Consolidated Financial Results
for the Nine Months Ended December 31, 2022

SAKAI HEAVY INDUSTRIES, LTD.
Stock code: 6358
URL https://www.sakainet.co.jp/enFebruary 14, 2022

Summary of Consolidated Financial Results(Amounts less than one million yen are rounded down)
１．Consolidated financial results for the nine months ended December 31, 2022 (from April 1, 2022 to December 31, 2022)
Percentages indicate year-on-year changes（１）Consolidated operating results (cumulative)
DilutedProfit attributable toEarnings
Net sales
Operating profit
Ordinary profitearnings
owners of parent
per shareper share
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Yen
Yen％％％％
Nine months ended December 31, 2022
22,125
11.8
1,585
36.0
1,586
31.5
1,172
40.2
277.45－
Nine months ended December 31, 2021
19,793
28.7
1,165
189.0
1,206
286.2
836
197.01－－（２）Consolidated financial position
Total assets

Net assets

Millions of yen
41,34237,858

As of December 31, 2022
As of March 31, 2022

Equity ratio
％
60.8
61.1

Millions of yen
25,214
23,161

２．Cash dividendsAnnual dividends per share
1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen－－

Yen
60.00
80.00

Yen－－

Yen
105.00Yen
165.00100.00180.00Year ended March 31, 2022
Year ending March 31, 2023
Year ending March 31, 2023 (Forecast)

Total

３．Forecast of consolidated financial results for the year ending March 31, 2023 (from April 1, 2022 to March 31, 2023)
Percentages indicate year-on-year changes
Net sales

Full year

Millions of yen
30,000Operating profit％
12.8

Millions of yen
2,020

Ordinary profit％
46.0

Millions of yen
2,050％
45.6

Profit attributable toowners of parent
Millions of yen％
1,520
6.5Earnings
per shareYen
360.081Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Nine Months EndedDecember 31, 2022
1) Consolidated net sales: ¥22,125 million, up 11.8% YoYOverseas sales was expanded by handling supply chain issues.

2) Operating profit: ¥1,585 million, up 36.0% YoYProfit structure reform made progress, especially in overseas business.

3) Sales in Japan: ¥10,864 million, down 2.0% YoY

Net sales decreased slightly due to a shortage in manufacturing components amid continuing
firm sales.

4) Sales in North America: ¥5,028 million, up 56.2% YoYStrong recovery in demand continued to make progress against the backdrop of robust
investment in construction.

5) Sales in Asia

: ¥5,703 million, up 17.1% YoYMarket environment remained firm overall, although there were slowdowns in growthin some markets.

2

Highlights of Consolidated Business Performance
2. Adapting to a Changing Business Environment
1) Shifting to business management with a focus on a sound capital policy(1) Formulating the medium-term management policy with the goals of achieving net salesof ¥30.0 billion, operating profit of ¥3.1 billion, ROE of 8%
Nine Months ended December 31,2022: Net sales of ¥22.12 billion, operating profit of ¥1.58billion, ROE of 6.5%
Fiscal year ending March 31, 2023 (Forecast): Net sales of ¥30.0 billion, operating profit of ¥2.02billion, ROE of 6.4%
(2) Building a sustainable management structure by ESG and DX including humancapital investment.

2) Adaptability to change(1) Dealing with volatile demand• Inventories of ¥9,800 million（up 33.8% YoY, inventory turnover was reduced by 0.60 times）• Increasing inventory levels to increase production and reduce the risk of parts stockout(2) Strengthening product supply capabilities• Enhancement of supply chain (review of suppliers and dual sourcing)• Expansion of domestic production capacity (Increasing in production lines)(3) Reforming our profit structure in the wake of rising of manufacturing component prices
and transportation costs• Further penetration of sales price revisions• Transportation cost reductions through improving efficiency
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 hub2) Expand the scope of overseas business:
Enter the overseas market for road maintenance equipment

3) Pursue business opportunities in North America:
Increase our market share through niche marketing

4) Start developing next-generation businesses:
Focus on developing emergency brakes, compaction management systems, and autonomous
vibratory rollers

4. Outlook for Business Environment
1) Japan
Demand for construction machinery is projected to remain strong, buoyed by the Japanesegovernment’s ¥15-trillion initiative to accelerate national land resilience over the next five years to prevent andmitigate natural disasters.

