FY2017 SECOND QUARTER FINANCIAL RESULTS BRIEFING

Transcription

1 FY2017 SECOND QUARTER FINANCIAL RESULTS BRIEFING Nov 20, 2017 Page.01

2 FY2017 SECOND QUARTER FINANCIAL RESULTS BRIEFING 1. Status of the Kansai Paint Group 2. Financial Results & Forecasts 3. Regional Overview 4. The 15th Mid-Term Business Plan Progress Reference Material for the FY2017 Second Quarter Financial Results Page.02

3 1 Status of the Kansai Paint Group Founded Capital : May 1918 : 25.6 billion yen (as of September 30, 2017) (Number of Shares Issued: 272 million) Number of Employees : 15,754 (as of September 30, 2017) : billion yen(fy2016) Japan India Asia 9% 2% 5% Automotive Auto Refinish 6% 5% 32% Africa Europe Other 20% By region 41% Industrial Decorative 26% By business Marine & Protective 6% 23% Other Paints 25% Page.03

4 2 Financial Results & Forecasts Amount of 2Q Cumulative Sales in all regions up YoY (year on year) Kansai Helios (Europe) began contributing to sales in 2Q Full Year Sales in all regions set to rise Former Sadolin Group (Africa) to begin contributing to sales in 3Q % % FY2016 2Q FY2017 2Q FY2016 FY2017 Forecast Page.04

5 2 Financial Results & Forecasts 2Q Cumulative Profit up YoY in Japan, India, and Europe Kansai Helios began contributing to profit in Europe in 2Q Profit down YoY in Asia and Africa Full Year Profit set to rise in Japan, India, and Europe Profit set to fall in Asia and Africa Ongoing efforts to reduce costs Ordinary Profit Ratio Ordinary Profit Ratio Ordinary Profit Ratio (%) Ordinary Profit Ratio (%) % % FY2016 2Q FY2017 2Q 2.0 FY2016 FY2017 Forecast 2.0 Page.05

6 2 Financial Results & Forecasts EBITDA 2Q Cumulative Pretax profit up Increase in goodwill amortization and depreciation expenses due to consolidation of Kansai Helios, U.S. Paint, etc. Operating cash flow (CF) up Full Year Pretax profit set to rise Operating CF set to rise EBITDA 10 EBITDA 売上 Sales/EBITDA 率 ratio Sales/EBITDA ratio EBITDA (%) EBITDA Sales/EBITDA ratio 売上 Sales/EBITDA 率 ratio (%) % % FY2016 2Q FY2017 2Q 8.0 FY2016 FY2017 Forecast 8.0 Page.06

7 3 Regional Overview Japan 2Q Cumulative Sales and profit up Increase in car production and recovery in sales to car component makers and construction machinery makers Domestic naphtha prices lower than expected Full Year Sales and profit set to rise Ongoing increase in car production and recovery in sales to car component makers and construction machinery makers expected Efforts to reduce costs, including by increasing productivity Domestic naphtha price expected to be 40,000 yen/kl % % % FY2016 2Q +4.7% 77.3 FY2017 2Q FY2016 FY2017 Forecast Page.07

8 3 Regional Overview India 2Q Cumulative Full Year Increase in car production by key customers Ongoing increase in demand in both Ongoing strong demand in decorative automotive and decorative segments segment Lower sales due to change in accounting Impact of goods and services tax (GST) on standards in conjunction with introduction of paint demand limited GST % +17.5% % +11.1% FY2016 2Q FY2017 2Q FY2016 FY2017 Forecast Page.08

9 3 Asia Regional Overview 2Q Cumulative Full Year Indonesian economy bouncing back Increase in sales in decorative segment in Malaysia (Sancora contributing) Drop in car production in Thailand and Malaysia China profits from equity method affiliates down Raw materials prices and SG&A expenses up Ongoing economic recovery in Indonesia Recovery in car production in Thailand and 8 6 Malaysia lagging Profits from equity method affiliates set to fall % % +8.4% % FY2016 2Q FY2017 2Q FY2016 FY2017 Forecast Page.09

10 3 Regional Overview Africa 2Q Cumulative Full Year Weak demand due to economic stagnation in South Africa Impact of rising raw-materials costs due to currency depreciation Incurrence of transient costs Impact of currency translation significant FY2016 2Q +7.9% -2.3 FY2017 2Q Economic recovery in South Africa lagging Performance of former Sadolin Group to begin contributing in 3Q Incurrence of transient expenses in conjunction with acquisition of former Sadolin Group -3.7 FY % -4.5 FY2017 Forecast Page.10

11 3 Regional Overview Europe 2Q Cumulative Performance of Kansai Helios began contributing in 2Q Increase in car production in Turkey Full Year Contribution of performance of Kansai Helios Car production in Turkey expected to continue increasing % % FY2016 2Q % FY2017 2Q FY % FY2017 Forecast Page.11

12 3 Regional Overview Other 2Q Cumulative Performance of U.S. Paint contributed (became a consolidated subsidiary in 3Q of last year) Slump in car production in North America Full Year Performance of U.S. Paint to contribute to full-year results Recovery in car production in North America lagging FY2016 2Q +6.4% % FY2017 2Q FY % +89.1% 1.0 FY2017 Forecast Page.12

13 4 FY2017 forecasts have been revised downwards to sales of 400 billion yen and ordinary profit of 43.5 billion yen as a result of the economic slump in South Africa and the significant impact of transient expenses. FY2018 targets have also been revised downwards to sales of 445 billion yen and ordinary profit of 54 billion yen despite increases due to M&A deals sealed in FY2016 and the prospect of a recovery in South Africa The 15th Mid-Term Business Plan Progress Business Plan EBITDA EBITDA (Actual) (Plan) (Actual) (Forecast) (Plan) 1 Page.13

14 4 The 15th Mid-Term Business Plan Progress Priority Measures and Progress Each initiative was conducted based on the three themes set as priority measures. etc Priority measures Main content Progress up until now etc. Accelerating Globalization Increasing Profitability Strengthening the Groupʼs Management Foundations 1. Expanding and strengthening our businesses in existing markets 2. Entering into new markets and regions 1. Increasing earning power by expanding market share 2. Reducing costs through efficiency and optimization 1. Sharing and promoting the resource utilization within the group 2. Establishing the headquartersʼ function and building the organization 3. Integrating current regions into eight global regions and establishing a supervisory control function Acquired shares of the Helios Group in Europe allocations from third parties Acquired shares of U.S. Paint in the U.S. Acquired shares of the Sadolin Group in East Africa Acquired shares of Polisan Turkey, and accepted share Acquired shares of Saudi Industrial Paint in Saudi Arabia Acquired shares of Sancora Paint Industries in Malaysia Planned to establish a joint venture in Nigeria and Kenya Acquired pipeline-internal-painting technology from Mirodur in Italy Promote measures to develop businesses for non-japanese clients and to boost shares Promote the entry and development of the European and U.S. automakers Expand sales of functional products such as plaster paint and insect repellent paint Issue convertible bonds Establishment of headquartersʼ functions to start in FY 2017 Page.14

15 4 The 15th Mid-Term Business Plan Progress Topics Project in Zambia to promote the use of paint that fights infectious diseases adopted as part of JICA Collaboration Program with the Private Sector for Disseminating Japanese Technology [Overview of project to promote the use of paint that fights infectious diseases] Administrator Japan International Cooperation Agency (JICA) Project name: Collaboration Program with the Private Sector for [Kansai Paint products to be promoted through the project] Anti-mosquito paint (ANTI-MOSQUITO) Disseminating Japanese Technology in Developing Countries Project details: Goal of preventing malaria and other infectious diseases by popularizing the use of infectious-disease-fighting paints (anti-mosquito paint and anti-virus paint). Anti-virus paint (SHIQUY) At the same time, we will put together a business structure by, for example, verifying the effectiveness of the paints, obtaining permits for them, and promoting them in order to encourage their use. Project period: April 2017 March 2019 (two years) Project location: Lusaka Province, Zambia Anti-germ/anti-mosquito tapestry sheet We will be endeavoring to popularize our infectious-disease-fighting paints globally to contribute to making life more comfortable and creating safer environments throughout the world. Page.15 KANSAI PAINT CO.,LTD.

16 Finally Kansai Paint contributes. We will assist in the development of society and mankind through the coating business and continually endeavor to be a company indispensable to society. We will strive to contribute to solving problems facing society such as the need for environmental conservation, as well as creating a better world. We will address changes and aim to build and maintain the companyʼs credibility in society. Furthermore, The global coating business is a growth industry. In this industry, we will aim to improve our cash generation ability and further disseminate coatings throughout the world. Page.16

17 FY2017 Second Quarter Reference Material for Financial Results Page.17

18 Reference Material Sales by Segment H Full year 1H Full year 1H Full year (forecasts) Automotive (domestic) Automotive (overseas) Auto Refinish (domestic) Auto Refinish (overseas) Automotive total Industrial (domestic) Industrial (overseas) Industrial total Decorative (domestic) Decorative (overseas) Decorative total Marine & Protective (domestic) Marine & Protective (overseas) Marine & Protective total Other Paints Total Page.18

19 Reference Material Sales by Region H Full year 1H Full year 1H Full year (forecasts) Total Ordinary Profit by Region H Full year 1H Full year 1H Full year (forecasts) Total Page.19

20 Reference Material Cash Flows H Full year 1H Full year 1H Full year (forecasts) Operating CF Investing CF Financing CF Depreciation, Capital Expenditures, and R&D Expenses (million yen) H Full year 1H Full year 1H Full year (forecasts) Depreciation 5,228 9,742 4,775 10,153 5,895 13,000 Capital expenditures 6,460 11,443 6,246 13,617 7,582 18,000 R&D expenses 2,555 5,046 2,540 5,297 3,091 6,500 Page.20

21 Reference Material Key Performance Indicators H Full year 1H Full year 1H Net assets Total assets Net assets per share (yen) , Earnings per share (yen) Shareholdersʼ equity ratio (%) Return on equity (%) Price-earnings ratio (multiple) No. of employees (persons) 11,892 12,491 12,435 14,828 15,754 Domestic Car Production (million) H Full year 1H Full year 1H Full year (our predictions) No. of cars produced Source: Japan Automobile Manufacturersʼ Association Page.21

22 Reference Material Currency Translation Rates (yen/local currency) 2016 Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep H (our predictions) U.S. Dollar Euro Indian Rupee Chinese Yuan Thai Baht Malaysian Ringgit Indonesian Rupiah Turkish Lira South African Rand Domestic Naphtha Price(our estimate) H 2H 1H 2H (prediction) Domestic naphtha price 31,450 38,000 38,000 40,000 (yen/kl) Page.22

23 Forecasts of financial results stated in this document are forecasts based on currently available information that includes potential risks and uncertain elements. Therefore, actual financial results may differ from the forecast figures.