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©2018 KITZ CORPORATION All Rights Reserved

FY2018 3rd Quarter (April – December)

Results Presentation

KITZ CORPORATION

February 2019

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 ｜2

FY2018 3rd Quarter Results

FY2017

Q3

Result

FY2018

Q3

Plan

FY2018

Q3

Result

YoY Plan vs Result

Sales 91,667 99,710 103,207 11,540 12.6% 3,497 3.5%

Valve Manufacturing 72,229 79,204 82,746 10,516 14.6% 3,542 4.5%

Brass Bar Manufacturing 17,136 18,084 18,027 890 5.2% (56) (0.3%)

Operating Income 7,250

(7.9%)

9,045

(9.1%)

9,545

(9.2%) 2,295 31.7% 500 5.5%

Valve Manufacturing 9,167 11,280 11,834 2,666 29.1% 554 4.9%

Brass Bar Manufacturing 559 264 238 (320) (57.3%) (25) (9.6%)

Ordinary Income 6,973 8,865 9,609 2,636 37.8% 744 8.4%

Net income attributable to owners of the parent

4,694 5,846 4,009 (685) (14.6%) (1,836) (31.4%)

Yen / US Dollar 111.80 110.00 109.64

Yen / Euro 125.20 130.00 130.61

Electrolytic Copper, Yen/ton 743,000 760,000 753,000

*Note : Total Sales and Operating Income include other segment and adjustment..

(Millions of Yen)


Valve Manufacturing Business – Domestic Sales

Demand of valves for building facilities was strong as deliveries for redevelopment projects in Tokyo Metropolitan area continued. Penetration of price revision in the market progressed in Q3 and had positive effect on both sales and profit. Demand of valves for water works was rather weak especially in Tokyo. Trend of order volume of valves for semiconductor manufacturing equipment changed downward in Q3. As for industrial valve, sales increased thanks to capex increase by end users of various industries (chemical, food, medical etc.). They aggressively invest especially for expansion of production capacity of plant.

FY2017

Q3 Q1 Q2 Q3

FY2018

Q3 YoY

Domestic Total 47,400 16,800 17,500 18,300 52,600 5,200 11%

Building Facilities 20,400 7,300 7,300 7,500 22,200 1,800 9%

Water (supply, sewer, industrial filter)

6,000 1,500 2,000 2,400 5,900 (100) (2%)

Semiconductor 5,700 2,300 2,300 2,400 6,900 1,200 21%

Machinery

15,100

1,800 1,800 2,000 5,600

2,500 17%

Petrochemical 1,700 1,700 1,700 5,100

General Chemical 700 700 700 2,100

Food and Paper 600 600 600 1,700

Gas, Power Plant 600 600 600 1,800

Project(LNG, etc.) 300 600 400 1,300

*Note : Sales of each market in Japan are our estimated amount.

(Millions of Yen)


Valve Manufacturing Business – Overseas Sales

As SPE manufacturers decided to postpone large investment, volume of order of valves for semiconductor from them decreased especially in Korea. In China, demand of commercial valves continued strong especially for data centers. In ASEAN, sales increased due to acquisition of Cephas Pipe Lines Corp. In Middle East, deliveries of valves for additional order of large project have completed. In Americas and Europe, although there is concern of downward trend of crude oil price, demand of valves was firm. European distributors began to order to increase their inventories.

FY2017

Q3 Q1 Q2 Q3

FY2018

Q3 YoY

Overseas Total 24,700 9,000 10,600 10,500 30,100 5,300 22%

ASEAN and other 9,400 3,300 3,100 3,400 9,800 400 4%

(for semiconductor) (1,800) (900) (500) (300) (1,700) (-100) (-6%)

China (incl. HK, Taiwan)

4,700 1,500 2,100 2,300 6,000 1,300 28%

(for semiconductor) (1,400) (600) (700) (600) (1,900) (500) (36%)

Middle East 900 500 1,800 1,200 3,400 2,500 277%

Asia Total 15,000 5,300 6,900 6,900 19,100 4,100 27%

Americas (North and South)

