FY2016 Financial Results Briefing - kansai.com€¦ · Automotive Coatings Overseas (excluding auto refinish) India Thailand Indonesia Taiwan Malaysia China Turkey South Africa Others

KANSAI PAINT CO.,LTD.KANSAI PAINT CO.,LTD.Page.01

May 22, 2017

FY2016 Financial Results Briefing


1. Status of the Kansai Paint Group

2. Financial Results & Forecasts

3. Business Overview

4. Regional Overview

5. About the fiscal 2017 business forecast

6. The 15th Mid-Term Business Plan Progress

FY2016 Financial Results Briefing


Status of the Kansai Paint Group1

OverseasJapan

Consolidated

Kansai Paint Sales 973 （986）（Automotive, Industrial/Decorative, Sales）

Kansai Paint Marine 122 （141）（Marine , Sales）

Kanpe Shoji 73 （75）（Industrial, Sales）

Kanpe Hapio 63 （66）（Decorative, Manufacturing）

KNPL（India） 747 （658）（Decorative/Automotive, Manufacturing）

KPAL（South Africa） 282 （293）（Decorative/Automotive, Manufacturing）

TKP（Thailand） 127 （142）（Automotive/Industrial, Manufacturing）

KABS（Turkey） 163 （172）（Automotive/Industrial, Manufacturing）

Other 10 companies 25 in Asia, 22 in Africa, and 43 other companies

Equity method affiliates

Ogi Shokai 211 （203）（Decorative/Automotive, Sales）

Eru Mizuho 44 （45）（Industrial, Sales）

Hunan Xiangjiang Kansai (China) 446 （393）（Automotive, Manufacturing）

PKAF・US (United States) 144 （160）（Automotive, Manufacturing）

Cosco Kansai Paint (Shanghai, China) 65 （106）（Marine & Protective, Manufacturing）

12 other companies 12 in Asia, 4 in Africa, and 10 other companies

（Unit : 100M yen）

■ Main Group companies and their sales results Figures in parentheses are FY2015 results

Consolidated sales inFY2016: 330.2 billion yen

Founded : May 1918

Capital : 25.6 billion yen (as of March 31, 2017)

(Number of Shares Issued : 272 million)

Number of Employees : 14,828 (as of March 31, 2017)

● Automotive● Industrial● Decorative● Marine & Protective● Other Paints

By business（Consolidated）

38％

25％

26％

6％5％

● Japan● Asia● Africa● Europe● Others

By region（Consolidated）

41％

43％

5％2％

9％


Ordinary Profit (100M yen)

Financial Results (consolidated)Sales (100mn yen)

● Automotive ● Industrial ● Decorative ● Marine & Protective ● Other Paints ● Other Businesses 　 Ordinary Profit EBITDA　

■ Full Fiscal Year　

Financial Results & Forecasts2

● Operating CF ● Investing CF ● Financing CFCash Flows (consolidated)

EBITDA

255

-161

-65

319

-195

-96

314

-147

-148

291

-970

602

395

-180

-76

104

-219

147

251

-134

-34

183

-142

-47

Operating CF

Investing CF

Financing CF

2013 2014 2015 2016 20172011 20122010

0500

10001500200025003000350040004500

0

100

200

300

400

500

600

700

Cash Flows (100M yen)

-300-200-100

0100200300400500600

3,204

354

502

3,493

377

502

3,281

397

596

3,302

400

531

4,050

490

683

2,565

214

346

2,940

283

422

2,369

235

305

Sales

Ordinary Profit

EBITDA

20162013 2014 2015 20172011 20122010

※EBITDA was calculated by adding and subtractingfrom profit before income taxes and minority interests

Sales

Ordinary Profit

EBITDA

2016

Year-on-year change (%)

2017 forecast

+0.6

+0.8

△10.8

+22.6

+22.4

+28.5

-1000-900

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010


Sales (100M yen)

0

100

200

300

400

500

600

700

379

471

546 561 561

635

373

645

○ Auto production increased in India, China, and Turkey.○ ASEAN was flat growth, sluggish.▷ India to expand, ASEAN to recover▷ Accelerate efforts to break into or expand business with 　 European and American automakers.

