As of and for the Year Ended February 29, 2020

Financial Results Briefing Materials
April 14, 2020

Points to Note:
This document is a translation of the Japanese original. The Japanese original is authoritative.
The information listed in these materials the Company’s future prospects as determined by management, based on the information
available at the time of announcement, and potential risks and uncertainties. It should be noted that the actual results may differ
substantially from these forecasts, due to these various elements.
The numerical values shown in these materials are the monetary amounts listed in the consolidated balance sheet, consolidated profitand-loss statement, consolidated statement of changes in shareholders’ equity, and notes to consolidated financial statements. Shownvalues of less than one unit are truncated, and ratios and other values are rounded off.
*“E” in this material represents that the figure is a plan or projection for operation.
** “FY” in this material indicates the fiscal year ending February 28(29) of the succeeding year.
*** “1Q” in this material represents the three-month period beginning on March 1 and ending on May 31, “2Q” represents the six-monthperiod beginning on March 1 and ending on August 31,“3Q” represents the nine-month period beginning on March 1 and ending on
November 30, and ”4Q” represents the twelve-month period beginning on March 1 and ending on February 28(29).

FURUNO ELECTRIC CO., LTD. All Rights Reserved.

FY 2/2020 Points of the Results
 Net Sales: Increase In Japan and Asia, in the Marine Business, sales for newly-built
merchant vessels increased.
 Sales up owing to strong sales of Wireless LAN Access Point forschools in the Wireless LAN Systems.

 Profit: Decrease The gross profit margin decreased due to production
adjustment intended to reduce inventory, changes in theproduct mix, foreign exchange effects, and other factors.

 Inventory: Reduced
 This is due to our promoting inventory reduction throughmeasures such as production adjustment.

FURUNO ELECTRIC CO., LTD. All Rights Reserved.

2

Consolidated Financial Results Highlights
Unit: Millions of Yen

FY 2/2019

FY 2/2020

Year-overyear（amount）

Net sales
Gross profit

82,10883,066

+958

+1.2%

31,612

28,524▲3,088▲9.8%（38.5%）（34.4%）（▲4.1）

4,771

2,411

▲2,360(Sales ratio)（5.8%）（2.9%）（▲2.9）

Ordinary income

5,112

2,702

▲2,410(Sales ratio)（6.2%）（3.3%）（▲2.9）

Profit attributable toowners of parent

4,026

2,041

▲1,985(Sales ratio)（4.9%）（2.5%）（▲2.4）

R＆D expenses(Sales ratio)
Capital investment
expenses(Sales ratio)
Depreciation
expenses(Sales ratio)

4,707

4,266

▲441

（5.7%）（5.1%）（▲0.6）

2,595

3,245＋650（3.2%）（3.9%）（＋0.7）

3,093

3,246+153（3.8%）（3.9%）（＋0.1）

111

110▲1▲0.9％130123▲8▲6.0%(Sales ratio)

OperatingincomeYear-overyear（ratio）▲49.5%▲47.1%▲49.3%▲9.3%＋25.0%+4.9%

Unit: Yen, annual average exchange rate

1USD
1EUR
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3

Analysis of Increase/Decrease in Net Sales(Unit: 100 Millions of Yen)

850

Asia

+10.0845

840

Europe＋8.2

WirelessLANSystems

Other-2.5835

＋1.1

+7.4

830

Others＋0.6825

Foreign
ExchangeEffect-14.4

America-1.8820

815＋4.9PNTJapan821

Marine Business+6.9

Health Care-4.2

IndustrialBusiness-2.5

WirelessLANSystems830+4.9810

FY 2/2019

FY 2/2020*Exchange Rate Sensitivity (actual results as of February 29, 2020)[USD] Net sales 1.1 100M yen , Operating income 0.5 100M yen[Euro] Net sales 1.6 100M yen , Operating income 0.7 100M yen

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4

Analysis of Increase/Decrease in Profit
Analysis of Increase/Decreasein Gross Profit on Sales

Analysis of Increase/Decreasein Operating Income(Unit: 100 Millions of Yen)

330

(Unit: 100 Millions of Yen)

