Financial Results Briefing For the Year Ended March 31, 2018
Chairman & CEO Hiroyuki Suzuki
I. Consolidated Financial Highlights for the Year Ended March 31, 2018 ・・・P. 2 II. Nonconsolidated Financial Highlights for the Year Ended March 31, 2018 ・・・P. 1 2 III. Performance Forecasts for the Year Ending March 31, 2019 ・・・P. 2 0 IV. Outlook for the First Year of the ‘Fifth Medium-Term Management Plan’ ・・・P. 2 6 (Reference) Overview and Trends in Business Performance of Overseas Group Companies ・・・P. 4 4 (Reference) Features of the Maruichi Group ・・・P. 5 3
May 11, 2018
Devoted to Steel Tubes 1 I. Consolidated Financial Highlights for the Year Ended March 31, 2018
Devoted to Steel Tubes 2 Consolidated Operating Results
(Millions of yen) Net sales (Millions of yen) FY2017 FY2018 Increase/ Forecasts announced Increase/ Results Results decrease in February decrease Net sales 137,277 156,266 ＋13.8% 153,400 ＋1.9% 156,266 Operating Income 24,502 20,826 -15.0% 19,600 ＋6.3%
Ordinary Income ＋ 152,668 26,192 22,986 -12.2% 21,200 8.4% Net income attributable to owners of parent 17,715 15,777 -10.9% 14,300 ＋10.3%
Profits (Millions of yen) Operating income 144,968 Ordinary income 26,192 Net income attributable to owners of parent 24,502 22,586 22,986 20,826 20,080 19,919 18,944 137,277 17,734 17,715 136,547 17,027 15,777 13,748
11,184 9,299
FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 Devoted to Steel Tubes 3 Consolidated Operating Results Statements of Income
(Millions of yen)
FY2014 FY2015 FY2016 FY2017 FY2018
Percentage of Percentage of Percentage of Percentage of Percentage of Amount total (%) Amount total (%) Amount total (%) Amount total (%) Amount total (%)
Net sales 136,548 100.0 152,668 100.0 144,969 100.0 137,277 100.0 156,266 100.0 Cost of sales 104,571 76.6 122,198 80.0 114,974 79.3 100,153 73.0 122,304 78.3 Gross profit 31,977 23.4 30,470 20.0 29,995 20.7 37,125 27.0 33,962 21.7 Selling, general and 11,896 8.7 12,736 8.3 12,967 8.9 12,622 9.2 13,135 8.4 administrative expenses Operating income 20,080 14.7 17,734 11.6 17,028 11.7 24,502 17.8 20,826 13.3 Non-operating income 3,109 2.3 2,882 1.9 2,933 2.0 2,671 1.9 2,933 1.9 Non-operating expenses 602 0.4 697 0.5 1,015 0.7 981 0.7 774 0.5 Ordinary income 22,587 16.5 19,919 13.0 18,945 13.1 26,192 19.1 22,986 14.7 Extraordinary income 3,529 2.6 856 0.6 1,952 1.3 330 0.2 299 0.2 Extraordinary losses 3,842 2.8 5,444 3.6 2,844 2.0 398 0.3 33 0.0 Income before income taxes 22,274 16.3 15,331 10.0 18,053 12.5 26,123 19.0 23,251 14.9 Income taxes 8,035 5.9 7,324 4.8 7,457 5.1 7,302 5.3 6,966 4.4
Net income attributable to non- 491 0.4 (1,293) (0.8) (589) (0.4) 1,106 0.8 507 0.3 controlling interests
Net income attributable to 13,748 10.1 9,300 6.1 11,185 7.7 17,715 12.9 15,777 10.1 owners of parent
Devoted to Steel Tubes 4 The Year Ended March 31, 2018 Consolidated P/L results: Factors for changes from FY2017
(Billions of yen) FY2018 Net sales Factors attributable to the Company ¥+8.08 billion Previous Current Increase/ Percentage Year Year decrease Increase/decrease MAC ¥+1.18 billion MKK USA INC. ¥+2.59 billion Net sales 137.28 156.27 +18.99 +13.8% MOST ¥+1.09 billion Operating income 24.50 20.83 -3.68 (15.0)% MMX ¥+0.22 billion (Interest income, dividends) 0.85 1.34 +0.49 SUNSCO (including Hanoi) ¥+3.14 billion (Equity in earnings of affiliated 0.72 0.62 -0.10 KUMA ¥+1.88 billion companies, etc.) Other domestic subsidiaries ¥+0.74 billion (Other non-operating income) 1.10 0.97 -0.13 Increase/decrease in consolidated elimination and reclassification ¥+0.07 billion (Interest expense) 0.25 0.23 +0.01 Operating income (Exchange loss, net) 0.16 0.09 +0.07 Factors attributable to the Company ¥-2.03 billion (Expenses of real estate rent) 0.36 0.34 +0.02 MAC ¥-0.35 billion (Other non-operating expenses) 0.22 0.11 +0.10 MKK USA INC. ¥+0.18 billion MOST ¥-0.01 billion Ordinary income 26.19 22.99 -3.21 (12.2)% MMX ￥-0.00 billion （Gains from sale of fixed assets） 0.14 0.22 +0.09 SUNSCO (including Hanoi) ¥-1.81 billion (Gains on sales of investment KUMA ¥+0.28 billion 0.00 0.08 +0.08 securities) Alpha Metal ¥+0.00 billion (Other extraordinary income) 0.19 0.00 -0.19 Increase in profits in other domestic subsidiaries ¥+0.14 billion Increase/decrease in consolidated elimination and reclassification ¥-0.07 billion (Loss on sales of investment 0.12 0.01 +0.12 securities) Ordinary income (Loss on disposal of property, Factors attributable to the Company ¥-0.86 billion plant 0.06 0.03 +0.03 and equipment, etc.) MAC ¥-0.26 billion MKK USA INC. ¥+0.20 billion (Other extraordinary losses) 0.22 0.00 +0.21 MOST ¥+0.03 billion Income before income taxes 26.12 23.25 -2.87 (11.0)% MMX ¥-0.02 billion (Income taxes) 7.30 6.97 + 0.34 SUNSCO (including Hanoi) ¥-1.71 billion （Net income） 18.82 16.29 -2.54 KUMA ¥+0.22 billion Alpha Metal ¥+0.01 billion (Net income attributable to non- 1.11 0.51 +0.60 Increase in profits in other domestic subsidiaries ¥+0.20 billion controlling interests) Affiliated companies accounted for by the equity method ¥-0.08 billion Net income attributable to 17.72 15.78 -1.94 (10.9)% Increase/decrease in consolidated elimination and reclassification ¥-0.94 billion owners of parent
Devoted to Steel Tubes 5 Consolidated Business Results by Segment
(Millions of yen)
FY2017 FY2018
Operating Operating Net sales Share Share Net sales Share Share income income
Japan 89,379 65.1% 19,485 79.5% 99,102 63.4% 17,601 84.5%
North America 22,401 16.3% 1,945 7.9% 26,736 17.1% 1,902 9.1%
Asia 26,157 19.1% 2,899 11.8% 30,687 19.6% 1,082 5.2%
Reconciliations (660) (0.5)% 174 0.7% (259) (0.2)% 242 1.2%
Total 137,277 100.0% 24,502 100.0% 156,267 100.0% 20,827 100.0%
Devoted to Steel Tubes 6 Statements of Income Consolidated Operating Results Major factors for changes from forecasts announced in Februrary
(Billions of yen) Net sales Forecast Result Amount of impact FY2018 Factors attributable to Maruichi ¥93.61 billion ¥95.60 billion ¥1.99 billion MAC ¥7.48 billion ¥7.70 billion ¥0.22 billion Forecasts FY2018 announced in Change MKK USA INC. ¥11.64 billion ¥11.83 billion ¥0.19 billion results Februrary MOST ¥5.29 billion ¥5.40 billion ¥0.10 billion MMX ¥2.15 billion ¥2.17 billion ¥0.03 billion SUNSCO (including Hanoi) ¥24.95 billion ¥25.16 billion ¥0.21 billion KUMA ¥5.59 billion ¥6.40 billion ¥0.81 billion Alpha Metal ¥4.77 billion ¥5.18 billion ¥0.40 billion Consolidated adjustments (mainly for machinery sales and ¥(2.07) billion ¥(3.17) billion ¥(1.10) billion Net sales 153.40 156.27 2.87 related steel strip)
Operating income Forecast Result Amount of impact Factors attributable to Maruichi ¥14.71 billion ¥15.52 billion ¥0.82 billion MAC ¥0.36 billion ¥0.37 billion ¥0.01 billion MKK USA INC. ¥0.66 billion ¥0.79 billion ¥0.13 billion MOST ¥0.37 billion ¥0.40 billion ¥0.04 billion MMX ¥0.47 billion ¥0.47 billion ¥(0.00) billion SUNSCO (including Hanoi) ¥0.46 billion ¥0.39 billion ¥(0.07) billion KUMA ¥0.65 billion ¥0.70 billion ¥0.05 billion Alpha Metal ¥0.15 billion ¥0.09 billion ¥(0.06) billion Operating income 19.60 20.83 1.23 Other domestic subsidiaries ¥1.40 billion ¥1.80 billion ¥0.41 billion Goodwill ¥0.00 billion ¥0.00 billion ¥0.00 billion Consolidated adjustments ¥0.37 billion ¥0.29 billion ¥(0.09) billion
