Nippon Air Conditioning Services Co., Ltd. · TSE:4658
Nippon Air Conditioning Services — Q2 FY2024 Earnings Presentation
50 slides from Nippon Air Conditioning Services's earnings presentation, November 2023
Slide 1: Reference Materials of Financial Results for the 2nd Quarter of FY Ending March 2024
We are the doctor of your invisible air. Reference Materials of Financial Results for the 2nd Quarter of Fiscal Year Ending March 31, 2024 November 2023 TSE Prime Market, NSE Premier Market : 4658 0
Slide 2: Disclaimer
Disclaimer These materials were prepared by Nippon Air Conditioning Services Co., Ltd. (the “Company”) for the purpose of understanding the current status of the Company, and do not aim at solicitation for investment in securities issued by the Company. The information in these materials is based on
Slide 3: Contents
Contents Ⅰ. Overview and strength p.02-p.25 Ⅱ. Financial highlights p.26-p.38 Ⅲ. Toward the achievement of long-term vision p.39-p.48 2
Slide 4: Overview and strength: Building facilities maintenance
Overview and strength Building facilities maintenance Number of technology-related employees: 2,538 Bases: 47 prefectures and 6 overseas countries * Number of Technology-related employees and Base information are as of the end of September 2023. 3
Slide 5: Company overview
Company overview Company overview Head office 239-2 Terugaoka, Meito-ku Apr. 1964 The company is established in Nagoya-shi, Aichi Japan Higashijukucho, Nakamura-ku Nagoya-shi, Aichi. Capital stock ¥1,139 million Business General building facility description maintenance service Number of Consolidate
Slide 6: Technology-oriented company
Number of employees ■Number of employees (persons) ■ Regular employees Technology-related employees ■ Average temporarily employed workers 4,000 ( ) Technology-related employees account for more than 80% 3,132 3,158 Technology-oriented company 3,500 3,065 3,095 3,121 (2,502) (2,515) (2,523) (2,520)
Slide 7: Stock-related information
Stock-related information Stock-related information ■dividend yield (％) Stock price ¥792 6.00 5.24 3.82 4.14 3.82 3.88 Total market capitalization ¥28.3 billion 4.00 Dividends ¥30 per share 2.00 0.00 Dividend payout ratio 51.4% 2019.3 2020.3 2021.3 2022.3 2023.3 Dividend yield 3.79% ■Total sharehold
Slide 8: Management philosophy
Management philosophy To make all our stakeholders happier ▼ Creation of social value Management philosophy Bringing together the technological capabilities and human resources to maintain optimal environments and give our clients peace of mind through top quality service. ▼ Creation of economic val
Slide 9: In-house technicians can respond in any phase
Maintenance and management cycle of building facilities In-house technicians can respond in any phase ▼ Technological capabilities Business Solution capabilities Model Total support capabilities ▲ What sets us apart from the competition 8
Slide 10: Business division
Business division Net sales Business division Overview composition PM ■ Inspection, maintenance, repair, Preventive Maintenance replacement, etc. of overall equipment / systems of buildings. (mainly air conditioning) 38 ％ FM ■ Integrated management that optimally combines maintenance services with d
Slide 11: Business contents
Business contents Central surveillance service Solution proposals “Is it possible to create such and such environment?” or “How can we improve the situation?” ▼ Daily measurement service Environmental diagnosis service ＋ Boosting added value by identifying needs based on dialogue with customers ▼ Re
Slide 12: History since foundation
History since foundation ■ Net sales (left axis) ■Net sales and operating income changes since foundation (billion yen) ● Operating income (right axis) 60 Apr. 1964 Establishment 6.0 2019 Five-Year Mid-Term Management Plan Start of TECS (Total Environmental Consulting System) Jun. 1985 2016 Three-Ye
Slide 13: Goals since foundation and goals in the future
Goals since foundation and goals in the future Three goals since foundation To make all our stakeholders happier (1) Overseas expansion (Jan. 1999) (1) [Customers] Provision of high-added value services (2) IPO in TSE and NSE (Sep. 2006) (2) [Employees] Improvement of satisfaction level and (3) Expa
