Financial Results for FY2015-Q1...Order booking in Thailand recovered and India have been strong....

0© 2015 OSG Corporation

Financial Resultsfor FY2015-Q1

April, 2015OSG Corporation


OSG at glance

Tap

Rolling dies

End millDrill

Indexable tools

1. Products

・Consumable cutting tools used in machine tools

・World top market share (30%) in taps

2. Strengths

・High-value added cutting tools

・Excellent after-sales service

・Global sales & service network across 29 countries

3. Dividend policy

・Maintain over 30% payout ratio (consolidated)

Tools to cut threads

Tools to shape metalTools to make holes

Tools to shape metal

Tools to form threads

4. Growth strategies

・Development of New Customers

・Flagship Products Strategy

・M&A strategy

Note regarding forecast

This material includes forward-looking statements based on information available at the time of release. The forecasts and other forward-looking statements are not guarantees of future performance. Actual financial results may differ from the above forecasts due to known and unknown risks, uncertainties, and other factors.


Financial summary for FY2015-Q1

Net sales 23,660 26,665 3,004 +12.7% 52,400

Operating profit 3,319 4,854 1,535 +46.3% 8,900

OPM 14.0% 18.2% - - 17.0%

Ordinary profit 3,406 4,769 1,362 +40.0% 8,800

Net profit 1,885 2,803 917 +48.7% 5,100

EPS(yen) 19.86 29.52 9.66 +48.7% 53.71

ChangeFY15 fcst.

Semi-AnnualFY14-Q1 FY15-Q1

(Millions of yen)

Net sales Operating profit Net profitOrdinary profit

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

0

5,000

10,000

15,000

20,000

25,000

30,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY14 FY15

0

1,000

2,000

3,000

4,000

5,000

6,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

0

1,000

2,000

3,000

4,000

5,000

6,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY14 FY15 FY14 FY15 FY14 FY15


Review

Increase in sales and profit- Record high in sales and gross profit on a quarterly basis by the production ability reinforcement and the high operation rate.

- Both sales and profit exceed the company plan.

Stable financial condition- Equity ratio 66.1% (1.8% increase from the end of FY2014), virtually non-debt

- EBITDA(1Q) 66 billion yen, 24.9%

- ROE 11.7% (As of the end of FY2014)

Review by region- Japan

Sales and profit were increased due to steady demand from the automotive and aerospace industries.

Strong export business also boosted results.

- The Americas

Sales and profit were increased because of strong demand from the automotive and aerospace industries in North America.

The return to the black of South America’s earnings contributed to increase profit.

- Europe

Sales and profit grew by demand increase from the aerospace industry, and by expanding local area including Eastern

Europe and Turkey . The demand from the automotive industry was same level year on year.

- Asia

Sales and profit were up in whole Asia segment.

The demand from the automotive industry in China and from the fastener industry in Taiwan were steady.

Order booking in Thailand recovered and India have been strong.

Results for the capital investment- CAPEX 2.1 billion yen (Annual forecast of 9.0 billion yen)

- Depreciation 1.8 billion yen (Annual forecast of 7.5 billion yen)


Operations by geographical segment

Change in local FY14-Q1 FY15-Q1 currency

Japan Net Sales 14,545 15,831 1,285 +8.8% -O.P 2,104 2,567 462 +22.0% -O.P.M 14.5% 16.2%

The Americas Net Sales 4,191 5,428 1,236 +29.5% +12.4%O.P 204 822 618 +302.6% +246.7%O.P.M 4.9% 15.2%

Europe Net Sales 2,406 2,738 331 +13.8% +10.9%O.P 254 290 36 +14.2% +12.1%O.P.M 10.6% 10.6%

Asia Net Sales 6,603 7,925 1,321 +20.0% +6.1%O.P 1,145 1,561 415 +36.3% +20.5%O.P.M 17.4% 19.7%

Total Net Sales 27,747 31,923 4,175 +15.0%O.P 3,708 5,241 1,532 +41.3%

Eliminations Net Sales -4,086 -5,257 -1,170O.P -389 -386 2

Consolidated Net Sales 23,660 26,665 3,004 +12.7% -O.P 3,319 4,854 1,535 +46.3% -O.P.M 14.0% 18.2%

Change

(Millions of yen)


Net sales by geographical segment(Millions of yen)

