q1 fy2019 earnings presentation - furusato · fy15 fy16 fy17 fy18 fy19 plan business investment...

Q1 FY2019Earnings Presentation

August 2019

First Section of the Tokyo Stock Exchange :8087

Furusato Industries, Ltd.

2Copyright© Furusato Industries, Ltd. All Rights Reserved

1. Group Overview

2. Financial Results

3. Earnings Forecast

4. Non-consolidated Results

Copyright© Furusato Industries, Ltd. All Rights Reserved

33,85431.4％

Equipment and Tools

Seg.

3

FY2018

Construction and Piping Products Seg.

Steel Frame

Building Supplies

PipingProducts

Machine and Facility Seg.

Machine Tool

Factory

Automation

IndustrialEquipment

HousingEquipment

Overseas・Other

Machine and Tools

for Automotive

Steel fabricatorHouse manufacturer

Piping contractor

Subcontractor

Manufacturer

ConsumerNewly-built・remodeling

Local manufacturer(Overseas)Stores(Security)

Automotive

manufacturer

User

Machine& toolsdealers

Machine& toolsdealers

BuilderRemodelingcontractor

Agent

Constructor

26,83024.9％

7,0246.5％

24,14522.4％

49,87346.2％

Net sales% of total sales

107,873/100%

1,92847.7％

68517.0％

1,29732.1％

Op. income% of total sales

4,040/100%

20,56519.1％

3,5803.3％

37,05534.4％

5,2754.9％

7960.7％

6,7456.3％

Security 2,645

＊FY2018 Unconsolidated

Telecom, security,building management company

248

Business StructureRounded down to the nearest million yen

Furusato

G-net

Gifu Shoji

Security

Design

Unconsolidated company：Retra Engineering (Thailand) Co., Ltd., Suzhou Retra Co., Ltd.,

Retra Engineering (Vietnam) Co., Ltd., Robot Technical Center CO., LTD.

[Established] China/Suzhou（２０１２） Thailand/Bangkok（２０１２）Vietnam/Ho Chi Ming（２０１８）

RTC Hyogo（Nishinomiya-city） RTC Tokyo（Ota-ku）

Company Overview

[Headquarters] Chuo-ku, Osaka-city/Ota-ku, Tokyo

[Bases] ５１（Sales Base）１０（Production Base）２（Distribution Base）

[Employees] １，０８３（Consolidated）５２０（Non-consolidated）

[Established] １９５９ [Capital] ¥５,２３２M

[Listed] Tokyo 1st [Fiscal Year End] March

[Headquarters] Chuo-ku, Osaka-city

[Branch] Tokyo（Ota-ku）, Nagoya（Naka-ku）, Osaka（Chuo-ku）

[Bases] ４６（Sales Base）３（Distribution Base）

[Employees] ４１９（Non-consolidated）[Established]１９４７ [Capital]¥420M

[Headquarters] Gifu-city

[Bases] ３ Kariya Branch, Hamamatsu Branch, Kita-kyushu subbranch

[Employees] ６６（Non-consolidated） [Established]１９３４ [Capital] ¥10M

[Headquarters] Minato-ku, Tokyo[Bases] ６ Sapporo, Sendai, Nagoya, Osaka, Hiroshima, Fukuoka[Employees] ７８（Non-consolidated）[Established] １９９９ [Capital] ¥１00Ｍ

Copyright© Furusato Industries, Ltd. All Rights Reserved 4

Local company

Retra

Consolidated company



Robot Technical Center

Furusato Group Overview

Unconsolidated

Company Business Business overview Operating structure

Building SuppliesSales of hardware for buildings, fastening products, welding supplies, machine & tools, consumables, etc.

Direct sales to steel fabricators

Piping ProductsSales of pipes, pipe fittings, valves, machine and tools, fastening products, etc.

Direct sales to piping contractors

Industrial Equipment

Sales of consumable tools, built-in tools, physical distribution machine, facility equipment, consumables, etc.

