May 16, 2018

OKADA AIYON CORPORATION(TSE1 6294)

Corporate Presentation Materials

Toshiyuki Kanda, President

Contents
Business Summary
FY3/18 Business Results
Medium-to Long-Term Management Plan – Rolling PlanOKADA AIYON CORPORATIONBusiness Summary

4

Corporate Profile[End-FY3/18]

Company nameOKADA AIYON CORPORATIONFoundedJuly 1938 (established in 1960)

Head office

4-1-18 Kaigan-dori, Minato-ku, Osaka

Capital2,221 million yen

Sales

15,399 million yen (end-FY3/18, consolidated)

Fiscal year

March 31

Employees

402 (consolidated)

Business

Manufacture, sales and repair of constructionmachinery

Listing

TSE1 (6294)

Shares issued

8,378,700 shares

5Main Products
Demolition attachment(Tip of hydraulic shovels)

Environmental machinery(Wood grinders)Primary Crushers TS-WB Crusher

Shown on video

6

7

Business Summary<Manufacture/procurement><Development/sales/repair>[Overseas market]
・Overseas dealer
・US subsidiary[Manufacturing subsidiary]

AIYON TECH

Okada America[Subcontract factory][Domestic market]
・Shovel manufacturers
・Rental companies
・End users

Nansei Group
Nansei machineCo., Ltd.

Nansei Wintech Co., Ltd.

AkatsukiKikou Co., Ltd.
暁機工株式会社

8

Domestic Business Locations (12 Sales Offices, 1 Manufacturing Base)

Sapporosales office

Kyushusales office

Head office and overseas officeKansai branch
Hokuriku
Hiroshima
sales officesales office
AIYON TECH

Shikokusales officeChubusales office Yokohama
sales officeMoriokasales officeSendaisales office
Tokyo head office

Tokyo office9Overseas Business Locations<Map of North America>

Okada America
Head office

Ohio branch<Enlarged view ofEurope>

Amsterdam

Texas branch

Rotterdam

Netherlands
Belgium

Germany

Ratio of Overseas Sales Destinations (End-FY3/18)

Overseas

17.9％

North
America
66％

Europe7％Asia
5％

Domestic
72.1％

Oceania％
Nansei
10.0％
Nansei business

Domestic business

Overseas businessSouth
America
１％

1011

Sales Composition Ratio (End-FY3/18)
Others

4.8％

GrapplesNansei

10.0％
Hydraulic breakers

3.3％

17.8％

Repair

5.2％

Parts sales

10.7％

Crushers

Environmental-related equipment

7.9％

40.3％

*Our sales composition ratio from April 2017 – March 201812

Our Strengths
Development

Manufacturing

One-stop handlingcapability
RepairSales13Main Products and Domestic Shares

Primary crushers

Cutters

Pulverizers

13%

49%

40%

44%

Hydraulic breakers

Prepared by our Company based on the Japan Construction Equipment Manufacturers Association’s
presentation materials (April 2017 – March 2018 total)

14

Tokyo Area Main Products and Domestic Shares
Primary crushers

Pulverizers

Cutters49%

National average

44%

40%

Tokyo area

56%

45%

55%

Prepared by our Company based on the Japan Construction Equipment Manufacturers Association’s presentation materials (April 2017 – March 2018 total)
Tokyo area: Tokyo, Saitama, Chiba, Kanagawa

Profile of the Nansei Machine Group

15[End-FY3/18]

Name

Nansei machine Co., Ltd., Nansei Wintech Co., Ltd.,
Akatsuki Kikou Co., Ltd.

BusinessDesign, production and sales, etc. of forestrymachines, scrap machines, cable cranes and largewinches, etc.

Location

Kikuchi-shi, Kumamoto

Founded1948

Net sales

1,532 million yen (6 months total)

No. of employees 180

Main Products of the Nansei Group
Nansei machine Co., Ltd.
Forestry grapple

16

Nansei Wintech Co., Ltd.
Cable crane for dam construction

Akatsuki Kikou Co., Ltd.

Sales of parts and toolsDomestic Business Locations (Manufacturing Base and 10 Sales Offices)

17

SapporoEnlarged view ofKumamoto Pref.

Nansei Machine Group

Mount Aso

Kumamoto Airport

Niigata
NaganoMoriokaNansei machine/Nansei
Hiroshima
Wintech head offices andKumamoto sales offices
Akatsuki Kikou

NagoyaTokyoOsaka
Shikoku

18

Sales Composition (FY3/18)
Akatsuki Kikou Co., Ltd.

