Results of Operations for the
Fiscal Year Ended March 31, 2020 (FY3/20)
May 14, 2020

IWAKI CO.,LTD.

Stock
code: 6237
証券コード：6237
Trade
name:
Iwaki Pump
証券コード：6237
銘柄名：イワキポンプ

Contents

I. Summary of FY3/20 Financial Results

・・・・P 3

II. Outlook for FY3/21

・・・・P13

III. Medium-term Management Plan
Business Development and Growth・・・・P192

I

Summary of FY3/20 Financial Results

3

1 Financial Summary(Millions of yen)

FY3/19FY3/20

AmountAmountYoY change

Net sales

29,171

28,636-1.8%

Gross profit

10,374

9,806

-5.5%

(Gross margin)(35.6%)(34.2%)(-1.3pt)

Operating profit

2,337

2,114

-9.6%

(Operating margin)(8.0%)(7.4%)(-0.6pt)

Ordinary profit

2,847

2,578

-9.5%

Profit attributable to owners of parent

2,163

2,122

-1.9%

Net income per share (Yen)

96.25

96.06

-0.2%

Exchange rate
(average)

USD/JPY (Yen)

110.45109.03

EUR/JPY (Yen)

130.35122.034

2 Sales and Earnings Highlights

1

Sales were down 1.8% (-¥535 million) affected by a decline in sales in thesemiconductor/liquid crystal market during the first half of FY3/20
Sales in the water treatment market were strong, especially in the U.S., but total sales
decreased because of a sales downturn in the semiconductor/liquid crystal market during thefirst half of the fiscal year. Sales in this market started recovering in the second half
In the medical equipment market, sales decreased 2.0% (-¥102 million) as customers in Japan
reduced their inventories. Sales were strong in China
U.S. sales increased 7.5% (+¥287 million)
The COVID-19 pandemic had an insignificant effect on FY3/20 sales

2

Operating profit was 9.6% lower (-¥223 million) than one year earlier

3

A small decrease in profit attributable to owners of parent

Earnings benefited from cost cutting but total earnings decreased because of lower
sales and a higher cost of sales ratio.

Profit from equity method investments decreased (-¥82 million) because of lower performanceof affiliates, mostly in Asia that mostly target the semiconductor/liquid crystal market
Gain on sales of investment securities of about ¥150 million
Profit attributable to owners of parent was down 1.9%. There was a reduction of
approximately ¥100 million in corporate tax due to tax credits related to experimental researchexpenses5

3 Factors Affecting Profitability(Thousands of yen)

Effect of ¥1 exchange rate change

USD

EUR

Net sales

50,21919,802

Operating profit

15,198

10,472(Millions of yen)

FY3/19OperatingprofitIncrease/decreasein sales, change incost of sales ratio

Gross profit
Foreignexchange
impactSG&A
expensesForeignexchange
impactSG&A expenses
Increase/decreasein R&D and othercosts

FY3/20Operatingprofit6

4 Net Sales and Operating Profit (Quarterly)
Sales were highest in the fourth quarter during FY3/20 because of strong sales in the water
treatment market and a recovery trend in the semiconductor/liquid crystal and surface
treatment equipment markets
FY3/18(Millions of yen)

7,500

FY3/19(Millions of yen)

FY3/201,200
Net
sales (left)
売上

7,250
1,000
7,000

Operatingprofit (right)
営業利益

800
6,750

Ordinary
profit (right)
経常利益

6,500

600

6,250
400
6,000
200
5,750
5,500

0
1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

7

5 Gross Margin and SG&A Expense Ratio (Quarterly)
Although SG&A expenses usually increase in the fourth quarter, expenses were about the sameas in the third quarter due to measures to hold down personnel expenses
FY3/19FY3/18(Millions of yen)

FY3/20

2,400

40%
38%

2,200

SG&A expenses (left)
販管費

36%
2,000

34%

売上総利益率Gross margin (right)

32%

1,800

30%
1,600

SG&A
expenses
販管費率
ratio (right)

28%
26%

1,400

24%
1,200
22%
1,000

20%
1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

8

6 Product Category Sales
Slow sales of pneumatic drive pumps for the semiconductor/liquid crystal market due to a decline in thefirst half of FY3/20
Steady sales of metering pumps and strong sales of systems products (IWAKI America’s aquatic business)
FY3/19(Millions of yen)

FY3/20FY3/20 sales

8,000(Millions of yen)

