Financial Results Briefing
Fiscal 2019(Ended May 31, 2020)
July 13, 2020
Toyo Denki Seizo K. K.

Program Briefing on Financial Results:
1. Overview of Financial Results for Fiscal 2019
2. Outlook for Financial Results for Fiscal YearEnding May 2021 and Medium-Term
Management Plan
3. Topics11. Overview of Financial Results forFiscal 2019
(From June 2019 to May 2020)

1-1. Overview of Consolidated Financial Results
Although net sales declined, operating income increased
significantly due to improved profitability.
100 million yen, %FY2018FY2019YoY Change%

Published value(May 2020)

Published value ratio
%

411.7

390.7-21.0-5.1%

420.0-29.2

93.0%

Operating Income

5.5

10.6+5.1+91.5%

9.0+1.6

118.6%(%)(1.4%)(2.7%)(+1.3pt)－(2.1%)(+0.6pt)－

Ordinary Income

4.9

12.0+7.1 +143.5%

11.0+1.0

109.7%Net Income

6.9

10.8+3.9+56.7%

9.0+1.8

120.1%[Net incom e per share (yen)]

75.27

120.98+45.71－100.65+20.33

－ROE

2.7%

4.4%

+1.7pt－3.3%+1.1pt－Orders received406.8

385.2

-21.5

-5.3%

430.0

-44.7

89.5%

Ratio of overseas
sales to net sales

22.9%

20.7%

-2.2pt－Net Sales

3

<Reference> Trends in Consolidated Orders Received, Net Sales andOperating Income
Measures have been implemented steadily based on the basic policy of theMedium-Term Management Plan “focusing on improving profitability in the firsttwo years.”
Operating income

Orders received and net sales

500

25

(100 million yen)(100 million yen)

400

20300

15200

10

100

500'11/5

'12/5

'13/5

'14/5

Orders received'15/5'16/5

Net sales

'17/5

'18/5

'19/5

Operating income

'20/5
4

1-2. Factors for Increase and Decrease in Operating Income (YoY change)
Thanks to improved profitability, operating income exceeded 1,000 million yen for
the first time in three fiscal years despite the depreciation burden (approx. 450
million yen) associated with the installation of the Shiga Ryuo Plant.
Improved by510 million
yen year onyear

Decrease in sales(non-consolidated)-60 million yen

Increase in subsidiary
profits+50 million yen
Decrease in selling,
general & administrative
expenses (nonconsolidated)+80 million yen
Plant profit/loss (nonconsolidated)+150 million yen
Improvement in grossmargin (non-consolidated)+230 million yen

550 million yen

1,060 million yen<FY2018><FY2019>5

<Reference> Trends in Depreciation on Non-Consolidated Basis
Depreciation at Ryuo reached its peak and will start decreasing
gradually.
The core system will be amortized through 2022.
Yokohama-related
Ryuo-related

161412

Depreciation ofRyuo is especiallyhigh in 2019 and2020.

Core system
Head Office
Although it remained at a high level of about
1,100 million yen, it will decrease gradually10864
The core system
will be amortizedover five years.

20'17/5

'18/5

'19/5

'20/5

'21/5

'22/5

'23/5
6

1-3. Breakdown of Non-Operating Income/Expenses andExtraordinary Income/Loss
Non-operating
income / expenses+130 million yen• Dividend income+230 million yen• Interest expense-80 million yen• Foreign exchange
losses-50 million yen• Other+40 million yen

1,060
million yen

Operatingincome

Extraordinary
income / loss
+440 million yen• Gain on sales ofinvestment securities+440 million yen

1,650 million yen
1,200
million yen

Ordinary
incomeIncometaxes

1,080
million yen

Income before
income taxes

Net
income7

1-4. Segment Performance Transportation Systems
Segment income was comparable to the level of a year earlier despite lowersales.
 Orders received and order backlog

300

Ordersreceived

258.6

 Net sales and segment income
Net sales

260.8

257.1

300

Segment income

279.4

200

225.9

241.0

Orderbacklog

242.6

200

40Segment
income10010000
FY201760

272.3

Net sales

237.5(100 million yen)

FY2018FY2019

25.7

24.2

24.7

200
FY2017FY2018FY2019• Although orders received increased for JR and China, orders received as a whole decreased slightly year on year due to a decline inother countries.
• Net sales decreased due to a decline in orders received for JR in the previous fiscal year. However, sales for China increased.
• Segment income was comparable to the level of a year earlier due to improvement in plant profitability despite the impact of lower sales.

