Presentation transcript of Consolidated Financial Results for the Year Ended March 31, 2025（3,095KB）

Q2 Financial Results Briefing for the Fiscal Year Ending September 2025 May 27, 2025

(Total: 58 minutes, Presentation: 32 minutes, Q&A: 26 minutes)

Kota Aoki Executive Vice President

Yuichi Yamamoto Director and General Manager,

Administration Division

Mitsuyuki Oodaira Tokai Tokyo Intelligence Laboratory Ichiro Kojima Bunseki Koho Laboratory

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or whose questions were read by moderator/company representatives.

To start, let me introduce today's speakers. We have with us Executive Vice President, Kota Aoki, and Director and General Manager of the Administration Division, Yuichi Yamamoto. That concludes the introductions.

We plan to end the session at 5:00 PM.

For those participating via Zoom webinar, please note that you can download the presentation materials by clicking the URL provided in the email.

Now, we will begin the explanation of our financial results. Director and General Manager of the Administration Division, Mr. Yamamoto, will provide the explanation.

Let me first outline today's presentation.

I will explain the performance for the interim period and the full-year forecast for the fiscal year ending September 2025. Following that, Executive Vice President Aoki will speak on market information and our growth strategy.

Now, let me begin with the interim financial results for the fiscal year ending September 2025. Here are the key highlights from our interim results.

Although the global economy faced concerns over a slowdown due to prolonged geopolitical risks and uncertain US trade policies, demand for molding machines, which are our core business, remained firm and contributed to driving our results.

As a result, we recorded JPY22.9 billion in orders, JPY21.9 billion in sales, JPY5.4 billion in operating profit, and JPY4.0 billion in net income. Each of these figures marked a record high for H1.

Orders increased by 11.2% YoY, supported not only by strong demand for our mainstay small- and medium-sized machines, but also steady performance in molds and parts. Sales rose 31.6% YoY, driven by shipments of large orders received in the previous fiscal year.

Consequently, operating profit grew 59.6% YoY, with an operating margin of 25%, reflecting a high level of profitability.

Ordinary profit also increased by 65.4% YoY.

As a result, net income attributable to owners of the parent was JPY4.0 billion, a 54% increase YoY, also marking a record high for H1.

Now, let me touch on the factors behind the changes in operating profit. The main driver of the increase was the higher sales volume.

As for exchange rates, while the yen weakened against the US dollar, currencies in South America strengthened against the yen, and the overall impact of foreign exchange was largely offset.

Additionally, R&D expenses increased in H1 as we accelerated new product development in preparation for an exhibition scheduled for October.

Next, I will explain the status of orders by segment.

In molding machines, we saw a reactionary decline due to a large domestic order for the PF36 model last year. However, this was offset by strong sales of our mainstay small- and medium-sized machines.

Molds and parts continued to perform well, each marking a record high for H1.

By region, orders remained strong across all regions except East Asia, where we saw a reactionary decline due

to last year's large PF36 order.

Next, I will explain sales by segment.

By product, sales of molding machines saw a significant increase of 57% YoY, driven by shipments of large machines for the domestic market. Molds and parts also performed well, and sales for all product categories reached record highs.

By region, East Asia experienced a substantial increase thanks to domestic shipments of large machines. Other regions also performed strongly, and all regions posted record-high sales. Notably, South and West Asia were led by strong results in India.

Now, let me turn to the sales trend by category within molding machines.

In H1, the sales ratio of large machines increased due to PF36 sales in Japan. However, when looking at the full fiscal year, we expect no major deviation from historical trends, with a ratio of large to small- and medium-sized machines remaining around 1:3.

Next is the regional sales composition.

There has been no significant change in the ratio between the Americas/Europe and Asia, with each accounting for 50%, thereby maintaining a well-balanced regional sales structure.

Now, let me explain the cash flow situation.

With the strong business performance, EBITDA increased, covering the rise in working capital, capital expenditures, and dividend payments. As a result, cash and cash equivalents increased by JPY1.587 billion.

