Nippon Paint Holdings Co., Ltd. · TSE:4612
Nippon Paint — Q2 2020 Earnings Presentation
51 slides from Nippon Paint's earnings presentation, Aug 14, 2020
Slide 1: FY2020 2Q Financial Results Presentation Material
August 14, 2020 FY2020 2Q Financial Results Presentation Material
Slide 2: Contents
Contents 1. FY2020 2Q Highlights ・・・ P.8 2. FY2020 2Q Results (by Region) ・・・ P.11 3. FY2020 Forecast ・・・ P.21 4. Reference -（1） FY2020 1H Highlights ・・・ P.28 -（2） FY2020 1H Results (by Region) ・・・ P.32 -（3） Breakdown of the Adjustment Items ・・・ P.36 -（4） Financial Index ・・・ P.45 Disclosure Policy f
Slide 3: Today's Summary (1)
Today’s Summary (1) ・FY2020 2Q Results (YOY): FY2020 2Q ‘Tanshin’/Revenue: +10.6%, operating profit: -10.9% ‘Non-GAAP’/Revenue: -11.6%, operating profit: -39.8% YoY Growth ・NIPSEA China saw recovery and had higher revenue and profit YoY in 2Q mainly due to market re-opening after lockdown. Project h
Slide 4: Today's Summary (2) FY2020 Consolidated Earnings Forecast
Today’s Summary (2) ・COVID impact varies across regions and industries and remains difficult to reasonably estimate market conditions for final demand due to uncertain factors such as impact of COVID second wave and FY2020 governments ending economic stimulus programs. Updated FY2020 Consolidated gu
Slide 5: COVID Impact Around the Globe
COVID Impact Around the Globe COVID impact varies across regions but the overall impact remains to be seen ・In Turkey, curfew imposed mainly on ・COVID impact remains but market conditions are weekends from April but restrictions were NIPSEA better with re-opening after lockdown. However, Europe rela
Slide 6: Summary of Market and Business Conditions in Major Operating Regions (1)
Summary of Market and Business Conditions in Major Operating Regions (1) Market and business conditions in major operating regions Decorative: 2Q market tone weaker than expected as COVID impact became apparent from March. Market climate slow to recover in 2H due to bad weather and heavy rainfall da
Slide 7: Summary of Market and Business Conditions in Major Operating Regions (2)
Summary of Market and Business Conditions in Major Operating Regions (2) Market and business conditions in major operating regions YoY growth achieved, driven by strong demand in decorative paints and paint related business due to Oceania stay-at-home restrictions. Demand expected to normalize in 2H
Slide 8: 1. FY2020 2Q Highlights
1. FY2020 2Q Highlights Photo image: NIPSEA/Shanghai World Financial Center
Slide 9: 1-1. FY2020 2Q Highlights
1-1．FY2020 2Q Highlights (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Revenue 165.1 182.5 10.6% 165.0 145.7 -19.2 -11.6% Operating profit 21.8 19.4 -10.9% 22.0 13.2 -8.7 -39.8% OP margin 13.2% 10.6% -2.6pt 13.3% 9.1% - -4.2pt P
Slide 10: 1-2. FY2020 2Q Highlights (Revenue & Operating Profit by Region)
1-2．FY2020 2Q Highlights (Revenue & Operating Profit by Region) Results(Tanshin) Results(Non-GAAP) (Billion yen) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Revenue 46.3 35.7 -22.9% 46.3 35.7 -10.6 -22.9% Japan OP profit※ 6.0 -0.2 - 6.8 -0.2 -7.0 - Revenue 95.2 88.1 -7.5% 95
Slide 11: 2. FY2020 2Q Results (by Region)