Automotive Coatings Overseas (excluding auto refinish)● India ● Thailand ● Indonesia ● Taiwan ● Malaysia ● China ●Turkey ● South Africa ● Others

Consolidated Sales (excluding auto refinish coatings)

Business Overview - 1. Automotive (new vehicles)3

○ Auto production numbers: 9.36 million vehicles (+1.9% 　 year-on-year)▷ Auto production numbers: 9.40 million vehicles forecast 　 (+0.4% year-on-year)

Automotive Coatings in Japan (excluding auto refinish) Consolidated Sales (excluding auto refinish coatings)● Sales 　Auto production numbers in Japan

From FY2010, sales of two-wheeled vehiclesand auto parts have been counted in Industrial.


Auto Production Numbers (1,000)Sales (100M yen)

0

100

200

300

400

500

600

700

0

2000

4000

6000

8000

10000

12000

421 413 422463 471475 460473

8,9949,555 9,912

9,1889,5919,267 9,4009,360Sales

2016Year-on-year change (%)

2017 forecast

+0.4 ▲2.8

Sales


2017 forecast

+0.0 +14.9

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010


Auto Refinish

Industrial

● Japan ● Overseas Sales (100M yen)

Consolidated Sales

Consolidated Sales

Sales (100M yen)● Japan ● Overseas

Business Overview - 2. Auto Refinish/Industrial3


○ Sales expansion of eco-friendly paint was 　　　　　　 promoted in Japan.○ Sales expansion was promoted in Africa.▷ Accelerate breaking into and developing efforts in 　　　 emerging countries.▷ Sales from Helios to newly contribute to our 　　　　　 financial results (after 2Q 2017)

0

50

100

150

200

250

0

200

400

600

800

1000

1200

141

200 206 196 194211

172

240

645

750819 834873

819

671

1105

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

Sales


2017 forecast

▲1.4 +23.9

Sales


2017 forecast

+1.9 +32.4

○ Demand for automobile components recovered in 　　　 Japan.○ Demand expanded mainly in emerging countries such 　 as India.▷ Expand market share by strengthening our 　　　　　 competitiveness and exploring untapped markets.▷ Attract demand of Japanese manufacturers 　　　　　 abroad as well as from new clients.▷ Sales from Helios to newly contribute to our 　　　　　 financial results (after 2Q 2017)


Decorative

Marine & Protective

● Japan ● Overseas Sales (100M yen)

Consolidated Sales

Consolidated Sales

Sales (100M yen)● Japan ● Overseas

Business Overview - 3. Decorative/Marine & Protective3

0

200

400

600

800

1000

1200

0

50

100

150

200

250

193 191

224208

199190188

215

460

771832 867

935

832

612

1135

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

Sales


2017 forecast

+4.1 +31.0

Sales


2017 forecast

▲7.3 +3.4

○ Continued demand expansion in India○ Demand stagnated due to economic slowdown in South 　 Africa.▷ Increase demand in business deployment regions and 　　 further expand our business deployment regions.▷ Sales from Helios to newly contribute to our 　　　　　　 financial results (after 2Q 2017)▷ Performance of the Sadolin Group to newly contribute to 　 our financial results (expected after 3Q 2017)

○ Weak domestic shipbuilding market○ Protective coating business expanded in the ASEAN 　　 region.▷ Obtain demand related to the Tokyo Olympics.▷ Break into, develop, and expand the protective coating 　　 market in emerging countries.


