Nitto Boseki Co., Ltd. · TSE:3110

Nitto Boseki — FY2017 Earnings Presentation

46 slides from Nitto Boseki's earnings presentation, May 16, 2018

1. Slide 1: Presentation Material for FY2017 Ended March 31, 2018

   Nittobo Group Presentation Material for FY2017 Ended March 31, 2018 Financial results 2017｜ Nittobo Group Note on the handling of this document Numerical forecasts contained in this document were created on the basis of information available to the Company as of the date of May 16, 2018 the announce

2. Slide 2: Contents

   Contents 1. Summary of the Financial Results for FY2017 2. Financial Results by Segment for FY2017 3. Forecast for FY2018 4. Progress of the <<Go for next 100>> Mid-term Business Plan Copyright (C) Nitto Boseki Co., Ltd. All Rights Reserved. 2

3. Slide 3: 1. Summary of the Financial Results for FY2017

   1. Summary of the Financial Results for FY2017 Copyright (C) Nitto Boseki Co., Ltd. All Rights Reserved.3

4. Slide 4: Consolidated ordinary income and net income attributable to owners of parent

   Consolidated ordinary income and net income attributable to owners of parent (Billions of yen) ・Ordinary income broke the 10 billion yen mark for the third consecutive year. 15.0 ・Current net income hit an all-time high. 11.1 11.4 11.0 11.4 10.3 10.2 10.0 8.7 7.5 6.0 6.4 6.5 5.9 5.5 5.6 4.6 4.6 5.0

5. Slide 5: Results outline (consolidated) PL and CF

   Results outline (consolidated) PL and CF (Millions of yen) FY2016 FY2017 YoY Changes Net sales 83,324 84,526 1,202 Operating income 11,148 10,837 （311） ROS％ 13.4 12.8 Ordinary income 11,396 11,071 （325） Extraordinary income (loss) （989） 3,413 4,402 Net income attributable to 7,479 10,253 （2,774） own

6. Slide 6: Operating income: Year-on-year change

   Operating income: Year-on-year change  The initiative to reinforce the foundation aimed at medium- and long-term growth was carried out as planned.  Though we strove to enhance added value and slash costs (a total of 1.7 billion yen), higher inflation than expected placed a pressure on earnings, w

7. Slide 7: Results outline (consolidated): B/S

   Results outline (consolidated): B/S (Millions of yen) YoY FY2016 FY2017 Changes Current assets 67,600 74,578 6,918 Notes and accounts receivable 24,077 25,891 1,814 Inventory assets 21,364 25,118 3,754 Fixed assets 72,521 72,729 208 Land 16,847 14,748 （2,099） Total assets 140,182 147,307 7,125 Net a

8. Slide 8: Results outline (consolidated): C/F

   Results outline (consolidated): C/F (Millions of yen) FY2016 FY2017 YoY Changes Operating cash flow 11,034 7,791 （3,243） Inventory assets （248） （3,742） （3,494） Corporate tax, etc. （1,765） （3,104） （1,339） Cash flow from （2,271） 2,524 4,795 investments Cash flow from （8,826） （9,467） （641） financial ac

9. Slide 9: Net interest-bearing debt balance and equity ratio

   Net interest-bearing debt balance and equity ratio (Billions of yen) 35 58% 30 55% 30 27 52% 25 25 50% 21 46% 20 45% 18 42% 42% 15 15 10 9 5 1 0 11/03 12/03 13/03 14/03 15/03 16/03 17/03 18/03 Net interest-bearing ネット有利子負債残高 自己資本比率 Equity ratio debt balance Copyright (C) Nitto Boseki Co., Ltd. All R

10. Slide 10: 2. Financial Results by Segment for FY2017

    2. Financial Results by Segment for FY2017 Copyright (C) Nitto Boseki Co., Ltd. All Rights Reserved. 10

11. Slide 11: Results outline (by segment)

    Results outline (by segment) (Millions of yen) FY2016 FY2017 Change Operating Operating Operating Net sales Net sales Net sales income income income Textiles 4,959 （366） 4,950 （452） （9） （86） Glass fiber yarn 33,124 5,235 35,171 6,559 2,047 1,324 Glass fiber cloth 14,249 2,784 13,789 2,130 （460） （654

