Financial Results
Summary Material

Management Strategy for Future
November 16, 2022
SHIBAURA MACHINE CO., LTD.

Management Strategy forFuture1) Management Reform Plan and ProgressEvaluation
2) Management Reform Plan - Tasks for FY2022
3) Long-term Vision2

Management Reform Planand Progress Evaluation

3

Framework of "Management Reform Plan"
Quantitative
Targets
Target Values
for FY2023
Consolidated basis

Sales

135 billion yen

Payout Ratio

Operating ProfitRatio

Prospect of 40%

8.0%(During the period of“Management Reform Plan”)

ROE

8.5%

[Management Reforms Centered on Reorganization]

SpecificMeasures(1)Abolish the “division system” and employ “company system” to further promote total optimization even.

(2)

Establish am “R&D Center” and “Production Center” which bear enhancement of production efficiency andQCD* as common.

(3)

Conduct personnel relocation and voluntary retirement toward optimal resource allocation and reduction offixed costs.

[Promotion of growth investments aimed for expansion of purposes to fields
expected to grow in the future](4) Promotion of growth investments aimed for expansion of purposes to fields expected to grown in the future.
*QCD: Quality, Cost, Delivery

Investment plan/
Financialstrategies[Implement a Financial Strategies Aimed for Enhancement of Return On
Equity (ROE)](5) Allot cash-on-hand to investments towards change into a profitable company, and enhance profitability andcapital efficiency

4

Implementation Measures and Assumed Effects(Impact on Operating Profit)
Achieve the operating profit of 10.8 billion yen in FY2023 by steady implementation of thereduction of fixed cost and reduction of procurement cost through the management
reform centring on reorganization.
(Unit: 100 million yen)+70
Fixed cost reduction

Capital investment
and R&D/humaninvestment increase
portionVariablecost
cutting

Unprofitablebusiness
restriction

Investment
to increase
sales

Productivity
improvement/revenue increase
effect108(8.0%)
340
2

15

1438
(Operating
profit ratio) (3.2%)

33

Outsourcing
cost andlaborcost
increase

Cost
reduction

20

19

94

FY2018operatingprofitIncreased
depreciation
cost relating
to capital
investment

Increased
cost relating
to R&D andhumaninvestment

Personnel
reduction
throughvoluntary
retirement

Procurementcost(material
cost ratio)
cutting

ROE
4.9%

5

Businessorganization/officeconsolidation
effectSales
Effects ofpromotion
productivity
cost (agentimprovement
commissions,etc.)
increase

Revenue
Increase
effectOthers

FY2023Operatingprofit

ROE
8.5%

Management Reform Plan Measures and Progress2020
1st Half
Businessreform

2021
2nd Half

1st Half

Humanresources

2nd Half

1st Half

2023
2nd Half

1st Half

2nd Half●Organizational reform (establishment of company system, RDC, production center)●RDC (Consolidated to Sagami)

Businessmanagement

2022●Relocation of Head Office(Numazu to Tokyo)●Integration of Fuji Seiki●Management accounting system (visualization of business management)●Engineering department: New 3D-CAD system (DX)
●New HR system (management)●Early voluntary retirement●New HR system (union members)●Sales activity management system
Sales reform●Closure of UK distributor

Service business
Reinforcement initiative●Small injection molding machines: Shift production to overseas (Japan to China and Thailand)●Relocation of injection molding machines production department (Numazu to Sagami)

Plant reform●Shift production of general-purpose robots to overseas (Japan to China)〇New plant in India starts operation

Preparation / Design /Construction

6〇Marshalling center starts operation〇Logistic center business starts

Management Reform Plan
Effects of Reform of the First Half◼ Progress Evaluation at of the End of First Half of FY2022
Through negotiation of higher selling prices, we aim torecover a contribution to sales up to FY2023 of
2.5 billion yen (as of end-September 2022)

FY2021 cost UP (Result)
FY2022 cost UP (Forecast)

1.5 billion yen
2.0 billion yen

108 (Unit: 100 million yen)
(8.0%)

On target3

3.5 billion yen

40

Expected to exceed the sales
target for FY2023

Deviation of approx. -5 billion yen(Operating profit ratio)21438(3.2%)

