Amada : Consolidated Results for the Six Months Ended September 30, 2021(with script)

Miwa: I would like to begin with a summary of the financial results for the first half.

In the first half of the last fiscal year, the economic impact of the spread of COVID-19 was the greatest, resulting in a significant decrease in sales revenue, but this fiscal year, in the midst of the severe environment of the re-emergence of the infection, economic activities are beginning to normalize globally, and sales revenue increased 25% YoY to JPY141.8 billion.

Operating income totaled JPY17.5 billion, an increase of 13.8% from the same period last year. Net income was JPY13.1 billion, an increase of 17.3% from the same period last year. Orders received were up 63.1% from the same period last year to JPY184.2 billion, a record high for a half-year period. This was a turnaround from last year, when orders were sluggish due to the spread of COVID-19, and was supported by pent-up demand, demands for automation, and efficiency improvement demand which all were pushed further with government subsidies.

As mentioned at the beginning of this report, sales revenue was JPY141.8 billion, an increase of 25% over the same period last year. Gross profit was JPY60.3 billion, an increase of 33.2% over the same period last year, and the gross profit margin increased by 2.6 percentage points, from 39.9% to 42.5%. Positive factors for the gross profit margin included an increase in capacity utilization of 1.9 percentage points due to higher production output, an improvement in selling prices of 0.6 percentage points, and manufacturing rationalization of 0.1 percentage points, resulting in improvement throughout the first half of the fiscal year.

SG&A expenses were JPY43.3 billion, an increase of JPY4.1 billion from the same period last year, but the SG&A ratio improved significantly to 30.5% from 34.5% in the same period last year. The variable cost ratio increased by 0.4% due to an increase in the ratio of exports to overseas subsidiaries and the impact of rising logistics costs. Fixed costs increased by JPY2.4 billion, but after taking into account foreign currency exchange rates, the increase was only JPY1.3 billion. The main reasons for the increase were sales-related expenses associated with the increase in sales revenue and an increase in personnel expenses.

Next, operating income for the first half of last fiscal year included a gain of about JPY10 billion from the sale of fixed assets, so the JPY17.5 billion figure for this fiscal year is only a 13.8% increase from the same period last year. In terms of Japan GAAP, operating income, excluding other income and expenses, which include this special factor, grew 2.8 times YoY, thanks to the effects of our rationalization efforts. The break-even point is not shown here, but the annualized amount is JPY194 billion, which is below the JPY200 billion structure.

The yen weakened against the US dollar to JPY109.80, the euro to JPY130.89, and the Chinese yuan to JPY16.99.

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As mentioned at the beginning of this report, orders received were JPY184.2 billion, up 63% from JPY112.9 billion in the same period last year. Of this total, the sheet metal portion accounted for JPY136.4 billion, an increase of 65% from JPY82.9 billion in the same period last year. In particular, sales of machines were JPY100.6 billion, up 88% from JPY53.4 billion in the same period last year.

By region, domestic sales increased by 48% to JPY73.1 billion, and overseas sales increased significantly by 75% to JPY111 billion.

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By business segment, sales revenue in the Metal Working Machinery segment increased by 25% to JPY116.2 billion, but operating income decreased by 3% YoY to JPY14.3 billion, due to the impact of the special factor of the gain on the sale of fixed assets that I mentioned earlier.

In the Metal Machine Tools business, sales revenue increased 26% to JPY25 billion, and operating income improved 13.5 times YoY to JPY2.7 billion.

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The fiber laser machine business, which is the pillar of our growth strategy in our business, accounted for 93.8% of total sales, up 5.3% from the same period last year and 2.7% from the first quarter. In addition, sales of fiber laser machine increased by 37.3% YoY.

While the sales ratio of fiber laser machine is increasing, the ratio of fiber laser machine in the already delivered base is still less than 30%. We expect that the replacement of CO2 lasers, which are expected to account for more than 70% of the existing installed base, will accelerate due to the perspective of the responding labor shortage and environmental requirements.

Next, the automation ratio of bending machines was 27.9%, up 1.2% from the same period last year and 0.9% from the first quarter. Sales of automated bending machines increased significantly by 47.1% over the same period last year.

The percentage of automation by peripheral equipment attached to lasers and punching machines was 52.3%, up 0.9% from the same period last year and 7.1% from the first quarter. Sales of these blanking automation machines increased by 30% over the same period last year.

Finally, the ratio of After-sales business decreased by 1.1% compared to the same period of the previous fiscal year, but remained high at 34.9% as machine sales grew, especially in the sheet metal division.

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