Kawasaki Heavy Industries, Ltd.
Q4 2022 Earnings Call Transcript
Published:
- Katsuya Yamamoto:
- My name is Yamamoto. Thank you for participation. Now I'd like to present financial highlights. Page 1. As we disclosed at the Tokyo Stock Exchange and through our website at 11
- Yasuhiko Hashimoto:
- I am President Hashimoto. I will explain the relationship between the content of FY 2022 earnings results and the growth scenario presented in the Group Vision 2030. First of all, although we achieved the highest net income in this fiscal year, we have finally reached the lower end of our business profit target range 5% to 8%. We will first work to achieve 8% business profit and then 10% or more business profit. On the other hand, in terms of the three-step growth scenario outlined in the Group Vision 2030, that is first, mass production business will drive earnings, followed by a recovery in the aviation business and other order-based businesses. And finally, significant growth in new businesses such as hydrogen. We are at the stage where the first step, mass production is driving earnings. And the second step, order-based businesses are returning. The record net high income shows that we are on track with our growth scenario. Looking back, the aerospace business, which had led the group's earnings before 2019 experienced a sharp decline in demand from 2020 due to the pandemic and company-wide reforms were urgently needed to ensure future business growth. Under such circumstances, as one of the policies of the Group Vision 2030 announced in October 2020, we have decided to establish the Rolling Stock business and the Powersports & Engine business as a new company from October 2021, ensuring a steady decision-making structure as well as to establish the mass production business as a driver of earnings and cash generation, along with the Precision Machinery & Robot business. As a result, the Powersports & Engine business of Kawasaki Motors has developed the structure that enabled it to provide products in a timely manner to meet the strong demand in the North American market. And at the same time, it has improved its profitability by making prompt decisions in situations of rising logistic costs, semiconductor shortages and the price pass-through. And over the past two years, the business has grown to generate more than ¥100 billion in cumulative business profit. In the Precision Machinery & Robot business, we have also been able to secure stable earnings by capturing the steady needs for construction machinery and automation and have made a significant contribution to improving profitability in the mass production business. On the other hand, in the Rolling Stock business of Kawasaki Railcar Manufacturing, we have identified risks in the North American business, which had been posting consecutive losses. And the entire group has been working on countermeasures to address these risks. As a result of our selective order intake and taking orders at appropriate prices, we have secured profit for two consecutive years since FY 2021 and are on track to increase profits going forward. In the Energy Solution & Marine Engineering business, in addition to focusing on hydrogen as a future business, we have been strengthening our measures to minimize the risk of loss by carefully examining project risks in advance. Our group's overall earnings ability has improved through these efforts. As you are aware, demand for aviation is rapidly with the containment of the pandemic. And in FY 2023, the profitability of the order-based business will improve as the Aerospace Systems business fully recovers. As explained in the announcement of the group Vision 2030, we will shift to a stable management structure that can both earn profits from the second step of order-based business, along with the profit-making first step of mass production business. I will also briefly explain the progress of three focus fields set forth in the Group Vision 2030. Regarding safe and secure remote society, the medical robotics business is steadily expanding with robotic-assisted surgery system hinotori of Medicaroid, a joint Sysmex and the PCR testing service business using robots, which was started as a pandemic countermeasure will be developed into the medical health care business, which includes medical testing for genome analysis and drug-discovery support, even after COVID-19's downgrading to category five by leveraging the knowledge acquired in the medical health care area. In addition, many new initiatives are well underway, including a new platform business through remote robotics in collaboration with the Sony Group and the development of an indoor location-based service business by iPNT-K. As for near future mobility, the demonstration of the armored helicopter K-Racer is used for [dual use] and delivery robots for use on public roads and in hospitals, are progressing smoothly. In the hydrogen business, as an energy and environmental solution, we are collaborating with many governments and companies in Japan and around the world. Based on our world-leading liquefied hydrogen technology, which has gained recognition to become a byword for Kawasaki Heavy Industries. We expect these new businesses to grow significantly and contribute to profits from FY 2025 onwards as the third step in our earnings. Finally, we have not changed our cautious outlook for FY 2023 with respect to variable factors. And although we currently plan to pay a dividend of ¥80 per share, we are aiming for further improvement in profits and the increase in dividends. And as I explained earlier, we expect the upward trend we have depicted in our growth scenario to become more certain from FY 2024 onward. We look forward to your continued support and encouragement. Thank you very much for your attention.
- End of Q&A: