Briefing on Results for the First Half of theFiscal Year ending March 31, 2022

November 11, 2021

Photo: Fukui Plant (Japan)

ContentsI. Overview of Results for the First Half of FY2022/3
Makoto Tanabe,

Director and Senior Executive Officer,
Chief Executive, Administration Division

II. Outlook for FY2022/3
Shoichi Shiratori, President

All Rights Reserved. Copyright Denyo Co.,Ltd. 1

Overview of Results for
the First Half of FY2022/3

All Rights Reserved. Copyright Denyo Co.,Ltd. 2

Highlights of Results for the First Half of FY2022/3 (Consolidated)
Key Point

Both Net sales and incomes decreased year on year.
(million yen)First half of
FY2021/3

First half of
FY2022/3

Change(YoY)

Rate ofchange (YoY)

Net sales

25,346100%

24,836

100%

△ 510

Operating income

2,014

7.9%

1,615

6.5%

△ 399 △ 19.8%

Ordinary income

2,167

8.5%

1,689

6.8%

△ 478 △ 22.0%

Profit attributable toowners of parent

1,442

5.7%

1,173

4.7%

△ 269 △ 18.6%

Capital investment

906

219

Depreciation

528

674

69.17 yen56.25 yen

Net income per share

ROE
Interim dividends pershare

5.0%

22.0 yen

Annualized

4.0%△ 2.0%△ 687 △ 75.8%
146

27.7%

△ 12.92yen △ 18.7%
Annualized

22.0 yen
All Rights Reserved. Copyright Denyo Co.,Ltd. 3

Sales Trends by Product (Consolidated)
Overview

1. Sales of generators decreased by 774 million yen (3.9%).
2. Sales of welders increased by 293 million yen (13.3%).
3. Sales of compressors decreased by 40 million yen (9.6%).
(million yen)

By productFirst half of
FY2021/3

First half of
FY2022/3

Rate ofchange (YoY)

Change(YoY)

Net sales

25,346100%

24,836 100%

△ 510 △ 2.0%

Generators

20,072 79.2%

19,297 77.7%△ 774 △ 3.9%

Welders

2,2068.7%

2,499 10.1%

Compressors

424

1.7%

Others2,642 10.4%

383

1.5%

2,654 10.7%

293

13.3%

△ 40 △ 9.6%
120.5%All Rights Reserved. Copyright Denyo Co.,Ltd. 4

Engine Generators (Consolidated)

Generators

First half of
FY2021/3

First half of
FY2022/3

20,072million yen

19,297million yen• In Japan, shipment of the large-type generators forconstruction work increased. Shipment of theemergency generators decreased.
• Overseas, shipment to the Middle East increased, but
shipment to America decreased.

Rate of change(YoY)△ 3.9%

70%
Domestic market share of*According to aengine generators (mobile-type) Company survey(5-year average)

Manufacturing engine-driven generators with capacityfrom 1kVA to 1100kVA

Soundless generator“Mālie”

Generator with operational
data recording function

Mobile-type generators
Power source on a construction site and for civil engineering workand disaster recovery/restoration, etc.
Stand-by generating sets (stationary type)Back-up power source for disaster prevention equipment
and offices, etc.
Power-supply vehicles, etc.
All Rights Reserved. Copyright Denyo Co.,Ltd. 5

Engine Welders (Consolidated)

Welders

First half of
FY2021/3

First half of
FY2022/3

2,206million yen

2,499million yen

Rate of change(YoY)

13.3%• Shipment to Japan slightly decreased.
• Shipmen to overseas market increased, mainly for thesmall-type welding machines.

55%
Domestic market share ofengine welders*According to aCompany survey(5-year average)

The Company developed the first engine-driven welder for outdoor work inJapan.
Ranging from 135A for welding light-gauge steel to a 500A engine-driven
welder for heavy-gauge steel, a TIG welder and a CO2 welder, etc.
Welding of steel construction for buildings, condominiums and bridges.
Welding of important structures such as petroleum storage tanks and pipelines.
CO2 welder
All Rights Reserved. Copyright Denyo Co.,Ltd. 6

Engine Compressors (Consolidated)
First half of
FY2021/3

424million yen

Compressors

First half of
FY2022/3

Rate of change(YoY)

383million yen△ 9.6%• Shipment to America decreased.

