OKADA AIYON CORPORATION (TSE1/6294)

Financial Results for Q2 FY3/21
Yuji Okada,President andRepresentative Director(Yamba Dam, Gunma Prefecture)

Financial Summary◆ Economic activity in Japan and overseas remains unpredictable due to the impact of COVID-19.
◆ For Q2 of FY3/21, sales and profits declined but exceeded its forecasts (announced on August 7).
• Net sales: 8,456 million yen (Down 9.0% YoY; +356 million yen vs. forecast)• Operating income: 735 million yen (Down 16.5% YoY; +85 million yen vs. forecast)◆ OKADA AIYON CORPORATION (Domestic Sales): 5,751 million yen (Down 7.9% YoY)
OKADA AIYON CORPORATION (Overseas Sales): 1,366 million yen (Down 18.5% YoY)
Nansei Machinery (Domestic Sales): 1,338 million yen (Down 2.6% YoY)
*Became subsidiary in October 2017
◆ While sales of mainstay construction machinery attachments and forestry machines struggled due tothe impact of COVID-19, sales of renewable energy-related products and disaster recovery-related
products were steady, as shown below.
• Grapples, which are expected to be used for disaster recovery, etc. (Up 20.3% YoY)
• Environmental-related equipment for biomass power generation (Up 27.2% YoY)
• Cable cranes related to hydropower (Up 34.3% YoY)

2

Status by segment under COVID-19【YoY(%)】
Ratio tosales for Q2
FY3/21(%)

FebMar

AprMayJunJul

Aug

SepTotal

68

117

99

100

95

112

110

87

71

96

North
America

11142

57

57

72

89

52

126

63

76

Europe

3151

89

62

160

92

138

156

93

110

Asia,others

2225

55

80

63

136

75

156

117

103

Nansei

1666

112

60

90

94

1271796595

Consolidated
total

100

11394

8292

107105107

7094

DomesticOverseas32020*For local subsidiaries in North America and Europe, the fiscal year ends at the end of January, so the first quarter is from February to April and the second quarter is from May to July.

Results for Q2 of FY3/21 and Full-year Forecasts(Million yen)4

FY3/21Forecasts

Q2 FY3/20
Results(cumulative)(cumulative)

YoY change(Amount)

YoY change(%)

Net sales

9,296

8,456

▼840

▼9.0

16,00052.9

Gross profit

2,768

2,446

▼322

▼11.6－－SG&A

1,886

1,710

△176

△9.3－

－

Operating income

881735

▼145

▼16.5

1,00073.6

Ordinary income

892758

▼133

▼15.0

1,00075.8

Net income attributableto owners of parent

554

460

▼94

▼17.1

650

70.8

Q2 FY3/21Results（Announced onAugust 7, 2020）

Progress rate(%)

Capital investments(Million yen)

1,200

■ Capital investments ■ R&D Expenses ■ Depreciation and Amortization
1,000(Plan)
800
600

817

850

765

887

636

627

400

509
200
0

[Major Contents]

5205
80
FY3/15・ AIYON TECH's
neighboring landand plant(402 million yen)

267

332

80
FY3/1671
FY3/17・ AIYON TECH
Capital Investment(559 million yen)・ Construction of
Hokuriku Sales Office(270 million yen)

433

429

374

450

120

172

181

190

FY3/18

FY3/19FY3/20FY3/21・ Reconstruction of
AIYON TECH
(220 million yen)
・ Nansei Group’s
goodwill(209 million yen)・ Land for relocation of
Yokohama Sales Office(201 million yen)・ Land for relocation of
Shikoku Sales Office(105 million yen)・ Newly built of
Shikoku Sales Office(276 million yen)・ Rebuilding of Head OfficeMaintenance Factory(94Million yen)・ Newly built of Shonan
Sales Office(445 million yen)

Changes in dividends
・ Dividend policy︓Payout ratio 30％/DOE 3％・ Review of the shareholder benefit program (Premium Shareholder Benefit Club)
(Yen)

（％）

30

Dividend per share

Payout ratio

34.4

3534.6

2540

30
20

25.3

25.6

22.8

1521.927282328(Plan)

