The 2nd Quarter FY2018
Summary of Financial Results
November 9, 2018

Sanki Engineering Co., Ltd.
1

Contents
Key Points of Financial Results
FY2018 2Q Results – Cumulative Results (Consolidated)
Orders Received by Segment (Consolidated)
Net Sales by Segment (Consolidated)
Ordinary Income and loss by Segment (Consolidated)
Quarterly Results (Consolidated)
Operating Results over the Last 5 Years (Consolidated) <Orders Received/Net Sales>
Operating Results over the Last 5 Years (Consolidated) <Profit>
Orders Received by Industry (Consolidated)
Orders Received by Type
Main Major Large Projects Received
Main Major Completed Construction Projects
Major Projects over 1 Billion Yen (by Industry)
Profit Improvement Factors and Measures
Balance Sheet (Consolidated)
Statement of Cash Flows (Consolidated)
Dividends and Others
FY 2018 Full-Year Forecast
FY2018 Forecast of Orders Received and Net Sales by Segment (Consolidated)

030405
060708
091011121314151617181920212

Key Points of Financial Results<Orders Received>
In the Facilities Construction Business, there was a great increase in Industrial
HVAC, particularly with regard to large-scale projects.
Building HVAC and Electrical Systems also firmed with year-on-year increases.
Machinery Systems maintained its level year on year; however, Environmental
Systems decreased due to the effect of receiving large-scale projects in the same
period of the previous year.
As a result, overall orders received exceeded those in the same period of theprevious year, and there was also an increase in the balance carried forward to thenext period.
<Net Sales & Profit>
Net sales in the Facilities Construction Business increased year on year due togreat increases in Industrial HVAC, etc. However, the Plant & Machinery Systems
Business remained steady, resulting in a great increase in net sales overall.
As a result of our continued initiatives for thorough cost management andimprovement of work efficiency, etc. we have seen a year-on-year improvement ingross profit margin. In addition, higher profit, etc. was seen in all profit items due
to higher net sales, particularly in Industrial HVAC.
3

【Overall Results】
FY2018 2Q Results - Cumulative Results (Consolidated)
・ Orders received, net sales, and balance carried forward all increased year on year due to favorable results in the Facilities Construction Business, etc.
・ Gross profit margin improved year-on-year, and gross profit, operating income, and all profit items increased as a result of further continuing initiatives (Millions of yen)including the enhancement of our site support system.

September
2016

September
2017

September
2018

Year on year

Rate ofchange(%)

Orders received

90,912

95,775

103,819

8,044

8.4

Balance carried forward

126,960

147,026

167,80920,783

14.1

Net sales

70,341

72,50680,723

8,216

11.3

Completed construction
contracts

69,491

71,561

79,710

8,148

11.4

Real estate and others

849

944

1,012

68

7.3

8,144

9,319

10,771

1,452

15.6

Completed construction
contracts

7,940

8,972

10,407

1,434

16.0

Real estate and others

204

346

363

17

4.9

11.6

12.9

13.3

0.4
pt.

―

8,087

8,829

9,644

814

9.2

Operating income (loss)

57

489

1,126

637

130.1

Net non-operating income and loss （Cost）

311

462

413

(49)

(10.7)

Ordinary income (loss)

368

952

1,540

587

61.7

Net extraordinary income (loss)(32)(1,134)

(150)

984

―

Profit attributable to owners of parent (loss)

229

(95)

796

891

―Gross profit

Gross profit margin(%)

Selling, general and administrative expenses4【Orders Received】
Orders Received by Segment (Consolidated)
・ In the Facilities Construction Business, there was a great increase in Industrial HVAC, particularly with regard to large-scale projects relating toelectrical machinery and semiconductor industries. Building HVAC and Electrical Systems also firmed with great increases for the entire business.
・ Machinery Systems maintained its level from the previous fiscal year, in which orders were received for large-scale projects; however,Environmental Systems decreased due to the effect of receiving large-scale projects in the same period of the previous fiscal year. (Millions of yen)