Regarding capital expenditures, depreciation, and R&D expenses.

Capital investment is progressing smoothly in line with the plan, with additional investment in machine tools at the India plant to expand production in response to strong orders.

As for R&D expenses, we have used JPY460 million out of the annual budget of JPY800 million, and the development of new models is progressing steadily.

Next, I would like to discuss our full-year earnings forecast for the fiscal year ending September 2025.

As for the outlook for the full year, we have achieved solid progress in H1, with sales reaching 53% of the full-year plan and operating profit reaching 61%. However, due to significant uncertainties in the global economy, we have decided to maintain our previous forecast for now, with sales projected at JPY41.0 billion and operating profit at JPY9.0 billion.

Regarding US tariffs, which Mr. Aoki will address shortly, we currently consider the impact to be minimal.

Today, I will continue by discussing market information and our growth strategy. I plan to spend about 20 minutes on this section.

Now then, please turn to page 16 of the presentation. Here, I will talk about our response to the US tariff policy.

At this point, we believe the impact is minimal.

Let me start with our basic policy. For the portion of increased costs resulting from higher tariffs, we intend to respond through price adjustments. This approach will help us maintain earnings stability.

Next, regarding the impact on demand, we do not anticipate any significant direct effects. This is because demand for plastic containers, which are daily necessities, tends to remain stable. Furthermore, there are no competing machinery manufacturers operating within the US, which means we believe our competitive advantage-including our service infrastructure-will remain intact.

Lastly, regarding business opportunities, we see potential for increased consumption of daily necessities and condiments as people stay home more due to rising prices. Additionally, a trend toward reshoring plastic container production within the US could lead to increased capital investment. Moreover, given the ongoing shortage of technical personnel in the market, we expect even greater demand for our Technical Support Center (TSC) services.

Based on these factors, while there may be a temporary lull in capital investment, we see little risk in the medium term.

Our competitive edge in both products and services remains unchanged, and we expect continued steady performance in the Americas segment, including North, Central, and South America.

Now, let me go over the market summary.

Starting with North America. As mentioned earlier, the impact of US tariffs is minor, and steady demand is expected to continue.

Next, in Latin America, while the Mexican market is showing some weakness due to tariff concerns, we are shifting our sales focus to countries in the region that are less affected by tariffs in order to maintain balance.

In Europe, conditions remain favorable. We are seeing positive trends in capital investment, driven by in-house production among end-users and steady demand for containers. Furthermore, the service enhancements provided by our TSC in Europe, which began partial operation this year, are beginning to contribute to increased orders for molds.

India also continues to perform well. Demand remains high and stable, supported by market expansion and diversification in container needs.

Southeast Asia is showing signs of recovery. Mold demand is particularly strong, and we expect machinery demand to expand as well. There is ongoing demand in this region for polyethylene containers produced with our machines.

In the Middle East, despite geopolitical risks, demand remains stable. We are also strengthening our outreach to the West African market, where there appears to be latent demand for daily necessities and cosmetics.

Lastly, in East Asia-particularly the Japanese domestic market-conditions remain steady. In the cosmetics segment, small and midsize manufacturers are actively investing in molds. While PF36 demand has

temporarily settled following last year's surge, interest from new customers is growing, which is further

strengthening our market presence.

The Chinese market remains sluggish, but we are seeking new business opportunities through participation in trade shows and proactive sales proposals.

That concludes our summary of key markets.

We will continue to monitor conditions in each region closely and respond with timely and appropriate measures.

Now, I would like to discuss our growth strategy.

Please take a look at this chart. It shows the trends in our sales and profits over the past 20 years. Over this period, our sales have roughly tripled, while profits have grown sixfold.

One of the major drivers of this growth is, of course, our strong technological foundation. However, in addition to our technological strength, we have also expanded our production capacity by establishing new factories in both India and Japan during this 20-year span.

