Business Outlook. Medium-Term Business Plan, Jump Up 2014

Transcription

1 Business Outlook Medium-Term Business Plan, Jump Up 2014 May 9, 2014

2 Contributing to the Environment and Saving Energy through Commitment to Heat and Comfortable Lifestyles. 1 Gas equipment Electrical equipment Production bases: Japan, Asia, Oceania, etc. Built-in-stove Tabletop stove Rice cooker Clothes dryer Hot-water unit Fan heater Fireplace Production bases: New Zealand ASEAN China Korea Japan (range hoods, dishwashers) Hot-water unit Range hood Dishwasher Solar equipment Hybrid equipment Production bases: Australia Brazil Production bases: Australia (solar + gas) Brazil (solar + gas) Japan (heat pump + gas) Solar hot-water panel Hybrid hot-water/heating system Solar system Providing heat appliances, centered on household use products, matched to the living cultures and energy circumstances of each country (80 nations worldwide)

3 Basic Philosophy of Product Manufacturing: Relentless Pursuit of Quality and Safety Basic management philosophy: Quality is our destiny In-house development of core technologies related to heat 2 Burners Heat exchangers Electronic units Gas valves Water valves In-house manufacture of key units and components: Integrated production system, from processing to assembly Press work Sheet-metal processing Cutting work Assembly Units/components deemed important for quality reasons are developed in-house and manufactured within the Group

4 Medium-Term Business Plan, Targets (From Fiscal 2013 to Fiscal 2015) 3 Consolidated [Billions of yen] Medium-Term Business Plan Jump UP 2014 Fiscal 2013 Actual Fiscal 13 年 2014 度 1Q Target 実 績 Fiscal 2014 Actual Fiscal 2015 Original Target Fiscal 2015 Revised Target * Net Sales Breakdown Domestic Overseas Operating Income Operating Margin % % % % % *Fiscal 2015 revised target includes contribution from Rinnai Indonesia Surpassed Fiscal 2015 targets in Fiscal 2014, ahead of schedule; challenge for Fiscal 2015 is to achieve new targets

5 Changing Domestic Business Environment 4 Great East Japan Earthquake and Fukushima Nuclear Power Plant Accident Strong yen recession Abenomics Weak yen; high share prices Tax hike; fall in consumption Japan More aware of need for saving energy, disaster risk measures, and energy costs Nuclear power plant shutdowns Electricity shortages Increase in thermal power generation Rising CO 2 emissions Review of basic energy policies Restart nuclear power plants to address current issues Pursue cost reductions (import costs, free competition) Emphasize safety (create alternative energy forms) Reliable supply of energy for abundant lifestyles Industry and Rinnai Decline in products for all-electric homes (Switch to other heat sources) ECO JOZU Highefficiency hot-water systems Improvement in home insulation Pursuit of peace of mind living Improvements in convenience and energy efficiency Shift from tabletop to built-in stoves Shift from standalone hot-water units to bathfilling and room heating functions Solid replacement demand from housing peak (Replacement of appliances) Popularity of systembased kitchens and bathrooms Proliferation of floor heating systems Proliferation of bathroom heater/dryers Shift to high-end appliances 2020 Decline in household numbers Deregulation of electricity and gas Reorganization/ diversification of energy business Distributed power generation Promote cogeneration; shift to hydrogen society Emphasis on ideal heating appliances People want optimal combination of reliable, energy-efficient, and economical appliances

6 Heating Appliance Business Environment Japan Overseas (advanced nations) Overseas (emerging nations) 5 Background Energy deregulation Basic new energy plan Mandate for energy-efficient equipment Realization of low-carbon society Environmental and energy measures in conjunction with economic stimulus Increasing use of gas (which is abundant) Energy diversification Rising populations Improving living standards Electricity shortages; proliferation of gas Promotion of environmental protection Increasing number of households worldwide using heat appliances Proliferation of safe, highly efficient heat appliances and shift to system-based equipment Heat appliance business is a growing industry Rinnai contributes to society through heat

7 Medium-Term Business Plan Medium-Term Business Plan Jump UP 2014 (From April 1, 2012 to March 31, 2015) 6 Aims Contribute to people s lives worldwide and the global environment as a comprehensive heat-energy appliance manufacturer Product vision: Comprehensive heating appliance manufacturer that delivers environmentally responsible products Regional vision: Global company that improves the lifestyles of people all over the world 1 Raise product quality in pursuit of zero defects 2 3 Business vision: Company with a unique business model that attracts people and business partners Three Jump Up Priorities Raise versatility through reforms of development, production, and sales processes Raise organizational strength through human resource development and Groupwide interaction Targets for final year of plan Net Sales Operating income Operating income ratio Increase targets for the final year with view to next medium-term business plan billion yen 36.5 billion yen 11.7%

8 Rinnai Products: Contributing to Environment and Energy Efficiency (Hot-water units) Hybrid hot-water/heating system Received Energy Conservation Grand Prize (top prize in METI Energy Conservation Awards) Reasons for receipt of prize - High efficiency achieved combining heat pump (electricity) and ECO JOZU (gas) (Industry-leading primary energy efficiency of 125%) - Reduced energy loss owing to learning function - Gas-only operation option effectively saves electricity 7 Toward a low-carbon society Review of energy-efficiency standards in October 2013: Evaluation standards for primary energy consumption now consistent Toward deregulation of electricity and gas From 2016: Revisions to be made allowing deregulation of electricity and gas sales Primary energy consumption Energyefficiency reference level Reference level 60% ECO ONE consumption 25GJ/year 15GJ/year From energy-efficiency performance evaluation program Electric power Featuring low primary energy consumption, ECO ONE is the best As a true energy-saving product, symbolizes social infrastructure Gas Utilizing both electricity and gas to achieve optimal energy mix, ECO ONE is the best

