Consolidated Financial Results
for the Fiscal Year Ended March 31, 2023

SAKAI HEAVY INDUSTRIES, LTD.
Stock code: 6358
URL https://www.sakainet.co.jp/en/May 10, 2023

Summary of Consolidated Financial Results(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)(1) Consolidated operating results
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating profit
Ordinary profit
owners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Year ended March 31, 2023
31,459
18.3
2,506
81.2
2,327
65.4
1,694
18.7
Year ended March 31, 2022
26,599
23.0
1,383
97.3
1,407 113.6
1,427–Earnings per share
Yen
400.75336.87

Year ended March 31, 2023
Year ended March 31, 2022

Profit attributable toowners of parent/equity
%
7.0
6.3

Ordinary profit/total
Operating profit/net sales
assets
%%
5.9
8.0
3.9
5.2

(2) Consolidated financial position
Total assets
As of March 31, 2023
As of March 31, 2022

Net assetsEquity ratio

Millions of yen
40,80437,858Millions of yen
25,29523,161

Cash flows fromoperating activities
Millions of yen
1,893
2,359

Cash flows frominvesting activities
Millions of yen
(399)
(263)

Net assets per share
%
61.8
61.1

Yen
5,957.01
5,489.91(3) Consolidated cash flows

Year ended March 31, 2023
Year ended March 31, 2022

Cash flows from
Cash and cash equivalents
financing activities
at end of period
Millions of yen
Millions of yen(2,242)
7,416(1,227)7,926

2. Cash dividends
Annual dividends per share
1st quarter-end 2nd quarter-end 3rd quarter-end Fiscal year-end
YenMillions of yen%%

49.0
49.9

3.1
3.5

Millions of yen
Six months ending
September 30, 2023
Full year

Yen

Yen

Yen

Ratio of dividends
to net assets(Consolidated)Year ended March 31, 2022
–
60.00
–
105.00165.00694
Year ended March 31, 2023
–
80.00
–
120.00200.00847
Year ending March 31, 2024
–
90.00
–
125.00215.00(Forecast)
3. Forecast of consolidated financial results for the year ending March 31, 2024 (from April 1, 2023 to March 31, 2024)

Net salesYen

Total cash
Dividend payout
dividends (Total) ratio (Consolidated)

Total

49.7

Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
Earnings per shareowners of parent% Millions of yen% Millions of yen% Millions of yen%
Yen

16,100

8.1

1,300

21.8

1,250

14.1

770

(5.9)

182.1233,000

4.9

2,950

17.7

2,800

20.3

1,830

8.0

432.82

１

Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Fiscal Year
Ended March 31, 2023
1) Consolidated net sales:¥31,459 million, up 18.3% YoYOverseas sales was expanded by handling supply chain issues under a favorable
business environment.
2) Operating profit:¥2,506 million, up 81.2% YoYProfit structure reform made progress through price revisions and rationalization,
especially in overseas business.
3) Sales in Japan:¥15,208 million, up 6.4% YoYStrong demand continued against the backdrop of measures to accelerate nationalresilience.
4) Sales in North America:¥7,751 million, up 53.8% YoY
Despite a decline in housing starts, road construction investment expanded against
the backdrop of the Infrastructure Investment and Jobs Act.
5) Sales in Asia:¥7,796 million, up 20.1% YoY
The market environment remains firm, especially in the large markets of Indonesiaand Vietnam.

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 ¥30.0 billion, operating profit of ¥3.1billion, ROE of 8.0%
Second-year results: Net sales of ¥31.4 billion, operating profit of ¥2.5 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, up 63% from June two years ago,satisfying all criteria
2) Profit structure reform through sales price revision and cost cuts
Cost-of-sales ratio improvement: 74.0％, improvement of 1.9％ YoYProfit structure reform progressed with sales price revisions and transportation cost reductions,especially in overseas business.
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: 3.33 times, down 0.36 times YoY
Inventory level increased by 31.2% to increase production and reduce parts
shortage issues.

３Highlights of Consolidated Business Performance
3. Mid- to Long-Term Growth Strategy
1) Make more significant inroads into the Asian market:
Market development centered on our Indonesian hub (net sales up 20.1% YoY)

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

3) Pursue business opportunities in North America:
Increase our market share through niche marketing (net sales up 53.8％ YoY)

4) Start developing next-generation businesses:
Overseas expansion of emergency brakes, creation of market for compaction management systems, expansion of
on-site testing of autonomous vibratory rollers, R&D for EV rollers

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
Overseas construction machinery demand is firm with infrastructure investment totaling $1.2
trillion planned in the U.S., infrastructure investment and mine development becoming active inASEAN and emerging countries, among other factors, although the demand has repeatedly
fluctuated amid a rapidly changing global situation.

