1,889 million. 1,272 million. 1,764 million 54, ,000 MID-TERM REPORT (3.8% year on year) million. million. Summary of Financial Results

Transcription

1 Trying steadfastly in persistent pursuit of innovations Securities code: 8081 MID-TERM REPORT 2019 the 169th Fiscal Year From April 1, 2018 to September 30, 2018 Summary of Financial Results Net sales 54,405 million Operating profit 1,764 million Ordinary profit 1,889 million Profit attributable to owners of parent 1,272 million (3.8% year on year) (-4.4% year on year) (-1.8% year on year) (-2.5%) ecast for the full year Net sales 125,000 million Operating profit 4,820 million Ordinary profit 4,900 million Profit attributable to owners of parent 3,250 million

2 Greetings from the President We will contribute to the development of manufacturing industry through a corporate culture that embraces challenge. Please allow me to begin by extending my heartfelt gratitude to you all for your continued patronage and support. I would like to report on our performance for the first half of the 169th fiscal year. Nobuyuki Motohashi President Business overview for the first half of the 169th fiscal year During the first six months of the fiscal year under review, the business environment of the Kanaden Group experienced an increase in capital investment for rationalization and labor savings against a backdrop of the labor shortage, steady corporate earnings as the result of economic policies, and a recovery trend in the employment and income environment. Going forward, a moderate economic recovery is expected to continue, driven by domestic demand; however, the situation remains unpredictable due to the risk of stagnancy in global trade activities as the result of the protectionist trade policies initiated by the U.S. In these circumstances, the Group launched the new threeyear medium-term management plan, CI-J-3 (Challenge & Innovation-Joint), from this fiscal year and as well as focusing on the environment- and energy-related field, which is expected to experience continued growth, and seeking expansion of business areas with an emphasis on growth potential, we are working to improve profitability by developing the high-value-added system solution business. Through these initiatives, in the Factory Automation Systems segment, the system solution business for manufacturers grew. In the Building Facilities segment, although sales of receiving/ substation facilities were brisk, sales of elevators and escalators and air-conditioning equipment were on a par with the previous year due to the impact of large-scale projects in the previous fiscal year. In the Infrastructure segment, sales from the business for railway operators and the public sector were buoyant, although sales of photovoltaic related products struggled. In the Information & Communications Equipment segment, although sales of electronic medical care systems decreased, sales of electronic devices for office automation equipment were brisk. Status of initiatives for the three-year medium-term management plan, CI-J-3 The three-year medium-term management plan CI-J-3 sets out three basic strategies. One of these is to expand business areas, and in order to respond to the automation business where demand is expanding overseas, we established FACOM-KD (Thailand) Co., Ltd., a joint venture, in May In addition, on the domestic front, we opened a sales office in Mito, Ibaraki Prefecture in November We are also making efforts to expand our business through participation in the automobile-related business that is expected to grow going forward, and development of the medical business in the Kanto region. Next, as a means to strengthen our management base, we reformed our personnel system and began its partial operation in October in order to strengthen our structure for attaining sustainable growth. Furthermore, in September we decided to consolidate the multiple offices that comprise our Head Office, and aim to strengthen cooperation among our business divisions as well as raise productivity by improving the working environment. Regarding our interim dividend, we revised our basic policy for providing returns to shareholders as of the current fiscal year and have set the payout ratio at 35%. While continuing to retain sufficient profits to fund business development based on our growth strategy and reinforce the company s operations, we will strive to provide an appropriate level of shareholder returns in accordance with business performance. Based on this policy, we will pay a dividend of 19.5 per share for the interim period. We ask all stakeholders for their continued support going forward.

3 TOPICS Opening of Mito Sales Office In November 2018, we opened the Mito Sales Office in Mito, Ibaraki Prefecture. As one of the basic strategies of our three-year medium-term management plan CI-J-3 (Challenge & Innovation-Joint), we are working to expand business areas. The opening of the sales office forms part of this strategy. The Mito Sales Office will focus mainly on the expansion of the Factory Automation Systems Business, and will work on integrated sales of products such as security cameras and air-conditioning equipment, as well as activities aimed at winning orders for automation and system projects, for which there is growing demand among the manufacturing industry in the Ibaraki area, including for robots and equipment. Address: Imon Mito Bldg. 6F, , Jonan, Mito-shi, Ibaraki Exhibited at CAR-ELE JAPAN Nagoya The Company exhibited at CAR-ELE JAPAN Nagoya, the 1st International Automotive Electronics Technology Expo Nagoya, held at the Nagoya International Exhibition Hall from September 5 to September 7, The expo is a specialty event where semiconductors, electronic components, software, testing technology and other products that support the evolution of automobiles are all exhibited at a single venue. A great many visitors, mainly manufacturers of automobiles and equipment, came to the Company s section, where we displayed Hongfa-made automotive relays, REALTEK-made in-vehicle Ethernet solutions, and Kingbright-made in-vehicle LEDs. Viewing this expo as an opportunity, we will engage in proactive marketing proposals in the car electronics sector.