Slide 14: Domestic market size
Domestic market size Construction and maintenance Companies approx. ¥2.2 trillion ▼ Approx. 70% of the air conditioning and heat source system market is for existing buildings ▼ we project a target for the Company of approx. ¥1.5 trillion * Prepared by the Company with reference to “Actual State of
Slide 15: Comparison with other companies in the same business
Comparison with other companies in the same business The Company Company Company Company A B C Characteristics of the Company compared to other Total market ¥28.3 ¥169.7 ¥102.9 ¥8.2 companies in the same sector capitalization Billion Billion Billion Billion PER 13.57x 15.63x 15.57x 4.72x (1) Scope o
Slide 16: Our strength lies in our ability to service products from any manufacturer
Our strength lies in our ability to service products from any manufacturer There is air-conditioning equipment from various makers inside buildings. Company A- Company B- Company C- manufacture manufacture manufacture (1) As an independent company, we are not subject to restrictions imposed by manuf
Slide 17: Strength in the stability
Strength in the stability ■ Annual contract sales ■Ratio of annual contracts to net sales (%) ■ Manufacturing plant, etc. sales excluding annual contracts ■ Other sales 100.0 (1) Maintaining stable annual contracts, mainly with hospitals (2) Growth by expanding manufacturing plants 75.0 ▼ Transactio
Slide 18: Strength in excellent technological capabilities
Strength in excellent technological capabilities ■Ratio of sales of facilities with special environment (%) ■ Ratio of sales of facilities with special environment ■ Other sales 100.0 Hospitals and manufacturing plants must meet strict environmental demands, thus maintenance at these 75.0 facilities
Slide 19: Reasons for inclination to facilities with special environments
Reasons for inclination to facilities with special environments Office building Hospitals Manufacturing plants Air conditioning equipment in Air conditioning equipment in operating Air conditioning equipment in conference room breaks down room breaks down manufacturing plant breaks down ▼ ▼ ▼ Operat
Slide 20: Wide range of high-quality services
Wide range of high-quality services Examples of the technological capabilities required are shown below. * Picture: Environmental performance measurement / diagnosis, Clean equipment maintenance, Environmental hygiene management, High efficiency filter maintenance, Work environment measurement, Safe
Slide 21: Technological capabilities index
Technological capabilities index ■Technological capabilities index (pt) 25.0 Number of technological type official 21.6 22.2 20.8 qualification acquisition 19.9 20.0 20.0 10,017 (Increase of 144 from previous fiscal year) 15.0 Target 20pt or higher ▼ 10.0 While technological capabilities cannot be m
Slide 22: Share in large-scale domestic hospitals
Share in large-scale domestic hospitals ■ Percentage of acceptance of outsourcing for domestic hospitals that have 600 beds or more (beds) Our strengths include facilities maintenance at large ■ Our company ■ Others hospitals, founded on our many years of experience 19,937 beds at facilities with sp
Slide 23: Hospital energy savings (example)
Hospital energy savings (example) ■Energy transition graph（t-CO2） 2010年度エネルギー Energy in FY2010 2021年度エネルギー Midsized Tokyo hospital Energy in FY2021 800 Total floor area approx. 48,000 sqm DOWN 600 Succeeded in saving a significant amount of energy 400 by maintaining a thorough site understanding and
Slide 24: Mid-to Long-Term Growth Strategy
Mid-to Long-Term Growth Strategy ■ Solar power generation and consumption business Train capable engineers [Target] Manufacturing plants with high voltage/high power electricity requirements. while striving to achieve [Goal] Expand outsourcing from manufacturing plants. full-scale operations as [Sta
Slide 25: Patent acquisition and additional patent application for space decontaminating method
