Financial Results for Q2 FY3/24

November 21, 2023

OKADA AIYON CORPORATION(TSE Prime 6294)

１

Table of Contents

1.

Corporate Profile/History

2.

Q2 FY3/24
Financial Results Summary and
Full-year Forecasts

3. Appendix

2

Corporate Profile (As of March 31, 2023)
Business content
Manufacture, sale and repair of construction and forestry machinery fordismantling and crushing

FoundedCapital stock

Net sales

Business bases

July 1938

2,221
million yen

23,575
million yen

22 in Japan
6 overseas(Established in 1960)

Head Office (Minato-ku, Osaka)

Consolidated subsidiaries

Number of employees(consolidated)

・AIYON TECH. CO., LTD.
(Main assembly plant)
・Nansei Machine Co., Ltd.
(Manufacturing,development and sales offorestry machinery)・Okada America, Inc.
・Okada Europe B.V.

487

3

Our Major Products (Demolition Attachments)
Demolition specific attachments for hydraulicexcavators to demolish concrete buildings.
Domestic market share of
our major products

No.1

Hydraulicexcavators

Primary
Crushers

Pulverizers

Cutters

Breakers

43%

44%

54%

17%

(Prepared by company based on materials published by the Japan Construction Equipment Manufacturers Association (CEMA) April 2023 to September 2023)

４

Business Bases[Domestic][Overseas]
Okada America
Okada Europe

Okada Mid-west(newly established)

Okada Thailand

OKADA AIYON: 12 bases

Okada America: 4 bases (headquarters/Oregon)

AIYON TECH: 1 baseOkada Europe: 1 base (headquarters/Netherlands)

Nansei Machine: 9 bases

Okada Thailand: 1 base (headquarters/Ayutthaya)5

Coprorate History
Around 1951
Appearance of
excavator method

1938
EstablishedAround 1960
Appearance oflarge air breaker

The latter half of the1970s
Appearance of thecrushing method

さくがんき

We have grown mainly through the development and sale of demolition attachments
to meet various demand from rock drills to urban demolition machineries.
(Million yen)2022
Acquisition ofThoesen Ltd.
(USA)

Changes in net sales
over the past 30 years

2011
Great East Japan
Earthquake

1995
Great Hanshin-Awaji
Earthquake
1992
Listed on the 2nd Sectionof the Osaka Stock Exchange

2017
Acquisition ofNansei machine Co., Ltd.
2016
Listed on
TSE1

2008
Financial Crisis

30,00025,00020,00015,00010,000

Since
1990s

5,000

FY
1990

FY
2000

FY
2010

FY
2020

0

6

Table of Contents

1.

Corporate Profile/History

2.

Q2 FY3/24
Financial Results Summary and
Full-year Forecasts

3. Appendix

7

Results Summary (Q2 FY3/24)● For the first half of FY3/24, both sales and profits exceeded forecasts, making the highest first-half performance.
● In Japan, sales of demolition crushers and forestry machinery were strong. Overseas, the growth in the North Americanbusiness, as well as the M&A deal in North America contributed to this performance.

● On the profit front, the promotion of price increases and the recovery in overseas freight rates helped offset the cost
increases. Additionally, the foreign exchange gains increased reflecting the yen’s depreciation.

Net sales

Ordinary
income13,391

million yen(+8.0% vs. forecast)(+14.7％ YoY)

1,648

million yen(+44.6% vs. forecast)(+41.1％ YoY)

OperatingincomeNet income
attributable toowners of parents

1,525

million yen(+31.5％ vs. forecast)(+38.0％ YoY)

1,105

million yen(+45.5％ vs. forecast)(+40.7％ YoY)8

Business Results for Q2 FY3/24 and Future Outlook● We revised upward the full-year forecasts for both sales and profits. Ordinary income was adjusted to align with the operating

income for the full year, reflecting the unclear outlook for foreign exchange rates in the second half, despite the positive
impact of the yen's depreciation in the first half.

