Consolidated Financial Results
for the Fiscal Year Ended March 31, 2024

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

May 14, 2024

Summary of Consolidated Financial Results1

Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Fiscal Year Ended
March 31, 2024
1) Consolidated net sales:¥33,020 million, up 5.0% YoY
Although sales in Japan and Asia began to decline, the drop was offset by increased
sales in North America.
2) Operating profit:¥3,318 million, up 32.4% YoY
Progress in profit structure reform and the upside effect of yen depreciation.
3) Domestic sales:¥14,320 million, down 5.8% YoY
Although construction investment remained strong against the backdrop of measuresto accelerate national land resilience, repeated price revisions and the 2024
construction and logistics problems brought investment in construction machinery to a
standstill.
4) Sales in North America:¥9,700 million, up 25.1% YoYHigh level of construction investment continues against the backdrop of theInfrastructure Investment and Jobs Act.
5) Sales in Asia:¥7,566 million, down 2.9% YoY
Slowdowns in the Chinese and ASEAN markets, despite the strong Indonesian market.
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 current fiscal year (third year): Net sales of ¥33 billion, operating profit of ¥3.31 billion, ROE of 9.0%
(2) Progress of enhancing corporate value (PBR above 1)
At the end of March 2023: PBR 0.68 times (Share price ¥4,010)
At the end of March 2024: PBR 0.98 times (Share price ¥6,680)
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 and high added value
Cost-of-sales ratio improvement: 71.6%, improvement of 2.4% YoYProfit structure reform progressed with penetration of sales price revisions in Japan and overseas, and normalizationof transportation costs.
3) Strengthening product supply capabilities(1) Enhancement of supply chain (stabilization through review of suppliers and dual sourcing)(2) Modification of global business activities (stabilization of business structure in Japan and overseas through expansionof production capacity at domestic plants and expansion of parts business at Chinese plants)
4) Dealing with volatile demand
Inventory turnover: 3.10 times, down 0.23 times/7% YoY
Increase in parts for increased production and safety stock. Currently adjusting to an optimized
inventory level due to easing of supply constraints.

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 2.9% 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 up 25.1% 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
In the domestic market, construction investment continues to be firm due to the five-year acceleration measures fornational land resilience, but structural adjustment of the entire supply chain is still ongoing due to a wide range of cost
increases, such as construction machinery, and the 2024 problem in construction and logistics, but after a temporary
standstill, the market is expected to return to a recovery trend. In the North American market, high levels ofgovernment construction investment based on the Infrastructure Investment and Jobs Act are continuing, and a solid
market environment is expected.
In the Asian market, although the Chinese market continues to be sluggish, the ASEAN market is expected to bottom
out due to strong domestic demand.
2) Risks and Countermeasures
Domestically, prices, wages, and interest rates are expected to rise to balance the gap with those overseas. Globally,
supply chain risks and resource and logistics costs are expected to remain high due to the ongoing fragmentation of the
global economy caused by tensions in Ukraine and the Middle East.
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)

Fiscal year
ended
March 31,2023

Fiscal year
ended
March 31,2024

Net sales

31,45933,020

1,560

5.0%

Japan

15,20814,320

▲ 888

▲5.8%

Overseas

16,251

18,699

2,448

15.1%

Operating profit

2,506

3,318

812

32.4%

Operating profit ratio(8.0%)(10.1%)

Ordinary profit

2,327

3,324

996

42.8%

Profit attributable toowners of parent

1,694

2,440

746

44.0%

(74.0%)(71.6%)

Cost-of-sales ratio

YoY change
Amount%5

Consolidated Business Performance (Graph)6

Sales by Region in Which Customers Are Located(Millions of yen)

Fiscal year
ended
March 31,2023

Fiscal year
ended
March 31,
2024

Japan

15,20814,320

▲ 888

▲5.8%

Overseas

16,251

18,699

2,448

15.1%

North America

7,751

9,700

1,948

25.1%

Asia

7,796

7,566

▲ 229

▲2.9%

703

1,432

729

103.8%

31,45933,020

1,560

5.0%

Other regions

Total

YoY change
Amount%7

Sales by Region (Map)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024Japan

15,20814,320(▲888, ▲5.8%)

