Financial Results H

Transcription

1 KH Neochem Co., Ltd. Financial Results H August 8, 2018 Copyright (C) KH Neochem Co., Ltd. all rights reserved.

2 Contents I. Overview of Results H II. Financial Results H / Forecasts

3 I. Financial Results H Keiichi Asai, President and CEO Copyright (C) KH Neochem Co., Ltd. all rights reserved.

4 Results H Year on Year Both revenue and profit decreased due to the large-scale periodic maintenance Changes Results 1H Forecasts 1H (February) Results 1H Y o Y From forecasts Net sales Gross profit Operating income Operating income margin 12.5% 9.8% 9.1% - - Ordinary income Profit attributable to owners of parent Exchange rate ( /$) Domestic naphtha ( /KL) 40,500 48,000 48,300 7,

5 Results H (Trend by Segment) Year on Year Although strong demand, a decrease in production and sales due to periodic maintenance and an increase in maintenance costs. Basic Chemicals Performance Materials Electronic Materials (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 Air conditioners Cosmetics Semiconductors LCD panels Decrease in Revenue and Profit Net sales 21.3 billion (-0%) Gross profit 2.9 billion (-13%) Sales prices hike [+] Periodic maintenance [-] Decrease in Revenue and Profit Net sales 16.9 billion (-9%) Gross profit 4.8 billion (-20%) Sales prices hike [+] Periodic maintenance/stronger yen [-] Increase in Revenue and Profit Net sales 5.8 billion (+10%) Gross profit 1.5 billion (+3%) Strong demand in Semiconductor field [+] Rise in raw materials/increase in depreciation [-] Note: The figures in parentheses represent YoY changes. 4

6 Forecasts 2018 Profit will decrease year on year on a full-year basis; however, an upward revision vs. the initial forecasts Changes Results Forecasts (February) Forecasts (August) Y o Y From forecasts Net sales Gross profit Operating income Operating income margin 12.1% 10.8% 10.6% - - Ordinary income Profit attributable to owners of parent Exchange rate ( /$) Domestic naphtha ( /KL) 40,500 48,000 51,150 10,650 3,150 5

7 Forecasts 2018 (Trend by Segment) Year on Year Profit decreased due to the periodic maintenance in 1H. In 2H, strong performance is expected. Basic Chemicals Performance Materials Electronic Materials (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 Cosmetics Air conditioners Semiconductors LCD panels Increase in Revenue and Profit Net sales 50.4 billion (+10%) Gross profit 7.1 billion (+4%) Increase in Revenue and Decrease in Profit Net sales 38.8 billion (+4%) Gross profit 11.5 billion (-7%) Increase in Revenue and Decrease in Profit Net sales 11.6 billion (+6%) Gross profit 3.0 billion (-6%) Firm demand [+] Sales prices hike [+] Sales prices hike [+] Periodic maintenance [-] Note: The figures in parentheses represent YoY changes. Stable demand in the semiconductor field [+] The stronger yen/ increase in depreciation [-] 6

8 Progress in the Medium-Term Business Plan Significant achievements are expected in the Medium-Term Business Plan Net sales Medium-Term Business Plan Results Forecasts (Aug. 2018) Operating income 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. 7

9 Progress in the Medium-Term Business Plan Progress in strengthening the financial base for growth investments in the future Forecast as of February Forecast as of August Medium-Term Business Plan Interestbearing debt 34.1 bn 31.3 bn 24.7 bn 24.7 bn 23.0 bn 25.0 bn Equity ratio 20% 28% 33% 37% 39% 30% or more ROE 38% 28% 29% 22% 22% 20% Medium-Term Business Plan Forecasts for FY2018 Reduction in interest-bearing debt according to the plan Significant increase in the equity ratio The industry's top-class ROE 8

10 Shareholder Return An annual dividend of 54 per share is planned Interim dividend (already approved) Year-end dividend Annual dividend Note: Dividends in 2016 include the commemorative dividend for listing of 3.5. The year-end dividend in 2018 is to be determined at the general meeting of shareholders held in March

