FY2018 ended March 31,2018

Financial Results Briefing
May 29, 2018

NIHON PARKERIZING CO., LTD.

Table of contents
Overview of the Company
Financial Result of FY2018
Financial Highlights
Consolidated Income Statement
Variation Analysis of Operating Income
Financial Results by Business Segments
Capital investment
R&D
Consolidated Balance Sheet
Forecast of FY2019
Dividend Policy and Dividends Plan
Key measures for the achievement of the second medium-term management plan
The second mid-term management plan- Fundamental Policy
Enhancing and expanding business baseTechnology-driven company
Strengthening the structure of the organization
Medium-term management plan achieve expected
Supplementary Information
Question-and-answer session

NIHON PARKERIZING CO., LTD.

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Overview of the Company
Company name:Nihon Parkerizing Co., Ltd.

Chairman & C.E.O: Kazuichi Satomi
President & C.O.O:

Kentaro SatoHeadquarters:

15-1, 1-chome, Nihonbashi, Chuo-ku, Tokyo

Established:

July 12, 1928

Listing:First Section of Tokyo Stock Exchange, 1967

Other:JPC Nikkei Index 400（January 2014）
Global Niche Top Company 100 (March 2014)

Founded in 1928, Nihon Parkerizing will celebrate its 90th anniversary in 2018. Thehistory of Nihon Parkerizing starts from the company being granted a patent in Japanfor the technology developed by Dr. Parker in 1915, for generating a phosphate coating
on steel to prevent corrosion. In the beginning, the technology was mostly developed
for the Army Ministry, however following the war, business expanded in conjunction
with the growth of the automotive industry.

NIHON PARKERIZING CO., LTD.

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Overview of the Company - Business Areas and Sales Composition Ratios

FY2018OtherChemicals

Conversion Coating Chemicals
Rolling oil and lubricants
Rust proof oil
Electroless plating solution

Equipment

Pre-treatment and ED equipment
Waste water treatment equipment
Powder coating equipment
Heat exchangers

Jobbing

Rust proof jobbing
PlatingHeat treatment
Painting

Otherbusiness

Building maintenance
Manufacture and sale of metal
test pieces
Manufacture and sale of bolts
Export of specialty steel products

4%Jobbing
39%

Sales
consolidated

114,840

Chemicals
40%

million yen

Equipment
17%

Sales by segment
NIHON PARKERIZING CO., LTD.

4Financial Highlights（Unit: million yen）
160,000

40,000

営業利益

売上高

140,000

35,000

Increased 35.5% in 6 years（ CAGR+5.2% ）120,000

109,063

Sales99,793

114,840

30,000109,569

102,514100,000

25,00089,919

Increased 57.6% in 6 years（ The average rate of increase +7.9% ）84,75880,00020,000Operating income

15,393

14,85015,766

16,934

17,984

13,14660,00015,00011,41140,00010,00020,0005,000

00

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

Renewed our record amount of Sales and Operating income
NIHON PARKERIZING CO., LTD.

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Consolidated Income Statement（Unit: million yen）

2017/3

2018/3S a l e s

109,569

114,840＋5,271＋4.8% Renewed our record amountOperating income16,934

17,984＋1,049＋6.2% Renewed our record amount

Ordinary income

18,77920,750＋1,970 ＋10.5% Renewed our record amount

Net income attributableto parent companys h a r e h o l d e r s

12,22812,721

N e t

Change% Change

＋493

＋4.0%

Ratio of ordinary
income to total assets

9.7％

9.9%

＋0.2％

-

Retu rn on equity（ R O E ）

10.2％

9.7％

▲0.5％

-

Net income pershare

99.14yen

104.85yen＋5.71yen-T h e a v e r a g e
exchange rate
(USD)

108.84yen

112.19yen--Foreign currency translation effect:
Sales approx. +1,727 million yen, Operating income approx. +283 million yen

NIHON PARKERIZING CO., LTD.