Overseas

16,251

18,699(+2,448, +15.1%)

Total

31,45933,020(+1,560, +5.0%)(Millions of yen)

YoY change

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

Total net sales
Operating profit

Year
Year
ended
ended
March 31, March 31,
2024
2023

YoY change
Amount%20,73019,225▲ 1,504

▲7.3%

3,826

4,185

359

9.4%

23,411 ▲ 1,145

▲4.7%
17.5%

24,556
836

983

146

(Millions of yen)

Year
Year
ended
ended
North America March 31, March 31,
2023
2024
Sales to externalcustomers
Intercompany
sales

Indonesia
Sales to externalcustomers
Intercompany
sales

YoY change
Amount

%

2,656

3,793

1,136

42.8%

4,355

3,091

▲ 1,263▲29.0%

Total net sales

7,012

6,885

▲ 127

▲1.8%

Operating profit

836

1,004

168

20.1%

Amount

%

7,751

9,700

1,948

25.1%

50

20

▲ 29

▲58.4%

Total net sales

7,802

9,721

1,919

24.6%

Operating profit

688

1,162

473

68.7%

(Millions of yen)

(Millions of yen)

Year
Year
ended
ended
March 31, March 31,
2023
2024

YoY change

China
Sales to externalcustomers
Intercompany
sales

Year
Year
ended
ended
March 31, March 31,
2023
2024

YoY change
Amount

%

320

300

▲ 20

▲6.3%

1,268

1,678

410

32.4%

Total net sales

1,589

1,979

390

24.6%

Operating profit

133

209

75

56.2%

9

Segment Information by Region (Graph)
Japan

North America(Millions of yen)

Indonesia

China

10

Breakdown of YoY Changes in Operating Profit•

Gross profit increased by ¥405 million, in line with a YoY increase in sales of ¥1,560 million.

•

The cost-of-sales ratio improved by 2.4% and gross profit rose by ¥800 million, with upward factors
such as the weak yen in addition to the penetration of sales price revisions and the normalization oftransportation costs.

•

SG&A expenses increased by ¥391 million following the increased investment in human capital(increased payroll) and increased business activities.

•

As a result, operating profit rose by ¥812 million YoY to ¥3,318 million.
(Millions of yen)
Fiscal year
Fiscal year
ended March ended March
31, 2023
31, 2024

Net sales
Cost-of-sales ratio
Gross profit

YoYchangeImpact on
operatingprofitNote

31,45933,020

1,560

+405

1,560 ｘ （1 - 74.0％）

74.0%

71.6%

▲2.4%

+800

33,020 ｘ ▲2.4％

8,165

9,369

1,204

SG&A expenses

5,659

6,050

Operating profit

2,506

3,318

391

▲ 391

Payroll: up 300; Travel and transportation
expenses: up 49; Sales commission: up 27;
Other SG&A: up 17

+812
11

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

Increase in
payroll

Increase in
net sales
Operatingprofit for
the fiscal
year ended
March 31,
2023

+405

Impact of
improvement
in cost-ofsales ratio▲300

Increase in travel Increase in
and transportation
sales
expensescommission

▲49

▲27

＋800
SG&A expenses▲391

Increase inother SG&A

▲17
Operatingprofit for
the fiscal
year ended
March 31,
2024

3,318

2,506
Operating profit＋812
Operating profit ratio
8.0%

Operating profit ratio
10.1%

12

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

Net working capital invested in sales activities increased by ¥1,261 million YoY to ¥13,031 million.

As a result, the net working capital/sales ratio increased by 2.1% to 39.5%.
•

Inventories increased by ¥1,206 million YoY to ¥10,658 million through increase in parts for increased production andsafety stock.
As a result, net sales/inventory turnover decreased by 0.23 times (down 7%) to 3.10 times.
Currently making adjustments to optimize inventory levels.
(Millions of yen)

As of March As of March
31, 2023
31, 2024

YoY change
Amount%Annualized
consolidated net sales

31,45933,020

1,560

5.0%

Trade receivables

9,464

8,498

▲966

▲10.2%

Inventories

9,452

10,658

1,206

12.8%

Trade payables▲7,146▲6,1251,021▲14.3%Net working
capital11,77013,031

1,261

10.7%

Inventory turnover

3.33 times

3.10 times ▲0.23 times

Net working
capital/Sales ratio

37.4%

39.5%

2.1%

13

Consolidated Business Forecast•

Although the market environment in Japan, North America, and Asia is expected to hold firm,sales in Japan are expected to temporarily stall due to rising costs and structural adjustments inthe entire 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)