Wholesale to machine and tools dealers

Machine ToolSales of machine tools, industrial robots, etc.

Wholesale to machine dealers

Factory Automation

Sales of machine tools, industrial robots, specialized machine, etc. Direct sales to suppliers

Housing Equipment

Sales of kitchens, baths, wash rooms, toilets, boilers, etc.

Wholesale to hosing equipment dealers

Machine and Tools for Automotive

Sales of cutting tools, die-related tools, machine tools, etc.

Direct sales to automotive industry

SecurityIntroduction of crime prevention monitoring system and access control service, sales of security devices

Direct sales to telecom, security and building management companies


Sales of cutting tools, machine tools & peripherals, equipment for production line automation, purchasing from local companies, exports to Japan

Direct sales to local Japanese companies and local companies

Providing test trial, consulting and operator training for industrial robotic systems

For companies that have already introduced or are considering to introduce robots

Furusato Group Overview

Local company

Retra

Robot Technical Center


1. Group Overview





Net sales✓ ¥25,094M ＋¥429M, +1.7% YoY✓ Over ¥25B for the first time in Q1 due to

consolidation of Security Design

Gross profit✓ ¥3,724M +¥333M, +9.8% YoY✓ Gross profit margin +1.1P YoY

SG&A ✓ ¥2,935M +¥219M, +8.1% YoY✓ Increase in personnel expenses and depreciation

and amortization, amortization of goodwill, etc.

Operating income✓ ¥788M +¥113M, +16.8% YoY

Q1 FY18 Financial Results Summary


（Millions of yen） Q1 FY18 Q1 FY19YoY

%

Q2 FY19

ForecastProgress

%

Net sales 24,665 25,094 +1.7% 53,100 47.3%

Gross profit 3,391 3,724 +9.8% 7,800 47.7%

SG&A 2,716 2,935 +8.1% 5,900 49.8%

Operating income 674 788 +16.8% 1,900 41.5%

Ordinary income 800 893 +11.6% 2,100 42.6%

Net income attributable to owners of parent 500 576 +15.2% 1,370 42.1%

● Net sales: +¥429M due to the addition of Security Business from Q1 FY19(¥500M)

● Gross profit: Security Business high margin, Machine & Tools Seg. + 1.3P

● SG&A : Equipment & Tools Seg. +17.4%, Security Business added

● Operating income: Equipment & Tools Seg., Machine & Facility Seg. down, Construction and Piping Products Seg. + 44.6%

P/L (Consolidated)

△176

Machine &

Facility Seg.

+29

Equipment &

Tools Seg.


Net Sales by Segment

Q1 FY18 Q1 FY19 YoY YoY%

Equipment &Tools

Industrial Equipment 9,052 8,398 (653) (7.2)%

Machine & Tools For Automotive

1,547 1,863 +315 +20.4%

Housing Equipment 1,259 1,314 +54 +4.3%

Security - 500 +500 -

Other 240 54 (186) (77.5)%

Total 12,100 12,130 +29 +0.2%

Machine &Facility

Machine tool 4,009 4,045 +36 +0.9%

Factory Automation 656 444 (212) (32.3)%

Total 4,666 4,489 (176) (3.8)%

Construction & Piping

Building Supplies 6,217 6,828 +611 +9.8%

Piping Products 1,681 1,646 (35) (2.1)%

Total 7,898 8,474 +576 +7.3%

Consolidated total 24,665 25,094 +429 +1.7%

+576

Construction &

Piping

Products Seg.

25,094

Q1 FY18 Q1 FY19

24,665

+429

Rounded down to the nearest million yen

△158

+58


Changes in Operating Income by Factor

788

Q1 FY18 Q1 FY19

674

+113

+274 +15

△76

Sale

s Change

(Incre

ase

)

Change in

sale

s mix

Cost re

ductio

n, e

tc.

Sellin

g E

xpense

s

Perso

nnel e

xpense

s

Genera

l &

adm

inistra

tive e

x.

and o

thers

(+16.8%)

3.1%2.7%


Q1 FY18 Q2 Q3 Q4 Q1 FY19 YoY

Net sales 12,100 12,182 12,853 12,736 12,130 +0.2%

Industrial equipment 9,052 9,040 9,598 9,363 8,398 -7.2%

Machine and Tools For Automotives 1,547 1,678 1,634 1,885 1,863 +20.4%

Housing Equipment 1,259 1,270 1,406 1,338 1,314 +4.3%

Security 500 -

Other 240 192 213 148 54 (77.5)%


Equipment and Tools Segment

234

363 326

373

210

0

100

200

300

400

500

600

700

Q1 FY18 Q2 Q3 Q4 Q1 FY19

Operating Income

(△10.2%)[Factors behind the decline]

・ Gross profit +12.5%

・ SG&A +17.4%




Machine & Facility Segment

57 102

311

213

53

0

100

200

300

400

500

600

700

Q1 FY18 Q2 Q3 Q4 Q1 FY19

Operating Income(△8.1%)


Net sales 4,666 5,896 7,619 5,963 4,489 (3.8)%

Machine tool 4,009 4,929 6,499 5,127 4,045 +0.9%

Factory Automation 656 967 1,120 836 444 (32.3)%

[Factors behind the decline]

・ Net sales △3.8%

・ No change in margin



194,388 194,217 172,383 142,378 123,934

-36.2%

277,212 250,763 234,363

223,429 192,183 -30.7%

0

100,000

200,000

300,000

400,000

500,000

Q1FY18

Q2 Q3 Q4 Q1FY19

Orders Received for Machine Tool(Japan Machine Tool Builders Association)

Overseas

demand

Domestic

demand



(△33.0%)

YoY Q1 FY18 Q2 Q3 Q4 Q1 FY19

Machine tool(Orders received) (4.4)% +32.4% (19.4)% (18.8)% (29.7)%

Machine Tool(Backlog) +58.6% +92.6% +31.0% +5.9% (7.9)%

Factory Automation (Orders received) +11.1% (12.3)% (5.5)% (16.4)% (45.8)%

Factory Automation(Backlog) +74.9% +30.5% (30.3)% (31.1)% (38.6)%




351

508 623

444 508

0

200

400

600

800

1,000

Q1 FY18 Q2 Q3 Q4 Q1 FY19

Operating Income(+44.6%)


Net sales 7,898 8,598 9,153 8,205 8,474 +7.3%

Building Supplies 6,217 6,836 7,347 6,430 6,828 +9.8%

Piping Products 1,681 1,762 1,805 1,775 1,646 (2.1)%

[Factors behind the increase]

・ Net sales +7.3%

・ Gross profit margin +0.6P

Construction & Piping Products Segment



87,000

87,000

89,000 89,000 89,000

50,000

60,000

70,000

80,000

90,000

100,000

Q1

FY18

Q2 Q3 Q4 Q1

FY19

Steel Product Price


YoY Q1 FY18 Q2 Q3 Q4 Q1 FY19

(Product A) Sales +9.0% +9.3% +9.8% +11.1% +0.6%

Volume +0.3% +0.5% +1.2% +1.8% (5.2)%

Ave. Unit price +7.5% +8.1% +8.4% +9.0% +6.2%

(Product B) Sales +9.4% +21.3% +11.4% +37.5% +44.0%

Volume +7.4% +15.9% +2.9% +19.4% +17.0%

Ave. Unit price +1.8% +4.7% +8.0% +15.2% +23.0%

1,347,662 1,356,566 1,266,727 1,106,972 1,217,369

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Q1

FY18

Q2 Q3 Q4 Q1

FY19

Steel Frame UsedUnit: tons Unit: yen/ton



Investing activities

△209

Operating activity+860


Cash Flows

Cash flow from operations Cash flow from investing Cash flow from financing

Income before income taxes

+893 Purchases of property, plant and equipment

(179) Repayment of long-term debt

(25)

