Slide 1: Presentation Materials for the Fiscal Year Ended March 31, 2023
Presentation Materials for the Fiscal Year Ended March 31, 2023 (Based on Japanese GAAP) May 12, 2023 Azbil Corporation RIC: 6845.T, Sedol: 6985543 © Azbil Corporation. All rights reserved.
Slide 2: Highlights
Highlights 1. Consolidated Financial Results for FY2022 We achieved record financial results for the second consecutive fiscal year, with increased revenue and profits. We recorded the highest figures ever for orders received and order backlog (156 billion yen, up 16.2% compared with FY2021). Fa
Slide 3: Contents
Contents 1. Consolidated Financial Results for FY2022 4 2. Consolidated Financial Plan for FY2023 13 3. Returning Profits to Shareholders 18 4. Progress in Implementing the Medium-term Plan 23 Appendix 38 Notes 56 © Azbil Corporation. All rights reserved. 3
Slide 4: 1. Consolidated Financial Results for FY2022
1. Consolidated Financial Results for FY2022 © Azbil Corporation. All rights reserved. 4
Slide 5: Consolidated Financial Results
1. Consolidated Financial Results for FY2022 Consolidated Financial Results Orders received increased for the second consecutive fiscal year. The order backlog also reached a record high, standing at 156 billion yen. Both net sales and profits exceeded the plan (announced on November 8, 2022), r
Slide 6: Financial Results by Segment
1. Consolidated Financial Results for FY2022 Financial Results by Segment Orders received in all three businesses—the BA, AA, and LA—increased from FY2021. Sales growth was also achieved compared with FY2021 in all three businesses, and the AA and LA businesses exceeded the plan. While being a
Slide 7: Segment Information: BA Business
1. Consolidated Financial Results for FY2022 Segment Information: BA Business Our View of the Business Environment — In the domestic market, demand has continued at a high level for urban redevelopment projects in the Tokyo metropolitan area and for heating, ventilation, and air conditioning (HVAC)
Slide 8: Segment Information: AA Business
1. Consolidated Financial Results for FY2022 Segment Information: AA Business Our View of the Business Environment — Capital investment has continued at a high level in the manufacturing industry as a whole, thanks to the gradual recovery from the COVID-19 pandemic. — From the third quarter, there w
Slide 9: Segment Information: LA Business
1. Consolidated Financial Results for FY2022 Segment Information: LA Business Our View of the Business Environment — The Lifeline field, which includes gas (city gas, LP gas) and water meters, depends on demand for meter replacement as required by law. Though demand can be expected to remain basical
Slide 10: Overseas Sales by Region
1. Consolidated Financial Results for FY2022 Overseas Sales by Region Sales increased in all areas, up 20% from FY2021. The overseas sales now accounts for 22.5% of net sales. The BA and AA businesses achieved a significant growth in Asia. From the fourth quarter a recovery was observed in China
Slide 11: Consolidated Financial Position
1. Consolidated Financial Results for FY2022 Consolidated Financial Position In addition to increases in trade receivables and inventories, there was an increase in property, plant and equipment, such as our R&D base (new facilities within the Fujisawa Technology Center). Liabilities increased a
Slide 12: Consolidated Cash Flows
1. Consolidated Financial Results for FY2022 Consolidated Cash Flows Net cash flow provided by operating activities increased due to higher profit and the fact that in FY2021 there had been a transitory increase in the payment of trade payables triggered by a change in payment terms, despite an in
Slide 13: 2. Consolidated Financial Plan for FY2023
2. Consolidated Financial Plan for FY2023 © Azbil Corporation. All rights reserved. 13
Slide 14: Consolidated Financial Plan
2. Consolidated Financial Plan for FY2023 Consolidated Financial Plan We plan to increase both net sales and operating income for the third consecutive fiscal year. — Capital investment demand in the manufacturing industry is uncertain. However, drawing on the improvements we made to procurement a
Slide 15: Reference: Progress of Operating Income
