Consolidated Financial Results
for the Six Months Ended September 30, 2022

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

November 11, 2022

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, 2022 (from April 1, 2022 to September 30, 2022)(1) Consolidated operating results (cumulative)
Net sales

Six months ended September 30, 2022
Six months ended September 30, 2021

Millions of yen
14,891
12,987

Operating profit

Ordinary profit

Percentages indicate year-on-year changes
Profit attributable toEarnings per Diluted earnings
owners of parent
share
per share% Millions of yen% Millions of yen% Millions of yen
14.7
1,067 47.2
1,095 49.5
818
27.8
725 279.2
732 332.8
509

%
60.8
–

Yen
193.92119.52Yen––(2) Consolidated financial position
Total assets
As of September 30, 2022
As of March 31, 2022

Net assets

Millions of yen
41,21237,858Equity ratio

Millions of yen
24,762
23,161

%
59.9
61.1

2. Cash dividends
Annual dividends per share

Year ended March 31, 2022
Year ending March 31, 2023
Year ending March 31, 2023 (Forecast)

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Total

Yen
–
–

Yen
60.00
80.00

Yen
–

Yen
105.00Yen
165.00–100.00180.003. Forecast of consolidated financial results for the year ending March 31, 2023 (from April 1, 2022 to March 31, 2023)
Percentages indicate year-on-year changes
Profit attributable to
Net sales
Operating profit
Ordinary profit
Earnings per shareowners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Yen
Full year
30,000
12.8
2,020
46.0
2,050
45.6
1,520
6.5
360.081

Highlights of Consolidated Business Performance
1. Summary of Consolidated Business Performance for the Six Months Ended
September 30, 2022
1) Consolidated net sales : ¥14,891 million, up 14.7% YoYOverseas sales was expanded by handling supply chain issues.

2) Operating profit: ¥1,067 million, up 47.2% YoYProfit structure reform made progress, especially in overseas business.

3) Sales in Japan: ¥7,181 million, up 3.1% YoY

Sales remain firm against the backdrop of measures to accelerate
national land resilience.

4) Sales in North America: ¥3,307 million, up 43.9% YoYStrong recovery in demand made progress against the backdrop of robust
investment in construction.

5) Sales in Asia

: ¥4,119 million, up 24.9% YoY

In addition to the shift to demand recovery in the Indonesian market,
Vietnam market was strong.

2

Highlights of Consolidated Business Performance
2. Adapting to a Changing Business Environment
1) Shifting to business management with a focus on a sound capital policy(1) Formulating the medium-term management policy with the goals of achieving net salesof ¥30.0 billion, operating profit of ¥3.1 billion, ROE of 8%
Six Months ended September 30, 2022 : Net sales of ¥14.89 billion, operating profit of ¥1.06
billion, ROE of 6.8%
Fiscal year ending March 31, 2023 (Forecast): Net sales of ¥30.0 billion, operating profit of ¥2.02
billion, ROE of 6.4%
(2) Building a sustainable management structure by ESG and DX

2) Adaptability to change(1) Dealing with volatile demand• Inventories of ¥8,061 million (up 19.7% YoY, inventory turnover was reduced by 0.10 times)
Reducing parts stockout risk by reviewing inventory levels of long delivery parts(2) Strengthening product supply capabilities• Enhancement of supply chain (review of suppliers and dual sourcing)• Expansion of domestic production capacity (Increasing in production lines)(3) Reforming our profit structure in the wake of rising of manufacturing component prices
and transportation costs• Penetration of sales price revisions• Transportation cost reductions through improving efficiency
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 hub2) Expand the scope of overseas business:
Enter the overseas market for road maintenance equipment

3) Pursue business opportunities in North America:
Increase our market share through niche marketing

4) Start developing next-generation businesses:
Focus on developing emergency brakes, compaction management systems, and autonomous
vibratory rollers

4. Outlook for Business Environment
1) Japan
Demand for construction machinery is projected to remain strong, buoyed by the Japanese
government’s ¥15-trillion initiative to accelerate national land resilience over the next five years to prevent andmitigate natural disasters.

2) Overseas
Overseas construction machinery demand is firm with infrastructure investment totaling $1.2 trillion planned in
the U.S., infrastructure investment and mine development becoming active in ASEAN and emerging countries,
among other factors, although the demand has repeatedly fluctuated amid a rapidly changing global situation.