Ordinary income Forecast Result Amount of impact Factors attributable to Maruichi ¥18.17 billion ¥19.20 billion ¥1.03 billion MAC ¥0.41 billion ¥0.43 billion ¥0.01 billion MKK USA INC. ¥0.61 billion ¥0.73 billion ¥0.12 billion MOST ¥0.37 billion ¥0.44 billion ¥0.07 billion MMX ¥0.44 billion ¥0.47 billion ¥0.03 billion SUNSCO (including Hanoi) ¥0.68 billion ¥0.65 billion ¥(0.03) billion Ordinary income 21.20 22.99 1.79 KUMA ¥0.63 billion ¥0.70 billion ¥0.07 billion Alpha Metal ¥0.16 billion ¥0.10 billion ¥(0.06) billion Other domestic subsidiaries ¥1.74 billion ¥2.15 billion ¥0.41 billion Affiliated companies accounted for by the equity method ¥0.47 billion ¥0.64 billion ¥0.17 billion Consolidated adjustments ¥(2.49) billion ¥(2.52) billion ¥(0.03) billion
Net income attributable to owners of parent Forecast Result Amount of impact Factors attributable to Maruichi ¥12.96 billion ¥13.83 billion ¥0.87 billion MAC ¥0.25 billion ¥0.32 billion ¥0.08 billion MKK USA INC. ¥0.55 billion ¥0.73 billion ¥0.18 billion Net income MOST ¥0.22 billion ¥0.44 billion ¥0.21 billion attributable to 14.30 15.78 1.48 MMX ¥0.31 billion ¥0.27 billion ¥(0.04) billion owners of parent SUNSCO (including Hanoi) ¥0.60 billion ¥0.60 billion ¥0.01 billion KUMA ¥0.44 billion ¥0.46 billion ¥0.02 billion Alpha Metal ¥0.11 billion ¥0.07 billion ¥(0.04) billion Other domestic subsidiaries ¥1.19 billion ¥1.47 billion ¥0.27 billion Consolidated adjustments ¥(2.33) billion ¥(2.41) billion ¥(0.08) billion Devoted to Steel Tubes 7 Differences between forecasts announced in Consolidated Operating Results February and actual results of major companies
(Billions of yen) Forecasts announced in Feb. 2018 Results for FY2018
Net income attributable Net income Net sales Operating income Ordinary income Net Operating Ordinary attributable to owners of parent sales income income to owners of parent Change Change Change Change
Maruichi Steel Tube 93.61 14.71 18.17 12.96 95.60 1.99 15.52 0.82 19.20 1.03 13.83 0.87
MAC 7.48 0.36 0.41 0.25 7.70 0.22 0.37 0.01 0.43 0.01 0.32 0.08
MKK USA INC. 11.64 0.66 0.61 0.55 11.83 0.19 0.79 0.13 0.73 0.12 0.73 0.18
MOST 5.29 0.37 0.37 0.22 5.40 0.10 0.40 0.04 0.44 0.07 0.44 0.21
MMX 2.15 0.47 0.44 0.31 2.17 0.03 0.47 -0.00 0.47 0.03 0.27 -0.04
SUNSCO (including Hanoi) 24.95 0.46 0.68 0.60 25.16 0.21 0.39 -0.07 0.65 -0.03 0.60 0.01
KUMA 5.59 0.65 0.63 0.44 6.40 0.81 0.70 0.05 0.70 0.07 0.46 0.02
Alpha Metal 4.77 0.15 0.16 0.11 5.18 0.40 0.09 -0.06 0.10 -0.06 0.07 -0.04
Other domestic subsidiaries 2.11 1.40 1.74 1.19 2.11 0.00 1.80 0.41 2.15 0.41 1.47 0.27 Af f iliated companies accounted f or by the 0.47 0.64 0.17 equity method
Goodwill 0.00 0.00 0.00
Consolidated adjustments (4.19) 0.37 (2.49) (2.33) (5.29) -1.10 0.29 -0.09 (2.52) -0.03 (2.41) -0.08
Total 153.40 19.60 21.20 14.30 156.27 2.87 20.83 1.23 22.99 1.79 15.78 1.48
Devoted to Steel Tubes 8 Balance Sheets compared with the Consolidated Operating Results previous fiscal year
(Billions of yen) Factors for increases/decreases of current assets Consolidated FY2018 Cash and bank deposits Japan ¥-30.30 billion Overseas ¥+0.02 billion ¥+0.18 billion adjustments
Previous Current Trade notes and accounts Consolidated Change Japan ¥+7.05 billion Overseas ¥-0.07 billion ¥-3.45 billion Year Year receivable adjustments Consolidated Current assets 153.1 159.6 +6.49 Inventories Japan ¥+1.97 billion Overseas ¥+2.78 billion ¥+0.04 billion adjustments Subsidiary Consolidated (Cash and bank deposits) 88.5 58.4 -30.10 Others ¥+23.96 billion Others ¥+5.58 billion ¥-1.28 billion NCD adjustments (Trade notes and accounts 33.0 36.5 +3.53 receivable) (Inventories) 22.7 27.5 +4.80 Factors for increases/decreases of long-term assets Domestic (Others) 8.9 37.1 +28.25 Maruichi ¥-0.65 billion ¥+0.63 billion MOST ¥-0.05 billion subsidiaries MKK USA Long-term assets 153.4 156.8 +3.48 Property, plant and MAC ¥-0.02 billion ¥-0.32 billion SUNSCO ¥-1.96 billion equipment INC. Consolidated (Property, plant and equipment) 83.0 80.6 -2.40 KUMA ¥-0.17 billion MMX ¥-0.18 billion ¥+0.33 billion adjustments (Intangible assets) Consolidated 1.9 1.8 -0.07 Intangible assets Maruichi ¥+0.22 billion Subsidiaries ¥-0.29 billion ¥+0.00 billion adjustments (Investments and other assets) 68.5 74.4 +5.94 Investments and other Consolidated Japan ¥+5.66 billion Overseas ¥-0.04 billion ¥+0.32 billion Total assets 306.5 316.4 +9.97 assets adjustments Current liabilities 33.2 34.7 +1.50 Factors for increases/decreases of current liabilities (Trade notes and accounts 17.0 18.4 +1.45 Trade notes and accounts Consolidated payable) Japan ¥+4.39 billion Overseas ¥+1.46 billion ¥-4.40 billion payable adjustments (Short-term bank loans) 6.9 6.3 -0.53 MKK USA Alpha Metal ¥+0.04 billion SUNSCO ¥-0.70 billion ¥+0.26 billion Short-term bank loans INC. (Accrued income taxes) 3.2 3.0 -0.20 Consolidated KUMA ¥+0.00 billion MMX ¥-0.13 billion ¥+0.00 billion adjustments (Others) 6.1 6.9 +0.77 Consolidated Accrued income taxes Maruichi ¥-0.06 billion Subsidiaries ¥-0.11 billion -¥-0.04 billion adjustments Long-term liabilities 14.1 12.5 -1.62 Consolidated Others Maruichi ¥+0.21 billion Subsidiaries ¥+0.35 billion ¥+0.21 billion Total liabilities 47.2 47.1 -0.12 adjustments Net assets 259.2 269.3 +10.08 Factors for increases/decreases of long-term liabilities (Common stock) 9.6 9.6 +0.00 Domestic Consolidated Maruichi ¥+0.68 billion ¥-0.01 billion ¥+0.00 billion (Additional paid-in capital) 15.8 15.9 +0.10 subsidiaries adjustments MKK USA Long-term liabilities SUNSCO ¥-1.95 billion KUMA ¥+0.01 billion ¥-0.33 billion (Retained earnings) 239.7 248.5 +8.78 INC. MMX ¥+0.00 billion MAC -¥-0.02 billion MOST ¥+0.00 billion (Treasury stock) (27.0) (27.1) -0.09 (Unrealized holding gains on 10.7 12.4 +1.62 available-for-sale securities) Factors for increases/decreases of net assets (Foreign currency translation 0.0 (0.6) -0.60 adjustments) Consolidated Retained earnings Japan ¥+7.27 billion Overseas ¥+1.79 billion ¥-0.28 billion (Remeasurements of defined adjustments (0.1) (0.1) +0.05 benefit plans) Unrealized holding gains Consolidated (Stock options) 0.1 0.2 +0.02 on available-for-sale Maruichi ¥+1.62 billion Subsidiaries ¥+0.00 billion ¥+0.00 billion adjustments securities (Minority interests) 10.3 10.5 +0.19 Foreign currency End of December 2016: ¥116.49/US$ → End of June 2017: ¥112.00/US$ Total liabilities and net assets 306.5 316.4 +9.97 translation adjustments Devoted to Steel Tubes 9 Capital investment and Consolidated Operating Results depreciation
(Billions of yen) Budget for 2H Budget for Budget for 2H Budget for
4.2 9.9 3.2 8.8
6.7 6.4 6.0 6.2 6.3 5.8 5.6 5.2 1H for Result Result for 1H for Result
2.9 3.2
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Devoted to Steel Tubes 10 Employees
: Overseas consolidated subsidiaries 2500 : Domestic consolidated subsidiaries : Maruichi Steel Tube Figures in parentheses indicate employees temporarily transferred overseas 2,057 1,999 2,038 1,988 2000 1,942 1,955 1,960 1,967
971 1023 1016 1500 960 949 948 955 939
1000
396 387 388 384 372 376 386 395
500
632 647 634 644 621 631 619 633 （42） （41） （40） （40） （37） （34） （37） （31）
