Financial Results Presentation

Second Quarter for Fiscal Year Ended March 31, 2018

Nippon Pillar Packing Co., Ltd.

(Securities code: 6490)
D b 2017
December

Contribute to global environment conservation and the future of society with fluid control technology
1
 Table of Contents

1. Outline of Business, Highlights of Financial

Results

2 O
2. Overview
i off the
th Financial
Fi i l Results
R lt ffor th
the 2nd
2 d
Quarter of Fiscal Year Ended March 2018 and
Outlook of Financial Results for the Fiscal Year
Ending March 2018

３．Medium-term Management Plan "BTvision19"

2
 Change of Our Sales Since 1990

(Point) The sales have stably increased for more than 20 years.
(Unit: million yen)
30,000

Change of sales
25 000
25,000

20,000

15,000

10,000

5,000
91/3 92/3 93/3 94/3 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3
(予)
(Forecast)

3
 Change Over 5 years

(Point) High operating income ratio has been maintained.

(Unit: million yen)

30 000
30,000
Sales 28,300
27,225

25,000
22,960
21,675
20,720
20,000 18,831

15 000
15,000
2013/3 2014/3 2015/3 2016/3 2017/3 2018/3
(予)
(Forecast)
6,000 32.0
（%）
5,166
5 000
5,000 4 700
4,700
24.0
19.0
4,000
3,226 14.9 15.1 16.6
3,469
12.7 2,908 14.0 3,204 3,100
16.0
3,000
2,393 2,397
1,986 8.0
2,000 1,854
1,589

1,000 0.0

Operating income Net income Operating income ratio

4
Origin of Our Company Name & Company Profile

Origin of our company name This naming is derived from the fact that at the time
of founding, "Pillar Packing No.1" developed as seal
product for preventing steam leak from ships was
pillar-shaped.

Established in 1924

President Kiyohisa Iwanami, CEO

Stock Exchange
First Section, Tokyo Stock Exchange (Securities code: 6490)
Listing

Capital ¥ 4,966 million

Description of
Manufacture and sales of equipment products related to fluid control
Business
Number of
753 (Consolidated: As of September 30, 2017)
Employees

Sales ¥ 27,225
27 225 million (Consolidated: FYE March 2017)

5
 Highlights of Financial Results

Consolidated
Consolidated cumulative 2nd quarter of
cumulative 2nd quarter
of FYE March 2017 FYE March 2018
Results ((million yyen)) Results ((million yyen)) Year-on-year
y change
g Year-on-year
y ((%）

Sales 12,391 13,975 +1,583 +12.8

Operating income 2,042 2,288 +245 +12.0

Ordinary income 1 998

1,998 2 318
2,318 +320 +16 0
+16.0

Net income 1,138 1,540 +401 +35.3

B segmentt
By
Consolidated
Consolidated cumulative 2nd quarter of
cumulative 2nd quarter
of FYE March 2017 FYE March 2018
Results (million yen) Results (million yen) Year-on-year
Year on year change Year on year (%）
Year-on-year

Industrial equipment business

Sales 5,135 5,064 △70 △1.4

Operating income 807 703 △104 △12 9

△12.9

Electronic equipment business

Sales 7,206 8,865 +1,658 +23.0

Operating income 1,206 1,610 +403 +33.5

6
 Sales by Segment (FYE March 2017)

Others ¥ 91 million (0.3%)

Industrial equipment Electronic

¥ 10,680 million equipment
(39.2%) ¥ 16,452 million
FYE March 2017
(60 4%)
(60.4%)
¥ 27,225 million
(100.0%)

7
 Introduction of Businesses

We are a fluid control equipment manufacturer based on the "technology for preventing the leak of
fluid". In accordance with changes
g in the industrial structure, we are developing p g
proprietary technology-applied highly-functional products focusing on seal products, to
contribute to a wide range of industries.