Patent acquisition and additional patent application involving new and safer space decontaminating method Invention name: Space Decontaminating Method and Space Decontaminating Equipment Additional patent application Regular methods Patent acquired (registration date: April 17, 2023) submitted (fili
Slide 26: Progress on Technology Training Center construction
Progress on Technology Training Center construction Location Minami-ku, Nagoya-shi Estimated September 2024 completion Scheduled start April 2025 of operations Total floor area Approx. 4,100 m2 Scale Five (5) aboveground floors * Completed rendering To allow new employees to contribute quickly; Purp
Slide 27: Contents
Contents Ⅰ. Overview and strength p.02-p.25 Ⅱ. Financial highlights p.26-p.38 Ⅲ. Toward the achievement of long-term vision p.39-p.48 26
Slide 28: Financial highlights
Financial highlights Net sales：¥24.1 billion [+10.3％] Operating income：¥1.12 billion [+66.7%] Net income attributable：¥0.77 billion [+67.8％] to owners of the parent * For net sales, operating income, net income attributable to owners of the parent, the number in the 2nd quarter of fiscal year ending
Slide 29: Results for the 2nd quarter of FY ending March 2024 1/8
Results for the 2nd quarter of fiscal year ending March 31, 2024 1/8 FY03/2022 2Q FY03/2023 2Q FY03/2024 2Q Cumulative period Year-on- Year-on- Year-on- （unit : billion yen, %） Ratio to Ratio to Ratio to Amount year growth Amount year growth Amount year growth sales sales sales ratio ratio ratio Net
Slide 30: Results for the 2nd quarter 2/8
Results for the 2nd quarter of fiscal year ending March 31, 2024 2/8 With the impact of COVID-19 subsiding and as supply restrictions are addressed and improved, net sales are forecasted to increase by four billion yen from the previous fiscal year. The rate of progress toward the forecasted target
Slide 31: Results for the 2nd quarter 3/8: Net sales
Results for the 2nd quarter of fiscal year ending March 31, 2024 3/8 Net sales set a record high for 1H. In mainstay maintenance services, record highs were set in 1H for the second consecutive year. This involved expanding spot maintenance at hospitals, research facilities, and manufacturing plants
Slide 32: Results for the 2nd quarter 4/8: Gross profit
Results for the 2nd quarter of fiscal year ending March 31, 2024 4/8 Maintenance profit margins improved, despite rising procurement costs of materials and supplies and rising labor costs. Profit margins of renovation work is also on a slightly improving trend, but did not reach the level of the cor
Slide 33: Results for the 2nd quarter 5/8: SG&A and operating income
Results for the 2nd quarter of fiscal year ending March 31, 2024 5/8 SGA rose due to the rise in labor costs resulting from base-pay increase and elimination of COVID-19 movement restrictions, but growth in net sales outpaced this increase, resulting in both higher operating profit and operating mar
Slide 34: Results for the 2nd quarter 6/8: Net sales by facility
Results for the 2nd quarter of fiscal year ending March 31, 2024 6/8 ■Net sales by facilities of which services are entrusted (billion yen) ①Hospitals and research facilities ■ Hospitals and research facilities ■ Manufacturing plants, etc. ・Major increase mainly in renovation projects 11.00 ■ Other
Slide 35: Results for the 2nd quarter 7/8: Annual contract, maintenance and renovation
Results for the 2nd quarter of fiscal year ending March 31, 2024 7/8 ■Annual contract sales (billion yen) ■ Maintenance services net sales (billion yen) ■ Renovation work construction work volume (billion yen) ■ Hospitals and research facilities ■ Manufacturing plants, etc. ■ Other special facilitie
Slide 36: Results for the 2nd quarter 8/8: Overseas net sales
Results for the 2nd quarter of fiscal year ending March 31, 2024 8/8 ■Overseas net sales by region (million yen) ■ China ■ Singapore ■ Other regions Overseas net sales : ¥ 812 million yen 400 378 Operating income to sales overseas : -1.4％ 349 350 320 Net sales increased due to relaxed restrictions o
Slide 37: Status of cash flows
Status of cash flows FY03/2023 2Q FY03/2024 2Q Consolidated (cumulative period) Amount Year-on-year Amount Year-on-year Positive operating cash flow ▼ change change (billion yen) (billion yen) (billion yen) (billion yen) Cash flows from operating 0.40 -1.31 2.33 +1.93 activities Lower accounts recei
