Financial Results Presentation

Transcription

1 Financial Results Presentation Consolidated Results For Fiscal Year 2016 AMADA HOLDINGS CO., LTD. May 12, 2017

2 Consolidated Income Statement Results Consolidated Results Net sales Operating income Orders bn YTY -8.3% 33.0 bn YTY -22.3% bn YTY -10.0% (-1.5% in real terms) (-4.1% in real terms) [Billions of yen] FY2016 [Results] FY2015 [Results] YTY FY2016 [Forecast] Amount Share(%) Amount Share(%) Amount Difference (%) Amount Difference (%) Net Sales % % % % Gross profit % % % % SG&A % % % % Variable cost % % % % Fixed cost % % % % Installment sales adjustment Operating income % % % % Ordinary income % % % % Net income * % % % % Orders % % \exchange rate USD % % EUR % % RMB % % *Profit attributable to owners of parent 1

3 Sales of Geographical & Industry Segments Japan Overseas Total [Billions of yen] North America Europe China Asia and others Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] Metalworking machinery Sheet metal processing Welding % % % % % % % YTY(%) -8% -9% -7% -10% -12% -9% -9% % % % % % % % YTY(%) -8% -10% 1% -8% 8% -16% 1% -15% -3% -11% 3% -10% -2% 6.2 2% 5.0 2% 4.2 2% 4.0 1% 3.8 1% % % YTY(%) -0% -1% 9% 1% 13% 11% 29% 7% 18% 4% 16% 3% 12% Metal machine tools % 4.2 2% 5.6 2% 2.5 1% 3.2 1% % % YTY(%) 1% -17% -11% -30% -22% -19% -7% Bandsaws % 3.8 1% 4.2 2% 2.0 1% 2.0 1% % % YTY(%) -0% -12% -2% -3% 9% -24% -10% -22% -19% -13% -3% -6% -1% Presses 8.8 3% 0.0 0% 0.0 0% 0.1 0% 0.3 0% 0.6 0% 9.4 3% YTY(%) -2% -82% -82% -62% -57% 6% 25% -13% -5% -32% -23% -5% -4% Machine tools 3.7 1% 0.4 0% 1.3 0% 0.2 0% 0.9 0% 2.9 1% 6.7 2% YTY(%) 14% -38% -31% -23% -13% -62% -62% -25% -25% -32% -27% -13% -10% Others 1.2 0% 0.0 0% 0.0 0% 0.0 0% 0.0 0% 0.0 0% 1.2 0% Total % % % % % % % YTY(%) -6% -9% 1% -8% 7% -14% 2% -13% -3% -10% 3% -8% -2% Regional situation Japan North America Europe China Asia and others [YTY -6%] Reactionary fall in Sheet metal processing and Presses. Weak: Precision machinery, Steel supplies related, Construction machinery, etc. Strong: Transportation vehicles. [YTY +1% (in real terms)] Business expansion in Canada. Downturn demand in Mexico. Strong: Construction machinery, Kitchen equipment, Air-conditioning equipment, Medical equipment, etc. [YTY +7% (in real terms)] Strong demand in Western Europe and South Europe. Stagnation in UK and Eastern Europe. Strong: Construction machinery, Kitchen equipment, Automobiles-related, etc. [YTY +2% (in real terms)] Recovery trend in the South and the Coast. Strong: Communication-related, Electric and electronic machinery, Switchboard, Control board, etc. [YTY -3% (in real terms)] Downturn demand in resource rich countries such as Middle East, Brazil. Strong demand in ASEAN and India. Weak: Automobiles, Energy-related, etc. YTY by previous term s exchange rate 2

4 Operating Income Analysis FY2015(Results) FY2016(Results) Performance situation (YTY) Operating income 33.0 bn YTY -9.4 bn Net sales -25.1bn Effect of foreign exchange -20.6bn, Decrease in sales on real terms 4.5bn Operating income -9.4bn Effect of foreign exchange -7.7bn, Decrease in real terms 1.7bn Retirement benefit expenses Pro forma standard taxation Costs of exhibition Depreciation R&D 0.6bn 0.6bn 0.2bn 0.2bn -0.6bn 42.5bn ~FY2015 Sales on [Billions of yen] Operating real terms income Effect of foreign exchange New products. Amelioration of selling price Work rate Production rationalization Costs on real terms Installment sales adjustment Increased profit factor Decreased profit factor Others ~FY2016 Operating income bn 3

