1. Homepage
  2. Equities
  3. Japan
  4. Japan Exchange
  5. Air Water Inc.
  6. News
  7. Summary
    4088   JP3160670000

AIR WATER INC.

(4088)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector news

Air Water : Integrated Report 2021 Financial Section (Year Ended March 31, 2021)

12/28/2021 | 05:37am EDT

A I R WAT E R R E P O R T 2 021

Financial Section

Year

Business Overview and Analysis of Financial Condition and Cash Flows

AIR WATER INC.

1. Business Overview

During the consolidated fiscal year under review, the Japanese economy experienced a slump in consumer spending and business activities in the first half, due to the novel coronavirus (hereinafter "COVID-19") pandemic. In the second half of the fiscal year, there were signs of recovery in some areas due to growth in exports and economic stimulus but the outlook remained uncertain, with a resurgence of infections from the winter onwards.

Under these conditions, AIR WATER INC. and its consolidated subsidiaries (hereinafter "the Group") fulfilled its responsibility of providing a stable supply of industrial gas, medical gas and other products which are essential for industry and people's lives, based on the implementation of thoroughgoing infection control measures and measures in consideration of safety. Meanwhile, the COVID-19 crisis led to growth in demand for electronics as teleworking and faster 5G networks become more widespread. At the same time, COVID-19 has brought about ongoing changes in needs, with growing demand for home cooked meals and home meal replacement products and increased energy consumption at home, in addition to needs for infection control products, especially sanitary materials. To adapt to such changes under the new normal the Group leveraged its diverse businesses and products to actively carve out new markets. It also made groupwide efforts to implement work style reform with digital at the core and worked to increase the efficiency of business operations.

In addition, as the foundations for growth over the coming decade, we established the Corporate Technology Strategy Center, a technology strategy platform for the overall Group, and reformed our research and development framework. We also implemented structural reforms, merging our eight regional business companies to form three new companies, with the aim of building a powerful business base which will drive improvement of profitability and sustainable business growth in Japan.

The Group advocates the recycling of global resources and strives for the realization of an Earth and society that enables future generations to live comfortably. Through its human- and environmentally friendly manufacturing activities, the Group contributes to society, works to preserve the global environment and efficiently use resources such as air and water. Under our communication concept, "meeting society's needs with nature's blessings," we have promoted initiatives to achieve the sustainable development goals (SDGs). An organizational system to facilitate Group-wide SDG activities was created by establishing the SDGs Promotion Division and the SDGs Implementation Committee chaired by the Chairman and CEO. The Group's Sustainability Vision was formulated to clarify the goals to be realized by 2050, with milestones for the achievement of the SDGs throughout the Group companies set for 2030.

During the first half of the fiscal year, the Group's performance was affected by reduced demand due to COVID-19, especially in the Industrial Gas Business and the Medical Business in Japan, and the overseas engineering business of the Other Businesses segment. However, during the second half of the fiscal year, the business environment showed continuous improvement in all

segments, especially in Japan. Under these circumstances, earnings improved, largely due to the full-year contribution of the Indian industrial gas business in the Industrial Gas Business segment as well as the opening-up of new business opportunities, primarily infection control products, and reorganization of the production structure mainly in the Chemical Business, and the Agriculture and Food Business. Further boosted by cost reductions achieved through progress on digitalization and workstyle reform, operating profit exceeded the year-ago level in all segments except the Other Businesses segment, reaching an all-time high. The Group's strength as a conglomerate covering diverse business domains that support people's lives and livelihoods, including industrial gas, medical care & hygiene, energy, agriculture & food products and logistics and the strength of its business base which is closely tied to local communities were clear for all to see even under the unprecedented conditions of the COVID crisis.

As a result, the Group reported revenue for the fiscal year under review of ¥806,630 million (99.7 that of the previous year), operating profit of ¥51,231 million (101.2), and profit attributable to owners of parent of ¥27,367 million (89.9).

Because of the tax law reform that came into force on March 24, 2021 in India, the amortization of goodwill is no longer permitted in the country.

