Ishii Iron Works Co., Ltd.

Second Quarter of FY2023

Financial Results
Presentation Materials
December 2, 2022

Index1Company Overview and Business Domain

2

Progress of Medium-term Management Plan and
Future Strategies

3

Overview of Second Quarter Results for FY2023

4

Earnings Forecast for FY2023©ISHII IRON WORKS CO., LTD. All rights reserved.

2

1

Company Overview and Business Domain©ISHII IRON WORKS CO., LTD. All rights reserved.

3

Management philosophy

Contribute to society through our business. Seek higher corporate
value through engineering that meets social needs andmanufacturing with a sincere attitude.

Steel Structure
Business

Real EstateBusiness

And now, to a company that contributes to GX
through engineering!
©ISHII IRON WORKS CO., LTD. All rights reserved.

4

Business Segments

Steel Structure BusinessAs a specialist tank manufacturer, Ishii Iron Works Co., Ltd. provides integrated engineering services from design to fabrication,
installation, and commissioning, focusing on products for petroleum refineries, city gas companies, petrochemical companies, andelectric power companies.
ー

Petroleum refineriesーPetrochemical companies

Large floating-roof oil storage tankーCity gas companiesー

LNG satellite terminal

Low-temperature tank and terminal

Other storage tanks

Tsunami-resilient structured tanks(Kesennuma)ーSeismic reinforcement and maintenance

Seismic reinforcement oflarge floating-roof oil storage tank

©ISHII IRON WORKS CO., LTD. All rights reserved.

5

Business Segments

Real Estate Business
Ishii Iron Works Co., Ltd. develops and manages real estate that meets society’s changing requirements, and provides high value-addedbuildings such as condominiums, logistics facilities, and commercial facilities that take advantage of company-owned land locations. In
recent years, the Company has also entered the solar power generation business.

ー

Condominiums

Suncity Ginza Eastー

Logistics facilities

DS・L・HQ HANEDAーSolar power generation

Higashi-Kojiya Fourth Power Plant©ISHII IRON WORKS CO., LTD. All rights reserved.

6

120 years of value creation
From “Technological contributions for our country” to “Technological contributions for the world”
From the oil crises to our 100th
anniversary

From our founding period to the end of WW2
In 1900, Takichi ISHII
founded an iron works
shop in Tsukishima,
Tokyo. The shop
developed technologies
related to the energy
industry, including gas andoil, and provided a varietyof equipment

Over many years of research anddevelopment, the Company wasable to provide new equipment andconstruction methods, such as PS(pre-stressed) concrete tanks.
Started real estate leasing business

Founder Takichi ISHII

Low-temperature tank made of PS
concrete. Received many authorizedcertifications, including the Technological
Progress Certification from the JPI(Japan Petroleum Institute) in 1978

Manufactured the first alumina electrolyzer in Japan

1900–1945

1945–1973

1973–2000

From the end of WW2 to the oil crises

Our 100th anniversary
to todayFirmly established a position as a tankand plant manufacturer along with thedevelopment of the domestic energy
industry. Having actively expanded
overseas, the Company has become
known as “ISHII—the tank fabricator.”
Entered into new businesses such as
leisure industry

Promoted thedevelopment of new
facilities for a recyclingoriented society andreal estate for an aging
societyLargest wet seal gas holder in East Asia (atthat time)

Low-temperature tank terminal
completed in Singapore in 2015

Completed construction of one of theJapan’s largest city gas holders in 1995

2000–Present

Completed construction of Japan’s
first five tsunami-resilient structured
tanks in Kesennuma, Miyagi in 2020

Completed construction ofSuncity Ginza East, an urban
high-rise residential building
in 2006©ISHII IRON WORKS CO., LTD. All rights reserved.

7

The Ishii DNA

Know-how
Know-how accumulated
since our founding in 1900

Since its establishment in 1900, theCompany has been supplying tank andplant facilities essential to customers in key
industries such as petroleum, chemicals,
steel, electric power, and gas throughout
the world. Over the course of more than acentury of history, we have inherited our
DNA of a manufacturing company withtechnological know-how.

Challenge
From EPC operations, which include
planning, engineering, procurement,
and construction, to commissioning
and maintenance operations, we
provide safe, reliable and highly
efficient tanks and plants that meet
our customers’ requirement while
complying with required regulations
and standards within limited cost
and time constraints.

Accumulated
achievements andchallenges

Upbringing
Developing
human resources

Focusing on the three points of (1)improving problem-solving skills,(2) improving communication skills,and (3) improving intuition backed
by experience and qualifications,
we develop global humanresources.

