s Presentation KITZ CORPORATION May 2018 The forecast data presented herein reflects assumed results based on conditions that are subject to change. KITZ Corporation does not make representations as to, or warrant, in whole or in part, the attainment or realization of any of the forecasted results presented in this document. Numerical figures presented herein are rounded down. 2018 KITZ CORPORATION All Rights Reserved
s (Consolidated) vs Sales 114,101 123,000 124,566 10,464 9.2% 1,566 1.3% Valve Manufacturing 91,766 97,800 98,162 6,396 7.0% 362 0.4% Brass Bar Manufacturing 19,333 22,500 23,535 4,202 21.7% 1,035 4.6% Operating Income 8,929 7.8% 10,000 8.1% 10,117 8.1% 1,188 13.3% 117 1.2% Valve Manufacturing 11,444 12,700 12,798 1,354 11.8% 97 0.8% Brass Bar Manufacturing 831 650 699 (132) (16.0%) 49 7.6% Ordinary Income 8,799 9,700 9,733 934 10.6% 33 0.3% Net income attributable to owners of the parent 5,400 6,300 6,518 1,117 20.7% 218 3.5% Yen / US Dollar 109.45 110.00 112.04 Yen / Euro 120.59 120.00 127.09 *Note : Total Sales and Operating Income include other segment and adjustment.. Electrolytic Copper, Yen/ton 604,000 760,000 757,000 2018 KITZ CORPORATION All Rights Reserved 2
Valve Manufacturing Business Domestic Sales Sales of valves for building facilities increased due to beginning of deliveries for large construction projects mainly in Tokyo metropolitan area. As for industrial valve, demand for maintenance works was firm. Demand of valves for water works was weak as municipal budget implementation has not progressed as expected. Valves for semiconductor manufacturing equipment continued to show good growth. Production capacity of valves for semiconductor increased according to schedule. Q1 Q2 Q3 Q4 Domestic Total 58,600 15,200 15,400 16,700 16,700 64,200 5,600 10% Building Facilities 25,400 6,800 6,600 6,900 7,000 27,300 1,900 7% Water (supply, sewer, industrial filter) 7,600 1,600 2,100 2,300 2,000 8,000 400 5% Semiconductor 5,600 1,700 1,900 2,100 2,300 8,000 2,400 43% Machinery 5,600 1,500 1,500 1,600 1,600 6,100 500 9% Petrochemical 2,500 700 700 700 600 2,700 200 8% General Chemical 2,100 500 500 600 600 2,200 100 5% Food and Paper 3,700 900 900 1,000 1,000 3,900 200 5% Gas 2,800 800 700 800 800 3,100 300 10% Power t 600 200 200 200 200 800 200 33% Project (LNG, etc) 2,500 400 400 300 600 1,700 (800) (32%) *Note : Sales of each market in Japan are our estimated amount. 2018 KITZ CORPORATION All Rights Reserved 3
Valve Manufacturing Business Overseas Sales Sales of valves for semiconductor manufacturing equipment grew significantly in Korea and China. In China, demand of commercial valves especially for data center increased. In Americas (North, Middle and South America) and Europe, demand of industrial valves was still weak in Oil&Gas market, especially for downstream. In ASEAN, sales slightly increased. New marketing bases were established in that area. Delivery of valves for large project in Middle East postponed to FY2018. Q1 Q2 Q3 Q4 Overseas Total 33,100 7,700 8,500 8,500 9,200 34,000 800 3% ASEAN and other 11,300 2,900 3,500 3,000 3,700 13,100 1,800 16% (for semiconductor) 1,700 600 700 500 500 2,400 700 41% China 5,400 1,500 1,500 1,700 1,800 6,500 1,100 20% (for semiconductor) 1,100 500 400 500 500 2,000 900 72% Middle East 1,200 200 500 200 300 1,200 - -% Asia total 18,000 4,600 5,500 4,900 5,800 20,800 2,800 16% Americas 10,600 2,300 2,300 2,700 2,500 10,000 (600) (6%) Europe 4,300 800 600 800 900 3,200 (1,100) (26%) 2018 KITZ CORPORATION All Rights Reserved 4
Valve Manufacturing Business Operating Income vs Sales 91,766 97,800 98,162 6,396 7.0% 362 0.4% Operating Income 11,444 12,700 12,798 1,353 11.8% 97 0.8% Millions of yen 20,000 15,000 Sales Increase +2,180 Cost Reduction +1,620 10,000 Material Cost (1,250) SG&A (1,100) 114.4 11,444 億円 128.0 12,798 億円 Forex (100) 5,000 0 2018 KITZ CORPORATION All Rights Reserved 5
