Slide 1: Results Briefing for the Second Quarter of Fiscal Ending March 2020
Securities ID code:6859 ESPEC CORP. Results Briefing for The Second Quarter of Fiscal Ending March 2020 November 28, 2019 www.espec.co.jp
Slide 2: Table of Contents
Table of Contents Company Profile Financial Result for the Second Quarter of Fiscal Ending March 31, 2020 Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2020 Business Plan for the Fiscal Ending March 31, 2020 Reference 1
Slide 3: Company Profile
Company Profile World-leading manufacturer of environmental test chambers Name ESPEC CORP. Head Office 3-5-6, Tenjinbashi, Kita-ku, Osaka Represented By Masaaki Ishida Established July 25,1947 Incorporated January 13,1954 Paid-up Capital ¥6,895Million Shares Issued 23,781,394 Shares Head office Empl
Slide 4: Global Network
会社概要 Global Network Consolidated Subsidiaries Global Network 45 countries Business Facilities in Japan : 25 10 companies Domestic Agencies in Japan : 46 (Global 7 companies, Domestic 3 companies) 42 companies EUROPE U.S.A. △ESPEC EUROPE GmbH ●ESPEC NORTH AMERICA, INC △ESPEC IKLIM KABINLERＩ SATIS VE
Slide 5: Summary of ESPEC Business (Per Market / Use)
Summary of ESPEC Business (Per Market / Use) Sales composition Main Products Market Use (FY2019 2Q) ・Temperature & humidity chamber ・Electronic component ・Thermal shock chamber and equipment market ・For R & D ・Bench-top type temperature & humidity chamber ・Automobile market ・For credibility Environm
Slide 6: Financial Result for the Second Quarter of Fiscal Ending March 31, 2020
Financial Result for the Second Quarter of Fiscal Ending March 31, 2020 5
Slide 7: Making All Overseas Subsidiaries Share the Same Fiscal Year-End
Making All Overseas Subsidiaries Share the Same Fiscal Year-End From fiscal 2018, the fiscal years of overseas consolidated subsidiaries (previously December) have been made the same as the fiscal years for consolidated subsidiaries in Japan (March). (For fiscal 2018, the overseas consolidated subsi
Slide 8: Financial Highlights
Financial Highlights In the first half of FY2019, orders for environmental test chambers, the mainstay product of the company were sluggish due to U.S.-China trade friction and the global economic slowdown. Consequently, on October 31, the Company announced downward revisions to its first-half and f
Slide 9: Summary of Profits and Losses
Summary of Profits and Losses (millions of yen) FY 2018 FY 2019 2Q FY 2019 Initial plan Year on Year 2Q (Initial plan) 2Q ratio Orders-Received ２４，６８１ ２３，５００ ２３，４６３ -４．９％ -０．２％ Net sales １９，０９２ ２１，５００ １８，７７６ -１．７％ -１２．７％ Cost of Net Sales １２，０６２ １３，５３０ １２，１７２ ０．９％ -１０．０％ （１．６pt （１．９pt (Cost of sales
Slide 10: Performance by Segment
Performance by Segment (millions of yen) FY 2018 FY 2019 2Q FY 2019 Initial plan Segment Year on Year 2Q (Initial plan) 2Q ratio Orders-Received ２０，８７４ １９，８００ １８，４７６ -１１．５％ -６．７％ Equipment Net Sales １５，６３９ １８，０００ １５，１３１ -３．２％ -１５．９％ Business Operating Income １，４５７ ２，１００ １，１７１ -１９．７％ -４４．２％ Orders-Re
Slide 11: Review of the First Half of Fiscal 2019
Review of the First Half of Fiscal 2019 External Environment Developments within ESPEC ・Investment was held back more than ・Sales decreased due to sluggish orders both in expected in Japan and overseas due to Japan and overseas U.S.-China trade friction and concerns about a global economic slowdown
Slide 12: Analysis of Operating Income
Analysis of Operating Income Increase and Decrease Factor Equipment Business （ millions of yen ） Service Business Other Business -187 40 7 38 -277 16 29 -25 86 expenses and administrative Other selling, general fee Commission expenditures R&D 1,659 1,387 -116 -309 Increase and Increase and 154 decre
Slide 13: Statement of Assets and Liabilities
53,805 FY ２０１９ 12 (millions of yen) ２Ｑ -1,750 31 -395 Net assets Liabilities and equity Noncurrent liabilities -3,553 Other current liabilities -744 Electronically recorded monetary claims - operating -693 Notes and accounts FY ２０１８ payable-trade 57,359 53,805 FY ２０１９ ２Ｑ 350 -65 120 Investment and o
