Shinagawa Refra Co., Ltd · TSE:5351
Shinagawa Refra — Shinagawa Refractories — FY2018 Earnings Presentation
44 slides from Shinagawa Refra's earnings presentation, Jun 11, 2019
Slide 1: Shinagawa Update: Results for Fiscal Year Ended March 2019
Securities Code Number: 5351 Shinagawa Update Results for Fiscal Year Ended March 2019 June 11, 2019 ― Supporting the World’s Key Industries Through Technologies ― Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2019
Slide 2: Table of Contents
Table of Contents I. Overview of Financial 1. Consolidated Financial Highlights 5 .Factors Behind Changes in Operating Income 2. Consolidated Net Sales & Operating Income (YoY) Results for 2018 3. Net Sales by Business Segment 6. Raw Materials Procurement 4. Operating Income by Business Segment 7. C
Slide 3: I. Overview of Financial Results for 2018
I. Overview of Financial Results for 2018 (Fiscal Year ended March 2019) Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2019 2
Slide 4: Consolidated Financial Highlights
1. Consolidated Financial Highlights （Unit: Million JPY） FY 2017 FY 2018 YoY Results Results Net Sales 102,749 119,067 ＋15.9% Operating Income 6,049 10,233 ＋69.2% Ordinary Income 6,322 10,659 ＋68.6% （ROS） （6.2％） （9.0％） （+2.8pt） Profit attributable to owners of parent 3,419 6,225 ＋82.1% ● Net sales:
Slide 5: Consolidated Net Sales & Operating Income
2. Consolidated Net Sales & Operating Income （Billion JPY） Net Sales (Left Axis) （Billion JPY） 140.0 Operating Income (Right Axis) 16.0 119.0 14.0 120.0 103.7 102.7 100.1 97.8 12.0 100.0 10.6 10.0 80.0 8.0 60.0 6.3 6.3 5.2 4.9 6.0 40.0 4.0 20.0 2.0 0.0 0.0 2014 2015 2016 2017 2018 (Fiscal Year) Shin
Slide 6: Net Sales by Business Segment
3. Net Sales by Business Segment （Unit: Million JPY） FY 2017 FY 2018 YoY Results Results Refractories and related products 79,830 77.7 93,102 78.2 ＋16.6% Furnace construction and engineering 20,823 20.3 23,950 20.1 ＋15.0% Real estate and other businesses 2,095 2.0 2,014 1.7 - 3.9% Total 102,749 100.
Slide 7: Operating Income by Business Segment
4. Operating Income by Business Segment （Unit: Million JPY） FY 2017 FY 2018 YoY Results Results Refractories and related products 5,528 77.3 9,667 84.3 ＋74.9% Furnace construction and engineering 561 7.8 763 6.7 ＋36.0% Real estate and other businesses 1,058 14.8 1,034 9.0 - 2.3% Total 7,148 100.0 11
Slide 8: Factors Behind Changes in Operating Income (YoY)
5. Factors Behind Changes in Operating Income (YoY) (Unit: Billion JPY) Negative Factors Positive Factors △6.0 ＋10.2 Change in Total +4.2 10.2 Sales Price Contribution Raw Change in by Group Increases Impact from Material Product Mix, Companies ＋7.8 changes in Costs +0.2 Foreign +0.2 Increases Cost
Slide 9: Raw Materials Procurement
6. Raw Materials Procurement Raw Materials Market <Market Trend> - Supply shortage caused by introducing FY 2017 FY 2018 FY 2019 stricter environmental measures in China triggered soaring of raw material prices since the second half of 2017, continued into 2018. - It has been stabilizing now in 2019
Slide 10: Consolidated Balance Sheet
7. Consolidated Balance Sheet Unit: Million JPY 2018/3 2019/3 Change ・Cash & Deposits + 1,777 ・Receivables + 4,213 ・Merchandise & Current Assets 65,547 72,167 ＋6,620 Finished Goods + 1,672 ・Securities - 1,099 Fixed Assets 40,932 39,059 - 1,873 ・Buildings & Structures - 1,131 Total Assets 106,479 111
Slide 11: Consolidated Cash Flows
8. Consolidated Cash Flows Unit: Million JPY [Main contents of cash flows from operating activities] FY 2017 FY 2018 Change Cash Flows from ・Income before income Taxes + 10,239 Operating Activities 1,578 4,288 ＋2,710 ・Depreciation + 2,344 Cash Flows from ・Changes in Receivables - 4,403 - 1,623 - 1,1