12. Slide 12: Textiles business: Results

    Financial results of FY2017 (by segment) Textiles business: Results Interlining • The ladies’ textile market where the Company captures a high share remained tough. The deficit widened due to the effects of import duties enforced in fiscal 2017 (3.5% import duty in Japan) and a stronger yuan. Raw ya

13. Slide 13: Glass fiber business: Results

    Financial results of FY2017 (by segment) Glass fiber business: Results Glass fiber yarn • On the whole, demand remained strong. Thanks to its initiatives of ramping up production capacity and improving productivity, sales of products centered on high value-added yarn and composite materials grew, re

14. Slide 14: Life science business: Results

    Financial results of FY2017 (by segment) Life science business: Results Medical • As a result of focusing on selling immunodiagnostic agents etc. both at home and abroad and improving productivity, the segment ensured increase in revenue and profit. Specialty chemicals • The segment supplied high va

15. Slide 15: 3. Forecast for FY2018

    3. Forecast for FY2018 Copyright (C) Nitto Boseki Co., Ltd. All Rights Reserved. 15

16. Slide 16: Outlook on FY2018 financial results (overall)

    Outlook on FY2018 financial results (overall) • FY2018 marks the second year of the new <<Go for next 100>> mid-term business plan. Continue to reinforce the foundation with an eye toward medium- and long-term growth. • Demand for high value-added products is expected to remain strong. • The effects

17. Slide 17: Results outline (consolidated)

    Results outline (consolidated) (Millions of yen) FY2017 results FY2018 forecast FY2020 YoY mid-term change H1 H2 Full-year H1 H2 Full-year target Net sales 4,474 43,172 41,364 84,526 43,000 46,000 89,000 100,000 [YoY change] [5.3%] Operating income 10,837 10,800 6,236 4,601 4,200 6,600 （37） 12,000 R

18. Slide 18: Operating income: Year-on-year change analysis

    Operating income: Year-on-year change analysis  Continue to reinforce the foundation with an eye toward medium- and long-term growth (-1.1 billion yen).  A stronger yen, higher oil prices and surging prices, including distribution costs, are expected (-2.1 billion yen).  Sales of high value-added

19. Slide 19: Results outline (by segment)

    Results outline (by segment) (Millions of yen ) FY2017 results FY2018 forecast Change Full-year (a) H1 Full-year (b) (ｂ) - (a) Net sales 84,526 43,000 89,000 4,474 (based on external sales) Textiles 4,945 2,500 5,400 455 Glass fiber yarn 29,172 14,700 31,200 2,028 Glass fiber cloth 13,750 7,100 14,8

20. Slide 20: Operating Income FY2018 1st Half 2nd Half

    Operating Income FY2018 1st Half  2nd Half (Billions of yen) 6.6 0.7 1.0 4.2 1.5 (0.8) Main effects of investments ・Boost in ultrafine yarn production capacity ・Boost in T glass production capacity ・Installation of new NE glass chopped strand production facilities FY2018 1st half 2018上期 Foundation

21. Slide 21: Textile business

    Textile business Continue to implement its initiatives of stepping up sales force for high value-added products and reducing costs. In addition, hike prices of part of products, thereby aiming to narrow the deficit. Interlining Secure proper volumes in the female product area that seems to have bott

22. Slide 22: Glass fiber business

    Glass fiber business Glass fiber yarn Demand from the markets centered on electronic communication device expected to remain strong. Continue to promote the manufacture and expansion of sales of high value-added products. Start to sell fine count yarn and NE glass chopped strand on a full scale in t

23. Slide 23: Life science business

    Life science business Medical ・Shore up the R&D and sales systems ・Promote efforts to boost productivity with an eye toward ramping up production capacity ・Bolster its integrated production system from materials to finished products, i.e. the Company’s strength, further, thereby enhancing its develo

