5.3%

(1.7)％

(5.2)%

(12.2)%

+4.9%

PPoint


8


Profit by Segment / SG&A

Equipment & Tools Segment Main Points

◼Industrial Equipment・Decreased sales of both machine tool peripherals and industrial built-in equipment

due to slowdown in production

・Canceled the Machining System Exhibition(Osaka/Chubu) due to the outbreak of Covid-19

◼Machine & Tools For Automotive・Expanded new focus areas (inspection and processing jigs and molds)

・Strengthened the approach to automation lines by Factory Automation Div.

◼Housing Equipment・Launched a business in the renovation market

◼Security・Down in Q1 due to sluggish sales of HIKVISION→Tried to offset it by PB（GFDesign)

・Investing aggressively aimed at its business expansion


9

Machine and Facility Main Points

◼Machine Tool

・Machine Tool orders -35.8％ YoY

・Q4E backlog -51.2％ YoY, ¥4,736M

◼Factory Automation

・Factory Automation orders -20.4％ YoY

・Q4E backlog +78.0％ YoY, ¥1,321M


10,327 9,706 9,524

7,141

5,774 4,736

761 742 815 1,012 1,056 1,321

0

5,000

10,000

FY18Q3 FY18Q4 FY19Q1 FY19Q2 FY19Q3 FY19Q4

Machine Tool Factory AutomationBacklog

10

Construction & Piping Products Main Points

◼Building Supplies・In-house products：Turnbuckle brace sales down（-2.5% YoY）

→Volume -5.9％ YoY、Ave. unit price +3.6％ YoY

→Improved productivity with the new production system

・Purchasing supplies：High strength bolts sales up（+19.0% YoY）

→Volume -1.1％ YoY, Ave. unit price +20.2％ YoY

◼Piping Products ・Effect of strategy by targeting based on industry classification of users

・Operating the Seibu Contact Center as a demonstration base for improving businessproductivity


11

B/S(Consolidated)

March 31, 2019 March 31, 2020 Change

Current assets 48,150 45,069 (3,080)

Noncurrent assets 18,838 21,819 2,980

Total assets 66,988 66,888 (99)

Current liabilities 25,578 24,050 (1,527)

Noncurrent liabilities 719 535 (183)

Total liabilities 26,297 24,586 (1,710)

Shareholders' equity 39,340 41,365 2,024Accumulated othercomprehensive income 1,349 798 (551)

Non-controlling interests - 138 138

Total net assets 40,690 42,302 1,611

Total liabilities and net assets 66,988 66,888 (99)

Equity Ratio 60.7% 63.0%


12


Cash Flows (Consolidated)

FY18 FY19 Change

Cash flows from operating activities

3,757 4,750 992

Cash flows from investing activities

(1,216) (3,550) (2,334)

Free cash flows 2,540 1,199 (1,341)

Cash flows from financing activities

(796) (1,520) (723)

Cash and cash equivalents at end of the period

13,056 12,883 (172)


13


Business InvestmentDepreciation & Amortization

Recording amortization of goodwill due to consolidation of Security Design

FY15 FY16 FY17 FY18 FY19

Business investment 1,663

・New ShigaPlant (Buildings,

Machines)・Facilities

renewal atbranches

1,710・New

productionsystem

・Shiga PlantFacilities

・Facilitiesrenewal atbranches

1,157・G-NET

Nagoya・New

productionsystem

・Facilitiesrenewal atbranches

1,193・G-NET

Nagoya・Gifu Shoji

HQ・Facilities

renewalat branches

1,827・Shiga Plant Ⅱ

land,etc. ・Machines for

production・Gifu Shoji

HQ・Facilities

renewal atbranches

Depreciation &amortization 392 533 666 611 698

Amortization of goodwill - - - - 54

PPoint


14


Returns to shareholders

Dividend down based on dividend payout ratio of 30% due to a decrease in consolidated net income

FY15 FY16 FY17 FY18 FY19

EPS 166.69 161.06 159.44 199.57 193.71

Dividend per

share50.50 48.50 48.00 60.00 58.50

Share price

(Fiscal year-end)1,685 1,687 1,825 1,612 1,442

PPoint


15


FY20 Earnings Forecasts

Regarding the consolidated earnings forecast for FY20, ending March 31, 2021, Furusato has not determined as it is difficult to reasonably estimate any impact of Covid-19 at this point. We will promptly announce it as soon as the estimate can be made.