11 Initiatives H Production base and governance were strengthened in 1H. Review of 1H Large-scale periodic maintenance/preventive maintenance Improvement of facilities efficiency for refrigeration lubricant raw materials (Chiba) Appropriate pricing policy Rise in investment ratio to subsidiaries and strengthening of governance Initiatives in 2H Production increase by improvement of more efficient production Appropriate pricing policy/high capacity utilization /increase in sales volume Corresponding to reform of the corporate governance code Centralization of group funds Initiatives in a full year Construction of a new plant of refrigeration lubricant raw materials (Yokkaichi) Taiwan project Formulation of long-term vision and the next Medium-Term business Plan (2019 to 2021) 10

12 Initiatives H Actions to ensure greater efficiency in production and finance will be taken in 2H. Review of 1H Large-scale periodic maintenance/preventive maintenance Improvement of facilities efficiency for refrigeration lubricant raw materials (Chiba) Appropriate pricing policy Rise in investment ratio to subsidiaries and strengthening of governance Initiatives in 2H Production increase by improvement of more efficient production Appropriate pricing policy/high capacity utilization /increase in sales volume Corresponding to reform of the corporate governance code Centralization of group funds Initiatives in a full year Construction of a new plant of refrigeration lubricant raw materials (Yokkaichi) Taiwan project Formulation of long-term vision and the next Medium-Term business Plan (2019 to 2021) 11

13 Initiatives 2018 Actions toward the future will be continued during the entire year. Review of 1H Large-scale periodic maintenance/preventive maintenance Improvement of facilities efficiency for refrigeration lubricant raw materials (Chiba) Appropriate pricing policy Rise in investment ratio to subsidiaries and strengthening of governance Initiatives in 2H Production increase by improvement of more efficient production Appropriate pricing policy/high capacity utilization /increase in sales volume Corresponding to reform of the corporate governance code Centralization of group funds Initiatives in a full year Construction of a new plant of refrigeration lubricant raw materials (Yokkaichi) Taiwan project Formulation of long-term vision and the next Medium-Term business Plan (2019 to 2021) 12

14 II. Financial Results H /Forecasts 2018 Kenichi Hirai, CFO Copyright (C) KH Neochem Co., Ltd. all rights reserved.

15 Results H Year on Year Both revenue and profit decreased due to the large-scale periodic maintenance Changes Results 1H Forecasts 1H (February) Results 1H Y o Y From forecasts Net sales Gross profit Operating income Operating income margin 12.5% 9.8% 9.1% - - Ordinary income Profit attributable to owners of parent Exchange rate ( /$) Domestic naphtha ( /KL) 40,500 48,000 48,300 7,

16 Variance Analysis of Operating Income H Profit declined due to the large-scale periodic maintenance, despite sales prices hike billion -0.7 Price differences: a rise in sales prices Volume and mix: a fall in the sales volume due to large-scale periodic maintenance Fixed manufacturing costs: an increase in maintenance costs H Price Volume Fixed SG&A differences and mix manufacturing expenses costs Affiliates and elimination H 15

17 Breakdown of Net Sales/Gross Profit H In each segment, there was an impact from a sales price increase and periodic maintenance. Electronic Materials 5.8 bn Performance Materials 16.9 bn Net Sales (Results 1H) Gross Profit (Results 1H) 38% Other 0.3 bn 13% 1% 44.4 bn 48% Basic Chemicals 21.3 bn Electronic Materials 1.5 bn Performance Materials 4.8 bn 52% Other 0.1 bn 16% 1% 9.3 bn 31% Basic Chemicals 2.9 bn Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance Materials 機能性材料 (refrigeration lubricants raw materials, ( 冷凍機油原料 化粧品原料等 cosmetic raw materials, etc.) ) Electronic Materials (high-purity solvents, etc.) 16

18 Forecasts 2018 Profit will decrease YoY on a FY basis; however, an upward revision vs. the initial forecasts Changes Forecasts (February) Forecasts (August) Y o Y From forecasts Net sales Gross profit Operating income Operating income margin 12.1% 10.8% 10.6% - - Ordinary income Profit attributable to owners of parent Exchange rate ( /$) Domestic naphtha ( /KL) 40,500 48,000 51,150 10,650 3,150 17

