First Quarter Results and Outlook(PDF:3,100 kB/36 pages)

DMG MORI CO., LTD.

FY 2020 Q1 (Jan-Mar)St Results

IR Announcement

May 28, 2020

IR CONFERENCE 2020/5/28

0 /35

Agenda

1. Business results of 2020 Q1
2. Business environment
3. Management strategies
4. • Lower BEP, expand credit line
   • Accelerate digitization
   • Promote advanced machining technologies

IR CONFERENCE 2020/5/28

1 /35

Highlights: 2020 Q1

• Order intake JPY 78.3 bn（decrease by 34.3% year-on-year）
• Order amount by unit increased by 8% year-on-year
• Lower break-even-point (from JPY 350 bn to JPY 310-320 bn)
• Expanded credit line: JPY 340.4 bn at 30.04.2020 (JPY 285.3 bn at 31.03.)

• Accelerate digitization

Online seminars (for customers and employees' training)

Digital showroom, digital acceptance

IR CONFERENCE 2020/5/28

2 /35

Income Statement Summary

（JPY bn）

Company-wide order intake

Sales revenue

Operating profit

% to sales revenue

Net financial costs

(thereof, economic compensation associated with DA)

Profit before taxes

Net profit

Net profit attributable to owners

Depreciation & amortization with lease

Capital expenditure

USD/JPY

EUR/JPY

Jan-Mar	Changes		Full year	（		）
		Jan-Dec
FY2019	FY2020	%		FY2019		FY2020 Plan
		（ ）			(as of Feb 14)	(as of May 28)*
119.1	78.3	-34.3	409.4		420.0	‐
120.6	87.3		485.8		400.0	〜	340.0
-27.6		320.0
10.4	3.3		37.3			20.0	〜	10.0
-68.6			5.0
8.6%	3.8%			％			5.0%	‐
	7.7
-1.6	-2.1			-5.9			-6.0	‐
(-0.9)	(-1.6)		(-3.5)			(-3.5)	‐
8.8	1.3	-85.7	31.5			14.0	‐
6.4	0.1	-98.6		18.9			8.8	‐
6.2	0.1	-97.9		18.0			8.5	‐
5.5	5.9			23.1			23.0	23.0
3.1	3.1			21.2			19.0	15.0
110.2	108.9			109.1			110	110
125.2	120.1			122.1			120	120

*The forecast of financial results for FY 2020 is based on the assumption that the restrictions on travel for business purposes in major regions, such as the EU, Americas, China and Southeast Asia, will be lifted, the development of vaccines against COVID-19 will advance, as well as no further disorder will be caused.

IR CONFERENCE 2020/5/28

3 /35

Quarterly financial results

(JPY bn)					(JPY bn)
150.0					15.0
				136.4
	Sales (left-axis)
	120.6	118.1
	OP	110.7
	(right-axis)
	10.4
100.0		9.6		8.8	10.0
			8.6	87.3
50.0					5.0
					3.3
OP margin	8.6	8.1	7.7	6.4	3.8
%	%	%
	%	%
0.0					0.0
	2019Q1	Q2	Q3	Q4	2020Q1
IR CONFERENCE 2020/5/28				4 /35

Operating profit bridge - FY2019 Q1 vs FY2020 Q1

(JPY bn)	FY2019.Q1	FY2020.Q1	+/-		FY2019.Q1	FY2020.Q1
USD/ JPY	110.2	108.9
Sales
120.6	87.3	-33.3	EUR/JPY	125.2	120.1

(JPY bn)	+4.3	-11.4

Digital

Personnel innovation Volume cost

Margin +2.9 +0.5

improvement

+0.9-10.9

	10.4	Depreciation,
	others
		-0.5
		3.3
		0
	FY2019.Q1
	FY2020.Q1
	Operating profit	Operating profit

IR CONFERENCE 2020/5/28

5 /35

Cash flows

（JPY bn）									FY2019				FY2020
			Q1	Q2	Q3	Q4	FY		Q1
Cash flow from operation			13.0		3.8			4.3		22.5	43.6	2.5
Profit before taxes			8.8		8.2			7.1		7.4	31.5	1.3
Depreciation & amortization			5.5		5.3			5.9		6.4	23.1	5.9
+/- in working capital			3.5		-4.8			-5.1		2.2	-4.2	4.4
Others			-4.8		-4.9			-3.6		6.5	-6.8	-9.0
Cash flow from investments			-3.6		-1.6			-9.6		-8.7	-23.5	-3.1
（thereof, acquisition of			-3.1		-5.3			-4.3		-8.5	-21.2	-2.9
fixed assets）
FCF			9.4		2.2			-5.2		13.7	20.1	-0.6
	+						FY2019								FY2020