2. Consolidated Financial Plan for FY2023 Reference: Progress of Operating Income In FY2023, price hikes of parts will continue to have an impact, and expenses for growth in DX, human capital, and R&D will also increase. Nevertheless, measures to improve profitability including cost pass-through w
Slide 16: Financial Plan by Segment (1)
2. Consolidated Financial Plan for FY2023 Financial Plan by Segment (1) The business environment is different for each business, but we plan to increase revenue in the BA and AA businesses by making use of the order backlog existing at the start of FY2023. Profits for the AA and LA businesses ar
Slide 17: Financial Plan by Segment (2)
2. Consolidated Financial Plan for FY2023 Financial Plan by Segment (2) BA The domestic market will remain robust. Overseas markets are expected to recover and return to pre-pandemic levels. Based on the buildup in the order backlog at the start of FY2023, sales are expected to increase steadily
Slide 18: 3. Returning Profits to Shareholders
3. Returning Profits to Shareholders © Azbil Corporation. All rights reserved. 18
Slide 19: Plan to Further Improve Shareholder Returns in Accordance with the Basic Policy
3. Returning Profits to Shareholders Plan to Further Improve Shareholder Returns in Accordance with the Basic Policy In accordance with our basic policy—promoting shareholder returns, investment in growth and healthy financial foundation—we will increase dividends, repurchase the Company’s own stock
Slide 20: Plan for FY2022 Year-end Dividend and FY2023 Annual Dividend
3. Returning Profits to Shareholders Plan for FY2022 Year-end Dividend and FY2023 Annual Dividend FY2022 It is planned to increase the year-end dividend to 33.5 yen per share, to make an annual dividend dividend of 66 yen per share. FY2023 It is planned to increase the dividend by 7 yen per share, t
Slide 21: Repurchase of Own Stock and Cancellation of Treasury Shares
3. Returning Profits to Shareholders Repurchase of Own Stock and Cancellation of Treasury Shares Repurchase of It is planned to repurchase the Company’s own stock up to a maximum of 10 billion yen own stock or 4 million shares. Cancellation of treasury It is planned to cancel all the Company’s treas
Slide 22: Trend of Shareholder Returns
3. Returning Profits to Shareholders Trend of Shareholder Returns In FY2023 it is planned to increase dividends for the ninth consecutive fiscal year. DOE is expected to be 4.7%. (Yen) Dividend per share Dividend on equity (DOE) 4.7% 80.0 5.0% 4.4% (plan) 75.0 (plan) 4.2% 4.5% 70.0 4.0% 3.9% 65.0
Slide 23: 4. Progress in Implementing the Medium-term Plan
4. Progress in Implementing the Medium-term Plan © Azbil Corporation. All rights reserved. 23
Slide 24: Long-term Targets and Medium-term Plan
4. Progress in Implementing the Medium-term Plan Long-term Targets and Medium-term Plan The azbil Group defines three growth fields—new automation, environment and Long-term targets energy, and life-cycle solutions—which share a common foundation of automation technology. Focusing on the growth of t
Slide 25: Initiatives for Continuous Sales Expansion and Strengthened Business Profitability
4. Progress in Implementing the Medium-term Plan Initiatives for Continuous Sales Expansion and Strengthened Business Profitability We will actively make R&D/capital investments. Despite the impact of price hikes of parts, we will realize higher profits through implementing measures to strengthen
Slide 26: Addressing Parts Shortages and Price Hikes
4. Progress in Implementing the Medium-term Plan Addressing Parts Shortages and Price Hikes We have been promoting measures to strengthen our (1) capability to secure and procure parts/materials, (2) production capacity, and (3) profitability. In FY2022, profits were secured mainly through incre
Slide 27: Growth in Overseas Markets
4. Progress in Implementing the Medium-term Plan Growth in Overseas Markets Progress is being made with strengthening sales systems and production systems overseas, and with collaboration overseas to strengthen product competitiveness. FY2024 FY2030 FY2016 FY2021 FY2022 (results) FY2023 (Final yea
Slide 28: Working to Achieve Long-Term Targets and the Medium-Term Plan