Our segment category

Industrial
equipment business
(Seal products) Heat Mechanical seal (MS) Gland packing (GP)

Raw material resistance

technology
Pressure
・Fiber
・Metal
resistance Gasket (VG))

Marketing (Appliccation
ology

Design technology

Wear

developmentt)
Material techno

technologyy
Processingg

resistance

Chemical
Pilaflon (PF)
resistance
Semiconductor and Construction field
D
M

Application
A li ti off M liquid crystal field
resin Purity
characteristics
Low friction
Electronic characteristics
equipment business
(Resin products)
8
 Main Delivery Destinations for Industrial Equipment Business
(Seal Products)

Main industries as
Main equipment delivered
d l d delivery destination
Mechanical seal (MS)

Electric power
Pump
Gland packing (GP)

Chemical plant

Valve Agitator
Gasket (VG)

Automobile Food

9
 Main Delivery Destinations of Electronic Equipment Business
(Resin Products)

Main industries as
Main equipment delivered delivery destination
Pilaflon (PF)

Semiconductor and
q crystal
liquid y field

Coating and Semiconductor

Cleaning device developing device

Chemical supply
CMP device Liquid crystal
device

Construction field Main delivery destinations

Connecting
Connecting
bridge
Buildingg corridor

10
 Table of Contents

1. Outline of Business, Highlights of Financial

Results

2 O
2. Overview
i off the
th Financial
Fi i l Results
R lt ffor th
the 2nd
2 d
Quarter of Fiscal Year Ended March 2018 and
Outlook of Financial Results for the Fiscal Year
Ending March 2018

３．Medium-term Management Plan "BTvision19"

11
 Overview of Financial Results for the Second Quarter for
Fiscal Year Ended March 2018
(Unit: million yen)

28,300
Sales Operating income Net income

12,391 13,975
4,700
3,100
2,042 2,288
1,138 1,540

2016/1-2Q 2017/1-2Q 2018/3 2016/1-2Q 2017/1-2Q 2018/3 2016/1-2Q 2017/1-2Q 2018/3

(Forecast) (Forecast) (Forecast)

2016/1-2Q – 2017/1-2Q 2016/1-2Q – 2017/1-2Q 2016/1-2Q – 2017/1-2Q

Year-on-year change : +1,583 Year-on-year change : +245 Year-on-year change : +401
Year-on-year : +12.8% Year-on-year :+12.0% Year-on-year : +35.3%

(Unit: million yen)

28,300 4,700

3,123 3,100
,
14 833 13,975
14,833 13 975 2 288
2,288
10,947 12,013 12,391 2,042
1,879 2,065 1,540
1,590
1,393
1,003 1,138

12
 Overview of Financial Results for the 2nd Quarter of
Fiscal Year Ended March 2018
Consolidated
Consolidated cumulative 2nd quarter of
cumulative 2nd quarter
of FYE March 2017 FYE March 2018
Results ((million yyen)) Results ((million yyen)) Year-on-year
y change
g Year-on-year
y ((%）

Sales 12,391 13,975 +1,583 +12.8

Operating income 2,042 2,288 +245 +12.0

Ordinary income 1 998

1,998 2 318
2,318 +320 +16 0
+16.0

Net income 1,138 1,540 +401 +35.3

B segmentt
By
Consolidated
Consolidated cumulative 2nd quarter of
cumulative 2nd quarter
of FYE March 2017 FYE March 2018
Results (million yen) Results (million yen) Year-on-year
Year on year change Year on year (%）
Year-on-year

Industrial equipment business

Sales 5,135 5,064 △70 △1.4

Operating income 807 703 △104 △12 9

△12.9

Electronic equipment business

Sales 7,206 8,865 +1,658 +23.0

Operating income 1,206 1,610 +403 +33.5

13
 Factors Attributable to Increases and Decreases in Sales by Segment
(Results for the 2nd Quarter of FYE March 2018)

Due to a boom in the semiconductor industry, the sales

related to electronic equipment business largely increased.
increased

(Unit: million yen)

