Grow and leap toward 2025 through
strengthening the business base

Toshihiko Kai
President & Chief Executive Officer
March, 2020

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 fiscal year ended December 2019.

Current Year Performance

Current year performance (for FY ended December 2019) shows orders received totaling 167 billion yen, revenue of 165.7 billion yen, operating profit of 12.4 billion yen, profit before tax of 11.3 billion yen, and profit for the year attributable to owners of the company of 6.8 billion yen.

In the Industrial Business, LEWA achieved a year-on-year increase in revenue and profit thanks to the number of quotation requests in its main business targeting the upstream sector increasing steadily to previous levels, and the strengthening of sales activities in the downstream sector, including after-sales services. The Cryogenic Industries Group (hereinafter the “CI Group”) also reported strong sales of LNG-related products against the backdrop of LNG market growth.
The Industrial Division ensured an increase in profit as a whole thanks to the improved performance of LEWA and the CI Group, although its revenue fell year-on-year due to decreased deals in the Middle East, the effect of a weaker Euro, etc.
The Precision Equipment Divison reported fewer orders and lower sales revenue as a whole compared with last year mainly due to the transfer of its particle analytical equipment business.
The Aerospace Division reported steady year-on-year growth in orders and revenue, but profit decreased due to increased expenses incurred in connection with the launch of the Miyazaki Factory.
In addition, since the third quarter of the current fiscal year, the Deep UV-LED Division has posted income from a licensing agreement with a joint venture company and revenue arising from development services. As a result, the Industrial Business reported decreased revenue and increased profit compared with last year.

天天斗牛The Medical Business reported a year-on-year increase in revenue thanks to strong machine sales in overseas markets such as China and Europe and increased domestic sales of disposables, although domestic sales of hemodialysis machines remained relatively weak mainly due to the effect of longer replacement cycles. In addition, the Medical Business posted increased expenses, such as product development expenses, and impairment losses related to the CRRT (Continuous Renal Replacement Therapy) business, seeing revenue increase but profit decrease as a whole.

Gains on sales of shares in the particle analytical equipment business were also posted。 As a result, the Company’s revenue and profit increased year-on-year as a whole。

New Medium-Term Business Plan “Nikkiso 2025”

While implementing Nikkiso’s Medium-Term Business Plan “Nikkiso 2020,” which started in FY ended December 2016, we reallocated our management resources by strengthening the LNG-related business through the acquisition of the CI Group, accelerating our investments in growth areas such as new factory construction in Miyazaki and Vietnam, and selling unprofitable business operations and other peripheral business operations that are relatively irrelevant to the main business. In doing so, each segment has clarified its future growth trajectory. We have also identified issues that we must solve to ensure growth, and therefore prepared our new Medium-Term Business Plan “Nikkiso 2025,” which reflects external environmental changes and domestic and overseas issues.

During the first three years, we will focus on “strengthening our business bases” through the promotion of technological advancement and the restructuring of our production system (i.e. measures launched under “Nikkiso 2020” with the future in mind) and by strengthening our business promotion system in a globally unified manner.
天天斗牛 The final three years are the period in which we will turn each strategy into an achievement. Our target figures for FY ending December 2025 (final fiscal year under “Nikkiso 2025”) are revenue of 250 billion yen and operating profit of 20 billion yen.

Shareholder Return

Nikkiso’s basic capital policy is to achieve sustainable growth and mid to long term corporate value enhancement while pursuing an optimum balance between financial soundness, capital efficiency, and shareholder return.
The Company has decided to pay a year-end dividend of 10 yen per share, resulting in the payment of an annual dividend of 20 yen per share. The Company also plans to pay an annual dividend of 20 yen per share for the next fiscal year.

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