FY2023 Financial Results

May 20th, 2024
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Table of Contents

１． FY2023 Summary of Consolidated
Financial Results
２． FY2024 Full-Year Forecast
３．Mid-Term Management Plan
(FY2024-FY2026)

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SummaryFY2023
FinancialResults
SummaryFY2024
Full-YearForecast• Due to the recovery of production volume and foreignexchange impacts etc., sales, operating profit, andrecurring profit reached record high• Due to the extraordinary loss caused by the businessdivestiture of German subsidiaries, net income wasdeclined• Profit is expected to increase despite of theassumption of strong yen (143 yen to the dollar)• Aim for operating profit ratio of over 13%.
• Profitability is expected to be improved in part by thebusiness divestiture of loss-making German subsidiaries
as mentioned above• Aim for a stable growth through continuous
improvement in installed value per vehicle, cost
Mid-Term
reduction, and fixed cost control
Management- FY2026 Target :Plan
Sales - 375 billion yen, OP - 50 billion yen
ROE - 12％, ROIC - 17%Total Payout Ratio - over 45%
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Table of Contents

１． FY2023 Summary of Consolidated
Financial Results
２． FY2024 Full-Year Forecast
３．Mid-Term Management Plan
(FY2024-FY2026)

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1. Financial Highlights

Historical sales and Operating Profit (OP)• Record-high sales were recorded in 4Q following 3Q.
• OPM remained steady with an upper 12% level.
(Billions of yen)

97.9 20.0%

100.0

Net sales:
90.0

Operating Margin:
15.0%

80.0

12.7%

70.0
10.0%
60.0

50.0

5.0%

40.0
0.0%
30.0

20.0
-5.0%
10.01) Overseas: January – December 2023, Japan: April 2023 – March 2024

3Q

23/1Q

3Q

22/1Q

3Q

21/1Q

3Q

20/1Q

3Q

19/1Q

3Q

18/1Q

3Q

17/1Q

3Q

16/1Q

3Q

15/1Q

3Q

14/1Q

3Q

13/1Q

3Q

12/1Q

3Q

11/1Q

3Q

10/Q1

3Q

09/1Q

3Q

-10.0%
08/1Q

0.0

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2. Overview of FY2023 4Q Consolidated

Highest level of sales, OP and OP Margin in the past year
• Both sales and OP increased QoQ, mainly due to yen depreciation and strong
performance in Japan.
• Net income was negative due to the divestiture of the German business.
FY2022

FY2023

4Q

1Q

2Q

3Q

4Q

QoQ

Net Sales

87.5bn87.9bn90.9bn94.9bn97.9bn+11.8%

Operatingprofit8.9bn

10.1bn10.5bn10.8bn12.4bn+38.4%

OP margin

10.2%

11.5%

11.6%

11.4%

12.7%

+2.5%pts

Net income1)

2.6bn

9.7bn

7.6bn

6.1bn

-5.1bn-295.3%EPS

26.37yen

97.50yen

FX rates

1USD=131.6yen
1EUR=138.1yen

76.22yen 61.02yen -51.91yen -296.9%

1USD=132.4yen 1USD=135.0yen 1USD=138.2yen
1EUR=142.1yen 1EUR=145.9yen 1EUR=149.8yen

1) Net income is net income attributable to parent company

1USD=140.7yen
1EUR=152.1yen

1USD=+9.1yen
1EUR=+14.0yen

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3. Overview of FY2023 4Q Consolidated Financials(Cumulative)

Sales and OP increased YoY. OPM remained solid at 11.8%••Both sales and OP increased YoY mainly due to yen depreciation and strong performancein Japan
OPM remained steady at 11.8%
FY2021

FY2022Full-Year

Full-Year

Full-YearYoY

Net Sales

283.7bn

321.7bn

371.6bn+15.5%

Operatingprofit

30.5bn34.4bn43.9bn+27.5%

OP margin

10.7%

10.7%

11.8%

+1.1%pts

Net income 1)

