Results of Operations for the
Fiscal Year Ended March 31, 2018 (FY3/18)
May 25, 2018

IWAKI CO.,LTD.
IWAKI CO.,LTD.

Stock code: 6237
Trade name: Iwaki Pump

０

Contents

I. Summary of FY3/18 Financial Results

・・・・P 3

II. Outlook for FY3/19

・・・・P13

III. First-Second Medium-term Management Plan

・・・・P19

IV. Supplementary Information

・・・・P29

Copyright © IWAKI CO., LTD. All Rights Reserved2

I

Summary of FY3/18 Financial Results3

1

Financial Summary(Millions of yen)

FY3/17

FY3/18AmountFY3/18YoY change

Forecast

Net sales

25,14628,067+11.6%

28,141Gross profit

8,175

9,409

+15.1%

9,492(Gross margin)(32.5%)(33.5%)(+1.0pt)(33.7%)

Operating profit

1,465

2,106

+43.8%

2,062(Operating margin)(5.8%)(7.5%)(+1.7pt)(7.3%)

Ordinary profit

2,136

2,733

+27.9%

2,691

Profit attributable to owners ofparent

1,690

2,059

+21.8%

2,091

Net income per share (Yen)

225.93275.16+21.8%

279.47

Exchange rate USD/JPY (Yen)(average)
EUR/JPY (Yen)

108.81120.30112.17126.70107.00128.00
Announced on March 15, 2018

Copyright © IWAKI CO., LTD. All Rights Reserved

4

2

Sales and Earnings Highlights

1

2

3

Sales increased Capital expenditures in the semiconductor/liquid crystal and surface treatment
equipment markets contributed to higher sales and there was significant growthin Asia Sales in China were over 30% higher than one year earlier mainly because of
growing demand in the medical equipment market
 Increasing demand in Europe in the new energy market

A big increase in operating profit
 Earnings benefited from the growth in sales
 Strong sales growth of magnetic drive pumps and metering pumps, which arecore products with high profit margins

Ordinary profit increased but profit attributable to owners of parent
decreased The foreign exchange gain declined because of the contribution of one-time
factors one year earlier, but there was an increase in ordinary profit resulting
from the consistently strong performances of affiliated companies, mainly in Asia
 Income and other taxes were higher than expected

Copyright © IWAKI CO., LTD. All Rights Reserved5

3

Factors Affecting Profitability(Millions of yen)

158
1,074

-66
2,106
-526
1,465

FY3/17
OperatingprofitSG&A expenses
Increase/decrease
Gross profit
in sales, change in Foreign exchange Foreign exchange
impactcost of sales ratio
impactCopyright © IWAKI CO., LTD. All Rights Reserved

SG&A expenses
Higher R&D andother costs

FY3/18Operatingprofit6

4

Net Sales and Operating Profit (Quarterly)• Higher sales and profits at all levels backed mainly by strength in the semiconductor/liquid crystal market• Personnel costs increased in 4Q due to higher sales(Millions of yen)

FY3/167,400

FY3/17(Millions of yen)

FY3/181,200
Net sales（左目盛）(left)
売上

7,200
1,000

7,000

（右目盛）
Operatingprofit (right)
営業利益

6,800

800

6,600

経常利益
Ordinary（右目盛）
profit (right)

6,400

600

6,200
400

6,000
5,800

200

5,600
5,400

0
1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

* FY3/16 1Q and 2Q figures are for reference only because there are no consolidated financial statements for these fiscal periods.
Copyright © IWAKI CO., LTD. All Rights Reserved75Gross Margin and SG&A Expense Ratio (Quarterly)
Sales growth reduced the SG&A expense ratio and the gross margin remained high(Millions of yen)

FY3/17

FY3/162,200

FY3/18

40%

38%
2,000

（左目盛） (left)
販管費expenses
SG&A

36%
34%

1,800

32%
1,600

30%

（右目盛）
Gross
margin(right)
売上総利益率

SG&A
expenses
販管費率
ratio (right)

28%
1,400

26%

24%

1,200

22%
1,000

20%

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

* FY3/16 1Q and 2Q figures are for reference only because there are no consolidated financial statements for these fiscal periods.
Copyright © IWAKI CO., LTD. All Rights Reserved

8

6

Product Category Sales

Sales of pneumatic drive pumps continued to increase sharply and sales of metering pumps and rotary
displacement pumps also increased.
(Millions of yen)