4

Consolidated Business Performance(Millions of yen)

1st half ended 1st half ended
September 30, September 30,
2021
2022

YoY change
Amount%Net sales

12,987

14,891

1,903

14.7%

Japan

6,968

7,181

213

3.1%

Overseas

6,019

7,709

1,690

28.1%

725

1,067

342

47.2%

(5.6%)(7.2%)

Ordinary profit

732

1,095

362

49.5%

Profit attributable toowners of parent

509

818

309

60.8%

(75.2%)(74.3%)

Operating profit
Operating profit ratio

Cost-of-sales ratio5Consolidated Business Performance (Graph)
Net sales(Millions of yen)

Operating profit(Millions of yen)

16,00014,891

Net sales
14,0002,500

12,9872,000

12,00010,000

7,709

6,019

8,000

6,000

1,500

Overseas

1,067
Operating profit

725（7.2%）(Operating profit ratio)

1,000（5.6%）
4,000

2,000

6,968

7,181

500

Japan

0

0
1st half ended

1st half ended

September 30,

September 30,

2021

2022

6

Sales by Region in Which Customers Are Located(Millions of yen)
1st half
ended
September
30, 2021

1st half
ended
September
30, 2022

Japan

6,968

7,181

213

3.1%

Overseas

6,019

7,709

1,690

28.1%

North America

2,297

3,307

1,009

43.9%

Asia

3,298

4,119

821

24.9%

423

282

▲ 140

▲33.2%

12,987

14,891

1,903

14.7%

Other regions

Total

YoY change
Amount%7

Sales by Region (Map)（Millions of yen）

Japan

1st half ended 1st half ended
September 30, September 30,
2021
2022
6,968
7,181

YoY change(+213、+3.1%)

Overseas

6,019

7,709

(+1,690、+28.1%)

Total

12,987

14,891(+1,903、+14.7%)（

North America
2,297 → 3,307

China segment
300 → 108（△191、△63.9%）

Asia
3,298 → 4,119（+821、+24.9%）

3,298（+1,009、+43.9%））: Yo Y change

2,297

3,307

4,119

Japan
6,968 → 7,181

6,968

7,181

（+213、+3.1%）

Indonesia segment
627 → 930（+303、+48.3%）

Other (Africa, Oceania, Latin America)
423 → 282（△140、△33.2%）

423

282

Plants ands sales offices
Sales offices
Service and sales offices8Segment Information by Region in Which Our Manufacturing Facilities and Sales Offices Are Located(Millions of yen)Japan

1st half
1st half
ended
ended
September
September
30, 2022
30, 2021

YoY change
Amount%(Millions of yen)

North America

Sales to externalcustomers

9,761

10,545783

8.0%

Sales to externalcustomers

Intercompany sales

1,104

1,637

532

48.2%

Intercompany sales

10,866

12,182

1,315

12.1%

562

415

Total net sales
Operating profit▲ 147 ▲26.2%

1st half
1st half
ended
ended
September September
30, 2021 30, 2022

YoY change
Amount

2,297

3,307

1,009

43.9%

25

11

▲ 14

▲55.0%

Total net sales

2,323

3,318

994

42.8%

Operating profit

133

286

153

114.7%(Millions of yen)

Indonesia
Sales to externalcustomers

1st half
1st half
ended
ended
September September
30, 2021 30, 2022

YoY change
Amount%%(Millions of yen)China

1st half
1st half
ended
ended
September September
30, 2021 30, 2022

YoY change
Amount

%

627

930

303

48.3%

Sales to externalcustomers

300

108

▲ 191

▲63.9%

Intercompany sales

1,803

2,380

576

32.0%

Intercompany sales

172

354

181

105.4%

Total net sales

2,430

3,310

879

36.2%

Total net sales

472

463

▲9

▲2.1%

Operating profit

134

348

213

158.2%

Operating profit

▲ 34

▲ 20

14

－ ％

9

Segment Information by Region (Graph)Japan

12,182

10,866

North America
2,323
25

1,637

2,297

1,104

1st half ended September 30,
2021

Indonesia

Operatingprofit 562

11

3,307

286

2,430

627

10,545China

930
1st half ended September 30,
2022

472

463

300

△ 34
1st half ended September 30,
2022

2,380

1st half ended September 30,
2021

172

9,761

348

134

Sales tocustomers

1st half ended September 30,
2022

3,310

1,803

415

1st half ended September 30,
2021

3,318

133

Intercompany sales

external(Millions of yen)

1st half ended September 30,
2021

354

△ 20
108
1st half ended September 30,
2022

10

Breakdown of YoY Changes in Operating Profit•

Gross profit increased by ¥471 million, in line with YoY increase in sales of ¥1,903 million.

•

Cost-of-sales ratio decreased by 0.86% and gross profit increased by ¥128 million through sales
price revisions and logistics streamlining.

