Briefing on Results for the First Half of the
Fiscal Year ending March 31, 2023

November 10, 2022

Photo: Fukui Plant (Japan)

Contents

I. Overview of Results for the First Half of FY2023/3
Makoto Tanabe,

Director and Senior Executive Officer,
Chief Executive, Administration Division

II. Outlook for FY2023/3
Shoichi Shiratori, President

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

Overview of Results for
the First Half of FY2023/3

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

Highlights of Results for the First Half of FY2023/3 (Consolidated)
Key Point

Net sales increased year on year, incomes decreased year on year.
(million yen)First half of
FY2022/3

First half of
FY2023/3

Change(YoY)

Rate ofchange (YoY)

Net sales

24,836100%

28,271

100%

3,434

13.8%

Operating income

1,615

6.5%

1,083

3.8%

△ 531

△ 32.9%Ordinary income

1,689

6.8%

1,157

4.1%

△ 532

△ 31.5%

Profit attributable toowners of parent

1,173

4.7%

800

2.8%

△ 372

△ 31.8%748 △ 341.6%

Capital investment

219

967

Depreciation

674

606

△ 68

△ 10.1%56.25 yen38.64 yen△ 17.61yen△ 31.3%

Net income per share

ROE
Interim dividends per
share

4.0%

22.0 yen

Annualized

2.6%

Annualized

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

Sales Trends by Product (Consolidated)
Overview

1. Sales of generators increased by 3,986 million yen (20.7%).
2. Sales of welders decreased by 361 million yen (14.4%).
3. Sales of compressors increased by 1 million yen (0.5%).
(million yen)

By productFirst half of
FY2022/3

First half of
FY2023/3

Rate ofchange (YoY)

Change(YoY)

Net sales

24,836100%

28,271 100%

3,434

13.8%

Generators

19,297 77.7%

23,284 82.4%

3,986

20.7%

Welders

2,499 10.1%

2,138

7.6%

△ 361△ 14.4%

1.5%

385

1.4%

1

2,654 10.7%

2,461

8.7%

△ 192 △ 7.3%

Compressors
Others383

0.5%

All Rights Reserved. Copyright Denyo Co.,Ltd. 4

Engine Generators (Consolidated)

Generators

First half of
FY2022/3

First half of
FY2023/3

19,297million yen

23,284million yen• In Japan, shipment to the rental industry remainrobust.

• Overseas, shipment to America and Asia increased
strongly.

Rate of change
(YoY)

20.7%

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
FY2022/3

First half of
FY2023/3

Rate of change(YoY)

2,499million yen

2,138million yen△ 14.4%• Shipment to Japan and overseas market decreased due tothe shortage of parts.

55%
Domestic market share ofengine welders*According to a
Company 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
FY2022/3

383million yen

Compressors

First half of
FY2023/3

Rate of change(YoY)

385million yen

0.5%• Shipment to America increased slightly.

15%

Domestic market share ofengine compressors

Engine compressor

Motor compressor*According to a
Company 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
FY2022/3

First half of
FY2023/3

2,654million yen

2,461million yen

Rate of change(YoY)△ 7.3%• OEM products and load testing equipment decreased.

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

Load testing
equipment

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

Sales Trends by Region (Consolidated)(million yen)First half of
FY2022/3

First half of
FY2023/3

Change(YoY)

Rate of change(YoY)

24,836100%

28,271

100%

3,434

13.8%

Domestic sales

15,465

62.3%

14,164

50.1% △ 1,300△ 8.4%

Overseas sales

9,371

37.7%

14,106

49.9%

America

5,736

23.1%

9,551

Asia

2,095

8.4%

Others

1,539

6.2%

By region

Net salesFirst half of FY2022/3

50.5%

33.8%

4,735
3,815

3,258

11.5%

1,162

55.5%

1,296

4.6%

△ 242 △ 15.8%

North/Central
America

Japan

First half of FY2023/3

Japan
0

5,000

10,00015,000

Asia

66.5%

OthersNorth/Central
AmericaAsia

20,00025,000

Others
30,000All Rights Reserved. Copyright Denyo Co.,Ltd. 9

Factor Analysis of Changes in Operating Income
Decrease in Operating Income

The operating income decreased mainly due to higher cost of sales
ratio.
(million yen)

Operating income
Operating income margin (%)

Gross profit marginFirst half of
FY2022/3

First half of
FY2023/3

Change (YoY)

1,615
6.5%

1,083
3.8%

△ 531
△ 2.7 percentage points

First half of
FY2022/3

First half of
FY2023/3

Change (YoY)

Ratio of SG&A to sales

22.4%
15.9%

19.2%
15.3%

Ratio of operating income to sales

6.5%

3.8%

•
•

△ 3.2 percentage points△ 0.6 percentage points△ 2.7 percentage points

Gross profit margin declined due to rising raw material costs prior to the price pass-through for products.
The ratio of SG&A to sales was improved due to the increase in sales, despite increased logistics costs andexpenses associated with the recovery of sales activities.