24. Slide 24: Distribution of Profit

    Distribution of Profit □ Based on stable growth of dividends, distribution of profit is to be determined with a payout ratio (based on performance) in view. Net income per share (yen) Dividend per share (yen) Payout ratio (%) 188.57 -38.38 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY20

25. Slide 25: 4. Progress of the Go for next 100 Mid-term Business Plan

    4. Progress of the <<Go for next 100>> Mid-term Business Plan 25 Copyright (C) Nitto Boseki Co., Ltd. All Rights Reserved.

26. Slide 26: Progress of mid-term business plan

    Progress of mid-term business plan Earnings targets (Billions of yen) FY2017 results FY2018 (forecast) FY2020 FY2023 Net sales 84.5 89.0 100.0 150.0 Operating income 10.8 10.8 12.0 15.0 Ordinary income 11.1 11.0 12.0 15.0 Net income attributable to owners of parent 10.3 7.7 8.0 10.0 EBITDA 15.0 15.4

27. Slide 27: Macro Trends of Market and Society

    Macro Trends of Market and Society ○Environmental problems including global warming ○Decreasing birthrate and an aging population, increasing cost of social security ○Acceleration of Smart technology (Automobiles, house, appliance, clothes) ○Expansion of IoT, big data, Cloud networking and informati

28. Slide 28: FY2023 (101st year) Ideal Corporate Vision

    Mid- to Long-term Business Plan - “Vision 101” Nittobo survives in our home country’s market in spite of the total demand attenuation and decreasing birthrate, and aging population. And we are expanding the oversea business for sustainable growth over the NEXT 100 years. 《FY2023 (101st year) Ideal C

29. Slide 29: Glass fiber business

    Glass fiber business Mid-term business plan, long-term vision “101,” ideal corporate vision for FY2023 <Glass fiber business> Stable provision of high value added products in the rapidly changing environment to consolidate our presence as market learder. Reinforce the electronic materials Strengthen

30. Slide 30: Glass fiber business: Growth opportunities (electronics materials area)

    Glass fiber business: Growth opportunities (electronics materials area) Technical trends PCB trends Glass cloth trends ・5G ・Miniaturization ・Ultrathin type ・Acceleration of cloud ・High density, multi-layer ・Low Dk, low Df computing ・High frequency-compatible ・High reliability ・Self-driving ・High sti

31. Slide 31: Glass fiber business: Increased applications of special glass

    Glass fiber business: Increased applications of special glass T Glass NE Glass Existing Electronic substrates for semiconductor packages Electronic substrates for data centers, base main applications stations and servers New applications Needs for composite materials using high-strength Needs for lo

32. Slide 32: Glass fiber business: Priority investment area

    Glass fiber business: Priority investment area Fine count yarn/thin materials Nittobo’s Strength E glass Ultrathin ~ thin yarn T glass (low CTE) NE glass (low Df, Dk) General- Special purpose composition composition E glass thick yarn (commodity segment) Coarse count yarn/thick materials  Focus on

33. Slide 33: Glass fiber business (main measures)

    Glass fiber business (main measures)  Ramp up production capacity of special glass (T/NE) yarn (to 2018/4) Glass fiber yarn  Ramp up production capacity of fine count yarn Domestic: Nitto Glass Fiber Manufacturing Co., Ltd. (to be launched in the 2nd half of 2018) Overseas: Nittobo Asia Glass Fibe

34. Slide 34: Topic: Acquisition of Baotek Industrial Materials Ltd.

    Topic: Acquisition of Baotek Industrial Materials Ltd.  Corporate profile Name: Baotek Industrial Materials Ltd. Business description: Manufacture and distribution of glass cloth, etc. Establishment: August 12, 1992 Location: No. 277, Minfeng Rd., Yangmei, Taoyuan, Taiwan Representative: Ko Ch