４Consolidated Business Performance（Millions of yen）

Fiscal year
ended
March 31,2022

Fiscal year
ended
March 31,2023

Net sales

26,59931,459

4,860

18.3%

Japan

14,292

15,208916

6.4%

Overseas

12,306

16,251

3,944

32.0%

Operating profit

1,383

2,506

1,122

81.2%

Operating profit ratio(5.2%)(8.0%)

Ordinary profit

1,407

2,327

920

65.4%

Profit attributable toowners of parent

1,427

1,694

267

18.7%

(75.9%)(74.0%)

Cost-of-sales ratio

YoY change
Amount%５

Consolidated Business Performance (Graph)６

Sales by Region in Which Customers Are Located（Millions of yen）
Fiscal yearended
March 31,2022

Fiscal yearended
March 31,2023

Japan

14,292

15,208916

6.4%

Overseas

12,306

16,251

3,944

32.0%

North America

5,039

7,751

2,712

53.8%

Asia

6,492

7,796

1,303

20.1%

775703

▲ 72

▲9.3%

26,59931,459

4,860

18.3%

Other regions

Total

YoY change
Amount%７

Sales by Region (Map)
Fiscal year ended
March 31, 2022

Fiscal year ended
March 31, 2023

Japan

14,292

15,208(+916、+6.4%)

Overseas

12,306

16,251(+3,944、+32.0%)

Total

26,59931,459(+4,860、+18.3%)(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
Total net sales
Operating profit

Year
Year ended
ended
March 31,March 31,
2023
2022

YoY change
Amount%19,566

20,730

1,163

5.9%

1,801

3,826

2,025

112.4%

21,36724,556

3,188

14.9%

884

836

▲ 47

▲5.4%

YearYear
ended
ended
North America March 31, March 31,
2022
2023
Sales to externalcustomers

Indonesia
Sales to externalcustomers
Intercompanysales

YoY change
Amount%

1,631

2,656

1,025

62.9%

3,527

4,355827

23.5%

Total net sales

5,158

7,012

1,853

35.9%

Operating profit

274

836

561 204.4%

Amount%

5,039

7,751

2,712

53.8%

45504

9.5%

Total net sales

5,085

7,802

2,716

53.4%

Operating profit

328

688

Intercompany sales

360 109.8%(Millions of yen)

(Millions of yen)

YearYear
ended
ended
March 31, March 31,2022
2023

YoY change

China
Sales to externalcustomers
Intercompany
sales

YearYear
ended
ended
March 31, March 31,2022
2023

YoY change
Amount%362320▲ 41▲11.4%

611

1,268657

107.5%

Total net sales

973

1,589615

63.3%

Operating profit▲ 79133213－%

９Segment Information by Region (Graph)(Millions of yen)JapanIndonesia

China

10

Breakdown of YoY Changes in Operating Profit• Gross Profit increased by ¥1,170 million, in line with YoY increase in sales of ¥4,860 million.
• Cost-of-sales ratio decreased by 1.87% and gross profit increased by ¥587 million through sales pricerevisions and logistics streamlining in overseas business.
• SG&A expenses increased by ¥635 million as we came out of restricted operational conditions andresumed business activities.
• As a result, operating profit rose by ¥1,122 million YoY to ¥2,506 million.
(Millions of yen)
Fiscal year
ended March
31, 2022

Fiscal year
ended March
31, 2023

Net sales

26,59931,459Cost-of-sales ratio

Impact on
operatingprofit

Note

4,860

+1,1704,860 ｘ （1 - 75.9％）

75.9%

74.0% ▲1.87%+587

Gross profit

6,407

8,165

1,757

SG&A expenses

5,023

5,659635

Operating profit

1,383

2,506YoYchange

31,459 ｘ ▲1.87％

Payroll: up 256; Technical research expenses: up 110;

▲ 635 Transportation costs: up 63; Other SG&A: up 205+1,122

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

Increase in
Payroll
Increase in
net sales

Impact ofimprovement
in cost-ofsales ratio+1,170＋587

Operatingprofit for
the fiscalyear ended
March 31,2022
1,383
Operating profit ratio
5.2%

▲256

Increase in
Increase intechnicaltransportation Increase inresearchcosts
other SG&Aexpenses▲63▲205▲110
SG&A expenses▲635

Operatingprofit for
the fiscalyear ended
March 31,2023
2,506

Operating profit＋1,122
Operating profit ratio
8.0%

12

Net Working Capital (Trade Receivables + Inventories – Trade Payables)• Net working capital invested in sales activities increased by ¥1,991
million YoY to ¥11,770 million.
• Inventories increased by ¥2,245 million YoY to ¥9,452 million due
to increased production and measures taken to address parts
shortage.