19 Variance Analysis of Operating Income Forecasts 2018 The profit is expected to be decreased due to the impact of periodic maintenance, despite a rise in sales prices billion Price differences: a rise in sales prices Volume and mix: a fall in the sales volume due to large-scale periodic maintenance Fixed manufacturing costs: an increase in maintenance costs 2017 Price Volume Fixed SG&A Affiliates 2018 differences and mix manufacturing expenses and August costs elimination Forecasts 18

20 Breakdown of Net Sales/Gross Profit Forecasts 2018 Although steady progress in 2H, the influence of large-scale periodic maintenance will remain. Net Sales (Annual Forecasts) Gross Profit (Annual Forecasts) Performance Materials 38.8 bn Electronic Materials 11.6 bn 38% Other 0.7 bn 1% 11% bn 50% Basic Chemicals 50.4 bn Electronic Materials 3.0 bn Performance Materials 11.5 bn 53% Other 0.2 bn 1% 14% 21.8 bn 32% Basic Chemicals 7.1 bn Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance Materials 機能性材料 (refrigeration lubricants raw materials, ( 冷凍機油原料 化粧品原料等 cosmetic raw materials, etc.) ) Electronic Materials (high-purity solvents, etc.) 19

21 Summary of Results H In H, both revenue and profit declined year on year. Net sales decreased 1.1 bn year on year (-3%) Operating income decreased 1.7 bn year on year (-29%) Sales prices hike Decrease in production/sales and increase in costs due to periodic maintenance [+] [-] Rise in the investment ratio to the subsidiary (Kurogane Kasei Co., Ltd.) 70.1% as of the end of June 2018 (+16.7%) Full-year forecasts 2018, an increase in revenue and profit is expected from the initial forecasts. Net sales will increase 4.5 bn from the initial forecast (+5%) Operating income will increase 0.3 bn from the initial forecast (+3%) Strong demand environment and increase in production/sales Pricing reflecting raw material prices and strong demand [+] [+] 20

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

23 Balance Sheet H Shareholders equity increased due to the accumulation of profits and a rise in the investment ratio to the subsidiary. 2017/ /6 Changes Current assets Current and non-current liabilities 2017/ /6 Changes Cash and deposits Accounts payable - trade Accounts receivable - trade Interest-bearing debt Inventories Other Other Shareholders equity Non-current assets Capital stock and capital surplus Property, plant and equipment Retained earnings Intangible assets Accumulated other comprehensive income Other Non-controlling interests Total assets Liabilities and net assets

24 Statement of Cash Flows H Cash flows from operating activities decreased due to periodic maintenance and an increase in taxes paid H H Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Changes in cash and cash equivalents Increase in cash and cash equivalents due to new consolidation Balance of cash and cash equivalents

25 Development in Results (Quarterly) Income declined due to a decrease in the production/sales volume attributable to periodic maintenance and an increase in maintenance costs. Net sales Operating income Net income Q 3Q 4Q 1Q 2Q Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q

26 Development in Results by Segment Periodic maintenance caused the greatest impact in 2Q. Net sales Gross profit Other Electronic Materials Performance Materials Basic Chemicals /2Q 3Q 4Q 18/1Q 2Q 17/2Q 3Q 4Q 18/1Q 2Q Basic Chemicals (plasticizer raw materials, solvents, etc.) Performance Materials 機能性材料 (refrigeration lubricants raw ( materials, 冷凍機油原料 化粧品原料等 cosmetic raw materials, ) etc.) Electronic Materials (high-purity solvents, etc.) 25

27 CAPEX, Depreciation and R&D Expenses (Quarterly) The production base was strengthened through the active maintenance of facilities. CAPEX Depreciation R&D expenses Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q

28 Inventories, Interest-bearing Debt and Shareholders Equity ratio (Quarterly) The equity ratio rose steadily. (%) Inventories Interest-bearing debt Equity ratio Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q

29 Results of Consolidated Subsidiaries H H 1H Changes Kurogane Kasei Co., Ltd. Kurogane Fines Inc. KH Neochem Americas Net sales Operating income Net sales Operating income Net sales Operating income

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.