President & Chief Executive Officer
I would like to sincerely thank all shareholders for the support extended to our company.
It is my pleasure to provide an overview of Nikkiso’s business performance for the second quarter fiscal year ending December 2020.
FY2020 Q2 Performance
FY2020 Q2 performance shows orders received totaling 77.1 billion yen (a 10.2% year-on-year (“YoY”) decrease), revenue of 74.8 billion yen (a 5.2% YoY decrease), operating profit of 4.1 billion yen (a 17.0% YoY increase), quarterly profit before tax of 3.8 billion yen (a 28.8% YoY increase), and quarterly profit attributable to owners of the company of 2.8 billion yen (a 49.3% YoY increase).
The Industrial Division continued to face a challenging environment due to global economic stagnation caused by the spread of COVID-19 (e.g. suspended or delayed crude oil- or gas-related investment plans, and a plunge in aircraft demand). As a result, the amount of orders that the Industrial Business received declined year on year. Revenue fell, affected by the sale of the particle analytical equipment business in Q3 of the previous fiscal year, although manufacturing and shipments for existing orders progressed. The Aerospace Business reported substantial decreases in revenue and profit as the sales of cascades and other products plunged in Q2 of the current fiscal year. As a result, the Industrial Division posted decreased revenue and profit.
The Medical Division reported year-on-year increases in revenue and profit. This was thanks to strong performance of the hemodialysis business, its main business, and higher sales at the CRRT business and of healthcare products driven by greater needs for such business and products as part of measures against COVID-19.
The Company’s revenue decreased year on year as the Medical Division’s revenue growth fell short of the Industrial Division’s declined revenue. Meanwhile, its profit increased year on year mainly because the Medical Division’s performance pushed up the operating profit and the Industrial Division posted solid operating profit at the Industrial Business.
In the Industrial Business, we will strive to ensure profit by steadily carrying out manufacturing and shipments for existing orders. We are also currently building a cryogenic pump test facility in Miyazaki, anticipating stronger demand for LNG from a medium- to long-term perspective.
The Aerospace Business will see a decline in profitability in and after Q3 of the current fiscal year due to increasing fixed costs including depreciation expenses incurred in the Miyazaki Factory. However, we will steadily carry out activities to grow the business including the joint development with aircraft companies regarding new production methods and materials. Its business environment is expected to remain challenging for the next few years. However, we will not only strive to reduce costs but also transform its structure to become able to meet demand that will recover in the future and to respond to new customer needs for products and technologies.
Regarding the Medical Business, we will promote products in the domestic market by highlighting the new functions of new types of hemodialysis machines and the value the new machines will bring to management of medical institutions . In the overseas market, we will develop markets mainly in China where market expansion continues and in the U.S. where dialysis is big business. Additionally, to meet rapidly increasing quotation requests for “Aeropure,” an air purifier using deep UV-LED technology, we will set up a structure enabling increased production as early as possible. We have also been expanding the usage of deep UV-LED technology in various sectors and conducting joint development in various industries. We are aiming for full-scale business development (e.g. development of products for residential air conditioner and in-vehicle products). However, these activities can only contribute to our current fiscal year performance in a limited manner. They will be contributing to our performance on a full-scale basis in and after next fiscal year. Furthermore, we will actively engage in strengthening the business base through means including a review of our business portfolio and a reduction of non-essential and non-urgent costs.
The business environment surrounding the Company still remains uncertain due to the spread of COVID-19. The Company has steadily implemented measures to strengthen the business base. However, under increasingly uncertain business environments, it is still considered difficult to reasonably make forecasts including the timing of the emergence of effects of these measures. Therefore, we have withdrawn our full-year consolidated performance forecast and left it undecided. We will disclose it immediately after we become able to calculate it reasonably.