Financial Results for FY216-Q2 July, 216 OSG Corporation 216 OSG Corporation
OSG at glance 1. Products Tools to cut threads Consumable cutting tools used in machine tools Tap World leader in market share (3%) in taps Tools to shape metal 2. Strengths High-value added cutting tools Excellent after-sales service Global sales & service network across 3 countries 3. Dividend policy Maintain over 3% payout ratio (consolidated) 4. Growth strategies Development of New Customers Flagship Products Strategy M&A strategy End mill Tools to form threads Rolling dies Tools to make holes Drill Tools to shape metal Indexable tools Note regarding forecast This material includes forward-looking statements based on information available at the time of release. The forecasts and other forward-looking statements are not guarantees of future performance. Actual financial results may differ from the above forecasts due to known and unknown risks, uncertainties, and other factors. 216 OSG Corporation 1
Financial summary FY15-1H FY16-1H Change FY16 fcst. Annual Net sales 56,187 53,484-2,73-4.8% 16, Operating profit 11,16 9,835-1,18-1.7% 18, OPM 19.6% 18.4% - - 17.% (Millions of yen) * 35, 3, 25, 2, Ordinary profit 1,971 9,462-1,58-13.8% 17,7 Net profit attributable to OSG Corporation 6,614 5,816-798 -12.1% 1,7 EPS(yen) 69.66 62.52-7.14-12.1% 115.2 7, 7, 4,5 FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16 6, 4, 6, 5, 4, 5, 4, 3,5 3, 2,5 *Revised Net sales Operating profit Ordinary profit Net profit 15, 3, 3, 2, 1, 5, 2, 1, 2, 1, 1,5 1, 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 216 OSG Corporation 2
Review Decrease in sales and profit The reduction in sales and operating profits in China and the US has caused a decline in sales and profits. Sales compared with the previous first-half was flat, excluding exchange rate factors. Stable financial condition Equity ratio 59.6% (purchasing of treasury stock, 6.5 point decrease from the end of FY215) EBITDA in 6 months (margin) 136 billion yen (25.5%) ROE 12.9% (as of the end of FY215) Review by region Japan The domestic sales was increased, however overseas slowdown in China and the US resulted in a negative impact on OSG Japan export. The Americas The revenue grew on a local currency basis in Mexico and Canada, however, overall downturn in the American markets generally. Europe Tool demand was steady in this segment and the results of the companies acquired by M&A boosted sales and profits. On a local currency basis, sales and profit grew. Asia The results of Greater China were negatively affected by the slowdown of manufacturing industries in China. Conditions in India and Korea remained good. Capital Investment Results - CAPEX 6.7 billion yen (annual forecast of 12.5 billion yen) - Depreciation 3.8 billion yen (annual forecast of 8.1 billion yen) 216 OSG Corporation 3
Operations by geographical segment FY15-Q1 FY16-Q1 Change Japan Net Sales 33,68 33,16-51 -1.5% O.P 5,711 5,5-76 -12.4% O.P.M 17.% 15.1% The Americas Net Sales 11,66 9,87-1,195-1.8% O.P 1,71 1,37-33 -19.4% O.P.M 15.4% 13.9% Europe Net Sales 5,593 6,418 825 +14.8% O.P 677 669-7 -1.1% O.P.M 12.1% 1.4% Asia Net Sales 16,852 13,946-2,96-17.2% O.P 3,543 2,44-1,12-31.1% O.P.M 21.% 17.5% Total Net Sales 67,12 63,342-3,777-5.6% O.P 11,633 9,486-2,146-18.5% (Millions of yen) Eliminations Net Sales -1,933-9,858 1,74 - O.P -617 348 965 - Consolidated Net Sales 56,187 53,484-2,73-4.8% O.P 11,16 9,835-1,18-1.7% O.P.M 19.6% 18.4% 216 OSG Corporation 4
Net sales by geographical segment 2, 16, 12, Japan 17,776 17,323 16,874 16,229 15,597 15,831 16,288 17,94315,783 14,545 7, 6, 5, 4, 4,55 4,191 5,637 5,428 4,934 4,768 The Americas 5,629 5,288 4,839 5,31 (Millions of yen) 8, 4, 4, 3, 2, 1, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY14 FY15 FY16 FY14 FY15 FY16 2,46 2,541 2,561 2,47 Europe 2,855 2,738 2,799 3,2 3,76 3,341 3, 2, 1, 1, 8, 6, 4, 2, 7,59 7,226 6,515 6,63 Asia 8,927 8,589 7,925 7,414 7,152 6,793 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY14 FY15 FY16 FY14 FY15 FY16 216 OSG Corporation 5
Operating profit by geographical segment 3,5 3, 2,5 2, 2,241 2,14 2,573 2,567 2,393 3,144 Japan 2,89 2,798 2,333 2,672 1, 8 6 515 667 616 (Millions of yen) The Americas 946 878 822 84 711 659 1,5 1, 5 4 2 24 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY14 FY15 FY16 FY14 FY15 FY16 Europe 2,4 Asia 4 3 2 254 31 332 228 29 386 282 287 328 341 2, 1,6 1,2 8 1,25 1,145 1,475 1,443 1,561 1,982 1,675 1,262 1,76 1,178 1 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY14 FY15 FY16 FY14 FY15 FY16 Q3 Q4 216 OSG Corporation 6
Overseas sales ratio Millions of yen FY16-1H 12, 1, 8, 6, 48.6% 49.7% 48.% 53.5% 54.6% 57.8% 55.3% 6.% 5.% Europe 12.% 4.% 3.% Asia 25.1% AM 18.2% Japan 44.7% 4, 2, 2.% 1.% Asia Europe The Americas Japan FY1 FY11 FY12 FY13 FY14 FY15 FY16-1H.% 216 OSG Corporation 7
B/S overview 15/11E 16/5E Change Cash & TD 21,472 18,123-3,348 Receivables 21,519 2,14-1,378 Inventories 3,673 31,54 381 Other current assets 5,26 5,675 648 Fixed assets 76,437 76,255-181 Total assets 155,129 151,249-3,879 Total current liabilities 23,515 25,528 2,13 Total long-term liabilities 17,976 25,568 7,592 Total net assets 113,637 1,152-13,485 Total liabilities and net assets 155,129 151,249-3,879 Equity ratio 66.1% 59.6% Receivable turnover period 7 69 days Inventory turnover period 3.3 3.5 months Cash and TD 21,472 18,123-3,348 Debt 2,195 32,712 12,516 Net Cash 1,276-14,588-15,865 1, 5, -5, -1, -15, Changes in B/S (Millions of yen) +7,592 +2,13 +381 +648-181 -1,378-3,348-13,485 Net assets Long-term liabilities Current liabilities Other current assets Fixed assets Inventories Receivables Cash and TD 216 OSG Corporation 8
