Kondotec Inc. · TSE:7438
Kondotec — Q2 FY2021 Earnings Presentation
62 slides from Kondotec's earnings presentation, Nov 6, 2020
Slide 1: Financial Results Q2 FY2021
Financial Results Q2 FY2021 November 6, 2020 Securities Code : 7438
Slide 2: Notes on forward-looking statements
Notes on forward-looking statements This document contains forward-looking statements and business plans. These statements were made based on economic environment and business policies at the time of release. Actual results may differ materially from these forward-looking statements due to various f
Slide 3: Contents
Contents 1. Highlights of Q2 FY2021 Financial Results and Recent P.4 Initiatives 2. Company Overview P.8 3. Main Products and Merchandise P.16 4. Q2 FY2021 Financial Results and Analysis P.22 5. Q2 FY2021 Financial Results and Analysis by Segment P.28 6. Response to ESG Issues P.36 7. Growth Strateg
Slide 4: 1. Highlights of Q2 FY2021 Financial Results and Recent Initiatives
1. Highlights of Q2 FY2021 Financial Results and Recent Initiatives
Slide 5: Summary of Q2 FY2021 Consolidated Financial Results
Summary of Q2 FY2021 Consolidated Financial Results Net sales decreased due to the sales contribution from TOKAI STEP was unable to offset the drop in sales caused by the impact of the COVID-19 infection. Operating results decreased. Although we worked to cut SG&A expenses and improve efficiency
Slide 6: Establishment of Intermediate Holding Company
Recent Initiatives Establishment of Intermediate Holding Company Purpose of establishment of intermediate holding company KONDOTEC has three subsidiaries – TECBUILD CO., LTD., TOKAI STEP CO., LTD. and FUKOKU, Ltd. -each operating independently and providing scaffolding construction services. We anno
Slide 7: Acquisition of FUKOKU, Ltd.
Recent Initiatives Acquisition of FUKOKU, Ltd. Acquisition of FUKOKU, Ltd. in January 2021 KONDOTEC acquired all shares in FUKOKU, Ltd. with the aim of achieving sustainable growth and improving the corporate value of the KONDOTEC group over the medium to long term. We anticipate further business ex
Slide 8: 2. Company Overview
2. Company Overview
Slide 9: Performance Trends
Performance Trends We achieved our 9th consecutive year of record sales and profit as a result of efforts to supply products and merchandise to various industries in response to changes of the times and customer needs since establishment in 1953. Acquired shares （trillion yen） Acquired shares of TEC
Slide 10: Company Overview
Company Overview Company name KONDOTEC INC. Sanwa Denzai Co., Ltd. KONDOTEC INTERNATIONAL (THAILAND) CO., LTD. Group companies CHUOH GIKEN Co., Ltd. TECBUILD CO., LTD. TOKAI STEP CO., LTD. Established January 1953 President and Representative Katsuhiko Kondo Director 2-2-90 Sakaigawa, Nishi-ku, Osak
Slide 11: Company History and Business Areas
Company History and Business Areas Company history Business areas January 1953 Construction industry wholesale Established Kondo Shoten Co., Ltd. Other than January 1989 Field Categorization of merchandise construction Changed the company name to KONDOTEC INC. KONDOTEC INC. April 1995 Shipbuilding L
Slide 12: Net Sales by Segment
Net Sales by Segment Segment Main customers Main products & merchandise Net sales by segment (FY2020) Turn buckles Shackles Hardware stores Scaffolding chains Wholesalers Industrial Hooks and clips Materials Home Screws Electrical improvement Container bags Equipment center Tarpa
Slide 13: Distribution Channels
