Consolidated Financial Results
for the Six Months Ended September 30, 2024
SAKAI HEAVY INDUSTRIES, LTD.
Stock code: 6358
URL https://www.sakainet.co.jp/en/
November 13, 2024
Summary of Consolidated Financial Results
1
Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Six Months Ended September 30, 2024
1) Consolidated net sales: ¥14,385 million, down 14.3% YoY
The Global Construction Machinery Market remained in the decelerating trend due to passing a peak of the economic expansion period after the COVID-19 pandemic and entering a period of adjustments.
2) Operating profit: ¥1,231 million, down 37.4% YoY
Operating profit declined due to decreased sales, despite cost-of-sales ratio improvement through the profit structure reform.
3) Profit: ¥1,302 million, down 15.1% YoY
Posted gain on sale of investment securities of ¥280 million.
4) Sales in Japan: ¥6,628 million, down 11.0% YoY
Although government construction investment remained strong against the backdrop of measures to accelerate national land resilience, repeated price revisions and the overtime cap on construction and logistics brought investment in construction machinery to a continued restraint.
5) Sales in North America: ¥3,782 million, down 16.2% YoY
Adjustments to inventory by dealers accelerated while interest rates remained high, despite the continued investment in road construction against the backdrop of the Infrastructure Investment and Jobs Act.
-
Sales in Asia: ¥3,451 million, down 13.1% YoY
Demand stagnated in the ASEAN markets overall.
2
Highlights of Consolidated Business Performance
2. Adapting to a Changing Business Environment
1) Initiatives for enhancing the profitability of capital
(1) Progress of medium-term management policy
Five-year medium-term management policy: Net sales of ¥30 billion, operating profit of ¥3.1 billion, ROE of 8.0%
Results for the previous fiscal year (third year): Net sales of ¥33 billion, operating profit of ¥3.31 billion, ROE of 9.0%
Results for six months ended September 30, 2024: Net sales of ¥14.3 billion, operating profit of ¥1.23 billion, ROE of 8.8%
Forecast for the current fiscal year (fourth year): Net sales of ¥27.2 billion, operating profit of ¥1.74 billion, ROE of 5.8%
(2) Progress of enhancing corporate value (PBR above 1)
Timely disclosure of policies regarding initiatives has been provided in the Status of Initiatives for Enhancing Profitability of Capital, dated April 13, 2023.
https://www.sakainet.co.jp/en/news/item/2023april25.pdf
At the end of March 2024: PBR 0.98 times (Share price ¥3,340) ← Share split considered
At the end of September 2024: PBR 0.69 times (Share price ¥2,420) ← Share split considered
2) Profit structure reform through sales price revisions, high added value, and efficiency
Cost-of-sales ratio improvement: 69.9%, improvement of 0.2% YoY
Progress in profit structure reform and the effect of yen depreciation
3) Increased investment in human capital
- Wage improvement and stabilized employment: Rise in wages (5.1% in the fiscal year ended March 31, 2024, 6.0% in the fiscal year ending March 31, 2025)
- Increasingon-site skilled labors and improving working conditions: Enhance factories and service areas, and establish healthy working environments.
4) Dealing with volatile demand | |
Inventory turnover: 2.6 times, down 0.41 times/13% YoY | |
Currently making adjustments to optimize inventory levels, as the Construction Machinery Market entered | |
a period of adjustments amid slowdowns in the world economy. | 3 |
Highlights of Consolidated Business Performance
3. Mid- to Long-Term Growth Strategy
1) Make more significant inroads into the Asian market:
Expand the ASEAN market centered on our Indonesian hub (sales development in mine and pavement markets)
2) Expand the scope of overseas business:
Develop the overseas market for road maintenance equipment (ODA initiative, start local production, create a market for the cement and asphalt emulsion stabilizer method)
3) Pursue business opportunities in North America:
Increase our market share through niche marketing (strengthen technical sales with differentiated products)
4) Develop next-generation businesses:
Focus on market development for emergency brakes, compaction management systems, and Automatic Cutter Control System.
Commercialization of autonomous rollers and EV rollers started.
4. Outlook for Business Environment
1) Global Construction Machinery Market
In the short term, the Global Construction Machinery Market is expected to bottom out through an economic cycle, although a phase of adjustments continues due to passing the period of the increased demand after the COVID-19 pandemic. In the medium term, potential demand for construction machinery is expected to remain stable due to factors such as large-scale infrastructure investment plans in Japan and the U.S., infrastructure investment and mine development becoming active in emerging countries, together with renewal of aging infrastructure and disaster-related countermeasures.
2) Risks and Countermeasures
The future direction of the world economy is unpredictable, due to factors such as global economic slowdowns, further tensions in the security situation, and rapid changes in the social structure.
Under these circumstances, the Group will transition to a management structure adapted to changes in the times by promoting profit structure reform and increasing investment in human capital.
