Consolidated Financial Results
for the Three Months Ended June 30, 2023

SAKAI HEAVY INDUSTRIES, LTD.
Stock code: 6358
URL: https://www.sakainet.co.jp/en/

August 10, 2023

Summary of Consolidated Financial Results1

Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Three Months
Ended June 30, 2023
1) Consolidated net sales: ¥7,529 million, up 9.7% YoYOverseas sales was expanded, especially in North America.
2) Operating profit: ¥551 million, up 22.8% YoY
Progress was made with profit structure reform through penetration of pricerevisions in Japan and overseas.
3) Sales in Japan: ¥2,798 million, down 0.4% YoY
Sales remain firm against the backdrop of measures to accelerate national landresilience.
4) Sales in North America: ¥2,301 million, up 33.1% YoYDemand continues to expand due to increased investment in road construction
against the backdrop of the Infrastructure Investment and Jobs Act.
5) Sales in Asia
: ¥2,092 million, down 4.2% YoY
Signs of slowing growth in some of the markets, despite a strong recovery indemand in Indonesia.

2

Highlights of Consolidated Business Performance
2. Adapting to a Changing Business Environment1) Initiatives for enhancing the profitability of capital(1) Progress of medium-term management policy
Five-year medium-term management plan: Net sales of ¥30 billion, operating profit of ¥3.1 billion, ROE of 8.0%
Forecast for the current fiscal year (third year): Net sales of ¥33 billion, operating profit of ¥2.95 billion, ROE of 7.1%
Results of the three months ended June 30, 2023: Net sales of ¥7.5 billion, operating profit of ¥0.55 billion, ROE of 7.0%
(2) Measures to comply with the Continued Listing Criteria for the Tokyo Stock Exchange Prime Market
Tradable share market capitalization: Achieved ¥10.3 billion at the end of March 2023, up 63% compared to June 2021,
compliant with all the criteria(3) Progress of enhancing corporate value (PBR above 1)
At the end of March 2023: PBR 0.67 times (Share price ¥4,010)
At the end of June 2023: PBR 0.88 times (Share price ¥5,380)
2) Profit structure reform through sales price revisions and high added value

Cost-of-sales ratio improvement: 73.1%, improvement of 1.3% YoYProfit structure reform progressed with penetration of sales price revisions in Japan and overseas.
3) Strengthening product supply capabilities(1) Enhancement of supply chain (review of suppliers and dual sourcing)(2) Modification of global business activities (expansion of production capacity at domestic plants, expansion of parts
business at Chinese plants)
4) Dealing with volatile demand
Inventory turnover: 3.01 times, down 0.66 times/18% YoY
Increase in parts for increased production and safety stock. Currently adjusting to an optimized
inventory level due to easing of supply constraints.

3Highlights of Consolidated Business Performance
3. Mid- to Long-Term Growth Strategy
1) Make more significant inroads into the Asian market:
Expand the ASEAN market centered on our Indonesian hub (net sales down 4.2% YoY)

2) Expand the scope of overseas business:
Develop the overseas market for road maintenance equipment (start the local production in Indonesia)

3) Pursue business opportunities in North America:
Increase our market share through niche marketing (net sales up 33.1% YoY)

4) Start developing next-generation businesses:
Focus on market development for emergency brakes, compaction management systems, and road cutting
management systems.
Research and development on autonomous vibratory rollers and EV rollers is underway.

4. Outlook for Business Environment
1) Japan
Demand for construction machinery is projected to remain strong, buoyed by the Japanese
government’s ¥15-trillion initiative to accelerate national resilience over the next five years toprevent and mitigate natural disasters.
2) Overseas
Demand in overseas construction machinery market is expected to remain stable with infrastructure
investment totaling $1.2 trillion planned in the U.S., becoming active in infrastructure investment
and mine development in emerging countries, and renewal of aging infrastructure and disastercountermeasures.
４

Consolidated Business Performance(Millions of yen)First threemonths
ended
June 30,2022

First threemonths
ended
June 30,2023

Net sales

6,865

7,529

664

9.7%

Japan

2,811

2,798

▲ 12

▲0.4%

Overseas

4,053

4,730

676

16.7%

448

551

102

22.8%

(6.5%)(7.3%)

Ordinary profit

516692

175

34.0%

Profit attributable toowners of parent

402

471

69

17.2%

(74.4%)(73.1%)

