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    6141   JP3924800000

DMG MORI CO., LTD.

(6141)
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Financial Statements and Related Announcement::Notification of Results Release

11/05/2021 | 01:53am EST

DMG MORI CO., LTD.

2-3-23, Shiomi, Kotoku, Tokyo, 135-0052, Japan

Tel.: +81 (0)3-6758-5900

November 5th, 2021

DMG MORI Co., Ltd.

65% growth of orders in the first nine month (January-September)/ Further

upward revision of full year forecast

Key figures

(JPY)

FY2021 Jan-Sep

(YoY)

FY2020 Jan-Sep

Consolidated order Intake

340.3

bn

(+64.8%)

206.5

bn

Machine order backlog

168.0

bn

-

96.0

bn (End of Dec. 2020)

Sales revenue

274.3

bn

(+17.0%)

234.4

bn

Operating profit

16.7

bn

(2.7x)

6.2

bn

Operating profit margin

6.1%

2.7%

Net profit attributable to the

9.9 bn

0

bn

owners of the parent

Net profit attributable to

8.3

bn

-0.8

bn

ordinary shareholders

[Third quarter (January-September) financial results summary]

DMG MORI's consolidated orders have been expanding across almost all industries in developed countries such as Japan, Europe and the Americas, which account for around 80% of total orders. Although the early demand recovery in China, which account for about 10% of total orders, has moved into a state of pause, this effect is being fully absorbed by strong order influx in the developed countries. As a result, our consolidated orders are in a solid recovery.

Consolidated orders in the first nine month (January-September) grew to JPY340.3 billion (+65% year on year), driven by businesses areas where our strengths lie, such as automation, full-turnkey systems and digitization with process-integrated machine tools such as 5-axis machines and mill-turn centers as their basis. Order backlog for machinery at the end of September climbed to JPY168 billion (JPY142 billion at the end of June).

Sales revenue for the first nine months grew to JPY274.3 billion (+17% year on year), operating profit increased to JPY16.7 billion (+2.7 times year on year) with an operating profit margin of 6.1% (2.7% in the same period last year). Although logistics costs rose, we were able to significantly improve our profit margin by controlling other costs, increased sales volume, improved gross profit margin by providing value to customers, and benefitting from the yen's depreciation.

1

DMG MORI CO., LTD.

2-3-23, Shiomi, Kotoku, Tokyo, 135-0052, Japan

Tel.: +81 (0)3-6758-5900

Net finance costs declined by JPY1.4 billion mainly because of lower amount of annual recurring compensation owed to non-controlling shareholders of DMG MORI AG (hereinafter referred to as AG). In addition, the effective tax rate normalized to an appropriate level of about 30%, leading to net profit attributable to owners of the parent (herein after referred to as net profit) of JPY9.9 billion (zero of the same period last year).

[Third quarter cumulative business overview]

(Order trends)

Consolidated orders for the first nine months grew to JPY304.3 billion (+65% year on year) reflecting continued favorable demand environment in Japan, Europe and the Americas. We are expanding our small-scale business meeting events worldwide, which we started in Japan last year. Most recently, we held the "pre-EMO show" at the Pfronten factory in Germany. We also invited customers who visited the exhibition "EMO MILANO 2021" held in Italy to explore our Milan showroom. Such measures lead to order growth in Europe.

The average unit price per machine body order is on an upward trend with JPY39.2 million in the third quarter (July- September 2021) compared to JPY37.1 million in the last fiscal year. An increase in demand for automation and full-turnkey systems as well as integrated machines has contributed to higher prices. Orders for after-sales-services and repair parts, which account for 18% of consolidated orders, also increased 26% year on year. In addition, Magnescale, one of our group companies, is also increasing contribution due to strong demand for precision measuring components for cutting-edge semiconductor production equipment.

The share of domestic and overseas order intake was 13% (14% in the last fiscal year) and 87% (86% in the last fiscal year), respectively. The overseas order composition by region was 52% in Europe (45% in the last fiscal year), 19% in the Americas (24%) and 10% in China (10%), and 6% in Asia (7%). Demand for semiconductor production equipment, space-related components, EVs, molds and decarbonization-related products remained strong. Inquires for commercial aircraft and energy industries began to take off.

