Investors Meeting for FY2008 2nd Quarter Financial Results
Nov.20,2008Tsukishima Kikai Co., Ltd.
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
2
《
Contents 》
Section1 General・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
P 3~10
Section2 FY2008 2nd Quarter Financial Results・
P11~20
Section3 Outlook beyond FY2008・・・・・・・・・・・・・・
P21~32
Appendices・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
P33~44
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
3
Section1: General
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
4
Corporate data①
Corporate name TSUKISHIMA KIKAI CO., LTD.President & CEO Kazuhiko YamadaFounded Started operations August 1905
Formally established May 1917Address 17-15,Tsukuda 2-chome,
Chuo-ku, TokyoCapital ¥6,646millionTotal shares issued 45,625,800Shares per unit 1,000Employees 2,039(consolidated)
633(non-consolidated)(As at Sep.30 2008)
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
5
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Water environmental business
Industrial business
△11
Corporate data②
Operating income change by segmentOperating income change by segment((consolidatedconsolidated))
★Growth story by conversion of earnings structure
36
25
17
23
6
19
31
12
433
29
(×¥100million)
ResultsResultsResultsResults
Changing composition of
operating income
Surplus in Industrial Surplus in Industrial businessbusiness
■Water environmental business:
Switch to stable earning business from high earning business by structural reform
■Industrial business:
Growth by expansion of market and business fields
7
15
22
Estimate
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
6
Operations of the Tsukishima Group
Basic technologies
and applications
associated with
Sugar refining
Water Environmental Business Division
Industrial Business Division
Water :Filtration and purification, Wastewater treatment
Sewage :Sewage treatment, Sludge treatment Industrial plant equipment and machinery, sugar
and bio, incineration, vacuum processing
Core technologies
Reaction,Crystallization
Distillation,
Centrifuge separation
Filtration,Dehydration,
Incineration
Combustion,fusion
Vacuum processing
Public sectorPrivate sector
(domestic/overseas)
Samukawa Water Services
Tsukishima Techno Machinery
Sun Eco Thermal
Tsukishima Kankyo EngineeringTsukishima Tecnno Maintenance Services
Machinery and equipment
Applications
Tsukishima Kikai
Applications
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
7
Water Environmental Business①M a i n B u s i n e s s F i e l dM a i n B u s i n e s s F i e l d
◆Machinery and equipment sales・Tsukishima is TOP brand in sludge treatment equipment (dewatering/drying/incineration)・Most equipment can be produced internally・Large market share in the major cities
Plants and equipmentPlants and equipment
◆New business models based on reliability and advanced technology・Comprehensive O&M (operation & maintenance),multi-year agreements・PFI model (construction and long-term operation)・Construction and long-term operation of new energy-producing and energy-saving products
L i f e c y c l e b u s i n e s sL i f e c y c l e b u s i n e s s
◆Equipment operation and maintenance・Many contracts in Japan (around 100 sites)・High performance for operation and maintenance
M a i n t e n a n c e M a i n t e n a n c e
Filter Press Inclined disc dryer
Samukawa Water ServicesPressurized fluidized combustion system
Sludge recycling into fuel
See Appendices P35,37~40
control room Equipment maintenance
See Glossary P2
Tornado Press
Water purification and sewage treatment facilities, incineration facilities,machinery such as dewatering machine and dryersOperation and maintenance of water purification and sewage treatment equipment and facilities
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
8
Water Environmental Business②
050
100150200250300350400450500
Mar '06 Mar '07 Mar '08 Mar '09
MaintenanceLife cycle businessPlants&Equipment
050
100150200250300350400450500
06.3期 07.3期 08.3期 09.3期
210245
16
158 86
141
173
141
134384
472448
295 293
184
164
1 30
151
46
130
460 474
360
Results
・Value of orders received is declining after Mar’07.
・The new business model of “Life cycle business” is growing.
・Sales is declining on Mar’08.・
In the “Life cycle” category, several years worth of orders received are lumped together whereas the associated sales figures are shown annually, creating discrepancy between orders and sales in individual years.
See Reference Materials P5
400
128
58
214
400
125
84
191
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
(×¥100million) (×¥100million)
Results Results Results Results ResultsEstimate Estimate
Value of orders receivedValue of orders received SalesSales
9
Industrial Business①
◆The only domestic supplier of large vacuum chambers for liquid crystal panel production・Film formation equipment for solar cells
Chemical and food manufacturing plants, biomass ethanol manufacturing plants, vacuum equipment, machinery such as dryers, centrifuge and gas tanks, waste treatment systems (liquid/solid/industrial/general waste)
Main business fieldMain business field
◆The only domestic supplier of sugar manufacturing plant and facilities and leading presence in the international sugar refining industry・Many installation experiences for sugar manufacturer in ASEAN region・Biomass ethanol manufacturing plant in Osaka and Thailand and Hokkaido
◆Core of industrial business using various machinery and product・Tsukishima Kikai has a 70% share of the dryer market (steam tube dryer) for terephthalic acid.