35. Slide 35: Topic: Acquisition of Baotek Industrial Materials Ltd.

    Topic: Acquisition of Baotek Industrial Materials Ltd. Network of the glass fiber business bases <Objective of Acquisition>  Ramp up production capacity of glass Yarn Nittobo’s cloth. process Fukushima Cloth Factory process  In Taiwan, where electronic materials manufacturers are clustered, build

36. Slide 36: Life science business

    Life science business Mid-term business plan, long-term vision “101,” ideal corporate vision for FY2023 <Life Science Business> Growth as 2nd pillar of Nittobo group by leveraging the competence in diagnostics, specialty chemical, and beverage fields. ■In-vitro diagnostic reagent business Make the m

37. Slide 37: In-vitro diagnostic reagent business (main measures)

    In-vitro diagnostic reagent business (main measures)  To boost the ability to develop reagents, step up its integrated R&D system from materials to products Research and Development ・To shore up the ability to deploy new technology overseas and explore new leading-edge technology, the Strategic Off

38. Slide 38: Textiles business

    Textiles business Mid-term business plan, long-term vision “101,” ideal corporate vision for FY2023 <Textile Business> Acceleration of high value added strategy and expansion of the application of textile technology to industrial fields with proper business volume and profitability.  Polish its uni

39. Slide 39: Capital expenditures, depreciation & amortization and research & development expenses

    Capital expenditures, depreciation & amortization and research & development expenses The Company plans to conduct capital expenditure programs amounting to 55.0 billion yen for the four-year period of the Mid-Term Business Plan. In the first year, about 50% of the budget has already been approved.

40. Slide 40: EBITDA Growth Story

    EBITDA Growth Story (Yen in Billion) 30 Annual Basis Approx. (9 of 2nd half EBITDA×２） 20.0 25 Approx. 18.0 20 15 Implement investments for growth, thereby boosting earning capacity ・Glass fiber business 15 Domestic: Investments in ultrathin yarn and cloths Overseas: Investments in fine count yarn :

41. Slide 41: Long-term vision and the mid-term business plan

    Long-term vision and the mid-term business plan “Long-term Vision 101” Ideal Corporate Vision <<Go For Next 100>> Mid-term Business Plan 100th anniversary/101st year FY2023 Tokyo Olympic and Paralympic Games FY2020 Sales: 150 billion yen Sales: 100 billion Operating income: 15 yen billion yen FY2016

42. Slide 42: End

    End Copyright (C) Nitto Boseki Co., Ltd. All Rights Reserved. 42

43. Slide 43: Key financial data

    Key financial data FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 ROS (Operating income to 7.5% 2.2% 2.5% 7.7% 7.2% 8.1% 7.6% 9.8% 12.6% 13.4% 12.8% sales ratio) ROA (Ordinary income to 6.4% 1.6% 1.0% 4.7% 4.2% 4.9% 4.8% 6.1% 7.6% 8.1% 7.7% total assets ratio) ROE 8.2%

44. Slide 44: Textiles business: Product highlights

    Textiles business: Product highlights Business Principal product Characteristics Product photograph category Raw yarn Core spun yarn (CSY) Nittobo’s CSY is a yarn product made by twining short fiber such as cotton around a polyurethane filament before covering it. CSY, being a pioneer of stretch fab

45. Slide 45: Glass fiber business: Product highlights

    Glass fiber business: Product highlights Principal product Business Characteristics Product photograph Main uses category Prefabricated bath unit A product consisting of strands of Septic tank Roving untwisted glass fiber. Body of smartphone and Glass A product made by chopping glass PC fiber Choppe

46. Slide 46: Life science business: Product highlights

    Life science business: Product highlights Segment Characteristics Product photograph Main uses Medical Provides in-vitro diagnostic ・Measurement of liver function, drugs in biochemistry, cholesterol and neutral lipid hematology and serum- ・Measurement of inflammation, immunology areas, and autoimmun

Nitto Boseki — FY2017 Earnings Presentation on 6ix