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Sodick

Sodick 6143

ソディック
Sodick Co., Ltd.
Recent Updates
2022-05-12
Q1 FY12/22 flash update
2022-04-04
Full-year FY12/21 report update
2022-02-15
FY12/21 flash update
Get in touch
3-12-1 Nakamachidai, Tsuzuki-ku Yokohama, Kanagawa Pref.
https://www.sodick.co.jp/
045-942-3111
Summary
Sodick is a machinery manufacturer that supplies electrical discharge machines (EDMs: machine tools that use electric sparks to machine metals).
Machinery
Key dates
2021-09-09
Coverage initiation
Full Report
2022-05-12
Q1 FY12/22 flash update
2022-05-12
FY12/21 flash update
2022-02-15
Q3 FY12/21 flash update
2021-11-15
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Executive summary

Business overview

Sodick is a machinery manufacturer that supplies electrical discharge machines (EDMs: machine tools that use electric sparks to machine metals; see box below). In FY12/21, it reported revenue of JPY75.2bn and operating profit before consolidation adjustments of JPY9.3bn. It has four segments: Machine Tool (EDMs and other machinery; 68.5% of total revenue and 77.0% of total profit in FY12/21), Industrial Machinery (injection molding machines and other machinery; 13.8% and 5.4%), Food Machinery (noodle-making machines and sterile-packed cooked-rice production systems; 9.2% and 8.9%), and Other (precision die and mold operations, sales of products manufactured with in-house technology; 8.6% and 8.7%). Overseas operations generate 70.8% of total revenue (value basis), with Asia accounting for 53.0% (Greater China: 42.6%), the Americas 10.0%, and Europe 7.8%.

EDMs have been the core product since the company’s founding in 1976. In FY12/21, they brought in JPY51.5bn or roughly 95% of the revenue generated in the Machine Tool segment (after including repairs, maintenance, and consumables). Sodick has captured a global market share in high-end EDMs of roughly 30%, which puts it in the same league as Mitsubishi Electric (TSE1: 6503) and Switzerland-based GF Machining Solutions (formerly Agie Charmilles). It has pioneered EDMs equipped with numerical control units (NC units) since its early days, and established itself as a leader in the EDM field. Examples of its achievements include the development of the world’s first linear servo motor drive high-speed NC die-sinker EDM in 1998, and the world’s first linear servo motor drive high-speed wire-cut EDM in 1999.

In the 10 years from FY03/12 to FY12/20 (during which the company changed its accounting period), OPM averaged 8.0%. Compared with its rivals, this was below Okuma Corporation (TSE1: 6103; 9.1%), but ahead of DMG Mori Seiki (TSE1: 6141; 5.9%) and Makino Milling Machine (TSE1: 6135: 5.6%). Over the same period, OPM in the company’s Machine Tool segment averaged 13.1%. Shared Research understands the strong segment OPM is attributable to the company’s sizable market share in high-end EDMs (roughly 30%), integrated production achieved through in-house manufacturing of NC units and linear motors, and the use of internally developed ceramics.

* Electrical discharge machine (EDMs): A machine tool to machine metals and other materials through electrical discharge machining.
* Electrical discharge machining: A technology that uses electrical discharges (or sparks) to machine metals and other materials. It involves generating an arc discharge between an electrode and a workpiece (typically a metal) to remove materials from the surface of the workpiece. The electrode does not make physical contact with the workpiece. Instead, the electric energy (discharge) generated in the narrow gap between the electrode and the workpiece performs the function of a conventional cutting tool.
* Non-EDM machining: Conventional machining technologies include cutting (application of cutting tools), grinding (removal of surface materials by applying a grinding stone rotating at a high speed), and polishing (smoothening of surfaces by applying a hard grindstone with high precision).
* Benefits of electrical discharge machining: It is effective in settings that are problematic for conventional machining approaches, such as the machining of ultra-hard metals, locations that require high precision, and intricate shapes. In addition, EDMs equipped with a numerical control unit (NC) do not require the presence of an operator and can therefore be operated at night. However, electrical discharge machining also has some drawbacks. The machining process is slow, making it unsuitable for mass production. It also cannot be used to machine non-conductive materials. Finally, it requires additional costs to manufacture electrodes (if using die-sinker EDMs).
* Linear motor: A motor that produces thrust through magnetic attraction and repulsion. Linear motors outperform conventional ball screws in areas such as high-speed drive, high-precision control, and repeated operation under harsh conditions.

The company mainly provides EDMs to large, mid-sized, and small die/mold manufacturers, which supply their products to the automotive, smartphone, IT equipment, electronic parts, and many other industries. Parts machining is also an essential component of the medical equipment, aerospace, energy, and other industries. In Japan, the company sells its products both directly through its sales division and indirectly via agents. Through this collaborative approach, it aims to meet the specific needs of each region. In China, the largest market for the company, Sodick mainly sells its products directly through sales subsidiaries. In other parts of the world, it sells its product directly in the US, via agents in Europe (excluding Germany), and using different strategies for each region in Asia.

Prices for Sodick’s EDMs range from JPY7–8mn at the low end to roughly JPY60mn at the high end, with the bulk of the orders falling in the JPY10–15mn range. Base models function as platforms that can be upgraded with optional equipment (such as automatic electrode changers), and prices can therefore diverge by as much as several million yen depending on variations in specifications. While selling prices have generally trended down over the last 10 years, Sodick says they turn up in some years due to orders for optional equipment. The lead time between orders and revenue recognition is roughly three months. The company maintains production plans extending four months out, and reviews these plans each month. Based on an analysis of historical order and customer trends, it also produces a certain quantity of EDMs using a make-to-stock approach. It says the EDM replacement cycle is about 10 years, although this varies by customer.

Sodick manufactures EDMs in Japan, Thailand, and China (two production sites), and sells them around the world. In FY12/21, it sold 3,606 EDMs, with Asia accounting for 75.6% (China: 68.4%), Japan for 7.5%, the Americas for 7.1%, and Europe for 9.8%. It sells a large number of EDMs in China because it can take advantage of local production, and because the country is home to many smartphone and IT companies with micromachining needs. Sodick has annual production capacity for some 4,000 EDMs, but it can ramp up production to 5,000 units by adjusting manpower in its assembly processes. By region, it produces about 50% of its EDMs in Thailand, just over 40% in China (two production sites), and under 5% in Japan.

Materials costs (including parts procurement costs) make up some 75% of the company’s manufacturing costs, labor costs about 10%, and outsourcing and other costs roughly 15% (averages estimated by Shared Research, non-consolidated basis). Labor costs are expanding in tandem with an increase in personnel costs overseas. After excluding the procurement of parts, stainless steel and castings are the main component of material costs. Such costs fluctuate based on price negotiations with suppliers, and related impact takes roughly six months to be reflected in operations. Thereafter, these price swings also start showing up partially in the pricing of end products. 

