Part 1: Second Quarter Financial Summary and Projections for FY2011 - PowerPoint PPT Presentation

Part 1: Second Quarter Financial Summary and Projections for FY2011 Sumitomo Heavy Industries, Ltd.

1-1 FY2011 Second Quarter Performance Summary ■ Key points Unit: JPY billion (1) Orders ・ Significant increase over same period last FY2011 FY2010 Change 1H 1H year. ・ Increase in all segments. 303.1 243.8 59.3 Orders (2) Net Sales ・ Although increased over the same period 294.1 251.9 42.1 Net Sales last year, Environmental Facilities and Plants decreased. 21.6 16.3 5.3 Operating income ・ Four ships delivered, same as last year. (3) Operating Income Operating income 7.3% 6.5% 0.9% ・ 32% increase, due to increase in net sales. ratio (4) Net Income ・ Increase remained at 17%, due to 20.2 14.8 5.4 Ordinary income declaration of valuation loss for Ordinary income investment securities. 6.9% 5.9% 1.0% ratio Extraordinary (2.8) (0.5) (2.3) income or loss 9.2 7.9 1.3 Net income 3.1% 3.1% 0.0% Net income ratio

1-2 Orders and Net Sales Unit: JPY billion Orders Net Sales Orders recovered to JPY300 billion for the first half. Machinery components, construction machinery and Machinery components, construction and industrial machinery showed an increase. industrial machinery showed an increase. Four new ships were delivered. No orders were received for new ships. 400 400 303.1 296.1 294.1 291.1 Others 300 4.6 Others 4.3 4.3 264.5 300 4.6 Environmental Environmental 251.7 251.9 27.0 46.2 40.2 facilities and plants facilities and plants 4.3 243.8 42.5 3.9 4.6 3.9 31.1 Ships Ships 223.7 4.3 45.6 29.9 13.7 36.3 31.1 Industrial 45.0 4.3 28.0 Industrial machinery 37.2 machinery 37.2 0.9 28.4 28.6 200 33.7 33.1 179.7 34.3 200 36.0 1.5 4.4 32.8 Construction 39.8 35.6 86.4 Construction 29.5 machinery 79.9 45.8 73.8 67.0 machinery 2.8 67.4 24.2 63.8 52.0 54.0 50.6 100 100 46.6 Precision Precision 74.1 68.6 machinery machinery 80.6 73.4 69.9 59.9 58.5 63.3 45.3 42.8 Machinery Machinery 49.2 46.0 40.1 34.8 34.2 34.5 38.6 components components 37.2 32.0 29.4 0 0 1H-FY09 2H-FY09 1H-FY10 2H-FY10 1H-FY11 1H-FY09 2H-FY09 1H-FY10 2H-FY10 1H-FY11

1-3 Operating Income by Segment ■ Comparison with previous year <Machinery components> Unit: JPY billion Profits increased, due to an increase in sales overseas. <Precision machinery> FY2011 FY2010 Change Injection molding machines experienced a significant 1H 1H increase in profits, due to increases in net sales and Machinery 2.2 1.6 0.6 improvements made at Demag. SEN and precision components machinery experienced improvement. <Construction machinery> Precision 6.0 1.7 4.3 Even though sales for China have been slowing for machinery hydraulic excavators, improvement has been Construction experienced, due to increased demand in other areas. 3.9 3.1 0.8 machinery <Industrial machinery> Sales of material handling systems declined, Industrial 4.9 5.4 (0.5) resulting in decreased profits. machinery <Ships> Although the number of ships delivered remained the Ships 5.7 3.2 2.5 same, at four vessels, two of these vessels were sold on a Yen basis, resulting in a profitable turn this fiscal Environmental (2.0) 0.6 (2.6) term. facilities and <Environmental facilities & plants> plants Profitability deteriorated, due to decreased net sales Others 0.8 0.7 0.1 and delayed progress in constructions. ■ Comparison with forecast Total 21.6 16.3 5.3 Precision machinery, construction machinery, industrial machinery and ships were more favorable than forecast.

Analysis of change in Operating Income 1-4 (FY2010 / 1H to FY2011 / 1H) Unit: JPY billion Impact of sales reduction/increase +9.9 Improvement of cost of sales ratio, etc. 21.6 ＋ 2.2 Impact of currency exchange fluctuations (2.4) Sales administrative 16.3 costs, etc. (4.4) FY2011 FY2010 1H 1H

1-5 Consolidated Balance Sheet Unit: JPY billion September March September March Change 2011 2011 Change 2011 2011 Current assets 380.3 365.3 15.0 Liabilities 364.8 357.4 7.4 Notes and accounts 135.6 132.0 3.7 Cash and deposits 57.5 52.5 5.0 payable Notes and accounts 158.4 155.3 3.1 Advance payments 38.4 33.3 5.2 payable received Inventories 138.4 131.0 7.3 Interest-bearing 73.6 67.8 5.8 debts Others 26.1 26.6 (0.4) Others 117.1 124.4 (7.2) Net assets 274.7 269.4 5.3 Fixed assets 259.2 261.5 (2.3) Common equity 247.9 242.6 5.2 Tangible assets 215.7 214.2 1.6 Valuation variations Intangible assets 23.7 24.7 (1.0) 6.4 6.9 (0.6) and currency exchange fluctuations Investments and 37.1 40.4 (3.3) Minority interests 3.1 2.1 1.0 other assets Total Total 639.5 626.8 12.7 639.5 626.8 12.7 Net ratio of interest- 2.5% 2.4% 0.1% bearing debts Stockholders’ 42.5% 42.6% (0.1)% equity ratio

1-6 Consolidated Cash Flow Statement Unit: JPY billion Category FY2011 FY2010 Change 1H 1H Operating activities 13.5 14.4 (0.8) Income before income taxes and 17.4 14.3 3.1 minority interests Depreciation 8.5 8.7 (0.2) Working capital (0.2) 1.4 (1.5) Others (income taxes etc.) (12.2) (10.1) (2.2) Investing activities (8.7) (9.6) 0.9 Free cash flow 4.9 4.8 0.1 (0.6) (22.1) 21.5 Financing activities Change in cash and cash equivalents 4.0 (17.7) 21.7 Cash and cash equivalents at end of 56.4 44.0 12.5 fiscal term

1-7 Performance Forecast for FY2011 by Segment ■ Key Points: (1) Slight slowdown in orders for machinery components and construction machinery. Two new vessel orders for ships are expected in the second half. (2) In terms of sales, improvement occurs for machinery components, precision machinery, construction machinery and industrial machinery. Three vessels are planned for sales in the second half. (3) In terms of operating income, machinery components, precision machinery and construction machinery increase from the previous fiscal year. Unit: JPY billion Record Record Forecast Forecast Record FY2010 2H FY2011 1H FY2011 2H FY2011 FY2010 38.6 49.2 49.8 99.0 75.8 Orders Machinery 40.1 46.0 48.0 94.0 74.6 Net Sales components 3.2 2.2 3.8 6.0 4.9 Operating income 80.6 74.1 80.9 155.0 150.5 Orders Precision 73.4 68.6 81.4 150.0 131.9 Net Sales machinery 6.7 6.0 7.0 13.0 8.3 Operating income 73.8 86.4 88.6 175.0 141.2 Orders Construction 67.0 79.9 90.1 170.0 130.8 Net Sales machinery 2.2 3.9 3.6 7.5 5.3 Operating income 37.2 45.0 37.0 82.0 73.2 Orders Industrial 33.7 37.2 43.8 81.0 66.5 Net Sales machinery 4.9 4.9 5.6 10.5 10.3 Operating income 13.7 3.9 11.1 15.0 14.6 Orders Ships 31.1 31.1 25.9 57.0 59.5 Net Sales 6.7 5.7 4.3 10.0 9.9 Operating income 42.5 40.2 44.8 85.0 70.6 Orders Environmental 46.2 27.0 53.0 80.0 76.1 facilities and Net Sales plants 5.0 (2.0) 7.0 5.0 5.6 Operating income 4.6 4.3 4.7 9.0 8.9 Orders Others 4.6 4.3 3.7 8.0 8.6 Net Sales 0.8 0.8 1.2 2.0 1.6 Operating income 291.1 303.1 316.9 620.0 534.9 Orders Total 296.1 294.1 345.9 640.0 548.0 Net Sales 29.5 21.6 32.4 54.0 45.8 Operating income

1-8 Performance Forecast for FY2011 ■ Key Points: (1) The assumed currency exchange rate was modified from the previous JPY80 to JPY77, but the operating income still remained the same as previous forecast. (2) The interim dividend of JPY4 was revived. The dividend become JPY10 for the full fiscal year, as initially announced. Unit: JPY billion Record Forecast Forecast Record FY2011 1H FY2011 2H FY2011 FY2010 303.1 316.9 620.0 534.9 Orders 294.1 345.9 640.0 548.0 Net Sales Operating income 21.6 32.4 54.0 45.8 7.3% 9.4% 8.4% 8.4% Operating income ratio 20.2 30.3 50.5 44.3 Ordinary income 6.9% 8.8% 7.9% 8.1% Ordinary income ratio (2.8) (0.2) (3.0) 0.8 Extraordinary income or loss 9.2 18.8 28.0 27.9 Current net income 3.4% 5.4% 4.4% 5.1% Current net income ratio JPY4 JPY6 JPY10 JPY8 Dividends - - 21.9% 17.4% Dividend payout ratio - - 8.3% 7.8% ROIC (after tax) JPY88 JPY92 JPY77 - Integrated exchange rate (US dollars) （ actual ） （ actual ）

Part 2: Management Strategy

2-1 Transitions of Orders and Net Sales Unit: JPY billion Orders Net Sales The economic condition for the second half of The delivery of three ships is planned for the second FY2011 is uncertain, with the overall condition half. All segments other than ships are expected to remaining at about the same level as the first half. grow. 400 400 345.9 Others 316.9 3.7 303.1 Others Environmental 296.1 294.1 4.7 53.0 291.1 facilities and plants 4.3 300 Environmental 300 4.6 44.8 4.6 4.3 facilities and plants 40.2 27.0 251.9 25.9 Ships 243.8 46.2 42.5 11.1 Ships 3.9 3.9 31.1 Industrial 4.3 43.8 13.7 37.0 Industrial machinery 45.0 29.9 31.1 machinery 28.0 0.9 37.2 37.2 28.4 200 200 33.7 36.0 Construction Construction 88.6 90.1 32.8 machinery machinery 86.4 73.8 79.9 67.0 67.4 63.8 100 100 Precision Precision 80.9 81.4 machinery machinery 74.1 68.6 80.6 73.4 69.9 58.5 Machinery Machinery 49.2 49.8 48.0 46.0 components components 38.6 40.1 37.2 34.5 0 0 1H-FY10 2H-FY10 1H-FY11 Forecast 1H-FY10 2H-FY10 1H-FY11 Forecast 2H-FY11 2H-FY11