Consolidated Financial Results
for the Six Months Ended September 30, 2023

SAKAI HEAVY INDUSTRIES, LTD.
Stock code: 6358
URL https://www.sakainet.co.jp/en/November 9, 2023

Summary of Consolidated Financial Results(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the six months ended September 30, 2023 (from April 1, 2023 to September 30, 2023)(1) Consolidated operating results (cumulative)
Net sales
Six months ended September 30, 2023
Six months ended September 30, 2022

Millions of yen
16,78514,891

Percentages indicate year-on-year changes
Profit attributable toEarnings per Diluted earnings
Operating profit
Ordinary profit
owners of parent
share
per share% Millions of yen% Millions of yen% Millions of yen%
Yen
Yen
12.7
1,966 84.2
2,109 92.6
1,534 87.4
361.64–14.7
1,067 47.2
1,095 49.5
818 60.8
193.92–(2) Consolidated financial position
Total assets

Net assets

Millions of yen
45,26340,804As of September 30, 2023
As of March 31, 2023

Equity ratio

Millions of yen
28,131
25,295

%
62.0
61.8

2. Cash dividends
Annual dividends per share

Year ended March 31, 2023
Year ending March 31, 2024
Year ending March 31, 2024 (Forecast)

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Total

Yen––

Yen
80.00
90.00

Yen–

Yen
120.00Yen
200.00–180.00270.003. Forecast of consolidated financial results for the year ending March 31, 2024 (from April 1, 2023 to March 31, 2024)

Net sales
Full year

Millions of yen
33,100Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
Earnings per shareowners of parent% Millions of yen% Millions of yen% Millions of yen%Yen
5.2
3,300
31.7
3,300
41.8
2,300
35.7
542.15

1

Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Six Months Ended
September 30, 2023
1) Consolidated net sales: ¥16,785 million, up 12.7% YoYOverseas sales expanded, particularly in North America and Indonesia.
2) Operating profit: ¥1,966 million, up 84.2% YoY
Upside factors included the weak yen, in addition to profit structure reform throughthe penetration of sales price revisions and normalization of transportation costs.

3) Sales in Japan: ¥7,447 million, up 3.7% YoY
Sales remain firm against the backdrop of measures to accelerate national landresilience.
4) Sales in North America: ¥4,511 million, up 36.4% YoYDemand continues to expand due to increased investment in road construction
against the backdrop of the Infrastructure Investment and Jobs Act.
5) Sales in Asia
: ¥3,973 million, down 3.6% YoY
Signs of slowdown in China and slowing growth in ASEAN market, despite continuing
recovery in demand in Indonesia.
2

Highlights of Consolidated Business Performance
2. Adapting to a Changing Business Environment1) Initiatives for enhancing the profitability of capital(1) Progress of medium-term management policy
Five-year medium-term management policy: Net sales of ¥30 billion, operating profit of ¥3.1 billion, ROE of 8.0%
Forecast for the current fiscal year (third year): Net sales of ¥33.1 billion, operating profit of ¥3.3 billion, ROE of 8.6%
Results for six months ended September 30, 2023: Net sales of ¥16.78 billion, operating profit of ¥1.96 billion,
ROE of 11.5%(2) Progress of enhancing corporate value (PBR above 1)
At the end of March 2023: PBR 0.68 times (Share price ¥4,010)
At the end of September 2023: PBR 0.81 times (Share price ¥5,320)
Timely disclosure of policies regarding initiatives has been provided in the Status of Initiatives for Enhancing Profitability ofCapital, dated April 13, 2023
https://www.sakainet.co.jp/en/news/item/20230425EnhancingProfitabilityofCapital.pdf2) Profit structure reform through sales price revisions and high added value
Cost-of-sales ratio improvement: 70.1%, improvement of 4.2% YoYProfit structure reform progressed with penetration of sales price revisions in Japan and overseas, and normalization oftransportation costs.
3) Strengthening product supply capabilities(1) Enhancement of supply chain (stabilization through review of suppliers and dual sourcing)(2) Modification of global business activities (stabilization of business structure in Japan and overseas through expansion of
production capacity at domestic plants and expansion of parts business at Chinese plants)
4) Dealing with volatile demandInventory turnover: 3.00 times, down 0.53 times/15% YoY
Increase in parts for increased production and safety stock. Currently adjusting to an optimized
inventory level due to easing of supply constraints.

