Tsubakimoto Chain Co. President and Representative Director Yasushi Ohara
Contents Long-Term Vision 2020 and Mid-Term Plan Review of Mid-Term Plan for 2016 Mid-Term Management Plan 2020 Commemorating Our Centennial 2
Long-Term Vision 2020 and Mid-Term Plan Mid-Term Management Plan 2020 Commemorating Our Centennial 3
Long-Term Vision 2020 The way it should be in 2020 = Leading Global Company Establishing an unshakable position in target markets Global leaders Niche leaders Performance targets Consolidated sales 300 billion Operating income ratio 10% International sales ratio 70% 4
Long-Term Vision 2020 and Mid-Term Plan 2016 Mid-Term Plan Plan for implementing our Long-Term Vision 2020 Each division must target these goals, resolve current issues, engage in M&A activity, and integrate its businesses. Mid-Term Plan 2020 Mid-Term Plan 2012 Mid-Term Plan 2016 11/3 12/3 13/3 14/3 15/3 16/3 17/3 21/3 5
Long-Term Vision 2020 and Mid-Term Plan Review of Mid-Term Plan for 2016 Commemorating Our Centennial 6
Mid-Term Plan 2016 Basic Policies 1 Transition to a market-oriented corporate culture 2 Exercise comprehensive strengths of Group 3 Enhance earning power 4 Develop and fully utilize manpower 7
Transition to a market-oriented corporate culture 1 Creation of new products, new technologies, etc. (Chain) (1) 100 th Anniversary Model: G8 Series Neptune Chain (on sale Jun 15) Lambda Chain (on sale Oct 15) RS Roller Chain (on sale Jun 16) SUPER Chain (on sale Jun 16) (2) Plastic Top Chain TTUPM-H, WT2515G-M (on sale Jan 16) Ultra low-friction and wear resistant April 201612, 年 32017 月 23 日 8
Transition to a market-oriented corporate culture 1 Creation of new products, new technologies, etc. (PTUC) (1) Power Cylinder Worm Series (on sale Oct 15) (2) Echt-Flex Coupling NER Series (on sale Jan 16) (3) Power Lock KE Series: low contact pressure (on sale Jan 16) (4) Axia Motor (on sale Apr 17) 9
Transition to a market-oriented corporate culture Axia Motor TM For small light-load conveyors, orthogonal hollow gear motors in the food industry, distribution centers, and the like. New structure eliminates oil leaks. Narrow space Pocket mechanism Grease pocket Grease does not flow into oil seal side. 10
Transition to a market-oriented corporate culture 1 Creation of new products, new technologies, etc. (Automotive Parts) (1) Low-cost bush chain (2) Low-wear Silent Chain (3) New Mechanism: Ring-type tensioner (4) Sprocket with rubber cushion 11
Transition to a market-oriented corporate culture 1 Creation of new products, new technologies, etc. (Materials Handling) (1) SYMTRUCK (chassis conveyor line) (Installed one in FY2016; received order for one more in FY2017) (2) Linisort S-C (received one order in FY2016) (3) Labostocker 150M (Under development: testing prototype) (4) AGV Mark I-e (Commenced field test in FY2016) (5) New FS-L Flow (conveying equipment for grain silos) (Orders received) 12
Expansion of overseas bases (Results for FY 2014 to FY 2016) USA Auto parts plant expanded (USA) Europe China Sprocket manufacturing company established Auto parts plant constructed (Tianjin) Auto parts plant constructed (Czech) Auto parts office established (Germany) Conclusion of technical assistance agreements (Italy) European chip conveyor plant concentrated (Slovakia) Sales company established (Spain) Materials handling systems plant (Indonesia) Indian Ocean Rim Auto parts plant (Czech) Materials handling systems manufacturing company established (India) Sales company established (Vietnam) New materials handling systems plant completed (Indonesia) Sales company established (Philippines) East Asia Sales company established (Korea) Auto parts second plant constructed (Korea) Auto parts second plant (Korea) 13
