Consolidated Financial Results
for the Nine Months Ended December 31, 2023

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

February 9, 2024

Summary of Consolidated Financial Results1

Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Nine Months Ended
December 31, 2023
1) Consolidated net sales: ¥24,301 million, up 9.8% YoYOverseas sales were strong albeit depending on the regions.
2) Operating profit:¥2,580 million, up 62.7% YoY
Upside factors included the weak yen, in addition to profit structure reform.
3) Sales in Japan:¥11,070 million, up 1.9% YoY
Under the firm market environment against the backdrop of measures to accelerate
national land resilience, capital investment trends were at a standstill, faced withfrequent sales price revisions and a broad range of cost increases.
4) Sales in North America: ¥6,626 million, up 31.8% YoYStrong demand continues to expand against the backdrop of robust investment inconstruction.
5) Sales in Asia:¥5,503 million, down 3.5% YoY
Slowdowns in the Chinese and major ASEAN markets, despite the strong
Indonesian market.
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 policy: 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 ¥33.1 billion, operating profit of ¥3.3 billion, ROE of 8.6%
Results for nine months ended December 31, 2023: Net sales of ¥24.3 billion, operating profit of ¥2.58 billion, ROE of 9.7%
(2) Progress of enhancing corporate value (PBR above 1)
At the end of March 2023: PBR 0.68 times (Share price ¥4,010)
At the end of December 2023: PBR 0.90 times (Share price ¥5,990)
Timely disclosure of policies regarding initiatives has been provided in the Status of Initiatives for Enhancing Profitability of
Capital, dated April 13, 2023
https://www.sakainet.co.jp/en/news/item/20230425EnhancingProfitabilityofCapital.pdf2) Profit structure reform through sales price revisions and high added value

Cost-of-sales ratio improvement: 70.9%, improvement of 3.6% YoYProfit structure reform progressed with penetration of sales price revisions in Japan and overseas, and normalization oftransportation costs.
3) Strengthening product supply capabilities(1) Enhancement of supply chain (stabilization through review of suppliers and dual sourcing)(2) Modification of global business activities (stabilization of business structure in Japan and overseas through expansion of
production capacity at domestic plants and expansion of parts business at Chinese plants)
4) Dealing with volatile demand
Inventory turnover: 2.79 times, down 0.16 times/5% 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 3.5% 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 31.8% YoY)
4) Develop next-generation businesses:
Focus on market development for emergency brakes, compaction management systems, and road cutting
management systems.
Research and development on autonomous rollers and EV rollers is underway.

4. Outlook for Business Environment
1) Global Construction Machinery Market
Potential demand is expected to remain stable due to factors such as large-scale infrastructure investment plans inJapan and the U.S., infrastructure construction and mine development becoming active in emerging countries, together
with renewal of aging infrastructure, and disaster-related countermeasures and reconstruction.
2) Risks and Countermeasures
The future direction of the world economy is unpredictable, due to factors such as the radicalization of the global
security environment, formation of international community blocs, and rapid changes in the social structure by
generative AI technology, amid a phase of change in the world economy, which has been recovering rapidly since the
COVID-19 pandemic.
In order to transition to a management structure adapted to these changes in the times, we will move forward withthe approach of adapting to a changing business environment.
4

Consolidated Business Performance(Millions of yen)First nineFirst ninemonths ended months ended
December 31, December 31,
2022
2023

YoY change

Amount%Net sales

22,12524,301

2,175

9.8%

Japan

10,864

11,070205

1.9%

Overseas

11,261

13,231

1,970

17.5%

Operating profit

1,585

2,580

994

62.7%

Operating profit ratio(7.2%)(10.6%)

Ordinary profit

1,586

2,676

1,089

68.7%

Profit attributable toowners of parent

1,172

1,947

775

66.1%

Cost-of-sales ratio(74.4%)(70.9%)

5

Consolidated Business Performance (Graph)
Operating profit(Millions4,000of yen)Net sales
30,000(Millions of yen)

25,000Net sales

24,301

22,125
13,231

20,00011,2612,580（10.6%）

15,0001,585

Operating profit

2,000

1,500

(Operating profit ratio)（7.2%）
5,000

3,000

2,500

Overseas

10,0003,500

10,8641,000

11,070
500

Japan
0

0

First nine months ended

First nine months ended

December 31, 2022

December 31, 2023

6

Sales by Region in Which Customers Are Located(Millions of yen)First ninemonthsended
December31, 2022

First ninemonthsended
December31, 2023

YoY change
Amount%Japan

10,864

11,070205

1.9%

Overseas

11,261

13,231

1,970

17.5%

North America

5,028

6,626

1,598

31.8%

Asia

5,703

5,503

▲ 200

▲3.5%

528

1,101

572

108.2%

22,12524,301

2,175

9.8%

Other regions

Total

7

Sales by Region (Map)First nine months
ended December 31,
2022

First nine months
ended December 31,
2023

Japan

10,864

11,070(+205, +1.9%)