September
2016

Segment

September
2017

September
2018

Year on year

Rate of change(%)

HVAC and Plumbing for Buildings

33,97928,86032,385

3,524

12.2

Industrial HVAC

27,39927,06038,495

11,434

42.3

Electrical Systems

8,337

10,39412,013

1,618

15.6

Facility Systems

5,274

5,487

5,350

(137)

(2.5)

74,99071,80388,244

16,44022.9

Machinery Systems

3,287

6,506

6,536

30

0.5

Environmental Systems

12,451

16,634

8,776(7,857)(47.2)

15,73823,141

15,313(7,827)(33.8)

90,72994,945103,557

8,612

9.1

Real Estate Business

787

860

923

62

7.3

Others

259

305

320

15

5.1

Adjustments *(864)

(335)

(982)

(647)

―

90,912

95,775

103,819

8,044

8.4

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems
Business
Sub-total

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

5

【Net Sales】
Net Sales by Segment (Consolidated)
・ Net sales in the Facilities Construction Business increased year on year due to great increases in Industrial HVAC, etc. The Plant &Machinery Systems Business remained steady; however, there was a great increase in overall net sales as a result of contributions
from the Facilities Construction Business.
(Millions of yen)

September
2016

Segment

September
2017

September
2018

Year on year

Rate of change(%)

HVAC and Plumbing for Buildings

24,00127,802

27,111(690)(2.5)

Industrial HVAC

22,082

20,89829,774

8,875

42.5

Electrical Systems

9,065

8,785

8,647

(138)

(1.6)

Facility Systems

4,587

3,687

4,460

773

21.0

59,736

61,17369,993

8,819

14.4

Machinery Systems

4,384

4,522

4,377(145)(3.2)

Environmental Systems

5,782

6,139

6,132

(7)

(0.1)

10,166

10,662

10,509

(153)

(1.4)

69,903

71,83580,502

8,666

12.1

Real Estate Business

787

860

923

62

7.3

Others

254

291

295

3

1.3

Adjustments *(604)

(482)

(998)

(516)

―

70,341

72,50680,723

8,216

11.3

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems Business
Sub-total

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

6

【Profit】
Ordinary Income and Loss by Segment (Consolidated)(Millions of yen)

September
2016

September
2017

September
2018

Facilities Construction

(15)

597

1,600

1,002

167.6

Machinery Systems

119

6(78)

(85)

―(755)

(789)

(758)

30―

(651)

(184)

763

947

―

Segment

Segment Profit Loss

Environmental Systems
Sub-totalRate ofchange(%)（Real Estate Business

103

238

266

28

11.8）

Others204226(15)(35.9)

Adjustments *895

856

483(373)(43.5)

368

952

1,540

587

61.7Total*Year onyear

The amount of adjustments of profit and loss by segment indicates the amount of the Company-level profit and loss not distributed into each segment. The
7
Company-level profit and loss mainly consists of that of interests and dividends not attributable to each segment, and the balance of allocations for the Companylevel expenses.

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

FY2016FY2017FY2018

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Orders received

55,33835,57347,25047,71638,20957,56643,881

51,45650,88552,934Net sales

33,86636,47444,222

53,94932,93339,573

43,10254,54835,25245,470Gross profit

3,905

4,238

5,566

8,827

3,482

5,837

5,995

9,744

4,329

6,442

Gross profit
margin(%)

11.5

11.6

12.6

16.4

10.6

14.8

13.9

17.9

12.3

14.2

Selling, general andadministrative expenses

4,171

3,915

3,798

4,640

4,442

4,386

4,193

5,443

4,571

5,072

Operating income (loss)

(265)

323

1,767

4,187(960)

1,450

1,802

4,300(242)1,369Operating profit
margin(%)

(0.8)

0.9

4.0

7.8

(2.9)

3.7

4.2

7.9(0.7)

3.0

Ordinary income (loss)

27341

2,085

4,425(593)

1,546

2,093

4,388

92

1,447

Extraordinary income(loss)

―(32)

(43)

200(327)

(806)

