Consolidated Financial Results
for the Three Months Ended June 30, 2024

SAKAI HEAVY INDUSTRIES, LTD.
Stock code: 6358
URL https://www.sakainet.co.jp/en/

August 9, 2024

Summary of Consolidated Financial Results1

Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Three Months Ended
June 30, 2024
1) Consolidated net sales: ¥6,706 million, down 10.9% YoY
The Construction Machinery Market also entered a period of adjustments to inventory amid
slowdowns in the world economy.
2) Operating profit:¥449 million, down 18.5% YoY
Operating profit declined due to decreased sales and increased payroll, despite cost-of-sales ratio
improvement of 3.3% YoY through the progress in profit structure reform and the effect of yen
depreciation.
3) Profit:¥690 million, up 46.3% YoY
Posted gain on sale of investment securities of ¥280 million.
4) Sales in Japan:¥2,497 million, down 10.8% YoY
Although construction investment remained strong against the backdrop of measures to accelerate
national land resilience, repeated price revisions and the overtime cap on construction andlogistics brought investment in construction machinery to a continued standstill.

5) Sales in North America: ¥2,203 million, down 4.3% YoYShowed a movement toward adjustments to inventory by dealers, despite continued high-level
investment in road construction against the backdrop of the Infrastructure Investment and Jobs
Act.
6) Sales in Asia:¥1,650 million, down 21.1% YoYDemand stagnated in Indonesia and Vietnam, our major markets.
2

Highlights of Consolidated Business Performance
2. Adapting to a Changing Business Environment1) Initiatives for enhancing the profitability of capital(1) Progress of medium-term management policy
Five-year medium-term management policy: Net sales of ¥30 billion, operating profit of ¥3.1 billion, ROE of 8.0%
Results for the previous fiscal year (third year): Net sales of ¥33 billion, operating profit of ¥3.31 billion, ROE of 9.0%
Forecast for the current fiscal year (fourth year): Net sales of ¥33 billion, operating profit of ¥2.73 billion, ROE of 6.2%
Results for three months ended June 30, 2024: Net sales of ¥6.7 billion, operating profit of ¥0.44 billion, ROE of 9.4%
(2) Progress of enhancing corporate value (PBR above 1)
At the end of March 2024: PBR 0.98 times (Share price ¥6,680)
At the end of June 2024: PBR 0.85 times (Share price ¥5,930)
Timely disclosure of policies regarding initiatives has been provided in the Status of Initiatives for Enhancing Profitability of
Capital, dated April 13, 2023.
https://www.sakainet.co.jp/en/news/item/20230425EnhancingProfitabilityofCapital.pdf2) Profit structure reform through sales price revisions, high added value, and efficiency
Cost-of-sales ratio improvement: 69.8%, improvement of 3.3% YoY
Progress in profit structure reform and the effect of yen depreciation
3) Increased investment in human capital(1) Wage improvement and stabilized employment: Rise in wages (5.1% in the fiscal year ended March 31, 2024, 6.0% in thefiscal year ending March 31, 2025)(2) Increasing on-site skilled labors and improving working conditions: Enhance factories and service areas, and establish healthy
working environments.
4) Dealing with volatile demand
Inventory turnover: 2.65 times, down 0.36 times/12% YoY
Currently making adjustments to optimize inventory levels, as the Construction Machinery Market entereda period of adjustments to inventory amid slowdowns in the world economy.

3

Highlights of Consolidated Business Performance
3. Mid- to Long-Term Growth Strategy
1) Make more significant inroads into the Asian market:
Expand the ASEAN market centered on our Indonesian hub (net sales down 21.1% YoY)
2) Expand the scope of overseas business:
Develop the overseas market for road maintenance equipment (start the local production in Indonesia)
3) Pursue business opportunities in North America:
Increase our market share through niche marketing (net sales down 4.3% YoY)
4) Develop next-generation businesses:
Focus on market development for emergency brakes, compaction management systems, and Automatic Cutter Control
System.
Research and development on autonomous rollers and EV rollers is underway.