16

Verification of the medium-term management planDesign the Future2020

17

876 948 941 988

1,078 1,080

32 35 31 3140 40

2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3

Consolidate net sales

Consolidated operating income

Mid-term Management Plan Overview（Apr. 2017～Mar. 2020）


Aiming for further growth by gathering the power of the group

■ Numerical target

・FY19

・Net sales ¥108B

・Operating income ¥4B

■Business strategy with clear

priority subjects in each business

・Setting priority subjects of each

business and completing initiatives

through regular follow-up meetings

■Realizing M&A strategy

・Collaborating with partners who can

maximize synergies

■Working style reform

・Aiming for realizing workplace

environment with high job satisfaction

Corporate slogan Design the Future 2020One step ahead, pursuing the value customers never experience

18

Current plan Next plan

＊～2019/3 Actual results


Performance（100 million yen）

FY16 FY17 FY18 FY19 Plan

Net sales 941 988 1,078 1,046 1,080

Gross profit 131 136 151 158 159

SG&A 99 104 110 118 119

Op. income 31 31 40 39 40

850

900

950

1,000

1,050

1,100


●Net sales

0

10

20

30

40

50


●Operating income

Summary

■ In FY18, net sales record high (¥107.8B)operating income achieved the target ahead of schedule(¥4.04B)

■In FY19, the final year, fell short of the target due toslowdown in domestic production

●I.E：Developed private brand products and strengthened proposal-basedmarketing by exhibition and sales promotion

●M.T.A: Sold measurement and processing jigs, and automation and heattreatment equipment to Tier 1 of automobile manufacturers in the Chubu area

●H.E.: Strengthened construction functions to meet renovation demand●M.T.: Strengthened proposals for machine and equipment to end users by

door-to-door business●B.S. ：Developed new products centered on building materials and proposed

them through visits to design officesImproved production efficiency with a new production system mainly at theShiga Plant

●P.P.: Expanded sales of fittings and valves to plants and set manufacturersStrengthened the service system in the Kyushu area through the launch of theContact Center

●S.：Strengthened sales with synergies by consolidation of Security Design andformer Security System Division of G-net

Achievement

Challenge

●I.E.: Improving margin and sales efficiency●M.T.A.: Proposing and selling mold-related products, strengthening to

collect information on facility projects ●H.E.: Logistics and design functions for renovation●M.T.: Strengthening system proposals for design and manufacturing

processes ●F.A.: Strengthening engineering function●B.S.: Launching new products and PB products in the market and

stocking themImproved production efficiency at small factories

●P.P.: Sharing sales know-how by industry and fostering humanresources

●S.: Sharing know-how of security products and services establishing training system

19

Mid-term Management Plan Summary（Apr. 2017～Mar. 2020）

Note:I.E.=Industrial Equipment, M.T.A.=Machine & Tools for Automotive,H.E.=Housing Equipment, M.T.=Machine ToolB.S.=Building Supplies, P.P.=Piping Products, S.=Security

Mid-term Management Plan Growth Strategy 1Improving Productivity by Introducing New Production System


■New production system

・Improving planned production

・Trained personnel in charge of facilities

・Improved quality, decreased in claims

・Improved special production

(hot-dip galvanized products, etc.)