5 Consolidated Forecasts Income Statement Consolidated Results Net sales Operating income Orders bn YTY +2.2% 34.0 bn YTY +2.9% bn YTY +5.1% (+4.2% in real terms) (+9.8% in real terms) [Billions of yen] FY2017[Forecast] FY2016[Results] YTY FY2017[Forecast] Amount Share(%) Amount Share(%) Amount Difference (%) Previous term's exchange rate Amount Difference (%) Net Sales % % % % Gross profit % % % % SG&A % % % % Variable cost % % % % Fixed cost % % % % Installment sales adjustment Operating income % % % % Ordinary income % % % % Net income * % % % % Orders % \exchange rate USD % % EUR % % RMB % % *Profit attributable to owners of parent 4

6 Sales of Geographical & Business Segments / FY2017 Forecast Japan [Billions of yen] North America Europe China Asia and others Metalworking machinery Sheet metal processing Welding Metal machine tools Bandsaws Presses Machine tools Overseas Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] Amount [Ratio] % % % % % % % YTY(%) 4% -0% -0% 5% 4% 1% 2% % % % % % % % YTY(%) 4% 0% 4% -1% 3% 6% 12% 4% 8% 1% 5% 2% 5% 6.8 2% 4.7 2% 4.3 1% 4.0 1% 3.8 1% % % YTY(%) 8% -7% -4% 1% 4% -1% 4% -1% 3% -2% 1% 0% 3% % 4.6 2% 6.0 2% 2.5 1% 3.4 1% % % YTY(%) 2% 10% 9% 9% 6% 7% 3% % 4.1 1% 4.5 2% 2.0 1% 2.2 1% % % YTY(%) 0% 8% 11% 6% 9% -2% 3% 11% 11% 6% 9% 2% 4% 8.9 3% 0.0 0% 0.1 0% 0.2 0% 0.3 0% 0.7 0% 9.5 3% YTY(%) 1% 79% 80% -4% -1% 24% 31% -5% -3% 7% 11% 1% 2% 4.0 1% 0.5 0% 1.4 1% 0.3 0% 0.9 0% 3.1 1% 7.1 2% YTY(%) 6% 7% 10% 5% 9% 23% 23% -5% -5% 4% 6% 5% 6% Others 1.1 0% 0.0 0% 0.0 0% 0.0 0% 0.0 0% 0.0 0% 1.1 0% Total % % % % % % % Previous year's exchange rates YTY(%) 3% 0% -0% 4% 4% 1% 2% YTY(%) 3% 4% 4% 9% 7% 5% 4% Total YTY by previous term s exchange rate 5

7 Operating Income Analysis FY2016(Results) FY2017(Forecast) Performance situation (YTY) Operating income 34.0 bn YTY \+0.9 bn Net sales +6.1bn Effect of foreign exchange -5.4bn, Increase in sales on real terms 11.5bn Operating income +0.9bn Effect of foreign exchange -2.2bn, Increase in real terms 3.2bn bn [Billions of yen] ~ R&D Depreciation Others 1.0bn 1.1bn 0.4bn 34.0bn FY2016 Operating income Sales on real terms Effect of foreign exchange New products. Amelioration of selling price Work rate Production rationalization Costs on real terms Installment sales adjustment Increased profit factor Decreased profit factor Others ~ FY2017 Operating income

8 Net Sales and Operating Margin Results by Region Performance situation Interregional elimination Net sales -53.6bn, Operating income -0.5bn Effect of foreign exchange Net sales -20.6bn, Operating income -7.7bn * Before interregional elimination Billions of yen (OPM) Japan North America % 20.0 Annual OPM 11.6% 14.9% 12.8% 7.2% 8.2% 7.5% % 16.8% 16.9% 17.1% 20% % 14.4% 14.7% 8.8% 8.8% 8.3% 8.6% 8.5% 8.3% % 15% 11.0% 10.4% 6.6% 6.8% 7.5% % % 10% % 3.2% % 5% % 10% 5% 0.0 FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0% 0.0 FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0% 20.0 Annual OPM 0.7% Europe Asia and others 6.0% 5.8% 15% % 7.4% 6.9% 15% % 7.4% 5.8% 6.6% 2.7% 2.9% 3.3% 3.6% 1.0% -4.6% 4.7% 7.5% 10% 5% 0% -5% % 8.5% 6.9% 7.8% 8.5% 6.3% 6.3% 6.1% 4.6% 5.7% 8.1% 5.4% 10% 5% 0.0 FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q -10% 0.0 FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0% 7

