The 3rd Quarter FY2020
Summary of Financial Results
February 8, 2021

The 3rd Quarter FY2020 Financial Summary☆Key Points of Financial Results【1】Impact of the COVID-19 pandemic: Decline in orders received, net sales, and gross profit for small and miscellaneous projects【2】Large-scale projects: Orders received were favorable, particularly for industrial HVAC. Net sales declined due to being between projects,
particularly for HVAC and plumbing for buildings【3】Gross profit: Gross profit was down due to decreased revenue; however, profitability remained at a high level<Orders received> 146,447 million yen (150,933 million yen in the same period of the previous fiscal year)●Net sales fell short of the same period of the previous fiscal year due to a decline in small and miscellaneous projects as a result of the
impact of the COVID-19 pandemic●Large-scale industrial HVAC projects, particularly relating to semiconductors, were favorable<Net sales> 129,215 million yen (143,678 million yen in the same period of the previous fiscal year)●In addition to there being a decline in net sales due to large-scale projects, particularly HVAC and plumbing for buildings, being at the endof their cycles, net sales also fell short of the same period of the previous fiscal year due to a decline in small and miscellaneous projects
as a result of the impact of the COVID-19 pandemic.
<Gross profit> Gross profit margin of 14.1% (14.4% in the same period of the previous fiscal year)●Although gross profit margin fell slightly short of cumulative results in the third quarter of the previous fiscal year, we maintained a highlevel of profitability, exceeding the same period of the previous fiscal year in the third quarter (October – December)<FY2020 consolidated results forecasts> (comparison with initial forecasts)●Orders received of 190,000 million yen (no change), net sales of 192,000 million yen (-8,000 million yen), and ordinary income of 8,500
million yen (-1,000 million yen)
* Net sales and gross profit were downwardly adjusted in light of the impact of the protracted COVID-19 pandemic
Although, at this stage, results of our consideration have been incorporated, business results may be further impacted due to alteredcircumstances in the future<Shareholder returns>●Conduct shareholder returns according to medium-term management plan “Century 2025” Phase 2 financial and capital policies●Annual shareholder return of 70 yen (interim dividend: 35 yen, year-end dividend: 35 yen) *no change from initial forecast● Cancellation of 1 million shares of treasury stock was conducted on August 17, 2020
1 million shares of treasury stock were acquired by October 27, 2020
●Payout ratio: 69.1%; total return ratio: 89.2%

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Contents

1

22

33

44

55

The 3rdQuarter
FY2020Results

The 3rdQuarter
FY2020
Balance Sheetand Statementof Cash FlowsFY2020
Forecast

Shareholder
Returns

Supplementary
Materials

P4-10

P11-13

P14-16

P17-19

P20-263©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

FY2020 3Q RESULTS

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【Overall Results】
FY2020 3Q Results – Cumulative Results (Consolidated)(Millions of yen)
December
2018

December
2019

December
2020

Year onyear

Rate ofchange (%)

Orders received

155,048

150,933

146,447(4,485)(3.0)

Balance carried forward

157,714

157,084

153,395(3,689)(2.3)

Net sales

142,046

143,678

129,215(14,462)(10.1)

Completed construction
contracts

140,521

141,912

127,366(14,545)(10.2)

Real estate and others

1,524

1,766

1,849

83

4.7

19,425

20,62818,172(2,456)(11.9)

Completed construction
contracts

18,91419,99817,421(2,576)(12.9)

Real estate and others

510

630

750

119

19.0

13.7

14.4

14.1

(0.3)pt.

―

Selling, general and administrative expenses

14,60915,04015,315275

1.8Operating income

4,815

5,588

2,856

(2,732)(48.9)

573

559

514

(45)

(8.1)

Ordinary income

5,388

6,148

3,370

(2,777)(45.2)

Extraordinary income (loss)(1,317)

158

(366)

(524)

―

Profit attributable to owners of parent

2,540

4,300

2,469

(1,831)(42.6)

Gross profit

Gross profit margin (%)

Non-operating income

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【Overall Results】
Quarterly Results (Consolidated)
FY2018(Millions of yen)

FY2019FY2020

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

Orders received

50,88552,934

51,22862,04846,69754,20450,031

43,08547,66055,575

43,211

Net sales

35,25245,47061,32370,26740,88250,962

51,83364,00638,25342,611

48,351Gross profit

4,329

6,442

8,654

12,258

5,305

7,862

7,460

11,482

5,120

5,637

7,414

Gross profit margin (%)

