Consolidated Financial
Results 2Q FY2023

November 10, 2023

Index• Results Highlights• 2Q FY2023 Results• 2Q FY2023 Results by Segment• FY2023 Outlook• Capital Allocation to Raise Corporate Value

1

Company Profile
Company NameHIRANO TECSEED Co., Ltd.

Representative

Kaoru Okada, President

Paid-in Capital¥1,847,821,000 (as of end-September 2023)

Headquarters

101-1, Kawai, Kawai-cho, Kitakatsuragi-gun, Nara Pref. 636-0051, Japan

Group Companies（wholly-owned）• HIRANO GIKENKOGYO Co., Ltd. • HIRANO K&E Co., Ltd. • HIRANO AMERICA, INC.

Number of Employees

322 (Consolidated: 420, as of end-September 2023)

Securities Code6245 (Industry: Machinery)2

Results Highlights
2Q FY2023 results

FY2023 earnings forecasts
2Q FY2023

Net Sales
Operating Income
Operating Income
Margin¥22,346mn¥769mn3.4%

FY2023 forecasts

YoY+¥4,075mn＋22.3％-¥727mn

Net Sales
Operating Income-48.6％-4.7pts

Operating Income
Margin¥41,000mn¥2,920mn
7.1%

YoY-¥1,423mn-3.4％-¥173mn-5.6％-0.2pts

Topics2Q FY2023 results

FY2023 earnings
forecasts✓ Net sales rise in the Coating and Laminating Machinery Segment on clearing of order backlog for lithium-ion battery-use anode coating equipment✓ Net sales fall in the Industrial Machinery Segment despite demand for film making systems for electronic materials applications such as multi-layer
ceramic capacitors (MLCC) and polyimide films✓ Operating income margin falls as ongoing efforts on price negotiations and cost cutting are insufficient to offset a sharp rise in costs, mainly forindustrial materials and personnel✓ No change in initial sales forecast✓ Operating income hit by higher costs from sharp rise in industrial materials prices, personnel costs, and outsourcing costs, but full-year forecast left
unchanged to reflect income improvement initiatives to share and standardize components and equipment, boost productivity, and raise the value
added of equipment.
3

2Q FY2023 Results

Overview of 2Q FY2023 Results
Cumulative 1Q-2Q FY2023 results
FY22

FY23

1Q-2Q

1Q-2Q

a
Orders2Q FY2023 results overview
Change

YoY %

b

b-a

(b-a)/a42,917

6,696-36,221-84.4%Net Sales

18,27022,346+4,075+22.3%

Operating
Income

1,496

769

-727

-48.6%

Operating
Income Margin

8.2%

3.4%

-4.7%

-

Ordinary Income

1,557

814

-742

-47.7%

Ordinary Income
Margin

8.5%

3.6%

-4.9%

-

Net Income

1,078

564

-514

-47.7%Net Income
Margin

5.9%

2.5%

-3.4%

-

(Unit: ¥million)✓ Orders fall in 2Q owing to the concurrence of strong advance orders
in FY2022 and earlier, particularly for coating equipment for EV-use
lithium-ion batteries, weak orders as client closely monitor prices,and specification adjustments for changes in clients’ delivery
locations.
✓ Net sales rise in the Coating and Laminating Machinery Segment on
clearing of order backlog for lithium-ion battery-use equipment, butfall YoY in the Industrial Machinery Segment despite demand for film
making systems for electronic materials applications becoming themain focus✓ Operating income falls on sharp rise in costs (mainly for industrial
materials and personnel)✓ Ordinary income falls on decline in operating income and rise ininterest payable for repayment of borrowings✓ Net income also falls on decline in ordinary income
5

2Q FY2023 Results by Segment
FY22
Cumulative 1Q-2Q(Unit: ¥million)b-a(b-a)/a42,917
18,270
1,496
8.2%