81-5. Segment Performance Transportation Systems Factors for Increase andDecrease in Income

Segment income was comparable to the level of a year earlier due
to a substantial improvement in plant profitability and a decline in
expenses, although net sales decreased.
Decrease in sales(non-consolidated)-250 million yen
Change in grossmargin(non-consolidated)-120 million yen

Increase insubsidiary profits,etc.
+90 million yen
Decrease in selling,
general &administrative
expenses (nonconsolidated)+80 million yen
Plant profit/loss(non-consolidated)+250 million yen

2,420 million yen

2,470 million yen<FY2018><FY2019>9

1-6. Segment Performance Industrial Systems
Net sales and segment income increased considerably despite lower orders
received.
 Net sales and segment income
 Orders received and order backlog(100 million yen)

Net sales

150

Ordersreceived

150

128.3

113.0

117.6

111.9

100Netsales

Segment income

123.3

100

10.0

Orderbacklog

50

66.9

71.8
53.5

50

130.2

Segment
income

6.5

15105

2.7

00
FY2017FY2018FY20190FY2017

FY2018FY2019• Orders received declined mainly due to stagnation in activities for capturing orders caused by the spread of the novel coronavirus in addition toa reactionary decrease in new large-scale projects (related to power supply) following large orders received in the previous fiscal year.
• Net sales rose primarily due to an increase in sales for testing devices and progress in the construction of new large-scale projects (related topower supply).
• Segment income continued growing significantly from the previous fiscal year owing to the effect of increased sales and improved profitability.

101-7. Segment Performance Industrial Systems Factors for Increase andDecrease in Income

Segment income reached 1,000 million yen due to the effect of anincrease in net sales, which exceeded 13,000 million yen for the
first time in 12 fiscal years, and profitability improvement.

Plant profit/loss(non-consolidated)-70 million yen

Increase in subsidiary
profits, etc.
+40 million yen
Decrease in selling,
general & administrative
expenses (nonconsolidated)+30 million yen
Change in gross margin(non-consolidated)+200 million yen
Sales increase (nonconsolidated)+150 million yen

650 million yen1,000 million yen<FY2018><FY2019>11

1-8. Segment Performance Information Equipment Systems
Net sales and segment income increased despite lower orders received.
 Orders received and order backlog

 Net sales and segment income(100 million yen)

Net sales

30

30

24.1
20

10Orders
received

Orderbacklog

Segment income

28.0

15Netsales

17.5

16.1

20

10
7.0

5.2

15.8

2.9

4.6

00
FY2017FY2018FY2019105Segment
income

3.1

5.3

17.70
FY2017FY2018FY2019• Orders received decreased due to reaction after orders for large-scale projects, such as compound issuing devices, etc.,
received in the previous fiscal year, although there were software upgrade cases accompanying the change in theconsumption tax rate and the springtime revision of railway timetables.
• Net sales and segment income rose due to increases in sales from software upgrade cases and compound issuing devices
following the change in the consumption tax rate.

12

1-9. Consolidated Financial Position

100 million yen, %20
May 31, 2019 May 31, 202015

2015年 6月末

ChangeRemarks

580.0

551.6

-28.3

Current assets

260.1

262.8+2.6

Fixed assets

319.8

288.8

-31.0 Investment securities: -2,400 million yen

Total Liabilities

331.9

309.8

-22.1

131.8

112.5

-19.2

248.0

241.8

-6.2 for-sale securities: -1,400 million yen

42.8%

43.8%

Total Assets

Of which, net interestbearing debt

Net Assets
Shareholders’ equity ratio

Unrealized holding gain/loss on available-+1.0pt

13

1-10. Trends in Consolidated Cash Flows• CF from operating activities is 2,100 million yen  Including depreciation of 1,400 million yen• CF from investing activities is 40 million yen  Including sales of strategic stockholdings (+1,100 millionyen) and capital investment (-600 million yen)
• Net interest-bearing debt was reduced steadily to 11,200 million yen (down 1,900 million yen from theprevious year).

100 million yen
FY2015

Cash flows from operating activities
Depreciation and amortization
Cash flows from investing activities
Purchases of property,
plant and equipment
Purchases of intangible assets
Proceeds from sales ofinvestment securities
Investments in affiliates
Cash flows from financing activities
Purchase of treasury stock
Cash dividends paid
Free cash flow
Cash at the end of the period
Interest bearing debt
Net interest bearing debt

FY2016FY2017FY2018FY2019

11.3
8.5
-9.3

15.0
8.0
-46.9

-15.7
12.3
-30.8

37.2
17.7
-10.1

21.4
14.8
0.4

-4.5

-39.0

-34.4

-22.7

-6.4

-3.3

-6.1

-1.3

-0.4

-0.3

0.1

0.9

11.0

14.4

11.3

-1.9
-13.4
-0.0
-2.9
1.9

28.6
-3.0
-2.8
-31.8

-4.9
41.4
-0.0
-2.8
-46.5

-20.1
-8.0
-4.7
27.0

-3.3
-11.20.0
-2.6
21.8

24.0
83.0
59.0

20.9
117.5
96.6

15.5
161.7
146.1

22.4
154.2
131.8

32.9
145.5
112.5 14

2. Outlook for Financial Results for Fiscal
Year Ending May 2021 and Medium-Term
Management Plan

2-1. Outlook for Financial Results for Fiscal Year Ending May 2021
(Consolidated)
Amid the novel coronavirus spreading globally, it is difficult to quantify its impact on theCompany’s performance reasonably. Therefore, the forecast is undecided at this moment.
As soon as it becomes possible to reasonably make a performance forecast, the Company
will announce such immediately.
100 million yen, %FY ended May 2020 (Result)

2Q

Full year

FY ending May 2021(Forecast)YoY Change

2Q

Full year

Full year

Net Sales

193.9

390.7

●

●

#VALUE!