Distribution Channels Suppliers Manufacturers, etc. related construction & Overseas Electrical equipment In-house Civil engineering factory procurement manufactures 50％ 15％ 20％ 15％ ※ Manufacturer function (In-house manufactured products and OEM products) Approximately 40％ Sales contribution ratio by
Slide 14: Segment Overview
Segment Overview (As of end March 2020) Industrial Structural Electrical Consolidated Materials Steel Materials Equipment 60,599 million yen 35,459 million yen 16,429 million yen 8,710 million yen In- In- house In- house house Net sales 16％ 13％ 32％ Domestically- Imported Imported Domestically- Domes
Slide 15: Market Size for Main Products and Merchandise
Market Size for Main Products and Merchandise Market size for main products, merchandise and corresponding market shares (As of end March 2020) We offer an extensive range of products including higher market shares products and merchandise (such as wire ropes, nets, sheets and screws) and products
Slide 16: 3. Main Products and Merchandise
3. Main Products and Merchandise
Slide 17: Sales Fields
Sales Fields We supply roughly 50,000 products and merchandise to various industries in response to changes of the times and customer needs. Wind power generation Agriculture and horticulture Railroad and railroad bridge Agriculture and forestry Prefabricated Wooden construction construction Slope C
Slide 18: Turnbuckle Braces
Turnbuckle Braces Turnbuckle braces are connected cornerwise to prevent the collapse of buildings exposed to lateral pressure. Turnbuckle braces are used as seismic bracing products in prefabricated steel-frame houses and steel constructions such as shopping centers, factories and warehouses. Th
Slide 19: Anchor Bolts
Anchor Bolts Anchor bolts are important materials used to connect a building structure to a concrete foundation. Their main purpose is to prevent the building connected to the concrete foundation from tilting and falling over. After construction work Anchor bolts Anchor frame (Kon-base Eco) 18
Slide 20: Container Bags
Container Bags Container bags are used in a wide range of settings such as 1) transportation and storage of feedstuff, fertilizer, plastic pellets, and industrial waste; 2) rubble disposal and decontamination work; and 3) post-disaster reconstruction work (used as large sandbags). 19
Slide 21: Scaffolding Installation
Strengthened Business and Products for Last Year Scaffolding Installation TOKAI STEP and TECBULID handle assembly and disassembly of scaffolding is used for construction and repairs such as warehouses, detached homes and condominiums. Overpass repair Condominium construction 20
Slide 22: 4. Q2 FY2021 Financial Results and Analysis
4. Q2 FY2021 Financial Results and Analysis
Slide 23: Q2 FY2021 Consolidated Financial Results
Q2 FY2021 Consolidated Financial Results (million yen) Q2 Q2 YoY FY2020 FY2021 Amount % Net sales 30,367 28,952 △1,415 △4.7％ Gross profit 6,757 6,602 △155 △2.3％ SG&A expenses 4,734 5,026 ＋291 ＋6.2％ Operating income 2,023 1,576 △446 △22.1％ Ordinary income 2,073 1,626 △446 △21.5％ Profit attributable t
Slide 24: Operating Income Analysis (Consolidated)
Operating Income Analysis (Consolidated) Operating income analysis (million yen) Quarterly GPM Conslidated Parent 23.5% 23.3% 23.3% △601 23.0% 23.0% 23 22.8% 22.8% 143 △11 22.8% 2,023 22.6% 22.5% The impact of 1,576 making TOKAI STEP a subsidiary 22.1% 22.0% Q2 FY2020 Net sales Gross Profit SG&A Oth
Slide 25: Progress for FY2021 Forecast
Q2 FY2021 Consolidated Financial Results Progress for FY2021 Forecast Progress for FY2021 forecast (million yen) Net sales and operating income (million yen) ■ Q2 FY2021 ■ Full-year forecast Net sales Operating income Net sales Full-year 16,053 forecast Progress 15,585 14,647 14,839 14,313 14,112 28