FY3/17

FY3/18

8,000
7,000
6,000

33.8%

(Millions of yen)

YoYchangeマグネットポンプ
pumps

Magnetic drive

9,408

+7.3%

Metering pumps
定量ポンプ

4,989

+10.0%

空気駆動ポンプ
pumps

Pneumatic drive

2,885+45.4%

回転容積ポンプ
pumps

Rotary displacement

2,623+12.0%Air pumps
エアーポンプ

1,458

+1.5%

System products
システム製品

1,286+17.8%

仕入商品
products

Purchased

2,598+18.6%

Others
その他

2,816

+0.9%

FY3/18 sales

32.6%

33.7%

34.1%

5,000
4,000

18.8%

17.8%

16.9%

17.6%

3,000

8.6%

2,000
1,000

9.7%

11.1%

11.5%
9.4%

9.2%

9.4%

9.4%

5.5%
5.0%

5.3%
3.9%

5.3%
3.8%

9.5%

9.3%

9.2%

9.1%

10.5%

10.0%

9.7%

10.0%

4.7%
5.7%

0

1Q

2Q

3Q

Copyright © IWAKI CO., LTD. All Rights Reserved

4Q

1Q

2Q

3Q

4Q
9

7

Market Category Sales
Significant sales growth in the semiconductor/liquid crystal market and higher sales in the surface
treatment equipment(Millions of yen)

FY3/17(Millions of yen)

YoYchangeSemiconductor/
liquid crystal

4,583+33.9%

Medical equipment

4,048

+3.6%

9.1%

Surface treatment
equipment

2,401+18.9%

FY3/18 sales

FY3/18

16.4%

17.3%

16.8%

14.6%
14.6%

14.7%

14.9%
8.5%

23.3%

8.4%

8.2%

22.1%

22.4%

Water treatment

23.6%

6,413

+6.0%

8.9%

8.8%

Chemicals

2,570

+9.8%

2.6%

2.7%

New energy

815+25.4%

26.2%

26.5%

7,233

+7.2%

9.6%

9.4%

3.4%

3.0%

25.6%

13.6%

24.7%

OthersCopyright © IWAKI CO., LTD. All Rights Reserved108

Regional Sales
Sales increased in Japan, Europe and America and sales remained very strong in Asia and China

FY3/17(Millions of yen)

8,000

FY3/18

FY3/18 sales

7,000
6,000
5,000

62.4%

62.2%

(Millions of yen)

YoYchangeJapan
日本

17,452+9.5%

Overseas
海外計
total

10,614+15.2%

ヨーロッパ
Europe2,541+11.9%

America
アメリカ

3,444

+5.2%

Asia
アジア

2,708

+29.2%

中国
China

1,021

+33.6%

その他
Others899+11.6%

62.9%

61.2%

4,000
3,000
2,000
1,000
0
1Q

2Q

3Q

4Q

9.4%

8.8%

9.1%

８.9%

12.3%

12.5%

12.4%

11.9%

10.2%

8.8%

10.1%

9.5%

3.7%
3.3%

4.0%
3.4%

3.7%
2.5%

3.2%
3.6%

1Q

2Q

3Q

4Q
Overseas sales ratio

Copyright © IWAKI CO., LTD. All Rights Reserved

37.8%
11

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

350
FY3/16

FY3/17

FY3/18 sales

FY3/18(Millions of yen)

300

YoY
changeCapital
設備投資
expenditures

345

-23

R&D expenses
研究開発費

574

+42

Depreciation
減価償却費

510

+11

250
200
150
100
50

* Construction in progress of ¥1,829 million
for new Technical Center was reported.

0
2Q

4Q

Copyright © IWAKI CO., LTD. All Rights Reserved

2Q

4Q

2Q

4Q
12

II

Outlook for FY3/19

13

1

FY3/19 Forecast

Higher sales and earnings forecasts because of strong sales in thesemiconductor/liquid crystal and surface treatment equipment markets(Millions of yen)

FY3/19 (forecast)

FY3/18YoY change

Net sales

28,06729,427+4.8%

Operating profit

2,106

2,366

+12.3%(Operating margin)(7.5%)(8.0%)(+0.5pt)

Ordinary profit

2,733

2,804

+2.6%

Profit attributable to owners of parent

2,059

2,015

-2.1%

Net income per share (Yen)275.16*269.27-2.1%

Exchange rate
(average)