15%

Domestic market share ofengine compressors

Engine compressor

Motor compressor*According to aCompany survey(5-year average)

Manufacturing compressors with air discharge
amounts from 1.7㎥/min to 45.3㎥/min.
 Breaking-up of roads and ground improvement workof roads
 Mortar spraying work for preventing landslides ofmountain roads.
 For artificial snow machines on ski slopes, etc.

All Rights Reserved. Copyright Denyo Co.,Ltd. 7

Others (Consolidated)

OthersFirst half of
FY2021/3

First half of
FY2022/3

2,642million yen

2,654million yen

Rate of change(YoY)

0.5%• Sales of Parts attached to products etc. increased.

Sales of other products
Self-propelled lifters
Load testing equipment
PartsSecondhand equipment and purchased
merchandiseRepair sales, etc.
Self-propelled lifter

Load testingequipment

All Rights Reserved. Copyright Denyo Co.,Ltd. 8

Sales Trends by Region (Consolidated)(million yen)First half of
FY2021/3

First half of
FY2022/3

Change(YoY)

Rate ofchange(YoY)

25,346100%

24,836

100%

△ 510

△ 2.0%

Domestic sales

16,329

64.4%15,465

62.3%

△ 864

△ 5.3%

Overseas sales

9,017

35.6%

9,371

37.7%

354

3.9%

North/Central
America

6,156

24.3%

5,736

23.1%

△ 420

△ 6.8%

Asia

1,938

7.6%

2,095

8.4%

157

8.1%

Others

921

3.6%

1,539

6.2%

617

67.0%

By region

Net salesFirst half of FY2021/3

Japan

First half of FY2022/3

Japan
0

5,000

North/Central
America

North/Central
America
10,00015,00020,000Asia

Asia

OthersOthers
25,00030,000All Rights Reserved. Copyright Denyo Co.,Ltd. 9

Factor Analysis of Changes in Operating Income
Decrease in Operating Income

The cost to sales ratio and the SG&A expense ratio increased.
(million yen)

Operating income
Operating income margin (%)

First half of
FY2021/3

First half of
FY2022/3

Change (YoY)

2,014
7.9%

1,615
6.5%

△ 399
△ 1.4 percentage points

First half of
FY2021/3

First half of
FY2022/3

Change (YoY)

Ratio of SG&A to sales

23.0%
15.0%

22.4%
15.9%

△ 0.6 percentage points
0.9 percentage points

Ratio of operating income to sales

7.9%

6.5%

△ 1.4 percentage points

Gross profit margin••Gross profit margin declined due to higher raw material prices and a decrease in the proportion of relatively profitableproducts.
The ratio of SG&A to sales rose due to increases in logistics costs and labor costs.

All Rights Reserved. Copyright Denyo Co.,Ltd. 10

Consolidated Balance Sheets
Overview

1. A 310 million yen decrease in current assets was mainly due to an decrease in tradereceivables, etc.
2. A 2,852 million yen decrease in current liabilities was mainly due to a decease inaccounts payables and short-term loans payables, etc.
(million yen)

At the end ofFY2021/3

Current assets

First half ofFY2022/3

Change from theend of FY2021/3

54,443
24,61379,057
15,434

54,13324,32478,458
12,582

Total net assets

2,058
17,49361,5642,820
15,40363,054

Total liabilities and net assets

79,05778,458Non-current assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

△ 310
△ 289
△ 599
△ 2,852762△ 2,090
1,490
△ 599

All Rights Reserved. Copyright Denyo Co.,Ltd. 11

Changes in Consolidated Cash FlowsOverview

1. 2,633 million yen cash flow from operating activities was mainly due to a decrease in tradereceivables, etc.
2. Balance of cash and cash equivalents increased 1,699 million yen from the end of theprevious fiscal year.
(million yen)First half of
FY2021/3