Enhance earning power 1 Improve productivity Goals Results Objectives Chain MIK2018 Development <FY 2018 target> Labor productivity +30% On-time delivery 100% Implementation items completed two years ahead of schedule Improve productivity through further enhancements Continue to increase effectiveness after 2017 PTUC Tsubaki E&M Plant reorganization (3 plants 2 Plants) <FY 2018 target> Productivity +30% Completed as planned Maintain increased effectiveness toward FY 2018 Automotive Parts Manufacturing reform activities <Productivity improvement targets> (1) New assembly plant +30% (2) 4 plants in Saitama +15% Achieved goal ahead of schedule Train personnel and strengthen production equipment & maintenance management under the theme of stable production to accommodate increased production (1) Modular design activity Materials Handling Design productivity improvement (2) Progress in new diagram numbering (Diagram-free provisions made) Progress 80% Continue in FY 2017 14
Estimate of Mid-Term Plan 2016 Med-term earning budgets (Sales: 220 billion, Operating income: 22 billion) Neither target was reached. ( 100 million) Operations Group Budget Sales Estimated Achievement rate Budget Operating Income Estimated Achievement rate Chain 729 589 80.8% 61 60 98.4% Power Transmission Units and Components 261 210 80.5% 28 18 64.3% Automotive Parts 744 746 100.3% 111 117 105.4% Materials Handling Systems 474 417 88.0% 21 7 33.3% Consolidated 2,200 1,970 89.5% 220 197 89.5% The estimated figures are based on the published value of November 7, 2016. 15
Pending issues for Med-Term Plan 2016 Chain Division Establish European manufacturing base Expand sales of conveyor chain in the Chinese market Power Transmission Units and Components Operations Develop and introduce large products Materials Handling Systems Operations Improve profitability Expand business in emerging markets All Companies Engage in M&A activity 16
Long-Term Vision 2020 and Mid-Term Plan Mid-term Management Plan 2020 Commemorating Our Centennial 17
Mid-Term Management Plan 2020 Basic Policies Overarching Policies 1 Convert our corporate culture to a market-focused approach 2 3 Exercise comprehensive strengths of Group Achieve our objectives for 2020, The way it should be 18
Mid-Term Management Plan 2020 Basic Policies 1 Convert our corporate culture to a market-focused approach Europe Americas China East Asia (Taiwan, South Korea, Japan) Indian Ocean Rim (Including Oceania) Product development and manufacturing strategies that consistently respond to the needs of the market (region/industry) 19
Mid-Term Management Plan 2020 Basic Policies 2 Exercise comprehensive strengths of Group < Increase corporate value > We will pursue synergies among our business groups and utilize our group's comprehensive strengths to improve the value of group companies. 20
Mid-Term Management Plan 2020 Basic Policies 3 Achieve our objectives for 2020, The way it should be Establishing an unshakable position in target markets Leading Global Company Global leaders Niche leaders Performance targets Consolidated sales 300 billion Operating income ratio 10% International sales ratio 70% 21
Mid-Term Plan 2020 The way it should be Chain Secure our status as global leader and niche leader by developing the leading product the market needs < FY 2017 Objectives > Re-development of the Japanese market Japan Marketing Project (JM-Pj) Promotion Expand global share of G8 Series roller chain Establish & expand the production base in order to devise an optimal global supply system Implement an innovative production system for improved productivity 22
Mid-Term Plan 2020 The way it should be Power Transmission Units and Components Establish a solid position as a category leader with core products that demonstrate technological superiority and cost competitiveness < FY 2017 Objectives > Re-development of the Japanese market Japan Marketing Project (JM-Pj) Promotion Introduce new products that meet customer needs Promote quality improvements and stabilization in production bases for power transmission products both domestically and internationally 23
Mid-Term Plan 2020 The way it should be Automotive Parts 1. Timing chain drive systems Commanding share of world market through Dantotsu improvement activities (42%) 2. Expand the non-timing-chain business < FY 2017 Objectives > Develop order entry activities to achieve global sales of 100 billion by 2020 Enhance and manage global production bases for increased production and optimized production locations Develop new chains with excellent balance between cost and performance 24
