financial results for fy2016-q3 · tools to shape metal tools to make holes tools to shape metal...
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© 2016 OSG Corporation 0
Financial Resultsfor FY2016-Q3
October, 2016
OSG Corporation
© 2016 OSG Corporation 1
2. Strengths
・High-value added cutting tools
・Excellent after-sales service
・Global sales & service network across 30 countries
OSG at a glance
Tap
Rolling dies
End mill
Drill
Indexabletools
1. Products
・Consumable cutting tools used in machine tools
・World leader in market share (30%) in taps
3. Dividend policy
・Maintain over 30% payout ratio (consolidated)
Tools to cut threads
Tools to shape metal
Tools to make holes
Tools to shape metal
Tools to form threads4. Growth strategies
・Development of New Customers
・Flagship Products Strategy
・M&A strategy
Note regarding forecast
This material includes forward-looking statements based on information available at the time of release. The forecasts and other forward-looking statements are not guarantees of future performance. Actual financial results may differ from the above forecasts due to known and unknown risks, uncertainties, and other factors.
© 2016 OSG Corporation 2
Financial summaryFY15-Q3 FY16-Q3
9 months 9 months
Net sales 83,824 78,652 -5,172 -6.2% 106,000
Operating profit 16,680 14,467 -2,213 -13.3% 18,000
OPM 19.9% 18.4% - - 17.0%
Ordinary profit 16,631 13,845 -2,786 -16.8% 17,700
Net profit attributable to
OSG Corporation9,941 8,448 -1,493 -15.0% 10,700
EPS(yen) 104.68 91.70 -12.98 -15.0% 116.15
ChangeFY16 fcst.
Annual
(Millions of yen)
0
1,000
2,000
3,000
4,000
5,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net sales Operating profit Net profitOrdinary profit
FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16
*Revised 7.July
*
© 2016 OSG Corporation 3
ReviewDecrease in sales and profit
– The reduction in sales and operating profits in China and the US has caused a decline in sales and profits.– Sales compared with the previous first-half was slightly increased, excluding exchange rate factors.
Stable financial condition
– Equity ratio 58.5% (purchasing of treasury stock, 7.6 point decrease from the end of FY2015)– EBITDA in 9 months (margin) 202 billion yen (25.7%)– ROE 12.9% (as of the end of FY2015)
Review by region– Japan
The domestic have slightly increased, however, exports to China and the US have decreased. Overall results shows a decrease.
– The AmericasThe US was flat. Mexico remained good.
– EuropeGenerally remained strong.
– AsiaGreater China and South Asia is on track to recovery. Korea was flat.
Capital Investment Results- CAPEX 9.8 billion yen (annual forecast of 12.5 billion yen)
- Depreciation 5.7 billion yen (annual forecast of 8.1 billion yen)
© 2016 OSG Corporation 4
Operations by geographical segmentFY15-Q3 FY16-Q3
( 9 months ) ( 9 months )
Japan Net Sales 49,896 48,546 -1,350 -2.7%
O.P 8,602 7,146 -1,455 -16.9%
O.P.M 17.2% 14.7%
The Americas Net Sales 16,696 14,917 -1,778 -10.7%
O.P 2,647 2,064 -583 -22.0%
O.P.M 15.9% 13.8%
Europe Net Sales 8,392 9,200 807 +9.6%
O.P 959 892 -67 -7.0%
O.P.M 11.4% 9.7%
Asia Net Sales 25,442 20,530 -4,912 -19.3%
O.P 5,219 3,741 -1,477 -28.3%
O.P.M 20.5% 18.2%
Total Net Sales 100,427 93,194 -7,233 -7.2%