4. Outlook for Business Environment
1) Global Construction Machinery Market
Potential demand is expected to remain stable due to factors such as large-scale infrastructure investment plans inJapan and the U.S., infrastructure investment and mine development becoming active in emerging countries, together
with renewal of aging infrastructure and disaster-related countermeasures.
2) Risks and Countermeasures
The future direction of the world economy is unpredictable, due to factors such as global economic slowdowns, tensions
in security issues, and rapid changes in the social structure.
In order to transition to a management structure adapted to these changes in the times, we will move forward with theapproach of adapting to a changing business environment.

4

Consolidated Business Performance(Millions of yen)First threemonthsended June30, 2023

First threemonthsended June30, 2024

Net sales

7,529

6,706

▲ 822

▲10.9%

Japan

2,798

2,497

▲ 301

▲10.8%

Overseas

4,730

4,209

▲ 521

▲11.0%

551

449

▲ 102

▲18.5%(7.3%)(6.7%)

Ordinary profit

692

503

▲ 188

▲27.2%

Profit attributable toowners of parent

471

690

218

46.3%

(73.1%)(69.8%)

Operating profit
Operating profit ratio

Cost-of-sales ratio

YoY change
Amount%5

Consolidated Business Performance (Graph)6

Sales by Region in Which Customers Are Located(Millions of yen)First threemonthsendedJune 30,2023

First threemonthsendedJune 30,
2024

Japan

2,798

2,497

▲ 301

▲10.8%

Overseas

4,730

4,209

▲ 521

▲11.0%

North America

2,301

2,203

▲ 97

▲4.3%

Asia

2,092

1,650

▲ 441

▲21.1%

337

355

17

5.3%

7,529

6,706

▲ 822

▲10.9%

Other regions

Total

YoY change
Amount%7

Sales by Region (Map)(Millions of yen)First three months
First three months
ended June 30, 2023 ended June 30, 2024

YoY change

Japan

2,798

2,497

(▲301, ▲10.8%)

Overseas

4,730

4,209

(▲521, ▲11.0%)

Total

7,529

6,706

(▲822, ▲10.9%)

China segment
54 → 9North America
2,301 → 2,203（▲45, ▲83.4％）

2,301

2,203

（▲97, ▲4.3％）

Asia
2,092 → 1,650（▲441, ▲21.1％）

2,092

1,650

Japan
2,798 → 2,497

2,798

2,497

（▲301, ▲10.8％）

Indonesia segment

994 → 760（▲234, ▲23.5％）

Other (Africa, Oceania, Latin America)

337 → 355（+17, +5.3％）

337

355

Plants and sales office
Sales offices
Service and sales offices8Segment Information by Region in Which Our Manufacturing Facilities and Sales Offices Are Located(Millions of yen)Japan
Sales to externalcustomers
Intercompany
sales

First three First threemonthsmonthsended June ended June30, 2023
30, 2024

YoY change
Amount

%

4,179

3,733

▲ 445

▲10.7%

1,042

1,084

41

4.0%

Total net sales

5,221

4,817

▲ 403

▲7.7%

Operating profit

121

37

▲ 83 ▲69.0%(Millions of yen)First three First threemonthsmonthsNorth America ended June ended June30, 2023
30, 2024

Sales to externalcustomers
Intercompany
sales

Indonesia
Sales to externalcustomers
Intercompany
sales

YoY change
Amount

%

994

760

▲ 234

▲23.5%

1,063

747

▲ 316

▲29.7%

Total net sales

2,058

1,508

▲ 550 ▲26.7%

Operating profit

187

79

▲ 107 ▲57.5%

Amount

%

2,301

2,203

▲ 97

▲4.3%

3

2

▲1

▲41.8%

Total net sales

2,304

2,205

▲ 99

▲4.3%

Operating profit

194

387

192

98.6%

(Millions of yen)First three First threemonthsmonthsended June ended June30, 2023
30, 2024

YoY change(Millions of yen)