Jan-MarApr-JunJul-Sep Oct -DecJan-Mar

-	Quarterly free cash flows

IR CONFERENCE 2020/5/28

6 /35

Financial position summary

Assets

JPY 524.6 bn JPY 505.3 bn

Short-term

Liability & Equity

JPY 524.6 bn

JPY 505.3 bn

Financial assets	33.2	28.9
55.3
Trade receivables	48.9

54.9

37.5

55.1 Payables

35.3 Advance payments

Inventories	120.9	120.0

Fixed assets

149.0

143.8

108.7	114.5	Interest-bearing
		debts
92.3	88.3	Obligation of
	AG share purchase
103.4	97.6	Other
	Liabilities

Goodwill

Intangibles

Other assets

66.5	65.0		Shareholders'
62.8	61.8	124.0	equity
110.3
				Shareholders'
36.9	36.9		equity ratio: 21.8%

Dec 2019

Mar 2020

Dec 2019

Mar 2020

Decrease in shareholders' equity due to exchange rate adjustment：- JPY 28.1 bn (- JPY 19.2bn as of 31.12.2019) (Main cause of the loss was weak local currencies in emerging countries.)

IR CONFERENCE 2020/5/28

7 /35

目次

1. Business results of 2020 Q1
2. Business environment
3. Management strategies
4. • Lower BEP, expand credit line
   • Accelerate digitization
   • Promote advanced machining technologies

IR CONFERENCE 2020/5/28

8 /35

Consolidated order composition (by region)

※Value basis

(JPY Mil.)

China

Asia

Americas

EMEA*

Russia

Turkey

Germany

Japan

*Europe, the Middle East and Africa

IR CONFERENCE 2020/5/28

9 /35

DMG MORI quarterly consolidated machine order intake

														1,385
													1,206	1,276
													1,183
														1,123
												1,121	1,126	1,121
				1,055	1,063	1,081
							1,034			1,039
JPY-basis
			1,022		972		949						970
(JPY 100 Mil.)		928 920	920	931
	904 880 898
								898
				844				892				981
831			763					917 925			815
775	720									854	913	896
799						806					844	875		705
680		753						770	762					785
753					743 725		746	741					752
	691 684	719 702	726				684 671											678
	668
Euro-basis	625	617															587

(Euro Mil.)

Jan-Mar FY12

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY13

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY14

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY15

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY16

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY17

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY18

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY19

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar FY20

FX

USD

79.3

80.2

78.6

81.2 92.4 98.8 99.0 100.5

102.8 102.2

103.9

114.5 119.1 121.4 122.2 121.5 115.5 108.2 102.4

109.3 113.7 111.1 111.1 113.0 108.3 109.1 111.5112.9 110.2 109.9 107.4 108.8 108.9

(JPY) EUR

104.0 102.9 98.4

105.3 122.0 129.0 131.1 136.7

140.8 140.1

137.8

143.1 134.2 134.2 136.0 133.0 127.2 122.0 114.3

117.8 121.1 122.2 130.4 133.0 133.2 130.1 129.6128.8 125.2 123.5 119.3 120.3 120.1

IR CONFERENCE 2020/5/28

10 /35

Average order price per unit (machine body)

(JPY Mil.)

(EUR K)

45.0

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

(EUR/JPY)

450

400

350

JPY-basis(left-axis)

300

250

200

EUR-basis(right-axis)

150

100

50

0

FY2012	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019	FY2020
								1Q
102.6	129.7	140.4	134.3	120.3	126.7	130.4	122.1	120.1

IR CONFERENCE 2020/5/28

11 /35

Order composition

※ Value basis

FY2020.Q1

		by industry				by customer's number
						of employees
	Construction Others
				1,001 or more
Energy, Power
Medical	Machinery	501~1,000
		9%
				1~20
Electronics,
				10%
Precision,					32%
Semicon
					current＋
		JPY 78.3 bn
Die &	101~500		potential users
(Jan-Mar)	15%	Approx.
Mold			300K
		Aerospace
	SMEs*						34%
		Automotive

by product type

	Advanced
Vertical MC	technologies
Turning Center

14%	7%
5-axis
CMX
V series 3%

JPY 78.3 bn (Jan-Mar)36%

25%

Mill Turn

15%

Motorcycle

*Small and medium-sized enterprises

21~100

Horizontal MC

IR CONFERENCE 2020/5/28

12 /35

Demand by region & industry

Region

Industry

DOWN

Flat

UP

DOWN

Flat

UP

Japan						Machinery
Europe						Automotive
North						SMEs
Americas
China						Aircraft
Asia						Die & Mold
(excl. China)
						Electronics
						Energy
						Medical
						Construction
						Machinery