+1,658 △4 13,975
,

Others Year-on-year change:

+1,583
12,391 △70 Year-on-year: +12.8%

Industrial equipment Electronic equipment

business business

2016/1-2Q 産業機器事業 電子機器事業 その他 2017/1-2Q

14
 Factors Attributable to Increases and Decreases in Operating
Income (Results for the 2nd Quarter of FYE March 2018)

Secured earnings over the previous year

due to increased sales
+757 △103 (Unit: million yen)
△131
△179
Effects by material Production
△99
costs and expenses cost
Sales 2,288
arising from outside
2,042 manufactures administrative
cost
Others

Effects by sales Year-on-year change:

amount (output) +245
Year-on-year: 12.0%

2016/1-2Q 列1 列2 列3 列4 列5 2017/1-2Q

15
 Sales Results by Market (Non-consolidated (for Reference))

(Unit: million yen)

Semiconductor Chemical and Oil, steel and
and liquid crystal others transportation
14 000
14,000 13,329
,
Others
+17.7%UP↑ △2.4% +2.2%UP↑
6,894
11,805 Public demand
12,000
5,859 2,421 2,363
1,827 1,868
Electric power and
energy
10,000
Civil engineering and
construction

8,000 Oil, steel and 2016/1-2Q 2017/1-2Q 2016/1-2Q 2017/1-2Q 2016/1-2Q 2017/1-2Q
transportation

Chemical and others Civil engineering Electric power and Public demand
6,000 and construction energy
Semiconductor and
+73.7%UP↑ △1.6% +22.9%UP↑
q
liquid crystal
y

4,000
1,108
694 683
638
2,000
96 118

0 2016/1-2Q 2017/1-2Q
2016/1-2Q 2017/1-2Q 2016/1-2Q 2017/1-2Q
2016/1-2Q 2017/1-2Q

16
 Overseas Sales Results

(Unit: million yen) Others Asia Ratio of overseas sales （%）

6 000
6,000 25 0
25.0

21.7

5,000 4,809
18 6
18.6 20 0
20.0

16.6
4,028 17.7
4,000 3,804 1,637
15.0
1,166
3,035
1,239
3,000

888
10.0

2,000

3,172
2,862
2,565 5.0
1 000
1,000 2,147

0 0.0

2015/3 2016/3 2017/3 2017/1-2Q

17
Outlook of Financial Results for the Fiscal Year Ending March 2018

FYE March 2017 FYE March 2018 (Forecast)

Year-on-year
Results ((million yyen)) Results ((million yyen)) Year-on-year (%)
change
Sales 27,225 28,300 +1,074 +3.9

Operating
5,166 4,700 △466 △9.0
income
Ordinary income 5,255 4,700 △555 △10.6

Net income 3,204 3,100 △104 △3.2

By segment
FYE March 2017 FYE March 2018 (Forecast)
YYear-on-year
Results (million yen) Results (million yen) Year-on-year (%)
change
Industrial equipment business
Sales 10,680 10,370 △310 △2.9
Operating income 1,828 1,430 △398 △21.8

Electronic equipment business

Sales 16,452 17,850 +1,397 +8.5
Operating income 3,314 3,260 △54 △1.6

18
Factors Attributable to Increases and Decreases in Sales by Segment
(Outlook of Financial Results for the FYE March 2018)

Semiconductor industry products remained strong,

a record
d sales
l expected
t d

(Unit: million yen)

1 397
+1,397 △11
28,300
Year-on-year change:
Others
+1,074
△310 Year-on-year:
27 225
27,225 +3 9%
+3.9%

Industrial equipment Electronic equipment

business business

2017/3 産業機器事業 電子機器事業 その他 2018/3 (Forecast)

19
 Factors Attributable to Increases and Decreases in Operating Income
(Outlook of Financial Results for the FYE March 2018)