7,400 2,800 2,700 2,800 8,300 900 12%

Europe, etc. 2,300 900 1,000 700 2,700 400 12%

(Millions of Yen)


Valve Manufacturing Business – Operating Income

FY2017 Q3

Result

FY2018

Q3

Plan

FY2018

Q3

Result

YoY Plan vs Result

Sales 72,229 79,204 82,746 10,516 14.6% 3,542 4.5%

Operating

Income 9,167 11,280 11,834 2,666 29.1% 554 4.9%

56.0億円

73.0億円

(Millions of Yen)

(Millions of Yen)

FY2017 Q3 FY2018 Q3

Cost Reduction+1,100

Material Cost(310)

SG&A(1,890)

Sales IncreaseProduct mix

+3,560Forex+200

0

40,000

80,000

120,000

160,000

9,167 11,834

Graph1

FY2017 Q3FY2017 Q3FY2017 Q3FY2017 Q3

Sales IncreaseSales IncreaseSales IncreaseSales Increase

Cost reductionCost reductionCost reductionCost reduction

Material CostMaterial CostMaterial CostMaterial Cost

SG&ASG&ASG&ASG&A

ForexForexForexForex

FY2018 Q3FY2018 Q3FY2018 Q3FY2018 Q3

FY2017 Q3 Sales Increase Cost reduction Material Cost SG&A Forex FY2018 Q3

余白

プラス

マイナス

FY2017 Q3

2016年度


Material Cost(310)

SG&A(1,890)

為替+4.5億円

Sales IncreaseProduct mix+3,560

Forex+200

91700

91700

35600

0

127300

11000

0

135200

0

3100

116300

0

18900

116300

2000

0

118300

実績

値アタイ期首・期末キシュキマツ余白ヨハクプラスマイナス

FY2017 Q391,700.091,700.0

Sales Increase35,600.091,700.035,600.00.0

Cost reduction11,000.0127,300.011,000.00.0

Material Cost-3,100.0135,200.00.03,100.0

SG&A-18,900.0116,300.00.018,900.0

Forex2,000.0116,300.02,000.00.0

FY2018 Q3118,300.0118,300.0

実績

FY2017 Q3 Sales Increase Cost reduction Material Cost SG&A Forex FY2018 Q3

余白

プラス

マイナス

FY2017 Q2

2016年度

Cost Reduction+550

Material Cost(350)

SG&A(1,100)

為替+4.5億円

Sales Increase+2,400

Forex200

計画

値アタイ期首・期末キシュキマツ余白ヨハクプラスマイナス

FY201712,800.012,800.0

Sales Increase3,200.012,800.03,200.00.0

Cost reduction1,700.016,000.01,700.00.0

Material Cost-1,400.016,300.00.01,400.0

SG&A-2,500.013,800.00.02,500.0

Forex100.013,800.0100.00.0

FY201813,900.013,900.0

計画

FY2017 Sales Increase Cost reduction Material Cost SG&A Forex FY2018

余白

プラス

マイナス

FY2017

2016年度


Material Cost-1,400

SG&A-2,500

為替+4.5億円

Sales Increase+3,200

Forex+100

Sheet2

Sheet3


Brass Bar Manufacturing Business

FY2017

Q3

Result

FY2018 Q3

Plan

FY2018 Q3

Result

YoY Plan vs Result

Sales 17,136 18,084 18,027 890 5.2% (56) (0.3%)

Operating Income 559 264 238 (320) (57.3%) (25) (9.6%)

Electrolytic Copper, Yen/ton 743,000 760,000 753,000

■Sales Sales increased compared with the previous term due to rise in average selling price arising from copper market. Copper price was on a rising trend in Q1, but changed downward trend in Q2 & Q3. ■Operating Income Operating income decreased impacted by fluctuation in copper market.