Brass Bar Manufacturing Business Sales Sales increased compared with the previous term due to rise in selling price arising from copper market trend, even though sales volume slightly declined. Operating Income Operating profit decreased 16% impacted by fluctuation in copper market in Q4, although productivity has improved as a result of enhancement of manufacturing lines. vs Sales 19,333 22,500 23,535 4,202 21.7% 1,035 4.6% Operating Income 831 650 699 (132) (16.0%) 49 7.6% Electrolytic Copper, Yen/ton 604,000 760,000 757,000 1,000/ton Electric Copper (From April 2015 to March 2018) 900 800 700 600 500 400 15/4 15/7 15/10 16/1 16/4 16/7 16/10 17/1 17/4 17/7 17/10 18/1 Brass rods 2018 KITZ CORPORATION All Rights Reserved 6
Other KITZ subsidiary Hotel Beniya Co., Ltd. operates a resort hotel in Suwa city, Nagano pref. Sales and operating income decreased compared with the previous term. In the previous term, there was a big festival Onbashira in Suwa area. Also, number of inbound customers especially from Taiwan did not grow as expected. vs Sales 3,002 2,700 2,867 (134) (4.5%) 167 6.2% Operating Income 59 0 (28) (87) - (28) - Hotel Beniya in Suwa city, Nagano pref. 2018 KITZ CORPORATION All Rights Reserved 7
Other income/expense Extra ordinary income / loss Note () Operating Income 8,929 10,117 1,188 Non-operating Income 768 793 24 Non-operating Expense 898 1,177 278 Forex loss 208( : 19) Ordinary income 8,799 9,733 944 Extraordinary income 2,152 883 (1,268) Gain on sales of securities 869( : 2,097) Extraordinary loss 3,925 502 (3,423) Impairment loss 386( : 3,598) Net Income before income taxes and minority interests 7,025 10,114 3,088 Income Taxes 1,509 3,513 2,003 Net Income 5,515 6,601 1,085 Net Income attributable to noncontrolling interests Net Income attributable to owners of the parent 115 82 (32) 5,400 6,518 1,117 2018 KITZ CORPORATION All Rights Reserved 8
2018 KITZ CORPORATION All Rights Reserved 9 Balance Sheet Compared to March 2017, cash and deposits increased due to the 4 th issuance of unsecured corporate bonds of 10 billion in March 2018. Current asset increased due to expansion of sales volume and rise of material price. Fixed asset increased due to capital investment for production capacity expansion and new IT System. Liabilities also increased due to the issuance of corporate bonds. Asset March 2017 March 2018 Variance Liabilities March 2017 March 2018 Variance Current Asset 67,972 78,807 10,835 Current Liabilities Fixed Asset 51,175 55,379 4,204 Fixed Liabilities 19,608 24,139 4,531 24,647 32,656 8,008 PPE 34,722 36,799 2,076 Total Liabilities 44,255 56,796 12,540 Intangible 6,881 8,951 2,070 Investment and others 9,571 9,628 57 Net Asset 74,892 77,391 2,498 Total Asset 119,148 134,187 15,039 Total Liabilities and Net Assets 119,148 134,187 15,039
Cash Flows March 2017 March 2018 Operating Cash Flow 12,979 6,941 (6,038) (46.5%) Investing Cash Flow (2,141) (7,066) (4,925) - Free Cash Flow 10,838 (125) (10,964) - Financing Cash Flow (6,838) 5,267 12,106 - Cash and cash equivalents at the end of the period 16,799 22,019 5,220 31.1% 2018 KITZ CORPORATION All Rights Reserved 10
Financial Highlight Consolidated Sales 114,101 124,566 Operating Income 8,929 10,117 Ordinary Income 8,799 9,733 Net Income attributable to owners of the parent 5,400 6,518 Overseas Sales Ratio 29.7% 27.9% Total Asset 119,148 134,187 Net Asset 74,892 77,391 Interest Bearing Debt 24,787 34,302 ROE 7.3% 8.7% Equity Ratio 61.9% 56.8% BPS(Yen) 727.78 782.98 EPS(Yen) 51.43 65.50 2018 KITZ CORPORATION All Rights Reserved 11
FY2018 FY2018 Q1+Q2 Q3+Q4 Total Sales 124,566 66,000 66,000 132,000 7,433 6.0% Operating Income 10,117 8.1% 5,500 8.3% 5,700 8.6% 11,200 8.5% 1,083 10.7% Ordinary Income 9,733 7.9% 5,400 8.2% 5,500 8.3% 10,900 8.3% 1,167 12.0% Net Income attributable to owners of the parent 6,518 5.3% 3,500 5.3% 3,600 5.5% 7,100 5.4% 582 8.9% ROE 8.7% - - 9.1% - - EPS(Yen) 65.50 - - 72.93 円 7.18 円 10.9% Yen / US Dollar 112.04 109.0 Yen / Euro 127.09 132.0 Electrolytic Copper, Yen/ton 757,000 800,000 2018 KITZ CORPORATION All Rights Reserved 12
FY2018 (By Segment) Sales FY2018 Q1+Q2 Q3+Q4 Total Q1+Q2 Q3+Q4 Total Valve 46,951 51,211 98,162 52,600 52,400 105,000 Brass Bar 11,046 12,489 23,535 11,700 12,300 24,000 Other 1,594 1,271 2,867 1,700 1,300 3,000 Total 59,592 64,974 124,566 66,000 66,000 132,000 Operating Income FY2018 Q1+Q2 Q3+Q4 Total Q1+Q2 Q3+Q4 Total Valve 5,606 7,191 12,797 6,700 7,200 13,900 Brass Bar 342 356 699 330 320 650 Other 56 (84) (28) 80 (30) 50 Adjustment (1,690) (1,661) (3,351) (1,600) (1,800) (3,400) Total 4,314 5,802 10,116 5,500 5,700 11,200 2018 KITZ CORPORATION All Rights Reserved 13