©ISHII IRON WORKS CO., LTD. All rights reserved.

8

Corporate profile
Corporate nameISHII IRON WORKS CO., LTD.

Headquarters

26-11, 3-Chome, Tsukishima, Chuo-ku, Tokyo

Date of establishment

Founded: March 1900 / Incorporated: November 1919

Representative

Hiroji ISHII, President

Paid-in capital

1,892 million yen (as of March 31, 2022)

Business description

Steel Structure Business, Real Estate Business

Number of employees

138 (consolidated basis, as of March 31, 2022)

Group companies

Subsidiaries: 2, affiliates: 1

Fiscal year end

March 31

Qualifications• ISO9001 Certification• Specific construction business license No.122476(Specific-1) issued by the Governor of Tokyo• First-Class Registered Architect's Office Registration No. 7001 issued by the Governor ofTokyo• Seismic structural calculation programs certified business site for high-pressure gas facilities,
etc. (Class A and Class B)

Stock listings

Tokyo Stock Exchange Standard Market (Securities Code: 6362 / Loan-Transaction Stock)©ISHII IRON WORKS CO., LTD. All rights reserved.

9

Earnings results(millions of yen)

Net sales

Operating profit(millions of yen)

12,00011,011

1,600

1,322

10,000

1,200
8,000

6,000

800

4,000

400
2,000

0
2018.32019.32020.32021.32022.302018.32019.32020.32021.32022.3©ISHII IRON WORKS CO., LTD. All rights reserved.

10

2

Progress of Medium-term Management Plan
and Future Strategies©ISHII IRON WORKS CO., LTD. All rights reserved.

11

Forecast of the business environment and its impact
Steel Structure Business
Content

Opportunities

Risks
Risks

Short-term

Medium to long-term

Expanding of new energy markets through carbon neutrality

Large

Large

Increasing renovation of plant equipment due to plant aging

MediumMediumDeclining workforce and experienced engineers

MediumMediumResponding to natural disasters, such as earthquakes, tsunamis, and major
typhoons due to global warming, as well as development of energy infrastructure
and measures to make it more resilient

MediumMediumExpanding energy and petrochemical markets and environmental and safety-related
investments in Southeast Asia

Large

Large

Declining petroleum tank maintenance work due to lower demand for oil

MediumMediumDecreasing number of field workers and aging workforce reduces responsivenessMediumLarge

Real Estate Business
Content
Opportunities
Risks
Risks

Degree of business and financial impact

Degree of business and financial impact
Short-term

Medium to long-term

Government support for carbon neutral initiatives

Small

MediumDeclining value due to aging of buildings

Small

Medium©ISHII IRON WORKS CO., LTD. All rights reserved.

12

Approach to our business portfolio
Medium-term policy
Steel
Structure
Business

Make proactive investments to drive sales andprofit growthBusiness growth potentialReal EstateBusiness

Steel Structure
Business

New
construction

Secure profitability base through stable receipt of orders for tank maintenancework
Participate in the carbon neutrality market
Deepen our presence in Southeast Asia, where energy infrastructure
investment is growing

Secure stable long-term profitability by adding highvalue to rental properties

Increased value and redevelopment to improve profitability

Steel Structure
Business

Maintenance

Sales composition of the Steel Structure BusinessNew
construction

Sales composition of the Steel Structure Businessin Japan and overseas

Overseas

Overseas

18%30%

Approx. 30%

Real EstateBusinessJapan

Maintenance82%

Approx. 60%
Other
Approx. 10%

Current status

Medium-term

FY2022

Japan

70%

Medium-term

Stability of profitability*The size of each circle represents the scale of sales©ISHII IRON WORKS CO., LTD. All rights reserved.

13

Progress of the Medium-term Management Plan’s basic policy
Basic policy
Lowtemperaturetank

Accumulate orders and profit bydifferentiation throughenhancement of engineering
capabilities

Maintenance

Secure orders and profit bydifferentiation through service
capabilities

Domestic

Steel
Structure
Business
Overseas

Leverage service and engineering
capabilities gained in Japan andstrengthen collaboration with local
subcontractors

New Business

Enrich our existing engineering
capability to develop into the newmarket related with steel structurebusiness

Real Estate Business

Promote the use of former
material storage yards, etc.
Management Infrastructure

Establish robust management
structure
Develop human resources fornext-generation
Promote SDGs initiatives

Actual performance to date and future initiatives••

Delivered Japan’s largest (24,000 tons) low-temperature ammonia tank
Collaborated with JFE Engineering Corporation to receive orders for large lowtemperature ammonia tanks for the introduction of fuel ammonia•

