Horiba, Ltd. · TSE:6856
Horiba — Morgan Stanley MUFG Kyoto Trip 2018
47 slides from Horiba's conference presentation, Jun 14, 2018
Slide 1: Morgan Stanley MUFG Kyoto Trip 2018
Morgan Stanley MUFG Kyoto Trip 2018 Masao Okawa Managing Director HORIBA, Ltd. June 14-15, 2018 © 2018 HORIBA, Ltd. All rights reserved. 1
Slide 2: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 2
Slide 3: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 3
Slide 4: Review of 2017
Review of 2017 Start of the Trump administration in US UK’s announcement to leave EU ⇨ General election in UK External Presidential election in France, general election in Germany Events Booming semiconductor market ⇨ Innovation such as IoT, AI, and autonomous vehicle operation Automotive
Slide 5: Summary of 2017 Results
Summary of 2017 Results Renewed record-highs in sales, profit and dividend; 11.5% ROE Increase in sales and profit in the Automotive Test Systems and Semiconductor P&L segments Total assets were 265.9bn yen, up 26.2bn yen from the end of 2016, due to capital spending B/S Interest-bearing debt was
Slide 6: 2017 Results
2017 Results (Billions of Yen) 2016 2017 Forecast vs. vs. Results Results ： Record-high (as of Dec. 19, 2017) 2016 Forecast Sales 170.0 192.0 195.3 +25.3 +3.3 Operating Profit 18.4 24.5 26.8 +8.3 +2.3 O. P. % 10.9% 12.8% 13.7% +2.8p +1.0p Ordinary Profit 18.2 23.5 26.6 +8.3 +3.1 Net Income attributa
Slide 7: 2017 Results by Segment
2017 Results by Segment (Billions of Yen) Sales Operating profit 2016 2017 2016 2017 Forecast vs. vs. Forecast vs. vs. ： Record-high Results (as of Results 2016 Forecast Results (as of Results 2016 Forecast Dec. 19, 2017) Dec. 19, 2017) Auto 62.2 72.0 73.3 +11.1 +1.3 3.5 6.7 7.6 +4.1 +0.9 P&E 16.7 1
Slide 8: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 8
Slide 9: Market Assumptions for 2018
Market Assumptions for 2018 Strong willingness to invest by the global automotive sector due to tighter emission Auto regulations in Japan & Asia and innovation for electrification & autonomous driving Recovery in investment by the oil industry due to higher oil prices P&E Tighter environmental regu
Slide 10: Exchange rate
Exchange rate (Yen) 2016 2017 2018 Results Results Forecast Forecast vs 2017 (as of Feb. 13) (as of May 9) USD 108.78 112.16 110 110 -2.16 EUR 120.26 126.70 130 130 +3.30 1 yen O.P. sensitivity for 2018 Forecast (Yen appreciation) USD 0.21 billion yen EUR 0.02 billion yen © 2018 HORIBA, Ltd. All rig
Slide 11: 2018 Forecast
2018 Forecast (Billions of Yen) 2016 2017 2018 ： Record-high Results Results Forecast Forecast vs. 2017 (as of Feb. 13) (as of May 9) Sales 170.0 195.3 210.0 218.0 +22.6 Operating profit 18.4 26.8 29.0 34.0 +7.1 O.P. % 10.9% 13.7% 13.8% 15.6% +1.9p Ordinary profit 18.2 26.6 28.4 33.4 +6.7 Net Income
Slide 12: 2018 Forecast by Segment
2018 Forecast by Segment (Billions of Yen) Sales O.P. 2017 2018 2017 2018 vs. vs. ： Record-high Forecast Forecast 2017 Forecast Forecast 2017 Results Results (as of Feb. 13) (as of May 9) (as of Feb. 13) (as of May 9) Auto 73.3 79.0 79.0 +5.6 7.6 8.0 8.0 +0.3 P&E 17.4 19.0 19.0 +1.5 1.0 1.4 1.4 +0.3
Slide 13: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 13
Slide 14: NEXT Slide
NEXT Slide © 2018 HORIBA, Ltd. All rights reserved. 14
Slide 15: Auto 2017 Results and 2018 Forecast
Auto 2017 Results and 2018 Forecast (Billions of yen) 2017 Results ＜Auto Sales Breakdown＞ 79.0 *1 ＋ EMS Sales increase due to tighter emission regulations 73.3 10.5 ECT 65.4 62.2 8.0 1.5 ＋ MCT*2 Recovery in capital spending by automakers 1.6 4.2 7.2 1.6 18.0 ITS *4 1.6 18.3 MCT ＋ - ECT*3 Increase in
Slide 16: The next-generation emission regulations / EVs generating activity
Auto The next-generation emission regulations EVs generating activity (Billions of yen) Status of next-gen emission regulations Activity derived from EVs Test systems Regulation EU Japan Provide solutions from single systems(powertrain, motor) WLTP1 Oct. 2018(Plan) to comprehensive systems, incl. ve
Slide 17: Establishment of battery development facility for electrified vehicles
Establishment of battery development facility Auto for electrified vehicles Introduction of advanced evaluation concept to connect Real and Virtual Battery development facility for electrified vehicles (HORIBA BIWAKO E-HARBOR) Enable powertrain and vehicle testing with battery and fuel cell connec