Prospects
p for slight
g decrease due to aggressive
gg
investment in equipment and R & D etc.
(Unit: million yen)
+500 △100
△270
Effects by
material costs △450
5,166 and expenses
Production cost
arising
g from
outside Year-on-year change:
Effects by sales manufactures
△466
amount (output)
△146 Year-on-year:
4,700 △9.0%
Sales
administrative Others
cost

2017/3 Column 1 Column 2 Column 3 Column 4 Column 5 2018/3

(Forecast)

20
 Change in Sales and Operating Income by Segment
(Outlook of Financial Results for the Fiscal Year Ending March 2018)

(Unit: million (%) (Unit: million (%)

yen) Industrial equipment yen) Electronic equipment
20 000
20,000 30 0%
30.0% 20 000
20,000 30 0%
30.0%
Sales
Sales
Operating income
18,000 Operating income 18,000
Operating income ratio
Operating income ratio 25.0% 17,850 25.0%
16 000
16,000 16 000
16,000
16,452

14,000 14,000 20.1%

20.0% 20.0%
18.3%
12,000
, 17.1% 12,000
,
12 525
12,525
14.8%
10,000 15.0% 10,000 15.0%
10,352 10,680 10,370 15.3%

8,000
13.8% 8,000

10.0% 10.0%
6,000 6,000

4,000 4,000
5 0%
5.0% 5 0%
5.0%

2,000 2,000 3,314 3,260

1,527 1,828 1,430 1,919
0 0.0% 0 0.0%

2016/3 2017/3 2018/3(予)

(Forecast) 2016/3 2017/3 2018/3(予)
(Forecast)

21
 Financial Status
（%）

60,000 Total assets Net assets Capital adequacy ratio 100.0

55,000 90.0
80.1 78.5 79.8 80.4
49,347
50,000 74.0 74.2 48,812 80.0
71.1 72.1
68.4 77.9
45,000
, million
(Unit: 42 164
42,164 74.5 70.0
41 466
41,466
yen)
38,986
40,000 38,038 60.0
36,590 36,740
35,731
35,368 33,905
35,000 33,530 33,099 50.0
32,455 32,158
30 585
30,585
30,000 28,629 40.0
27,135
25,500
24,020
25,000 22,948 22,864 30.0

20,000 20.0

15,000 10.0

10 000
10,000 00
0.0
2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2017/9

22
 Change of Capital Investment and Depreciation Cost

(Unit:
(U i million
illi Depreciation cost Capital investment
yen)
6,000

5,000 Project name Investment amount

FYE March Head office Yotsubashi Building / Repair Approx. ¥ 2,000 million
4,000 2017 NP Kogyo Co., Ltd. / Factory reinforcement Approx. ¥ 900 million

FYE March Kyushu Factory / Reinforcement Approx ¥ 1,500

Approx. 1 500 million
3,000 2018 Nippon Pillar Precision Co., Ltd / Factory Approx. ¥ 600 million
(Forecast) reinforcement

2,000 1,633
1 424
1,424 1,322 1 400
1,400
1,137 1,141 1,022
996 967 924 954 940
1,000

1,003 2,671 5,858 1,461 279 401 421 597 1,703 1,475 4,189 4,600
0
2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3
(Forecast)

23
 Main Financial Indexes (ROE, ROA and DOE)

ROE
DOE
ROA
（%） 12.0 （%）
（ ）
ROE ROA DOE
12.0 3.0

2.4 9.1
8.6
8.5
21
2.1
8.0 2.0
6.3 6.2 7.2
6.2 5.7
1.7
6.5 1.5 7.0
1.6 15
1.5 13
1.3
1.4 5.7
4.0 5.0 4.9 1.0
4.8 4.4
0.6
0.4

0.0 -0.5 0.0

2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3
-1.6
-0.7
ROE: Return on Equity ROA: Return on Assets
-2.4 Net income / Net assets Net income / Total assets
-4.0 -1.0

DOE: Dividend on Equity

Dividend / Net assets (= ROE x Dividend payout ratio)

