Toda Corporation · TSE:1860
Toda — Q2 FY2023 Earnings Presentation
57 slides from Toda's earnings presentation, Nov 14, 2023
Slide 1: Results Briefing for the Second Quarter Ended September 30, 2023
Results Briefing for the Second Quarter Ended September 30, 2023 November 14, 2023 TODA CORPORATION 1
Slide 2: Forward-looking statements
This material contains forward-looking statements regarding TODA CORPORATION and the Group’s business plans, strategies, and earnings forecasts. These statements are TODA CORPORATION’s forecasts based on currently available information and may involve potential risks and uncertainties. The actual re
Slide 3: Today's Program
Today’s Program １．Results Briefing General Manager of Corporate Administration Group Toshihiro Yamazaki ２．Progress of the Management Plan President and Representative Director Seisuke Otani 3
Slide 4: 1. Results Briefing
１．Results Briefing General Manager of Corporate Administration Group Toshihiro Yamazaki 4
Slide 5: Apr-Sep FY2023 Financial Highlights (Consolidated)
Apr-Sep FY2023 Financial Highlights (Consolidated) Consolidated net sales Apr-Sep Apr-Sep Change FY2023 ¥230.3 bil (-4.0％ YoY) (Billions of yen) FY2022 FY2023 (YoY) (Forecasts) ︓ Net sales decreased 4.0% YoY to ¥230.3 Consolidated net 239.8 230.3 540.0 bil, mainly due to decrease in sales in the -
Slide 6: [Consolidated] Results by Segment
[Consolidated] Results by Segment （Billions of yen） Domestic Apr-Sep Architectural Civil Investment Domestic Group Overseas Group Environment Adjustment Total FY2023 Construction Engineering and Development Companies Companies and Energy Net sales 139.7 54.3 4.9 22.7 23.1 0.6 -15.2 230.3 Segment -0.
Slide 7: Major Orders Received
Major Orders Received Ordering Parties Name of Works Kushiro City Kushiro City General Hospital New Tower Construction Architectural Construction KOKUBU GROUP CORP. (Tentative name) KOKUBU No.2 Head Office Building New Construction Plan Tokyo Metropolitan Tokyo International Forum (5) Renovation Wor
Slide 8: Major Carryover Works
Major Carryover Works Ordering Parties Name of Works Shibuya Station Sakuragaoka Exit Shibuya Station Sakuragaoka Exit Construction Work Architectural District Redevelopment Associated with Type 1 Urban Revitalization Project Association Construction St. Marianna University School of St. Marianna Un
Slide 9: [Non-consolidated] Carryover Works
[Non-consolidated] Carryover Works （Billions of yen） 738.5 The amount carried over to the next 718.6 fiscal year decreased slightly from the 3.6 691.0 previous fiscal year. 0.5 Overseas In domestic Architectural 0.3 263.6 Civil Construction business, the amount 279.2 Engineering decreased by ¥16
Slide 10: 1-1. Details of Financial Results
１-1．Details of Financial Results 10
Slide 11: [Consolidated] Overview of TODA Group
[Consolidated] Overview of TODA Group Business Subsidiaries in Japan Overseas Subsidiaries 39 companies APEC Engineering Co., Ltd. PT Tatamulia Nusantara Indah Chiyoda Kenkou Co., Ltd. Thai Toda Corporation Ltd. Construction Toda Road Co., Ltd. Toda Vietnam Co., Ltd. 22 Sato Kogyo Co., Ltd. companie
Slide 12: [Consolidated] Balance Sheets
[Consolidated] Balance Sheets Assets Major variable factors (Billions of yen) Current Assets -87.3 815.5 -48.7 766.8 Cash and deposits -10.1 Accounts receivable -87.7 Costs on uncompleted +7.2 construction contracts Current Current -87.3 Assets Assets Non-current assets +20.4 431.5 344.1 Buildings
Slide 13: [Consolidated] Balance Sheets
[Consolidated] Balance Sheets Liabilities and Net Assets Major variable factors (Billions of yen) Current liabilities -69.1 815.5 -48.7 766.8 Notes and account payable-trade -37.1 Short-term loans payable -43.5 Current Current Advances received on uncompleted +13.7 liabilities liabilities construc
Slide 14: [Non-consolidated] Cross-Shareholdings
[Non-consolidated] Cross-Shareholdings Number of stocks The balance of cross-shareholdings 160 is being reduced to secure funds for 159 158 investments in growth. At least ¥30 bil worth of cross- shareholdings to be sold over three (Billions of yen) years (FY2022 – FY2024) * Market value basis 1
Slide 15: [Consolidated] Interest-Bearing Liabilities