Slide 18: Contributing to R&D for autonomous driving vehicles
Auto Contributing to R&D for autonomous driving vehicles Business in UK Action for business globalization Participate in the UK government project Event at the British Embassy Tokyo Autonomous driving “UK Autodrive” Automakers and UK government VIPs attended Host demonstration experiment HOR
Slide 19: P&E 2017 Results and 2018 Forecast
P&E 2017 Results and 2018 Forecast (Billions of yen) 2017 Results <Sales by Business> Japan: Replacement demand 19.0 ＋ Stack gas analyzers China: Demand increase, driven by 16.7 16.7 17.4 1.3 Other 1.1 1.4 1.9 VOC regulation 1.2 0.9 1.5 1.9 2.7 Process 2.5 2.4 2.1 Slow sales in the process measureme
Slide 20: Business expansion in emerging markets
P&E Business expansion in emerging markets Gas Water Launch new products in developing countries Sales increase by coping with local regulations (Tunable Laser Hydrogen Chloride Analyzer “TX-100”) Feature: No need of periodic replacement of parts; S. Korea Wastewater regulation change Easy calibrati
Slide 21: Medical 2017 Results and 2018 Forecast
Medical 2017 Results and 2018 Forecast (Billions of yen) 2017 Results New testing systems ＋ - Increase in expense in promoting hematology and CRP analyzers in Japan - Sales drop in South America Solution (Launch in 2017) ＋ Increase in expense for US FDA approval and - sales promotion of new products
Slide 22: Medical Initiatives for business expansion
Medical Initiatives for business expansion Long-term agreement with Siemens Healthineers New product “Yumizen H630CRP” with combined technology Contract signed: Oct. 2017 of Japan and France Contents: Supply middle-large hematology analyzer to 5 Diff. white cell diagnosis(France) Siemens, which pr
Slide 23: Semi 2017 Results and 2018 Forecast
Semi 2017 Results and 2018 Forecast (Billions of yen) 2017 Results MFC-related topics in Semi. market ＋ Record-high sales and O.P. Increase in storage for data centers High Record-high production volume in Increase throughput of Big Data ＋ demand for Mass Flow Controllers (MFC) related to AI and IoT
Slide 24: Establish a stable delivery system / Enhance sales and service capabilities
Establish a stable delivery system Semi Enhance sales and service capabilities Completed expansion of Aso factory Enhance global sales and service bases Expansion to satisfy further increase in demand Korea: new head office of HORIBA STEC KOREA, Ltd. Timely delivery of high-quality products Starte
Slide 25: Scientific 2017 Results and 2018 Forecast
Scientific 2017 Results and 2018 Forecast (Billions of yen) 2017 Results Diffraction gratings Core component of - Sluggish sales to universities in Japan, US and EU optical products ⇔ ＋ Strong sales in China Global state of the art technology ＋ Increase in R&D expenses for new products Develop
Slide 26: Initiatives taken in growth markets
New product launch in new markets Scientific Initiatives taken in growth markets New product “DUETTA” Raman spectrometer: Expand business for the Bio-Life science market in China and apply new technology Fluorescence and absorbance spectrometer Raman/Fluorescence Technology Symposium For R&D of
Slide 27: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 27
Slide 28: Shareholder Return
Shareholder Return Basic policy - Dividend payment + Share buyback = 30% of Consolidated net profit to be targeted - Remaining earnings are retained internally for strategic investment (i.e. facilities, M&A) Per-share dividend (from 2008 to 2018 Forecast 116 120 Dividends per share and Share buyback
Slide 29: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 29
Slide 30: Change in Representative Directors
Change in Representative Directors Name New title from Jan.1, 2018 Previous title Atsushi Horiba Chairman & Group CEO Chairman, President & CEO Juichi Saito Executive Vice Chairman & Group COO Executive Vice President Dr. Masayuki Adachi President & COO Senior Managing Director Takashi Nagano Direct
Slide 31: Initiatives for workstyle innovation matching the workfront
Initiatives for workstyle innovation matching the workfront “Stained Glass Project” initiatives STEP １ Start from promoting women’s Reviews of activities in 2017 2014 empowerment “KAERU” Meeting 34 meetings STEP 2 Start Workstyle Innovation workshop Get off early. (340 participants) from 2015 Theme:
Slide 32: HORIBA Premium Value introduction