(381)

536

(147)

(3)

Profit attributable toowners of parent (loss)

(2)

232

1,349

3,119(604)

508

1,119

2,882(66)8628

【Operating Results】
Operating Results over the Last 5 Years(Consolidated) <Orders Received/Net Sales>(Millions of yen)
200,000

180,000

Orders received

160,000

Net sales
140,000

Balance carriedforward120,000

100,000
80,00060,000
40,00020,00002014

2015

2016

2017

2018

(Forecast)9【Operating Results】
Operating Results over the Last 5 Years(Consolidated) <Profit>(Millions of yen)（％）

30,00016.0

14.0
25,000Gross profit (left axis)
Operating income (left axis)
Ordinary income (left axis)

12.0
Gross profit margin (right axis)

20,00010.0

15,0008.0

Operating profit margin (right axis)

Ordinary profit margin (right axis)

6.0
10,0004.0
5,000
2.000.0
2014

2015

2016

2017

2018
(Forecast)10【Orders Received】
Orders Received by Industry (Consolidated)(Millions of yen)

25,00020,000Government

Medical Services
Wholesale and Retail
Trade
Miscellaneous
business services
Education

Real Estate

Finance and Insurance

Food

ChemicalMachinery
PharmaceuticalIndustry
Automobile

Electrical Machinery0

September2016
September2017
September2018

15,00010,0005,000

11【Orders Received】
Orders Received by Type(Millions of yen)
FY2015

Orders received (Non-consolidated : Facilities
Construction Business)

Orders received from general contractors (Nonconsolidated : 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) (%)

FY2016FY2017

September
2017

September
2018

Diff.

145,069

139,997

147,01368,60883,942

15,33372,751

61,49367,34528,45936,415

7,955

50.1

43.9

45.8

41.5

43.4

1.9
pt.

183,270

185,880

191,113

95,775

103,819

8,044

2,343

1,612

1,246

562

1,588

1,025

1.3

0.9

0.7

0.6

1.5

0.9
pt.

Orders received for renewal construction(Consolidated)

99,920101,114

101,597

53,67062,1198,448

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

54.5

54.4

53.2

56.0

59.8

3.8

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

96,32593,602

94,60137,33843,488* Orders received by SANKI CONSTRUCTION ENGINEERING (SHANGHAI) CO., LTD., an unconsolidated subsidiary,
are not included in orders receive from overseas projects.

6,150

12

【Orders Received】
Main Major Large Projects Received· Nissay Logistics Center, Machida(HVAC, Plumbing, and Electrical Systems) <New construction work>· NGK Ceramic Device Co., LTD., Tajimi Plant(HVAC Systems) <New construction work>· Toshiba Memory Corporation Yokkaichi Plant Building 260, Stage 4(HVAC Systems) <Expansion>· Sony Semiconductor Manufacturing Corporation,Yamagata Technology Center(HVAC and Electrical Systems) <Renovation work>· Tokyo Metropolitan Higashiyamato Medical Center for the Severely
Disabled(Plumbing Systems) <Renovation work>· Takashimaya EAST BUILDING Hotel Conversion(HVAC and Plumbing Systems) <Renovation work>· Toshiba Memory Corporation Iwate Building 510, Stage 1(HVAC Systems) <New construction work>
2 other projects* The property name is the name being used by the Company. This may differ from the name used on the construction contract.

13

【Net Sales】
Main Major Completed Construction Projects·Toyota Motor Corporation PI Tower(HVAC and Electrical Systems) <New construction work>·Nihonbashi 2-Chome Type-1 Urban Area Redevelopment
Project (Districts C & D)
(Plumbing Systems) <New construction work>·Toshiba Memory Corporation Yokkaichi Plant Building 260,
Stage 3
(HVAC Systems) <New construction work>·Fukuoka High and District Cout/ Family Court/Summary Court
Office(HVAC and Plumbing Systems) <New construction work>* The property name is the name being used by the Company. This may differ from the name used on the construction contract.

