Nippon Air Conditioning Services Co., Ltd. · TSE:4658
Nippon Air Conditioning Services — FY2021 Earnings Presentation
48 slides from Nippon Air Conditioning Services's earnings presentation, June 2021
Slide 1: Fiscal year ended March 2021 Financial Results Reference Materials
We are the doctor of your invisible air. Fiscal year ended March 2021 Financial Results Reference Materials June 2021 TSE 1st section, NSE 1st section: 4658 1
Slide 2: Disclaimer
Disclaimer These materials were prepared by Nippon Air Conditioning Services Co., Ltd. (the “Company”) for the purpose of understanding the current status of the Company, and do not aim at solicitation for investment in securities issued by the Company. The information in these materials is based on
Slide 3: Contents
Contents Ⅰ. Overview and strength p.03-p.24 Ⅱ. Financial highlights p.25-p.38 Ⅲ. Toward the achievement of long-term vision p.39-p.47 3
Slide 4: Building facilities maintenance
Overview and strength Building facilities maintenance Number of technology-related employees: 2,515 Bases: 47 prefectures and 6 overseas countries * Number of Technology-related employees and Base information are as of the end of March 2021. 4
Slide 5: Company overview
Company overview Company overview 239-2 Terugaoka, Meito-ku Apr. 1964 The company is established in Head office Nagoya-shi, Aichi Japan Higashijukucho, Nakamura-ku Nagoya-shi, Aichi. Capital stock ¥1,139 million Business General building facility description maintenance service Number of Consolidate
Slide 6: Technology-oriented company
Number of employees ■Number of employees (persons) ■ Regular employees ■ Average temporarily employed workers 4,000 ( ) Technology-related employees Technology-related employees 3,500 2,967 2,993 3,065 3,095 account for more than 80% 2,914 (2,502) (2,515) (2,421) (2,418) (2,405) 3,000 Technology-ori
Slide 7: Stock-related information
Stock-related information Stock-related information ■Total shareholder return (%) ● The Company (including dividends) ● TOPIX including dividends Stock price ¥730 Total market capitalization ¥26.1 billion 180.0 162.3 Dividends ¥28 per share 160.0 140.0 Dividend payout ratio 50.2% 143.8 120.0 Dividen
Slide 8: Management philosophy
Management philosophy To make all our stakeholders happier ▼ Creation of social value Management philosophy Bringing together the technological capabilities and human resources to maintain optimal environments and give our clients peace of mind through top quality service. ▼ Creation of economic val
Slide 9: Maintenance and management cycle of building facilities
Maintenance and management cycle of building facilities In-house technicians can respond in any phase ▼ Business Model Technological capabilities Total support capabilities Solution capabilities 9
Slide 10: Business division
Business division Net sales Business division Overview composition PM ■ Inspection, maintenance, repair, replacement, etc. of overall equipment / systems of buildings. (mainly air conditioning) 37 ％ Preventive Maintenance FM ■ Integrated management that optimally combines maintenance services with d
Slide 11: Business contents
Business contents Central surveillance service Solution proposals “Is it possible to create such and such environment?” or “How can we improve the situation?” Daily measurement service Environmental diagnosis service ＋ ▼ Boosting added value by identifying needs based on dialogue with customers Disi
Slide 12: History since foundation
History since foundation ■ Net sales (left axis) ■Net sales and operating income changes since foundation (billion yen) ● Operating income (right axis) 60 2019 Five-Year Mid-Term Management Plan 4.0 Apr. 1964 Establishment Start of TECS (Total Environmental Consulting 2016 Three-Year Mid-Term Manage
Slide 13: Goals since foundation and goals in the future