Cash flow overview FY14 FY15 15/1H 16/1H Change Income before income taxes 17,419 21,363 1,971 9,462-1,58 Depreciation and amortization 6,83 7,75 3,681 3,86 125 Chagne in accounts receivables -933 226 132 147 15 Change in inventories 526-2,32-798 -1,978-1,18 Chagne in accounts payables -269 592-328 22 53 Other-net 678-32 -32-176 144 Income taxes paid -4,563-7,964-4,528-3,721 86 Operating cash flow 19,688 19,588 8,88 7,742-1,66 Capital expenditures -7,327-12,487-5,42-6,737-1,335 Payment of time deposits 6,135-1,195-2,723 411 3,134 Purchase of subsidaries' stock -1,18-2,137-455 -2,882-2,427 Purchase of securities -7-17 -88-95 -7 Other-net -811-1,47-534 -111 422 Investing cash flow -3,119-16,976-9,24-9,416-211 Free cash flow 16,569 2,612-395 -1,673-1,278 Change in interest-bearing debt -9,383 11 399 12,671 12,272 Payments of Long-term accounts payable -1,39-1,4 1,4 Cash dividends paid -3,223-4,368-1,893-1,899-6 Purchase of treasury stock -6-6 -3-9,333-9,329 Increase in money held in trust for purchase of treasury stock - - -1,2-1,2 Dividends paid to noncontrolling interests -2-553 -364-259 14 Other-net 13 13 Financing cash flow -12,813-6,216-3,262 188 3,451 Foreign currency translation adjustments 915-854 54-1,597-1,651 Net increase(decrease) in cash 4,67-4,458-3,63-3,81 521 Cash from newly consolidated subsidiaries 182 182 357 174 Net increase in cash resulting from change in fiscal period of consolidated subsidiaries 2,24 2,24-2,24 Cash, end of year 21,474 19,42 2,257 16,678-3,579 14 12 1 8 6 4 2 35, 3, 25, 2, 15, 1, 5, (Millions of yen) CAPEX and depreciation FY13 FY14 FY15 FY16/1H Depreciation CAPEX EBITDA 4% 29,32 35% 24,246 25.5% 3% 19,544 25% 26.2% 2% 22.1% 24.% 13,642 15% 1% 5% % FY13 FY14 FY15 FY16/1H EBITDA EBITDA Margin 216 OSG Corporation 9
Forecast for FY216 (Revised) Financial forecast (Revised) Consolidated Parent company Amount Growth Amount Growth Net Sales 16, -5.3% 5, -6.% Operating profit 18, -16.7% 6, -28.8% as % of sales 17.% 12.% Ordinary profit 17,7-17.7% 8, -27.6% as % of sales 16.7% 16.% Net profit attributable to OSG Corporation 1,7-14.5% 6,1-22.9% as % of sales 1.1% 12.2% EPS (yen) 115.2 65.57 CAPEX 12,5 Depreciation 8,1 Exchange rate FY215-1H result : 1US$= 12.16yen 1Euro=135.38yen FY216-1H result : 1US$= 114.75yen 1Euro=127.25yen FY216 forecast : 1US$= 18.5yen 1Euro=12.yen Dividend forecast Payout Interim Year-end Annual ratio Dividend per share (yen) 22. 28. 5. 43.5% Sales 12, 1, 8, 6, 4, 2, '1 Consolidated results '11 Sales O.P N.P '12 '13 '14 (Millions of yen) '15 '16fcst Profit 24, 2, 16, 12, 8, 4, 216 OSG Corporation 1
Expansion of overseas business Sales org. Production and sales org. The Americas 1968 OSG USA (USA) 1974 OSG Sulamericana de Ferramentas (Brazil) 1988 OSG Canada 1994 OSG Royco (Mexico) 213 PRIMUS COATING (Mexico) 216 AMAMCO (USA) Europe 1997 OSG Europe Logistics (Belgium) 1997 OSG France 1997 OSG Nederland (Netherlands) Europe 1999 OSG UK 2 OSG Scandinavia (Denmark) 22 OSG Comaher (Spain) 23 OSG GmbH (Germany) 23 OSG Italia 29 OSG Slovakia (Slovakia) 29 OSG Scandinavia, Sweden Branch (Sweden) 212 OSG Turkey 212 Romsan International (Romania) 212 OSG POLAND 213 OSG PN