Slide 12: II. 2019 Business Plan
II. 2019 Business Plan Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2019 11
Slide 13: Business Environment: Global and Japan Economy
1. Business Environment Global Economy Japan Domestic Economy Widespread Sense of Negative Impact on Uncertainty Japanese Economy ● US-China Trade War ● More Challenging ● No Deal Brexit Environment for Exports and Manufacturing Sectors ● China’s Economic Slowdown and its impact to ● Vulnerable Econ
Slide 14: Business Environment: Global Steel Industry
1. Business Environment Global Steel Industry Expected to Show Steady Growth Globally ● Increases in Infrastructure Investment allows Steady Growth in Japan ● Global Production continues to Increase due to Strong Demand in Emerging Economies However… There are Risks of Slowdown with Global Steel Ind
Slide 15: Fourth Mid-Term Management Plan (2018-2020)
2. Fourth Mid-Term Management Plan (2018-2020) Getting off to a Good Start toward the Goal Sales (Billion JPY) ROS (%) Sales Goal in 2020 （123） 125 115 119 9.0 ROS Goal 104 103 in 2020 8.0 （8.0） 6.1 6.2 6.5 Results Results Results Plan Plan 2016 2017 2018 2018 2019 (Fiscal Year) Shinagawa Refractori
Slide 16: 2019 Business Plan: Areas of Focus
3. 2019 Business Plan: Areas of Focus Strategic Importance of 2019: ● 10 Years since the Merger of Shinagawa Shirorenga and JFE Rozai to create Shinagawa Refractories ● Crucial Year as a Milestone for Our Future Success Area of Focus① Sales Expansion of Refractory Products Area of Focus② Cost Reduct
Slide 17: Area of Focus 1: Sales Expansion of Refractory
3. Area of Focus① Sales Expansion of Refractory Sales of Refractory Products Sales Expansion in 120 Domestic Sales Domestic Market (Billion JPY) Overseas Sales (including Export) Market Penetration with Existing 100 98 98 1 93 Markets: BOF/EAF Customers 80 New Market Development: Non- 80 2 Ferrous/C
Slide 18: Sales Expansion in Domestic Market
3. Area of Focus① Sales Expansion of Refractory Sales Expansion in Domestic Market 1 Existing Markets ●Market Penetration with BOF/EAF Customers ▶ Cost Reduction Proposal with Improved Monolithic Reparing Products ▶ Proposal-Based Sales by Value Analysis Engineering 2 New Markets ●Market Development
Slide 19: Sales Expansion in Overseas Market
3. Area of Focus① Sales Expansion of Refractory Sales Expansion in Overseas Market 1 Sales and Services Onsite China/Asia Americas 2017/1 ●Expat in India Liaoning Shenyang 2018/4 ●Open Shanghai Office Shinagawa Shinagawa JWHI SAM 2019/1 ●Open Taiwan Office Shinghai Office ●Expat in Brazil Taiwan Off
Slide 20: Area of Focus 2: Cost Reduction Initiative
3. Area of Focus② Cost Reduction Initiative Cost Reduction Initiative to further strengthen Competitive Cost Position 1 Product Integration 2 Low Costs Raw Materials Further Improvement of Competitive Cost 3 Process Innovation Position by Cost Reduction Initiative 4 Productivity Improvement 5 Automa
Slide 21: Area of Focus 3: Product Competitiveness
3. Area of Focus③ Product Competitiveness 1 Support Customers for their Stable Production ① Optimal & Customized Products for Each Customers’ Need ＜e.g.＞ ・Customizing Magnesia Carbon Bricks for BOF according to Customers’ Operation Analysis ・In-House Integrated Production of Custom-Engineered Precas
Slide 22: Tailored Refractories to Meet Customers' Service Conditions
3. Area of Focus③ Product Competitiveness Support Customers for their Stable Production 1 (1) Tailored Refractories to Meet Customers’ Service Conditions Strategic Product: High Strength Magnesia Carbon Bricks for BOF Achieve 20% Reduction in the Wear Rate of the Charging wall and Bottom-Blowing Tuy
