Results of Operations
for the Fiscal Year Ended March 31, 2020 (Fiscal 2020)

May 22, 2020
DAIKEN CORPORATION(Security Code: 7905)

1
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Contents
1. Impact of the Spread of COVID-19 Infections and Status of Our Response■ Impact of the Spread of COVID-19 Infections and Status of Our Response・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4

2. Fiscal 2020 Financial Results■ Fiscal 2020 Market Environment (Excluding the impact of COVID-19 pandemic)・・・・・・・・・・・・・・・・・・・ ・・・ 6■ Fiscal 2020 Financial Results ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 7■ Fiscal 2020 Business Segment Results ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ・・・・ 8■ Fiscal 2020 Changes in Operating Profit ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ・・・・・・ 9■ Fiscal 2020 Market Category Sales ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ・・ ・・・ 10■ Fiscal 2020 Market Category Sales and Changes for Business Segments ・・・・・・・・・・・・・・・・・・・・・・・・ ・・・・ 11

3. Fiscal 2021 Forecast■ Announcement of Fiscal 2021 Forecast・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 13

4. Responses Going Forward■ Major Actions (1) (Risk recognition/Response to risks) ・・・・・・・・・・・･････・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 15■ Major Actions (2) (Strengthen governance/Reaffirm Daiken’s strengths and pursue solutions to social issues) ・・・・ 16

5. Financial Information■ Fiscal 2020 Consolidated Balance Sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・■ Fiscal 2020 Consolidated Statement of Income ･・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・■ Fiscal 2020 Consolidated Statement of Cash Flows ・・・・・・・・・・・･････・・・・・・・・・・・・・・・・・・・・・・・・・・・・

All contents copyright ©DAIKEN CORPORATION All rights reserved.

1819202

Impact of the Spread of COVID-19 Infections
and Status of Our Response

All contents copyright ©DAIKEN CORPORATION All rights reserved.

3

Impact of the Spread of COVID-19 Infections and Status of Our Response (As of May 18, 2020)
Status of operations at major production centers
All activities at Daiken involving the COVID-19 crisis are overseen by the New Coronavirus Response Headquarters, which
is supervised by the president of Daiken. The goal is to continue conducting business operations as much as possible
while implementing numerous measures for protecting the health of employees and preventing the spread of infections.
◆Domestic production centers
Okayama plant, Takahagi plant, Mie plant, Inami plant, other group factories - Continuing operations after production
adjustment at some locations◆Overseas production centers
Malaysia:
Two MDF plants are operating; workforce has been reduced by 50%
New Zealand:
Two MDF plants suspended operations from March 23 to April 28 due to a government stay-at-homeorder and has subsequently resumed operations
North America: The Canada veneer plant is continuing to operate while taking actions to prevent COVID-19 infections.
The U.S. LVL plant is continuing to operate while lowering capacity utilization by about 60%
China:Suspended operations up to February 17 for the spring festival, then resumed while lowering capacity
utilization by 30%
Indonesia:
Plans to resume operation in early June after the Lebaran holidays◆Sales locations
All administrative staff at Tokyo, Osaka and other sales locations shifted to telework from home from April 1

u Although there were only small declines in sales and orders as of April because of this crisis, a steep
downturn in demand is expected. Preparations are under way for ensuring that manufacturing operations
have the flexibility to adapt to upcoming changes in demand as much as possible

Measures for liquidity
u As of March 31, 2020, cash and deposits were ¥16.8 billion and there was an unused committed credit line of ¥5.0billion
u Since April, liquidity has been further increased by using loans from the company’s primary banks and other sourcesof funding due to the uncertain outlook

4
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020
Financial Results

All contents copyright ©DAIKEN CORPORATION All rights reserved.

5

Fiscal 2020 Market Environment(Excluding the impact of COVID-19 pandemic)
Domestic home market
uHousing starts in fiscal 2020 were down 7.3%. Demand for owner-built homes and built-for sale homes wasstrong in the first half due to a spike in demand prior to the October 2019 consumption tax hike. However, in
the residential rental property category housing starts were down 14.2% from a year earlier. In addition, there
were slowdowns in the owner-built homes and built-for sale homes categories in the second half.
Public and commercial buildings (non-housing sector)uConstruction demand remained firm because of projects involving the Tokyo Olympics/Paralympics andredevelopment projects, mainly in the Tokyo metropolitan area. However, the cost of labor remains highbecause of the shortage of skilled construction workers.
uMore opportunities to supply functional building materials for specific types of buildings, a product categorythat was expanded during the previous medium-term management plan.
High cost of raw materials and logistics
uThe increase in prices of imported plywood, and other raw materials is slowing, with some exceptions, but
the cost of raw materials such as wood chips and the cost of energy overseas is on the rise. The rising cost oflogistics is also exerting downward pressure on earnings.
Effects of global events
uOverseas market conditions continued to worsen because of sluggish demand, chiefly for MDF in Asia,
caused by the U.S.-China trade friction, U.S. economic sanctions on Iran and other events.

