Translation
Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy
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Company name:
Stock exchange listing:Stock code:
Representative:
Inquiries

Denyo Co., Ltd.
Tokyo6517
President
Senior Executive Officer

May 13, 2021

Shoichi Shiratori
Makoto Tanabe

TEL +81-3-6861-1111

Notice Regarding Formulating the Second Medium-term Management Plan
Denyo group, has formulated a three-year medium-term management plan “Denyo 2023”, covering fromthe fiscal year ending March 31, 2022 to the fiscal year ending March 31,2024, and announced the plan here.
Overview of the Second Medium-term Management Plan
1. Business Objectives
Consolidated Net Sales
Ordinary IncomeROE

61 billion yen
6.2 billion yen (Ordinary Income margin 10% or more)
6.5% or more

2. Basic Policy
Establish a profit structure that is resistant to changes in the environment, by increasing the ratios of nonconstruction-related products as well as products for overseas markets, while firmly maintaining our position as
the leading provider of high-quality power sources in the construction-related sector.
3. Business Strategies(1) Strategies in the Domestic Market[Construction-related sector]
Aim to maintain and increase share of the domestic market focusing on top brand products such as enginedriven generators and welders.
① Strive to increase market share and expand market by launching new products which meet customer
needs.
② Aim for more efficient, more sophisticated sales activities.
[Non-construction-related sector]
Focus on laying the foundations for further expanding sales of stand-by generating sets.
① Enhance training structure to improve specialist knowledge.
② Strengthen cooperation among group companies.
③ Enhance product maintenance structure(2) Strategies in Overseas Markets[Overseas sector]
Aim to increase presence in targeted high quality market.
① Aim to develop new markets by seeking to enhance product line-up through market research andenhancement of functions and other features.
② Seek to increase sales capabilities by strengthening sales network in each country and enhancing training
structure.
③ Strengthen marketing capabilities and increase contact with customers.
④ Continue to develop markets through the release of a series of stationary generators.

1(3) Reinforcing the Operating Foundations[Development]
Develop market-leading products as the pioneer of high-quality power sources.
① Identify market needs accurately and seek to speed up development.
② Step up action for the development of innovative products.
[Production]
Build a globally competitive production system.
① Establish a flexible and highly efficient production structure by strengthening production site
capabilities and promoting the use of IT.
② Seek to develop more sophisticated production sites in Japan.
[Organization]
Create a structure which enables the career advancement of diverse human resources.
① Aim to achieve both job satisfaction and ease of working through further enhancement of the training
structure and a review of personnel systems.
② Pursue computerization in every process.
End of Text

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The Second Medium-term Management Plan
FY2021～FY2023『』～Powering up for the future～
May 13, 2021

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Summary of the Previous MediumTerm Management Plan
FY2018-2020

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Summary of Business Performance and Summary by Sector (FY2018-FY2020)■ Summary of Business Performance(million yen)

14.0%

62,88760,00048,851
9.3%
40,0005.7%

50,182
8.3%
5.3%

55,554
9.9%
8.3%

7.4%

5.9%

■ Summary by Sector

55,006

12.0%

10.3%

10.0%
8.0%

6.7%

6.0%

Strategies inthe Domestic
MarketEvaluation

Achievements and Issues○Business in the domestic market was generally
brisk due to the launch of new products andstrong cooperation with Group companies.
Sales of stationary generators in particularincreased on the back of heightenedawareness of disaster management and BCP
driven by more frequent natural disasters andgrowing demand associated with government
measures.

△In FY2019, sales grew, especially in the UnitedStates, but FY2020 saw a sharp decline in sales,
reflecting the severe impact of COVID-19. The
issue of establishing a structure to increase
sales of stationary generators, which had been
identified as a priority, still needs to beaddressed.

○We made progress developing products tomeet market needs and launched numerous
new models. In response to significant sales
growth in FY2019, we mobilized the full
capacity of the Group's production bases.