With regard to the treatment of tax effect accounting for goodwill based on this tax law reform in India, therefore the financial results of AW INDIA in light of the findings of BSR and posted 4,875 million yen as a deferred tax liability for its goodwill.

As a result, profit and profit attributable to owners of parent for the consolidated fiscal year under review will each decrease by 4,715 million yen.

2. Summary of financial position for current period

Total assets at the end of the consolidated fiscal year under review stood at ¥926,821 million, an increase of ¥27,121 million compared to the end of the previous consolidated fiscal year due mainly to increases in property, plant and equipment. Liabilities stood at ¥554,431 million, an increase of ¥6,546 million compared to the end of the previous consolidated fiscal year due mainly to increases in bonds and borrowings. Equity stood at ¥372,389 million, an increase of ¥20,574 million compared to the end of the previous consolidated fiscal year, due mainly to an increase in other components of equity and accumulation of profit attributable to owners of parent.

Equity attributable to owners of parent per share grew from ¥1,460.00 at the end of the previous consolidated fiscal year to ¥1,584.86, and ratio of equity attributable to owners of parent to total assets was 38.6 , compared with 36.9 at the end of the previous consolidated fiscal year.

3. Summary of cash flow for the current period

Cash flows from operating activities was an inflow of ¥76,601 million after deducting payments including corporate income taxes from profit before tax and allowances for depreciation, which was an increase of ¥32,817 million compared to that in previous consolidated fiscal year.

Cash flows from investing activities was an outflow of ¥52,699 million, which was a decrease in expenditures of ¥62,898 million compared to the previous consolidated fiscal year, due mainly to a decrease in expenditures resulting from purchase of property, plant and equipment, Payments for acquisition in subsidiaries resulting in change in scope of consolidation and acquisition of businesses, despite a decrease in proceeds resulting from the recording of proceeds from sale of businesses in the same period of the previous fiscal year.

Cash flows from financial activities was an outflow of ¥20,889 million, which was an increase in expenditures of ¥80,981 million compared to the previous consolidated fiscal year, due mainly to dividends paid and Purchase of treasury shares.

As a result of the foregoing, cash and cash equivalents at the end of the consolidated fiscal year ended March 31, 2021 stood at ¥45,983 million, an increase of ¥4,122 million compared to the end of the previous consolidated fiscal year.

4. Risks of Business, etc.

From the standpoint of our Group's business development, risks such as the following have the potential of changing our business or management situation, and having an important impact on investor decision-making.

Forward-looking statements are judgments by our Group as of the end of the current consolidated fiscal year.

  1. Management strategy risks Global Business risks Description of risk
    As part of our growth strategy, our Group is engaged in global business development through M&A, and we are strengthening our global business expansion with a focus on the Asian region where economic growth is particularly strong.
    However, in conducting our business, business bottlenecks- due to differences with Japan in terms of language, legal systems, tax systems, or social/political risks-may affect the performance or financial situation of our Group.

Countermeasures by our Group

We are working to achieve sharing within our Group of information on the economic/political/social situation, disputes, legal restrictions, management situation, and customers in each of the countries we have expanded into. In addition, in June 2019 we established the Global Strategy Office and Global Supervisory Office, and we are developing a risk management system across our entire Group while exploiting the know-how and knowledge we have previously acquired through global M&A.

Institutional change risks

Description of risk

In Japan, the trend toward a declining birthrate and aging population is advancing at a rapid pace. The government adheres to a policy of social security for all generations, aimed at lengthening healthy life expectancy, and continuing efforts are being made to reform the healthcare system to control and optimize rising medical costs. Therefore, in our Medical Business, large scale future revisions of medical service fees or drug prices may affect the performance or financial situation of our Group.

Countermeasures by our Group

In an environment where there are expected to be continuing government measures to optimize medical costs going forward, our Medical Business is responding to changing market needs by developing and improving products/services to support higher work efficiency and improved working practices for medical institutions and medical staff.