The global market for high-end EDMs, in which Sodick controls a high share, is worth around JPY150.0bn. Over the medium term, the company sees the market transitioning from mid-range and low-end models to high-end models (its forte), spurred by trends such as miniaturization, increasing complexity, and integrated production.

In the Industrial Machinery segment (revenue of JPY10.4bn in FY12/21), the second largest business after the Machine Tool segment, the company mainly supplies injection molding machines—a type of equipment that handles all processes involved in injection molding, from melting the plastic resin materials (pellets) to injecting the molten plastic into a mold, cooling, and removing the solidified material. Sodick produces and sells injection molding machines equipped with its proprietary V-LINE® System, which supports improved precision and yields through stable filling volume achieved by separating the processes of plasticization (melting of pellets) and injection of the molten plastic into a mold. The company supplies these machines to the automotive, smartphone, IT equipment, electronic parts, connector, and medical instruments industries.

In the Food Machinery segment (revenue of JPY6.9bn in FY12/21), which was launched in 2007, the company develops, manufactures, and sells noodle-making machines, noodle-making plants, sterile-packed cooked-rice (instant rice) production systems, and production lines. It supplies integrated production lines for sterile-packed cooked-rice that handle all processes from washing, sterilizing, and cooking the rice, inserting it into containers, and packaging the containers. It sells food machinery to major noodle manufacturers, manufacturers that supply noodles to convenience stores and supermarkets, restaurant chains, and confectionary manufacturers. In the Other segment (revenue of JPY6.4bn in FY12/21), the company undertakes contracted development of products such as precision dies and molds and automotive plastic connectors, and also develops, manufactures, and sells ceramic products, linear motors, motor drivers, and LED lighting.

Earnings trends

In FY12/21, revenue was JPY75.2bn (+29.5% YoY), operating profit JPY6.8bn (about 3.7x YoY), recurring profit JPY8.6bn (about 4.2x YoY), and net income of JPY6.6bn attributable to owners of the parent (about 4.9x YoY). Both orders and sales of mainstay EDMs increased YoY, driving earnings recovery for the Machine Tool segment as a whole. The company plans an annual dividend of JPY26.0 per share (year-end dividend of JPY13.0 per share), for a projected payout ratio of 20.6%.

Sodick forecasts FY12/22 revenue of JPY77.9bn (+3.6% YoY), operating profit of JPY7.2bn (+5.7% YoY), recurring profit of JPY7.2bn (-16.2% YoY), and net income of JPY5.7bn attributable to owners of the parent (-13.5% YoY). It targets EPS of JPY108.6 and plans an annual dividend of JPY27.0 per share (versus a projected JPY26.0 per share in FY12/21), for a projected payout ratio of 24.9%. The company expects a decline in recurring profit due to the disappearance of foreign exchange gains recorded in FY12/21 and a drop in net income attributable to owners of the parent due to lower recurring profit and increase in income tax and other tax expenses. The company left its forecast for the full year unchanged at the time of its Q1 earnings announcement.

The company every year releases a medium-term management plan for the following three years. The latest iteration of the rolling plan covers the period from FY12/22 to FY12/24. It calls for FY12/24 revenue of JPY89.6bn (versus JPY75.2bn recorded in FY12/21), operating profit of JPY9.1bn (JPY6.8bn), and an OPM of 10.2% (9.1%). It anticipates an earnings improvement in the core Machine Tool segment (FY12/24 targets: segment profit of JPY8.5bn, OPM of 15.0%) and higher performance in the Industrial Machinery, Food Machinery, and Other segments.

Strengths and weaknesses

Shared Research sees Sodick’s strengths as: 1) its reputation as a pioneer in EDMs and global market share in high-end EDMs of roughly 30% that ranks it among the leaders in the field; 2) its ability to generate higher margins on EDMs than its rivals by manufacturing NC units and linear motors in-house (whereas rivals source a high share of their parts and materials externally) and sell its products at a premium; 3) the potential to benefit from the many advantages offered by EDMs over conventional machine tools, such as superior micromachining capabilities and support for unmanned operation.

We see its weaknesses as: 1) low labor efficiency—an area with much room for improvement; 2) limited potential for growth through market share gains in a stagnant EDM market; and 3) insufficient risk diversification attributable to a concentration of sales and production in specific countries.