6,696
22,346769
3.4%-36,221+4,075-727-4.7%-84.4%+22.3%-48.6%-

Orders39,7583,580-36,177-91.0%Net Sales

12,821841
6.6%

18,227918
5.0%+5,405+77-1.5%+42.2%+9.2%-

Orders

2,178

2,247

+68

+3.2%

Net Sales

4,796
1,107
23.1%

3,261
504
15.5%

-1,534-603-7.6%-32.0%-54.4%
-

980
653
63
9.7%

868
857
47
5.5%

-112
+204
-15
-4.2%

-11.5%+31.2%-25.2%-

Operating Income *1
Operating Income
MarginOperating Income*2
Operating Income
MarginIndustrial Machinery
Segment

Operating Income*2
Operating Income
MarginOrdersNet Sales

Others, Adjustments

YoY %

b

Net Sales

Coating and Laminating
Machinery Segment

ChangeaOrdersConsolidated total

FY23
Cumulative 1Q-2Q

Operating Income*2
Operating Income
Margin*1 After adjustment for SG&A not assignable to any reporting segment*2 Operating income equivalent to segment profit in the quarterly results report.

6Factors for Change in 2Q FY2023 Operating Income＞

Factors for change in operating income(Unit: ¥million)

Main changes（ー）Rise in commissions

Countermeasures

Gross income✓

Rise in net sales•••
Main changes（＋）Rise in sales fromproject orders（ー）Higher costs from sharp
rise in industrial materials prices,delivery location/specification changes
Delays due to longer construction times

769

•

✓

Main changes（ー）Profit falls on lower sales
and changes in product mix

Revision of transaction conditions toreflect changes in clients’ delivery locations
Price negotiations on increased added
value created by improved
functionality of machinery
Improvement in production structure
via early decision on specifications
due to frontloading
Fall in lost orders as increased
production capacity shrinks lead times

Fall in CoGS•••

Fall in costs from sharing and standardization
Profit improvement by raising rate of in-houseproduction for key components
Visualization of CoGS to maximize profitability
such as by improving monitoring system

SG&A costs✓

Coating and Laminating
Machinery segment+77

Industrial Machinery
segment-603

Others✓Fall in commissions from revision of contract
conditions
Improvement in productivity from DX advances-15
7

2Q FY2023 Balance Sheet
Assets(Unit: ¥million)

End-FY2022

End-2Q FY2023

Value

Value

ChangeCurrent Assets

48,15843,964-4,194

Fixed Assets
Tangible Fixed
AssetsIntangible Fixed
AssetsInvestments andOther Assets
Total Assets

12,363

12,943

+579

7,408

7,391

-17

672

595

-76

4,283

4,956

+673

60,522

56,908-3,614Current Liabilities

23,42819,223-4,205

Fixed Liabilities

1,096

1,054

-42

Net Assets
Equity Ratio

35,997

36,630

+633

59.5%

64.4%

+4.9pts

Current Assets
Down ¥4,194mn✓ Cash and deposits
Down ¥1,260mn✓ Marketable securities Down ¥2,299mn✓ Advance payments Down ¥1,359mn
Fixed Assets Up ¥579mn✓ Investments and other assets Up ¥673mn✓ Intangible fixed assets
Down ¥76mn

Liabilities
Current Liabilities Down ¥4,205mn✓ Short-term borrowings Down ¥3,982mn
Fixed Liabilities Down ¥42mn✓ Deferred tax liabilities Up ¥123mn✓ Long-term borrowings Down ¥176mn

Net Assets
Net Assets

Up ¥633mn

8Change in Notes and Accounts Receivable - Trade, and Contract
Assets and Electronically Recorded Monetary Claims - Operating(Unit: ¥million)

Accounts receivable - trade

Contract assets

9

2Q FY2023 Results by Segment

Order Backlog, Net Sales, and Orders in the Coating and Laminating Machinery Segment
Order backlog, net sales, and orders in the Coating and
Laminating Machinery Segment

Highlights in the Coating and Laminating Machinery Segment(Unit: ¥million)
Order backlog

