Kurita Water Industries Ltd. · TSE:6370
Kurita Water Industries — FY2019 Earnings Presentation
35 slides from Kurita Water Industries's earnings presentation, May 19, 2020
Slide 1: Results Presentation for the Fiscal Year Ended March 31, 2020
Kurita Water Industries Ltd. Results Presentation for the Fiscal Year Ended March 31, 2020 (Securities code: 6370) May 19, 2020
Slide 2: Table of Contents
Table of Contents 1 Consolidated Financial Results for the Fiscal Year Ended March 31, 2020 p1-11 2 Consolidated Business Forecast for the Fiscal Year Ending March 31, 2021 p12-20 3 Progress of Medium-Term Management Plan Maximize Value Proposition 2022 (MVP-22) p21-29
Slide 3: Consolidated Financial Results for the Fiscal Year Ended March 31, 2020
Consolidated Financial Results for 1 the Fiscal Year Ended March 31, 2020
Slide 4: Overview of Results
Overview of Results Previous Forecast (Billions of Yen) FY ended 03/2019 FY ended 03/2020 (Announced on Initial Forecast YoY Change Nov. 11) Orders 258.4 259.5 +0.4% 270.0 270.0 Net Sales 257.3 264.8 +2.9% 273.0 278.0 Business Profit 25.7 26.7 +3.8% 26.5 26.5 Net of Other Income and (5.8) 0.8 - 3.5
Slide 5: Impact of the Novel Coronavirus in the Year Ended March 31, 2020
Impact of the Novel Coronavirus in the Year Ended March 31, 2020 ⚫ In China, the Water Treatment Chemicals Business has been affected by the decline in the rate of operation by customers, and in the Water Treatment Facilities Business there has also been delayed orders caused by the restrictions on
Slide 6: Results by Segment
Results by Segment (Billions of Yen) FY ended 03/2019 FY ended 03/2020 YoY Change Previous Forecast (Announced on ⚫ The effects of new consolidation of U.S. Water Nov. 11) Services, Inc. (“U.S. Water”), Avista Technologies, Inc. and Avista Technologies (UK) Ltd. (“Avista”) are Orders 258.4 259.5 +1.
Slide 7: Factors in Change in Business Profit (YoY Change)
Factors in Change in Business Profit (YoY Change) (Billions of Yen) Impact of Cost of sales SG&A Impact of new decreased ratio expenses consolidation revenue improvement decrease +0.2 (4.8) +5.2 +0.4 Cost of sales improved for Revenue decreased in domestic and overseas overseas chemicals and chemica
Slide 8: Water Treatment Chemicals
Water Treatment Chemicals Previous Forecast ⚫ In Japan, there has been a general decline in (Billions of Yen) FY ended 03/2019 FY ended 03/2020 YoY Change (Announced on Nov. 11) demand in the second half of the year. Orders 102.9 113.8 +10.8 117.4 ⚫ Revenue decreased by 1.2 billion yen due to the Do
Slide 9: Water Treatment Facilities (for the domestic electronics industry)
Water Treatment Facilities (for the domestic electronics industry) Previous Forecast (Billions of Yen) FY ended 03/2019 FY ended 03/2020 YoY Change (Announced on ⚫ Orders for facilities decreased due to the absence of Nov. 11) the orders for large projects placed in the previous fiscal year. Orders
Slide 10: Water Treatment Facilities (for domestic general industries)
Water Treatment Facilities (for domestic general industries) Previous Forecast ⚫ The decrease in orders for Energy and Infrastructure (Billions of Yen) FY ended 03/2019 FY ended 03/2020 YoY Change (Announced on Nov. 11) is due to the decrease in orders for facilities for the electric power industry
Slide 11: Water Treatment Facilities (Overseas)
Water Treatment Facilities (Overseas) Previous Forecast (Billions of Yen) FY ended 03/2019 FY ended 03/2020 YoY Change (Announced on ⚫ Facilities orders and sales include the 7.5 billion yen Nov. 11) impact of new consolidation of U.S. Water. Orders 30.2 33.3 +3.1 37.6 ⚫ Orders and sales for facilit
Slide 12: Breakdown of Service Business Sales
Breakdown of Service Business Sales Previous Forecast ⚫ The Water Treatment Chemicals Business increased (Billions of Yen) FY ended 03/2019 FY ended 03/2020 YoY Change (Announced on Nov. 11) due to the impact of new consolidation. Water Treatment Chemicals 102.1 113.6 +11.5 117.2 ⚫ Sales in domestic