Industrial plants and equipmentIndustrial plants and equipment
◆Expanding after business integration with the former Nittetsu chemical engineering・Tsukishima Kikai has a 70% share in Japanese waste liquid
combustion
S u g a r / b i oS u g a r / b i o
I n c i n e r a t i o nI n c i n e r a t i o n
V a c u u mV a c u u m
Steam tube dryer(STD)
Biomass ethanol manufacturing plant
Waste liquid combustion facility
Electron beam welder(for large vacuum chamber
manufacturing)
Fully automatic centrifuge (for sugar production)
BPA plant
See Appendices P36,41
See Glossary P3
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
10
Industrial Business②
0
100
200
300
400
500
Mar '06 Mar '07 Mar '08 Mar '090
100
200
300
400
500
Mar '06 Mar '07 Mar '08 Mar '09
OtherVacuumIncinerationSugar/bioIndustrial plants&Equipment
171233
24
13111
15
28
104
1414352
393
181
156110
15
189
237714
14
209
24
160
1113
282317
417
SalesSalesValue of orders receivedValue of orders received・Value of orders received have risen favorably.・”Industrial plants & Equipment ” and ”Incineration” are core of Industrial business, constant scale of orders are secured.・”Sugar and bio” and “Vacuum” have risen orders gradually. But Mar’09 will be valley for orders.
・Sales increased to ¥40,000million.・”Industrial plants and Equipment” is core of
Industrial business, constant scale of sales are secured.・”Incineration” have achieved increasing of sales on
Mar’08, the scale of sales is over ¥10,000million.・”Sugar and bio” and “Vacuum” have risen sales with
steady progress.
38313
35
137
53
145
4351912
128
19
257
39012
40
122
61
155
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
(×¥100million)
(×¥100million)
ResultsResultsResults Results Results ResultsEstimate Estimate
See Reference Materials P7
11
Section 2: FY2008 2nd Quarter financial Results
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
12
Market trendsWater Environmental BusinessWater Environmental Business
Industrial BusinessIndustrial Business
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
■ Public sector budget continues to decline, reducing the size of the market and being hard competition for orders received
■ There is an increasing tendency toward orders contracted to the private sector, as well as “life cycle business” (Comprehensive O&M contracts and long-term O&M contracts).
■ There is an tendency that local governments choose technology and equipment can realize cost reduction and prevention global warming.
■ For business recession caused by financial crisis, plant and equipment investment are on the decline in the field of chemical and iron steel.
■ Increasing demand for biomass ethanol made from anti-food material, R&D of biomass ethanol manufacturing have developed.
■ Demands for liquid crystal panel is stagnant by inventory adjustment, but solar cells show activity.
13
FY2008 2nd Quarter financial Results
*Previous expectation indicates estimation At FY2007 financial results statement on 23rd May. 2008
(×100 million)
FY2007Intermediate
FY20082nd Quarter Difference
FY20082nd Quarter
previous expectation
Difference withpreviousexpectation
Sales 279 257 (22) 270 (13)
Operating income (3) (11) (8) (7) (4)
Ratio of operating income to sales (1.1%) (4.4%) (3.3%) (2.6%) (1.8%)
Ordinary income 0 (9) (9) (6) (3)
Net income (7) (12) (5) (4) (8)
Net income per share (\14.49) (\25.82) (\11.33) (\8.79) (\17.03)
■Sales have decreased compared with “FY2007 Intermediate” and “ FY2008 2nd Quarter previous expectation” . The decreasing factor is a sales decreasing of “Industrial plants & Equipment” in industrial business.
■Operating income and ordinary income have decreased compared with “FY2007 Intermediate” and “ FY2008 2nd Quarter previous expectation” .
■Net income decreased by evaluation losses investment securities.
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Reference Materials P7
14
Orders received ,sales and operating income by segment
0
100
200
300
400
115
142
257
-20
-15
-10
-5
0
5
10
15
13
(16)
(3)
0
100
200
300
400
500
600 Industr ial business
Water environmental business
212
213
425
93
186
279
*Abroad sales
Mar’08
2Q resultsMar’09
2Q results
199
398
*59
S a l e sS a l e s Operat ing incomeOperat ing incomeOrders rece ivedOrders rece ived
【Water environmental business】Orders received decreased compared with Mar’08 2Q, because “Life cycle business” is the valley for orders.【Industrial business】Orders received decreased compared with Mar’08 2Q, because “Industrial plants& Equipment” decreased.