Expanded market share of tank maintenance work by deepening relationships
with existing customers and cultivating new customers
Achieved labor savings and efficiency, and secured profitability by introducing
and strengthening automation and mechanization technologies that takeadvantage of the technologies of specialized manufacturers•••

Delivered one of the largest (30,000 tons) low-temperature ammonia tank
Increased orders through collaboration with local companies based on extensive
experience in constructing low-temperature tanks••

Delivered safety equipment for nuclear fuel cycle operation
Renovated existing tanks to support new energy••

Continued to recruit tenants based on the premise of advanced use
Promoted the construction of new solar power generation facilities, etc., andappropriately carried out large-scale repair work

Reviewed administrative authority and budget system, reformed personnel system(personnel evaluation, etc.), strengthened IR, established the Sustainability
Promotion Committee, etc.

©ISHII IRON WORKS CO., LTD. All rights reserved.

14

Medium-term Management Plan Initiatives / Steel Structure Business

Low-temperature tank market (Japan and Southeast Asia) and strategies
Aggressively working to receive orders in the expanding carbon neutral and Southeast Asian markets

Japan

Southeast Asia

Low-temperature tank market

Low-temperature tank market

Market growthpotential◎

Market growthpotential

2050
Fuel ammonia

30 million

tons/year

2030
Fuel ammonia

3 million

Export and popularizationof fuel ammonia mixed
combustion technology◎
 Economic growth rate
approx. 5%
 Expansion of energy
infrastructure market
 Increased demand for
petrochemical products
due to higher living
standards

tons/year

Order receipt strategies

Order receipt strategies

While developing technology to increase the size of PC external tanktype low-temperature tanks, enter the carbon neutral market throughcollaboration with JFE Engineering Corporation and promote activities
to receive orders for large low-temperature tanks

Based on our experience completing numerous low-temperature tankconstruction projects since constructing our first tank in 1966, theCompany aims to receive orders for low-temperature tanks for energy
and petrochemical products in the Southeast Asian region, where
economic growth is anticipated©ISHII IRON WORKS CO., LTD. All rights reserved.

15

Medium-term Management Plan Initiatives / Steel Structure Business

New energy storage initiatives
Formed a business alliance with JFE Engineering Corporation in January 2022. Many inquiries for carbon neutrality projects, and aproven track record of receiving orders
Division of
Diagram ofroles for both JFE Engineering Corporation: Plant facilities (PJT supervision)
Ishii Iron Works: Tank facilities
Details of collaboration
collaborationcompanies
The two companies work together on the following projects related to newenergy supply plants.

Fuel ammonia receiving, storage and supply plant① Fuel ammonia receiving, storage and supply plant② Carbon dioxide capture and storage plant③ Various types of decarbonization-related plants, including hydrogen-related
plants④ Review of larger storage tanks of various types

Ammonia/
Hydrogen receiving
terminal

Marinetransport

BackgroundIn response to the efforts to introduce fuelammonia and hydrogen as decarbonizedenergy sources, fuel ammonia and otherresources will be procured from overseas,requiring large import receiving facilities.
At the same time, social needs to fix andstore carbon dioxide are accelerating. The
Company, which has experience in theconstruction of large low-temperature tanks,and JFE Engineering Corporation, which
has actual experience in the construction oflarge plants, will complement each other inorder to aggressively enter the carbon
neutral market.

Ammonia mixed
combustion

Coal-fired
power plant

Ammonia &Hydrogen

Progress to date

Storage andreceiving/disbursement

Hydrogen mixed
combustion

GTCC (*1)

Since the collaboration, joint sales
and technological exchanges havebeen conducted, and inquiries havebeen received for projects related tocarbon neutrality

Carbon dioxide capture and storage plant

Power plant

As a specific result, we obtained orders
for a carbon dioxide gas liquefaction andstorage plant related to carbon neutrality*1 GTCC: Gas turbine combined cycle power plant*2 CCS: Carbon dioxide capture and storage. Refers to a series of technologies for capturing and storing carbon dioxide (CO2) in the ground*3 CCU: Carbon dioxide capture and utilization. Effective use of captured and stored carbon dioxide (CO2)

CO2-PL

CO2
shipping terminal

CO2
receiving terminal

CCS
Oil refinery(*2)

Marinetransport

Ironworks

CCU
(*3)

Separationand capture

Liquefaction, storage,
and shipping

Storage andreceiving©ISHII IRON WORKS CO., LTD. All rights reserved.

