Financial Results
Summary Material

Management Strategy for Future
June 3, 2022
SHIBAURA MACHINE CO., LTD.

Management Strategy forFuture１) Management reform plan and change of thebusiness environment２) Management reform plan – Results and effectsof the first half
３) Management reform plan – Tasks for FY2022
４) Long-term vision2

Management reform plan andchange of the businessenvironment3

Framework of "Management reform plan"
Quantitative
targets

Sales

Operating profit ratio

Payout ratio

ROE

Target value for
FY2023135 billion yen8.0

Prospect of 40%8.5

(During the period of“Management Reform Plan”)

Consolidated basis【Management reform centered on reorganization】
 Abolish the “division system” and employ “company system” to further promote total optimization even.

Specificmeasures establish am ”R&D Center” and “Production Center” which bear enhancement of production efficiency andQCD* as common.
 Conduct personnel relocation and voluntary retirement toward optimal resource allocation and reduction of
fixed costs.

【Promotion of growth investments aimed for expansion of purposes to fields
expected to grow in the future】
 Promotion of growth investments aimed for expansion of purposes to fields expected to grown in the future.
*QCD: Quality, Cost and Delivery

Investment plan/
Financialstrategies【Implement a financial strategies aimed for enhancement of return on equity(ROE)】 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

Capital investment
and R&D/humaninvestment
increase portion

Variable Unprofitable Investment
Productivity
costbusiness to increase
improvement/
cuttingsales
restriction
revenue increase
effectFixed cost reduction

3108(8.0%)40(Operating
profit ratio)

238(3.2%)

149

FY2018operatingprofit

ROE
4.9%

33

Outsourcing
cost andlabour
Cost
increase

Cost
reduction

1520

194

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

Personnel
reduction
throughvoluntaryretirement

Procurement
Business
Sales
Effects ofRevenue
Costorganization/ promotion
productivity Increase(materialofficecost (agent improvement
effectcost ratio) consolidation commissions,cuttingeffectetc.)
increase

5Others

FY2023OperatingprofitROE
8.5%

Change of the external business environment
Factors that are newly introduced since the planning of the management reform(February 2020) due to the change of the business environment

PositiveNegative✓ Acceleration of transition to EV → Increase oforders received for extruders(+40.5 billion yen, increase of 172%*)✓ Acceleration of transition to EV → Decrease oforders received for die casting machines（-8.1 billion yen, -34% reduction*)✓ Materialization of the India production plants ofJapanese automobile manufacturers✓ Restriction of sales and service activities andproduction due to the outbreak and prolonged
COVID-19 pandemic（Deferred sales amounting to -4.8 billion yen)

✓ Efficiency improvement and reduction of businesstrip expenses by utilization of WEB tools✓

Difficulty in procurement of electrical components
including semiconductors(Delivery delay of 45 days on average and up to 420
days from the normal situation)✓

Soaring steel and energy prices and transport
costs（Factor of profit downward pressure -1.9 billion yen,of which the procurement cost is -1.5 billion yen)

＊The changes of the amounts and ratios are basedon the comparison between FY2021 and FY2018.

6

Results and effects ofmanagement reform plan in
the first half7

Management reform plan:
result of reform in the first half
PolicyProduction
reformProgress of FY2020 and FY2021• Reorganization of domestic production system(Structuring according to the shift of the internalcompany system)• Integration manufacturing divisions of injection moldingmachines and die casting machines• Transfer of production of small molding machines and SCARA
robots to overseas plants⇒ Improved profitability of overseas production plants• Transfer of general-purpose machines
production to overseas plants

Sales reform• Reorganization of sales process• Review of domestic offices and overseas offices• Operation commencement and stabilization of business activity
visualization system(Monitoring of negotiation amounts and negotiation stages)• Closure of UK distributors• Construction of a new HR system

