Kawasaki Heavy Industries Ltd. · TSE:7012

Kawasaki Heavy Industries — Kawasaki Heavy Industrial — Q1 2022 Earnings Presentation

43 slides from Kawasaki Heavy Industries's earnings presentation, Aug 12, 2022

1. Slide 1: Financial Results for First Quarter FY2022

   Financial Results for First Quarter FY2022 For the Year ending March 31, 2023 0 August 12, 2022 © Kawasaki Heavy Industries, Ltd. All Rights Reserved

2. Slide 2: Table of Contents

   0 Table of Contents 1 Consolidated Results for 3 Details by segment First Quarter FY2022 Summary 3 Aerospace Systems 15 Segment 4 Rolling Stock 19 Statement of Comprehensive income 5 Energy Solution & Marine Engineering 23 Details of Change in business profit 7 Precision Machinery & Robot 27 Stateme

3. Slide 3: Consolidated Results for First Quarter FY2022 – Summary

   Consolidated Results for First Quarter FY2022 1 –Summary- Business profit was lower than in the same period last year, despite benefiting from depreciation of the yen Profit before tax improved from business profit due to foreign exchange gains 【Appendix】FY21 Q1 Results under JGAAP (Billion Yen) (Bi

4. Slide 4: Consolidated Results – Segment

   Consolidated Results for First Quarter FY2022 1 –Segment- Revenue and profit decreased in Aerospace Systems due to fewer deals for Boeing ① Revenue and profit decreased in Precision Machinery & Robot due to the impact of lockdowns in China ② (Billion Yen) Orders Received Revenue Business Profit (Los

5. Slide 5: Statement of comprehensive income

   Consolidated Results for First Quarter FY2022 1 –Statement of comprehensive income- (Billion Yen) FY21 Q1 FY22 Q1 Change Details % % Revenue 355.5 100.0 350.3 100.0 - 5.2 ① Increase due to rise in raw Cost of sales 1 material prices mainly in 291.2 81.9 292.9 83.6 + 1.7 Motorcycle & Engine Gross pro

6. Slide 6: Statement of comprehensive income (continued)

   Consolidated Results for First Quarter FY2022 1 –Statement of comprehensive income- (Billion Yen) FY21 Q1 FY22 Q1 Change Details % % Finance income and Finance costs - 1.4 6.0 + 7.5 ⑤ USD/JPY rate 122.41 March 31,’22 Net Interest expense (incl. dividend income) - 0.5 - 0.5 + 0.0 136.69 June 30,’22 G

7. Slide 7: Details of change in business profit

   Consolidated Results for First Quarter FY2022 1 –Details of change in business profit- In Aerospace Systems, profit deteriorated due to changes in sales mix as revenue to Boeing were concentrated in Q4 FY2021 Rising raw material prices and logistics costs weighed on profits in Motorcycle and Engine

8. Slide 8: Details of change in business profit by segment

   Consolidated Results for First Quarter FY2022 1 –Details of change in business profit- (Billion Yen) FY21 Q1 Details of change FY22 Q1 Business Change in Change in share of profit (loss) Change in Business Profit Effects of Change of investments Total Profit product mix and SG & A (Loss) FX rates※ i

9. Slide 9: Statement of financial position

   Consolidated Results for First Quarter FY2022 1 –Statement of financial position- (Billion Yen) End of End of Change Details Mar. 2022 % Jun. 2022 % Cash and cash equivalents 108.5 78.4 - 30.0 ① Increase in Motorcycle and Trade receivables (Incl. contract assets) 482.9 456.1 - 26.7 Engine, Rolling S

10. Slide 10: Statement of financial position (continued)

    Consolidated Results for First Quarter FY2022 1 –Statement of financial position- (Billion Yen) End of End of Change Details Mar. 2022 % Jun. 2022 % Trade payables 344.2 327.0 3 - 17.1 ③ Increase in borrowings as a normal business cycle in Q1 Interest-bearing debt 553.9 641.5 + 87.5 Contract liabili

11. Slide 11: Cash Flows

    Consolidated Results for First Quarter FY2022 1 –Cash Flows- (Billion Yen) FY21 Q1 FY22 Q1 Change Details Profit before tax 17.0 10.6 - 6.4 ① Q1 FY2021 Progress in receivable Depreciation and amortization 18.6 19.0 + 0.3 collection in Plant Engineering Increase and decrease in working capital - 38.1