Overseas

11,261

13,231(+1,970, +17.5%)

Total

22,12524,301(+2,175, +9.8%)(Millions of yen)

YoY change（
China segment
75 → 82

North America
5,028 → 6,626（+6, +9.2%）

Asia
5,703 → 5,503（△200, △3.5%）

5,703

5,503

（+1,598, +31.8%）

Japan
10,864 → 11,070

10,864）: YoY change

5,028

6,626

11,070（+205, +1.9%）
Indonesia segment

1,887 → 3,140（+1,253, +66.4%）

Other (Africa, Oceania, Latin America)

528 → 1,101（+572, +108.2%）

528

1,101

Plants and sales offices
Sales offices
Service and sales offices8Segment Information by Region in Which Our Manufacturing Facilities and Sales Offices Are Located(Millions of yen)

(Millions of yen)

Japan

First nineFirst ninemonths ended months ended
December 31, December 31,
2022
2023

YoY change
AmountNorth America%

Sales to externalcustomers

15,133

14,451

▲ 682

▲4.5%

Sales to externalcustomers

Intercompany
sales

2,690

3,324

634

23.6%

Intercompany
sales

Total net sales

17,824

17,775

▲ 48

▲0.3%

Operating profit

516

843

327

63.5%

First nineFirst ninemonths ended months ended
December 31, December 31,
2022
2023

Indonesia

YoY change
Amount%Amount

%

5,028

6,626

1,598

31.8%

46

6

▲ 40

▲86.2%

Total net sales

5,075

6,633

1,558

30.7%

Operating profit

437

762

324

74.1%

(Millions of yen)First nineFirst ninemonths ended months ended
December 31, December 31,
2022
2023

YoY change(Millions of yen)

ChinaFirst nineFirst ninemonths ended months ended
December 31, December 31,
2022
2023

YoY change
Amount%Sales to externalcustomers

1,887

3,140

1,253

66.4%

Sales to externalcustomers

75

82

6

9.2%

Intercompany
sales

3,761

2,559

▲ 1,201▲31.9%

Intercompany
sales

869

1,352

483

55.6%

Total net sales

5,648

5,700

51

0.9%

Total net sales

945

1,435

490

51.9%

Operating profit

593

864

270

45.6%

Operating profit

35

183

148 421.4%

9

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

North America

Japan

6,633
6

5,075

17,824

17,7755,028Intercompany sales
2,690

6,626

46

762

437

3,324

monthsended 31, First First
nine months
ended31,FirstFirst
nine ninemonthsended December
nine months
ended December
2022
202331, 2023
December31, 2022
DecemberOperating

843

Indonesia

profit

5,648

516

3,761

0.9% UP

593
1,887
FirstFirst
nine months
ended December
nine months
ended31,202231, 2022
DecemberSales to

5,700
2,559
864

3,140
nine months
ended31,FirstFirst
nine months
ended December
202331, 2023
Decemberexternal customers

15,133

14,451

China
1,435
945

First nine
endedended
December First nine
endedended
DecemberFirstmonths
nine months
Firstmonths
nine months
31, 2022
31, 2023
December31, 2022
December31, 2023

1,352
183

869
35

75

First nine months ended December 31,
First nine months ended2022

December 31, 2022

82

First nine months ended December 31,
First nine 2023
months ended

December 31, 2023

10

Breakdown of YoY Changes in Operating Profit•

Gross profit increased by ¥556 million, in line with a YoY increase in sales of ¥2,175 million.

•

The cost-of-sales ratio improved by 3.6% and gross profit rose by ¥866 million, with upward factors
such as the weak yen in addition to the penetration of sales price revisions and the normalization oftransportation costs.

•

SG&A expenses increased by ¥427 million following the increased investment in human capital(increased payroll) and increased business activities.

•

As a result, operating profit rose by ¥994 million YoY to ¥2,580 million.
(Millions of yen)
Impact on
operatingprofitFirst nine months
ended December
31, 2022

First nine months
ended December
31, 2023

Net sales

22,12524,301

2,175

+556

2,175 ｘ （1 - 74.4％）

Cost-of-sales ratio

74.4%

70.9%

▲3.6%

+866

24,301 ｘ ▲3.6％

Gross profit

5,654

7,076

1,422

SG&A expenses

4,069

4,496

Operating profit

1,585

2,580

YoY
change

427

▲ 427

Note

Payroll: up 213; Travel and tarnsportation
expenses: up 30; Technical research expenses:
up 15; Other SG&A: up 169

+994
11

Breakdown of YoY Changes in Operating Profit (Graph)(Millions of yen)
Impact of
improvement
in cost-ofsales ratio＋866

Increase in
Increase in
payroll
Increase in travel technical▲213
and transportation researchexpenses▲30
expenses▲15

Increase in
net sales+556
Operatingprofit for
first ninemonthsended
December31, 2022
1,585
Operating profit ratio
7.2%

SG&A expenses▲427

Increase inother SG&A
▲169
Operatingprofit for
first ninemonthsended
December31, 2023
2,580

Operating profit＋994
Operating profit ratio
10.6%

12

Net Working Capital (Trade Receivables + Inventories - Trade Payables)•

Net working capital invested in sales activities increased by ¥1,182 million YoY to ¥12,827 million.
As a result, the net working capital/sales ratio decreased by 2.1% to 38.1%.