HR systemreform➢

Introduction of some elements of a JOB-based➢

HR system
Commencement of the system for managers(from April 2021)➢

Commencement of the system for union• Application of the system for managers(Commenced in April 2021)• Application of the system for union managers⇒ Commenced in April 2022 for providing thorough explanationand familiarization of the system with applicable employees

members (from October 2021)

Visualizationof business
management• Automatic aggregation➢ Result aggregation (Commenced in April 2021)➢ Budget/outlook calculation (Commenced in October 2021)• Multiaxial analysis➢ Capable of obtaining figures from the main unit sales to salesof service
Used for measures to be taken for weak regions andinvestment planning for strong regions• Construction of a management account system➢➢

Automatic aggregation of management figures
Installation of a multiaxial analysis function

8

Results of FY2021
The target business figures for
FY2021 have been achieved.

◼ Management reform plan
Operating profit 8.0％
ROE 8.5%

Unit: 100 million yen

1200

1168
128

1060
975
55

297

Unit: 100 million yen

1350
107

1168

336

128

108

297

294

626

1658

336
108

1077
236
60

772

907
35926107209

60772

1078
1077

1350

1200

3527756643

907
4294-29-29

FY2019FY2020

FY2021

FY2022

Metal & plastics industrial machine

Machine tools

OthersElimination

FY2023

FY201919年度
Metal &plastics
成形機
industrialmachine

Operating profit

9FY2020
20年度
Machine工作tools

FY2021
21年度
Control
制御
systems

FY2022
22年度
Others他

FY202323年度

Elimi消去nationOperating
営業利益profit

Management reform plan
- Effects of reform of the first half

Progress evaluation as at the end of FY2021
Unit: 100 million yen+70

Capital investment
and R&D/humaninvestment increaseportion

Fixed cost reduction

Variablecost
cutting

UnInvestment
profitable to increasebusinesssales
restriction

Satisfactory
Productivity
improvement/
revenue increase
effect40

FY2021 cost UP (Result) 1.5 billion yen
FY2022 cost UP (Forecast) 0.5 billion yen

3108(8.0%)

Expected to exceed thesales target for
FY2023

Deviation of -3.4 billon yen(Operating profit ratio)

1438(3.2%)

19932

1520

Improved profitability of overseas

3production plants
Effects started to appear during the courseof achievement

Deteriorated

4
Completed

FY2018operatingprofitROE4.9%

Increased
Increased
Personnel Outsourcing
depreciation cost relating reduction
cost andcost relating to R&D andthroughlabourto capital
humanvoluntary
Cost
investment investment retirement
increase

Cost
Procurement Business
Sales
Effects ofreduction
Costorganization/ promotion productivity(materialofficecost (agent improvement
cost ratio)concommissions,cuttingsolidationetc.)
effectincrease

10

Revenue
Increase
effectOthers

FY2023OperatingprofitROE
8.5%

Management reform plan
Tasks for FY2022

11

Targets and forecast for FY2022
Forecast of FY2022◼ Management reform plan

Sales 120 billion yen
Operating profit 6 billion yen

Operating profit ratio
8.0％
ROE 8.5%

Unit: 100 million yen

Unit: 100 million yen

1200

1168
975

297

55

128

336

297

108

907

626

16

58

107

10336

77

108

236

772

60
35

926

1077
1078

209

294

772

1350

1200

1168

107

1060

128

1350

35

60

756
643

907

4227
49-29-29

FY201919年度
FY2029FY2020

FY2021

FY2022

Metal & plastics industrial machine

Machine tools

OthersElimination

FY2023

Metal &Moldingplastics
成形機machinesindustrialmachine

Operating profit

12FY2020
20年度
Machine工作tools

FY2021
21年度
Control
制御
systems

FY2022
22年度
Others他

FY202323年度
Elimi消去nationOperating
営業利益
profitProbability for sales achievement for FY2022◼ Transition of order backlog’22 sales
forecast

1200

Unit: 100 million yen’18 sales

1174’19 sales’21 sales

1168

1407

’22 sales forecast
Structural ratio of120 billion yen

1077’20 sales

926

923

843
698

※
Salesof ‘22
657

18/3E
Order backlog

19/3E
Order backlog

20/3E
Order backlog

Orders received
in current term

21/3E＊
Order backlog

Orders that havebeen received

937

Salesfrom ‘2322/3E
Order backlog
Extrusionmachines accountfor about 60% oforder backlog.