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

Consolidated Balance Sheets
Overview

1. The 2,891 million yen increase in current assets was mainly due to increases in work-inprogress, raw materials and supplies, etc.
2. The 1,349 million yen increase in current liabilities was mainly due to increases inaccounts payable and short-term loans payable, etc.
(million yen)

At the end of
FY2022/3

Current assets

First half of
FY2023/3

Change from theend of FY2022/3

56,872
23,90280,774
14,26959,76325,28585,04915,619

2,891
1,383
4,274
1,349

Total net assets

2,744
17,013
63,7602,959
18,57966,470

215
1,565
2,709

Total liabilities and net assets

80,77485,0494,274

Non-current assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

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

Changes in Consolidated Cash Flows
Overview

1. The 2,536 million yen cash flow from operating activities was mainly due to the recordingof quarterly net income before taxes and the decrease in trade receivables, etc.
2. Balance of cash and cash equivalents increased by 1,190 million yen from the end of theprevious fiscal year.
(million yen)First half of
FY2022/3

First half of
FY2023/3

I Cash flow from operating activities

2,633

2,536

II Cash flow from investing activities△ 307△ 1,030

2,326

1,506

△ 905

△ 399

279

83

V Net increase or decrease in cash and cash
equivalents

1,699

1,190

VI Cash and cash equivalents, end of quarterly
period24,61324,548I + II Free cash flows
III Cash flow from financing activities

IV Foreign currency translation adjustments on
cash and cash equivalents

All Rights Reserved. Copyright Denyo Co.,Ltd. 12

Outlook for FY2023/3

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

Outlook for FY2023/3: Consolidated Income and Loss
Key points

1. Net sales are expected to be 60.0 billion yen.
2. Assumed exchange rate changed from 110yen/dollar to 130 yen/dollar.
(million yen)

FY2022/3

FY2023/3 (forecast)

Change (YoY)

Rate of change(YoY)

Net sales

55,168100%

60,000

100%

4,832

8.8%

Operating income

3,653

6.6%

3,400

5.7%

△ 253

△ 6.9%

Ordinary income

4,029

7.3%

3,500

5.8%

△ 529 △ 13.1%

Profit attributable toowners of parent

2,753

5.0%

2,400

4.0%

△ 353 △ 12.8%

Capital investment
Depreciation
Net income per share

ROE
Cash dividends per share

839

3,700

1,361

1,300

2,861
△ 61

132.0yen

115.8yen△ 16.2yen

4.6%
47.0yen

3.9%
48.0yen341.0%△ 4.5%* Equity is calculated by using the amount of money at the end of FY2022/3.
All Rights Reserved. Copyright Denyo Co.,Ltd. 14

Outlook for Sales by Product (Consolidated)
Overview

1. In Japan, demand is expected to remain robust, but our supply constrains for someproducts and the impact of postponement of construction due to soaring construction
material prices are expected.
2. Overseas, sales to America and Asia are expected to recover.
(million yen)

FY2022/3

FY2023/3 (forecast)

Change (YoY)

Rate of change(YoY)

55,168100%

60,000

100%

4,832

8.8%

Generators

43,754

79.3%

49,600

82.7%

5,846

13.4%

Welders

4,829

8.8%

4,100

6.8%

△ 729 △ 15.1%

Compressors

727

1.3%

800

1.3%

73

10.0%

Others

5,856

10.6%

5,500

9.2%

△ 356

△ 6.1%

By productConsolidated sales

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

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

FY2022/3

FY2023/3 (forecast)

Change (YoY)

Rate of change(YoY)

55,168100%

60,000

100%

4,832

8.8%

Domestic sales

34,63262.8%

33,40055.7%△ 1,232△ 3.6%

Overseas sales

20,53637.2%

26,600

44.3%

6,064

29.5%

America

13,052

23.7%

18,300

30.5%

5,248

40.2%

Asia

4,596

8.3%

5,800

9.7%

1,204

26.2%

Others

2,886

5.2%

2,500

4.2%

△ 386 △ 13.4%

By region

Consolidated sales

FY2022/3

Japan

FY2023/3(forecast)

Japan
0

10,00020,000

North/Central
America

Asia Others

North/Central
America
30,00040,000Asia
50,000

Others60,00070,000All Rights Reserved. Copyright Denyo Co.,Ltd. 16

Details of the Operating Income Forecast
Decrease in operating income

Profits are expected to decrease due to factors such as rising raw
material costs.
(million yen)

FY2022/3

FY2023/3 (forecast)

Change (YoY)

Operating income

3,653

3,400

△ 253

Operating income margin

6.6%

5.7%

△ 0.9percentage point

FY2022/3

FY2023/3 (forecast)

Change (YoY)

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

•
•

21.2%
14.6%
6.6%

20.3% △ 0.9percentage point
14.6%
0percentage point
5.7% △ 0.9percentage point

The gross profit margin is expected to decline due to a slight delay in passing on the increase in raw material costs
to selling prices.
The ratio of SG&A to sales is expected to be on par with the previous fiscal year.