199
*55
1
(12)
(27)
(14)
(13)
【×¥100million】
(22)
(44)
*(4)
+22
(11)
(8)
(12)
+4
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Reference Materials P6
【×¥100million】 【×¥100million】
【Water environmental business】Sales increased compared with Mar’08 2Q, because “Plants& Equipment” and “Life cycle business” increased.【Industrial business】Sales decreased compared with Mar’08 2Q, because PJ delayed.
【Water environmental business】Operating income increased compared with Mar’08 2Q, because of sales increasing and reducing selling cost and general administration expenses.【Industrial business】Operating income decreased compared with Mar’08 2Q, because of sales decreasing and increasing selling cost and general administration expenses.
Mar’08
2Q results
Mar’08
2Q resultsMar’09
2Q results
Mar’09
2Q results
15
【Water environmental business】Operating income increased compared with Mar’08 2Q.The increasing factors are sales increasing and decreasing
selling cost / general administration expenses despite declining profitability.
【Industrial business】Operating income decreased compared with Mar’08 2Q.The decreasing factors are decreasing sales and increasing
selling cost / General administration expenses for sales activity.
Analysis of operating income by segment
-20-15-10
-505
(16)0
5
10
15
13(12)
1
(12)+4
【Key factors】Sales increasing/decreasing :
+ 4Profitability:
(4)Increasing/decreasing for selling cost and general administration expenses:
+ 4
【Key factors】Sales increasing/decreasing:
(7)Profitability:
(1)Increasing/decreasing for selling costand general administration expenses (4)
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Mar’08
2Q results
Mar’08
2Q results
Mar’09
2Q results
Mar’09
2Q results
See Reference Materials P6
Water Environmental BusinessWater Environmental Business Industrial BusinessIndustrial Business【×¥100million】 【×¥100million】
16
Extraordinary income/loss
(×100million) Mar'08 2Q Mar'09 2Q
Extraordinary income 5 -
Gain on sales ofinvestment securities
5 -
Extraordinary loss 17 11
Marketable securities - 3
Evaluation losses investment securities - 7
Specific construction losses - 1
Transfer into accrued warranty
17 -
Other - -
Evaluation losses by falling stock price
■Extraordinary loss: Evaluation losses investment securities(¥700million)
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Reference Materials P3
17
Consolidated balance sheet ①Assets
Mar 31,2008 Sep 30, 2008
¥88.3billion (¥14.6billion)
Other current assets
¥41.1billion
(¥2.3billion)
(¥11.2billion)
(¥0.4billion)
(¥0.7billion)
Cash deposit+ securities¥16.1billion
Other current assets
¥52.3billion
Investment in securities¥16billion
Other fixed assets
¥18.5billion
¥102.9billion+2.5billion Operating capital demand(2.3billion) Purchased of marketable
securities(0.4billion) Dividends payment(2.1billion) Tax payment
(14.4billion) Accounts receivable+3.2billion Inventory
(0.7billion) Evaluation losses by falling stock price
+0.3billion Difference with current price
■Total assets are reduced ¥14.6billion since Mar 31, 2008.
■The reduction in investment securities is for evaluation losses by falling stock price.
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Reference Materials P4
Cash deposit+ securities¥13.8billion
Investment in securities
¥15.6billionOther fixed
assets¥17.8billion
18
(¥13.0billion)
(¥0.3billion)
+¥0.1billion
(¥1.5billion)
¥88.3billion (¥14.6billion)Current liabilities
¥42.3billion
Fixed liabilities ¥13.9billion
Value of securities ¥1.8billion
Net assets(less discrepancies
in appraisal of securities)
¥44.9billion
¥102.9billion
(¥8.9billion) Bills accounts payable(¥4.1billion) Others
(¥0.3bilion) Long-term loans
(¥1.5billion) Earned surplus
■Reduction liabilities by reduction in note and account payable
■Reduction in total assets brings the equity ratio to 50.9%, improvement of 5.9pt over the Mar
31th. 2008
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Consolidated balance sheet ②Liabilities and equity
Mar 31,2008 Sep 30, 2008
Current liabilities
¥29.3billion
Fixed liabilities ¥13.6billion
Value of securities ¥1.9billion
Net assets(less discrepancies
in appraisal of securities)
¥43.4billion
See Reference Materials P4
19
Consolidated cash flow results
020406080
100120140160180
¥15.7billion
(¥1.0billion)
(2.3billion)(0.7billion)
¥11.7billion
CF from
sales activities CF from
investing activities CF from
financing activities
(¥0.3billion) Repayment of long-term loans
(¥0.4billion) Dividends payment etc
+¥0.3billion Sales of securities(¥2.3billion) Acquisition of
securities(¥0.3billion) Acquisition of tangible
and intangible fixed assets etc
■Collection of accounts receivable and acquisition of securities resulted in ¥4.0billion decrease in
cash and equivalents since the end of the March 2008.