O.P 17,428 13,845 -3,583 -20.6%
Eliminations Net Sales -16,603 -14,541 2,061 -
O.P -748 621 1,369 -
Consolidated Net Sales 83,824 78,652 -5,172 -6.2%
O.P 16,680 14,467 -2,213 -13.3%
O.P.M 19.9% 18.4%
Change
(Millions of yen)
© 2016 OSG Corporation 5
Net sales by geographical segment
6,6036,5157,226
7,590 7,925
8,9278,589
7,4146,793
7,152
6,583
0
2,000
4,000
6,000
8,000
10,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
5,031 5,046
5,629
4,8395,288
5,6375,428
4,9344,7684,505
4,191
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
15,439
17,323
14,54516,22915,597
16,87415,831
17,776 17,943
15,78316,288
0
4,000
8,000
12,000
16,000
20,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Japan The Americas
Europe Asia
FY15 FY16FY14 FY15 FY16FY14
FY15 FY16FY14 FY15 FY16FY14
(Millions of yen)
2,781
3,3413,0763,020
2,7992,8552,738
2,4072,5612,541
2,406
0
1,000
2,000
3,000
4,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
© 2016 OSG Corporation 6
Operating profit by geographical segment
1,3011,145
1,250
1,4751,4431,561
1,982
1,675
1,0761,178
1,262
0
400
800
1,200
1,600
2,000
2,400
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Japan The Americas
Europe Asia
FY16FY14 FY15 FY16FY14
FY15 FY16FY14 FY15 FY16FY14
FY15
2,141
2,890
2,333
2,798
3,144
2,5672,5732,393
2,2412,104
2,672
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
659
946
711
840878
822
616667
515
204
694
0
200
400
600
800
1,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
341
222254
310332
228
290
386
282 287
328
0
100
200
300
400
500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
(Millions of yen)
© 2016 OSG Corporation 7
Overseas sales ratio
48.6%
49.7%48.0%
53.5%
54.6%57.8%
55.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
0
20,000
40,000
60,000
80,000
100,000
120,000
FY10 FY11 FY12 FY13 FY14 FY15 FY16-Q3
Asia
Europe
The Americas
Japan
Millions of yen
Japan44.4%
AM18.7%
Europe11.7%
Asia25.2%
FY16-Q3( 9 months )
( 9 months )
© 2016 OSG Corporation 8
15/11E 16/08E Change
Cash & TD 21,472 16,389 -5,083
Receivables 21,519 19,147 -2,371
Inventories 30,673 31,101 428
Other current assets 5,026 4,723 -302
Fixed assets 76,437 76,731 294
Total assets 155,129 148,094 -7,035
Total current liabilities 23,515 23,655 140
Total long-term liabilities 17,976 27,570 9,593
Total net assets 113,637 96,868 -16,769
Total liabilities and net assets 155,129 148,094 -7,035
Equity ratio 66.1% 58.5%
Receivable turnover period 70 67 日
Inventory turnover period 3.3 3.6 ヶ月
Cash and TD 21,472 16,389 -5,083
Debt 20,195 34,707 14,511
Net Cash 1,276 -18,318 -19,594
(Millions of yen)
B/S overview
Cash and T
D
Receivables
Inventories
Fixed assets
Other current assets
Current liabilities
Long-term liabilities
Net assets
Changes in B/S
-5,083
-2,371
+428 +294
-302
+140
+9,593
-16,769
-20,000
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
© 2016 OSG Corporation 9
Sales ProfitConsolidated results■Financial forecast (Revised 7.July)
Interim Year-end AnnualPayout
ratio
Dividend per share (yen) 22.00 28.00 50.00 43.0%
■Dividend forecast
Exchange rateFY2015-Q3 result : 1US$= 120.96yen 1Euro=135.70yenFY2016-Q3 result : 1US$= 111.00yen 1Euro=123.17yenFY2016 forecast : 1US$= 108.50yen 1Euro=120.00yen
Amount Growth Amount Growth