First half ofFY2022/3

I Cash flow from operating activities

1,961

2,633

II Cash flow from investing activities△ 1,003△ 307958

2,326

III Cash flow from financing activities

△ 602

△ 905

IV Foreign currency translation adjustments oncash and cash equivalents△ 137279217

1,699

21,272

24,613

I + II Free cash flows

V Net increase or decrease in cash and cashequivalents
VI Cash and cash equivalents, end of quarterly
periodAll Rights Reserved. Copyright Denyo Co.,Ltd. 12

Outlook for FY2022/3

All Rights Reserved. Copyright Denyo Co.,Ltd. 13

Outlook for FY2022/3: Consolidated Income and Loss
Key points••

Net sales are expected to be 53.0 billion yen.
Assumed exchange rate is 105 yen/dollar.
(million yen)

FY2021/3

FY2022/3 (forecast)

Change (YoY)

Rate of change(YoY)

Net sales

55,006100%

53,000100%△ 2,006△ 3.6%

Operating income

5,332

9.7%

3,900

7.4%

△ 1,432△ 26.9%Ordinary income

5,645

10.3%

4,100

7.7%

△ 1,545△ 27.4%

Profit attributable toowners of parent

3,860

7.0%

2,750

5.2%

△ 1,110△ 28.8%

Capital investment

1,918

1,150

△ 768

△ 40.0%Depreciation

1,167

1,400

233

20.0%

185.1yen

131.8yen△ 53.3yen

6.7%

*4.8%

47.0yen

47.0yen

Net income per share

ROE
Cash dividends per share* Equity is calculated by using the amount of money at the end of FY2021/3.
All Rights Reserved. Copyright Denyo Co.,Ltd. 14

Outlook for Sales by Product (Consolidated)•Overview•

Overseas sales are expected to recover to a certain degree, but domestic sales areexpected to decline in reaction to the strong sales of emergency generator in the previous
fiscal year.
Production delays of some models due to parts shortages are expected to affect thefinancial results.
(million yen)

FY2021/3

FY2022/3 (forecast)

Change (YoY)

Rate ofchange(YoY)

55,006100%

53,000100% △ 2,006△ 3.6%

Generators

44,02080.0%

42,30079.8% △ 1,720△ 3.9%

Welders

4,386

8.0%

4,300

8.1%

△ 86

△ 2.0%

Compressors

755

1.4%

800

1.5%

456.0%

Others

5,845

10.6%

5,600

10.6%

△ 245

△ 4.2%

By productConsolidated sales

All Rights Reserved. Copyright Denyo Co.,Ltd. 15

Outlook for Sales by Region (Consolidated)(million yen)

FY2021/3

FY2022/3 (forecast)

Change (YoY)

Rate of change(YoY)

55,006100%

53,000100%△ 2,006△ 3.6%

Domestic sales

37,737

68.6%

34,10064.3%△ 3,637△ 9.6%

Overseas sales17,269

31.4%

18,900

35.7%

1,631

9.4%

North/ Central
America

10,89719.8%

12,100

22.8%

1,203

11.0%

Asia

3,948

7.2%

4,100

7.7%

152

3.9%

Others

2,423

4.4%

2,700

5.1%

277

11.4%

By region

Consolidated sales

FY2021/3

North/Central
AmericaJapan

FY2022/3(forecast)

North/Central
AmericaJapan010,00020,00030,00040,000Asia Others

Asia

Others

50,00060,000All Rights Reserved. Copyright Denyo Co.,Ltd. 16

Details of the Operating Income Forecast
Decrease in operating income

With the decrease of the net sales and the gross profit margin, operating income
is expected to decrease by 1,432 million yen.
(million yen)

FY2021/3

FY2022/3 (forecast)

Change (YoY)

Operating income

5,3323,900△ 1,432

Operating income margin

9.7%

7.4%

△ 2.3percentage point

FY2021/3

FY2022/3 (forecast)

Change (YoY)

Gross profit margin
Ratio of SG&A to sales
Ratio of operating income to sales

•
•

24.2%
14.5%
9.7%

22.6% △ 1.6percentage point
15.3%
0.8percentage point
7.4% △ 2.3percentage point

The gross profit margin is expected to be affected by the sharp rise in raw material prices.
The ratio of SG&A to sales are expected to be worsen due to increased logistics costs and expenses associatedwith the recovery of sales activities.

