東京計器（7721） – [Delayed] Financial Results Briefing for 3Q of the Fiscal Year Ended March 31, 2022 (Fiscal 2021)

Financial Results Briefing for 3Q of the Fiscal Year Ended March 31, 2022 (Fiscal 2021)－From October 1 to December 31, 2021－February 10, 2022The forward-looking statements contained in this material reflect the management’s assumptions based on currently available information as of the date of announcement. Future changes in business environment and other factors may therefore cause differences with the actual situation.©TOKYO KEIKI INC. All Rights Reserved©TOKYO KEIKI INC. All Rights ReservedSummary of Financial Results for 3Q of Fiscal 2021 Summary of 3Q Results Sales were on par with the previous 3Q and profits were up across all indicators. The Hydraulics and Pneumatics Business, which was significantly impacted by the COVID-19 pandemic in the previous fiscal year, posted higher sales and profits year on year (the operating loss lessened compared to the first half). Full-Year Forecast There was protracted production lead time caused by disruptions in the supply chain and deferral of planned public-sector projects, which is expected to cause net sales to decline slightly compared to the previous earnings forecast. In terms of profits, the strong sales of the Fluid Measurement Equipment Business, a high operating profit margin business, is forecast to boost profits. Both sales and profits are forecast to increase year on year. The impacts of soaring raw materials prices and delayed delivery of parts at present has been reflected in the forecast.©TOKYO KEIKI INC. All Rights Reserved2Table of Contents1. Summary of financial results for 3Q of FY20212.Full-year forecasts of FY2021 3. Topics＜References＞©TOKYO KEIKI INC. All Rights Reserved33Q Financial ResultsFull-year ForecastsTopics3Q Net Sales and P/L Net sales were on par with the previous 3Q and profits increased across all indicators. The breakdown of net sales included a decrease in net sales of the Defense & Communications Equipment Business as initially forecast and a large increase in net sales of the Hydraulics and Pneumatics Business and the Fluid Measurement Equipment Business. As for P/L, profits increased on the improving cost-of-sales ratio across all business segments excluding Other Businesses.(Million yen)Fiscal 2020 3Q ResultsFiscal 2021 3Q ResultsYear on Year ChangeAmountRateNet sales28,71828,404△314△1.1％Operating profitOrdinary profitProfit attributable to owners of parent△370△194△137293577507+663+770+644©TOKYO KEIKI INC. All Rights Reserved－－－43Q Financial ResultsFull-year ForecastsTopics3Q Changes in Operating Profit (YoY) Shifted to operating profit from operating loss in previous 3Q due to the improvement of cost-of-sales The cost-of-sales ratio improved on the rising production volume in the Hydraulics and Pneumatics Business, despite the impacts of soaring raw materials prices. In addition, changes in the product mix of the Fluid Measurement Equipment Business improved the cost-of-sales ratio as well.ratio.(Million yen)Fiscal 2020 3Q ©TOKYO KEIKI INC. All Rights ReservedFiscal 2021 3Q 5Operating profit+6633Q Financial ResultsFull-year ForecastsTopics3Q Net Sales and Operating Profit by Segment Marine Systems: Maintenance services for marine systems trended steadily, but overall sales decreased and profit increased because of the declining sales of purchased products compared to the previous 3Q and yen weakening against other currencies. Hydraulics and Pneumatics: Increased sales and profits on improving demand in all markets compared to previous 3Q. Fluid Measurement Equipment: Sales increased and operating profits returned to the black thanks to steady sales of mainstay ultrasonic flowmeters and fire extinguishing systems and their inspection work. Defense & Communications Equipment: Both sales and profits declined due to the off-period for public-sector projects up to the current fiscal year, despite increased sales in private-sector markets.