199

31520

Improved profitability of overseas
production plants

3

Effects started to appear during thecourse of achievement

Deteriorated

4
Completed

FY2018operatingprofitROE
4.9%

Increased
Increased
depreciation cost relating
cost relating to R&D andto capital
human
investment
investment

Personnel
reduction
throughvoluntary
retirement

Outsourcing
cost andlaborcost
increase

Cost
reduction

Business
Procurement
Sales
Effects oforganization/
cost
promotion productivity
office(material
cost (agent improvement
cost ratio) consolidation commissions,effectcuttingetc.)
increase

7Revenue
Increase
effectOthers

FY2023OperatingprofitROE
8.5%

Materialized Risk in the First Half
At the start of lockdown, each sales company initially responded with its own on-hand machine
inventory, but product supply routes were temporarily paralyzed after that.
⇒Switched to direct supply from Chinese partners / Recovery beginning in June to Julyat Shanghai Plant
Chinese distributors◼ Shanghai Plant Production Output
Shanghai lockdown (March-May)

Product supply

Paralyzed

Shanghai Plant shutdown
Shanghai
AssemblyPlant

RecoveryYear-onyear

Partial equipment
supplyParalyzed
Product export

Thailand Assembly
Plant

Oct.
2021

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Product supply

Sep.

2022

8

Paralyzed

Paralyzed

Southeast Asian distributors

USdistributors

Handling of Immediate Business Risks
Overt events

Material pricehikes
Procurement
difficulty

Immediate business risks••

Deterioration in profit ratio due tohigher raw material costs
Operational shortage and sales delay
emerge while waiting for procured
goods to arrive

Measures••••

Energy pricehikeInflation••

Increase of manufacturing costs
Increase of logistics costs•

Pressure on the labor costassociated with the price rise•
Weaker yen

Geopoliticalrisks••

Sale price increase negotiations (negotiations for an 8%
increase over FY2020 continue)
Personnel shift from underutilized workplaces toextrusion machines
Strengthen service business
Improvement of productivity by promoting the use ofDX
Negotiation of sharing the load of the increase oflogistics cost•

Efficiency enhancement by reviewing work methods(control information, from sales to production andshipping information)•

Promote local production for local consumption further
by increasing the OUT-OUT weight
Temporary return to Japanese production of high-valueadded models
Strengthen export sales of Japanese production
equipment (large machine tools and high-precision
processing machine tools)

Decrease in the price advantage of
foreign-produced machines overcompeting machines made in Japan•

China risk (US-China trade friction,
the Taiwan-China issue, zero-COVIDpolicy)••

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Shifted production from Chinese plants to Thai plants
and local procurement in Thailand

Forecast for FY2022◼ Management Reform Plan
<Factors that worsen profit ratio>

Plan for FY2022• Further increase in procured goods andtransportation costs• Decrease in profit due to sales composition

Sales:
120 billion yen
Operating profit:
6 billion yen
Operating profit ratio 8.0%
ROE 8.5%

Unit: 100 million yen

1300

1350
1200

1167

1200

107

91
296

926

92

73

236

102

1200

1077

5.0%

287

336 108

60

3.8%
50

208

700

60
772
35

643

916

907

42755

200

4
Plan

Forecast

計画
Plan

予想
Forecast-300

FY2019FY2020

FY2021

Metal & plastics industrial machine
Control systems
Elimination

FY2022

FY2023

Sales

Operating profit(Operating profit ratio)

Machine tools
OthersOperating profit

10Management Reform Plan
Tasks for FY2022

11

Probability for Sales Achievement for FY2022‛23 Salestarget◼ Transition of Order Backlog

1350‛22 Sales
forecast

Unit: 100 million yen‛18 Sales

1174

1958

1300

‛19 Sales‛21 Sales

1168‛20 Sales

1407

1077

926
937

923
698

843
*657

‛18
Order backlog‛19
Order backlog‛20
Order backlog‛21*
Order backlog‛22
Order backlog*Increase of order backlog due to the change of the revenue recognition criteria made in April 2021.

12‛23
Order backlog(Forecast)

Although the order backlog
shows that the sales targetwill be achieved, further
increase in production
volume is needed to clear
the profit target amid soaring
material prices.