All Rights Reserved. Copyright Denyo Co.,Ltd. 17

Changes in the Amount of Capital Investment(million yen)

Cost ofequipment
Main uses

End of March 2019

End of March 2020

End of March 2021

1,499

1,201

1,918

・Machinery of Fukui plant,etc.
・Nishihatsu
・U.S. Plant
・Others

730
50670
40

・Machinery of Fukui plant,etc.
・Nishihatsu
・U.S. Plant
・Vietnam Plant・Others

810
20290
1070

・Machinery of Fukui plant,etc.
・Nishihatsu
・U.S. Plant
・Vietnam Plant
・Others

1,450
110
30
20300

End of March 2022
(plan)

1,150
・Machinery of Fukui plant,etc.
・Nishihatsu
・U.S. Plant
・Vietnam Plant
・Others

350
5050
100600

Amount of capital investment

million yen
2,500

2,000
1,500
1,000
500
0
End ofMarch2019

End ofMarch2020

End ofMarch
2021

End ofMarch
2022(plan)

Denyo Manufacturing Corporation (U.S.A.)All Rights Reserved. Copyright Denyo Co.,Ltd. 18

Profit Distribution Policy
Profit distribution: Denyo recognizes the importance of making further efforts to return profits
to shareholders, while aiming to strengthen the company’s financial structure and profitability,and we will implement an interim and term-end dividend payouts of distribution of results
comprehensively calculated by achievement and payout ratio.
Changes in cash dividends:
46 yen in FY2020/3 ⇒ 47 yen in FY2021/3 ⇒ 47 yen (forecast) in FY2022/3

50
4030

22242525
Year-end dividends
Interim dividends

20102022

FY2019/3

FY2020/32222

FY2021/3

FY2022/3(forecast)0※Breakdown of the year-end dividends in FY2018/3: Ordinary dividends
15.00 yen
Commemorative dividends 10.00 yen

All Rights Reserved. Copyright Denyo Co.,Ltd. 19

Future Business Strategy（Overview of the Second Medium-term Management Plan）
2023 ～Powering up for the future～
BasicPolicy

Establish a profit structure that is resistant to changes in the environment, by increasing the ratios of nonconstruction-related products as well as products for overseas markets, while firmly maintaining our position as theleading provider of high-quality power sources in the construction-related sector.

Our SDGs（ESG）Commitment

Business Objectives/FY2023
Consolidated
Net Sales
Ordinary Income

ROE

Ｅ：Help protect
the environment•

6.2

Ｓ：Realizea sustainable society•

6.5% or more

Ｇ：The Long-term enhancementof corporate value•billion yen

61 +αbillion yen

Strategies in the Domestic Market【Construction-related sector】
Aim to maintain and increase share of thedomestic market focusing on top brand products
such as engine-driven generators and welders①
Strive to increase market share and expand market②by launching new products which meet customerneeds
Aim for more efficient, more sophisticated sales
activities【Non-construction-related sector 】
Focus on laying the foundations for further
expanding sales of stand-by generating sets①②③

Enhance training structure to improve specialist
knowledge
Strengthen cooperation among group companies
Enhance product maintenance structure

•

•

•

Development and provision of products with the highest environmental
performance.
Reduction and recycling of waste, and reduction of GHG emissions, etc.
Contribution to the prosperity of society through the development of
infrastructure and disaster management and disaster mitigation products.
Provision of safe and secure products, etc.
Compliance with laws and regulations, social norms, ethics, internal
regulations and other relevant rules.
Promotion of fair business activities, etc.

