Nikkiso enters its next stage of growth
Toshihiko Kai
President & Chief Executive Officer
September, 2019

I would like to sincerely thank all shareholders for the support extended to our company. It is my pleasure to provide an overview of Nikkiso’s business performance for the second quarter of the fiscal year ending December 2019.

Q2 FY2019 Performance

Our Q2 FY2019 performance results show orders amounting to 85.9 billion yen (1.4% year-on-year increase), revenue of 78.9 billion yen (4.5% year-on-year increase), operating profit of 3.5 billion yen (12.3% year-on-year increase), profit before tax of 2.9 billion yen (8.6% year-on-year increase), and profit for the year attributable to owners of the company of 1.9 billion yen (6.3% year-on-year decrease).

Regarding the Industrial Business, the oil price outlook remains uncertain, but at the current oil price level, investments have resumed in the oil and gas mining markets (upstream sector) and the petrochemical market (downstream sector). As a result, our performance is recovering, mainly driven by that of LEWA. The Industrial Division is the main division and it increased its orders and revenue year on year thanks to strong orders received for cryogenic pumps along with LNG market growth. The Precision Equipment Division saw its orders fall slightly, affected by the U.S.–China trade friction, but the Aerospace Division increased its shipments of engine parts. As a result, the Industrial Business posted higher revenues and profits as a whole.

天天斗牛The Medical Business had greater overseas sales of hemodialysis machines particularly in Europe, but in the domestic market, faced fiercer competition and increases in logistics and other expenses. As a result, this Business’s profit fell despite an increase in revenue as a whole.

FY2019 Performance Forecast

Each division’s performance is improving almost as planned。 The Industrial Division’s performance is steadily improving due to market recoveries affecting LEWA and the Cryogenic Industries Group, and the Medical Division is expected to see a better performance compared with 1H of FY2019 in anticipation of the launch of new hemodialysis machines in 2H。 However, our costs are expected to be higher than initially anticipated due to the posting of gains on sales of shares of the particle analytical equipment business, exclusion of 2H performance forecasts in connection with the exclusion of this business from consolidation, and the establishment and strengthening of business bases (e。g。 payment for the restructuring of domestic bases)。

Considering these business trends and changes in exchange rates that were assumed in preparing performance forecasts (the USD/JPY remained at 109, and the EUR/JPY changed from 125 to 122), we revised the revenue, operating profit, profit before tax, and profit for the year attributable to owners of the company.

Future Measures

The Industrial Division aims to increase manufacturing efficiency and capabilities by integrating domestic manufacturing functions into the Miyazaki Factory and increase sales in the canned motor pump and cryogenic pump businesses, as well as profitability, by drastically reforming procurement, logistics and operational processes。

The Precision Equipment Division aims to steadily increase orders in anticipation of greater demand for electronic components manufacturing equipment in general including warm isostatic laminators along with the global growth in the 5th generation of wireless communication services in future.

The Aerospace Division aims to improve profitability by strengthening business bases (e.g., stable operations at the Miyazaki Factory and cost optimization through integration of bases).

天天斗牛The Medical Division’s new hemodialysis machines that are scheduled to be launched in 2H are equipped with new functions incorporating convenience, safety of medical treatment, and economic advantages of facility management, and have been highly rated by customers。 We will strive to enhance maintenance and management service systems and expand the market further。 As our hemodialysis machines’ advanced functions and reliability have also been well received in the overseas market, we will strengthen our system to newly expand sales。

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