(Million yen)Marine SystemsHydraulics and Pneumatics Fluid Measurement EquipmentDefense & Communications EquipmentOthersAdjustmentTotalNet salesOperating profitFiscal 2020 3Q ResultsFiscal 2021 3Q ResultsYoY ChangeAmountRateFiscal 2020 3Q ResultsFiscal 2021 3Q ResultsYoY ChangeAmountRate6,347△139 △2.1％266305+39+14.6％6,4877,4558,525+1,070 +14.4％△479△19+4592,1242,508+384 +18.1％△59131+19011,1009,239 △1,861 △16.8％715△66 △92.7％1,5521,785+233 +15.0％11+0 +35.3％28,71828,404△314 △1.1％△109△61△370△72△57293+37+4+663ー－ーー－6©TOKYO KEIKI INC. All Rights Reserved3Q Financial ResultsFull-year ForecastsTopicsStatus of Orders Received and Order Backlog Orders received and order backlog both increased in total. However, there were discrepancies when viewed by segment.received and order backlog.demand across all markets. Marine Systems: Demand for new shipbuilding recovered in East Asian markets resulting in an increase in orders Hydraulics and Pneumatics: Both orders received and order backlog increased on the ongoing recovery in Fluid Measurement Equipment: Both orders received and order backlog increased on strong results for projects planned to be converted to sales in 4Q.public-sector market as in the previous 3Q. Defense and Communications Equipment: Orders received declined because there were no large projects in the Amount of orders received for 3Q of FY2021Amount of order backlog at the end of 3Q of FY2021(Million yen)AmountYoY changeAmountMarine SystemsHydraulics and Pneumatics Fluid Measurement EquipmentDefense & Communications EquipmentOthersTotal7,2559,2363,9817,4402,584©TOKYO KEIKI INC. All Rights ReservedChange from the end of FY2020YoY change3,1853,3702,488+39.9%+47.4%+26.7%+36.9%+145.3%+16.1%+21.5%+25.3%+20.5%△26.2%13,773△11.5%△3.4%△7.5%1,712+89.6%30,498+3.3%24,528+9.4%+2.5%+8.1%73Q Financial ResultsFull-year ForecastsTopicsSupply Chain Situation• The Group’s net sales are weighted toward public-sector products. Parts procurement for these products is carried out systematically from a relatively early stage, which means they are less susceptible to the impacts of difficulty sourcing parts occurring this fiscal year.Features of the Group’s supply chain• Marine Systems business: Room for addressing the impacts of sourcing difficulties because of the relatively long manufacturing lead time, while sales have little in the way of seasonal fluctuations.• Hydraulics and Pneumatics business: Little in the way of seasonal fluctuations in net sales and susceptible to sourcing difficulties and soaring resource prices because of short manufacturing lead time.Situation in 3QResponsesDifficulty obtaining partsSoaring raw materials prices• Products in Marine Systems and private-• Continued to adjust deliveries with suppliers sector products in Defense & Communications Equipment have seen sourcing difficulties emerge for some electronic parts.• Hydraulics and Pneumatics have seen sourcing difficulties of purchased products overseas.including arranging sourcing in advance.• Secured market inventory by expanding suppliers.• Adjusted delivery timing with customers.*Risks understood as of present have been reflected in the full-year sales forecast.• Hydraulics and Pneumatics have seen • Continuing with price negotiations with worsening materials costs due to soaring prices for metal parts including steel, copper and aluminum.customers.*Risks understood as of present have been reflected in the full-year sales forecast.