China
Sales to externalcustomers
Intercompany
sales

First three First threemonthsmonthsended June ended June30, 2023
30, 2024

YoY change
Amount

%

54

9

▲ 45

▲83.4%

344

372

27

8.1%

Total net sales

398

381

▲ 17

▲4.4%

Operating profit

37

35

▲1

▲5.1%

9

Segment Information by Region (Graph)
North America

Japan

2,304

3

5,221
Intercompany

2,301

4,817

2,203

2

194

1,084

OperatingFirst three months ended
June 30, 2023

Indonesia

profit

1,063
187

994
First three months ended
June 30, 2023

37

customers

4,179

3,733

First three months ended
June 30, 2023

First three months ended
June 30, 2024

First three months ended
June 30, 2024

2,058

121

Sales to external

2,205

387

sales

1,042

(Millions of yen)

China

1,508
747
79
760
First three months ended
June 30, 2024

398

381

344

372

37
54
First three months ended
June 30, 2023

35
9First three months ended
June 30, 202410

Breakdown of YoY Changes in Operating Profit•

Gross profit decreased by ¥220 million, in line with YoY decrease in net sales of ¥822 million.

•

The cost-of-sales ratio improved by 3.3% and gross profit rose by ¥221 million through theprogress in profit structure reform and the effect of yen depreciation.

•

SG&A expenses increased by ¥102 million following the increased investment in human capital(increased payroll) and increased business activities.

•

As a result, operating profit decreased by ¥102 million YOY to ¥449 million.
(Millions of yen)First threeFirst threemonths ended months ended
June 30, 2023 June 30, 2024

Impact on
operatingprofitYoYchangeNote

Net sales

7,529

6,706

▲ 822

▲ 220

▲822 ｘ （1 - 73.1％）

Cost-of-sales ratio

73.1%

69.8%

▲3.3%

+221

6,706 ｘ ▲3.3％

Gross profit

2,022

2,022

0

SG&A expenses

1,470

1,573

Operating profit

551

449

102

Payroll: up 93; Transportation costs: down 11;▲ 102 Technical research expenses: up 8;
Other SG&A: up 11

▲ 102
11

Breakdown of YoY Changes in Operating Profit (Graph)(Millions of yen)

Impact of
improvement
in cost-ofsales ratio

Decrease in
net sales

▲220

＋221

Decrease intransportation
costs

＋11
Increase in
payroll▲93

Increase intechnical
research
expenses▲8

Operatingprofit for
first threemonthsendedJune 30,
2023

SG&A expenses

＋102

551
Operating profit

Increase inother SG&A

▲11
Operatingprofit for
first threemonthsendedJune 30,
2024

449

▲102
Operating profit ratio
7.3%

Operating profit ratio
6.7%

12

Net Working Capital (Trade Receivables + Inventories - Trade Payables)•

Net working capital invested in sales activities increased by ¥940 million YoY to ¥12,503 million.
As a result, the net working capital/sales ratio increased by 2.8% to 38.8%.

•

Inventories increased by ¥1,469 million YoY to ¥12,127 million, as the Construction Machinery Market entered a periodof adjustments to inventory.
As a result, net sales/inventory turnover decreased by 0.36 times (down 12%) to 2.65 times.
Annualized

Currently making adjustments to optimize inventory levels.

net sales(Millions of yen)

As ofJune 30,
2023

As of
June 30,
2024

Amount％32,19774

0.2%

Trade receivables

8,733

6,171

▲2,562▲29.3%

8,733

Net working capital

1,469

12,52812,827

13,031

Trade payables▲7,828▲5,7952,033▲26.0%Net working capital

11,563

12,503940

8.1%

12,127

10,658Trade△ 5,795

payablesNet working
capital/Sales ratio

3.01 times

36.0%

2.65 times ▲0.36 times

38.8%

2.8%

12,50313.8%
Inventories

Inventory turnover

32,197

6,171

receivables

11,56312,12733,02032,123Trade32,123

10,65833,353

33,635

YoY change

Annualized
consolidated net sales

Inventories(Millions of yen)consolidated△ 7,828
As of Jun.
30, 2023

As of Sep.
30, 2023

As of Dec.
31, 2023

As of Mar.
31, 2024

As of Jun.
30, 2024

13

Consolidated Business Forecast
No change from the previous forecast.
•

Although the market environment in Japan, North America, and Asia is expected to hold firm, salesin Japan are expected to temporarily stall due to rising costs and structural adjustments in theentire supply chain caused by the 2024 construction and logistics issues and are therefore set at¥33,000 million, the same level as the previous year.