¥1,000/ton Electric Copper (From April 2015 to December 2018）

Brass products

(Millions of Yen)

400

500

600

700

800

900

15/4 15/7 15/10 16/1 16/4 16/7 16/10 17/1 17/4 17/7 17/10 18/1 18/4 18/7 18/10

Graph1

42095

42125

42156

42186

42217

42248

42278

42309

42339

42370

42401

42430

42461

42491

42522

42552

42583

42614

42644

42675

42705

42736

42767

42795

42826

42856

42887

42917

42948

42979

43009

43040

43070

43101

43132

43160

43191

43221

43252

43282

43313

43344

43374

43405

43435

765

808

770

724

676

680

677

639

610

573

577

602

581

555

534

548

526

525

533

629

705

700

713

704

670

671

673

713

753

773

812

813

811

826

802

766

779

798

811

741

716

717

745

741

727

2016.4-2017.9

【銅建値】ドウタテネ

2013201420152016

41365750732765581

41395772748808555

41426729741770534

41456728770724548

41487745769676526

41518754783680525

41548749772677533

41579750828639629

41609785816610705

41640808746573

41671782724577

41699730763602

41730732

41760748

41791741

41821770

41852769

41883783

41913772

41944828

41974816

42005746

42036724

42064763

4月ガツ42461581

5月ガツ42491555

6月42522534

7月42552548

8月42583526

9月42614525

10月42644533

11月42675629

12月42705705

1月42736700

2月42767713

3月42795704

42826670

42856671

42887673

42917713

42948753

42979773

43009

43040

43070

43101

43132

43160

2016.4-2017.9

（千円/t）

2017年度当初計画前提： 680千円/t

下期前提： 760千円/t

2016年度実績

2017年度実績

2015.4-2017.12


2013201420152016

41365750732765581

41395772748808555

41426729741770534

41456728770724548

41487745769676526

41518754783680525

41548749772677533

41579750828639629

41609785816610705

41640808746573

41671782724577

41699730763602

41730732

41760748

41791741

41821770

41852769

41883783

41913772

41944828

41974816

42005746

42036724

42064763

42095765

42125808

42156770

42186724

42217676

42248680

42278677

42309639

42339610

42370573

42401577

42430602

42461581

42491555

42522534

42552548

42583526

42614525

42644533

42675629

42705705

42736700

42767713

42795704

42826670

42856671

42887673

42917713

42948753

42979773

43009812

43040813

43070811

43101826

43132802

43160766

43191779

43221798

43252811

43282741

433137164月～9月平均ガツガツヘイキン

43344717760

43374745

434057414月～12月平均ガツガツヘイキン

43435727月間平均ゲッカンヘイキン753

2015.4-2017.12

2013～2016


2013201420152016

41365750732765581

41395772748808555

41426729741770534

41456728770724548

41487745769676526

41518754783680525

41548749772677533

41579750828639629

41609785816610705

41640808746573

41671782724577

41699730763602

41730732

41760748

41791741

41821770

41852769

41883783

41913772

41944828

41974816

42005746

42036724

42064763

42095765

42125808

42156770

42186724

42217676

42248680

42278677

42309639

42339610

42370573

42401577

42430602

42461581

42491555

42522534

42552548

42583526

42614525

42644533

42675629

42705705

2013～2016

Sheet1


Other

FY2017 Q3

Result

FY2018

Q3

Plan

FY2018

Q3

Result

YoY Plan vs Result

Sales 2,301 2,422 2,433 132 5.8% 11 0.5%

Operating Income

35 129 147 111 310.9% 18 14.4%

KITZ subsidiary Hotel Beniya Co., Ltd. operates a resort hotel in Suwa city, Nagano pref. Sales and operating income increased compared with the previous term as number of group tourist increased.

(Millions of Yen)

Hotel Beniya in Suwa city, Nagano pref.