Slide 26: Consolidated Balance Sheet [Assets]
Consolidated Balance Sheet [Assets] (million yen) FY2020 Q2 FY2021 Change Cash and deposits 8,305 9,009 ＋703 Notes and receivable –trade 13,207 11,987 △1,220 Current assets Electronically recorded 1,695 1,846 ＋150 monetary claims operating Inventories 5,026 5,038 ＋12 Other 672 807 ＋134 Total current
Slide 27: Consolidated Balance Sheet [Liabilities and Net Assets]
Consolidated Balance Sheet [Liabilities and Net Assets] (million yen) FY2020 Q2 FY2021 Change Notes and accounts payable – trade 3,333 3,333 △0 Electronically recorded 8,400 7,034 △1,365 obligations – operations Current liabilities Breakdown Electronically recorded obligations–operations 10,006 8,95
Slide 28: 5. Q2 FY2021 Financial Results and Analysis by Segment
5. Q2 FY2021 Financial Results and Analysis by Segment
Slide 29: Q2 FY2021 Financial Results by Segment
Q2 FY2021 Financial Results by Segment (million yen) Change Full-year Q2 FY2020 Q2 FY2021 Progress (%) forecast Net sales 17,546 17,783 ＋1.4％ 38,900 45.7% Industrial Materials Segment 966 946 △2.1％ 2,068 45.8％ profit or loss EBITDA 1,170 1,282 +9.6％ － － Net sales 8,247 7,126 △13.6％ 14,800 48.1％ Stru
Slide 30: Industrial Materials
Industrial Materials Net sales and segment profit or loss (million yen) YoY Quarterly Net sales 9,175 9,227 9,025 Segment profit or loss 8,685 8,758 17,783 YoY 8,371 17,546 +1.4％ 672 544 553 966 946 YoY 472 421 393 △2.1％ Q1 Q2 Q3 Q4 Q1 Q2 Q2 FY2020 Q2 FY2021 FY2020 FY2020 FY2020 FY2020 FY2021 FY
Slide 31: Industrial Materials profit analysis
Segment profit or loss analysis (million yen) Quarterly GPM manufactured 29.9% 28.6% 29.1% 27.0% 27.3% 74 in-house Products △99 23.4% 148 Major increase/decrease △356 factors related to subsidiaries 213 Goodwill △95 million yen amortization： 29.2% 29.8% merchandise Goodwill amortization incurred in
Slide 32: Structural Steel Materials
Structural Steel Materials Net sales and segment profit or loss (million yen) YoY Quarterly Net sales Segment profit or loss 4,412 4,322 8,247 YoY 3,835 3,859 3,658 7,126 3,467 △13.6％ 497 482 896 399 YoY 338 551 311 △38.5％ 240 Q1 Q2 Q3 Q4 Q1 Q2 Q2 FY2020 Q2 FY2021 FY2020 FY2020 FY2020 FY2020 FY2
Slide 33: Structural Steel Materials profit analysis
Segment profit or loss analysis (million yen) Quarterly GPM manufactured 32.2% 32.3% in-house Products 30.9% 30.7% 29.3% 28.6% △200 △80 35 35.4% 35.7% 35.5% 35.8% △100 merchandise Imported 34.2% 896 33.5% 551 20.8% 20.7% 20.1% merchandise Domestically 20.0% 19.3% Sourced 18.8% Q2 FY2020 Sales volume
Slide 34: Electrical Equipment
Electrical Equipment Net sales and segment profit or loss (million yen) YoY Quarterly Net sales Segment profit or loss 2,465 4,573 YoY 4,042 2,107 2,101 2,155 2,035 △11.6％ 1,886 106 158 YoY 63 69 96 59 52 △39.5％ 26 Q1 Q2 Q3 Q4 Q1 Q2 Q2 FY2020 Q2 FY2021 FY2020 FY2020 FY2020 FY2020 FY2021 FY2021 F
Slide 35: Electrical Equipment profit analysis
Segment profit or loss analysis (million yen) Quarterly GPM and number of projects Gross Profit Margin 17.5% 16.8% 16.8% 16.6% 16.6% 16.6% △80 158 26 △8 Q1 Q2 Q3 Q4 Q1 Q2 FY2020 FY2020 FY2020 FY2020 FY2021 FY2021 96 Number of project※ 15 14 13 Q2 FY2020 Net sales Gross Profit SG&A Expenses Q2 FY2021
Slide 36: 6. Response to ESG Issues
6. Response to ESG Issues
Slide 37: ESG Basic Policy
ESG Basic Policy In engaging in corporate activities, we recognize that management promoting response to ESG (environment, social and governance) issues will lead to sustainable growth. Materiality Relevant SDGs Provision of optimal products Expansion of the handling of environment-related and m