Mid-Term Plan 2020 The way it should be Materials Handling 1. Enhance profitability 2. Attain leading market share in specified markets < FY 2017 Objectives > Practice thorough management on a cell-by-cell and project-by-project basis and shift to a profit structure with reduced BEP Through modular design activities, VA/VE activities, and easy device installation, achieve cost reductions and quality improvements Prepare new factories to target product development, improve promotion and order growth, and prepare exhibition models 25
Mid-Term Plan 2020 The way it should be Concept and aim of the new materials handling plant (Saitama Plant) (1) Create a fascinating factory (with product exhibition spaces) (2) Specialize in product development and improvement (by establishing a product development area and enhanced production facilities) (3) Refine and share manufacturing skills and maintenance skills (establish a manufacturing workshop) (4) Create a safe, comfortable and environment-friendly plant Incorporate seismic resistance; LED illumination; and energy-efficient air conditioning 26
: Basic Policies regarding ESG E Environment Raise environmental awareness through manufacturing Total CO 2 emissions reduction target: 30% reduction below FY 2013 level (In Japan, FY 2030) S Safety Personnel G Governance Diligently practice a safety first policy Visualize risk information, implement training for unforeseen circumstances Become a company that allows all employees to feel their work is rewarding and worthwhile Reform our approach to work, develop human resources, promote successful women, and improve human resource systems for consistency with the circumstances of the respective countries in which we operate Generate customer value and contribute to society Adhere to the Corporate Governance Code Ensure compliance with corporate ethics and risk management according to our Internal Control Regulations. 27
Sales Breakdown by Business and Region Operations Group Operations Group Sales ( 100 million) Operating income Chain 781 93 PTUC 281 30 Automotive Parts 1,000 150 Materials Handling 573 34 Other* 2 399 - Consolidated (Operating income margin) 3,000* 1 300 *1 (10%) *M&A builds on our existing business to improve global competitiveness *1: Includes consolidation adjustment amounts 28 Japan Region Other* FYE2021 Consolidated sales 300 billion South Korea & Taiwan Americas China Europe Indian Ocean Rim
Sales Breakdown by Business and Region Chain Operations Power Transmission Units and Components Operations 781 639 589 218 210 281 16/3 17/3 21/3 16/3 17/3 21/3 million) Japan, South Korea &Taiwan, China, Indian Ocean Rim, Europe, Americas (Yen 100 29
Sales Breakdown by Business and Region Automotive Parts Operations 1,000 Materials Handling Systems Operations 734 746 573 443 417 16/3 17/3 21/3 16/3 17/3 21/3 million) Japan, South Korea &Taiwan, China, Indian Ocean Rim, Europe, Americas (Yen 100 30
Achieving the goals of our 1) Pursuit of M&A 2) Strengthening of new business Agribusiness Monitoring business elink EV power systems, etc. 300 billion Growth of existing businesses (sales expansion) Achieving our goals in each segment 197 billion 11/3 12/3 13/3 14/3 15/3 16/3 17/3 21/3 31
: Capital Policy and Other Matters Investment plan Total capital investment: Approximately 40 to 50 billion yen (Total over four years from FY 2017 to FY 2020) Financial indicators Target the following indicators in order to maintain a sound financial foundation Net D/E ratio: 0.2 times or below Fiscal year ending March 31, 2021 Dividend Policy *The above figures do not include M&A costs. We will pay a dividend based on a consolidated dividend payout ratio of 30% while investing in growth as outlined above 32
Long-Term Vision 2020 and Mid-Term Plan Review of Mid-Term Plan for 2016 Commemorating Our Centennial 33
TSUBAKI SPIRIT 34
Commemorating Our Centennial Commemorating Our Centennial Looking ahead to our next centennial while commemorating our first centennial To accelerate our Group s momentum and expand business opportunities, we will effectively emphasize gratitude for the past while focusing on our promise for the future < Corporate PR (Improving awareness) > 35
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