Net sales

Others90,000Marketconditions✓ Solid growth in the lithium-ion battery market (esp.
the EV market), expect expansion in North
America/Southeast Asia

Orders✓ As well as large-lot orders from North American
clients, orders were up last year on advance orders inanticipation of continued EV market growth, orders
continue to fall this year due to clients’ decreasedorder appetite as they monitor prices and toadjustments for change in delivery locations✓ In anticipation of further market growth, aim todevelop and strengthen business partnerships, bolster
production capacity, implement component sharing
and standardization, and clear the order backlog

Net sales✓ YoY rise in net sales, especially in energy-related areas,from efforts to clear the order backlog by increasing
output80,00070,00060,00050,00040,00030,00020,00010,000
0
FY20
FY21
FY22
FY23 2Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q 2Q 3Q 4Q 1Q 2Q2 3Q3 4Q4 1Q 2Q3 3Q2 4Q2 1Q
1Q 2Q
FY20

FY21

FY22

FY23

11

Order Backlog, Net Sales, and Orders in the Industrial Machinery Segment
Order backlog, net sales, and orders in the Industrial
Machinery Segment

Highlights in the Industrial Machinery Segment

Marketconditions✓ Market being driven by film making systems forsemiconductor materials applications, such as MLCC
and polyimide films✓ Demand rising particularly in China

Orders✓ Orders rose slightly YoY, in part on orders from clientsin regions such as Japan and China

Net sales✓ Down YoY despite film making systems for electronicmaterials applications becoming the main focus(Unit: ¥million)
Order backlog

Net sales

Orders

18,00016,00014,00012,00010,000
8,000
6,000

4,000
2,000
0
FY21
FY22
FY23
FY24 2Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q 2Q 3Q 4Q 1Q 2Q2 3Q3 4Q4 1Q 2Q5 3Q6 4Q7 1Q
1Q 2Q
FY20

FY21

FY22

FY23

12

FY2023 Outlook

FY2023 Earnings Forecasts
FY2022

FY2023 forecast(Unit: ¥million)ab

Net Sales

42,423Operating Income

YoY
Change b-a

YoY% (b-a)/a

41,000-1,423

-3.4%

3,093

2,920

-173

-5.6%

Operating Income Margin

7.3%

7.1%

-0.2pts-

Ordinary Income

3,219

3,000

-219

-6.8%

Ordinary Income Margin

7.6%

7.3%

-0.3pts-

Net Income

2,243

2,100

-143

-6.4%

Net Income Margin

5.3%

5.1%

-0.2pts

-

ROE

6.4%

5.8%

-0.6pts

Dividends Per Share

¥56

¥56

¥0

Interim dividend

¥28

¥28

¥0

Year-end dividend

¥28

¥28

¥0
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FY2023 R&D Expenditure, Capex, and Depreciation Expenses
R&D expenditure

Capex and depreciation expenditure (consolidated)(Unit: ¥million)(Unit: ¥million)
Total

Capex

Industrial Machinery Segment

Depreciation expenditure

1,500

Coating and Laminating Machinery Segment
400

1,000

300
142

144

118

200

1,500
380

1,175
500

100

179

171

184

563

580

551

624

700

279
0

0
FY2020

FY2021
ActualFY2022

FY2023
Forecast

FY2020

FY2021
ActualFY2022

FY2023
Forecast

15

Capital Allocation to Raise
Corporate Value

Raising Corporate Value and Realizing Long-term Vision
We are formulating our next medium-term plan based around policies and capital allocation strategies aimed at achieving our 2030
objective of becoming a “Global leader in coating machines”

Stage1

Stage2

Stage3

Expand market share in
the energy field

Raise profitability andproductivity

Develop and market
new technologies（Unit:¥ billion）

Net Sales

Operating profit margin

Long-term Vision 2030『Core principles』

Net sales ¥60bn
Operating profit margin 12％
ROE 10%

70
60

12%

50

10%

30

Strong push toward standardization/mass production

2

Enhancing customer service structure3

Continued strengthening of global development

4

Pursuing smart factory technologies

5

Business development that embodies market needs

6

Expanding human capital

14%
12.0%

40

1

Formulating management policies and capital
検討中
allocation strategies
for our next medium-term plan60
that build toward our long-term vision for 2030