0 Sep. 2014 Mar. 2015 Sep. 2015 Mar. 2016 Sep. 2016 Mar. 2017 Sep. 2017 Mar. 2018
Devoted to Steel Tubes 11 II. Nonconsolidated Financial Highlights for the Year Ended March 31, 2018
Devoted to Steel Tubes 12 Nonconsolidated Operating Results
Net sales (Millions of yen) (Millions of yen) FY2017 FY2018 Increase/ Forecasts announced Increase/ 97,576 Results Results decrease in Februray decrease Net Sales 87,518 95,601 ＋9.2% 93,607 ＋2.1% 95,601 Operating Income 17,556 15,523 -11.6% 14,708 ＋5.5% Ordinary Income 20,063 19,200 -4.3% 18,171 ＋5.7% 94,132 Net Income 14,091 13,827 -1.9% 12,958 ＋6.7%
Profits (Millions of yen) Operating income Ordinary income Net income
19,932 20,063 19,200 18,688 18,936 17,556 89,615 17,320 16,108 15,968 15,523
87,518 14,091 13,827 12,926 12,332
5,049
FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018
Devoted to Steel Tubes 13 Nonconsolidated Operating Results Statements of Income
(Millions of yen)
FY2014 FY2015 FY2016 FY2017 FY2018
Percentage of Percentage of Percentage of Percentage of Percentage of Amount Amount Amount Amount Amount total (%) total (%) total (%) total (%) total (%)
Net sales 94,132 100.0 97,576 100.0 89,615 100.0 87,518 100.0 95,601 100.0 Cost of sales 70,265 74.6 74,875 76.7 67,193 75.0 63,589 72.7 73,616 77.1 Gross profit 23,867 25.4 22,700 23.3 22,422 25.0 23,928 27.3 21,985 23.0 Selling, general and administrative 6,547 7.0 6,591 6.8 6,453 7.2 6,371 7.3 6,461 6.8 expenses Operating 17,320 18.4 16,108 16.5 15,968 17.8 17,556 20.1 15,523 16.3 income Non-operating 2,999 3.2 2,900 3.0 3,463 3.9 3,088 3.5 4,140 4.3 income Non-operating 387 0.4 320 0.3 494 0.6 582 0.7 463 0.5 expenses Ordinary income 19,932 21.2 18,688 19.2 18,936 21.1 20,063 22.9 19,200 20.1 Extraordinary 3,431 3.6 823 0.8 1,944 2.2 195 0.2 298 0.3 income Extraordinary losses 4,070 4.3 40 0.0 9,212 10.3 368 0.4 28 0.0 Income before 19,293 20.5 19,471 20.0 11,669 13.0 19,890 22.7 19,470 20.4 income taxes Income taxes 6,707 7.1 6,065 6.2 6,833 7.6 5,888 6.7 5,618 5.9 Income taxes - 253 0.3 479 0.5 (213) (0.2) (89) (0.1) 24 0.0 deferred Net income 12,332 13.1 12,926 13.2 5,049 5.6 14,091Devoted16.1 to Steel13,827Tubes 14.514 Statements of Income Major factors for changes from Nonconsolidated Operating Results FY2017 Amount of impact (Billions of yen) Net sales FY2018 on income Increase/ Percentage Previous Year Current Year decrease increase/decrease Domestic pipe sales volume increase ¥+0.27 billion Domestic pipe unit selling price rise ¥+7.26 billion Export pipe sales volume decrease ¥-0.11 billion Export pipe unit selling price rise ¥+0.10 billion Steel strip sales volume increase ¥+0.15 billion Net sales 87.52 95.60 +8.08 +9.2% Steel strip unit selling price rise ¥+1.39 billion Pole Division ¥+0.53 billion Related steel strip ¥-1.61 billion Machinery, others ¥+0.10 billion Operating income Increase/ decrease Operating income 17.56 15.52 -2.03 -11.6% Gross sales volume increase ¥+0.04 billion Gross unit selling price rise ¥+7.81 billion Cost of sales increase ¥-9.81 billion (Dividend income, interest from Selling, general and administrative expenses increase 1.80 2.86 +1.06 ¥-0.07 billion bonds, etc.) Ordinary income Increase/ decrease (House rent income) 0.69 0.73 +0.04 From operating income ¥-2.03 billion (Royalty income) 0.43 0.40 -0.03 Dividend income, interest on securities, etc. increase ¥+1.06 billion (Other non-operating income) 0.17 0.15 -0.03 Other non-operating income increase ¥-0.01 billion (Rent expenses) 0.45 0.42 -0.03 (Other non-operating expenses) 0.14 0.05 -0.09 Non-operating expenses decrease ¥+0.12 billion Ordinary income 20.06 19.20 -0.86 -4.3% Income before income taxes Increase/ decrease (Gains on sales of investment From ordinary income ¥-0.86 billion 0.00 0.08 +0.08 securities) Gains on sales of investment securities ¥+0.08 billion (Gains on sales of property, plant 0.00 0.22 +0.22 Gains on sales of property, plant and equipment increase ¥+0.22 billion and equipment) Loss on sales of investment securities increase ¥+0.12 billion (Other extraordinary income) 0.19 0.00 -0.19 Loss on valuation of securities decrease ¥+0.00 billion (Loss on sales of securities) 0.12 0.01 -0.12 Costs of disposal and removal of property, plant and (Loss on valuation of securities) 0.00 0.00 +0.00 equipment, etc. decrease ¥+0.03 billion (Costs of disposal and removal of 0.50 0.02 -0.03 Others ¥-0.00 billion property, plant and equipment, etc.) (Other extraordinary loss) 0.19 0.00 -0.19 Net income Increase/ decrease From income before income taxes ¥-0.42 billion Income before income taxes 19.89 19.47 -0.42 -2.1% Income taxes increase ¥+0.27 billion (Income taxes) 5.89 5.62 -0.27 Income taxes–deferred ¥-0.11 billion (Income taxes–deferred) (0.09) 0.02 +0.11 Net income 14.09 13.83 -0.26 -1.9% Devoted to Steel Tubes 15 Statements of Income Major factors for changes from forecasts Nonconsolidated Operating Results announced in February
(Billions of yen) Net sales Increase/decrease Domestic pipe sales volume ¥-0.08 billion FY2018 Domestic pipe unit selling price ¥+1.07 billion FY2018 forecasts Percentage Export pipe sales volume ¥+0.14 billion FY2018 announced in Change increase/ results Export pipe unit selling price ¥+0.00 billion February decrease Steel strip sales volume ¥+0.11 billion Steel strip unit selling price ¥-0.01 billion Pole Division ¥+0.05 billion Related steel strip ¥+0.70 billion Net sales 93.61 95.60 + 1.99 ＋2.1% Machinery, others ¥+0.01 billion
Operating income Increase/decrease Factors attributable to company-wide sales volume ¥+0.04 billion Factors attributable to company-wide unit selling price ¥+1.74 billion (Factors attributable to domestic pipe unit selling price) (￥+1.21billion) Cost of sales ¥-1.12 billion Selling, general and administrative expenses ¥+0.16 billion Operating income 14.71 15.52 + 0.82 ＋5.5% Ordinary income Increase/decrease From operating income ¥+0.82 billion Dividend income, interest on securities, etc. ¥+0.16 billion Other non-operating income ¥+0.04 billion Non-operating expenses ¥+0.02 billion
Ordinary income 18.17 19.20 + 1.03 ＋5.7% Income before income taxes Increase/decrease From ordinary income ¥+1.03 billion Gains on sales of investment securities ¥+0.01 billion Gains on sales of property, plant and equipment ¥+0.00 billion Costs of disposal and removal of property, plant and equipment, etc. ¥+0.02 billion Income before Loss on valuation of investment securities ¥-0.01 billion 18.42 19.47 + 1.05 ＋5.7% ¥+0.00 billion income taxes Others
Net income Increase/decrease From income before income taxes ¥+1.05 billion Net income 12.96 13.83 + 0.87 ＋6.7% Income taxes ¥-0.16 billion Income taxes-deferred ¥-0.02 billion
Devoted to Steel Tubes 16 Balance Sheets compared with Nonconsolidated Operating Results the previous fiscal year