2. FY2020 2Q Results (by Region) Photo image: DuluxGroup/ Freycinet Lodge
Slide 12: 2-1. Market & Business Environment (2Q)
2-1．Market & Business Environment (2Q) Japan Asia (NIPSEA China) Oceania Americas Automotive coatings DIY Project Decorative paints ■ Market (YoY) ■Business (vs. Market)※ ※Own estimation Strong Weak Outperform Inline Underperform Market analysis ✓Automotive: Auto production in China recovered slight
Slide 13: 2-2. Operating Profit Gap Analysis (Based on Non-GAAP Results)
2-2．Operating Profit Gap Analysis (Based on Non-GAAP Results) (Billion yen) Gap(Non-GAAP) -8.7 Major reasons for changes ✓Japan/Americas/Asia Excepting for NIPSEA China: Lower profit due to weak performance in automotive coatings business ✓Adjustment items (+): Both DuluxGroup and Betek Boya continu
Slide 14: 2-3. Result Analysis by Region (Japan)
2-3．Result Analysis by Region (Japan) Results(Tanshin) Results(Non-GAAP) (Billion yen) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Automotive coatings 11.4 5.5 -51.7% 11.4 5.5 -5.9 -51.7% Decorative paints 12.8 11.1 -13.5% 12.8 11.1 -1.7 -13.5% Industrial coatings 10.2 8.4 -
Slide 15: 2-3. Result Analysis by Region (Japan)(Topic)
2-3．Result Analysis by Region (Japan)(Topic) Concluded Industry-Academia Co-creation Agreement with the University of Tokyo ・Concluded an industry-academia co-creation agreement on May 18 aimed at high level comprehensive joint research and exchange of human resources ・The agreement is for 5 years f
Slide 16: 2-4. Result Analysis by Region (NIPSEA China)
2-4．Result Analysis by Region (NIPSEA China) Results(Tanshin) Results(Non-GAAP) (Billion yen) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Automotive coatings 9.0 7.5 -16.9% 9.0 8.0 -1.1 -11.9% Decorative paints 55.4 59.8 7.9% 55.5 63.3 7.8 14.0% Revenue Industrial coatings 5
Slide 17: 2-5. Result Analysis by Region (Asia Excepting for NIPSEA China)
2-5．Result Analysis by Region (Asia Excepting for NIPSEA China) (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Revenue 25.1 15.6 -37.9% 25.1 16.4 -8.6 -34.5% Operating profit 2.8 0.4 -86.1% 2.8 0.2 -2.6 -93.2% OP margin 11.3% 2.5
Slide 18: 2-6. Result Analysis by Region (Oceania)
2-6．Result Analysis by Region (Oceania) (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Decorative paints - 18.9 - - - - - Industrial coatings - 1.2 - - - - - Revenue Paint related business - 14.9 - - - - - Total - 35.0 - - - - -
Slide 19: 2-7. Result Analysis by Region (Americas)
2-7．Result Analysis by Region (Americas) (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Automotive coatings 6.7 2.5 -63.6% 6.7 2.6 -4.1 -61.4% Decorative paints 12.7 12.0 -5.7% 12.7 12.2 -0.5 -3.7% Revenue Fine chemicals 0.8 0.6
Slide 20: 2-8. Result Analysis by Region (Others)
2-8．Result Analysis by Region (Others) Results(Tanshin) Results(Non-GAAP) (Billion yen) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 2Q 2Q (％) 2Q 2Q (Amount) (％) Automotive coatings 3.0 0.9 -69.8% 3.0 1.0 -2.0 -67.3% Decorative paints - 4.1 - - - - - Industrial coatings 0.0 0.7 - 0.0 0.0 0.0 - Revenue Fi
Slide 21: 3. FY2020 Forecast
3. FY2020 Forecast The logo “PAINT.WONDER” represents our commitment to provide solutions to social issues through technological innovation in paints