©TOKYO KEIKI INC. All Rights Reserved83Q Financial ResultsFull-year ForecastsTopicsConsolidated Balance Sheets (Main accounting items only)(Assets)(Million yen)As of Mar 31, 2021As of Dec 31, 2021Amountof change(Million yen)As of Mar 31, 2021As of Dec 31, 2021Amountof change(Liabilities and net assets)Current assets40,95041,069+119 Current liabilities17,72217,958+235Cash and deposits11,62010,801△819Notes and accounts payable5,0936,273+1,180Notes and accounts receivableElectronically recorded monetary claims12,56810,265△2,303Short-term loans payable8,5168,162△3553,8163,568△248Provision for bonuses1,097552△545Inventories12,67315,690+3,017 Non-current liabilities3,8843,649△236Accounts receivableOther32245376372+344Long-term loans payable2,4242,166△258+127 Total liabilities21,60721,606△0Non-current assets12,59612,602+6 Shareholders’ equity29,61929,719+100Tangible assets6,9706,629△341Retained earnings23,07623,162Intangible assets3346+131,8351,901Investment securities3,6063,903+297 Total net assets31,93932,065+125Total assets53,54653,671+12553,54653,671+125Accumulated other comprehensive incomeTotal liabilities and net assets+86+669©TOKYO KEIKI INC. All Rights ReservedTable of Contents1. Summary of financial results for 3Q of FY20212.Full-year forecasts of FY2021 3. Topics＜References＞©TOKYO KEIKI INC. All Rights Reserved103Q Financial ResultsFull-year ForecastsTopicsFiscal 2021 Full-year Earnings Forecast The previous earnings forecast disclosed on November 9, 2021 has been reviewed taking into account the negative factors of supply chain disruptions and the positive factors of improving cost-of-sales ratio. Both sales and profits are forecast to increase year on year.* In the previous forecast disclosed on November 9, 2021, the total of net sales and profits remained unchanged from the initial forecast on May 14, 2021, while changes were made by each segment. (Million yen)ForecastPrevious forecastVs. previous forecastYoY ChangeAmountRateAmountRateFiscal 2020 ResultsNet sales42,10042,900△800△1.9%42,081+19+0.0%Operating profit1,4401,350+90+6.7%1,250+190+6.7%Ordinary profit1,7301,470+260+17.7%1,458+272+17.7%Profit attributable to owners of parent1,3101,130+180+15.9%945+365+15.9%©TOKYO KEIKI INC. All Rights Reserved113Q Financial ResultsFull-year ForecastsTopicsFiscal 2021 Full-year Earnings Forecast by Segment Marine Systems Business: Profits expected to increase on declining SG&A expenses. Hydraulics and Pneumatics Business: Net sales reviewed because certain projects were deferred to next fiscal year due to supply chain disruptions. Fluid Measurement Equipment Business: Profits expected to rise on changes in product mix. Defense & Communications Equipment Business: Net sale and profit reviewed because of deferral of some projects to next fiscal year.(Million yen)ForecastPrevious forecastFiscal 2020 ResultsYoY ChangeForecastPrevious forecastAmountRateAmountRate AmountRateAmountRateOperating profitVs. previous forecastFiscal 2020 ResultsYoY Change8,8008,8908,522+278340210+130246+9411,83012,08010,351+1,4792010△424+444ー4,3504,330+204,003+347750600+150647+10314,13014,470△340 △2.3%16,281 △2,151 △13.2%2704002,9903,1502,924+66150250△130 △32.5%△100 △40.0%537330△267 △49.7%△180 △54.5%0△20+20ー1△1△90△120+30ー△87△3ー42,10042,90042,081+191,4401,350+901,250+190+6.7%©TOKYO KEIKI INC. All Rights ReservedNet salesVs. previous forecast△90 △1.0%△250 △2.1%+0.5%△160 △5.1%△800 △1.9%Marine SystemsHydraulics and Pneumatics Fluid Measurement EquipmentDefense & Communi-cations EquipmentOthersAdjustmentTotal+3.3%+14.3%+8.7%+2.3%ー+0.0%+38.2%+15.9%+15.2%12+10 +100.0%+61.9%+25.0%3Q Financial ResultsFull-year ForecastsTopicsBusiness Outlook by SegmentMarine Systems BusinessHydraulics and Pneumatics Business Fluid Measurement Equipment BusinessDefense & Communications Equipment Business• Recovery trend in demand for new shipbuilding in East Asian markets.• Maintenance services for marine systems are expected to trend steadily.• The exchange rate is expected to trend toward a weaker yen compared to the initial assumption of 104 yen/US dollar.• All markets in a recovery mode and orders received are strong.• Protracted production lead time due to slow product supply, leading to deferrals of some projects to next fiscal year.• In terms of P/L, profit is expected to contract on deteriorating cost-of-sales ratio due to soaring raw materials prices and other factors.