  1. Business operation risk Natural disaster risk Description of risk
    Natural disasters (earthquakes, tsunamis, typhoons, torrential rains, heavy snowfall, strong winds, volcanic eruptions, etc.) are difficult to predict and are occurring with greater frequency. These disasters may interrupt lifelines by cutting off power or water supplies, or cause breakdown of delivery routes. If a disaster results in a reduction or stoppage of production capability, a reduction in sales due to delay or stoppage of supply/delivery, costs incurred to address problems or to achieve recovery, or costs incurred for preventive measures for the future, this may affect the performance or financial situation of our Group.
    In our Agriculture and Food Products Business, natural disasters may impede operation of our processing facilities due to major fluctuations in the yield of vegetables, which are a key raw material.

Countermeasures by our Group

As a response to potential natural disasters, the Industrial Gas Business of our Group is putting in place a stable supply system inside Japan for industrial gases and medical oxygen, through decentralized installation of compact liquefied oxygen/nitrogen production plants (VSU). We minimize risk by periodically conducting disaster prevention drills and bolstering our stockpiles of disaster supplies in case of a large-scale natural disaster.

In our Chemical Business, we ensure a reliable supply system by increasing the number of production sites, and we always maintain product inventory to cover a certain period of time.

In Hokkaido, the main business area for our Energy Business, we deploy LP gas-powered mobile power source trucks at LP gas receiving terminals, LP gas filling stations, and kerosene terminals, and we have established a system to ensure that emergency power sources are available even in a power outage.

In our Agriculture and Food Products Business, we are working to spread farming of vegetables to cultivate and procure over different areas.

  • AIR WATER REPORT 2021 Financial Section

Business Overview and Analysis of Financial Condition and Cash Flows

2

Quality risks

Description of risk

In a diverse range of industries, our Group provides products, merchandise, and services, with quality guaranteed based on legal restrictions or agreements with customers. In our Medical Business, which is connected especially closely with human life, we manufacture, import, and sell medical gases and medical devices in accordance with the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, but if product defects arise that lead to recalls or product liability damages, we may incur expenses to take countermeasures or pay damages, and this may affect the performance or financial situation of our Group.

In our Agriculture and Food Products Business, we manufacture and sell food products such as frozen food, ham, deli food, beverages, and sweets in accordance with the Food Safety Basic Act, Food Sanitation Act, Food Labeling Act, and other laws. Also, in our Seawater Business, we manufacture food products such as salt, seaweed, and furikake rice topping. If a problem arises, such as a serious quality accident, we may lose the trust of consumers, and incur expenses to take countermeasures or pay damages, etc.

Magnesia for magnetic steel sheets is one of the key products of our Seawater Business, and it is positioned upstream in the supply chain, with a sales territory covering approximately 40 countries, and thus if there is a serious product defect, the impact may be wide ranging.

In the global engineering field, which falls under our Other Businesses category, one of our businesses is high-power uninterruptible power supplies (UPS), and our main product is rotary UPS. This business plays a key role in business continuity planning (BCP) of data centers, semiconductor manufacturers, and other end users, and if a product defect, problem, or other trouble causes major damages for a customer, we may incur expenses to take countermeasures or pay damages, etc.

Countermeasures by our Group

In our Group's mid-term management plan, NEXT-2020 Final, we are committed to strengthening quality compliance as a key management challenge, and we strive to minimize risk by establishing Quality Compliance Guidelines as a Group-wide indicator, and conducting periodic quality risk surveys and quality compliance audits.

We ensure preparedness for liability risk attributable to quality problems of products and merchandise by maintaining comprehensive liability insurance coverage for our company and our consolidated subsidiaries in Japan.

Procurement risks

Description of risk

We use large amounts of electric power in manufacturing oxygen, nitrogen, and argon, the mainstay products of our Industrial Gas Business. If power costs rise substantially, and those costs cannot be passed on in the sales price, there may be an impact on our Group's performance. Also, helium gas, a scarce natural resource, and CO gas and dry ice, which are produced as by-products during processing of their source gases by petroleum refiners and other industries, may have an effect on our Group's performance due, respectively, to geopolitical factors, or reduction of volume due to the operating situation. The purchasing prices of LP gas and kerosene, the mainstay products of our Energy Business are generally linked with the price of crude oil. If the crude oil price falls much further than projected, this may have an effect on our Group's performance.

