Shinagawa Refra Co., Ltd · TSE:5351
Shinagawa Refra — Shinagawa Refractories — FY2015 Earnings Presentation
46 slides from Shinagawa Refra's earnings presentation, Jun 14, 2016
Slide 1: Presentation Material: Results for Fiscal Year Ended March 2016
Presentation Material Results for Fiscal Year Ended March 2016 June 14, 2016 ― Supporting the World’s Key Industries Through Technologies ― Securities Code Number: 5351 Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2016
Slide 2: Table of Contents
Table of Contents I. Overview of 1. Consolidated Financial Highlights for Fiscal Year Ended March 2016 5. Balance Sheets (Consolidated) Financial 2. Net Sales by Business Segment 6. Cash Flows (Consolidated) 3. Operating Income by Business Segment (Segment Profit) 7. Financial Strategy Results 4. Fa
Slide 3: I. Overview of Financial Results for FY2015
I. Overview of Financial Results for FY2015 Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2016 2
Slide 4: Consolidated Financial Highlights for Fiscal Year Ended March 2016
1. Consolidated Financial Highlights for Fiscal Year Ended March 2016 (Unit: million yen) FY 2014 FY 2015 YoY Results Results Net sales 100,188 97,889 - 2.3% Operating income 4,895 5,019 + 2.5% Ordinary income 5,215 4,951 - 5.1% Profit attributable to owners of parent 3,098 2,796 - 9.7% ● Net sales
Slide 5: Net Sales by Business Segment
2. Net Sales by Business Segment (Unit: million yen) FY 2014 FY 2015 YoY Results Results Refractories and related products 74,833 74.7 73,849 75.4 - 1.3% Furnace construction and engineering 22,885 22.8 21,694 22.2 - 5.2% Real estate, Leisure business, etc. 2,470 2.5 2,345 2.4 - 5.0% Total 100,188 1
Slide 6: Operating Income by Business Segment (Segment Profit)
3. Operating Income by Business Segment (Segment Profit) (Unit: million yen) FY 2014 FY 2015 YoY Results Results Refractories and related products 4,490 74.4 4,648 75.6 + 3.5% Furnace construction and engineering 525 8.7 475 7.7 - 9.4% Real estate, Leisure business, etc. 1,017 16.9 1,023 16.7 + 0.6%
Slide 7: Factors Behind Changes in Operating Income (Year-on-Year Comparison)
4. Factors Behind Changes in Operating Income (Year-on-Year Comparison) (Unit: 100 million yen) Positive factors Negative factors +1.6 -0.4 Change in total +1.2 50 Decrease in furnace repairs, 49 etc. Cost reduction 1.5 Volume, sales mix, sales price, raw materials and fuels -6.6 Contribution by Gro
Slide 8: Balance Sheets (Consolidated)
5. Balance Sheets (Consolidated) (Unit: million yen) FY 2014 FY 2015 Change Current assets 62,994 62,847 -147 ・ Notes and accounts receivable-trade: -835 Noncurrent assets 46,847 40,850 -5,997 ・ Investment securities: -4,382 Total assets 109,841 103,697 -6,143 Current liabilities 41,188 40,624 -564
Slide 9: Cash Flows (Consolidated)
6. Cash Flows (Consolidated) (Unit: million yen) [Main contents of cash flows from operating activities] FY 2014 FY 2015 Change ・Income before income taxes and Cash flows from minority interests: 4,823 operating activities 4,448 4,390 -58 ・Depreciation and amortization: 2,453 Cash flows from investi
Slide 10: Financial Strategy: Profitability and Financial Position
7. Financial Strategy 1 Securing high profitability ＲＯＳ (%) ＲＯＥ (%) ● ROS (Return on Sales) 10 10 7.3 8 8 6.3 and 5.2 5.1 6 6 ● ROE (Return on Equity) 4 4 will be set as major management 2 2 indicators with the aim of enhancing 0 0 management efficiency. FY2014 FY2015 FY2014 FY2015 2 Further improve
Slide 11: Financial Strategy: Shareholder Returns and Growth Investment
7. Financial Strategy 3 Shareholder returns Dividend per share (Yen) 8 ●Maintaining constant dividend payouts. 6 6 6 6 [Actual dividend payout for the fiscal year ended March 2016] (Dividend per share) 4 ● Interim dividend: 3.00 yen 2 ● Year-end dividend: 3.00 yen 0 Annual dividend: 6.00 yen FY2014
Slide 12: II. Future Strategies
II. Future Strategies Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2016 11
Slide 13: Overview of the Medium-Term Management Plan
1. Overview of the Medium-Term Management Plan Based on our successful implementation of the second mid-term management plan during 2012-2014, we commenced the third medium-term management plan in FY2015. Basic policy of the medium-term management plan Achieving sustainable growth for the future by
Slide 14: FY2016 Management Plan: Numerical Targets
2. FY2016 Management Plan: Numerical Targets (Unit: million yen) FY 2015 FY 2016 YoY Results Forecast Net sales 97,889 100.0 102,800 100.0 ＋5.0% Operating income 5,019 5.1 5,200 5.1 ＋3.6% Ordinary income 4,951 5.1 5,300 5.2 ＋7.0% Profit attributable to owners of parent 2,796 2.9 3,200 3.1 ＋14.4% Not
Slide 15: Assumptions of FY2016 Management Plan
3. Assumptions of FY2016 Management Plan Business environment Japanese economy: The growth rate will remain modest. ● Corporate earnings have been improving. ● Potential negative effects from the slowdown of emerging economies. Overseas economy: Economic outlook remains uncertain. ● The U.S. economy
Slide 16: Key Challenges for FY2016 Management Plan
4. Key Challenges for FY2016 Management Plan 1 Further improvement of cost competitiveness Enhancement of manufacturing infrastructure and Key measure reorganization of procurement system 2 Boosting technological capabilities Key measure Development of highly value-added products 3 Business expansio
Slide 17: Further Improvement of Cost Competitiveness: Manufacturing Infrastructure
4. Key Challenges for FY2016 Management Plan 1 Further improvement of cost competitiveness (1) Enhancement of manufacturing infrastructure Making capital investment to upgrade the core manufacturing equipment necessary for achieving sustainable growth. Securing reliable manufacturing Further improve
Slide 18: Enhancement of Manufacturing Infrastructure: Examples
4. Key Challenges for FY2016 Management Plan 1 Further improvement of cost competitiveness (1) Enhancement of manufacturing infrastructure <Examples> New press machine for manufacturing slide plates FY2015 New drying furnace New press machine for manufacturing magnesia- FY2016 carbon bricks Updating
Slide 19: Reorganization of Procurement System
4. Key Challenges for FY2016 Management Plan 1 Further improvement of cost competitiveness (2) Reorganization of procurement system Creation of “Procurement Center” (April 1, 2016) Procurement Center Raw Materials and Product Procurement Resources Department Department Improving procurement efficien
Slide 20: Boosting Technological Capabilities: High-Value-Added Products
4. Key Challenges for FY2016 Management Plan 2 Boosting technological capabilities (1) Development of highly value-added products Responding to customer needs and addressing the challenges faced by customers ● Performance enhancement of various High durability refractory products ● Improvement of te
Slide 21: Boosting Technological Capabilities: Future Growth Areas
4. Key Challenges for FY2016 Management Plan 2 Boosting technological capabilities (2) Future growth areas Development of products for future growth areas ● Refractories for secondary melting furnaces (for automobile and aircraft manufacturing industries) Refractories for specialty steel ● Mold powd
Slide 22: Business Expansion in Japan: New Customers Development
4. Key Challenges for FY2016 Management Plan 3 Business expansion in Japan (1) Sales increase by leveraging comprehensive expertise in refractories and furnace construction ● New Customers Development => Develop new customers by leveraging the Group’s comprehensive expertise in refractories and furn
Slide 23: Business Expansion in Japan: Large-Scale Furnace Projects
4. Key Challenges for FY2016 Management Plan 3 Business expansion in Japan (1) Sales increase by leveraging comprehensive expertise in refractories and furnace construction ● Winning all major large-scale furnace construction projects from steel manufacturers => Winning orders for scheduled large-sc
Slide 24: Overseas Business Expansion
4. Key Challenges for FY2016 Management Plan 4 Overseas business expansion Respond to the needs of respective Target 3 regions around the world by reorganizing our global sales structure Target 4 Target 2 Reorganizing overseas business Target 1 departments in April 2015 to introduce regional busines
Slide 25: Overseas Expansion: Southeast Asia
4. Key Challenges for FY2016 Management Plan 4 Overseas business expansion Target 1 Southeast Asia --- Realizing growth strategy through regional subsidiaries --- Business Expansion from Oceania to Indonesia ●Established SRI in October 2014 SRI PT Shinagawa Refractories Indonesia ●Capture growth opp
Slide 26: Overseas Expansion: Americas
4. Key Challenges for FY2016 Management Plan 4 Overseas business expansion Target 2 Americas --- Realizing growth strategy through regional subsidiaries --- Shinagawa Advanced Materials Americas, Inc. Expand Business in the Americas, from North to South, from SAM SAM ● Reorganization of SAM in Octob
Slide 27: Overseas Expansion: China and India
4. Key Challenges for FY2016 Management Plan 4 Overseas business expansion Target 3 China --- Responding to growing needs for high grade steel --- Shenyang Shinagawa A new mold powder production line was launched Metallurgy Materials Co., Ltd. in May 2016 Sales expansion of mold powder for Liaoning
Slide 28: The Third Medium-Term Management Plan: Numerical Targets
5. The Third Medium-Term Management Plan: Numerical Targets Third Medium-Term Management Plan: Numerical Targets Goal: Record results in FY2017 Consolidated net sales: Consolidated ROS 150,000 15,000 110.0 billion yen (ordinary income ratio): 6% 110,000 101,070 103,038 100,188 102,800 99,204 96,875
Slide 29: Corporate Governance: Transition to Audit and Supervisory Committee Structure
6. Corporate Governance Transition to “Company with an Audit and Supervisory Committee” Structure * Resolved at the Board of Directors’ Meeting held on March 10, 2016 * Planning to submit a proposal to the 182nd Ordinary General Meeting of Shareholders to be held on June 29, 2016 [Reasons for the tr
Slide 30: III. Supplementary Notes
III. Supplementary Notes Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2016 29
Slide 31: History
1. History [Established in 1875] [Established in 1938] Shinagawa Refractories Co., Ltd. JFE Refractories Corporation (First private company in Japan to (Operated as a subsidiary of the Kawasaki Steel manufacture fire bricks) Corporation Group since 1944) Increasing market presence and establishing r
Slide 32: Mission Statement
2. Mission Statement Mission Statement of Shinagawa Refractories With our core philosophy of respecting the basics “Be BASIC,” Shinagawa Refractories is committed to contributing to the industrial development and the creation of affluent societies through providing high quality refractory products a
Slide 33: Changes in Net Sales and Ordinary Income During Past Years
3. Changes in Net Sales and Ordinary Income During Past 10 Years (Consolidated Basis) (Million yen) (Million yen) 120,000 Net sales Ordinary income 12,000 Merged on October 1, 2009 103,038 101,070 99,204 100,188 100,000 Consolidated financial results for the fiscal year ended March 2010 combine the
Slide 34: What Are the Roles of the Refractory Industry?
4. What are the roles of the "Refractory Industry"? ● Many varieties of materials used in public infrastructure such as iron and steel, nonferrous metals, cement, glass are manufactured in furnaces at extremely high temperature with refractory lining. ● The refractory industry provides foundational
Slide 35: Major Products 1/2
5. Major Products 1/2 Refractories are industrial materials that can resist ultra-high temperatures in Refractories excess of 1,500 degrees Celsius. Approximately 80% of refractory production is consumed by the steel industry. Shaped refractories Monolithic refractories Mold powder Shaped refractori
Slide 36: Major Products 2/2
5. Major Products 2/2 Ceramic fiber Advanced ceramics Lightweight Ceramic material with a broad range of characteristics material featuring including excellent electrical insulation properties, abrasion low thermal resistance, corrosion resistance, chemical stability, conductivity and mechanical str
Slide 37: Key Features and Strengths
6. Key Features and Strengths Leading company of ultra-high 1 temperature technologies Solid customer base with highly-advanced 2 technological capabilities 3 Global business expansion Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2016 36
Slide 38: Ultra-High Temperature Technology: Two Technologies
7. Key Features and Strengths (1) Ultra-High Temperature Technology (i) Two Technologies Leading company of ultra-high temperature technology Solid technology development and commercialization capabilities supported by two technologies ●Furnace design ●Refractories Advanced ●Engineering services Ref
Slide 39: Ultra-High Temperature Technology: Customer-Oriented Technological Response
7. Key Features and Strengths (1) Ultra-High Temperature Technology (ii) Customer-Oriented Technological Response Work closely with customers at all times backed up by technologies and long track records of four divisions covering design, manufacturing, furnace construction, and development. Technic
Slide 40: Ultra-High Temperature Technology: Development Capability
7. Key Features and Strengths (1) Ultra-High Temperature Technology (iii) Development Capability to Meet Customer Needs With world-class research facilities, the Research Center focuses on the development of products to meet the exact needs of customers EDS analysis data (color map) Elements present
Slide 41: Solid Customer Base
8. Key Features and Strengths (2) Solid Customer Base Solid customer base with highly-advanced technological capabilities Meeting the exact needs of customers in various industries including the Japanese steelmaking industry, known for their best steelmaking technology in the world Ultra-high temper
Slide 42: Global Business Expansion
9. Key Features and Strengths (3) Global Business Expansion Global business expansion Starting from our launch into China in 1997, the Company has continued to expand overseas, establishing production bases in Australia and the U.S. [China] Entered market in 1997 ■ Overseas net sales and market sh
Slide 43: Current Status of the Expansion of Overseas Business Locations
10. Current Status of the Expansion of Overseas Business Locations Expanding overseas business locations in China, Oceania, and the Americas with a focus on areas close to the production sites of our customers Liaoning Shinagawa Hefeng Shenyang Shinagawa Metallurgy Materials Co., Ltd. Metallurgical
Slide 44: Domestic and Overseas Production System
11. Domestic and Overseas Production System [Overseas] [Japan] Developing a stable supply system Promoting the redevelopment of a reliable by establishing the Group’s supply system with enhanced efficiency manufacturing sites closer to and effectiveness customers in order to responsive to customer n
Slide 45: Global Procurement System
12. Global Procurement System Amid such circumstances, the Company The Company depends on foreign sources for developed a balanced procurement system to approximately 60% of refractory materials, 80% source materials from production centers in five or more of which (approximately 50% of the total ge
Slide 46: Disclaimer
Disclaimer This document is intended to provide information on the results for the fiscal year ended March 2016 (April 2015 – March 2016) and is not intended to solicit investment in securities issued by the Company. The document was prepared based on data available as of June 14, 2016. Opinions, fo
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