Consolidated Financial Results
for the Three Months Ended June 30, 2022

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

August 10, 2022

Summary of Consolidated Financial Results1

Highlights of Consolidated Business Performance
１．Summary of Consolidated Business Performance for the Three Months Ended
June 30, 2022

１）Consolidated net sales : ¥6,865 million, up 12.7% YoYOverseas sales was expanded by handling supply chain issues.

２）Operating profit: ¥448 million, up 2.2 times YoYProfit structure reform made progress, especially in overseas business.

３）Sales in Japan: ¥2,811 million, up 1.7% YoY

Sales remain firm against the backdrop of measures to accelerate
national land resilience.

４）Sales in North America: ¥1,729 million, up 25.6% YoYStrong recovery in demand made progress against the backdrop of robust
investment in construction.

５）Sales in Asia

: ¥2,184 million, up 22.6% YoY

In addition to the shift to demand recovery in the Indonesian market,
Vietnam market was strong.

2

Highlights of Consolidated Business Performance
２．Adapting to a Changing Business Environment１）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 billion, operating profit of ¥3.1 billion, ROE of 8%
Three Months ended June 30,2022 : Net sales of ¥6.8 billion, Operating profit of ¥0.4 billion,
ROE of 6.9%（２）Building a sustainable management structure by ESG and DX２）Adaptability to change（１）Dealing with volatile demand• Inventories of ¥7,458 million（up 10.2% YoY, sales/inventory turnover was improved by
0.25times to 3.67times）
Reducing parts stockout risk by reviewing inventory levels of long delivery parts（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• 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 Environment１）JapanDemand for construction machinery is projected to remain strong, buoyed by the Japanese
government’s ¥15-trillion initiative to accelerate national land resilience over the next five years toprevent and mitigate natural disasters.

２）Overseas
Overseas construction machinery demand is also expected to maintain a firm recovery trend, withinfrastructure investment totaling $1.2 trillion planned in the U.S., and ASEAN and emerging
countries expanding infrastructure investment as an economic stimulus measure,among other factors.
4Consolidated Business Performance(Millions of yen)First Threemonthsended
June30,2021

First Threemonthsended
June30,2022

Net sales

6,089

6,865

775

12.7%

Japan

2,765

2,811

45

1.7%

Overseas

3,323

4,053

729

22.0%

Operating profit

202448246

121.7%(3.3%)(6.5%)

Ordinary profit

214516302

140.8%

Profit attributable toowners of parent

154402248

160.9%(76.3%)(74.4%)

Operating profit ratio

Cost-of-sales ratio

YoY change

Amount%5

Consolidated Business Performance (Graph)6

Sales by Region in Which Customers Are Located(Millions of yen)First Threemonths ended
June30,2021

First Threemonths ended
June30,2022

Japan

2,765

2,811

45

1.7%

Overseas

3,323

4,053

729

22.0%

North America

1,376

1,729

352

25.6%Asia

1,782

2,184402

22.6%

165

140▲ 25▲15.2%

6,089

6,865775

12.7%

Other regions

Total

YoY change
Amount%7

Sales by Region (Map)(Millions of yen)First Threemonths ended
June30,2021

First Threemonths ended
June30,2022

YoY change

Japan

2,765

2,811

(+45、+1.7%)

Overseas

3,323

4,053

(+729、+22.0%)

Total

6,089

6,865

(+775、+12.7%)

8

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

(Millions of yen)

YoY change

JapanFirst Threemonths ended
June30,2021

First Threemonths ended
June30,2022

Sales to externalcustomers

4,373

4,656

282

6.5%

412705293

71.2%Intercompany sales

Total net sales

4,785

5,362

576

12.0%

Total net sales

Operating profit

10090▲9▲9.2%

Operating profit

Intercompany sales

North America
Amount%Sales to externalcustomers

First Threemonths ended
June30,2022

1,376

1,729

352

25.6%

167▲8▲52.1%

1,392

1,737

344

24.7%

90

228

(Millions of yen)

YoY changeFirst Threemonths ended
June30,2021

First Threemonths ended
June30,2022

Sales to externalcustomers174446271

155.6%

Intercompany sales

807

867

597.4%

Total net sales

982

1,314

331

33.8%

Operating profit

5099

48

96.1%

Indonesia

Amount%YoY changeFirst Threemonths ended
June30,2021

Amount%137 151.4%(Millions of yen)

YoY change

ChinaFirst Threemonths ended
June30,2021

First Threemonths ended
June30,2022

Sales to externalcustomers

165

33

▲ 131

▲79.9%

88151

62

70.5%

Total net sales

254

184

Operating profit▲ 21▲8Intercompany sales

Amount%▲ 69 ▲27.2%
13－ ％9Segment Information by Region (Graph)(Millions of yen)JapanNorth AmericaIndonesia

China

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Breakdown of YoY Changes in Operating Profit•

Gross profit increased by ¥183 million, in line with YoY increase in sales of ¥775 million.