Measures to Achieve Net Sales in FY2023
Boost production volume by all possible means to digest thebacklog of orders that is at a plateau• Shift in policy from production tailored to customer delivery dates to production aheadof schedule⇒Increase production turnover in production areas• Uniform management of global sales and production information on general-purpose
injection molding machines in Japan⇒To ensure that finished machines do not remain in the production area, the JapaneseHeadquarters will, from time to time, direct the destination of finished machinesaccording to the delivery date specified by the overseas sales subsidiaries.
• Shipment of 4 lines/month of extrusion BSF (production system completed)⇒Continued transfer of human resources from other departments⇒Collaboration with local engineering company for machine adjustment in China• Start operation of new plant in India (second half of FY2023)

13

BSF: Battery separator film manufacturing equipment

Tasks for FY2022 (1)Productivity Improvement (Overseas)
Create profits by improving productivity through small variety mass production.

FY2020

FY2021ThailandPlant• Improvement of local
procurement rate of partsand materials• Effects of increased
production of electric
injection molding machines• Improvement of local
procurement ratio of partsand materials• Consolidation of hydraulicinjection molding machines

IndiaPlant• Increased production of
medium to large hydraulicinjection molding machines• Study production of electric
injection molding machines

FY2023

Partial switch to Japan production due to Shanghai
lockdown in Q1 and continued yen depreciation⇒ Achievement of 75% of local procurement ratio,
but forecast to fall below 2,000 units• Transfer of SCARA robot
production

ChinaPlant

FY2022850 units/year

Transfer ofproduction of 180ton-class Injection

Transfer productionof 50- to 350-tonclass Injection

Production
19 units/month

Production
50 units/month
Consolidated hydraulicmachines

Acquisition of neighboring land

3,400 units/year

4,800 units/year

Dispatch of instructors from Japan to several local
suppliers to provide technical guidance on machining
and casting⇒ Completion of production system for 60 units
per month

Production
50 to 60 units/month

Production
60 units/month

Construction permit approval is under review by Indian
government / general contractor for construction hasbeen specified / financing policy has been decided

Plant investment
planConstruction ofnew plantOperation ofnew plant

In-house machining of large structures for injection

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Tasks for FY2022 (2)Expansion of India Market
Sales promotion of injection molding machines
to the fast-growing India market
Increase of medium to large machines(In particular, for the automobile industry)

Demand for switching fromhydraulic machines to electric machines•Growth of the markets of white goods, building materials,
containers, and automobiles is expected due to thepopulation growth.

•The Japanese automobile industry is expected to commencebusiness in India in 5 years time.

Increased production of medium tolarge hydraulic machines•

Led by the medical/container industry and Japanese
automobile manufacturers•

Rate of electrification
FY2021 11.5% ⇒ After 10 years - 31.5% forecast

Start of production of small electric machines

New plant

Current plant

Current plant's maximum
monthly production is 100 units

New Office

Exterior view of the new plant ⇒New Tech CenterGreenery
New Cafeteria Building

Currently 1,200 units/year ⇒ Plan to build a plant capable of producing up to
4,000 units/year in combination with the current plant
Aiming for 3200 units/year at the start of operation

15

Tasks for FY2022 (3)Increase of Extrusion BSF Production
Aiming at extrusion BSF sales 100 billion yen (next mid term)

BSF: Battery separator film manufacturing equipment

Target 4 lines/month production
From October 2021

2nd half of FY2022

Production 2 lines/month*

Production 4 lines/month*⇒ Production systemcompleted in September*Full line

Construction ofProduction System
It is necessary to set up

12 lines concurrently(Production LT 3 months as precondition)

Machine Tool Production • September: Large crane installed
Preparation of BSF organization
Deployment Locations
structure completed

Numazu No. 9 Plant

Numazu No. 15 Plant

Gotenba No. 1 Plant

6 lines*

2 lines*

4 lines*

The strength of our company is the ability of providing
high-precision products (thin and uniform) from our full engineering line.

16

Tasks for FY2022 (3)Increase of Extrusion BSF Production
BSF: Battery separator film manufacturing equipment◼ Order Backlog of Extrusion(including equipment other than BSF)

4timesCurrent: 4 lines/month

100 billion yen↓
Planning for production systemcapable of 6 lines/month*(from FY2024 onward)

Mar. 2018 Sep. 2018 Mar. 2019 Sep. 2019 Mar. 2020 Sep. 2020 Mar. 2021 Sep. 2021 Mar. 2022 Sep. 2022 Mar. 2023
(Forecast)17* Rather than restricting ourselves toachieving the 6 lines on our own, we aimfor early realization by utilizing every
possible means, including the use ofsubcontractors.