(Million yen)

Q2 FY3/23
Results

Q2 FY3/24
Results

YoY change(amount)

YoYchange(%)

FY3/24

FY3/24

Initialforecasts

Revisedforecasts(May 11, 2023)(Revised)

Change(vs. forecasts
on May 11)

Net sales

11,68013,391

1,711

14.7

25,50026,500+1,000Gross profit

3,347

4,040

692

20.7

－

－

－

SG&A expenses

2,242

2,514

272

12.1

－

－

－

Operatingincome

1,105

1,525

420

38.0

2,300

2,650

+350

Ordinary income

1,168

1,648

480

41.1

2,250

2,650

+400

785

1,105

320

40.7

1,500

1,730

+230

U.S. dollar: 134 yen
Euro: 139 yen

U.S. dollar: 141 yen
Euro: 153 yen

Net income(attributable to ourshareholders)

Average exchange
rate used*The assumed exchange rates for FY3/24 remain unchanged at 130 yen to the US dollar and 140
yen to the euro.

9Progress to Forecasts (Q2 FY3/24)● The graph below shows the H1 performance progress rate toward the revised full-year forecasts.
(Million yen)

(Million yen)

(Million yen)

(Million yen)

Revisedforecast

Revisedforecast

Revisedforecast

Revisedforecast

26,500

2,650

2,650

1,730

23,57520,306

1,808

1,771

Progress
rate
49.5%

Progress
rate
49.5%

Progress
rate
62.2%

Progress
rate
57.6%

Progress
rate
50.5%
Progress
rate
57.7%

Progress
rate
56.3%

Progress
rate
56.7%

Progress
rate
59.6%
Q2

Q2
Q2
Q2

Q2

13,391

Q2

11,68010,056

1,022

FY3/22

FY3/23[Net sales]

FY3/24

FY3/22

Q2

FY3/22

FY3/23

Progress
rate
63.9%
Progress
rate
55.5%
Q2

Q2
Q2

1,168

1,105

785

659

1,026

[Operating income]Progress
rate
55.4%

Q2
Q2

FY3/24

1,190

1,648

1,525

1,105

FY3/23

1,414

1,961

1,965

FY3/24[Ordinary income]

FY3/22

FY3/23

FY3/24[Net income]10Factors for Changes in Net Sales● Domestic: sales increased as the decline in special demand for cable cranes was offset by other product sales.
Sales of large crushers increased, and sales of a new product, Hybrid Bucket, remain stable in the forestry machinery
segment.
Sales of grapples and large environmental machinery turned to increase from the previous year’s decline, and the growth
was further supported by other AT couplers.
● Overseas: sales increased due to the sales growth in existing U.S. businesses and the M&A deal in Chicago.

(Million yen)Overseas

Domestic

Large
environmental
machinery

Forestrymachinery
Environmental
AT
Other AT

Grapples91

Crushers

345

(55)

26

206

311

80
▼

Demolish environmental AT(attachments): 614

309

Material/
repair

(462)
Cable
crane

1,102

77
(13)
Other
machineryHydraulicbreakers

11,680Q2 FY3/23

13,391Q2 FY3/24

11

Sales by Segment and Business (Q2)
● The overseas sales ratio increased due to the acquisition of a company in Chicago,
U.S., in line with the overseas business expansion policy.
For details of each segment, please refer to "Sales Trends by Model" on page 13.

Net sales

Net sales

Net sales

10,056 million yen

11,680 million yen

13,391 million yen

Q2 FY3/22

Q2 FY3/23

Q2 FY3/24
Demolishenvironmental
attachment

Overseas

19%

20%

52%

12%
17%

26%
47%

49%

12%

11%

19%

解体用ATT

解体用ATT

林業・大型環境機械
補材修理他

林業・大型環境機械
補材修理他

Repair16%
解体環境ATT
Forestry machinery,large
林業・大型環境他
environmental machinery, etc.
修理

海外

12

Sales Trends by Model (Q2)(Million yen)
YoY

FY3/22
Q2

FY3/23
Q2

FY3/24
Q2

AmountYo2Y

Changes(%)

Changes(%)

3,352
448
698

3,796
498
620

4,142
442
712

345
(55)
91

9.1
(11.2)
14.8

23.6
(1.3)
2.0

313

288

315

26

9.3

0.5

Forestry machinery

403
5,216
347

480
5,684
571

686
6,298
882

206
614
311

42.9
10.8
54.5

70.1
20.8
153.7

Large environmental
machinery

446

149

230

80

54.1

(48.4)