Slide 14: Statement of Cash Flow
1,624 13 Increase in funds (millions of yen) Effect of exchange rate change -176 on cash and cash equivalents -1,071 Total financial cash flow -15 Other -874 -1,056 Cash dividends paid Total investment cash flow 182 Other -1,057 Purchase of property, plant and equipment and intangible assets Stateme
Slide 15: Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2020
Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2020 14
Slide 16: Equipment Business
Equipment Business Environmental Test Chambers ■Both orders-received and net sales decreased year on year ・In Japan, net sales decreased as sales of customized products were sluggish, while standardized products performed firmly ・Overseas, major projects declined in China, where performance was favo
Slide 17: Equipment Business
Equipment Business (millions of yen) FY 2018 FY 2019 2Q FY 2019 Initial plan Year on Year 2Q (Initial plan) 2Q ratio Orders-Received ２０，８７４ １９，８００ １８，４７６ -１１．５％ -６．７％ Net Sales １５，６３９ １８，０００ １５，１３１ -３．２％ -１５．９％ Operating Income １，４５７ ２，１００ １，１７１ -１９．７％ -４４．２％ [Profit ratio(%)] [９．３％] [１１．７％] [７．７％]
Slide 18: Service Business
Service Business (millions of yen) FY 2018 FY 2019 2Q FY 2019 Initial plan Year on Year 2Q (Initial plan) 2Q ratio Orders-Received ３，２３８ ３，２００ ３，２４２ ０．１％ １．３％ Net Sales ３，０５６ ３，１００ ３，０７５ ０．６％ -０．８％ Operating Income ２８４ ２５０ ２８０ -１．４％ １２．０％ [Profit ratio(%)] [９．３％] [８．１％] [９．１％] After-sales Service an
Slide 19: Other Business
Other Business (millions of yen) FY 2018 FY 2019 2Q FY 2019 Initial plan Year on Year 2Q (Initial plan) 2Q ratio Orders-Received ６７９ ６００ １，８６５ １７４．７％ ２１０．８％ Net Sales ４９９ ５００ ６７５ ３５．３％ ３５．０％ Operating Income -８３ -５０ -６５ ー ー [Profit ratio(%)] [-１６．７％] [-１０．０％] [-９．７％] The Forest Wetland and Greening
Slide 20: Breakdown of Sales by Market
Breakdown of Sales by Market Non-consolidated (Equipment business) Other markets 100% Automobile market 29 27 30 30 29 Flat panel display 80% market Electronic device and 21 equipment market 60% 20 20 19 23 Semiconductor market 3 7 4 3 2 40% 39 36 36 41 37 20% 9 10 10 7 8 0% FY2015 FY2016 FY2017 FY2
Slide 21: Breakdown of Sales by Region
Breakdown of Sales by Region FY 2018 2Q FY 2019 2Q Overseas sales ratio： 47．1％ Overseas sales ratio： 44．4％ 3.1% 2.5% 16.8% 13.7% Ta i w a n 3.8% Chi na 4.2% FY2018 Korea FY2019 2Q E urope&A m eri ca 2Q 52.9% South E a s t A s i a 55.6% 17.9% 16.2% Other J a pa n 5.7% 5.0% 1.0% 1.5% Total: 19,092mill
Slide 22: Business Plan for the Fiscal Ending March 31, 2020
Business Plan for the Fiscal Ending March 31, 2020 21
Slide 23: Equipment Business: Second Half Business Environment
FY 2019 Second half Awareness of the Environment Investment in the automotive market continued in the first half, Environmental Test △ but not as rapidly as in the previous year. There are concerns about a slowdown in investment in the second half. Chambers Equipment Business Businesses have maintai
Slide 24: FY 2019 Assumed exchange rate
FY 2019 Assumed exchange rate ■Assumed exchange rate FY 2017 FY 2018 FY 2019 First half First half Results Results Assumed Results Results US$（yen） 112.17 108.68 110.40 108.60 108 Reference. FY 2019 Exchange rate sensitivity (for every appreciation of ¥1 against the U.S. dollar) Net Sales A decrease
Slide 25: Business Plan for the Fiscal Ending March 31, 2020
Business Plan for the Fiscal Ending March 31,2020 FY ２０１８ FY ２０１9 （millions of yen） Reference: Results Revised Plan for 12-month financial results First half Year on Results period for overseas (Results) Full Year Year(12-month Second half reference consolidated subsidiaries value） Orders-received ５
Slide 26: Equipment Business
Equipment Business （millions of yen） FY ２０１８ FY ２０１９ Reference: Results for 12- Revised Plan month financial First half Year on Results results period (Results) Year(12- for overseas Second half Full Year month consolidated reference subsidiaries value） Orders- ４２，５８７ ３９，９７９ １８，４７６ １５，９２４ ３４，４００ -１４
