Nippon Aqua Co., Ltd.TSE: 1429

Company Presentation Materials (2nd quarter FY2024/12)

Aug 9, 2024 at 7:20 AM UTC · Issued by Nippon Aqua Co., Ltd.

Business Results for the Six Months Ended June 30, 2024

August 9, 2024

Nippon Aqua Co., Ltd.

Tokyo Stock Exchange Prime Section #1429

Six months ended June 30, 2024

Financial Highlights

Net sales 13,112 Million yen

YoY (0.3 %)

Initial

forecast 13,556 Million yen

✓Single-family Homes Division: As expected, landed in a market downturn. The construction of higher-grade works has progressed more slowly than expected.

✓Buildings Division: Delays in construction due to shortages of building materials have caused shifts in the timing of revenue recognition.

Gross profit	Ordinary profit
2,906	Million yen	868	Million yen
	YoY	(1.5 %)	YoY	(38.0 %)
Initial	3,012 Million yen	Initial	960 Million yen
forecast	forecast

Six months ended June 30, 2024

Progress towards Full-year

Financial Forecast

(Million yen)	13,112	868

	42.3%	28.0%
	13,556	960
	6M forecast	6M forecast

Net Sales			Ordinary Profit
		31,005				3,100
		FY forecast				FY forecast

		FY2019	FY2020	FY2021	FY2022	FY2023

Net sales	6M	10,003	9,989	10,712	11,742	13,158
	FY	21,366	21,872	23,903	25,670	28,341

	Progress rate	46.8%	45.7%	44.8%	45.7%	46.4%

Ordinary profit	6M	720	783	335	936	1,400
	FY	1,909	1,911	1,429	2,359	2,917

	Progress rate	37.7%	41.0%	23.5%	39.7%	48.0%

Fiscal Year Ending December 2024

Efforts in the First Half and Future Outlook

Single- family Homes Division

Buildings Division

Company -wide, etc

Q1 Net sales	6.27 Bn yen		Q2 Net sales	6.84 Bn yen

✓The thermal conductivity of AQUA FOAM and AQUA FOAM LITE has changed, improving insulation performance.

✓An increase in the number of orders from key builders

✓Promotion of standardization of air tightness measurement services

✓Secured about 86% of orders for the FY2024 full-year sales forecast

✓Sales of urethane raw materials have grown in line with the expansion of the building market.

✓Increase in blowing equipment sales due to the increase in external installation work personnel

✓From the second quarter, the construction of AQUA MOEN NEO has increased.

✓Increase in non-residential renovation projects in the Waterproofing Division

✓Managed to suppress the cost of raw material purchases amid a weaker yen and higher naphtha prices

✓Mid-career hiring of internal installation work personnel is progressing smoothly

✓Strengthening of sales backed by the development of construction capabilities

✓Opening of the Miyazaki branch office at the end of May 2024.

Q3	about 8.6 Bn yen		Q4	about 9.2 Bn yen

✓Share acquisition from urethane construction contractors based on the establishment of a construction system (5% increase in the number of residential constructions)

✓Share acquisition from other insulation constructions based on the improved insulation performance of the two main products

✓Differentiation with a combination of higher grades (Insulation Class 6 and above) and high confidentiality performance

✓Cross-sell through airtightness measurement services and bundled sales of waterproofing construction

✓Share acquisition from urethane construction contractors based on the establishment of a construction system

✓Full-scale operation of AQUA MOEN NEO construction for semiconductor factories and large redevelopment projects.

✓Continued increase in sales of urethane raw materials for properties that our company cannot handle in construction

✓In the Waterproofing Division, steady progress in renovation construction proposals to leading companies representing Japan

✓Regarding procurement, taking advantage of purchasing from multiple companies, the impact of the weaker yen and higher naphtha prices is limited

✓Through media strategies (such as increased exposure in housing specialty papers), appealing the strengths of Nippon Aqua.

01
Overview of Financial Highlights for

the Six Months Ended June 30, 2024

Agenda03

Market Environment

Single-family Homes Division

Buildings Division

Waterproofing Division, etc.

