Giken : Financial Results Overview _FY2023

Construction Revolution

FY2023 (September 2022 to August 2023)

GIKEN LTD.

Financial Results

Overview

October 11, 2023

Forward-looking Statements Disclaimer

Except for historical facts, certain information provided in this document, such as our and our group's current policies and management strategies, contains forward-looking statements based on currently available information, including statements about the future. These statements, which are based on estimates, projections, or assumptions with potential risks, involve uncertainties that could cause results to differ materially from those anticipated in the statements.

Such risks and uncertainties include general domestic and international economic conditions, such as national economic conditions, industrial and market conditions, interest rates, commodity prices, and exchange rate fluctuations.

We are not obligated to update or revise "forward-looking statements" provided in this document, even in the event of new information or future developments.

1

Content

I. Financial Results
◼ Financial Results Overview FY2023	P	3
◼ FY2024 Forecast	P	9
◼ Revision of Medium-term Management Plan	P 17
◼ Shareholder Return	P 19
II. Long-term Vision
◼ GIKEN GOALS 2031	P 22
III. References	P 37

2

Financial Results Overview

FY2023

3

Financial Results Trend

					Unit: Millions of JPY
	FY2021	FY2022		FY2023
	Actual	Actual	YoY	Actual	YoY
Net Sales	27,618	30,378	+10.0%	29,272	-3.6%
Operating Profit	3,997	4,613	+15.4%	2,983	-35.3%
Ordinary Profit	4,161	4,832	+16.1%	3,060	-36.7%
Profit*	3,073	3,234	+5.2%	846	-73.8%
Profit per Share	112.22	117.65	+4.8%	30.82	-73.8%
(JPY)
*1 An extraordinary losses of 1,367 million yen for loss on liquidation of subsidiaries and associates
was recorded for the fiscal year ended August 31, 2023.
*2 Profit attributable to owners of GIKEN LTD.			4

Financial Results Trend－Net Sales and Operating Profit

Unit: Millions of JPY

[Factors in sales changes]

• Large-scale projects overseas undertaken

27,618

5,460

(19.8%)

22,158

3,997

30,378

5,965

(19.6%)

24,413

4,613

29,272

4,092

(14.0%)

25,180

2,983

mainly in the previous fiscal year have been

completed.

• Steady progress in construction work, with

robust adoption increase of our method, mainly

for projects related to disaster recovery and

reconstruction, disaster prevention and

mitigation measures, and strengthening national

resilience measures.

[Factors in operating profit changes]

• Amid soaring steel and other construction

material prices, material costs represent a

larger proportion of construction works

expenditures, and the resulting downward

trend in construction volume has affected

sales of machinery products and parts with a

high gross margin used in permanent

structures.

FY2021FY2022FY2023

Domestic Sales Overseas Sales Operating Profit

Figures in brackets show the overseas ratio

• Selling, general and administrative expenses,

including research and development

expenses, increased.

5

Financial Results Trend－Net Sales by Segment

Construction Machinery Segment

			Unit: Millions of JPY
25,000	13.2%	9.5%	9.9%
		20,851	20,752
20,000	19,134	1,986	2,053
	2,526
15,000

10,000
18,865	18,699
	16,608
5,000

0

FY2021 FY2022 FY2023

Domestic Sales		Overseas Sales		Overseas ratio

[Factors in sales changes]

Overseas: Steady sales growth of finished goods in Asia

Domestic: The sales of large machinery used in the construction of permanent structures decreased. In contrast, robust sales of general machinery used in the construction of temporary structures were recorded.

Press-in Work Segment

							Unit: Millions of JPY
12,000				41.8%
34.6%
10,000				9,526	23.9%
8,484			8,519
8,000
		3,978	2,038
2,934
6,000
4,000
				6,480
5,550	5,547
2,000
0
		FY2021		FY2022		FY2023

Domestic Sales		Overseas Sales		Overseas ratio

[Factors in sales changes]

Overseas: Large-scale projects overseas undertaken mainly in the previous fiscal year have been completed.

Domestic: Adoption of our method has strongly increased for disaster recovery and reconstruction projects and other fields.

6

Financial Results Trend－Operating Profit by Segment

Construction Machinery Segment

25,000			Unit: Millions of JPY
20,097	21,694	21,276
20,000	842	523
963
15,000
10,000
4,775	6,068	4,668
	(28.0%)
5,000	(23.8%)		(21.9%)

Press-in Work Segment

10,000	Unit: Millions of JPY
9,656

	8,663	129	8,796
8,000	179		276

6,000

4,000

1,243

2,000 (14.4%) 948875

(9.8%) (10.0%)

19,134	20,851	20,752
0

0

8,484 9,526 8,519

FY2021

FY2022

FY2023

External Customer Sales		Internal Sales
Operating Profit	Figures in brackets show the
	operating profit margin

[Factors in profit margin changes]

• The sales of high gross margin finished goods and parts decreased.
• Selling, general and administrative expenses, including research and development expenses, increased.

FY2021	FY2022	FY2023
External Customer Sales		Internal Sales
Operating Profit			Figures in brackets show
			the operating profit margin

[Factors in profit margin changes]

• Completion of large-scale overseas projects with low gross margin undertaken mainly in the previous fiscal year increased

operating profit margin. Domestic operating profit remains at the

level seen in the first half of the year due to the decrease of	7
high gross margin projects.

Extraordinary Losses on Dissolution of Joint Venture with J Steel

Background

• December 2017

• Acquisition of 50.1% of outstanding shares of J Steel Group Pty Limited to drive our global expansion.

• May 2023

• Agreement on dissolution of the joint venture relationship due to differences in management policies.
• Recording an extraordinary losses of 1,367 million yen as a loss on liquidation of subsidiaries and associates for the consolidated financial results of the third quarter of the fiscal year ended August 31, 2023.

• June 2023

• Completion of transfer of J Steel shares. Dissolution of the joint venture relationship.

Going Forward

• J Steel continues operations as a user of the press-in method in the Oceania market.
• J Steel has an ongoing dispute with one of its customers regarding construction work for which J Steel received orders. The Company had a parent company guarantee covering the disputed transactions and will continue to cooperate with J steel in resolving the issue even after the dissolution of the joint venture agreement.

8

FY2024 Forecast

9