Other income/expense Extra ordinary income / loss

FY2017

Q3

Result

FY2018

Q3

Result

YoY Note

Operating Income 7,250 9,545 2,295

■Non-operating Income 486 681 194 Forex gain +69

■Non-operating Expense 763 616 (146) Forex loss (162)

Ordinary income 6,973 9,609 2,636

■Extraordinary income 875 7 (867) Gain on sales of investment securities (869)

■Extraordinary loss 454 2,579 2,124 Cephas Pipelines Corp. Goodwill impairment 2,485

Net Income before income taxes and minority interests

7,393 7,038 (355)

Income Taxes 2,621 2,939 317

Net Income 4,771 4,098 (673)

Net Income attributable to non-controlling interests

77 89 12

Net Income attributable to owners of the parent

4,694 4,009 (685)

(Millions of Yen)


Cephas Pipelines Corp. Goodwill Impairment Loss

｜9

In April 2018, KITZ acquired Cephas Pipelines Corp. (hereinafter “Cephas”), Korean valve manufacturer to meet strong demand of industrial butterfly valves in the world. The acquisition enabled KITZ group to expand product line up. Purchase price : 3,752 million yen (37,415 million won)

Summary of Acquisition

Background of Goodwill Impairment Loss

Although Cephas is in a tough situation, KITZ group will increase the sales of butterfly valves through the KITZ global network and focus on sales of valves for ships to expand its business.

KITZ Group also try to maximize synergy effect between two companies in production. Cephas will be able to increase production efficiency by using “know-how” of KITZ group

Future Projection

Remaining Balance (as of Dec. 2018) 2,397

Intangible Asset 88

Total 2,485

（Millions of Yen）

In 2018, Korean economy rapidly slowed down and the sales of Cephas to its main customers Korean EPC (engineering companies) rapidly decreased. Production efficiency also decreased after the acquisition. Thus, its profitability sharply deteriorated. After reviewing the latest business situation and future cash flow projection of Cephas, KITZ decided to make goodwill impairment loss based on the Japanese accounting standard. The amount of loss is as follows.

＜Detail of Goodwill impairment loss＞

Cephas Butterfly Valve


Balance Sheet

Asset March

2018

December

2018 Variance Liabilities

March

2018

December

2018 Variance

Current Asset 77,400 72,513 (4,886) Current

Liabilities 24,078 24,025 (52)

Fixed Asset 56,145 58,356 2,211 Fixed

Liabilities 32,075 30,908 (1,167)

PPE 36,799 39,390 2,591 Total Liabilities 56,154 54,934 (1,220)

Intangible 8,951 9,594 643

Investment and others

10,394 9,371 (1,022) Net Assets 77,391 75,936 (1,454)

Total Asset 133,545 130,870 (2,674)

Total Liabilities and

Net Assets

133,545 130,870 (2,674)

(Millions of Yen)

Due to acquisition of Cephas Pipelines Corp. in April, inventories, PPE increased. Intangible asset also increased due to expenditure for new IT system. Cash in hand and in banks decreased due to acquisition of treasury stocks etc. Net Asset decreased due to acquisition of treasury stock, payment of dividend and forex change.


Cash Flows

December

2017

December

2018 YoY

Operating Cash Flow 2,513 5,850 3,337 132.7%

Investing Cash Flow (5,319) (6,785) (1,465) -

Free Cash Flow (2,806) (934) 1,871 -

Financing Cash Flow (2,602) (8,218) (5,616) -

Cash and cash equivalents

at the end of the period 11,475 12,839 1,364 11.9%

Although the amount of inventory increased and the company paid corporate tax, Operating Cash Flow increased due to net income attributable to owners of the parent and depreciation expense. Investing Cash Flow decreased due to capital expenditure including new IT system and acquisition of Cephas Pipelines Corp.. Financing Cash Flow decreased due to repayment of debt, payment of dividend and acquisition of treasury stocks.

(Millions of Yen)


FY2018 Q3 Financial Highlight

Consolidated

FY2017

Q3

Result

FY2018

Q3

Result

Sales 91,667 103,207

Operating Income 7,250 9,545

Ordinary Income 6,973 9,609


4,694 4,009

Overseas Sales Ratio 27.7% 29.7%

Interest Bearing Debt 25,049 33,907

Equity Ratio 62.0% 57.1%

BPS(Yen) 769.45 783.68

EPS(Yen) 46.91 41.58

(Millions of Yen)


FY2018 Plan

(Millions of Yen)

FY2017 FY2018

Q1+Q2 Result

Q3+Q4

Result Total

Q1

Result

Q2

Result

Q3

Result

Q4

Plan Total

Sales 59,592 64,974 124,566 32,752 35,028 35,426 32,792 136,000

Operating Income 4,314 5,802 10,117

(8.1%) 2,647 3,166 3,732 2,154

11,700

(8.6%)

Ordinary Income 4,057 5,675 9,733

(7.9%) 2,530 3,258 3,820 1,990

11,600

(8.5%)

Net income attributable to owners of the parent

2,641 3,876 6,518

(5.3%) 1,712 2,214 82 1,290

5,300

(3.9%)

ROE - 8.7% - 7.0%

EPS(Yen) - 65.50 - 55.12

Yen / US Dollar 112.12 112.04 108.52 109.50

Yen / Euro 122.18 127.09 130.66 128.00

Electrolytic Copper, Yen/ton 709,000 757,000 760,000 745,000


FY2018 Plan (By Segment)

(Millions of Yen)

Sales

FY2017 FY2018

Q1+Q2 Result

Q3+Q4

Result Total

Q1

Result

Q2

Result

Q3

Result

Q4

Plan Total

Valve 46,951 51,211 98,162 25,775 28,068 28,902 26,853 109,600

Brass Bar 11,046 12,489 23,535 6,290 5,947 5,789 5,372 23,400

Other 1,594 1,271 2,867 686 1,012 734 566 3,000

Total 59,592 64,974 124,566 32,752 35,028 35,426 32,792 136,000

Operating

Income

FY2017 FY2018

Q1+Q2 Result

Q3+Q4

Result Total

Q1

Result

Q2

Result

Q3

Result

Q4

Plan Total

Valve 5,606 7,191 12,798 3,443 3,863 4,528 3,165 15,000

Brass Bar 342 356 699 127 63 46 61 300

Other 56 (84) (28) (18) 138 27 (97) 50

Adjustment (1,690) (1,661) (3,351) (905) (899) (871) (974) (3,650)

Total 4,314 5,802 10,117 2,647 3,166 3,731 2,154 11,700


FY2018(Plan) Financial Highlight

Consolidated

FY2017

Result

FY2018

Plan

Sales 124,566 136,000

Operating Income 10,117 11,700

Ordinary Income 9,733 11,600


6,518 5,300

Overseas Sales Ratio 27.9% 30.0%

Interest Bearing Debt 34,302 33,750

ROE 8.7% 7.0%

Equity Ratio 57.1% 57.5%

BPS(Yen) 782.98 807.20

EPS(Yen) 65.50 55.12

(Millions of Yen)


7.5 9.5 10.0

13.0 13.0 13.0

17.0

20.0

0.0

5.0

10.0

15.0

20.0

12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3（plan）

(Yen)

Shareholder Return

｜16

KITZ believes that a dividend payout ratio of about 25% of net income attributable to owners of the parent is appropriate. In FY2018, KITZ decided to calculate dividend forecast based on the net income attributable to owners of the parent by excluding the effect of the goodwill impairment loss. Thus, year-end dividend forecast was changed from 11.00 yen to 12.00 yen. As a result, total dividend of FY2018 would be 20.00 yen including interim dividend. For your reference, the forecasted dividend per share 20.00 yen is record-high since going public.