102225

24

15
105

500
FY3/16620

FY3/17

FY3/18

FY3/19FY3/20FY3/21

Priority measures: Enhancement of domestic bases【Renewal of bases】
2015: Expanded AIYON TECH. CO., LTD.
2017: Relocated and newly built Hokuriku Sales Office
2019: Relocated and newly built Shikoku Sales Office
2020: Relocated and newly built Shonan Sales Office (October)◆Yokohama Sales Office was relocated and newly established asShonan Sales Office.
・In line with the increase in the size of machines to save manpower, there is an urgent
need to enhance crane facilities.
・Plans to continue renewing sales offices throughout Japan.

: Kyushu Sales Office Second Factory andwarehouse (*)
2021: Rebuild Chubu Sales Office (*): Relocate and newly built Hiroshima SalesOffice (*)
2022︓Relocate Sendai Sales Office (*)(*) are under planningSide view

Shonan Sales Office7

Inside of the repair plantPriority measures: Start of overseas manufacturing◆ Start of manufacturing in Vietnam (during FY2021)
・My Phuoc 3 Industrial Park, Binh Duong Province(One of the largest industrial parks in southern Vietnam)

・ Enjoy advantage of economies of scale with auniversal model

VietnamBinh Duong【Reference model】
TOPV-50

Image Source: wikipedia

8【 Reference model 】
TOP-32

Initiatives for SDGs
Dismantling and metal recycling machinery that supports recycling systems in cities[Strengthening national land and reconstruction capabilities]

The life of concrete is said tobe 40 to 50 years. Resilience
requires dismantling

The highway collapsed in the Great
Hanshin Earthquake. Our products
supported the reconstruction.

Separate process of large quantities ofgarbage generated by the Tohoku
Earthquake using wood crushers[Promotion of recycling of concrete, iron, etc.]

9Efficient sorting without burdening the shovelbody

The attachment of Nansei Machine isplaying an active role in the recyclingof scrap ironSome machinery treats soft waste such as
wood waste, plastic waste, and tires

Initiatives for SDGs
Forestry equipment and cable cranes that contribute to the effective use of domestic mountainous andforestry resources[It is necessary to cut trees in order to protect the forest]

We use winches to haul theharvested timber down fromthe roadless mountainIt can move, cut down, clear branches,and helps to alleviate the labor
shortage

We can process large trees, stumps
and root balls.

[Promote woody biomass power generation and hydroelectric power generation]

10

Thinned wood can be chipped and used as fuelfor power generation

Cable cranes play an active role in transporting materials during
construction of dams and power plants

100% of electric power our company consumes
is derived from biomass power plant

OKADA contributes to biomass power generation
All the electricity we use comes from biomass[Power suppliers (excerpt)]
・ Green Power Generation Oita (Oita)
・ Chugoku Wood Biomass Power Plant (Saga)
・ Chugoku Wood Biomass Power Plant (Saga) ・ Uttikawaikuzakai Power Station (Iwate)・ Ichinohe Forest Power Genaration (Iwate) ・ Shiranui Biomass Power Plant (Hokkaido),etc.

Scope of OKADA Group's business

FIT system(Fixed purchase priceby the government)
Logging and transportation of thinned wood
(OKADA/Nansei products)

11Wood chipping(OKADA products)

Combustion and powergeneration(Biomass power plant)

Flow of woody biomass power generation

Sales of electricity topower companies

We also contributes to dam construction andhydroelectric power generation① When constructing a dam,connect mountains andthey transport concrete,equipment, materials,
etc.