+¥14.6billion Collection of accounts and receivable
(¥8.9billion) Reduction in notes payable(¥3.2billion) Increase in inventories(¥3.5billion) Tax payments and others
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Reference Materials P5
【×¥100million】
Mar 31,2008 Sep 30, 2008
20
Section3:Outlook beyond FY2008
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
21
Consolidated business outlook for FY2008
×100millionMar'08results
Mar'09expectation Difference
Mar'09previous
expectation
Difference withprevious
expectation
Sales 777 790 13 830 (40)
Operating income 33 22 (11) 35 (13)
Ratio of operatingincome
4.2% 2.8% (1.4%) 4.2% (1.4%)
Ordinary income 36 24.5 (11.5) 36 (11.5)
Net income 8 3 (5) 16 (13)
Net income per share
\18.18 \6.59 (\11.59) \35.16 (\28.57)
■Amendment for FY2008 business outlook on 31th Oct
■Sales is expected to increase to ¥79billion.
■Operating income is expected to decrease to ¥2.2billion, because of sales decrease in Industrial business.
■Net income is expected to decrease to ¥0.3billion, because evaluation loss of investment securities and marketable securities was counted on second quarter of FY2008.
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Reference Materials P3
*Previous expectation indicates estimation At FY2007 financial results statement on 23rd May. 2008
220
100
200
300
400
500
600
700
800
900
1,000 Industri a l bus iness
Water env i ronmenta l bus iness
0
100
200
300
400
500
600
700
800
900
1,000
417
360400
390
777 790
0
5
10
15
20
25
30
35
40
4
2925
33 35
383
448 400
435
831 835
10
(196) (145)
400
470
870
395
435
830
(168)
15
22
7
【Water environmental business】Sales is expected to increase, because of increase in “Plants & equipment” and “Life cycle business”.
【Industrial business】Sales is expected to decrease, because of delay for orders received in “Industrial plant & equipment”
【Water environmental business】Orders received is expected to keep the previous expectation, because of orders received in “Plants & Equipment”.
【Industrial business】Orders received is expected to decrease, because of delay for orders in “Industrial plants & equipment”.
【Water environmental business】Operating income is expected to increase, because of sales increasing effect and decreasing selling cost / general administration expenses 【Industrial business】Operating income is expected to decrease, because of sales decreasing effect and increasing selling cost / general administration expenses for spread of business.
(35)
(35)
±0
(40)
+5
(45)*(23)
(13)
(3)
(10)
+4
+52
(48)
+13
(27)
*(51)
+40
*Orange :compared with Mar’09 previous expectation
Green :compared with Mar’08 results
(11)
(14)
+3
Outlook for orders received ,sales and operating income by segment See Reference Materials P6
See Glossary P2
Orders rece ivedOrders rece ived S a l e sS a l e s Operat ing incomeOperat ing income
【×¥100million】
*Abroad sales
ResultsMar’08 Mar’09
Previousexpectation
Mar’09
expectationPresent Results
Mar’08 Mar’09Previous
expectation
Mar’09
expectationPresent Results
Mar’08 Mar’09Previous
expectation
Mar’09
expectationPresent
23
0
5
10
15
20
25
30
0
5
10
15
20
25
30
47
29
15
■<Water environmental business>
Operating income is expected to increase compared with Mar’08 by increasing sales and decreasing
selling cost and general administration expenses.
■<Industrial business>
Operating income is expected to decrease compared with Mar’08 by decreasing sales and increasing
selling cost and general administration expenses.
