Financial Results for First Quarter FY2020 (for the year ending March 31, 2021) August 11, 2020 Copyright © 2020 IHI Corporation All Rights Reserved. Table of Contents １. Consolidated Results for First Quarter FY2020 Summary of Financial Results..................................................................................................................................................................................................................4 Financial Results by Segment.....................................................................................................5 Non-operating Income / Expenses............................................................................................12 Balance Sheets.......................................................................................................................................................................................................13 Supplementary Information......................................................................................................................................14 ２. Forecasts of the Consolidated Results for FY2020 Summary of Forecasts........................................................................................................17 ３. Financial Results by Segment Resources, Energy and Environment..........................................................................................19 Social Infrastructure and Offshore Facility....................................................................................................................21 Industrial System and General-Purpose Machinery..........................................................................................23 Aero Engine, Space and Defense.........................................................................................................25 <Appendices> .......................................................................................... 27 Copyright © 2020 IHI Corporation All Rights Reserved. １. Consolidated Results for First Quarter FY2020 Copyright © 2020 IHI Corporation All Rights Reserved. 3 １. Consolidated Results for First Quarter FY2020 Summary of Financial Results Note: Average exchange rates for FY2020.1Q US$ 1.00= ¥107.05 (In billion yen) FY2019.1Q FY2020.1Q Change Orders received 220.0 167.4 ▲ 52.5 ▲10.3 Net sales 281.1 218.5 ▲ 62.6 ▲1.5 Operating profit 0.9 ▲ 9.2 ▲ 10.1 0.2 Ordinary profit ▲ 0.6 ▲ 7.9 ▲ 7.2 Profit before income taxes ▲ 0.6 ▲ 7.9 ▲ 7.2 Profit attributable to ▲ 2.7 ▲ 7.6 ▲ 4.8 owners of parent The figures on the left side of net sales, operating profit, and ordinary profit for FY2020.1Q show the effect of applying Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, March 31, 2020). Copyright © 2020 IHI Corporation All Rights Reserved. 4 １. Consolidated Results for First Quarter FY2020 Financial Results by Segment Orders received & Order backlog (In billion yen) Orders received Order backlog FY2019.1Q FY2020.1Q Change FY2019 FY2020.1Q Change Resources, Energy and 47.2 45.8 ▲ 1.4 521.2 499.7 ▲ 21.5 Environment Social Infrastructure and 34.0 28.9 ▲ 5.0 229.6 225.9 ▲ 3.7 Offshore Facility Industrial System and 116.0 74.0 ▲ 41.9 190.8 174.8 ▲ 15.9 General-Purpose Machinery Aero Engine, Space and 13.5 12.0 ▲ 1.4 493.6 450.4 ▲ 43.2 Defense Total Reportable Segment 210.8 160.9 ▲ 49.9 1,435.4 1,350.9 ▲ 84.4 Others 19.5 15.7 ▲ 3.8 26.6 30.2 3.6 Adjustment ▲ 10.3 ▲ 9.2 1.1 - - - Total 220.0 167.4 ▲ 52.5 1,462.0 1,381.1 ▲ 80.8 Overseas orders received 66.6 51.2 ▲ 15.3 605.5 565.1 ▲ 40.3 / order backlog % of Overseas orders received 1% 0% / order backlog 30% 31% 41% 41% Copyright © 2020 IHI Corporation All Rights Reserved. 5 １. Consolidated Results for First Quarter FY2020 Financial Results by Segment Net sales & Operating profit (In billion yen) Net sales Operating profit FY2019.1Q FY2020.1Q Change FY2019.1Q FY2020.1Q Change Resources, Energy and ▲0.4 ▲1.4 Environment 64.8 64.0 ▲0.8 ▲5.7 ▲3.4 2.2 Social Infrastructure and 1.0 0.0 Offshore Facility 32.8 31.9 ▲0.8 2.5 2.1 ▲0.4 Industrial System and 4.1 0.1 General-Purpose Machinery 86.7 78.1 ▲8.6 0.2 ▲1.7 ▲2.0 Aero Engine, Space and ▲13.9 ▲0.2 Defense 90.2 42.4 ▲47.8 5.4 ▲4.7 ▲10.1 ▲9.1 ▲1.5 Total Reportable Segment 274.7 216.5 ▲58.1 2.4 ▲7.8 ▲10.3 ▲1.1 0.0 Others 15.3 10.5 ▲4.8 0.1 ▲0.5 ▲0.7 Adjustment ▲8.9 ▲8.5 0.3 ▲1.7 ▲0.8 0.9 ▲10.3 ▲1.5 Total 281.1 218.5 ▲62.6 0.9 ▲9.2 ▲10.1 Overseas sales 142.2 82.9 ▲59.3 % of overseas sales 51% 38% ▲ 13% The figures on the left side of net sales and operating profit for FY2020.1Q show the effect of applying Accounting Standard for Revenue Recognition . Copyright © 2020 IHI Corporation All Rights Reserved. 