4.0%

20,000

2.0%
0Sector

FY2016FY2017

Consolidated Net Sales

FY2018FY2019FY2020Ordinary income margin

0.0%

Strategies inOverseasMarkets

ROE(Target: Net Sales 58billion yen, Ordinary Income margin 11%, ROE 7.0%)

 In FY2020, the effects of COVID-19 led to a deteriorationin performance, including a slump in overseas business,but, in FY2019, net sales reached a record high. Net sales
and ROE exceeded targets.

Reinforcing theOperatingFoundation

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2Summary of Sales Plan (FY2018-FY2020)■ Summary by Region

62,887(million yen)

60,00048,85150,182■ Summary by Product55,55455,00660,00040,00040,00020,00020,00000

FY2016
Domestic Sales

FY2017FY2018

North/Central America

62,887(million yen)

48,85150,182FY2017FY2019FY2020FY2016Asia※Others

Generators※Others：Europe, Middle and Near East, Russia, etc.

Welders

55,554FY201855,006FY2019Compressors

FY2020※Others※Others：Parts, Self-propelled lifter, etc.

 In Japan, we exceeded the plan, despite signs of a lull inconstruction demand, by expanding sales in other sectors
such as emergency generators.

 Sales of generators exceeded the target in FY2019, driven
by growing demand for stationary generators andmarket expansion in the United States.

 Sales to the United States increased sharply mainly
thanks to growing demand in the rental market.

 Sales of welders and other products also held firm but,in FY2020, the blow to demand from COVID-19 wasstrongly reflected in sales performance.

 In FY2020, sales plummeted, especially overseas, due
weaker demand than the previous year and the impact of
COVID-19.

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The Second Medium-termManagement Plan
FY2021～FY2023

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Our Aims―――― Second medium-term Management Plan Slogan――――

Powering up for the future

Further accelerate initiatives for the realization of a sustainable society, and work toreinforce operating foundations to enhance corporate value in the long term.

Outlook for Business Environment

Domestic
MarketOverseasMarkets

The construction sector is predicted to remain firm, bolstered by the construction work to address
aging infrastructure and disaster countermeasures and redevelopment projects.
In other sectors, products for the BCP measures of the private sector and local authorities will
perform solidly and products for events are also expected to recover gradually.

 In the United States, infrastructure investment can be expected and recovery of rental demand is also
anticipated.
 In Asia, there is strong potential demand, with expansion in infrastructure investment and theresource-related and rental markets.
 In Russia and the Middle East, the resource-related market is expected to rebound on the back ofglobal economic recovery.
 The outlook for the European market remains unclear mainly due to Brexit.

Changes in Trends and Operating Environment Acceleration of paradigm shift due to COVID-19
 Changes in stakeholder values Growing expectation that companies contribute to sustainability and solve social issues

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Our SDGs (ESG) Commitment
Through sustainable, sincere and responsible business activities based on our management philosophy and code of ethics, we implement ESG management practices

which help protect the environment (E) and realize a sustainable society (S) and which ensure governance (G) for the long-term enhancement of corporate value.
In accordance with this policy, when implementing specific measures over the period of the second Medium-term Management Plan, we will help achieve thesustainable development goals (SDGs) by incorporating elements of the SDGs into our business activities as much as possible.

Category

Our Commitment

Ｅ◆Environmental Protection• Development and provision of products and services with the highest
environmental performance• Reduction and recycling of waste for the creation of a recycling-oriented society,and reduction of GHG emissions

EnvironmentRelevant SDGs

◆Employees• Fair and equitable treatment• Creation of safe, comfortable and fulfilling workplace culture• Provision of opportunities enabling diverse human resources to achieve their fullpotentialＳSocial◆Customers/Products & Services• Customer first mindset• Contribution to the prosperity of society through the development ofinfrastructure and disaster management and disaster mitigation products• Provision of safe and secure products◆Selection of Appropriate Suppliers• Avoidance of companies which commit labor and human rights violations anddestroy the environment• Selection based on reasonable criteria such as price, quality and lead time
◆Realization of Prosperous and Livable Local Communities• Creation of partnerships with local communities

ＧGovernance◆Enhancement of Effectiveness of Corporate Governance• Compliance with laws and regulations, social norms, ethics, internal regulations
and other relevant rules• Promotion of fair business activities
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Overview of the Second Medium-term Management Plan(FY2021-FY2023)
Contribute to enriching society and become the company most trusted by investors,
business partners and suppliers by providing safe, secure power sources based on“Benefits for Three Parties” (which expresses our aim to see the user (customer), theseller (dealership), and the manufacturer (Denyo) prosper together).