• Public-sector markets are expected to continue trending steadily.• The fire extinguishing systems market is expected to see steady demand for parking garage projects, for parts sales and for replacement work required for “statutory safety inspections of valves for gas-based fire extinguishers”.• Public-sector markets are expected to see some projects deferred to next fiscal year, in addition to weaker sales due to the off-period in large projects up to this fiscal year as initially forecast.• The private-sector market is expected to see steady demand for equipment for semiconductor manufacturing, antenna stabilizers for mobile satellite communication, and accelerometers, etc.Other Businesses• The Railway Maintenance Business is expected to see weaker equipment sales at fiscal year end due to the resurgence of COVID-19 cases.©TOKYO KEIKI INC. All Rights Reserved133Q Financial ResultsFull-year ForecastsTopicsProfit returns to shareholders[Commemorative dividend]We marked our 125th anniversary on May 1, 2021. We are extremely grateful for the long-standing support of our shareholders and stakeholders which made this milestone possible. As a result, we have decided to offer a commemorative dividend of 5 yen per share as part of the dividend for FY2021 to express our appreciation for your support over the years.[Shareholder benefits program (TOKYO KEIKI Premium Benefits Club)]No plans at present to change the shareholder benefits program.Dividend for the last five years and forecast for Fiscal 2021Annual dividend per share (yen)Payout ratio (consolidated) (%)Total return ratio (consolidated) (%)4.0046.846.82017/32018/32019/32020/32021/320.0025.0025.0025.002022/3（Forecast）Common, 25.00+ Commemorative, 5.0029.637.121.325.628.834.743.443.437.6―*From Fiscal 2017 (2018/3) onward, dividend amounts are those after consolidation of shares. (Dividend amount before consolidation of shares is 1/5 of amount shown.)Status of recent acquisition of treasury sharesTotal number of reacquired shares (yen)Acquisition cost(million yen)©TOKYO KEIKI INC. All Rights ReservedMay 2014May 2015Nov. 2015Nov. 2017Feb. 2019Nov. 2019310,000300,000335,00058,00076,80084,7008484848585*November 2017 and February 2019 show the numbers after consolidation of shares.8514Table of Contents1. Summary of financial results for 3Q of FY20212.Full-year forecasts of FY2021 3. Topics＜References＞©TOKYO KEIKI INC. All Rights Reserved153Q Financial ResultsFull-year ForecastsTopicsTopic 1Growth of the Hydrogen Related BusinessTOKYO KEIKI Vision 2030: New Growth Drivers – Business DevelopmentOn January 20, 2022, TOKYO KEIKI and its subsidiary TOKYO KEIKI POWER SYSTEMS INC. (TPS) concluded a business partnership agreement with Sunny Limited (Chiyoda-ku, Tokyo) regarding the hydrogen related business.Previously, TPS and Sunny Limited have worked together to manufacture and sell hydrogen compressors used at hydrogen stations.Going forward, the three companies will mutually utilize their management resources in development, manufacturing, sales, and maintenance services to further develop the hydrogen related business, including the integrated development, manufacturing and sales of equipment for manufacturing, compressing and filling hydrogen. Hydraulic-drive high-pressure compressor forStationary hydrogen stationHydrogen manufacturing systemHydrogen supplyHydrogen station equipmentBoost pressure of hydrogenHydrogen supplyHydraulic-drive compressorAccumulatorDispenserHydrogen manufacturing systemHydraulic-drive compressor unitAccumulator DispenserPrevious manufacturing and sales by the two companies©TOKYO KEIKI INC. All Rights ReservedAll-in-one package163Q Financial ResultsFull-year ForecastsTopicsTopic 2Delivery and installation of the first SeaKu, a high-resolution solid-state radar system for coastal monitoring in overseas markets, in EuropeIn December 2021, TOKYO KEIKI delivered and completed installation of its