7,000
6,000

35.4%

34.1%

35.0%

33.3%

35.1%

34.0%

31.9%

37.6%

5,000
4,000

16.4%

16.9%

17.8%

17.2%

18.4%
17.7%

3,000

11.3%

10.0%

2,000
1,000

10.9%
9.4%

9.4%
10.2%

6.4%
9.8%

6.3%

10.1%

9.2%

5.7%
4.8%

12.2%

12.9%

11.8%

11.8%

1Q

2Q

3Q

4Q

8.9%

7.6%

2Q

3Q

4Q

5.1%

10.4%

8.2%

1Q

9.0%

8.8%

8.0%

5.3%
4.0%
7.7%

9.5%

8.5%

9.6%

5.5%
3.7%

10.6%

6.8%

6.7%

4.9%
4.1%

5.5%
5.3%

9.9%

7.9%

18.8%

5.2%
4.7%

5.1%
4.7%

12.0%

6.3%

18.7%

0

YoY
changeMagnetic drive pumps
マグネットポンプ

9,779

-3.9%

定量ポンプ
Metering pumps

5,184

+2.3%

空気駆動ポンプ

Pneumatic drive
pumps

1,953

-29.6%

回転容積ポンプ
pumps

Rotary displacement

2,632

-8.2%

Air pumps
エアーポンプ

1,527

-0.0%

Systems products
システム製品

1,454+11.3%

仕入商品
Purchased products

2,621+10.0%

Othersその他

3,482+13.6%
9

7 Market Category Sales
Sales in the water treatment market, which account for a large percentage of total sales, were favorable
Semiconductor/liquid crystal sales were sluggish but the year-on-year decrease became progressively
smaller: 1Q: -36.3% 1Q-2Q: -35.3% 1Q-3Q: -26.5%(Millions of yen)

FY3/198,000(Millions of yen)

YoYchangeliquid crystal
半導体・液晶3,695-20.5%

Medical equipment
医療機器

5,129

-2.0%

8.7%

表面処理装置equipment

2,321

-1.9%

25.2%

Water treatment
水処理

6,750

+8.1%

Chemicals
化学

2,874

+5.0%

New energy
新エネルギー

734

+0.0%

7,129

-1.1%

FY3/20 sales

FY3/20
Semiconductor/

7,000
17.8%

17.5%

16.0%

11.7%

12.4%

16.5%

19.1%

7.8%

7.4%

17.9%

18.6%
8.5%

16.6%

18.6%

18.5%

5,000
8.7%

12.7%

12.1%

6,000
17.7%

15.0%

7.9%
8.1%

Surface treatment

7.7%

4,000
19.7%

20.9%

23.4%

22.0%

9.4%

9.8%

10.2%

21.6%

23.2%

23.8%

3,000
8.5%

9.8%

2,000

3.1%

2.6%

2.0%

2.4%

3.1%

1,000

24.6%

24.8%

24.4%

25.0%

25.9%

10.1%

10.6%

3.2%

9.3%
2.0%

25.3%

24.3%

24.2%

1.9%

Others
その他

0
1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

10

88 Regional Sales
Sales in Japan and Asia were impacted by a decline in the semiconductor/liquid crystal market
Sales remained strong in America
FY3/19(Millions of yen)

FY3/20FY3/20 sales(Millions of yen)

YoYchange日本
Japan

17,369-4.4%

Overseas
total
海外計

11,266+2.3%

Europe
ヨーロッパ

2,670

+0.5%

America
米国

4,093

+7.5%

Asia
アジア

2,269

-3.4%

China
中国

1,218

-0.7%

Others
その他

1,014

+4.6%

8,000
7,000
6,000
5,000

61.9%

61.8%

61.7%

63.7%

59.2%

62.6%

59.2%

61.5%

4,000
3,000
9.7%

9.7%

8.6%

8.5%

10.9%

9.4%

11.3%

13.2%

13.8%

13.8%

15.0%

14.1%

1,000

10.2%

0

3.7%
3.2%

8.1%
4.0%
3.1%

8.0%
5.1%
2.8%

5.9%
4.0%
4.2%

7.6%
4.1%
3.2%

6.7%
4.1%
3.0%

1Q

2Q

3Q

4Q

1Q

2Q

2,000

9.2%

8.0%

14.0%

14.0%

9.2%
4.8%
3.6%

8.2%
4.0%
4.4%

3Q

4Q
Overseas sales ratio

39.3%

11

9 Capital Expenditures, R&D Expenses and Depreciation (Semi-annual)(Millions of yen)

FY3/18

FY3/19FY3/20550
3,100(Millions of yen)