4
Consolidated Business Performance
(Millions of yen) | |||||
1st half | 1st half | YoY change | |||
ended | ended | ||||
September | September | Amount | % | ||
30, 2023 | 30, 2024 | ||||
Net sales | 16,785 | 14,385 | ▲ 2,399 | ▲14.3% | |
Japan | 7,447 | 6,628 | ▲ 819 | ▲11.0% | |
Overseas | 9,337 | 7,757 | ▲ 1,580 | ▲16.9% | |
Operating profit | 1,966 | 1,231 | ▲ 735 | ▲37.4% | |
Operating profit ratio | (11.7%) | (8.6%) | |||
Ordinary profit | 2,109 | 1,178 | ▲ 931 | ▲44.1% | |
Profit attributable to | 1,534 | 1,302 | ▲ 231 | ▲15.1% | |
owners of parent | |||||
Cost-of-sales ratio | (70.1%) | (69.9%) | 5 | ||
Consolidated Business Performance (Graph)
Net sales
(Millions of yen)
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Net sales
16,785
9,337 | 14,385 |
Overseas | 7,757 |
1,966
(11.7%)
Operating profit | ||||
1,231 | ||||
(Operating profit ratio) | ||||
7,447 | (8.6%) | |||
Japan | 6,628 | |||
1st half ended | 1st half ended | |||
September 30, 2023 | September 30, 2024 |
Operating profit (Millions of yen)
3,000
2,500
2,000
1,500
1,000
500
0
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Sales by Regionin Which Customers Are Located
(Millions of yen) | |||||
1st half | 1st half | YoY change | |||
ended | ended | ||||
September | September | Amount | % | ||
30, 2023 | 30, 2024 | ||||
Japan | 7,447 | 6,628 | ▲ 819 | ▲11.0% | |
Overseas | 9,337 | 7,757 | ▲ 1,580 | ▲16.9% | |
North America | 4,511 | 3,782 | ▲ 729 | ▲16.2% | |
Asia | 3,973 | 3,451 | ▲ 522 | ▲13.1% | |
Other regions | 853 | 523 | ▲ 329 | ▲38.6% | |
Total | 16,785 | 14,385 | ▲ 2,399 | ▲14.3% | |
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Sales by Region (Map)
1st half ended | 1st half ended | |||
(Millions of yen) | September 30, | September 30, | YoY change | |
2023 | 2024 | |||
Japan | 7,447 | 6,628 | (▲ 819, ▲11.0%) | |
Overseas | 9,337 | 7,757 | (▲1,580, ▲16.9%) | |
Total | 16,785 | 14,385 | (▲2,399, ▲14.3%) |
China segment 72 → 77
(+4, +6.5％)
North America
4,511 → 3,782 | 4,511 | 3,782 |
Asia | (▲729, ▲16.2％) |
3,973 → 3,451 | 3,973 | 3,451 |
(▲522, ▲13.1％) | ||
Japan | |
7,447 → 6,628 | 7,447 6,628 |
(▲819, ▲11.0％)
Indonesia segment 2,177 → 1,743
(▲433, ▲19.9％)Other (Africa, Oceania, Latin America)
853 → 523853 523
(▲329, ▲38.6％)
Plants and sales office
Sales offices
Service and sales offices
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Segment Information by Regionin Which Our Manufacturing Facilities and Sales Offices Are Located
(Millions of yen) | |||||
1st half | 1st half | YoY change | |||
Japan | ended | ended | |||
September | September | Amount | % | ||
30, 2023 | 30, 2024 | ||||
Sales to external | 10,024 | 8,782 | ▲ 1,241 | ▲12.4% | |
customers | |||||
Intercompany | 2,295 | 2,049 | ▲ 245 | ▲10.7% | |
sales | |||||
Total net sales | 12,319 | 10,832 | ▲ 1,487 | ▲12.1% | |
Operating profit | 630 | 291 | ▲ 339 | ▲53.8% | |
(Millions of yen) | |||||
1st half | 1st half | YoY change | |||
ended | ended | ||||
North America September | September | Amount | % | ||
30, 2023 | 30, 2024 | ||||
Sales to external | 4,511 | 3,782 | ▲ 729 | ▲16.2% | |
customers | |||||
Intercompany | 3 | 5 | 2 | 67.8% | |
sales | |||||
Total net sales | 4,514 | 3,788 | ▲ 726 | ▲16.1% | |
Operating profit | 533 | 611 | 78 | 14.6% | |
(Millions of yen) | |||||
1st half | 1st half | YoY change | |||
Indonesia | ended | ended | |||
September | September | Amount | % | ||
30, 2023 | 30, 2024 | ||||
Sales to external | 2,177 | 1,743 | ▲ 433 | ▲19.9% | |
customers | |||||
Intercompany | 1,960 | 1,246 | ▲ 713 | ▲36.4% | |
sales | |||||
Total net sales | 4,137 | 2,989 | ▲ 1,147 | ▲27.7% | |
Operating profit | 693 | 280 | ▲ 413 | ▲59.5% | |
(Millions of yen) | |||||
1st half | 1st half | YoY change | |||
China | ended | ended | |||
September | September | Amount | % | ||
30, 2023 | 30, 2024 | ||||
Sales to external | 72 | 77 | 4 | 6.5% | |
customers | |||||
Intercompany | 877 | 732 | ▲ 144 | ▲16.5% | |
sales | |||||
Total net sales | 949 | 809 | ▲ 140 | ▲14.8% | |
Operating profit | 113 | 67 | ▲ 46 | ▲41.0% | |
9