(Order backlog)

The order backlog for machinery at the end of September climbed to JPY168 billion (JPY96 billion at the end of December 2020). Machine orders in the fourth quarter (October-December) are expected to exceed sales, leading to an order backlog of JPY170-180 billion at the end of this year. At the beginning of this fiscal year, we got off to a very tough start with the low order backlog of JPY96 billion. However, given the expected relatively large order backlog, we will be able to see a favorable performance from the beginning of next fiscal year.

(Profit and loss situation)

Sales revenue for the first nine months was JPY274.3 billion (+17% year on year). With the easing of travel

2

DMG MORI CO., LTD.

2-3-23, Shiomi, Kotoku, Tokyo, 135-0052, Japan

Tel.: +81 (0)3-6758-5900

restrictions in a few regions, business activities in orders, sales and services have been normalizing.

Operating profit came to JPY16.7 billion (+2.7 times year on year), reflecting an increase in sales volume of JPY9.6 billion, the effect of the yen's depreciation of JPY2.2 billion, and an improvement in gross profit margin of JPY1.8 billion due to the provision of high value-added solutions to customers. On the other hand, an increase in personnel expenses of JPY1.7 billion and an increase in logistics costs of JPY1.4 billion had negative impacts, leading to combined total decrease of JPY3.1 billion. We continue to curb sales-related expenses by shifting towards small- scale business meeting events from larger scale setups and enhancing digital contents. As a result, the operating profit margin improved significantly to 6.1% (2.7% of the same period last year).

Net finance costs improved by JPY1.4 billion due to an additional acquisition of AG's shares in April 2020. In addition, the effective tax rate normalized to about 30%. As a result, net profit stood at JPY9.9 billion (zero in the same period last year). Interest payments of JPY1.6 billion on the hybrid capital was deducted from the net profit, leading to JPY8.3 billion of profit attributable to ordinary shareholders (JPY800 million deficit in the same period last year).

(Cash Flow)

Free cash flow for the first nine months was in the black at JPY15.8 billion. Profit before income taxes of JPY14.2 billion and net working capital of JPY4 billion derived from an increase of down payments contributed to a healthy free cash flow. We proceeded with sale of strategic-cross-holding shares in the third quarter.

(Financial position)

Total assets at the end of September 2021 increased by JPY65.2 billion from the end of December 2020. While operating assets increased by JPY29.1 billion due to growth in orders and sales, operating liabilities climbed to JPY30.4 billion. We raised JPY40 billion through issuing convertible bonds in July and JPY30 billion through perpetual subordinated bonds in August. Net interest-bearing debt was reduced by JPY9.7 billion to JPY54.7 billion by using free cash flow for repayment. The balance of hybrid capital remained unchanged at JPY118.7 billion from the end of December 2020 due to refinancing with new instruments. Shareholders' equity increased by JPY22.2 billion. However, total assets expanded mainly due to the increase of operating assets and liabilities, which resulted in a stable shareholders' equity ratio at 35.1%, the same level as at the end of the previous fiscal year.

(Funding through convertible bonds and perpetual subordinated bonds)

On July 16, 2021, we raised JPY40 billion through zero-coupon convertible bonds with due date of July 16, 2024 and a conversion price of JPY2,593 (30.04% up from the closing price on the date of the decision to issue the bonds). The funds will be used for the projects such as reduction of CO2 emissions, medium-tolong-term business growth in China and an introduction of ERP system.

3

DMG MORI CO., LTD.

2-3-23, Shiomi, Kotoku, Tokyo, 135-0052, Japan

Tel.: +81 (0)3-6758-5900

In addition, we raised JPY30 billion through issuing perpetual subordinated bonds at the end of August. The funds were used for voluntary redemption of subordinated bonds. Since the interest rate on the newly issued hybrid capital is lower than before, the weighted average annual interest costs on the amount of hybrid capital lowered to 1.47% (previously 1.77%).

(Number of employees)

The number of consolidated employees (including contract employees, part-time employees) at the end of September 2021 was 12,184, which was almost the same as at the end of December 2020 when the headcount was 12,160. By enhancing digital tools and contents such as digital twin test cut technology, digital sales manual, my DMG MORI and TULIP, we increase productivity and curb an increase in number of employees.

(Research and Development)

We launched the NZ-PLATFORM, the first machine jointly developed between Japan and Italy. This product is a turning center that can amount up to for turrets. Provided with a B-axis function (swivel function), the machine can process parts with complicated shapes in a short time with flexibility and high productivity by process integration. It is suitable for machining complex parts such as shafts with complicated shapes for vacuum pumps and hydraulic equipment.