YoYchangeCapitalexpenditures
設備投資

469

-3,020

R&D
expenses
研究開発費

677

+69

Depreciation
減価償却費

649

+40

FY3/20 sales

3,050
500
450
400
350

300
250
200
150

*Capital expenditures in the first half of
FY3/19 include expenses of ¥2,862
million at the new technology center

100
50
0
First half

Second halfFirst half

Second halfFirst half

Second half

12

II

Outlook for FY3/21

13

1 FY3/21 Forecast(Millions of yen)

FY3/20FY3/21 (forecast)AmountAmountNet sales

28,636Gross profit

9,806(Gross margin)(34.2%)

Operating profit

2,114(Operating margin)(7.4%)

Ordinary profit

2,578

Profit attributable to owners of parent

2,122

Net income per share (Yen)

96.06

Exchange rate
(average)

USD/JPY (Yen)

109.03

EUR/JPY (Yen)

122.03

YoY change

Underexamination*Iwaki will promptly announce the FY3/21
forecast as soon as it is determined14

2 Major Effects of the COVID-19 Pandemic (1)

1

Japan
Teleworking, rotation shift work, flexible-time work, and measures for employee
health management have been implemented
Normal operations at production bases in Japan (Saitama and Miharu plants) andno significant problems involving procurement activities
For sales activities, restrictions on some sales visits to customers

2

Overseas
In China, Hong Kong has been operating since Feb. 3 (end of Lunar New Yearholiday) and business sites in Shanghai, Guangzhou, Shenzhen and Beijing as well as
the Guangdong knock-down plant have been operating since March 2 (Teleworking
was used between the end of the holiday and restart of operations)IWAKI America was certified by the Commonwealth of Massachusetts as a necessary
business and has continued normal operation even after the stay-at-home orders
was issued with implementing measures to protect employees from COVID-19
IWAKI Europe has implemented rotation shift work. In Asia, major group companies
have been operating mainly by teleworking
Sales activities are limited by the lockdowns and other restrictions of countries
worldwide15

3 Major Effects of the COVID-19 Pandemic (2)3Demand associated with the COVID-19 pandemicRequests to increase production of pumps to meet rising demand for clinicaltesting equipment (immunology analyzers and biochemical analyzers) in China
Higher demand for pumps used on disinfectant production lines
Higher demand for pumps used in devices associated with disinfectant
Demand for maintenance services at factories that have suspended operations

16

4 FY3/21 Market Environment Assumptions
Market environment assumptions
Japan

Overseas

Water treatment
market• Firm demand for disinfectant related equipment due to anincreased needs of disinfectant, etc.
• Increasing demand for remote controllers mainly due totelework and stay-at-home orders• Sluggish demand in the water treatment plant category due todecline in investments• Firm sales of pumps for ballast water control equipment• Temporary upturn in global demand involving disinfecting

Semiconductor/
liquid crystal market• Soft demand at manufacturers of production devices in thismarket• Signs of a resumption of capital expenditures for memory
devices

Medical equipment
market• Expect small decline in 2Q in production of clinical testing
equipment (immunology analyzers and biochemical analyzers)• Firm demand for products used in endoscope sterilizationequipment• Slowing sales for dialysis equipment as production decreases
due to market saturation• Firm demand for clinical testing equipment in China(immunology analyzers and biochemical analyzers)

New energy market• Slowing sales in the rechargeable battery (lithium-ion) market• Signs of resumption of investment in rechargeable batteries• Big drop in household fuel cell production because of COVID-19
after COVID-19 infection spread has ceased

Chemicals market• Steady demand related to development of value-added
products• Increasing investments by pharmaceutical companies fordeveloping COVID-19 drugs• Uncertainty about the procurement of raw materials, mainlyin Asia, but signs of a resumption of investments inrechargeable battery materials after COVID-19 infection
spread has ceased

Surface treatment
equipment market• Increasing demand for value-added electronic components
used in automotive components, IoT applications and othermarkets• Soft demand in the smartphone market• Continuation of steady demand for electronic components
used in automotive and telecommunication applications• Soft demand at printed circuit board device manufacturers
due to an effect of COVID-19*Bold indicates priority markets targeted for growth.
*Red indicates negative outlooks.