Corporate

Philosophy•

ManagementVision•

2023 Medium-termManagement Plan

Aim to be the global No1 brand of high-quality power sources withcreativity and constant technological innovations.
Aim to be a vital organization in which every employee strives for selfimprovement and acts responsibly.
Basic Policy

Establish a profit structure that is resistant to changes in the environment, byincreasing the ratios of non construction-related products as well as products foroverseas markets, while firmly maintaining our position as the leading provider ofhigh-quality power sources in the construction-related sector.
Net Sales
Ordinary income■ Business Objectives

FY2020（Results）
billion yen

FY2023（Target）
billion yen

61.0 +α

Consolidated Net Sales

55.0

Ordinary income

5.66.2ROE

6.7%

6.5% or morebillion yen

billion yen

55billion+6billion

6.2billion

5.6billion

FY202061billion+α+0.6billion

FY2021

FY2022

FY2023

Aim for consolidated net sales: 61 billion yen, ordinary
income: 6.2 billion yen (ordinary income margin: 10% ormore) for the FY2023 through sustainable growth.
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Business Strategies
Strategies in the基本方針
Domestic Market
Construction-related sector

Non-construction-related sector☞ Aim to maintain and increase share of the☞ Focus on laying the foundations for further(engine-driven Generators, Welders, Compressors, self-propelled
lifter, etc.)

domestic market focusing on top brand products
such as engine-driven generators and welders(General-use･Stand-by Generating sets, Power-Supply Vehicles, etc.)• Strive to increase market share and expand market bylaunching new products which meet customer needs• Aim for more efficient, more sophisticated sales activities

Industry-first!*• Enhance training structure to improve specialist knowledge• Strengthen cooperation among group companies• Enhance product maintenance structure

Generator with operational data recording function

Recording ofoperationaldata

DCA-45LSYE

expanding sales of stand-by generating sets

Uploading ofdata onto USB

Confirmation ofoperational statuson computer＊According to our research in September 2020

Backup generator installed at financial institution
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Business Strategies
Strategies inOverseas Markets

Overseas sales subsidiaries

Overseas sector(engine-driven Generators, Welders, Compressors, etc.)☞ Aim to increase presence in targeted high quality market• Aim to develop new markets by seeking to enhance product lineup through market research and enhancement of functions andother features• Seek to increase sales capabilities by strengthening sales networkin each country and enhancing training structure• Strengthen marketing capabilities and increase contact withcustomers

Sales subsidiary in Singapore: DUM• Continue to develop markets through the release of a series ofstationary generators

Generators installed ona plant construction site overseas

Sales subsidiary in Vietnam: DTV

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Business Strategies
Reinforcing theOperating Foundation☞ Develop market-leading products as theDevelopment

pioneer of high-quality power sources•

Identify market needs accurately and seek to speedup development•Step up action for the development of innovativeproducts☞ Build a globally competitive production system

Production••

Establish a flexible and highly efficient production
structure by strengthening production site capabilities
and promoting the use of IT
Seek to develop more sophisticated production sites
in Japan☞ Create a structure which enables the career

Organization

advancement of diverse human resources••

Aim to achieve both job satisfaction and ease ofworking through further enhancement of thetraining structure and a review of personnel systems
Pursue computerization in every process

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10Business Strategies
Initiatives for Nextgeneration energy☞ Towards carbon neutrality, Aiming for mass production of products
compatible with hydrogen and other next-generation energy, andcreation of innovative businesses that will lead the future

Fuel-cell Portable Generator•••

Selected by Japan’s Ministry of the Environment as a “Low Carbon Technology
Research and Development Program”
Developed a new power conditioner especially for fuel cells, and installed it inthe generators
Demonstration operation will start in May 2021

Intended use ・Civil engineering and construction sites・Houses without power after a disasters・Location where TV reporters are reporting, and event sites, etc.