[Consolidated] Interest-Bearing Liabilities During the second quarter of （Billions of yen） the fiscal year ending March 31, 2024, interest-bearing 230.0 liabilities decreased by ¥48.0 211.5 bil due to ¥43.5 bil decrease in 179.3 short-term loans payable and 163.5 ¥4.4 bil decrease in long-term loa
Slide 16: [Consolidated] Provision for Loss on Construction Contracts
[Consolidated] Provision for Loss on Construction Contracts （Billions of yen） 9.43 －¥2.22 bil Provision for loss on Overseas 0.05 construction contracts Civil Engineering －¥2.22 bil (YoY) 2.89 7.20 Overseas 0.01 Major variable factors: Civil Provision for loss on Engineering construction contrac
Slide 17: [Consolidated] SG & A
[Consolidated] SG & A During the second quarter of the SG&A Ratio fiscal year ending March 31, 2024, on non-consolidated basis, the 9.3% 9.3% expenses increased by ¥0.6 bil YoY mainly due to increase in personnel, technology R&D and digitalization costs. 8.1% Consolidated 50.0 In addition to the a
Slide 18: [Consolidated] Cashflow
[Consolidated] Cashflow Net increase (decrease) in cash and cash equivalents (Mar 2023 to Sep 2023) -9.3 Operating CF +62.3 Inv CF -23.0 Financial CF -52.7 （Billions of yen） +87.7 +0.7 +1.7 95.8 -23.3 -1.4 +9.1 86.5 +3.1 +4.1 +3.2 -50.6 -4.2 -1.0 -38.4 Investment Income Mar before tax Depreciation O
Slide 19: Acquisition of Own Shares
Acquisition of Own Shares At the Board of Directors Meeting held on November 13, 2023, the Company has resolved the matters relating to acquisition of its own shares. Details of matters relating to the acquisition (1) Type of shares to be acquired: The Company’s common stock (2) Total number of sh
Slide 20: 1-2. Earnings Forecasts
１-２．Earnings Forecasts 20
Slide 21: [Consolidated] FY2023 Earnings Forecasts
[Consolidated] FY2023 Earnings Forecasts （Billions of yen） FY2023 FY2022 Forecasts Change (YoY) Consolidated net sales 547.1 540.0 -1.3% -7.1 Operating income 14.1 16.0 +13.2％ +1.8 Ordinary income 19.0 19.5 +2.4％ +0.4 Net income attributable to 10.9 19.5 +77.3％ +8.5 owners of the parent Orders recei
Slide 22: [Non-consolidated] FY2023 Earnings Forecasts
[Non-consolidated] FY2023 Earnings Forecasts Amount Profit margin (¥bil） (%) Net sales 440.0 Gross profit 53.5 12.2 Profit from construction business 47.0 11.2 [Domestic Architectural Construction] 25.9 9.0 [Domestic Civil Engineering] 20.9 16.2 [Overseas] 0.0 6.2 Profit from Investment and Developm
Slide 23: [Non-consolidated] Earnings Forecasts for Construction Business
[Non-consolidated] Earnings Forecasts for Construction Business Orders Received for Net Sales of Completed Gross Profit Margin on Construction Construction Contracts Completed 700.0 （Billions of yen） 700.0 （Billions of yen） Construction Contracts (%) Civil Engineering 426.7 460.0 600.0 446.5 420.0 6
Slide 24: 2. Progress of the Management Plan
2．Progress of the Management Plan President and Representative Director Seisuke Otani 24
Slide 25: Business and Financial Outlook
Business and Financial Outlook 25
Slide 26: Market Environment: Construction Investment
Market Environment: Construction Investment Strong construction investment is anticipated as social activities normalize Construction Investment (Trillions of yen) (Nominal value) Forecasts 80 Outlook for FY2023 71.4 72.2 With the normalization of 68.7 70 66.4 67.8 7.5 7.4 social activities, stron
Slide 27: Market Environment: Construction Material Prices and Labor Cost
Market Environment: Construction Material Prices and Labor Cost In response to concerns about soaring construction costs, thoroughly pursue orders with an emphasis on profitability Construction Material Price Index Construction 140 (Tokyo, based on 2015) (Oct 2023) labor unit price per day 133.3 136
Slide 28: Market Environment: Construction Material Prices and Labor Cost
Market Environment: Construction Material Prices and Labor Cost Concerns about the impact on the construction term due to soaring equipment costs and tight schedules of facilities companies Social background The entire supply chain of the manufacturing There are cases where labor costs and other i
Slide 29: Market Environment: Construction Material Prices and Labor Cost