•Cost-of-sales ratio decreased by 1.84% and gross profit increased by ¥126 million
through sales price revisions and logistics streamlining.

•SG&A expenses increased by ¥64 million as we came out of restricted operational
conditions and resumed business activities.

•As a result, Operating profit rose by ¥246 million YoY to ¥448 million.
(Millions of yen)First Threemonths endedJune30,2021

First Threemonths ended
June30,2022

Net sales

6,089

6,865

775+183775 ｘ （1 - 76.3％）

Cost-of-sales ratio

76.3%

74.4% ▲1.84%+126

6,865 ｘ ▲1.84％

Gross profit

1,443

1,754

310

SG&A expenses

1,241

1,305

64

Operating profit

202448

YoYchange

Impact on
operating profit

Notepayroll: up 19; Technical research expenses: up 18▲ 64 Transportation costs: up 12; Other SG&A: up 15+246

11

Breakdown of YoY Changes in Operating Profit (Graph)12

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

Net working capital invested in sales activities
increased by ¥212 million YoY to ¥9,273 million.
Inventories increased by ¥691 million YoY to¥7,458 million.
Sales/Inventory turnover was improved by
0.25 times YoY to 3.67 times for the year.
(Millions of yen)

YoY change

As of June
30,2021

As of June
30,2022

23,14827,375

4,227

18.3%

Trade receiveables

7,412

7,706

294

4.0%

Inventories

6,767

7,458

691

10.2%

▲5,118▲5,891

▲773

15.1%

Net working capital

9,061

9,273

212

2.3%

Inventories turnover

3.42 times

3.67 times

0.25 times

Annualized
consolidated net sales

Trade payables

Amount%13

Consolidated Business Forecast
No change from the earlier forecast•••••

Firm recovery trend in global construction machinery demand amid global infrastructure
investment growth
Further increase in material prices and pressure to revise supply chains
Promote profit structure reform through penetration of sales price revisions and cost cuts
Strengthening product supply capabilities by enhancement of supply chain and expansionof domestic production capacity
Profit to reflect the absence of temporary boost from deferred tax assets of ¥381 million(Millions of yen)First half
Six months
ended September
30,2021(Results)

Six months
ended September
30,2022(Forecast)

12,987

14,000Operating profit

725

Ordinary profit
Profit attributable toowners of parent

Net sales

Earnings per share

Full year
Fiscal year
ended March
31,2022(Results)

Fiscal year
ended March
31,2023(Forecast)

7.8%

26,59929,300

2,700

10.2%

650

▲ 75 ▲10.4%

1,383

1,500

116

8.4%

732

625

▲ 107 ▲14.7%

1,407

1,450

423.0%

509

400▲ 109 ▲21.4%

1,427950119.52円

94.41円YoY change
Amount

1,012▲ 25.11%▲21.0%

336.87円

YoY change
Amount%▲ 477 ▲33.4%

224.22円 ▲ 112.65▲33.4%

14

Dividends per Share
Since the announcement of the Medium-Term Management Policy on June 2, 2021, we have set 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.

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.

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KPIs Established in the Medium-Term Management Policy•

Net sales 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 andmaterial prices and high logistics costs, improvement in operating margin is lagging,and we are now promoting profit structure reform through sales price revisions andcost reductions.

(Millions of yen)First ThreeFirst Threemonths ended months ended
June30,2021 June30,2022(Results)(Results)

Net sales
Operating profit
Annualized return on equity (ROE)

Share buybacks(through March 31, 2026)※1

Fiscal year
Target for
Target forended Marchfiscal year
fiscal year
31,2023
ending March ending March(Forecast)
31,2024
31,2026

6,089

6,865

29,30026,50030,000202448

1,500

2,000

3,100

2.8%

6.9%

4.1%

5.5%

8.0%

ーー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 of share buybacks projected for the fiscal year ending March 31, 2023, represents the amount ofbuybacks conducted for the year-to-date as of August 10, 2022.
※3 The cumulative amount of buybacks projected through March 31, 2026.

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SAKAI HEAVY INDUSTRIES, LTD.

Contact us

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.