TOOLS (UK) 214 OSG Belux (Belgium) 215 OSG DAVID (Belgium) 215 Desgranges (France) 216 Flatley Engineering(Ireland) Asia 197 Taiho Tool (Taiwan) 1985 OSG Korea 199 OSG Asia (Singapore) 1996 OSG Thailand 1997 Da-Bao (Dongguan) Tool (China) 2 OSG Asia, Malaysia Branch (Malaysia) 21 OSG Shanghai (China) 21 Carbide Cutting Tool (India) 24 OSG Shanghai plant (China) 25 OSG India 27 OSG Trading (China) 27 OSG Indonesia 27 Ningbo Dabao (China) 27 OSG Asia, Australia Branch (Australia) 28 QINGDAO HAOTAI (China) 28 Kunshan Dabao (China) 28 OSG Vietnam 28 OSG Philippines 211 Taiho Coating Service (Taiwan) 216 OSG Corporation 11
Appx.1 Consolidated balance sheet (Millions of yen) 15/11E 16/5E Change 15/11E 16/5E Change Current Assets 78,692 74,994-3,698 Current Liabilities 23,515 25,528 2,13 Cash & time deposits 21,472 18,123-3,348 Payables 4,98 4,559-42 Receivables 21,519 2,14-1,378 Short-term loans payable 4,52 8,927 4,874 Inventories 3,673 31,54 381 Current Portion of LT loans payable 445 563 117 Other 5,215 5,861 646 Income taxes payable 3,486 2,377-1,18 Allowance for -188-186 1 Accured expenses 6,715 6,147-568 doubtful accounts Other 3,834 2,953-88 Fixed Assets 76,437 76,255-181 Long-term Liabilities 17,976 25,568 7,592 PP&E 63,276 62,629-647 Convertible bonds 14,85 14,85 Intangible assets 1,254 3,72 2,465 Long-term loans payable 847 8,37 7,523 Investments & other 11,96 9,96-2, Other 2,279 2,348 68 Total Liabilities 41,491 51,97 9,65 Total Equity 113,637 1,152-13,485 Common stock 1,44 1,44 Capital surplus 12,9 12,9 Retained earnings 75,719 79,59 3,789 Current ratio 335% 294% -41pt Treasuary stock -1,14-1,464-9,359 Quick ratio 183% 15% -33pt Unrealzed gain on 2,79 1,77-939 Equity capital 12,566 9,82-12,483 available-for-sale securities Equity ratio 66.1% 59.6% -6.5pt Deferred gain on 2 4 38 Equity per share(yen) 1,79.12 997.78-81.34 derivatives under hedge accounting Interest-beating debt 2,195 32,712 +12,516 Foreign currency 2,745-3,267-6,12 Net Cash 1,276-14,588-15,865 translation adjustments Subscription rights to shares - 13 13 Noncontrolling interests 11,71 1,56-1,14 Total 155,129 151,249-3,879 Total 155,129 151,249-3,879 216 OSG Corporation 12
Appx.2 Consolidated income statement (millions of yen) FY215 Q1 Q2 Q3 Q4 FY216 Q1 Q2 1H FY215 1H Change % % % % % Net sales 26,665 29,521 27,637 28,92 25,814 1. 27,67 1. 53,484 1. 56,187 1. -2,73-4.8 Cost of sales 14,899 16,424 14,84 15,71 14,153 54.8 15,512 56.1 29,666 55.5 31,324 55.7-1,657-5.3 Gross profit 11,765 13,97 12,797 12,391 11,66 45.2 12,157 43.9 23,817 44.5 24,862 44.3-1,45-4.2 SG&A expenses 6,911 6,935 7,133 7,474 6,869 26.6 7,112 25.7 13,982 26.1 13,846 24.6 135 +1. Operating profit 4,854 6,161 5,663 4,917 4,791 18.6 5,44 18.2 9,835 18.4 11,16 19.6-1,18-1.7 Non-operating profit 334 245 317 338 329 244 574 58-5 Non-operating expenses 42 25 32 376 642 34 947 625 322 Ordinary profit 4,769 6,21 5,66 4,878 4,478 17.3 4,984 18. 9,462 17.7 1,971 19.5-1,58-13.8 Extraordinary gain Extraordinary loss 147 Profit before taxes 4,769 6,21 5,66 4,731 4,478 17.3 4,984 18. 9,462 17.7 1,971 19.5-1,58-13.8 Income taxes 1,63 1,893 1,929 1,773 1,456 1,551 3,7 3,523-516 Net profit attributable to noncontrolling interests Net profit attributable to OSG Corporation 336 496 44 382 316 321 638 833-194 2,83 3,811 3,327 2,576 2,75 1.5 3,11 11.2 5,816 1.9 6,614 11.8-798 -12.1 216 OSG Corporation 13