Current assets Cash and bank ¥-4.96 billion (Billions of yen) deposits Income before Purchase of FY2018 ¥+19.47 billion Depreciation ¥+2.53 billion ¥+0.00 billion Deposit into NCD ¥-0.49 billion income taxes treasury stock Previous Year Current Year Change Purchase of Stock-related ¥+1.07 billion Bond-related ¥-5.00 billion Operating funds ¥-4.78 billion ¥-2.99 billion Current assets 96.54 104.02 +7.48 investment trust Investments in Dividends and taxes Capital (Cash and bank deposits) 54.76 49.80 -4.96 ¥-13.49 billion ¥-2.79 billion affiliated ¥+0.00 billion Others ¥+1.51 billion paid investments (Trade notes and companies 28.01 34.23 +6.22 accounts receivable) Accounts receivable ¥+6.22 billion Trade notes ¥+0.26 billion Trade accounts¥+5.96 billion (Inventories) 8.87 10.03 +1.16 receivable Inventories ¥+1.16 billion (Others) 4.91 9.96 +5.05 Supplies and Finished goods ¥+0.54 billion Raw materials ¥+0.61 billion ¥+0.01 billion Long-term assets 130.51 134.93 +4.42 others Others ¥+5.05 billion (Property, plant and Short-term 44.61 43.96 -0.65 ¥+4.01 billion Others ¥+1.04 billion equipment) securities (Intangible assets) 0.04 0.26 +0.22 Long-term assets Property, plant (Investments and other ¥-0.65 billion 85.86 90.71 +4.85 and equipment New assets) ¥+1.88 billion Depreciation ¥-2.53 billion investments Total assets 227.05 238.95 +11.89 Investments and ¥+4.85 billion Current liabilities 19.45 22.21 +2.76 other assets Valuation difference on investment ¥+2.47 billion Stock-related ¥-1.07 billion Bond-related ¥+0.94 billion (Trade notes and securities 12.84 15.45 +2.61 Loss on valuation of investment accounts payable) ¥+0.00 billion Others ¥+2.51 billion securities (Accrued income taxes) 2.67 2.61 -0.06 Current liabilities Trade notes and (Others) 3.94 4.15 +0.21 ¥+2.61 billion accounts payable Long-term liabilities 6.10 6.78 +0.68 Electronically recorded Trade accounts ¥+0.02 billion ¥+2.59 billion Total liabilities 25.55 28.99 +3.44 monetary claims payable payable Net assets 201.51 209.96 +8.45 Others ¥+0.21 billion Equipment accounts payable- (Common stock) 9.60 9.60 +0.00 ¥+0.15 billion Others ¥+0.06 billion other/notes payable (Additional paid-in capital) 14.63 14.73 +0.10 Long-term liabilities Long-term (Retained earnings) 194.12 200.93 +6.80 ¥+0.68 billion liabilities (Treasury stock) (26.97) (27.06) -0.09 Accrued retirement benefits ¥+0.04 billion Long-term deferred tax liabilities ¥+0.63 billion Others ¥+0.00 billion (Unrealized holding gains Net assets Retained on available-for-sale 9.98 11.59 +1.62 ¥+6.80 billion earnings securities) Loss on disposal of Net income ¥+13.80 billion Dividends ¥-4.92 billion Interim dividends ¥-2.07 billion ¥+0.00 billion (Stock options) 0.14 0.17 +0.02 treasury stock Unrealized holding gains on available- ¥+1.64 billion Total liabilities and net for-sale securities 227.05 238.95 +11.89 Bonds/ assets Listed stock investment ¥-0.01 billion Listed stock ¥+1.99 billion ¥-0.34 billion (overseas) trusts
Devoted to Steel Tubes 17 Nonconsolidated Operating Results Changes in balance sheets
Assets Liabilities and net assets (Billions of yen) 239.0 239.0 234.7 234.7 227.0 227.0 15.5 220.6 220.6 14.5 Accounts 215.4 215.4 payable 12.8 13.5 43.8 49.8 12.7 15.7 Other Cash and 13.6 12.7 liabilities 39.7 54.8 bank 14.9 deposits 12.6 52.3 29.7 debt 34.2 210.0 29.3 Accounts 10.8 28.0 receivable 10.0 204.5 10.1 26.5 201.5 8.9 Inventories 192.2 9.1 189.2
64.2 treasury( including stock
66.9 treasury( including stock treasury( including stock treasury( including stock
63.7 treasury( including stock Net assets 58.3 Investment 50.6 securities
35.5 Investments 28.6 26.3 27.0 in affiliated 27.0 companies
Property, 19.8） 43.2 43.9 44.0 44.6 plant and 44.0 20.5） 27.0） 27.1） equipment 20.5）
Other 6.0 6.8 6.6 5.4 assets 7.1 FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018
Devoted to Steel Tubes 18 Nonconsolidated Operating Results
(Billions of yen) Depreciation Capital investments
5.7 Budget for 2H Budget for 2H
1.7 1.3
3.2 2.9 2.6 2.4 2.4 2.5 2.5 Budget for 1H 2.1 2.2 Budget for 1H
1.3 1.3
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Devoted to Steel Tubes 19 III. Performance Forecasts for the Year Ending March 31, 2019
Devoted to Steel Tubes 20 Consolidated and Nonconsolidated Sales Results and forecasts
(Millions of yen) Consolidated net sales (full year) 164,400 Nonconsolidated net sales (full year) Consolidated net sales (1H) 156,267 152,668 Nonconsolidated net sales (1H) 144,969 137,277
100,163 97,576 95,601 81,500 89,616 87,518 75,146 74,317 75,861 65,810
47,988 48,823 44,582 46,027 41,550
FY2015 FY2016 FY2017 FY2018 FY2019 Forecasts Devoted to Steel Tubes 21 Consolidated and Nonconsolidated Ordinary Income Results and forecasts
(Millions of yen)
Consolidated ordinary income (full year) 26,192 Nonconsolidated ordinary income (full year) Consolidated ordinary income (1H) Nonconsolidated ordinary income (1H) 22,986 21,500
19,919 18,945 20,064 19,200 18,688 18,937
16,930
12,853 12,102 10,800 10,230 10,650 8,595 9,666 9,904 9,203 8,971
FY2015 FY2016 FY2017 FY2018 FY2019 Forecasts Devoted to Steel Tubes 22 Consolidated Operating Results Forecasts Compared with ‘Fifth Medium-Term Management Plan’ by Segment
(Millions of yen)
FY2019 Forecasts Fifth Medium-Term Management Plan FY2021 Targets
Operating Operating Net sales Share Share Net sales Share Share income income
Japan 102,672 62.5% 15,959 79.4% 106,000 60.6% 18,400 76.7%
North America 27,711 16.9% 2,081 10.4% 32,000 18.3% 2,600 10.8%
Asia 34,017 20.7% 2,060 10.2% 37,000 21.1% 3,000 12.5%
Reconciliations 0 0.0% 0 0.0% 0 0.0% 0 0.0%
Total 164,400 100.0% 20,100 100.0% 175,000 100.0% 24,000 100.0%
Devoted to Steel Tubes 23 Consolidated and Nonconsolidated Profit Forecasts
Consolidated financial (Millions of yen) forecasts
FY2019 Forecasts Full-year forecasts FY2018 YoY Results 1H Forecasts 2H Forecasts Full-year Forecasts Sales profit ratio increase/decrease
Net sales 81,500 82,900 164,400 156,267 5.2%
Operating income 9,800 10,300 20,100 12.2% 20,827 (3.5)%
Ordinary income 10,800 10,700 21,500 13.1% 22,986 (6.5)%
Net income attributable 7,200 7,100 14,300 8.7% 15,777 (9.4)% to owners of parent
Nonconsolidated financial forecasts
FY2019 Forecasts Full-year forecasts FY2018 YoY Results 1H Forecasts 2H Forecasts Full-year Forecasts Sales profit ratio increase/decrease
Net sales 48,823 51,340 100,163 95,601 4.8%
Operating income 6,719 7,125 13,844 13.8% 15,523 (10.8)%
Ordinary income 8,972 7,959 16,931 16.9% 19,200 (11.8)%
Net income 6,212 5,491 11,703 11.7% 13,828 (15.4)%
Devoted to Steel Tubes 24 Full–year Forecasts by Consolidated Major Companies FY2019
(Millions of yen) Forecasts for 1H of FY2019 Forcasts for FY2019
Net income attributable Net income attributable Net sales Operating income Ordinary income Net sales Operating income Ordinary income to onwers of parent to onwers of parent
Change Change Change Change Change Change Change Change Maruichi Steel 48,823 2,795 6,719 -1,313 8,972 -1,678 6,212 -1,508 100,163 4,562 13,844 -1,679 16,931 -2,269 11,703 -2,125 Tube MAC 4,323 474 353 145 374 139 224 83 7,629 -71 520 148 554 128 332 7
MKK USA INC. 6,486 274 392 -195 375 -186 335 -169 12,565 736 702 -85 665 -65 593 -141
MOST 2,918 236 226 -4 212 -24 127 -15 5,266 -130 382 -20 368 -69 221 -216
MMX 975 -150 221 -58 218 -44 153 -30 2,251 78 477 7 473 2 331 60
SUNSCO (including Hanoi) 13,138 1,490 420 147 284 -77 218 -134 27,391 2,235 1,373 981 1,170 520 846 241 KUMA 3,382 405 352 -13 340 -14 248 11 6,626 222 687 -14 664 -39 485 26
Alpha Metal 2,559 57 71 -4 77 -5 54 -3 5,285 107 173 85 185 83 129 61 Other domestic 1,006 -30 745 22 1,018 -27 708 -8 2,120 5 1,527 -277 1,817 -333 1,263 -203 subsidiaries
