Slide 1: Takuma Co., Ltd. May 24, 2024
Takuma Co., Ltd. May 24, 2024 Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.
Slide 2: Table of Contents
Table of Contents 1. Financial Results of FY2023 (Ended 3/2024) P.2 2. Financial Forecast for FY2024 (Ending 3/2025) P.19 3. 14th Medium-Term Management Plan (FY2024-2026) P.25 4. Reference Material P.52 Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 1
Slide 3: Table of Contents
Table of Contents 1. Financial Results of FY2023 (Ended 3/2024) P.2 2. Financial Forecast for FY2024 (Ending 3/2025) P.19 3. 14th Medium-Term Management Plan (FY2024-2026) P.25 4. Reference Material P.52 Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 2
Slide 4: FY2023 (Ended 3/2024) Summary
FY2023 (Ended 3/2024) Summary FY2023 Results Orders received Net sales Operating profit ¥160.5 billion ¥149.1 billion ¥10.2 billion -¥7.9 billion +¥6.5 billion -¥3.5 billion (-4.7%) YoY (+4.6%) YoY (-25.9%) YoY Orders received were down due primarily to a decrease in orders received in the Overseas
Slide 5: FY2023 Financial Highlights
FY2023 (Ended 3/2024) Financial Highlights Orders received were down due primarily to a decrease in orders received in the Overseas Environment and Energy Business and the Equipment and Systems Business, despite orders received for DBO projects for municipal solid waste treatment plants. Net sales w
Slide 6: FY2023 Profit Variance Analysis
FY2023 (Ended 3/2024) Profit Variance Analysis Profit was down due to the change in the EPC project mix in the Domestic Environment and Energy Business as well as an increase in depreciation at the new Harima Factory associated with operations, increases in personnel and R&D expenses. Breakdown of o
Slide 7: FY2023 Financial Highlights by Segments
FY2023 (Ended 3/2024) Financial Highlights by Segments FYE 3/2022 FYE 3/2023 FYE 3/2024 (Millions of yen) YoY change (FY2021) (FY2022) (FY2023) Orders received Total 192,244 168,558 160,568 (4.7%) Domestic Environment and Energy 164,865 130,280 131,567 1.0% Overseas Environment and Energy 2,035 5,92
Slide 8: Domestic Business Orders Received / Order Backlog
Orders received / Domestic Environment and Energy Business Order backlog Orders received were up owing to orders for Energy Plants and Water Treatment Plants in addition to a DBO projects for a municipal solid waste treatment plant, despite contract cancellations for some energy plant projects. Or
Slide 9: Domestic Business Net Sales / Operating Profit
Net Sales / Domestic Environment and Energy Business Operating Profit Sales were up, but profit was down due to a change in the EPC project mix as well as an increase in depreciation at the new Harima Factory associated with operations, increases in personnel and R&D expenses. Net sales: Up owing
Slide 10: Domestic Business Breakdown by Product / Service
Breakdown by Domestic Environment and Energy Business Product / Service Orders received were up for municipal solid waste treatment plants (after-sale services) and Water Treatment Plants, etc. Sales were up, mainly owing to an increase in a municipal solid waste treatment plant. Orders received Net
Slide 11: Domestic Business Main Orders Received (Waste Plants)
Domestic Environment and Energy Business Main Orders Received FY3/2024, orders were received for 2 municipal solid waste treatment plant DBO projects and 1 large-scale renewal of a sand filtration system for a sewage treatment plant, and 1 sludge treatment facility DBM project. Year Delivered to: No
Slide 12: Domestic Business Main Orders Received (Energy Plants)
Domestic Environment and Energy Business Main Orders Received FY3/2024, orders were received for 6 biomass power plants (FIT), 1 self-consumption project, and 1 EPC project for an industrial waste treatment plant. Scheduled Year Delivered to: Notes Capacity Completion Q1 Company A EPC Power generati
Slide 13: Domestic Business Quarterly Trend
Quarterly trend in Domestic Environment and Energy Business Orders received / Net sales (Reference material) Orders received vary significantly depending on the timing that projects are recorded. Net sales tend to increase going into the fourth quarter. Orders received (quarterly) Net sales (quarter
Slide 14: Overseas Business Orders Received / Order Backlog
Orders received / Overseas Environment and Energy Business Order backlog Orders received were down due to orders for new plants being limited to the additional order for the waste treatment plant project in Vietnam received the previous year. We will continue going after new construction and renewal
Slide 15: Overseas Business Net Sales / Operating Profit
Net sales / Overseas Environment and Energy Business Operating profit Net sales were up owing primarily to progress on EPC projects previously ordered in addition to maintenance services. Operating profit also improved. Net sales Operating profit （Millions of yen） Approx. ¥1.0 billion increase （Mill