24
 Main Financial Indexes ( PBR・PER)

PBR PER

（%）
（ ） （%）
（ ）
PBR PER
2.00 16.00

1.80
14.00

1.60
12.00
1.40 12.11 12.47
11.45 10.00
1.20 10.69
7 96
7.96 10.07 1.00
1.00
9.43 8.00
6.71 0.75
0.80 0.65 0.67 0.65 0.71
6.00
0.76
0.60
0.61 0 67
0.67
4.00
0.40

2.00
0.20
0.33
0.00 0.00
2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3

PBR： Price Book value Ratio PER： Price per Earning Ratio
Stock price/Net assets per share Stock price/Net income per share

25
 Policy of Return to Shareholders

We consider the return of profits to shareholders as one of the important management issues.
Our basic policy is that we will stably and continually pay dividends to shareholders and
improve
p the dividend scale.

（%）
50.00
（円） 35.0
Dividend per share 28.8
25.9 26.8 30.0
40 00
40.00 25.6 24 9
24.9 24 9
24.9
Dividend payout ratio
21.4 25.0
30.00 17.7 34.00 34.00 20.0
13.6 28.00
20 00
20.00 15 0
15.0

20.00 10.0
16.00 16.00 16.00 16.00
10.00
16.00 5.0
6 00
6.00 4.00
0.00 0.0
2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3(予)
(Forecast)

Shareholder special benefit

QUO card worth 1,000 yen

Shareholders who own 100 shares (share unit) or more of our
company
p y as of March 31 everyy year
y are entitled to receive the
card.
26
 Table of Contents

1. Outline of Business, Highlights of Financial

Results

2 O
2. Overview
i off the
th Financial
Fi i l Results
R lt ffor th
the 2nd
2 d
Quarter of Fiscal Year Ended March 2018 and
Outlook of Financial Results for the Fiscal Year
Ending March 2018

３．Medium-term Management Plan "BTvision19"

27
Medium-term Management Plan "BTvision19"

To ssustainably
stainabl enhancing o
ourr corporate value,
al e we
e form
formulated
lated the three
three-year
ear medi
medium-
m
term management plan "BTvision19 (breakthrough vision 19) starting in FY2017.

Name

~ Contribute to resources saving and safe and clean global community ~

"Breakthrough" expresses meanings such as "advance", "progress", and "overcome".

We aim to continue to grow for sustainably enhancing our corporate value in the rapidly
changing market environment. Therefore, the medium-term management plan
"BTvision19" indicates that we will make rapid progress by breaking through all sorts of
existing concepts (process, technology development and cost).

28
 Medium-term Management Plan "BTvision19"
Sales Operating income
(Unit: million yen) (Unit: million yen)
35,000 7,000

We aim to achieve continual growth by

surely implementing the initiatives we can 6,500
take for these three years.
30,000 6,000

Sales Operating income

5,500

25,000 5,000

4,500

20,000 4,000

3,500

15,000 3,000

2,500

10,000 2,000
2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2020/3
(予)
(Forecast) (予)
(Forecast)

29
 Medium-term Management Plan "BTvision19"

Figure target

BTvision16 BTvision19
Compared with FY2016
Publicized
Target
FY 2016 budget for FY FY 2019 Year-on- Increase-
Progress Annual
2017 rate
year decrease
rate
change rate

Sales 27 225
27,225 28 300
28,300 94 3%
94.3% 30 000
30,000 2 775
2,775 10 2%
10.2% 3 3%
3.3%

Operating
5,166 4,700 5,500
dated

85.5% 334 6.5% 2.1%

income
Consolid

Net income 3,204 3,100 88.6% 3,500 296 9.2% 3.0%

8 2%
8.2% 8 0% or
8.0%
ROE 9.1% <the first half - - - -

year interim> more

*Averaged in 3 years: 7.5% (FY2014 to FY2016)