Operating profit
Operating profit ratio

Cost-of-sales ratio

YoY change

Amount%5

Consolidated Business Performance (Graph)6

Sales by Region in Which Customers Are Located(Millions of yen)First threemonths
ended
June 30,2022

First threemonthsendedJune 30,2023

YoY change

Amount%

Japan

2,811

2,798

▲ 12

▲0.4%

Overseas

4,053

4,730

676

16.7%

North America

1,729

2,301

572

33.1%

Asia

2,184

2,092

▲ 92

▲4.2%

140337197

140.5%

6,865

7,529

664

9.7%

Other regions

Total7

Sales by Region (Map)First threemonths ended
June 30, 2022

First threemonths ended
June 30, 2023

Japan

2,811

2,798

(▲12, ▲0.4%)

Overseas

4,053

4,730

(+676,+16.7%)

Total

6,865

7,529(+664, +9.7%)(Millions of yen)

YoY change

8Segment Information by Region in Which Our Manufacturing Facilities and Sales Offices Are Located(Millions of yen)

(Millions of yen)Japan
Sales to externalcustomers
Intercompany
sales

First three First threemonthsmonthsended June ended June30, 2022
30, 2023

YoY change
AmountNorth America%

4,656

4,179

▲ 477

▲10.2%

698

1,04234449.3%

Total net sales

5,354

5,221▲ 132▲2.5%

Operating profit

9012130

33.7%

Sales to externalcustomers
Intercompany
sales

First three First threemonths
monthsended June ended June30, 2022
30, 2023

Indonesia
Sales to externalcustomers
Intercompany
sales

YoY change
Amount%

446

994

548

122.7%

867

1,063

196

22.6%

Total net sales

1,314

2,058

744

56.6%

Operating profit

99187

87

88.0%

Amount%

1,729

2,301

572

33.1%

73▲4▲55.2%

Total net sales

1,737

2,304

567

32.7%

Operating profit

228194(Millions of yen)First three First threemonths
monthsended June ended June30, 2022
30, 2023

YoY change▲ 33 ▲14.8%(Millions of yen)

China
Sales to externalcustomers
Intercompanysales

First three First threemonths
monthsended June ended June30, 2022
30, 2023

YoY change
Amount%33

542164.1%151344

192

127.1%

Total net sales

184398213 115.8%

Operating profit▲83746－%

9Segment Information by Region (Graph)
JapanNorth America(Millions of yen)

Indonesia

China

10

Breakdown of YoY Changes in Operating Profit•Gross profit increased by ¥169 million, in line with YoY increase in net sales of ¥664 million.

•Cost-of-sales ratio decreased by 1.3% and gross profit increased by ¥98 million through penetrationof sales price revisions in Japan and overseas.

•SG&A expenses increased by ¥165 million following the increased investment in human capital(increased payroll) and increased business activities.
•As a result, operating profit rose by ¥102 million to ¥551 million.
First threeFirst threemonths ended months ended
June 30, 2022 June 30, 2023

YoYchangeImpact on
operatingprofitNet sales

6,865

7,529664+169

Cost-of-sales ratio

74.4%

73.1%

▲1.3%

+98

Gross profit

1,754

2,022267

SG&A expenses

1,305

1,470

165

Operating profit

448551▲ 165(Millions of yen)Note664 ｘ （1 - 74.4％）
7,529 ｘ ▲1.3％

Payroll: up 93; Technical research expenses: up 16
Promotion and advertising expenses: up 10;
Other SG&A: up 44+102
11

Breakdown of YoY Changes in Operating Profit (Graph)(Millions of yen)

Increase in
Impact of
Increase in
payroll
improvement
net salesin cost-of▲93+169
sales ratio

Increase intechnicalresearchexpenses

+98

▲16

Operatingprofit for
first threemonths
ended
June 30,2022
448
Operating profit ratio
6.5%

Increase inpromotion
andadvertisingexpenses▲10SG&A expenses▲165

Increase inother SG&A
▲44

Operatingprofit for
first threemonths
ended
June 30,2023
551

Operating profit+102
Operating profit ratio
7.3%

12

Net Working Capital (Trade Receivables + Inventories – Trade Payables)•Net working capital invested in sales activities increased by ¥2,290 million YoY to ¥11,563 million.
As a result, net working capital/sales ratio increased by 2.1% to 36.0%.