Slide 22: 3-1. FY2020 Forecast
3-1. FY2020 Forecast (Billion yen) Results(Tanshin) Constant Exchange Rate Basis vs. vs. vs. FY2020 FY2020 FY2020 FY2020 Previous Previous Previous Forecast Forecast Forecast Forecast Forecast Forecast Forecast (previous) (current) (%) (previous) (current) (Amount) (%) Revenue 720.0 730.0 1.4% 720.0
Slide 23: 3-2. Market & Business Environment (3Q)
3-2．Market & Business Environment (3Q) Japan Asia (NIPSEA China) Oceania Americas Automotive coatings Decorative DIY Project paints ■ Market (YOY) Strong Weak Market analysis ✓Automotive: In Japan, production slowdown due to COVID impact peaked in 2Q but remains weak in 3Q In China, recovery in 2Q t
Slide 24: 3-3. Market & Business Environment (4Q)
3-3．Market & Business Environment (4Q) Japan Asia (NPISEA China) Oceania Americas Automotive coatings Decorative DIY Project paints ■ Market (YOY) Strong Weak Market analysis ✓Automotive: In Japan, weak auto production expected, with full production cut expected at automakers in 3Q In China, lower p
Slide 25: 3-4. Various Assumptions for FY2020 Forecast (1)
3-4．Various Assumptions for FY2020 Forecast (1) NIPSEA China YoY(Current YoY(Previous Revenue Qualitative Information forecast) forecast) NIPSEA China 0%～-5% -5%～-10% Decorative No change -5%～-10% With market expected weak in 2H, various promotional measures (DIY) planned but not enough to offset 1Q
Slide 26: 3-4. Various Assumptions for FY2020 Forecast (2)
3-4． Various Assumptions for FY2020 Forecast (2) Japan YoY(Current YoY(Previous Revenue Qualitative Information forecast) forecast) Japan -10%～-20% -5%～-10% Automotive No change -25%～-35% Lower revenue expected in line with 1Q assumptions due to lower auto production reflecting economic slowdown and
Slide 27: 3-4. Various Assumptions for FY2020 Forecast (3)
3-4．Various Assumptions for FY2020 Forecast (3) Americas YoY(Current YoY(Previous Revenue Qualitative Information forecast) forecast) Americas -5%～-10% -15%～-25% Automotive -25%～-30% -30%～-40% Market remained challenging as with 1Q assumptions and some automakers likely accelerate production resumpt
Slide 28: Reference: FY2020 1H Highlights
4-(1) Reference: FY2020 1H Highlights
Slide 29: 4-(1)-1. FY2020 1H Highlights
4-(1)-1．FY2020 1H Highlights (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 1H 1H (％) 1H 1H (Amount) (％) Revenue 312.4 345.4 10.6% 312.5 272.5 -40.0 -12.8% Operating profit 41.9 34.7 -17.3% 40.0 23.7 -16.3 -40.8% OP margin 13.4% 10.0% -3.4pt 12.8% 8.7% - -4.
Slide 30: 4-(1)-2. Operating Profit Gap Analysis (Based on Non-GAAP Results)
4-(1)-2． Operating Profit Gap Analysis (Based on Non-GAAP Results) 30
Slide 31: 4-(1)-2. FY2020 1H Highlights (Revenue & Operating Profit by Region)
4-(1)-2．FY2020 1H Highlights (Revenue & Operating Profit by Region) (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 1H 1H (％) 1H 1H (Amount) (％) Revenue 90.1 75.8 -15.9% 90.1 75.8 -14.4 -15.9% Japan OP profit※ 14.0 2.9 -79.0% 12.9 2.9 -10.0 -77.2% Revenue 177
Slide 32: Reference: FY2020 1H Results (by Region)
4-(2) Reference: FY2020 1H Results (by Region)
Slide 33: 4-(2)-1. Result Analysis by Region / Japan & NIPSEA China