Affiliated companies accounted for by the equity method 119 -79 430 -211
Goodwill 0 0 0 0 Consolidated (2,110) 87 301 17 (1,189) 694 (1,078) 814 (4,896) 390 415 129 (1,757) 766 (1,602) 812 adjustments Total 81,500 5,639 9,800 -1,257 10,800 -1,302 7,200 -958 164,400 8,133 20,100 -727 21,500 -1,486 14,300 -1,477
Devoted to Steel Tubes 25 Ⅳ. Outlook for the First Year of the‘Fifth Medium-Term Management Plan’
Devoted to Steel Tubes 26 Targets and Results of the ‘Forth Medium-Term Management Plan’
(Billions of yen) Final Year of ‘Fourth Final Year of ‘Fifth Fourth Medium-Term Management Plan Medium-Term Medium-Term Management Plan’ Management Plan’ FY2016 FY2017 FY2018 FY2018 FY2021 Results Results Results Targets Targets
Net sales 144.9 137.2 156.2 185.0 175.0
Operating income 17.0 24.5 20.8 22.5 24.0
Operating margin 11.7％ 17.8% 13.3% 12% 13.7%
ROE 4.7% 7.4% 6.2％ 6.5% or over 6.5%
255.2% 49.6% 48.2% 70% or over Shareholder return 3-year 50.0% ratio （ 80.5% (3-year average) average）
¥21 million ¥22 million ¥24 million ¥21 million Returning profits 3-year ¥30 million to society （ ¥22.37 million（3-year average） average）
Devoted to Steel Tubes 27 Net Sales Targets and Progress
Nonconsolidated sales in Japan Other sales in Japan Net Sales (Billions of yen) North America Asia Results during the Forth Forecasts and Medium-Term Targets during the Management Plan and Fifth Medium-Term 200.0 targets of final year of Management Plan the Forth Medium-Term 180.0 Management Plan 36.9 160.0 37.0 34.0 35.4 140.0 30.8 30.7 27.7 39.6 22.7 26.1 120.0 29.4 32.0 14.0 27.7 13.9 15.4 21.7 26.7 17.4 25.8 3.4 100.0 12.7 22.4 2.6 3.0 3.0 11.0 10.1 14.1 2.3 2.6 3.2 2.6 3.1 1.8 10.5 1.6 1.2 80.0
60.0 97.5 105.1 100.1 100.4 103.0 89.1 90.8 94.1 89.6 95.6 40.0 80.9 86.7 87.5
20.0
0.0
Total 102.4 115.7 120.6 117.8 136.5 152.6 144.9 137.2 156.2 185.0 164.4 168.2 175.0 Devoted to Steel Tubes 28 Operating Income Targets and Progress
Results during the Fourth Operating Income (Billions of yen) Forecasts and Targets during Medium-Term Management the Fifth Medium-Term 30.0 Plan and targets of final year of Management Plan Nonconsolidated operating income in Japan the Forth Medium-Term Management Plan 25.0 Other operating income in Japan 2.9 North America 1.6 3.0 0.6 1.9 20.0 Asia 0.4 1.1 1.8 2.6 2.6 1.8 0.8 2.2 2.0 2.0 0.7 1.8 1.1 2.1 0.8 0.1 1.3 2.1 15.0 0.70.3 0.3 1.1 2.2 1.7 2.2 1.7 10.0 1.5 17.3 16.1 16.1 17.5 18.0 16.7 14.9 14.6 14.2 15.5 13.8 14.1 5.0 10.4 -0.8 0.0 -0.2 -0.2 -1.2 -0.2FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2018 FY2019 FY2020 FY2021 (5.0) (Targets) (Forefasts) (Targets) (Targets) Total 10.9 16.6 15.5 15.4 20.1 17.7 17.0 24.5 20.8 22.5 20.1 20.5 24.0 Operating Margin 25% 22% 20% 19% 20% 17% 18% 18% 16% 18% 16% 15% Overall 17% 15% 15% Targets 13% 14% 13% 13% 12% Domestic 10% 12% 10% 12% 8% Targets 5% 5% 7% 7% Overseas 2% 0% 2% 0% Targets 0% -1%
-5%
Devoted to Steel Tubes 29 Capital Policy Targets and Progress
Targets of ‘Fifth Medium-Term Management Plan’ ・Shareholder return ratio（FY2019・FY2020・FY2021）⇒ 50.0％ ・Targets of ROE：FY2019⇒5.3％、FY2020⇒5.5％、FY2021⇒6.5％
Results during the Fourth Forecasts and targets during 8.0% Medium-Term the Fifth Medium-Term 300.0% Management Plan Management Plan 7.4% 7.0% 255.2% 6.5% 250.0% 6.0% 6.1% 6.2% 5.5% 200.0% 5.0% 5.0% 5.0% 5.5% 4.7% 4.0% 3.9% 3.9% 150.0% 3.6% 3.0% 130.4% 100.0% 2.0% 61.5% 48.2% 70.3% 50.5% 50.6% 50.0% 50.0% 53.7% 46.9% 50.0% 1.0% 49.6%
0.0% 0.0%
ROE Shareholder return ratio
Devoted to Steel Tubes 30 Capital Investment Plan of ‘Fifth Medium-Term Management Plan’
(Billions of yen)
FY2019 FY2020 FY2021 3-year total Total in the Medium- Medium-Term Medium-Term Medium-Term Term Management Management Plan Management Plan Management Plan Plan Total capital investment 7.7 7.0 6.3 21.0 Capital 4.9 5.1 3.0 13.0 Domestic group investment companies Depreciation 3.4 3.6 3.7 10.7 Capital 2.8 1.9 3.3 8.0 Overseas group investment companies Depreciation 3.6 3.6 3.7 10.9
Major capital investment plan (FY2019)
Domestic Overseas Relocation of Niigata Sales Office of Maruichi Kohan: ¥0.9 billion Leavitt USA: renewal of 2-inch mill: ¥0.4 billion Sakai Plant: Renewal of electrical substation facilities MOST USA: completion of new plant: ¥0.4 billion (First stage to second stage): ¥0.5 billion MOST USA: completion of new 2-inch mill: ¥0.4 billion Tokyo Plant: Renewal of No. 1 Slitter: ¥0.4 billion MAC USA: renewal of 2-inch mill: ¥0.4 billion Kashima Pole Plant: Constructed new expandable tube MAC USA: construction of new warehouse: ¥0.2 billion processing facilities: ¥0.2 billion Leavitt USA: constructed new cutting-to-size facilities: Renewal of No. 2 Unit at Tokyo Plant: ¥0.2 billion ¥0.1 billion Renewal construction of rolling line at Takuma Plant: ¥0.1 billion
Devoted to Steel Tubes 31 【Domestic】The topics of capital investment
November 2017 Relocated Hokuriku Sales Office of Maruichi Kohan
January 2018 Completion of renewal construction of No. 1 Unit at the Sakai Plant (Mill, cutter, chamfering machine) (currently underway separated into three construction periods since 2015)
January 2018 Completion of renewal construction of No. 1 Slitter at the Sakai Plant
March 2018 Constructed new Tokyo Plant (cutting-to-size plant) (Relocation of equipment completed in April 2018)
April 2018 Constructed new expandable tube processing facilities at the Kashima Pole Plant 【Future schedule】 Primarily focused on renovation constructions aimed at improving productivity
June 2018 Scheduled completion of renewal construction of No. 2 Unit at the Tokyo Plant
During 2018 Scheduled completion of renewal construction of rolling line at the Takuma Plant (third construction period) (commenced from 2016, currently underway separated into three construction periods, the first and second periods have completed)
February 2019 Scheduled completion of renewal construction of No.1 Slitter at the Tokyo Plant
March 2019 Scheduled relocation of Niigata Sales Office of Maruichi Kohan
2018 - 2019 Scheduled renewal of electrical substation facilities at the Sakai Plant (separated into three construction periods: summer of 2018 / winter of 2018 / summer of 2019)
Devoted to Steel Tubes 32 【Overseas】The topics of capital investment
March 2018 Completion of extension construction of No. 1 Plant building at SUNSCO Hanoi
March 2018 Completion of construction of new warehouse at MAC USA 【Future schedule】 Three U.S. companies Strengthen sales capabilities May 2018 Scheduled completion of new plant at MOST USA through additional construction June 2018 Scheduled renewal of 2-inch mill at Leavitt USA of product warehouses and factories and construction and October 2018 Scheduled completion of new 2-inch mill at MOST USA renewal of small diameter pipe facilities December 2018 Scheduled completion of renewal of 2-inch mill at MAC USA
April 2019 Scheduled completion of cutting plant construction and installation of new cutters at MMX (Mexico) May 2019 Scheduled to begin operation at MPST (the Philippines)
New warehouse at MAC USA New plant at MOST USA Devoted to Steel Tubes 33 Increasing production and clerical work efficiency (using IoT and AI)
FY2019 FY2020 FY2021
