Fiscal Year 2016 - Toto Ltd.€¦ · Financial Results for 3Q of FY 2016 （with 3Q, FY2015 as 100...

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Fiscal Year 2016

3Q Results

This notice has been translated from the original notice in Japanese.

In the event of any discrepancy, the original in Japanese shall prevail.

January 31, 2017

１. Financial Results for 3Q of FY 2016

２.Topics

Contents

Highlights

New business domains: Increased sales and profits

◆ Increased sales and profits if the influence of the exchange rate is disregarded. ◆ Washlet sales have continued to grow rapidly.

◆Net sales: Decreased due to the influence of the exchange rate (a decrease of 19.3 billion yen) and other factors. (increased if the influence of the exchange rate is disregarded) ◆Operating income: Decreased due to the influence of the exchange rate (a decrease of 3.6 billion yen) and other factors. (increased if the influence of the exchange rate is disregarded) ◆Profit: Decreased due to the extraordinary income (an increase of 3.6 billion yen) recorded in the previous fiscal year as well as the influence of the exchange rate (a decrease of 2.1 billion yen) (increased if these factors are disregarded)

Global housing equipment business (Japan): Increased sales and profits

Global housing equipment business (overseas): Decreased sales and profits

1

Decreased sales and profits ; increased sales and profits if the influence of the exchange rate is disregarded

Overview of Financial Results for 3Q of FY 2016

◆ Increased sales and positive net income continue, contributed to by the advanced ceramics business

◆In remodeling segment, net sales remained at the same level, but profit increased. ◆Sales and profits grew in new housing segment.

2

Financial results

3Q, FY15 3Q, FY16

YoY

Influence of exchange rete

Currency-neutral basis

Net Sales 4,180 4,095 -85

(-2%) -193

+108 (+3%)

Operating Profit

[Operating Margin]

339 [8.1%]

335 [8.2%]

-4 (-1%)

-36 +32

(+9%)

Recurring Profit

361 346 -15

(-4%) -32

＋17 (+5%)

Profit attributable to owners of parent 282 236

-46 (-16%)

-21 -25

(-9%)

Decreased sales and profits ; increased sales and profits if the influence of the exchange rate is disregarded

Unit: ¥ 100 million

Revised plan

vs. Plan

4,143 -48

340 [8.2%]

-5

335 +11

222 +14

3Q, FY15 3Q, FY16 Revised plan

1$ ¥120.0 ¥101.1 ¥100.0

1 CNY ¥19.0 ¥15.1 ¥15.0

1€ ¥135.0 ¥113.4 ¥110.0

■ Exchange rates

※

Financial Results for 3Q of FY 2016

※ Extraordinary income or loss (cumulative) for 3Q of FY2016: An increase of 3.6 billion yen Details: Profit on the sale of welfare sites and others

3

3Q, FY15 3Q, FY16 YoY Influence of exchange rate

Without influence of exchange rate

(YoY)

Domestic H.E. 3,080 3,105 +25 (+1%)

+25 (+1%)

Overseas H.E. 953 835 -118 (-1２%)

-183 +65 (+7%)

New Domain 144 152 +8 (+6%)

-9 +17 (+12%)

Others 1 1 +0 +0

Total 4,180 4,095 -85 (-2%)

-193 +108 (+3%)

3Q, FY15 3Q, FY16 YoY Influence of exchange rate


(YoY)

Domestic H.E. 198 215 +17 +17

Overseas H.E. 169 153 -16 -35 +19

New Domain 0 0 +0 -0 +0

Others -29 -34 -5 -5

Total 339 335 -4 -36 +32

単位：億円

Revised plan

Vs. Plan

3,161 -56

831 +4

149 +3

１ +0

4,143 -48

Revised plan

Vs. Plan

227 -12

152 +1

-2 +2

-36 +2

340 -5


Sales and profit by business segment

<Net Sales>

<Operating Profit>


Housing Equipment Business（Japan）

4

198 215

+19

+57 ▲25

▲11

▲12 ▲16 ▲21

+25

Cause of increase/decrease of operating profit (YoY)


3Q, FY15 operating profit

Increase/decrease in sales and product range differences

Cost reduction

Influence of raw materials

increase/ decrease in labor costs

Amortization development of Production investment

Strengthening investment sales

Others 3Q, FY16 operating profit

・Showroom costs, etc.