(14)
+3
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Reference Materials P6
Analysis of operating income by segment
Water Environmental BusinessWater Environmental Business Industrial BusinessIndustrial Business
Sales increasing/decreasing :
+ 7Profitability:
(15)Increasing/decreasing for selling cost and general administration expenses:
+ 11
Sales increasing/decreasing:
(5)Profitability:
(1)Increasing/decreasing for selling costand general administration expenses (8)
【Key factors】 【Key factors】
Mar’09
Expectation
Mar’08
Results
Mar’08
Results
Mar’09
Expectation
【×¥100million】 【×¥100million】
24
(×100million)Mar'08results
Mar'09estimate
Increase/decrease
Orders received 448 400 (48)
Plants & equipmenrt 173 214 41
Life cycle business 141 58 (83) *Comprehensive andlong-term O&M contracts
131 54 (77)
Maintenance 134 128 (6)
Sales 360 400 40
Plants & equipmenrt 184 191 7
Life cycle business 46 84 38 *Comprehensive and long-term O&M contracts
40 70 30
Maintenance 130 125 (5)
Operating income 4 7 3
Ratio of operating income to sales 1.0% 1.8% +0.8pt
Balane of orders 452 452 ±0
■Market reduction-”Plants & equipment” is increasing slightly, but
total market volume is reducing.
■”Life cycle business” is bottom period
-Large project in “Life cycle business” from local government is expected to decrease.
★Switch to stable earning business
-”Stock (assets)” based on lots
of experience
-Close to customers
Business environmentBusiness environment
Basic policy of businessBasic policy of business
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Business strategies for Mar 09 period Water environmental business
See Reference Materials P7
See Glossary P2
25
◆Review of
business structure
◆New products/
New business
◆Profitability
of projects
・Cost reduction effect ¥100miilion until Sep.30 ’08⇒Execute until Mar’09 continuously
・Reduction of selling cost and general administration expenses⇒¥400million has been reduced until Sep.30 ’08. That reduction will execute until Mar’09 continuously.
Strategy for short-term: Maintain earnings
Strategy for medium, long-term =to earning structure for future by new products & business
・Participate in joint research with Tokyo metropolitan government・Acquisition official certification
・be in active to plural projects.
・Already got orders ¥3.4billion(18 projects) until Sep.30 ‘08
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Business strategies for Mar 09 period Water environmental business See Glossary P2,3
・Standardize of design spec for plants and
equipment / Intensive procurement
・Intensification of selective order received
・Optimize sales and engineers
・In-house engineering
・Unite management of “Tsukishima Kikai”
and “Tsukishima Techno Maintenance
Services”
・
Intensification of sales promotion
for new dewatering machine
・Orders received of “Comprehensive O&M contracts”, ”Long-term O&M contracts”
・Orders received of “energy creation system”and “energy saving system”◆Sludge to fuel recycling system◆Pressurized fluidized combustion system
26
PFI business Comprehensive O&M contracts
①Samukawa PFI project
・Contract term:Dec.2003~Mar.2026・Contract amount:¥15billion
②Chiba Nogikuno-sato PFI projects
③Chiba-city south WWTP
comprehensive O&M
・Contract term:Apr.2008~Mar.2011
④Osaka prefecture waterworks waste-water & heat-electricity supply equipment O&M
Operation & Maintenance
Chemicals Measure Repair
Design
Comprehensive O&M contracts
DBO business
PFI business
Procurement Construction
Finance
To stable earning structure by PFI business and comprehensive O&M contracts
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Glossary P2,3Water environmental business Experience of “Life cycle business”
・Contract term:Mar.2005~Sep.2027 ・Contract term:Apr.2008~Mar.2015・Contract amount:¥8.9billion
・Contract amount:¥3.5billion
・Contract amount:¥4.2billion
27
(×100million)Mar'08results
Mar'09expectation
Increase/decrease
orders received 383 435 52 *Abroad 148 156 8 Industrial plants & equipment 145 257 112*STD 68 40 (28)
Sugar/bio 53 19 (34) Incineration 137 128 (9) Vacuum 35 19 (16) Other 13 12 (1)Sales 417 390 (27) *Abroad 196 145 (51) Industrial plants & equipment 209 155 (54)*STD 62 60 (2)
Sugar/bio 24 61 37 Incineration 160 122 (38) Vacuum 11 40 29 Other 13 12 (1)Operating income 29 15 (14) Ratio of operating income to sales 6.9% 3.8% (3.1pt)Balance of orders 321 366 45
★Adaptability against economic fluctuations◆ Improvement of profitability◆ Expansion of market-from domestic to abroad-new business (bio, vacuum) -expansion of application-plant business
■Reduction of plant and equipment investment in chemical field■Higher interest to biomass ethanol made of
anti-food material, because of global warming and the price of crude oil changing■Stable market condition in “Incineration”■Liquid crystal market got into adjustment
stage, but solar-cell technology is watched with keen interest for prevention of global warming in “Vacuum” field
Business environmentBusiness environment
Basic policy of businessBasic policy of business
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Business strategies for Mar 09 period Industrial business
See Reference Materials P7
28
◆Expansion of application ・Expansion of application for STD
・Terephthalic acid drying for chemical industry
⇒ coal drying for steel industry
◆Maintain volume of orders
◆New business
◆Profitability of projects
《Biomass ethanol》・Development biomass manufacturing
technology made from anti-food materials ・Development new process
《Vacuum》・Establishment of deposition technology