22.9bn21.1bn18.2bn-13.8%

EPS

227.27yen

211.28yen

183.26yen-13.3%FX rates

1USD=109.9yen
1EUR=129.9yen

1USD=131.6yen
1EUR=138.1yen

1USD=140.7yen
1EUR=152.1yen

1USD=+9.1円
1EUR=+14.0円

1) Net income is net income attributable to parent companyFY2023

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4. FY2023 Q4 Cumulative Consolidated OP (YoY)1)

Operating profit analysis (YoY)••

OP increased driven by sales increase due to recovery in production volume.
Fixed costs increased due to inflation, but were controlled to a certain level, including
variable costs.
+0.09bn-8.5bn+1.8bn+16.1bn

43.9bn34.4bnOperating profit(FY2022 full-year)

Salesfactors

Marginal profit
ratio factors1) Overseas: January – December 2023, Japan: April 2023 – March 2024Fixed cost
factors

FX ratefactors

Operating profit(FY2023 full-year)

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5. FY2023 4Q Cumulative Net Sales by segment(Sales) 1)

Achieved revenue growth in all regions and all segments except china•

Japan and the U.S., where recovery in production volume by JPN OEMs is remarkable,
led the increase in sales• Sluggish sales in China due to lower production volume caused by struggle of JPN OEMs
FY2022
FY2023
YoYNote(Full-Year)(Full-Year)(JPN)
Consolidated

321.7bn

371.6bn+15.5%Plastics

288.7bn

334.7bn+15.9%

Japan

77.4bn85.9bn+11.0%

Automobile production recovery

NorthAmerica

71.4bn90.1bn+26.2%

Automobile production recoveryof Japanese OEMs

Europe37.7bn47.6bn+26.3%

Automobile production recovery

Asia

102.2bn111.1bn+8.7%

Strong production of Korean OEMs

China

33.2bn30.9bn-6.9%

Decreased automobile productionof Japanese OEMs

Bed

33.0bn36.9bn+11.8%

Sales to hotels recoveryJapan

17.1bn18.9bn+10.5%

Asia

15.9bn18.0bn+13.2%

1) Overseas: January – December 2023, Japan: April 2023 – March 2024

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96. FY2023 4Q by Segment (OP) 1)

Managed on a consolidated, although the situation differs from region to region••(JPN)

Margin improvement in Europe and Japan, drove the rise in OPM
Although China continues to face a difficult business environment due to the impact ofdeclining sales but were controlled fixed cost and secured OPM.
FY2022
FY2023
YoY
Note(Full-Year)(Full-Year)

Consolidated

34.4bn43.9bn+27.6%

Plastics

34.0bn42.8bn+25.9%

Japan

12.4bn17.7bn+42.7%

2.7bn

2.4bn

-11.1%

Europe

0.8bn

3.1bn

+287.5%Asia

18.2bn19.5bn+7.1%

Some drops, but remain strong

China

5.5bn

(16.5%)

5.3bn(17.2%)-3.6%

Despite decrease in profits, the profit rate
was increased by controlling fixed costs.

5.9bn(17.8%)

6.5bn(17.7%)+10.2%

2.3bn(13.7%)

2.7bn(14.3%)+17.4%

3.6bn

3.8bn

+5.6%

North
America

BedJapanAsia(10.7%)(11.8%)(16.1%)(3.7%)(2.1%)(17.8%)(22.2%)(11.8%)(12.8%)(20.6%)(2.7%)(6.5%)(17.5%)(21.2%)

1) Overseas: January – December 2023, Japan: April 2023 – March 2024

Improvement due to increased sales
and fixed cost management
Improvement due to increased sales
and fixed cost management
Improved utilization ratio due toincreased production volume

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7.Customer Base (average installed value per vehicle and customer mix)