•Inventories increased by ¥3,200 million YoY to ¥10,658 million through increase in parts for increased production andsafety stock.
As a result, net sales/inventory turnover decreased by 0.66 times (down 18%) to 3.01 times.
Currently making adjustments to optimize inventory levels.
(Millions of yen)

As ofJune 30,2022
Annualized
consolidated net sales

As ofJune 30,2023

YoY change
Amount%27,37532,123

4,748

17.3%

Trade receivables

7,706

8,733

1,027

13.3%

Inventories

7,458

10,658

3,200

42.9%

▲5,891▲7,828▲1,937

32.9%

Net working capital

9,273

11,563

2,290

24.7%

Inventory turnover

3.67 times

3.01 times▲0.66 times

Net workingcapital/Sales ratio

33.9%

36.0%

2.1%

Trade payables

13

Consolidated Business Forecast
No change from the previous forecast.
・ We anticipate firm demand in Japan, North America and Asia, so the net sales
forecast is set at ¥33,000 million, representing a YoY increase of 4.9%.
・ Amidst further price revisions, rationalization, increased business activities,and planned investments in human capital and digital transformation (DX), theoperating profit forecast is set at ¥2,950 million, a YoY increase of 17.7%.
(Millions of yen)First half

Full year

Six months
ended
September 30,2022(Results)

Six months
endingSeptember 30,2023(Forecast)

14,891

16,100

1,208

8.1%

31,45933,000

1,540

4.9%

Operating profit

1,067

1,300

232

21.8%

2,506

2,950

443

17.7%

Ordinary profit

1,095

1,250

154

14.1%

2,327

2,800

472

20.3%

818

770

▲ 48

▲5.9%

1,694

1,830

135

8.0%

¥193.92¥182.12▲ ¥11.80▲6.1%¥400.75¥432.82¥32.078.0%Net sales

Profit attributable toowners of parent
Earnings per share(Yen)

YoY change
Amount%Fiscal year ended
March 31, 2023
(Results)

Fiscal year
ending March31, 2024
(Forecast)

YoY change
Amount%14２．『中期的な当社経営方針』に関連する主要な取り組み状況

Dividends per Share• Since the announcement of the Medium-Term Management Policy on June 2, 2021, we have set adividend policy as follows, with a target of 8% ROE:
When ROE falls below 3%, a payout ratio of 100% will apply.
When ROE is between 3% and 6%, a DOE of 3% will apply.
When ROE exceeds 6%, a payout ratio of 50% will apply.

Note: We made a ten-for-one share consolidation effective October 1, 2017. Dividend payouts for the periods prior
to the share consolidation are adjusted to be in line with the post-consolidation payouts.

15

KPIs Established in the Medium-Term Management Policy• Net sales are on pace to exceed the plan in the third year of the medium-term
management policy.

• Faced with profit structure deterioration due to structural increases in energy andmaterial prices, improvement in operating margin is lagging, and we are now promoting
profit structure reform through sales price revisions and high added value.
(Millions of yen)

Net sales
Operating profit
Annualized return on equity (ROE) *1
Share buybacks

First three months
ended June 30,2022(Results)

First three months
ended June 30,2023(Results)

6,865

7,529

448
6.9%

Fiscal year
ending March 31,2024(Forecast)Target for the
fiscal year
ending March 31,
2024

Target for the
fiscal year
ending March 31,
2026

33,00026,50030,000

551

2,950

2,000

3,100

7.0%

7.1%

5.5%

8.0%Cumulative amount of share buybacksーー

340*2500 ～ 2,000*3*1 The annualized ROEs were calculated based on the year-to-date results of the corresponding fiscal year.
*2 The amount represents the cumulative amount of share buybacks that had been executed as of August 10, 2023.
*3 The amount represents the targets of the cumulative amount of share buybacks through March 31, 2026.

16

Contact us

SAKAI HEAVY INDUSTRIES, LTD.

Email: sakai.ir＠sakainet.co.jp

IR Office: Takao Yoshikawa

Fax: +81-3-3436-6513 (from outside Japan)

Telephone: +81-3-3434-3401 (from outside Japan)

Performance forecasts and other forward-looking statements in this document are based on
information available at the time of this writing, as well as certain assumptions deemed reasonable.
Actual performance and other results may differ depending on a variety of factors.