In our Agriculture and Food Products Business, we manufacture and sell processed foods whose main ingredients are vegetables and pork, and these prices may have an impact due to bad weather or changes in supply and demand in the market.

In our Other Businesses, the FIT system in Japan is moving toward more stringent monitoring of stable supply and business sustainability for suppliers of globally-sourced biomass fuel for power generation. Supply and demand are tight for fuels meeting standards, and there is a risk of rising fuel prices.

Countermeasures by our Group

Our Group is working to secure revenue by revising sales prices in a timely and appropriate manner with the understanding of customers.

Also, to stably secure raw materials and products, we are examining steps such as increasing stockpiles in Japan, making preparations to commit to alternative fuels, and developing procurement routes aside from those that currently exist.

Accident risk

Description of risk

In our Logistics Business, we are engaged in transport of general cargo, as well as high-pressure gases and other hazardous items, using large vehicles such as trucks and lorries. Therefore, if a serious accident occurs, we may be liable for damages, or subject to administrative measures such as halting use of vehicles or halting business site operations, and this may have an effect on our Group's performance.

Countermeasures by our Group

Our Group is actively engaged in measures to promote safety such as ensuring thorough operation management, and implementing safety education.

Foreign exchange risk

Description of risk

In our Group, we position global business as the foundation of our growth, and we have gained many subsidiaries outside Japan through M&A or establishing companies. In particular, at subsidiaries involved in our industrial gas-related equipment business, and our high-power UPS business (in our Other Businesses category), we are globally expanding procurement of raw materials and product sales. Therefore, if sudden fluctuations in exchange rates occur, this may affect performance or the financial situation of these businesses.

Countermeasures by our Group

In our Group, we strive to minimize foreign exchange risk through measures such as exchange contracts, diversification of procurement routes, and unification of transaction currencies at foreign subsidiaries.

  1. Other risks Environmental risks Description of risk
    In our business activities both inside and outside Japan, our Group is subject to environmental laws and regulations, but if they are strengthened due to enactment or amendment, then the resulting constraints on business activities, increased costs of compliance, and other necessary measures may affect our Group's performance or financial situation. This applies especially to the Industrial
    Gas Business, which uses large amounts of electric power in the
    manufacturing process. If carbon taxes are imposed or regulation of greenhouse gas (CO) emissions is strengthened, e.g., through an emissions trading system, it may affect our Group's performance or financial situation.

Countermeasures by our Group

In our Group's mid-term management plan, NEXT-2020 Final, we have positioned response to climate change as a key management challenge, and established a reduction target for total greenhouse gas (CO) emissions as a key performance indicator (KPI).

Our Group is working to reduce total emissions of greenhouse gas (CO) by taking steps such as adopting/upgrading high- efficiency plants and implementing thorough energy-conservation activities, so that we can attain our target.

COVID-19 risk

Description of risk

The worldwide spread of COVID-19 infection is affecting all businesses of our Group. It remains unclear when this situation will resolve, and if resolution takes a long time, that may have an effect on operations of our businesses-including our Industrial Gas Business, and the global engineering field of our Other Businesses- as well as on the performance, financial situation, and cash flow of our Group.

Countermeasures by our Group

Our Group is working to reduce costs in all our businesses. Our objective is to continue fulfilling our responsibility to stably supply industrial gases, medical gases, and other products, while giving the utmost consideration to the safety of all Group employees. To that end, we are implementing thorough measures to prevent contagion and ensure safety such as implementing staggered working hours and remote-working, taking body temperature when entering buildings, and wearing masks. To maintain sufficient financial stability in case economic slowdown continues over the long term, we will select M&A and capital investments with extreme care, while prudently ascertaining changes in the business environment.

Also we have launched the Corporate Business Innovation Division for the purpose of fundamentally revising the work styles from new perspectives and thinking that disregard conventional lifestyles, values, business systems and ideas. It has thus been developing a structure for business reforms including expansion of teleworking.