8%
6%

20

4%

10

2%

0

0%

FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030

17

Capital Policies in Long-term Vision 2030（Reprint of materials published in May 2023)
Larger and more stable shareholder returns while retaining sufficient funds for investment in continuous growth
Growth investment

Shareholder returns◼ Strategic investment◼ Shareholder returns

•
•
•
•
•
•
•

Enhance Technicum (R&D testing facility)
Strengthen smart factory technologies
Boost remote, labor-saving, and automated operation technologies
Expand global procurement and production structures (including withdomestic and overseas partners)
Invest in factory infrastructure
Expand after-sales service structure
Technological development and business development for next-generation
growth areas◼ Foundation strengthening•••

Expand investment in human capital (train engineers, working-style reforms,
etc.)
Invest in systems to improve operating efficiency
R&D and equipment investment to reduce environmental load

•
•
•
•

Maintain current DPS as the minimum level and the dividend payout ratioat 35% or more
Focus on capital efficiency to improve and stabilize ROE
Consider share buybacks based on share price trends
Policy of larger and more stable shareholder returns while retaining
sufficient funds for investment in growth
Dividend payout
ratio 35％ or more

Dividends per share(Unit: ¥)
¥46
28

¥56

¥56

28

28

28

28

FY2021

FY2022

¥37
22

18

15

FY2019FY2020Interim dividend

FY2030Year-end dividend

18

Capital Allocation Policy（FY2024～FY2027）
Prioritize capital allocation to investments necessary for growth, while maintaining a sound financial position and flexibly procuring funds
Take a flexible approach to shareholder returns, including share buybacks, in cases where there is no strategic alliance for planned growth investment
1

Growth investment(around ¥3bn)✓ Expand production structure and bolster capacity on a global basis: around ¥2bn
✓ Strengthen digital twinning, smart factory technologies, and DX: around ¥1bn
✓ Capital allocation to after-sales services in US, other growth and human capital initiatives to raise corporate value
2

Operating CF
Strategic alliances orshareholder returns(around ¥3bn)

External borrowings

End-2Q FY2023
cash and deposits（¥10.4bn）

Dividends

Base investment(around ¥1bn）

Working capital✓ Where there is no strategic alliance, flexibly conduct high-priority growth investments or shareholder returns(including share buybacks depending on share price trends) to reach an appropriate ROE level for PBR improvement

Cash out

Dividends✓ With current DPS (¥56) as the minimum level, set a dividend payout target in line with earnings progress and thelevel of ROE needed for PBR improvement and conduct regular reviews (target a dividend payout ratio of at least
35% based on securing DPS as the minimum level)
4

Base investment: Investment to strengthen the business base to support continuous growth✓ Investment in upgrading existing factory infrastructure (buildings, equipment, etc.): around ¥1bn
5

Cash in

Strategic alliances or shareholder returns: M&A to grow Hirano group or shareholder returns✓ Strategic alliances for growth to bolster production capacity, secure key components, acquire HR, etc.

3
(use for investment projects
while maintaining
a sound financial position)

Growth investment: Investment in raising medium- and long-term corporate value to achieve 2030 Long-term Vision

Working capital✓ Policy of maintaining cash and deposits equivalent to three months of sales

19Initiatives to Improve PBR and ROE
Pursue PBR/ROE improvement by expanding earnings power via growth investments in line with capital allocation, controlling equity
via a flexible dividend policy, and strengthening IR activities based on market dialogue
Current situation