4 Results and Trends in Sales by Segment Factory Automation Systems Sales 21,330 million (up 2.5% year on year) Ordinary profit 1,226 million (up 79 million year on year) Composition of Sales by Segment FA 28.4% Industrial Mechatronics 4.2% 39.2% In the FA field, although sales of drive equipment were brisk because of robust orders from machinery equipment manufacturers, sales decreased due to a slump in sales of controllers and the impact from large-scale electrical facility projects in the previous fiscal year. In the industrial mechatronics field, whereas sales of electrical discharge machines were sluggish, sales of laser processing machines (CO2 lasers, fiber lasers) were buoyant and overall sales increased. In the industrial systems field, sales increased due to the recording of large-scale electrical facility projects for plant manufacturers. As a result, sales in the Factory Automation Systems segment increased 2.5% year on year and ordinary profit increased by 79 million. Sales (Millions of yen) 50,000 40,000 30,000 20,000 42,293 19,807 43,903 20,276 First half Full year 49,300 (Plan) 45,820 20,814 21,330 Industrial Systems 6.6% 10, (FY) Building Facilities Sales 7,449 million (down 0.9% year on year) Ordinary profit 22 million (down 51 million year on year) In the facilities equipment field, although sales of elevators and escalators decreased due to the impact from large-scale projects in the previous fiscal year, overall sales increased as the result of the recording of large-scale receiving/substation facilities for telecommunication carriers. In the air-conditioning and refrigerating equipment field, whereas sales of low-temperature equipment and residential facilities equipment were virtually the same level as the previous year, overall sales decreased due to the impact of large-scale air-conditioning equipment projects in the previous fiscal year. As a result, sales in the Building Facilities segment decreased 0.9% and ordinary profit decreased by 51 million. Composition of Sales by Segment Sales (Millions of yen) 50,000 First half Full year 40, % 30,000 20,000 16,390 19,815 17,476 16,900 (Plan) Facilities Equipment 7.1% Air-Conditioning and Refrigerating Equipment 6.6% 10, , , , , (FY)

5 Infrastructure Sales 11,673 million (up 11.7% year on year) Ordinary profit (23) million (down 76 million year on year) In the transportation field, whereas sales of receiving/substation equipment for railway operators were sluggish, overall sales increased greatly due to large-scale projects in both rolling stock equipment and train radio facilities. In the social systems field, whereas sales from the business for the public sector remained buoyant, overall sales decreased due to a slump in photovoltaic power generation projects (mega solar), which had been a focus area as a renewable energy-related business. As a result, sales in the Infrastructure segment increased 11.7%. Meanwhile, ordinary profit decreased 76 million due to the high profitability of photovoltaic power generation projects in the previous fiscal year. Composition of Sales by Segment 21.5% Transportation 16.9% Social Systems 4.6% Sales (Millions of yen) 50,000 40,000 30,000 20,000 10,000 34,645 11,680 31,646 13,024 First half 29,962 10,453 29,800 (Plan) 11,673 Full year (FY) Information & Communications Equipment Sales 13,952 million (up 2.4% year on year) Ordinary profit 542 million (down 35 million year on year) In the telecommunications field, sales decreased due to a slump in electronic medical care systems, despite continued security-related demand for visual systems. In the semiconductors and devices field, overall sales increased as the result of buoyant sales of ICs for hard disk drives and electronic devices for office automation equipment, although sales of power devices for industrial applications were sluggish due to production adjustments. As a result, sales in the Information & Communications Equipment segment increased 2.4%. Meanwhile, ordinary profit decreased 35 million due to profitable projects in electronic medical care systems in the previous fiscal year. Composition of Sales by Segment Sales (Millions of yen) 50,000 First half Full year 25.6% 40,000 30,000 20,000 27,206 13,124 27,619 13,739 28,798 13,625 29,000 (Plan) 13,952 Telecommunications 8.7% Semiconductors and Devices 16.9% 10, (FY)