Appendix

Six months ended June 30, 2024

Net Sales

(Million yen)

YoY	(45 Million yen) (0.3%)

	FY_E
FY	31,005

28,341
Q4
8,176
Q3
7,006
Q2	Q2
6,789	6,840
Q1	Q1
6,368	6,272
2023	2024

		+155
		Sales of
		urethane raw
13,156		materials	13,112

(246)	+114	+12	(111)
Single-	Buildings	Waterproofing	Product
family			sales
homes
2023			2024

Six months ended June 30, 2024

Gross Profit

(Million yen)

YoY	(217 Million yen)	(6.9%)
GPM			23.7%		22.2%
3,123			+26		(112)
			Product
			Waterproofing	sales	2,906
	(235)	+86		+18
		Sales of
	Single- Buildings
	urethane raw
	family
			materials
	homes

2023						2024

Gross profit by division

	FY2023 Q1	Q2	Q3	Q4	FY2024 Q1	Q2

Gross profit	1,457	1,666	1,734	2,066	1,447	1,459

	Single-family homes	876	866	922	1,019	733	774
	Buildings	361	450	540	610	454	443
	Waterproofing	(21)	(12)	(1)	0	2	(10)
	Sales of urethane raw materials	63	82	89	107	74	89
	Product sales	177	279	182	329	181	162

Six months ended June 30, 2024

Ordinary Profit

(Million yen)

YoY	(531 Million yen)	(38.0%)
Ordinary PM	10.6%	6.6%
1,400
	(217)
	Decrease
	in gross	(314)
	profit
	Increase
		868
		in SG&A
		(1)
		Non-
		operating
		profit and
		loss
2023			2024

✓Increase in labor costs: Increase in personnel and salaries, etc.

✓From the first quarter of 2024, we have allocated certified contractors' incentive payments.

	SG&A	Note: Due to a change in the method of calculating labor costs from the second quarter of
	2024, adjustments have been made retroactively.

			FY2023 Q1	Q2	Q3	Q4	FY2024 Q1	Q2
Gross profit		1,457	1,666	1,734	2,066	1,447	1,459

SG&A		829	913	915	1,383	1,002	1,055
	Payroll cost		432	912	1,390	2,128	557	577
	Special incentives*		-	-	-	150	2	9
	Trainee related expenses	56	62	60	89	72	93
	Travel expenses		53	66	64	66	53	58
	Rent expenses		45	46	48	50	49	55
	Depreciation expenses	39	41	41	42	41	43
Ordinary Profit		641	758	824	691	453	415

*Special incentives for certified contractors	8

71,122

(Jan 2014)

Six months ended June 30, 2024

Sensitivity to Raw Material Prices

123.8

(Jun 2015)

USD monthly average

(yen)103.9 (Jan 2014)

		101.3	106.1		103.7
		(Mar 2018)
		(Aug 2016)	112.0	(Jan 2021)
	113.4

100.0	(Apr 2015)			(Jan 2020)

Average raw material(Jan 2014)

147.2 150.0

(Oct 2022) (Nov 2023)

193.2

(Feb 2023)

141.3

(Sep 2023)

157.9

(Jun 2024)

167.9

(Jun 2024)

purchase price

Set the value of January 2014 as 100

Naphtha import CIF price

80.7

(Aug 2016)

83,988

(Apr 2022)

100

77,677

Preliminary

figures

(yen/kl)54,810 (Nov 2018)

58,901

(Aug 2023)

Sensitivity to the US dollar 0.831
Sensitivity to naphtha	0.692	27,751
Estimated period:		(Mar 2016)				18,575
From January 2014 to June 2024
					(Jun 2020)

2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024

It is not a transition under the same conditions due to an increase in the products handled and the purchase volume.

(Jun 2024)

Source: Mizuho Bank (Foreign Exchange Official Market Rate), Ministry of Finance (Trade Statistics by Commodity)

Number of internal installation work personnel (Nippon Aqua)

Technical Intern Trainees are entitled to a temporary return to their home country under the Technical Intern Training Act.

					277
				220
	196				88

Technical intern	168	156
trainees	50
			84
		40

			57
internal installation
work personnel
	146	128	99	136	189
	2020	2021	2022	2023	Jun
					2024

Nippon Aqua's Initiatives

Construction

Capability Trends

The reasons people are drawn to Nippon Aqua

High compensation and	Complete
favorable conditions	weekends off
Listed on the TSE	Department
Prime Market	responsible for training
Proximity of workplace	A predominantly
and residence	young workforce

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