Yokogawa Electric Corporation · CENTUM VP 100year History 横河電機株式会社...

Daiwa Investment Conference Tokyo 2015 Yokogawa Electric Corporation

Avoid surprises

Preempt bottlenecks

Reduce blind spots

Takashi Nishijima President and Chief Operating Officer

March 3, 2015

Greeting

◆Brief history Takashi Nishijima April 1981 Joined the company ～Upon joining the company, worked in development and marketing of field instruments～ October 2008 Head of Control Products Business Center, Industrial Automation Business Headquarters April 2010 President of Yokogawa Meters & Instruments Corporation June 2011 Director President of Yokogawa Meters & Instruments Corporation April 2012 Director and Senior Vice President, Head of IA Platform Business Headquarters April 2013 President and Chief Operating Officer

横河電機株式会社ｺｰﾎﾟﾚｰﾄ･ｺﾐｭﾆｹｰｼｮﾝ室 ©Yokogawa Electric Corporation 2015/3/3

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①Corporate profile ・Corporate information ・Our business(business model, customers, market share) ・Our strengths ②Yokogawa until now ・Review of business structural reform strategy ・Review of financial strategy ③Current situation ・FY14 forecast ④Future direction ・Direction of new mid-term business plan ⑤Closing

P.3～ P.14～

横河電機株式会社ｺｰﾎﾟﾚｰﾄ・ｺﾐｭﾆｹｰｼｮﾝ室 ©Yokogawa Electric Corporation 2015/3/3

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Contents

P.20～ P.25～

P.29

①Corporate profile

Corporate data, our business, our strengths

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Yokogawa Electric Corporation

September 1, 1915

43.401 billion Yen

388.5 billion Yen

25.9 billion Yen

12.3 billion Yen

6.6％

19,837(Outside Japan 11,404 Japan 8,433)

46.9％

12 Yen (Dividend per share)

350 billion Yen ※At the end of Feb 2015

Company name:

Founded:

Capital stock:

Consolidated net sales:

Operating income:

Net income:

R&D expenses/sales ratio:

Employees:

Shareholder equity ratio:

Dividend:

Market cap:

（2013 results）

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Corporate Information

（Announced in January 1988）

Standards of Business Conduct for the Yokogawa Group Ⅰ. Basic Principles of the Yokogawa Group Winning customer satisfaction is the start to gaining the trust of

shareholders and all concerned people in the community and society. Ⅱ. Basic Attitude of the Yokogawa Group ～Shareholders～ We use, maintain and enhance corporate assets efficiently and

effectively to win the trust of our shareholders. We openly and accurately disclose corporate and management

information to our shareholders. We maintain a sound and clear relationship with our shareholders.

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As a company, our goal is to contribute to society through broad-ranging activities in the areas of measurement, control, and information Individually, we aim to combine good citizenship with the courage to innovate

The Yokogawa Philosophy

86 affiliates in 56 countries Global business expansion

1915 2015 1955 1965 1975 1985 1995 2005

1975 World’s 1st DCS: CENTUM

1915 Founded by Dr. Tamisuke Yokogawa

1957 USA 1974 Europe

1987 India, Australia 1986 China

1997 Russia, South Africa

1950 First electronic recorders in Japan

1979 World’s 1st vortex flowmeter

1994 World’s 1st fully digital transmitter with silicon resonant sensor

1996 World’s largest DCS-PJT

2000 World’s 1st MAC-PJT

2010 World’s 1st ISA100 compliant field devices

2009 World’s 1st ISA95 compliant real-time MES package

1973 Singapore 1992 Brazil 2006 Saudi Arabia

1990 Middle East

2005 World’s 1st integrated DCS-SIS

2014 World’s 1st smart configurable I/O: CENTUM VP

100year History


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100th anniversary

FY13 Sales Breakdown （Total:388.5 billion yen）

Test and Measurement

27.8billion yen 7%

6.8% Other

24.3billion yen

336.4billion yen 87%

Industrial automation and control

Business Segments

DL850 WT3000

Flat panel displays

CSU-X1

80% @2008

70% @2006

59% @2002

60% @2004

Gyrocompasses

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DCS Field instruments


Features of Control Business

① Long-term

“Long term” and “Onsite/localization” Keywords:

② Onsite/localization

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・High reliability (24/365 operation) ・Continual proposal of solutions and provision of support (40-year plant lifecycle)

・Knowledgeable about site operations and able to respond to changes ・Staying close to customers＝localization (service infrastructure)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

US dollar (Yen) 107.46 113.09 117.00 113.80 100.66 92.61 85.13 78.82 83.33 100.67

Euro (Yen) 134.90 137.81 150.33 162.26 143.28 130.68 143.28 109.34 107.40 135.24


Control Sales by Geographical Location

FY13 non-Japan (mainly Asia and the Middle East) sales / ratio at a record high

＜Average exchange rate＞

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(Billion yen)


Global Customers

Confidential 10

ExxonMobil United States

(Oil)

SAINT-GOBAN France (Glass)

EVONIK Germany

(Chemical)

SOLVAY Belgium

(Chemical)

AIR LIQUIDE France (Gas)

Shell Netherlands

(Oil)

Pfizer United States

(Pharma)

KBR United States (Engineering) TOTAL

France (Oil)

Dow United States (Chemical)

BP United

Kingdom (Oil)

Bayer Germany (Pharma ceutical)

PETRONAS Malaysia

(Oil)

Vopak Netherlands

(Tank Terminal )

Andritz Austria

(Engineering)

LyodellBasell Germany

(Chemical)

ConocoPhillips United States

(Oil)

Chevron United States (Oil)

CPchem United States (Oil)

Buckman United States

(Chemical)

Gazprom Russia (Gas)

SIBUR Russia (Oil)

SAUDI ARAMCO Kingdom of Saudi Arabia

(Oil)

LANXESS Germany (Pharma)

Petrobras Brazil (Oil)

PTT Thailand

(Oil)

PDO Oman

(Oil)

PEMEX Mexico (Oil)


Indonesia Oil

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Recent Major Projects

Mong Duong 2 coal-fired power plant, Vietnam

Jaypee Nigrie supercritical coal-fired power plant

Malaysian International Shipping Corporation/ Tenaga and Seri class LNG carriers

Taneco Phase I oil and petrochemical PJT, Tatarstan

Angola FPSO BP

Turceni thermal power plant pollution abatement PJT, Romania

Dushanzi oil refining and ethylene project CNPC

Map Ta Phut Olefins Co., Ltd. petrochemical plant complex construction PJT

PETRO Rabigh 1,2 PJT Saudi Aramco and Sumitomo Chemical Co.

Shell Nanhai petrochemical complex PJT Shell＆CNOOC

Shell Norco chemical reinstrumentation program

Sakhalin 2 crude oil and natural gas development PJT

Yamal LNG PJT Yamgaz, a consortium of Technip and JGC

USGC petrochemicals PJT Chevron Phillips Chemical Company

Ichthys LNG PJT / Ichthys JV Added: LNG carrier control system

Sabine Pass LNG PJT Cheniere Energy Partners

NAM-GLT renovation, GLT-PLUS innovation & upgrade PJT, Holland

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RAPID PJT(FEED*) PETRONAS

LNG PJT(FEED*) LNG Canada

*FEED = Front End Engineering Design

DCS Market Share in 2013

Source: ARC Distributed Control Systems Worldwide Outlook MARKET ANALYSIS AND FORECAST THROUGH 2018

Global market share for petrochemicals

Petrochemical & chemical

Others (food & beverage, pharmaceutical, cement & glass and others)

Water & wastewater

Power

Metals & mining

Refining

LNG, oil & gas

Pulp & paper

40%

6%

8%

3%

14%

18%

7% 3%

Source: Company data

Yokogawa DCS sales: 186.2 billion yen (+19.5 billion yen)

Global market share (market size US$16.14bn)

Energy related about 80%

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MAC= Main Automation Contractor


Yokogawa Strengths

①Line-up of highly reliable, high quality products

②Superior project management capabilities as MAC

③Extensive knowledge of industries and high-level engineering capabilities

④Close-knit services through localization

Integration

②Yokogawa until now Review of business structural reform strategy

Review of financial strategy

14 横河電機株式会社ｺｰﾎﾟﾚｰﾄ･ｺﾐｭﾆｹｰｼｮﾝ室 ©Yokogawa Electric Corporation 2015/3/3

Background

◆ Basic policy for the portfolio review ・ Focus resources on the control business. ・ Maintain and develop the company’s core measurement technologies. ・ Quickly select and establish new businesses. ・ Discontinue loss-making businesses.

Profits generated by the control business have been covering losses in the measurement business and investments in new businesses.


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End of March 2008

Measuring instruments Life science Photonics Advanced stage Semiconductor testers

Japan System Techniques Co., Ltd Medical information

Control

Measurement

Other

Information business

Now

Control

Measurement

Other

Spin-off

Transfer

Transfer/Withdrawal

Withdrawal Transfer/Withdrawal

Withdrawal from MEG* business

Spin-off

Kokusai Chart Corporation Transfer

Yokogawa Digital Computer Corporation Transfer


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Completion of Structural Reforms

*MEG= Magnetoencephalograph

Financial Review: Sales, Operating Income

Sales (million yen)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000


Sales 売上高 Operating income 営業利益

Operating income (million yen)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13Sales売上高

(million yen) 387,053 388,877 433,405 437,448 376,534 316,606 325,620 334,668 347,899 388,463

Annual change前年比

(%) 4.1% 0.5% 11.5% 0.9% -13.9% -15.9% 2.8% 2.8% 4.0% 11.7%

Operating income営業利益

(million yen) 24,756 25,320 29,274 27,412 4,707 2,619 11,079 16,601 18,409 25,893

Operating income on sales売上高営業利益率

(%) 6.4% 6.5% 6.8% 6.3% 1.3% 0.8% 3.4% 5.0% 5.3% 6.7%

Continual revamp of finances: higher sales and profits forecast for FY14

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(%) (Million Yen)