2) Overseas
Overseas construction machinery demand is firm with infrastructure investment totaling $1.2 trillion planned in
the U.S., infrastructure investment and mine development becoming active in ASEAN and emerging countries,
among other factors, although the demand has repeatedly fluctuated amid a rapidly changing global situation.

4

Consolidated Business Performance(Millions of yen)First ninemonths
ended
December 31,2021

First ninemonths
ended
December 31,2022

Net sales

19,79322,125

2,332

11.8%

Japan

11,083

10,864

▲ 219

▲2.0%

Overseas

8,709

11,261

2,551

29.3%

Operating profit

1,165

1,585

419

36.0%

Operating profit ratio(5.9%)(7.2%)

Ordinary profit

1,206

1,586

379

31.5%

836

1,172

336

40.2%

(75.1%)(74.4%)

Profit attributable toowners of parent
Cost-of-sales ratio

YoY change

Amount%5Consolidated Business Performance (Graph)First nine months endedDecember 31,2021

First nine months ended
December 31,2022

6

Sales by Region in Which Customers Are Located(Millions of yen)First ninemonths ended
December 31,2021

First ninemonths ended
December 31,2022

11,083

10,864

▲ 219

▲2.0%

8,709

11,261

2,551

29.3%

North America

3,220

5,028

1,808

56.2%

Asia

4,871

5,703

832

17.1%

617528▲ 88▲14.4%

19,79322,125

2,332

11.8%

Japan
Overseas

Other regions

Total

YoY change
Amount%7

Sales by Region (Map)First ninemonths ended
December 31,2021

First ninemonths ended
December 31,2022

Japan

11,083

10,864(▲219、▲2.0%)

Overseas

8,709

11,261(+2,551、+29.3%)

Total

19,79322,125(+2,332、+11.8%)(Millions of yen)

YoY change

8Segment Information by Region in Which Our Manufacturing Facilities and Sales Offices Are Located(Millions of yen)

(Millions of yen)

YoY changeFirst ninemonths ended
December
31,2022

3,220

5,028

1,808

56.2%

2946

16

56.8%

Total net sales

3,249

5,075

1,825

56.2%

Operating profit

129437

Japan

First ninemonths ended
December
31,2022

Sales to externalcustomers

15,165

15,133

▲ 31

▲0.2%

Sales to externalcustomers

1,607

2,690

1,082

67.4%

Intercompany sales

16,772

17,824

1,051

6.3%

914

516

Intercompany sales
Total net sales
Operating profit

AmountNorth America%▲ 398 ▲43.6%(Millions of yen)

YoY changeFirst ninemonths ended
December
31,2021First ninemonths ended
December
31,2022

Sales to externalcustomers

1,071

1,887

815

Intercompany sales

2,527

3,761

Total net sales

3,598

5,648

Operating profit

195593

Indonesia

YoY changeFirst ninemonths ended
December
31,2021First ninemonths ended
December
31,2021

Amount%308 238.5%(Millions of yen)

YoY change

ChinaFirst ninemonths ended
December
31,2021First ninemonths ended
December
31,202276.1%

Sales to externalcustomers

33675

▲ 260

▲77.5%

1,234

48.8%

Intercompany sales

326

869

543

166.5%

2,050

57.0%

Total net sales

662

945

282

42.6%

Operating profit▲ 443580－%

Amount%398 203.7%

Amount%9

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

North America

Indonesia

China

10Breakdown of YoY Changes in Operating Profit•Gross profit increased by ¥579 million, in line with YoY increase in sales of ¥2,332 million.

•Cost-of-sales ratio decreased by 0.71% and gross profit increased by ¥156 million through sales
price revisions and logistics streamlining in overseas business.

•SG&A expenses increased by ¥316 million as we came out of restricted operational conditions andresumed business activities.