*Increase of order backlog due to the change of therevenue recognition criteria made in April 2021.

13

To respond to the dramatic
immediate external
environment changes,
plan the handling of therisks for downward
pressure of sales andprofit.

Extrusionmachines accountfor about a half oforders that havebeen received.

Handling of Immediate Business Risks
Overt events

Immediate business risks

COVID-19• Deterioration of Shanghai Plant operation due tothe extended lockdown in Shanghai City• Use of cooperation companies located within Anhui Province.
• Increase the operation of Thailand Plant.

Material pricehike• Deterioration of profitability due to the increaseof cost of raw materials• Curtailed operation and sales delay due to thedelay of arrival of procured items• Negotiation of increase of sale price (3% increase in FY2021 from that ofFY2020 ⇒ 8% increase in FY2022)• Transfer of human resources from the operation curtailed workplaces
to the extrusion machine operation plants• Focus on the service business.

• Increase of manufacturing cost

• Improvement of productivity by promoting the use of DX• Increase of logistics cost

• Negotiation of sharing the load of the increase of logistics costInflation• Pressure on the labor cost associated with theprice rise

• Efficiency enhancement by reviewing work methods

Weaker yen• Increase of procurement cost for theinjection/mold clamping units produced in China• Increase of cost prices of parts produced bymanufacturers in China and Taiwan

Procurement
difficulty
Energy pricehikeGeopoliticalrisks• Exit of Britain from EU• Extended period of US-China trade friction• Russia-Ukraine issueMeasures• Promote local production for local consumption further by increasing
the OUT-OUT weight.
• Temporary use of parts manufactured domestically within Japan.

• Closure of the UK distributor → Transfer the territory to Italian
distributor• China plant → Shift production to the Thailand plant.
• Export to Russia is minimal (impact is extremely low).

14

Tasks for FY2022 ①
Productivity improvement (overseas)
Create profits by improving productivity through small variety mass production.
FY2020

FY2021

FY2022

However, revised to 2300 units assome production is switched to theplant in Japan due to lockdown inShanghai

Transfer of SCARA
robot production
China
plant

Thailandplant

Improvement oflocal procurementrate
75% or more

India
plant

850 units/year

Effects of increased
production

Transfer of
production of 180ton-class Injection

Improvement oflocal procurement
rate

Production
19 units/month

Consolidation of
hydraulic injection
molding machines
Increased
production of
medium to large
machines

FY2023

Transfer of
production of 50 to350-ton-classInjection
Production
29 units/month⇒50 units/month

3400 units/year

4800 units/year

Production
50 to 60
units/month

Production
60 units/month

Consolidation ofhydraulic machines

Acquisition of neighbouringland15

Plant investment
planIn-house processing of injectionsof large structure
Installation of 4 machine tools
manufactured in house

Construction of newplantOperation of newplantTasks for FY2022 ②
Expansion of India Market
Sales promotion of injection molding machines to the fast-growing India market◼ Alliance (Scheme under discussion)◼ Organic

Demand for switching fromhydraulic machines to electric machines

Increase of medium to large machines(In particular, for the automobile industry)•Led by the medical/container industry and Japanese
automobile manufacturers•

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

Growth of the markets of white goods, building
materials, containers, and automobiles is expected
due to the population growth.

•The Japanese automobile industry is expected tocommence business in India in 5 years time.

