Medium-Term Management Plan
Vision for 2030
First Medium-Term Management Plan 2022-2024

https://www.star-m.jp
Code 7718

February 9, 2022
* The projections in this document are based on information available at the time of release of this report and certain assumptions the Company considers reasonable.
* The Company does not promise that these projections will be achieved. Actual results may differ materially from projections due to a variety of factors.

Contents
Corporate Philosophy

2

Purpose3

Management Policy

4

Action Guidelines

5

Vision for 2030

6

Business Environment

7

Vision Roadmap

8First Medium-Term Management Plan 2022-2024 KPIs

9

Business Strategy (1) Special Products Segment (2) Machine Tools Segment (3) New Business

10

Cash Allocation

15

Shareholder Return Policy

16

Sustainability Policy

17

Human Resource Strategy

18

Enhancing Corporate Governance19

Corporate Philosophy
A company and its employees must constantly evolve through a process of steadydevelopment while also making every effort possible to improve the lives of eachindividual. This growth must happen together.
Role of the Company
Provide a place where
employees can remain engaged
and realize their full potential ina healthy and safe environment

Enhance corporate value in asustainable way

Role of the employee

Grow
togetherContribute to the sustainable
development of society

Contribute to build that engaged
Company and continuously seek andmaster challenges in the pursuit ofhigh performance

Enrich the lives of employees andtheir families

Founding spirit
Our founding spirit carries us forward in our contribution to the reconstruction of post-war Japan and its economic development through theprecision processing business that creates maximum added value with the least amount of materials.
We work to ensure the lives of those who bravely aspire to preserving this spirit are enriched and rewarded.

2

Purpose

Contribute to the sustainable
development of society as a “leading
small and medium-sized enterprise”
that seeks to excel on the world stage
As a technology group, Star Micronics strives to provide new value through unique technologies that increase
corporate value. At the same time, the Company will enrich the lives of its employees by providing a place where
diverse engaged employees can contribute their best. Our goal as a group is to stand at the forefront of Japan’s
small and medium-sized enterprises by generating a high level of productivity that rivals large companies as we
contribute to the sustainable development of society.

3Management Policy

1

Do not pursue scale unnecessarily; position capital efficiency and labor productivity as primaryevaluation indicators

2

Maintain the ability to continuously offer new value to society in response to changes in theenvironment

3

Constantly look to the global market for each business, and position “global niche” at the core of
the Company’s strategy

45

Invest in building an environment that allows employees to realize their full potential and the pursuit ofunique technologies from a long-term perspective, regardless of generational environment

Strive to become a company that perpetually evolves in harmony with society through its products
and its people4Action Guidelines

Act with
initiative and courage

Continue learning

Pursue technology

Focus onteam productivity

Take accountability and pride

Seek out challenges that will

Seek to develop and refine

Hold the utmost respect forin your work;

foster personal continuous

technology in ways that bringcolleague perspectives.

think, inquire, decide, and then act

learning and growth

unrivaled solutions to market

Work collaboratively andethically and with couragein ways that ultimately improve

decisively to achieve

the Company’s value

a high level of productivity

5

Vision for 2030
Drawing on its corporate philosophy and the management base, human resource
systems, and R&D capabilities that underpin its multi-business structure, Star
Micronics is targeting net sales of ¥100.0 billion and operating income of ¥20.0 billion.

Special Products Segment

Machine Tools Segment

Secure stable revenue while

New Business

Evolve as a promising

serving as the driving force

Generate continuous cash

behind commercialization of

as a core businessmainstay third pillar of
businessthe service business■ Diverse management team in which each individual exhibits characteristics that exemplify theCompany’s action guidelines■ Environment in which all employees can maximize their potential regardless of gender, age, or race
■ R&D capabilities to continuously create unique technologies
6Business Environment

Growing uncertainty owing to changes in the environmentMacroenvironment⚫ Changes in efforts to address environmental needs and tighter regulations with an eye
toward achieving a decarbonized and recycling-based society⚫ Worsening labor shortage due to declining birthrates and aging populations in leadingindustrial markets, wage growth in emerging markets⚫ Medium- to long-term slowdown in growth rates in such regions and countries as North
America, Europe, and China, growth expectations for emerging markets⚫ Concerns surrounding such geopolitical risks as trade friction and human rights conflicts

Growing need for business transformation⚫ Decline in demand for receipt printers on the back of progress toward a paperless society

Business
environment⚫ Evolution of digital innovation technologies such as IoT and AI and necessity for DX
promotion⚫ Transformation of the automobile industry in light of the shift to EVs and automateddriving⚫ Growing social need for sustainability management to address various areas including
SDGs and ESG concerns
7

Vision Roadmap
First Medium-Term Management Plan 2022-2024

Second Medium-Term Management Plan 2025-2027

Building a foundation for change

Driving change

Third Medium-Term Management Plan 2028-2030

Realizing our vision

SpecialProducts
Segment• Make deeper inroads into themPOS/food delivery market• Uncover peripheral areas• Strengthen software technologies
through various measures including
M&As• Commercialize peripheral areas• Nurture the service business into anearnings stream using software
technology• Become a total solution provider
for store operations