Key points

12◆ Recently, it was used in the construction of the Yamba
Dam.
◆ Renewal work for hydroelectric power generation isscheduled to continue in the future.
◆ Only Nansei and another company are authorized tohandle large cable cranes② Placing Water pipes
when constructing orrenewing a hydroelectricpower plantProgress of Medium-to Long-Term Management Plan
◆ To challenge the medium-term management plan again after COVID-19
1st stage
Results(Million yen)

FY3/16

ResultsPlan

Initial Plan

FY3/17

FY3/18

FY3/19FY3/20FY3/21

12,043

13,113

15,39917,866

17,957

16,00020,000

Operating income

760

1,106

1,195

1,524

1,368

1,000

2,000

Ordinary income

721

1,092

1,270

1,560

1,347

1,000

2,000

Net income
attributable to ownersof parent

438

696

666

1,000

884

650

1,250

Overseas net sales

2,313

2,095

2,752

3,061

2,985

2,180

4,000

Overseas sales ratio

19.2%

16.0%

17.9%

17.1%

16.6%

13.6％

Net sales13

2nd stage

FY3/21

20.0％*Announcement of revised forecast for FY3/21 on August 7, 2020

Market scale(Million yen)

28,000Trends and forecast for shipments of hydraulic breakers and crushers (incl. COVID-19 effects)
Domenstic

Overseas

20,824
19,86720,00018,468(Forecast)

18,89818,28818,082

16,16418,00012,88813,49910,06810,000

9,069

8,481

8,061
6,322

6,884 7,241

7,118

7,033

FY3/13

FY3/14

8,962

9,079
7,861(Forecast)
6,272

8,000

0

FY3/1014

FY3/11

FY3/12

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/20(Prepared by us based on data published as of August 27 of the Japan Construction Equipment Manufacturers Association (CEMA)** Impact of COVID-19 not taken into accountShare of our major products
Primary crushers

Domesticmarket

44％

Cutters

Pulverizers

37％

Breakers

45％
13％

13％

Tokyoarea

1547%

Tokyo area: Tokyo, Saitama, Chiba, Kanagawa

47％

55％

(Prepared by company based on materials published by the Japan Construction Equipment Manufacturers
Association (CEMA) April 2,019 to September 2020)

Demolition market demand
Age of constructions and floor area of non-wooden buildings (concrete buildings)◆ Looking at volume of buildings 40 years and older to be demolished, the demand for demolition is about to be full scale. (the area equivalent to about
1,500 Tokyo Domes is targeted every year)
Area (unit: 10,000 m2)

80,000Floor area of building to be
demolished in the future

70,000

Building area over 40 years
old at the moment

60,00050,000715 million square meters =about 15,000 Tokyo Domes

40,00030,00020,00010,000
0

～1950

～1960

～1970

Apartment house16◆ Calculated assuming the floor space of Tokyo Dome is 46,000 m2.

～1980

Office/Store609 million ㎡～1990

798 million ㎡～2000

727 million ㎡～2010

Factories and Warehouses

338 million ㎡～2017

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

Forestry market demand◆ Wood self-sufficiency rate has risen
for 9 consecutive years (37.8%)

Trends in wood supply and wood self-sufficiency rate

Increase at an average 1.2% pace

◆ Total demand for fuel materials increased
by 15.1% from the previous year
Expanding opportunities for forestry
machinery to play an active role

Imported logs

Imported products
Imported fuel materials

Domestic timber

17

Forestry Agency "Release of 'Supply and Demand Table of Wood in 2019'" (Announced on September 30, 2020)

【Supplementaryinformation】

Factors for changes in net sales

 In Japan, sales of crushers and hydraulic breakers declined (impacted by COVID-19).

Strong sales of grapples, which can be used even in times of disaster, and sales of wood crushers also increased due to strong
demand for biomass power generation.
 Overseas, sales declined in the U.S. (due to COVID-19), while sales were steady in Europe and signs of recovery were seen inAsia where new products have been introduced.
 Sales at Nansei increased due to demand for renovation of hydroelectric power plants, but sales of forestry machines decreased
reflecting the impact of restrained purchasing due to COVID-19.
OverseasDomestic▼ 78
Breaker

9,296

▼ 883
CrusherNansei(Million yen)

Environmental Grapples
machinery
79

200

▼48
Repairs▼ 68
Other▼309
▼ 38

8,456

18

‘20/3
4,296Q2'21/3 Q2

【Supplementaryinformation】

Factors for changes operating income Decrease in domestic, overseas, and Nansei gross profit due to sales decline
 Decrease in SG&A expenses such as exhibition expenses, transportation expenses, andentertainment expenses due to restrictions on activities caused by COVID-19