- Changes in treatment with human resource system reforms - Wage increases, bonuses, etc.


- Effect of changes in copper price - Effect of changes in the exchange rate, etc.

- Global strategy expenses - Tax based on business size, etc.


Performance by demand

3Q, FY15 3Q, FY16 YoY

Net Sales 2,096 2,096 +0%

Operating Profit 164 176 +12

Operating Margin 8% 8% +0pt


Net Sales 984 1,008 +2%



October November December

-4% -1% -5%

５

In remodeling segment, net sales remained at the same level, but profit increased. Sales and profits grew in new housing segments.

Revised plan Vs. Plan

2,153 -57

188 -12

9% -1pt


1,008 +0

38 +0

4% +0pt


< Remodeling>

<New Housing>

■ Changes in the number of visitors to showrooms (same month year-on-year comparison)

* After correction of operating day


６


Net Sales Operating Profit

3Q, FY15 3Q, FY16 YoY 3Q, FY15 3Q, FY16 YoY

Sanitary Ware 626 625 -0% 64 60 -4

Washlet 674 687 +2% 105 98 -7

Faucet Fixtures 677 666 -2% 28 52 +24

Bathrooms 698 721 +3% 27 30 +3

Modular Kitchens/Basins 334 340 +2% -17 -16 +1

Others 69 64 -7% -8 -10 -2

Total 3,080 3,105 +1% 198 215 +17

Sales per Products


※ The calculation method has been partially changed to bring the profits earned in individual business segments closer to actual conditions.


7

Housing Equipment Business（Overseas）

In Local Currency

Currency Net Sales Operating Profit


China CNY million 2,506 2,765 +10% 631 703 +72 Asian & Oceanian

Region $ million 179 185 +3% 32 37 +5

Americas $ million 192 199 +4% 12 13 +1

Europe € million 23 24 +7% -3 -3 -0

Net Sales Operating Profit


China 475 418 -12% 119 106 -13 Asian & Oceanian

Region 215 187 -13% 39 37 -2

Americas 230 201 -13% 15 13 -2

Europe 31 28 -10% -4 -4 +0

Total 953 835 -12% 169 153 -16

Revised plan

Net Sales Operating

Profit

407 103

190 38

204 13

28 -3

831 152

Revised plan

Net Sales Operating

Profit

2,718 691

190 38

204 13

25 -3

Exchange rates 3Q, FY15 3Q, FY16 Revised plan

1$ ¥120.0 ¥101.1 ¥100.0

1 CNY ¥19.0 ¥15.1 ¥15.0

1€ ¥135.0 ¥113.4 ¥110.0

※ ※


※ the influence of the exchange rate; Net sales; a decrease of 18.3 billion yen, Operating income; a decrease of 3.5 billion yen


8

Financial Results Unit: CNY million

Results for local subsidiaries (China)

675

▲45

714

+56

Cause of increase/decrease of operating profit


Net Sales 2,506 2,765 +10%


Operating Margin 27% 26% -1pt

Unit: CNY million


2,718 +47

726 -12

27% -1pt

+28

Increased sales and profits . Momentum for recovery from the slump in FY2015 Q3 continues.

1Q 2Q 3Q 4Q (Forecast)

+10% +6% +16% +12%

The rate of increase in net sales


* Base that does not include consolidated adjustment and common expense allocations

3Q, FY 2015 operating income

3Q, FY 2016 operating income

Increase/decrease in sales

Production cost



1CNY ¥19.0 ¥15.1 ¥15.0

East China

(＋10%)

９

Results for local subsidiaries (China)

Robust sales of Washlets. Increases in sales in all areas.

North China

South China

West China

Hong Kong

(＋13%)

(＋15%)

(+10%)

(＋3%)

■Net sales growth by region

China Total ：+10％

North China 22%

East China 40%

South China 20%

West China 14%

Hong Kong 4%

■Washlets: Growth in sales volume

100

2015年度3Q累計 2016年度3Q累計

151


（with 3Q, FY2015 as 100 ）

3Q, FY15 3Q, FY16

■ Sales distribution ratio

■ Washlets: Growth in sales volume （with 3Q, FY2015 as 100 ）


Net Sales (For external customers)

76 (39)

87 (50)

+14% (+27％)



Results for local subsidiaries (Asian & Oceanian Region)

10

Vietnam


Net Sales 3,037 2,735 -10％

Operating Profit 811 699 -112

Operating Margin 27% 26% -1pt

Decreased sales and profits continued in Taiwan, while business in Vietnam remained strong.