Slide 16: Package Boiler Business Orders Received / Order Backlog
Package Boiler Business Orders received / Order backlog Orders received were up owing primarily to orders for large-scale projects. Orders received Order backlog （Millions of yen） Approx. ¥0.26 billion increase （Millions of yen） Approx. ¥0.17 billion increase 18,666 7,000 18,400 6,115 20,000 17,925
Slide 17: Package Boiler Business Net Sales / Operating Profit
Package Boiler Business Net sales / Operating profit Net sales and operating profit were up owing primarily to progress on projects for which orders were already received and completion of large- scale projects. Net sales Operating profit （Millions of yen） Approx. ¥1.1 billion increase （Millions of
Slide 18: Equipment and Systems Orders Received / Order Backlog
Equipment and Systems Business Orders Received / Order Backlog Orders received were down due to the absence of the large-scale order received in the building equipment business in Q2 of the previous year and a decrease in orders for equipment for the semiconductor industry. Although demand for semic
Slide 19: Equipment and Systems Net Sales / Operating Profit
Equipment and Systems Business Net sales / Operating profit Net sales were up owing to progress on projects for which orders were already received. However, operating profit was down due to the recording of additional costs for some projects in the building equipment business. Net sales Operating pr
Slide 20: Table of Contents
Table of Contents 1. Financial Results of FY2023 (Ended 3/2024) P.2 2. Financial Forecast for FY2024 (Ending 3/2025) P.19 3. 14th Medium-Term Management Plan (FY2024-2026) P.25 4. Reference Material P.52 Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 19
Slide 21: FY2024 Results Forecast
FY2024 (Ending 3/2025) Results Forecast Our aim is to achieve a record high of 230.0 billion yen in orders received, up from 192.2 billion yen in FY2021 (ended 3/2022). While sales are expected to be down, profit will be up owing mainly to changes in the EPC project mix. Orders received: Demand wi
Slide 22: FY2024 Profit Variance Analysis Forecast
FY2024 (Ending 3/2025) Profit Variance Analysis Forecast Although we expect an increase in SG&A expenses such as personnel and R&D expenses, we also expect an increase in profit due to higher gross profit in the EPC Business and recurring revenue model businesses. Breakdown of ordinary profit varian
Slide 23: FY2024 Results Forecast by Segment
FY2024 (Ending 3/2025) Results Forecast by Segment FYE 3/2025(FY2024) FYE 3/2023 FYE 3/2024 (Millions of yen) Beginning of year YoY change (FY2022) (FY2023) forecast Order received Total 168,558 160,568 230,000 43.2% Domestic Environment and Energy 130,280 131,567 198,700 51.0% Overseas Environment
Slide 24: Human resources investment, Capital investment and R&D
Human resources investment, Capital investment and R&D Actively invest in further business expansion in the future. Human resources investment: Strengthen hiring and training of human resources, especially in Engineering, Construction and Maintenance divisions. Capital investment: Expected to de
Slide 25: Shareholder Return
Shareholder Return Under the 14th Medium-Term Management Plan launched in April 2024, we have established new shareholder return policy as below. The annual dividend for FY2024 (ending 3/2025) is to be increased by 8 yen to ¥56 per share. Share repurchase totaling up to JPY 4 billion will be done. 1
Slide 26: Table of Contents
Table of Contents 1. Financial Results of FY2023 (Ended 3/2024) P.2 2. Financial Forecast for FY2024 (Ending 3/2025) P.19 3. 14th Medium-Term Management Plan (FY2024-2026) P.25 4. Reference Material P.52 Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 25
Slide 27: Takuma Group Management Principles and Long-Term Vision
Takuma Group Management Principles and Long-Term Vision Management Principles Keywords for realizing Vision2030 Takuma will strive for social contribution, corporate value enhancement, long-term corporate development and the satisfaction of all stakeholders by providing goods and services that are n
Slide 28: Value Creation Process for Realizing the Long-Term Vision
Value Creation Process for Realizing the Long-Term Vision Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 27
Slide 29: Reflections on the 13th Medium-Term Plan: Initiatives and Results
Reflections on the 13th Medium-Term Management Plan Main Initiatives and Results Rolling Out Business Activities Contributing to Solutions to Strengthening the Management Foundation Issues Faced by Our Customers and Society Municipal solid waste R&D, manufacturing capabilities, and digital Securin
Slide 30: Reflections on the 13th Medium-Term Plan: Targets and Results
Reflections on the 13th Medium-Term Management Plan Numerical Targets and Results 3-year total ordinary profit target 3-year total orders received (reference) Achieved the financial targets of the 13th Medium-Term Management Plan JPY 36.0 billion JPY 36.4 billion JPY 450.0 billion JPY 521.3 billion
