Financial Results for FY2016-Q2 - オーエスジー株式 …Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan The Americas Europe Asia FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15

© 2016 OSG Corporation 0

Financial Results

for FY2016-Q2

July, 2016

OSG Corporation

© 2016 OSG Corporation 1

2. Strengths

・High-value added cutting tools

・Excellent after-sales service

・Global sales & service network across 30 countries

OSG at glance

Tap

Rolling dies

End mill

Drill

Indexabletools

1. Products

・Consumable cutting tools used in machine tools

・World leader in market share (30%) in taps

3. Dividend policy

・Maintain over 30% payout ratio (consolidated)

Tools to cut threads

Tools to shape metal

Tools to make holes

Tools to shape metal

Tools to form threads4. 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.

© 2016 OSG Corporation 2

Financial summary

Net sales 56,187 53,484 -2,703 -4.8% 106,000

Operating profit 11,016 9,835 -1,180 -10.7% 18,000

OPM 19.6% 18.4% - - 17.0%

Ordinary profit 10,971 9,462 -1,508 -13.8% 17,700

Net profit attributable

to OSG Corporation6,614 5,816 -798 -12.1% 10,700

EPS(yen) 69.66 62.52 -7.14 -12.1% 115.02

ChangeFY16 fcst.

AnnualFY15-1H FY16-1H

(Millions of yen)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Net sales Operating profit Net profitOrdinary profit

FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16

*Revised

*

© 2016 OSG Corporation 3

Review

Decrease in sales and profit– The reduction in sales and operating profits in China and the US has caused a decline in sales and profits.– Sales compared with the previous first-half was flat, excluding exchange rate factors.

Stable financial condition– Equity ratio 59.6% (purchasing of treasury stock, 6.5 point decrease from the end of FY2015)– EBITDA in 6 months (margin) 136 billion yen (25.5%)– ROE 12.9% (as of the end of FY2015)

Review by region– Japan

The domestic sales was increased, however overseas slowdown in China and the US resulted in a negativeimpact on OSG Japan export.

– The AmericasThe revenue grew on a local currency basis in Mexico and Canada, however, overall downturn in theAmerican markets generally.

– EuropeTool demand was steady in this segment and the results of the companies acquired by M&A boosted salesand profits. On a local currency basis , sales and profit grew.

– AsiaThe results of Greater China were negatively affected by the slowdown of manufacturing industries in China.Conditions in India and Korea remained good.

Capital Investment Results- CAPEX 6.7 billion yen (annual forecast of 12.5 billion yen)- Depreciation 3.8 billion yen (annual forecast of 8.1 billion yen)

© 2016 OSG Corporation 4

Operations by geographical segmentFY15-Q1 FY16-Q1

Japan Net Sales 33,608 33,106 -501 -1.5%

O.P 5,711 5,005 -706 -12.4%

O.P.M 17.0% 15.1%

The Americas Net Sales 11,066 9,870 -1,195 -10.8%

O.P 1,701 1,370 -330 -19.4%

O.P.M 15.4% 13.9%

Europe Net Sales 5,593 6,418 825 +14.8%

O.P 677 669 -7 -1.1%

O.P.M 12.1% 10.4%

Asia Net Sales 16,852 13,946 -2,906 -17.2%

O.P 3,543 2,440 -1,102 -31.1%

O.P.M 21.0% 17.5%

Total Net Sales 67,120 63,342 -3,777 -5.6%

O.P 11,633 9,486 -2,146 -18.5%

Eliminations Net Sales -10,933 -9,858 1,074 -

O.P -617 348 965 -

Consolidated Net Sales 56,187 53,484 -2,703 -4.8%

O.P 11,016 9,835 -1,180 -10.7%

O.P.M 19.6% 18.4%

Change

(Millions of yen)