Production Introduction of facility maintenance system • Daily work reports containing records of facility maintenance will be converted into data form and analyzed to assess update cycles. Maintenance and inspection work will be conducted efficiently and preventive maintenance will be carried out (Introduced in Sakai Plant from November 2017. Hand-written daily work reports for the preceding one year are being digitized) • Create equipment ledgers and manage equipment spare parts on a company-wide, shared basis
Production visualization aimed at improving operation rates Digitally manage equipment abnormal stop data and defect data, analyze reasons for equipment stoppage and data for stoppage duration, identify causes of divergences between production plans and actual production results, organize work conditions, and apply in worksites to enable stable pipe production (As the first stage of this initiative, a test run deployment is planned for pipe-making machines at the Sakai Plant)
Clerical Introduction of AI-based business software for accounting/personnel/administrative work operations
Devoted to Steel Tubes 34 Maruichi Steel Tube Group SDG initiatives
The Maruichi Steel Tube Group recognizes the importance of contributing to the achievement of Sustainable Development Goals (SDGs), and has identified the following as targets. In its promotion of the ‘Fifth Medium-Term Management Plan,’ the Group will strive to firmly establish these SDGs within the Group so that it can work as one to solve the Group's critical issues. Strengthen safety measures Creating value through business activities
Provide superior quality steel tube products
Meet customer needs and live up to customer trust
Fundamental philosophy supporting corporate value
Diverse human ・Environmental Strengthen safety Governance G Social contribution resources S consideration E measures activities S S • Timely and appropriate • Dedicate effort to • Improve energy • Eliminate occupational • Support for a wide range of disclosure of information social areas, such as human resource efficiency accidents • Improve management education, medicine, cultural development • Reduce energy usage • Safety education transparency activities, environmental • Foster a culture of • Effectively use • Ensure the health of • Ensure thorough compliance protection, and sports, both diversity resources employees • Implement BCP measures domestically and overseas
Engage in tasks related to ESG（As shown by E S G ) Devoted to Steel Tubes 35 Shareholder-focused capital policy
Maintaining a high dividend payout ratio
【Maintaining the divided policy】 • The dividend policy of setting 50% of expected net income (*) in the nonconsolidated statements of income as annual dividend
* Expected net income calculated as “nonconsolidated ordinary income x (1-effective corporate tax rate)”
with an effective corporate tax rate for FY2018 of 30.7%, with an estimated effective corporate tax rate for FY2019 of 30.5%, FY2020 of
30.5%, FY2021 of 30.5%
• Maintaining the minimum annual dividend at ¥50 per share
【Targets】In the final year (FY2021), Shareholder return ratio (nonconsolidated) of 50.0% or above, ROE of 6.5% or above
(Reference) Status of dividend paid (Figures in the parenthesis indicate dividend per share in yen.) (Millions of yen) Dividend payout Share buybacks Net income Total return ratio ROE Year-end ratio Interim dividend Annual dividend Number of shares/price (nonconsolidated) (nonconsolidated) (consolidated) dividend (nonconsolidated) (25.00) (52.00) (77.00) 2,000,000 shares FY2016 2,094 4,303 6,396 6,491 5,050 126.7% 255.2% 4.7% (25.00) (59.50) (84.50) FY2017 2,069 4,923 6,992 14,091 49.6% 49.6% 7.4% (25.00) (55.50) (80.50) FY2018 2,071 4,598 6,669 13,828 48.2% 48.2% 6.2% (25.00) (46.50) (71.50) FY2019 (Forecast) 2,071 3,852 5,923 11,703 50.6% 50.6% 5.5%
FY2021 targets (last year of the ‘Fifth Medium-Term Management Plan’) 14,200 50.0% 50.0% 6.5% ・ Buy-back of one million shares in July 2015 and a further million shares in January 2016 Devoted to Steel Tubes 36 S
Continuing providing approximately 0.5% of nonconsolidated net income after payment of dividends
environmental education culture protection ¥30 million or above per year medical care sports
【Results to date … Decided to continue in FY2019 (As of May 2018)】 Domestic Sponsoring the Shōsōin Exhibition（From FY2013) Sponsoring Osaka Philharmonic Association (From FY2016) Sponsoring the “Theater of the Heart” activities of Shiki Theatre Company (From FY2016) Sponsoring “2025 Japan World Expo Committee” (From FY2018) Support promotional activities for Osaka/Kansai to host the 2025 World Expo (Official Supporter) Support for “iPS Cell Research Fund” at the Center for iPS Cell Research and Application, Kyoto University (From FY2016) Support for relocation of RMH Osaka-Suita (FY2018)
Overseas Support for NPO Asia Prevention of Blindness Association (From FY2016)
● Support for students of Bal Niketan Senior Secondary School in India (KUMA) Provide scholarships equivalent to an annual tuition at a senior secondary school in the Pilani ward in the state of Rajasthan for 200 students recommended by the school on the basis of their marks and families’ financial situation
Devoted to Steel Tubes 37 [Introduction of new support project in FY2019] (Two-year support program planned for FY2019 and FY2020) Let's Go See a Bunraku Puppet Show!! One Coin Bunraku U-30 (held by NPO Ningyo-joruri Bunraku-za) Support aimed at passing on the traditional Osaka art form of “Ningyo-joruri Bunraku-za” on to the next generation Eligibility: Kinki area residents aged 30 or younger Project contents: Provide opportunity for young people to experience the allure of Bunraku for just ¥500 = Gain a deeper understanding of Bunraku through explanations provided by performers + watch performance at National Bunraku Theatre
(Reference) “One Coin Bunraku” started in 2014, and over the past four years over 2,000 young people have enjoyed watching Bunraku performances. Support is provided through Arts Support Kansai, with Keihanshin Building Co., Ltd. and Iwatani Corporation each providing support for two years respectively.
A press announcement was held on April 23, 2018 Devoted to Steel Tubes 38 (Reference) Change in Shareholder Distribution
(Figures on the bars indicate the number of shares.) Number of Shareholders (Unit: thousand of shares) (persons) 10,373 10,796 11,015 11,942 10,306 12,117 11,804 100% 9.3% 9.9% 9.9% 9.9% 12.0% 12.0% 11.9% Treasury 8,775 9,271 9,265 11,256 9,271 11,255 11,157 stock 90%
16,285 14,697 14,688 Individuals 80% 16,215 13,461 14,818 13,963 17.3% 17.2% 15.6% 15.6% 14.3% 15.8% 14.9% and others
70% 12,843 15,420 17,458 18,727 Foreign 13.7% 19,479 19,322 20,403 16.4% 18.6% 19.9% 20.7% investors 60% 20.5% 21.7%
50% 26,654 25,316 23,964 23,547 Domestic 40% 22,439 20,674 20,522 28.4% 26.9% 25.5% 25.1% 23.9% 22.0% 21.8% corporations 30%
20% 29,443 27,778 28,616 27,767 27,366 27,930 27,955 Financial institutions 10% 31.3% 29.6% 30.4% 29.5% 29.1% 29.7% 29.7%
0% Mar. 2012 Mar. 2013 Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
Trading unit of share was lowered to 100 shares in October 2005, and in April 2008, 4,260,000 shares of the treasury stocks were canceled.