first SeaKu unit, a high-resolution Ku-band and solid-state radar system, in Europe for use as a Vessel Traffic Service (VTS). This business is part of our globalization efforts under TOKYO KEIKI Vision 2030. Our VTS system has been delivered to all seven of the Vessel Traffic Service Center locations of the Japan Coast Guard, protecting ships as they operate in Japanese ports. These VTS systems feature a total of 25 of the world’s first high-resolution Ku-band and solid-state radar system. This track record and technological reputation earned TOKYO KEIKI its first overseas order for a high-resolution solid-state radar system. Going forward, these systems will contribute to safety at seas not only in Japan, but overseas as well.[Future business expansion] Following this first delivery, TOKYO KEIKI has been chosen to supply a river radar system for a river with congested vessel traffic. Leveraging this track record, TOKYO KEIKI will focus on expanding sales of radar systems in Europe.[SeaKu’s features] Delivers high resolution using Ku-bandConventional X-band radar systems already in use in Europe do not offer the high-resolution required of VTS operators. SeaKu delivers this high-resolution by utilizing TOKYO KEIKI’s know-how in solid-state radar systems for VTS in Japan using Ku-band.• X-band and Ku-band refers to microwave frequency bands used in radar. Ku-band is a higher frequency than X-band. Generally speaking, higher frequencies deliver higher resolution.• Resolution is the ability to identify objects. High resolution allows accurate identification and monitoring of each vessel coming and going.Our website:https://www.tokyokeiki.jp/products/mts/https://www.tokyokeiki.jp/Portals/0/images/company/report/pdf/tkr126.pdf©TOKYO KEIKI INC. All Rights ReservedThe radar installed atop an approx. 110-meter tall tower17References©TOKYO KEIKI INC. All Rights Reserved18ReferencesChanges in consolidated profit & loss（Million yen）【Net Sales】【Operating Profit】（Million yen）Full year3Q（Million yen）2019/3-3Q2019/3-3Q2020/3-3Q2021/3-3Q2022/3-3QYoY change(amount)YoY change(rate)Net sales29,83033,24131,67428,404△314△1.1％Operating profitOrdinary ProfitNet Profit*151981707771,01972524736226228,718△370△194△137293577507+663+770+644©TOKYO KEIKI INC. All Rights Reserved*Profit attributable to owners of parent－－－19References（Million yen）Changes in net sales by segmentFull year3QMarine SystemsHydraulics and PneumaticsFluid Measurement EquipmentDefense and Communications EquipmentOthers（Million yen）2018/3-3Q 2019/3-3Q 2020/3-3Q 2021/3-3Q 2022/3-3QMarine SystemsHydraulics and PneumaticsFluid Measurement Equipment Defense and Communications Equipment6,4869,4971,6926,6349,8851,9656,7999,0481,9536,4877,4552,12410,53712,37112,12211,100Others1,6162,3851,7491,552YoY change(amount)YoY change(rate)△139+1,070△2.1％+14.4％+384+18.1％△1,861△16.8％+233+15.0％6,3478,5252,5089,2391,785©TOKYO KEIKI INC. All Rights Reserved*Net sales before adjustment.20References（Million yen）Changes in operating profits by segmentFull year3QMarine SystemsHydraulics and PneumaticsFluid Measurement EquipmentDefense and Communications EquipmentOthers（Million yen）2018/3-3Q 2019/3-3Q 2020/3-3Q 2021/3-3Q 2022/3-3QMarine SystemsHydraulics and Pneumatics71209308231202△60266△479△200△107△110△59Fluid Measurement Equipment Defense and Communications Equipment93337425715△66 △92.7％Others△12758△162△109△72+37©TOKYO KEIKI INC. All Rights Reserved*Operating profits before adjustmentYoY change(amount)YoY change(rate)+39+14.6％305△19131+459+190ー－ー21ReferencesQuarterly changes in net sales（Million yen）2018/32019/3Full year43,80346,692©TOKYO KEIKI INC. All Rights Reserved2020/347,4402021/342,0812022/3(Forecast)42,10022References（Million yen）Quarterly changes in operating profits2018/32019/32020/32021/32022/3Full year1,3192,4401,8751,250©TOKYO KEIKI INC. All Rights Reserved(Forecast)1,44023©TOKYO KEIKI INC. 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