We made the LASERTEC 3000 DED hybrid available to the market, ad Directed Energy Deposition Metal Additive Manufacturing machine based on a 5-axis Mill Turn Center. With the hybrid functionalities of metal deposition welding and metal cutting, this machine is highly suited for applications like surface coating, repairing worn parts and finishing them in single-chucking.

In the area of automation, we have developed a robot system "MATRIS Light". It is a system in which a human collaborative robot is mounted on push-cart and can be freely moved by one operator. In addition, it is easy to operate without specialized knowledge of robots, thereby lowering the barrier for introduction. The automatic travelling robot system "WH-AGV 5" has already introduced by multiple customers. The AGV (Automated Guided Vehicle) is a trackless unmanned transport system that achieves a positioning of ±1 mm or less by using vision sensors to correct the position and orientation. It can transport workpieces and attach / detach them to / from machines.

We introduced a couple of peripheral devices such as "AI Chip Removal", "Zero Sludge Coolant" and "zeroFOG". Chips, coolant and mist (fine-grained cutting oil suspended in the air) generated during machining are called the three machining troublemakers, which adversely affect the machining accuracy of workpieces and can also cause machine failure. These devices not only solve these three machining troublemakers, but also contribute to longer-

4

DMG MORI CO., LTD.

2-3-23, Shiomi, Kotoku, Tokyo, 135-0052, Japan

Tel.: +81 (0)3-6758-5900

term operation times, improvement of the working environment and reduction of CO2 emissions.

We started "Digital Twin Test Cut" in February this year, which can reproduce the dynamic operating state of machine tools in actual machining on a computer and calculates the machining results. Compared to real test- cutting, we can significantly reduce time and cost of materials, tools and coolant, thereby reducing environmental impact. In case that the analysis time tends to be longer for molds with complicated curved surfaces, the supercomputer "Fugaku" provided by RIKEN can shorten the time drastically.

In the area of sales field, we have introduced Sales Manual 2.0 for approx. 600 Area Sales Managers (ASMs) worldwide. It enables efficient and effective communication with customers by providing detailed explanation of products and systems, and instant quotations. In addition, it eradicates misunderstanding between customers and DMG MORI when confirming order conditions.

Within the customer portal site "my DMG MORI", introduced in the third quarter of 2019, we kept adding content to enhance customer convenience. Including a new function "Service Request" that allows customers to request repairs and recovery and place orders for repair parts online. The number of registration is gradually increasing.

As mentioned above, we are actively investing in process integration, automation, full turnkey, which we have been focusing on, and digitization to manage and operate these processes in the most efficient manner. We are confident that such activities enable DMG MORI to maintain and strengthen our competitive advantage in the industry.

Outlook for fiscal year 2021 (January - December)

(JPY)

FY2021 Plan

(YoY)

FY2020

FY2021 Plan

(Revised)

Actual

(Aug.5th, 2021)

Consolidated order intake

450.0 bn

(+60.9%)

279.7 bn

420.0 bn

Sales revenue

380.0

bn

(+15.8%)

328.3

bn

365.0

bn

Operating profit

23.0

bn

(2.2x)

10.7

bn

20.0

bn

Operating profit margin

6.1 %

3.3 %

5.5 %

Profit before income taxes

19.5

bn

(3.8x)

5.1

bn

16.5

bn

Net profit attributable to the owners of

13.0

bn

(7.4x)

1.7

bn

11.0

bn

the parent

Net profit attributable to ordinary

11.0

bn

0.4

bn

8.9

bn

shareholders

5

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

Disclaimer

DMG Mori Co. Ltd. published this content on 05 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 November 2021 06:52:02 UTC.


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Financials
Sales 2021 381 B 3 320 M 3 320 M
Net income 2021 12 452 M 109 M 109 M
Net Debt 2021 77 671 M 678 M 678 M
P/E ratio 2021 23,1x
Yield 2021 1,53%
Capitalization 245 B 2 134 M 2 133 M
EV / Sales 2021 0,85x
EV / Sales 2022 0,67x
Nbr of Employees 12 160
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Last Close Price 1 958,00 JPY
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Managers and Directors
Masahiko Mori President & Representative Director
Hirotake Kobayashi Representative Director, GM-Finance & Accounting
Makoto Fujishima Senior MD, Head-Research & Development
Hiroaki Tamai Representative Director, VP, GM-Administration
Tojiro Aoyama Independent Outside Director
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