4-(2)-1．Result Analysis by Region / Japan & NIPSEA China (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 1H 1H (％) 1H 1H (Amount) (％) Automotive coatings 23.3 15.8 -32.5% 23.3 15.8 -7.6 -32.5% Decorative paints 23.8 21.4 -10.2% 23.8 21.4 -2.4 -10.2% Industria
Slide 34: 4-(2)-2. Result Analysis by Region / Asia Excepting NIPSEA China & Oceania
4-(2)-2．Result Analysis by Region / Asia Excepting for NIPSEA China & Oceania Results(Tanshin) Results(Non-GAAP) (Billion yen) Asia FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 1H 1H (％) 1H 1H (Amount) (％) Excepting for Revenue 49.7 37.3 -24.9% 49.7 39.1 -10.6 -21.3% NIPSEA Operating profit 5.2 2.7 -48.2
Slide 35: 4-(2)-3. Result Analysis by Region / Americas & Others
4-(2)-3．Result Analysis by Region / Americas & Others (Billion yen) Results(Tanshin) Results(Non-GAAP) FY2019 FY2020 YoY FY2019 FY2020 YoY YoY 1H 1H (％) 1H 1H (Amount) (％) Automotive coatings 13.5 8.5 -37.2% 13.5 8.7 -4.8 -35.3% Decorative paints 22.6 22.8 0.9% 22.6 23.2 0.6 2.6% Revenue Fine chemic
Slide 36: Reference: Breakdown of the Adjustment Item
4-(3) Reference: Breakdown of the Adjustment Item
Slide 37: 4-(3)-1. Breakdown of the Adjustment Items (FY2019 2Q vs. FY2020 2Q)
4-(3)-1．Breakdown of the Adjustment Items (FY2019 2Q vs. FY2020 2Q) (Billion yen) FY2019 2Q FY2020 2Q Subsidy, M&A Suspension New Subsidy, M&A Suspension New FX Insurance, related of amortiza- acqui- Total FX Insurance, related of amortiza- acqui- Total ※2 ※2 etc. cost tion of IA sitions etc. cost t
Slide 38: 4-(3)-2. Breakdown of the Adjustment Items (FY2019 2Q vs. FY2020 2Q)
4-(3)-2．Breakdown of the Adjustment Items (FY2019 2Q vs. FY2020 2Q) (Billion yen) FY2019 2Q FY2020 2Q Suspension Subsidy, M&A Suspension New Subsidy, M&A of amortiza- New FX Insurance, related of amortiza- acqui- Total FX Insurance, related acqui- Total ※2 tion of IA ※2※ etc. cost tion of IA sitions
Slide 39: 4-(3)-3. Breakdown of the Adjustment Items (FY2019 1H vs. FY2020 1H)
4-(3)-3．Breakdown of the Adjustment Items (FY2019 1H vs. FY2020 1H) FY2019 1H FY2020 1H Subsidy, M&A Suspension of New Subsidy, M&A Suspension of New (Billion yen) FX Insurance, related amortiza- acqui- Total FX Insurance, related amortiza- acqui- Total ※2 ※2 etc. cost tion of IA sitions etc. cost t
Slide 40: 4-(3)-4. Breakdown of the Adjustment Items (FY2019 1H vs. FY2020 1H)
4-(3)-4．Breakdown of the Adjustment Items (FY2019 1H vs. FY2020 1H) FY2019 1H FY2020 1H Subsidy, M&A Suspension of New Subsidy, M&A Suspension of New (Billion yen) FX Insurance, related amortiza- acqui- Total FX Insurance, related amortiza- acqui- Total ※2 ※2※3 etc. cost tion of IA sitions etc. cost
Slide 41: 4-(3)-5. Breakdown of the Adjustment Items (FY2018 2Q vs. FY2019 2Q)
4-(3)-5．Breakdown of the Adjustment Items (FY2018 2Q vs. FY2019 2Q) FY2018 2Q FY2019 2Q (Billion yen) Subsidy, M&A New Subsidy, M&A New Impar- Impar- FX Insurance, related acqui- Total FX Insurance, related acqui- Total ment loss ment loss etc. cost sitions etc. cost sitions Automotive - - - - - - -
Slide 42: 4-(3)-6. Breakdown of the Adjustment Items (FY2018 2Q vs. FY2019 2Q)
4-(3)-6．Breakdown of the Adjustment Items (FY2018 2Q vs. FY2019 2Q) FY2018 2Ｑ FY2019 2Q (Billion yen) Subsidy, M&A Impar- New Subsidy, M&A Impar- New FX Insurance related ment acqui- Total FX Insurance related ment acqui- Total , etc. cost loss sitions , etc. cost loss sitions Automotive 0.2 - - - -