Key financial data


Income statementFY03/14FY03/15FY03/16FY03/17FY12/17FY12/18FY12/19FY12/20FY12/21FY12/22
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Est.
Revenue56,89963,09065,14661,81265,60482,71667,59158,03075,17477,900
YoY3.4%10.9%3.3%-5.1%---18.3%-14.1%29.5%3.6%
Gross profit16,66620,87623,77722,49423,15930,22722,16918,25025,713-
YoY-0.4%25.3%13.9%-5.4%---26.7%-17.7%40.9%-
Gross profit margin29.3%33.1%36.5%36.4%35.3%36.5%32.8%31.4%34.2%-
SG&A expenses14,01415,98417,42417,25715,66920,33818,74716,39718,899-
YoY10.2%14.1%9.0%-1.0%---7.8%-12.5%15.3%-
SG&A ratio24.6%25.3%26.7%27.9%23.9%24.6%27.7%28.3%25.1%-
Operating profit2,6514,8916,3535,2367,4909,8883,4221,8526,8137,200
YoY-34.1%84.5%29.9%-17.6%---65.4%-45.9%267.9%5.7%
Operating profit margin4.7%7.8%9.8%8.5%11.4%12.0%5.1%3.2%9.1%9.2%
Recurring profit3,8865,6475,7194,6207,9109,6193,5582,0468,5887,200
YoY-27.4%45.3%1.3%-19.2%---63.0%-42.5%319.7%-16.2%
Recurring profit margin6.8%9.0%8.8%7.5%12.1%11.6%5.3%3.5%11.4%9.2%
Net income4,1943,5504,1673,6445,7366,4622,0021,3466,5915,700
YoY0.1%-15.4%17.4%-12.6%---69.0%-32.8%389.7%-13.5%
Net margin7.4%5.6%6.4%5.9%8.7%7.8%3.0%2.3%8.8%7.3%
Per-share data (split-adjusted; JPY)
Shares issued (year-end; '000)53,43353,43353,43353,43753,44153,45153,45153,36358,292-
EPS (JPY)83.470.682.876.9122.2137.642.628.6125.7108.6
EPS (fully diluted; JPY)---66.1104.9118.136.624.6--
Dividend per share (JPY)14201819222425252627
Book value per share (JPY)842.4981.5987.01,035.21,172.11,235.51,247.11,230.51,376.3-
Balance sheet (JPYmn)
Cash and cash equivalent24,04927,76727,66336,84737,01433,54633,87338,92045,274-
Total current assets64,55771,36267,84678,13687,52779,94675,29077,95496,377-
Tangible fixed assets24,45024,82824,33623,76826,29630,91231,85630,35830,217-
Intangible assets4,3463,7073,4633,1872,8952,5442,4112,2282,273-
Investments and other assets5,4214,2684,0754,1795,0965,6795,0885,5755,997-
Total assets98,776104,16799,722109,271121,815119,082114,647116,117134,866-
Short-term debt14,80816,97715,08614,78413,19911,88311,59217,5838,909-
Current liabilities29,77934,53729,65633,00936,34931,80427,09232,14633,705-
Long-term debt24,67218,77918,74026,16828,50327,64027,04423,80124,831-
Fixed liabilities26,54420,17620,30627,55130,29829,14828,81025,99326,722-
Total liabilities56,32454,71349,96360,56066,64860,95355,90258,14060,428-
Shareholders' equity42,38849,38649,66448,61355,04758,03358,66657,89974,386-
Total net assets42,45149,45349,75848,71055,16658,12958,74557,97674,438-
Total interest-bearing debt39,48035,75633,82640,95241,70239,52338,63641,38433,740-
Cash flow statement (JPYmn)
Cash flows from operating activities5,5778,2986,5798,3734,5229,2758,3365,2707,642-
Cash flows from investing activities-4,181-144-2,773-2,132-4,715-8,188-5,609-1,410-2,203-
Cash flows from financing activities-3,696-5,243-2,8543,134-439-3,485-2,2281,665-1,932-
Financial ratio
ROA (RP-based)4.0%5.6%5.6%4.4%6.8%8.0%3.0%1.8%6.8%
ROE10.7%7.7%8.4%7.4%11.1%11.4%3.4%2.3%10.0%
Equity ratio42.9%47.4%49.8%44.5%45.2%48.7%51.2%49.9%55.2%
Capex3,1792,2322,8872,5944,5888,5766,5612,448-
Depreciation2,5592,6592,7652,6972,3603,0853,6643,399-
R&D expenses2,0042,4943,4083,5183,3443,9023,4833,220-
Source: Shared Research based on company data
Note: In 2017, the company changed its fiscal year-end from March 31 to December 31, eliminating the three-month timing difference in the settling of accounts with its Chinese subsidiaries. The company did not disclose YoY changes for FY12/17 as that year was an irregular nine-month period.