17

5 Return to Shareholders
Basic policy・Dividend payout ratio: more than 30%
・Consistent distribution of dividends(Yen)

Dividend per share
1株当たり配当金

40

30.0(¥27.53)(¥28.90)

35.0

31.8

30.0
30

(%)

Dividend payout ratio (consolidated)
配当性向（連結）(¥30.50)

20

10

Not
determined

30.0* FY3/21 dividend
forecast will bepromptly announced
as soon as it isdetermined

20.0

25.0

15.0
10.0
5.0

0

0.0
FY3/18

FY3/19FY3/20FY3/21 (forecast)

Note: Dividends for FY3/18 are adjusted (with fractions after the hundredths place dropped) to reflect the
3-for-1 common stock split on July 1, 2018.

18

III

Medium-term Management Plan
Business Development and Growth19

1 Overview of the 10-Year Vision
FY3/16

FY3/17

FY3/18

FY3/19Medium-term Management Plan FY3/20–FY3/22

FY3/25Business development and growth

Consolidated sales

Numerical targets

FY3/16

FY3/17¥24.8 billion ¥25.1 billion

FY3/18

FY3/19¥28.0 billion ¥29.1 billion

FY3/20FY3/21

FY3/22¥40.0 billion¥28.6 billion

9.1

9.2

10.6

11.0

11.2

15.7

15.9

17.4

18.1

17.4

6.1%

5.8%

7.5%

8.0%

7.4%

Under
examination

Underexamination

Operatingmargin20.0

Overseas

20.0

Japan

10.0%

*Orange figures show forecasts.

Qualitative
targets

To supply the world’s best products as All Iwaki– We will work together to supply the world’s best products, quality, value, and services –“Change & Challenge” is our stance for accomplishing this goal
- We will firmly establish a corporate culture of never being afraid of change and new challenges 20

2

Goals of the Medium-term Management Plan (up to FY3/22)
Business Development and GrowthThis plan is for the period of business development and growth to build a base forachieving the 10-year vision

Key goals
 Specific initiatives for reaching the numerical targets of the 10-year vision
1) Rebuild the manufacturing system
3) Eliminate product defects and other problems2) Improve accuracy of production and sales plans4) Improve productivity in all aspects of operations

 Promote management with the goal of consistently increasing corporate value
1) Drastic review of personnel systems
3) Fully utilize the IoT2) Renovate core IT systems4) A commitment to CSR●Steps for achieving the 10-year vision
Business development
and growthclear
FY3/17

FY3/18Planting seeds

FY3/19FY3/20FY3/21

FY3/22Business development
and growth

FY3/23

FY3/24

FY3/25

Reaping benefits
21

Business Development and Growth Phase3– Major Accomplishments of the Medium-term Management Plan

Japan
Overseas key market
sectors (and new
businesses)

Major goals and progress

Level

Upcoming actions

Replace competitors’ products by sharing competitive SWOT analysis with all
associated departments○

Continue and strengthen these activities

To firmly establish the solutions business, increase system sales anddifferentiate IWAKI by using cooperation with its maintenance division○

Continue and strengthen these activities

Take actions to meet customer demands for faster deliveries○

Speed up deliveries in more product categories

Expand presence in the water treatment market (drinking water,
America food industry) and in the aquatic (water tank system for small fish)business, and start activities in Europe○

Build stronger sales channels for controllers(Europe, Asia and emerging countries)▲

Use the IWAKI Europe sales strategy throughout
EuropeOvercome competition in the water treatment market

Investments

EuropeTarget opportunities in the chemicals/chemical manufacturing
equipment plant market

ASEAN

Establish a business control headquarters, reduce expenses, pursue
benefits by streamlining distribution inventory and distribution
routes and other improvements, develop/establish a system for
maintenance services

×

Create sales regions and build a sales organization
Continue to build a stronger presence in the ASEAN
regionFurther growth in the water treatment market

China

Target opportunities in the medical equipment market△

Strengthen marketing activities in the new energy andwater treatment markets

Make investments in production facilities at IWAKI Europe;
make investments to introduce an enterprise resource planning system;
develop outsourced manufacturing companies in China and expand
procurement channels for parts△

Continue IWAKI Europe capital expenditures. Continue
to develop outsourced manufacturing companies andexpand procurement channels for parts in China

Establish alliances and seek M&A opportunities in sectors peripheral to thepump business▲Continue to examine opportunities for alliances andM&A