6 Consolidated Financial Data and Key Performance Indicators March 2014 March 2015 March 2016 March 2017 Years ended March 2018 March 2018 Second half Year ending March 2019 Second half Key financial data (Millions of yen) Net Sales 120, , , , ,058 52,415 54,405 Factory Automation Systems 37,812 43,256 42,293 43,903 45,820 20,814 21,330 Building Facilities 16,412 16,317 16,390 19,815 17,476 7,520 7,449 Infrastructure 36,688 31,890 34,645 31,646 29,962 10,453 11,673 Information & Communications Equipment 29,497 30,545 27,206 27,619 28,798 13,625 13,952 Operating profit 3,754 4,133 4,333 4,330 4,755 1,845 1,764 Ordinary profit 3,834 4,223 4,378 4,385 4,854 1,925 1,889 Profit attributable to owners of parent 2,178 2,667 2,844 2,943 3,193 1,305 1,272 Net assets 37,937 37,238 38,469 41,119 43,091 42,203 43,744 Total assets 76,897 77,768 81,637 81,383 77,869 71,443 71,175 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities 4, ,379 (2,428) (3,307) (1,985) 3,612 (72) 1,203 (1,107) (73) (411) (33) (251) (621) (4,183) (870) (982) (1,749) (541) (513) Per share data (Yen) Net assets 1, , , , , , , Profit Cash dividend Key performance indicators Equity ratio (%) Return on Assets (ROA) (%) Return on Equity (ROE) (%) Price Earnings Ratio (PER) (times) Payout ratio (%)

7 IR Information Announcement of Results of Resolutions at the Ordinary General Meeting of Shareholders The results of votes for and against resolutions proposed at the 168th Ordinary General Meeting of Shareholders held on June 20, 2018 are hereby reported. Against Proposal 1: Election of Eight (8) Directors Nobuyuki Motohashi 99.47% Kazunori Shimamoto 99.66% Takeshi Jin 94.99% Yoshiro Nagashima 96.63% Yukio Tsunekawa 99.66% Hisataka Mori 99.66% Shinsuke Saito 99.65% Akio Iguchi 99.51% Proposal 2: Election of Two (2) Substitute Audit & Supervisory Board Members Proposal 3: Setting of Remuneration Amount under Restricted Shares Remuneration Plan Junya Torigoe 82.59% Akira Takeuchi 88.18% 92.28% Results of the Questionnaire We received 1,434 responses to the Shareholder Questionnaire that we enclosed with KANADEN REPORT The opinions and suggestions that we received from our shareholders will be reflected in the Company s future business and IR activities. Thank you for your cooperation. Outline of the implementation of the questionnaire Number of valid responses: 1,434/11,819 Questionnaire period: July 2018 Participating shareholders: 12.1% of the total Please indicate how you found out about the Company s stocks (multiple responses possible). KAISHA SHIKIHO (Japan Company Quarterly Handbook)/Nikkei Kaisha Joho (Nikkei Company Report) 542 Shareholder benefit information magazine 532 Information magazines, etc. for individual investors 159 Introduction by family or friends (word-of-mouth) 108 Newspapers 100 Employees (former employees) 78 Others 70 Recommendation of securities company 63 The Company s website 56 Inheritance/Gift 37 Suppliers (former suppliers) 31 Please indicate the motive(s) for purchasing the Company s shares and/ or reason(s) for continuing to hold the Company s shares (multiple responses possible). The Shareholder Benefit Program 696 Dividends/Payout ratio 586 Stability/Reliability 405 Growth potential 333 Business activities 262 Profitability 233 Share price 195 Financial position 126 Technological capabilities 78 Business model 59 Management philosophy 54 Expectations of the management team 31 Inheritance/Gift 31 Familiarity 27 Other 25 Social contribution/environmental conservation activities 23 Information disclosure 19 Compliance 16 Competitiveness 15 Name recognition 14 Recommendation of securities company 11 Please indicate your future shareholding policy with regard to the Company s shares (select only one response). Long-term shareholding (5 years or more) 65.1% Undecided 10.7% Purchase more 9.0% Medium-term shareholding (between 2 years and less than 5 years) 8.6% Sold shareholding (including partial sale) 3.7% Short-term shareholding (around 1 year) 1.5% Plan to sell 1.4% Please indicate what you expect of the Company going forward (select only one response). Dividends 50.3% Business results 26.3% Share price 16.9% Other 6.5% Please indicate your impression of KANADEN REPORT % 0.6% Volume of information 41.4% 52.7% 6.4% 0.5% Contents 39.6% 53.5% 6.9% 0.7% Easy to view 46.3% 46.1% Whether or not the Company had any appeal for you 36.4% 55.1% Satisfied Somewhat satisfied Somewhat unsatisfied Unsatisfied 7.9% 0.6% Please indicate the sections in the KANADEN REPORT 2018 that interested you (multiple responses possible). Our Business Human Resources Review of Operations Social Contribution Activities About Kanaden Messages from Outside Directors Message from the President Corporate Governance Action to the Environment Welfare Corporate Profile Compliance