Non-financial asset impairment risk

Description of risk

Our Group has many non-financial assets such as property, plant, and equipment, goodwill, and intangible assets. For intangible assets (excluding inventory assets, deferred tax assets, etc.),

we detect the signs of impairment in pertinent assets or cash- generating units (referred to hereafter as "the assets"), and if there are signs of impairment, we estimate the recoverable amount of the asset, and conduct an impairment test. For intangible assets, for which it is impossible to determine goodwill and the depreciation period, we carry out an impairment test every quarter, regardless of whether there are signs of impairment. If an impairment loss is incurred, this may affect the business development, performance, and financial situation of our Group.

Countermeasures by our Group

Through periodic impairment tests of goodwill and intangible assets, our Group ascertains and properly handles appraised values.

3

AIR WATER REPORT 2021 Financial Section

Business Overview and Analysis of Financial Condition and Cash Flows

4

Consolidated Financial Statements

Consolidated Statement of Financial Position

AIR WATER INC.

Millions of yen

Notes

FY2019

FY2020

(March 31, 2020)

(March 31, 2021)

Assets

Current assets

Cash and cash equivalents

5

41,861

45,983

Trade and other receivables

6

187,402

188,664

Inventories

7

64,415

67,679

Other financial assets

8

5,794

4,590

Income taxes receivable

2,990

3,436

Other current assets

9

30,813

25,411

Total current assets

333,277

335,767

Non-current assets

Property, plant and equipment

10

380,284

403,604

Goodwill

11

64,005

52,994

Intangible assets

11

19,352

28,397

Investments accounted for using equity method

28,503

29,689

Retirement benefit asset

20

3,088

5,494

Other financial assets

8

62,365

67,827

Deferred tax assets

14

7,328

1,250

Other non-current assets

9

1,494

1,795

Total non-current assets

566,422

591,053

Total assets

899,699

926,821

Millions of yen

Notes

FY2019

FY2020

(March 31, 2020)

(March 31, 2021)

Liabilities and equity

Liabilities

Current liabilities

Trade and other payables

15

137,945

135,716

Bonds and borrowings

16

105,386

56,636

Other financial liabilities

18

5,426

6,221

Income taxes payable

8,510

11,861

Provisions

17

1,211

893

Other current liabilities

19

25,020

27,799

Total current liabilities

283,500

239,128

Non-current liabilities

Bonds and borrowings

16

195,648

250,876

Other financial liabilities

18

38,586

35,501

Retirement benefit liability

20

9,918

9,727

Provisions

17

2,354

2,831

Deferred tax liabilities

14

9,252

8,216

Other non-current liabilities

19

8,623

8,148

Total non-current liabilities

264,383

315,302

Total liabilities

547,884

554,431

Equity

Share capital

21

55,855

55,855

Capital surplus

21

51,077

54,517

Treasury shares

21

(2,556)

(5,947)

Retained earnings

21

228,854

244,794

Other components of equity

21

(1,237)

8,578

Total equity attributable to owners of parent

331,992

357,797

Non-controlling interests

19,822

14,591

Total equity

351,815

372,389

Total liabilities and equity

899,699

926,821

5

AIR WATER REPORT 2021 Financial Section

Consolidated Financial Statements | Consolidated Statement of Financial Position

6

Consolidated Statement of Profit or Loss

AIR WATER INC.

Millions of yen

FY2019

FY2020

Notes

(From April 1, 2019

(From April 1, 2020

to March 31, 2020)

to March 31, 2021)

Continuing operations

Revenue

24

809,083

806,630

Cost of sales

(628,463)

(625,734)

Gross profit

180,620

180,895

Selling, general and administrative expenses

25

(135,383)

(135,398)

Other income

26

9,122

6,767

Other expenses

26

(5,348)

(3,321)

Share of profit of investments accounted for using equity method

1,605

2,287

Operating profit

50,616

51,231

Finance income

27

1,395

1,128

Finance costs

27

(2,181)

(2,707)

Profit before tax

49,830

49,651

Income tax expense

14

(16,085)

(19,292)