12. Slide 12: Cash Flows: working capital and operating CF

    Consolidated Results for First Quarter FY2022 1 –Cash Flows- Working capital has declined since FY2021, and it remains unchanged from the same period last year Operating CF is lower than in the same period of the previous year, but close to the level before 1Q FY2018 (Billion yen) CF from operating

13. Slide 13: Forecasts for FY2022 – Summary

    Forecasts for FY2022 2 -Summary- Business profit forecast was revised up due to the change of FX assumption despite the impact of various cost increases The orders-based business will be profitable in the second half of the year, although the progress rate in 1Q against the business profit plan was

14. Slide 14: Forecasts for FY2022 – Segment

    Forecasts for FY2022 2 -Segment- Aerospace Systems will improve for the second half of the year and raised its outlook partly due to the depreciation of the yen ① Precision machinery and robots cut forecast due to the slowdown in Chinese construction equipment market ② (Billion Yen) Orders Received

15. Slide 15: Aerospace Systems

    3 Details by Segment -Aerospace systems- FY2022.Q1（vs. FY2021.Q1） FY2022 forecast（vs. Forecast in May） Orders Increased due to an increase for MOD and in Orders Expected to remain at the same level due to an component parts for commercial aircraft jet increased orders from MOD and changes in FX rece

16. Slide 16: Aerospace Systems

    3 Details by Segment -Aerospace systems- (Billion Yen) FY2021 FY2022 FY2021 FY2022 Forecast Q1 Actual Q1 Actual Change Actual Old FCST New FCST Chg. Vs. FY21 Chg. Vs. Old FCST Q2-4 FCST Orders Received 37.4 60.4 + 23.0 383.3 280.0 280.0 - 103.3 - 219.6 Aerospace 27.5 45.9 + 18.4 329.5 205.0 205.0 -

17. Slide 17: Aerospace Systems

    3 Details by Segment -Aerospace systems- Net Sales or Revenue (billion yen) 161.1 Aerospace Aero Engines 135.8 128.7 117.9 122.1 120.5 104.9 105.2 109.3 99.7 93.9 93.3 74.6 70.0 71.5 63.2 63.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY2018 FY2019 FY2020 FY2021 FY2022 （IFRS） （IFRS） Operati

18. Slide 18: Aerospace Systems

    3 Details by Segment -Aerospace systems- Market Overview Specific Efforts  Commercial business  Securing stable revenue in core business – Demand for aircrafts and aircraft jet engines is – Cost reductions in existing orders of aircrafts for Boeing and commercial sluggish because global passenger

19. Slide 19: Rolling Stock

    3 Details by Segment - Rolling Stock - FY2022.Q1（vs. FY2021.Q1） FY2022 forecast（vs. Forecast in May） Orders Orders Increased due to major orders for Expected to remain at the same level received domestic new commuter trains received +¥2.3 bil. ±¥0 bil. Revenue Decreased due to a decrease in the U.S.

20. Slide 20: Rolling Stock

    3 Details by Segment - Rolling Stock - (Billion Yen) FY2021 FY2022 FY2021 FY2022 Forecast Q1 Actual Q1 Actual Change Actual Old FCST New FCST Chg. Vs. FY21 Chg. Vs. Old FCST Q2-4 FCST Orders Received 9.3 11.7 + 2.3 71.5 80.0 80.0 + 8.5 - 68.3 Domestic & Asia 6.1 11.0 + 4.8 65.1 74.5 74.5 + 9.4 - 63.