•

SG&A expenses increased by ¥258 million as we came out of restricted operational conditions andresumed business activities.
•

As a result, operating profit rose by ¥342 million YoY to ¥1,067 million.
(Millions of yen)

1st half ended 1st half ended
September 30, September 30, YoY change
2021
2022

Impact on
operating profit

Note

Net sales

12,987

14,891

1,903

+471

1,903 ｘ （1 - 75.2％）

Cost-of-sales ratio

75.2%

74.3%

▲0.86%+128

14,891 ｘ ▲0.86％

Gross profit

3,220

3,821

600

SG&A expenses

2,495

2,754

258

▲ 258

Payroll: up 102; Technical research expenses: up 36
Transportation costs: up 30; Other SG&A: up 90

Operating profit

725

1,067

+342

11

Breakdown of YoY Changes in Operating Profit (Graph)

Impact of
Improvement in(Millions of yen)cost-of-sales
ratio
＋128

Increase in

Increase in

Increase in

Increase in

payrolltechnical

net salestransportation▲102

research

costs

expenses

▲30

+471

▲36
Operatingprofitfor 1st half

Increase inother SG&A
▲90

Operatingprofitfor 1st half

SG&A expenses ▲258

ended
September

ended

30, 2022

September

1,067

30, 2021
725

Operating profit ＋342

Operating profit ratio

Operating profit ratio

5.6%

7.2%

12

Net Working Capital (Trade Receivables + Inventories – Trade Payables)•

Net working capital invested in sales activities increased by¥1,808 million YoY to ¥10,384 million.

•

Inventories increased by ¥1,329 million YoY to ¥8,061
million.

•

Sales/Inventory turnover decreased by 0.10 times YoY to
3.54 times for the year.

(Millions of yen)

28,503

Annualized
consolidated
net sales

26,044

26,59927,37524,448
9,373(Millions of yen)

As of
September 30,
2021

As of
September 30,
2022

YoY change
TradeAmount%receivables
7,706

Annualized
consolidated net sales

24,448Trade receiveables

7,706

28,503

4,055

16.6%

9,779

8,868

9,373

1,667

21.6%

10,384
9,273

Net working
capital 8,576

8,061

Inventories

Inventories

Trade payables

6,732

8,061

1,329

19.7%

▲5,862▲7,050▲1,188

20.3%

6,732

Trade payables△ 7,050△ 5,862

Net working capital
Inventories turnover

8,576
3.63 times

10,384
3.54 times

1,808▲0.10 times

21.1%
As of Sep30,
2021

As of Dec31,
2021

As of Mar31,
2022

As of Jun30,
2022

As of Sep30,
2022

13

Consolidated Business Forecast•

Sales Forecast for the Full Year: We anticipate firm demand in Japan, North America andSoutheast Asia even in the second half of the FY, so we have upwardly revised from the previous
forecast of ¥29,300 million to ¥30,000 million.

•

Profit Forecast for the Full Year: Although costs continue to rise due to supply chain issues andsurging material prices, in light of the continuing penetration of sales price revisions and logistical
efficiency gains, we have upwardly revised the previous forecast of ¥950 million to ¥1,520 million.

(The assumed exchange rate used in the consolidated business forecast is ¥135 per US$.)(Millions of yen)First half

Full year

Six months
ended September
30,2021(Results)

Six months
ended September
30,2022(Previous forecast)

Six months
ended September
30,2022(Results)

12,987

14,00014,891

1,903

14.7%

Operating profit

725

650

1,067

342

Ordinary profit

732

625

1,095

Profit attributable toowners of parent

509

400

¥119.52¥94.41

Net sales

Earnings per share(Yen)

YoY change

Fiscal year ending
March 31, 2023
(Previous forecast)Fiscal year ending
March 31, 2023
(Revised forecast)

26,59929,30030,000

3,400

12.8%

47.2%

1,383

1,500

2,020

636

46.0%

362

49.5%

1,407

1,450

2,050

642

45.6%

818

309

60.8%

1,427

950

1,520

92

6.5%

¥193.92¥74.4062.2%¥336.87¥224.22¥360.08¥23.21

6.9%

Amount%Fiscal year ended
March 31, 2022
(Results)

YoY change
Amount%14

2. Implementing Key Initiatives Outlined in the Medium-Term Management Policy

Dividends per Share・ Since the announcement of the Medium-Term Management Policy on June 2, 2021, we have set 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.
・ Since the ROE for the full year business forecast is anticipated to exceed 6%, we have upwardly revised the dividend
forecast to ¥180 for a payout ratio of 50%.
(Yen)

250
240
230
220
210
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0

91%

－％

52%
26%

18%

20%

26%

16%

49%

50%

22%
180

Payout ratio

165

Bonus
dividend

100
100

45
25

25

60

35

65
35

70
35

dividend

105

100

20

75

25

100

Interim80

50

dividend

50

40

Year-end

Payout ratio
50
80

25

25

30

35

40

20
FY2013

FY2014FY2015FY2016FY2017FY2018

50

60

50
30

FY2019FY2020

FY2021

FY2022

FY2023(Year-end forecast)

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•

Net sales are on pace to exceed the plan in the second year of the medium-term management
policy.