14

【Orders Received】
Major Projects over 1 Billion Yen (by Industry)
September 2016

September 2017

September 2018

Office311Hotel――1Factory

2

2

5

Research institute

―

1

―

Logistics Center――1

Hospital―

Others―Railway, Airport―＊Orders received from
Customers : 5 Projects

1＊Orders received from
Customers : 6 Projects

Power station,Substation1＊Orders received fromgeneral contractors:2 Projects―＊Orders received fromgeneral contractors:2 Projects

Waste processing facility―

2―

Water and sewage treatment
facility

1――

7 Projects（17,852million yen）―
18 Projects（19,052million yen）

1―――

9 Projects（15,873million yen）

＊Orders received from
Customers : 4 Projects＊Orders received fromgeneral contractors: 5 Projects

15

【Profit】
Profit Improvement Factors and Measures○Improvement of the external environment○Thorough cost management (thorough internal control processes)○Developing site support systems• Improved support for purchasing operations by the Procurement Division(established in 2015) (Webification of the purchasing operations)• Expanded support for on-site documentation creation at each branch office• Expanded support for design work by the Design and Engineering Support Center(established in 2016)• Established the Technical Support Center, specializing in support and guidance forsite operation (established 2018)• ICT support at work sites (introduction of tablet devices to all sites)• Quality audits by technical experts○Strengthening relationships with business partners• Conducting the Liaison Meeting for subcontractor groups• Implementing the Sanki Super Meister System• Implementing the Sanki Best Partners System16【Financial Conditions】
Balance Sheet (Consolidated)(Millions of yen)
End of
FY 2017

September
2018

Diff.

Rate ofchange(%)

September
2017

Current assets

122,901

111,664(11,236)(9.1)

98,663

Noncurrent assets

54,11258,4464,333

8.0

55,599Current liabilities

73,78765,731(8,055)(10.9)

58,314

Noncurrent liabilities

17,035

17,414378

2.2

11,478

Total net assets

86,191

86,965773

0.9

84,469Total assets

177,014170,110(6,903)(3.9)

154,263

Book-value per share (yen)1,419.77

1,431.40

11.63

0.81,367.78

48.6

51.0

2.4

―54.6

13,504

12,790(713)

(5.3)

5,483

Equity ratio (%)
Interest-bearing liabilities(consolidated)* As we have applied Partial Amendments to Accounting Standard for Tax Effect Accounting, etc. since the 1st quarter of FY2018, the FY2017 balance sheet
has been partially rearranged. As a result, the equity ratio has also changed.

17

【CF】
Statement of Cash Flows (Consolidated)
・ The balance of cash and cash equivalents decreased from the end of the previous fiscal year (an increase year on year)
The increase in cash flows from operating activities is mainly due to the continued collection of receivables to a level surpassing thedecrease in accounts payable
The decrease in cash flows from investment activities is mainly due to the acquisition of tangible fixed assets
The decrease in cash flows from financing activities is mainly due to the repayment of long-term loans and the payment of dividends(Millions of yen)

FY 2014

FY 2015

FY 2016

FY 2017

September
2017

September
2018

Cash flows from operatingactivities

(139)

5,220

10,845

6,306

1,556

1,434

Cash flows from investing
activities

3,440

5,520

(1,644)(2,510)(2,599)(2,051)

Cash flows from financing
activities(2,901)(1,826)(2,458)1,814(3,813)(2,007)

Cash and cash equivalents atend of period

23,66732,501

39,18744,86634,35942,195

Capital investment(including intangible assets)

395

855

1,015

3,772

720

4,842

Depreciation and amortization

723

723

718

818

392

531

18

【Shareholder Returns】
Dividends and Others· Interim dividends for FY2018 were regular dividends of 20 yen per share (interim dividends for FY2017 were 15 yen per share).
The full-year forecast is for 40 yen, which is 5 yen more than the 35 yen in the previous fiscal year (regular dividend).
· Retirement of 1 million shares of treasury stock and acquisition of a further 1 million shares of treasury stock are scheduled to occur by the end of FY2018 as partof our shareholder returns policy.