Unit%

Sales of machine materials andvarious devices

Forestry machines

27.7
Construction, other912.40
Nansei
Nansei machinemachine Co.,
Co., Ltd.
Ltd.

Cable cranes

5.3
Nansei Wintech Co., Ltd.

Special large winches

Steel recycling

15.3

19.8
Other5.0Cranes

5.5* Nansei Machine Group sales composition from October 2017 to March 2018

OKADA AIYON CORPORATION

End-FY3/18 Business Results

End-FY3/18 Consolidated Business Results (Key Points)*Parentheses represent YoY comparisons

Consolidated net sales was 15,399 million yen (up 17.4%)
Ordinary income was 1,270 million yen (up 16.4%)[Domestic] Both sales of crushers and hydraulic breakers increased due tostrong demand for redevelopment and reconstruction but sales ofwood smashers decreased due to the effect of emission control
Sales of 11,114 million yen (up 0.9%)[Overseas] Sales increased to 2,752 million yen (up 31.3%) due to a recovery ofrental demand in North America, expansion of agents in Asia andlaunch of representative office in Europe[Nansei] Sales of Nansei business which was consolidated in the 3rd quarter
was 1,532 million yen (6 months total) as a result of selling forestry
machines, steel scrap machines and various winches, etc.

20

Net Sales Results (Past 5 Years)

21(Million yen)
20,00015,39915,00011,943 12,043

13,113

Revenue growthMarkeda recordhigh

10,371
10,000

4,987

6,279

6,121

5,707

■8 straight years of revenue growth

6,742(up 17.4%)■Made a good progress as in the Mid-5,000term plan

■Nansei business was consolidated in0

FY2014FY2015FY2016

2nd quarter

FY2017the 3QFY2018Full-year

22

Factors for Changes in Net Sales at End-FY3/18

In Japan, sales of strategic hydraulic breaker products were strong in addition tothe continued rise in the core crusher shares. However, environmental machinerysales decreased significantly due to the effect of emission control
Overseas sales increased in North America, Asia and Europe
Unit (million yen)Overseas

DomesticNansei

15,399Nansei

1,532
Overseas

CrushersBreakers

13,113

395

634

237

99

Environmentalmachinery

FY3/17
3,113

Auxiliarymaterials/repair

Other

656

79

78
Grapples

FY3/18

23

Changes in Ordinary Income (Past 5 Years)

Unit (million yen)
1,500

1,270
1,092
947

1,000

Markeda record
high

837
721
555
500

562

710
545

Profit growth■Record high profit growth(up 8.0%)448■Overseas business remains
strong0FY2014

FY2015FY2016

2nd quarter

FY2018FY2017

Full-year

24

Factors for Changes in Ordinary Income in FY3/18

Gross profit in Japan remained the same mainly because of the increased cost
rate due to the depreciation of the yen
Gross profit overseas continued to increase due to increased sales
M&A expenses and depreciation of goodwill increased in the SG&A expenses
Unit (million yen)
Gross profit
overseas

Nansei ordinary
income25268

1,092
3821
M&A
expenses Depreciationof goodwill

1,270

5556
Okada
America’s
increasedexpenses

5OtherGross profitin Japan

FY3/17592FY3/18

25

Breakdown of Extraordinary LossUnit (million yen)

Loss on liabilities for guarantee
Provision of allowance for
doubtful accounts
Loss on retirement of fixed assets
OtherTotalHighlights of Public Offering■Procured about 1,480 million yen through public offering■Mainly used for funds for M&As (1.3 billion yen), investment in repairing large
machinery (50 million yen), rebuilding of Hiroshima sales office and factory (50million yen)

No. of shares issued

1.15 million shares(of which OA 150 thousand shares)

Estimated total amount ofproceeds

1,483 million yen

No. of shares outstanding aftercapital increase

8,378,700 shares

Capital after capital increase

2,221 million yen

26Arch ２０２０
Medium-to Long-Term Management Plan 2nd Stage

Rolling Plan(2018 – 2020)© 2018 Okada Aiyon Corporation All Rights Reserved

Outline of Medium-to Long Term Management Reforms “Arch 2020 Strategy”“Arch 2020 Strategy” (FY2015 – FY2020)

Build a bridge over the Year 2020 aiming for triple “1.”Sales target triple “2”Financial target triple “10”Consolidated net sales 2 times (20billion yen)Domestic shares of main products Up20%
Overseas sales
2 times

Sales growth rate (average) 10% ormore
Operating income margin 10% or more
Return on equity (ROE) 10% or more

Company target triple “1”[Topnotch] Topnotch professionals will offer[First-rate] First-rate products and services[Strength] Aiming for the industry’s No.1 enterprise group