9 Trends in the Inventory Volume by Region Performance situation Inventory volume 70.6bn YTY -7.2bn(-9.3%) Turnover months 3.0months YTY -0.1months Turnover months:amount/net sales by region 12 Billions of yen Number of months Japan FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q North America FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Europe FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Asia and others FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

10 Transition of Orders by Region (YTY) YTY FY2014 FY2015 FY2016 Apr-Jun Jul-Sep Oct-Dec Jan-Mar Total Apr-Jun Jul-Sep Oct-Dec Jan-Mar Total Apr-Jun Jul-Sep Oct-Dec Jan-Mar Total Jan Feb Mar Domestic +48% +9% +5% +1% +7% +44% +2% -3% +4% +10% -39% +18% -10% -30% +21% -14% -10% -11% North America +7% +1% -1% -12% -1% +1% +4% +1% +18% +6% -9% -4% +3% +36% +8% +25% +22% +3% Europe +14% +13% +3% +9% +10% -2% -2% +10% +1% +2% +14% +3% -4% +25% +4% +47% +26% +9% China +30% -0% -23% -23% -4% -8% -19% -24% -5% -13% -20% +14% +30% +1% +72% +12% +21% +6% Asia and others +13% +3% +2% -17% -1% -3% +1% +5% -14% -3% -8% +1% -18% +34% +17% +33% +28% -1% Overseas +14% +5% -2% -8% +2% -2% -1% +2% +3% +0% -3% +1% -2% +27% +13% +32% +25% +5% Total +27% +7% +1% -2% +7% +18% +0% +0% +4% +5% -22% +10% -6% -4% +17% +6% +6% -3% *Overseas orders are converted at the same rate (YTY). Domestic and Overseas Europe and America Asia and others 60% 40% 20% 0% -20% -40% 48% 14% -60% FY2014 9% 5% 1% 44% 2% 2% 4% 5% 3% -2% -2% -1% 1% -3% -2% -3% -8% -10%-10% FY % FY % Domestic Overseas 25% % 20% 10% 0% -10% 14% 13% 10% 7% 9% 3% 4% 1% 1% 1% -20% FY2014-1% -12% North America Europe -2%-2% FY % 1% 14% -9% FY % 22% 3% 3% -4% -4% % 30% 20% 10% 0% -10% -20% 30% 13% -30% FY2014 3% 2% 0% -17% -23%-23% China Asia and others 5% -3% 1% 1% -5% -8% -8% FY % -19% -20% -24% FY % 30% 28% -18% 21%

11 AMADA DI (Diffusion Index) Research on March, September DI(Actual result) DI(Forecast) Prpduction equipment(forecast) Production orders(forecast) Financing(Forecast)

12 Background Data

13 Monthly Orders (Brief Version) [Billions of yen] FY2016 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total YTY(%) -2% -32% -26% -2% -1% +36% -5% -11% -1% -4% +17% +6% Domestic YTY(%) -9% -55% -40% +9% -7% +54% -24% -15% +5% -30% +21% -14% Overseas YTY(%) +3% -3% -9% -18% +5% +18% +12% -8% -6% +27% +13% +32% FY2015 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total YTY(%) -9% +36% +27% +24% -10% -13% -4% +9% -4% +7% -6% +9% Domestic YTY(%) -5% +91% +47% +41% -6% -25% +3% -1% -9% +15% -19% +16% Overseas YTY(%) -11% -2% +8% +6% -14% +4% -9% +17% +0% -2% +8% +1% *Overseas orders in FY2016 and FY2015 are converted at the same rate. 100% 80% Total Domestic Overseas 60% 40% 20% 0% -20% -40% -60% FY2015 FY2016 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 12