Slide 31: Reflections on the 13th Medium-Term Plan: Results by Segment
Reflections on the 13th Medium-Term Management Plan Results by Segment Although results fluctuate from year to year depending on the number of EPC projects and the timing of completion, orders received, net sales, and operating income have all remained strong. 12th Medium-Term Management Plan 13th M
Slide 32: Business Portfolio: Vision2030
Business Portfolio Vision2030: Our Vision for 2030 Achieve further expansion with recurring revenue model businesses as the core driver of growth for Vision2030. Work on expanding the EPC business at the same time as recurring revenue will increase to achieve ordinary profit of JPY 20.0 billion by F
Slide 33: 14th Medium-Term Plan Positioning and Policies
14th Medium-Term Management Plan Positioning and Policies Challenges for achieving Vision 2030 include a lack of human resources. In the 13th Medium-Term Management Plan, we paved the way toward growth to resolve these challenges by assessing the business environment and strengthening recruitment. T
Slide 34: 14th Medium-Term Plan Financial Targets (Summary)
14th Medium-Term Management Plan Financial Targets (Summary) In addition to ordinary profit, new targets for orders received and return on equity (ROE) are set in the 14th Medium-Term Management Plan. :Main target 13th MTP 14th Medium-Term Management Plan Vision2030 (JPY billions) (3-year total) 3-y
Slide 35: 14th Medium-Term Plan Profit Variance Analysis
14th Medium-Term Management Plan Profit Variance Analysis Although we expect an increase in SG&A expenses such as personnel and R&D expenses, we also expect an increase in profit due to higher gross profit in the EPC Business and recurring revenue model businesses. Increased profit mainly in Package
Slide 36: Financial Targets Forecasts by Segment
14th Medium-Term Management Plan Financial Targets Forecasts by Segment (JPY millions) FY2024 FY2025 FY2026 3-year total Orders received Total 230,000 180,000 190,000 600,000 Domestic Environment and Energy 198,700 146,700 155,000 500,400 Overseas Environment and Energy 4,000 4,000 4,000 12,000 Pack
Slide 37: Business Strategies: Market Environment
14th Medium-Term Management Plan Business Strategies Market Environment We expect the market environment for our business to be generally favorable and strong. 14th Medium-Term Management Plan period (FY2024-2026) Future + Steady demand for renewal (rebuilds) － Decreased demand for renewal due to lo
Slide 38: Business Strategies: Basic Policy 1 and 2
14th Medium-Term Management Plan Business Strategies Basic Policy ① and ② In the Domestic Environment and Energy Business, which is a pillar supporting growth, we will increase EPC orders and link them to operation management and maintenance to achieve a virtuous cycle between the EPC Business and r
Slide 39: Business Strategies: Basic Policy 3 and 4
14th Medium-Term Management Plan Business Strategies Basic Policy ③ and ④ We will focus on expanding our product lineup, developing overseas operations, and securing and developing human resources to maintain and expand orders in each business. ▍ Priority measures by business/field Steadily expandin
Slide 40: Business Strategies: Basic Policy 5 M&As and Alliances
Basic Policy ⑤ M&As and 14th Medium-Term Management Plan Business Strategies Alliances / New Businesses We will gather information with a focus on the business fields below to actively look into projects that match our business strategy. Priority field Segment Purpose/category (Business field) Funct
Slide 41: Securing and Development of Human Resources
14th Medium-Term Management Plan Basic Policy ① Securing and Strengthening the Management Foundation Development of Human Resources We will promote various human resources measures to expand resources in recurring revenue model businesses and the EPC Business. Challenges Human resources measures lin
Slide 42: Knowledge Management and DX
14th Medium-Term Management Plan Basic Policy ② Knowledge Management Strengthening the Management Foundation “Offensive” digital transformation (DX) has had some success in areas such as automated plant operation (AI development). We will continue efforts to create new value for further strengthenin
Slide 43: Knowledge Management: Data Assets
14th Medium-Term Management Plan Basic Policy ② Knowledge Management Strengthening the Management Foundation We are systematizing (visualizing) technical data, plant data, problem information, etc. as data assets to promote knowledge management. Harima Factory EPC O&M Technical information Operation
Slide 44: Management Conscious of Cost of Capital and Stock Price