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

Changes in the Amount of Capital Investment(million yen)

End of March
2020
Cost ofequipment

Main uses

End of March
2021

1,201
・Machinery of Fukui plant,
etc.
810
・Nishihatsu
20
・U.S. Plant
290
・Vietnam Plant
10
・Others70

End of March
2022

1,918

End of March2023 (plan)

839

・Machinery of Fukui plant,
etc.
1,450
・Nishihatsu
110
・U.S. Plant
30
・Vietnam Plant
20
・Others
300

・Machinery of Fukui plant,etc.
290
・Nishihatsu
50
・U.S. Plant
20
・Vietnam Plant
20
・Others
460

3,700
・Machinery of Fukui plant,etc.
540
・Nishihatsu
1,400
・U.S. Plant
160
・Vietnam Plant
100
・Others (repair base, etc. )1,500

Amount of capital investment

million yen
4,000

3,500
3,000
2,500
2,000

1,500
1,000
500
0
End ofMarch
2020

End of
March
2021

End of
March
2022

End ofMarch2023(plan)

Large repair base under construction(Sakura City, Chiba Prefecture)

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:
47 yen in FY2021/3 ⇒ 47 yen in FY2022/3 ⇒ 48 yen (forecast) in FY2023/3

60
50
40
30

24

25

25

25

Year-end dividends
Interim dividends

20
10

22

22

FY2020/3

FY2021/3

22

23

FY2022/3

FY2023/3(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～
Basic
PolicyEstablish 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：Realize
a 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 market②

by launching new products which meet customer
needs
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 innovative
products【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 the
training structure and a review of personnel
systems② Pursue computerization in every process

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

Efforts toward carbon neutrality
Denyo regards global environmental problems as a key management issue, and engages proactively inenvironmental initiatives. We consider initiatives aimed at creating a hydrogen-based society (such as
through the use of hydrogen fuel cells) to be one effective means of reducing CO2 emissions andpreventing atmospheric pollution, with the aim of preventing global warming.

Fuel-cell Portable Generator•••

Selected by Japan’s Ministry of the Environment as a “Low Carbon Technology
Research and Development Program”
Developed a new power conditioner especially for fuel cells, and installed it in
the generators
Demonstration operation will start in June 2021

Intended use•••

Civil engineering and construction sites
Houses without power after a disasters
Location where TV reporters are reporting, and event sites,
etc.

Hydrogen-light oil mixed combustion Generator•••

Operates with a light oil/hydrogen mixing ratio of 50%
50% reduction in CO2 emissions compared to using only light oil as fuelAiming for mass production of 250kW hydrogen-light oil mixed combustion
generator in 2023

Intended use••

Private consumption using byproduct hydrogen
Back-up power source in a power outage, etc.

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

Efforts toward carbon neutrality
Dedicated Hydrogen Generator• Uses only hydrogen as fuel and does not emit CO2• Starting with the development of the 45kVA class , which isthe volume zone
• Aiming for market launch after 2025
Intended use

Civil engineering, construction sites , harbor construction
TV broadcasting, various events, leisure, etc.

••

Mobile Battery LED floodlights• Quiet and no CO2 emissions• Uses a detachable cartridge-type lithium-ion battery• Long operation possible
Intended use•

Night construction, events, etc.

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

Notes on Our Outlook

This material contains assumptions and outlooks for the future andforecasts based on plans as November 10, 2022.
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. 23

Reference Materials

All Rights Reserved. Copyright Denyo Co.,Ltd. 24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. (FY2022/3 on a consolidated basis)(million yen)

Net sales

55,168Overseas sales

20,536

Ordinary income

4,029

Profit attributable to owners of parent

2,753

Total assets

80,774

Net assets

63,760Market capitalization (as of March 31)

37,398

Number of employees

1,359persons
Head Office (Nihonbashi-Horidomecho,Tokyo)

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

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. 26

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
1,440
4,832

5,525

1,012
5,072

1,059
5,115

5,845

5,856

755
4,386

727
4,829

44,02043,754FY2021/3

FY2022/3

5,500
800
4,100

1,083
4,919

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

FY2016/3

FY2017/3

FY2018/3

49,60010,0000FY2019/3

FY2020/3

FY2023/3(Forecast)

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

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
2,808
6,479

2,648

2,423
3,948

5,527

2,886
4,596

5,800

18,430

5,938

10,897
14,08040,000
10,3102,500

13,052

18,30010,38230,00020,00029,252

31,211

33,693

FY2017/3

FY2018/3

FY2019/3

37,04337,737

FY2020/3

FY2021/3

34,63233,400

FY2022/3

FY2023/3(forecast)

10,0000

All Rights Reserved. Copyright Denyo Co.,Ltd. 28

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

Lehman shock

50

Y2K boom

400

40

300

30

200

20

100

10

0

0
Fiscal Year

All Rights Reserved. Copyright Denyo Co.,Ltd. 29