Kansai Nerolac Paints Ltd. (KNPL)

Kansai Plascon Africa Ltd. (KPAL)

●Automotive ●Industrial ●Decorative ●Other Paints 　 Ordinary Profit　 EBITDA

●Automotive ●Industrial ●Decorative ●Other Paints 　　 Ordinary Profit(before amortization of goodwill)　　　Ordinary Profit (after amortization of goodwill)　　　EBITDA

Financial Results & Forecasts of KNPL in India

Financial Results & Forecasts of KPAL in South Africa

Regional Overview - 1. India and South Africa4

Ordinary Profit (100M yen)EBITDA


Sales (100M yen)

0100200300400500600700800900

1000

020406080100120140160180200

404501 550

658 747695

421

930

50 49 54

92

116

78

54

145

64 59 62

193

135

91

65

157

Sales (100M yen)

0

100

200

300

400

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

○ Auto output by major clients increased.○ Strong demand continued in the decorative field (limited 　 impact from abolishing high denomination notes).▷ Demand expected to continue expanding in both the 　　　 automotive and decorative fields.▷ Plan to establish production structures to meet 　　　　　 continued growing demand.

○ Weak demand due to economic stagnation○ Increased materials costs due to the weak South African rand and transient costs.▷ Further vitalize the promotion of sales activities mainly in the decorative field.▷ Improve profitability by resolving transient costs and adjusting prices.▷ Performance of the Sadolin Group to newly contribute to 　 our financial results (expected after 3Q 2017)▷ In the medium-to-long term, break into markets in 　 untapped regions and countries, and expect an increase 　 in financial results due to economic growth in Africa

Sales

Ordinary Profit

EBITDA

2016


2017 forecast

+13.5

+26.4

△30.0

+24.5

+24.8

+16.0

Sales

Ordinary Profit

EBITDA

2016


2017 forecast

▲4.2

ー

ー

+42.7

ー

ー

-40-30-20-100102030405060

05

-6

-37

0

1512

217

321293 280

400395348

10

19

4

-29

10

282429

37

23

-4

35

5245


Region Overview - 2. Asia, and Europe4

Financial Results & Forecasts of Consolidated Subsidiaries in Asia

Financial Results & Forecasts of Consolidated Subsidiaries in Europe



Ordinary profit in Asia

Breakdown ofordinary profit

Breakdown ofordinary profit

Ordinary profit in Europe

● Sales 　 Ordinary Profit 　 EBITDA


0100200300400500600700800

020406080100120140160180200

0100200300400500600700800

0102030405060708090100

Sales (100M yen)

Sales (100M yen)

46 4860

47

6772

30

56

402

501

589 566

662595

366

610

91142

191 178 168160105

540

20175.6billion

20164.7billion

● Turkey● Others 2017

3.2billion20167billion

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

　 ○ Auto production recovered in China, demand for 　　　　　　 motorbikes increased in Indonesia.○ Impact of currency conversions was large in all countries.▷ Auto production to recover in the ASEAN region

○ Auto output increased in Turkey.▷ Sales from Helios Group to newly contribute to our financial 　 results (after 2Q 2017)

Sales

Ordinary Profit

EBITDA

2016


2017 forecast

▲3.9

▲20.1

▲17.7

+7.7

+18.9

+38.2

Sales

Ordinary Profit

EBITDA

2016


2017 forecast

▲5.3

+36.3

+17.0

+221.4

+332.4

+461.9

● Thailand● Indonesia● Taiwan● Malaysia ● China● Other Asian countries

5868

9276

107100

38

105

5 7 996

32

5 79

101713

8

84

13 15


Regional Overview - 3. Other Consolidated and Equity method affiliates4

Ordinary profit in Other Consolidated

● Japan ●China ●Europe ●The United States ●Others

Profits from equity method affiliates (simple aggregation)


○ Auto production numbers increased in Japan.○ In China, sales increased, and sales to non-Japanese 　　 automakers enjoyed increased market share.▷ Profits from Polisan in Turkey to newly contribute to our 　 financial results

Profits from equity method affiliates (100M yen)


0

10

20

30

40

50

60

02468101214161820

-10

0

10

20

30

40

50 42

1522

4142

35

5

45

Profits from equitymethod affiliates


2017 forecast

+2.5 +7.5

Financial Results & Forecasts of Other Consolidated

Sales (100M yen)

5 7 9 10

26

84

50

○ U.S. Paint became a consolidated subsidiary (after 3Q 2016).▷ Market share expected to increase in the U.S. industrial 　　 field.