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Variation Analysis of Operating Income（Unit: million yen）

0

2017/3

2018/3NIHON PARKERIZING CO., LTD.

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Financial Results by Business Segments（Unit: million yen）

Net sales

Oparating Income

2017/3

2018/3

Changes

2017/3

2018/3

ChangesC h e m i c a l sJapanO v e r s e aInter-segment
E q u i p m e n tJapanO v e r s e aInter-segment
J o b b i n g
JapanO v e r s e aInter-segment
Others44,54927,50815,8401,200
22,382
12,8898,989
503
40,211
24,015
16,163
32
5,252

46,74627,87017,7291,146
20,794
10,4299,862
502
44,593
26,48918,04656
5,553+2,197+361+1,889▲53▲1,588▲2,460+873▲1+4,381+2,474+1,882+23+301

8,973
5,478
3,209
285
1,580
604
791
184
7,335
4,682
2,469
183
288

9,465
5,187
3,746
531
856
147
470
238
8,682
5,3483,139
194188+492▲290+536+245▲723▲456▲320+53+1,347+665+670+10▲99

Adjustments and Eliminations▲2,827▲2,847▲20▲1,242▲1,209+33

T

109,569

114,840+5,271

16,934

17,984+1,049

otal

C h e m i c a l s ： Japan：Sales increased, however, income decreased due mainly to rise in raw material prices.
Overseas：Sales and income increased due mainly to increase of demand in Thailand, China and India.
E q u i p m e n t ： Japan：Sales and income decreased due to reduction of capital investment demand.
Overseas：Sales increased in China, however, income decreased due mainly to fierce competition.
J o b b i n g ： Japan：Sales increased due mainly to increase of demand in heat treatment.
Overseas：Sales and income increased significantly in Thailand and China.
New plant expanded the operations in Mexico.

NIHON PARKERIZING CO., LTD.

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Capital investment（Unit: million yen）

In FY2018, we implemented capital investment in heat treatment equipment inJapan, renovation of own building in Kansai region and restructuring of themanufacturing plant in Korea.
NIHON PARKERIZING CO., LTD.

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R&D（Unit: million yen）

Anti-rust material
development center
In recent years we have focused our development on “creating new value” by adding not only
corrosion resistance but also other functions to the surface of substrates, and our investment in
R&D has continuously exceeded 2,000 million yen/year.
We have established a worldwide network which enables us to quickly grasp the requirements ofcustomers and provide the optimal technical support.
NIHON PARKERIZING CO., LTD.

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Consolidated Balance Sheet（Unit: million yen）
2017/3

2018/3Change

Current assets

97,021

111,331+14,309

Fixed assets

100,238

109,554+9,315Intangible assets

56,97861,288+4,309Investments and other assets

43,26048,265+5,005

197,260

220,886+23,625

Current liabilities

33,56239,896+6,334

Fixed liabilities

17,196

17,733+537

50,75857,630+6,872

146,502

163,255+16,753

equity113,291

123,762+10,471

Accumulated other comprehensive profit

10,006

14,589+4,583

Non-controlling interests

23,20424,902+1,698

Total liabilities and net assets

197,260

220,886+23,625

62.5%

62.6%

Tangible andTotal assets

Total liabilities
Total net assets
Shareholders'Shareholders‘ equity ratio

Increase（+）/Decrease（▲）
Cash and deposits＋10,273
Notes and accounts receivable-trade ＋4,100
Acquisition
Depreciation＋8,668▲5,381

Investment in securities ＋4,811

Notes and accounts payable-trade

Cash dividends paid
Current profit＋3,384▲2,473＋12,721

Valuation difference
On available-for-sale securities +3,504
Foreign currencytranslation adjustment+1,049※Shareholders‘ equity ratio＝（Total net assetsーNon-controlling interests）／Total liabilities and net assets

NIHON PARKERIZING CO., LTD.