Valve Manufacturing Business Environment Domestic Try to penetrate new prices into the market. For building facilities, delivery to large-scale projects in the metropolitan area will get into full swing. In 2H of FY2018, delivery related to Tokyo Olympics and Paralympics will be expected. In the industrial valve market, maintenance and renewal demand will be the main focus of the business. Expect some users make capital investment for new plant. As for semiconductor market, super cycle will continue and the demand of valves will be favorable. Overseas In the North American market, there is a feeling of bottoming out. Capital investment in Oil&Gas market improve and the distributors begin to increase their inventories. In the ASEAN region, demand of valves gradually improves. Establish new marketing bases in each countries and try to develop new product based on the local needs. In China, commercial valves for construction equipment such as data center continue to be strong. As for industrial valve, there is a feeling of bottoming out. In Europe, the market of industrial valves will continue in severe situation. Deliveries of valves for large project in Middle East will be completed in 1H 2018. 2018 KITZ CORPORATION All Rights Reserved 14
Valve Manufacturing Business Domestic Sales FY2018 Domestic Total 66,500 Building Facilities 28,400 Water (supply, sewer, industrial filter) 8,200 Semiconductor 8,200 Machinery 6,800 Petrochemical 6,000 General Chemical 2,400 Food and Paper 2,200 Gas 2,100 Project (LNG, etc) 2,200 2018 KITZ CORPORATION All Rights Reserved 15
Valve Manufacturing Business Overseas Sales FY2018 Overseas Total 34,000 38,500 4,500 13% ASEAN and other 13,100 15,200 2,100 16% (for semiconductor) 2,400 2,800 400 17% China 6,500 6,900 400 6% (for semiconductor) 2,000 2,000 - -% Middle East 1,200 3,000 1,800 150% Asia total 20,800 24,800 4,000 20% Americas 10,000 10,400 400 4% Europe 3,200 3,000 (200) (6%) 2018 KITZ CORPORATION All Rights Reserved 16
Valve Manufacturing Business OP Change (Millions of yen) FY2018 Operating Income 12,797 13,900 1,102 8.6% (Millions of yen) 25,000 20,000 15,000 10,000 12,797 Sales Increase +2,950 Cost Reduction +1,500 Material Cost (1,000) SG&A (2,400) Forex +50 13,900 110 億円 5,000 0 FY2018 2018 KITZ CORPORATION All Rights Reserved 17
Brass Bar Manufacturing Business Others Brass Bar Manufacturing Business Copper Price :800,000 yen/ton (Average Price in : 760,000 yen/ton) Domestic demand of brass bar is expected to decrease slightly compare to. Operating profit will decrease due to increase of depreciation and labor cost. The company will focus on improvement of productivity and expansion of sales of value added product. Brass Bar FY2018 Sales 23,535 24,000 464 2.0% Operating Income 699 650 (49) (7.0%) Others The company will strengthen online-reservation, obtain more reservation from domestic group travelers to achieve target. Others FY2018 Sales 2,867 3,000 132 4.6% Operating Income (28) 50 78-2018 KITZ CORPORATION All Rights Reserved 18
Capex and Depreciation <Capex > FY2018 Valve Manufacturing (Excl. IT) 4,700 5,000 6,100 Brass Bar Manufacturing 600 1,300 2,700 IT 1,800 3,200 1,500 Other 100 100 100 Total 7,300 9,800 10,500 <Depreciation > FY2018 Depreciation 4,100 4,200 5,000 2018 KITZ CORPORATION All Rights Reserved 19
FY2018() Financial Highlight Consolidated FY2018 Sales 124,566 132,000 Operating Income 10,117 11,200 Ordinary Income 9,733 10,900 Net Income attributable to owners of the parent 6,518 7,100 Overseas Sales Ratio 27.9% 29.8% Interest Bearing Debt 34,302 30,675 ROE 8.7% 9.1% Equity Ratio 56.8% 58.8% BPS(Yen) 782.98 832.00 EPS(Yen) 65.50 72.93 2018 KITZ CORPORATION All Rights Reserved 20
For questions concerning this material, please contact: KITZ Corporation Publicity and IR Promotion office E-mail : k-kouhou@kitz.co.jp 2018 KITZ CORPORATION All Rights Reserved