Decrease in
SG&A expenses▼ 139

88189219

Decrease indomestic grossprofit▼138

Decrease inoverseas grossprofit(Million yen)

Others▼9176▼ 36
Decrease in
Nansei Gross Profit735

【Supplementaryinformation】

Sales by product ratio (Overall)
NanseiOtherGrapples
Repair

5.6％

15.8％

5.5％

Hydraulic breakers

14.9％
Crushers

4.6％

32.2％
Parts sales

10.3％

Environment
machinery

11.1％

20

Apr.2019-Sep.2020 Company consolidated sales composition【Supplementaryinformation】

Sales by product category (Q2)(Million yen)

Q2
FY3/19Q2
FY3/20

Amount21

Vs. Q2
FY3/19YoY

Q2
FY3/21

Change (％)

Change(％)

Breaker

396

459

381

▼78

▼17.0

▼3.8

Crusher

3,060

3,123

2,539

▼583

▼18.7

▼17.0

Environment
machinery

705

737

937

200

27.2

32.9

Grapple

270

390

469

79

20.3

73.7

Repair andmaintenance

954

1,067

1,018

▼48

▼4.5

6.7

Others

351

470

407

▼63

▼13.7

16.1

Domestic total

5,736

6,246

5,751

▼495

▼7.9

0.3

Overseas total

1,728

1,6761,366

▼309

▼18.5

▼20.9

Nansei Total

1,308

1,373

1,338

▼35

▼2.6

2.3

Consolidated total

8,773

9,296

8,456

▼840

▼9.0

▼3.6

【Supplementaryinformation】

Sales by region (Domestic/Q2)(Million yen)

Q2
FY3/19Q2
FY3/21

YoYAmount

Vs. Q2
FY3/19 (%)

Change (%)

Kyushu

295
671
1,793
708
689
565
786

237
674
2,037
826
880
656
796

281
744
1,614
861
678
509
934

44
70
▼423
35
▼202
▼147
138

19.0
10.4
▼20.8
4.2
▼23.0
▼22.4
17.3

▼4.7
10.9
▼10.021.6
▼1.6
▼9.9
18.8

Other (Head Office)

229

135

130

▼5

▼3.7

▼43.2

Domestic total

5,736
1,728
1,308
8,773

6,246
1,676
1,373
9,296

5,751
1,366
1,338
8,456

▼495
▼309
▼35
▼840

▼7.9
▼18.5
▼2.6
▼9.0

0.3
▼20.9
2.3
▼3.6

Hokkaido
TohokuKanto
Chubu/Hokuriku
Kansai
Chugoku/Shikoku

Overseas total
Nansei Total
22Q2
FY3/20Consolidated total

【Supplementaryinformation】

Sales by products ratio (Nansei)
Merchandise
sales

MarinecranesSteel recyclingmachineries

6.6％

Others

7.6％

Cable cranes

6.9％

8.7％

44.9％

Forestrymachines

25.4％

23

2019/4～2020/3 Composition of Nansei Machinery Sales

【Supplementaryinformation】

Nansei: Sales by machinery (Q2)(Million yen)

Q2
FY3/1924

Q2
FY3/20

YoY

Q2
FY3/21

AmountVs. Q2 FY3/19

Change (％)

Change(％)

Cable cranes

372

447

600

153

34.3

61.3

Forestry machines

397

377

339

▼37

▼10.0

▼14.2

Steel recyclingmachineries

123

182

115

▼66

▼36.6

▼6.4

Marine cranes

112

88

91

34.4

▼18.2

Merchandise sales

193

148

87

▼60

▼40.7

▼54.3

Other111

129101▼27▼21.6▼8.1

Nansei Total

1,308

1,373

1,338

▼35

▼2.6

2.3

Consolidated Total

8,773

9,296

8,456

▼840

▼9.0

▼3.6

【Supplementaryinformation】

Overseas sales by regions

Overseas
16.2％

Europe17％
Domestic

68.0％

Nansei

15.8％
25

Asia
16％

North
America66％

Others1％

【Supplementaryinformation】

Sales by regions (overseas/Q2)(Million yen)Overseas
16.2％

Domestic
68.0％

Nansei
15.8％

26

Q2
FY3/19Q2
FY3/20

YoY

Q2
FY3/21

AmountChange (％)