Net Sales 106,000 -5.3% 50,000 -6.0%
Operating profit 18,000 -16.7% 6,000 -28.8%
as % of sales 17.0% 12.0%
Ordinary profit 17,700 -17.7% 8,000 -27.6%
as % of sales 16.7% 16.0%Net profit attributable
to OSG Corporation10,700 -14.5% 6,100 -22.9%
as % of sales 10.1% 12.2%
EPS (yen) 116.15 66.21
CAPEX 12,500
Depreciation 8,100
Consolidated Parent company
Forecast for FY2016 (Revised)(Millions of yen)
0
20,000
40,000
60,000
80,000
100,000
120,000
'10
'11
'12
'13
'14
'15
'16fcst
0
4,000
8,000
12,000
16,000
20,000
24,000Sales
O.P
N.P
Headquarters
© 2016 OSG Corporation
Technology Center 6 countries
Sales & Manufacturing Locations- Face-to-Face Style Sales Org. 30 countries- Manufacturing Locations 16 countries
OSG’s Global Network (30 countries)
© 2016 OSG Corporation 11
(Millions of yen)Appx.1 Consolidated balance sheet15/11E 16/08E Change 15/11E 16/08E Change
Current Assets 78,692 71,362 -7,329 Current Liabilities 23,515 23,655 140
Cash & time deposits 21,472 16,389 -5,083 Payables 4,980 4,525 -454
Receivables 21,519 19,147 -2,371 Short-term loans payable 4,052 8,988 4,935
Inventories 30,673 31,101 428 Current Portion of LT loans payable 445 557 111
Other 5,215 4,896 -319 Income taxes payable 3,486 1,176 -2,309
Allowance for -188 -172 16 Accured expenses 6,715 3,695 -3,020
doubtful accounts Other 3,834 4,712 878
Fixed Assets 76,437 76,731 294 Long-term Liabilities 17,976 27,570 9,593
PP&E 63,276 63,409 133 Convertible bonds 14,850 14,850 0
Intangible assets 1,254 3,455 2,200 Long-term loans payable 847 10,311 9,464
Investments & other 11,906 9,866 -2,039 Other 2,279 2,408 128
Total Liabilities 41,491 51,225 9,733
Total Equity 113,637 96,868 -16,769
Common stock 10,404 10,404 0
Capital surplus 12,090 12,090 0
Retained earnings 75,719 80,154 4,434
Current ratio 335% 302% -33pt Treasuary stock -1,104 -10,965 -9,860
Quick ratio 183% 150% -33pt Unrealzed gain on 2,709 1,772 -936
Equity capital 102,566 86,698 -15,868 available-for-sale securities
Equity ratio 66.1% 58.5% -7.6pt Deferred gain on 2 37 35
Equity per share(yen) 1,079.12 963.04 -116.08 derivatives under hedge accounting
Interest-beating debt 20,195 34,707 +14,511 Foreign currency 2,745 -6,796 -9,541
Net Cash 1,276 -18,318 -19,594 translation adjustments
Subscription rights to shares - 13 13
Noncontrolling interests 11,071 10,157 -914
Total 155,129 148,094 -7,035 Total 155,129 148,094 -7,035
© 2016 OSG Corporation 12
Q1 Q2 Q3 Q4
% % % % % %
Net sales 26,665 29,521 27,637 28,092 25,814 100.0 27,670 100.0 25,168 100.0 78,652 100.0 83,824 100.0 -5,172 -6.2
Cost of sales 14,899 16,424 14,840 15,701 14,153 54.8 15,512 56.1 13,829 54.9 43,496 55.3 46,164 55.1 -2,668 -5.8
Gross profit 11,765 13,097 12,797 12,391 11,660 45.2 12,157 43.9 11,338 45.1 35,156 44.7 37,660 44.9 -2,504 -6.6
SG&A expenses 6,911 6,935 7,133 7,474 6,869 26.6 7,112 25.7 6,706 26.6 20,689 26.3 20,980 25.0 -291 -1.4
Operating profit 4,854 6,161 5,663 4,917 4,791 18.6 5,044 18.2 4,631 18.4 14,467 18.4 16,680 19.9 -2,213 -13.3
Non-operating profit 334 245 317 338 329 244 241 815 897 -81
Non-operating expenses 420 205 320 376 642 304 489 1,437 946 491
Ordinary profit 4,769 6,201 5,660 4,878 4,478 17.3 4,984 18.0 4,382 17.4 13,845 17.6 16,631 19.8 -2,786 -16.8
Extraordinary gain 0 0 0 0 0 0 0 0 0 0