Fiscal year ended
March 31, 2023
(Results)

Fiscal year ended
March 31, 2024
(Results)

Fiscal year ending
March 31, 2025
(Forecast)

31,45933,02033,000

▲ 20

▲0.1%

Operating profit

2,506

3,318

2,730

▲ 588

▲17.7%

Ordinary profit

2,327

3,324

2,700

▲ 624

▲18.8%

1,694

2,440

1,830

▲ 610

▲25.0%¥400.75¥574.74¥430.96▲¥143.78▲25.0%Net sales

Profit attributable toowners of parent
Earnings per share(Yen)

YoY change
Amount%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.
Dividends for the current fiscal year were revised upward twice against the initial forecast of ¥215.
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 shareconsolidation are adjusted to be in line with the post-consolidation payouts.

15

KPIs Established in the Medium-Term Management Policy•

Net sales are on pace to exceed the medium-term management policy.

•

Improvements to the profit structure in the current period include upside factors other thanactual performance, such as the weak yen, in addition to penetration of sales price revisions andthe normalization of transportation costs, and we will aim to solidify this profit structure andfurther improve business performance moving forward.
(Millions of yen)
Fiscal year ended
March 31, 2023
(Results)

Fiscal year ended
March 31, 2024
(Results)

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

31,45933,02033,00030,000Operating profit

2,506

3,318

2,730

3,100

Return on equity (ROE)

7.0%

9.0%

6.2%

8.0%

Net sales

Cumulative amount of share buybacks

Share buybacks

ー

ー

340*1

500 ～
2,000

*2

*1 The amount represents the cumulative amount of share buybacks that had been executed as of May 14, 2024.
*2 The amount represents the targets of the cumulative amount of share buybacks through March 31, 2026.

16

Sustainability Initiatives
Initiatives to become carbon neutral through the use of new technologies
Autonomous roller: Reduces CO2 emissions atconstruction sites through efficient compaction
A short-term rental agreement
was used for the first time at theconstruction site of the ShinMaruyama Dam in Yaotsu-cho,
Gifu Prefecture.
With unmanned construction
expected to expand in the future,
the company is focusing on
turning this into a business.
* Experimental data has shown that autonomous rollers can reduce labor byapproximately 20% compared to manned work.

EV roller: Reduces CO2 emissions from construction
equipment
Demonstration tests of electric
Combined roller

Walk-behindrollercombined rollers and electric walkbehind rollers were conducted at
actual construction sites.
Electric walk-behind rollers arescheduled to go on sale this fiscal
year. Aiming to obtain certification
for “GX construction equipment”(eligible for Ministry of theEnvironment subsidies), which isrecognized by the MLIT in the next
fiscal year.

Respect for Human Rights
Established the Human Rights Policy in April 2024. Promoting business activities with respect for human rights.
As the next step following the establishment of the Human Rights Policy, we intend to conduct a questionnaire
survey of suppliers.
SAKAI HEAVY INDUSTRIES, LTD. and its affiliated companies (the “Group”) contribute to the social business of global landdevelopment through the road construction equipment business as the basic management policy.
Basic Approach
Based on this basic policy, the Group will contribute to the realization of sustainable society through initiatives for the respect ofhuman rights.
Human Rights The Group respects the “International Bill of Human Rights” and the “ILO Declaration on Fundamental Principles and Rights at
to be Respected Work” as the international standards of human rights.
Scope of
Application
Initiatives for
Respecting
Human Rights

The Group applies this Human Rights Policy to all officers and employees of the Group.
In addition, the Group requires its business partners in the supply chain to respect and not infringe upon human rights.
The Group respects human rights in all its business activities. Should it become evident that the Group has participated in an
infringement of human rights, it will work swiftly to remedy the situation.
Moreover, in the event where an infringement of human rights has clearly arisen at a business partner in the supply chain, theGroup will engage in dialogue with those involved and take an appropriate response.

17

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.