COMPANY PROFILE

March 2011 Filtration Industry Analyst7

Tsukishima Kikai Co Ltd, JapanProfileEstablished in 1905, Japan’s Tsukishima Kikai manufactures equipment and systems for a range of industrial and public sector appli-cations. It operates two business segments, Water Environment and Industrial. The Water Environment segment manufactures water supply and sewage treatment plants, incineration systems, and equipment such as dewatering machine and dryers, as well as providing support services for water purification and sewage treatment facilities. The Industrial segment manufactures plant and equipment for a range of industries, such as chemical, steel and food production, with its products including filters, dryers and separators.

AnalysisTsukishima Kikai experienced mixed fortunes in fiscal 2010 with a fall in net sales, but increased new orders and net profit. Although the Japanese economy began to show signs of economic recovery, the company’s sales were down 13% on the year earlier at ¥67.7 bil-lion. Better news was the 59% uplift in net income to ¥753 million and a 3% increase in new orders on the 2009 comparator to ¥68.3 billion. In its Water Environment segment, the company reported that demand for machinery and plant remained slow because of suppressed public sector expenditure. Consequently, the division put greater emphasis on income streams beyond traditional equipment sales such as private finance initiatives (PFI) and design, build and operate (DBO) projects. These efforts saw the Water Environment segment boost its net sales 3% on a year earlier to ¥43.4 billion, with its orders up 15% to ¥46.7 billion and its operating income up 49% to ¥2790 million. Tsukishima Kikai’s Industrial segment found the going much tougher, with capital investment in its end user markets remaining constrained. The segment saw net sales fall 32% on the 2009 figure to ¥24.3 billion, while new orders were down 16% at ¥21.6 billion. The division also recorded a loss for the year of ¥844 million compared to the year earlier gain of ¥974 million. In recognition of the difficult trading environment, Tsukishima Kikai implemented a range of group-wide efficiency initiatives during fis-cal 2010 including the use of centralized and overseas procurement of materials and equipment to reduce the cost of sales. The company also accelerated its efforts to reduce fixed costs by introducing struc-tural reforms, especially measures to improve the efficiency of its engineering operations.

Key Figures (¥ million) Tsukishima Kikai Co Ltd Year ended 31.3

2010 2009 2008 2007 2006

Net Sales 67 674 77 753 77 704 79 074 74 184Of Which:Water Environment 43 418 42 158 36 010 47 366 36 728*Industrial 24 255 35 595 41 694 31 708 37 456**

Cost of Sales 56 151 64 940 64 252 65 043 61 167

Gross Profit 11 522 12 813 13 452 14 031 13 017

Operating Income/(Loss) 1945 2850 3254 3072 2300Of Which: Water Environment 2790 1876 357 1890 502*Industrial (844) 974 2897 1182 1798**

Net Income 753 480 827 1009 1660

Number of Employees 2205 2015 2087 2129 2079*Plant business segment **Equipment and other business segment

Contact DetailsPresident & CEO: Kazuhiko Yamada Tel: +81 3 5560 6535-7Address: 17-15, Tsukuda 2-chome Fax: +81 3 5560 3536 0573 Chuo-ku, Tokyo 104-0051, Japan Web: www.tsk-g.co.jp/en/index.html

COMMENTTsukishima Kikai introduced a new three-year strategic plan in May 2010 that is seeing the firm focus on the environment and energy fields. In its Water Environment business segment these efforts have included the devel-opment of sludge-to-fuel production systems, and, an energy efficient turbo-charged fluidised bed incinera-tion system. The focus on sludge treatment reflects the company’s established reputation in this field that has recently seen it expand its sales into China. The Water Environment sector is also continuing to develop its ‘life cycle business’ model, including PFI and DBO projects as well as comprehensive operational and maintenance agreements, to develop a reliable income stream from services. Similarly, in its Industrial division Tsukishima Kikai is aiming to capitalise on tightening environmental legislation through its environmental and energy-related technologies, including flue-gas desulfurization systems, liquid waste combustion facilities, and solid waste treat-ment equipment. A particular priority is the develop-ment of additional applications for its large-scale dryers. Tsukishima Kikai has also developed a flue flue-gas desulfurization system using seawater that it believes can compete effectively with conventional systems. Another goal of Tsukishima Kikai’s three-year plan is to expand its sales into international markets. ■