14 Transition of Orders and Sales by Segments < Consolidated Orders > [Billions of yen] Metalworking machinery FY2017 FY2016 FY2015 Forecast 1H 2H FY 1H 2H FY Amount Share Amount Share Amount Share Amount Share Amount Share Amount Share Amount Share % % % % % % % Sheet metal processing % % % % % % % Machinery % % % % % % % Software/FA 8.5 3% 4.0 3% 4.4 3% 8.4 3% 4.1 3% 4.3 3% 8.5 3% Service % 7.5 6% 7.9 6% % 7.8 5% 8.1 6% % Consumables % % % % % % % Welding % % % % % % % Metal machine tools % % % % % % % Bandsaws % % % % % % % Presses 9.7 3% 4.5 3% 4.4 3% 8.9 3% 5.2 3% 4.4 3% 9.7 3% Machine tools 7.1 2% 3.5 3% 2.6 2% 6.1 2% 3.7 2% 3.6 2% 7.3 2% Others 1.1 0% 0.6 0% 0.6 0% 1.2 1% 0.9 1% 0.8 1% 1.7 1% Total % % % % % % % < Consolidated Sales > [Billions of yen] Metalworking machinery FY2017 FY2016 FY2015 Forecast 1H 2H FY 1H 2H FY Amount Share Amount Share Amount Share Amount Share Amount Share Amount Share Amount Share % % % % % % % Sheet metal processing % % % % % % % Machinery % % % % % % % Software/FA 8.5 3% 3.7 3% 4.6 3% 8.3 3% 4.1 3% 4.5 3% 8.7 3% Service % 7.5 6% 7.9 5% % 7.9 6% 8.1 5% % Consumables % % % % % % % Welding % % % % % % % Metal machine tools % % % % % % % Bandsaws % % % % % % % Presses 9.5 3% 4.0 3% 5.3 4% 9.4 3% 4.6 3% 5.2 3% 9.9 3% Machine tools 7.1 3% 3.1 3% 3.5 2% 6.7 2% 3.8 3% 3.9 3% 7.7 3% Others 1.1 0% 0.6 1% 0.6 0% 1.2 1% 0.9 1% 0.8 1% 1.7 1% Total % % % % % % % 13

15 Transition of Financial Data [Billions of yen] FY2014 FY2015 FY2016 FY2017 1H FY 1H FY 1H FY FY Forecast Total assets Billions of yen Equity Billions of yen Equity ratio (%) 74.6% 73.9% 74.3% 73.6% 77.1% 78.1% - ROE (%) - 4.4% - 6.5% - 6.2% 6.3% Basic earnings per share yen Net assets per share yen 1, , , , , , Dividends per share yen Payout ratio (%) 52.9% 48.3% 59.3% 55.2% Capital investment Total Tangible Intangible Depreciation Billions of yen R&D Billions of yen Increase and Cash flows decrease Operating activities \exchange rate USD During period End of period EUR During period End of period Consolidated subsidiaries Affiliates accounted for by equity method Total (consolidated) Number of employees Total Domestic Overseas Total Domestic Overseas Total Domestic Overseas ,091 8,083 7,909 7,955 7,995 8,005-14

16 Task321 Medium-term Management Plan Progress Report <FY FY2020> AMADA HOLDINGS CO., LTD. May 12, 2017

17 Promotion of growth strategy: Towards achieving net sales of bn Promotion of growth strategy Expand net sales by 30% 1) Expansion and strengthening of growth business: laser/automation Businesses 2) Establishment of new business models leveraging IoT 3) Devolvement of markets by new technology and responses to new materials 4) Development of overseas markets and responses to major global companies Consolidated net sales Unit: Billions of yen (Exchange rate: $ ) (YTY -2%) (YTY +4%) Growth strategy bn Market growth rate CAGR +4% Expansion of growth markets (Region/Product base) Development of new markets (Region/Product base) FY2015 FY2016 FY2017 FY2020 FY

18 Promotion of growth strategy: Expansion and strengthening of growth business Expansion and strengthening of fiber laser business Introduce new products into the market and strengthen cost competitiveness Introduce new type of high output and high performance fiber laser oscillator (2kw 9kw) Expand application of fiber lasers (medium-thickness plate market, welding, 3D processing) (Billions of yen) AJ oscillator Gen1 Gen2 Gen3 20% ENSIS series 3kw - Equipped with the latest beam control technology - Energy-efficient and capable of responding to variable type/quantity production 800 Welding % 10% 82% 75% 18% 25% 55% 47% 37% CO2 45% 53% Fiber 63% FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 *Converted at the same rate Plan 80% FY2020 Medium-term Plan Also apply ENSIS technology to welding system 17