Devoted to Steel Tubes 39 (Reference) Change in the Stock Prices (based on the closing price of the month)
(Yen) 8,000 22,000 21,454 22,467
7,000 20,000 19,207 18,909 17,060 17,288 18,000
Stock price of Maruichi Steel Steel TubeMaruichi of price Stock 6,000 Nikkei Stock Average 16,759 16,000
14,828 AverageStock Nikkei 5,000 14,000
12,526 12,398 12,000 4,000 11,090 3,745 3,660 11,669 3,255 10,000 10,084 3,085 9,755 3,000 3,300 8,110 3,165 8,000 2,935 2,215 2,669 2,846 2,260 2,055 2,000 6,000 2,110 1,896 1,932 4,000 1,000 Stock price of Maruichi Steel Tube 2,000
0 0 Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Apr. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2018
Devoted to Steel Tubes 40 Major Initiatives of the ‘Fifth Medium-Term Management Plan’
1. Commitments in Japan Major issues Major initiatives Related page i) Maintaining high profitability and further strengthening sales capabilities ii) Responding to the shortage of workers and • Increasing production and clerical work efficiency using IoT and P.3 4 increasing productivity AI (Deployment of IoT in production lines, introduction of AI- based business software for accounting/personnel/administrative operations) • Renewal of facilities, and review of recruitment policy and work styles • Use of female and overseas human resources
2. Commitments Overseas Major issues Related page i) Three U.S. companies • Leavitt・MAC P.31,33 Expanding operations using newly Improve narrow diameter pipe quality and productivity established or renewed facilities and by • MOST further strengthening marketing capabilities Begin manufacturing and sale of narrow diameter pipes, expand product range ii) SUNSCO（HCM） • Make improvements to unprofitable businesses Achieve stable profitability • Strengthen domestic sales capabilities, mainly focusing on pipes • Improve equipment operation rates and yields and further reduce costs through personnel efficiency improvement in indirect departments
Devoted to Steel Tubes 41 Major Initiatives of the ‘Fifth Medium-Term Management Plan’
2. Commitments Overseas Major issues Major initiatives Related page iii) Automobiles and motorcycles: • MMX: Construction of an additional cutting plant Implementing capital investments and • SUNSCO (HNI): Construction of additional plant strengthening sales capabilities in line with the • Establishment of MPST expanded production in each country iv) Procuring prospective local human resources • Facilitating the replacement of employees dispatched and further level enhancement. from the head office with local human resources v) Using overseas revenue to increase profit redistribution in Japan in the form of dividend, royalty, or the like
3. Common Commitments in Japan and Overseas Major issues Major initiatives Related page i) Increasing labor productivity per working hour • Domestic plants: P.3 4 and labor cost Renewal of old facilities; Labor saving by automatic operation using IoT technology and optimum operation and maintenance • Domestic administrative division: Efficient clerical work and labor saving by introducing new systems incorporating AI technology to accounting/ personnel/ administrative operations • Overseas: Increasing productivity by enhancing the level of local human resources
Devoted to Steel Tubes 42 Major Initiatives of the ‘Fifth Medium-Term Management Plan’
3. Common Commitments in Japan and Overseas Major issues Major initiatives Related page ii) Giving further consideration to the environment, • Reducing electricity consumption through a P.3 5 enhancing energy efficiency, and strengthening safety shift to LED lights; measures • Chrome-free production iii) Proactively considering M&A and other business investments in Japan and overseas
4. Shareholder-Focused Policy and Social Contribution Policy Major issues Major initiatives Related page i) Maintaining a high dividend payout ratio: Firmly • Returning the effect of the decrease in the P.3 6 upholding the policy of “nonconsolidated ordinary effective corporate tax rate as dividends income x (1- effective corporate tax rate) x 50%” • Maintaining minimum dividend of ¥50 per share ii) Social contributions • Japan: P.37,38 Continuing to provide approximately 0.5% of Continuing Contributing to the fields of nonconsolidated net income after payment of culture, art, sports, medical care, education, dividends as social contribution and natural environment protection • Overseas/Emerging countries: Increasing contributions to poverty eradication, healthcare, medical care, and education promotion
Devoted to Steel Tubes 43 (Reference) Overview and Trends in Business Performance of Overseas Group Companies
Devoted to Steel Tubes 44 Company Maruichi Sun Steel Joint Stock Company name: (SUNSCO)
Founded: June 1996 (Capital participation in 2006)
Location: Ho Chi Minh and Hanoi, Vietnam
Capital: US$130 million
Shareholder Maruichi Steel Tube 72.53% distribution: Toyota Tsusho 9.73%
JFE Steel 8.00%
Taiwanese shareholders 9.74% Trends in business performance (including Hanoi) (Millions of US$) Employees: 531 Operating Net sales income Production 266,600 mt/year results: December 2013 205 2 December 2014 256 (2) December 2015 196 5 December 2016 Results 202 17 December 2017 Results Announced in May 226 (1) December 2018 Forecasts Announced in May 256 9
4th Medium-Term Management Plan (December 2017) Targets 277 5 5th Medium-Term Management Plan (December 2020) Targets 258 20 Devoted to Steel Tubes 45 Company Maruichi Leavitt Pipe & Tube, LLC name: (Leavitt) Founded: 1956 (Capital participation in 2008)
Location: Chicago, Illinois Capital: US$25,225 thousand
Shareholder MKK USA. INC 90.00% distribution: Sumitomo Corporation of America 10.00% Employees: 117 Trends in business performance (Millions of US$) Operating Production 110,100mt/year Net sales income results: December 2013 113 1 December 2014 130 (17) December 2015 102 (26) December 2016 90 5 December 2017 Results Announced in May 106 6 December 2018 Forecasts Announced in May 117 7
4th Medium-Term Management Plan (December 2017) Targets 150 1 5th Medium-Term Management Plan (December 2020) Targets 123 9 Devoted to Steel Tubes 46 Company name: Maruichi American Corporation (MAC) Founded: December 1978
Location: California Capital: US$7.5 million
Shareholder Maruichi Steel Tube 53.00% distribution: Metal One Corporation 30.00% Trends in business performance (Millions of US$)
Maruichi Kohan 8.00% Operating Net sales income The Bank of Tokyo-Mitsubishi UFJ, Ltd. 5.00% December 2013 66 2 Sumitomo Mitsui Banking December 2014 62 3 Corporation 4.00% December 2015 60 0 Employees: 66 December 2016 60 6 December 2017 Results Announced in May 68 3
Production 66,500mt/year December 2018 Forecasts Announced in May 71 5 results: 4th Medium-Term Management Plan 70 5 (December 2017) Targets 5th Medium-Term Management Plan 74 6 (December 2020) Targets
Devoted to Steel Tubes 47 Company Maruichi Oregon Steel Tube, LLC name: (MOST) Founded: 2015
Location: Portland, Oregon Capital: US$55 million (equivalent)
Shareholder MKK USA 100% distribution: Employees: 52
Production 45,700mt/year results: Trends in business performance (Millions of US$) Operating Net sales income December 2015 35 0 December 2016 39 4 December 2017 Results Announced in May 48 3 December 2018 Forecasts Announced in May 49 3
4th Medium-Term Management Plan (December 2017) Targets 74 3 5th Medium-Term Management Plan (December 2020) Targets 59 5
Devoted to Steel Tubes 48 Company MARUICHIMEX S.A. de C.V. (Maruichimex) name: Founded: January 2012
Location: Aguascalientes, Mexico Capital: US$20.80 million (equivalent)
Shareholder MAC 30.00% distribution: MKK USA 30.00% Marubeni-Itochu Steel Group 20.00% Trends in business performance (Millions of US$) Operating Toyota Tsusho 20.00% Net sales income Employees: 65 December 2013 1 (1) December 2014 12 1 Production 10,700mt/year December 2015 15 3 results: December 2016 18 4 December 2017 Results Announced in May 19 4
December 2018 Forecasts Announced in May 21 4
4th Medium-Term Management Plan 30 4 (December 2017) Targets 5th Medium-Term Management Plan 29 6 (December 2020) Targets
Devoted to Steel Tubes 49 Company Maruichi KUMA Steel Tube Private Limited name: (KUMA)
Founded: November 2003 (Capital participation in 2009)
Location: Manesar, Gurgaon, Haryana, and Bangalore, India Capital: INR89 million (equivalent)
Shareholder Maruichi Steel Tube 70.00% Bangalore Plant distribution: Toyota Tsusho 30.00% Trends in business performance (Millions of US$) Employees: 108 Operating Net sales income Production 22,200mt/year March 2013 30 4 results: March 2014 31 3 March 2015 34 2 March 2016 35 2 March 2017 41 4 March 2018 Results Announced in May 51 5 March 2019 Forecasts Announced in May 62 6
4th Medium-Term Management Plan (March 2018) Targets 44 3 5th Medium-Term Management Plan (March 2021) Targets 74 8
Devoted to Steel Tubes 50 Company Maruichi Metal Product (Foshan) Co., Ltd. (MMP) name: Founded: April 2005
Location: Foshan, Guangdong Capital: US$18 million (equivalent)
Shareholder Maruichi Steel Tube 35.00% distribution: LARGE CROWN LIMITED 35.00%
Chung Mao Trading 15.00%
Toyota Tsusho 10.00% Wuhan Branch
Metal One Corporation 5.00%
Employees: 193
Maruichi Metal Product (Foshan) Co., Ltd. Maruichi Metal Product (Tianjin) Co., Ltd. Devoted to Steel Tubes 51 Company name: PT. Indonesia Steel Tube (ISTW)
Founded: December 1972
Location: Jakarta Capital: US$4.35 million (equivalent)
Shareholder Maruichi Steel Tube 20.00% distribution: Metal One Corporation 60.00%
Local 20.00%
Employees: 550 Jakarta Plant
Cikarang Plant in eastern Jakarta Semarang Plant
Devoted to Steel Tubes 52 (Reference) Features of the Maruichi Group
Devoted to Steel Tubes 53 1. Management Philosophy
• As a leading steel tube company, our mission is to contribute to society by providing outstanding products and responding to the trust of customers.
