GROUP

NSG Group FY2017 Quarter 1 Results

(from 1 April 2016 to 30 June 2016)

Nippon Sheet Glass Co., Ltd.

29 July 2016

Kenichi Morooka

Chief Financial Officer

Clemens Miller

Chief Operating Officer

Iain Smith

Finance Director - Global Finance

29 July 2016 FY2017 Quarter 1 Results 3

FY2017 Quarter 1 Results

(from 1 April 2016 to 30 June 2016)

Key Points Financial Results Business Update Summary

Agenda

29 July 2016 FY2017 Quarter 1 Results 4

Key Points - April to June 2016

  • Significant year on year improvement in trading profits

  • Cash flow continues to improve, reflecting the recovery

    in the Group's profitability

  • Progress made in execution of business and financial improvement initiatives

29 July 2016 FY2017 Quarter 1 Results 5

FY2017 Quarter 1 Results

(from 1 April 2016 to 30 June 2016)

Key Points Financial Results Business Update Summary

Agenda

29 July 2016 FY2017 Quarter 1 Results 6

Consolidated Income Statement

(JPY bn)

FY2017 Q1

150.5

FY2016 Q1

162.1

8.9

5.2

(1.8)

(2.1)

7.1

3.1

7.8

(0.6)

(4.2)

(4.2)

-

(0.1)

10.7

(1.8)

4.4

(0.5)

3.9

(1.4)

16.2

13.7

Change from FY2016

Revenue

Trading profit

-7% 2

71% 3

Amortization 1

Operating profit Exceptional items Finance expenses (net)

Share of JVs and associates Profit/(loss) before taxation Profit/(loss) for the period

Profit/(loss) attributable to owners of the parent

EBITDA

  1. Amortization arising from the acquisition of Pilkington plc only

  2. Increase of 4.5% based on constant exchange rates

  3. Increase of 97% based on constant exchange rates

18%

Improved profitability despite strengthened yen

29 July 2016 FY2017 Quarter 1 Results 7

Change Analysis

Trading profit

12

Q1 FY2016

10

8

6

4

2

Total

Sales Vol/Mix

Selling Prices

Input Costs

FX

Other

Total

JPY bn

5.2

2.0

0.4

1.7

(0.5)

0.1

8.9

0

Q1 FY2017

Benefits from improved market conditions and lower input costs

29 July 2016 FY2017 Quarter 1 Results 8

FY2017

FY2016

Q1

Q1

7.7

-

0.9

-

0.7

-

-

0.1

(0.7)

(0.3)

(0.7)

-

(0.1)

(0.4)

7.8

(0.6)

Exceptional Items

(JPY bn)

Gain on disposal of non-current assets Gain from exit of business

Gain on disposal of investments in associates Gain on dilution in associate

Restructuring costs

Impairment of non-current assets Settlement of litigation matters

Exceptional gains from disposal of non-current assets

29 July 2016 FY2017 Quarter 1 Results 9

Consolidated Cash Flow Summary

(JPY bn)

FY2017

FY2016

Q1

Q1

Profit/(loss) for the period

4.4

(0.5)

Depreciation and amortization

9.1

10.6

Impairment

0.7

-

Gain on disposal of assets and exit of business

(9.4)

-

Tax paid

(1.9)

(1.2)

Others

6.2

(5.5)

Net operating cash flows before movement in working capital

9.1

3.4

Net change in working capital

Net cash outflows from operating activities

Purchase of property, plant and equipment Disposal proceeds

Others

Net cash inflows/(outflows) from investing activities

Cash flow before financing activities

(11.1)

(14.9)

(2.0)

(11.5)

(7.8)

(8.6)

8.6

-

(0.5)

(0.3)

0.3

(8.9)

(1.7)

(20.4)

Operating cash flow driven by improved profit

29 July 2016 FY2017 Quarter 1 Results 10

30-Jun-16

374

6.0x

5.4

FY2017 Q1

4.0x

5.9%

Key Performance Indicators

Net Debt (JPY bn) Net Debt/EBITDA

Net Debt/Equity Ratio

EBITDA Interest Cover Operating Return* on Sales

* trading profit

31-Mar-16

381

6.3x

3.4

FY2016 Q1

3.7x

3.2%

Profit ratios improved, but equity affected by strengthened yen

29 July 2016 FY2017 Quarter 1 Results 11

FY2017 Quarter 1 Results

(from 1 April 2016 to 30 June 2016)