Appx.3 Selected financial data (consolidated) 27 28 29 21 211 212 213 214 215 216-1H Net sales (mill.yen) 94,164 97,24 53,325 69,513 8,959 84,83 88,378 11,31 111,917 53,484 Sales growth (%) 6% 3% -45% 3% 16% 4% 5% 14% 11% -5% Cost of sales (mill.yen) 58,159 6,449 39,23 44,65 48,439 49,381 52,777 58,61 61,865 29,666 Gross profit (mill.yen) 36,4 36,574 14,122 24,97 32,519 34,72 35,61 42,97 5,51 23,817 SG&A expenses (mill.yen) 2,647 22,158 16,857 17,383 2,214 2,747 22,774 25,554 28,454 13,982 Operating income (mill.yen) 15,356 14,416-2,735 7,524 12,35 13,954 12,827 17,415 21,597 9,835 Ordinary income (mill.yen) 14,57 13,55-2,73 6,699 11,374 13,695 13,91 17,568 21,51 9,462 Net income attributable to OSG corp. (mill.yen) 8,13 7,376-3,769 3,772 5,94 7,138 8,619 9,989 12,518 5,816 Gross profit / sales (%) 38.2% 37.7% 26.5% 35.8% 4.2% 41.3% 4.3% 42.5% 44.7% 44.5% SG&A expenses / sales (%) 21.9% 22.8% 31.6% 25.% 25.% 24.7% 25.8% 25.3% 25.4% 26.1% Operating income / sales (%) 16.3% 14.9% -5.1% 1.8% 15.2% 16.6% 14.5% 17.2% 19.3% 18.4% Ordinary income / sales (%) 15.5% 13.9% -5.1% 9.6% 14.% 16.3% 15.7% 17.4% 19.2% 17.7% Net income attributable to OSG corp. / sales (%) 8.5% 7.6% -7.1% 5.4% 7.3% 8.5% 9.8% 9.9% 11.2% 1.9% Average FX rate: 1USD (yen) 118.89 17.32 94.94 89.29 8.71 78.89 93.16 12.98 121.3 114.75 Average FX rate: 1Euro (yen) 159. 161.9 128.83 12.65 112.8 12.63 122.62 139.37 134.92 127.25 Total assets (mill.yen) 127,44 122,383 113,382 15,635 14,373 121,689 134,53 142,32 155,129 151,249 Total shareholders' equity (mill.yen) 64,295 64,251 55,931 57,117 59,367 64,482 8,24 91,458 12,566 9,82 Net income (yen) 82.42 76.53-39.22 39.34 62.18 75.16 9.76 15.2 131.78 62.52 Cash diviends (interim) (yen) 12. 12.. 4. 6. 1. 1. 14. 26. 22. (year end) (yen) 14. 12. 3. 8. 12. 13. 2. 2. 2. 28.(fcst) Total shareholders' equity (yen) 667.1 666.71 582.19 61.44 625.14 679.1 842.71 963.15 1,79.12 997.78 Numbers of shares issued (ths) 96,393 96,371 96,71 94,969 94,967 94,966 94,963 94,959 94,991 93,24 ROE (%) 12.9% 11.5% -6.3% 6.7% 1.1% 11.5% 11.9% 11.7% 12.9% - Equity ratio (%) 5.6% 52.5% 49.3% 54.1% 56.9% 53.% 59.5% 64.3% 66.1% 59.6% Operating cash flow (mill.yen) 16,733 1,653 6,49 14,95 11,344 12,286 16,171 19,688 19,588 7,742 Investing cash flow (mill.yen) -9,19 1,678-4,633-5,522-8,195-19,746-2,972-3,119-16,976-9,416 Financing cash flow (mill.yen) -6,821-4,5 5,47-15,562-5,855 8,643-9,423-12,813-6,216 188 Cash flow margin (%) 17.8% 11.% 11.3% 2.3% 14.% 14.6% 18.3% 19.5% 17.5% 14.5% 216 OSG Corporation 14
216 OSG Corporation