・Maintain stable profits by complete project management
・Completion of existing projects
・Establishment of new process、and new technology
・Completion project management
・Improvement of profitability
Strategy for short-term =maintain volume of orders and minimize decreasing earnings
・Maintain volume of orders to improve resource operation
=
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
See Glossary P2,3
See Appendices P42~44
Business strategies for Mar 09 period Industrial business
・Take in active demands in Asia
・Take in low-profitability projects to maintain volume of orders
Strategy for medium/long-term
not to depend on specific business field, to minimize the effect of economic fluctuations
29
0
20
40
60
80
100
120
140
160
180
Mar'03 Mar'04 Mar'05 Mar'06 Mar'07 Mar'08 Mar'09
Equipment
Plants
1218
30
8
8251
48
3
75
44
88
69
53
9590
119
157148
70
86
156
expectation
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Industrial business(Orders received from abroad)
【×¥100million】
《Characteristic of Tsukishima Kikai’s abroad plants business》
・Only E (Engineering)、P (Procurement)
portion, excluding C (Construction) portion
・Scope of project is generally limited to supply machinery and associated facilities (not being responsible for an entire projects as the prime contractor).
★Continuing plant & equipment investment demand in Asian region include middle-east region
★Exchange fluctuation -Ordered projects are almost contracted in calculated in yen. So exchange fluctuation risk is small.-Projects before order are affected in competitiveness.
30
Mar'07 Mar'08 Mar'09
results result plan
Net income(consolidated)in current period \1.0billion \0.8billion \0.3billion
Return value \0.68billion \0.68billion 0.68billion
Dividend payments \0.68billion \0.68billion \0.68billion
(Annual dividend payment per share) \15 \15 \15
(Intermediate period dividend payment per share)
\7 \7 \7
Treasury stock purchases \0 \0 \0
Return to stockholders(consolidated) 67.7% 82.5% 226.6%
■Based on basic principle (stable and continuous return to stockholders),
the current plan for Mar’09 is to maintain the dividend of ¥15 per share
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Return to stockholders
31
TSK’s core technologyCore technologies developed by sugar manufacturing technologies (reaction、crystallization、distillation、separation、filtration、drying、incineration、vacuum etc)
Evolution to environment technologiesEvolution to environment technologiesStrength of Tsukishima Kikai is Strength of Tsukishima Kikai is
keeping environment technologies keeping environment technologies Converting earnings
structure
Water environmental
business
Industrial business
◆To stock business-Life cycle business
PFI and comprehensive O&M contracts
⇒ Converting stable earning structure
◆Utilization of waste, popularization energy-saving facility
◆Incineration technology-Waste liquid combustion system-Solid waste combustion system◆Waste gas/waste water treatment technology-Flue gas desulfurization facility
◆Biomass ethanol technology
◆Expansion of market-from domestic to abroad⇒China, south east Asia, Middle east region◆Expansion of business domain-Biomass ethanol manufacturing process -Strengthening vacuum business
⇒Building up stable earning structure by new business
To new growth storyTo new growth story
-Waste water treatment system
-Abroad water environmental business by accumulated technologies
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Development of business in future
-Tornado press-Sludge recycling into fuel-Pressurized fluidized combustion system
AppendicesAppendices
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
33
Appendices
Water environmental business (water purification)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
'02 '03 '04 '05 '06
Subsidies Bond issues
(×¥100million)
Reservoir7%
Intake3%
Aqueduct2%
Other17%
Purification
14%
Supply8%
Distribution49%
Water purification-subsidies and bond issuesWater purification-subsidies and bond issues Expenditure by facility type(2005)Expenditure by facility type(2005)
◆As part of government cost-cutting measures, budget for public works are declining from 1999
◆Tsukishima Kikai boasts considerable experience and expertise in waste-water treatment
at water purification facilities
(Source: Ministry of internal affairs and communications)
Business target of Tsukishima Kikai
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
34
Appendices
Water environmental business (sewage)
(×¥100million)
下水道普及率
Source: Ministry of Land, Infrastructure, Transport and Tourism
Sew
age
budg
ets
0
10,000
20,000
30,000
40,000
50,000
60,000
'92 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '080%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
◆Sewage budget are shrinking in inverse proportion to coverage ratios
◆Tsukishima Kikai boasts considerable experience and expertise in sludge treatment at processing plant
(plan)
Sew
age
cove
rage
ratio
Coverage ratio for sewage
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
35(Source: Tsukishima Kikai data modified from Japan sewage maintenance association data )
780
840
903 916 928 945 947 952 970 981 9891,017
650688
744809
852928
971 1,001 1,021 1,053 1,072 1,078
0
200
400
600
800
1,000
1,200
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07
0
200
400
600
800
1,000
1,200
1,400
Contract amount Number of contract sites
Water environmental business(Sewage facility O&M contracts )
◆Japanese sewage treatment sites are about 1,800 sites. O&M by private sectors is growing gradually.