Japan The Americas

Europe Asia

1,607

1,9792,144 2,122

2,4062,541 2,561

2,407

2,738

0

500

1,000

1,500

2,000

2,500

3,000

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7,9257,590

7,226

6,5156,6036,4446,3015,843

5,217

0

1,500

3,000

4,500

6,000

7,500

9,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY14 FY15FY13 FY14 FY15FY13


12,207

14,44813,88015,18114,545

16,229 16,87415,83115,597

0

4,000

8,000

12,000

16,000

20,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4,768

5,428

4,9344,505

4,1914,3554,503

4,052

3,372

0

1,000

2,000

3,000

4,000

5,000

6,000

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Operating profit by geographical segment(Millions of yen)

Japan The Americas

Europe Asia

128

210

241

187

254

310332

228

290

0

100

200

300

400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

708

1,104

1,343

1,0561,145

1,250

1,4751,4431,561

0

400

800

1,200

1,600

2,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY15FY13 FY14 FY15FY13


1,037

2,064

1,581

2,105 2,1042,241

2,573 2,5672,393

0

500

1,000

1,500

2,000

2,500

3,000

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667

822

616

515

204

506569

357

212

0

200

400

600

800

1000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY14


Millions of yen

Overseas sales ratio

41.4%

44.3% 45.8%

49.8%

48.6%

49.7%48.0%

53.5%

54.6%

59.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0

20,000

40,000

60,000

80,000

100,000

120,000

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15-Q1

Asia

Europe

The Americas

Japan

Japan

41.0%

AM

20.1%

Europe

10.4%

Asia

28.5%

2015-Q1


-1,616

+147

+2,229+2,497

-225

-2,686

+311

+5,407

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

Cash and T

D

Receivables

Inventories

Fixed assets

Other current

assets

Current

liabilities

Long-term

liabilities

Net assets

Changes in B/S14/11E 15/02E Change

Cash & TD 22,547 20,931 -1,616Receivables 21,628 21,776 147Inventories 26,721 28,950 2,229Other current assets 4,561 4,336 -225Fixed assets 66,842 69,339 2,497Total assets 142,302 145,335 3,032Total current liabilities 22,236 19,549 -2,686Total long-term liabilities 19,122 19,434 311Total net assets 100,943 106,351 5,407Total liabilities and net assets 142,302 145,335 3,032

Equity ratio 64.3% 66.1%Receivable turnover period 78 75 daysInventory turnover period 3.2 3.3 mounths

Cash and TD 22,547 20,931 -1,616Debt 20,009 20,590 581Net Cash 2,538 341 -2,197

(Millions of yen)

B/S overview


-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

'04

'05

'06

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'10

'11

'12

'13

'14

'15fcst

-4,000

-2,000

0

2,000

4,000

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8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000Sales

O.P.

N.P.

Sales ProfitConsolidated results

■Financial forecast for FY2015

Interim Year-end AnnualPayout

ratioDividend per share (yen) 16.00 20.00 36.00 30.3%

■Dividend forecast

Exchange rateFY2014 -Q1 result ： 1US$= 102.11yen 1Euro=139.93yenFY2015 -Q1 result ： 1US$= 119.36yen 1Euro=138.02yenFY2015 forecast ： 1US$= 113.00yen 1Euro=140.00yen

Estimated sales growth (Annual, year over year)Japan +2.0% The Americas +14.2% Europe +11.1% Asia +12.5%

Amount Growth Amount GrowthNet Sales 52,400 +6.4% 109,000 +7.9%Operating profit 8,900 +13.8% 19,500 +12.0%as % of sales 17.0% 17.9%Ordinary profit 8,800 +13.0% 19,200 9.3%as % of sales 16.8% 17.6%Net profit 5,100 +20.8% 11,300 13.1%as % of sales 9.7% 10.4%EPS (yen) 53.71 119.00CAPEX 9,000Depreciation 7,500

Semi-annual Annual

Forecast for FY2015(Millions of yen)


Sales org.

Production and sales org.