3Highlights of Consolidated Business Performance
3. Mid- to Long-Term Growth Strategy
1) Make more significant inroads into the Asian market:
Expand the ASEAN market centered on our Indonesian hub (net sales down 3.6% YoY)
2) Expand the scope of overseas business:
Develop the overseas market for road maintenance equipment (start the local production in Indonesia)
3) Pursue business opportunities in North America:
Increase our market share through niche marketing (net sales up 36.4% YoY)
4) Develop next-generation businesses:
Focus on market development for emergency brakes, compaction management systems, and road cutting
management systems.
Research and development on autonomous rollers and EV rollers is underway.

4. Outlook for Business Environment
1) Global Construction Machinery Market
Demand is expected to remain stable due to factors such as large-scale infrastructure investment plans inJapan and the U.S., infrastructure construction and mine development becoming active in emerging
countries, together with renewal of aging infrastructure, and disaster-related countermeasures andreconstruction.
2) Risks and Countermeasures
The future direction of the world economy is unpredictable, due to factors such as continued global inflation,
rapidly escalating geopolitical risks, and societal change in line with technological evolutions anddecarbonization policies. In order to transition to a management structure adapted to these changes in thetimes, we will move forward with the approach of adapting to a changing business environment.

4

Consolidated Business Performance(Millions of yen)

1st half ended 1st half ended
September
September
30, 2022
30, 2023

YoY change
Amount%Net sales

14,891

16,785

1,894

12.7%

Japan

7,181

7,447

266

3.7%

Overseas

7,709

9,337

1,628

21.1%

Operating profit

1,067

1,966

899

84.2%

(7.2%)(11.7%)

1,095

2,109

1,014

92.6%

818

1,534

715

87.4%

(74.3%)(70.1%)

Operating profit ratio
Ordinary profit
Profit attributable toowners of parent
Cost-of-sales ratio5Consolidated Business Performance (Graph)6

Sales by Region in Which Customers Are Located(Millions of yen)
1st half
ended
September
30, 2022

1st half
ended
September
30, 2023

Japan

7,181

7,447

266

3.7%

Overseas

7,709

9,337

1,628

21.1%

North America

3,307

4,511

1,204

36.4%

Asia

4,119

3,973

▲ 146

▲3.6%

282

853

570

202.0%

14,891

16,785

1,894

12.7%

Other regions

Total

YoY change
Amount%7

Sales by Region (Map)
1st half ended
September 30,2022

1st half ended
September 30,2023

Japan

7,181

7,447

(+266, +3.7%)

Overseas

7,709

9,337

(+1,628, +21.1%)

Total

14,891

16,785(+1,894, +12.7%)(Millions of yen)

YoY change

8Segment Information by Region in Which Our Manufacturing Facilities and Sales Offices Are Located(Millions of yen)

(Millions of yen)Japan

1st half
1st half
ended
ended
September September
30, 2022
30, 2023

YoY change
AmountNorth America%

10,545

10,024

▲ 521

▲4.9%

Sales to externalcustomers

1,637

2,295

658

40.2%

Total net sales

12,182

12,319137

Operating profit

415

630

215

Sales to externalcustomers
Intercompany
sales

1st half
1st half
ended
ended
September September
30, 202230, 2023

Indonesia%

4,511

1,204

36.4%

Intercompany
sales

113▲8▲69.5%

1.1%

Total net sales

3,318

4,514

1,196

36.0%

52.0%

Operating profit

286

533

246

85.9%

YoY change
AmountAmount3,307(Millions of yen)
1st half
1st half
ended
ended
September September
30, 2022
30, 2023

YoY change%(Millions of yen)China

1st half
1st half
ended
ended
September September
30, 2022
30, 2023

YoY change
Amount%Sales to externalcustomers

930

2,177

1,247

134.1%

Sales to externalcustomers

10872▲ 36▲33.2%Intercompany
sales

2,380

1,960

▲ 420

▲17.6%

Intercompany
sales

354877522

147.5%

Total net sales

3,310

4,137827

25.0%

Total net sales

463

949486 105.1%

Operating profit

348693345

99.2%

Operating profit▲ 20113133－%

9Segment Information by Region (Graph)
JapanNorth America(Millions of yen)

Indonesia

China

10

Breakdown of YoY Changes in Operating Profit•Gross profit increased by ¥486 million, in line with a YoY increase in sales of ¥1,894 million.