USD/JPY (Yen)EUR/JPY (Yen)

Copyright © IWAKI CO., LTD. All Rights Reserved

112.17126.70107.00132.00* ¥89.76 after the 3-to-1 stock split

142Highlights of FY3/19 Forecast12Forecast another year of sales growth Anticipate continuation in capital expenditures in Asia in the semiconductor/liquid
crystal and surface treatment equipment markets
 Forecast higher demand in Japan and China in the medical equipment market
 Forecast strong sales in the water treatment market because of synergies with theresidual chlorine meter operations of TechnoECHOForecast higher operating profit as sales growth offsets increase in
expenses caused by the higher cost of materials
 Higher gross margin as sales growth increase in cost of materials
 Completion of the new technology center will raise depreciation by about ¥100 million
 Anticipate exhibition expenses of ¥50 million, including the June ACHEMA Exhibition inGermany, and operating expenses of about ¥80 million at the new technology center in
1H (negative impacts on earnings vs. FY3/18)
 Forecast significant growth in sales of magnetic drive pumps and metering pumps, which
are core products with high profit margins

3

Forecast a decrease in profit attributable to owners of parent
 Conservative estimate of taxes that reflects the effective tax rate in FY3/18
 The foreign exchange gain declined because of the contribution of one-time factors one
year earlier, but there was an increase in ordinary profit resulting from the consistently
strong performances of affiliated companies, mainly in Asia

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15

3

FY3/19 Forecast –Factors Affecting Profitability
14874(Millions of yen)

-12
2,366

2,106

2018/3期
FY3/18
営業利益
Operatingprofit-616

売上増減・
Increase/decrease
原価率変動など
in sales, change incost of sales ratio

Copyright © IWAKI CO., LTD. All Rights Reserved

売上総利益
Gross
profit
為替影響
Foreignexchange
impact

販管費
SG&A
為替影響
expensesForeignexchange
impact

販管費
SG&A
expenses
R&D経費増加等
Higher R&D andother costs

2019/3期
FY3/19
営業利益
Operating（予想）
profit(forecast)16

4Market Assumptions
Market environment assumptions
Japan

Overseas

Water treatment market• Solid demand for water quality management
for hot bathing facilities and for agricultureusing hydroponics and soil
• Slow sales of equipment for water treatment
plants• Steady growth in the sterilization and liquid
chemical supply sectors• Increasing investments in environment
protection related water treatment equipment,
mainly in Asia

Semiconductor/liquid
crystal market• Steady demand at manufacturers of
production equipment• Investments in Asia will remain firm for now

Medical equipment
market• Steady growth in dialysis equipment, clinicaltesting equipment and endoscopesterilization equipment• Steady growth in biological and immunology
analyzers used in China• No change in sales of household fuel cells• Strong capital investment in rechargeable
battery• Increasing demand in Europe for wind power
generation

Chemicals market• Steady demand related to development ofvalue-added products and investments bypharmaceutical companies• Increasing expenditures in the Chinese
semiconductor industry for equipment for purechemicals• Steady growth in chemicals for the automobile
industry

Surface treatment
equipment market• More demand for value-added electronic
components• Steady growth due to increasing production of
hybrid and electric automobiles

New energy market

Copyright © IWAKI CO., LTD. All Rights Reserved*Bold indicates priority markets targeted for growth.

175

Return to Shareholders

Basic policy・Dividend payout ratio: more than 30%
・Consistent distribution of dividends
1株当たり配当金
Dividend
per share

(Yen)

120

35.1

100
80

30.1

(%)

35

30.0
(¥82.6)(¥78.8)Commemorative
dividend: ¥11

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

30.0(¥81.0)(¥68.0)

60

¥27

40

¥27

25
20
15

20
0

30

¥27
2016/3
FY3/162017/3
FY3/17

2018/3
FY3/1810
50

FY3/19(forecast)
2019/3(予）Note: Due to the 1-to-3 stock split with a record date of June 30, 2018, the FY3/19 dividend forecastof ¥27 is tripled in this table to facilitate direct comparisons with prior years.
Copyright © IWAKI CO., LTD. All Rights Reserved