© 2016 OSG Corporation 5

Net sales by geographical segment

7,1526,793

7,414

8,5898,927

7,9257,5907,226

6,5156,603

0

2,000

4,000

6,000

8,000

10,000

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

5,031

5,629

4,8395,288

5,6375,428

4,9344,7684,505

4,191

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

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

17,323

14,54516,22915,597

16,87415,831

17,776 17,943

15,78316,288

0

4,000

8,000

12,000

16,000

20,000

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

Japan The Americas

Europe Asia

FY15 FY16FY14 FY15 FY16FY14

FY15 FY16FY14 FY15 FY16FY14

(Millions of yen)

3,341

3,0763,0202,7992,855

2,738

2,4072,5612,541

2,406

0

1,000

2,000

3,000

4,000

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

© 2016 OSG Corporation 6

Operating profit by geographical segment

1,1451,250

1,4751,4431,561

1,982

1,675

1,0761,178

1,262

0

400

800

1,200

1,600

2,000

2,400

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

Japan The Americas

Europe Asia

FY16FY14 FY15 FY16FY14

FY15 FY16FY14 FY15 FY16FY14

FY15

2,890

2,333

2,798

3,144

2,5672,5732,393

2,2412,104

2,672

0

500

1,000

1,500

2,000

2,500

3,000

3,500

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

659

946

711

840878

822

616667

515

204

0

200

400

600

800

1,000

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

341

254

310332

228

290

386

282 287

328

0

100

200

300

400

500

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

(Millions of yen)

© 2016 OSG Corporation 7

Overseas sales ratio

48.6%

49.7%48.0%

53.5%

54.6%57.8%

55.3%

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

FY10 FY11 FY12 FY13 FY14 FY15 FY16-1H

Asia

Europe

The Americas

Japan

Millions of yen

Japan44.7%

AM18.2%

Europe12.0%

Asia25.1%

FY16-1H

© 2016 OSG Corporation 8

15/11E 16/05E Change

Cash & TD 21,472 18,123 -3,348

Receivables 21,519 20,140 -1,378

Inventories 30,673 31,054 381

Other current assets 5,026 5,675 648

Fixed assets 76,437 76,255 -181

Total assets 155,129 151,249 -3,879

Total current liabilities 23,515 25,528 2,013

Total long-term liabilities 17,976 25,568 7,592

Total net assets 113,637 100,152 -13,485

Total liabilities and net assets 155,129 151,249 -3,879

Equity ratio 66.1% 59.6%

Receivable turnover period 70 69 days

Inventory turnover period 3.3 3.5 months

Cash and TD 21,472 18,123 -3,348

Debt 20,195 32,712 12,516

Net Cash 1,276 -14,588 -15,865

(Millions of yen)

B/S overview

Cash and T

D

Receivables

Inventories

Fixed assets

Other current assets

Current liabilities

Long-term liabilities

Net assets

Changes in B/S

-3,348

-1,378

+381

-181

+648

+2,013

+7,592

-13,485-15,000

-10,000

-5,000

0

5,000

10,000

© 2016 OSG Corporation 9

FY14 FY15 15/1H 16/1H ChangeIncome before income taxes 17,419 21,363 10,971 9,462 -1,508Depreciation and amortization 6,830 7,705 3,681 3,806 125Chagne in accounts receivables -933 226 132 147 15Change in inventories 526 -2,302 -798 -1,978 -1,180Chagne in accounts payables -269 592 -328 202 530Other-net 678 -32 -320 -176 144Income taxes paid -4,563 -7,964 -4,528 -3,721 806Operating cash flow 19,688 19,588 8,808 7,742 -1,066Capital expenditures -7,327 -12,487 -5,402 -6,737 -1,335Payment of time deposits 6,135 -1,195 -2,723 411 3,134Purchase of subsidaries' stock -1,108 -2,137 -455 -2,882 -2,427Purchase of securities -7 -107 -88 -95 -7Other-net -811 -1,047 -534 -111 422Investing cash flow -3,119 -16,976 -9,204 -9,416 -211Free cash flow 16,569 2,612 -395 -1,673 -1,278Change in interest-bearing debt -9,383 101 399 12,671 12,272Payments of Long-term accounts payable 0 -1,390 -1,400 0 1,400Cash dividends paid -3,223 -4,368 -1,893 -1,899 -6Purchase of treasury stock -6 -6 -3 -9,333 -9,329Increase in money held in trust for purchase of treasury stock - - 0 -1,002 -1,002Dividends paid to noncontrolling interests -200 -553 -364 -259 104Other-net 0 0 0 13 13Financing cash flow -12,813 -6,216 -3,262 188 3,451Foreign currency translation adjustments 915 -854 54 -1,597 -1,651Net increase(decrease) in cash 4,670 -4,458 -3,603 -3,081 521Cash from newly consolidated subsidiaries 0 182 182 357 174Net increase in cash resulting from change in fiscal period of consolidated subsidiaries 0 2,204 2,204 0 -2,204Cash, end of year 21,474 19,402 20,257 16,678 -3,579