Market Environment: Construction Material Prices and Labor Cost Prices for custom-built equipment, especially used in large-scale buildings, have increased significantly (Reference) Price escalation rate for facilities and equipment (custom-built products, etc.) Standard distribution Transformer Dat
Slide 30: Performance Targets and Results
Performance Targets and Results 2024 Targets ※ Unchanged from the forecasts at FY22 Actual FY23 Forecasts (Medium-term the beginning of the fiscal year Management Plan) Consolidated sales 547.1 540.0 600.0 ¥bil Profitability Operating income 14.1 16.0 33.0 ¥bil Operating margin 2.6 3.0 5.5 ％ Capital
Slide 31: Results by Segment
Results by Segment * Target for FY24 reclassified due to changes in segments. * Consolidated net sales and operating income for each segment include elimination of intracompany transactions. FY24 Targets FY22 Actual FY23 Forecasts (Medium-term Management Plan) Consolidated net sales 547.1 ¥bil 540.0
Slide 32: Carryover Works (Architectural Construction)
Construction Carryover Works (Architectural Construction) Business FY22 Q2 FY23 Q2 Accommodations Others Stores 2.4 Others 2.2 3.2 Others 2.4 ［¥9.0bil］ Others 2.1 Accommodations Redevelopment 2.1 5.9 ［¥19.5bil］ Factories ［¥19.7bil］ 4.7 4.3 and power Warehouse and 4.7 Offices and distribution facilit
Slide 33: Carryover Works (Civil Engineering)
Construction Carryover Works (Architectural Construction) Business FY22 Q2 FY23 Q2 Others Erosion and Others Erosion and 10.8 flood control 13.1 flood control 1.0 3.2 Land Roads development 33.7 Land ［¥87.6bil］ development Roads 6.3 40.1 ［¥16.4bil］ 4.3［¥11.4bil］ ［¥107.5bil］ Carryover Renewable Carry
Slide 34: Investments
Investments 34
Slide 35: Investment Update
Investment Update Full-scale investment in new TODA BUILDING to be completed in FY24 Medium-term FY22 Actual FY23 Plan Business Plan 2024 （2022-2024) Real Estate Development 28.3 ¥bil 77.0 ¥bil 160.0 ¥bil （Incl. ¥9.0bil for New TODA BLDG） （Incl. ¥30bil for New TODA BLDG） Investments Environment & fo
Slide 36: Joso Project (Agri-Science Valley Joso)
Joso Project (Agri-Science Valley Joso) Agricultural area Opening ceremony (May 26) Urban area Spa facilities (under construction) TSUTAYA BOOKSTORE JOSO IC Roadside Station Received Grand Prize/Minister of Internal Affairs and Communications Award in the Panoramic view of Joso Project “11th Platinu
Slide 37: Investment for Growth
Investment for Growth ¥190 bil of growth investment planned in the Medium-term Management Plan (FY22-FY24) Planned investment other than new TODA BUILDING Investment/ Agri-Science Valley Joso (¥bil) Investment Recovery 103.0 Construction of spa facility in progress (Joso City, Ibaraki Prefecture) (b
Slide 38: Investment in Intangible Assets
Investment in Intangible Assets Proactive technological research and development to create innovations Major technological research and development (news releases for the first half of FY2023) Investment Real-time measurement and management technology for spray thickness: Establishment of “spray nav
Slide 39: Management Priority Initiatives
Management Priority Initiatives New TODA BUILDING Overseas Business Renewable Energy Business 39
Slide 40: Priority Initiatives Roadmap
Priority Priority Initiatives Roadmap Initiatives New TODA BUILDING construction volume peaks Phase1（Medium-term Phase2 Phase3 150 th Plan 2024） Anniversary (FY) 2022 2023 2024 To 2027 To 2030 2031 New TODA Completion Monetization, technology and New building constriction BUILDING know-how deploymen
Slide 41: New TODA BUILDING: Progress of Construction
Priority New TODA BUILDING: Progress of Construction Initiatives System scaffold climbing status Full view of the construction site (Nov 8, 2023) (core wall 15F) 41
Slide 42: New TODA BUILDING: Art Program
Priority New TODA BUILDING: Art Program Initiatives Launching projects to build an ecosystem of a town through arts and culture A project to support emerging artists 1 through an open call for contemporary art Creation/ works Interaction Support for Selected works exhibited on the temporary crea
Slide 43: New TODA BUILDING: Art Program