•As a result, operating profit rose by ¥419 million YoY to ¥1,585 million.
First nine months First nine months
ended December ended December
31,2021
31,2022

YoYchange

Impact on
operating profit(Millions of yen)

NoteNet sales

19,79322,1252,332+579

2,332 ｘ （1 - 75.1％）

Cost-of-sales ratio

75.1%

74.4% ▲0.71%+156

22,125 ｘ ▲0.71％

Gross profit

4,918

5,654735

SG&A expenses

3,753

4,069

316

Operating profit

1,165

1,585

payroll: up 161; Technical research expenses: up 81▲ 316 Transportation costs: up 45; Other SG&A: up 29+419

11Breakdown of YoY Changes in Operating Profit (Graph)
Impact ofimprovement in（Millions of yen）

cost-of-sales

ratio

＋156
Increase innet sales+579
Operating

Increase inpayroll▲161

Increase intechnicalresearchexpenses▲81

Increase intransportationcosts▲45months▲29

Operatingprofit for
first nine
ended

SG&A expenses ▲316

December
31,2022

ended
December

1,585

31,2021

1,165

other SG&A

monthsprofit for
first nine

Increase in

Operating profit+419

Operating profit ratio

Operating profit ratio

5.9%

7.2%

12

Net Working Capital (Trade Receivables + Inventories – Trade Payables)•Net working capital invested in sales activities increased by¥2,777 million YoY to ¥11,645 million.

•Inventories increased by ¥2,474 million YoY to ¥9,800million by increasing production and reducing the risk ofparts stockout.

•Sales/Inventory turnover decreased by 0.60 times YoY to2.95 times for the year.
(Millions of yen)

As ofDecember
31,2021

As ofDecember
31,2022

26,04428,931

2,887

11.1%

Trade receiveables

8,676

9,765

1,089

12.6%

Inventories

7,326

9,800

2,474

33.8%

▲7,134▲7,920

▲786

11.0%

Net working capital

8,868

11,645

2,777

31.3%

Inventories turnover

3.56 times

2.95 times▲0.60 times

Annualizedconsolidated net sales

Trade payables

YoY change
Amount%13

Consolidated Business Forecast
No change from the previous forecast（We have upwardly revised at the time of the announcement of Consolidated Financial Results for the Six Months Ended September 30, 2022）•We anticipate firm demand in Japan, North America and Southeast Asia.

•Although costs continue to rise due to supply chain issues and surging material prices, we continue
to address the penetration of sales price revisions and logistical efficiency gains.
(The assumed exchange rate used in the consolidated business forecast is ¥135 per US$. If the exchange rate
remains at ¥125 per US$ in the months from February to March, the full-year average rate on consolidated financial
results is expected to be about ¥134 per US$.)(Millions of yen)First nine months

Full year

First nine months
ended December
31,2021(results)

First nine months
ended December
31,2022(results)

19,79322,125

2,332

11.8%

26,59930,000

3,400

12.8%

Operating profit

1,165

1,585

419

36.0%

1,383

2,020

636

46.0%

Ordinary profit

1,206

1,586

379

31.5%

1,407

2,050642

45.6%

836

1,172

336

40.2%

1,427

1,520

92

6.5%

¥197.01¥277.45¥80.4340.8%¥336.87¥360.08¥23.21

6.9%

Net sales

Profit attributable toowners of parent
Earnings per share(Yen)

YoY change
Amount%Fiscal year
ended March
31,2022(Results)

Fiscal year
ending March
31,2023(Forecast)

YoY change
Amount%14

2. Implementing Key Initiatives Outlined in the Medium-Term Management Policy

Dividends per Share・ Since the announcement of the Medium-Term Management Policy on June 2, 2021, we have set a dividend policy asfollows, 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.
・ Since the ROE for the full year business forecast is anticipated to exceed 6%, we have upwardly revised the dividend
forecast to ¥180 for a payout ratio of 50% at the time of the announcement of Consolidated Financial Results for the Six
Months Ended September 30, 2022.

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

15

KPIs Established in the Medium-Term Management Policy•

Net sales are on pace to exceed the plan in the second year of the medium-term management
policy.

•Faced with profit structure deterioration due to structural increases in energy and material prices
and high logistics costs, improvement in operating margin is lagging, and we are now promoting
profit structure reform through further sales price revisions and cost reductions.
（Millions of yen）
First nine months
ended December
31,2021(results)

First nine months
ended December
31,2022(results)

Net sales

19,79322,12530,00026,50030,000Operating profit

1,165

1,585

2,020

2,000

3,100

5.0%

6.5%

6.5%

5.5%

8.0%

Annualized return on equity(ROE)

Share buybacks※1

Fiscal year
ending March
31,2023(Forecast)Target for the
fiscal year
ending March
31,2024

Target for the
fiscal year
ending March
31,2026

Cumulative amount of share buybacks

340

ー340※2500 ～ 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 14, 2023.
※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.