19 Promotion of growth strategy: Expansion and strengthening of growth business Expansion and strengthening of bending automation business Establish robot technical centers that cover rapid proliferation in European and American markets Product planning of entry-level models that meet the needs in Chinese and Asian markets *Converted at the same rate General purpose machine Automation/robotization needs are increasing in overseas markets Component ratio of automation and general purpose machines by region (FY2016) 22% Japan General purpose machine With ATC / Robot With ATC/Robot 8% 11% 15% 18% 22% 25% FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 *Converted at the same rate Plan 30% FY2020 Medium-term Plan 31% Europe & America General purpose machine 14% Asia & others General purpose machine 18

20 Promotion of growth strategy: Establishment of new business models leveraging IoT Proposal of monozukuri (manufacturing) reform through the V-factory, leveraging IoT technology AMADA Customer Cloud V-factory Connecting Box Data Base And Analysis System Internet Remote support (machine/ software) IoT Support center ( Services / Consulting ) Mobile service (visualization info) Servicing Contents Processing navigation system New Web Support system for customer Tooling Contents Processing info Operation info AITS Server ID Tooling (ID parts) AMNC3i machine+iot functions Existing AMNC machine (F/V5) / FLW+IoT functions General purpose machine +IoT functions Non-IoT machine 19 Manual processing 19

21 Promotion of growth strategy: Development of markets by new technology and responses to new materials Market development using new technology Full-scale introduction of laser products into bandsaw market - Deregulation of laser processing due to the JASS6 revision - Development of next-generation structural steel machine products (laser multifunction machine) Expansion into non-metal markets by responding to new materials Early market entry with a view to expansion of the new material market Introduction of products for new material cutting and processing Expansion into electronic components, semiconductor and optics industries Expansion of carbide blade product lineup - Differentiation by proposing machine and blade as a set - Expansion of sales and production of carbide blades overseas Development of large-size transfer market by tandem lines Tapping into downsizing needs Fungible from line equipment Replacement services for machine failures Fine ceramics Quartz glass Specialty carbon and others Expanding use of fiber lasers (ceramics and FPC) Precision processing for smartphones and electronic components Expanding demand for ceramic substrates and FPC OIS parts Ceramic substrate FPC Large-size 1000t transfer press SED (200t 5) 20

22 Promotion of growth strategy: Development of overseas markets and responses to major global companies Development of overseas markets Expansion in North America market Sales expansion seizing the return of manufacturing to America Differentiation by engineering proposals based on advanced technology theory Expansion of local production in Brea plant and strengthening of supply system for the Mideast region Market development in emerging economies Establish Poland Technical Center Develop service base for the Middle Eastern market Establish sales base in Indonesia Poland Technical Center Opened in May 2017 Location: Krakow (Core city for industries and culture) Responding to major global companies and all-process proposals Responding to overseas bases of major Japanese-affiliated companies Composition ratio of Japanese-affiliated major companies in net sales: 12% (FY2016) To 20% (FY2020) For elevator panels Horizontal application of panel lines in domestic facilities into four Chinese facilities For vending machine parts Horizontal application and common operation of the system of domestic facilities in Chinese facilities Sales expansion for major global companies Major EMS companies: Launch sales promotions for Chinese head offices to expand sales in American, Indian, and Eastern European facilities Elevator manufacturers, agricultural machine manufacturers and others 21

23 Improvement in profitability: Towards 20% ordinary income ratio Improve profitability Ordinary income ratio: 20% 1) Strengthening and expansion of supply system and responses to optimum-site production 2) Pursuit of QCD by monozukuri (manufacturing) reform of integrating development and manufacturing 3) Differentiation strategy by promoting engineering business proposals Operating income ratio Non-operating income and expenses ratio Ordinary income ratio 20% Cost of sales ratio 57% 54% Decrease in cost of sales ratio by 3 points Fixed cost ratio Variable cost ratio 26% 22% 5% 5% Decrease in fixed cost ratio by 4 points FY2015 FY

24 Improvement in profitability: Strengthening and expansion of supply system and responses to optimum-site production Restructuring of supply system that supports growth strategy and improvement in profitability by optimum-site production France Local production ratio 55% Facility expansion (Opening in June 2017) Expansion of laser, peripheral, and robot production SCM area and parts center are attached China United States Local production ratio 30% Promotion of local production Expansion of lasers and machine types Investment in Chicago Austria Local production ratio 47% Japan (Ono) Japan (Fujinomiya) (Toki) (Fukushima) Expansion of carbide blades at the Austrian facility and Ono Plant - Integrated management of the Fujinomiya and Toki plants following restructuring manufacturing - Expansion of investment in the automation peripheral facility in Fukushima (Construction scheduled to begin in 2017) 23