6
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020 Financial Resultsu Sales were sluggish due to deteriorated MDF market conditions. On the other hand, we strived to assure stable supply inresponse to the increasing use of Daiken building materials by construction companies and an increase in orders for materials
used at public and commercial building projects. Subsidiaries newly acquired through M&A for strengthening our business intarget markets and included in the consolidation also contributed to the sales gains. Accordingly, sales increased 10.7%, achieving
the sales forecast (announced on Nov. 8) for the fiscal year.
u Operating profit increased 46.3% because of streamlining and cost reduction, contribution of the newly consolidated subsidiariesand other reasons. However, profit fell short of our November 8 fiscal year forecast due to substantial impact of higher prices ofraw materials in the wood industrial materials business in North America.
(Unit: million yen)
Net sales

Fiscal 2019
(Result)

YoY change

Fiscal 2020
(Result)

AmountFiscal 2020

(Forecast on Nov. 8)%

Vs. results

182,962

202,481+19,518+10.7%

202,000+481

Operating profit

5,733

8,384

+2,651+46.3%

8,700-316

Operating profit
ratio

3.1%

4.1%

+1.0pt-4.3%-0.2ptOrdinary profit

6,838

9,108+2,270+33.2%

9,400

-292

4,402

5,447

+1,045+23.7%

5,000+447

174.55209.32+34.77+19.9％

192.12+17.20

74

70

-4-70

±042.4%33.4%-9.0pt-36.4%-3.0pt7.8%

9.5%+1.7pt-8.5%+1.0ptProfit attributableto owners of parentEarnings per share(yen)Dividend per share(yen)Dividend payout
ratio
ROE

7
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020 Business Segment Resultsu Industrial Materials Business: Sales and earnings increased as higher sales of tatami facing and the newly consolidated
subsidiaries more than offset weak MDF sales and the slow recovery of Dai-Lite following the problem that occurred in fiscal 2019.
u Building Materials Business: Sales and earnings increased because of growth in orders for floor materials, doors, soundproofing
and other products in the domestic home market and public and commercial building sectors, andby increasing selling prices to reflect higher logistics cost.
u Engineering Business: Sales increased as orders were higher for interior finishing work, inclusion of the renovation subsidiary intothe consolidation and the solid flooring materials business. However, earnings decreased due to lower profitability mainly
because of the rising cost of labor.
Fiscal 2019
(Result)(Unit: million yen)
Net sales

Fiscal 2020
(Result)

OperatingprofitNet sales

YoY change
Amount%OperatingprofitYoY change
Amount%Industrial Materials
Business

61,843

1,132

76,589+14,745+23.8%

2,503+1,371+121.1%

Building Materials
Business

89,485

3,189

94,938+5,453

+6.1%

4,955

+1,766+55.4%

Engineering Business

18,063

1,015

21,713+3,649+20.2%

613-402-39.7%

Others13,569395

9,240-4,329-31.9%

312-83-21.1%

182,962

5,733

202,481+19,518+10.7%

8,384+2,651

46.3%

Total

8
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020 Changes in Operating Profitu Higher costs: Increase in prices of wood chips and other raw materials, higher energy and fixed manufacturing costs.
u Higher expense of logistics: Higher cargo transportation rates and storage feesu Streamlining/cost reduction: Reexamination of all categories of items purchased; effect of exchange rate changes on overseas
manufacturing subsidiaries in the industrial materials businessu Higher selling prices to reflect higher costs: Mainly in the building materials business to offset the higher costs and a rise in cost oflogistics
u Change in sales/composition: A net contribution to earnings as building materials business sales growth offset declines in theprofitability of MDF and building interior projects
u New consolidation: A wood industrial materials company in North America and a renovation company were newly consolidated in
the second quarter and solid flooring materials business was newly consolidated in the third quarter of fiscal 2020+301(Unit: million yen)

+1,400
+500
-900
5,733

Fiscal 2019'19/3期(Result)（実績）-1,200Higher

コストアップ
costs

8,384

+1,200Higher expenseof物流費増
logistics+1,350Streamlining/ Higher selling Change in sales/
New
合理化
売価への転嫁売上増減・構成差
新規連結
cost reduction prices to reflectcomposition
consolidation
コストダウンhigher costs