IR CONFERENCE 2020/5/28

13 /35

Agenda

1. Business results of 2020 Q1
2. Business environment
3. Management strategies
4. • Lower BEP, expand credit line
   • Accelerate digitization
   • Promote advanced machining technologies

IR CONFERENCE 2020/5/28

14 /35

Lower BEP (break-even-point)

(JPY bn)

Sales

BEP

Profit increase by:

Higher gross profit: 3 bn

Personnel cost:

13 bn

Digital innovation:

3 bn

Others:

1 bn

Total:

JPY 20 bn

IR CONFERENCE 2020/5/28

15 /35

Cash management with expanded credit line

As of 30.04.2020：
Cash	JPY	19.3 bn
Credit line (including AG share purchase)	JPY 340.4 bn
Loan (including additional acquisition of AG shares)	－JPY	82.2 bn

Cash＋remaining credit line

JPY 277.5 bn

IR CONFERENCE 2020/5/28

16 /35

Impact of COVID-19 on business operation ーSales, Engineering and Service

Germany

WFH

Off, others

Early April

At present

EMEA

WFH

Office

Off, others

Early April

At present

* Excluding factories

	Japan (Tokyo)
	Asia
Off, others WFH	Off, others WFH

Early April At present Early April At present

	China
		North America
Off, others	Office	Off, others
		Office

WHF

Mid February

At present

April

At present

IR CONFERENCE 2020/5/28

17 /35

Impact of COVID-19 on business operation ーProduction

Germany

WFH

Factory

Off, others

Early April

At present

EMEA

WFH

Factory

Off, others

Early April

Japan

In operation

In operation

Early April

At present

China (Tianjin)

WFH

Off, others

Factory

Mid February At present

USA (Davis)

WFH

Off, others

Factory	At present
Early April

IR CONFERENCE 2020/5/28

18 /35

Work from home & online meeting system

No commuting by public transportation*

(Japan)

Work from home

Online meeting system

Digital training by video

*As of end May 2020

IR CONFERENCE 2020/5/28

19 /35

Digital Twin

IR CONFERENCE 2020/5/28

20 /35

5G alliance with NTT Communications

Local 5Genables autonomous driving within factory

• Ultra-highspeed, low delay
• Expanded connection capacity
• High security

AGV remote operation test

① Electric wave transmission test (reception level, interference)

②Transmission quality test (delay, throughput, packet error rate) ③Application test (remote operation of AGV by local 5G)

• Evaluation of communication stability
• Remote monitoring of AGV's status

IR CONFERENCE 2020/5/28

21 /35

5G collaboration with KDDI

Facilitate customers'

5G networks integrated in DMG MORI to develop new solutions

• Apr. 2020- Iga Campus
• Jul. 2020- Tokyo Global Headquarters

digital transformation (DX) with a public 5G network

AI Engine

・Chip removal ・Tool shape

In-machine images processed by AI engine

KDDI
DMGMORI Cloud
public 5G
network

Collected data

AI learning

AI engine

		System developed in
Iga Campus showroom		Hokkaido and Tokyo

IR CONFERENCE 2020/5/28

22 /35

digitization Training by TULIP

TULIP: Software & hardware platform for digital training

Easily create Apps: no-code, no programming knowledge required Effective training by interactive communication

User friendly: create new Apps by easily modifiable templates

Factory kit: basic kit for introducing TULIP

Factory kit

IR CONFERENCE 2020/5/28

23 /35

my DMG MORI

my DMG MORI portal

Europe	approx. 10,000 customers	Target
Japan	approx. 6,500 customers	40,000
Other region	to be released	customers

Extra perk for registration

• The Nikkan Kogyo Shimbun

（electronic version）

• SEISANZAI (Production Equipment) MARKETING Magazine（electronic version ）

IR CONFERENCE 2020/5/28

24 /35

Technology Fridays (June-December)

Technology Fridays instead of Iga Innovation Days 2020

Invite a small group of customers (less than 30) every Friday to Iga and Tokyo

Topics: 5-axis & multi-axis, Automation, digitization my DMG MORI, TULIP Measurement, AM, New Technologies Quarterly release of new models/technologies, new seminars