Increase in average installed value per vehicle and customer diversification

Marginal Profit Ratio

Average Installed Valueper Vehicle (Japan)•Average installed value per vehicle continues to increase in this fiscal year with a wide
range of customers including Japanese OEMs, Korean OEMs, and European OEMs etc.
Marginal profit margin remains in the upper 40% range.
(yen/vehicle)
6,917
5,739
5,175
4,608

5,000

4,058
3,000

3,509

FY2023
FY1997FY2000FY2003FY2006FY2009FY2012FY2015FY2018FY2021

48.9%

49.5%

FY2009FY2010

Customer Mix (Global)

•9%
20%

10%
13%

Other nonJapanese OEMs
German OEMs

24%

Hyundai

18%
10%

12%
14%

12%
7%

27%

24%

FY2011

FY2023
FY2022Other JapaneseOEMs
HondaNissan
Toyota

47.0%

48.1%

48.2%

47.8%

47.7%

49.2%

49.6%

49.5%

49.2%

48.7%

47.2%

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021 FY2023
FY202246.9%

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8. CAPEX and Deprecation

Focus on cashflow oriented management
••
(JPN)

Free cash flow exceeded the initial plan due to yen depreciation and strong performance inJapan.
Cash and deposits at end of the fiscal year increased; plans to repay borrowings from cashand deposits on hand in FY2025/3
FY2022(Full-Year) FY2023(Full-Year)
Difference
Plan(YF2023)

CAPEX

8.9bn

10.0bn+1.1bn13.3bnDepreciation

13.7bn14.2bn+0.5bn13.8bn

R&D

3.7bn

4.0bn

+0.3bn3.6bn

Operating CF

37.2bn47.2bn+10.0bn

36.0bnInvestment CF-11.5bn-8.1bn+3.4bn-13.3bn

Free CF25.7bn39.1bn+13.4bn

22.7bnFinancial CF-17.4bn-26.0bn-8.6bn-19.5bn

Cash equivalentbalance122.2bn

142.0bn+19.8bn

124.2bn

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9.Return to Shareholders

Dividend is planned at the same level as the previous fiscal year,
cancellation of shares and share buybacks were implemented flexibly•••

Executed a cancellation of shares of 7,251,901 share in the end of September
Dividend is 64 yen which is the same level as the previous fiscal year(Dividend payout ratio35%)
Continue to consider share buyback flexibly for this fiscal year
FY2019FY2020

FY2021

FY2022

FY2023

Dividend(Full Year)62
yen/shares

62
yen/shares

53
yen/shares

62
yen/shares

64yen/shares

64yen/shares

ShareBuy-Back

1mn shares 790k shares 710k shares 1.38mn shares 360k shares 800k shares(2.8bn yen) (1.4bn yen) (1.4bn yen) (4.8bn yen) (1.2bn yen) (3.0bn yen)

Return to Shareholders

FY2018Target(payout ratio)30%: Dividend

Actual

30%

30%

30%

30%

: Share buybacks

45%

43%

14%

8%

31%

35%

52%

48%
37%
8%
29%

20%

27%

30%

36%

17%

6%
30%

35%

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Table of Contents

１． FY2023 Summary of ConsolidatedFinancial Results
２． FY2024 Full-Year Forecast
３．Mid-Term Management Plan
(FY2024-FY2026)

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10. FY2024 Full-Year Consolidated Forecast

Aim for record-high OP and 13% OP ratio•Though the foreign exchange assumption is set more towards appreciation of the yen(1USD = 143 yen), aim for an increase of OP by the improvement of installed value pervehicle, reorganization of loss-making subsidiaries, and thorough cost management.
FY2022

FY2023Full-Year

Full-Year

Full-YearYoY

Net sales

321.7bn

371.6bn

340.0bn-8.5%

OP

34.4bn43.9bn45.0bn+2.5%(10.7%)(11.8%)(13.2%)(+1.4%pts)