100 93

0

50

100

150

Taiwan

Taiwan 47% Vietnam 27% Others 26%

A large decrease in the number of new housing starts (3Q; down 30% YoY).

Net sales for the forth quarter decreased by 11% YoY.


* Base that does not include consolidated adjustment and common expense allocations

3Q , FY15 3Q, FY16

Net sales breakdown by area

Unit: Million Taiwan dollars

Net sales to external customers for the forth quarter increased by 76% YoY.

Exchange rates 3Q, FY15 3Q, FY16

1 Taiwan dollars ¥3.62 ¥3.22

Exchange rates 3Q, FY15 3Q, FY16

1$ ¥120.0 ¥101.1

Unit: $ million

Financial Results

Results for local subsidiaries (Americas)

11

13

+6 ＋1

20


Net Sales 192 199 +4%


Operating Margin 7% 10% 3pt

Cause of increase/decrease of operating profit

Revised plan

Vs. Plan

204 -5

19 +1

9% +1pt

Increased sales and profits. Shift in sales strategy maintained the double-digit operating margin.

The rate of increase in net sales ＋0

Unit: $ million

1Q 2Q 3Q 4Q (Forecast)

+7% +5% -1% +6%


•Base that does not include consolidated adjustment •and common expense allocations

Unit: $ million

3Q, FY15 operating income

3Q, FY16 operating income

Increase/decrease in sales


Production cost


1$ ¥120.0 ¥101.1 ¥100.0

12

Results for local subsidiaries (Americas)

Business continues to be brisk in the Western region. Robust sales of Washlets .

West

Canada

Northeast Central

(+8%) (+2%) (+6%)

(-7%)

West 41%

Northeast 28%

Central 20%

Canada 11%

Americas Tota：+4％

■Washlets: Growth in sales volume

100

2015年度3Q累計 2016年度3Q累計

124


（with 3Q, FY2015 as 100 ）

3Q, FY15 3Q, FY16

■ Sales distribution ratio

■ Net sales growth by region

Financial Results


Net Sales 23 24 +7%

Operating Profit -3 -2 +1

Results for local subsidiaries (Europe)

Revised plan

Vs. Plan

25 -1

-1 -1

Schedule ： March 14 - 18, 2017 Place：Messe Frankfurt

13


•Base that does not include consolidated adjustment •and common expense allocations

Unit: € million

■International Sanitary and Heating (Held in Frankfurt in Germany every two years.)

Participated for the fifth time in the world’s largest exhibition for sanitation, kitchen and air-conditioning.

Exchange rates 3Q, FY15 3Q, FY16 Plan

1€ ¥135.0 ¥113.4 ¥110.0

14

Results and Plans of washlet sales in overseas

0

50

100

150

200

250

300

2012年 2013年 2014年 2015年 2016年（計画）

100 114

133

189

270

Plan 2.7 times more than in the 2012 ratio


（ with FY2012 as 100 ）

FY15 FY16 (Plan) FY14 FY13 FY12

Advanced Ceramic Business

Green Building Materials Business

New Domain Business

15

Increased sales and positive net income in the new business domains continued, driven by the advanced ceramics business.

3Q, FY15 3Q, FY16

YoY

Influence of exchange rate


(YoY)

Net Sales 75 87 +12

(+15%) -9

+21 (+28%)

Operating Profit 5 5 -0 -0 +0

Revised plan

Vs. Plan

80 +7

3 +2

3Q, FY15 3Q, FY16

YoY

Influence of exchange rate


(YoY)

Net Sales 68 65 -3

(-5%) -3

(-5%)

Operating Profit -5 -5 +0 +0

Revised plan

Vs. Plan

68 -3

-5 +0


Unit: Y 100 million

Unit: Y 100 million

１. Financial Results for 3Q of FY 2016

２.Topics

Contents

16

We opened directly-managed showrooms, aiming to establish a premium brand.

