Ihi Corporation · TSE:7013
Ihi — Q2 FY2024 Earnings Presentation
27 slides from Ihi's earnings presentation, November 2024
Slide 1: Management Briefing for Second Quarter of Fiscal Year 2024
Management Briefing for Second Quarter of Fiscal Year 2024 Hiroshi Ide Representative Director, President, and Chief Executive Officer © IHI Corporation All Rights Reserved.
Slide 2: Contents
Contents 1. Progress with Group Management Policies 2023 2. Business Portfolio and Balance Sheet Reforms 3. Growth Businesses (Civil Aero-Engines, Defense, and Space) 4. Development-Focus Businesses (Fuel Ammonia Value Chain) 2 © IHI Corporation All Rights Reserved.
Slide 3: 1. Progress with Group Management Policies 2023
1. Progress with Group Management Policies 2023 © IHI Corporation All Rights Reserved. 3
Slide 4: Progress with Group Management Policies 2023
Progress with Group Management Policies 2023 Boosted profitability on Civil Aero-Engine and LCB*1 expansions and achieved medium-term target ahead of schedule Billions of yen 営業利益 OP profit 営業利益率 OP margin ROIC ROIC Medium-term ％ target 1,500 150 10.5% announced in May 2024 10.0% ROIC Above 8% 8.0%
Slide 5: Progress with Group Management Policies 2023
Progress with Group Management Policies 2023 While profitability benchmark EBITDA grew significantly, faced issues with operating cash flow levels and cash conversion cycle 営業CF Operating CF EBITDA EBITDA Balance sheet issues Medium-term Billions of yen Working capital increase target 2,000 200 anno
Slide 6: Attaining Group Management Policies 2023 Goals
Attaining Group Management Policies 2023 Goals Accelerate reforms and strengthen growth foundations to support next medium-term plan and beyond Overhaul business portfolio Accelerate cash and talent shifts to growth and development-focus businesses Restructure businesses with underperforming pro
Slide 7: 2. Overhauling Business Portfolio and Restructuring Balance Sheets
2. Overhauling Business Portfolio and Restructuring Balance Sheets 7 © IHI Corporation All Rights Reserved.
Slide 8: Envisioned Medium-to-Long-Term Business Portfolio
Envisioned Medium-to-Long-Term Business Portfolio Overhauling business portfolio vital to realize vision and boost corporate value FY2023 results Corporate value Near term Medium term Long term creation approach （2030） （2040） Develop Fuel ammonia focus ment value chain businesses Civil Aero- Revenue
Slide 9: Business Portfolio Assessment Criteria
Business Portfolio Assessment Criteria Build portfolio that can deliver steady growth while controlling volatility Increase greater emphasis on stability and efficiency, in addition to strategic alignment and growth potential Strategic alignment • Synergies with growth and development-focus busine
Slide 10: Business Portfolio Strategy: Conventional Businesses
Business Portfolio Strategy: Conventional Businesses Determine the direction of restructured business by FY2024 and accelerate its implementation from FY2025 Conventional businesses to generate stable revenue and cash flow base sustainably supporting Group’s overall portfolio Restructure nonperf
Slide 11: Restructuring Balance Sheets
Restructuring Balance Sheets Optimize invested capital and focus on capital costs and returns Swiftly restore D/E ratio to around 1.1*1 and boost equity ratio to at least 20% (Billions of yen) At end-September 2024 Cash and cash equivalents 90 Reduce working capital Step up efforts to lower groupw
Slide 12: Progress with Business Portfolio and Balance Sheet Reforms
Progress with Business Portfolio and Balance Sheet Reforms Some reforms underway, will keep urgently pursuing improvements Business portfolio reforms Announcement Businesses Overview timing Vehicular • Fixed asset impairment and other structural reforms at IHI FY2023 turbochargers Charging Systems I
Slide 13: Generating Sustainable Value
Generating Sustainable Value Keep undertaking operating reforms and boost corporate value over medium to long terms Operating CF and EBITDA Operating CF 営業CF Billions of yen 3,000 EBITDA EBITDA 2,500 2,000 200 1,500 EBITDA Deliver sustainable growth through resources concentration and selection 100