21. Slide 21: Rolling Stock

    3 Details by Segment - Rolling Stock - Net Sales or Revenue (billion yen) Domestic & Asia North America 40.6 38.6 38.8 38.1 39.0 36.8 37.5 32.3 32.3 31.7 31.5 28.7 28.8 26.4 23.3 22.0 20.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY2018 FY2019 FY2020 FY2021 FY2022 (IFRS) (IFRS) 5.9% 5.9% 3

22. Slide 22: Rolling Stock

    3 Details by Segment - Rolling Stock - Market Overview Specific Efforts  The impact of COVID-19  Compliance with delivery schedules for – Some domestic railway operators are overseas projects reviewing their railway related investment Dhaka ‣The first and second trains are undergoing functional te

23. Slide 23: Energy Solution & Marine Engineering

    3 Details by Segment - Energy Solution & Marine Engineering - FY2022.Q1（vs. FY2021.Q1） FY2022 forecast（vs. Forecast in May） Orders Increased due to an increase mainly in orders Orders Expected to increase due to an increase in received for LPG carriers and major orders for received Plant Engineering

24. Slide 24: Energy Solution & Marine Engineering

    3 Details by Segment - Energy Solution & Marine Engineering - ※ The prior results of previous segment have been reclassified to current segment (Billion Yen) FY2021 FY2022 FY2021 FY2022 Forecast Q1 Actual Q1 Actual Change Actual Old FCST New FCST Chg. Vs. FY21 Chg. Vs. Old FCST Q2-4 FCST Orders Rece

25. Slide 25: Energy Solution & Marine Engineering

    3 Details by Segment - Energy Solution & Marine Engineering - Net Sales or Revenue (billion yen) ※ The prior results of previous segment have been reclassified to current segment Energy, Plant & Marine Machinery Ship & Offshore Structure 100.1 103.8 99.3 95.5 88.2 82.5 73.0 70.5 72.2 70.5 72.8 70.3

26. Slide 26: Energy Solution & Marine Engineering

    3 Details by Segment - Energy Solution & Marine Engineering - Market Overview Specific Efforts Providing of products and services for a  Energy system & Plant Engineering low-carbon and decarbonized society Domestic Emerging Markets Delivered a high-capacity battery propulsion system for the world'

27. Slide 27: Precision Machinery & Robot

    3 Details by Segment - Precision Machinery & Robot - FY2022.Q1（vs. FY2021.Q1） FY2022 forecast（vs. Forecast in May） Orders Increased due to an increase in various Orders Revised down due to lower volume of robots including robots for semiconductor hydraulic components for China construction received

28. Slide 28: Precision Machinery & Robot

    3 Details by Segment - Precision Machinery & Robot - (Billion Yen) FY2021 FY2022 FY2021 FY2022 Forecast Q1 Actual Q1 Actual Change Actual Old FCST New FCST Chg. Vs. FY21 Chg. Vs. Old FCST Q2-4 FCST Orders Received 65.1 67.9 + 2.8 271.8 280.0 270.0 - 1.8 - 10.0 202.1 Hydraulic 41.1 37.6 - 3.5 171.6 1

29. Slide 29: Precision Machinery & Robot

    3 Details by Segment - Precision Machinery & Robot - Net Sales or Revenue (billion yen) Hydraulic Components & Systems 86.6 Robotics 73.1 67.8 70.3 60.6 61.2 55.2 57.6 54.1 52.1 53.6 47.9 48.3 49.8 48.8 45.4 52.6 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY2018 FY2019 FY2020 FY2021 FY2022 (

30. Slide 30: Precision Machinery & Robot

    3 Details by Segment - Precision Machinery & Robot - Market Overview Specific Efforts  Construction machinery  Developing electrification and automation – China’s demand slumps due to the impact of technology for construction machinery lockdown by Zero-COVID policy – Development and supply of the

31. Slide 31: Motorcycle & Engine

    3 Details by Segment - Motorcycle & Engine - FY2022.Q1（vs. FY2021.Q1） FY2022 forecast（vs. Forecast in May） Revenue Increased due to an increase in motorcycles Revenue Revised up due to changes in sales prices in for North America and Southeast Asia, and FX response to rising costs, an increase in fo

32. Slide 32: Motorcycle & Engine

    3 Details by Segment - Motorcycle & Engine - (Billion Yen) FY2021 FY2022 FY2021 FY2022 Forecast Q1 Actual Q1 Actual Change Actual Old FCST New FCST Chg. Vs. FY21 Chg. Vs. Old FCST Q2-4 FCST Revenue 113.4 126.0 + 12.5 447.9 500.0 520.0 + 72.1 + 20.0 394.0 Motorcycles for developed contries 46.6 46.1

33. Slide 33: Motorcycle & Engine

    3 Details by Segment - Motorcycle & Engine - Net Sales or Revenue (billion yen) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY2018 FY2019 FY2020 FY2021 FY2022 (IFRS) (IFRS) Operating Profit or Business Profit (billion yen) 13.1% 11.0% 10.6% 10.2% 8.2% 8.8% 5.6% 4.5% 5.3% 0.9% 2.3% - 0.6% - 1.