TOTO Vietnam was established in 2002. After working to enhance brand

recognition through the adoption of the better-known sites, we established

dealer showrooms in Hanoi and Ho Chi Minh, thereby facilitating the

development of the sales system.

In November 2016, we opened our first directly-managed showroom in Ho

Chi Minh, Vietnam, aiming to establish a premium brand as a new stage.

We opened the first directly-managed showroom in Vietnam

The high growth rate continued from the progress made in brand recognition and market penetration, in addition to the economic growth in Vietnam.

Awareness of the TOTO brand further increased from the expansion of dealer showrooms.

Topic: Vietnam Showroom Opened

Net Sales ■Strengthen sales network

37

60 80

0

20

40

60

80

100

2014年度 2015年度 2016年度（計画）

■ Net Sales （ For external customers ） Unit: $ million

FY15 FY16 (Plan) FY14

Approach notable properties Strengthen sales network

1st stage: Brand awareness

2nd stage: Market penetration

3rd stage: Establishment of

luxury brand

■North ■South

17

Topic: TY Niigata Showroom Opened

TY Niigata Showroom （ opening on December , 2016 ）

The showroom was opened through collaboration between TOTO and YKK AP.

TDY collaboration showrooms were opened in major cities throughout Japan for further growth and the acceleration of the remodeling business.

TDY alliance In 2002, we commenced collaborations with Daiken Corporation and YKK AP, top-class manufacturers of commercial products required for housing, for the growth and acceleration of our remodeling business. Leveraging the high-quality products and sales networks of each manufacturer, we three or two companies are working together to open collaboration showrooms and to hold fairs and events. The number of collaboration showrooms: 12, as of December 2016

18

Standard pictograms (pictorial symbol)

Survey result: What problems do foreigners have with Japanese toilets? Source: "Survey of foreigners on toilets (TOTO, 2014)“ n=600

Didn’t know how to use Japanese style toilets

Didn’t know the function of operating buttons

Didn’t know how to use toilet seat with bidet

function Toilet area was small

Information was displayed in Japanese only

Didn’t know how to flush the toilet

Couldn’t use toilet as there was a long queue

Toilet was too dirty to use There was no toilet paper

Didn’t know if I can flush paper down the toilet

Pushed emergency button by mistake

Didn’t know where to dump toilet paper

Didn’t want to use unisex toilet Couldn’t use toilet as it was out of order

Didn’t know how to use western style toilet

Didn’t know how to lock toilet room

Didn’t know distinction between gents’ and

ladies’ Others

Never been troubled 18.7% 3.8%

1.5% 1.5%

2.3% 3.2%

4.5% 4.5%

8.8% 9.0%

10.0% 12.7%

13.5% 14.7%

15.7% 17.3%

18.5% 25.7% 26.7%

0 10 20 30

Top answers are: -Couldn’t understand the operating buttons; 25.7% -Didn’t know how to use the toilet seat with bidet function; 18.5%

■Visually intuitive "standard pictograms" Japanese comfortable and high-tech toilets, such as toilet seats with bidet functions, have been accepted in other countries and their use is spreading globally. The Japan Sanitary Equipment Industry Association*, consisting of nine major

domestic manufacturers, has developed standard pictograms for the toilet’s operating panel that transcend language barriers, aiming to spread "toilet facilities that are safe and available to everyone" towards international standardization in the future.

*The Japan Sanitary Equipment Industry Association

The Japan Sanitary Equipment Industry Association is an industry group that was restructured in April 2015 through a merger of the former Japan Sanitary Equipment Industry Association and the Bidet Function Toilet Seats Industry Association, and made a new start as an industry organization for businesses for plumbing accessories, including toilets and restrooms. Chair: Madoka Kitamura, President of TOTO Ltd.

The Japan Sanitary Equipment Industry Association <The development of standard pictograms for the operating panel on the toilet>

Large flush

Stop

Small flush Open/close lid Open/close seat

Shower Bidet Drying

This presentation material contains forward-looking statements based on

assumptions, estimates and plans as of January 31, 2017.

Actual performance may differ materially from these forward-looking statements

due to risks and undermined factors arising from changes in the world economy,

competition and foreign currency exchange rates.

Fiscal Year 2016 - Toto Ltd.€¦ · Financial Results for 3Q of FY 2016 （with 3Q, FY2015 as 100...

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