Fuel-cell Power Supply Vehicle••••

Selected by Japan’s Ministry of the Environment as a “Low Carbon Technology
Research and Development Program”
Zero emissions of environmentally hazardous substances during driving andpower generation
Enables up to approximately 72 hours of continuous power supply
Demonstration operation in progress since September 2020

Intended use ・Disaster-stricken areas without power
・Use of water produced as a by-product of power generation forshowers, etc.
・Location where TV reporters are reporting, and event sites, etc.
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Sales Plan (Consolidated)■ Sales by Region
FY2020(Result)

FY2023(Target)ChangeRate of
ChangeDomestic Sales

37,73738,300

+563

+1.5%

North/Central
America

10,89815,000+4,102

Asia

3,948

5,000

※ Others

2,423

Total

55,006FY2023(Target)ChangeRate of
ChangeGenerators

44,02048,300+4,280+9.7%+37.6%

Welders

4,387

5,400

+1,013+23.1%+1,052+26.6%

Compressors

755

1,200+445+58.9%

2,700+277+11.4%※ Others

5,845

6,100+255+4.4%

61,000+5,994+10.9%

Total

55,00661,000+5,994+10.9%(million yen)

38,30037,737

North/CentralAmerica※Others：Parts, Self-propelled lifter, etc.

(million yen)

Generators

15,00010,898FY2020

FY2021Asia

FY2022

FY2020

FY2023(million yen)

5,000

3,948

(million yen)

FY2020(Result)※Others：Europe, Middle and Near East, Russia, etc.

Japan

■ Sales by Product(million yen)(million yen)

48,30044,020

FY2020

FY2021Others

FY2022

FY2020

FY2023(million yen)(million yen)

5,400

4,387

FY2021

Compressors

2,7002,423

Welders

FY2022

FY2023(million yen)

1,200

FY2020

FY2021

FY2022

FY2023(million yen)

Others6,100

5,845755

FY2021

FY2022

FY2023

FY2020

FY2021

FY2022

FY2023

Increase cooperation among group companies and enhance theservice structure in Japan and aim to expand business overseas bystrengthening the sales network and sales capabilities.

FY2020FY2021

FY2022

FY2023

FY2020

FY2021

FY2022

FY2023

Seek to increase share of markets for various products including
generators and welders through the launch of various products
which meet market needs and effective sales operations.
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Capital Investment Plan
Make aggressive investment

 Expand facilities with increased production capacity
in mind Introduce and update various systems to encourage
greater use of IT
 Build large repair centers to improve customer
service

Domestic Production Sites
Fukui Plant, Shiga Sub-Plant, Nishihatsu (Saga Pref.)Overseas Production Sites
America Plant, Vietnam Plant, Indonesia Plant

Total amount:

7.0 billion yen

Total amount:

0.8 billion yen

OthersTotal amount:

TotalSum amount: 9.3 billion yen

1.5 billion yen

Production Sites:

America Plant
Vietnam Plant

Indonesia Plant

Fukui Plant

Shiga Sub-Plant

Nishihatsu (Saga Pref.)

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13Profit Distribution Policy
Denyo recognizes the importance of making further efforts to return profits to shareholders,
while aiming to strengthen future competitiveness and profitability, and we will implement aninterim and term-end dividend payouts of distribution of results comprehensively calculated byachievement and payout ratio.
(yen)

Dividends
50404030424647

FY2019FY20203020

100

FY2016FY2017
Interium dividend

FY2018anniversar

FY202370th anniversary commemorative dividend
14Notes on Our Outlook

This material contains assumptions and outlooks for the futureand forecasts based on plans as May 13, 2021.
Actual results may differ materially from projected values due tofuture economic changes and competition.
This material is prepared for the purpose of providing
information and is not meant to solicit investment in securities
issued by the Company.
Investors are responsible for making their own final investment
decision.

All Rights Reserved. Copyright Denyo Co., Ltd.

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