8 Corporate Profile (as of September 30, 2018) Registered Trade Name KANADEN CORPORATION Establishment May 15, 1907: Established as Kanagawa Electric Limited December 18, 1912: Incorporated as Kanagawa Electric Co., Ltd. October 1, 1990: Trade name changed to KANADEN CORPORATION Paid-in Capital 5,576,250,000 Number of Employees 816 (consolidated basis) Directors and Auditors (as of September 30, 2018) President (Representative Director) Nobuyuki Motohashi Managing Director Kazunori Shimamoto Director (Outside) Takeshi Jin Director (Outside) Yoshiro Nagashima Director/ Yukio Tsunekawa Director/ Hisataka Mori Share Information (as of September 30, 2018) Total Number of Shares Authorized to be Issued Shares of Common Stock Issued and Outstanding Number of Shares Consisting a Minimum Trading Unit 90,000,000 shares 30,310,000 shares 100 shares Number of Shareholders 10,084 Major Shareholders Shareholder Number of shares held (thousands of shares) Ownership ratio (%) Mitsubishi Electric Corporation 7, Kanaden Corporation Client Stock Ownership Association 2, BRITISH EMPIRE TRUST PLC 1, Japan Trustee Services Bank, Ltd. (Trust Account) 1, Kanaden Corporation Employee Stock Ownership Association MUFG Bank, Ltd Mitsubishi Logistics Corporation KANADEN CORPORATION Meiji Yasuda Life Insurance Company Ltd The Master Trust Bank of Japan, Ltd. (Trust Account) Director Director/ Audit & Supervisory Board Member (Standing) Audit & Supervisory Board Member (Outside) Shinsuke Saito Akio Iguchi Harushige Sakai Kei Doi Share Distribution by Owner Category Financial instruments business operators 0.77% Financial institutions 19.26% Other corporations 33.23% eign corporations, etc % Treasury shares 2.12% Personal and others 31.88% Audit & Supervisory Board Member (Outside) Yutaka Nomiyama Audit & Supervisory Board Member (Outside) Nobutake Ipposhi Yasuaki Norikane Toshiyuki Tanno Kazuhiro Tsukada Mitsuo Tokuda Hironori Saigusa Yasuhiro Miura Futoshi Moriya Hiroyuki Fuji Naoki Takaya Information for Shareholders Fiscal year From April 1 to March 31 of the following year Record date for year-end dividend March 31 Record date for interim dividend September 30 Ordinary General Meeting of Shareholders June of every year Administrator of shareholders register Mitsubishi UFJ Trust and Banking Corporation Contact information Mitsubishi UFJ Trust and Banking Corporation 1-1 Nikkocho, Fuchu-shi, Tokyo Tel: (Toll-free in Japan) Method of public notice Public notices by the Company shall be by electronic means. (However, in the event that accidents or other unavoidable reasons prevent public notice by electronic means, the notice will be posted in The Nikkei.) Annual IR Calendar Q2 Q3 Q4 Q1 Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Announcement of Q1 results Announcement of Q2 results Results briefing for the first six months of the fiscal year Announcement of Q3 results Announcement of full-year financial results General Meeting of Shareholders Results briefing for the full year KANADEN CORPORATION Contact: General Affairs Division , Shimbashi, Minato-ku, Tokyo , Japan TEL: