We will steadily establish
our business foundation
for medium- to long-term growth.
Toshihiko Kai
President & Chief Executive Officer
September, 2018

I would like to sincerely thank all shareholders for the support extended to our company. It is my pleasure to provide an overview of Nikkiso’s business performance for the Second Quarter of the fiscal year ending December 2018.

2018 2Q Results

During the six months ended June 30, 2018, Nikkiso recorded orders recieved of 84.7 billion yen, up 31% year-on-year, revenue of 75.5 billion yen, up 20 % year-on-year, operating profit of 3.1 billion yen, up 30% year-on-year, profit before tax of 2.7 billion yen, up 19% year-on-year, profit for the year attributable to owners of the company of 2.0 billion yen, up 15% year-on-year.

In the Industrial Business, orders grew while the business environment was improving from upstream to downstream. On the revenue side, strong performance of cryogenic pump projects for liquefied petroleum gas (LPG) facilities in the domestic pump business pushed up the overall performance of the Industrial Division, resulting in year-on-year increases in both revenue and profit.

In addition, orders for new warm isostatic laminator surged in the Precision Equipment Division, and both orders and revenue steadily grew in the Aerospace Division.

As for the Medical Business, the mainstay hemodialysis-related business saw growth in sales of disposables such as blood tubing lines with the recovery of demand for dialysis machines in the domestic market. Also, both revenue and profit increased on a year-on-year basis in the overseas market, boosted by continued strong sales in the rapidly expanding Chinese market as well as sales growth in Asia.

Outlook for FY 2018

Plan figures for the fiscal year ending December 2018 are 162.0 billion yen for orders/revenue, up 15% year-on-year, and 10 billion yen for operating income, up 15% year-on-year.

In the Industrial Business, we will continue our efforts to win orders after receiving inquiries from customers while remaining focused on strengthening our business foundation by redeveloping our production system, targeting the fall of 2018 for operation start of the Miyazaki plant and for construction completion of the second plant in Hanoi, Vietnam.

In the Medical Business, we will speed up launching of high value-added next generation dialysis machines while striving to enhance profitability by implementing drastic organizational reforms for service operation systems such as sales and maintenance. In addition, we will expand our scale of operations by strengthening our overseas sales system to steadily tap into growth markets mainly in Asia.

Focus Measures Going Forward

During the two years from FY 2016, the year when the medium-term business plan “Nikkiso 2020” started, we invested for medium- to long-term growth and worked on the expansion of our business foundation under the harsh business environment.

In FY 2018, we will steadily implement measures to create a strong business foundation.

Specifically, the measures include expanding business in the area of pump-related equipment on the back of the shift of energy sources from oil to liquified natural gas, and growing the new Miyazaki plant to be a key facility to support “Nikkiso as a technology expert.” At the new Miyazaki plant, we aim to re-establish our sophisticated manufacturing culture by radically reviewing manufacturing processes partly because we need to develop engineers capable of responding to the new business environment and requests of customers, and to embed the quality management system.

Also, we will establish effective corporate organizations and sales/service systems, and drive selection and concentration of businesses, to foster strong profitability.

Return to Shareholders

The basic capital policy of the Company is to realize sustainable growth and higher corporate value for the Company over the medium to long term while pursuing an optimum balance among its financial health, capital efficiency and return to shareholders.

Based on the recognition that continuous and stable return of profit is the main pillar of capital policy, we will return profits considering our performance, operating environment and other factors comprehensively, and properly allocate retained earnings to reinvestments in developing new businesses and enhancing production.

We decided the interim dividend for the FY 2018 at 8 yen per share as planned at the beginning of the fiscal year. Also, as planned at the beginning of the fiscal year, we plan to pay the year-end dividend of 8 yen per share, totaling to the annual dividend of 16 yen per share.