30
 Medium-term Management Plan "BTvision19"

Basic policies

By promoting the initiatives for productivity improvement and

Strengthening the corporate making effective capital investment, we will build strong
competitiveness management bases that can create more profits and further
strengthen our corporate competitiveness.
To cope with the globalization of markets, we will promote
Promoting global business global business through the "creation of sales network",
"expansion of manufacturing bases" and "human resources
development".
By placing importance on the key word "new", which is included in such
Creating new business concepts as "new product", "new market", and "new application", we will
make aggressive efforts for creating new business with high novelty in
order
d tto bbuild
ild the
th thi
third
d pillar
ill ththatt can ffollow
ll our iindustrial
d t i l equipment
i t
business and electronic equipment business.
By focusing on education on globalization, we will develop human
Developing human resources resources who can demonstrate the leadership to contribute to
continual growth of business pillars with broad range of perspectives
and knowledge
knowledge.

Based on the basic policy above, we will surely implement the initiatives we can take for
the three years in order to build a strong management base and aim to become a
company that can achieve sustainable growth.

31
 Medium-term Management Plan "BTvision19"

Growth strategy

Basic policy
Strengthening the corporate
competitiveness
By promoting the initiatives for productivity improvement and making Establishing the position as
effective capital investment, we will build strong management bases
that can create more p profits and further strengthen
g our corporate
p a leadingg company
p y with
competitiveness.
fluid control technology
Promoting productivity improvement
・Promoting automation, self-manufacture, parts
standardization, etc.
Restructuring Sanda Factory
Establishing the production increasing system Market development
・Expansion of clean room, etc.
Develop high value-added products
・Further technological innovation of products for existing business
Production ・Promoting the development of seismic isolation products and
millimeter wave radar antennas
millimeter-wave
development Grasp the most advanced needs in the market
・Strengthening relationships with main customers (promoting
technology exchange, etc.)
Develop the sales network
Increase contracted orders for moldings

Basic policy Creating new business Enter the market related to medical treatment (CS)
Strengthen repair business
By placing importance on the key word "new", which is included in such concepts as ・Strengthening the functions of sales companies and responding
"new product", "new market", and "new application", we will make aggressive efforts to short delivery period
for creating new business with high novelty in order to build the third pillar that can
follow our industrial equipment business and electronic equipment business.

32
 Medium-term Management Plan "BTvision19"

Growth strategy
gy

Basic policy Promoting global business Basic policy Developing human resources
TTo cope with
ith th
the globalization
l b li ti off markets,
k t we will
ill promote
t global
l b l By focusing on education on globalization, we will develop
business through the "creation of sales network", "expansion of human resources who can demonstrate the leadership to
manufacturing bases" and "human resources development". contribute to continual growth of business pillars with broad
range of perspectives and knowledge.

Europe North America

Establishing representative offices,
etc. Producing TVG and yarn (Mexico)

South Korea● ● U.S.

● Algeria ●
Suzhou●●Shanghai
(Fremont)
●(Houston)
Asia
● ● Taiwan
UAE
Increasing production items (Suzhou ● Mexico
● and Taiwan)
(Dubai)
Thailand Increasing the sales of CS products
Middle East ● Singapore (China)
● Increasing business bases (China)
Establishingg the agency
g y network Indonesia

Southeast Asia
Human resources strategy
Establishing the agency network
Increasing the sales of seismic
Systematic training of global human resources
● Head Office of Nippon Pillar ・Development of domestic human resources
isolation products to the (Language training, subordinate management
Packing infrastructure and plant market training trainee system)
training,
● Overseas affiliated company Providing design function. ・Overseas local staff training
Local parts procurement of processing
● Representative office (Providing training to overseas local staff in Japan
parts (Singapore) and at overseas bases)
33
Thank you for your kind attention.
・ This material includes descriptions about future business performance.
These descriptions do not guarantee the future business performance and
contain elements of risk and uncertainty.
・ Please note that the future business performance may largely differ from target
and assessment figures due to changes in the business environment, etc.
・ This material is prepared for the purpose of offering the information and is not
intended to induce any actions.

34