Slide 13: Capital Expenditures, Depreciation and R&D Expenses
Capital Expenditures, Depreciation and R&D Expenses (Billions of Yen) FY ended 03/2019 FY ended 03/2020 YoY Change ⚫ In the Water Treatment Chemicals Business, manufacturing facilities were increased overseas Capital Expenditures 40.0 31.7 (8.3) including in Europe. (Excluding Intangible) ⚫ Capital
Slide 14: Financial Condition
Financial Condition (Billions of Yen) End of March 2019 End of March 2020 Change ⚫ Goodwill increased as a result of new consolidation of Avista. Cash and Cash Equivalents 35.5 50.2 +14.7 ⚫ There was an increase in right of land use assets Other Current Assets 115.6 112.6 (2.9) due to the acquisitio
Slide 15: Consolidated Business Forecast for the Fiscal Year Ending March 31, 2021
Consolidated Business Forecast for 2 the Fiscal Year Ending March 31, 2021
Slide 16: Assumptions for the Business Forecast for the Fiscal Year Ending March 31, 2021
Assumptions for the Business Forecast for the Fiscal Year Ending March 31, 2021 Assumptions ⚫ Although it seems that novel coronavirus infections will taper by the end of this September, it is assumed that the impact on the economy will remain. ⚫ The forecast is for reduced production in the automob
Slide 17: Overview of Business Forecast
Overview of Business Forecast FY ended 03/2020 FY ending 03/2021 (Billions of Yen) (Results) (Forecast) YoY Change Orders 259.5 261.0 +0.6% Net Sales 264.8 268.0 +1.2% Business Profit 26.7 23.5 (11.8%) Net of Other Income and Expenses 0.8 (1.0) - Operating Profit 27.5 22.5 (18.1%) Profit Before Tax
Slide 18: Forecast by Segment
Forecast by Segment (Billions of Yen) FY ended 03/2020 FY ending 03/2021 YoY Change ⚫ Due to the impact of the novel coronavirus, orders (Results) (Forecast) and net sales are expected to decrease by 8 Orders 259.5 261.0 +1.5 billion yen in the Water Treatment Chemicals Business and 7.5 billion yen
Slide 19: Water Treatment Chemicals
Water Treatment Chemicals FY ended 03/2020 FY ending 03/2021 (Billions of Yen) (Results) (Forecast) YoY Change ⚫ Demand for chemicals is expected to decline in industries such as automobiles, steel and petroleum in Orders 113.8 108.5 (5.3) Japan and overseas. Domestic 46.0 42.0 (4.1) ⚫ Demand for ai
Slide 20: Water Treatment Facilities (for the domestic electronics industry)
Water Treatment Facilities (for the domestic electronics industry) (Billions of Yen) FY ended 03/2020 FY ending 03/2021 YoY Change ⚫ In regard to facilities, the impact of the novel (Results) (Forecast) coronavirus is minor. Orders 56.4 56.1 (0.2) ⚫ Delays in maintenance are expected due to Faciliti
Slide 21: Water Treatment Facilities (for domestic general industries)
Water Treatment Facilities (for domestic general industries) (Billions of Yen) FY ended 03/2020 FY ending 03/2021 YoY Change ⚫ It is possible that there will be delays in (Results) (Forecast) construction work for facilities. Orders 56.1 52.3 (3.8) ⚫ Modifications are expected to be delayed in Energ
Slide 22: Water Treatment Facilities (Overseas)
Water Treatment Facilities (Overseas) FY ended 03/2020 FY ending 03/2021 (Billions of Yen) (Results) (Forecast) YoY Change ⚫ In regard to facilities for China and South Korea, no projects have been canceled due to the impact of Orders 33.3 44.0 +10.7 the novel coronavirus. Facilities 22.8 22.6 (0.2)
Slide 23: Breakdown of Service Business Sales
Breakdown of Service Business Sales (Billions of Yen) FY ended 03/2020 FY ending 03/2021 YoY Change ⚫ Revenue is expected to increase in the Ultrapure (Results) (Forecast) Water Supply Business in Japan. Water Treatment Chemicals 113.6 107.6 (6.0) ⚫ Revenue is expected to increase significantly in t