Progress level ○: 70%+△: 50% to 69%▲: 20% to 49% ×: Under 20%

22

4

Business Development and Growth Phase– Basic Policies of the Medium-term Management Plan

Basic Policy 1

Basic Policy 2

Concentrate resources on markets
targeted for reinforcement• Water treatment market  Synergies with Walchem controllers• Medical equipment market  New overseas OEM customers,
new products• New energy market  Rechargeable battery production, large
storage battery equipment

Basic Policy 3

Expand business activities that provide
solutions• Improve customer services → More products for faster deliveries• Solutions business → Proposals for actual fluid simulation tests• Utilization of IoT → Study and establish new business models

Achieving the
10-year vision

Build a business model for new activities• Aquatic business  Continue promotion of sales activities in
Europe and China, aim for growth in Japan and U.S.
• Provide engineering/maintenance support to customers→ Sales activity support from IJ engineers
Train maintenance personnel suitable for each local market

Basic Policy 4

Unified operation of strategic
overseas regions• ASEAN project  Continue progress with this project• Recruit marketing personnel in all countries and regions• IT infrastructure  Use the core IT system renovation process as
an opportunity to optimize the entire IT infrastructure23

5

Business Development and Growth Phase– Major Initiatives of the Medium-term Management Plan

1. JapanTarget demand for the replacement of products of competitors
Continue to strengthen the solutions business
Focus on IoT products and solutions for customers
Continue to improve customer satisfaction
Meet customers’ demands involving products, parts, delivery, etc.

2. Overseas
Country/region
America
EuropeASEAN

Key overseas markets for growth
Medical equipment, water treatment
Water treatment, chemicals/chemical
manufacturing equipment, new energy, coolingequipment
Medical equipment, surface treatment
equipment, water treatment, chemicals

Targeted applications
Medical analysis, industrial water treatment, aquatic
business
Systems products, wind power generation, equipmentused in ships
Surface treatment equipment, water quality
management

China

Medical equipment, water treatment, newenergyMedical analysis, water treatment plants, rechargeable
batteries

South Korea/Taiwan

Water treatment, new energy

Water quality management, surface treatment
equipment, rechargeable batteries

3. Investments
 Make more investments in production facilities in Europe and strengthen logistics
 Consider alliances and M&A for the expansion of business operations24

6 Reorganization Activities

1

Merger of TechnoECHO Co., Ltd. (a wholly owned subsidiary)
IWAKI will absorb wholly owned subsidiary TechnoECHO for the purposes of using
the IWAKI Group’s resources more effectively and increasing the efficiency ofbusiness operations
IWAKI believes this merger will create significant synergies involving the residual
chlorine meters made by TechnoECHO and the IWAKI Group’s pump operations.
Scheduled date of merger is April 1, 2021

2

Conversion of Iwaki Nordic A/S into a consolidated subsidiary
IWAKI converts equity-method affiliate Iwaki Nordic A/S into a consolidated
subsidiary (Wholly-owned subsidiary IWAKI Europe will acquire shares of thiscompany)
IWAKI places Scandinavia as an important region for sales activities in Europe.
IWAKI will incorporate Iwaki Nordic A/S into the IWAKI Group’s global businessorganization to further strengthen our competitivenessScheduled date of acquisition is June 30, 202025

Disclaimer and Precautions Concerning Forward-looking Statements
 This presentation was prepared by IWAKI to provide information to investors about business operations.
 Information in this presentation is based on reasonable judgments by IWAKI using generally accepted viewsof economic, social and other factors as of May 14, 2020. This information may have to be revised without
prior notice in the event of a change in the business climate or some other event.

 The information in this presentation includes forward-looking statements. These statements are current
outlooks, forecasts and assumptions that include risk and incorporate uncertainties that may cause actual
performance to differ from these statements.
 Risk factors and other uncertainties include but are not limited to items related to the Japanese and global
economies, such as changes in business and market conditions and in interest rates and exchange rates.
 IWAKI has no obligation to update or revise the forward-looking statements in this presentation even if thereis new information, a significant event or some other reason for a change.
 This document has been translated from the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

 IWAKI assumes no responsibility for this translation or for direct, indirect or any other forms of damages
arising from the translation.
For more information:
E-mail: ir@iwakipumps.jp
Telephone: +81-3-3254-2931
26
Operating hours: 9:00 to 17:30