Management that is Conscious of Cost of Capital and Stock Price We recognize our cost of equity as around 6%. ROE has remained at or above 8%, and a certain equity spread has been secured*1. Analysis of PBR is also stable at 1x or higher, but equity spreads are declining.. current situation
Slide 45: Analysis of Current Situation (1/2)
Management that is Conscious of Analysis of Current Situation (1/2) Cost of Capital and Stock Price ROE has remained above cost of equity, and a certain equity spread has been secured. PBR has also remained above 1.0x, but equity spreads are declining. PBR*1 over time ROE / Cost of equity*2 / Equity
Slide 46: Analysis of Current Situation (2/2)
Management that is Conscious of Analysis of Current Situation (2/2) Cost of Capital and Stock Price Over the past 15 years, we have enhanced our equity capital while providing a certain level of shareholder return to stabilize management and improve creditworthiness. As a result, financial leverage
Slide 47: Policy and Main Initiatives
Management that is Conscious of Policy and Main Initiatives Cost of Capital and Stock Price Policy Main Initiatives We will expand EPC orders, which is a prerequisite for further growing recurring revenue model businesses. Improvement of In particular, we will give priority to investing manageme
Slide 48: Capital Policy
Capital Policy We will establish a quantitative policy based on an analysis of the current situation related to cost of capital and stock price. We will enhance corporate value by balancing business growth and shareholder returns that meet market expectations with a solid financial foundation. 1 2 3
Slide 49: Capital Policy: Cash Allocation
Capital Policy Cash Allocation Focus on growth investments and shareholder returns and execute appropriate cash allocation to increase corporate value. 13th Medium-Term Management Plan period 14th Medium-Term Management Plan period Growth (JPY billions) Sale of cross- investments Sale of cross- shar
Slide 50: Capital Policy: Shareholder Return
Capital Policy Shareholder Return 1 Enhancing shareholder returns and improving capital efficiency through stable dividends and share repurchase Shareholder return 2 Establish as a target amount whichever is higher calculated based on dividend payout ratio of 50% or dividend on equity (DOE) ratio of
Slide 51: ESG Initiatives: Environmental
ESG Initiatives Environmental Initiatives Continue to promote initiatives to address ESG issues through business activities by leveraging the Group’s strengths. During the period of the 14th Medium-Term Management Plan, we will calculate Scope3 CO2 emissions and look into establishing a target value
Slide 52: ESG Initiatives: Social and Governance
ESG Initiatives Social and Governance Initiatives Add employee engagement and customer satisfaction as new KPIs. Key issues (materiality) Main Initiatives 14th Medium-Term Management Plan KPI 1-4 are for Takuma only Strengthening 1. Number of main career-track 3 relationships of trust with customers
Slide 53: Table of Contents
Table of Contents 1. Financial Results of FY2023 (Ended 3/2024) P.2 2. Financial Forecast for FY2024 (Ending 3/2025) P.19 3. 14th Medium-Term Management Plan (FY2024-2026) P.25 4. Reference Material P.52 Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 52
Slide 54: Business Segment
Business Segment Our business is centered on engineering, procurement, and construction (EPC) and after-sales service of waste treatment facilities, biomass power plants, etc. based on the primary themes of “environment” and “energy”. Municipal Solid Waste Treatment Plant Business Overseas Municipal
Slide 55: History
History In 1912, we invented the first boiler in Japan using purely Japanese technology. While improving boiler technology, the company cultivated combustion and water treatment technologies and utilized them to enter the environmental field, such as waste incineration plants. Since then, we have pr
Slide 56: Performance Trends
Performance Trends In the latter half of the 2000s, we focused on after-sales service, which would provide its earnings base. There has been steady demand for renewal and service life improvement of waste treatment plants and an increase in demand for biomass power plants, resulting in stable net sa
Slide 57: Business Model: Domestic Business
Business Model Domestic Environment and Energy Business Revenue comes primarily from engineering and construction (EPC*) and after-sales service (operational management, maintenance, O&M*, etc.) of plants. Completion Approx. 2-5 years Approx. 20-30 years EPC after-sales service Recurring revenue mod
Slide 58: Situation by Segment: Municipal Solid Waste Treatment Plants
Domestic Environment and Energy Situation by Segment Municipal solid waste treatment plants Business Environment Demand for renewal and service life improvement will continue due to the aging of waste treatment facilities. We expect renewal demand to continue for the time being. DBO* orders are on t