Increased production of medium to large
hydraulic machines

Start of production of small electric machines
Our model machines

Chennai

MumbaiPlan to start the operation during FY2023

Manufactured in the Nissei ASB India Plant

Expansion of the plant production area ＋Updating of process facilities
1200 units/year ⇒ 2500 units/year (including thenew plant operation)

16

Tasks for FY2020 ③
Increase of extrusion BSF production

Aiming at extrusion BSF sales 100 billion yen (next mid term)
BSF: Battery Separator Film

Target 4 lines/month production
From October 2021

2nd half of FY2022

Production2 lines/month*

Production 4 lines/month**Full line

Construction of production system
It is necessary to set up 12 lines concurrently(Production LT 3 months as precondition)

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.

The Gotenba plant is used temporarily
although it normally operates for
production of machine tools.

Establish dedicated BSF organization structure (April, 2022)

17

Tasks of FY2022 ④Capital Investment
Major capital investment plan and operation schedule (FY2022 + FY2023)
Category

Investment purpose

Management• Profit creation by theeffective use of company
assetsSales service• Expansion of the service
business by DX utilization

Technology• Use of DX to eliminate redo
work of development anddesign（Productivityimprovement)

Production(Domestic)• Realization of the sales
achieved by the highprecision machine tools tothe 10-billion-yen scale

FY2022
H1

FY2023
H2

H1

H2
Start of theoperation at Sagami
Logistic Center

Start of injection subscription service (in USA)

Operation of new 3D-CAD

DXDX

Operation of Gotenba precision assembly plantOperation ofGotenba
Marshalling Center

Start of designing ofNumazu Plant• Reorganization of Numazu
plantProduction(Overseas)

Horizontal
development to otherregions

Installation and operation ofIndia plant machine tools• Expansion of India market

Four units are to operate byJune 2023

Total investment of the above amounts to about 23 billion yen18

Operation ofnew India Plant

Long-term Vision

19

Business portfolio strategy(Long-term vision)
High-value-added/market expansion areas
Basic policy

Machine Tools
CompanyNew

Focus on specific domains bymodel selection
EnergyAircraft

OpticsDevices

・Multifunction machines
・Ceramic cutting machines

・System engineering

Molding
MachineCompany

Automobiles

Extrusion machines→ Business expansion throughinvestment
Devices
New materials

New BusinessCompany

Specialize in external sales.
Strengthen system engineering.
Automation

・High pressure continuouspresses(batteries, etc.)
・Reactive extrusion
machines (biomass, etc.)

・Collaborative robots
・AMR

Labor-saving

Establish technology for adding
new functions via surface
structure control
Automation

・Injection molding
machines
・Dissimilar material joining machines
・Diecasting machines

Resource-saving

EnergyControlMachineCompany・Large machines
・Special, dedicatedmachines
・Ultra-precision
processing machines

Devices・Extrusion machines

・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

・Small and generalpurpose machines

Digital transformation

Injection and die casting→ Expand local production for
local consumption overseas

Reduce/withdraw

Expand/enhance

・Domestic production ofstandard hydraulicmachines

・Conical-type extruders

・NC, controllers(utilizing of externalalliances)Future realized by SHIBAURA MACHINE
Environmental BurdenReduction

Creation ofHigh-Quality Products

Through Products

Through Technological Innovation
Promotion of SHIBAURA DX

Development of eco products that reduce theenvironmental load through the use of lightweight parts and fewer parts

Achievement of the 99.7% perfection level invirtual space

Social Value thatSHIBAURA MACHINE
Will Provide
Contribute to the spread of renewableenergies with a variety of products

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

Optimal Production
lines

Natural energy
Dissemination

Enabled by Automation
Information provided in
Integrated Report 2021

21

Published on the corporate website.

SHIBAURA MACHINE CO., LTD.
2-2, Uchisaiwaicho 2-Chome, Chiyoda-ku, Tokyo 100-8503, Japan
TEL: 81-(0)3-3509-0444
FAX: 81-(0)3-3509-0333
URL: https://www.shibaura-machine.co.jp22