•

Inventories increased by ¥2,262 million YoY to ¥12,062 million through increase in parts for increased production andsafety stock.
As a result, net sales/inventory turnover decreased by 0.16 times (down 5%) to 2.79 times.
Currently making adjustments to optimize inventory levels.

Annualized
consolidated(Millions of yen)

Annualized
consolidated net sales
Trade receivables

As of
December31, 2022

As ofDecember31, 2023

28,931

33,635

4,704

16.3%

9,765

8,568

▲1,197▲12.3%

YoY change

net sales

31,45932,12333,353

8,568

Trade

Amount%

9,800

12,062

2,262

23.1%

Trade payables▲7,920▲7,803117▲1.5%

Net working capital

11,645

12,827

1,182

10.2%

Inventory turnover

2.95 times

2.79 times▲0.16 times

Net working
capital/Sales ratio

40.3%

38.1%

▲2.1%

33,63528,931
receivables

9,765

Net working
capitalInventories(Millions of yen)

11,645Inventories

11,77011,563

12,52812,827

12,0629,800

Trade payables△ 7,920△ 7,803

As of Dec. 31, As of Mar. 31, As of Jun. 30, As of Sep. 30, As of Dec. 31,
2022
2023
2023
2023
2023

13

Consolidated Business Forecast•

Sales Forecast for the Full Year: We upwardly revised the forecast on November 9, 2023,
based on the consolidated financial results for the first half of the fiscal year.

•

Moving forward, in addition to inflation in raw material prices, logistics costs are expected toincrease and investment in human capital is expected to expand.
Against this backdrop, while the North American market is expected to remain strong, there aresigns that growth in the Asian and domestic markets is slowing due to frequent sales pricerevisions and uncertainty regarding the future.
(The assumed exchange rate used in the consolidated business forecast is ¥140 per US$.)(Millions of yen)First nine months
Fiscal year ended
March 31, 2023
(Results)

Fiscal year
endingMarch 31, 2024
(Forecast)

9.8%

31,45933,100

1,640

5.2%

994

62.7%

2,506

3,300

793

31.7%

2,676

1,089

68.7%

2,327

3,300

972

41.8%

1,172

1,947

775

66.1%

1,694

2,300

605

35.7%

¥277.45¥458.78¥181.3365.4%¥400.75¥542.15¥141.40

35.3%

Nine months
ended December
31, 2022(Results)

Nine months
ended December
31, 2023(Results)

22,12524,301

2,175

Operating profit

1,585

2,580

Ordinary profit

1,586

Profit attributable toowners of parent
Earnings per share(Yen)

Net sales

Full year

YoY change
Amount%YoY change
Amount%14

Dividends per Share・ Since the announcement of the Medium-Term Management Policy on June 2, 2021, we haveset 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.
(Yen)

400

91%

－％

52%

350

20%

26%

16%

49.0% 49.9% 49.8%
Payout ratio

22%

300

270

dividend250

Year-end

200

200

dividend

165
120
100

100
60

0

180

Interimdividend

150

50

Bonus

35

65

70

35

35

20
40

100

100
80

50

50
50

25

30

35

40

50

FY2015FY2016FY2017FY2018FY2019

Payout ratio

105

50
FY202030
FY202160
FY2022

90

80

FY2023

FY2024(Year-end forecast)

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

15

KPIs Established in the Medium-Term Management Policy•

In the forecast for the full fiscal year, net sales of ¥33.1 billion and ROE of 8.6% are expected,
and we expect to achieve the values included in the medium-term management policy.

•

Improvements to the profit structure in the current period include upside factors other thanactual performance, such as the weak yen, in addition to penetration of sales price revisions
and the normalization of transportation costs, and we will aim to solidify this profit structureand further improve business performance moving forward.
(Millions of yen)
Nine months
Nine months
ended
ended
December 31, December 31,
2022
2023
(Results)(Results)

Target for
Target for
Fiscal yearthetheending Marchfiscal year
fiscal year
31, 2024
ending March ending March(Forecast)31, 2024
31, 2026

Net sales

22,12524,301

33,10026,50030,000Operating profit

1,585

2,580

3,300

2,000

3,100

Annualized return on equity (ROE)* 1

6.5%

9.7%

8.6%

5.5%

8.0%

Share buybacks

Cumulative amount of share buybacks

ー

ー

340*2

500 ～ 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 February 9, 2024.
*3 The amount represents the targets of the cumulative amount of share buybacks through March 31, 2026.

16

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.