Vs. Q2
FY3/19North America

1,188

1,229896

▼333

▼27.1

▼24.6Asia

358

204

215

105.3

▼39.9

Europe

140

215

233

178.0

66.4

Oceania

274

84

100

▼70.4

Others

15

2212

▼9

▼41.5

▼20.0

Total overseas sales

1,728

1,676

1,366

▼309

▼18.5

▼20.9

Overseas ratio (%)

19.7

18.0

16.2

▼1.8

－

－

Ratio of North
America(%)

68.8

73.3

65.6

▼7.7

－

－

Thank you for your attention.
Precautions
The forecasts in this document were prepared basedon the information available at the time of theannouncement of settlement of accounts.
Actual results may differ depending on variousfactors in the future.

27

【Ref.】

Corporate Profile (As of March 31, 2020)

FoundedJuly 1938 (Established in 1960)

Businesscontent

Manufacture, sale and repair of construction and forestrymachinery

Capital stock

2,221 million yen

442 (Consolidated)

Net sales

17,957 million yen

Business bases(Group total)
28

Head Office (Minato-ku, Osaka)

Number ofemployees

21 in Japan and 5 overseas

【Ref.】

Business Bases[Domestic][Overseas]

Okada America

Okada Europe

Thai Representative Office

29

OKADA AIYON

12 bases

AIYON TECH

1 baseNansei Machinery Group 10 bases

Okada America

3 bases (headquarters/Oregon)

Okada Europe

1 base (headquarters/Netherlands)

Thai Representative Office (Ayutthaya)【Ref.】

Corporate History
2011

1995

1938
Established(Great East Japan Earthquake)(Great Hanshin-Awaji Earthquake)

Changes in net sales
over the past 30 years

2017
M&A ofNansei machine Co., Ltd.

Around 1951
(excavator method)

2016
Listed on TSE1
1992
Listed on the Second Section of the
Osaka Securities Exchange

2008
Financial Crisis

Around 1960 (appearance of large air breaker)

The latter half of the 1970s (appearance of the crushing method)

3019902000

20102020【Ref.】

Product application (attachment)- Able to install in excavators of all domestic and overseas manufacturers[① Primary crushers]・ Demolition of the mainpart of the building[② Pulverizers][③ Cutters]

・ Crushing the concrete after
primary crusher

・ Used for cutting rebar and steelframes.

[④ Breaker]
・ Excellent crushing power
・ However, the noise is loud.

31【Ref.】

Product application(Environmental machinery)[Middle and low speed
rotary machine]••

32

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.

【Ref.】

Product application(Nansei Machine)[Forestry machinery]・ Logging timber in the forest
・ Lumering, pruning and transporting

33[Cable crane for dam
construction and power plants
and dams]

・ Conveying concrete, materials, etc.
on roadless mountain slopes【Ref.】

Product customers (Domestic)
About 70%

About 20%
[Rental companies][Excavator manufacturers](Example)(Example)(Other, regional rentalcompanies)

34

About 10%Demolitionbusinessoperator【Ref.】

Our strengths
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 ｐｒｏｆｅｓｉｏｎａｌ

RepairDesign/Development

One-stop

Sales

Manufacture

Sales to excavator manufacturers and distributors

Manufacturing by group companies and subcontractors

Direct sales to end users

Manufacturing-ability does not constrain novel ideas

We listen to customer’s needs at first hand.

35【Ref.】

Product characteristics
Our commitment
Casting steels are used for the primarycrushers and cutters, which gives unmatchedstrength in demolition work.

Casting steel*Casting steel : made by melting special steel and pouring it into molds.
There are no linkages or joints, and the strength is higher than that offabricated weldment.
It can be freely formed and has strength in designing.

Fabrication --- Formed by steel plates welded together
Fabrication

Twin Cylinder and high-capacity speed valve give unmatched force
and fastest cycle time.
Use of wedge arms realizes outstanding crushing powerArms do not protrude as they close, and they can be operated in densely
populated residential areas.

36