Slide 27: Service Business
Service Business （millions of yen） FY ２０１８ FY ２０１９ Reference: Results for 12- Revised Plan month financial First half Results results period Year on (Results) Year(12- for overseas consolidated Second half Full Year month reference subsidiaries value） Orders- ６，６１４ ６，５２４ ３，２４２ ３，３６０ ６，６００ １．２％ recei
Slide 28: Other Business
Other Business （millions of yen） FY ２０１８ FY ２０１９ Revised Plan First half Results (Results) Second half Full Year Year on Year Orders- １，７０６ １，８６５ ３３５ ２，２００ ２９．０％ received Net sales １，５４１ ６７５ ９２５ １，６００ ３．８％ Operating ９ -６５ ６５ ０ income ー [０．６％] [-９．７％] [７．０％] [０．０％] [Profit ratio(%)] 27
Slide 29: Dividends
Dividends Dividend policy Recognizing that passing on profits to our shareholders is a key priority and that raising corporate value on a lasting basis is fundamental to raising shareholder value, dividends are decided taking into account sustainability and the dividend payout ratio. Dividend per sh
Slide 30: Action Items for the Fiscal Ending March 31, 2020
Action Items for the Fiscal Ending March 31, 2020 29
Slide 31: Demand for environmental testing services is growing
Demand for environmental testing services is growing around the world A business essential to the development of cutting-edge technology CASE Connected Autonomous Shared Electric ５G IoT 30
Slide 32: Equipment Business
Equipment Business Environmental Test Chambers ・Increase orders-received by launching new products in the automotive market ・Cultivate IoT and 5G-related needs Target areas: Japan, North America, China ・Measures to improve the cost of sales ratio Boost internal production through the utilization of
Slide 33: Global Strategy: China
Global Strategy：China Target Markets Automobiles, IoT, 5G and semiconductors Marketing strategy according to customer needs ・Early development of test equipment that addresses larger test specimens ・Bolster price competitiveness ・Strengthen coordination on development and sales between Chinese subsi
Slide 34: Global Strategy: Europe
Global Strategy：Europe Target market Automobiles Strengthen the capabilities of ESPEC’s German subsidiary ・Strengthen design capabilities ・Set up a quick response framework ・Expand technical services ・Bolster partnerships with local agencies Upgrade and expand the product lineup for Europe ・Products
Slide 35: Service Business: Commissioned Tests
Service Business: Commissioned Tests Promote global testing services Address an increasingly diverse array of testing standards driven by globalization Expand the scope of operations in collaboration with other companies ■Expand the testing capabilities of the Battery Safety Certification Center ■Re
Slide 36: Strengthen management foundation and promote ESG
Strengthen management foundation and promote ESG Under the corporate philosophy, THE ESPEC MIND, the Company is aiming for sustainable growth E（Environmental） ①7th Mid-term Plan on the Environment ②Contribute to reducing the environmental load through products ③Promote biodiversity and natural envir
Slide 37: Investment plan
Investment plan First half Second half Full Year Plan Results Plan Strategic 1.6 billion yen 0.6 billion yen 1 billion yen investment Ordinary 1 billion yen 0.25 billion yen 0.75 billion yen investment Total 2.6 billion yen 0.85 billion yen 1.75 billion yen Main Capital Investments ・Construct new bu
Slide 38: Quality is more than a word
Quality is more than a word ESOEC ESPEC CORP.
Slide 39: Forward-looking statements and inquiries
These materials contain forward-looking statements, including the Company’s present plans and forecasts of performance, that reflect the Company’s plans and forecasts based on the information presently available. These forward-looking statements are not guarantees of future performance, and plans, f
Slide 40: Reference
Reference ESPEC CORP.