Depreciation &amortization

+155 Other (29) Dividend per share

(765)

Provision for bonuses

+321 Other (0)

Decrease in accounts receivable

+3,214

Increase in inventory assets

(366)

Decrease in notes and accounts payable

(2,423)

Income taxes paid

(1,027)

Other +94

Total +860 Total (209) Total (791)

Financing activities

△791 13,065

Beginning Year-end

13,056

+8Increase due

to new consolidation

+148



1,663 1,710

1,157 1,193

1,000

392 533

666 611 630

0

500

1,000

1,500

2,000

FY15 FY16 FY17 FY18 FY19 Plan

Business Investment Depreciation & Amortization

FY15 FY16 FY17 FY18 FY19 plans

BusinessInvestment

1,663

・ New Shiga Plant(Buildings, Machines)

・ Facilitiesrenewal atbranches

1,710

・ New productionsystem

・ Shiga PlantFacilities

・ Facilitiesrenewal atbranches

1,157

・ G-NET Nagoya・ New production

system・ Facilities

renewal atbranches

1,193

・ G-NET Nagoya・ Gifu Shoji

Headquarters・ Facilities renewal

at branches

1,000

・ Shiga Plant Ⅱ・ Gifu Shoji

Headquarters・ Facilities

renewal atbranches

Depreciation &amortization

392 533 666 611 630

Business InvestmentDepreciation & Amortization




166.69 161.06 159.44

199.57 203.50

50.50 48.50 48.00 60.00 61.50

0.00

50.00

100.00

150.00

200.00

250.00

FY15 FY16 FY17 FY18 FY19 Forecast

EPS Dividends

FY15 FY16 FY17 FY18 FY19 Forecast

EPS 166.69 161.06 159.44 199.57 203.50

Dividends 50.50 48.50 48.00 60.00 61.50

Share price(Fiscal year-end)

1,685 1,687 1,825 1,612 1,414*

Unit: yen

Unit: yen

* : Stock price at Q1E

Returns to shareholders


1. Group Overview





Basis of FY19 Earnings Forecast

Business Environment Forecast⚫ Industrial Production；Flat～slightly up

⚫ Domestic automotive demand；Slightly down～flat

⚫ New construction starts of houses；Single-digit decrease

⚫ Orders received for machine tools；Double-digit decrease（Forecast by Japan Machine Tools Builders Association ▲11.9％）

⚫ Steel frame used for buildings；Flat～slightly up＊Towards end of demand for Tokyo Olympic Games

⚫ Trends before and after consumption tax hike；Unpredictable, uncertain

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

Consolidated net sales

Consolidate operating income

Current plan Next plan

＊～2019/3 Actual results

Aiming to achieve the goal of a mid-term management plan amid uncertain business environment

2020/3

Net sales ¥108BOp. income ¥4B


Earnings Forecast (Consolidated)

（Millions of yen） H1YoY％ H2

YoY％

FULL

YEARYoY

%

Net sales 53,100 +3.4％ 54,900 (2.9)％ 108,000 +0.1％

Gross profit 7,800 +7.8％ 8,100 +2.9％ 15,900 +5.2％

SG&A 5,900 +6.2％ 6,000 +8.9％ 11,900 +7.5％

Operating income 1,900 +13.3％ 2,100 (11.1)％ 4,000 (1.0)％

Ordinary income 2,100 +11.6％ 2,300 (9.3)％ 4,400 (0.4)％

Net income attributable to owners of parent 1,370 +10.8％ 1,580 (4.6)％ 2,950 +2.0％

Aiming to YoY growth of net income targeting the goal of a mid-term management plan



Equipment & Tools Segment


YoY％

FULL

YEARYoY

%

Net sales 26,000 +7.1％ 26,600 +3.9％ 52,600 +5.5％

Industrial Equipment 18,400 +1.7% 18,700 (1.4)% 37,100 +0.1%

Machine and Toolsfor Automotive 3,300 +2.3% 3,480 (1.1)% 6,780 +0.5%

Housing Equipment 2,500 (1.2)% 2,600 (5.3)% 5,100 (3.3)%

Security 1,650 - 1,650 - 3,300 -

Others 150 (65.4)% 170 (53.1)% 320 (59.8)%

Gross profit 3,290 +17.8％ 3,390 +16.0％ 6,680 +16.9％

SG&A 2,600 +18.4％ 2,600 +17.0％ 5,200 +17.7％

Operating income 690 +15.4％ 790 +12.9％ 1,480 +14.1％

Sales & income growth due to inclusion of Security Business


（Millions of yen）H1

YoY％ H2

YoY％

FULL

YEARYoY

%

Net sales 10,300 (2.5)％ 10,900 (19.9)％ 21,200 (12.2)％

Machine Tools 8,700 (2.7)% 9,000 (22.6)% 17,700 (13.9)%

Factory Automation 1,600 (1.5)% 1,900 (2.9)% 3,500 (2.2)%

Gross profit 830 (0.9)％ 870 (19.8)％ 1,700 (11.6)％

SG&A 550 (18.8)％ 550 (1.8)％ 1,100 (11.1)％

Operating income 280 +74.2％ 320 (39.0)％ 600 (12.4)％

Sales & income decrease due to deteriorating business environment





YoY％

FULL

YEARYoY

%

Net sales 16,800 +1.8％ 17,400 +0.2％ 34,200 +1.0％

Building Supplies 13,200 +1.1% 13,800 +0.2% 27,000 +0.6%

Piping Products 3,600 +4.5% 3,600 +0.5% 7,200 +2.5%

Gross profit 3,680 +2.1％ 3,840 (0.7)％ 7,520 +0.7％

SG&A 2,750 +0.2％ 2,850 +1.9％ 5,600 +1.1％

Operating income 930 +8.1％ 990 (7.3)％ 1,920 (0.4)％

Building Supplies flat, Piping Products up




1. Group Overview




26

（Millions of yen） Q1 FY19 YoYYoY%

Net sales 8,477 +575 +7.3%

Gross profit 1,912 +175 +10.1%

SG&A 1,404 +18 +1.3%

Operating income 508 +156 +44.6%

Ordinary income 550 +111 +25.5%

Net income 365 +95 +35.1%


Non-consolidated Results－Furusato

27


Net sales 14,566 (1,050) (6.7)%

Gross profit 1,333 (72) (5.2)%

SG&A 1,172 (34) (2.8)%

Operating income 161 (38) (19.2)%

Ordinary income 213 (37) (15.1)%

Net income 132 (26) (16.5)%


Non-consolidated Results－G-net

28


Net sales 1,863 +315 +20.4%

Gross profit 270 +24 +9.9%

SG&A 155 +2 +1.4%

Operating income 114 +22 +23.9%

Ordinary income 138 +29 +27.1%

Net income 90 +19 +27.7%


Non-consolidated Results－Gifu Shoji

29

（Millions of yen） Q1 FY19

Net sales 502

Gross profit 207

SG&A Ex. 206

Operating income 0

Ordinary income 5

Net income 2


Non-consolidated Results－Security Design


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.

Corporate Planning Dept.

ＴＥＬ：０６－６９４６－９６２１

ＦＡＸ：０６－６９４６－１９３４

E-mail ：[email protected]

Furusato Industries, Ltd.


Group Initiatives


Initiatives for growth

Steel Frame Building Supply BusinessSecuring earnings by developing original unique products

Construction method of exposed-type fixed column baseFree Base

⚫ In-house development based on a different approach from other construction method of exposed-type fixed column base

⚫ Benefiting for both designers and clients

⚫ Ensuring high quality by providing supplies and construction work

Laser blast method Laser KEREN

⚫ Devise to remove rust and old coating film by laser irradiation

⚫ Realize small-size, high-efficiency, high-output with special structures

⚫ Diverse applications in steel structures, repair of bridges, construction of large infrastructure

Brace cover series

⚫ Cover series to enhance the design and safety of turnbuckle braces

⚫ Made of resin; easy to install, color selection available

⚫ Winning a Good Design Award, changing image of Furusato group


Piping Products BusinessRationalizing by improving work efficiency through sharing specialized works

Problems

Specialized knowledge is required to cover a wide range of piping products

Sales representatives with specialized knowledge cover all tasks from taking orders, inquiries and other administrative processes

This photo is for illustrative purpose.

