Takuma Co., Ltd. · TSE:6013
Takuma — Q2 FY2024 Earnings Presentation
66 slides from Takuma's earnings presentation, Nov 8, 2024
Slide 1: Takuma Co., Ltd. November 8, 2024
Takuma Co., Ltd. November 8, 2024 Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.
Slide 2: Table of Contents
Table of Contents 1. Overview of Q2 FY2024 (Ending 3/2025) Financial Results 2. Financial Forecast for FY2024 (Ending 3/2025) 3. Notice Regarding Reduction of Cross-shareholdings (Announced on November 8, 2024) Appendix - Company outline - 14th Medium-Term Management Plan; 4. Outline, Business Strat
Slide 3: Table of Contents
Table of Contents 1. Overview of Q2 FY2024 (Ending 3/2025) Financial Results 2. Financial Forecast for FY2024 (Ending 3/2025) 3. Notice Regarding Reduction of Cross-shareholdings (Announced on November 8, 2024) 4. Appendix Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 2
Slide 4: Q2 FY2024 (Ending 3/2025) Summary
Q2 FY2024 (Ending 3/2025) Summary Orders received Net sales Operating profit ¥162.0 billion ¥68.0 billion ¥4.5 billion +¥89.2 billion +¥2.1 billion +¥1.8 billion Q2 YoY YoY YoY +122.8% +3.3% +67.0% Results Orders received were up significantly owing Operating profit was up owing primarily to a prima
Slide 5: Q2 FY2024 Financial Highlights
Q2 FY2024 (Ending 3/2025) Financial Highlights Orders received were up owing to orders for a municipal solid waste treatment plant DBO projects and a primary equipment improvement project in the Domestic Environment and Energy Business. Net sales were up in all business segments. Operating profit wa
Slide 6: Q2 FY2024 Financial Highlights by Segments
Q2 FY2024 (Ending 3/2025) Financial Highlights by Segments Q2 FYE 3/2023 Q2 FYE 3/2024 Q2 FYE 3/2025 (Millions of yen) YoY change (FY2022) (FY2023) (FY2024) Orders received Total 65,152 72,714 162,013 +122.8% Domestic Environment and Energy 45,177 57,183 144,789 +153.2% Overseas Environment and Ener
Slide 7: Domestic Business Orders received / Order backlog
Orders received / Domestic Environment and Energy Business Order backlog Orders received were up owing primarily to orders for a municipal solid waste treatment plant DBO projects and a primary equipment improvement project. Orders received: Up owing to orders for waste treatment plants (2 DBO pro
Slide 8: Domestic Business Net Sales / Operating Profit
Net Sales / Domestic Environment and Energy Business Operating Profit Net sales were up owing primarily to an increase in municipal solid waste treatment plants (after-sales service) and water treatment plants. Operating profit was up owing primarily to a change in the EPC project mix in the Domesti
Slide 9: Domestic Business Breakdown by Product / Service
Breakdown by Domestic Environment and Energy Business Product / Service Orders received were up owing to an increase in municipal solid waste treatment plants (EPC and after-sales services). Net sales were up owing to an increase in municipal solid waste treatment plants (after-sales services) and w
Slide 10: Domestic Business Main Orders Received
Domestic Environment and Energy Business Main Orders Received In Q1 and Q2 of FYE 3/2025, orders were received for waste treatment plants (2 DBO projects, 1 primary equipment improvement project), and 1 sludge incineration plant. Year Delivered to: Notes Capacity Scheduled Completion Senboku Environ
Slide 11: Domestic Business Main Orders Received
Domestic Environment and Energy Business Main Orders Received In Q1 and Q2 of FYE 3/2025, order was received for 1 biomass power plant. Year Delivered to: Notes Capacity Scheduled Completion Sanyo-Onoda Green Energy Co. EPC Power generation business (Biomass, FIT) 1,990kW 6/2024 Q1 Power Aid MIE LLC
Slide 12: Domestic Business Quarterly trend in Orders received / Net sales
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 13: Domestic Business Topics
Domestic Environment and Energy Business Topics Received order for DBO project for waste treatment plant from Gyoda Hanyu Resources and Environment Association Construction of new incineration facilities and material recycling promotion facilities 20 years of operation starting from July 2028
Slide 14: Overseas Business Orders received / Order backlog
Overseas Environment and Energy Business Orders received / Order backlog Orders received were down compared to FY2023, when we ordered an additional offer for new plant construction projects. Orders received Order backlog (Q2) （Millions of yen） Approx. ¥0.45 billion decrease （Millions of yen） Approx
Slide 15: Overseas Business Net sales / Operating profit
Overseas Environment and Energy Business Net sales / Operating profit Net sales and operating profit were up owing to progress on new plant projects previously ordered. Net sales Operating profit （Millions of yen） Approx. ¥0.45 billion increase （Millions of yen） Approx. ¥0.14 billion increase Q2 Q4
Slide 16: Package Boiler Business Orders received / Order backlog