50Net Sales
increase+3.7453204048310
Production
adjustment-7.0300

OtherInventory andProductWarranty costs-3.325+1.6-15.5

316

ForeignExchange effect20285-10.4

270
FY 2/2019

Foreign
Other, Exchange
Increase in effect
SG&AExpenses

30

Changes in the
Product mix

290

280

35

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FY 2/2020

R＆D
expenses＋2.1＋3.8＋4.4-30.9241510Gross profit on sales-30.9

Fluctuationin gross
Profit onsales

FY 2/2019

Increase inhumanresource-relatedexpenses-3.0

FY 2/2020*Foreign exchange effects on operating income:-6.5 100M yen

5Overview of Marine BusinessNet sales by Marine Business/Sales by Region

JapanAmericaEuropeAsia

Other

700

600

32
169

Marine Business:Net sales 673 100M yen (+1.0% year on year)(Unit: 100 Millions of Yen)

800

“100M” in this material indicates 100 Million

2927177

186

Segment Profit 20 100M yen (-20 100M yen )⇒ Revenue rose in Japan and Asia.
⇒ Profits down due to the effects of changes in
the product mix, foreign exchange, production
adjustment, and other factors.

 Japan: Net sales 195 100M yen (+3.9%)500

 Increase for newly-built Merchant vessels
400179188

184

300200100

 America: Net sales 81 100M yen (-3.1%)
 Decrease for Pleasure Boats Europe: Net sales 184 100M yen (-2.3%)
7983

81176

188

195

 Demand for fishing vessels and existing merchantvessels remaining strong while revenue down due
to foreign exchange effects (-125 100M yen)

 Asia: Net sales 186 100M yen (+5.0%)
 Increase for newly-built Merchant vessels

0
FY 2/2018

FY 2/2019

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FY 2/20206

Overview of Industrial Business, Wireless LAN SystemsNet sales by Industrial Business& Wireless LAN Access Point / Sales by Products

Segment Profit -3 100M yen (-6 100M yen )■ Wireless LAN Systems
PNT■ Industrial Others■ Healthcare■ PNT

15035333819202112090372117⇒ Sales of products related to domestic ITS remainstrong overall.
⇒ Healthcare declined during reform of businessstructure.
⇒ Profit decreased due to the effects of having
reexamined the standards of an optimal inventory.

 PNT Business: Net sales 78 100M yen (+1.4%)*Reviewing business fields, and changing the name fromCommunications & GNSS Solutions

 Healthcare: Net sales 17 100M yen (-20%)

60

30

Industrial Business:
Net sales 116 100M yen (-2.1% year on year)(Unit: 100 Millions of Yen)

180

“100M” in this material indicates 100 Million

637778FY 2/2019

FY 2/2020

0
FY 2/2018

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Wireless LAN Systems:
Net sales 38 100M yen (14.5% year on year)
Segment Profit 7 100M yen (+0.2 100M yen )⇒ Wireless LAN Access Point keep performing well.

7

Analysis of Financial Condition(Unit: 100 Millions of Yen)

Cashanddeposits
120Accountspayable
115
54

Accounts
receivable
179

Other
current
liabilities
91
Fixedliabilities
115

Fixed
asset
185

Accounts
payable90

Cashanddeposits
121

32

Accounts
receivable
175

Other
current
liabilities
101
Fixed
liabilities
114

Inventory
250

Inventory
281

Other
current
assets25

Short term/Long-termborrowed money
returned within 1 year

Net worth
415

Capitaladequacy
ratio
52.0%

Other
current
assets
16

Fixed
asset
196

FY 2/2019

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Net worth422

Capitaladequacy
ratio
55.1%

 Due to our promoting stock reduction
through measures such as production
adjustment, inventory was reduced by 31
100M yen compared to the end of the previousyear.

 In accordance with suppression ofpurchases due to production adjustment,accounts payable.
were reduced by 25 100M yen compared tothe end of the previous year.
 With the increase in surplus, the capital
adequacy ratio.
rose by 3.1 pt compared to the previousyear.

