Financial Results H

Transcription

1 KH Neochem Co., Ltd. Financial Results H August 4, 2017 Copyright (C) KH Neochem Co., Ltd. all rights reserved.

2 Contents I. Overview of Results for H II. Financial Results for H III. Outlook

3 I. Overview of Results for H Keiichi Asai, President & CEO Copyright (C) KH Neochem Co., Ltd. all rights reserved.

4 Results for H Year on Year Revenue and profit increased year on year. Operating income rose by 1.4 billion yen (up 32%) H H Changes Amount % Net sales % Gross profit % Operating income % Operating income margin 11% 13% - 2% Ordinary income % Profit attributable to owners of parent % Exchange rate ( /$) Domestic naphtha ( /KL) 32,950 40,500 7,550 23% 3

5 Results for 2017 (Trend by Segment) Year-on-year growth in revenue and profit increased in each segment during H Basic Chemicals Performance Electronic (plasticizer raw materials, solvents, etc.) (refrigeration lubricants raw materials, cosmetic raw materials, etc.) (high-purity solvents, etc.) Areas of use Areas of use Areas of use Paints Wire harnesses Increase in Revenue and Profit Air conditioners Cosmetics Semiconductors LCD panels Increase in Revenue and Profit Increase in Revenue and Profit Net sales 21.4 billion (up 17%) Net sales 18.5 billion (up 24%) Net sales 5.3 billion (up 12%) Gross profit 3.3 billion (up 30%) Gross profit 6.1 billion (up 55%) Gross profit 1.5 billion (up 1%) Firm demand, improvement in overseas markets Increase in quantity with no longterm periodic repairs Strong demand for refrigeration lubricants raw materials Continuously high operation rate for cosmetic raw materials Strong sales to semiconductor industry Stable sales of LCD Panels Note: The figures in parentheses represent YoY changes. 4

6 Initiatives in H Entry to the growth market for performance chemicals and increased stability of basic chemicals I. Globally expand performance chemical sales II. Enhance profitability of basic chemicals Areas of use Areas of use Air conditioners Cosmetics Semiconductors Paints Wire harnesses Room interiors Gross Profit in Performance Chemicals Continuously Comprehensive Cost Reductions Reduction target of 2.0 billion (total during Medium-Term Business Plan) Progress of 1.3 billion (65%) made up to H Intensive Purchase Reduced Equipment Cost Increased Production Efficiency 2016 年上期 1H 2017 年上期 1H 5

7 Initiatives in H Focus on developing future business base such as examining new factory construction in Taiwan III. Establish a base for the future Other Taiwan Project (Establishment of new plant for plasticizer raw materials in Taiwan) Technology/Know-How Taiwan Stable and competitive supplies of raw materials Basic design of equipment and preparation for bidding Arrangement of financing Improvement of corporate governance One independent outside director added to make a total of two Start the nominating and the compensation committee on a voluntary basis Rationalization and increased efficiency of the Group Made subsidiary in Singapore dormant Improvement of financial strategies Acquisition of a credit rating, issued CP, and reduced financing costs Increased IR activities TSE IR Festa, factory tours, and overseas IR activities 6

8 Initiatives in H H : Strategic investment and comprehensive cost reductions Initiatives planned for H Decisions on investment in refrigeration lubricants raw materials supported by growing demand Continuous cost reductions through reduced equipment costs, increased production efficiency, etc. Final decisions on investment in Taiwan Project that would be a strategic move for the future 7

9 Progress in the Medium-Term Business Plan Progress in both net sales and operating income achieved as planned in the Medium-Term Business Plan Net sales Operating income Medium-Term Business Plan Results Forecasts H H Medium-Term Business Plan Medium-Term Business Plan Note: In 2015, both net sales and operating income exclude the figures for sold subsidiaries. 8

10 Shareholder Returns Scheduled 2017 interim dividend of 25.0 and year-end dividend of 25.0 Interim dividend Year-end dividend Commemorative dividend Annual dividend Results Forecasts 2017 (May 2017) Revised forecasts 2017 (Aug 2017) (scheduled) (scheduled) Note: The 2017 year-end dividend is scheduled to be resolved at the general meeting of shareholders held in March

11 II. Financial Results for H Kenichi Hirai, Board Director & Chief Financial Officer Copyright (C) KH Neochem Co., Ltd. all rights reserved.