12.3

14.2

14.1

17.4

13.0

15.4

14.4

17.9

13.4

13.2

15.3

Selling, general andadministrative expenses

4,571

5,072

4,965

6,437

4,983

4,992

5,063

6,396

5,274

4,976

5,064

Operating income (loss)

(242)

1,369

3,688

5,821

322

2,869

2,396

5,085

(154)

660

2,350

Operating profit margin
(%)

(0.7)

3.0

6.0

8.3

0.8

5.6

4.6

7.9

(0.4)

1.5

4.9

92

1,447

3,848

5,815

547

2,955

2,644

5,076

66

776

2,527

Extraordinary income(loss)(147)(3)(1,167)

1,439

24

84

49

(269)

(82)

(243)

(40)

Profit attributable toowners of parent (loss)

(66)

862

1,743

6,505

428

2,057

1,815

3,276

11

809

1,647

Ordinary income

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【Orders Received】
Orders Received by Segment (Consolidated)(Millions of yen)

December
2018

Segment

December
2019

December
2020

Year on year

Rate of
Change (%)

HVAC and Plumbing for
Buildings

46,375

48,17045,520(2,650)(5.5)

Industrial HVAC

60,04644,25049,032

4,782

10.8

Electrical Systems

17,58820,363

16,649(3,714)(18.2)

Facility Systems

8,406

9,325

7,998

(1,327)(14.2)

132,416

122,110

119,201(2,909)(2.4)

Machinery Systems

9,526

8,245

6,169

(2,075)(25.2)

Environmental Systems

12,67419,197

19,412214

1.1

Total of Plant & Machinery
Systems Business

22,20027,44325,582(1,861)(6.8)

154,617

149,554

144,783(4,770)

(3.2)

1,409

1,628

1,777

149

9.2

575

476

432

(44)

(9.3)

(1,554)

(725)

(545)

180

―

155,048

150,933

146,447(4,485)(3.0)

Total of Facilities Construction
Business

Sub-total
Real Estate Business
OthersAdjustments *Total* “Adjustments” eliminate inter-segment transactions included in each segment.

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【Net Sales】
Net Sales by Segment (Consolidated)(Millions of yen)

December
2018

Segment

December
2019

December
2020

Year on year

Rate of
Change (%)

HVAC and Plumbing for
Buildings

46,84749,30536,670(12,635)(25.6)

Industrial HVAC

52,65348,29844,855(3,442)(7.1)

Electrical Systems

15,147

15,543

17,643

2,100

13.5

Facility Systems

6,984

7,030

7,169

138

2.0

121,632

120,178

106,339(13,838)(11.5)

Machinery Systems

7,089

7,882

6,617

(1,264)(16.0)

Environmental Systems

12,77814,303

14,713410

2.9

Total of Plant & Machinery
Systems Business

19,86822,185

21,331

(854)

(3.9)

141,500

142,363

127,671(14,692)(10.3)

1,409

1,628

1,777

149

9.2

461

606

567

(39)

(6.5)

(1,325)

(920)

(799)

120

―

142,046

143,678

129,215(14,462)(10.1)

Total of Facilities Construction
Business

Sub-total
Real Estate Business
OthersAdjustments*
Total* “Adjustments” eliminate inter-segment transactions included in each segment.

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【Profit】
Gross Profit by Segment (Consolidated)(Millions of yen)
December
2018

December
2019

December
2020

Year on year

Rate of
Change (%)

HVAC and Plumbing for
Buildings/Industrial
HVAC/Electrical Systems

14,845

15,88913,298(2,591)(16.3)

Facility Systems

1,036

1,152

1,107

(44)

(3.9)

15,882

17,041

14,406(2,635)(15.5)

Machinery Systems

1,298

1,530

1,071

(459)

(30.0)

Environmental Systems

2,089

1,494

2,133

639

42.8

3,388

3,024

3,204

180

6.0

19,27020,066

17,610(2,455)(12.2)

Real Estate Business

410

496

685

189

38.1

Others

117

145

44

(101)

(69.5)

Adjustments

(372)

(79)

(168)

(88)

―

19,425

20,62818,172(2,456)(11.9)

