DAIHATSU DIESEL MFG. CO., LTD.

Fiscal Year Ended March 31, 2019

Financial Results Briefing
May 2019

Sales Breakdown/Market Share
Sales Breakdown
Business

Internal combustion engines

SectionMarine-use

Application

Auxiliary power
approx.
generators

94％

82％
80％

Other

6％

Land-use

18％

Main
propulsion systems

approx.

20％

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.

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 lineBusiness 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)
180,0002016
Japan
２，５ ２０ （１ ３％）
Korea
５，７ ８０ （３ １％）
China
６，５ ５０ （３ ５％）World total １ ８，８ ００

2017２， ８３０ （ ７％ ）１ ８， ５００ （４ ３％ ）１ ５， ２００ （３ ５％ ）４ ３， ２００

2018
９， ９５ ０（ １９％ ）
２３， ３６ ０（ ４５％ ）１３， ０７ ０（ ２５％ ）５１， ４３ ０

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

140,000

European countries total

120,000

350,000

European countries total
China

China
South Korea

2018
３ １ ， ２ ７０ （ ２ １ ％ ）
４ ４ ， ９ ３０ （ ３ ０ ％ ）
５ ４ ， １ ４０ （ ３ ６ ％ ）１ ５ ０ ,９ ７０

Other countries total

Other countries total
160,0002017
Japan
３ ４ ,９ ００ （ ２ ３ ％ ）Korea
３ ５ ,４ ００ （ ２ ３ ％ ）China
６ １ ,３ ００ （ ４ １ ％ ）World total １ ５ １ ,１ ００

300,000

South Korea
JapanJapan
250,000

100,000
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

12,000Other
Petroleum products
10,000Compared to 2000

The average increase
rate of + 3.6% / year

112% increase

1,200,000

Crude oil

Bulk carriersContainers
1,000,000
8,000

Grain

Tankers

Coal
800,000

Iron ore

Other（cargo vessels, etc.）

6,000

600,000

4,000
400,000

2,000
200,000

001996199719981999200020012002200320042005200620072008200920102011201220132014201520162017(Estimate)

Source: The Shipbuilders’ Association of Japan

Increasing trend in shipping capacity in line with increase in ocean cargo volume→ stable increase in maintenance demand expected

7

DAIHATSU 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: EuropeEmissions 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

ＳＣＲ（a selective catalytic reduction device）

dual fuel engines

8DAIHATSU DIESEL MFG. CO., LTD.

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

Maximum loading
quantity of containervessels（Twenty-foot Equivalent Unit (TEU): capacity of container ships）

25,00020,00015,00010,0005,000

2003 2006 2012 2013 2015 2016 2017

Utilization of IoT: Supporting autonomous ship operation and seafarer shortage

Number of seafarers
in Japan

60,00050,000
40,00030,00020,00010,0000(Unit: person)

Foreign-going

1980

1990

Domestic

2004

2010

9

DAIHATSU DIESEL MFG. CO., LTD.

Update on Recent Major Progress (1) (New Himeji Factory)

feature・Located on the coast・Introduce advanced production facility and system
・Toyota's production systems
・Spread benefits of innovation at Moriyama Factory
across all operations

Shipping from the berthAndon (electric light board)

Transport using wheelift

Efficient assembly lines

10* Status of production lines are indicatedProduction information monitor* Status of production (plan vs. result)Update on Recent Major Progress (2) (Environment-related Products)

compliance with IMO (InternationalMaritime Organization) Tier III
standards

Mechanism of a dual fuelenginePilot fuelinjection valve

Diesel fuel injection
valve (water-coolingnozzle)

Cylinderpressure
sensorsecure a BCP (business continuity plan)
power source for disaster response

Gas turbine power generation facility for
Crisis Management and Disaster Prevention
Center11

Update on Recent Major Progress (3) (Environment-related Products)

Detoxification of NOx (nitrogen oxides) in exhaust gas
emissions and compliance with IMO (InternationalMaritime Organization) Tier III standards
80% reduction in the emission rate of NOx in exhaust gas
emissions compared with Tier I standards

Onboard trial on Hanoi Bridge ofKawasaki Kisen Kaisha, Ltd.

Developed a space-saving-designed aqueous urea solutiongenerator in-house
It can generate a highly pure urea solution that serves as
an SCR reductant

First shipment of aqueousurea solution generator

12

Fiscal Year Ended March 31, 2019
Summary of Earnings

DAIHATSU DIESEL MFG. CO., LTD.

Summary(Unit: Million yen)March 2017
Results

March 2018
Results

March 2019
Results

YoY difference
Increase/decrease(%)

Net sales

58,93460,16657,270(2,896)(4.8)%

Operatingincome

3,498

3,044

2,626(418)(13.7)%

Ordinary
income3,441

3,1042,576(528)(17.0)%Net income

2,319

2,095

1,818(277)(13.2)%

Basic earnings
per share

72.87

65.83

57.11(8.72)(13.2)%

Total assets

78,98180,96982,450

1,481

1.8％

Equity ratio

46.1%

47.0%

47.6%

0.6％

POINT

－Despite increased sales of engines, sales decreased due to smaller sizeof engines soldContinued profitability deterioration for engines had an impact onearnings
Maintenance-related sales showed signs of recovery
Depreciation increased in connection with upfront investment

14

DAIHATSU DIESEL MFG. CO., LTD.

Trend of Sales and Earnings
Operating income

Ordinary income

Net income

Net sales(Unit: Million yen)

7,000

(Unit: Million yen)

65,00062,30458,9346,000

57,019

5,000

5,493
5,438

4,000

60,16657,27060,00055,00050,000

4,736
4,689

45,000
3,596

3,000

3,498
3,441

3,004

2,000

40,000
3,104
3,044

2,626
2,576

2,319
2,095

1,818

1,000

35,00030,00025,000020,00015/3

16/3

17/3

15

18/3

19/3

DAIHATSU DIESEL MFG. CO., LTD.

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

70,000Marine-use(Japan)
Land-use(Japan)

Internal combustion engine section earnings
Marine-use(Overseas)
Land-use(Overseas)

56,49560,00055,408594

688

50,000

8,420

9,978

28,74225,081(Unit: Million yen)

6,000

54,013
1,020

5,295

4,500

8,544

40,00030,000

5,648

4,641

3,000

25,49720,0001,500

10,00017,651

20,747

18,95100
FY2017POINT

FY2018FY2017FY2019FY2018FY2019Sales decreased due to lower proportion of larger engines formarine-use
Profitability deterioration for sales of diesel engine units
continued
Maintenance-related sales showed signs of recovery
16

DAIHATSU DIESEL MFG. CO., LTD.

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

1200
1000

Maintenance-related net sales

Marine-use(Japan)

Marine-use(Overseas)

Land-use(Japan)

Land-use(Overseas)

849

800

92600

264

(Unit: Million yen)

30,00025,000

749
84215

825
72
258

400

24,715

24,627FY2017FY201825,35020,00015,00010,000493

2004484925,0000
FY2017

POINTFY2018

0FY2019

FY2019Total units sold increased
Maintenance-related sales showed signs ofimprovement
17DAIHATSU 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, March 2020 (Estimate): ¥105.00

Unit sales of diesel engines for marine-use to increase
Forecast

Sales of diesel engine units to remain bleak in profitability
Maintenance-related sales to be robust
18

DAIHATSU 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.