MachineTools
Segment• Strengthen the production system• Delve into hardware technologies• Promote the adoption of software
technology• Expand in areas outside the automobile
industry• Commercialize peripheral areas• Strengthen software technologies• Establish a position as a leading
manufacturer of automatic lathes

New
Business• Uncover and commercialize new
segments mainly through M&As

• Uncover and commercialize new segments
by utilizing the Company’s own resources
and collaboration with other companies• Create new business segments• Target net sales of ¥10.0 billion• Target operating income of ¥1.5
billion

SystemMaintenance• Strengthen the management
platform• Strengthen R&D structures andsystems• Reform human resource systems• Put in place a diversity management
structure and systems• Reform the corporate culture based on new
human resource structures and systems• Continue to strengthen the
management platform8

First Medium-Term Management Plan 2022-2024 KPIs
ActualTarget(Past three years
cumulative/average)(Next three-year
cumulative/average)¥21.5 billion¥20.0 billion–¥25.0 billion¥3.38 million¥6.00 million

ROE

7.4%

10.0% or more

Ratio of R&D expenses
to net sales

2.9％

5.0%

¥39,124¥50,000

KPI
Operating cash flow
(cumulative)

Operating income
per employee(consolidated)

Education and training
outlays per employee(non-consolidated)** Reference: Average cost per company: ¥35,628 according to the FY2020 Survey on Education and Training Costs undertaken by SANRO Research Institute, Inc.

9

Business Strategy (1) Special Products Segment■First Medium-Term Management Plan
2022-2024 KPIs

ROA

Operatingincome ratio

ActualTarget(Past three-year
average)(Next three-year
average)

16.0%

13.6%

Cash Drawer and Receipt Printer mPOP

Principal Initiatives
1

Explore and expand sales of products otherthan printers used in stores

2

Strengthen cloud-related technologies withan eye to external alliances

3

Optimize production and logistics throughreorganization of EMS partners

20.0%

18.0%

POS Printer mC-Print series

POS Printer TSP100IV series

10Business Strategy (2) Machine Tools Segment■First Medium-Term Management Plan
2022-2024 KPIs

Principal Initiatives
1

ActualTarget(Past three-year
average)(Next three-year
average)

Establish solution centers in Europe and Asia,
building a user support system in collaboration with Japan

2
ROA

10.3%

11.8%

CNC Swiss Type Automatic Lathe SL-10

15.0%

Enhance the development of mechanical technology andbefore/after-sales service support software

15.0%

3
Operatingincome ratio

Globally expand the Company’s Solution Center

Expand production capacity through three manufacturing bases(1) Undertake a large-scale renovation of domestic factories(2) Increase floor area at the Company’s Dalian factory(3) Upgrade and expand facilities and equipment at the Company’s
factory in Thailand

CNC Swiss Type Automatic Lathe SX-38 type B

CNC Swiss Type Automatic Lathe SR-32JIII type B

11

Business Strategy(2) Machine Tools Segment: Globally Expand the Company’s Solution Center

Establish Solution Centers in Japan, Europe, and Asia
Reinforce sales by enhancing before/after-sales services●European Solution Center
Zurich, Switzerland / Star Micronics AG●Solution Center
Kikukawa, Shizuoka, Japan / Star Micronics
Scheduled to open in May 2024
*Image is for illustrative purposes only

●Asian Solution Center
Shanghai, China / Shanghai Xingang Machinery Co., Ltd.

Completed in July 2020

Scheduled to open in September 2022

[Features of Solution Centers]◼ Displays of state-of-the-art machinery
New product presentations and private shows in person and online◼ Sales support through processing technology and maintenance seminars for agents and engineers◼ Providing optimal solutions such as test processing and operator training to enhance customer satisfaction◼ Building a user support system in collaboration with each solution center

12

Business Strategy(2) Machine Tools Segment: Undertake a Large-Scale Renovation of Domestic Factories

Enhance Production
Capacity
Enhance spindle production
capacity

Initiate Digital
Transformation
Drive the automation anddigitization of production,
logistics, and after-sales services

Serve as a sustainable factory that nurtures people,
develops technology, and grows together with society
Construction Site: Kikukawa, Shizuoka, Japan, Total Project Cost: Approx. ¥10.0 billion, Completion: 2025 (Planned)

2022

2030

Design for theEnvironment
Drive the introduction ofenvironmentally friendly
facilities and equipment tocontribute to the realization of asustainable society

Create new value and inherit technologies
through the fusion of cutting-edge technology and master craftsmen’s skills
13Business Strategy (3) New Business
Create new business value that contributes to improve business efficiency of customers
Principal
Initiatives

Develop and commercialize new business proposals mainly through the use of M&A’s

Target2024: Net sales of ¥3.0 billion, operating income of ¥0.3 billion■New Business Domains
New
Value Provided/Business Process