FY 2/2020

8A New Management Vision

Business Vision；
Achieve better safety, security and comfort to bring about a society and sea
navigation that considers the needs of people and the environment
Human Resources and Corporate Culture Vision；
VALUE through GLOBALIZATION and SPEED

Growth targets for FY 2/2031；consolidated net sales of 1,200 100M yen,operating margin of 10％,new business composition ratio of 30％
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9

Management Vision
Achieving our goal in 3 phases【Phase 1・・・Advance】 （FY 2/2021-2/2023）
Procure resources and strengthen our capabilities
by improving the structure of our businesses.

【Phase 2・・・Connect】 （FY 2/2024-2/2026)
Take action toward building a profitable structure
and the pillars of our technologies and businesses.

【Phase 3・・・Transform】 （FY 2/2027-2/2031）
Realize an appropriate corporate scale,profitability and business structure.

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10Phase 1 Mid-term Management Plan Outline

Basic policy; Advance
Procure resources and strengthen our capabilities by improving thestructure of our businesses.

Targets for FY 2/2023
Build a management foundation that can stably achieve the followings.
ROE(based on operating income) : 10% or higher

Payout ratio: 30% or higher

Various efforts to strengthen capabilities and improve structure
achieved through implementation of individual business strategies.

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11

Strengthening Capabilities and Improving Structure(1) Dramatic Reduction of Inventory(2) Further Increase in Quality Level(3) Optimization of Product Development Functions(4) Optimization of Comprehensive Manufacturing Functions(5) New Strategic Investment Quota

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12

Dramatic Reduction of Inventory
All relevant divisions will work together to reduce inventory,
including not just sales, logistics, and manufacturing,
but also planning, designing, development, procurement, services,quality assurance, and more.
• Raise our ability to respond to a discontinuation of production andshorten the procurement lead time.
• Raise our ability to respond to a change in production planning andshorten the production lead time.
• Raise our sales forecast accuracy, optimize our sales office inventory,and optimize logistics bases.

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13

Further Increase in Quality Level
Under our philosophy of prioritizing quality over all else, we willstrive to reexamine our back-to-basics quality processes, and,without impeding progress, aim for further improvement.
•Formulation and steady execution of a product quality business planin each business unit.

•Upgrading of a product quality education system.
Los Cost caused by quality problem

FY 2/2009

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FY 2/2020

FY 2/2023

14

Optimization of Product Development Functions
While continuing our efforts to improve quality, we will strive toachieve both cost reduction and compliance with deadlines,
bring them into effect throughout the company, and transform theminto a solid structure that supports the foundations of our company.
We will also, simultaneously, strive to establish a technology baseand a development base. that will lead to growth and expansion ofour business in the future.
•Promoting design changes to bring down the cost ofexisting machines.

•Speeding up the PDCA cycle by introduction of an
integrated development cost management system.

•Promoting automation of the inspection process.

TechnologyCost

Delivery

15Quality

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Optimization of Comprehensive Manufacturing Functions

We are eliminating waste with FPS activities*
and continuously promoting “1/2 manufacturing.”* FPS stands for “Furuno Production System.” It has been continually implemented since 2012.

•Optimization of the global production structure.
(Miki Plant, Dongguan Plant, other cooperating factories)•

Automation of the production process.

•Expansion of configuration production.

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16

New Strategic Investment Quota
Make investment for future growth in Phase 2 and later•

Cultivation of new businesses•

Research and development including in the advanced technology area•Development of various infrastructure
Single pipe aswave guide

Antenna unit

New building for research & development work space scheduled to be completed in
September 2021
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Image of building construction site utilizing“Waveguide LAN System ™” scheduled forcommercialization in 202017

Strategy of the Marine BusinessBusinesses targeting merchant vessels

Development of life cycle support and more
While expanding our share of the new shipbuilding market and promoting, on a
global scale, full “life cycle support” that includes after-sales service and meeting thedemand for device updates, we will accelerate actions for autonomous and remotecontrolled ships, including digitalization inside vessels.

Digitalization

Supply for
new shipSupply for
device update

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After sales
service18Strategy of the Marine BusinessBusinesses targeting fishing vessels“Visualization of intuition and experience” to support
fishing industry workers on both hard and soft fronts
We will aim to raise our profitability, not just by providing various devices held by
the fisheries industry, which is where the FURUNO Group started, but also by
providing, on a global scale, solutions to the various problems surrounding theindustry.