Priority New TODA BUILDING: Art Program Initiatives Outdoor International Photography Festival Support Program for Joint project Emerging Artists Start the Future from Here “Tokyo Dialogue 2023” ▲ 4th Excellence Award-winning work exhibited on the temporary enclosure at construction site ▲”TOKYO DIA
Slide 44: Overseas Business
Priority Overseas Business Initiatives Established "Toda Asia Pacific Pte. Ltd." in Singapore with the Asia/Oceania region as the core of our overseas business Global business headquarters Japan Formulation and deployment of effective strategies Appropriate allocation of domestic resources to ov
Slide 45: Floating Offshore Wind Power Generation
Priority Floating Offshore Wind Power Generation Initiatives Efforts to develop technology through repeated demonstrations to upscale wind turbines Offshore wind power generation project off the coast of Goto City Operation start date postponed to January 2026 (initially scheduled for January 2024
Slide 46: Offshore Wind Power Generation
Priority Offshore Wind Power Generation Initiatives Six companies to jointly own self-elevating work platform (SEP) Features of SEP in possession A used SEP-equipped crane is being modified to lift 1,300 tons, making it possible to handle larger wind turbine assemblies (over 15 MW class). By tak
Slide 47: Non-financial Business Objectives
Non-financial Business Objectives 47
Slide 48: Non-financial Business Objectives
Non-financial Business Objectives FY22 FY23 FY24 Quantitative evaluation indicators Actual Forecasts Targets (Actual) E CO2 emissions Reduction rate (vs FY2020） -14.5 -29.2 -16.8 % ※ Results at the end of June Scope 1&2 Basic unit (per 100 mil yen） 13.6 13.5 11.2 t-CO2 CO2 emissions Reduction rate（v
Slide 49: CO2 Emissions (Scope 1&2)
Scope １ CO2 Emissions (Scope 1&2) Direct CO2 emissions from the use of diesel, etc. Scope ２ Indirect CO2 emissions by power plants for use of purchased electricity/heat CO2 Emissions Medium-term FY23 Forecasts SBT Targets （10,000t-CO2） Management Plan Targets vs FY20 vs FY20 vs FY20 Initiatives to r
Slide 50: Management that is Conscious of Cost of Capital and Stock Price
Management that is Conscious of Cost of Capital and Stock Price 50
Slide 51: Enhancing Our Corporate Value
Enhancing Our Corporate Value Medium- to long-term growth strategies improve stakeholder value Investment for further growth to enhance corporate value Optimal Cash capital generation structure Growth and earning power/ Capital efficiency Shareholder returns Investors 51
Slide 52: Recognition of Current Situation
Recognition of Current Situation PBR below 1x due to decline in capital efficiency (ROE) PBR (times) PBR ＝ PER × ROE Price Book-value Ratio 9.6% PBR1.0x 10.0% (Forecast) 6.1% 6.8% (Forecast) ROE 5.9% 0.80 Return On Equity 0.78 0.79 3.5% 18 19 20 21 22 23 （FY） ROE＝Net income for the fiscal year ÷ Sha
Slide 53: Estimation of Cost of Capital
Estimation of Cost of Capital Cost of shareholders' equity estimated at around 8.0%, weighted average cost of capital (WACC) at around 4.5%. Continuously aim for ROE 8.0%+ and ROIC 5.0%+ through capital efficiency-conscious management. ROE ROIC Return On Equity Return on Invested Capital （in medium-
Slide 54: Analysis of Current Situation
Analysis of Current Situation ROE enhancement requires pursuit of growth and earning power and improvement of capital efficiency Net income margin on sales Net income （Forecast） Pursuit of growth on sales 5.0% 5.0% and earning power 3.9% 3.7% 3.6% Net income 2.0% FY18 FY22 Net sales 5.0% → 2.0％ × As
Slide 55: Policy to Improve Return on Capital and Market Valuation
Policy to Improve Return on Capital and Market Valuation Aim to secure profitability in construction business, and improve capital efficiency through sales of cross-shareholdings and use of private placement funds Key points for improvement Policy and indicators Improvement Growth strategy and str
Slide 56: Internal Management using ROIC Reverse Tree
Internal Management using ROIC Reverse Tree KSF（Key Successful Factors） KPI Decomposition ROE • Selection and concentration of projects Construction orders received Net sales Orders • Understanding customer needs and improving the Operating ROIC value provided to customers Customer satisfaction inco
Slide 57: mZ4”A TODA
oO mZ4”A TODA === CORPORATION aa