Ordinary Gross Profit by Segment

Segment

Total of Facilities Construction
Business

Total of Plant & Machinery Systems
Business
Sub-total

Total

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【Profit】
Initiatives to Improve Profits● Thorough cost management (thorough internal control processes)● Enhancement of the site support system through promotion of the Smile Site Plan*
・ Procurement Division: Purchasing support and introducing web-based procurement
support system
・ Design and Engineering Support Center: support for design work・ Technology Support Center: support and instruction for construction sites
・ Quality Management Center: Construction audits and quality management by the chiefengineer and technical experts
・ Branch office and branch site support divisions: support for on-site document creation
・ Information systems office: ICT support at work sites● Development of ICT technology that enables energy-saving construction andintroduction to sites
・ Improved work efficiency through use of autonomous airflow measurement robots
・ Improved construction management efficiency through use of digital information such asbuilding information modeling (BIM)● Strengthening relationships with business partners
・ Reviewing payment conditions for partner companies with capital of less than 40 million
yen (payments made entirely in cash)
・ Conclusion of commitment line agreements for the purpose of catering to short-term
demand for financing and working capital in order to support the stable operation ofpartner companies* A specialist committee established in fiscal 2017 to reduce the burden on construction managers and promote businessefficiency.

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FY2020 3Q
BALANCE SHEET AND
STATEMENT OF CASH
FLOWS

11

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【Financial Conditions】
Balance Sheet (Consolidated)
End ofDecember2020

End of
FY2019Current assets(Millions of yen)
End ofDecember
2019

Rate ofchange (%)

Vs. end of
FY2019130,765

103,168(27,597)(21.1)

119,544

71,73955,347(16,392)(22.8)

62,55650,04053,0893,048

6.1

54,77224,01728,011

3,994

16.6

29,45279,70558,990(20,714)(26.0)

70,72652,48938,922(13,566)(25.8)

52,805

Noncurrent liabilities

13,735

10,874(2,860)(20.8)

14,460Total net assets

87,36486,391

(972)

(1.1)

89,129(4,187)(3,859)328―(3,330)Total assets

180,805

156,257(24,548)(13.6)

174,316Book-value per share (yen)1,510.59

1,518.18

7.59

0.5

1,526.42

48.2

55.1

6.9

―

51.0

10,7198,585(2,133)(19.9)

10,287

Notes and accounts receivable
on completed construction
contracts and otherNoncurrent assets
Investment securities
Current liabilities
Notes and accounts payable
on construction contracts
and other

Treasury stock

Equity ratio (%)
Interest-bearing liabilities (consolidated)

pt.

12

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【CF】
Statement of Cash Flows (Consolidated)○ The balance of cash and cash equivalents decreased from the end of the previous fiscal year (also a year-on-year
decrease)• The decrease in cash flows from operating activities is due to contribution to retirement benefit funds and payment ofbonuses and corporation tax, etc., despite recovery of receivables exceeding payment of accounts payable.
• The decrease in cash flows from investment activities is mainly due to the acquisition of property, plant and equipment.
• The decrease in cash flows from financing activities is mainly due to the acquisition of treasury stock and the payment
of dividends.

(Millions of yen)

FY2016FY2017FY2018FY2019December
2020

December
2019

Cash flows from operating
activities

10,845

6,306

6,786

11,940(4,045)

4,583

Cash flows from investing
activities(1,644)(2,510)(3,775)(303)(1,432)(670)

Cash flows from financing
activities(2,458)

1,814(5,215)(8,955)(8,934)(8,477)

Cash and cash equivalents at
end of period

39,18744,866

42,61245,946

31,53038,65913©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

FY2020 FORECAST

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【Overall Forecast】
FY2020 Full-Year Forecast (Consolidated)(Millions of yen)

FY2020 forecast FY2020 forecast
FY2017FY2018(Interim forecast (Interim forecast
from November 13, from February 8,
2021)
2020)
A
B

FY2019Difference
B－A

Orders received

191,113217,096

194,018

190,000

190,000―

Balance carried forward

144,712

149,495

136,163

126,163

134,163

8,000

Net sales

170,157

212,314207,684

200,000

192,000(8,000)Gross profit

25,06031,684

32,11031,00029,500(1,500)

14.7

14.9

15.5

15.5

15.4

(0.1)

Operating income

6,593

10,637

10,674

9,000

8,000

(1,000)Ordinary income

7,434

11,204

11,224

9,500

8,500

(1,000)

Profit attributable to owners ofparent

3,906

9,046

7,576

6,500

5,800

(700)

Cash dividends per share:
regular dividends (yen)

20

40

70

70

70

―

Cash dividends per share:
extra dividends (yen)

15

20

25

―

―

―

35

60

95

70

70

―

Gross profit margin (%)

Cash dividends per share (total) (yen)* Although results have been incorporated, which take into account the impact of the spread of the novel coronavirus (COVID-19) on the Group’sbusiness, business results may be further impacted due to altered circumstances in the future.