Slide 41: History of Environmental Test
History of Environmental Test What is Environmental Test Test to analyze and evaluate effects of environmental factors such as temperature, humidity, pressure, and light on various industrial products like electronic components in order to ensure product quality. <1950s> <1970s–1990s> <Today> The en
Slide 42: Transition in Business
Transition in Business Expanding business based on the “environmental creation technology” refined during the course of developing environmental test chambers large scale integration Automated driving, Integrated circuit IoT,5G Eco cars such as EVs, HVs, and PHVs surface mount package ＬＣＤ storage of
Slide 43: Usage Case with Environmental Test Chambers
[Equipment Business] Usage Case with Environmental Test Chambers 42
Slide 44: Main New Products
[Equipment Business] Main New Products Release Date Name of product Features ・Enables materials tests to be performed during the actual Cooling And Heating Temperature Air Testing Dec. 2019 System operation of automobiles and other equipment, when used in combination with various materials testing i
Slide 45: Examples of Products Delivered 1
[Equipment Business] Examples of Products Delivered 1 (Delivered in July 2018) ■Delivery examples of temperature (& humidity) chambers, test chambers for use for building materials Uses Reproduce the environment inside apartments (temperature and humidity) and outdoors (weather such as rain, snow, a
Slide 46: Examples of Products Delivered 2
[Equipment Business] Examples of Products Delivered 2 (Delivered in March 2016) ■Smart System Research Facility, ■National Laboratory for advanced energy storage Fukushima Renewable Energy Institute, AIST technologies (NLAB), National Institute of Technology (Koriyama city, Fukushima) and Evaluation
Slide 47: Usage Case with Energy Device Equipment
[Equipment Business] Usage Case with Energy Device Equipment Charge-discharge Cycle Evaluation Equipment Equipment for ensuring the reliability and safety of lithium-ion secondary batteries for next-generation vehicles (e.g., hybrid and electric vehicles) Secondary Batteries Charge- discharge cycle
Slide 48: Usage Case with Semiconductor Equipment
[Equipment Business] Usage Case with Semiconductor Equipment Screening Eliminate defective products to maintain initial-period quality at the final inspection stage of semiconductor device manufacturing Semiconductors × Heat load × Burn-in chamber Elimination of latent early failures Reliability Eva
Slide 49: Service Business
[Service Business] After–sales Service and Engineering Preventive maintenance of products, maintenance service, and the upgrading/improvement and installation/relocation of products ■ Speedy response via one of the most extensive networks in Japan ■ Industry’s first new services using networks 「ESPE
Slide 50: ESPEC ONLINE SERIES
[Service Business] Industry’s first new services using networks 「ESPEC ONLINE SERIES」 * Services started in November 2013 ■ESPEC online support Trouble notification and recovery service enabling peace of mind when using the Company’s products ■ESPEC OnlineCore A centralized management system enablin
Slide 51: Renovated the Toyota Test Center
[Service Business] Renovated the Toyota Test Center World’s first First testing facility in Japan to address Battery Safety Certification Center the German Automotive Manufacturer compliant with United Nations regulations Testing Standards Providing a one-stop service to support the implementation S
Slide 52: Other Business
[Other Business] The forest wetland and greening Business ■Reforestation (Tree planting) Recovery of local forest by selecting species and planting out seedlings using potential natural vegetation data. ■Waterfront biotope restoration Reconstruction of natural environment, １ development of vegetativ
Slide 53: High value-added vegetables using deep-seawater
[Other Business] Produced a high value-added vegetables using deep-seawater Established in March 2016 near Haneda Airport at a plant factory*, Production and sales of vegetables high in minerals with the use of deep sea water. * Joint research with DHC Corporation and Kyoto University Interior of th
Slide 54: Other Business TOPICS: Examples of Products Delivered
[Other Business] TOPICS：Examples of Products Delivered (Delivered in March 2016) ■Arid Land Research Center, Tottori University Products delivered: Experimental System for Analyzing Responses of Dryland plants to Climate Changes(2 units) (Simulates the climates of arid lands, including high temperat
Slide 55: ESPEC Identity Corporate Philosophy
ESPEC Identity Corporate Philosophy Our important values that have been passed on since our inception “THE ESPEC MIND” （Excerpt） To engage in a higher level of value exchange The Origin as a public institution Provide more certain Seikankyo (living environment) via Mission environmental creation tec
Slide 56: ESPEC Business and SDGs
ESPEC Business and SDGs Equipment Business Service Business Contribute to the development of cutting-edge technologies through the supply of products and services that harness “Environmental Creation Technology” ・Supply products and services that contribute to the development of cutting-edge technol
Slide 57: ESPEC Business and SDGs
ESPEC Business and SDGs Environmental （E） ・Contribute to global warming mitigation ・Reduce environmental impact ・Eco-site and eco-operation ・Prevent pollution ・Preserve biodiversity Social （S） ・Improve customer satisfaction and ensure product safety ・Supply chain management ・Respect human rights and
Slide 58: Initiatives tackling environmental problems
Initiatives tackling environmental problems Achieved 85th place in the Nikkei Environmental Management Survey Forest preservation activity - Kehara Forest Creation Program In March 2018, designated as an affiliated business of the Japan Committee for United Nations Decade on Biodiversity Since 2007,
Slide 59: Initiatives tackling environmental problems
Initiatives tackling environmental problems （March 2018） Designated as affiliated businesses of the Kebara Forest Creation Program: Creating a Mountain Full of Treasures—The Kyoto Model Forest Project, and The Japan Committee for the United Nations Decade on Biodiversity ・The Kebara Forest Creation
Slide 60: To a company where employees can be more active
To a company where employees can be more active Employee Education System Initiatives to promote women's success Enhancement ・Implement a Global Trainee Program aimed at developing human resources who are capable of working in international settings ・Enhance the education program to support From the