33.0 25.7

30.6

20.6 28.6 25.3 26.0

36.3

27.638.8

92.5

80.072.9

0.0

50.0

100.0

12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3…

(％)

Payout Ratio

Total Return Ratio

(plan)

Graph1

12/3

13/3

14/3

15/3

16/3

17/3

18/3

19/3（plan）

1株当たりの年間配当金額(左軸)

(Yen)

7.5

9.5

10

13

13

13

17

20

配当性向・総還元性向

年間配当金・配当利回りネンカンハイトウキンハイトウリマワ

配当性向ハイトウセイコウ総還元性向ソウカンゲンセイコウ

06/3

07/3

08/3

09/3

10/3

11/3

12/333.033.0

13/325.725.7

14/330.630.6

15/327.837.4

16/328.638.8

17/325.392.5


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配当性向

総還元性向

(％)

年間配当金・配当利回り


1株当たりの年間配当金額(左軸) ヒダリジク1株購入価額(期末株価) キマツカブカ配当利回り(右軸) ハイトウリマワミギジク

06/314.011281.2%第92期ダイキ

07/315.010701.4%第93期ダイキ

08/315.05912.5%第94期ダイキ

09/39.02993.0%第95期ダイキ

10/37.05451.3%第96期ダイキ

11/37.04001.8%第97期ダイキ

12/37.53602.1%第98期ダイキ

13/39.54722.0%第99期ダイキ

14/310.05052.0%第100期ダイキ

15/313.05942.2%第101期ダイキ

16/313.04872.7%第102期ダイキ

17/313.07421.8%

18/317.0932

19/3（plan）20.0


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配当利回り(右軸)

(円)

Graph1

12/312/3

13/313/3

14/314/3

15/315/3

16/316/3

17/317/3

18/318/3

19/3(plan)19/3(plan)

Payout Ratio

Total Return Ratio

(％)

33

33

25.7

25.7

30.6

30.6

20.6

27.6

28.6

38.8

25.3

92.5

26

80

36.3

72.9



Payout RatioTotal Return Ratio

06/3

07/3

08/3

09/3

10/3

11/3

12/333.033.0

13/325.725.7

14/330.630.6

15/320.627.6

16/328.638.8

17/325.392.5

18/32680.0

19/3(plan)36.372.9


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Payout Ratio

Total Return Ratio

(％)



1株当たりの年間配当金額(左軸) ヒダリジク1株購入価額(期末株価) キマツカブカ配当利回り(右軸) ハイトウリマワミギジク

06/314.011281.2%第92期ダイキ

07/315.010701.4%第93期ダイキ

08/315.05912.5%第94期ダイキ

09/39.02993.0%第95期ダイキ

10/37.05451.3%第96期ダイキ

11/37.04001.8%第97期ダイキ

12/37.53602.1%第98期ダイキ

13/39.54722.0%第99期ダイキ

14/310.05052.0%第100期ダイキ

15/313.05942.2%第101期ダイキ

16/313.04872.7%第102期ダイキ

17/313.07421.8%

18/3（予想）ヨソウ16.0932


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配当利回り(右軸)

(円)


CAPEX updates

Considering risks after the launch of the system, the company decided to postpone the launch date

of new IT system “KITZ Innovation Global System”(KInGS) to May 2019. The development work of

the system started in 2015 and now in the final stage.

Total capex amount：7,000 million yen

New IT system launch postponed

Brass Bar Manufacturing Business / Renewal Project

The renewal project of aged production facilities of KITZ Metal Works is on schedule. Mass

production of brass bar products is planned to be started from July 2019.

Total capex amount : 5,300 million yen

For questions concerning this material, please contact: KITZ Corporation

Publicity and IR Promotion office E-mail : [email protected]

FY2018�3rd Quarter (April – December)�Results Presentation　　 FY2018 3rd Quarter ResultsValve Manufacturing Business – Domestic SalesValve Manufacturing Business – Overseas Sales　Valve Manufacturing Business – Operating IncomeBrass Bar Manufacturing Business 　Other 　Other income/expense�Extra ordinary income / lossCephas Pipelines Corp. �Goodwill Impairment Loss　Balance Sheet　Cash FlowsFY2018 Q3 Financial HighlightFY2018 PlanFY2018 Plan (By Segment)　FY2018(Plan) Financial Highlightスライド番号 16CAPEX updatesスライド番号 18

results presentation - kitz · results presentation kitz corporation . february 2019 . the forecast...

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