Tasks for FY2022 (4)Capital Investment
Major capital investment plan and operation schedule (FY2022 + FY2023)
FY2022CategoryH1Sales service• Expansion of the service
business by DX utilization

Technology• Use of DX to eliminate redo workof development and design（Productivity improvement)• Realization of the sales achievedby the high precision machine
tools to the 10-billion-yen scale• Reorganization of Numazu plant

Production(Overseas)

H2

H1

H2
Start of the operation at
Sagami Logistic Center• Profit creation by the effective
use of company assets

Management

Production(Domestic)

FY2023

Investment purposeDX
Launch of injection subscription service (in U.S.)

Operation of new 3D-CAD

DX

Operation of Gotenba precision assembly plantPrecision assembly plant
are to operate by June 2022

Installation and operation ofIndia plant machine tools• Capture demand in theexpanding India market

Four units are to operateby June 2023

Horizontal
development to otherregions

Operation of Gotenba
Marshalling Center

Start of designing ofNumazu Plant

Operation ofnew India Plant

Total investment of the above amounts to about 23 billion yen18

Long-term Vision

19

Business Portfolio Strategy (Long-term Vision)
High-value-added/Market Expansion AreasNewExpand/enhance

Basic Policy

MachineToolsCompanyFocus on specific domains bymodel selection
EnergyAircraft

OpticsDevices• Multifunction machines• Ceramic cutting machines

Reduce/withdraw• Large machines• Special, dedicatedmachines• Ultra-precision
processing machines• Small and general-purposemachines• System engineering

Molding
MachineCompanyAutomobiles

Resource conservation

Extrusion machines→ Business expansion throughinvestment
Energy• Dissimilar material joining machines• Injection moldingmachines• Die casting machines

Devices• High-pressure continuouspress (batteries, etc.)• Reactive extrusion machines(biomass, etc.)• Extrusion machines

Digital transformation

Injection and die casting→ Expand local production for
local consumption overseas• Domestic production ofstandard hydraulic machines• Conical-type extruders

New materials

ControlMachineCompanyNew
BusinessSpecialize in external sales.
Strengthen system engineering.
Automation

Labor-saving

Establish technology for adding
new functions via surface structure
controlAutomation• Collaborative robots• AMR

Devices• Robots• Servo motors,
controllers• Film casting equipment: Electronic circuit market (next-generationcommunications)• Coaters: High-performance films, devices market (batteries,ceramic capacitors, optical components, etc.)• Imprint equipment: Water purification and sterilization market(Deep-UV LEDs)

20• NC, controllers(utilizing of external alliances)

R&D Orientation
Environmental BurdenReduction
Through Products

Development of eco productsthat reduce the environmentalload through the use of lightweight parts and fewer parts

Creation of High-Quality
Products
Through Technological Innovation◼ New injection molding
machine (under development)◼ Metal 3D additive
manufacturing system

Energy-saving productsTechnology catch-up for repair
applications on aircraft parts andindustrial machinery parts◼ High-shear processingmachines
Materials recycling

Optimal Production LinesEnabled by Automation

Exhibits at JIMTOF2022

Contribute to factory
automation with our total
support to the entire
factory

Natural Energy
Dissemination

Contribute to the spread ofrenewable energies with avariety of products◼ New double column-type
machine tools◼ Engineering solutions

Support for offshore wind andhydrogen gas turbines◼ Autonomous mobile robots(AMR)◼ Collaborative robots

Promotion of SHIBAURA DX
Achievement of the 99.7%
perfection level in virtual
space

Exhibits at Robot
Technology Japan

Exhibits at JIMTOF2022

21

SHIBAURA MACHINE CO., LTD.
2-2, Uchisaiwaicho 2-Chome, Chiyoda-ku, Tokyo 100-8503, Japan
https://www.shibaura-machine.co.jp/
TEL +81-3-3509-0444 FAX +81-3-3509-0333 URL: http://www.shibaura-machine.co.jp/

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