Net income

21.1bn18.2bn26.1bn+43.4%

EPS1)

211.28yen

183.26yen

262yen+43.0%

ROE

10%

7.8%

10.5%

+2.7%pts

ROIC

13.1%

17%

17%

±0%ptsFX rate

1USD=JPY131.6
1EUR=JPY138.1

1USD=JPY140.7
1EUR=JPY152.1

1USD=JPY143
1EUR=JPY155

1USD=JPY+2.3
1EUR=JPY+2.9(OPM)1) FY2019は潜在株式調整後1株当たり四半期純利益

FY2024All Rights Reserved. Copyright © 2018. Nifco Inc.

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11.FY2024 Consolidated Operating Profit Analysis (YoY Comparison)

Aim for profit increase by covering sales decrease impact with others••

Aim for the same level as the previous year by covering the sales decrease
impact with the control of variable and fixed costs.
Reduction of fixed cost by business divestiture of subsidiaries has a huge impact+1.1bn+16.2bn-17.2bn+1.0bn45.0bn43.9bnOperating Profit(FY2023 full-year)

Sales
factors

Marginal profit(Raw materialcosts, etc.)

Fixed costfactors

FX impact

Operating Profit(FY2024 full-year)

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12.FY2024 Full-Year Forecast (Risk Treatment)
Thorough response by utilizing our strengths of diverse customer mix and fixed cost control••

Deal appropriately with labor market shortages by improving retention rate, automation, andothers
Aim to reduce the risk of whole Nifco Group by taking actions that are most appropriate foreach region
Risk factor

Situation / Response

Demand• Change in OEMs’ market share
due to a shift to EVs etc.
• Demand seems to be peaked out• Reduce the risks through diversecustomer mix• Change actions in each region• Control fixed cost appropriate tothe situation

Supply• Avoid increase of cost by
starting up new factories• Continuation of toughlabor market(human resource shortage)• Thorough preparation bywhole company• Improve retention rate
• Implementation of automation• Increase of labor costs• Increase of other costs(Logistics and electricity cost etc.)• Promote price optimization initiatives• Through reduction of expenses
and fixed cost controlCost

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13.Capital Investment and Depreciation

Allocate funds with emphasis on cashflow-oriented management••

Plan to make meaningful capital investments in a timely manner.
Ending cash equivalent will be decreased due to capital investments and theimpact of the divesting off German businesses.
FY2023 (Actual)

FY2024 (Plan)

Difference

CAPEX

10.0bn23.2bn+13.2bn

Depreciation

14.2bn12.8bn-1.4bn

R&D

4.0bn

4.0bn

±0bn

Operating CF

47.2bn42.6bn-4.6bnInvestment CF-8.1bn-23.0bn-14.9bn

Free CF39.1bn19.6bn-19.5bn

Financial CF-26.0bn-29.5bn-3.5bnCash equivalentbalance

142.0bn

121.4bn-20.6bn

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14.Return to Shareholders

Plan to increase dividend by 6 yen and actively consider share buyback••Dividend is planned with 70 yen which is 6 yen increase from previous fiscal year
Even after share buyback of 5 bn yen, continue to consider share buy back flexibly
FY2020

FY2021

FY2022

FY2023

FY2024e

Dividend(full-year)62
yen/share53
yen/share62
yen/share64
yen/share64yen/share

70yen/share(plan)

Share
Buy-back

790k shares 710k shares1.38mn shares 360k shares 800k shares 1.30mn shares(1.4bn yen) (1.4bn yen) (4.8bn yen) (1.2bn yen) (3.0bn yen) (5.0bn yen)

Return to Shareholders

FY2019Target: Dividend

ActualTotal payout ratio
more than 45%

Dividend payout ratio: 30%

8%

35%

: Share buyback

8%
29%

20%

27%

17%

19%

6%
30%

46%
(as of now）

35%

27%

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19Table of Contents

１． FY2023 Summary of Consolidated
Financial Results
２． FY2024 Full-Year Forecast
３．Mid-Term Management Plan
(FY2024-FY2026)