Progress of Medium-to Long-Term Management Reforms “Arch 2020 Strategy”
Medium-to long-term management plan Arch 2020

Million yen

1st stage (2015 – 2017) results

2nd stage (2018 – 2020) Medium-termmanagement plan

FY2015FY2016FY2017FY2018FY2019FY202012,04372113,113
1,092

15,3991,270

17,5001,500

18,5001,700

20,0002,000

Net sales
Ordinary
incomeGrowth + Building aframework

Further growth +Quality improvement

Production system: Expansion of main factory
Domestic operation: Establishment of new locations in Tokyo
area

Domestic

Integration with the NanseiGroup→Chemical reaction

Overseas

Establishment of North
America-Europe-Asia trilateralframework

Management base

Efforts toward work-stylereforms

Aftermarket: Improvement of service factory
systemOverseas development: Establishment of lnew ocationsin North America and Europe
New business development: Management integration
with the Nansei GroupStrengthen management base: Listing on the TSE 1stsection

Changes in the 1st Stage (FY2015 – FY2017) Business Results
Changes inbusiness results

Net sales

8 straight years ofrevenue growth

Ordinary income

Record highRecord high119120131

FY2014FY2015FY2016

100 million
yen153

1,270 Million yen
1,092
947721FY2014FY2017FY2015FY2016FY2017

Net income
attributable to owners of parent

Operating income
Record high1,106892

FY2014

1,195

Million yen

666

FY2016FY2017574438760

FY2015696

FY2016FY2017FY2014FY2015

Million yen

Review of the 1st Stage (FY2015 – FY2017)
Major measures

Item

Contents

Productionsystem

Built a system to increase production by rebuilding and expanding Asaka factorythrough purchase of an adjacent land (April 2016) and strengthening relationshipwith subcontracting company.

Domestic
operation

Establishes two locations to strengthen Tokyo area.
Yokohama sales office (April 2015, Tsuzuki-ku, Yokohama-shi)
Tokyo office (August 2015, Kasumigaseki, Chiyoda-ku)

Aftermarket

Set up an aftermarket department to strengthen the system (April 2015).
Started a designated service factory system to strengthen cooperation with
subcontracted factories (October 2016).
Now locating large cranes at sales locations in response to large construction
machinery.

Globaldevelopment

Established the Texas Branch (January 2016), the third location in the U.S.
Established a representative office (August 2017) in Europe (Rotterdam, theNetherlands).

New businessdevelopment

Advanced into the forest machinery field by management integration with thethree Nansei group companies (October 2017).

Strengthened
management base

Changed the listing to the Tokyo Stock Exchange 1st Section and strengthened
management base (March 2016).

Progress of the 1st Stage (FY2015 – FY2017) Management Target
Financial target
FY2014FY2015FY2016FY2017

Selfassessment

Million yen

Net sales

11,943

12,043

13,113

15,399○

Sales growth
rate

17.4%

0.8%

8.9%

17.4%

Operating income
margin

7.4%

6.3%

8.4%

7.8%

ＲＯＥ

9.2%

6.5%

9.8%

7.9%

Progress of the 1st Stage (FY2015 – FY2017) Management Target
Overseas sales
FY2014FY2015FY2016FY2017

Selfassessment

Million yen

Overseas sales

1,890

2,313

2,095

2,752

Overseas sales
ratio

15.8%

19.2%

16.0%

17.9%

○

Million dollar(Reference)
Okada America
dollar-basedsales

12.2

13.4

12.2

16.2

○Progress of the 1st Stage (FY2015 – FY2017) Management Target
Changes in domestic shares of major attachments

Primary crushers
Tokyo areaCutters
Tokyo area
Pulverizers
Tokyo area
Hydraulic breakers
Tokyo area

FY2014FY2015FY2016FY2017

Selfassessment

37%

39%

42%

44%

○

45%

41%
54%

41%
46%

16%
16%

47%

47%
49%

39%
41%

12%
11%

52%

40%

56%

49%

43%

39%

55%

◎○
◎

40%

42%

13%

45%

14%
8%

10%

*Estimated by our Company based on the Japan Construction Equipment Manufacturers Association’s materials(Tokyo area: Tokyo, Saitama, Chiba, Kanagawa)○××1st Stage Progress of Major Measures
Production upgrade

System to increase production
Rebuilding and expansion of Asaka factory (Asaka-shi, Saitama Pref.)Shipments of Asaka factory

Amount(Unit)(Million yen)

