Hanwa Co., Ltd. · TSE:8078

Hanwa — H1 FY2019 Earnings Presentation

34 slides from Hanwa's earnings presentation, Nov 19, 2019

  1. Slide 1: Financial Results for the First Half of FY2019

    Financial Results for the First Half of FY2019 Nov 19, 2019 HANWA CO., LTD. Copyright© 2019 Hanwa Co., Ltd. All Rights Reserved 0

  2. Slide 2: Operating Results (Consolidated)

    Operating Results (Consolidated) H1 (ended September 30) FY2018 FY2019 Y on Y Y on Y (billions of yen) Change Rate Net Sales 1,004.9 946.0 ▲ 58.9 ▲6% Gross Profit 37.9 0.0 39.7 0.0 +1.7 +5% SG&A 24.7 26.0 +1.2 +5% Operating income 13.1 13.6 +0.4 +4% Ordinary income 10.8 10.8 ▲ 0.0 ▲0% Net income att

  3. Slide 3: Changes in Business results (Consolidated)

    Changes in Business results (Consolidated) （billions of yen） （billions of yen） Net Sales (H2) 2,000.0 Net Income (H2) 2,074.6 Net Sales (H1) （Forecast） Net Income (H1) 2,000.0 20.0 1,791.1 17.3 1,514.0 16.3 1,500.0 1,069.7 1,054.0 13.9 954.1 8.8 10.7 798.4 10.1 （Forecast） 1,000.0 10.0 7.4 5.5 500.0

  4. Slide 4: Effect of Profit/Loss from Market value Accounting and Temporary factors

    Effect of Profit/Loss from Market value Accounting and Temporary factors （billions of yen） 13.0 11.0 10.8 10.6 0.2 0.0 △0.4 0.0 0.0 9.0 7.0 5.0 0 Accounting Inventory Derivative Exchange Loss of Others Actual ordinary ordinary income valuation valuation conversion subsidiaries income  Reported Ordi

  5. Slide 5: Segment Information (consolidated)

    Segment Information (consolidated) Net Sales Segment income （billions of yen) 1,200.0 10.8 1,004.9 13.0 10.8 946.0 0.9 39.3 0.0 1,000.0 0.4 1.7 151 44.4 11.0 0.6 132 0.8 0.5 126.6 1.0 0.8 800.0 9.0 96.8 1.0 1.3 52.7 41.3 52.3 0.1 40.5 7.0 600.0 155.8 123.0 5.0 400.0 7.7 7.8 3.0 492.9 494.7 200.0 1.0

  6. Slide 6: Financial Position (consolidated)

    Financial Position (consolidated) Consolidated Financial Position Mar-2018 Sep-19 Y on Y Y on Y (billions of yen) Change Rate Total assets 933.3 892.7 ▲ 40.5 ▲4% +111100% Total liabilities 730.8 0.0 690.9 0.0 ▲ 39.9 ▲5% +3% Interst-bearing debt 363.2 358.6 ▲ 4.6 ▲1% Net DER 161.5% 159.6% ▲ 1.9pt - 1

  7. Slide 7: Cash Flow Situation (consolidated)

    Cash Flow Situation (consolidated) H１ (ended September 30) FY2018 FY2019 Y on Y Y on Y (billions of yen) Change Rate CF from operating activities ▲ 39.2 14.3 +53.6 - CF from investing activities ▲ 0.0 7.3 ▲ 0.0 5.0 +2.2 ▲31% FCF ▲ 46.6 0.0 9.2 0.0 +55.8 - CF from financing activities 48.4 ▲ 10.6 ▲ 5

  8. Slide 8: Business Forecast FY2019

    Business Forecast FY2019 Fiscal Year (ending March 31) FY2018 FY2019 FY2019 Y on Y (billions of yen) (Acctual) (Previous forecast) (Revised forecast) Rate Net Sales 2,074.6 2,200.0 2,000.0 ▲4% Operating income 28.9 35.5 31.0 +7% Ordinary income 23.3 0.0 28.0 0.0 18.5 0.0 ▲21% Net income attributable

  9. Slide 9: Forecast of Segment Information

    Forecast of Segment Information Net Sales Segment incomes （billions of yen） 2,300.0 2,077.3 2,000.0 26.0 82.5 30.0 90.0 0.9 1.0 18.5 315 2.1 1,800.0 270 25.0 1.5 1.6 0.9 0.5 244.2 4.0 245.0 6.3 101.3 20.0 105.0 1.4 97.0 2.0 1,300.0 90.0 282.9 15.0 235.0 10.0 17.3 16.2 800.0 5.0 1,047.9 1,040.0 0.0 3