Slide 43: 4-(3)-7. Breakdown of the Adjustment Items (FY2018 3Q vs. FY2019 3Q)
4-(3)-7．Breakdown of the Adjustment Items (FY2018 3Q vs. FY2019 3Q) FY2018 3Ｑ FY2019 3Q (Billion yen) Subsidy, M&A New Subsidy, M&A New Impar- Impar- FX Insurance related acqui- Total FX Insurance related acqui- Total ment loss ment loss , etc. cost sitions , etc. cost sitions Automotive - - - - - -
Slide 44: 4-(3)-8. Breakdown of the Adjustment Items (FY2018 3Q vs. FY2019 3Q)
4-(3)-8．Breakdown of the Adjustment Items (FY2018 3Q vs. FY2019 3Q) FY2018 3Ｑ FY2019 3Q (Billion yen) Subsidy, M&A New Subsidy, M&A New Impar- Impar- FX Insurance related acqui- Total FX Insurance related acqui- Total ment loss ment loss , etc. cost sitions , etc. cost sitions Automotive 0.2 - - - -
Slide 45: Reference: Financial Index
4-(4) Reference: Financial Index
Slide 46: 4-(4)-1. Revenue & Operating Profit Transition by Region①
4-(4)-1．Revenue & Operating Profit Transition by Region① (Billion yen) FY2017(J-GAAP) FY2018(IFRS) FY2019(IFRS) FY2020(IFRS) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Automotive 10.8 10.3 10.9 11.5 11.5 11.1 10.6 12.1 11.9 11.4 11.3 10.2 10.3 5.5 Decorative 9.4 11.0 10.1 10.9 10.6 12.0 11.2 13.0 11.
Slide 47: 4-(4)-2. Revenue & Operating Profit Transition by Region②
4-(4)-2．Revenue & Operating Profit Transition by Region② FY2017(J-GAAP) FY2018(IFRS) FY2019(IFRS) FY2020(IFRS) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Automotive 15.7 15.5 15.8 17.7 18.5 19.6 17.6 18.5 16.5 17.2 15.9 17.5 12.4 11.4 Decorative 51.2 58.2 66.1 54.4 54.6 62.2 64.0 50.2 54.3 65.6 65.3
Slide 48: 4-(4)-3. Statement of Financial Position
4-(4)-3．Statement of Financial Position (Billion yen) As of As of As of As of Increase / Increase / Assets Dec. 31, Jun. 30, Liabilities and equity Dec. 31, Jun. 30, Decrease Decrease 2019 2020 2019 2020 Total current assets 507.2 523.3 16.0 Total liabilities 790.7 797.9 7.3 Cash and cash equivalent
Slide 49: 4-(4)-4. Capital Expenditure, Depreciation, R&D Expenses, etc.
4-(4)-4．Capital Expenditure, Depreciation, R&D Expenses, etc. ＜Capital Expenditure, Depreciation, R&D Expenses, etc.＞ (Billion yen) FY2019 FY2020 1H 1H Property, plant and 15.8 16.6 equipment Capital Intangible assets 1.1 1.4 expenditure Total 16.9 18.0 Property, plant and 7.8 11.2 equipment Depreci
Slide 50: 4-(4)-5. FX Rates & Market Conditions
4-(4)-5．FX Rates & Market Conditions <Exchange rate for P/L(average rate)> <Exchange rate for F/P (closing rate)> FY2020 FY2020 As of As of FY2019 FY2020 FY2019 (Previous (2H Dec. 31, Jun. 30, 2Q 2Q forecast) forecast) 2019 2020 JPY/USD 110.0 109.2 108.2 107.0 107.7 JPY/USD 109.5 107.7 JPY/RMB 16.2
Slide 51: Nippon Paint Holdings Co., Ltd. Investor Relations
NIPPON PAINT HOLDINGS CO., LTD. Investor Relations Email: ir_kouhou@nipponpaint.jp The forward-looking statements in this document are based on information available at the time of preparation and involve inherent risks and uncertainties. Accordingly, the actual results and performance of Nippon Pai
Nippon Paint Holdings — Q2 2020 Earnings Presentation on 6ix