Furthermore, growth over the past five to six years has been driven by the introduction of a new technology called Zero Cooling, the strengthening of our service infrastructure, and, more recently, the expansion of PF36 sales.

As a result, we have seen sharp and steady growth in both sales and profit in recent years.

Looking ahead, our growth strategy comprises three main pillars.

The first is to ensure stable growth of the ASB Series in the non-beverage segment, which is both our existing market and a core area of expertise.

The second is to expand the scale of sales of the PF Series in the beverage segment, which we position as a strategic area.

The third is to break into new markets through entry into the polyethylene container segment.

As this overview shows, we intend to promote a three-pronged growth strategy: stable growth through the ASB Series, expansion of sales through the PF Series, and new market development through the polyethylene container market.

Now, focusing on the first pillar-ensuring stable growth through the ASB Series-there are two key initiatives.

The first of these is leveraging our Zero Cooling technology. This is a revolutionary molding method that enhances productivity and improves container quality. By strategically deploying production and sales using patents already secured in major countries, we aim to ensure ongoing, stable growth.

We believe Zero Cooling represents a significant technological breakthrough within our industry. To give some context, after the development and commercialization of Zero Cooling began in 2019, our annual growth rate in mold sales increased from 6% to 9%. Additionally, as you can see in the pink-colored graph, 56% of our new mold orders are now for Zero Cooling mold specifications. This demonstrates that our mold business has grown substantially thanks to Zero Cooling.

On the right side of the chart, there's another interesting data set. It compares our growth rate with those of our competitors since the introduction of Zero Cooling. Over the past five years, our sales growth rate has reached 141%, while that of our competitors is 109%. This suggests that the adoption of Zero Cooling has led to a significant divergence in growth. We believe this indicates that we are steadily capturing market share from our competitors, which in turn is expanding the market.

Going forward, we plan to further increase the proportion of Zero Cooling molds in our sales mix, with the aim of expanding our market share relative to competitors.

Next, I will discuss the second initiative for ensuring stable growth of the ASB Series. This is our DX (digital transformation) strategy.

Recently, we developed a new controller. We are currently working to increase its installation rate in the ASB Series. By raising this rate, we can enhance the competitiveness of the machines themselves, and therefore we are promoting this as a matter of urgency.

Now, let me share the current situation. If you look at the graph on the left, you'll see that two years ago, when the Vision1 initiative began, only 3% of new machines were equipped with the new controller. Today, Vision1 is installed in 53% of newly shipped machines.

In particular, as shown in the graph on the right, adoption rates are especially high in the Americas and Europe, where there is strong interest in and understanding of digital transformation. We will continue to push for greater adoption of Vision1.

As with Zero Cooling, we intend to use both of these improvements to drive stable growth in the ASB Series.

Moving on, let's discuss the second pillar of our growth strategy: expanding the scale of sales with PF36.

PF36 was developed to establish a strong presence in the beverage market. Over the past four to five years, it has gained significant popularity in the Japanese market and has secured a considerable number of orders. Starting last year, we began efforts to expand PF36 overseas.

However, the results so far have not been as strong as we had hoped. Therefore, we plan to accelerate these efforts and promote the message that ASB is also a player in the beverage machinery market.

If you look at the chart in the center, you'll see that PF36 has thus far been sold exclusively in Japan, with annual sales of roughly 10 to nearly 20 units. Our medium-term target is to build a global market capable of absorbing more than 30 units per year.

To achieve this, we first need to address what's lacking overseas. One of the main issues is that our presence in the beverage segment is still relatively weak. While ASB is well known for the ASB Series, our recognition in beverage machinery is low. To change that, we are planning to raise the profile of PF36 through extensive participation in overseas exhibitions.

In terms of our exhibition schedule, next month we will present PF36 at a major conference in India. Then, in September and October of this year, we will exhibit at two major trade shows in Germany. The September exhibition is the world's largest beverage trade fair, and in October, as many of you may know, we will participate in K, the world's largest plastics trade fair. At both events, we will exhibit and demonstrate PF36.