Key Points Financial Results Business Update Summary

Agenda

29 July 2016 FY2017 Quarter 1 Results 12

External Revenue - Group Businesses

¥ 150.5 billion

Auto

North America 14%

Auto Japan

8%

Auto - ROW 5%

Technical 8%

Architectural

Europe

15%

Architectural Japan 10%

Architectural

North America 6%

Auto Europe 25%

Architectural - ROW 9%

FY2017 Quarter 1

Diversified geographical coverage

29 July 2016 FY2017 Quarter 1 Results 13

Europe

Q1 FY2016 v Q1 FY2017

Revenues

Trading profit

€m €m

500

400

300

Q1 FY2016

176

10

Q1 FY2017

183

31

Architectural

40 • Volumes and prices improved due

to increased market demand

  • Profits benefitted from lower

30 energy costs

20 Automotive

  • OE volumes benefitted from

200

100

0

276 303

10

0

Arch Auto Trading profit

continued recovery of light-vehicle sales in the region

  • Improved operational performance

  • Robust volumes in AGR

    Businesses benefitted from improved market conditions

    29 July 2016 FY2017 Quarter 1 Results 14

    Japan

    Q1 FY2016 v Q1 FY2017

    Revenues

    Trading profit

    JPY bn JPY bn

    Q1

    35 FY2016

    30

    25 17

    20

    15

    10 14

    5

    0

    0.9

    0.4

    Q1 FY2017

    15

    13

    4.0

    3.0

    2.0

    1.0

    0.0

    Architectural

  • Volumes below the previous year

    Automotive

  • Revenues and profits fell from the previous year, reflecting lower light-vehicle sales

    Arch Auto Trading profit

    Profitability affected by softened market conditions

    29 July 2016 FY2017 Quarter 1 Results 15

    North America

    Q1 FY2016 v Q1 FY2017

    Revenues

    Trading profit

    $m $m

    300

    200

    Q1 FY2016

    80

    18

    Q1 FY2017

    88

    30

    Architectural

    40 • Revenues and profits improved, as selling prices continue to be strong

    30 • Further growth in value-added volumes

    20

    Automotive

    100

    0

    190197

    10

    0

    Arch Auto Trading profit

  • Improved OE revenues and profits reflects increased NSG volumes

  • Improved operational efficiency

  • AGR results similar to the previous year

    Profitability improved as markets continue to show strength

    29 July 2016 FY2017 Quarter 1 Results 16

    Rest of World

    Q1 FY2016 v Q1 FY2017

    Revenues

    Trading profit

    $m $m

    250

    200

    Q1 FY2016

    Q1 FY2017

    Architectural

    50 • Previous year's results included the effect of a cold repair in Argentina

    40 • Demand continues to be robust in South East Asia

    150

    100

    50

    0

    122 119

    30

    26

    13 20

    10

    79 69

    0

    Arch Auto Trading profit

    Automotive

  • Weak market conditions persist in South America

    Mixed market conditions among regions

    29 July 2016 FY2017 Quarter 1 Results 17

    Technical Glass

    Q1 FY2016 v Q1 FY2017

    Revenues

    Trading profit

    JPY bn JPY bn

    Q1

    15 FY2016

    10 14

    5

    0

    0.2 0.1

    Q1 FY2017

    12

    2.0

    1.5

    1.0

    0.5

    0.0

    Technical Glass

  • Losses in the Display business narrowed following the mothballing of the thin glass float line in Vietnam

  • Volumes of components used in

    multi-function printers declined

  • Volumes of glass cord used in engine timing belts were robust, reflecting strengthening automotive markets

  • Battery separator segment

    enjoying strong demand

    Revenue Trading profit

    Pressured by challenging market conditions

    29 July 2016 FY2017 Quarter 1 Results 18

    Joint Ventures and Associates

    Q1 FY2017 v Q1 FY2016

    (JPY bn)

    FY2017 Q1 FY2016 Q1

    Share of post-tax losses - (0.1)

    • Profits were below the previous year at Cebrace, the Group's joint

      venture in Brazil

    • Previous year losses in China and Russia Joint Ventures not repeated following March 2016 impairments

Previous year impairments removed effects of loss-making entities

29 July 2016 FY2017 Quarter 1 Results 19

FY2017 Quarter 1 Results

(from 1 April 2016 to 30 June 2016)

Key Points Financial Results Business Update Summary

Agenda

29 July 2016 FY2017 Quarter 1 Results 20

Summary

  • Significant year on year improvement in trading profits

  • Cash flow continues to improve, reflecting the recovery

    in the Group's profitability

  • Progress made in execution of business and financial improvement initiatives

  • FY2017 forecast unchanged

    29 July 2016 FY2017 Quarter 1 Results 21

    Notice

    The projections contained in this document are based on information currently

    available to us and certain assumptions that we consider to be reasonable. Hence the actual results may differ. The major factors that may affect the results are the economic environment in major markets (such as Europe, Japan, the U.S. and Asia), product supply/demand shifts, and currency exchange fluctuations.

    Nippon Sheet Glass Co., Ltd.