Slide 24: Capital Expenditures, Depreciation and R&D Expenses
Capital Expenditures, Depreciation and R&D Expenses (Billions of Yen) FY ended 03/2020 FY ending 03/2021 YoY Change ⚫ Investment in facilities for the Ultrapure Water (Results) (Forecast) Supply Business is expected to decrease in the Capital Expenditures initial plan, but additions may be made thro
Slide 25: Progress of Medium-Term Management Plan Maximize Value Proposition 2022 (MVP-22)
3 Progress of Medium-Term Management Plan Maximize Value Proposition 2022 (MVP-22)
Slide 26: Basic Policy
Basic Policy Designation of key objectives for the medium term Maximize Dismantle Dramatically raise customer preconceived the quality and intimacy ideas speed of our work Changing of Enhancement Source of business of value competitiveness models and provided from generating new business the custome
Slide 27: Performance Targets
Performance Targets Emphasis on profitability and capital efficiency FY ended 03/2020 FY ending 03/2023 (Results) (Target) CAGR of net sales - 0.7％ 3% or more Business profit margin on net sales 10.1％ 15％ ROE 7.6％ 10% or more 22
Slide 28: Creation of System for Promotion of CSV Business
Creation of System for Promotion of CSV Business Creation of system for promotion of CSV business throughout the Group ⚫ Contribution to the ⚫ Awards within resolution of social issues the Company ⚫ Enhancement of reputation Reduction of environmental outside of the Company impact from the Company’s
Slide 29: The Course of Creation of a Solution Model
The Course of Creation of a Solution Model Contract follows verification in each stage Customer needs Packaging of Embodiment Market Social products, Proposal to Verification in Completion of of customer needs value technologies customers the field business model deployment and services Technologica
Slide 30: Solution Model Development Results
Solution Model Development Results Completion of seven models for prototypes of horizontal expansion Model name Market area Value provided (1) 3S (Stable, Secure, Saving) solution for wastewater treatment using coagulation Entire market Waste reduction sensors (2) System of increasing productivity a
Slide 31: Solution Model Orders
Solution Model Orders Adoption expanding to a wide range of industries Pulp & paper Other Electronics Steel Orders in Automotive FY ended 03/2020 1.9 billion yen Petrochemicals Food, beverages, pharmaceuticals 26
Slide 32: M&A and Measures by Region
M&A and Measures by Region Europe North America Company Kurita Europe GmbH Avista Technologies (UK) Ltd. Company Kurita America, Inc. Avista Technologies, Inc. History 2015 Acquisition 2019 Acquisition History 1996 Established Kurita America, Inc. 2019 Acquisition 2017 Purchase of paper pulp 2017 Ac
Slide 33: Project Acorn – R&D / Technical
Global Development of Reverse Osmosis Membrane Technology Project Acorn – R&D / Technical Project started in January 2020 East Asia Mission Japan Europe (1) Creation of globally unified strategic products (2) Global standardization of evaluation and testing methods (3) Development of new products No
Slide 34: Transformation of Business Models and Business Processes
Transformation of Business Models and Business Processes Utilize ICT and digital technology changing the way of business 1. Establishment of system for promoting digitalization ⚫ Establishment of new Digital Strategy Division and integration of IT-related departments within the Group ⚫ Establishment
Slide 35: Forward-looking Statements
Forward-looking Statements This presentation contains forward-looking statements, business plan projections, and judgments based on information available to management at the time of writing. Due to the existence of a variety of risk factors and uncertainties, actual results may differ from those sp
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