Trends and outlook

Quarterly trends and results

Note: Shared Research will update some of the figures in the following tables after the company announces Q1 (January–March) results following the publication of its FY12/21 annual report.
CumulativeFY12/21FY12/22FY12/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Revenue14,31734,50453,97675,17419,604---25.2%77,900
YoY9.9%29.2%32.5%29.5%36.9%---3.6%
Gross profit4,65211,67218,57225,7136,553---
YoY14.2%38.4%44.4%40.9%40.9%---
Gross profit margin32.5%33.8%34.4%34.2%33.4%---
SG&A expenses4,2278,95713,62118,8994,645---
YoY1.6%10.8%13.2%15.3%9.9%---
SG&A ratio29.5%26.0%25.2%25.1%23.7%---
Operating profit4242,7144,9506,8131,907---26.5%7,200
YoY-686.7%498.5%267.9%349.8%---5.7%
Operating profit margin3.0%7.9%9.2%9.1%9.7%---9.2%
Recurring profit1,1763,7846,0778,5882,975---41.3%7,200
YoY-945.3%580.5%319.7%153.0%----16.2%
Recurring profit margin8.2%11.0%11.3%11.4%15.2%---9.2%
Net income8712,6484,3776,5912,113---37.1%5,700
YoY-2,421.9%607.1%389.7%142.6%----13.5%
Net margin6.1%7.7%8.1%8.8%10.8%---7.3%
QuarterlyFY12/21FY12/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4
Revenue14,31720,18719,47221,19819,604---
YoY9.9%47.7%38.7%22.6%36.9%---
Gross profit4,6527,0206,9007,1416,553---
YoY14.2%61.0%55.9%32.5%40.9%---
Gross profit margin32.5%34.8%35.4%33.7%33.4%---
SG&A expenses4,2274,7304,6645,2784,645---
YoY1.6%20.5%18.2%20.9%9.9%---
SG&A ratio29.5%23.4%24.0%24.9%23.7%---
Operating profit4242,2902,2361,8631,907---
YoY-428.9%363.9%81.8%349.8%---
Operating profit margin3.0%11.3%11.5%8.8%9.7%---
Recurring profit1,1762,6082,2932,5112,975---
YoY-507.9%331.8%117.8%153.0%---
Recurring profit margin8.2%12.9%11.8%11.8%15.2%---
Net income8711,7771,7292,2142,113---
YoY-1,344.7%236.4%204.5%142.6%---
Net margin6.1%8.8%8.9%10.4%10.8%---
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
By applicationFY12/21FY12/22FY12/22
Cumulative (JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Revenue14,31734,50453,97675,17419,604---25.2%77,900
YoY9.9%29.2%32.5%29.5%36.9%---3.6%
Machine Tool10,38224,14537,24851,48514,096---27.5%51,200
YoY26.0%41.5%41.5%35.4%35.8%----0.6%
% of total72.5%70.0%69.0%68.5%71.9%---65.7%
Machine sales8,02019,20029,73641,27211,245---
YoY35.6%50.7%49.3%40.5%40.2%---
Maintenance and supplies2,3624,9457,51210,2132,850---
YoY1.7%14.4%17.5%18.0%20.7%---
Industrial Machinery1,8934,6286,92810,3672,625---24.3%10,800
YoY-25.9%-12.9%-13.9%-5.2%38.7%---4.2%
% of total13.2%13.4%12.8%13.8%13.4%---13.9%
Machine sales1,5463,8995,8568,9412,241---
YoY-31.2%-17.8%-18.8%-8.6%45.0%---
Maintenance and supplies3477281,0721,425383---
YoY11.9%27.7%28.2%24.1%10.4%---
Food Machinery5802,5215,0636,8841,021---12.5%8,200
YoY-25.8%66.4%127.8%92.0%76.0%---19.1%
% of total4.1%7.3%9.4%9.2%5.2%---10.5%
Machine sales4182,1784,5446,156857---
YoY-36.0%78.7%159.5%111.5%105.0%---
Maintenance and supplies161342519728163---
YoY25.8%15.5%10.2%8.0%1.2%---
Other1,4603,2094,7356,4371,861---24.2%7,700
YoY0.5%14.3%13.9%17.3%27.5%---19.6%
% of total10.2%9.3%8.8%8.6%9.5%---9.9%
Operating profit4242,7144,9506,8131,907---26.5%7,200
YoY-686.7%498.5%267.9%349.8%---5.7%
Operating profit margin3.0%7.9%9.2%9.1%9.7%---9.2%
Machine Tool8983,1565,2607,1762,143---28.6%7,500
YoY355.8%235.4%214.0%147.8%138.6%---4.5%
Operating profit margin8.6%13.1%14.1%13.9%15.2%---14.6%
% of total88.7%79.6%77.5%77.0%87.3%---77.3%
Industrial Machinery10177274503152---50.7%300
YoY-93.0%-35.9%-25.9%-15.6%1,420.0%----40.4%
Operating profit margin0.5%3.8%4.0%4.9%5.8%---2.8%
% of total1.0%4.5%4.0%5.4%6.2%---3.1%
Food Machinery-39205566830-29----3.1%950
YoY-4,000.0%1,996.3%1,176.9%----14.5%
Operating profit margin-6.7%8.1%11.2%12.1%-2.8%---11.6%
% of total-3.9%5.2%8.3%8.9%-1.2%---9.8%
Other144426688811188---19.8%950
YoY140.0%94.5%120.5%154.2%30.6%---17.1%
Operating profit margin9.9%13.3%14.5%12.6%10.1%---12.3%
% of total14.2%10.7%10.1%8.7%7.7%---9.8%
Adjustments-588-1,251-1,839-2,507-548----2,500
By applicationFY12/21FY12/22
Quarterly (JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4
Revenue14,31720,18719,47221,19819,604---
YoY9.9%47.7%38.7%22.6%36.9%---
Machine Tool10,38213,76313,10314,23714,096---
YoY26.0%55.9%41.6%21.6%35.8%---
% of total72.5%68.2%67.3%67.2%71.9%---
Machine sales8,02011,18010,53611,53611,245---
YoY35.6%63.8%46.7%22.2%40.2%---
Maintenance and supplies2,3622,5832,5672,7012,850---
YoY1.7%29.2%23.9%19.3%20.7%---
Industrial Machinery1,8932,7352,3003,4392,625---
YoY-25.9%-0.9%-15.7%19.2%38.7%---
% of total13.2%13.5%11.8%16.2%13.4%---
Machine sales1,5462,3531,9573,0852,241---
YoY-31.2%-5.8%-20.6%19.9%45.0%---
Maintenance and supplies347381344353383---
YoY11.9%46.5%29.3%13.1%10.4%---
Food Machinery5801,9412,5421,8211,021---
YoY-25.8%164.8%259.0%33.7%76.0%---
% of total4.1%9.6%13.1%8.6%5.2%---
Machine sales4181,7602,3661,612857---
YoY-36.0%211.0%344.7%39.0%105.0%---
Maintenance and supplies161181177209163---
YoY25.8%7.7%1.1%3.0%1.2%---
Other1,4601,7491,5261,7021,861---
YoY0.5%29.2%13.0%28.0%27.5%---
% of total10.2%8.7%7.8%8.0%9.5%---
Operating profit4242,2902,2361,8631,907---
YoY-428.9%363.9%81.8%349.8%---
Operating profit margin3.0%11.3%11.5%8.8%9.7%---
Machine Tool8982,2582,1041,9162,143---
YoY355.8%203.5%186.6%56.9%138.6%---
Operating profit margin8.6%16.4%16.1%13.5%15.2%---
% of total88.7%76.5%74.5%75.7%87.3%---
Industrial Machinery1016797229152---
YoY-93.0%24.6%3.2%1.3%1,420.0%---
Operating profit margin0.5%6.1%4.2%6.7%5.8%---
% of total1.0%5.7%3.4%9.0%6.2%---
Food Machinery-39244361264-29---
YoY--1,540.9%594.7%----
Operating profit margin-6.7%12.6%14.2%14.5%-2.8%---
% of total-3.9%8.3%12.8%10.4%-1.2%---
Other144282262123188---
YoY140.0%77.4%181.7%1,657.1%30.6%---
Operating profit margin9.9%16.1%17.2%7.2%10.1%---
% of total14.2%9.5%9.3%4.9%7.7%---
Adjustments-588-663-588-668-548---
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Overseas revenue by segmentFY12/21FY12/22
Cumulative (JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Revenue14,31734,50453,97675,17419,604---
YoY9.9%29.2%32.5%29.5%36.9%---
Japan4,6599,92715,08221,9596,671---
YoY-16.5%-0.4%5.1%11.3%43.2%---
% of total32.5%28.8%27.9%29.2%34.0%---
Machine Tool2,1413,8335,7708,4803,140---
YoY2.1%6.1%10.2%12.3%46.7%---
Industrial Machinery8821,9592,9054,3451,133---
YoY-42.2%-23.2%-15.0%0.6%28.5%---
Food Machinery3041,3032,1403,255621---