    29 July 2016 FY2017 Quarter 1 Results 22

    Appendices

    29 July 2016 FY2017 Quarter 1 Results 23

    Revenue by Business

    FY2017 Q1 v FY2016 Q1

    (JPY bn)

    FY2017 Q1

    FY2016 Q1

    Change

    Architectural

    59.9

    64.7

    (4.8)

    Europe

    22.3

    23.5

    (1.2)

    Japan

    15.1

    16.6

    (1.5)

    North America

    9.6

    9.7

    (0.1)

    Rest of World

    12.9

    14.9

    (2.0)

    Automotive

    78.5

    83.1

    (4.6)

    Europe

    37.0

    36.9

    0.1

    Japan

    12.6

    13.6

    (1.0)

    North America

    21.4

    23.1

    (1.7)

    Rest of World

    7.5

    9.5

    (2.0)

    Technical Glass

    12.0

    14.2

    (2.2)

    Europe

    1.8

    2.1

    (0.3)

    Japan

    6.2

    7.0

    (0.8)

    North America

    0.3

    0.3

    0.0

    Rest of World

    3.7

    4.8

    (1.1)

    Other Operations

    0.1

    0.1

    0.0

    Europe

    0.0

    0.0

    0.0

    Japan

    0.1

    0.1

    0.0

    North America

    0.0

    0.0

    0.0

    Rest of World

    0.0

    0.0

    0.0

    Total

    150.5

    162.1

    (11.6)

    29 July 2016 FY2017 Quarter 1 Results 24

    Trading profit

    FY2017 Q1 v FY2016 Q1

    (JPY bn)

    FY2017 Q1

    FY2016 Q1

    Change

    by SBU

    Architectural

    6.5

    3.3

    3.2

    Automotive

    3.7

    2.6

    1.1

    Technical Glass

    0.1

    0.2

    (0.1)

    Other Operations

    (1.4)

    (0.9)

    (0.5)

    Total

    8.9

    5.2

    3.7

    by Region

    3.5

    1.4

    2.1

    Europe

    Japan

    (0.6)

    0.7

    (1.3)

    North America

    3.1

    2.1

    1.0

    Rest of World

    2.9

    1.0

    1.9

    Total

    8.9

    5.2

    3.7

    29 July 2016 FY2017 Quarter 1 Results 25

    30-Jun-16

    31-Mar-16

    Change

    742.7

    812.1

    (69.4)

    501.3

    571.4

    (70.1)

    154.3

    176.4

    (22.1)

    236.2

    258.9

    (22.7)

    110.8

    136.1

    (25.3)

    241.4

    240.7

    0.7

    55.9

    55.1

    0.8

    185.5

    185.6

    (0.1)

    674.0

    700.1

    (26.1)

    284.9

    285.9

    (1.0)

    156.2

    143.5

    12.7

    128.7

    142.4

    (13.7)

    389.1

    414.2

    (25.1)

    278.1

    293.4

    (15.3)

    111.0

    120.8

    (9.8)

    68.7

    112.0

    (43.3)

    60.4

    103.1

    (42.7)

    8.3

    8.9

    (0.6)

    742.7

    812.1

    (69.4)

    Consolidated Balance Sheet

    (JPY bn)

    Assets

    Non-current assets Goodwill & intangible assets Property, plant and equipment Other

    Current assets

    Cash and cash equivalents Other

    Liabilities

    Current liabilities Financial liabilities Other

    Non-current liabilities

    Financial liabilities Other

    Equity

    Shareholders' equity Non-controlling interests

    Total liabilities and equity

    29 July 2016 FY2017 Quarter 1 Results 26

    FY2016 Q1

    FY2016

    Full-year

    FY2017 Q1

    Average rates used:

    JPY/GBP

    186

    181

    155

    JPY/USD

    122

    120

    108

    JPY/EUR

    134

    132

    122

    Closing rates used:

    JPY/GBP

    192

    161

    138

    JPY/USD

    122

    113

    103

    JPY/EUR

    136

    127

    114

    29 July 2016

    FY2017 Quarter 1 Results

    Exchange Rates

    27

    NSG Group Revenues by Geographical Destination (FY2016)

    Americas

    30%

    36%

    Europe

    Asia

    32%

    Revenues include:

    • Group revenues: JPY 629 bn; and

    • Group share of Joint Ventures & associates revenues: JPY 48bn

    (Fiscal year ended 31 March 2016)