609
283
1,688
821
395
1,217
8,121
1,158
373
260
142
1,935
10,056

1,235
223
2,180
952
466
1,418
9,283
1,387
562
304
141
2,397
11,680

773
209
2,096
991
505
1,496
9,891
2,491
579
291
138
3,500
13,391

(462)
(13)
(83)
38
38
77
608
1,103
16
(13)
(3)
1,102
1,711

(37.4)
(6.1)
(3.8)
4.1
8.3
5.5
6.6
79.5
2.9
(4.4)
(2.4)
46.0
14.7

26.9
(26.1)
24.2
20.6
27.8
22.9
21.8
115.0
55.0
11.9
(3.0)
80.9
33.2

Crushers

Demolishenvironmental
attachments

Breakers
GrapplesEnvironmental
attachments
OthersForestrymachinery, large
environmental
machinery, others

Domestic

Total

Cable crane
Others

Total
Aftersales
business

Material
Repair

Total
Domestic segment
Overseas

U.S.
EuropeAsia (excluding China)
OthersOverseas segment

Consolidated total

13

Orders, Manufacturing, and Sales Trends for
Major Products (Crushers)● Sales of crushers, our mainstay product, continued to increase by 9.1% YoY and 23.6% Yo2Y, as we could

increase the production volume as our measures.
● The number of orders received is on a downward trend due in part to the impact of longer delivery times for caststeel products, especially for primary crushers and cutters.
We are focusing on the procurement of cast steel components, which has been an issue. We expect to increase
production and gradually shorten the delivery period over the next fiscal year.

300

Orders received (left scale)

Production (left scale)

Order backlog (left scale)

Crushers sales (right scale)(Million yen)

4,500
Order backlog

250

Ordersreceived

150

Production

200

100

4,000
3,500
3,000
2,500
2,000
1,500
1,000

50
500
0

0
H1 FY3/20

H2 FY3/20

H1 FY3/21

H2 FY3/21

H1 FY3/22

H2 FY3/22

H1 FY3/23

H2 FY3/23

H1 FY3/24*Orders received, production, and order backlog are set at 100 for the H1 of FY3/20.

14

Sales Breakdown by Region (Q2 FY3/24)● The overseas sales ratio increased by 5.6% thanks to the growth in the North American business.
(Sales Composition)

North
America

EuropeOverseas
26.1％

17％

71％

Asia

8％
OthersDomestic

4％

73.9％

[Q2 performance by region/Unit: Million yen][Europe]
562

600
400

[Asia/Others]
579

373

600
400

403

446

2,500

[North America] 2,491

2,000
429

1,500

1,158

1,387

1,000
200

200

0
FY3/22

FY3/23

FY3/240500
FY3/22

FY3/23

FY3/240

FY3/22

FY3/23

FY3/2415

Factors for Changes in Operating Income● Domestic: profits increased due in part to the price increase. The decline in profits in the Cable crane business wasoffset by the sales of demolish environmental attachments, grapples, forestry machinery, large environmental
machinery, and other products.
● Overseas: profits increased due to the growth in the North American business through M&A, etc., and lower
overseas freight rates.
● The increase in SG&A expenses is attributable to the higher personnel expenses due to the M&A deal andincreases in sales-related and depreciation expenses.
(Million yen)Domestic grossDomestic
profitSG&A expenses

Overseas
Gross profit

Overseas
SG&A
expenses

Adjustments

(234)

+25

492
195

(58)

1,525

1,105
Domestic: 872
Overseas: 259
Adjustments: (26)Q2 FY3/23

Domestic: 1,009
Overseas: 516
Adjustments: 0

Domestic operating
income: +137

Overseas operating
income: +257
FY3/24 Q2

16

Capital Expenditures and Depreciation Plan
● The capital expenditure plan was revised to 900 million yen (+300 million yen compared to the initial plan).
The additional costs for a new company in the U.S. and the prepaid amount for the warehouse in Osaka wereadded to the plan.
● Going forward, we plan to initiate a series of plans, including expansion of the AIYON TECH manufacturing plant,
expansion of the Tokyo head office, expansion of the Osaka head office and Kansai branch, and construction ofa new training center.

(Million yen)

■Capital expenditures ■Depreciation and Amortization

FY3/24 Q2 Results

2,500
900

(Million yen)Vs. full-year plan
82.1%

2,000

590

1,500

739

2,295

Vs. full-year
estimate
48.8%

288

1,000
Capitalexpenditure

1,229

500

900
482

518

590

0
FY3/22 (Result)

FY3/23 (Result)

FY3/24 (Forecast)
Current period

Depreciation<Major capital expenditure>
Branch in Sapporo (completed)
New company in the U.S.
(completed)
Warehouse in Osaka (partiallycompleted, the rest will be readynext year)17Shareholder Return/Dividend Results and Plan
● Based on the revised full-year business forecasts for FY3/24, we have also revised the annual dividend to
65 yen per share, with a payout ratio of 30%.
(+9 yen vs. initial plan, +27 yen YoY)
● We will continue to increase dividends based on our progressive dividend policy (dividend has been
increased for 14 consecutive years in the current fiscal year).
(Dividend per share: yen)

70

(Dividend payout ratio：％)

Dividend per share

Payout ratio: 40.0%
30%Dividend payout ratio

Dividend
increase →

60

9

35.0%
30.0%

50
25.0%

40
56

30

20.0%
15.0%

20
10
8.5

10

12

18

22

23

24

27

28

29

32

38

10.0%
5.0%

0

0.0%
FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21

FY3/22

FY3/23

FY3/24(Forecast)18

Medium-Term Management Plan Rolling Plan (FY2023-FY2025)
Basic policy: In Japan, we will further strengthen the value chain, primarily for productivity improvement. Simultaneously, in overseas
markets, we are successfully yielding results through the M&A deal in the U.S. (Chicago) and expanding our branches inPortland. As we enter the final year of our three-year plan, we are committed to challenging ourselves to achieve the early
realization of our medium-to-long-term management plan, VISION30.

Numerical plan

(Million yen)

FY3/23Results

FY3/24
Revisedplan

YoY

FY3/25Plan

YoY

FY3/26Plan

YoY

VISION30
Targets

Net sales

23,575

3,268

26,5002,924

27,5002.000

30,00030,000Operating income

1,965

193

2,650

684

2,600

300

3,000

3,000

Ordinary income

1,961

152

2,650

688

3,000

3,000

1,414

223

1,730

315

2,000

2,000

Operating profit to net
sales ratio
(%)

8.3

(0.4)

10.0

1.7

9.5

0.5

10.0

10.0

(%)

10.7

0.7

11.8

1.１

11.0

0.6

11.8

10.0

Net income(attributable to ourshareholders)

ROE

The next
year’s plan isscheduled to 300
2,550
be revised in
May 2024 inlight of the
1,710
current year’s 210
results.

*Assumed exchange rates for planning purposes: 1USD = 130JPY, 1EUR = 140JPY

19

Table of Contents

1.

Corporate Profile/History

2.

Q2 FY3/24
Financial Results Summary and
Full-year Forecasts

3. Appendix

20

Our Strengths
One-stop circulation model
Utilize user’s needs obtained throughrepair service and direct sales indevelopment work.

Every products require service
and maintenance work.
→ We are the only company
having "in-house“
repair service professional

Design/Repair Develop
ment

Manuf
Sales acture
Sales to excavator
manufacturers and distributors

Manufacturing by groupcompanies and subcontractors

Direct sales to end users

Manufacturing-ability does
not constrain novel ideas

We listen to customer’s needs at first hand.

21

Product Characteristics
Our commitment
Cast steel products are used for the primarycrushers and cutters, which are especially required
for strength in dismantling.

Cast steel products*Cast steel products: made by melting special steel
and pouring it into molds. There are no linkages, andthe strength is higher than that of canned sheet metal
products.
It can be freely formed and has strength in designing.

Canning products: made by melting steel plates andwelding it
Canning products

Cylinder is equipped with a speed increasing valve to achieve both
power and speed

Use of wedge arms realizes outstanding crushing powerArms do not protrude as they close, and they can be
operated in densely populated residential areas.

22

Product Application(Demolish environmental attachments)- Able to install in excavators of all domestic and overseas manufacturers[Crushers] (Pulverizers)[Crushers](Primary Crushers)・ Demolition of the main partof the building・ Crushing theconcrete after
primary crusher[Crushers](Cutters)
・ Used for cutting rebar andsteel frames[Environmental Attachments(Trommel Screening Bucket)]・Select/screen various mixtures
without straining the excavator[Grapples]
・Versatile equipment for demolition ofwooden houses, scrap lumber collection,and disaster relief breakers[Breakers]
・Major equipment in overseas,with outstanding crushing power
・However, the noise is loud.

23

Product Application(Large environmental machinery)[Middle and low speed
rotary machine]••

Processes large logs
Played active role in disposing of debris
after the Great East Japan Earthquake[High-speed rotary machine]••

Cutting wood into wood chips
Chips are used in biomass
power generation, etc.

24

Product Application(Forestry machines and cable cranes)[Forestry machinery]・ Logging timber in the forest
・ Lumering, pruning and transporting[Cable crane for dam construction
and power plants and dams]

・ Conveying concrete, materials, etc.
on roadless mountain slopes
・ For pipe replacement work at aging
hydroelectric power plants25

Long term Vision "VISION 30“ (Formulated on May 13, 2021)
Framework of VISION30
VISION30 Statement

SloganVISION30 Performance Indicators (KPI)

People create an environment[Corporate culture] Respect for the individual, free-spiritedness, and a sense of unity

ValuesTriple3

Net sales
Operating profit¥30 billion+¥3 billion+

Market capitalization ¥30 billion+[Business] Provision of user-friendly products and services[Social] Expansion of business that leads to solutions to social issues such as environmental problems

To develop human resources capable of creating the environment without
being carried away by the environment, and to contribute to therealization of an environmentally friendly society through our businesses.

Triple10

Net sales growth rate
10%+
Operating profit to net sales 10%+
ROE
10%+

VISION30 Three Strategies
Human resources
strategyMarket strategy

Strengthening ofmanagementfoundation(1) Human resource development

Recruitment, training and utilization of human resources(2) Personnel system

Fair evaluation and compensation system that reflects performance and contributions(3) Work style reform

Creating a comfortable, motivating, and rewarding workplace(1) Domestic strategy(3) New businesses

Strengthening the integrated value chain to meet growing demandMarket development by introducing products and capabilities to three bases in the US,
Europe, and Asia
Promoting new technology applications (new demolition methods, DX, etc.) and strategic M&A(1) CG System

Establish a governance system that supports sustainable growth(2) Hardware

Development of domestic and overseas plants, sales offices, etc. (expansion and new construction)(3) Software

Improvement of system infrastructure and DX to reform operations and enhance customer
responsiveness(2) Overseas strategy

26Medium-Term Management Plan Rolling Plan (FY2023-FY2025):
Priority Measures
VISION30 Three Strategies

Human resources strategy(Human capitalmanagement)

Measures

Content◇ Diversification of human resources and human resource development

Engagement measures to create a comfortable,
motivating, and rewarding workplace◇ Work-life balance and health support◇ Improvement of the work environment and operational environment◇ Fostering an open corporate culture◇ Renewal of domestic sales offices and maintenance shops

Domestic
sales andproduction

Strengthening the value chain centered on
productivity improvement◇ Establishment of increased production system through expansion of

suppliers and plant expansion◇ Vietnam: Breaker plant begins mass production◇ Expand productivity and improve profitability in the forestry sector◇ Deployment of manpower and commercial products to Europe andMarket strategy

Overseas
sales

Global expansion through a three-region system(US, Europe, Asia)

other bases◇ Expansion of warehousing and repair functions with the completion of
the new US headquarters◇ Expansion in Asia with the Thai subsidiary at the coreNewbusinesses& M&A

Maximizing M&A synergies in the US◇ Customer acquisition in the Chicago area, US

Strengthening governance system to support
sustainable growth

Strengthening ofmanagement foundation◇ Establishment of repair and maintenance systems in the US

Development of domestic and overseas plants,
sales offices, etc.

