DAIHATSU DIESEL MFG. CO., LTD.

First Half of the Fiscal Year Ending March 31, 2020

Financial Results Briefing
November 2019

Sales Breakdown/Market Share
Sales Breakdown
Business

Internal combustion engines

SectionMarine-use

Application

Auxiliary power
generators

Other

6％

Land-use

18％

Main
propulsion systems

20％

94％

82％
80％

Market Share (Auxiliary Engines for Large Ocean-going Vessels)〈Share in Japan〉〈Overseas market share〉

DAIHATSUDIESELDAIHATSUDIESEL%%50232

DAIHATSU DIESEL MFG. CO., LTD.

Remarks on Earnings

POINT

Stable capture of earnings overlife-cycle (30 years)▶Post-voyage maintenance services are key.
▶Cumulative total of engine units (number ofships carrying our engines) is decisive.

Sales by Horsepower(10,000 hp)

March March March March March March March March March March March March March March March March
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

*Does not include technological partners in China

3

DAIHATSU DIESEL MFG. CO., LTD.

Strengthening Business in the After-sales-service
Market/Overseas Strategy (Licensing)
10 years ago Sales approx. ¥15.0 billion

Holding the line

Business focus was selling engines
to builders of new vessels.
Sales for the after-sales-service did
not really exist.

Issuesfor thefuture

NowMajor
increase

Sales approx. ¥26.0 billion

Shifting to the offensive
Creation of sales teams specializing inparts
Launch of strategic sales targeting shipowners and ship-managers in the aftersales-service market

Genuine parts usage ratio is approx. 50%.
Scope exists for increasing this rate.
▶ Strategic deployment of CMAXS system.

Licensing (in China)

Anqing CSSC Diesel Engine Co., Ltd.

Anqing Diesel

Contract partner since 1982

Anhui Province, China(Yangtze River Basin, 600 km from Shanghai)

Granting of rights for Manufacture
and marketing of certain classes ofinternal combustion engine

SHAANXI DIESEL ENGINE HEAVY
INDUSTRY CO., LTD.

Shaanxi Diesel

Expand market share of DAIHATSU
brand

Shaanxi Province, China(50 km from Xi’an)

4

DAIHATSU DIESEL MFG. CO., LTD.

Recent Major Initiatives in Line withMid-term Management Plan

DAIHATSU
MFG.CO.,
CO.,LTD.
LTD.
DAIHATSU DIESELDIESEL MFG.

Market Trends for Newbuild Vessels
Source: The Shipbuilders’ Association of Japan

Volume of orders received, by country(Unit:Thousandtons)

2016
Japan
２ ，５ ２０ （１３ ％）Korea
５ ，７ ８０ （３１ ％）China
６ ，６ ５０ （３５ ％）World total １８ ，８ ００

180,000

160,000

Other countries total
140,000

European countries total

2017
２ ，８ ３０（ ７ ％）１８ ，５ ００（ ４３ ％）１５ ，２ ００（ ３５ ％）４３ ，２ ００2018
１０ ，３１ ０（ ２０％ ）
２３ ，１１ ０（ ４６％ ）
１３ ，０８ ０（ ２６％ ）５０ ，４０ ０

Volume of work in hand, by country(Unit:
Thousandtons)
400,000

350,000

300,000

China
120,000

100,000

South Korea

2017
Japan
３ ０ ， ４１ ０ （ ２ １ ％）Korea
３ ５ ， ４５ ０ （ ２ ５ ％）China
５ ６ ， ５３ ０ （ ３ ９ ％）World total １ ４ ３ ， ６９ ０2018
３ １ ， ２７ ０ （ ２ １ ％）４ ４ ， ９３ ０ （ ３ ０ ％）５ ４ ， １４ ０ （ ３ ６ ％）１ ５ ０ ， ９７ ０

Other countries total
European countries total
China

250,000

JapanSouth Korea
Japan

200,000
80,000150,000
60,00040,000100,000

50,00020,00000

Orders received showed an uneven increase overall, with a spike in 2006 to 2007 just before the 2008
financial crisis. The marine cargo market is now on a recovery trend despite the downturn in the marine
cargo market in 2016

6DAIHATSU DIESEL MFG. CO., LTD.

Market Trend for Marine Cargo
Global ocean cargo volumes, by product

Global shipping capacity(Unit: Thousand tons)(Unit: Million tons)

1,400,000

12,000

OtherPetroleum products
10,000

Crude oil

Compared to 2000

The average increase
rate of + 3.5% / year

139% increase

1,200,000

Containers

Bulk carriers

Grain
8,000

1,000,000

CoalTankers

Iron ore
800,000

6,000

600,000

4,000
400,000

2,000

200,000

00(Estimate)

Source: The Shipbuilders’ Association of JapanIncreasing trend in shipping capacity in line with increase in ocean cargo volume→ stable increase in maintenance demand expected

7DAIHATSU DIESEL MFG. CO., LTD.

Initiatives in Line with Mid-term Management Plan
Tighter environmental regulations: Exhaust gas regulations (NOx, SOx, CO2,etc.), and diversification of fuels
2016

2017

2018

2019

2020

NOx Tier III regulations:North America /Caribbean Sea

2022

CO2: Europe

Emissions standard: (80)％

Operating data reporting system

CO2: IMO

Operating data reporting system

CO2: EEDI regulations

Fuel economy standard: (20)％SOx: Baltic Sea /North Sea /offshore USA and Canada/Caribbean Sea
SOx: Other marine areas（Use examples : Dual fuel engines formarine-use）

2023

Emissions standard: (80)％

NOx Tier III regulations:North Sea /Baltic Sea

Examples of exhaust gas
regulations for vessels
・NOx: Nitrogen oxide
・SOx: Sulfur oxide

2021

Outsiderestricted area:
operate withliquid fuelSulfur in fuel oil 0.1％

currently 3.5% ->Sulfur in fuel oil 0.5％

Withinrestricted area:
operate withgas

Low carbon
brandcertificationfrom Shiga
dual fuel engines

ＳＣＲ（a selective catalytic reduction device）

8

DAIHATSU DIESEL MFG. CO., LTD.