6 １. Consolidated Results for First Quarter FY2020 Financial Results by Segment Analysis of change in operating profit from the previous period (In billion yen) Effect of applying Change in Change in Accounting Change in Change in construction foreign Standard for Total net sales SG&A profitability exchange rate Revenue Recognition Resources, Energy and ▲ 0.3 3.8 0.1 ▲ 1.4 2.2 Environment Social Infrastructure and ▲ 0.4 ▲ 0.2 0.2 ▲ 0.4 Offshore Facility Industrial System and General- ▲ 4.2 2.1 0.1 ▲ 2.0 Purpose Machinery Aero Engine, Space and ▲ 13.2 1.4 ▲ 0.3 2.2 ▲ 0.2 ▲ 10.1 Defense Total Reportable Segment ▲ 18.2 5.0 ▲ 0.3 4.8 ▲ 1.5 ▲ 10.3 Others ▲ 0.6 ▲ 0.6 0.5 ▲ 0.7 Adjustment 0.8 0.1 0.9 Total ▲ 18.8 5.1 ▲ 0.3 5.4 ▲ 1.5 ▲ 10.1 There are cases that the aggregated amount of each segment or factor doesn’t match to the total due to rounding off. *Change factors of net sales of “Industrial System and General-Purpose Machinery” and “Aero Engine, Space and Defense” were mainly due to the impact of the spread of COVID-19. Copyright © 2020 IHI Corporation All Rights Reserved. 7 １. Consolidated Results for First Quarter FY2020 Financial Results by Segment The impact of the spread of COVID-19 Civil aero engines Business Sales of engines and spare parts in the Civil aero engines Business is greatly decreasing owing to the drastic decline in demand for aero transportation and the deterioration of business conditions for airlines. Although demands for aero transportation on domestic routes (mainly medium and short haul routes) are expected to lead the recovery, we foresee that the recovery speed varies by area under the situation where the spread of infection is not converged. With regard to international routes (mainly long haul routes), due to the various restrictions of these routes about immigration, the movements toward recovery are slower than domestic routes and full recovery is expected to take several years. Under such circumstance, since our aero engines are mounted on relatively new type aircrafts and they have superiority in terms of operating costs such as fuel efficiency, it is expected that operations will be resumed preferentially and earnings in the aftermarket will recover rapidly in the period of recovery in demand. Vehicular turbochargers Business While the number of delivery decreases in the Vehicular turbochargers Business due to the impact of global downturn of demand for automobiles and the suspension of factory production at automotive manufacturing companies, the number of delivery in Chinese market is turning into an increasing phase according to the movement out of the slump in the automotive industry. Furthermore, signs of recovery are also seen in the U.S. and Europe as the factory operations of automotive manufacturing companies resumed from mid-May. ⇒The IHI Group is working on such countermeasures against the impact of the spread of COVID-19 as temporary freezing and/or reduction in expenditure on capital investments, research and development etc., reduction in the total cost/fixed cost and inventories, and shifting human resources to the growth areas and lifecycle businesses flexibly, and will strengthen these efforts in response to the future business environment and demand recovery. Copyright © 2020 IHI Corporation All Rights Reserved. 8 １. Consolidated Results for First Quarter FY2020 Financial Results by Segment The impact of the spread of COVID-19 Civil aero engines：Net sales 150 125.0 Effect of change in sales revenue recognizing timing* 29.2 100 76.6 Net sales (billion yen) 65.1 66.4 95.8 50 Effect of applying 34.9 Accounting Standard 14.5 for Revenue Recognition 20.4 0 FY2019.1Q FY2019.2Q FY2019.3Q FY2019.4Q FY2020.1Q Net sales decreased 46.4% due to a decrease in sales of engines and spare parts year-on-year. *The effect of change of revenue recognition timing from the month following the sale to the same month as the sale Copyright © 2020 IHI Corporation All Rights Reserved. 9 １. Consolidated Results for First Quarter FY2020 Financial Results by Segment The impact of the spread of COVID-19 Vehicular turbochargers The number of delivery and net sales by region 50.0 Number of units（1,000 Units） 1,440 1,500 1,700 1,360 1,150 40.0 Net sales 30.0 （billion yen） 20.0 10.0 0.0 FY2019.1Q FY2019.2Q FY2019.3Q FY2019.4Q FY2020.1Q Europe 8.3 7.8 5.9 6.9 3.0 Central and South America 1.6 1.4 1.9 1.7 0.2 North America 3.1 2.6 2.4 2.7 1.1 Asia 2.5 2.6 2.7 2.9 0.9 Japan 10.1 9.5 9.6 9.9 6.8 China 12.7 14.2 19.5 12.9 15.9 Total 38.7 38.0 42.1 36.9 28.2 The number of delivery and net sales in China increased year-on-year. Copyright © 2020 IHI Corporation All Rights Reserved. 10 １. Consolidated Results for First Quarter FY2020 Financial Results by Segment Progress of measures against the spread of COVID-19 Measures Progress Hereafter • Established fundraising line of about