3,560

3,700

4,000

3,325

1,000

2,880
3,000
April 2016 Full-scale operationof new factory

1,000750

928

2,000865
778
500

1,000
FY2015
results

FY2016
results

FY2017
results

FY2018 plan

Respond to increased large
machinery production

1st Stage Progress of Major Measures
Aftermarket

Enhanced auxiliary materials and repair
Focused on auxiliary material management and expansion ofdesignated service factories
Auxiliary materials and repair sales(Million yen)

19.4%
17.2%

Percentage of domestic sales

18.8%

20.0%

1,990

2,150

15.0%

FY2017
results

FY2018 plan

17.9%

2,000
Improvement of maintenancesystem

1,889

1,891

FY2015
results

FY2016
results

10.0%

1,000

44 designated service
factories nationwide*Calculated by OKADA AIYON (Nansei Group excluded)

1st Stage Progress of Major Measures
Strengthen Tokyo area

Establish new locations
Strengthen support by setting up Yokohama sales office andTokyo office(Unit)

Sales of crushers/Tokyo area

600

51.8%

Share

53.0%
50.0%

46.9%
500

44.5%
539

August 2015 Tokyo office

400

560
40.0%

498
464

300

30.0%
FY2015
results

FY2016
results

FY2017
results

FY2018 plan

(Tokyo area: Tokyo, Saitama, Chiba, Kanagawa)

April 2015 Yokohama sales office*Calculated by OKADA AIYON (Nansei Group excluded)

Major Measures for the 2nd Stage (FY2018 – FY2020)

Integration with the Nansei Group→Chemical reaction

Domestic

Maximize integration effect by strengthening value chain using
the strengths of both parties and enhancing product lineup

Establishment of North America-Europe-Asia trilateral framework

Overseas

Managementbase

Establish trilateral framework and strengthen overseas sellingsystem by establishing a subsidiary in Europe and a location inSoutheast Asia

Efforts toward work-style reforms
Aim for “a company where it is pleasant to work, where it
encourages to work and where it is worth working” for sustainablegrowth and realization of employee satisfaction

Integration with the Nansei Group→Chemical reaction
Strengthen value chain

Choose the best practice using the strength of each company(The thick frames of the diagram below show the strength of each company)
Material

部材製造
manufacture

解体
DismantlingThe
自社
company

Outsourcing
外注

組立

Assembling

Sales
販売

自社

The
company

Outsourcing
外注

attachment
ｱ ｯ ﾒﾝﾄ

Thecompany

ＯＥ Ｍ
Environmental
環境機械
machinery

Cooperation
協働 ナsynergy
ーsystem
Outsourcing
system Selling
販売体制
外注体制

自社

Subcontract
factory
協力工場

Aftermarket
systemﾌﾀ 体制

Internal
manufacturing
内製体制
systemThecompany

Users

The
自社
company

ユーザー

The
自社
company

The
自社
company

自社

南Nansei
星グ ルー
プ
Group

Forestmachinery

Thecompany

Import andpurchasemachinery
輸入・仕入れ林業機械
machinery
Industrial
産業機械

Maintenance
ﾒﾝﾃﾅﾝ

Operation
ｵﾍﾟﾚｰ ｮﾝユーザー
Users

Design設計

自社

ダグ ルGroupープ
Okada

Main products
主力製商品Thecompany
自社

ﾃﾞDealer
ｨ-ﾗ
協力工場
Subcontractfactory

ﾕ ｻﾞCableｰﾌ cranes
ｰLargewinches
大型
ﾁ

外注

Outsourcing

外注

Outsourcing

自社

Thecompany

Users

Integration with the Nansei Group→Chemical reaction
Strengthen capability tohandle forest machinery

Our Group can handle forest machinery in a one-stop fashion<Cutting><Logging>

Processor
Harvester

Tower yarder
Swing yarder(Cutting down, branch
pruning, cutting)(Large and large
amount of logging)

Grapple(Small amount,loading, etc.)

Nansei’s machinery

OKADA AIYON<Chipping>
Aiyon Yosaku(Processing beforecrushing)Log buster
Wood hog(Wood grinders)Establishment of North America-Europe-Asia Trilateral Framework
Establish overseas
trilateral framework

Expand locations in Europe and Asia

North America

EuropeExpand shares under a three location system

Aim to establish a subsidiary early

Okada America head office Ohio branch(Oregon)

Asia

Consider establishing a new location

Netherlands representative office(Launched in August 2017)

Texas branch(Launched in January 2016)

Domestic
82.1%

NorthAmericaOverseas

17.9%Asia
24.8%
Europe 7.4%

65.8%

Other
FY2017 Shares by foreign geographic areas

Establishment of North America-Europe-Asia Trilateral Framework
Plan by foreign
geographic areas