  10. Slide 10: Dividends (yen)

    Dividend Policy 【Trend in dividends】 Interim dividends Year-end dividends Dividend payout ratio 160 150.0 Dividend payout ratio (%) 140 40 125.0 Dividends (yen) 120 36.3 95.0 75.0 30 100 (to be 29.3 80 announced) 23.7 75.0 20 60 50.0 40 75.0 75.0 10 20 45.0 50.0 0 0 FY2016 FY2017 FY2018 FY2019(estim

  11. Slide 11: Steel Business Segment

    Steel Business Segment H１（ended Sep 30）  Despite decrease in the sales volume, FY2018 FY2019 Y on Y net sales and segment income (billions of yen) Rate increased, due to revenue from large- Net Sales 492.9 494.7 +0% scale property construction projects +111100% as well as high level of market price

  12. Slide 12: Primary Metal Business Segment

    Primary Metal Business Segment H１（ended Sep 30）  Despite the increase of loss on FY2018 FY2019 Y on Y investment in affiliates in SAMANCOR, (billions of yen) Rate segment income increased by the Net Sales 155.8 123.0 ▲21% turnaround of foreign exchange losses +111100% in the same period of previous

  13. Slide 13: Metal Recycling Business Segment

    Metal Recycling Business Segment H１（ended Sep 30）  Net sales and segment income FY2018 FY2019 Y on Y decreased due to decline of base metal (billions of yen) Rate prices in the same period of the Net Sales 41.3 40.5 ▲2% previous year as well as decrease in +111100% the volume of both stainless and

  14. Slide 14: Foods Business Segment

    Foods Business Segment H１（ended Sep 30）  Net sales and segment income FY2018 FY2019 Y on Y decreased mainly due to stagnant (billions of yen) Rate market condition for shrimp and Net Sales 52.7 52.3 ▲1% shrinking margins of consolidated +111100% subsidiaries. Segment Income 1.0 0.5 ▲50% 《Net Sales》

  15. Slide 15: Petroleum & Chemicals Business Segment

    Petroleum & Chemicals Business Segment H１（ended Sep 30）  Despite decreased volume by weak FY2018 FY2019 Y on Y market of petroleum products, segment (billions of yen) Rate income increased mainly due to the expansion of profit margins of bunker Net Sales 126.6 96.8 ▲24% +111100% fuel oil and biomas

  16. Slide 16: Overseas Sales Subsidiaries Segment

    Overseas Sales Subsidiaries Segment H１（ended Sep 30）  Net sales and segment income FY2018 FY2019 Y on Y decreased due to price downturn in (billions of yen) Rate metal and nonferrous metal in Net Sales 150.6 131.6 ▲13% Singapore, volume decrease in U.S. and +111100% increase of finance cost in Indo

  17. Slide 17: Other Business Segment

    Other Business Segment H１（ended Sep 30）  In the lumber business, net sales and FY2018 FY2019 Y on Y segment income increased due to increase in Rate sales volumes to housing manufacturers. (billions of yen) Lower duties by effectuation of EPA with EU Net Sales 39.3 44.4 +13% +111100% also contribut

  18. Slide 18: Progress of Medium-term Business Plan

    Progress of Medium-term Business Plan FY2019 （billions of yen） Previous Revised Ordinary income H1 forecast Progress forecast STRATEGIC Equity in earnings of affiliates from resource investees and △0.5 0.5 －% △6.5 dividends from strategic investments SPEEDY Ordinary income from consolidated subsidia

  19. Slide 19: Track of Quantitative indices

    Track of Quantitative indices Track of Quantitative indices FY2016 FY2017 FY2018 FY2019 (H1) 5.4% ROE 10.1% 9.7% 7.4% (2.7%) ROS 1.1% 1.0% 0.7% +0.5% 2.0 Total assets turnover 2.3 2.3 2.3 (1.0) Financial leverage 4.0 4.3 4.8 4.9 5.8% ROIC 6.2% 6.1% 5.3% (2.9%) 162% 160% Net DER 136% 154% * 131% *129

  20. Slide 20: Profits of Group Companies

    Profits of Group Companies 【Ordinary income trend of subsidiaries by business segment】 H１(ended Sep 30) FY2018 FY2019 Y on Y Change (billions of yen) Consolidated/ Unconsolidated Consolidated/ Unconsolidated Consolidated/ Unconsolidated Equity method Equity method Equity method Steel 1.6 0.0 0.9 0.1