Strategies in the Overseas Market【Overseas Sector】
Aim to increase presence in targeted high quality
market①

Aim to develop new markets by seeking to enhance
product lineup through market research andenhancement of functions and other features② Seek to increase sales capabilities by strengthening
sales network in each country and enhancing
training structure③

Strengthen marketing capabilities and increase
contact with customers④

Continue to develop markets through the release ofa series of stationary generators

Reinforcing the Operating Foundation【Development】
Develop market-leading products as the pioneerof high-quality power sources①②

Identify market needs accurately and seek to speed
up development
Step up action for the development of innovativeproducts【Production】
Build a globally competitive production system①②

Establish a flexible and highly efficient production
structure by strengthening production site
capabilities and promoting the use of IT
Seek to develop more sophisticated production
sites in Japan【Organization】
Create a structure which enables the careeradvancement of diverse human resources①

Aim to achieve both job satisfaction and ease ofworking through further enhancement of thetraining structure and a review of personnel
systems② Pursue computerization in every process

All Rights Reserved. Copyright Denyo Co.,Ltd. 20

Notes on Our Outlook

This material contains assumptions and outlooks for the future andforecasts based on plans as November 11, 2021.
Actual results may differ materially from projected values due to future
economic changes and competition.
This material is prepared for the purpose of providing information and is
not meant to solicit investment in securities issued by the Company.
Investors are responsible for making their own final investment decision.

All Rights Reserved. Copyright Denyo Co.,Ltd. 21

Reference Materials

All Rights Reserved. Copyright Denyo Co.,Ltd. 22

Overview of the Company
The leading manufacturer of outdoor power sources such as engine generators and engine welders
History:

July 2,1948

Established as Japan Power Welding Machine Co., Ltd.

1959

Developed and launched Japan’s first high-speed engine-driven welders.

1961

Began to manufacture and sell engine-driven generators.

1966

Developed soundproof engine-driven generators.
Changed its corporate name to Denyo Co., Ltd.

1983

Listed on the Second Section of the Tokyo Stock Exchange.

2000

Listed on the First Section of the Tokyo Stock Exchange.

● Company size, etc. (FY2021/3 on a consolidated basis)(million yen)

Net sales

55,006

Overseas sales

17,269Ordinary income

5,645

Profit attributable to owners of parent

3,860

Total assets

79,057

Net assets

61,564Market capitalization (as of March 31)

47,822

Number of employees

1,334persons
Head Office (Nihonbashi-Horidomecho,Tokyo)

All Rights Reserved. Copyright Denyo Co.,Ltd. 23

The Group Companies
100%( Nishihatsu Co., Ltd. )100%

80%100%100%100%

76%

51%100%*1. Other than the above, the New Japan Machinery Corporation is an equity-method affiliate (investment ratio 15.7%).
2. Underlined companies are manufacturers.

All Rights Reserved. Copyright Denyo Co.,Ltd. 24Trends and Forecasts by Product Sales
Sales by product
Generators

Welders

Compressors

Others

70,00060,000

6,365
5,719

50,0005,919

40,000

1,104
5,100

5,720
1,4404,832

5,525

1,012
5,072

1,059
5,115

5,845

755
4,386

5,600
800
4,300

44,02042,300

FY2021/3

FY2022/3(Forecast)

1,083
4,919

30,00050,43620,00043,66038,29436,85738,653

FY2016/3

FY2017/3

FY2018/3

10,0000FY2019/3

FY2020/3

All Rights Reserved. Copyright Denyo Co.,Ltd. 25

Changes in Sales by Region and Forecasts
Sales by region
Japan

North/Central America

Asia

Europe and others

70,0002,216
5,197

60,0002,252

50,000

3,606
6,921

2,808
6,479

2,648

10,31018,430

5,938

2,700
4,100

10,897
14,08040,000
9,776

2,423
3,948

5,527

12,10010,38230,00020,00030,15529,252

31,211FY2016/3

FY2017/3

FY2018/3

33,693

FY2019/3

37,04337,737

FY2020/3

FY2021/3

34,10010,0000

FY2022/3(forecast)

All Rights Reserved. Copyright Denyo Co.,Ltd. 26

Changes in Results for the Last 30 Years

Net sales,100 milion yen

JapanOverseas

Ordinary income

700

Ordinary income, 100 million yen

70Great East Japan
Earthquake

600

60

Bubble period

500
400

Lehman shock

Y2K boom

50
40300

30200

20100

1000
Fiscal Year

All Rights Reserved. Copyright Denyo Co.,Ltd. 27