-20

-10

0

10

20

-40,000

-20,000

0

20,000

40,000


Net income 当期純利益 Return on shareholders' equity 株主資本利益率


Net income当期純利益

(Million Yen) 9,372 21,559 12,563 11,667 -38,446 -14,799 -6,692 5,952 14,688 12,341

Shareholders' equity株主資本

(Million Yen) 168,751 224,566 234,252 220,674 167,224 153,362 141,702 145,691 168,389 187,255

Return on equity株主資本利益率

(%) 5.7 11.0 5.5 5.1 -19.8 -9.2 -4.5 4.1 9.4 6.9

Total assets総資産

(Million Yen) 400,268 417,805 438,683 444,644 400,959 398,792 361,233 359,500 379,931 398,920

Financial Review: Net Income, ROE

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Thanks to structural reforms, net income and ROE forecast to improve significantly in FY14

21.416.2

12.917.4

30.1

(13.2)(8.0) (7.8) (7.5)

(13.9)

5.1

16.2

9.98.28.2

Operating CF Investment CF Free CF （Billion \ ）

FY09 FY10 FY11 FY13FY12

Financial Review: Cash Flow

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With investment ongoing, FCF was at a record high in FY13 and is on track to hitting Evolution 2015 target


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③Current Situation Including FY14 Forecast


Orders might level out from time to time, but long-term prospects for growth are good. (laying of foundation for sustainable growth)

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In response to accelerating changes in our business environment, we are optimizing our operations to emphasize the importance of turning a profit. (at a turning point).

The IT revolution and globalization will lead to creation of new markets (new business opportunities for Yokogawa)


Current Control Business Environment

■ Control market outside Japan ■ Japan control market

Growth in Energy Demand

While a short-term decline in the oil price is always possible, this situation will correct itself due to strong energy demand driven by the continued development

of the global economy.

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0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1990 2012 2020 2025 2030 2035 2040

Coal

Oil

Gas

Nuclear

Hydro

Bioenergy

Other renewables

Source: IEA World Energy Outlook (Released on November 12, 2014)

(Mtoe)

1. Accelerate implementation of long-term growth strategy.

２. Respond to a changing business environment by taking enhanced measures to improve profits.

Management Policy


Avoid being distracted by short-term factors: make investments with a long-term perspective.

Implement measures that will put the company on a strong financial footing and increase profitability.

FY14 Forecast, Mid-term Business Plan

Business plan for FY15

put the company in a strong financial position.

While growing the IA and control business,

Operating income

Sales

Operating income- to-sales ratio EPS

Debt-to-equity ratio

Equity ratio

¥400 billion

¥40 billion

¥100 or more

10%

FY15 plan

40%

50%

FY15 plan

325.6 334.7 347.9

388.5

39.2 40.5 44.3

46.9

78.3

70.9

58.6

43.5

% %

Shareholders’ equity ratio

Debt/Equity ratio

11.1

16.6 18.4

25.9

3.4

5.0 5.3

6.7

ROS

Forecast

400.0

28.0

7.0

Forecast

500.0

450.0

400.0

350.0

300.0

250.0

200.0

150.0

100.0

50.0

0.0

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

Net sales Operating income Billion yen Billion yen

・In general, making good progress due to completion of structural changes and impact of changes in foreign exchange rates

・Aiming for further growth while responding to market changes ・Laying a foundation for the next growth phase


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④Yokogawa’s Future Direction

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Achieving the Evolution 2015 targets and paving the way to make us the global No.1 company in IA

put the company in a strong financial position.

～2015 2016～

Long-term vision

Become global No. 1 company in IA and control business

Capture largest share of market

Business plan for FY15 While growing the IA and control business,

Operating income Sales

Operating income- to-sales ratio EPS

¥400 billion ¥40 billion

¥100 or more

10%

40%

50% Debt-to-equity ratio (D/E)

Equity ratio

Exchange rate: 1$=¥80, 1€=¥110

Yokogawa’s Future Direction


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New mid-term business plan ① Management with a long-term perspective

② Aiming for both growth and efficiency

③ Maximizing our corporate value by placing a top priority on optimizing our value as a business

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The next mid-term business plan will be announced in FY15.

Yokogawa’s Future Direction


⑤Closing


Expect great things from Yokogawa

Aiming to be more than just a manufacturer, Yokogawa is transforming itself into a global enterprise that generates high added value with its solutions.

With gratitude to all for the support received over the past 100 years

The information pertaining to our business plans and forecasts that has been provided in this presentation and at analyst meetings contains forward-looking statements that are based on our management’s current knowledge and require the making of assumptions about future events. As such, it cannot be guaranteed that these statements will not differ materially from actual results.

Disclaimer

IR Group, Corporate Communication Department Yokogawa Electric Corporation

Email: [email protected] Phone: +81-422-52-5530

URL: http://www.yokogawa.com/pr/ir/index.htm

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Yokogawa Electric Corporation · CENTUM VP 100year History 横河電機株式会社...

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