Initiatives in Line with Mid-term Management Plan
Larger engines: Aggressive capital investment by domestic shipyards, energy conservation

Utilization of IoT: Supporting autonomous ship operation and seafarer shortage

Number of seafarers
in Japan

60,00050,00040,00030,00020,00010,0000(Unit: person)

Foreign-going

1980

1990

Domestic2004

2010

9DAIHATSU DIESEL MFG. CO., LTD.

Update on Recent Major Progress
New initiatives

To market launch in response to demand for small, lightweight and highoutput engines for naval vessels

MTU engine：For propulsion power generator
Our engine：For emergency power generator

Accommodate needs of logistic support such as maintenance of engines
after a new naval vessel is commissioned10

First Half of the Fiscal Year Ending March 31,2020

Summary of Earnings

DAIHATSU DIESEL MFG. CO., LTD.

Summary(Unit: Million yen)

September
2017
Results

September
2018
Results

September
2019
Results

Net sales

29,557

26,72927,321

Operatingincome1,454

625

Ordinary
income1,540

Net
incomeYoY difference(%)

Forecast*Progress(%)

591

2.2%

62,00044.1%646203.3%

3,000

21.5％

752

852

99

13.2%

3,000

28.4％

1,069

483

511

28

5.8%

2,100

24.4％

Basicearnings
per share

33.58

15.18

16.10

0.92

6.1%

65.93

24.4％

Total
assets78,33979,57883,422

3,844

4.8％

－－

Equity
ratio

47.3%

47.8％

46.9％

(0.9)%－－－

POINT

Increase/decrease

March 2019

Despite increased unit sales of engines, profitability in engines remains
bleak
Maintenance-related sales improved
Financial results forecast for the first half has been revised upward;
however, the forecast for the full year remains unchanged

12DAIHATSU DIESEL MFG. CO., LTD.

Trend of Sales and Earnings(Unit: Million yen)

Operating income

7,000

6,000

5,000

57,019Ordinary income

58,934

Net income

Net sales
62,00060,16665,00060,00057,27055,000

5,493
5,438

50,000

4,000

3,000

(Unit: Million yen)

45,000
3,596

3,498
3,104
3,044

2,000

40,0003,000 3,000

3,441

2,319

2,095

2,626
2,576

2,100

30,000

1,818

1,000
646 852

016/3

17/3

18/3

1319/335,00025,000511

20,00020/3 (Est.)
DAIHATSU DIESEL MFG. CO., LTD.

Net Sales and Earnings for the Internal
Combustion Engine Section
Net sales(Unit: Million yen)

35,00030,00025,000Marine-use (Japan)
Land-use (Japan)

27,743387

3,459Internal combustion engine section earnings
Marine-use (Over seas)
Land-use (Over seas)

25,129683

2,059(Unit: Million yen)

3,000

25,813

2,500

469
2,134

2,000

20,00015,00013,903

12,131

1,725

1,690

1H FY2019

1H FY2020

1,500

12,9061,000

10,000
5,000

2,636

9,994

10,255500

10,30300
1H FY2018

1H FY2019

1H FY2018

1H FY2020

Proportion of larger engines for marine-use increased

POINT

Profitability deterioration for sales of diesel engine units
continued14DAIHATSU DIESEL MFG. CO., LTD.

Unit Sales and Maintenance-related Net Sales
Units sold(Unit: Units)

450
400
350
300
250

Maintenance-related net sales

Marine-use (Japan)

Marine-use (Over seas)

Land-use (Japan)

Land-use (Overseas)

351
18392
5141

414

(Unit: Million yen)

14,0001112,000

132

10,000

110

8,000

200

6,000

150
100

11,165

11,83812,767

221

245

4,000

267

2,000

5000
1H FY2018

POINT

1H FY2019

1H FY2020

1H FY2018

1H FY2019

1H FY2020

Total units sold increased
Maintenance-related sales recovered
15DAIHATSU DIESEL MFG. CO., LTD.

Earnings Forecasts(Unit: Million yen)March 2020

March 2019
Results

Forecast

Increase/decrease(%)

Net sales

57,27062,000

8.3

Operatingincome

2,626

3,000

14.2

Ordinary income

2,576

3,000

16.4

Net income

1,818

2,100

15.5

Basic earnings
per share

57.11

65.93

15.5

*Exchange rates: March 2019 (Results): ¥109.95, 1H 2020 (Results): ¥107.90, 2H 2020 (Estimate): ¥100.00

Forecast

Unit sales of diesel engines for marine-use to increase
Sales of diesel engine units to remain bleak in profitability
Maintenance-related sales to be robust
16DAIHATSU DIESEL MFG. CO., LTD.

These materials contain statements relating to future earnings and businessstrategy, etc. Inherent in these statements are risk and uncertainty; they
form no guarantee of future performance.
Please be aware that actual results may differ significantly from forecasts,
due to changes in the business environment, etc.
Furthermore, information relating to companies other than the Company or
the Company group, etc., contained here has been taken from publicly
available information, etc. No verification of any kind has been undertakenby the Company, and no guarantee is offered regarding the accuracy orappropriateness of such information.
The information contained in these materials is intended only for purposes ofprovision of information, and not for solicitation to purchase securities.

Daihatsu Diesel Mfg. Co., Ltd.