Source: Japan Fisheries Agency “About efforts for social implementation of smart fisheries”
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19

Strategy of the Marine BusinessBusinesses targeting pleasure boats

Striving to recapture our market share by dramatic
reexamination of the business structure
In order to regain our share in the global market, we will restructure our businessstructure and speed up the launch of products from the perspective of the customer.

NavNet TZtouch3
The latest model of the network compatible navigationequipment "NavNet" series, which is scheduled to be solddomestically in June 2020.

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DRS NXT series
New solid-state radar sensor scheduled
for release in the fall of 2020

20

Initiatives in the System Products Business
PNT* Business (ITS Business Unite)
Striving for evolution of in-house products
and solutions and global expansion
In the three fields of “Positioning,” “Navigation,” and “Timing,”
we will accelerate customer POV-centered development of products andsolutions, in addition to beginning initiatives toward a full-fledged globalexpansion starting with the timing business.
*Reviewing business fields, and changing the name from Communications & GNSS Solutions

Customer POV-centered
Positioning

Global expansion

Navigation

TimingFURUNO ELECTRIC CO., LTD. All Rights Reserved.

21

Initiatives in the System Products Business
Healthcare Business
Expanding our business by concentrated investment
in corporate management resources for key areas
We will focus on China and Southeast Asia, whose markets are expected to grow,as priority regions, and strive to expand our business by providing products thatare suited to the characteristics of each region.

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22

Initiatives in the Defense Equipment Business
Defense Equipment Business
Anticipatory investment for future growth by diversion ofconsumer technology
We aim to achieve growth from a long-term perspective, by promoting theadaptation of technologies cultivated in the consumer field to defense
applications.
Technology
forconsumer

adaptation

Technology
fordefense

Understanding changes
in needs and trends

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23

Initiative in the Wireless LAN System BusinessWireless LAN System Business
Procurement of corporate management resources inbusinesses targeting in the educational market andanticipatory investment for future growth
We will continue to cultivate new markets and develop new businesses while
maintaining our top share in the educational market, which has been expanding
in recent years.

New market cultivation
New businessdevelopment

Source : Japan Ministry of Education, Culture, Sports, Science and Technology"GIGA School Plan Realization Package"
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24Forecast of Results and Dividends for FY 2/2021

The consolidated business forecast for the fiscal year ending
February 2021 is undecided because it is difficult at this stage toreasonably calculate the impact of the novel coronavirus.
Dividends for the next fiscal year are also undecided.
We will promptly disclose them together with the full-year earnings
forecast when earnings can be more accurately predicted.

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25

Corporate Profile

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26

Outline
Since commercializing the world's first fish finder in 1948, FURUNO has
supplied many types of products for the marine electronics market. By using
its exclusive knowledge of ultrasonic and electronics technologies, FURUNO
has developed a wide array of products that have been world firsts and Japanfirsts.
As of Feb 29, 2020

Company NameHeadquarters
IncorporatedFURUNO ELECTRIC CO., LTD.
Nishinomiya City, Hyogo, JapanMay 23, 1951

Business

Manufacturing and sale ofmaritime and industrial electronic
products

Paid-in Capital¥7,534 million

President

Yukio Furuno

Investor Relations⇒ http://www.furuno.co.jp/en/ir/
Products Site⇒ http://www.furuno.com/en/
Corporate Movie⇒ http://www.furuno.com/special/en/corporatemovie/
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27

FURUNO's Business Fields

GPS/GNSS
Disciplined
Oscillator

Automatic
Identification
System (AIS)
Satellite
Communications
Equipment

GPS/GNSS
Displacement Continuous
Remote Monitoring
SystemMeteorological
Monitoring andAnalyzing
SystemWireless
Access Points

Radar

GPS/GNSS
Receiver for Car
Navigation
SystemVoyage Data
Recorder(VDR)

GPS Plotter

FishFinder/Sonar

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Multi Beam
Sonar

UltrasoundBone
Densitometer

ClinicalChemistry
Analyzer

ETC28