16

Medium-term Management Plan Initiatives / Real Estate Business

Haneda district redevelopment plan
Overview of the redevelopment plan
Item

Content

Location

Higashi-Kojiya, Ota-ku, Tokyo(Close to Tokyo International Airport and theMetropolitan Expressway)

Lot area

Approx. 2,100 m 2

Present
condition

Rental parking lot (flat)

Use

Conceptual drawing of warehouse/distribution center construction

Metropolitan
Expressway

Warehouse, distribution center, etc.
Site

Remarks

Tokyo
International
AirportTo be constructed to design specifications inaccordance with the requests of the tenant company.
Currently seeking tenant companies
Map: from the Geospatial Information Authority of Japan website©ISHII IRON WORKS CO., LTD. All rights reserved.

17

Real Estate Business

Increase in value as a result of conversion of rights to assets held
Conversion of rights between Company-owned land and part of a newly constructed building property inconnection with the effective implementation of the Tsukishima 3-chome South District Type 1 Urban
Redevelopment ProjectType of asset
Current
holdings

Type of asset
Site area
Usage
Book value: Land: Approx. 430m2/6,500m2: Rental parking lots, etc.
: Approx. 90 million yen

Assetsacquired afterconversion ofrights: Land and buildings (part of a newly
constructed building property in a
redevelopment project)
Floor space: Approx. 1,000m2/77,200m2
Usage: Residences and a nursery school
Appraised value after conversion of rights : Approx. 654 million yen

Schedule for conversion of rights
November 17, 2022

Conversion of rights plan approved(approved by the Governor of Tokyo)

December 2, 2022

Conversion of rights period

Tsukishima
StationSite
Tsukishima 3-chomeSouth District

Impact on earnings

In the consolidated and non-consolidated financial statements for
FY2023, a gain on conversion of non-current asset rights of 564
million yen and a loss on tax purpose reduction entry of non-current
assets of 564 million yen will be recorded as extraordinary income
and extraordinary losses, respectively

Kachidoki
StationLocation of subject assets

Tsukishima 3-chome South District
CG of expected completion of the Type 1
Urban Redevelopment Project (to becompleted in FY2027)©ISHII IRON WORKS CO., LTD. All rights reserved.

18

Progress of the Medium-term Management Plan
Although earnings forecasts for FY2023 have been revised downward, the Company expects to achieve its sales and profit targets for
FY2024(millions of yen)

Net sales

Current Medium-term Management Plan

Operating profit

13,80014,00012,000(millions of yen)

10,445

11,011

11,0002,500

10,000

2,000

8,000
6,000

1,218

1,400

1,321
950

500

2,000
0

ROIC

1,500
1,000

4,000

ROE

3,000

0
FY2021 (Actual)

FY2022 (Actual)

FY2023 (Forecast)

FY2024 (Planned)

8.5%

5.5%

8.0% or higher

5.9%

7.4%

6.5%
©ISHII IRON WORKS CO., LTD. All rights reserved.

19

Cash flows during the period of the Medium-term Management Plan
Cash inBreakdown of investments
and progress

Cash out

Capital investment

Investment
Procuring funds

1.6 billion yen

1 billion yen

①
②
③





1 billion yen

Stable cash management through long-term
fixed-rate working capital loans

Steady investment based on the medium- tolong-term growth investment policy:“investment in growth with a target of about
5% of net sales to increase corporate value”

Haneda district redevelopment plan
Renewal of production facilities at
Haneda Branch
Renewal of facilities at Headquartersand Haneda Branch(IT, business environment
improvement)

Strategic investments

Returning profits
to shareholders
Operating CF

1.6 billion yenIn addition to stable Real Estate Businessprofitability, the Company continues toimprove the profitability of the Steel
Structure Business.

1 billion yen
Dividends for FY2022 was 60 yen per shareand the same level is projected for FY2023.
In the final year of the medium-term
management plan (FY2024), a dividend
payout ratio of around 30% is targeted Conduct share buybacks

500 million yen
New energy-related capital investment

Infrastructure enhancement

100 million yen
Developing human resources,developing new products, deepening
existing technologies, updating systems,
addressing sustainability, etc.

©ISHII IRON WORKS CO., LTD. All rights reserved.

20

3

Overview of Second Quarter Resultsfor FY2023©ISHII IRON WORKS CO., LTD. All rights reserved.