Slide 23: Reducing Environmental Burden
3. Area of Focus③ Product Competitiveness Support Customers for their Stable Production 1 (2) Reducing Environmental Burden Industrial Waste Reduction by Used Refractories Recycling Recycle Cokes Ovens 60cm Develop New Recycling Process Door Blocks Remove Adhered Substance on the Door ・Dismantle ・Dr
Slide 24: Improvement of Installation Services
3. Area of Focus③ Product Competitiveness Improvement of Installation Services 2 Targeting Large Construction Project: Reorganization of Engineering Business Reorganization of Engineering Business ● Consolidation of Engineering & Furnace Construction Department: Engineering Division ● Further Integr
Slide 25: Area of Focus 4: Production Facilities Upgrade
3. Area of Focus④ Production Facilities Upgrade 【Capital Spending】 Active Capital Spending to Enable Flawless Operation and Enhance Product Competitiveness Capital Spending 2018 2019 Capital Spending 2 eyras is Plan (a) 4,100 4,800 in total of 9,500M JPY, which is more than our original Results (b)
Slide 26: Financial Targets & Strategies: Shareholder Returns
4. Financial Targets & Strategies Shareholder Returns ● Increased fiscal year-end dividend from Dividend per Share 60 to 75 JPY per Share (JPY) Dividend per Share Payout Ratio (%) 【FY 2018 Results】 （Per Share） 250 21.9 25 20.2 ●Interim Dividend 60JPY 20.2 18.3 20 200 ●Year End Dividend 75JPY 15 Tota
Slide 27: 2019 Business Plan: Financial Targets
5. 2019 Business Plan: Financial Targets （Unit: Million JPY） FY 2018 FY 2019 YoY Results Plan Net Sales 119,067 100.0 125,300 100.0 ＋5.2% Operating Income 10,233 8.6 9,800 7.8 - 4.2% Ordinary Income 10,659 9.0 10,000 8.0 - 6.2% Profit attributable to owners of parent 6,225 5.2 6,000 4.8 - 3.6% Note:
Slide 28: III. Supplementary Notes
III. Supplementary Notes Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2019 27
Slide 29: History
1. History [Established in 1875] [Established in 1938] Shinagawa Refractories Co., Ltd. JFE Refractories Corporation (First private company in Japan to (Operated as a subsidiary of the Kawasaki Steel manufacture fire bricks) Corporation Group since 1944) Increasing market presence and establishing r
Slide 30: Mission Statement
2. Mission Statement Mission Statement of Shinagawa Refractories With our core philosophy of respecting the basics “Be BASIC,” Shinagawa Refractories is committed to contributing to the industrial development and the creation of affluent societies through providing high quality refractory products a
Slide 31: Consolidated Net Sales and Ordinary Income for Past 11 Years
3. Consolidated Net Sales and Ordinary Income for Past 11 Years (Million JPY) Net sales Ordinary income (Million JPY) 140,000 14,000 Merged on October 1, 2009 Consolidated financial results for the fiscal year ended March 2010 combine the consolidated financial results of Shinagawa 119,067 120,000 R
Slide 32: Refractory Industry: Foundation of Society
4. Refractory Industry: Foundation of Society ● Many varieties of materials used in public infrastructure such as iron and steel, nonferrous metals, cement, glass are manufactured in furnaces at extremely high temperature with refractory lining. ● The refractory industry provides foundational suppor
Slide 33: Major Products 1/2
5. Major Products 1/2 Refractories are industrial materials that can resist ultra-high temperatures in Refractories excess of 1,500 degrees Celsius. Approximately 80% of refractory production is consumed by the steel industry. Shaped refractories Monolithic refractories Mold powder Shaped refractori
Slide 34: Major Products 2/2