Slide 38: Financial position
Financial position FY03/2023 FY03/2024 2Q Consolidated growth ratio growth ratio (as of the end of period) compared to compared to Amount Amount the end of the the end of the (billion yen) previous period (billion yen) previous period (％) (％) The capital adequacy ratio increased Current assets 23.4
Slide 39: Forecast for the fiscal year ending March 31, 2024
Forecast for the fiscal year ending March 31, 2024 Despite progress in striking a balance between measures to stop the spread of COVID-19 and steps to resume economic and social activity, international instability, inflation, and supply limitations are expected to persist. We will seek to expand sal
Slide 40: Contents
Contents Ⅰ. Overview and strength p.02-p.25 Ⅱ. Financial highlights p.26-p.38 Ⅲ. Toward the achievement of long-term vision p.39-p.48 39
Slide 41: Toward the achievement of long-term vision
Toward the achievement of long-term vision Improvement of happiness of all stakeholders ▲ Creation of sustainable shareholder value ▲ Capital productivity improvement ▲ Enhanced human resources value 40
Slide 42: Enhancing human resources value
Enhancing human resources value Promote four projects aiming at enhancing human resources value Plans are underway to build a new Training Center. The facility will strengthen employee skills overall and help new and young employees make rapid contributions. 「Human」 「Technological capabilities」 「Sat
Slide 43: Employee satisfaction levels
Employee satisfaction levels ■Employee satisfaction levels (％) Employee satisfaction levels： 67.4％ 100.0 Positive responses concerning rewarding work / teamwork / work-life balance 90.0 We will strive to deliver improvements is trending higher 80.0 through initiatives with each project (raise 65.9 6
Slide 44: Improving the capital productivity
Improving the capital productivity Most important factor for improving the capital productivity 「enhancement of human resources value」 Linked to ESG(Social) Number of employees Special environment × Net income Net sales ＋ Technological capabilities Overseas development × Satisfaction level ROE Barri
Slide 45: Shareholder return policy
Shareholder return policy Maintain dividend payout ratio of 50% by enhancing capital productivity ▼ Implementation of shareholder return with awareness of dividend on equity ratio ■ROE (%) ■Payout ratio (%) ■Dividend on equity ratio (%) 15.0 14.1 60.0 8.0 7.2 50.2 51.0 49.4 × ＝ 10.5 6.0 5.2 9.4 4.6
Slide 46: Dividends
Dividends ■Dividends per share (yen) ■(year-end dividend ■(interim dividend 45.00 41.50 Returning 50% of extraordinary gains from cross- 40.00 shareholdings sales as a special dividend 35.00 14.00 30.00 Dividend per share 13.50 yen 30.00 28.00 28.50 28.00 26.00 25.00 15.00 20.00 15.50 16.00 14.00 Th
Slide 47: Sustainable shareholder value creation
Sustainable shareholder value creation ■PBR (x) ■(PBR＞1 ■(PBR＝1 2.00 PBR＞1 1.80 1.60 Evaluation of non-financial capital 1.40 ▼ 1.20 “Creation of sustainable shareholder value” 1.00 Linked to ESG (Governance) 0.80 0.60 ▼ 0.40 Medium- to long-term expansion of corporate value 0.20 Improvement of happ
Slide 48: Financial Key Performance Indicator
Financial Key Performance Indicator Net sales：¥55.0 billion (Ratio of sales of facilities with special environment 75％) Operating income：¥3.00 billion (Operating income to sales overseas 5％) Profit attributable to owners of parent：¥1.90 billion EPS：¥54 (Payout ratio：50％) ROE： Maintain 10％ * For net
Slide 49: Aim to improvement of happiness of all stakeholders
Aim to improvement of happiness of all stakeholders Improvement of happiness of all stakeholders Creation of sustainable Shareholder Value shareholder value Purposeful dialogue with stakeholders 10％ ROE Payout ratio50％ Financial Key Performance Indicator Operating income ¥ 3 billion ¥ 55 billion Net
Slide 50: www.nikku.co.jp/en
www.nikku.co.jp/en In charge of IR: Corporate Planning Division E-mail：ir4658@nikku.co.jp 49
Nippon Air Conditioning Services — Q2 FY2024 Earnings Presentation on 6ix