Goals since foundation and goals in the future Three goals since foundation To make all our stakeholders happier (1) Overseas expansion (Jan. 1999) (1) [Customers] Provision of high-added value services (2) IPO in TSE and NSE (Sep. 2006) (2) [Employees] Improvement of satisfaction level and (3) Expa
Slide 14: Domestic market size
Domestic market size Construction and maintenance Companies approx. ¥2.2 trillion ▼ Approx. 70% of the air conditioning and heat source system market is for existing buildings ▼ we project a target for the Company of approx. ¥1.5 trillion * Prepared by the Company with reference to “Actual State of
Slide 15: Comparison with other companies in the same business
Comparison with other companies in the same business The Company Company Company Company A B C Total market ¥26.1 ¥179.0 ¥96.8 ¥6.5 capitalization billion billion billion billion High flexibility and PER 13.08x 15.74x 15.69x 6.44x PBR 1.27x 1.89x 1.57x 0.37x Capability to create added value ROE 10.5
Slide 16: Strength in the capability to handle any event regardless of the maker
Strength in the capability to handle any event regardless of the maker There is air-conditioning equipment from various makers inside buildings. Company A- Company B- Company C- manufacture manufacture manufacture No restrictions by makers Quick response in-house ▼ Reduced workload on customers Flex
Slide 17: Strength in the stability
Strength in the stability ■ Annual contract sales ■Ratio of annual contracts to net sales (%) ■ Manufacturing plant, etc. sales excluding annual contracts ■ Other sales 100.0 Stable annual contracts 75.0 Expansion of manufacturing plants, etc. ▼ 50.0 The key to growth is manufacturing plants 25.0 Ap
Slide 18: Strength in excellent technological capabilities 1/2
Strength in excellent technological capabilities 1/2 ■Ratio of sales of facilities with special environment (%) ■ Ratio of sales of facilities with special environment ■ Other sales 100.0 Excellent technological capabilities 75.0 are required for maintenance and management 50.0 Approx. 70% ▼ (Ratio
Slide 19: Strength in excellent technological capabilities 2/2
Strength in excellent technological capabilities 2/2 Examples of the technological capabilities required are shown below. * Picture: Environmental performance measurement / diagnosis, Clean equipment maintenance, Environmental hygiene management, High efficiency filter maintenance, Work environment
Slide 20: Technological capabilities index
Technological capabilities index ■Technological capabilities index (pt) 25.0 20.8 Technological type official 19.6 19.7 19.9 20.0 20.0 qualification acquisition number 15.0 Target 9,336 20pt or higher 10.0 ▼ Technological type official × Qualification score Base of technological capabilities qualifi
Slide 21: Reasons for inclination to facilities with special environments
Reasons for inclination to facilities with special environments Office building Hospitals Manufacturing plants Air conditioning equipment in Air conditioning equipment in operating Air conditioning equipment in conference room breaks down room breaks down manufacturing plant breaks down ▼ ▼ ▼ Operat
Slide 22: Share in large-scale domestic hospitals
Share in large-scale domestic hospitals ■Percentage of acceptance of outsourcing for domestic hospitals that have 600 beds or more (%) Strength in maintenance and management of facilities of large-scale hospitals ▼ Integrated management 11.1% Bed-number base Maintenance of environmental performance
Slide 23: New approach 1/2
New approach 1/2 New approach to expand orders for pharmaceutical manufacturing plants, etc. ▼ Validation total support ▼ A project is under way to build a system toward medium- to long-term deployment 23
Slide 24: New approach 2/2
New approach 2/2 To achieve carbon neutrality: ▼ Private solar power generation and consumption systems for manufacturing plants and similar facilities ▼ Shift in paradigm from selling power to in-house production and consumption Currently being actively developed by Nippon Air Conditioning Hokuriku