Cash flow overviewCAPEX and depreciation

0

2000

4000

6000

8000

10000

12000

14000

FY13 FY14 FY15 FY16/1H

Depreciation CAPEX

EBITDA

19,544

24,246

29,302

13,64224.0%26.2%

25.5%

22.1%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

FY13 FY14 FY15 FY16/1H

0%

5%

10%

15%

20%

25%

30%

35%

40%

EBITDA EBITDA Margin

(Millions of yen)

© 2016 OSG Corporation 10

Sales ProfitConsolidated results■Financial forecast (Revised)

Interim Year-end AnnualPayout

ratio

Dividend per share (yen) 22.00 28.00 50.00 43.5%

■Dividend forecast

Exchange rateFY2015-1H result ： 1US$= 120.16yen 1Euro=135.38yenFY2016-1H result ： 1US$= 114.75yen 1Euro=127.25yenFY2016 forecast ： 1US$= 108.50yen 1Euro=120.00yen

Amount Growth Amount Growth

Net Sales 106,000 -5.3% 50,000 -6.0%

Operating profit 18,000 -16.7% 6,000 -28.8%

as % of sales 17.0% 12.0%

Ordinary profit 17,700 -17.7% 8,000 -27.6%

as % of sales 16.7% 16.0%Net profit attributable

to OSG Corporation10,700 -14.5% 6,100 -22.9%

as % of sales 10.1% 12.2%

EPS (yen) 115.02 65.57

CAPEX 12,500

Depreciation 8,100

Consolidated Parent company

Forecast for FY2016 (Revised)(Millions of yen)

0

20,000

40,000

60,000

80,000

100,000

120,000

'10

'11

'12

'13

'14

'15

'16fcst

0

4,000

8,000

12,000

16,000

20,000

24,000Sales

O.P

N.P

© 2016 OSG Corporation 11

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)

2016 AMAMCO (USA)

Europe1999 OSG UK2000 OSG Scandinavia (Denmark)2002 OSG Comaher (Spain)2003 OSG GmbH (Germany)2003 OSG Italia2009 OSG Slovakia (Slovakia)2009 OSG Scandinavia, Sweden Branch

(Sweden)2012 OSG Turkey2012 Romsan International (Romania)2012 OSG POLAND2013 OSG PN TOOLS (UK)2014 OSG Belux (Belgium)2015 OSG DAVID (Belgium)2015 Desgranges (France)2016 Flatley Engineering（Ireland）

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)2000 OSG Asia, Malaysia Branch

(Malaysia)

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)2007 OSG Asia, Australia Branch (Australia)

2008 QINGDAO HAOTAI (China)

Europe1997 OSG Europe Logistics

(Belgium)

1997 OSG France1997 OSG Nederland

(Netherlands)

© 2016 OSG Corporation 12

(Millions of yen)Appx.1 Consolidated balance sheet15/11E 16/05E Change 15/11E 16/05E Change