Additionally, in February next year, we plan to exhibit PF36 at PLASTINDIA, the largest plastics trade show in India. As I mentioned earlier, we intend to use these opportunities to raise PF36's profile and drive overseas sales.

I'd also like to share some further information. For us, the most important exhibition will be "K 2025" this October. Held every three years, it is the industry's biggest event. This year, we plan to exhibit four machines. Of those, two will specifically target the beverage market.

One of these is PF36, as mentioned. The other is another key highlight: a preform molding machine for beverage applications, in the two-stage molding category.

As for this preform molding machine, while we previously had one in our lineup, it lacked competitiveness. Now, we have developed a new mechanism that offers higher productivity and is expected to deliver better returns on investment. In the medium term, we are aiming to build a business that captures a multi-billion-yen market in preform molding machines.

In short, we are planning to expand our sales scale through both PF36 and the PM90 preform molding machine.

Next, I will discuss our third growth strategy, which involves pioneering a new market through polyethylene containers.

The polyethylene container market actually represents around 30% of the global plastic container market, making it one of the major plastic materials in use. At ASB, we have been focusing our R&D efforts in this area, and as a result, both inquiries and orders for molds have been increasing.

If you look at the graph on the left, you'll see that inquiries related to polyethylene molds accounted for only about 1% in the year 2000. Today, that figure has risen to 4%. Of course, inquiries don't translate directly into orders, but if you refer to the table on the right-which shows the number of polyethylene mold orders- you'll see a clear upward trend from 2016 to 2024. I believe this trend will continue going forward.

That said, in terms of how much we're actually capturing from this market, currently only about 1% of all our mold orders are for polyethylene. In that sense, developing this market will still take some time.

However, as I mentioned earlier, this is a very large market, and we intend to seize that opportunity and continue developing this new business area.

Let me now touch on another area of our growth strategy-one that we've been communicating consistently: the continued expansion of our parts and services business. We believe this business holds more market value than we had initially expected. Since the full-scale launch of our Technical Support Center (TSC) in the US in 2020, the parts and services business in North America has experienced significant growth.

Building on that experience, we launched a new TSC in Germany this fiscal year, and we are also in the process of preparing one in Mexico. By establishing service hubs in key regions, we aim to strengthen our global parts and services operations, which we see as a foundation for stable growth.

If you look at the chart below, it shows the order value and growth rate of our parts and services business over the past five years. Compared to five years ago, the business has grown by 179%.

Focusing specifically on the US, where the TSC initiative began, the growth rate is 260%. While part of this increase is influenced by exchange rate effects, even after accounting for that, we believe the growth is still substantial.

We intend to continue expanding our parts and services business and position it as another pillar of stable growth.

Bringing together all the growth strategies I've explained so far, our vision for future growth is to achieve

JPY50 billion in sales by our 50th anniversary.

ASB will celebrate its 50th anniversary in the fiscal year ending September 2028. As a milestone for that year, we aim to reach JPY50 billion in sales.

To achieve this, as indicated on the right side of the slide, we will continue to pursue stable growth through the ASB Series, scale expansion through the PF Series, and new market development through polyethylene containers.

Finally, let me speak about our initiatives to enhance corporate value.

We are working to implement management practices that are conscious of capital costs and our stock price. Specifically, we aim to improve ROE by enhancing capital efficiency, while also stabilizing share price volatility and reducing capital costs.

To improve ROE, we will focus on expanding profits, enhancing shareholder returns, and reducing inventory levels. To reduce capital costs, we plan to strengthen communication with shareholders and increase the number of individual shareholders.

That concludes my presentation.

We sincerely hope you will continue to follow the sustainable growth and transformation of Nissei ASB Machine Co., Ltd. We believe that what we build together with you is our future.

Thank you very much for your attention today.

