Kawasaki Heavy Industries Ltd. · TSE:7012

Kawasaki Heavy Industries — Kawasaki Heavy Industrial — FY2022 Earnings Presentation

47 slides from Kawasaki Heavy Industries's earnings presentation, May 10, 2023

1. Slide 1: Financial Results for FY2022

   Financial Results for FY2022 For the Year ended March 31, 2023 0 May 10, 2023

2. Slide 2: Table of Contents

   0 Table of Contents 1 Consolidated Results for FY2022 3 Details by segment Summary 3 Aerospace Systems 15 Segment 4 Rolling Stock 19 Statement of Comprehensive income 5 Energy Solution & Marine Engineering 23 （ES&M） Details of Change in business profit 7 Precision Machinery & Robot 27 Statement of f

3. Slide 3: Consolidated Results for FY2022 – Summary

   Consolidated Results for FY2022 1 –Summary- Revenue and profits grew significantly YoY, and orders received, revenue and profit attributable for owners of parent hit a record high The January-March quarter was largely as planned, with the concentration of provision for bonuses and settlement of vari

4. Slide 4: Consolidated Results for FY2022 – Segment

   Consolidated Results for FY2022 1 –Segment- Revenue and Profits significantly improved due to the passenger demand recovery (Aerospace Systems), strong outdoor leisure demand (PS&E), and the depreciation of the yen ① Investment related to DX and IT infrastructure increased, and an impairment loss wa

5. Slide 5: Statement of comprehensive income

   Consolidated Results for FY2022 1 –Statement of comprehensive income- (Billion Yen) Details FY2021 FY2022 Change % % ① Improved due to Revenue increasing sales amount, 1,500.8 100.0 1,725.6 100.0 + 224.7 price pass-through, and Cost of sales 1 depreciation of the yen, 1,247.6 83.1 1,391.7 80.7 + 144

6. Slide 6: Statement of comprehensive income

   Consolidated Results for FY2022 1 –Statement of comprehensive income- (Billion Yen) Details FY2021 FY2022 Change % % ⑤ Mainly due to the time difference between deposits Finance income and Finance costs - 2.6 - 12.0 - 9.3 and withdrawals Net Interest expense (incl. dividend income) - 1.7 - 3.0 - 1.3

7. Slide 7: Details of change in business profit

   Consolidated Results for FY2022 1 –Details of change in business profit- The depreciation of the yen and fixed cost reduction covered the rising raw material prices Change in product mix and other factors kept positive in PS&E due to successful price pass-through FY’21 FY’22 Business Profit + ¥54.9

8. Slide 8: Details of change in business profit

   Consolidated Results for FY2022 1 –Details of change in business profit- (Billion Yen) FY2021 Details of change FY2022 Business Change in Change in Business Effects of Change share of profit (loss) Change in Profit product mix and of investments SG & A Total Profit (Loss) FX rates※ in sales※ other f

9. Slide 9: Statement of financial position

   Consolidated Results for FY2022 1 –Statement of financial position- (Billion Yen) End of End of Details Change Mar. 2022 % Mar. 2023 % Cash and cash equivalents 108.5 138.4 + 29.9 ① Increase in PS&E and Aerospace Systems 1 Trade receivables (Incl. contract assets) 482.9 592.6 + 109.7 2 Inventories 6

10. Slide 10: Statement of financial position

    Consolidated Results for FY2022 1 –Statement of financial position- Details ③ Increase in Aerospace Systems ④ Increased due to receivables liquidation in Aerospace Systems Appendix Short-term debt (Bil Yen) Long-term debt (Bil Yen) Cash Conversion Cycle Net D/E Ratio （day） IFRS 732.7 760.6 783.4 End

11. Slide 11: Cash Flows

    Consolidated Results for FY2022 1 –Cash Flows- (Billion Yen) FY2021 FY2022 Change Details Profit before tax 27.6 73.2 + 45.6 ① FY2021： An increase in advance Depreciation and amortization 77.5 77.3 - 0.1 receipt in Aerospace, and Increase and decrease in working capital 30.4 - 157.2 - 187.6 good pro

12. Slide 12: Cash Flows

    Consolidated Results for FY2022 1 –Cash Flows- Operating CF is deteriorated due to temporary increase in working capital, with a sharp recovery in order-based businesses and sales growth in Powersports & Engine, but it is expected to be normalized in FY2023 (Billion yen) CF from operating acitivitie

13. Slide 13: Forecasts for FY2023 – Summary

    Forecasts for FY2023 2 -Summary- Business profit is expected to grow in real terms, excluding the impact of FX, and steady improvement in profitability, though profit is expected to decrease YOY Order-based businesses are on a improvement trend as assumed, resulting in better balanced profit mix (Bi

14. Slide 14: Forecasts for FY2023 – Segment

    Forecasts for FY2023 2 -Segment- Aerospace Systems will enjoy further recovery in passenger demand ① PS&E sales are expected to remain strong, but increased sales promotion costs will deteriorate both revenue and profit ② (Billion Yen) Orders Received Revenue Business Profit (Loss) FY2022 FY2023 Cha

15. Slide 15: Aerospace Systems

    Details by Segment 3 -Aerospace systems- FY2022（vs. FY2021） FY2023 forecast（vs. FY2022） Orders Decreased compared to the previous fiscal Orders Expected to increase due to an increase received year when major orders were received from received for MOD, Boeing and component parts -¥37.7 bil. MOD desp

16. Slide 16: Aerospace Systems

    Details by Segment 3 -Aerospace systems- (Billion Yen) FY2021 FY2022 FY2023 Actual FCST in Feb. Actual Chg. Vs. FY21 Chg. Vs. FCST Forecast Chg. Vs. FY22 Orders Received 383.3 300.0 345.5 - 37.7 + 45.5 540.0 + 194.5 Aerospace 329.5 225.0 253.9 - 75.5 + 28.9 410.0 + 156.1 Aero Engine 53.8 75.0 91.5 +

17. Slide 17: Aerospace Systems

    Details by Segment 3 -Aerospace systems- Net Sales or Revenue (billion yen) Aerospace Aero Engines 161.1 128.7 122.1 120.5 109.3 110.2 99.7 93.9 93.3 93.5 81.5 74.6 70.0 71.5 63.2 63.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2019 FY2020 FY2021 FY2022 （IFRS） （IFRS） 17.8% 13.8… 8.9% 7.2% 3.9

18. Slide 18: Aerospace Systems

    Details by Segment 3 -Aerospace systems- Market Overview Specific Efforts  Commercial business  Securing stable revenue in core business – Air passenger demand is recovering from – Cost reductions in existing orders of aircrafts for Boeing and commercial the great impact of COVID-19, with the airc

19. Slide 19: Rolling Stock

    Details by Segment 3 - Rolling Stock - FY2022（vs. FY2021） FY2023 forecast（vs. FY2022） Orders Increased due to major orders such as Orders Expected to decrease compared to the received optional subway cars for New York City received previous fiscal year when the major orders +¥241.7 bil. Transit -¥23

20. Slide 20: Rolling Stock

    Details by Segment 3 - Rolling Stock - (Billion Yen) FY2021 FY2022 FY2023 Actual FCST in Feb. Actual Chg. Vs. FY21 Chg. Vs. FCST Forecast Chg. Vs. FY22 Orders Received 71.5 300.0 313.2 + 241.7 + 13.2 80.0 - 233.2 Domestic & Asia 65.1 47.0 58.1 - 6.9 + 11.1 76.0 + 17.9 North America 6.4 253.0 255.1 +

21. Slide 21: Rolling Stock

    Details by Segment 3 - Rolling Stock - Net Sales or Revenue (billion yen) Domestic & Asia North America 38.8 39.0 39.5 38.1 37.5 36.8 33.7 32.3 32.3 31.7 31.5 32.1 28.7 28.8 26.4 20.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2019 FY2020 FY2021 FY2022 （IFRS） 5.2% （IFRS） 3.4% 5.3% 3.1% 2.4% 1

22. Slide 22: Rolling Stock

    Details by Segment 3 - Rolling Stock - Market Overview Specific Efforts  The impact of COVID-19  Compliance with delivery schedules for – Railway relate investment is resuming in both overseas projects domestic and foreign markets as the impact of COVID-19 subsides Dhaka ‣The first and second trai

23. Slide 23: Energy Solution & Marine Engineering

    Details by Segment 3 - Energy Solution & Marine Engineering - FY2022（vs. FY2021） FY2023 forecast（vs. FY2022） Orders Increased due to an increase in submarine, Orders Expected to decrease compared to the received LPG/LAG carriers, and power generation received previous fiscal year when the orders for