21

Overview of Financial Results

Consolidated financial results
Decreased revenues due to a decrease in large-scale construction projects in the Steel Structure Business, etc.
Operating profit decreased due to provision for loss on construction contracts for domestic construction contracts(millions of yen)

2Q of FY2022(Actual)YoY

2Q of FY2023(Actual)AmountRatio

Net sales

5,396

4,486

(909)

(16.9%)

Operating profit
Operating profit margin

567
10.5%

253
5.7%

(313)
-

(55.3%)(4.9P)

Ordinary profit

572

369

(202)

(35.4%)

Profit attributable toowners of parent

380

236

(144)

(38.0%)

103.0665.09(38.00)-Earnings per share (yen)©ISHII IRON WORKS CO., LTD. All rights reserved.

22

Overview of Financial Results

Earnings by business segment
Steel Structure
Business(millions of yen)

Decreased revenues due to a decrease in large-scale construction projects, etc. Profit decreased due to theimpact of provision for loss on construction contracts.
Orders received increased from the previous fiscal year due to construction of large spherical storage tanks anddemolition of large tanks, etc.
2Q of FY2022(Actual)YoY

2Q of FY2023(Actual)Amount

Ratio

4,517

3,588

(928)

(20.6%)

Segment profit

6

(279)

(285)

-

Orders received

2,450

3,145

695

+28.4%Net sales

Real EstateBusiness(millions of yen)

Increased revenues as a result of the effect of rent increase. Profit decreased due to higher SG&A expenses on acompany-wide basis.
2Q of FY2022(Actual)YoY

2Q of FY2023(Actual)AmountRatio

Net sales

878

897

19

+2.2%

Segment profit

560

532

(28)

(5.0%)©ISHII IRON WORKS CO., LTD. All rights reserved.

23

Overview of Financial Results

Earnings by business segment
Net sales are trending upward in the Steel Structure Business. Real Estate Business is continuing to record stable rental income.
Net orders received in the Steel Structure Business averaged 10 billion yen per year, although this varied depending on the number oforders received for large projects.
(millions of yen)

Net sales
Steel Structure
Business

Segment profit

Real EstateBusiness

1,747

Net orders received(Steel Structure Business)

Steel Structure
Business

Real EstateBusiness

1,763

1,746
1,667

14,937
1,111

6,866

8,037

8,698

9,248

898

1,140
1,016

10,703

1,123
8,036
532

3,589

6,559

3,145

210
FY201919.3期

FY202020.3期

FY2021
21.3期

FY202222.3期

FY2023
23.3期
2Q

(228)

2Q

FY2019

(279)
(28)

78

FY2020

FY2021

FY2022FY2019FY2020

FY2021

FY2022

FY20232Q

FY2023
2Q©ISHII IRON WORKS CO., LTD. All rights reserved.

24

4

Earnings Forecast for FY2023©ISHII IRON WORKS CO., LTD. All rights reserved.

25

Full year forecast for FY2023
Forecasts were revised due to the impact of a decrease in large-scale construction projects in the Steel Structure Business and theposting of a provision for loss on construction contracts.
Profit is expected to exceed that of the previous fiscal year due to the elimination of accident-related losses incurred in the previous fiscal
year(millions of yen)

Full year actual for
FY2022

FY2023
Initial forecast

Compared to initial forecast

Revised forecast *AmountRatio

Net sales

11,01012,00011,000(1,000)(8.3%)

Operating profit
Operating profit margin

1,321
12.0%

1,250
10.4%

950
8.6%

(300)
(1.8P)(24.0%)

Ordinary profit

1,469

1,250

950

(300)

(24.0%)

595

850

650

(200)

(23.5%)

161.20229.92

183.18(46.74)-

Profit attributable toowners of parent
Earnings per share (yen)*Published on November 9©ISHII IRON WORKS CO., LTD. All rights reserved.

26

Returning profits to shareholders
Under the basic policy of “aiming to returning profits to shareholders through stable distribution, etc.,” the Company paid a dividend of 60
yen for FY2021, an increase of 10 yen YOY. In FY2023, the total return to shareholders ratio is expected to exceed 70%, including sharebuybacks.
Annual dividend per share(yen)

Dividend payout ratio

80
70

50.0%

42.6%
25.7%

60

30.2%

33.4%

40.0%

Medium-term management plan target 30%

30.0%

60

20.0%

37.2%

25.6%

50
40
30

50

50

50

60

60

20
10.0%
10
0

0.0%
FY2018FY2019FY2020

FY2021

FY2022

FY2023

FY2024(Forecast)(Planned)*Share buybacks of 85,000 shares (acquisition cost of 243,525 thousand yen) through ToSTNet-3 on May 31, 2022.
©ISHII IRON WORKS CO., LTD. All rights reserved.

27