YoY-43.3%19.7%26.9%23.6%104.3%---
Other1,3302,8294,2655,8791,776---
YoY-6.1%4.4%6.4%12.3%33.5%---
North and South America1,4823,4495,2837,5212,343---
YoY-3.5%15.5%14.1%15.1%58.1%---
% of total10.4%10.0%9.8%10.0%12.0%---
Machine Tool1,3073,0524,5496,4421,982---
YoY-9.9%22.7%17.5%14.5%51.6%---
Industrial Machinery170372694982356---
YoY112.5%-12.7%5.8%22.1%109.4%---
Food Machinery--------
YoY--------
Other--------
YoY--------
Europe1,1402,5174,0445,8541,817---
YoY-1.4%25.9%29.7%35.0%59.4%---
% of total8.0%7.3%7.5%7.8%9.3%---
Machine Tool1,1392,5174,0435,8541,817---
YoY-1.5%25.9%29.7%35.0%59.5%---
Industrial Machinery--------
YoY--------
Food Machinery--------
YoY--------
Other--------
YoY--------
Greater China5,36514,79723,95731,9876,575---
YoY67.4%65.3%63.0%47.5%22.6%---
% of total37.5%42.9%44.4%42.6%33.5%---
Machine Tool4,62112,23119,44025,8235,570---
YoY89.7%73.8%71.8%55.8%20.5%---
Industrial Machinery6111,6902,4223,792624---
YoY-13.9%-5.8%-22.9%-15.0%2.1%---
Food Machinery34981,6241,814296---
YoY-84.2%2,521.1%1,627.7%360.4%9,766.7%---
Other12937746955884---
YoY248.6%288.7%216.9%118.8%-34.9%---
Asia1,6703,8125,6087,8502,196---
YoY7.4%36.2%42.1%36.8%31.5%---
% of total11.7%11.0%10.4%10.4%11.2%---
Machine Tool1,1722,5103,4434,8861,584---
YoY6.8%30.5%24.0%24.0%35.2%---
Industrial Machinery2296049051,247511---
YoY-3.4%11.2%9.4%-7.4%123.1%---
Food Machinery2676941,2591,71799---
YoY21.4%109.7%269.2%279.0%-62.9%---
Other12------
YoY--------
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Overseas revenue by segmentFY12/21FY12/22
Quarterly (JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4
Revenue14,31720,18719,47221,19819,604---
YoY9.9%47.7%38.7%22.6%36.9%---
Japan4,6595,2685,1556,8776,671---
YoY-16.5%20.1%17.6%27.6%43.2%---
% of total32.5%26.1%26.5%32.4%34.0%---
Machine Tool2,1411,6921,9372,7103,140---
YoY2.1%11.5%19.5%17.0%46.7%---
Industrial Machinery8821,0779461,4401,133---
YoY-42.2%5.2%9.2%60.0%28.5%---
Food Machinery3049998371,115621---
YoY-43.3%80.7%40.2%17.6%104.3%---
Other1,3301,4991,4361,6141,776---
YoY-6.1%15.8%10.5%31.9%33.5%---
North and South America1,4821,9671,8342,2382,343---
YoY-3.5%35.6%11.6%17.6%58.1%---
% of total10.4%9.7%9.4%10.6%12.0%---
Machine Tool1,3071,7451,4971,8931,982---
YoY-9.9%68.4%8.1%7.9%51.6%---
Industrial Machinery170202322288356---
YoY112.5%-41.6%40.0%94.6%109.4%---
Food Machinery--------
YoY--------
Other--------
YoY--------
Europe1,1401,3771,5271,8101,817---
YoY-1.4%63.3%36.6%48.5%59.4%---
% of total8.0%6.8%7.8%8.5%9.3%---
Machine Tool1,1391,3781,5261,8111,817---
YoY-1.5%63.5%36.5%48.6%59.5%---
Industrial Machinery--------
YoY--------
Food Machinery--------
YoY--------
Other--------
YoY--------
Greater China5,3659,4329,1608,0306,575---
YoY67.4%64.1%59.3%15.0%22.6%---
% of total37.5%46.7%47.0%37.9%33.5%---
Machine Tool4,6217,6107,2096,3835,570---
YoY89.7%65.4%68.6%21.4%20.5%---
Industrial Machinery6111,0797321,370624---
YoY-13.9%-0.5%-45.7%3.9%2.1%---
Food Machinery34951,126190296---
YoY-84.2%-1,401.3%-36.7%9,766.7%---
Other129248928984---
YoY248.6%313.3%80.4%-16.8%-34.9%---
Asia1,6702,1421,7962,2422,196---
YoY7.4%72.3%56.4%25.0%31.5%---
% of total11.7%10.6%9.2%10.6%11.2%---
Machine Tool1,1721,3389331,4431,584---
YoY6.8%62.0%9.4%24.1%35.2%---
Industrial Machinery229375301342511---
YoY-3.4%22.5%6.0%-34.1%123.1%---
Food Machinery26742756545899---
YoY21.4%284.7%5,550.0%308.9%-62.9%---
Other11------
YoY--------
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Electrical discharge machinesFY12/21FY12/22
CumulativeQ1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Orders
Total1,3112,5133,3874,173967
YoY109.1%93.2%68.3%45.6%-26.2%
North and South America5812818225081
YoY3.6%52.4%27.3%11.1%39.7%
Europe10020832142796
YoY28.2%49.6%57.4%52.0%-4.0%
China1,0071,8652,3782,803578
YoY187.7%116.4%78.8%48.5%-42.6%
Asia7816223831092
YoY1.3%44.6%45.1%28.6%17.9%
Japan68150268383120
YoY3.0%44.2%56.7%65.1%76.5%
Unit sales
Total7151,6942,6573,606904
YoY38.3%42.4%43.0%33.3%26.4%
North and South America5212517625768
YoY-13.3%27.6%15.8%8.0%30.8%
Europe68150242353108
YoY1.5%25.0%22.8%26.5%58.8%
China4671,1721,8832,465514
YoY88.3%58.2%58.5%44.0%10.1%
Asia6713818626189
YoY11.7%17.9%16.3%15.5%32.8%
Japan61109170270125
YoY-25.6%-4.4%5.6%7.6%104.9%
Electrical discharge machinesFY12/21FY12/22
QuarterlyQ1Q2Q3Q4Q1Q2Q3Q4
Orders
Total1,3111,202874786967---
YoY109.1%78.3%22.9%-8.1%-26.2%---
North and South America5870546881---
YoY3.6%150.0%-8.5%-17.1%39.7%---
Europe10010811310696---
YoY28.2%77.0%73.8%37.7%-4.0%---
China1,007858513425578---
YoY187.7%67.6%9.6%-23.8%-42.6%---
Asia7884767292---
YoY1.3%140.0%46.2%-6.5%17.9%---
Japan6882118115120---
YoY3.0%115.8%76.1%88.5%76.5%---
Unit sales
Total715979963949904---
YoY38.3%45.5%44.2%11.9%26.4%---
North and South America5273518168---
YoY-13.3%92.1%-5.6%-5.8%30.8%---
Europe688292111108---
YoY1.5%54.7%19.5%35.4%58.8%---
China467705711582514---
YoY88.3%43.0%59.1%11.1%10.1%---
Asia6771487589---
YoY11.7%24.6%11.6%13.6%32.8%---
Japan614861100125---
YoY-25.6%50.0%29.8%11.1%104.9%---
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
FY12/21FY12/22FY12/22
Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Capital investment4001,3011,9543,451939---22.9%4,100
YoY3.6%60.6%24.8%41.0%134.8%---18.8%
Depreciation8141,6692,5483,452851---24.3%3,500
YoY-3.0%-0.1%1.1%1.6%4.5%---1.4%
R&D expenses7701,5812,3053,216685---19.0%3,600
YoY-4.6%0.3%-2.5%-0.1%-11.0%---11.9%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Foreign exchange ratesFY12/21FY12/22FY12/22
(Average during term)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4FY Est.
USD106.09107.82108.58109.90116.34---115.00
YoY-2.5%-0.4%1.0%2.9%9.7%---4.6%
CNY16.3516.6516.7717.0118.29---17.50
YoY4.8%8.3%9.1%9.9%11.9%---2.9%
EUR127.81129.89129.87129.91130.40---130.00
YoY6.4%8.9%7.4%6.6%2.0%---0.1%
THB3.503.503.453.443.52---3.50
YoY0.6%2.0%1.2%0.6%0.6%---1.7%
Foreign exchange ratesFY12/21FY12/22
(End-term)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
USD110.71110.58111.92115.02122.39---
YoY1.7%2.6%5.8%11.1%10.6%---
CNY16.8417.1117.3018.0619.26---
YoY10.0%12.3%11.3%13.7%14.4%---
EUR129.80131.58129.86130.51136.70---
YoY8.6%8.7%4.6%2.8%5.3%---
THB3.543.443.303.433.68---
YoY6.0%-1.4%-1.2%-0.3%4.0%---
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Q1 FY12/22 results (out May 11, 2022)