Slide 38: Initiatives
Initiatives We have established our ESG basic policy and link it to sustainable corporate growth by incorporating it in the management strategy. Current Specific Initiatives Cost Reduction and Risk Management Enhancement of Corporate Value Implementation of energy-saving measures (LED Sale of
Slide 39: Initiatives: Environment
Initiatives: Environment Environment Provision of optimal products and merchandise Business activities paying attention to the for environment measures environment Green sweeper Initiatives for environmental protection and energy-saving This is a biodegradable high-performance cleaner, ISO1400
Slide 40: Initiatives: Social
Initiatives: Social Social Human resource development and diversity We aim to create a working environment in which employees with diverse backgrounds fully demonstrate their respective abilities and are motivated to work. Male-female ratio of new employees with main career track Benefit progr
Slide 41: Initiatives: Governance
Initiatives: Governance Governance Corporate governance KONDOTEC recognize that strengthening and enhancing corporate governance through increasing soundness, transparency and efficiency of management and maximizing corporate value is one of the most important management objectives. A performance-
Slide 42: 7. Growth Strategies
7. Growth Strategies
Slide 43: Toward Achieving Billion Yen Sales Target
Toward Achieving 100 Billion Yen Sales Target We target consolidated sales of 100 billion yen in the 2020s by strengthening the earnings capability of existing core businesses and expanding into fields with growth prospects. M&A strategies 100 billion yen 1,000 Accelerate growth with current KONDO
Slide 44: ① Four Growth Strategies: New Customers and Products
Organic Growth ① Four Growth Strategies ～ Cultivation of New Customers and Offer of New Products and Merchandise ～ Cultivation of new customers Offer of new products and merchandise We achieve a monthly average of one new customer per sales For the purpose of developing new merchandise, joint Ne
Slide 45: ① Four Growth Strategies: Sales Methods and Distribution Routes
Organic Growth ① Four Growth Strategies ～ Adoption of Flexible Sales Methods and Cultivation of Distribution Routes ～ Adoption of flexible sales methods Cultivation of distribution routes We are working to expand our business into new sectors, such Differentiation strategies as Home improvement
Slide 46: ② Expansion of Operating Sites
Organic Growth ② Expansion of Operating Sites We strive for expansion of operating sites which maintained a local-community-oriented sales structures in order to respond quickly to customer needs. Recently we opened the Okayama office of the Company in April 2018. We will continue to execute quick
Slide 47: ③ Response to Natural Disasters
Organic Growth ③ Response to Natural Disasters Response to “New stage” published by Response to natural disasters Ministry of Land, Infrastructure, Transport and Tourism We have established a structure that allows it to rapidly The Ministry of Land, Infrastructure, Transport and Tourism respond
Slide 48: Increasing Presence in Foreign Markets
Periphery-strengthening Growth Increasing Presence in Foreign Markets Based on our view that increasing presence in foreign markets where growth is expected will contribute to enhancing our earning capability, we established a subsidiary in Thailand in November 2012. We executed a capital increase
Slide 49: M&A strategies