12 Results for H Year on Year Strong results exceeding forecast of year-on-year increase in revenue and profit for H H Forecasts H (as of May) H YoY change Changes Difference from forecast Net sales Gross profit Operating income Operating income margin 11% 11% 13% 2% 2% Ordinary income Profit attributable to owners of parent Exchange rate ( /$) Domestic naphtha ( /KL) 32,950 41,400 40,500 7,

13 Variance Analysis of Operating Income for H Continuous strong sales in each segment, resulting in significant profit growth (up 32%) billion Price differences: rising raw material costs Volume and mix: strong performance of shipments, no long-term periodic repairs 5.7 Other: Absence of technology licensing fees from Taiwan H Price Volume and Fixed SG&A Other Affiliates and H differences mix manufacturing costs expenses elimination 12

14 Breakdown of Net Sales for H Net sales increased due to growth in volume and a rise in naphtha prices H : 39.3 billion H : 45.5 billion Electronic 4.7 billion Other 1.4 billion 12% 4% Electronic 5.3 billion 11% 1% Other 0.3 billion Performance 15.0 billion 38% 46% Basic Chemicals 18.2 billion Performance 18.5 billion 41% 47% Basic Chemicals 21.4 billion Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance (refrigeration 機能性材料 lubricants raw materials, ( 冷凍機油原料 化粧品原料等 cosmetic raw materials, etc.) ) Electronic (high-purity solvents, etc.) 13

15 Breakdown of Gross Profit for H Percentage of profit from Performance Chemicals (Performance /Electronic ) is about 70% H : 9.0 billion H : 11.0 billion Electronic 1.4 billion Other 1.1 billion 16% 12% 28% Basic Chemicals 2.6 billion Electronic 1.5 billion Other 0.1 billion 13% 1% 31% Basic Chemicals 3.3 billion Performance 3.9 billion 44% Performance 6.1 billion 55% Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance 機能性材料 (refrigeration lubricants raw materials, cosmetic raw materials, etc.) ( 冷凍機油原料 化粧品原料等 ) Electronic (high-purity solvents, etc.) 14

16 III. Outlook 2017 Kenichi Hirai, Board Director & Chief Financial Officer Copyright (C) KH Neochem Co., Ltd. all rights reserved.

17 Revised of Forecasts 2017 Upward revision of financial forecasts 2017 based on expected continuation of strong sales 2016 Forecasts 2017 (as of May) Forecasts 2017 (as of Aug) YoY change Changes Difference from forecast Net sales Gross profit Operating income Operating income margin 11% 11% 12% 1% 1% Ordinary income Profit attributable to owners of parent Exchange rate ( /$) Domestic naphtha ( /KL) 32,800 41,200 38,800 6,000-2,400 16

18 Variance Analysis of Operating Income for 2017 upon Revision Strong sales in each segment expected to result in increased profit of 1.3 billion (up 15%) billion 9.0 Price differences: impact of rising raw material costs Volume and mix: strong performance of shipments Difference in fixed manufacturing costs: impact of long-term regular repairs SG&A expenses: increase in logistics expenses due to increase in volume Other: Absence of technology licensing fees from Taiwan Results Price differences Volume and mix Fixed manufacturing costs SG&A expenses Other Affiliates and elimination 2017 Revised forecasts 17

19 Variance Analysis of Breakdown of Net Sales for 2017 Revenue growth expected based on increased sales volume and a rise in naphtha prices 2016 : 80.2 billion 2017 Revised forecast : 88.5 billion Electronic 9.8 billion Other 1.8 billion 12% 2% Electronic 10.2 billion Other 0.6 billion 11% 1% Performance 30.3 billion 38% 48% Basic Chemicals 38.3 billion Performance 35.0 billion 40% 48% Basic Chemicals 42.7 billion Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance 機能性材料 (refrigeration lubricants raw materials, cosmetic raw materials, etc.) ( 冷凍機油原料 化粧品原料等 ) Electronic (high-purity solvents, etc.) 18