Slide 25: Contents
Contents Ⅰ. Overview and strength p.03-p.24 Ⅱ. Financial highlights p.25-p.38 Ⅲ. Toward the achievement of long-term vision p.39-p.47 25
Slide 26: Financial highlights
Financial highlights Net sales：¥49.1 billion [-1.1％] Operating income：¥3.0 billion [-3.2%] Final income：¥1.9 billion [+5.2％] * For net sales, operating income, final income, the number in the fiscal year ended March 2021 is used. * Final income indicates profit attributable to owners of parent. 26
Slide 27: Results for the fiscal year ended March 2021 1/4
Results for the fiscal year ended March 2021 1/4 Special demand for renovation work related to air conditioning at schools disappeared. Revenue and profit decreased due partly to the Covid-19 pandemic. (billion yen, %) FY03/2019 FY03/2020 FY03/2021 Consolidated Year-on- Year-on- Year-on- (cumulative
Slide 28: Results for the fiscal year ended March 2021 2/4
Results for the fiscal year ended March 2021 2/4 ■Net sales of renovation work for educational and cultural facilities (billion yen, %) 3.0 2.7 2.5 Disappearance of special demand for renovation work 2.0 1.6 ▼ 1.5 Inability to offset slowing special demand 1.1 1.0 0.8 for air conditioning equipment
Slide 29: Results for the fiscal year ended March 2021 3/4
Results for the fiscal year ended March 2021 3/4 ■Net sales for each type (billion yen) ■ Maintenance services net sales (inside dotted line frame, annual contract sales) ■ Renovation work construction work volume 60.0 Impact of Covid-19 pandemic 49.6 49.1 50.0 ▼ 45.4 46.3 43.1 40.0 17.4 16.3 14.6 1
Slide 30: Results for the fiscal year ended March 2021 4/4
Results for the fiscal year ended March 2021 4/4 Slowing special demand and COVID-19 impacted heavily on 1H; recovery began in 3Q ■Net sales by quarter (billion yen) ■ Maintenance services net sales ■ Renovation work construction work volume 10.0 9.3 9.0 9.0 8.3 8.6 8.2 7.9 8.1 8.0 7.8 7.6 7.0 7.2 7
Slide 31: Net sales by facilities of which services are entrusted 1/2
Net sales by facilities of which services are entrusted 1/2 ■Net sales by facilities of which services are entrusted ■ Hospitals and research facilities ■ Manufacturing plants, etc. ■ Other special facilities ■ Office buildings, etc. (billion yen) 20.0 18.8 17.4 17.8 18.0 16.6 16.5 Demand related to
Slide 32: Net sales by facilities of which services are entrusted 2/2
Net sales by facilities of which services are entrusted 2/2 ■Annual contract sales (billion yen) ■ Maintenance services net sales (billion yen) ■ Renovation work construction work volume (billion yen) ■ Hospitals and research facilities ■ Manufacturing plants, etc. 14.0 5.0 ■ Other special facilitie
Slide 33: Gross profit margin
Gross profit margin ■Gross profit margin (%) 25.0 ● Gross profit margin ● Maintenance services gross profit margin Maintenance ● Completed construction gross profit margin 21.0 gross profit margin: decreased 20.6 ▼ 19.7 20.0 19.8 20.0 18.5 18.4 18.9 Difficulty in growing spot sales 18.1 18.1 15.0 16
Slide 34: Net sales overseas
Net sales overseas ■Net sales overseas by region (million yen) ■ China ■ Singapore ■ Other regions 800 760 746 704 Net sales in seven countries outside Japan: 691 700 ¥ 1.0 billion 600 575 Operating income to sales overseas :－3.9％ 500 The impact of the Covid-19 pandemic was large 400 300 315 341 ▼ 2
Slide 35: Status of cash flows
Status of cash flows FY03/2020 FY03/2021 Consolidated (cumulative period) Year-on-year Year-on-year Amount Amount growth ratio growth ratio (billion yen) (billion yen) (％) (％) The operating CF increased Cash flows from operating ▼ activities 0.1 (95.9) 2.7 +2,425.3 Cash flows from investing (0.3) (1
Slide 36: Financial position
Financial position FY03/2020 FY03/2021 Consolidated (as of the end of period) Year-on-year Year-on-year Amount Amount growth ratio growth ratio (billion yen) (％) (billion yen) (％) The capital adequacy ratio increased Current assets 19.5 (3.1) 20.1 +2.9 54.8% ⇒ 57.4% 13.4 (2.2) 14.7 +9.9 ▼ Fixed asse
Slide 37: Fiscal year ending March 2022 forecast 1/2
Fiscal year ending March 2022 forecast 1/2 While the impact of COVID-19 is not expected to increase from the last period, profits are expected to decrease, despite increased sales, due to factors such as higher labor costs associated with the proactive hiring of new graduates (billion yen, %) FY03/2
Slide 38: Fiscal year ending March 2022 forecast 2/2
Fiscal year ending March 2022 forecast 2/2 ■Number of new graduates hired (persons) 120 104 100 Number of new graduates hired: 104 persons 77 75 ▼ 80 67 59 Forward-looking investments 60 intended to increase the value of human capital 40 20 0 2017.4 2018.4 2019.4 2020.4 2021.4 38
Slide 39: Contents
Contents Ⅰ. Overview and strength p.03-p.24 Ⅱ. Financial highlights p.25-p.38 Ⅲ. Toward the achievement of long-term vision p.39-p.47 39
Slide 40: Toward the achievement of long-term vision
Toward the achievement of long-term vision Enhanced human resources value ▼ Capital productivity improvement ▼ Creation of sustainable shareholder value ▼ Improvement of happiness of all stakeholders 40
Slide 41: Enhancing human resources value
Enhancing human resources value Promote three projects aiming at enhancing human resources value 「Human」 「Technological capabilities」 「Satisfaction level」 ▼ ▼ ▼ Improvement of Improvement of Recruitment and PR operational efficiency systems and environment ▼ ▼ ▼ Improvement of recognition Shortening
Slide 42: Employee satisfaction levels
Employee satisfaction levels ■Employee satisfaction levels (％) 100.0 90.0 Positive responses concerning rewarding work/teamwork is trending higher Employee satisfaction levels 80.0 66.5 65.9 69.3 69.3％ 70.0 65.2 63.9 ▼ 60.0 50.0 Target: 40.0 70％ or higher Basis of customer satisfaction 30.0 20.0 “Fo
Slide 43: Improving the capital productivity
Improving the capital productivity Most important factor for improving the capital productivity 「enhancement of human resources value」 Linked to ESG(Social) Number of employees Special environment × Net income Net sales ＋ Technological capabilities Overseas development × Satisfaction level ROE Barri
Slide 44: Shareholder return policy
Shareholder return policy Maintain dividend payout ratio of 50% by enhancing capital productivity ▼ Implementation of shareholder return with awareness of dividend on equity ratio ■ROE (%) ■Payout ratio (%) ■Dividend on equity ratio (%) 15.0 60.0 6.0 5.5 5.6 50.9 51.8 50.2 5.2 × ＝ 10.8 10.8 10.5 10.
Slide 45: Dividends
Dividends ■Dividends per share (yen) 30.00 28.00 28.50 28.00 26.00 Decisions on matters related to acquisition of 25.00 23.00 22.00 treasury shares 16.00 14.00 20.00 15.50 Total number: up to 700,000 shares (1.98%) ＋ 14.50 12.00 Total amount: up to 500 million yen 12.00 15.00 Period: November 2020 t
Slide 46: Sustainable shareholder value creation
Sustainable shareholder value creation ■PBR (x) ■(PBR＞1 ■(PBR＝1 2.00 1.80 PBR＞1 1.60 Evaluation of non-financial capital ▼ 1.40 1.20 “Creation of sustainable shareholder value” 1.00 Linked to ESG (Governance) 0.80 0.60 ▼ 0.40 Medium- to long-term expansion of corporate value 0.20 Improvement of happ
Slide 47: Financial Key Performance Indicator
Financial Key Performance Indicator Net sales：¥55 billion (Ratio of sales of facilities with special environment 75％) Operating income：¥3 billion (Operating income to sales overseas 5％) Profit attributable to owners of parent：¥1.9 billion EPS：¥54 (Payout ratio：50％) ROE： Maintain 10％ * For net sales,
Slide 48: www.nikku.co.jp/en
www.nikku.co.jp/en In charge of IR: Corporate Planning Division E-mail：ir4658@nikku.co.jp 48
Nippon Air Conditioning Services — FY2021 Earnings Presentation on 6ix