•

Domestically, prices, wages, and interest rates are expected to rise to balance the gap with thoseoverseas. Globally, supply chain risks and resource and logistics costs are expected to remain highdue to the ongoing fragmentation of the global economy caused by tensions in Ukraine and the
Middle East, so operating income was set at ¥2,730 million, down 17.7% YoY.

(The assumed exchange rate used in the consolidated business forecast is ¥140 per US$.)(Millions of yen)First half
Six months
Six months
ended
endingSeptember 30, September 30,
2023
2024
(Results)(Forecast)

Full year
YoY change

Amount%Fiscal year
ended March
31, 2024(Results)

Fiscal year
ending March
31, 2025(Forecast)

YoY change
Amount%16,785

15,500▲ 1,285▲7.7%

33,02033,000

▲ 20

▲0.1%

Operating profit

1,966

1,050

▲ 916

▲46.6%

3,318

2,730

▲ 588

▲17.7%

Ordinary profit

2,109

1,050

▲ 1,059▲50.2%

3,324

2,700

▲ 624

▲18.8%

Profit attributable toowners of parent

1,534

700

▲ 834

▲54.4%

2,440

1,830

▲ 610

▲25.0%

Earnings per share(Yen)¥361.64¥164.85▲¥196.79▲54.4%¥574.74¥430.96▲¥143.78▲25.0%Net sales

14

Dividends per Share・

Since the announcement of the Medium-Term Management Policy on June 2, 2021, we have set a
dividend policy as follows, with a target of 8% ROE.
When ROE falls below 3%: A payout ratio of 100% will apply.
When ROE is between 3% and 6% : A DOE of 3% will apply.
When ROE exceeds 6%: A payout ratio of 50% will apply.

Note: We made a ten-for-one share consolidation effective October 1, 2017. Dividend payouts for the periods prior
to the share consolidation are adjusted to be in line with the post-consolidation payouts.

15

KPIs Established in the Medium-Term Management Policy•

Improvements to the profit structure in the fiscal year ended March 31, 2024, include upside factors
other than actual performance, such as the weak yen, in addition to penetration of sales pricerevisions and the normalization of transportation costs, despite achievement of the KPIs establishedin the Medium-Term Management for the fiscal year ended March 31, 2024.

•

We will aim to improve the profit structure to be able to continuously achieve ROE of 8% for
maintaining PBR 1 in a new phase of change.
(Millions of yen)

Net sales
Operating profit
Return on equity (ROE) *1

First threemonths ended
June 30, 2023
(Results)

First threemonths ended
June 30, 2024
(Results)

7,529

6,706

551
7.4%

Fiscal year
ended March
31, 2024(Results)

Fiscal year
ending March 31,
2025(Forecast)Target for the
fiscal year
ending March
31, 2026

33,02033,00030,000

449

3,318

2,730

3,100

9.4%

9.0%

6.2%

8.0%

Cumulative amount of share buybacks

Share buybacks

ー

ー

ー

340*2

500 ～
2,000

*3

*1 The annualized ROEs were calculated based on the year-to-date results of the corresponding fiscal year.
*2 The amount represents the cumulative amount of share buybacks that had been executed as of August 9, 2024.
*3 The amount represents the targets of the cumulative amount of share buybacks through March 31, 2026.

16

Contact us

SAKAI HEAVY INDUSTRIES, LTD.
IR Office: Takao Yoshikawa

Email: sakai.ir@sakainet.co.jp
Telephone: +81-3-3434-3401 (from outside Japan)
Fax: +81-3-3436-6513 (from outside Japan)

Performance forecasts and other forward looking statements in this document are based on
information available at the time of this writing, as well as certain assumptions deemed reasonable.
Actual performance and other results may differ depending on a variety of factors.