20 Variance Analysis of Breakdown of Gross Profit for 2017 Profit growth expected based on higher sales of performance materials, etc : 18.7 billion 2017 Revised forecast : 20.9 billion Electronic 3.1 billion Other 1.2 billion 16% 7% 31% Basic Chemicals 5.8 billion Electronic 2.8 billion Other 0.2 billion 13% 1% 29% Basic Chemicals 6.1 billion Performance 8.7 billion 46% Performance 11.8 billion 57% Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance 機能性材料 (refrigeration lubricants raw materials, cosmetic raw materials, etc.) ( 冷凍機油原料 化粧品原料等 ) Electronic (high-purity solvents, etc.) 19

21 Copyright (C) KH Neochem Co., Ltd. all rights reserved. Appendix

22 Balance Sheet for H Improved financial position based on strong financial performance 2016/ /6 Changes Current assets Current and non-current liabilities 2016/ /6 Changes Cash and deposits Accounts payable - trade Accounts receivable - trade Interest-bearing debt Inventories Other Other Shareholders equity Non-current assets Property, plant and equipment Intangible assets Capital stock and capital surplus Retained earnings Accumulated other comprehensive income Other Non-controlling interests Total assets Liabilities and net assets

23 Statement of Cash Flows for H Positive cash flow balance from operating activities ensured through strong sales and working capital management H H Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Changes in cash and cash equivalents (including changes due to new consolidation) Balance of cash and cash equivalents

24 Development in Results (Quarterly) Rising trend of revenue and profit based on increased sales volume, etc. Net sales Operating income Net income Q 3Q 4Q 1Q 2Q Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q

25 Development in Results by Segment (Quarterly) Steady progress both in net sales and in gross profit was achieved in each segment. Net sales Gross profit Other Electronic Performance Basic Chemicals /2Q 3Q 4Q 17/1Q 2Q 16/2Q 3Q 4Q 17/1Q 2Q Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance 機能性材料 (refrigeration lubricants raw materials, cosmetic raw materials, etc.) ( 冷凍機油原料 化粧品原料等 ) Electronic (high-purity solvents, etc.) 24

26 CAPEX, Depreciation and R&D Expenses (Quarterly) CAPEX mostly for maintenance and renewal CAPEX Depreciation R&D expenses Q 3Q 4Q 1Q 2Q Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q

27 Inventories, Interest-bearing Debt and Shareholders Equity (Quarterly) Steady rise in the equity ratio due to accumulation of income (%) Inventories Interest-bearing debt Equity ratio Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q

28 Overview of Earnings of Consolidated Subsidiaries for H The results of subsidiaries also remained firm H H Changes Kurogane Kasei Co., Ltd. Kurogane Fines Inc. KH Neochem Americas Net sales Operating income Net sales Operating income Net sales Operating income Note: KH Neochem Americas is included in the scope of consolidation from

29 Summary of Results for 2017 In H, revenue and profit growth based on higher sales of performance materials, etc. Net sales increased 6.2 billion year on year. Operating income increased 1.4 billion year on year. The sales volume of performance materials such as refrigeration lubricants raw materials, cosmetics raw materials, and other products generally increased. Substantial increases in revenue and profit were achieved based on 6.2 billion (up 16%) year on year rise in net sales and 1.4 billion (up 32%) year-on-year growth in operating income. Financial forecasts 2017 are revised upward. Operating income increased by 1.3 billion (up 15%) year on year. Net sales increased 8.3 billion year on year. Operating income increased 1.3 billion year on year. Full-year forecasts for net sales, operating income, ordinary income, and final profit have all been revised upward based on expected growth in sales volume. Targeting a record high operating income for three consecutive years. 28

30 Note: The information presented herein is intended neither to solicit nor induce investors to either purchase or sell shares of KH Neochem. The forward-looking statements in this document such as those regarding future prospects of the business include assumptions and forecasts based on information available as of the date of this document, and accordingly such statements do not constitute KH Neochem s assurance or guarantee. This document also contains figures for reference purposes that have not undergone audit. As such, please note that actual results may materially vary from those expressed or implied herein, due to various future risks and uncertainties. Also, please be aware that neither KH Neochem nor the information providers shall bear liability for any damages incurred from use of this data. Contact KH Neochem Co., Ltd. Copyright (C) KH Neochem Co., Ltd. all rights reserved.