4. Progress in Implementing the Medium-term Plan Working to Achieve Long-Term Targets and the Medium-Term Plan Focus points of our Medium-Term Plan Accelerating transformation for further growth We will accelerate transformation to achieve growth by tracking changing customer business models/deman
Slide 29: (1) Strengthening Product Competitiveness for Business Expansion
4. Progress in Implementing the Medium-term Plan (1) Strengthening Product Competitiveness for Business Expansion Developing a system/infrastructure to track market/customer EXAMPLE V8C changes and enable rapid product development Sapphire Capacitance Diaphragm Gauges Issues involved in realizin
Slide 30: (2) Strengthening Technological Development and Capital Investment
4. Progress in Implementing the Medium-term Plan (2) Strengthening Technological Development and Capital Investment We will continue to invest actively in R&D and in equipment and facilities to strengthen the foundation for strengthening product/service competitiveness that will lead to business g
Slide 31: (3) Promoting Sustainability Management―Increased Investment in Human Capital―
4. Progress in Implementing the Medium-term Plan (3) Promoting Sustainability Management―Increased Investment in Human Capital― Promoting sustainability management: azbil Group policy We are committed to continuously enhancing enterprise value by building relationships of trust with all stakeholders
Slide 32: Initiatives in Three Growth Fields & Application to Each Business Segment
4. Progress in Implementing the Medium-term Plan Initiatives in Three Growth Fields & Application to Each Business Segment Three Growth Fields New Automation Field Providing distinctive solutions through our business in the three growth fields in which the Expanding sales by providing solutions th
Slide 33: Product Development in Three Growth Fields
4. Progress in Implementing the Medium-term Plan Product Development in Three Growth Fields Online anomaly detection system Cloud services for large buildings Providing a wide range of AI-based systems for the continuous online monitoring of services—to building owners, to factory/building proce
Slide 34: Business Development Initiatives Involving Alliances and Investments with Other Companies
4. Progress in Implementing the Medium-term Plan Business Development Initiatives Involving Alliances and Investments with Other Companies Contents Partner/investment Year 2021 Next-generation energy management business DX-EGA TAKAOKA TOKO Group（electricity meters） Year 2022 GX solutions to reduce C
Slide 35: Financial Plan by Segment—Progress and Forecast—
4. Progress in Implementing the Medium-term Plan Financial Plan by Segment—Progress and Forecast— While responding rapidly to changes in the social and business environment—such as pandemics, parts procurement difficulties, and inflation—and reviewing necessary measures, we will aim to achieve sus
Slide 36: azbil Group Sustainability
4. Progress in Implementing the Medium-term Plan azbil Group Sustainability The azbil Group is committed to continuously enhancing enterprise value based on mutual trust with stakeholders, to realize safety, comfort, and fulfillment in people’s lives and contributing “in series” to a sustainable soc
Slide 37: Addition of New Quantitative SDG Indices for Our Business
4. Progress in Implementing the Medium-term Plan Addition of New Quantitative SDG Indices for Our Business That Will Lead “In Series” to a Sustainable Society New Automation, one of the azbil Group’s four essential SDG goals (p.48 for more details), was chosen as a growth field to develop business t
Slide 38: Appendix
Appendix © Azbil Corporation. All rights reserved. 38
Slide 39: Performance Trend by Segment (1)
Appendix Performance Trend by Segment (1) ■ Orders received by segment ■ Order backlog by segment (Billions of yen) (Billions of yen) 300.0 300.0 250.0 250.0 200.0 200.0 150.0 150.0 100.0 100.0 50.0 50.0 0.0 0.0 FY2019 FY2020 FY2021 FY2022 FY2019 FY2020 FY2021 FY2022 ■BA 122.9 118.5 132.5 135.3 ■BA
Slide 40: Performance Trend by Segment (2)
Appendix Performance Trend by Segment (2) ■ Sales by segment ■ Segment profit (operating income) (Billions of yen) (Billions of yen) (%) 300.0 35.0 17.5 30.0 15.0 250.0 25.0 12.5 200.0 20.0 10.0 150.0 15.0 7.5 100.0 10.0 5.0 5.0 2.5 50.0 0.0 0.0 FY2019 FY2020 FY2021 FY2022 0.0 ■BA 14.8 14.0 13.8 16.
Slide 41: Cell-type HVAC system
Appendix Cell-type HVAC system New HVAC system is suited to the diversifying work styles and office use of this “new normal” era With the ongoing diversification of work styles, the office environment is changing. This new HVAC system, which with is considerate of humans, contributes to the creation
Slide 42: Cloud-based valve analysis and diagnosis
Appendix Cloud-based valve analysis and diagnosis Harnessing DX to optimize maintenance and ensure safe and stable operation Monitoring valve status via the cloud enables the early detection and prediction of anomalies. Previously this was only possible by open inspection because the internal state
Slide 43: Promoting DX for water supply businesses using existing water meters
Appendix Promoting DX for water supply businesses using existing water meters Developing OCR Attachment with Leak Detection Function to Turn Direct-read Water Meters into Smart Meters Introducing smart water meters is expected to bring several benefits—including more efficient meter reading, early
Slide 44: Customer case study: Kao Corporation, Wakayama Plant
Appendix Customer case study: Kao Corporation, Wakayama Plant The introduction of BiG EYES, an AI-based anomaly detection system, has reduced the workload and contributed to HR training and skills transmission at the production site. Awarded the Responsible Care* Award by the Japan Chemical Industry
Slide 45: Japan Green Investment Corp. for Carbon Neutrality
Appendix Toward Expansion of the Environment and Energy Field: Investing in Japan Green Investment Corp. for Carbon Neutrality (JICN) Azbil to invest in Japan Green Investment Corp. for Japan Green Investment Corp. for Carbon Neutrality Carbon Neutrality (JICN)*, a public-private fund established by
Slide 46: Investing in CEC and Forming a Business Alliance
Appendix Providing Solutions that Combine Energy-saving with Renewable Energy: Investing in CEC and Forming a Business Alliance Azbil to invest in Clean Energy Connect, Inc. and form a business alliance: Contributing to the realization of a decarbonized society by Energy-saving solutions Green power
Slide 47: DX-EGA: Next-generation energy management business
Appendix DX-EGA *1: Next-generation energy management business Collaborative business concept that utilizes existing data collection methods and combines them with diverse operator data and services Against the backdrop of today’s environmental problems and the rapid growth of decarbonization initia
Slide 48: Essential Goals of azbil Group for SDGs
Appendix Essential Goals of azbil Group for SDGs Regarding SDGs, we have set four of our own essential goals (I to IV) as well as specific targets, and we are now working to steadily implement them. Furthermore, we are continuously reviewing and raising their levels. ⅠEnvironment and energy Ⅱ New au
Slide 49: Contribution “In Series” to the Achievement of a Sustainable Society
Appendix Contribution “In Series” to the Achievement of a Sustainable Society Reduce about 160 times of the CO2 (environmental burden) from business activities of azbil Group at customers’ sites By providing our customers with automation equipment/systems, energy management and other solutions, as w
Slide 50: Contribution to the Environment
Appendix Contribution to the Environment Regarding greenhouse gas emissions (scopes 1+2)*1 associated with our own business activities, we have already launched specific initiatives. Aiming to achieve zero emissions by 2050, we have developed our long-term vision for reducing greenhouse gas emission
Slide 51: Transition to a Company with a Three-committee Board Structure
Appendix Transition to a Company with a Three-committee Board Structure Transition to a company with a three-committee board structure Aiming to promote further reforms in corporate governance, the Company transitioned to a company with a three-committee board structure (on June 23, 2022), ensur
Slide 52: Revision of the Executive Remuneration System and Disclosure of Remuneration Policy
Appendix Revision of the Executive Remuneration System and Disclosure of Remuneration Policy With regard to our executive remuneration system, in order to add impetus to the realization of our long-term targets (to achieve by FY2030) and the medium-term plan (FY2021-FY2024), we will further increase
Slide 53: Progress of Corporate Governance Reforms (1)
Appendix Progress of Corporate Governance Reforms (1) Number of directors Composition of independent outside directors (People) Total number of directors Independent outside directors 12 12 11 11 11 10 9 8 33.3% 45.5% 2021 2022 5 out of 11 8 out of 12 6 5 5 5 54.5% 4 66.7% 3 0 2018 2019 2020 2021 20
Slide 54: Progress of Corporate Governance Reforms (2)
Appendix Progress of Corporate Governance Reforms (2) Skill matrix Sustainability • Disclosed skill matrix (2021) • In the medium-term plan, we recognize that addressing ‒ The Board of Directors at the meeting held on May 14, 2021 defined the skills sustainability is not simply a response to risk, b
Slide 55: External Evaluation and Initiatives
Appendix External Evaluation and Initiatives (as of April 2023) ESG-related topics—Inclusion in ESG indexes, external evaluation and initiatives Five indexes adopted by the Government Pension Investment Fund (GPIF) of Japan FTSE Blossom Japan Index FTSE Blossom Japan Sector Relative Index MS
Slide 56: Notes (1)
Notes (1) 1. Financial data and financial statements have been prepared based on Japanese GAAP and the amounts have been rounded down. 2. The following are the azbil Group’s segments (each identified by abbreviation) together with the various sub-segments and their principal business fields. BA: Bui
Slide 57: Notes (2)
Notes (2) (from page 48) 1. Science-based targets: Greenhouse gas emission reduction targets that are consistent with scientific evidence. 2. The azbil Group’s own sustainable design principles: This design strives to create and provide products that contribute to solving global environmental issues
Slide 58: IR Inquiries and Disclaimer
IR Inquiries and Disclaimer Inquiries regarding investor relations Azbil Corporation Investor Relations Phone: +81-3-6810-1031 Email: azbil-ir@azbil.com Disclaimer The projections are based on management’s assumptions, intent and expectations in light of the information currently available to it, an