Toward Accelerating Organic Growth Strategies and Periphery-strengthening Growth Strategies M&A Strategy (Corporate Acquisitions and Capital/Business Tie-Ups ) We view that pursuing corporate acquisitions and capital/business tie-ups is an important strategy to strengthen our business platform. Fo
Slide 50: 8. Shareholder Return
8. Shareholder Return
Slide 51: Dividends and Shareholder Incentive Plan
Dividends and Shareholder Incentive Plan We target ROE of 10% or more and DOE of 2.5% or more with the aim of continuing to increase dividends. Shareholders receive the rice certificate per share once a year. Dividend yield Transition in dividends Closing price on October 30: 1,009 yen 31yen Div
Slide 52: Transition of Stock Price
Transition of Stock Price Transition of stock price Ranking among listed companies Stock price (after stock split) Nikkei average stock price KONDOTEC stock price (yen) Nikkei average stock price (yen) Among 3,816 listed companies … 1,318 1,250 30,000 1,000 24,000 ROE 806th 750 18,000 Profit 500 12,
Slide 53: 9. Highlights of Results
9. Highlights of Results
Slide 54: Highlights of Consolidated Financial Results
Highlights of Consolidated Financial Results 28,952 1,576 Progress Operating income Progress Net sales (million yen) million yen 46.7％ (million yen) million yen 42.6％ 62,000 60,599 4,085 57,828 3,907 3,700 52,811 50,211 50,410 3,441 3,516 3,537 47,991 49,168 3,271 3,303 41,153 2,664 38,745 35,548 28
Slide 55: Highlights of Consolidated Financial Results
Highlights of Consolidated Financial Results Net assets (million yen) 28,637 million yen ROE (％) Target 10 ％ or higher 28,387 28,637 11.1 11.4 26,756 10.8 10.9 10.7 10.7 10.4 24,745 10.0 22,719 21,102 20,231 18,783 10％ or higher 7.1 16,990 15,097 5.8 14,381 4.7 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/
Slide 56: Highlights of Consolidated Financial Results
Highlights of Consolidated Financial Results 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/3 21/3 2Q 21/3 (forecast) Result of Operations （million yen） Net sales 35,548 38,745 41,153 47,991 49,168 50,211 50,410 52,811 57,828 60,599 28,952 62,000 Operating profit 1,275 1,926 2,664 3,271 3,303 3,441
Slide 57: Quarterly Highlights
Quarterly Highlights Consolidated Net sales (million yen) 15,665 16,053 15,585 14,350 14,647 14,839 14,050 14,199 14,313 14,112 13,220 13,613 12,660 13,058 12,924 13,108 12,433 11,767 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 17/3 18/3 19/3 20/3 21/3 Operating income (million yen)
Slide 58: Quarterly Highlights: Industrial Materials
Quarterly Highlights Industrial Materials Net sales (million yen) 9,175 9,227 9,025 8,919 8,685 8,758 8,371 8,052 7,968 7,907 7,757 7,694 7,607 7,664 7,297 7,228 7,373 7,083 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 17/3 18/3 19/3 20/3 21/3 Segment profit or loss (million yen) 653
Slide 59: Quarterly Highlights: Structural Steel Materials
Quarterly Highlights Structural Steel Materials Net sales (million yen) 4,597 4,412 4,322 4,225 3,991 3,913 4,019 3,720 3,835 3,859 3,658 3,349 3,330 3,420 3,467 3,277 3,032 2,720 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 17/3 18/3 19/3 20/3 21/3 Segment profit or loss (million yen
Slide 60: Quarterly Highlights: Electrical Equipment
Quarterly Highlights Electrical Equipment Net sales (million yen) 2,465 2,272 2,196 2,125 2,156 2,148 2,155 2,080 2,107 2,101 2,013 1,970 2,005 2,035 2,035 1,963 1,927 1,886 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 17/3 18/3 19/3 20/3 21/3 Segment profit or loss (million yen) 106
Slide 61: &Z Konporec
&Z Konporec O ~
Slide 62: Contact details
2-2-90 Sakaigawa, Nishi-ku, Osaka 550-0024 Japan Telephone: +81-6-6582-8441 Website: https://www.kondotec.co.jp E-mail：kikaku@kondotec.co.jp