5. Major Products 2/2 Ceramic fiber Advanced ceramics Lightweight Ceramic material with a broad range of characteristics material featuring including excellent electrical insulation properties, abrasion low thermal resistance, corrosion resistance, chemical stability, conductivity and mechanical str
Slide 35: Key Features and Strengths
6. Key Features and Strengths Leading Company of Ultra-High 1 Temperature Technologies Solid Customer Base with Highly-Advanced 2 Technological Capabilities 3 Global Business Expansion Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2019 34
Slide 36: Key Features and Strengths: Ultra-High Temperature Technology
7. Key Features and Strengths (1) Ultra-High Temperature Technology (i) Key Two Technologies Leading Company of Ultra-High Temperature Technology Solid Technology Development and Commercialization Capabilities supported by Key Two Technologies ●Furnace Design ●Refractories ●Engineering Services Refr
Slide 37: Customer-Oriented Technological Support
7. Key Features and Strengths (1) Ultra-High Temperature Technology (ii) Customer-Oriented Technological Support Closely work with customers with Advanced Technologies and Proven Track Records in Four Divisions: Design, Manufacturing, Furnace Construction and Analysis & Development. Technical Resear
Slide 38: Development Capability to Meet Customer Needs
7. Key Features and Strengths (1) Ultra-High Temperature Technology (iii) Development Capability to Meet Customer Needs World-Class Facilities and Resources allow our Research Center to Propose and Develop Optimal Products for Customers EDS Analysis Data (Color Map) Elements present in the area can
Slide 39: Key Features and Strengths: Solid Customer Base
8. Key Features and Strengths (2) Solid Customer Base Solid Customer Base with Highly-Advanced Technological Capabilities Supplying Optimal Products for Various Customers Industries including the Japanese Steel Industry, known for their World Best Steelmaking Practices Ultra-high temperature technol
Slide 40: Key Features and Strengths: Global Business Expansion
9. Key Features and Strengths (3) Global Business Expansion Global Business Expansion Since 1997 when we launched JV company in China, Shinagawa has been expanding our global presence by establishing production sites in Australia, New Zealand, the US, Indonesia and India. [China] Established 1997
Slide 41: Overseas Business Locations
10. Overseas Business Locations Expanding Global Footprint by increasing Overseas Business Locations in China, Oceania, Asia and the Americas with our focus of Proximity to Customers Liaoning Shinagawa Hefeng Shenyang Shinagawa Metallurgy Materials Co., Ltd. Metallurgical Material Co., Ltd. Shinagaw
Slide 42: Domestic and Overseas Refractory Supply Coverages
11. Domestic and Overseas Refractory Supply Coverages [Overseas] [Japan] Developing Stable Supply System Optimal Supply System with Enhanced by Establishing Overseas Efficiency and Effectiveness to support our Production Sites with a Focus of Domestic Customer Base Proximity to Customers Okayama ・Sh
Slide 43: Disclaimer
Disclaimer This document is intended to provide information on the results for the fiscal year ended March 2019 (April 2018 – March 2019) and is not intended to solicit investment in securities issued by the Company. The document was prepared based on data available as of June 11, 2019. Opinions, fo
Slide 44: Shinagawa Update
Securities Code Number: 5351 Shinagawa Update Results for Fiscal Year Ended March 2019 June 11, 2019 ― Supporting the World’s Key Industries Through Technologies ― Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2019
Shinagawa Refractories — FY2018 Earnings Presentation on 6ix