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【Forecast of Orders Received and Net Sales】
FY2020 Forecast of Orders Received andNet Sales by Segment (Consolidated)
FY2020Orders Received Forecast

Segment(Millions of yen)
FY2020Net sales Forecast

HVAC and Plumbing for
Buildings

60,00055,000Industrial HVAC

60,00065,000Electrical Systems

23,00025,000

Facility Systems

12,00012,000155,000

157,000

Machinery Systems

9,000

9,000

Environmental Systems

24,00024,000Total of Plant & Machinery
Systems Business

33,00033,000188,000

190,000

Real Estate Business

2,000

2,000

Others

1,000

1,000

Adjustments*(1,000)(1,000)190,000

192,000

Total of Facilities Construction
Business

Sub-total

Total*Adjustments eliminate inter-segment transactions included in each segment.

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SHAREHOLDER
RETURNS

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【Shareholder Returns】
Dividends and Others• Conducted shareholder returns according to medium-term management plan “Century 2025” Phase 2 financial and capital
policies.
• Annual shareholder return of 70 yen (interim dividend: 35 yen, year-end dividend: 35 yen) *No change from initial forecast.
• Retirement of 1 million shares of treasury stock was conducted on August 17, 2020.
• Acquisition of 1 million shares of treasury stock was conducted by October 27, 2020.

FY2016FY2017FY2018FY2019FY2020(Forecast)

73.91

63.02

150.02128.51101.34

Cash dividends per share:
regular dividends (yen)

20

20

40

70

70

Cash dividends per share:
extra dividends (yen)

10

15

20

25

―

30

35

60

95

70

Payout ratio (%)

40.6

55.5

40.0

73.9

69.1

Total return ratio (%)

40.6

148.9

52.9

111.4

89.2

Number of shareholders at end of period

3,157

3,243

3,381

4,216

958

1,188

1,210

1,211

Acquisition of treasury stock(thousand shares)

―

3,000

1,000

1,958

1,000

Retirement of treasury stock(thousand shares)

―

3,000

1,000

2,000

1,000

ROE (Return on Equity) (%)

5.5

4.5

10.3

8.6

ROA (Return on Assets) (%)

4.1

4.3

6.0

6.0

Earnings per share (yen)Cash dividends per share (total) (yen)Share price at end of period (yen)18©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Shareholder Returns】
Total Return Ratio(Millions of yen)Phase1(%)

Phase2

10,000160.0%

148.9%

Price of acquired treasury
stock (left axis)

140.0%
Dividends paid (left axis)
8,000
120.0%

2,899

Total return ratio (rightaxis)
100.0%

111.4%

6,000

89.2%
1,191
4,000

1,171

3,679
40.6%

5,543

2,136

2016

2017

40.0%
4,001

3,595
1,906

←Total return ratio: 70%
60.0%

52.9%

2,000

80.0%

20.0%

0

0.0%
2018

2019

2020 (Forecast)

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SUPPLEMENTARY
MATERIALS

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【Orders Received】
Orders Received by Type

Orders received (Non-consolidated: Facilities
Construction Business)
Orders received from general contractors(Non-consolidated: Facilities Construction
Business)
Rate of orders received from generalcontractors (Non-consolidated: Facilities
Construction Business) (%)
Orders received (Consolidated)
Orders received from overseas projects(Consolidated)
Rate of orders received from overseas
projects (Consolidated) (%)(Millions of yen)

FY2017Full-year

FY2018Full-year

FY2019Full-year

December
2019
A

December
2020
B

Difference
B–A

147,013

173,553

147,191

114,711

114,032(679)

67,34578,304

48,23835,82449,533

13,708

45.8

45.1

32.8

31.2

43.4

12.2
pt.

191,113217,096

194,018

150,933

146,447(4,485)

1,246

2,379

3,143

2,006

1,781

(225)

0.7

1.1

1.6

1.3

1.2

(0.1)
pt.

Orders received for renewal construction(Consolidated)

101,597

117,619

112,90988,83180,723(8,107)

Rate of orders received for renewal
construction (Consolidated) (%)

53.2

54.2

58.2

58.9

55.1

(3.8)

<Ref.> Net sales for renewal construction(Consolidated)

pt.