Slide 14: 3. Growth Businesses
3. Growth Businesses Civil Aero-Engines, Defense, and Space 14 © IHI Corporation All Rights Reserved.
Slide 15: Civil Aero-Engine, Defense, and Space Business Growth Prospects
Civil Aero-Engine, Defense, and Space Business Growth Prospects Targeting ¥800 billion in revenue by FY2030 and ¥1,000 billion by FY2040 Billions of yen Revenue and operating margin 1,200 12,000 25.0% 売上収益 Revenue 営業利益率 OP margin 20.0% 10,000 1,000 15.0% 8,000 800 10.0% 5.0% 6,000 600 0.0% 400 4,000
Slide 16: Civil Aero-Engine Business: Business Scale Expansion
Civil Aero-Engine Business: Business Scale Expansion Total engine shipments have steadily increased, with aftermarket revenue growth being even faster Cumulative engine shipments Civil aero-engine business revenue Units Billions of yen 500 5,000 40,000 400 4,000 30,000 300 3,000 20,000 200 2,000 10,
Slide 17: Defense Business: Increase Scale and Profitability
Defense Business: Increase Scale and Profitability FY2030 targets: Sales of ¥250 billion and operating margin of 10% 3,000 IHI’s defense business sales Enhance profit margins as part of defense industry policy ¥250 billion in sales and (Billions of yen) operating margin of 10% 2,500 250 Cost fluctua
Slide 18: Defense Business: Strengthen Global Deployment
Defense Business: Strengthen Global Deployment Leverage long experience in developing and manufacturing defense engines to strengthen global deployment of defense business Export licensed domestic engine parts to U.S. original equipment manufacturer Help strengthen alliance between Japan and United
Slide 19: Space Business: Grow through Public-Private Collaboration
Space Business: Grow through Public-Private Collaboration Expand contributions to nation’s space development and commercialize launch services IHI’s rocket technologies ©JAXA ©JAXA Participate in resupply missions to lunar orbiting Help transport materials crewed station to International Space IHI S
Slide 20: 4. Development-Focus Businesses
4. Development-Focus Businesses Fuel Ammonia Value Chain 20 © IHI Corporation All Rights Reserved.
Slide 21: Development-Focus Businesses: Milestones
Development-Focus Businesses: Milestones Expected to accelerate social implementation of fuel ammonia from FY2028 Fiscal years 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030- Manufacturing India: Up to 400,000 metric tons annually Social implementation Australia: Up to 500,000 metric tons an
Slide 22: Development-Focus Businesses: Successes
Development-Focus Businesses: Successes Spearheading global efforts towards social implementation Production Storage and transportation Utilization NH NH333 NH NH3 NH3 Boilers Renewable Water Shipping Receiving energy Ammonia Marine electrolyzers terminals terminals synthesis transport Vessel Gas tu
Slide 23: Collaborating with Global Partners
Development-Focus Businesses Collaborating with Global Partners Storage and Transportation Utilization New developments since Storage and Transportation Commissioned to study feasibility of large previous report Completed world’s first 20% ammonia supply hubs in Soma, Initiated discussions with ammo
Slide 24: Looking beyond Group Management Policies 2023
Looking beyond “Group Management Policies 2023” 24 © IHI Corporation All Rights Reserved.
Slide 25: Integrating and enhancing diverse technologies to forge new value
By integrating, uniting, and enhancing the diverse technologies as the sources of our value, we forge new value for our customers moving beyond traditional products and services Technology is the cornerstone of everything we do and the value we deliver. It spans everything from the regular to the re
Slide 26: The IHI Group creates Value Chains
The IHI Group creates Value Chains 26 © IHI Corporation All Rights Reserved.
Slide 27: Forward-looking statements
Forward-looking figures shown in this material with respect to IHI’s performance outlooks and other matters are based on currently available information, and therefore contain risks and uncertainties. Consequently, you should not place undue reliance on these performance outlooks in making investmen