◆Tsukishima Kikai group has been entrusted about 100sites (water purification and sewage treatment)
Appendices
(×¥100million) (number of sites)
See Glossary P2
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
36
UtilizationIncineration
UtilizationDrying
Wat
er p
uri
fica
tio
nW
ater
pu
rifi
cati
on
Wa
ste
-wa
ter
tre
atm
en
tW
as
te-w
ate
r tr
ea
tme
nt
Water supplyFiltrationSettlingInlet
Samukawa water-servicesFilter-press
DewateringThickening
Waste-water
Drying
sludge sludge
Inclined disc dryer
Incinerator
Dewatering脱水DigestionThickening
Tornado Press
Aeration
Gas-holder
Water environmental business (Products)
Thickening-drying system
First settling Second settling
Sludge to fuel recycling systems
See Glossary P2Appendices
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
37
Orders OrdersMar 2008
SalesOrdersMar 2009
SalesOrdersMar 2010
SalesMar 2011
Sales
◆“Comprehensive O&M contracts”, ”Long-term O&M contracts
★
Future sales image for “life-cycle business”
◆PFI model★
Contribution to stable profits by long O&M execution and construction of facilities
(Samukawa W.S. / Edogawa W.S.)
◆Product differentiation through technological superiority
★ Construction of new business model by acceptance orders including new technologies/products and long-O&M (Sludge to fuel recycling system / Pressurized fluidized combustion system)
SalesOrdersMar 2007
Stable earnings base
Effe
ctEf
fect ★
Stable profits by acquisition multi-year O&M contracts
★
“Long-term O&M” and “PFI scheme projects” need high technologies and credit stability, so its bids are adopted ‘synthetic evaluation method’ by local governments
Water environmental business ”Life cycle business ”See Glossary P2Appendices
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
38
Hokkaido area
Water purification plant:
1site
Waste water treatment plant:1site
Water environmental business “stocks”(maintenance sites)
Tohoku areaWater purification plant :6sites Waste water treatment plant :2sites
Chubu/Hokuriku area
Water purification plant:
3sites
Waste water treatment plant:
6sites
Kansai/Tyugoku area
Water purification plant:
10sites
Waste water treatment plant:
7sites
Kyushu areaWater purification plant
:3sites
Waste water treatment plant
:
3sites
Kanto area
Water purification plant :15sites Waste water treatment plant :26sites
Many stocks
⇒To stable earning structure by “Life cycle business”
© 2008 Tsukishima Kikai Co., Ltd.
All Rights Reserved.
Appendices
39
Water environmental business(Market share and competitors)*Based on in-house research
M a i n t e n a n c eM a i n t e n a n c e
Plants and equipmentPlants and equipment Market share In Japan Main competitors
Li fe cyc le businessLi fe cyc le business
Dew
ater
ing
mac
hine
s
18%
Ebara environmental engineering,
Kobelco eco-solutions, Kubota, Sanki engineering,
JFE engineering, Metawater
Kawasaki heavy industries, Kubota
Hitachi plant technologies, Ishigaki, Takuma, Tomoe engineering, Mitsubishi kakoki,
【Main products】Tornado press(New machine)
【Major achievements】Samukawa Water Services
(PFI facility)
【Main products】Inclined disc dryer
【Main products】Fluidized
incinerator
【Main products】Cokes bed
melting furnace
25%
22%
53%
PFI:2 of 4(waste-water treatment at water purification facility)
Contract to:45 water purification facilities48 sewage facilities 4 other facilities
Equipment operation and maintenance
Nihon hels industry, Ebara engineering services, Kubota environmental services, Meiden environmental services, Veolia(France)
Metawater, Sanki engineering, Maezawa industriesMeiden environmental services
Appendices
Dry
ers
Inci
nera
tors
Mel
ting
furn
aces
See Glossary P2
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
40
Liqu
id-
was
te
Molasses
Crystallization
Bagasse
Coking
BPA
Ch
em
ica
l in
du
st
ry
Ch
em
ica
l in
du
st
ry
Naphtha Para-xyleneXylene PTA
PC
POM
Blast furnace RollingConverter ProductsMaterials
St
ee
l in
du
st
ry
St
ee
l in
du
st
ry
Affination centrifuge concentration FiltrationRaw
sugar
Su
ga
r ・
bio
Su
ga
r ・
bio
Parts for liquid crystal panel
manufacturing equipment