24. Slide 24: Energy Solution & Marine Engineering

    Details by Segment 3 - Energy Solution & Marine Engineering - (Billion Yen) FY2021 FY2022 FY2023 Actual FCST in Feb. Actual Chg. Vs. FY21 Chg. Vs. FCST Forecast Chg. Vs. FY22 Orders Received 343.5 410.0 439.0 + 95.4 + 29.0 330.0 - 109.0 Energy, Plant & 272.7 280.0 292.6 + 19.9 + 12.6 290.0 - 2.6 Mar

25. Slide 25: Energy Solution & Marine Engineering

    Details by Segment 3 - Energy Solution & Marine Engineering - Net Sales or Revenue (Note) The prior results of previous segment have been reclassified to current segment (billion yen) Energy, Plant & Marine Machinery Ship & Offshore Structure 103.8 102.1 99.3 95.5 82.5 77.8 72.2 70.5 72.8 70.3 70.8

26. Slide 26: Energy Solution & Marine Engineering

    Details by Segment 3 - Energy Solution & Marine Engineering - Market Overview Specific Efforts  Energy system & Plant Engineering Providing of products and services for a low-carbon and decarbonized society Domestic Emerging Markets  Seven orders received for LPG/LAG Carrier in FY’22 Topic Steady

27. Slide 27: Precision Machinery & Robot

    Details by Segment 3 - Precision Machinery & Robot - FY2022（vs. FY2021） FY2023 forecast（vs. FY2022） Orders Decreased due to a decrease in hydraulic Orders Expected to increase due to an increase received components for construction machinery received in construction machinery market in market in Chi

28. Slide 28: Precision Machinery & Robot

    Details by Segment 3 - Precision Machinery & Robot - (Billion Yen) FY2021 FY2022 FY2023 Actual FCST in Feb. Actual Chg. Vs. FY21 Chg. Vs. FCST Forecast Chg. Vs. FY22 Orders Received 271.8 260.0 262.0 - 9.8 + 2.0 270.0 + 8.0 Hydraulic 171.6 155.0 154.6 - 17.0 - 0.4 160.0 + 5.4 Components & Systems Ro

29. Slide 29: Precision Machinery & Robot

    Details by Segment 3 - Precision Machinery & Robot - Net Sales or Revenue (billion yen) Hydraulic Components & Systems 86.6 Robotics 73.1 73.5 70.3 65.0 60.6 61.2 61.5 55.2 57.6 53.6 52.6 48.3 49.8 48.8 45.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2019 FY2020 FY2021 FY2022 （IFRS） （IFRS） Op

30. Slide 30: Precision Machinery & Robot

    Details by Segment 3 - Precision Machinery & Robot - Market Overview Specific Efforts  Construction machinery  Developing electrification and automation – China’s lockdown under the zero-COVID technology for construction machinery policy depressed demand – Developing “ ”, a small, high-performance

31. Slide 31: Powersports & Engine

    Details by Segment 3 - Powersports & Engine - FY2022（vs. FY2021） FY2023 forecast（vs. FY2022） Revenue Increased due to an increase in motorcycles Revenue Expected to decrease due to a decline in for North America and Southeast Asia, four- motorcycles for developed countries and +¥143.2 bil. wheelers

32. Slide 32: Powersports & Engine

    Details by Segment 3 - Powersports & Engine - (Billion Yen) FY2021 FY2022 FY2023 Actual FCST in Feb. Actual Chg. Vs. FY21 Chg. Vs. FCST Forecast Chg. Vs. FY22 Revenue 447.9 590.0 591.1 + 143.2 + 1.1 580.0 - 11.1 Motorcycles for developed contries 169.9 215.0 211.2 + 41.3 - 3.8 185.0 - 26.2 Motorcycl

33. Slide 33: Powersports & Engine

    Details by Segment 3 - Powersports & Engine - Net Sales or Revenue (billion yen) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2019 FY2020 FY2021 FY2022 （IFRS） （IFRS） Operating Profit or Business Profit (billion yen) 17.2% 13.1% 10.6% 10.2% 10.9% 10.0% 8.2% 8.8% 4.5% 5.3% 0.9% 2.3% - 0.6% - 1.3%

34. Slide 34: Powersports & Engine

    Details by Segment 3 - Powersports & Engine - Market Overview Specific Efforts  U.S. Europe  Supplying products as much as demanded – Retail market remains strong despite a – All efforts to achieve production plans slight slowdown – Flexibly change production and sales plans according to sales con