Expansion of overseas business

The Americas1968 OSG USA (USA)1974 OSG Sulamericana de

Ferramentas (Brazil)1988 OSG Canada1994 OSG Royco (Mexico)2013 PRIMUS COATING

(Mexico)

Europe1999 OSG UK2000 OSG Scandinavia (Denmark)2002 OSG Comaher (Spain)2003 OSG GmbH (Germany)2003 OSG Italia2009 OSG Slovakia (Slovakia)2012 OSG Turkey 2012 Romsan International (Romania)2012 OSG POLAND2013 OSG PN TOOLS (UK)2014 OSG Belux (Belgium)

2008 Fudian (China)2008 Kunshan Dabao (China)2008 OSG Vietnam2008 OSG Philippines2011 Taiho Coating Service

(Taiwan)

Asia1970 Taiho Tool (Taiwan)1985 OSG Korea1990 OSG Asia (Singapore)1996 OSG Thailand1997 Da-Bao (Dongguan) Tool (China)2001 OSG Shanghai (China)2001 Carbide Cutting Tool (India)2004 OSG Shanghai plant (China)2005 OSG India2007 OSG Trading (China)2007 OSG Indonesia2007 Ningbo Dabao (China)2008 QINGDAO HAOTAI (China)

Europe1997 OSG Europe Logistics

(Belgium)1997 OSG France1997 OSG Nederland (Netherlands)


(Millions of yen)

Appx.1 Consolidated balance sheet

14/11E 15/02E Change 14/11E 15/02E ChangeCurrent Assets 75,459 75,995 535 Current Liabilities 22,236 19,549 -2,686

Cash & time deposits 22,547 20,931 -1,616 Payables 4,159 4,412 252Receivables 21,628 21,776 147 Short-term borrowings 3,934 4,645 710Inventories 26,721 28,950 2,229 LT borrowings, current portion 523 428 -95Other 4,771 4,534 -237 Income taxes payable 3,751 2,438 -1,312Allowance for -209 -198 11 Accured expenses 6,486 3,584 -2,902doubtful accounts Other 3,380 4,040 659

Fixed Assets 66,842 69,339 2,497 Long-term Liabilities 19,122 19,434 311PP&E 56,190 58,198 2,008 Convertible bonds 15,000 15,000 0Intangible assets 1,302 1,830 528 Borrowings 551 516 -34Investments & other 9,349 9,310 -39 Liabilities for employees' 261 307 45

retirement benefitsOther 3,309 3,610 300

Total Liabilities 41,358 38,983 -2,374Total Equity 100,943 106,351 5,407

Common stock 10,404 10,404 0Current ratio 339% 389% Capital surplus 12,051 12,051 0Quick ratio 199% 218% Retained earnings 66,837 68,473 1,636Equity capital 91,458 96,120 +4,662 Treasuary stock -1,209 -1,210 -1Equity ratio 64.3% 66.1% Unrealzed gain on 2,044 2,630 586Equity per share(yen) 963.15 1,012.25 +49.10 availabe-for-sale securitiesInterest-beating debt 20,009 20,590 +581 Foreign currency 1,328 3,769 2,441Net Cash 2,538 341 -2,197 translation adjustments

Minority interests 9,485 10,230 745Total 142,302 145,335 3,032 Total 142,302 145,335 3,032


% % % % % % %

Net sales 23,660 100.0 25,575 100.0 25,286 100.0 26,508 100.0 101,031 100.0 26,665 100.0 3,004 +12.7

Cost of sales 14,253 60.2 14,862 58.1 14,129 55.9 14,816 55.9 58,061 57.5 14,899 55.9 646 +4.5

Gross profit 9,407 39.8 10,713 41.9 11,157 44.1 11,692 44.1 42,970 42.5 11,765 44.1 2,358 +25.1

SG&A expenses 6,087 25.7 6,214 24.3 6,243 24.7 7,008 26.4 25,554 25.3 6,911 25.9 823 +13.5

Operating profit 3,319 14.0 4,498 17.6 4,913 19.4 4,683 17.7 17,415 17.2 4,854 18.2 1,535 +46.3

Non-operating profit 386 183 271 869 1,710 334 -51

Non-operating expenses 299 301 405 549 1,557 420 120

Ordinary profit 3,406 14.4 4,380 17.1 4,777 18.9 5,003 18.9 17,568 17.4 4,769 17.9 1,362 +40.0

Extraordinary gain 0 0 0 0 0 0 0

Extraordinary loss 3 99 31 14 148 0 -3

Profit before taxes 3,403 14.4 4,281 16.7 4,746 18.8 4,988 18.8 17,419 17.2 4,769 17.9 1,366 +40.1