FY 2014

FY 2015

FY 2016

FY 2017

September2017

FY 2018（Forecast）

38.30

83.84

73.91

63.02

13.15

97.37

Cash dividends per share: regulardividends (yen)15182020

2040

Cash dividends per share:commemorative dividends (yen)

5―

―

―

―

―

Cash dividends per share: extra
dividends (yen)―121015――

Cash dividends per share (yen)

2030

30

35

2040

Payout ratio (consolidated) (%)

52.2

35.8

40.6

55.5

Number of shareholders at end of period

3,375

3,397

3,157

3,243

3,170

930

901

958

1,188

1,220

Acquisition of treasury stock (thousandshares)

2,000――

3,000―

1,000

Retirement of treasury stock (thousandshares)

3,000―

―

3,000

―

1,000

ROE (Return on Equity) (%)

3.0

6.3

5.5

4.5

6.7

ROA (Return on Assets) (%)

2.2

4.7

4.1

4.3

5.1

Earnings per share (yen)Stock price at end of period (yen)41.1<Reference>19

【Overall Forecast】
FY 2018 Full-Year Forecast
The FY2018 full-year forecast has been upwardly revised for all items, including orders received, due to exceedingvalues stated in the initial forecast.
FY 2018 Forecast(as of August 10)

First halfof year

Secondhalf ofyear

Orders received

90,00085,000

Balance carried forward

155,712Net sales

Gross profit

FY 2018 Forecast(as of November 9)First halfof year

Secondhalf ofyear

175,000

103,819

81,181

132,712

132,712167,80979,000108,000

187,000

10,00016,800Gross profit margin
(%)

12.7

Operating income (loss)(Millions of yen)

Diff.

First halfof year

Secondhalf ofyear

185,000

13,819(3,819)10,000130,712130,712

12,097(2,000)(2,000)80,723

118,277

199,000

1,723

10,277

12,00026,80010,771

17,82928,600

771

1,029

1,800

15.6

14.3

13.3

15.1

14.4

0.6Pt.

(0.5)Pt.

0.1Pt.

500

7,000

7,500

1,126

7,074

8,200

62674700

Ordinary income (loss)

800

7,200

8,000

1,540

7,360

8,900

740

160

900

Profit attributable toowners of parent (loss)

400

5,100

5,500

796

5,104

5,900

396

4400

Total

Total

Total20【Forecast of Orders Received and Net Sales】
FY2018 Forecast of Orders Received and Net Sales
by Segment (Consolidated)(Millions of yen)

FY 2018
Orders Received Forecast(as of November 9)

Segment

FY 2018
Net sales Forecast(as of November 9)

HVAC and Plumbing for Buildings

58,40063,300Industrial HVAC

63,00070,000Electrical Systems

21,00020,000

Facility Systems

9,8009,900

152,200

163,200

Machinery Systems

12,00012,000

Environmental Systems

19,00022,00031,00034,000183,200

197,200

1,800

1,800

500

500(500)(500)

185,000

199,000

Total of Facilities Construction BusinessTotal of Plant & Machinery Systems Business
Sub-total
Real Estate Business
OthersAdjustments*
Total*Adjustments eliminate inter-segment transactions included in each segment.

21Remarks on Business Forecast
The descriptions contained in these materials, except for those as to past or present facts, are based on
anticipations, assumptions, evaluations and estimations in light of the information available as of November 9,2018.
Therefore, the actual results may differ from those presented herein as a consequence of various factors including
uncertainties and prospective changes in the economic environment.

<Major factors>● Credit exposures of client companies.
● Sudden changes in material and equipment cost and labor cost.
● Stock Market fluctuations.
● Increase in retirement benefits or debts.
● Country risk.

● Accident or disaster in Facilities construction and other.
● Outbreak of the unprofitable project.
● Risk in the Real Estate Business.

For inquiries, please contact:● Risk of legal action.

Corporate Communications
Department● Risk of legal regulation.
● Outbreak to the natural disasters.

TEL: +81-3-6367-7041

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