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Forecasts for FY2019 ended March 31, 2019
（Unit: million yen）

2018/3
ActualN e t

2019/3
ForecastChange% Change

S a l e s

114,840

116,500＋1,659＋1.4％

Operating income

17,984

18,200＋215＋1.2％

Ordinary income

20,75020,600

▲150

▲0.7％

Net income attributable top a r e n t c o m p a n ys h a r e h o l d e r s

12,721

12,600

▲121

▲1.0％

The average exchange rate
(USD)

112.19yen

108.00yen

Sales and operating income are expected to increase due mainly toincrease of demand in heat treatment in oversea.
Ordinary income and net income are expected to decrease due mainly to
reduction of equity in earnings of affiliates by appreciation of the yen.

NIHON PARKERIZING CO., LTD.

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Dividend Policy and Dividends Plan
Fundamental Policy
Based on a target payout ratio of 20% on a consolidated basis, we will determine theamount of dividends after giving sufficient consideration to consolidated achievements,
future business expansion and earnings.

NIHON PARKERIZING CO., LTD.

13Key measures for the achievement of the second medium-term management plan

<Second Mid-term Management Plan- Fundamental Policy>
Our aim is to be THE leading global company in the field of surface
modifications, maintaining our technical superiority in the market of
surface modifications for a wide array of substrates.

Enhancing andexpanding
business baseTechnologydriven company

Achievingsustainable growth
Strengthening thestructure of theorganization
NIHON PARKERIZING CO., LTD.

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Enhancing and expanding business base

事業基盤 の強化拡大

Expanding and developing new markets
Non-automotive and non-steel industry (aircraft, electronic parts, defense force, medical parts, etc.）

Capture demand in growth foreign markets
Implement the aggressive investment in overseas. (China, Mexico India, etc.)

Set the overseas sales ratio to 50% or more for mid-long term target

Take up the challenge of creating a new business model
Actively investigate M&A and alliances

NIHON PARKERIZING CO., LTD.

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Technology-driven company
Select research topics keeping in mind future growth areas
Conduct R&D to expand and develop new markets
Meeting changing needs such as environmental needs (improvement of durability, improvingperformance and energy efficiency, and chrome-free, etc.）
In addition to rust prevention, create demand through development of diverse functions ( insulation,conductivity, hydrophilicity, anti-finger print, design, etc.)
Functionheat radiation

Applications⇔ insulation

Heat sink, Engine parts, Roof panel material

electric insulation ⇔ conductive

Motor parts, Electromagnetic shielding material, Electrical component

adhesive ⇔ non-stickiness

Rubber ･resin-metal composite material, Seal material, Laminate materialhydrophilic ⇔ water-repellent, oil repellent

Heat exchanger, Aantifouling material

low friction ⇔ high friction

Power train, Clutch, Slide rail

hardening ⇔ softening

Sliding parts, Plastic working parts

stable rust layer ⇔ rust proof coating

Weathering steel, Repair of building materials

otherFingerprint-resistant steel sheet

Enhance fundamental research
Developing products for next generation vehicles and the aircraft market
Nonferrous material, adhesive or joining between metal and different materials.

NIHON PARKERIZING CO., LTD.

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Adding a variety of properties to surfaces

We supply environmentally-friendly, cost effective technology.
NIHON PARKERIZING CO., LTD.

17Strengthening the structure of the organization
Strengthen our corporate governance continuously
Transition to a company with an audit and supervisory committee
Strengthen governance by the organization reform
Strengthen global quality assurance system
Reorganization for improving management efficiency
Strengthen group collaboration
Develop global HR
Improve productivity,change corporate culture and reform the mindset

NIHON PARKERIZING CO., LTD.