• We respect all stakeholders, including shareholders, business partners, employees and local communities.
• We promote the creation of energy for growth and new values for the future by enhancing product reliability, technological capability, and sales capability by means of the wisdom, passion and action of each employee.
• We will continue being an outstanding company filled with dreams that all of our employees feel worthy of entrusting their lives to.
Devoted to Steel Tubes 54 2. Domestic Production and Sales System
Head Office Sapporo Office Office and Sales Office
Plant
Warehouse and Pipe Center Hokkaido Maruichi Steel Tube Ltd.
Maruichi Group Companies Maruichi Steel Tube Kitakami Processing Center
Maruichi Kohan Niigata Sales Office Maruichi Kohan Kitakami Sales Office
Maruichi Kohan Kitakanto Sales Office Maruichi Kohan Sendai Sales Office Maruichi Kohan Yokohama Sales Office Maruichi Steel Tube Ltd. Head Office Tokyo Office Maruichi Kohan Ltd. Head Office Maruichi Kohan Hamamatsu Sales Office Tokyo Pole Marketing Department
Maruichi Kohan Hokuriku Sales Office Kashima Pole Plant
Maruichi Kohan Okayama Sales Office Nagoya Office Ichikawa Warehouse
Takuma Plant Maruichi Kohan Tokyo Sales Office
Hiroshima Office Tokyo Plant
Alpha Metal Co., Ltd.
Fukuoka Office Maruichi Kohan Nagoya Sales Office
Nagoya Plant
Kasuga Industry Ltd. Ginowan Pipe Center Maruichi Kohan Fukuoka Sales Office Osaka Warehouse Nagasu Pipe Center Sakai Plant Sakai Pole Plant Osaka Pole Marketing Department Kyushu Maruichi Steel Tube Ltd. Nankou Pipe Center Okinawa Maruichi Ltd. Shikoku Maruichi Steel Tube Tachibana Plant Maruichi Kohan Shikoku Sales Office Maruichi Steel Tube Osaka Office Shikoku Maruichi Steel Tube Ltd. Maruichi Kohan Osaka Sales Office
Devoted to Steel Tubes 55 3. Overseas Production Facilities
Asia Americas
MMP (Tianjin) (China) MMP (Foshan) Wuhan Branch (China)
KUMA (India) MMP (Foshan) Manesar Plant (China) MOST MPST (the U.S) Leavitt （the Philippines） (the U.S) *Scheduled to begin operation SUNSCO (Hanoi) in 2019 (Vietnam) MAC (the U.S)
KUMA (India) SUNSCO J-Spiral Bangalore Plant (Vietnam) (Vietnam)
Alphamex Maruichimex (Mexico) (Mexico) ISTW Cikarang Plant ISTW Semarang ISTW Jakarta Plant (Indonesia) Plant (Indonesia) (Indonesia) Devoted to Steel Tubes 56 4. Features
Production Where Demand Exists
Maruichi Steel Tube operates 12 plants, including affiliated companies, which cover the areas from Hokkaido to Kyushu. Such wide-coverage plant operation significantly contributes to the improvement of service to users, as well as the reduction of distribution cost.
Variety of Products
Material Maruichi Steel Tube provides a variety of products to meet the diverse needs of Independent Manufacturing Management and users. Processing Material Manufacturing and Processing
Steel strips of optimum quality processed at the Takuma Plant are used at each plant of the Maruichi Group.
Independent Management Dedicated Maruichi Steel Tube’s management is independent of any affiliation and not to Tube Manufacturing subject to restrictions regarding suppliers and customers. Maruichi Steel Tube Adoption of therefore is able to constantly conduct business operations in pursuit of maximum Variety of Proprietary profit. Products Production Where Sales System Demand Exists Sound Financial Structure
The sound financial structure serves as the strong backbone of Maruichi Steel Tube.
Dedicated to Tube Manufacturing
Maruichi Steel Tube is dedicated to steel tube manufacturing and related businesses. Sound Business Financial Development Adoption of Proprietary Sales System Structure in the Pacific Maruichi Steel Tube sells products through two channels: general trading Rim companies and Maruichi Kohan Ltd. Maruichi Kohan has its own warehouse and also stocks and sells products. Under this system, Maruichi Steel Tube can clearly grasp customer needs, demand trends and price trends, thus enabling the company to devise management strategies that are sensitive to the market at all times.
Business Development in the Pacific Rim
It has become easier to grasp market conditions, such as supply and demand trends of hot coils and products.
Devoted to Steel Tubes 57 5. History
１９２６ Maruichi Production founded as a bicycle parts manufacturer. １９９５ Newly constructed Kashima Pole Plant. １９３５ Started manufacturing bicycle steel pipes. １９９８ Integrated Sapporo Plant of Hokkaido Maruichi Steel Tube Ltd. into Tomakomai Plant. １９４０ Changed company name to Maruichi Steel Tube Works. Completed construction of the new Hiroshima Office １９４７ Established Maruichi Steel Tube Ltd. ２０００ １９５６ Reorganized Osaka Office and established Maruichi Kohan Ltd. and warehouse. １９５７ Newly constructed Osaka Plant. ２００２ Constructed the new warehouse in Tokyo No. 2 Plant. １９５８ Established Tokyo Office. ２００５ Took over the lighting pole business of JFE Steel Pipe Co., Ltd. Imported electric tube welding system manufactured by ２００６ Started operation of MMP in China. Abby Etona Co. of the U.S., and shifted to an electric Invested in Toyo Superior Steel Tube Works. resistance welded tube manufacturer. Invested in SUNSCO of Vietnam. １９６０ Changed the trade name to Maruichi Steel Tube Ltd. ２００８ Established Nagoya Office. Converted SUNSCO and Leavitt into consolidated subsidiaries. Completed renovation of Sakai Plant. １９６１ Newly constructed Tokyo Plant. ２００９ Converted KUMA of India into a subsidiary. １９６２ Listed on the Second Sections of the Tokyo Stock Started operation of Sakai Production Facility of Seikei Exchange and the Osaka Securities Exchange. Steel Pipe Corporation. １９６４ Listed on the First Sections of the Tokyo Stock ２０１０ Converted Alpha Metal into a consolidated subsidiary. Exchange and the Osaka Securities Exchange. Started operation of SUNSCO Hanoi. Established the Fukuoka Office. Invested in J-Spiral Steel Pipe Co., Ltd. in Vietnam. １９６５ Newly constructed Sakai Plant. ２０１１ Started operation of MMP Tianjin in China. １９６６ Newly constructed Nagoya Plant (integrated into current Newly constructed the stainless steel tube factory at Nagoya Plant in 1984). Tokyo No. 2 Plant. Established Hiroshima Office. Newly constructed the No. 2 factory at Sakai Pole Plant. １９７０ Established Hokkaido Maruichi Steel Tube Ltd. ２０１２ Newly established Wuhan Branch for MMP in China. Established Sapporo Office. Newly constructed the No. 3 factory at Tokyo No. 2 Plant. １９７１ Established ISTW in Indonesia. Established Maruichimex in Mexico. １９７２ Newly established Pole Plant. ２０１３ Started operation of the mega solar power facility in the Established Osaka Office. Takuma Plant. １９７３ Newly constructed Tokyo No. 2 Plant. Started operation of the second CGL/CCL of SUNSCO. １９７４ Established Shikoku Maruichi Steel Tube Ltd. ２０１４ Completed consolidation of Tokyo Plant. Established Kyushu Maruichi Steel Tube Ltd. Converted Maruichimex into a consolidated subsidiary. １９７７ Newly constructed Nagoya Second Plant (current Nagoya Plant). ２０１５ Converted MOST into a consolidated subsidiary. Relocated the head office to the present location at Newly constructed Bangalore Plant of KUMA １９７８ Kitahorie, Nishi-ku, Osaka. ２０１６ Completed consolidation of Osaka Plant. Established MAC in the U.S. １９８９ Newly constructed Takuma Plant. Devoted to Steel Tubes 58 Direction of the Maruichi Steel Tube Group
1. We are intent on continuing pursuing shareholder-focused management and making constant efforts to maximize shareholder value in the future. Also, we will grow and develop into a corporate organization that can be considered globally as number one in the world in terms of both quality and quantity in the steel pipe industry. ２．Under the newly formulated the ‘Fifth Medium-Term Management Plan,’ the Group will maintain high profitability while continuing to meet the needs of society, actively engage in future-oriented growth investment, and strive to achieve further growth amidst the rapidly changing business environment.
Devoted to Steel Tubes 59 Disclaimer Plans and forward-looking statements herein are based on the Company’s judgment drawn from currently available information. Please note that actual results may differ significantly from such plans and forward-looking statements due to various important factors.
Devoted to Steel Tubes 60