18

III

First-Second Medium-termManagement Plan

19

1

Overview of the 10-Year Vision
FY3/16

FY3/17

FY3/18-FY3/20
First-Second Medium-term Management Plan

FY3/25

Consolidated sales
Numerical targets

FY3/16 Results

FY3/17 Results¥24.8 billion ¥25.1 billion

FY3/18 Results

FY3/19 Forecast¥28.0 billion¥29.4 billion

10.6

11.4

18.0

9.1

9.2

15.7

15.9

17.4

6.1%

5.8%

7.5%

8.0% (forecasts)¥40.0 billion

Operating profit on
sales

20.0

Overseas

20.0

Japan

10.0%

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 Copyright © IWAKI CO., LTD. All Rights Reserved20

2 Evaluation of the First-Second Medium-term Management Plan
This plan is for the periods of planting seeds and business development and growth
to build a base for achieving the 10-year vision

Rebuild and reinforce the profit structure →Started trial operations
 Build and reinforce a base to reach the numerical targets of the 10-year vision→Started
using the new base on a provisional basis
 Firmly establish all vectors for reaching the qualitative targets of the 10-year vision andfoster a “Change & Challenge” corporate culture →The entire workforce embraced the“Change & Challenge” spirit for R&D, manufacturing, sales and customer support
activities Manage operations with the goal of consistently increasing corporate value →Start ofrestricted stock compensation plan
●Steps for achieving the 10-year vision
First
Planting
seeds
FY3/17First-Second Medium-term Management Plan

Planting seeds-Business development and growth
FY3/18

FY3/19Copyright © IWAKI CO., LTD. All Rights Reserved

FY3/20

Second Medium-termManagement Plan

Business development
and growth
FY3/21

FY3/22

Third Medium-term Management Plan

Reaping benefits
FY3/23

FY3/24

FY3/2521

3

Accomplishments of the First Medium-term Management Plan

Japan
Overseas Key market sectors(and new businesses)
Investments

Major 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 maintenanceproviders▲Target the IoT sector by deepening ties
among associated departments and upgradeand expand simulation testing facilities

Take actions to meet customer demands for faster deliveries○

Speed up deliveries in more productcategories

America

Expand presence in the water treatment market(drinking water, food industry) and in the aquatic(water tank system for small fish) business△

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

EuropeExpand presence in the chemical/chemical
manufacturing equipment plant market and target
demand for cooling equipment▲

Use the IWAKI Europe sales strategy
throughout Europe

ASEAN

Start using a single model for the entire ASEAN region,
establish a business control headquarters, andbuild/develop locations to control logistics within
ASEAN

×

Advance to the development/operations
phase while continuing to build a stronger
presence in the ASEAN region

China

Target opportunities in the medical equipment market△

Stabilize performance in the new energy andwater treatment markets

Make investments in production facilities at IWAKI Europe; in China,
increase outsourced manufacturing companies and expand
procurement channels for parts△

Continue IWAKI Europe capital expenditures;in China, add more outsourced production
companies and procurement channels

Establish alliances and seek M&A opportunities in sectors
peripheral to the pump business▲Continue to examine opportunities foralliances and M&A

Copyright © IWAKI CO., LTD. All Rights Reserved

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

22

First-Second Medium-term Management Plan (FY3/18-FY3/20)(Differences Between the Initial and Current Plan)

4(Millions of yen)

FY3/19 (plan)

FY3/18Results*Initial plan

FY3/20 (plan)change+4.8%*Initial plan

Net sales

28,06728,12429,427Gross profit

9,409

9,744

10,271

Operating profit

2,106

2,261

2,366

+12.3%

3,075

Ordinary profit

2,733

2,689

2,804

+2.6%

3,501

Profit attributable toowners of parent

2,059

1,996

2,015

-2.1%

2,548

change29,86010,678*Initial plan was announced on November 29, 2017

1

The FY3/19 sales forecast is higher because of strong sales in the semiconductor/liquid
crystal market. In FY3/20, forecast a higher operating margin based on the outlook formore sales growth and higher sales at subsidiaries with high gross margins

2

FY3/19 is the final year of the planting seeds phase; planning on up-front
investments for the aquatic business and overseas production facilities as well as anincrease in the R&D workforce

3

The FY3/19 forecast for performance of affiliated companies in Asia is higher due to theoutlook for continued strength in the semiconductor/liquid crystal market