Establishing a contact center

⚫ Operation center specializing in piping products

⚫ Covering some piping products sales offices

⚫ Easy to build and share expertize

⚫ Lowering employee turnover and utilizing skilled workers

April 2019 Seibu Contact Center established（Kita-Kyushu-shi）⇒Aiming to expand in other regions



Factory Automation BusinessEarly establishment of robotic system integrator business

⚫ Enhancing recognition as a trading company with engineering function

⚫ Establishing SIer network Establishing 7 blocks nationwide

⚫ Acquiring projects through PR to RTC trainees, our potential users

SIer

Supplier (manufacturer)➢ Robot➢ Machine・Facility➢ Equipment

Business Model

Supplier

G-net

User

User➢ SMMs→Lack or weakness

in Productiontechnology functions

RTC

Introduction

ServiceClient info.

・Operator Training・Consulting・Trial

Trainees

Strategy

⚫ Establishing production system；Nationwide 7-block SIercollaboration system

⚫ Targeting marketing；Trainee information, exhibitions, sales support tool

⚫ Division of works；G-net covers previous and following processes, SIer can concentrate manufacturing

⚫ Overseas；Local company of users, possible to cover in Japan

＊SIer：System integrator

＊RTC：Robot technical Center

Design, manufac

turing

Business Relationship

Proposal-style salesConceptual Design

QuotationAdjustment

install

Risk

⚫ Trends in government subsidies⚫ State of business succession among SMMs⚫ Operating state of installed systems＝Skills of SIer



Security Business Business expansion as a security system integrator

Project sales

⚫ Specialized in handling of physical security for offices, key facilities, etc.

⚫ Providing world-leading and global standard solutions

⚫ Providing comprehensive services from design to operation after installing the system as a system integrator



Supplier(Manufacturer)➢ Camera➢ Security system➢ Equipment

Business model

Security Design

User➢ Plant➢ Office➢ Shop➢ School, etc.

Delivery

・Introduction of systems of western countries・Security SIer・Comprehensive service Design～Maintenance

Supplier

Project

User

Strategy

⚫ Leading-edge solution；LENEL system(USA) etc.⚫ Reinforcing service function；S-DOC（help-desk, support center）⚫ Expanding market；Business base development

（７ bases→ongoing development）⚫ Company structure；Establishing an appropriate structure as a

subsidiary of the listed company

Risk

⚫ Trends in government-affiliated brand in China

⚫ Demand trend after Tokyo Olympic Games

⚫ Recruiting human resources

Business model of Security Design

Product・Service

Telecom

company,

etc.

Security

company,

etc.



Renovation of workplace environmentGrowth strategy to secure earnings by securing outstanding talents and improving productivity

Purposes

⚫ Increasing the number of applicants and securing the number of recruits

⚫ Reducing avoidable turnover and preventing outflows of talents

⚫ Realizing both reduction of working hours and growth of Furusato Group

Revising salary levels

• Appealing to applicants

• Preventing turnover by improving working conditions of younger Employees

Launching telework

• Realizing diverse working styles

• Effective use of private time

Career path support

• Group-wide FA system and job posting system

• Maximizing each capabilities through optimization

Improving working environment

• Remodeling offices ongoing

• Organizing environment matched with quality and performance of the company

Lunching RPA

• Reducing workload through automation

• Promoting accuracy and speed of work

Trial use of AI

• Testing application of AI

• Continuing research including usage scenes


q1 fy2019 earnings presentation - furusato · fy15 fy16 fy17 fy18 fy19 plan business investment...

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