COMPANY PROFILE

8Filtration Industry Analyst April 2011

Tomoe Engineering Co Ltd, JapanProfileEstablished in 1941, Japanese firm Tomoe Engineering operates two main business segments, Machinery & Equipment and Chemical Products. The Machinery & Equipment division manufactures centrifugal decanters and related equipment such as rotary press filters. Its target markets include wastewater treatment facilities and a range of industrial applications including food, steel, mining, energy, paper/pulp and biochemical industries. The Chemical Products segment primarily imports and distributes a range of chemicals, plastics and related products for the Japanese market.

AnalysisTomoe Engineering saw some improvement in fiscal 2010 from the difficult trading environment it encountered a year earlier. The com-pany’s total net sales were up 6.9% on fiscal 2009 at ¥38 817 million, while its net income surged 36.4% to reach ¥1355 million. Despite the overall lift in net sales, the company’s Machinery & Equipment seg-ment, home to its filtration and separation operations, saw its revenues decline 3.6% on the year earlier figure to reach ¥11 523 million. The Machinery & Equipment division did benefit from an increase in sales from the public sector in its home Japanese market for equipment and systems, as well as for spare parts and repairs. This upturn, however, was unable to compensate for reduced demand from its industrial customer base, particularly as the fiscal 2009 figure had benefited from a signifi-cant contract for the supply of centrifuges for the chemical industry in Poland. Better news for the Machinery & Equipment segment was the growth in its operating income, which was up 14.8% on the prior year at ¥960 million. The growth in the sector’s operating income reflected a greater percentage of sales coming from its higher margin spare parts and repairs business, as well as from a reduction in its operating costs reflecting greater efficiencies. In contrast to the Machinery & Equipment segment, sales in the Chemical Products division were up 12.1% on the fiscal 2009 comparator at ¥27 294 million. The uplift in demand was particularly strong for the segment’s electronics materials, plastics and fine chemicals sectors. Operating income for the business segment also grew strongly year-on-year, increasing 61.9% to reach ¥1212 million, with its electronics materials business again to the fore. Tomoe Engineering did not make any acquisitions during the year, nor did it open any new plants/offices or establish any joint ventures. Key Figures (¥ million) Tomoe Engineering Co Ltd Year ended 31.10

2010 2009 2008 2007 2006

Net Sales 38 817 36 305 47 543 50 795 47 331Of Which:Machinery & Equipment 11 523 11 951 12 548 14 548 12 117

Cost of Sales 30 479 28 791 38 330 41 791 39 009

Gross Profit 8338 7514 9213 9004 8322

R&D Expenses n/a 194 194 215 225

Selling & General Administrative Expenses 6165 5929 6757 6559 6211

Operating Income 2173 1585 2456 2445 2111Of Which:Machinery & Equipment 960 837 973 925 851

Income before Income Taxes 2226 1643 2587 2445 2252

Net Income 1355 993 1365 1357 1267

Contact Details President: Noboru ShionoManaging directors: Hitoshi Shiraishi and Hitoshi Yamamoto Tel: +81 3 5435-6511Address: Art Village Osaki Central Tower Fax: +81 3 5435 00701 1-2-2 Osaki, Shinagawa-ku Web: www.tomo-e.co.jp/index_e.html Tokyo 141-0032, Japan

COMMENTTomoe Engineering’s mid to long-term strategy for its Machinery & Equipment segment is based around new product development, the reduction of manufacturing costs and the development of international markets. In the shorter term, this strategy is focused on increasing sales of its energy efficient centrifuge models and the expansion of its market share in China and the USA. With regards to the latter objective, Tomoe Engineering wants to see the contribution of international sales in the Machinery & Equipment division grow from the current 40% of revenues to 60%. The company has set similar initiatives for its Chemical Products segment, which will draw on its plastics compounding joint venture in southern China. Together, these strategies are targeting a growth in total net sales by fiscal 2013 of approximately 30% to ¥50 000 mil-lion. The company is also aiming for net income to grow around 85% in that period to reach ¥2500 million. For the current financial year, Tomoe Engineering has forecast its net sales in its Machinery & Equipment division to grow 12.8% to ¥13 000, while it anticipates that operating income for the segment will lift 13.5% on the fiscal 2010 figure to ¥1090 million. The growth is expected to come from increasing machinery orders for oil production and from the chemical industry. ■