•The cost-of-sales ratio improved by 4.2％ and gross profit rose by ¥704 million, with upward factors

such as the weak yen in addition to the penetration of sales price revisions and the normalization oftransportation costs.
•SG&A expenses increased by ¥291 million following the increased investment in human capital(increased payroll) and increased business activities.

•As a result, operating profit rose by ¥899 million YoY to ¥1,966 million.
(Millions of yen)
1st half ended 1st half ended
September 30, September 30,
2022
2023

YoY
changeImpact on
operatingprofit

NoteNet sales

14,891

16,7851,894+486

1,894 ｘ （1 - 74.3％）

Cost-of-sales ratio

74.3%

70.1%

▲4.2%

+704

16,785 ｘ ▲4.2％

Gross profit

3,821

5,012

1,190

SG&A expenses

2,754

3,045291

Operating profit

1,067

1,966

▲ 291

Payroll: up 150; Technical research expenses: up 38
Promotion and advertising expenses: up 12;
Other SG&A: up 90+899
11

Breakdown of YoY Changes in Operating Profit (Graph)(Millions of yen)
Impact ofimprovement Increase in
payrollin cost-ofsales ratio▲150＋704
Increase innet sales

Increase intechnicalresearchexpenses▲38

Increase inpromotion
andadvertisingexpenses▲12+486
Operatingprofit for
1st half
ended
September
30, 2022
1,067

SG&A expenses▲291

Increase inother
SG&A
▲90

Operatingprofit for
1st half
ended
September
30, 2023
1,966

Operating profit＋899

Operating profit ratio

Operating profit ratio

7.2%

11.7%

12

Net Working Capital (Trade Receivables + Inventories - Trade Payables)•Net working capital invested in sales activities increased by ¥2,144 million YoY to ¥12,528 million.
As a result, the net working capital/sales ratio increased by 1.1% to 37.6%.

•Inventories increased by ¥3,044 million YoY to ¥11,105 million through increase in parts for increased production andsafety stock.
As a result, net sales/inventory turnover decreased by 0.53 times (down 15%) to 3.00 times.
Currently making adjustments to optimize inventory levels.
(Millions of yen)

As ofSeptember
30, 2022

As ofSeptember
30, 2023

28,50333,353

4,850

17.0%

Trade receivables

9,373

9,275

▲98

▲1.0%

Inventories

8,061

11,105

3,044

37.8%

Trade payables▲7,050▲7,852▲80211.4%

Net working capital

10,384

12,528

2,144

20.6%

Inventory turnover

3.54 times

3.00 times▲0.53 times

Net working
capital/Sales ratio

36.4%

37.6%

1.1%

Annualized
consolidated net sales

YoY change
Amount%13Consolidated Business Forecast
・ In line with the upward revision of the consolidated business forecast for the six months ending
September 30, 2023, and in consideration of the current market situation, the consolidated
business forecast for the fiscal year has been revised upward.
・ Moving forward, in addition to inflation in raw material prices, logistics costs are expected toincrease and investment in human capital is expected to expand. Against this backdrop, while
the North American market is expected to remain strong, there are signs that growth in Asia isslowing due to frequent sales price revisions and uncertainty regarding the future.
(The assumed exchange rate used in the consolidated business forecast is ¥140 per US$.)(Millions of yen)First half

Full year

Six months
Six months
Six months
ended September ended September ended September
30, 2023
30, 2022
30, 2023(Previous forecast)(Results)(Results)

YoY change
Amount%Fiscal year ended
March 31, 2023
(Results)

Fiscal year ending
March 31, 2024
(Previous forecast)

YoY change
Fiscal year ending
March 31, 2024%(Revised forecast) Amount

14,891

16,10016,785

1,894

12.7%

31,45933,00033,100

1,640

5.2%

Operating profit

1,067

1,300

1,966

899

84.2%

2,506

2,950

3,300

793

31.7%

Ordinary profit

1,095

1,250

2,109

1,014

92.6%

2,327

2,800

3,300

972

41.8%

818

770

1,534

715

87.4%

1,694

1,830

2,300

605

35.7%

¥193.92¥182.12¥361.64 ¥167.72

86.5%¥400.75¥432.82¥542.15 ¥141.40

35.3%

Net sales

Profit attributable toowners of parent
Earnings per share(Yen)14

Dividends per Share・ Since the announcement of the Medium-Term Management Policy on June 2, 2021, we haveset a dividend policy as follows, with a target of 8% ROE:
When ROE falls below 3%, a payout ratio of 100% will apply.
When ROE is between 3% and 6%, a DOE of 3% will apply.
When ROE exceeds 6%, a payout ratio of 50% will apply.