  21. Slide 21: Progress of Japan Value Chain Extension Strategy

    Progress of Japan Value Chain Extension Strategy Investments Business domain Fast delivery/small activities lot/processing activities Makers Primary Intermediate Suppliers Trading Processing Users distribution distribution Hanwa Steel Service / San Ei Metal Nakayama Steel Works Steel center Hirouchi

  22. Slide 22: "Create another Hanwa in Southeast Asia" Strategy

    “Create another Hanwa in Southeast Asia”Strategy 【The major alliance partners】 Country Distributor Processer Manufacturer HSS Thailand Furukawa Unic Thailand PCM Processing Siam Hanwa Araya Steel Tube Indonesia Kapurindo Sentana Baja HSS Indonesia Indonesia CosmoSteel Holdings Singapore JFE Meranti

  23. Slide 23: Outline of strategic investment

    Outline of strategic investment AFARAK FeCr, SiMn OM Holdings Bacanora Lithium (Sales amount FeSi, SiMn, MeMn lithium carbonate 100 kt / FY2018） (Sales amount (2022 Production 510 kt / FY2018） commencement 35 kt / Year) SAMANCOR Tsingshan Holding Cr Ore, FeCr NPI & Stainless hot coil （FeCr Productio

  24. Slide 24: Investment in business

    Investment in business 【Current investment records】 Amounts Major investments (billions of yen) ・Acquired stocks of Hanwa SMC Steel Service HA NOI Steel 0.9 ・Capital expenditure in Steel center Isesaki ・Invested in overseas alliance partner Primary Metal 0.6 ・Capital increase of Hanwa Ｍｅｔａｌｓ (Thaila

  25. Slide 25: Appendix

    Appendix Copyright© 2019 Hanwa Co., Ltd. All Rights Reserved 24

  26. Slide 26: Market Trend of Steel Raw Materials

    Market Trend of Steel Raw Materials 【Transaction of steel raw materials price】  Iron ore…The prices remained high, partly due to impact of collapse of tailing dam in Brazil and damage caused by cyclone in Australia. However, the prices have weakened recently due to decline in demand in China and ot

  27. Slide 27: Steel Market Trend in China

    Steel Market Trend in China 【Transition of steel market in China 】  Supply/Demand…Supply for steel products continued to be excessive, mainly due to easing of environmental regulations by the government and effects of measures to support economic activity by the government and local governments. 

  28. Slide 28: Market Trend of Steel Scrap

    Market Trend of Steel Scrap 【Steel scrap and D-bar Market Price】  Supply/Demand…Supply and demand remained sluggish generally, as electric furnaces in Japan have not positively purchased and demand declined in China and Southeast Asia.  Market price…Market price continued to decline moderately in

  29. Slide 29: Market Trend of Long Products

    Market Trend of Long Products 【Transition of the H-Beams Markets in Japan】  Supply/Demand…Although demand for urban redevelopment and logistics facilities is expected, demand for construction and civil engineering work remained weak as demand for Olympic facilities had calmed down.  Market price…M

  30. Slide 30: Market Trend of Flat Products

    Market Trend of Flat Products 【Transition of Steel Sheets Markets in Japan】  Supply/Demand…Supply-demand balance remained sluggish generally, as exports of steel declined and production activity in the manufacturing industry weakened due to slowdown of economies in China and other countries,.  Mar

  31. Slide 31: Market Trend of Metals & Alloys

    Market Trend of Metals & Alloys  Nickel…In addition to expectations for demand for secondary batteries and concerns over restrictions on export of ores from Indonesia, speculative purchases have led to a significant rise in nickel market since the beginning of this year.  Alloys…In addition to con

  32. Slide 32: Market Trend of Non-ferrous Metals

    Market Trend of Non-ferrous Metals  Aluminum…Although prices rose temporally due to concerns over restrictions on export of bauxite from Indonesia. prices have declined moderately due to trade friction between U.S. and China and concerns over economic slowdown in other countries.  Copper…Prices co

  33. Slide 33: Market Trend of Frozen Marine Products

    Market Trend of Frozen Marine Products  Salmon…Despite continuance of decrease of Sockeye salmon caught in Russia and Alaska, inventory level has risen due to increase in supply of new Chilean Coho salmon. In result, prices have entered a downward revision phase.  Shrimp…Despite decrease in supply

  34. Slide 34: Market Trend of Crude Oil & Petroleum Products

    Market Trend of Crude Oil & Petroleum Products  Crude oil… price remained at a low level generally, despite an upward phase due to rising risks in the Middle East, as demand was expected to decline due to impact of trade conflict between U.S. and China, despite coordinated reduction of production b

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