We'll start with questions from the floor. For those participating via Zoom webinar, please either click the raise hand icon or enter your company name and your name in the Q&A box to submit a question.

Please note, due to time constraints, we may not be able to address all questions. Thank you for your understanding.

Now, if anyone in the room has a question, please raise your hand. Okay, we have someone-please bring them the microphone.

First, regarding your efforts to build presence in a new market through preform molding machines-could you please elaborate on your competitive advantages in preform molding compared to other companies? That's my first question.

Regarding the competitive advantages of the new preform molding machine we've developed, first of all, compared to European-made preform molding machines, ours are more affordable. Price-that's one clear advantage.

Another significant benefit is in the machine configuration. Standard preform molding machines are typically horizontal injection molding machines, which means the preforms are formed horizontally. That setup can lead to problems with longer preforms-they may sag, or if they're not cooled properly, they may become deformed.

By contrast, the preform molding machine we've developed is vertical in orientation, which makes it much less likely for the preforms to become distorted. Especially for certain types of preform shapes, it's easier to ensure quality.

That said, as I mentioned earlier, the biggest advantage is price. A preform molding system typically consists of three major components-the molding machine, the mold, and the hot runner-all of which are generally quite expensive. Since we produce all of these in-house, we are able to manufacture the system at a significantly lower cost. That's a key strength of ours.

Just as a follow-up, would it be fair to say that your target for the PM90 is the kind of customer you can't quite

reach with the PF36-like major beverage manufacturers, for instance?

Many of our customers don't actually use our machines for everything-they often use two-stage systems. For blow molding, they need preforms. Some buy their preforms from external suppliers, while others own

preform molding machines themselves. Quite a few customers have asked us, "Does ASB offer preform molding machines?"

We did actually have a preform molding machine before, but honestly, it wasn't all that competitive. This new machine, however, uses a new mechanism that greatly improves productivity, and because of that, we believe we can now confidently recommend it to customers. It's a preform molding machine we're proud to promote.

My second question is regarding what's shown on page 27 of the materials-your mid-term target to reach JPY50 billion in sales by fiscal 2028. I'd like to understand your profit level assumptions around that. My impression is that you've already completed major capital investments, especially in India, so there won't be much in the way of new capex. As capacity utilization increases, profitability should also rise accordingly. Is that the kind of image we should have?

Yes, if we're talking about going beyond JPY50 billion, then we might need to consider building another factory, maybe even two more.

Also, in our case, as sales increase, costs don't increase proportionately. Our gross margin is quite high, we don't expect that increased sales would cause our profitability to fall.

If there are any further questions from the floor, please raise your hand. Any questions from the audience? If you have one, please raise your hand.

We'll now move to questions from the Zoom webinar. First, we have a live audio question.

First, I'd like to revisit your JPY50 billion sales goal. Is there a regional breakdown for that figure? For example, how much from each market?

Even without specific figures, in terms of growth potential, looking at the market summary on page 17, is it fair to assume that growth will come mainly from the US and India, while China and Japan might stagnate?

Also, as I mentioned earlier, our new preform molding machine will debut at the K trade fair this year, and we think it could begin contributing to sales from next year or the year after. The regions where we expect these machines to sell are the Middle East and India. In fact, we believe India could become a very large market for PM units. On top of organic growth, we also see regional growth contributions from PM.

Also, I don't need detailed data or anything like that, but if we assume you're aiming for JPY50 billion in three years, then a 6% to 7% annual growth rate would get you there. This might be oversimplifying-but even without factoring in new products, wouldn't continuing on your current growth trajectory be enough to reach that level? Or is that too optimistic of an assumption?

One more question-it may fall under the broader impact of US trade policy under the Trump administration, but I'd like to ask about cost considerations. Suppose your customers use your equipment to manufacture plastic containers in the US, versus using your machines in Mexico or another region and then importing those containers into the US-there would be some tariffs involved. When it comes to the cost difference or how that's being evaluated, should we assume that customers are still quite undecided? Or is the understanding more like, "In the end, it'll probably be cheaper to produce in the US, this will eventually drive more sales in the American market"? I realize this may be more about your customers than about ASB directly, but as an equipment manufacturer, how are you thinking about this cost differential and how are you presenting that to customers?