Pre
cis
ion
ma
ch
ine
Pre
cis
ion
ma
ch
ine
パラキシレン
製造プラント
BPA PlantsLiquid-waste
incineration system
Agglomeration
Gas-holder
Drying Products
Biomass ethanol manufacturing plant
Centrifuge
STD
STDCentrifuge
Deposition equipments
Crystallizer
Flue gas desulfurization
system
Steam tube dryer(STD)Para- xylene
Plants
Fluidized dryer
See Glossary P3
Industrial business (Products)Appendices
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
41
Material: wheat ,corn
Material:wheat、sugar beetCapacity:15,000KL/年
Material:riceCapacity:1,000KL/year
Material:sawmill waste Capacity:0.25KL/year
Material:waste woodsCapacity:1,400KL/yearContractor:Tsukishima Kikai,
Taisei Corporation ,Marubeni Corporation
Material:riceCapacity:15,000KL/yearContractor:Tsukishima Kikai
Material:Capacity:750KL/year
Material:High biomass sugarcane Capacity:1.1KL/year
Tsukishima Kikai experiences
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Appendices
Industrial business (Biomass ethanol plants experiences)
42
Thailand saraburi prefecture
Company :TRE
Biomass ethanol manufacturing plant
・Material :Bagasse、Molasses
・Capacity :36,000KL/year
・Contractor :Tsukishima Kikai,
Marubeni corporation
Sapporo breweries Ethanol plant
Tsukishima Kikai is developing to the demands for biomass ethanol made from anti-food material, based on plural construction experiences.
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
Industrial business (Biomass ethanol plants experiences)Appendices
43
Industrial business (Market share and competitors)*Based on in-house researchS T DS T D
【Main product】Steam tube dryer
(STD)
I n c i n e r a t i o nI n c i n e r a t i o n
Was
te-li
quid
co
mbu
stio
n
Solid
in
dust
ries
was
te
【Main product】
Liquid-waste incineration
system
【Main product】Melting kiln
S u g a r P l a n t sS u g a r P l a n t s【Main product】Fully automatic sugar centrifuge
B i o m a s s e t h a n o lB i o m a s s e t h a n o l【Main product】
Biomass ethanol manufacturing plant
Large vacuum chambersLarge vacuum chambers【Main product】
Large vacuum chamber for liquid crystal panel
70%(¥12billion)
Mitsui engineering and shipbuilding, Louisville(US) (PTA dryers)
Market share
(Market value)
In Japan, the only domestic supplier for plant and
equipment, one of engineering companies for
sugar plant in the world
70% of domestic marketDomestic:¥3billion
Overseas:¥15billion
30%(Domestic¥15billion)
JGC、Mitsui engineering and shipbuilding
(cellulose ethanol system)
Asahi Kasei engineering, Volcano, John Zink (US),Callidus technologies (US)
Mitsubishi heavy industries(large electron beam welding)
Hitachi Zosen, Sumitomo heavy industry (leading heavy industry manufacturers / shipbuilding firms)Takuma, Ebara (leading environmental solution firms
Appendices
Hakko engineering, Sintanakakikai,BMA (Germany), Fifs cail (France)
Three orders
Oligopolyin Japan
See Glossary P3
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.
44
Note
Inquiries
Tsukishima Kikai Co., Ltd.
Corporate Management Planning Department, PR & IR Group
17-15, Tsukuda
2-chome, Chuo-ku, Tokyo, 104-0051 Japan
Phone:+81-(0)3-5560-6982
Fax :+81-(0)3-5560-6591
URL: http://www.tsk-g.co.jp
1. Numerical projections and estimates, future outlook descriptions and associated statements and declarations in this document and the accompanying presentation are based in judgments and assumptions made in accordance with the best information available to Tsukishima Kikai at the present point in time. Actual outcomes may differ from such predictions due to uncertainties inherent in underlying judgments and assumptions, operational and management developments, and changes in internal and external conditions. Tsukishima Kikai makes no warranties whatsoever in relation to future predictions shown herein.
2. This documents is intended purely as a source of information and does not constitute an instrument of solicitation or inducement on the part of Tsukishima Kikai.
3. No part of this document may be copied or quoted for any purpose without permission.
© 2008 Tsukishima Kikai Co., Ltd. All Rights Reserved.