5-axis & multi-axis		digitization

Transfer by our limousine bus

■ Iga campus Nagoya station Shin-Osakastation Kyoto station

■ Tokyo GHQ

Tokyo station

Measurement

Automation		Additive Manufacturing		Excellence Centers

IR CONFERENCE 2020/5/28

25 /35

Digital Acceptance of Machine Tools

Started "digital acceptance of machine tools" by online meeting system

■ Concept

	DMG MORI
CustomerOnline meeting	Image	Online meeting
・Live presentation, Q&A
Document	/ Webcam

・Presentation ・Q&A

Image

Document s

Office	Webcam	Live
broadcasting

Customers can join	Network
from home office
	iPhone / Webcam

HomeHome

IR CONFERENCE 2020/5/28

26 /35

Digital Showroom

Visit virtual showroom

Coming Soon

IR CONFERENCE 2020/5/28

27 /35

DMG MORI Digital Academy

Launch DMG MORI Digital Academy in summer 2020

1

2

3

E-learning-flexible & always available

Machining practice in only 2 days！(※1)

Online learning support by trainers！ (※2)

※1：The current training requires 5 days with physical presence in Iga ※2：Inquiries from website

IR CONFERENCE 2020/5/28

28 /35

Image of Digital Academy

The strengths of e-learning

Only 2 clicks from login to lesson start

Top screen	Current status Lesson screen
	of lessons
	taken

Easy navigation, Lesson status and progress on one screen, "Quiz" and "Final test" to check comprehension

Copyright （C） TECHNIUM Co., Ltd. All rights reserved.

IR CONFERENCE 2020/5/28

29 /35

Online Seminars Online seminars

Suggest Digital Manufacturing Package (DMP) and digital services Localized webinars for customers & employees

IR CONFERENCE 2020/5/28

30 /35

Additive Manufacturing: Application on high-precision components of DMG MORI's machine tools

Topology optimization, light weight,

larger surface, better function

27％ 33％

LESS LESS

WEIGHT COST

LASERTEC 125 3D hybrid	Ring nozzle for higher cooling
	capacity	ULTRASONIC 80 eVo
	(ULTRASONIC 80 eVo standard
	component)

56％ 60％

LESS LESS

WEIGHT COST

	Grinding nozzle (no assembly needed)
LASERTEC 30 DUAL SLM
(DMU 80 P duoBLOCK standard
	DMU 80 P duoBLOCK
	component)

IR CONFERENCE 2020/5/28

31 /35

ULTRASONIC: Demand increase in Semicon industry

IR CONFERENCE 2020/5/28

32 /35

Leverage alliance with NIKON to develop on-machine measuring systems

Technological alliance

Provide technologies related to measurement and cameras

Provide laser scanners

Sales alliance

Provide global sales network

Non-contact laser	Laser metal 3D printer
scanner	Lasermeister 101A
LC15Dx

Simultaneous 5-axis machine DMU 50, etc.

NTX series

NHX series

DMU Gantry series

IR CONFERENCE 2020/5/28

33 /35

Cooperation agreement with Hyogo Prefecture

April 10, 2020

• Signed a cooperation agreement with Hyogo Prefecture on the development of human resources for Monozukuri (manufacturing)

Hyogo Prefecture

Cooperation Plan:

• Contribution to the development of human resources for Monozukuri through the lending of machine tools
• Promotion of advanced machining technologies through the 5-axis machining consortium
• Workshop on cutting-edge machining operation with companies in Hyogo Prefecture

NLX 2000 | 500 and another two models for Hyogo Prefectural Monodzukuri Institute

IR CONFERENCE 2020/5/28

34 /35

Disclaimer

This material contains targets, plans, etc. concerning the future of DMG MORI CO., LTD. and the DMG MORI Group. All predictions concerning the future are judgments and assumptions based on information available to DMG MORI at the time of writing. There is a possibility that the actual future results may differ significantly from these forecasts, due to changes in management policy or changes in external factors.

There are many factors which contain elements of uncertainty or the possibility of fluctuation including, but not limited to, the following:

• Fluctuations in exchange rates
• Changes to the laws, regulations and government policies in the markets where DMG MORI CO., LTD. conducts its business
• DMG MORI CO., LTD.'s ability to develop and sell new products in a timely fashion
• Instability of governments in the markets where DMG MORI CO., LTD. conducts its business
• Operational changes by the competent authorities or regulations related to anti-trust, etc.

IR CONFERENCE 2020/5/28

35 /35