◇ Strengthening sustainability initiatives(Disclosure regarding TCFD recommendations is expected in June
2023)
◇ Expansion of Aiyon Tech Asaka Plant◇ Expansion of facilities in the Tokyo and Kansai areas◇ Development of technical training facilities

Development of system infrastructure and DX
initiatives◇ Review of operational systems and enhancement of security◇ Practical application of GPS attachment monitoring system

27

Market Strategy: Renewal of Domestic Sales Offices
Expand factories (AIYON TECH) and sales office facilities in a structured way to increase
production and enhance maintenance function.
2022

Sendai
2021

Sales
OfficeHiroshima
Sales
Office2019

Shikoku
Sales
Office

2016
Aiyon
Tech

2022

2023
SapporoSales
Office

Chubu
2020

Sales
OfficeShonan
2016

Sales
OfficeHokuriku
Sales
Office28

Market Strategy: Global Expansion
We are strengthening our three-region system (US, Europe, and Asia) and focusing on acquiring ashare of the global market.

EuropeAsia

US
Okada Midwest (formerly Thoesen)2022 Made into a group company through M&A[Aim] (1) Strengthen repair and maintenance system in the US(2) Customer acquisition in the Chicago area

Createch Vina (OEM plant in Vietnam)2024 Mass production of hydraulic breakers scheduled to start[Aim] (1) Produce products of Japanese quality at reasonable prices(2) Sold to Japan, US and Europe under the common global
model
Okada Europe (Netherlands)
2020 Establishment as a sales subsidiary[Aim] (1) Develop the European market, the world's largest
market(2) Set up distributors in 31 countries in Europe

Okada America Headquarters
2023 Relocated and built new headquarters in suburban Portland[Aim] (1) Strengthen warehouse and repair and maintenancefunctions(2) Expansion of hub functionality to meet growing demand

Okada Thailand (equity method affiliate)2021 Establishment of sales company jointly with local capital[Aim] (1) Strengthening of domestic business development in Thailand(2) Roll out products sold in Thailand to Asia and the Middle
East

29

Potential for Domestic Demolition Market
Building age and area of non-wooden buildings (concrete buildings)◆ Looking at demolition targets for buildings with 40 years old or older, demolition demand will begin in earnest in the coming
years (an area equivalent to about 1,500 Tokyo Domes will be targeted each year).
(Million square
meters)Area of buildings targeted to
be demolished in the future

80,00070,000

Building area that is more than
40 years old at this time

60,00050,000Equivalent to about
715 million ㎡ 15,000 Tokyo Domes

40,00030,00020,00010,000
0

-1950

-1960
Apartment house◆Converted to the floor area of the Tokyo Dome as
46,000 m2.

-1970

-1980

Offices and stores

-1990

-2000

Factories and warehouses-2010
Others

Prepared by company from "Building Stock Materials" by the Ministry of Land,
Infrastructure, Transport and Tourism

30

Outlook for Global Market Growth
Demolition attachment market◆ CAGR (CAGR) for 2021/2025 in the key markets of the U.S., Europe, and Asia was approximately 7.0%
◆ CAGR of Japan in 2021/2025 (CAGR) was also about 6.2%.
5,000 (Million US$)EuropeNorth America

Asia (excluding China)

Japan

OthersOutlook
4,000

1,869
1,749
1,626

3,000

1,505
1,101

2,000

1,000

962
187
329

1,200

1,224

1,382
1,264

1,000
193
345

210
385

228

238

425

441
581

235
446

251

487

271
545

284

299

319

596

647

700

653

689

490

620

721

563

470

470

534

582

550

555

588

628

636

580

632

672

712

747

781

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

0

Prepared by company based on research materials from private research companies

31

The forward-looking statements contained in this report are based on
management's assumptions and beliefs in light of the material currently
available to the Company and other reasonable assumptions, and involverisks and uncertainties.
Therefore, we do not promise or guarantee the realization of the futureplans and measures presented.

(Inquiries)
Corporate Planning Office,
OKADA AIYON CORPORATIONTEL: 06-6576-1271 FAX: 06-6576-1270
URL: http://www.okada-aiyon.com/

32