Sales

Ordinary Profit

EBITDA

2016


2017 forecast

+156.8

+49.4

+705.4

+92.3

+66.7

+118.0

0 0 000

10

1

5

000 000 000000000

101010

111

555

0 0 000

5

1

3

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010

2013 2014 20162015 2017(full fiscal

year forecast)

201220112010


About the fiscal 2017 business forecast5

Sales

Materials and costs

Ordinaryprofit

(Domestic)

(Overseas)

Compared to fiscal 2016 business results

Although auto production numbers are expected to exceed the previous year’s level, promotion of local production will be a factor for a decrease in sales revenue. A gradual increase in sales revenue is expected in other fields.Sales are expected to remain unchanged compared to the previous yeardue to promotion of sales expansion and price adjustments.

We expect demand to stagnate temporarily in some regions due to a weakening economy and effects of political uncertainty. However, revenue is expected to continue growing due to growing demand mainly in emerging countries. We expect demand to grow especially in India, which will be the engine behind revenue growth. Sales from the Helios Group in Europe and Sadolin Group in East Africa are expected to newly contribute to financial results.

Materials costs are forecast to remain on a rising trend due to the rise in oil prices since the previous fiscal year. We aim to improve profitability by continuing to promote cost-reduction efforts. In Japan in particular, we will continue our efforts in cost reduction, including improvements in productivity.

Ordinary profit is expected to grow by 9.0 billion yen from the previous year.Parent-only ordinary profit is estimated to decrease by 2.6 billion yen, consolidated ordinaryprofit from domestic businesses is expected to decline by 300 million yen, while consolidated ordinary profit from overseas businesses is seen growing by 10.7 billion yen.Investment gain on equity method is forecast to grow by 300 million yen, but this is expected to be offset by dividend income and other factors, resulting in a 900 million yen increase.


ROE　　　　Adjusted ROE


The 15th Mid-Term Business Plan Progress - 1. Performance plan6

* Adjusted ROE = (Net income + goodwill amortization)/ shareholders’equity

More than10%8.4

9.5

9.010.1

＊Figures for FY 2015 exclude extraordinary income resulting　from the sales of land in India.

(%)

Sales (100M yen)

2018201720162015（Plan）（Forecast）（Actual）（Plan）（Actual）

Sales　　　　　Ordinary profit　　　　　EBITDA

3281 3400 3302 4050 4700

6

8

10

12

2018201720162015

◯ The plan for FY 2016 failed to be reached due to the large impact of the temporary slowdown in growth of emerging economies and exchange conversions.

◯ The sales plan for the final year of the 15th Mid-Term Plan has been revised upward from 420 billion yen to 470 billion yen by incorporating M&As carried out in FY 2016.

◯ We will aim to achieve ROE of more than10% with the increase of EBITDA.

◯ Adjusted ROE* that excludes the impact of goodwill amortization has been added to indicators.

0

1000

2000

3000

4000

5000

0

100

200

300

400

500

600

700

800

596531

683

3281 3400 3302 4050 4700

397 400

420

490

600


The 15th Mid-Term Business Plan Progress - 2. Priority measures and progress etc.6

Main contentPrioritymeasures Progress up until now etc.