Copyright © IWAKI CO., LTD. All Rights Reserved

23

5

Basic Policies of the First-Second Medium-term Management Plan

Basic Policy 1

Basic Policy 4

Concentrate resources on markets targeted
for reinforcement

Unified operation of strategic overseas regions• Water treatment market  Use the strengths of TechnoECHO• Medical equipment market  New overseas OEM suppliers, newproducts• New energy market  Rechargeable battery production, large
storage battery equipment

・ASEAN project  Advance to the next stage
・Europe  Preparatory phase・IT infrastructure  Immediate actions are needed

Achieving the
10-year vision

Basic Policy 2

Basic Policy 3

Expand business activities that provide solutions

Build a business model for new activities

・Improve customer services  Short time-frame projects/IoT
services
・Consolidate customer data  Sales and maintenance information
・Supply entire systems  A broader range of businesses andtechnologies

・Aquatic project  Aim for growth in the US・Growth of overseas system and maintenance operations 
Create a model for Europe and study commercialization
・More procurement in China  Outsourced production; makeproducts where they are sold

Copyright © IWAKI CO., LTD. All Rights Reserved24

Major Initiatives of the First-Second Medium-term
6 Management PlanJapan Target demand for the replacement of products of competitors (improving customer satisfaction)
 Establish and strengthen the solutions business Meet customers’ demands involving products,
parts, delivery, etc.
 Focus on IoT products and solutions for customers

Key market sectors (and new businesses) in each overseas region
 America:

Water treatment, medical equipment (Aquatic business, chemical/chemical
manufacturing equipment plants)
 Europe:
Water treatment, chemicals/chemical manufacturing equipment, cooling equipment(Aquatic business)
 ASEAN:
Water treatment, surface treatment equipment, chemicals, medical equipment(Aquatic business)
 China:
Medical equipment, new energy, water treatment
 Korea/Taiwan: Water treatment, new energy

Investments
 Make more investments in production facilities in Europe, use more outsourced manufacturing
companies in China, strengthen logistics
 Consider alliances and M&A for the expansion of business operations
Copyright © IWAKI CO., LTD. All Rights Reserved25

7

Synergies with TEC (TechnoECHO)Grow in current markets

Electromagnetic
metering pumps
IWAKI Hotel construction boom for Tokyo Olympics• More demand for residual chlorine meters at
hot bathing facilities

User (customers)
Cross-selling
Collaboration

Residual chlorine
meterTechnoECHO
Copyright © IWAKI CO., LTD. All Rights Reserved

Synergies

Accomplishments of new markets to benefit fromsynergies Compact residual chlorine meter• More demand in the public welfare market (nursing
care bathtubs)• Higher demand in the medical equipment market(equipment with meters)

26

8Strategy for China
Expand procurement of parts

Outsourced manufacturing went into full-scale
operation
 Start using outsourced production in summer of 2018
 Use outsourcing to increase production where products
are sold

Copyright © IWAKI CO., LTD. All Rights Reserved

Faster deliveries by simplifying distribution
channels Further expand procurement channels for parts in China
 Cut the cost of manufacturing while maintaining the samehigh level of quality as in parts made in Japan27

9

Aquatic Business
Establish and expand global operations

 Develop and implement a global business model Clearly define division of roles between US and Japan
 Start global sales of internally developed products and products ofother companies

Division of roles and cooperation
 Share market information about the US and Japan Use the same parts and materials when possible
 Start operations in countries other than Japan and the US

Growth in Japan
 Provide products and services in the medical and pharmaceuticals sectors
 US technology feedback
Copyright © IWAKI CO., LTD. All Rights Reserved

Differentiate products from those of Japanese and foreign competitors
28

IV

Supplementary Information29

1

Topics (Timely Disclosure on May 25, 2018)

1

Stock split to lower the cost of a trading unit and raise liquidity

2

Start of restricted stock compensation plan

 1-to-3 split will reduce the minimum investment in Iwaki stock andimprove liquidity
・Record date: June 30, 2018 (Saturday) (effectively June 29)・Effectiveness: July 1, 2018 (Sunday)
・Shares issued: Will increase from 7,484,370 to 22,453,110
 Goal is sustained medium and long-term growth of corporate value
 Restricted stock compensation aligns the interests of plan participants
with those of shareholders

Copyright © IWAKI CO., LTD. All Rights Reserved

30

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 views of
economic, social and other factors as of May 25, 2018. This information may have to be revised without priornotice 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 there is
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 of any
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
Operating hours: 9:00 to 17:30
Copyright © IWAKI CO., LTD. All Rights Reserved31