9 Rinnai Products: Supporting Safe Lifestyles (Hot-water terminals) Using hot water to make bathrooms warm and comfortable 8 Bathroom heating Clothes drying Mist sauna Bathroom drying Cool air blowing Ventilation Ceiling type Wall-mounted type Bathroom heater/dryer Preventing heat shock when taking a bath during winter Blood pressure fluctuates with changes in temperature Sudden changes in blood pressure can cause heat shock when taking a bath! Road accidents deaths vs bathroom deaths (2011) Number of deaths in bathrooms exceeds deaths through road accidents by around three times * Source: Tokyo Metropolitan Institute of Gerontology

10 Rinnai Products: Supporting Safe Lifestyles (Kitchen appliances) sensor stove 20 million units sold! Temperature sensors now minimum standard for stoves Equipping stoves with Si sensors since 2008 Industry shipments have now surpassed 20 million units! Major decline in fires caused by stoves Market proliferation: 52% (Rinnai estimate) 9 Tabletop stoves Built-in stoves Range hoods Promoting sets combining built-in stoves and range hoods (Share of sets in overall stove sales: 14% as of Fiscal 2014) Built-in stoves linked with range hoods Range hoods automatically turn on/off because linked to built-in stove ignition

11 Bath Filling Units (Yukko UF Series): Model Change Further advancement of mid-range hot-water units Breakdown of hot-water unit sales New product in volume zone launched 10 High-end Hot-water/heating systems 25% Technical features Mid-range Low-end Bath-filling units Simple hot-water units 60% 15% RUF-E2405 (Launched April 2014) - Development of new components - Progress in parts standardization - More automated and streamlined Advantages for installers Advantages for customers Significant reduction in weight makes installation easier Lightest in industry* ECO JOZU bath-filling unit (No. 24) Existing model: 31.0kg 3.5kg New model: 27.5kg *As of April 2014 Enhanced efficiency not only for hot water supply but also bath filling Lower running costs

12 Gas Clothes Dryers: Kanta-Kun 11 Speedy Kanta-kun Features Launched June 2013 Retail price: 138,000 (5kg type; excludes consumption tax) Volume Sales by Region (Source: Rinnai; Apr. Mar.) Okinawa 7,000 units - Powerful air flow for fast drying Approx. one-third drying time compared with electric models - Meticulous drying down to fiber level Leaves clothes fluffier than when dried in sun - Rinnai: The only name in gas clothes dryers! Kanto 12,000 units Chubu 5,000 units Kansai 3,000 units 10 thousand units Strong sales in Okinawa Reasons: - Sea breezes, salt incursion - High annual rainfall - Many two-income households (robbery countermeasure) - High temperature and humidity levels Sales of Clothes Dryers (Source: Rinnai; Apr. Mar.) Effect of new product launch Fiscal 05 '04 06 '05 07 '06 08 '07 09 '08 10 '09 11 '10 '11 12 '12 13 '13 14 Record-high unit sales Reasons for growing nationwide popularity - Small particulate matter (PM2.5) - Sand/dust - Pollen - Radiation - Visual appearance

13 Consolidated Capital Expenditure Plan Capital expenditure Depreciation and amortization Capital expenditures: Results and plan Fiscal 2014 (full year, actual) Fiscal 2015 (full year, plan) (Millions of Yen) Change 12,439 16,400 +3,961 8,415 9,700 +1,285 R&D expenses 8,380 8, Future capital expenditure plan 12 Capital expenditure to grow by around 4 billion in Fiscal 2015 (Millions of Yen) 20,000 15,000 10,000 5,000 設 備 投 資 Capital expenditure 研 R&D 究 開 expenses 発 費 Plan to make consistent annual investments of 14 billion to 15 billion over medium term 0 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 年 度 2013 年 度 2014 年 度 2015 年 度

14 Medium-Term Investment Projection 13 Japan (reinforce system with next-generation technological innovation) Manufacturing Akatsuki Plant Integrated production of bathroom heater/dryers Operational since May 2013 Leverage new plants to innovate Groupwide product manufacturing ECO ONE Hybrid hotwater/heating system - Establish system with capacity of 30,000 ECO ONE units - Build system for rational, integrated manufacture of system-based offerings, a pillar of future growth Bathroom heater/dryer Product development - Expand and upgrade R&D facilities - Reinforce Production Technology Center system Sales - Expand and upgrade space for sales activities (Hokkaido, Hokuriku, Kanto, Kansai, Chubu, etc.) - Strengthen and upgrade distribution and service systems Production Technology Center Tsukuba Training Center Overseas (strategic investments in growth-driver businesses) - Expand and upgrade capacity of overseas production facilities (China, Indonesia, Vietnam, Thailand, Brazil, etc.) - Make strategic investments in markets earmarked as next growth regions (Southeast Asia, Europe, etc.)

15 Consolidated Operating Income, Share Price, and Dividends Operating income ( billions) Consolidated operating income Average monthly share price (closing) Share price ( ) Fiscal Total annual dividend ( ) Targeting continuous dividend increases over long term based on stable dividend policy Increased from 64 forecast at beginning of year

16 15 Performance forecasts and other future-oriented predictions contained in these materials are based on the Company s judgments using available information. Actual results may differ from such forecasts and predictions due to changing future circumstances. Copyright (C) 2014 Rinnai Corporation. All Rights Reserved.