Q1 summary (January–March, three months)

  • Revenue: JPY19.6bn (+36.9% YoY)
  • Operating profit: JPY1.9bn (roughly 4.5x YoY); OPM: 9.7% (+6.7pp YoY)
  • Recurring profit: JPY3.0bn (roughly 2.5x YoY)
  • Net income*: JPY2.1bn (roughly 2.4x YoY)
    * Net income attributable to owners of the parent 

The mainstay Machine Tool segment drove growth in consolidated results thanks to higher YoY segment revenue and profit, which were backed by a rise in the sales volume of electrical discharge machines (EDMs) and success in cost reduction. Results were also underpinned by a YoY increase in segment revenue and profit in Industrial Machinery—the only segment that recorded lower YoY profit in FY12/21—owing to recovery in injection molding machine sales. The Other segment also logged higher revenue and profit on strong performance in precision die and molding. As a result, consolidate revenue surpassed pre-pandemic levels and stood at JPY19.6bn, marking a record high for Q1 (counting from FY12/18 when the company changed its fiscal year-end to December).    

Operating profit margin (OPM) of 9.7% fell short of 12.1% in Q1 FY12/18 and 11.1% in Q1 FY12/19. Considering that OPM in the Machine Tool segment tracked a similar trend, Shared Research understands that OPM continued to suffer the impact of soaring material costs and tight parts procurement, which became more pronounced in the latter half of FY12/21. On a quarterly basis, revenue and operating profit logged YoY growth for five and six consecutive quarters, respectively.

Shared Research will update details of results after an interview with the company.

FY12/22 full-year company forecast (out February 14, 2022)

FY12/20FY12/21FY12/22
(JPYmn)1H2HFY1H2HFYFY Est.
Revenue26,70231,32858,03034,50440,67075,17477,900
YoY-18.4%-10.2%-14.1%29.2%29.8%29.5%3.6%
Gross profit8,4329,81818,25011,67214,04125,713-
YoY-25.6%-9.4%-17.7%38.4%43.0%40.9%-
Gross profit margin31.6%31.3%31.4%33.8%34.5%34.2%-
SG&A expenses8,0868,31116,3978,9579,94218,899-
YoY-12.1%-12.9%-12.5%10.8%19.6%15.3%-
SG&A ratio30.3%26.5%28.3%26.0%24.4%25.1%-
Operating profit3451,5071,8522,7144,0996,8137,200
YoY-83.8%16.4%-45.9%686.7%172.0%267.9%5.7%
Operating profit margin1.3%4.8%3.2%7.9%10.1%9.1%9.2%
Recurring profit3621,6842,0463,7844,8048,5887,200
YoY-82.5%13.4%-42.5%945.3%185.3%319.7%-16.2%
Recurring profit margin1.4%5.4%3.5%11.0%11.8%11.4%9.2%
Net income1051,2411,3462,6483,9436,5915,700
YoY-88.2%11.8%-32.8%2,421.9%217.7%389.7%-13.5%
Net margin0.4%4.0%2.3%7.7%9.7%8.8%7.3%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods. 
The company left its forecast for FY12/22 unchanged at the time of its Q1 earnings announcement in May 2022. The commentary below is based on the company forecast released in February 2022. Shared Research plans to update the content as necessary following an interview with the company.

FY12/22 forecast

The company announced its FY12/22 forecast as follows.

  • Revenue: JPY77.9bn (+3.6% YoY)
  • Operating profit: JPY7.2bn (+5.7% YoY); OPM: 9.2% (+0.1pp YoY)
  • Recurring profit: JPY7.2bn (-16.2% YoY)
  • Net income*: JPY5.7bn (-13.5% YoY)
  • EPS: JPY108.6. Annual DPS projection is JPY27.0 (versus projected JPY26.0 in FY12/21), for a projected payout ratio of 24.9%
    * Net income attributable to owners of the parent 

On February 14, 2022, the company announced that it would buy back and cancel shares in a bid to improve shareholder returns and increase the value of its shares based on a flexible capital allocation policy in response to changes in the business environment. The buyback period is February 15 to March 9, 2022. The company said it would purchase a maximum of 500,000 shares (JPY500mn), with cancellation scheduled for March 31, 2022. The upper limit of 500,000 shares represents 0.92% of the total number of shares in issue (excluding treasury stock). Sodick subsequently acquired treasury stock, completing the buyback on March 9, 2022. The company bought back 500,000 shares at a cost of JPY378mn.

Earnings forecasts by segment

The earnings trends by segment are shown below. Segment profit figures are before consolidation adjustments, and have been adjusted with operating profit on the income statement.

Machine Tool
  • Revenue: JPY51.2bn (-0.6% YoY)
  • Segment profit: JPY7.5bn (+4.5% YoY)
  • OPM: 14.6% (+0.7pp YoY) 

The company expects orders for its mainstay high-end (high-precision) EDMs to remain at a high level, as demand is expected to increase for automotive, semiconductor, and 5G-related applications. However, it expects sales to remain flat due to lower sales in the Chinese market (the segment's largest), and the time necessary to resolve long lead times caused by tight component procurement. The main factor in the company's forecast of YoY sales decline in the Chinese market is an expected reactionary decline from the high levels of sales in FY12/21.

Meanwhile, the company expects segment profit to increase 4.5% YoY and the segment OPM to improve 0.7pp YoY to 14.6%. Sodick expects that coping with tight component procurement will unavoidably yield higher procurement and transportation costs. However, the company expects the impact of COVID-19 to be less severe and does not believe plant operations will be seriously affected as they were in FY12/21. Further, it expects segment profit and the OPM to increase YoY as ongoing productivity improvements bear fruit. That said, the company remains concerned about the impact of continued longer lead times (such as delays in shipments or further increases in transportation costs).

Industrial Machinery
  • Revenue: JPY10.8bn (+4.2% YoY)
  • Segment profit: JPY300mn (-40.4% YoY)
  • OPM: 2.8% (-2.1pp YoY)

The company expects revenue growth of 4.2% YoY on higher demand for automotive, electronic components, and 5G-related applications in Japan and Greater China, as well as growth in sales to the medical sector in North America. On the other hand, it expects segment profit to decline 40.4% YoY. The company notes that the main reason for this decline in segment profit is the expected temporary increase in initial expenses due to the start of production at the new plant in Xiamen, China, which it expects to offset the increase in sales. The company also expects the segment OPM to decline 2.1pps YoY to below 3%.