Aim to achieve twofold increase

North America

5000

Asia

Million yen

Europe

4,000

4000
3000

Other

2,313

2,752

3,050

3,500

Europe

Asia

2,095

2000

NorthAmerica

1000
0FY2015
results

FY2016
results

1st stage

FY2017
results

FY2018 plan

FY2019 plan

2nd stage

FY2020 planEfforts toward Work-Style Reforms
Commitment“A company where it is pleasant to work, where it encourages to work andwhere it is worth working”

TargetsProductivity improvement
Improvement in employee satisfaction

Major efforts up to now
Launched work-style reform project
Review of business process, management of overtime work and improvement of
personnel and labor systems, etc. now underway.
Review employment system for the elderly
Regarding the re-employment after retiring at the age of 60, the Company introduced
a fixed wage system so that they will have the same job and same pay as the regular
employees.
Improvement in non-regular employees’ working conditions
Encouragement of shifting to a regular employee, participation in in-house training,
grant of stock options, etc.

Efforts toward Work-Style Reforms
Agendas
Accept the results of external evaluation and continue efforts aimed at achieving our targets.
Results of external evaluation (10 point scale for each item)
Management commitment
Promotion and progress management
Improvement in employees’ working conditions
Working hours and health support
Promote the work of diverse people

Agendas( * ) Efforts toward future generations
Information disclosure
0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0 10.0( * ) Efforts toward future generations…Incorporation into personnel evaluation, efforts made through supply chain, social contribution
activities, etc.
External evaluation: The Japan Research Institute, Limited (SMBC work style reform finance)

FY2018 Operation Policy

KeywordIntegration

Chemical reaction

The three C’s
1．CONNECTED Further build a new connection to visualize synergy
2．CHANGE

Respond to changes (change and make a change)

3．CHALLENGE Have high aspirations and new challenge but
WITH CHECK don’t forget to check

FY2018 Operation Policy

2nd Stage (FY2018 – FY2020) Numerical Plan
3-year business plan(Million yen)
2nd stage medium-term
management plan

1st stage results

FY2015FY2016FY2017FY2018FY2019FY202012,043

13,113

15,39917,50018,50020,000Operating income

760

1,106

1,195

1,500

1,700

2,000

Ordinary income

721

1,092

1,270

1,500

1,700

2,000

Net income

438

696

666

930

1,050

1,250

Overseas sales

2,313

2,095

2,752

3,050

3,500

4,000

Overseas sales ratio

19.2%

16.0%

17.9%

17.4%

18.9%

20.0%

Net sales

attributable to owners of parent

2nd Stage (FY2018 – FY2020) Numerical Plan
3-year business plan (vs. initial plan)

2nd stage medium-term management plan

Results
FY2017

Net sales[vs. plan] Upper stand: Compared to the rolling plan in the previousyear (prepared in 2017)
Lower stand: Compared to the initial Arch 2020 strategy(prepared in 2015)(Million yen)vs. plan

FY201817,5001,195

Ordinary
income1,270

Net income
attributable to owners ofparent▲55▲155

1,500+20666▲80▲144▲1341,500930

vs. plan＋150▲50＋150▲50+50▲20FY2020＋2,50018,500+1,000+399
Operatingincome

FY2019＋2,500＋1,399

15,399vs. plan-20,000+500

1,750＋25002,00001,750＋250＋70
00

2,00001,050vs.
plan

01,250+502nd Stage (FY2018 – FY2020) Numerical Plan
Financial target 3-year plan
2nd stage medium-term
management plan

1st stage results

Target
FY2015FY2016FY2017FY2018FY2019FY2020

Sales growth
rate

10.0%

0.8%

8.9%

17.4%

13.6%

5.7%

8.1%

Operatingincome margin

10.0%

6.3%

8.4%

7.8%

8.6%

9.2%

10.0%

ＲＯＥ

10.0%

6.5%

9.8%

7.9%

9.5%

9.9%

10.8%

Precautions

The plans and forecasts in these materials have been prepared based on
the information currently available to the Company and certain assumptions
that the Company deems to be reasonable, and embody risks anduncertainties.
Therefore, the Company gives no assurances or guarantees regarding
future planned figures and realization of measures.
(Contact)
Administrative Headquarter
OKADA AIYON CORPORATIONTEL 06-6576-1271 FAX 06-6576-1270
ＵＲＬ http://www.aiyon.co.jp/© 2018 Okada Aiyon Corporation．All Rights Reserved．