Current Assets 78,692 74,994 -3,698 Current Liabilities 23,515 25,528 2,013

Cash & time deposits 21,472 18,123 -3,348 Payables 4,980 4,559 -420

Receivables 21,519 20,140 -1,378 Short-term loans payable 4,052 8,927 4,874

Inventories 30,673 31,054 381 Current Portion of LT loans payable 445 563 117

Other 5,215 5,861 646 Income taxes payable 3,486 2,377 -1,108

Allowance for -188 -186 1 Accured expenses 6,715 6,147 -568

doubtful accounts Other 3,834 2,953 -880

Fixed Assets 76,437 76,255 -181 Long-term Liabilities 17,976 25,568 7,592

PP&E 63,276 62,629 -647 Convertible bonds 14,850 14,850 0

Intangible assets 1,254 3,720 2,465 Long-term loans payable 847 8,370 7,523

Investments & other 11,906 9,906 -2,000 Other 2,279 2,348 68

Total Liabilities 41,491 51,097 9,605

Total Equity 113,637 100,152 -13,485

Common stock 10,404 10,404 0

Capital surplus 12,090 12,090 0

Retained earnings 75,719 79,509 3,789

Current ratio 335% 294% -41pt Treasuary stock -1,104 -10,464 -9,359

Quick ratio 183% 150% -33pt Unrealzed gain on 2,709 1,770 -939

Equity capital 102,566 90,082 -12,483 available-for-sale securities

Equity ratio 66.1% 59.6% -6.5pt Deferred gain on 2 40 38

Equity per share(yen) 1,079.12 997.78 -81.34 derivatives under hedge accounting

Interest-beating debt 20,195 32,712 +12,516 Foreign currency 2,745 -3,267 -6,012

Net Cash 1,276 -14,588 -15,865 translation adjustments

Subscription rights to shares - 13 13

Noncontrolling interests 11,071 10,056 -1,014

Total 155,129 151,249 -3,879 Total 155,129 151,249 -3,879

© 2016 OSG Corporation 13

Q1 Q2 Q3 Q4

% % % % %

Net sales 26,665 29,521 27,637 28,092 25,814 100.0 27,670 100.0 53,484 100.0 56,187 100.0 -2,703 -4.8

Cost of sales 14,899 16,424 14,840 15,701 14,153 54.8 15,512 56.1 29,666 55.5 31,324 55.7 -1,657 -5.3

Gross profit 11,765 13,097 12,797 12,391 11,660 45.2 12,157 43.9 23,817 44.5 24,862 44.3 -1,045 -4.2

SG&A expenses 6,911 6,935 7,133 7,474 6,869 26.6 7,112 25.7 13,982 26.1 13,846 24.6 135 +1.0

Operating profit 4,854 6,161 5,663 4,917 4,791 18.6 5,044 18.2 9,835 18.4 11,016 19.6 -1,180 -10.7

Non-operating profit 334 245 317 338 329 244 574 580 -5

Non-operating expenses 420 205 320 376 642 304 947 625 322

Ordinary profit 4,769 6,201 5,660 4,878 4,478 17.3 4,984 18.0 9,462 17.7 10,971 19.5 -1,508 -13.8

Extraordinary gain 0 0 0 0 0 0 0 0 0

Extraordinary loss 0 0 0 147 0 0 0 0 0

Profit before taxes 4,769 6,201 5,660 4,731 4,478 17.3 4,984 18.0 9,462 17.7 10,971 19.5 -1,508 -13.8

Income taxes 1,630 1,893 1,929 1,773 1,456 1,551 3,007 3,523 -516

Net profit attributable to

noncontrolling interests336 496 404 382 316 321 638 833 -194

Net profit attributable to

OSG Corporation2,803 3,811 3,327 2,576 2,705 10.5 3,110 11.2 5,816 10.9 6,614 11.8 -798 -12.1

Change1HQ1 Q2 1H

FY2015FY2015 FY2016

(millions of yen)Appx.2 Consolidated income statement

© 2016 OSG Corporation 14

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-1H

Net sales (mill.yen) 94,164 97,024 53,325 69,513 80,959 84,083 88,378 101,031 111,917 53,484