25 Improvement in profitability: Pursuit of QCD by monozukuri (manufacturing) reform in integrating development and manufacturing AMADA s monozukuri reform: Pursuit of QCD by development/manufacturing integration leveraging IoT technology Restructuring manufacturing Manufacturing IoT reform Development process reform Procurement reform Use infrastructure effectively and control investment by restructuring manufacturing of the Group Develop optimum-site production systems by promoting local production Incorporate new added value by manufacturing key components in-house Obtain and analyze manufacturing digital data and provide optimum problem-solving solutions Connect global production bases and main suppliers with IoT and conduct same-quality monozukuri Implement shared module designs for common function parts with a view to the future Improve design quality by leveraging design support systems Develop optimum global procurement network system in QCD Improve quality by shifting procurement from part units to module units Process/SCM reform 30% reduction in lead-time and production area by line production using general purpose machines Manage order/delivery/inventory leveraging IoT Rationalization effect 6.0 bn Rationalization for product planning, standardization and materials cost Incorporating added value by manufacturing in-house Reduction in lead-time and complaint expenses 2.7 bn 2.8 bn 0.5 bn 24

26 Improvement in profitability: Pursuit of QCD by monozukuri (manufacturing) reform of integrating development and manufacturing Conducting shared module design Manufacturing process reform by booth/line production Standardization of basic parts in full-option specification Reduce costs through standardization Respond flexibly to specification changes and robot retrofitting Apply basic parts to new products in the future Lead-time in assembly reduced by 30% Line production area reduced by 30% Reduction in workload (3 workers 2 workers) Current booth production: Integrated cell production inside booth Robot ATC General purpose machine Booth production Design changes assuming that automation needs will increase in the future Line production: High lot efficiency products in the same specification Booth production: Products with a wide variety of specifications Robot function ATC General purpose function Standardization Basic ATC General purpose function Basic General purpose function Basic Improve booth operating ratio by booth/line (lot)-based production Line production Parts Added parts Parts Added parts Parts Booth production 25

27 Improvement in profitability: Differentiation strategy by promoting engineering business proposals Developing engineering system in LTC (Laser Technical Center), RTC (Robot Technical Center), and WTC (Welding Technical Center) Provide optimal proposals for customers by creating and sharing processing technology database Europe Japan North America Processing technology Processing technology LTC (Germany) RTC (Italy) LTC (Chicago) Software Towards China and Asia Software WTC RTC WTC Improve service quality by developing parts centers and tooling supply systems in each region Europe New establishment China Japan Present: Towards North America, Europe, and Asia North America New establishment 26

28 Improvement in capital productivity Promotion of balance sheet reform for 10% ROE Considering the implementation schedule for the optional application of IFRS (International Financial Reporting Standards) from April ) Change in accounting treatment for installments, 2)Valuation at market price for securities, and 3) Revaluation of leasing real estate Efficient management of working capital: Inventories/Accounts receivable Reduction of lead-time by promoting local production Optimization of inventories by developing a regional SCM system Liquidation of accounts receivable by restructuring commercial credit business Reduction of non-core assets: Rental properties and securities Consolidation and sale of non-core assets, including leasing and securities, based on profitability evaluation Implementation of stable and high-level capital management policy 27

29 Capital management policy FY2017 dividend policy Annual dividend forecast 40 (interim: 20, year-end: 20) Dividend payout ratio: 55% FY2015 results FY2016 results FY2017 forecast FY2018 and beyond Net profit 27.4 bn 25.8 bn 26.5 bn Dividend (Payout ratio %) 36 (48%) 42 *commemorative dividend of 6 included (59%) 40 (55%) Approx. 50% Share buybacks 10.0 bn Implemented flexibly Total return ratio (%) 82% 59% 55% Approx. 50% ROE (%) 6.5% 6.2% 6.3% ~ 10% 28

30 These materials include performance projections and descriptions of future strategies for use in connection with presentations and the provision of answers to inquiries, and these projections and descriptions are based on the Company s managers judgments made in light of currently available information. These kinds of statements and forecasts based on projections of future situations are not guarantees of future performance. Please be aware that actual results may differ greatly from such statements and forecasts due to diverse factors, including trends in demand for products, currency exchange rates, and interest rates. 29