34. Slide 34: Motorcycle & Engine

    3 Details by Segment - Motorcycle & Engine - Market Overview Specific Efforts  U.S.  Supplying products as much as demanded – Demand for off-road motorcycles and four- – All efforts to achieve production plans wheelers remains strong – Changing production and revenue plans promptly – Strong demand

35. Slide 35: Shareholder Return

    4 Shareholder Return Dividend Policy Dividend for FY2022  Profit attributable to owners of the parent was revised 30% The medium- to long-term upward by 3 billion yen from the initial forecast, partly on consolidated dividend payout ratio the back of the weaker yen.  On the other hand, social unre

36. Slide 36: Project Topics: TERYX KRX4 1000 launch

    4 Project Topics TERYX KRX 4 1000, four-seater model launched in sports off-road four-wheel vehicle market  North America sees growing demand for off-road four-wheelers, primarily for outdoor recreation  Strengthen our business base in North America, where growth is expected, with a lineup of spor

37. Slide 37: Project Topics: Kawasaki's First Electric Kids Bike, Elektrode

    4 Project Topics Kawasaki's First Electric Kids Bike, Elektrode, Launched in the US to realize Carbon Neutrality  Elektrode is the first of three electric motorcycles planned for release in 2022  It is "First Kawasaki" for children around 3 to 8 years old, which was not available in the lineup bef

38. Slide 38: Project Topics: Service robots entering demonstration phase

    4 Project Topics On April 22, Tokyo Governor Koike experienced an automated delivery Service robots are entering the demonstration phase robot in operation ～ To a life with robots by your side ～  The robot restaurant, which is open to the public, On April 20, ”Future Lab HANEDA” as a proposes a way

39. Slide 39: Project Topics: A hydrogen society is just around the corner

    4 Project Topics 2,000bn 80ships~ A hydrogen society is just around the corner ～ Detailed design of ‘Large liquefied hydrogen carrier' to proceed ～ Current Position  Japan-Australia Hydrogen Supply  The world’s first liquefied Chain Demonstration Test hydrogen carrier, SUISO Frontier, Completed la

40. Slide 40: Appendix: CAPEX, Depreciation, R&D Expenses, Employees

    4 Appendix - CAPEX, Depreciation and Amortization, R&D Expenses, Number of employees - (Billion Yen, Persons) FY2021 FY2022 FY2021 FY2022 Q1 Actual Q1 Actual Change Actual FCST Chg. Vs. FY21 CAPEX 16.3 22.6 + 6.3 77.6 100.0 + 22.4 Depreciation and amortization 18.6 18.9 + 0.2 77.3 78.0 + 0.7 R & D e

41. Slide 41: Appendix: Others – Order Backlog and Revenue by Region

    4 Appendix - Others -  Order Backlog （billion yen)  Order Backlog in Ship & Offshore (billion yen) FY21 Q1 FY22 Q1 Actual Actual Change Q1/E Q4/E Aerospace Systems 496.8 616.8 + 120.0 220.4 Rolling Stock 423.8 373.4 - 50.3 191.6 184.5 Energy Solution & Marine Engineering 464.9 568.1 + 103.2 101.6

42. Slide 42: Appendix: Others – Foreign Currency Revenue and IFRS Changes

    4 Appendix - Others -  Revenue in Foreign Currencies by Segment (USD) (Note)Major changes in the income statement associated with the adoption of IFRS (billion USD) JGAAP IFRS FY2021 FY2022 Net Sales Revenue Cost of sales Cost of sales Actual Actual Q2-4 FCST Gross profit Gross profit Aerospace Sys

43. Slide 43: © Kawasaki Heavy Industries, Ltd. All Rights Reserved

    © Kawasaki Heavy Industries, Ltd. All Rights Reserved

Kawasaki Heavy Industrial — Q1 2022 Earnings Presentation on 6ix