• The ratio of net working capital to net sales remains stable ataround 37%, similar to the previous year, and the working capital
structure is within a reasonable range.
(Millions of yen)
As of March As of March
31, 2022
31, 2023
Annualized
consolidated net sales

YoY change
Amount%26,59931,459

4,860

18.3%

Trade receivables

8,538

9,464

926

10.8%

Inventories

7,207

9,452

2,245

31.2%

▲5,966▲7,146▲1,18019.8%

Net working capital

9,779

11,770

1,991

20.4%

Inventory turnover

3.69 times

Net working
capital/Sales ratio

36.8%

Trade payables

3.33 times ▲0.36 times
37.4%

0.6%

13

Consolidated Business 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)

YoY change

Fiscal year ended
March 31, 2022
(Results)

Fiscal year ended
March 31, 2023
(Results)

Fiscal year ending
March 31, 2024
(Forecast)

26,59931,45933,000

1,540

4.9%

Operating profit

1,383

2,5062,950

443

17.7%

Ordinary profit

1,407

2,327

2,800

472

20.3%

Profit attributable toowners of parent

1,427

1,694

1,830

135

8.0%

¥336.87¥400.75¥432.82¥32.078.0%

Net sales

Earnings per share(Yen)

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 a
dividend 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 second year of the medium-term
management policy.
• Faced with profit structure deterioration due to structural increases in energy andmaterial prices and high logistics costs, improvement in operating margin is lagging,
and we are now promoting profit structure reform through sales price revisions and costreductions.
(Millions of yen)
Fiscal year
ended March
31, 2022(Results)

Fiscal year
ended March
31, 2023(Results)

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

Net sales

26,59931,45933,00026,50030,000Operating profit

1,383

2,506

2,950

2,000

3,100

Return on equity (ROE)

6.3%

7.0%

7.1%

5.5%

8.0%

Share buybacks

Cumulative amount of share buybacks

340ー340*1500 ～ 2,000*

2*1 The amount represents the cumulative amount of share buybacks that had been executed as of May 10, 2023.
*2 The amount represents the targets of the cumulative amount of share buybacks through March 31, 2026.

16• ESG
Initiatives
ESG
Initiatives
Initiatives to contribute to carbon neutrality
Exhibit at CSPI-EXPO Construction & Survey
Productivity Improvement Expo (May 24 to 26, 2023,at Makuhari Messe)

CO2 emissions reduction at construction sites(shift to EVs)

Electric Walk Behind Roller

Electric roller

Created a concept model using portable andswappable batteries made by Honda Motor Co., Ltd.

Demo machine completed.
Practical tests will be
conducted at actual pavingsites.
Data will be collected forcommercialization purposes.

Photo of roller

Initiatives to strengthen governanceInitiatives to resolve social issues through business activities

They will contribute to roadmaintenance in Southeast
Asia and the expansion of
our business domain.

Haruyasu Asakura, who is an expert in capital markets, is nominated as
an outside Director candidate. He will provide advice and monitoringfrom an investor's perspective.
CareerIn January 2024, we plan tostart production of roadplaners in Indonesia.

Appointment of New Outside Director (June 29, 2023)

Apr. 1984 Joined Mitsubishi Corporation
May 1999 Partner of Apax Globis Partners (now Globis Capital Partners)
Feb. 2001 Managing Director of Carlyle Group
July 2009 Member of the Board (COO) of INCJ, Ltd.
Mar. 2016 President (CEO and CIO) of Marunouchi Capital
Nov. 2022 Representative partner of HA Management LLC (current position)

Reasons forappointment

Launch of production of road maintenanceand repair machines at Indonesian plant

Batteryplacement

The Company has nominated Haruyasu Asakura as a candidate foroutside Director in view of the fact that he has broad knowledge ofcapital markets and corporate value improvement based on his many
years of experience in private equity funds, and the Company believes
he is suitable to serve as an outside Director who is an Audit andSupervisory Committee Member.

17

Compliance with the Continued Listing Criteria for the Tokyo Stock Exchange Prime Market• As of the reference date of transition (June 30, 2021), the Company did not meet thecriteria for "tradable share market capitalization" among the Continued Listing Criteria
for the Prime Market. However, as of the end of March 2023, we have complied with all
the criteria.
Number ofshareholders

Number of
tradableshares(units)Marketcapitalizationof tradable
shares(billion yen)

Tradableshare ratio(%)

Daily average
trading value(million yen)

As of end of June 2021
(reference date oftransition)

2,924

28,147

63

64.8

30

As of end of March2023(*1, 2)

4,081

27,436

103

62.4

40

Continued Listing Criteria

800

20,000

100

35.0

20

Compliance status as of March 31, 2023

CompliantCompliantCompliantCompliantCompliantCompliancestatus of theCompany andtransition*1 The compliance status of the Company was calculated based on the distribution of the Company's sharecertificates, etc., as known by the Tokyo Stock Exchange as of the reference date.
*2 The reference date for daily average trading value is December 31, 2022.

18

Contact us

SAKAI HEAVY INDUSTRIES, LTD.
IR Office: Takao Yoshikawa

Email: sakai.ir@sakainet.co.jp
Telephone: +81-3-3434-3401 (from outside Japan)
Fax: +81-3-3436-6513 (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.