35. Slide 35: Shareholder Return

    4 Shareholder Return Dividend Policy Dividend for FY2022 Profit attributable to owners of the parent reached a record high as a result of the recovery from the pandemic in Aerospace 30% The medium- to long-term consolidated dividend payout ratio Systems and the strong performance of PS&E, as well as

36. Slide 36: Project Topics: Resuming civil aerospace

    4 Project Topics Resuming civil Aerospace & Aero-engine business (Bn¥) BOEING 787 DREAMLINER and re-expansion of the market Photo provided by Boeing 250 Revenue in civil aerospace and  Aviation market recovers strongly from 200 civil aero-engine pandemic for re-expansion 150  Boeing has a large ba

37. Slide 37: Project Topics: Doors open for healthcare business

    4 Project Topics Doors open for healthcare business -Review of PCR inspection service business and future prospects- Background & Significance Results & Achievements Acquired Knowledge & Expertise Social significance Number of samples Acquisition of service business base – Ensure safety for medical

38. Slide 38: Project Topics: A hydrogen society is just around the corner

    4 Project Topics 2,000bn 80ships~ A hydrogen society is just around the corner ～ Sites for shipping and receiving for liquefied hydrogen supply chain commercialization project selected ～ Current Position NEW!  The world’s first liquefied  Selected Sites for shipping and Start Demonstration for hyd

39. Slide 39: ESG Topics: Initiatives to reduce CO2 emissions

    4 ESG Topics Initiatives to reduce CO2 emissions -To archive Net zero CO2 emissions in 2050 including SCOPE3 in whole Kawasaki group Target Target SCOPE 1,2 SCOPE 3 Category(1) Set in ‘22 SCOPE 3 Category(11) Set in ‘22 In-house fuel and power use Companies supplying materials and part Providing cus

40. Slide 40: ESG Topics: CDP A List selection

    4 ESG Topics Selected as an A List Company, the Highest Rating, in the CDP Climate Change Survey  The 2022 Climate Change Survey conducted by CDP※1 evaluated the results of our efforts in corporate sustainability for climate change President  We are the first A-list company in the heavy industry s

41. Slide 41: Appendix - CAPEX, Depreciation, R&D, Employees

    Appendix 4 - CAPEX, Depreciation and Amortization, R&D Expenses, Number of employees - (Billion Yen, Persons) FY2021 FY2022 FY2023 Forcast Actual Actual Chg. Vs. FY21 JGAAP Chg. Vs. FY22(JGAAP) CAPEX 77.6 96.3 + 18.7 125.0 + 28.7 Depreciation and amortization 76.9 77.3 + 0.3 79.5 + 2.2 R & D expense

42. Slide 42: Appendix - Others (Order backlog, revenue by region)

    Appendix 4 - Others -  Order Backlog （billion yen)  Order Backlog in Ship & Offshore (billion yen) FY2021 FY2022 Actual Actual Change 191.6 179.4 Aerospace Systems 619.8 670.6 + 50.8 Rolling Stock 388.1 570.5 + 182.3 Energy Solution & 104.6 110.5 Marine Engineering 507.1 629.0 + 121.8 99.1 101.6 8

43. Slide 43: Appendix - Others (Foreign currency, ROIC formulas)

    Appendix 4 - Others -  Revenue in Foreign Currencies by Segment (USD)  Weighted-average Exchange Rates (billion USD) (EUR/JPY) FY2021 FY2022 FY2023 FY2020 actual 124.61 Actual Actual Forecast FY2021 actual 130.47 Aerospace Systems 0.57 0.69 1.11 FY2022 actual 141.38 Rolling Stock 0.06 0.05 0.08 En

44. Slide 44: Kawasaki, working as one for the good of the planet

    Kawasaki, working as one for the good of the planet © Kawasaki Heavy Industries, Ltd. All Rights Reserved

45. Slide 45: Growth Scenario & Future Outlook

    Growth Scenario & Future Outlook May 10, 2023

46. Slide 46: Growth Scenario

    Growth Scenario "The scenario we set up two years ago becomes a reality" 3 Hydrogen and other new businesses will also become a pillar of earnings and a stable growth path – A Safe and Secure Remotely-Connected Society – Near-Future Mobility Further increase in social needs – Energy and Environmenta

47. Slide 47: © Kawasaki Heavy Industries, Ltd. All Rights Reserved

    © Kawasaki Heavy Industries, Ltd. All Rights Reserved

Kawasaki Heavy Industrial — FY2022 Earnings Presentation on 6ix