Amada : Consolidated Results for the Nine Months Ended December 31, 2022(with script)

AMADA CO.,LTD.

Financial Results Briefing for 3rd Quarter FY2022 (Presentation)

February 9, 2023

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This year, the forecast for the global economy remains uncertain due to accelerating inflation, sharp rising interest rates, a resurgence in the spread of COVID-19, and geopolitical tensions. However, there are some positive signs, such as optimism that the economy may be able to make a soft landing due to subdued inflation and the IMF raising its growth forecast by 0.2 percentage points from three months ago to 2.9% in January. That said, there is no indication of a change in policy by the US or European monetary authorities. Thus, downside risks remain.

Against this backdrop, the Company's revenue increased 19.2% YoY to JPY258.9 billion on top of high order backlogs. Operating profit was JPY35 billion, up 31.8% YoY, due to the effect of higher sales and improved selling prices, as well as the impact of foreign exchange rates, despite the impact of higher prices of steel and other materials and increased distribution costs. Profit was JPY24 billion, a 19% increase over the same period last year. Hence, the cumulative Q3 revenue, operating profit, and profit results were record highs.

The orders in Q3 were JPY91.9 billion, the second highest level for Q3 after the previous fiscal year, although there was a downward trend compared to the strong H1. Results of Q3 totaled to JPY297.1 billion, an increase of 6.5% from the same period last year. JPY297.1 billion was the highest ever for the Q3 accumulation, and as a result, the order backlog was JPY180 billion, up JPY42 billion from the previous fiscal year-end.

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Continuing on page two, I will explain the consolidated income statement results.

As mentioned at the beginning of this briefing, revenue was JPY258.9 billion, up 19.2% from the same period last year. Gross profit was JPY113.5 billion, up 21.7% from the same period last year, and the gross profit margin was 43.8%.

This gross profit margin improved by 0.9 percentage points from 42.9% in the same period of the previous year. In addition to the positive effects of 0.8 points from sales price improvement and 0.3 points from capacity utilization effect, foreign exchange rate and other factors contributed to this result, despite the significant impact of soaring costs of steel and other materials.

SG&A expenses totaled JPY79 billion, up JPY11.6 billion from the same period last year, but the SG&A- to-sales ratio improved by 0.5 percentage points, from 31% to 30.5%. The variable cost ratio increased by 0.4 percentage points to 5.1% due to the impact of rising logistics costs in Japan and overseas. Fixed costs amounted to JPY65.8 billion, an increase of JPY8.6 billion from the same period last year.

The exchange rates were JPY136.53 for USD1, JPY140.60 for EUR1, and JPY19.88 for CNY1; focusing on the US dollar, the depreciation of the yen continues to be seen.

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Next, on page three, the trend of orders.

As mentioned at the beginning of this briefing, orders received totaled to JPY297.1 billion, up 6.5% from JPY279 billion in the same period last year. The sheet-metal division, shown in the bar graph in the center, saw a 6.4% increase in orders totaling to JPY218.2 billion this fiscal year, partly due to a high level of orders received of JPY205.1 billion, up 57% from the same period last year.

Orders for machinery, shown in black, totaled to JPY155.8 billion, up only 4.1% from JPY149.7 billion, partly because of a particularly large increase in the same period last year.

The right-hand side shows orders by region. While domestic orders totaled to JPY119.7 billion, up 9.4% from the same period last year, overseas orders totaled to JPY177.3 billion, a high figure but only a 4.6% increase from the same period last year, due in part to the high hurdles of the previous year.

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Next, page four is the results by industry segment.

The metal working machinery segment, shown in the bar graph on the left, reported sales revenue of JPY212.6 billion, up 19.6% from JPY177.7 billion in the same period last year, and operating income of JPY28.7 billion, up 33.5% from JPY21.5 billion in the same period last year.

On the right side, the metal machine tools segment posted sales revenue of JPY45.2 billion, up 17.7% from JPY38.4 billion YoY, and operating income of JPY5.5 billion, up 27.2% from JPY4.3 billion YoY.

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