○ Acquired shares of the Helios Group in Europe○ Acquired shares of the Sadolin Group in East Africa○ Acquired shares of Polisan Turkey, and accepted share allocations from third parties

○ Acquired shares of U.S. Paint in the U.S.○ Acquired shares of Saudi Industrial Paint in Saudi Arabia○ Acquired shares of Sancora Paint Industries in Malaysia○ Planned to establish a joint venture in Nigeria and Kenya○ Acquired pipeline-internal-painting technology from Mirodur in Italy

○ Promote measures to develop businesses for non-Japanese clients and to boost shares

○ Promote the entry and development of the European and U.S. automakers

○ Expand sales of functional products such as plaster paint and insect repellent paint

○ Issue convertible bonds○ Establishment of headquarters’ functions to start　 in FY 2017

1. Sharing and promoting the resource utilization within the group

2. Establishing the headquarters’function and building the organization

3. Integrating current regions into seven global regions and establishing a supervisory control function

1. Increasing earning power by expanding market share

2. Reducing costs through efficiency and optimization

1. Expanding and strengthening our businesses in existing markets

2. Entering into new markets and regions

Strengthening the Group’s Management Foundations

Increasing Profitability

Accelerating Globalization

Each initiative was conducted based on the three themes set as priority measures.


（1） Overview of target company

（2） Overview of purchase, target and others

Acquiring shares of the Helios Group in Europe‒ Full-scale entry into the European coatings market ‒

○ Company name: Helios Group ○ Business size (2015)　 Sales of approx. 386 million euros　 (approx. 46.8 billion yen)　 Operating profit of approx. 34 million euros　 (approx. 4.1 billion yen)○ The Helios Group is a coatings maker whose　 strengths lie in industrial paints○ The Group operates in various countries in　 Central, Eastern and Western Europe as well as　 Russia.

○ Capital contribution ratio: Kansai Paint has 100%　 (consolidated subsidiary)○ Purchase price: 572 million euros　 (approx. 70 billion yen)○ Full-scale entry into the European coatings market○ A source for procurement of materials and　 ingredients in Europe○ Global utilization of highly competitive technology　 and product categories such as authentication　 products for railcar wheel makers and coatings for　 motors, for which demand is expected to grow　 in the future.



New Production Plant in Uganda SADOLIN Merchandising in a Major Dealer in Uganda

（1） Overview of target company

（2） Overview of purchase, target and others

Acquiring shares of the Sadolin Group in East Africa‒ Strengthening our business foundation in the East African market ‒

○ Company name: Sadolin Group○ Business regions: Uganda, Tanzania, Kenya, etc.○ Business lines: Manufacture and sale of construction　 and industrial coatings○ Business size (2015)　 Sales of 85.5 million US dollars　 (approx. 9.6 billion yen),　 operating profit of 13.7 million US dollars　 (approx. 1.5 billion yen)○ An excellent corporate entity with the top share in　 the coatings market of the East African Community

○ Capital contribution ratio: Kansai Plascon Africa Ltd.　 (consolidated subsidiary of Kansai Paint) has 100%○ We are attempting to further solidify our business　 foundation in the East African market as well as　 expand and develop our business in Africa overall.



Finally-

Kansai Paint contributes.● We will assist in the development of society and mankind through the coating business and continually endeavor to be a company indispensable to society.

● We will strive to contribute to solving problems facing society such as the need for environmental conservation, as well as creating a better world.

● We will address changes and aim to build and maintain the company’s credibility in society.

The global coating business is a growth industry.In this industry, we will aim to improve our cash generation ability and further disseminate coatings throughout the world.

Furthermore,


Forecasts of financial results stated in this document are forecasts based oncurrently available information that includes potential risks and uncertain elements.

Therefore, actual financial results may differ from the forecast figures.

KANSAI PAINT CO.,LTD.KANSAI PAINT CO.,LTD.

Documents

FY2016 Financial Results Briefing - kansai.com€¦ · Automotive Coatings Overseas (excluding auto refinish) India Thailand Indonesia Taiwan Malaysia China Turkey South Africa Others