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15. Mid-Term Management Plan

View “social issues” as opportunities to contribute to society by

Creating new business and Evolving existing businessNifco makes “Ideas” a “Reality”“ 価値共創 カンパニー”

Co-Creation

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16. Mid-Term Management Plan Reviews (Numerical Values)(100 million JPY)

FY2023
FY2023
Mid-TermActual
MP Target

Judgement

Remarks

3,1003,716〇Automobile production recovery
after COVID-19 and recovery ofSIMMONS Bed for hotels

380439〇

Sales increase impact％

12.3%

11.8%

×

Improvement of loss-making
subsidiary was not achieved

Net Income265

183

×Extraordinary loss due tobusiness divestiture of subsidiary

ROE

13%

7.8%

×

Impact by divestiture ofsubsidiary

ROIC

15%

17%

〇

Penetration of ROIC
management

Net sales
OPAll Rights Reserved. Copyright © 2018. Nifco Inc.

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17. Numerical Targets of Mid-Term Management Plan
FY2023

FY2024

ActualBudgetTarget

Compare withFY2023

Net sales

3,7163,400

3,750+1%OP

439

450

500+13%％

11.8%

13.2%

over 13%+1.2%pts

Net Income

182

261

328

1.8 times

ROE

7.8%

10.5%12%+4.2%pts

ROIC

17%

17%

over 17%±0%pts

FX$1=JPY140.7€1=JPY152.1$1=JPY143€1=JPY155$1=JPY143€1=JPY155(100 million JPY)

FY2026All Rights Reserved. Copyright © 2018. Nifco Inc.

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18. Priorities Measures of Mid-Term Management Plan (1)

１2

3

45

Growth throughexisting business

Further strengthening existing business model(Proposals that exceed customer expectations)・Ensuring growth in all directions (ICE, HV, PHV,FCV, EV)

Growth throughnew channels

Acquire business from superior Chinese OEMs
・Including businesses via global Tier 1

Invest resources ingrowth markets andincrease earnings

Actively invest resources in the Indian market andachieve solid results

Bed business inAsian Market
Exploring and building
new businesses

Strengthen business in Asia as a new growthmarket・Start operation of plant in Thailand
Utilize M&A and alliances instead of sticking to ourown knowledge and asset
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19. Priorities Measures of Mid-Term Management Plan (2)6789

Penetration of “Nifco”
brand inside and outside
the company

・Brand improvement for each region
・Brand improvement for customer
・Brand improvement for HR recruitment

PromoteHR development

・Create and execute succession plan・Establish and execute evaluation andcompensation system
・Reflection of employee engagement and steadyresults

Strengthen
digitalization and IT

・Improve and optimize operations in global level
・Creation of new businesses

Strengthen corporate
governance system tocontinuously improve
corporate value

・Strengthen the Board of Directors function underthe new organization
・Strengthen various committee functions
・Strengthen ESG management

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20. Thorough Management Focused on Cash Flow toMaximize Corporate Value
Strengthen
ROIC management(Improve capitalefficiency)

Optimize
Fixed Cost
(Appropriate B/S)

Improve profitability(Improve profit ratio)

Meaningfulinvestment plan
(Appropriate risk andreturn)Maximize Cash FlowStrengthen
Management Structure
・IT and digitalization
・Human resource
development
・Strengthen governance

Investment for
Further Growth・Strengthen existing business・Exploration of new business・M&A and alliance

Return toStockholders
・Over 45% total payout
ratio(Stable dividends andflexible stock buybacks)
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Forward‐looking statements or projections included in this document, including earnings projections,are based on currently available information and certain premises that are judged to be rational at thetime of this writing. Actual results may differ greatly from the forecast figures depending on variousfactors.

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