That's a very difficult question to answer, to be honest. The thing is, we don't yet have definitive numbers that say, "This is the way it's going to go." If such numbers existed, we could run proper cost studies and say, "Yes, this option is cheaper." At the moment, the information is constantly changing.

As I mentioned earlier, the Mexican market is currently weakening. We've spoken with customers in Mexico as well, and they're saying they don't feel ready to invest right now. Until there's some clarity-like, "How much exactly will the tariffs be?"-they can't move forward. There's a sense that by July, things may become clearer. At that point, I think we'll start re-evaluating again, doing the cost studies properly. That's how we're looking at it.

around 10%, I think importing from Mexico would still be more advantageous.

The reality is that in the US, there's a serious shortage of skilled engineers, and labor costs are extremely high. If you're really talking about restarting production in the US, the costs would be quite significant. To offset

those, I don't think a 10% difference is enough. That's my impression-that even with tariffs, Mexican production might still make more economic sense.

We'll now move on to the next question.

I also have a question regarding the PM90. When it comes to cold preform injection machines, overseas manufacturers have already taken the lead and hold a significant share of the market. I understand your strategy is to compete on pricing and differentiate based on the vertical versus horizontal configuration. But on the productivity side-specifically, how many units can be produced per cavity-what kind of production volume are you able to achieve? That's my first question.

The second question is about your target markets. You mentioned earlier that you're focusing on the Middle East and India. Could you elaborate a bit more on why you're specifically targeting those two regions?

However, when you look at it from a cost-per-unit basis, there are cases where our machine actually comes out cheaper. Also, not all customers need high-volume preform machines. Especially in places like the Middle East and India, there's stronger demand for small- to medium-sized preform molding machines. That's why we believe there's business potential in those markets.

Another point is that we intend to move into full-scale production in India. We already have a large factory there, and since we manufacture machines locally, customers see a strong appeal in being able to buy preform molding machines from a local source, with local service support. Based on our track record, a localized "made and consumed in-region" model works very well, so we have high expectations for India.

If I understand correctly, your strategy isn't to go head-to-head with companies like-well, a certain leading company that's already established in high-volume machines-but instead to carve out a niche in markets like India and the Middle East, which require a different scale of equipment. Is that right?

One more question. Regarding expected profitability for the PM90-how does it compare to your existing 1-step or 1.5-step machines?

With the PM90, you'll initially launch it in Japan, but ultimately shift to production in India for cost

competitiveness. Do you have a target timeframe for that transition?

We've designed it in a way that makes the transfer to India relatively easy. We expect the transition to be fairly smooth.

One final question-regarding your outlook for orders in H2. I assume H2 has already begun, and you likely have some pipeline visibility. Based on what you're seeing now, how do you feel about the order intake for H2?

We don't disclose order forecasts, but as Mr. Aoki mentioned earlier, the market environment, with a few exceptions, remains stable to favorable. Based on that, we believe we'll be able to maintain order volumes at a similar level to H1.

We'll now move on to questions submitted through the Q&A function. This one is from Mr. Kojima at Bunseki

Koho Laboratory.

As for the source of funds, naturally, we intend to generate the necessary profit through cost reductions outside of labor costs, and also through some price increases on selected products. That's how we plan to support the wage hikes.

This concludes Nissei ASB Machine's financial results briefing for Q2 of the fiscal year ending September 2025.

Thank you all for taking the time to join us today. [END]

Document Notes

1. Portions of the document where the audio is unclear are marked with [inaudible].

2. Portions of the document where the audio is obscured by technical difficulty are marked with [TD].

3. Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides an answer from the Company, or [M] neither asks nor answers a question.

4. This document has been translated by SCRIPTS Asia.