Message from the President

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Nikkiso will continue to take sure steps, one by one, in achieving medium- and long-term objectives.

President & Chief Executive Officer Toshihiko Kai

I would like to sincerely thank all shareholders for the support extended to our company.
I will give an overview of Nikkiso’s business performance for the second quarter of the fiscal year ending December 2017.


Business performance in the second quarter ended June 30, 2017

Looking at the performance in the second quarter, orders received amounted to 65.5 billion yen, net sales were 63.3 billion yen, operating income was 353 million yen, ordinary income was 532 million yen, and net income attributable to owners of the parent came to 162 million yen.
In the Industrial Division, LEWA continued to focus on business deals in the downstream and on after-sales services while making efforts to keep expenses down. As a result, earnings improved. In the segment of cryogenic pumps, although orders increased favorably, on-going measures in handling non-conforming products since last year led to posting additional expenses and caused profits to decrease.
In the Aerospace Division, the shipment volume of its mainstay “cascades” reached a record high. However, net sales declined mainly due to lower shipments caused by pricing revisions for some aircraft components and production adjustments by aircraft manufacturers. In addition, expenses increased in conjunction with the Higashimurayama Plant and the launch of a new plant in Miyazaki. Consequently, profits declined year on year.
In the Medical Division, sales in overseas markets, such as Europe and China, increased although domestic sales of dialysis machines and dialyzers in our core hemodialysis business were weak. As a result, net sales increased and profits were comparable to the level of a year earlier. Meanwhile, in the CRRT business, we faced difficulties in major markets in Europe and China, and operating income declined.
Meanwhile, in conjunction with the acquisition of shares of the Cryogenic Industries Group (“CI Group”) announced on April 20, 2017, we posted advisory fees and other expenses not included in our initial plan. As a result, operating income fell year on year.

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Efforts toward achieving Nikkiso 2020

By positioning the first half of our medium-term business plan “Nikkiso 2020” as a “year to secure a firm foothold toward achieving business growth,” we clarified issues to be addressed and implemented various measures to make our future vision of management more specific, including the decision to construct a new plant at Miyazaki. We are accelerating preparations for the new plant in an aim to, first of all, start operation as an aerospace plant by the end of FY2018.
We will continue take initiatives in building a business platform toward achieving medium-and long-term growth in our industrial business. For example, through the acquisition of shares of the CI Group, we will enter the downstream segment of LNG (liquefied natural gas), an area expected to grow going forward, and the industrial gas business which also handles hydrogen as a promising source of next-generation energy.

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Outlook for the year ending December 2017

Our full-year projections for the year ending December 31, 2017 are orders received of 145 billion yen and net sales of 140 billion yen. We are planning to voluntarily adopt IFRS for the financial results of the fiscal year ending December 31, 2017. Based on the IFRS standards, we are forecasting an operating income of 8.3 billion yen and net income of 6.7 billion yen.
It should be noted, however, that the aforesaid projections do not include the impact of share acquisition of the CI Group. We are currently in the process of calculating the impact of the acquisition of shares of the CI Group on the consolidated performance of our company. We will promptly disclose the information after completing the share acquisition.
While the business environment is not so favorable, due to the strong yen, slumping crude oil prices and other factors, the management issues that Nikkiso must address on a medium-to-long term are clear. Rather than reacting excessively to changes in the external environment, we will place a higher priority on taking sure steps, one by one, at this time toward resolving our management issues.

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Return to shareholders

Nikkiso’s basic capital policy is to aim for sustainable growth and enhancement of corporate value on a medium- and long-term basis while pursuing optimal balance in financial soundness, capital efficiency and return to shareholders.
Based on the recognition that distributing profit to shareholders in a continuous and stable manner is an important pillar of our capital policy, we will return profit to shareholders by taking into account our business performance, management environment and other factors comprehensively while properly reinvesting internal reserves in developing new businesses and strengthening our production structure.
The interim dividend for the year ending December 31, 2017 is 8 yen per share, as initially planned. The year-end dividend will be 8 yen per share also as per our initial plan, bringing the total dividend for the year ending December 31, 2017 to 16 yen per share.


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