Extraordinary loss 0 0 0 147 0 0 0 0 0 0
Profit before taxes 4,769 6,201 5,660 4,731 4,478 17.3 4,984 18.0 4,382 17.4 13,845 17.6 16,631 19.8 -2,786 -16.8
Income taxes 1,630 1,893 1,929 1,773 1,456 1,551 1,484 4,491 5,452 -961
Net profit attributable to
noncontrolling interests336 496 404 382 316 321 266 905 1,237 -331
Net profit attributable to
OSG Corporation2,803 3,811 3,327 2,576 2,705 10.5 3,110 11.2 2,632 10.5 8,448 10.7 9,941 11.9 -1,493 -15.0
Change9 monthsQ1 Q2 9 months
FY2015FY2015 FY2016
Q3
(millions of yen)Appx.2 Consolidated income statement
© 2016 OSG Corporation 13
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-Q3
Net sales (mill.yen) 94,164 97,024 53,325 69,513 80,959 84,083 88,378 101,031 111,917 78,652
Sales growth (%) 6% 3% -45% 30% 16% 4% 5% 14% 11% -6%
Cost of sales (mill.yen) 58,159 60,449 39,203 44,605 48,439 49,381 52,777 58,061 61,865 43,496
Gross profit (mill.yen) 36,004 36,574 14,122 24,907 32,519 34,702 35,601 42,970 50,051 35,156
SG&A expenses (mill.yen) 20,647 22,158 16,857 17,383 20,214 20,747 22,774 25,554 28,454 20,689
Operating income (mill.yen) 15,356 14,416 -2,735 7,524 12,305 13,954 12,827 17,415 21,597 14,467
Ordinary income (mill.yen) 14,570 13,505 -2,703 6,699 11,374 13,695 13,910 17,568 21,510 13,845
Net income attributable to OSG corp. (mill.yen) 8,013 7,376 -3,769 3,772 5,904 7,138 8,619 9,989 12,518 8,448
Gross profit / sales (%) 38.2% 37.7% 26.5% 35.8% 40.2% 41.3% 40.3% 42.5% 44.7% 44.7%
SG&A expenses / sales (%) 21.9% 22.8% 31.6% 25.0% 25.0% 24.7% 25.8% 25.3% 25.4% 26.3%
Operating income / sales (%) 16.3% 14.9% -5.1% 10.8% 15.2% 16.6% 14.5% 17.2% 19.3% 18.4%
Ordinary income / sales (%) 15.5% 13.9% -5.1% 9.6% 14.0% 16.3% 15.7% 17.4% 19.2% 17.6%
Net income attributable to OSG corp. / sales (%) 8.5% 7.6% -7.1% 5.4% 7.3% 8.5% 9.8% 9.9% 11.2% 10.7%
Average FX rate: 1USD (yen) 118.89 107.32 94.94 89.29 80.71 78.89 93.16 102.98 121.03 111.00
Average FX rate: 1Euro (yen) 159.00 161.90 128.83 120.65 112.80 102.63 122.62 139.37 134.92 123.17
Total assets (mill.yen) 127,044 122,383 113,382 105,635 104,373 121,689 134,503 142,302 155,129 148,094
Total shareholders' equity (mill.yen) 64,295 64,251 55,931 57,117 59,367 64,482 80,024 91,458 102,566 86,698
Net income (yen) 82.42 76.53 -39.22 39.34 62.18 75.16 90.76 105.20 131.78 91.70
Cash diviends (interim) (yen) 12.00 12.00 0.00 4.00 6.00 10.00 10.00 14.00 26.00 22.00
(year end) (yen) 14.00 12.00 3.00 8.00 12.00 13.00 20.00 20.00 20.00 28.00(fcst)
Total shareholders' equity (yen) 667.01 666.71 582.19 601.44 625.14 679.01 842.71 963.15 1,079.12 963.04
Numbers of shares issued (ths) 96,393 96,371 96,071 94,969 94,967 94,966 94,963 94,959 94,991 92,124
ROE (%) 12.9% 11.5% -6.3% 6.7% 10.1% 11.5% 11.9% 11.7% 12.9% -
Equity ratio (%) 50.6% 52.5% 49.3% 54.1% 56.9% 53.0% 59.5% 64.3% 66.1% 58.5%
Operating cash flow (mill.yen) 16,733 10,653 6,049 14,095 11,344 12,286 16,171 19,688 19,588 -
Investing cash flow (mill.yen) -9,019 1,678 -4,633 -5,522 -8,195 -19,746 -2,972 -3,119 -16,976 -
Financing cash flow (mill.yen) -6,821 -4,500 5,470 -15,562 -5,855 8,643 -9,423 -12,813 -6,216 -
Cash flow margin (%) 17.8% 11.0% 11.3% 20.3% 14.0% 14.6% 18.3% 19.5% 17.5% -
Appx.3 Selected financial data (consolidated)
© 2016 OSG Corporation