President & Chief Executive Officer
I would like to express my sincere gratitude to our shareholders for their continued support.
Let me give you an overview of Nikkiso’s business results.
Results for the six months ended June 30, 2023
In the Industrial Business, demand for capital investment has been growing due to the acceleration of efforts toward securing medium- to long-term energy and low and decarbonization. LNG-related markets are active as natural gas prices have remained high. In addition, orders for products for the chemical industry, the main market for the domestic pump business, are increasing. In the aircraft market, demand for small aircraft (single-aisle aircraft) is booming, and demand for medium-sized aircraft is gradually recovering. However, reconstruction of the global supply chain is taking time, and there is a delay in the recovery of finished aircraft production. In the hemodialysis market, a major market in the Medical Business, domestic demand remained strong. Overseas, sales also remained strong in China, where the market is expanding rapidly.
As a result, our Group’s financial results for the six months ended June 30, 2023, were as follows. Orders received totaled 98.5 billion yen (down 13% year on year), revenue slightly decreased to 87.2 billion yen, operating profit was 26 million yen, quarterly profit before tax was 5.4 billion yen, up 67% year on year mainly due to the recording of foreign exchange gains resulting from the depreciation of the yen, and profit for the period attributable to owners of the parent came to 3.8 billion yen, up 102% year on year. Excluding the results of LEWA and Geveke, whose shares were entirely sold in August 2022, orders received, revenue, and operating profit for the first half of the fiscal year increased significantly from a year earlier.
Outlook for the fiscal year ending December 31, 2023
Based on current business trends, we have revised our revenue forecast to 190 billion yen, an increase of 10 billion yen from the previous forecast. The operating profit forecast remains unchanged at the target of 4 billion yen. Forecasts for profit before tax and profit for the period have been revised upward to reflect the impact of the depreciation of the yen.
We are currently beginning to see signs of improvement in the business environment of our three main businesses. The pumps and systems business and the hemodialysis business are expecting growth in orders received and revenue mainly due to the expansion of overseas markets. In the Aerospace Business, while uncertain conditions will continue for some time due to the time required to rebuild the supply chain, aircraft demand is on a steady recovery trend. As such, we expect a full-scale recovery in business performance from fiscal 2024 onwards.
In terms of profits, in the pumps and systems business, we are halfway through the process of improving profitability amid the rising manufacturing costs to cope with rapidly increasing orders in addition to the surge in raw material and component prices. In the Medical Business, we expect to improve profitability by reducing fixed costs in addition to taking steps to increase equipment sales mainly in China and optimize sales prices.
Medium- to long-term outlook
We launched “Nikkiso 2025 Phase 2” medium-term business plan in 2023, positioning the next three years as an important period to solidify our management base for sustainable growth.
Since its inception, Nikkiso continued to develop as a company by being a pioneer in ascertaining the changes in society and the “essence” of customer needs, refining existing technologies, creating new technologies, and delivering products and services necessary for the development of society. There was a time in the past when we were trying to figure out where we wanted to go with each of our businesses, but now I feel that the roles we are expected to play are becoming clearer in our industrial, aerospace, and medical businesses. As a technology manufacturer in one of the few specialized fields in the world, Nikkiso will continue to contribute to the development of society by creating technologies that only we can achieve in areas such as ammonia and hydrogen where Nikkiso can demonstrate its presence.