    Balanced presence in Europe, Asia and Americas

    29 July 2016 FY2017 Quarter 1 Results 28

    Depreciation & Amortization, CAPEX

    Q1

    Depreciation and Amortization

    38.7

    36.6

    40.4

    41.7

    40.9

    9.1

    Capital expenditures

    34.7

    26.0

    31.6

    36.6

    28.2

    8.1

    R&D expenditures

    8.0

    7.3

    7.9

    8.2

    9.8

    2.2

    (JPYbn) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY2017

    29 July 2016

    FY2017 Quarter 1 Results 29

    EU Economic Indices - Architectural

    130

    125

    120

    115

    110

    105

    100

    95

    90

    85

    80

    2010 = 100

    Euro

    Euro

    area (18 cou

    2006 Q1

    2006 Q2

    29 July 2016

    2006 Q3

    2006 Q4

    Production Statistic - Construction Sector Output

    2007 Q1

    2007 Q2

    2007 Q3

    2007 Q4

    FY2017 Quarter 1 Results

    2008 Q1

    2008 Q2

    2008 Q3

    2008 Q4

    2009 Q1

    2009 Q2

    2009 Q3

    2009 Q4

    2010 Q1

    2010 Q2

    2010 Q3

    2010 Q4

    2011 Q1

    2011 Q2

    2011 Q3

    2011 Q4

    2012 Q1

    2012 Q2

    2012 Q3

    pean Union (28 countries)

    2012 Q4

    2013 Q1

    2013 Q2

    2013 Q3

    ntries)

    2013 Q4

    2014 Q1

    2014 Q2

    Source: Eurostat

    2014 Q3

    2014 Q4

    2015 Q1

    2015 Q2

    2015 Q3

    2015 Q4

    30

    2016 Q1

    EU Economic Indices - Automotive

    Western Europe Light Vehicle Build

    Millions

    16.00

    15.00

    14.00

    13.00

    12.00

    11.00

    10.00

    2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

    Calendar Year

    Source: : IHS Jul 2016, LMC Jun 2016

    29 July 2016

    FY2017 Quarter 1 Results 31

    Brief Guide to NSG Group

    29 July 2016

    FY2017 Quarter 1 Results 32

    NSG Today

  • One of the world's largest manufacturers of glass and glazing products for the Architectural, Automotive and Technical Glass sectors

    • World leader in float glass technology and coatings

    • Supplying the world's leading vehicle manufacturers

    • Leading player in thin glass for displays, lenses and light guides for printers and glasscord, etc.

  • Principal operations in 28 countries, with sales in over 130 countries

  • 26 float lines worldwide

  • Approximately 27,000 employees globally

(Reference) Consolidated revenue: JPY 629 billion (FY2016)

29 July 2016

FY2017 Quarter 1 Results 33

Company History

29 July 2016

Nov 1918

Obtained the flat glass technology (Colburn process) rom Libbey-Owens-Ford Glass Corporation of the United States.

Established as America Japan Sheet Glass Co., Ltd. with its head office in Osaka.

Jan 1931

Changed the company name to Nippon Sheet Glass Co., Ltd.

Feb 1965

Installed a new float glass manufacturing process at the Maizuru Plant in Kyoto, Japan.

Nov 1968

Developed "SELFOC®" (Joint Development with NEC Corporation).

Nov 1971

Established Malaysian Sheet Glass Sdn Bhd in Malaysia.

Mar 1995

Established Vietnam Float Glass Co., Ltd.

Oct 1997

Developed "Spacia™" vacuum glazing.

Oct 2001

Affiliated with Pilkington Plc. under the equity method.

Jul 2004

Changed the registered address of head office from Osaka to Kaigain, Minato-ku, Tokyo.

Jun 2006

Acquired the remaining 80% equity of Pilkington Plc. and made it a subsidiary.

Feb 2007

Changed the registered address of head office to Mita, Minato-ku, Tokyo.

Jun 2008

Changed the Board to the "Company with Committees" structure.

Apr 2011

Adopted the International Financial Reporting Standards (IFRS).

FY2017 Quarter 1 Results 34

Global Float Operations

UK 1

1 St Helens

Poland 1

1 Sandomierz

USA 5

2 Rossford

1 Ottawa

2 Laurinburg

Germany 4

2 Gladbeck

2 Weiherhammer

Italy 2

2 San Salvo

Japan 4

2 Chiba

2 Maizuru

Vietnam 3

1 VFG (Bac Ninh)

2 VGI (Ba Ria Vung Tau)

Chile 1

1 Concepcion

Brazil 2

1 Caçapava

  1. Barra Velha

    Malaysia 2

  2. MSG (Johore Bahru)

Argentina 1

1 Llavallol

Operated by NSG Group 26 (Data : as at FY2016)

29 July 2016 FY2017 Quarter 1 Results 35

Global Automotive Operations

Tampere Laitila

Collingwood Rossford Shelbyville Versailles Mexicali

San Salvo Sagunto

Witten

Aken

Sandomierz

Chimielow

Maizuru Tochigi Kyoto

Tianjin

Caçapava

Guilin Sungai Buloh

Vizag

Munro

29 July 2016 FY2017 Quarter 1 Results 36

GROUP

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