Income taxes 1,186 1,602 1,491 1,772 6,053 1,630 443

Minority interests 330 342 399 303 1,376 336 5

Net profit 1,885 8.0 2,335 9.1 2,855 11.3 2,912 11.0 9,989 9.9 2,803 10.5 917 +48.7

Q2 Q4

FY2014

Q3 Q1Change

FY2015

Q1 Total

(millions of yen)

Appx.2 Consolidated income statement


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-Q1Net sales (mill.yen) 88,862 94,164 97,024 53,325 69,513 80,959 84,083 88,378 101,031 26,665

Sales growth （％） 14% 6% 3% -45% 30% 16% 4% 5% 14% 13%

Cost of sales (mill.yen) 54,376 58,159 60,449 39,203 44,605 48,439 49,381 52,777 58,061 14,899Gross profit (mill.yen) 34,485 36,004 36,574 14,122 24,907 32,519 34,702 35,601 42,970 11,765SG&A expenses (mill.yen) 19,030 20,647 22,158 16,857 17,383 20,214 20,747 22,774 25,554 6,911Operating income (mill.yen) 15,455 15,356 14,416 -2,735 7,524 12,305 13,954 12,827 17,415 4,854Ordinary income (mill.yen) 14,940 14,570 13,505 -2,703 6,699 11,374 13,695 13,910 17,568 4,769Net income (mill.yen) 7,917 8,013 7,376 -3,769 3,772 5,904 7,138 8,619 9,989 2,803Margins:Gross profit margin （％） 38.8% 38.2% 37.7% 26.5% 35.8% 40.2% 41.3% 40.3% 42.5% 44.1%SG&A as % of sales （％） 21.4% 21.9% 22.8% 31.6% 25.0% 25.0% 24.7% 25.8% 25.3% 25.9%Operating income （％） 17.4% 16.3% 14.9% -5.1% 10.8% 15.2% 16.6% 14.5% 17.2% 18.2%Ordinary income （％） 16.8% 15.5% 13.9% -5.1% 9.6% 14.0% 16.3% 15.7% 17.4% 17.9%Net income （％） 8.9% 8.5% 7.6% -7.1% 5.4% 7.3% 8.5% 9.8% 9.9% 10.5%

Average FX rate: 1USD (yen) 116.41 118.89 107.32 94.94 89.29 80.71 78.89 93.16 102.98 119.36Average FX rate: 1Euro (yen) 143.63 159.00 161.90 128.83 120.65 112.80 102.63 122.62 139.37 138.02

Total assets (mill.yen) 122,451 127,044 122,383 113,382 105,635 104,373 121,689 134,503 142,302 145,335Total shareholders' equity (mill.yen) 60,081 64,295 64,251 55,931 57,117 59,367 64,482 80,024 91,458 96,120Per share:Net income (yen) 81.00 82.42 76.53 -39.22 39.34 62.18 75.16 90.76 105.20 29.52Cash diviends (interim) (yen) 12.00 12.00 12.00 0.00 4.00 6.00 10.00 10.00 14.00 16.00(fcst) (year end) (yen) 14.00 14.00 12.00 3.00 8.00 12.00 13.00 20.00 20.00 20.00(fcst)Total shareholders' equity (yen) 615.07 667.01 666.71 582.19 601.44 625.14 679.01 842.71 963.15 1,012.25

Numbers of shares issued (ths) 97,681 96,393 96,371 96,071 94,969 94,967 94,966 94,963 94,959 94,957Key financial ratios:ROE （％） 13.8% 12.9% 11.5% -6.3% 6.7% 10.1% 11.5% 11.9% 11.7% -Equity ratio （％） 49.1% 50.6% 52.5% 49.3% 54.1% 56.9% 53.0% 59.5% 64.3% 66.1%Cash flow:Operating CF (mill.yen) 9,546 16,733 10,653 6,049 14,095 11,344 12,286 16,171 19,688 -Investing CF (mill.yen) -30,616 -9,019 1,678 -4,633 -5,522 -8,195 -19,746 -2,972 -3,119 -Financing CF (mill.yen) 20,699 -6,821 -4,500 5,470 -15,562 -5,855 8,643 -9,423 -12,813 -Cash flow margin （％） 10.7% 17.8% 11.0% 11.3% 20.3% 14.0% 14.6% 18.3% 19.5% -

Appx.3 Selected financial data (consolidated)

Financial Results for FY2015-Q1...Order booking in Thailand recovered and India have been strong....

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