■Result of improvement

・Output /hour (all plants）：+24％

・Output/hour（Shiga plant）：+70％

◆ Establishing automatic production system, not depending on manpower toovercome the shortage of labor amid the low birthrate and aging population

◆Generating stable earnings by establishing a production system to survivethe period of sluggish demand

Achievement Challenge

・Staffing plan (not achieved)

・Degree of improvement in

production efficiency

（except Shiga Plant）

・Efficiency of in-process transfer

・Quick delivery

・Improving small factories

・Improving coating process

・Improving press process

・Environmental measures

Vision・Improving efficiency by reviewing

the production system・Increasing efficiency through

the consolidation of production sites・Increasing efficiency through

automation of facilities

Point➡Promoting a new production system

➡Increasing production at the Shiga Plant

➡Reducing workforce through increasedefficiency on automated lines

20


◆Strengthening our capability to respond to the needs for manpower saving,automation and improvement of efficiency in the SMEs

◆Establishing a collaborative system between the company's technical salesand engineering functions and system integrators

21

Vision・Utilizing the Robot Technical

Center (RTC)

・Improving network of system integrator

・Complementing required competencies

・Improving recognition among end-users

Point➡Effective use of RTC with three functions: robot school,

consulting, and trial

➡Developing sales through follow-up approach to robot

school trainees

➡Developing a network by function and area to build an

order system through collaboration with systemintegrators nationwide

➡Covering the shortage of technical sales staff for

meetings at the planning and conceptualization stage

➡Leveraging talented foreign personnel through offshore

development

➡Creating an image drawing of an automation plan by

using 3D CAD

➡Selling robot-based packaging systems directly to end

users as a manufacturer

➡Creating opportunities for proposal sales through direct

visits

Mid-term Management Plan Growth Strategy 2Pursuing Expertise to Strengthen Engineering Capabilities


◆Positioning Security Business as one of the drivers of growth in consolidated earnings

◆Optimizing the business structure through development of the servicebusiness and to expand and stabilize the earnings structure

・Strengthened sales with synergies by

consolidation of Security Design and

former Security System Division of G-net

・Established new sales branches in Hiroshima,

Nagoya, Sendai and Sapporo

・Launched S-DOC (support center) to fulfill user

support

・Established QMC (Quality Management Center)

to improve product quality

Vision

・Expanding the service business

・Enclosing business partnerswith a full support system

Point

➡Stabilizing the earnings structure by increasing thecomposition of the service business

➡Developing and expanding new subscription businesses➡Widely expanding to areas other than security, such as

production facilities and disaster prevention monitoring

➡Setting up a help desk mainly for technology, constructionand operations

➡Tests and inspection by professional staff to maintainquality

➡On-site service by specialized maintenance staff

・Expanding areas other than security, such as

production facilities and disaster prevention

monitoring

→Developing monitoring function, etc.

・Minimizing risk from external environmental

factors, such as overseas products

22

Mid-term Management Plan Growth Strategy 3Demonstrating Synergies Through Collaboration in Security Business

Achievement Challenge


Toward the realization of a sustainable environment and society, we manage our businesses with an awareness of our responsibilities for the impact to the society as a company

■Working style reform

・Reducing overtime work hours

・Creating flexible working environment：

Launching telework and staggered working hours

・ Improving working productivity：

Expanding adoption of RPA, providing mobile devices,

introducing groupware service

・Promoting diversity：Child care support,

support for a balanced life between treatment and work(LTD),

career path support, hiring foreign personnel

23

Mid-term Management Plan Growth Strategy 4

Revising salary levelLaunching telework Career path supportIntroducing RPA

（Reference）FY19 Non-consolidated Results

FY18（Actual）

FY19（Actual）

V.S. Forecast

YoY

Net sales 33,873 34,289 +415 +1.2％

Cost of sales

Gross profit

（%）

26,403

7,469

（22.1％）

26,661

7,627

（22.2％）

+258

+157

+1.0％

+2.1％

SG&A

Operating Income

（%）

5,541

1,928

（5.7％）

5,604

2,022

（5.9％）

+63

+94

+1.1％

+4.9％

Ordinary Income

（%）

2,167

（6.4％）

2,219

（6.5％）

+52 +2.4％

Income taxes 716 730 +14 +2.0%

Net income 1,469 1,469 (0) (0.1)％


24


Disclaimer


This material is prepared for the sole purpose of providing information to use as reference in making investment decisions, and is not intended as a solicitation for investment.

This material contains forward-looking statements that reflects Furusato’s plans and expectations. These forward-looking 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 Group Corporate Planning Dept.

25

4q fy2019 earnings presentation7 rounded down to the nearest million yen sales by segment gross...

Documents