Taikisha : FY2023 Financial Results Briefing (with comment)

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My name is Masashi Osada, Representative Director, and President, Corporate Officer.

Thank you very much for attending our financial results briefing today.

I would like to present the business environment, our achievements for FY2023, and our earnings forecast for FY2024.

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Regarding the business environment for the Group, in the Japanese market, capital investment of electronic component manufacturers and automobile manufacturers is ongoing and demand for the renovations in the metropolitan area was steady.

In overseas markets, although there is a concern about the slowdown of the global economy, the capital investment of manufacturers continued to be steady.

Under such market environment, there was a reactionary decrease in orders-received because we had large orders in the same period of the previous fiscal year. However, in terms of performance, backed by steady progress in construction work carried forward, we achieved the highest-ever net sales of completed construction contracts and all income items.

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Under such circumstances, we exceeded the full-year forecast revised at the time of announcing the third quarter financial results, in all the items except net sales of completed construction contracts.

As I will explain by item, orders-received exceeded the forecast because we secured more orders than expected.

Although net sales of completed construction contracts were slightly lower than expected, the results were almost as forecasted.

On the profit side, improvements were seen in construction profitability, resulting in ordinary income exceeding the forecast.

As for profit attributable to owners of parent, in addition to the factors mentioned previously, we exceeded our forecast from the proceeds of the sale of investment securities and others.

Factors by segment will be explained by Yasushi Nakajima, a Chief Executive of the Administrative Management Headquarters.

Please check the exchange rate of the main overseas affiliates and the effect of exchange rate differences shown in the bottom of the slide.

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This slide shows the performance of the company.

We have been able to continue with our growth, even though the business has been affected to a certain amount of fluctuation in the external environment, such as the impact of COVID-19.

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This slide shows the factors causing a fluctuation in ordinary income in FY2023.

We achieved a year-on-year increase in ordinary income through a significant increase in net sales of completed construction contracts despite the fall in profitability related to large-scale projects and the increase in selling, general and administrative (SG&A) expenses, mainly for labor cost.

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Next, I would like to explain the full-year earnings forecast for FY2024.

We saw the completion of multiple large-scale projects for FY2023. However, we forecast a decrease in income and sales, due to their absence in FY2024. However, regarding the amount of construction orders received, we had been adjusting the size of orders received for FY2023 due to a large increase in construction orders in hand. For FY2024, these construction orders in hand decreased last fiscal year, and the market environment for both businesses will continue to be favorable. Thereby, we expect to see an increase for the Company as a whole. The level of orders-received is expected to be close to 288.6 billion yen, which was the highest-ever level recorded two terms ago.

This FY marks the final year of the Mid-term business plan stretching from FY2022 to FY2024. When the plan was formulated, the target for FY2024 was shown here in the extreme right column. Net sales of completed construction contracts have exceeded the target and although profitability is on a path towards improvement, there has been a significant increase in labor costs, more than forecasted, stemming from higher salaries and an increase in selling, general and administrative (SG&A) expenses, such as R&D and IT investments, and we expect ordinary income of 15 billion yen, the same as the original target. We shall continue with our efforts to exceed the target numbers.

Factors by segment will be explained later by Mr. Nakajima, a Chief Executive of Administrative Management Headquarters.

Please also refer to the assumed exchange rates for our major overseas affiliates and the impact of exchange rate fluctuations.

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My name is Yasushi Nakajima, Chief Executive of the Administrative Management Headquarters.

From this slide, I am going to explain the financial results by segment.

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From this slide, I will explain the achievements of FY2023 by division.

This slide shows a summary of the orders received by division compared with FY2022 and forecasts.

On the whole, while an increase was seen in the Paint Finishing System Division, a fall was recorded for the Green Technology System Division, resulting in 263.5 billion yen, a year-on-year decrease of 25.1 billion yen.

In comparison with forecast, we exceeded the forecast revised in the third quarter financial results in all fields.

The following slides explain a breakdown by divisions.

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