•Faced with profit structure deterioration due to structural increases in energy and material prices
and high logistics costs, improvement in operating margin is lagging, and we are now promoting
profit structure reform through sales price revisions and cost reductions.
(Millions of yen)

Net sales
Operating profit
Annualized return on equity (ROE) ※1
Share buybacks

Six months
ended September
30,2021(Results)

Six months
ended September
30,2022(Results)

Fiscal year
ending March
31,2023(Forecast)Target for the
fiscal year
ending March
31, 2024

Target for
fiscal year
ending March
31,2026

12,987

14,891

30,00026,50030,000

725

1,067

2,020

2,000

3,100

4.6%

6.8%

6.5%

5.5%

8.0%

Cumulative amount of share buybacks
340

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 11, 2022.
※3 The amount represents the targets of the cumulative amount of share buybacks through March 31, 2026.

16

ESG Initiatives – Both Addressing Climate Change and Providing Added Value
Implementation of information disclosure based on the TCFD recommendations
Metrics and Targets▶

A target has been set to achieve “50% reduction by
FY2030“ and “Carbon neutral by FY2050“ relative to Japan’s
FY2019 Scope 1+2 CO2 emissions of 3,300 t.

3,300 tBy FY2030
50% reduction

By FY2050
Carbon neutral

Status of response▶

In Japan, we have already implemented reduction measuresby switching approximately 1,000 t of the 2,000 t in CO2emissions from factories to renewable energy.

▶

For the remaining CO2 emissions in Japan, we areconsidering and planning to implement measures such as
the expansion of renewable energy use, electrification ofvehicles and energy savings at facilities.

FY2019FY2030FY2050(Base FY)

(Target)(Target)Providing added value by contributing to the reduction of CO2 emissions at construction sites
Electric roller: Reducing CO2 emissions ofconstruction machinery
Demo vehicle to becompleted. Shifting fromthe research anddevelopment stage to thepractical test stage
involving implementationin actual paving sites.

Autonomous roller: Labor savings and improved efficiency inoverall construction operations
We are currently
conducting
demonstration test at
sites with theparticipation ofmultiple leading
general contractors forthe development ofindustry standardized
equipment.

17

ESG Initiatives – Strengthen Corporate Governance
Formulation of basic sustainability policies
The SAKAI Group aims to contribute to a sustainable society, the Group’s sustainable growth and medium- to long-term
increase in corporate value through implementation of ESG management based on our basic management policies ofcontributing to the social business of global land development through the road construction equipment business.

Environment

Together with our initiatives to reduce our own CO2 emissions we contribute to a decarbonized society
through the creation of added value by developing new technologies.

Society

We engage in resolving social issues and creating social value through our road construction equipment
business.

Human rights

We do not discriminate based on personal attributes such as gender, nationality or age and we respect thehuman rights of all stakeholders involved in our business activities.

Human
resources

Human resources are the driving force behind corporate development and we prepare a safe and secure
work environment while recognizing diversity and we strive to secure and train human resources.

Corporate
governanceWe strive to build a relationship of trust with all stakeholders, promoting the creation of a management
structure based on the Corporate Governance Code.

Diversification of the Board of Directors▶ Appointment of a female Director
For the purpose of ensuring diversity and tostrengthen the function of the Board of Directors,
Kaori Sato is appointed the Company’s first female
outside Director.
CareerReason forappointment

Jan. 1993
Jan. 2007
Nov. 2012
June 2022▶ Disclosure of skill matrix items

Joined SATO Co., ltd.
Senior Managing Director of SATO Co., ltd.
Representative Director of SATO Co., ltd. (current position)
Director (Audit and Supervisory Committee Member) of theCompany (current position)
Kaori Sato is a female manager who has extensive
experience in management of construction machinery rental
and overseas business. She also has extensive insight on
the Company’s road equipment business, and the Company
believes she is suitable to serve as an outside Director who
is an Audit and Supervisory Committee Member.

The skills to be possessed by our Board of Directors,
composed of each Directors and Executive Officers, are
set out in the following 7 items and listed in the notice ofgeneral meeting of shareholders from this fiscal year.
①

Management⑤

Administration②

Road equipment⑥

Manufacturing③

Global⑦Marketing④

Capital market

Notice of the 74th Annual General Meeting of
Shareholders (held on June 29, 2022)
https://www.sakainet.co.jp/en/ir/item/220615_74th_gms.pdf

18

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.