Note: We made a ten-for-one share consolidation effective October 1, 2017. Dividend payouts for the periods
prior to the share consolidation are adjusted to be in line with the post-consolidation payouts.

15

KPIs Established in the Medium-Term Management Policy•

In the forecast for the full fiscal year, net sales of ¥33.1 billion and ROE of 8.6% are expected,
and we expect to achieve the values included in the medium-term management policy.

•Improvements to the profit structure in the current period include upside factors other thanactual performance, such as the weak yen, in addition to penetration of sales price revisions
and the normalization of transportation costs, and we will aim to solidify this profit structureand further improve business performance moving forward.
(Millions of yen)Six months
ended
September 30,2022(Results)

Six months
ended
September 30,2023(Results)

14,891

16,785

Operating profit

1,067

Annualized return on equity (ROE) *1

6.8%

Net sales

Share buybacks

Fiscal year
ending March
31, 2024(Forecast)Target for the
fiscal year
ending March
31, 2024

Target for thefiscal year
ending March
31, 2026

33,10026,50030,000

1,966

3,300

2,000

3,100

11.5%

8.6%

5.5%

8.0%

Cumulative amount of share buybacks

ーー

340*2

500 ～ 2,000*3*1 The annualized ROEs were calculated based on the year-to-date results of the corresponding fiscal year.
*2 The amount represents the cumulative amount of share buybacks that had been executed as of November 9, 2023.
*3 The amount represents the targets of the cumulative amount of share buybacks through March 31, 2026.

16• ESG Initiatives
Sustainability
Initiatives
Providing added value by contributing to the realization ofa decarbonized society
Autonomous rollers: Labor savings and improved efficiency inoverall construction operations*

Autonomous roller / SV514

The introduction of ourautonomous rollers (SV514D) at
actual construction sites isscheduled to take place within
the current fiscal year.
This is expected to contribute toreducing CO2 emissions atconstruction sites throughefficient compaction.

* Experimental data has shown that autonomous rollers can reduce labor byapproximately 20% compared to manned work.

Resolving social issues and expanding the scopeof business
SAKAI stabilizer method and products selected by JICA
for business validation survey in Indonesia
Through the use of our stabilizer
method (road repair technology)
and products (PM550-s roadstabilizers), this project aims tocontribute to infrastructuredevelopment in Indonesia while
also expanding the use and saleof our products.
Road stabilizer / PM550-s
Documentation released by JICA regarding this project:https://www.sakainet.co.jp/en/news/item/sdgs20231005.pdf

Human capital management initiatives
Initiatives to increase the percentage of women in management positions and reduce the gender pay gap■ Ratio of women in management positions
March 2023
(Result)

September 2023
(Result)

March 2026
(Target)

3.0%

5.0%

15.0%

■ Female worker earnings as percentage of male worker
earnings (fiscal year ended March 31, 2023)
All workers

Permanentworkers

Permanent workers (excludingmanagement positions)

67.4%

75.1%

82.4%

We have set a target of having a percentage of women in management
positions of 15% by March 2026.*
Among permanent workers, excluding those in management positions,earnings by women are 82.4% of those of men, and the low percentageof women in management positions can be considered one factor behind
the gender pay gap.
The policy of actively working to increase the percentage of women inmanagement positions is also intended to reduce the gender pay gap.
* This target was set on the basis of raising the percentage of women in management
positions to approximately match the percentage of management positions among allemployees. Consequently, this target may be subject to change in future due tochanges affecting factors such as the number of employees and the number ofemployees in management positions.

17Contact us

SAKAI HEAVY INDUSTRIES, LTD.
IR Office: Takao Yoshikawa

Email: sakai.ir@sakainet.co.jp

Telephone: +81-3-3434-3401 (from outside Japan)
Fax: +81-3-3436-6513 (from outside Japan)

Performance forecasts and other forward-looking statements in this document are based on
information available at the time of this writing, as well as certain assumptions deemed reasonable.
Actual performance and other results may differ depending on a variety of factors.