Food Machinery
  • Revenue: JPY8.2bn (+19.1% YoY)
  • Segment profit: JPY950mn (+14.5% YoY)
  • OPM: 11.6% (-0.5pp YoY) 

Sales in Greater China were particularly noteworthy in FY12/21, and the company expects sales to continue to increase in Greater China in FY12/22, as well as in the rest of Asia (of macines that produce fresh noodles, frozen noodles, and cooked rice), yielding a YoY increase in both sales and segment profit. It expects this to result in record highs in sales and segment profit. However, the company forecasts OPM dropping 0.5pp to 11.6% due to cost increases associated with business expansion.

Other
  • Revenue: JPY7.7bn (+19.6% YoY)
  • Segment profit: JPY950mn (+17.1% YoY)
  • OPM: 12.3% (-0.3pp YoY) 

The company expects sales and profits to grow in both the precision die and molding business and in external sales of ceramics. It expects sales to reach a record high and segment profit to approach the record high of JPY1.0bn in FY12/18. However, the company expects the OPM to decline 0.3pp to 12.3% due to an increase in various costs associated with business expansion.

Company forecasts versus results

Results vs. Initial Est.FY03/15FY03/16FY03/17FY12/17FY12/18FY12/19FY12/20FY12/21FY12/22
(JPYmn) Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.
RevenueInitial Est.61,50069,00065,50055,80081,00076,80067,80065,40077,900
Act.63,09065,14661,81265,60482,71667,59158,03075,174
Results vs. Initial Est.2.6%-5.6%-5.6%17.6%2.1%-12.0%-14.4%14.9%
Operating profitInitial Est.3,9005,1005,8005,3008,0006,9003,8004,1007,200
Act.4,8916,3535,2367,4909,8883,4221,8526,813
Results vs. Initial Est.25.4%24.6%-9.7%41.3%23.6%-50.4%-51.3%66.2%
Recurring profitInitial Est.3,5004,7005,6005,2008,0006,4003,8004,1007,200
Act.5,6475,7194,6207,9109,6193,5582,0468,588
Results vs. Initial Est.61.3%21.7%-17.5%52.1%20.2%-44.4%-46.2%109.5%
Net incomeInitial Est.2,6003,2004,3003,7007004,7003,1003,0005,700
Act.3,5504,1673,6445,7366,4622,0021,3466,591
Results vs. Initial Est.36.5%30.2%-15.3%55.0%823.1%-57.4%-56.6%119.7%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: In 2017, the company changed its fiscal year-end from March 31 to December 31, eliminating the three-month timing difference in the settling of accounts with its Chinese subsidiaries. The company did not disclose YoY changes for FY12/17 as that year was an irregular nine-month period.

Medium-term management plan

FY12/20FY12/21FY12/22FY12/23FY12/243-year
(JPYmn) Act.Act.Est.TargetTargetCAGR
Revenue58,03075,17477,90082,70089,600+6.0%
YoY-14.1%29.5%3.6%6.2%8.3%
Machine Tool38,02451,48551,20053,40056,500+3.1%
YoY-17.0%35.4%-0.6%4.3%5.8%
% of total65.5%68.5%65.7%64.6%63.1%
Industrial Machinery10,93110,36710,80011,60013,700+9.7%
YoY11.8%-5.2%4.2%7.4%18.1%
% of total18.8%13.8%13.9%14.0%15.3%
Food Machinery3,5856,8848,2009,20010,000+13.3%
YoY-42.9%92.0%19.1%12.2%8.7%
% of total6.2%9.2%10.5%11.1%11.2%
Other5,4886,4377,7008,5009,400+13.5%
YoY-4.3%17.3%19.6%10.4%10.6%
% of total9.5%8.6%9.9%10.3%10.5%
Operating profit1,8526,8137,2008,0009,100+10.1%
YoY-45.9%267.9%5.7%11.1%13.8%
Operating profit margin3.2%9.1%9.2%9.7%10.2%
Machine Tool2,8967,1767,5008,1008,500+5.8%
YoY-37.3%147.8%4.5%8.0%4.9%
Operating profit margin7.6%13.9%14.6%15.2%15.0%
% of total74.7%77.0%77.3%101.3%93.4%
Industrial Machinery596503300400750+14.2%
YoY261.2%-15.6%-40.4%33.3%87.5%
Operating profit margin5.5%4.9%2.8%3.4%5.5%
% of total15.4%5.4%3.1%5.0%8.2%
Food Machinery658309501,0001,100+9.8%
YoY-89.6%1,176.9%14.5%5.3%10.0%
Operating profit margin1.8%12.1%11.6%10.9%11.0%
% of total1.7%8.9%9.8%12.5%12.1%
Other3198119501,1001,350+18.5%
YoY2.6%154.2%17.1%15.8%22.7%
Operating profit margin5.8%12.6%12.3%12.9%14.4%
% of total8.2%8.7%9.8%13.8%14.8%
Adjustments-2,025-2,507-2,500--
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Overview of medium-term management plan

Sodick releases three-year medium-term management plans that are updated on a rolling basis. The latest iteration of the plan was unveiled on February 18, 2022, and spans the period from FY12/22 to FY12/24. During this period, the company looks to improve profitability not only in the mainstay Machine Tool segment (FY12/24 targets: segment profit of JPY8.5bn, OPM of 15.0%), but also in the Industrial Machinery segment (JPY750mn, 5.5%), the Food Machinery segment (JPY1.1bn, 110%), and the Other segment (JPY1.4bn, 14.4%). It targets FY12/24 (final-year) revenue of JPY89.6bn (versus JPY75.2bn recorded in FY12/21), operating profit of JPY9.1bn (JPY6.8bn), and an OPM of 10.2% (9.1%). If these targets are achieved, operating profit will reach the third highest level in the company’s history, but OPM will only reach the eight highest level.

The company has released the long-term management plan “Next Stage 2026: Toward Further Growth,” which calls for FY12/26 revenue of JPY125.0bn and operating profit of JPY17.0bn as quantitative targets.
The updated medium-term management plan calls for operating profit of JPY9.1bn in FY12/24 (53.5% of JPY17.0bn), but leaves the long-term target for FY12/26 unchanged.

The medium-term targets by segment

Machine Tool

FY12/18FY12/19FY12/20FY12/21FY12/22FY12/23FY12/24
(JPYmn) Act.Act.Act.Act.Est.TargetTarget
Machine Tool
Revenue58,60745,79738,02451,48551,20053,40056,500
YoY--21.9%-17.0%35.4%-0.6%4.3%5.8%
Segment profit9,9884,6212,8967,1767,5008,1008,500
YoY--53.7%-37.3%147.8%4.5%8.0%4.9%
Segment profit margin17.0%10.1%7.6%13.9%14.6%15.2%15.0%
Source: Shared Research based on company data
Note: FY12/17 was an irregular nine-month period due to a change in fiscal year-end. As a result, the company did not disclose YoY changes for FY12/17 and FY12/18.