Sales growth （％） 6% 3% -45% 30% 16% 4% 5% 14% 11% -5%

Cost of sales (mill.yen) 58,159 60,449 39,203 44,605 48,439 49,381 52,777 58,061 61,865 29,666

Gross profit (mill.yen) 36,004 36,574 14,122 24,907 32,519 34,702 35,601 42,970 50,051 23,817

SG&A expenses (mill.yen) 20,647 22,158 16,857 17,383 20,214 20,747 22,774 25,554 28,454 13,982

Operating income (mill.yen) 15,356 14,416 -2,735 7,524 12,305 13,954 12,827 17,415 21,597 9,835

Ordinary income (mill.yen) 14,570 13,505 -2,703 6,699 11,374 13,695 13,910 17,568 21,510 9,462

Net income attributable to OSG corp. (mill.yen) 8,013 7,376 -3,769 3,772 5,904 7,138 8,619 9,989 12,518 5,816

Gross profit / sales （％） 38.2% 37.7% 26.5% 35.8% 40.2% 41.3% 40.3% 42.5% 44.7% 44.5%

SG&A expenses / sales （％） 21.9% 22.8% 31.6% 25.0% 25.0% 24.7% 25.8% 25.3% 25.4% 26.1%

Operating income / sales （％） 16.3% 14.9% -5.1% 10.8% 15.2% 16.6% 14.5% 17.2% 19.3% 18.4%

Ordinary income / sales （％） 15.5% 13.9% -5.1% 9.6% 14.0% 16.3% 15.7% 17.4% 19.2% 17.7%

Net income attributable to OSG corp. / sales （％） 8.5% 7.6% -7.1% 5.4% 7.3% 8.5% 9.8% 9.9% 11.2% 10.9%

Average FX rate: 1USD (yen) 118.89 107.32 94.94 89.29 80.71 78.89 93.16 102.98 121.03 114.75

Average FX rate: 1Euro (yen) 159.00 161.90 128.83 120.65 112.80 102.63 122.62 139.37 134.92 127.25

Total assets (mill.yen) 127,044 122,383 113,382 105,635 104,373 121,689 134,503 142,302 155,129 151,249

Total shareholders' equity (mill.yen) 64,295 64,251 55,931 57,117 59,367 64,482 80,024 91,458 102,566 90,082

Net income (yen) 82.42 76.53 -39.22 39.34 62.18 75.16 90.76 105.20 131.78 62.52

Cash diviends (interim) (yen) 12.00 12.00 0.00 4.00 6.00 10.00 10.00 14.00 26.00 22.00

(year end) (yen) 14.00 12.00 3.00 8.00 12.00 13.00 20.00 20.00 20.00 28.00(fcst)

Total shareholders' equity (yen) 667.01 666.71 582.19 601.44 625.14 679.01 842.71 963.15 1,079.12 997.78

Numbers of shares issued (ths) 96,393 96,371 96,071 94,969 94,967 94,966 94,963 94,959 94,991 93,024

ROE （％） 12.9% 11.5% -6.3% 6.7% 10.1% 11.5% 11.9% 11.7% 12.9% -

Equity ratio （％） 50.6% 52.5% 49.3% 54.1% 56.9% 53.0% 59.5% 64.3% 66.1% 59.6%

Operating cash flow (mill.yen) 16,733 10,653 6,049 14,095 11,344 12,286 16,171 19,688 19,588 7,742

Investing cash flow (mill.yen) -9,019 1,678 -4,633 -5,522 -8,195 -19,746 -2,972 -3,119 -16,976 -9,416

Financing cash flow (mill.yen) -6,821 -4,500 5,470 -15,562 -5,855 8,643 -9,423 -12,813 -6,216 188

Cash flow margin （％） 17.8% 11.0% 11.3% 20.3% 14.0% 14.6% 18.3% 19.5% 17.5% 14.5%

Appx.3 Selected financial data (consolidated)

© 2016 OSG Corporation