Other expenses
その他経費

Fiscal 2020
'20/3期(Result)（実績）

9All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020 Market Category Sales(Unit: million yen)
Upper: sales Lower: composition

Fiscal 2019
(Result)

Global markets
Public and commercial
buildings
Industrial materials

Home renovation market
Domestic new homemarket
OthersDomestic market

Total

YoY change

Fiscal 2020
(Result)

Amount%19,241

36,516+17,275+89.8%

10.5%

18.0%

+7.5pt-21,15826,292+5,134+24.3%

11.6%

13.0%

+1.4pt-35,59028,483-7,106-20.0%

19.5%

14.1%

-5.4pt-28,42931,777+3,348+11.8%

15.5%

15.7%

+0.2pt-77,522

78,630+1,108

+1.4%

42.4%

38.8%

-3.6pt

-

1,023

783

-240

-23.5%

0.5%

0.4%-0.1pt-163,721

165,965+2,244

+1.4%

89.5%

82.0%

-7.5pt-182,962

202,481+19,518+10.7%

100.0%

100.0%--10
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020 Market Category Sales and Changes for Business Segments(Unit: million yen)-186

Global markets+0+572+17,275+16,888
19,241

Public and commercial
buildings+338
21,158Higher sales oftatami products
and Dai-Lite wallmaterials for hotels
and commercialbuildingsHome renovation
market+162
28,429Fiscal 2019(Result)

36,516

New consolidationof North Americanbusiness

Industrial Materials
Business+2,462
Higher sales ofdoors, flooringmaterials andother products fornursing home,nursery schools
and kindergartens+1,306+2,281+53+5,134Higher sales
because of increasein orders forinterior finishingwork at office andother buildings andnew consolidationof solid flooringmaterials business+1,914

Sales of all types ofinterior building
materials increased
mainly due tohigher sales tocompanies
specializing inrenovations

Higher sales
because of growthof the apartmentrenovation businessand newconsolidation of arenovationcompany

Building Materials
BusinessEngineeringBusiness

26,292-33+3,348

31,777

OthersFiscal 2020(Result)

11All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2021
Forecast

All contents copyright ©DAIKEN CORPORATION All rights reserved.

12

Announcement of Fiscal 2021 Forecast

As was announced the results of operations on May 12, 2020, theforecast for the fiscal year ending March 31, 2021 has not been
determined at this time because it is difficult to reasonably predict
the impact of the spread of the COVID-19 pandemic. We will
carefully assess the impact of the COVID-19 pandemic on ourbusiness performance and promptly announce the forecast as soon
as it is determined.

13
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Responses Going Forward

All contents copyright ©DAIKEN CORPORATION All rights reserved.

14

Major Actions (1)Risk recognition• The spread of COVID-19 pandemic will have an extremely significant and long-term
impact on social and economic activities. This is an important risk factor which may
drastically push down demand for residential housing and construction materials.
àIn response, we will take necessary actions in a timely and appropriate manner.

Response to risks• Freezing capital investment plans: Investments, excluding highly important andurgent investments, will be frozen• Thorough review and careful selection of expenses: Expenses will be carefully
selected on the basis of urgency and medium- to long-term competitiveness• Speed up work-style reforms: Build a flextime system in which diverse humanresources can play active roles• Pursue asset utilization efficiency: Strengthen balance sheet and cash flow
management; continue to reduce cross shareholdings
15
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Major Actions (2)Strengthen governance• Increase the number of outside directors to 3 (three out of eight: more than onethird) to strengthen the supervisory function• Increase involvement of the board in group risk management• Strengthen monitoring of important investment projects

Reaffirm Daiken’s strengths and pursue solutions to social issues• Amid growing uncertainty, pursuing contribution to the resolution of social issues
through essential business activities
uContributing to a sustainable society through effective use of limited resources
uCreating a safe, secure, healthy, and comfortable space
Social issues and needs

×Daiken’s strengths＝

Proposed solutions

16
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Financial Information(Reference Materials)

All contents copyright ©DAIKEN CORPORATION All rights reserved.