In FY12/24, the final year of the medium-term plan, Sodick targets segment profit of JPY8.5bn and an OPM of 15.0%, which is below the 17.0% recorded in FY12/18 but approaching the 15.7% booked in FY12/17 (irregular nine-month period due to change in the fiscal year-end).

Profit margins in FY12/17 and FY02/18 improved on an increase of unit sales in the Chinese market due to government subsidy policies. The company does not factor in such special factors in FY12/24, but forecasts profitability recovering to a level close to that achieved in those periods. In the EDM business, demand for the company's mainstay high-end (high-precision) models is increasing, and the company believes that its products are gaining recognition in Europe and North America, where its presence has been smaller than in Greater China. 
The company said it feels that it is having success in expanding its market share in those regions. It plans to take the following measures to achieve its FY12/24 targets.

Sales strategy

In the three-year period covered by the medium-term plan, Sodick plans to reinforce its sales organization in growth markets, particularly Greater China, and strengthen its high-margin after-sales services (mainly repairs, maintenance and consumables). Rather than merely selling equipment, the company looks to offer solutions to its customers by selling comprehensive services and promoting digitalization. As part of such efforts, it will also pursue digital marketing that utilizes digital transformation (DX). Moreover, the company will strive to strengthen sales of products other than EDMs such as machining centers and metal 3D printers.

Technology strategy

The company plans to further improve the performance and operability of its EDMs—its core product—and increase their appeal to customers. It also intends to enhance the performance of its metal 3D printers and make progress in the mass production of its precision machining centers. Further, it plans to promote the development of environmentally friendly products.

Production strategy

The company plans to continue to optimize its global production organization. It looks to improve production efficiency and strengthen quality control by promoting digital transformation at each of its plants.

Organizational and personnel strategy

The company plans to restructure its business divisions and manage operations as a new organizaion. It intends to concentrate on personnel education in fields such as development, product design, production technology, and machining technology.

Industrial Machinery 

FY12/18FY12/19FY12/20FY12/21FY12/22FY12/23FY12/24
(JPYmn) Act.Act.Act.Act.Est.TargetTarget
Industrial Machinery
Revenue11,1559,77310,93110,36710,80011,60013,700
YoY--12.4%11.8%-5.2%4.2%7.4%18.1%
Segment profit802165596503300400750
YoY--79.4%261.2%-15.6%-40.4%33.3%87.5%
Segment profit margin7.2%1.7%5.5%4.9%2.8%3.4%5.5%
Source: Shared Research based on company data
Note: FY12/17 was an irregular nine-month period due to a change in fiscal year-end. As a result, the company did not disclose YoY changes for FY12/17 and FY12/18.

In FY12/24, Sodick targets segment profit of JPY750mn and an OPM of 5.5%. It forecasts revenue of JPY13.7bn. If achieved, this will mark the highest revenue in the company’s history.
The biggest objective for the Industrial Machinery segment is to increase sales by expanding local production through the operation of a new plant in Xiamen, China, starting in June 2022. The company expects a temporary decline in profitability as it brings the plant online, but plans further business expansion once operations stabilize. The company plans to take the following measures to achieve its FY12/24 targets.

Sales strategy

The company plans to promote sales of its electric injection molding machines, and expand sales of its vertical injection molding machines for automotive applications. By region, it plans to strengthen its sales organization in growth markets, particularly Greater China, while kicking off sales in the European market. The company will also strive sell environmentally friendly products through initiatives such as reducing energy consumption and improving the yield on raw materials.

Technology strategy

The company intends to further improve the performance and operability of its injection molding machines, and increase their appeal to customers. It also looks to strengthen support for new raw materials in its injection molding machines by, for example, offering models that support biodegradable plastics. The company also plans to promote automation using IoT technologies.

Production strategy

Production is scheduled to begin in mid-2022 at the company's new plant in Xiamen, China. The company aims to reduce costs by producing injection molding machines for the Chinese market at this plant. It also plans to focus on initiatives to rapidly achieve mass production of injection molding machines that support aluminum, and pare down production costs for electric injection molding machines.

Organizational and personnel strategy

In addition to reviewing its business management structure, the company intends to concentrate on personnel education in fields such as development, product design, production technology, and machining technology.

Food Machinery

FY12/18FY12/19FY12/20FY12/21FY12/22FY12/23FY12/24
(JPYmn) Act.Act.Act.Act.Est.TargetTarget
Food Machinery
Revenue6,5606,2833,5856,8848,2009,20010,000
YoY--4.2%-42.9%92.0%19.1%12.2%8.7%
Segment profit674625658309501,0001,100
YoY--7.3%-89.6%1,176.9%14.5%5.3%10.0%
Segment profit margin10.3%9.9%1.8%12.1%11.6%10.9%11.0%
Source: Shared Research based on company data
Note: FY12/17 was an irregular nine-month period due to a change in fiscal year-end. As a result, the company did not disclose YoY changes for FY12/17 and FY12/18.

In FY12/24, Sodick targets segment profit of JPY1.1bn and an OPM of 11.0%. It forecasts revenue of JPY10.0bn. If achieved, this will mark a new record high.
Demand in the Food Machinery segment is affected by different factors than those that affect the Machine Tool and Industrial Machinery segments. The company expects the Food Machinery segment to cover downturns in the Machine Tool segment's demand cycle to a certain extent. To this end, the company plans on aggressive capex in the Food Machinery segment, which it expects to depress OPM for some time. The company plans to take the following measures to achieve its FY12/24 targets.

Sales strategy

In Food Machinery, the company plans to establish three pillars: noodle-making machines, sterile-packed cooked rice production systems, and prepared dish machines, and acquire new customers outside of the existing business domains. It looks to step up sales overseas through a sales company in Shanghai, China, specifically in Asia, where it sees large potential demand.

Technology strategy

The company intends to conduct R&D to support an expansion of its business domains, and focus on development of energy-efficient equipment and other areas.

Production strategy

The company will expand overseas production through its plant that manufactures noodle-making machines in Xiamen, China. The company plans to improve productivity by having its two plants in Japan and China specialize in different models.

Organizational and personnel strategy

The company plans to rapidly recruit personnel at the sales company in Shanghai, China, and increase personnel for after-sales services, for which it expects growing demand in the future. The company will also step up training, including improving the skills of its engineers.

Other

FY12/18FY12/19FY12/20FY12/21FY12/22FY12/23FY12/24
(JPYmn) Act.Act.Act.Act.Est.TargetTarget
Other