Slide 59: Municipal Solid Waste Treatment Plants: Strategy (EPC)
Domestic Environment and Energy Situation by Segment Municipal solid waste treatment plants Business Strategy Focus on winning ongoing orders through comprehensive proposals tailored to diversifying needs. Steadily landing orders for EPC/O&M. The long-term O&M (contract period of 10 years or more) r
Slide 60: Municipal Solid Waste Treatment Plants: Strategy (O&M)
Domestic Environment and Energy Situation by Segment Municipal solid waste treatment plants Business Strategy Aim for sustainable growth of recurring revenue model businesses by strengthening O&M proposals and proposals for regular maintenance work. The Company received orders for long-term O&M (con
Slide 61: Situation by Segment: Energy Plants
Domestic Environment and Energy Situation by Segment Energy plants We contribute to stabilizing our customers’ businesses and maximizing their revenues through biomass power plants and large-scale plants that supply electricity and heat to their factories. Demand for small- and medium-sized biomass
Slide 62: Situation by Segment: Water Treatment Plants
Domestic Environment and Energy Situation by Segment Water Treatment Plants Contribute to the effective use of energy and decarbonization of sewage treatment facilities through greenhouse gas-reducing and highly energy-saving products. Business In addition to renewal and service life improvement dem
Slide 63: Situation by Segment: Power Retail Business
Domestic Environment and Energy Situation by Segment Power Retail Business Contribute to stabilizing customers’ electricity rates and reducing greenhouse gas emissions through the procurement and supply of electricity generated from renewable energy and non-fossil fuels. Business Demand is increasin
Slide 64: Situation by Segment: Overseas Business
Situation by Segment Business Overseas Environment and Energy Environment In addition to population and economic growth, the trend toward decarbonization in Southeast Asia has increased demand for biomass power generation and Energy from Waste plants. In Thailand, demand for Energy from Waste an
Slide 65: Overseas Business Strategy
Situation by Segment Business Overseas Environment and Energy Strategy Focus on securing continuous orders for biomass power generation plants and Energy from Waste plants and improving the system. Results Promoted the development of a system to win orders via local subsidiaries in Thailand and Taiw
Slide 66: Package Boiler Business / Equipment and Systems
Package Boiler Business / Situation by Segment Equipment and Systems Package Boiler Business Equipment and Systems Domestic market has matured, but we expect a certain level of demand for Building equipment business Semiconductor industrial equipment business renewal and other work to continue for t
Slide 67: Strengthening the Management Foundation: Human Resources Investment
Human Resources Strengthening the management foundation Investment Strengthen hiring and training of human resources to pass on our greatest strength, our technological capabilities, and expand our resources. Continue hiring and training efforts in the Engineering Division, as well as the Constructi
Slide 68: Strengthening the Management Foundation: R&D
Strengthening the management foundation R＆D In addition to fine tuning existing technologies, we will strengthen R&D focusing on CCUS and carbon recycling technologies to realize a decarbonized society. R&D roadmap for decarbonization technologies Examples of our technology/R&D Carbon recycling Fuel
Slide 69: Illustration: Sales Progress / Sales Composition
Appendix Illustration: Sales Progress / Sales Composition Illustration: Sales Progress of Project Orders Illustration: Sales Composition of Domestic Environment and Energy Business 100 Order backlog (1 years ago) Order backlog (2 years ago) 80 Order backlog (3 years ago) EPC Business 60 Order backlo
Slide 70: Illustration: Orders Received/Net Sales
Appendix Illustration: Orders Received/Net Sales Illustration: Orders Received/Net Sales 14th MTP 15th MTP 240,000 230,000 Order(EPC) Net sales target 220,000 around 200 billion yen 200,000 190,000 Sales(EPC: Order on 180,000 Order(EPC) or after FYE 3/28) 180,000 Order Sales(EPC: Order on FYE 3/27)
Slide 71: In closing
In closing In the 14th Medium-Term Management Plan (FY2024-2026), we will formulate and implement measures to realize our long-term vision "Vision May 24, 2024 2030,“ while prioritizing investment of management resources into receiving orders for municipal solid waste treatment plants (renewals and
Slide 72: Handling of this document
Handling of this document Information related to performance forecasts, business plans, and related topics included in this document is based on data currently available to the Company and on certain assumptions that are deemed to be reasonable. This information includes elements of risk and uncerta