Profit from continuing operations

33,745

30,359

Discontinued operations

Profit (loss) from discontinued operations

28

(218)

51

Profit

33,526

30,410

Profit attributable to

Owners of parent

30,430

27,367

Non-controlling interests

3,095

3,042

Profit

33,526

30,410

Earnings per share

Basic earnings (loss) per share

30

Continuing operations

148.49 Yen

120.75 Yen

Discontinued operations

(1.06) Yen

0.23 Yen

Basic earnings per share

147.43

Yen

120.98 Yen

Diluted earnings (loss) per share

30

Continuing operations

148.26 Yen

120.61 Yen

Discontinued operations

(1.06) Yen

0.23 Yen

Diluted earnings per share

147.20

Yen

120.84 Yen

Consolidated Statement of Comprehensive Income

AIR WATER INC.

Millions of yen

FY2019

FY2020

Notes

(From April 1, 2019

(From April 1, 2020

to March 31, 2020)

to March 31, 2021)

Profit

33,526

30,410

Other comprehensive income

Items that will not be reclassified to profit or loss

Net change in fair value of equity instruments designated as

29

(3,681)

9,473

measured at fair value through other comprehensive income

Remeasurements of defined benefit plans

29

(503)

1,612

Share of other comprehensive income of investments accounted for

29

23

(6)

using equity method

Total of items that will not be reclassified to profit or loss

(4,160)

11,079

Items that may be reclassified to profit or loss

Exchange differences on translation of foreign operations

29

(3,387)

959

Effective portion of cash flow hedges

29

2,583

(65)

Share of other comprehensive income of investments accounted for

29

42

60

using equity method

Total of items that may be reclassified to profit or loss

(761)

955

Total other comprehensive income

(4,922)

12,035

Comprehensive income

28,604

42,445

Comprehensive income attributable to

Owners of parent

24,438

39,407

Non-controlling interests

4,165

3,037

Comprehensive income

28,604

42,445

7

AIR WATER REPORT 2021 Financial Section

Consolidated Statement of Profit or Loss | Consolidated Statement of Comprehensive Income

8

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

AIR WATER Inc. published this content on 28 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 December 2021 10:36:06 UTC.


© Publicnow 2021
All news about AIR WATER INC.
05/18Don't Be Left "On The Fence" With The EPA Fenceline Risk Screening Approach
AQ
04/26AIR WATER : Materials Takes Stake in Hong-Kuang Hi-Tech, a Semiconductor Gas Dealer Based ..
PU
04/22AIR WATER : Transistors on a gallium nitride (GaN) layer bonded onto a diamond substrate w..
PU
04/19FuelPositive to Set Up Green Ammonia Production System on Manitoba Farm
MT
04/01AIR WATER : About the Air Water Group
PU
04/01AIR WATER : Value Creation Story
PU
04/01AIR WATER : CEO Messages
PU
04/01AIR WATER : COO Messages
PU
04/01AIR WATER : Businesses
PU
04/01AIR WATER : Integrated Report 2020 (Year Ended March 31, 2020)
PU
More news
Financials
Sales 2022 887 B 6 970 M 6 970 M
Net income 2022 42 250 M 332 M 332 M
Net Debt 2022 257 B 2 017 M 2 017 M
P/E ratio 2022 9,18x
Yield 2022 3,03%
Capitalization 384 B 3 020 M 3 020 M
EV / Sales 2022 0,72x
EV / Sales 2023 0,66x
Nbr of Employees 18 843
Free-Float 86,3%
Chart AIR WATER INC.
Duration : Period :
Air Water Inc. Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends AIR WATER INC.
Short TermMid-TermLong Term
TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 5
Last Close Price 1 716,00 JPY
Average target price 2 120,00 JPY
Spread / Average Target 23,5%
EPS Revisions
Managers and Directors
Kikuo Toyoda Managing Director & Executive Officer
Kiyoshi Shirai Manager-Airgas & Industry Company
Kiyotaka Nagai Executive Officer & Manager-Finance
Masahiro Toyoda Co-Chairman
Masato Machida Manager-Industrial Policy
Sector and Competitors