Package Boiler Business Orders received / Order backlog Orders received were up due to a continued moderate recovery in demand. Orders received Order backlog (Q2) （Millions of yen） Approx. ¥0.86 billion increase （Millions of yen） Approx. ¥0.91 billion increase Q2 Q4 18,800 8,867 10,000 18,400 18,666
Slide 17: Package Boiler Business Net sales / Operating profit
Package Boiler Business Net sales / Operating profit Net sales and operating profit were up owing to progress on projects previously ordered. Net sales Operating profit （Millions of yen） Approx. ¥0.11 billion increase （Millions of yen） Approx. ¥0.05 billion increase Q2 Q4 Q2 Q4 Q2 Operating Margin 1
Slide 18: Package Boiler Business Topics
Package Boiler Business Topics Signed a stock transfer agreement to acquire shares of IHI Packaged Boiler Co., Ltd. IHI Packaged Boiler Co. will become a consolidated subsidiary of Takuma on April 1, 2025, based on the stock transfer agreement between Takuma and IHI IHI Packaged Boiler Co. and o
Slide 19: Equipment and Systems Business Orders Received / Order Backlog
Equipment and Systems Business Orders Received / Order Backlog Orders received increased primarily from orders in the building equipment business. Orders received Order backlog (Q2) （Millions of yen） Approx. ¥1.3 billion increase （Millions of yen） Approx. ¥0.86 billion decrease Q2 Q4 11,165 12,000 1
Slide 20: Equipment and Systems Business 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, whereas operating profit was down due primarily to changes in the project mix. Net sales Operating profit （Millions of yen） Approx. ¥0.11 billion increa
Slide 21: Table of Contents
Table of Contents 1. Overview of Q2 FY2024 (Ending 3/2025) Financial Results 2. Financial Forecast for FY2024 (Ending 3/2025) 3. Notice Regarding Reduction of Cross-shareholdings (Announced on November 8, 2024) 4. Appendix Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 20
Slide 22: FY2024 Results Forecast
FY2024 (Ending 3/2025) Results Forecast No changes from the initial forecasts announced on May 14, 2024. Aiming for record-high orders received of ¥230.0 billion. While sales are expected to be down, profit will be up owing mainly to changes in the EPC project mix. Orders received: Demand will be
Slide 23: 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 24: 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 Environme
Slide 25: 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 26: Shareholder Return
Shareholder Return The annual dividend for FY2024 (ending 3/2025) is to be increased by 8 yen to ¥56 per share. The total return ratio is expected to be 95.7% through share repurchase of up to JPY 4 billion and cancellation of treasury shares. Purchase of treasury stock and Dividend per share and Pa
Slide 27: Table of Contents
Table of Contents 1. Overview of Q2 FY2024 (Ending 3/2025) Financial Results 2. Financial Forecast for FY2024 (Ending 3/2025) 3. Notice Regarding Reduction of Cross-shareholdings (Announced on November 8, 2024) 4. Appendix Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved. 26
Slide 28: Summary of the Document Announced on November 8, 2024
Summary of the Document Announced on November 8, 2024 • Takuma has been engaging in dialogue with shareholders and investors with the aim of further enhancing its corporate value since announcing its 14th Medium-Term Management in May of this year. Takuma announces that a policy to reduce cross-shar
Slide 29: Strengthening the Policy to Reduce Cross-share Holdings
Strengthening the Policy to Reduce Cross-share Holdings In order to further accelerate our reduction effort, we will reduce our cross-shareholdings to less than 15% of its consolidated net assets (selling approximately 7 billion yen worth of shares) by the end of the fiscal year ending March 2027, a
Slide 30: Strengthening Shareholder Return Policy
Strengthening Shareholder Return Policy We will work to improve the efficiency of our balance sheet, primarily by reducing cross-shareholdings, and use the cash generated to return profits to shareholders, such as dividends and purchases of treasury shares. As a result, shareholder returns over the
Slide 31: Upward Revision of ROE Target
Upward Revision of ROE Target Working to improve the efficiency of our balance sheet as mentioned above, and expecting to realize gains on sales from the reduction of cross-shareholdings, we have revised our ROE target for the fiscal year ending March 2027 upward to 11% or more. :Main target 13th MT
Slide 32: Table of Contents
Table of Contents 1. Overview of Q2 FY2024 (Ending 3/2025) Financial Results 2. Financial Forecast for FY2024 (Ending 3/2025) 3. Notice Regarding Reduction of Cross-shareholdings (Announced on November 8, 2024) Appendix - Company outline - 14th Medium-Term Management Plan; 4. Outline, Business Strat
Slide 33: 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 34: 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”. Business Segment Key Businesses Municipal Solid Waste Treatment P
Slide 35: 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 model