17

Fiscal 2020 Consolidated Balance Sheet (Major components)(Unit: million yen)

Fiscal 2019
(Result)

Fiscal 2020(Result)

YoY change

Cash and deposits

16,865

16,839-26

Notes and accounts
receivable

50,51142,092-8,419Inventories

21,36327,010+5,647

Other current assets

2,810

1,990

-820

Total current assets

91,55387,934-3,619Property, plant andequipment

41,321

51,426+10,105

Intangible assets

6,375

14,834+8,459Investments and otherassets

20,831

16,351-4,480Total assets

160,158

170,638+10,480

Notes and accounts
payables

30,573

26,846-3,727

Bonds and borrowings

30,682

43,539+12,857

Other current/non-current
liabilities

37,15337,268＋115

Total liabilities

98,416

107,662+9,246

Total shareholders’ equity

53,46057,059+3,599Total net assets

61,741

62,975+1,234

Total liabilities and netassets

160,158

170,638+10,480

Shareholder equity ratio

36.8%

32.7%

-4.1pt

0.52

0.79

+0.27

Debt-equity ratio (multiple)

uNotes and accounts receivable -8,419<Major factors>
New consolidation+2,489End of fiscal 2019 was on a Sunday, etc.
-10,908
uInventories<Major factors>
New consolidation
Finished goods and merchandise
inventories, and others+5,647+4,154+1,493uProperty, plant and equipment +10,105<Major factors>
New consolidation+10,736
Acquisition/construction in progress +4,506
Depreciation-3,650Exchange rate changes, etc.
-1,487uIntangible assets<Major factors>
Increase in goodwill due to newconsolidation+8,459+9,267uBonds and borrowings+12,857<Major factors>
Bond issuance+10,000
Increase in borrowings due to newconsolidation+6,547
Repayment of borrowings, etc.
-3,690uTotal net assets+1,234<Major factors>
Non-controlling interests+4,360Foreign currency translation adjustment-3,317

18All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020 Consolidated Statement of Income(Information about non-operating profit (expenses) and extraordinary income (losses))(Unit: million yen)

Fiscal 2019
(Result)

Fiscal 2020
(Result)

YoY change

Net sales

182,962

202,481+19,518

Gross profit

43,67351,038+7,365

SG&A expenses

37,94042,653+4,713Operating profit

5,733

8,384

+2,651Non-operating profit(expenses)+1,105+724-381

Ordinary profit

6,838

9,108+2,270

Extraordinary income(losses)+463-237-700

Profit before income taxes

7,301

8,871

+1,570Total income taxes

2,703

2,359-344

Profit4,597

6,512+1,915

195

1,064+869

4,402

5,447

+1,045

Profit attributable to noncontrolling interests
Profit attributable to ownersof parent
Exchange rate (yen)Fiscal 2019
(Result)

Fiscal 2020
(Result)

uNon-operating profit (expenses)<Major factors>
Interest expenses
Foreign exchange losses

-381
-130
-120

uExtraordinary income (losses)<Major factors>
Gain on sales of investment securities
Provision for loss on litigation
Loss on retirement of non-current assets
Loss on sales of investment securities

-237
+345
-184
-157
-148

YoY change

USD-

108.29

-

CAD-

81.57

-

NZD

75.45

70.39

-5.06

MYR

27.18

26.10

-1.08

19
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Fiscal 2020 Consolidated Statement of Cash Flows (Major components)
Fiscal 2019
(Result)(Unit: million yen)

Fiscal 2020
(Result)

Operating cash flow

+10,052+16,807

Investing cash flow

-15,079-17,863

Free cash flow

-5,027-1,056

Financing cash flow

+11,165+1,468Cash and cash equivalents
at end of period

16,865

16,839

Capital expenditures

6,586

5,490

Depreciation

4,134

5,079

20,000+16,807

15,00010,000+11,165+10,052

5,000+1,468

0-5,000◆Operating cash flow
+16,807<Major factors>
Profit before income taxes+8,871
Depreciation+5,079Amortization of goodwill+1,315
Changes in trade receivables/payables+2,916
Income taxes paid
-3,185◆Investing cash flow
-17,863<Major factors>
Sales of investment securities+1,183Purchase of property, plant and equipment-5,526
Purchase of shares of subsidiaries resulting inchange in scope of consolidation -13,279◆Financing cash flow
+1,468<Major factors>
Issuance and redemption of bonds +9,475
Decrease in borrowings-5,952
Dividends paid
-1,873-1,056-5,027-10,000-15,000-20,000-15,079

Fiscal 2019
(Result)
Operating cash flow
Investing cash flow

-17,863
Fiscal 2020
(Result)
Financing cash flow

Free cash flow

20
All contents copyright ©DAIKEN CORPORATION All rights reserved.

Toward the future going beyond the functions of yesterdayThis presentation is intended to provide information and does not solicit an action of any kind.
This presentation (including forecasts) was created by Daiken based on information that was currently
available. This presentation includes risks and uncertainties and Daiken provides no guarantee that
information is reliable or complete.
Please use this information based on your own judgment.
Daiken is not responsible for any losses that may result from investment decisions that relycompletely on the forecasts, targets and other information in this presentation.

All contents copyright ©DAIKEN CORPORATION All rights reserved.