Logistics
DX

Provide systems to streamline theprocesses of small and medium-sized
warehousing and distribution operations

Provide hardware and software(systems) that streamline store
operations

Logistics DX

Markets/Customers

Business
DomainStore DX

■Business Domain Matrix

Store DX
Special Products
Segment

Expansion
Production
DX

Production
DX

Provide new services related to the
Machine Tools Segment

Challenge

Current
businesses

Adjacent/Core

Machine Tools
Segment

Existing
Low

Business Model Uncertainty

High

14

Cash Allocation
Drawing on operating cash flow and cash on hand over the three years of
the Medium-Term Management Plan, allocate ¥21.0 billion to growth investmentand ¥9.0 billion or more to shareholder returns, etc.
■Fund Allocation Plan (FY12/2022–FY12/2024)

Growthinvestment

Operating cash flow

¥20.0–25.0 billion

Cash on hand

¥5.0–10.0 billion

Cash allocation
resources
About ¥30.0
billionShareholder
returns, etc.

New businessdevelopment costs¥5.0 billion

Capital investment(organic)¥6.0 billion

Investment inlarge-scalerenovation ofdomestic factories¥10.0 billion

Total returns andoptimized capitalefficiency¥9.0 billion
or more(dividends + share buybacks)

15

Shareholder Return Policy
Target a total payout ratio of 50% or more including the repurchases of own shares,
based on a stable annual dividend of ¥60 or more per share(Millions of yen)257.3%

250%

Dividends

Repurchases of own shares

Total payout ratio

10,000

8,000

200%

6,000

150%

125.2%

118.2%

50.0% or more
4,000

79.3%

100%

73.8%
54.9%
2,000

50%

39.5%

52.3%

53.1%

55.2%

0%

DPS (yen)0
FY2/2013

FY2/2014

FY2/2015

FY2/2016

FY2/2017

FY2/2018

FY12/2018

FY12/2019

FY12/2020

FY12/2021

Medium-Term
Management
Plan (three-year
average)

¥30

¥34

¥44

¥46

¥48

¥52

¥54

¥56

¥58

¥58

¥60 or more16

Sustainability Policy■Sustainability Policy
The Star Micronics Group aims to help bring about a sustainable society and enhance corporate value by putting into
practice the core concept of the Company and employees growing together and contributing to society.
・Guided by a longer-term vision for the Group, we will provide society with new value created using our proprietary technologies.
・We will draw on the global network we have built up over the years to address common issues facing society worldwide.
・We will realize fair and highly transparent management through dialogue and cooperation with all of our stakeholders.

■Initiatives to Address Material Issues

E
Environment

S
SocietyG
GovernanceMaterial issues

Targets• Addressing climate change by
reducing CO 2 emissions• Creating environmentally friendly products• Reducing greenhouse gas emissions• Promoting disclosure under TCFD andother frameworks• Creating new businesses and products leveraging
proprietary technologies• Fostering and utilizing diverse humanresources• Setting targets for women in management andmonitoring progress; career training and support• Expanding and sustaining education and training
programs for global HR development• More rigorous corporate governance• Building a more fair and transparent governanceframework by addressing Corporate Governance
Code guidelines

SDGs

17

Human Resource Strategy

HR Strategy
Goals

Building an environment in which all employees can maximize theirpotential regardless of gender, age, or race

1

Constructing new human resource systems• Rolling out a system for professionals (specialist training)• Rolling out a benefit framework commensurate with roles and responsibilities

2 Enhancing diversity• Enhancing women’s empowerment (KPI: 10% or more women in managerial positions by 2030)• Fostering a corporate climate and changing awareness (manager training, developing flexible and diverse
working styles, etc.)

education and training programs: Developing employee
3 Reinforcing
autonomy, global human resource• Enhancing upskilling and reskilling initiatives• Strengthening global human resource development (establishing a medium- to long-term HR development cycle)• Increasing education and training outlays per employee

18

Enhancing Corporate GovernanceCorporate
Governance
PolicyThe Group strives to achieve appropriate, efficient management with a view to the sustained
enhancement of corporate value and the realization of a sustainable society, and to distribute theresults of these efforts appropriately to shareholders and other stakeholders. Based on this policy,
we are pursuing the following measures.

⚫ Further reinforcing the supervisory function of the Board of Directors• Further enhancing deliberations by the Board of Directors regarding the direction and management strategies of
the Group• In light of the Company’s Management Policy and strategies, realizing a governance structure for the whole
Board of Directors that ensures a proper balance of gender and other aspects of diversity and requisite skills• Continuing to strengthen a highly transparent and objective governance framework by maintaining acomposition of the Board of Directors with a majority of independent outside directors• Making effective use of the Nomination and Compensation Committee to further enhance the transparency andobjectivity of procedures related to the nomination and compensation of directors and executive officers⚫ Constructing a fair, transparent governance framework through proactive,
appropriate disclosure• Active disclosure of non-financial information (sustainability initiatives, etc.)• Ongoing efforts to proactively disclose information in English

19