Slide 36: 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 37: Management Principles and Long-Term Vision
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 needed and re
Slide 38: Vision2030 Growth of Net Sales
Vision2030 Growth of Net Sales 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 FY3/2031. Vision2030:
Slide 39: 14th Medium-Term Management Plan Market Environment
14th Medium-Term Management Plan 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 low birth rate and agi
Slide 40: 14th MTP Positioning and Policies
14th Medium-Term Management Plan Positioning and Policies The 14th Medium-Term Management Plan is positioned to materialize the growth story for realizing the vision by prioritizing investment of management resources into receiving orders for municipal solid waste treatment plants (renewals and prim
Slide 41: 14th MTP Financial Targets Summary (restated)
14th Medium-Term Management Plan Financial Targets Summary (restated) In addition to ordinary profit, new targets for orders received and return on equity (ROE) are set in the 14th Medium-Term Management Plan. Three-year total target set for orders received of 600 billion JPY, which is significantly
Slide 42: 14th MTP 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 43: Illustration: Sales Progress / Sales Composition
Illustration: Sales Progress / Sales Composition 14th Medium-Term Management Plan (reference material) For EPC orders, sales are recorded according to the progress of construction. Assuming that the plant construction period is 4 years, sales will make significant progress in the 3rd year and the fi
Slide 44: Illustration: Transition of Orders Received and Net Sales
Illustration: Transition of Orders Received and 14th Medium-Term Management Plan Net Sales (reference material) Regarding EPC orders in the 14th MTP (see shaded area in the diagram below), it will be from the 15th MTP that significant contributions will be made to sales. By significantly increasing
Slide 45: 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 46: 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 47: Business Strategies Basic Policy 5: M&As and Alliances / New Businesses
14th Medium-Term Management Plan Business Strategies Basic Policy⑤ M&As and 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 Purpose/category Segment (Business field) Functi
Slide 48: Securing and Development of Human Resources
Strengthening the Management Foundation Securing and 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 linked to management strategy Elimination of huma
Slide 49: Human Resources Investment
Strengthening the Management Foundation Human Resources 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 50: 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 Agricultural use of C
Slide 51: Knowledge Management: Digital Transformation
Strengthening the Management Foundation Knowledge Management “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 strengthening our competitiveness. Regarding “defensive” DX,
Slide 52: Knowledge Management
Strengthening the Management Foundation Knowledge Management 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 Operational data Inspection history Production control In
Slide 53: 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 54: 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 (JPY billions) Growth investments JPY 21 billion Sale of cross- Sale
Slide 55: Capital Policy Shareholder Returns (restated)
Capital Policy Shareholder Returns (restated) Takuma will work to improve the efficiency of its balance sheet, primarily by reducing cross-shareholdings, and use the cash generated to return profits to shareholders, such as dividends and purchases of treasury shares. As a result, shareholder returns
Slide 56: 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 th
Slide 57: Situation by Segment: Municipal Solid Waste Treatment Plants
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 58: Situation by Segment: Municipal Solid Waste Treatment Plants
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 59: 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 60: 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. In addition to renewal and service life improvement demand due t
Slide 61: 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 62: 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 63: Situation by Segment: Overseas 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 64: Package Boiler / 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 renewal and other work to continue for the time b
Slide 65: Terminology
Terminology Term Definition EPC Engineering, procurement, and construction; one approach we use in our plant construction business. O&M Operation and maintenance; one approach we use in our plant operation business. DBO Design, build, and operate; one approach we use in our plant construction and op
Slide 66: Disclaimer
Disclaimer 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 uncertainty. Please no