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Medium-term management plan achieve expected（Unit: million yen）

2019/3
ForecastN e t

2019/3

Second mid-term
management planTarget

Difference

Achievementrate

S a l e s116,500

120,000▲3,50097.1%

Operating income

18,20019,000▲800

95.8%

Ordinaryincome

20,60021,000▲40098.1%

Net income attributable to parentcompany shareholders

12,60012,000+600

105.0%

108.00yen

113.00yen--

The average exchange rate(USD)

NIHON PARKERIZING CO., LTD.

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Supplementary Information

NIHON PARKERIZING CO., LTD.

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Subsidiaries and Affiliated Companies (As of 31 March 2018)
st

Network of 44 subsidiaries & 11 Affiliated Companies（Japan）（China）■ Parker Surface Technologies (Shanghai) Co., Ltd.
■Parker Engineering (Shanghai) Co., Ltd.
■Kanigen (Shanghai) Trade Co., Ltd.
■Guangzhou Parkerizing Co., Ltd.
■Foshan Parker Surface Modification Co., Ltd.
□Shenyang Parkerizing Co., Ltd.
□Shanghai Parkerizing Co., Ltd.
□Wuhan Parkerizing Chemical Co., Ltd.
(and 4 more companies)■Kyodo Unso
■Nihon Parkerizing Co., Ltd.
□Parker Corporation■Ozeki Chemical Industry Co., Ltd.
■Parker Engineering Co., Ltd.
□Yuugen Co., Ltd.
■Hokkaido Parkerizing Co., Ltd.
■Parker Kako Co., Ltd.
□Parker Netsushori Kogyo Co., Ltd.
■Kyowa Manufacturing Co., Ltd.
■Hamamatsu Netsushori Kogyo Co., Ltd.
□Nagaizumi Parkerizing Co., Ltd.
■Parker Giken Kogyo Ltd.
■Komatsu Parkerizing Co., Ltd.
□Green-Techno■Paltec Test Panels Co., Ltd.
■Oita Parkerizing Co., Ltd.
■Million Chemicals Co., Ltd.
■Japan Kanigen Co., Ltd.t（U.S.）■Parker Trutec Inc.
■Parker Trutec MMI Inc.
□Parkwood Engineering Development Corporation（Korea）（Belgium）■P.I of Europe NV（Vietnam）■Vietnam Parkerizing Co., Ltd.
■Vietnam Parkerizing (Hanoi) Co., Ltd.
■Parker Processing Vietnam Co., Ltd.

■Dae Han Parkerizing Co., Ltd.

（Taiwan）■Chung Jih Metal
Treatment Chemicals, Inc.

（The Philippines）（India）■Nihon Parkerizing (India) PVT LTD■Parker Engineering (India) PVT LTD■Philippine Parkerizing Inc.

（Mexico）■Parker Trutec Mexicana S.A de C.V.
■Parker Eng. De Mexico S.A. de C.V.

（Malaysia）■Nihon Parkerizing Malaysia Sdn Bhd（Thailand）■Thai Parkerizing Co., Ltd.
■PET Trading Co., Ltd.
■Parker Engineering (Thailand) Co., Ltd.
■Kanigen (Thailand) Co., Ltd. & 1 other（Indonesia）■P.T. Nusantara Parkerizing■P.T. Parker Metal Treatment Indonesia■P.T. Parker Engineering Indonesia

NIHON PARKERIZING CO., LTD.

■ Nihon Parkerizing and subsidiaries□ Affiliated companies

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NIHON PARKERIZING CO., LTD.

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The forward-looking statements such as forecast of financial consolidated
results contained in this document are based on the information
currently available to the Company and certain assumptions which are
regarded as legitimate. Actual results may differ from these forecast due
to various factors.
Significant factors which may affect actual results include but are notlimited to; a)state of the economy b)fluctuations in exchange ratesc)product competitiveness, d)regulations and e)limits of intellectual
property protection.
The information in this document is not intended to solicit investment.
Please make investment decisions at your own discretion.

NIHON PARKERIZING CO., LTD.

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