“HORIBA Premium Value” introduction Adopt a budget for a unique KPI to measure Approach by each division capital efficiency “Capital cost” is deducted from “Operating profit” HORIBA Premium Value Operating Profit Capital Cost Invested capital × Internal capital cost ratio Penetrate the concept to
Slide 33: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 33
Slide 34: Trend of Market capitalization
Trend of Market capitalization (Billions of yen) 407BJPY 132BJPY on May 14th 2018 in Jan. 2008 (Record-high) 52BJPY in Dec. 2008 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 © 2018 HORIBA, Ltd. All rights reserved. 34
Slide 35: Operating profit Analysis (vs 2016)
Operating profit Analysis (vs 2016) (Billions of Yen) 2016 2017 Jan. – Dec. Jan. – Dec. Increase Cost of Exchange Exchange Increase Increase Goods Impact for Impact for Increase Other 18.49 Sales sales Gross profit Expenses R&D cost expenses 26.83 +21.13 -9.85 +2.25 -0.94 -0.80 -3.44 Increase Gross
Slide 36: Impact of Fluctuation in Foreign exchange
Impact of Fluctuation in Foreign exchange (Billions of Yen) Exchange rate impact (2017 Results) Exchange rate impact Sales +4.17bn yen O.P. +1.30bn yen for 2018 Forecast Sales Operating profit 1 yen impact of Sales and O.P. (Yen appreciation) Total USD EUR Total USD EUR Sales Auto +1.26 +0.32 +0.96
Slide 37: Capital Investment, Depreciation, R&D
Capital Investment, Depreciation, R&D (Billions of Yen) 2016 2017 2018 Forecast vs vs vs Results Results Forecast @12/19 2016 Forecast 2017 Capital Investment 13.7 15.0 11.6 -2.1 -3.4 16.0 +4.4 Depreciation 6.8 7.2 7.5 +0.7 +0.3 7.5 +0.0 R&D 12.9 14.0 13.9 +1.0 -0.1 15.5 +1.6 (To net sales) 7.6% 7.4
Slide 38: Consolidated Cash Flows
Consolidated Cash Flows (Billions of Yen) 2017 2016 Variation Cash flows from operating activities +28.28 +15.87 +12.41 Cash flows from investing activities -13.16 -10.42 -2.73 Cash flows from financing activities -9.04 -0.45 -8.59 Cash and cash equivalents at end of year +58.33 +51.94 +6.39 Free ca
Slide 39: Cash Balance
Cash Balance (Billions of Yen) Total Loan Balance 46.7 (Consolidated basis, each end of year) 44.7 42.0 28.0 Bond Bonds Bonds redemption 15.0 Bonds In 2020 15.0 15.0 Cash※ Cash※ Cash※ Cash※ Borrowed Bonds Long Long 51.1 47.8 51.9 58.3 15.0 16,8 19,2 Long from JBIC 18,7 Long 2.2 15.1 bn yen Short Sho
Slide 40: Contents
Contents 2017 Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 40
Slide 41: Corporate Profile
Corporate Profile Head Office Kyoto, Japan - Corporate motto - Foundation 1945 Incorporation 1953 Fiscal Year End December 31 Atsushi Horiba Chairman & Group CEO To have interest and pride in our work to enjoy our lives © 2018 HORIBA, Ltd. All rights reserved. 41
Slide 42: Business Segments
Business Segments ・Emission Measurement Systems ・Test Automation Systems Automotive Test Systems ・Intelligent Transport Systems ・Engineering Consultancy & Testing(HORIBA MIRA, Ltd) ・Environmental & Process Systems ・Environmental Radiation Monitor Process & Environmental ・Environmental Regulation & P
Slide 43: Business Segments
Business Segments Sales Breakdown by Segment Automotive Test Systems Sales: 195.3 B.JPY 13% Scientific Process & Environmental 26.1 38% （231） Automotive 73.3 Semicon （649） Medical 27% 53.3 （471） Medical P&E 25.1 17.4 （222） （154） Semiconductor 9% 13% Scientific ( ) =Segment Sales in MUSD % = Segment
Slide 44: Market share
Market share Global Domestic Automatic Blood Cell Counter Emission Measurement Systems Stack Gas Analyzers plus CRP 80% 20% 100% (As of December 31, 2015) Mass Flow Controllers Raman Spectrophotometers Gratings 57% 30% 35% ※Market shares quoted are estimates by HORIBA. © 2018 HORIBA, Ltd. All rights
Slide 45: HORIBA Worldwide
HORIBA Worldwide Sales of FY2017 : 195.3 BJPY (1,729 MUSD) Sales Ratio by Region The Number of Group Companies by region EU Japan (As of December 31, 2017) 21% 33% Americas Americas 9 17% Asia Europe 22 29% Asia 17 (4 in Japan, including HORIBA, Ltd.) Total 48 © 2018 HORIBA, Ltd. All rights reserved
Slide 46: Employees by Region
Employees by Region Americas Other Europe 2% Total Number of Employees 2% U.S.A 7,399 11% Germany Japan Total Asia : 4,041 8% Japan 54% 38% UK 38% Total Europe： 2,414 11% France 33% Other 12% Asia Total Americas： 944 14%16% 13% (As of December 31, 2017) © 2018 HORIBA, Ltd. All rights reserved. 46
Slide 47: © 2018 HORIBA, Ltd. All rights reserved.
© 2018 HORIBA, Ltd. All rights reserved. 47