PBR＞

Solutions1

2

4

Expansion of returns

FY2020→FY2022

1.4x→0.9x

FY2020→FY2022

Increase profits by starting up North Americanbase to grow sales and provide after-sales
maintenance and ancillary services
Expand output by shrinking lead times using
strategic alliances that take advantage of financial
leverage=

ROE

Improve profitability by raising value added using
digital twinning technology and by cutting costs by
pursuing standardization and increase in in-houseproduction rates

3

Control of equity

PER

Pursue a flexible dividend policy balanced withgrowth investments

FY2020→FY2022

24.5x→13.9x

Activation ofengagement
activities

Secure key components and acquire HR

Implement a dividend policy with current DPS(¥56) as the minimum level

5.9%→6.4%
x

Secure and bolster production capacity

Formulate, implement, and disclose next mediumterm plan/growth investments (disclosurescheduled for 1Q FY2024)

Shareholder returns, including dividend hikes andshare buybacks, if there is no strategic alliance
Make further shareholder returns to reach an
appropriate ROE level for PBR improvement

Pursue active information disclosure

Further activate IR activities
Dialogue with investors

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Appendix

By Application ① Net Sales (quarterly)(Unit: ¥million)
14,00012,00010,000
8,000

6,000
4,000
2,000
0
1Q FY2021

2Q FY2021

Display-related

3Q FY2021

4Q FY2021

1Q FY2022

Electronic materials-related

2Q FY2022

3Q FY2022

Household product-related

4Q FY2022

1Q FY2023

Energy-related

Others2Q FY2023

We applied Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the FY2021 consolidated accounting period. Figures for FY2021 are adjusted to reflect these standards.

22

By Application ② Orders (quarterly)(Unit: ¥million)
30,00025,00020,00015,00010,0005,000
01Q FY2021

2Q FY2021

Display-related

3Q FY2021

4Q FY2021

1Q FY2022

Electronic materials-related

2Q FY2022

3Q FY2022

Household product-related

4Q FY2022

1Q FY2023

Energy-related

Others2Q FY2023

We applied Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the FY2021 consolidated accounting period. Figures for FY2021 are adjusted to reflect these standards.

23

By Application ③ Order Backlog (quarterly)(Unit: ¥million)
100,000
90,00080,00070,00060,00050,00040,00030,00020,00010,0000
1Q FY2021

2Q FY2021

Display-related

3Q FY2021

4Q FY2021

Electronic materials-related

1Q FY2022

2Q FY2022

3Q FY2022

Household product-related

4Q FY2022

1Q FY2023

Energy-related

Others2Q FY2023

We applied Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the FY2021 consolidated accounting period. Figures for FY2021 are adjusted to reflect these standards.

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Disclaimer
This document provides information intended solely to help readers’ understanding of HIRANO TECSEED CO., LTD.
Thus, we have no intention to solicit or encourage investment for securities or financial products mentioned in this document. Also, readers are advisedthat this document is not a disclosure document or statement of financial performance as required by Japan’s Financial Instruments and Exchange Act,Act on Investment Trusts and Investment Corporations, related cabinet orders, cabinet office ordinances or rules, the rules governing companies listed on
the Tokyo Stock Exchange, or any other applicable rules.
This document contains forward-looking statements, including forecasts of financial position, results of operations, and business-related matters, as well
as statements related to the plans and goals of the management of HIRANO TECSEED CO., LTD. There are a number of known and unknown risks anduncertainties that can cause its actual results or performance to differ materially from any explicit or implicit forecasts contained herein. These forwardlooking statements also rest on a number of assumptions with regard to our present and future management strategies, as well as the political andeconomical environments in which we will conduct its future business operations.
Although the information contained in this document is the best available at the time of publication, no assurances can be given regarding the accuracy,
certainty, validity or fairness of this information and we are not responsible for any error or inaccuracy in the information or data contained herein.
The content of this document can be modified or withdrawn without prior notice.

November 10, 2023
Contact:
General Division Department HIRANO TECSEED Co., Ltd .
https://www.hirano-tec.co.jp/en/contact/
Tel: +81-745-57-0681

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