94,601

116,627

114,208

76,484

66,896(9,588)21©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

【Orders Received】
Orders Received by Industry (Consolidated)(Millions of yen)
40,000Dember 2018

35,00030,000Dember 2019

25,000Dember 2020

20,00015,00010,0005,000

0Government Offices

MedicalWholesale and Retail Trade

Miscellaneous business services

Education

Real Estate

Finance and Insurance

Food

ChemicalMachinery

Pharmaceutical Industry

Automobile

Electrical Machinery

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【Orders Received / Net Sales 】
Main Large-scale Received Construction Projects
Property nameItem of construction

Type of construction

Location

Kurita Water Industries Ltd. New Research andDevelopment Facility Construction Project (provisional name)

HVAC systems

New construction
work

Tokyo

HVAC and Plumbing systems

New construction
work

Tochigi

Kawanishi City General Medical Center Development
Project (provisional name)Plumbing system

New construction
work

Hyogo

Toyota Technical Center Shimoyama Plumbing andElectrical Systems Project

Plumbing and electrical systems

New construction
work

Aichi

Kitatama Water Reclamation Center No. 1 Sludge
Incineration Systems Construction Project

Water and sewage treatment
systems

ExpansionTokyo

Toyota Industries Corporation Higashiura Plant No. 2

HVAC and Plumbing systems

New construction
work

Aichi

Kiyose Water Reclamation Center Sludge Transport
Equipment Reconstruction Project

Water and sewage treatment
systems

Renovation

Tokyo

Kanae Tochigi Factory No. 3 Building

11 other projects*The property name is the name being used by the Company. This may differ from the name used on the construction contract.

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【Orders Received / Net Sales 】
Main Large-scale Completed Construction Projects
Property nameItem of construction

Type of construction

Location

Nissay Training Center

HVAC systems

Renovation

Chiba

DENSO Corporation Headquarters PT Development Center

HVAC systems

New construction work

Aichi

Tokyo Metropolitan Higashiyamato Medical Center for the
Severely Disabled

Plumbing systems

RenovationTokyo

The Jikei University School of Medicine New Outpatient
Building, etc.

Electrical systems

New construction work
RenovationTokyo

Chiba University (Hospital) Center for Treatment and Care
New Building and Other Mechanical Systems Project

HVAC and plumbing systems

New construction work

Chiba

ToyotaTechnical Center Shimoyama

HVAC, plumbing and electricalsystems

New construction work

Aichi

Shiseido Osaka-ibaraki Factory/West Japan Distribution
Center

HVAC and plumbing systems

New construction work

Osaka

HVAC systems

New construction work

NiigataDenka NVP-42 Construction Project4 other projects*The property name is the name being used by the Company. This may differ from the name used on the construction contract.

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【Orders Received】
Main Large-scale Projects Received over 1 Billion Yen(by Industry)
December 2018

December 2019

December 2020

Office113Hotels and inns

1

－

－

Factory8

2

5

Research institute

1

2

3

Logistics Center

1

－

－

18 Projects

10 Projects

15 Projects

Hospitals andclinics

1

Gymnasium

1

Other building
interiors－

Railway, Airport

1

Waste processing
facility－

11

Water treatment
plants andsewage plants

－

1

2

1
(31,293 million yen)
* Orders received from
customers: 7 Projects* Orders received fromgeneral contractors:
8 Projects

－
2
－

1
(25,958 million yen)
* Orders received from
customers: 7 Projects* Orders received fromgeneral contractors:
3 Projects－
2
1(34,559 million yen)
* Orders received from
customers: 8 Projects* Orders received fromgeneral contractors:
10 Projects

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【Operating Results】
Operating Results over the Most Recent 5 Years(Consolidated) <Orders Received/Net Sales>(Millions of yen)Phase1

Phase2200,000
Orders received

Net sales
Balance carried forward
150,000

100,000

50,000

0
2016

2017

2018

2019

2020 (Forecast)

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【Operating Results】
Operating Results over the Most Recent 5 Years(Consolidated) <Profit>(Millions of yen)Phase2Phase1(%)
18.0

35,000

16.0

Gross profit (left axis)

14.0

Operating income (left
axis)

12.0

Ordinary income (left
axis)

10.0

Gross profit margin (rightaxis)

30,00025,00020,0008.0

15,000Operating profit margin(right axis)
Ordinary profit margin(right axis)

6.0
10,000

4.0
5,000
2.0

0.0

0
2016

2017

2018

2019

2020 (Forecast)

27©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.

Statements about the future, such as results forecasts included in thesematerials, are based on judgements made according to the information
available to the Company as of February 8. Actual results may differ from thefigures contained herein due to a number of factors.
For inquiries, please contact:
Sanki Engineering Co., Ltd.
Corporate Communications Department

TEL: +81-3-6367-7041©2020 SANKI ENGINEERING CO., LTD. All Rights Reserved.