Operating Income

3.0

10.6

●

●

#VALUE!

(1.5%)(2.7%)

3.8

12.0(%)
Ordinary Income
Net Income

4.7

10.8

[Net income per share (yen)]

52.63

120.98

●

203.4

385.2

●

#VALUE!

To be decided●●#VALUE!

●●#VALUE!

●

30.0

Dividend per share (yen)Orders received#VALUE!

●●#VALUE!
16

2-2. Medium-Term Management Plan Numerical Targets
During the first two years of the “Revitalize2020” Medium-Term Management Plan, theCompany focused on improving profitability and made progress largely as planned.
Plans for the second two years will be reviewed and announced going forward.
100 million yen, %FY ended May 2019

ResultFY ended May 2020
Plan

FY ending May 2022

ResultPlan

411.7
5.5(1.4%)
4.9
6.9

430.0
9.0
(2.1%)
11.0
7.0

390.7
10.6
(2.7%)
12.0
10.8

0.1

1.2

-0.3

2.7%
39.9%

3.3%
30.0%

4.4%
24.8%

To be4.0reviewed
5.0%
in thefuture
30.0%

Industrial Systems

272.3
123.3

290.0
130.0

242.6
130.2

310.0
150.0

Information Equipment
Systems

15.8

10.0

17.7

10.0

Net Sales
Operating Income(Operating margin ratio)

Ordinary Income
Net Income
Investment gain on equity
methodROE
Payout ratio

470超
20.0
(4.3%)
24.0
16.0<Net sales by segment>
Transportation Systems

17

2-3. Medium-Term Management Plan Summary of First Two Years
In the first two years (FY ended May 2019 to FY ended May 2020), theCompany focused on improving profitability and simultaneously made thefollowing achievements.
 Expanding the overseas business Transportation Systems (municipal transportation in China)• Made progress in developing a system to meet an expansion of demandfor maintenance (Beijing Jingche Shuangyang Traction System).
• Commenced pantograph production in China(Chengdu Yonggui Toyo Rolling Stock Equipment).
 Industrial Systems• Established a permanent magnet motor manufacturing company in China(Chinalco Toyo)• Established a subsidiary in Thailand to serve as the sales base in ASEAN(SIAM TOYO).
 Establishing a stable business earnings structure• Increased the production efficiency of industrial products by opening
the Shiga Ryuo Plant.

<Beijing Jingche Shuangyang
Traction System><Chengdu Yonggui Toyo
Rolling Stock Equipment> Developing foundations for expanding production capacity• Upgraded core systems with the aim of enhancing production efficiency.
• Enhanced production efficiency by introducing an automatic conveyance system at the Shiga Ryuo Plant.
 Promoting ESG• Contributing to the reduction of environmental impact and the improvement and development of social
infrastructure, and strengthening the Company’s corporate governance.
18

3. Topics

3-1. Responses to New Coronavirus Infections
Responses at Head Office, Branch Offices, and Plants
Until now, the spread of the novel coronavirus has had a limited impact on theCompany's operations.
The Company will continue its business activities after implementing infection
prevention measures, such as utilization of teleworking.

Status of offices

The head office and branches continue teleworking
and staggered commuting hours.

Status of sales
activities

Communication with customers is promoted througha web conference system, etc.

Status ofproduction

Production lines in plants are operating as in normaltimes.

Supplier status

There are no noticeable delays.
Promote decentralization of suppliers to reinforce
business continuity ability.
20

3-2. Overseas Operations
Chinalco Toyo: Progress status of launching a plantOperation start, which was initially scheduled for June 2020, is expected tobe delayed by two months or so due to the spread of the novel coronavirus.
Initial Schedule

Current Status

Operation

Start in June 2020

Start in August 2020

Production
equipment

Delivery, adjustment and trial
run between February and April

Delivery by July and adjustment and trial
run in August.

Plantpersonnel

Orientation and training fromJanuary to March
On-site training from April toMay

Orientation and training from April toJune (Online at home)On-site training from July to August

Sales activity

Start sales activity in March

Start sales activity in May* In parallel, the Chinalco Group
recommends that the Group prioritize
the use of motors made by ChinalcoToyo.
21

3-3. Product Development (Transportation Systems)
Promoting development of new products
 VVVF inverter using SiC element
 High-efficiency totally-enclosed motor
Developed and delivered high-efficiency core circuitsystems.
Realized energy-saving by reducing energy
consumption by 18% from conventional products.
 Low-noise type driving gear units
Developed a low-noise type driving gear units byrevising the processing method of small gears.
Significantly reduced noise levels during accelerationand deceleration.
 High-frequency insulated auxiliary power supply (SIV)
Achieved significant reductions in size and weight byadopting a high-frequency insulation method.
Succeeded in reducing the volume and mass by about
60% from conventional products (in the same output
range).

<VVVF inverter><Totally-enclosed motor><High-frequency insulated auxiliary
power supply>
22

3-4. Product Development (Industrial Systems)
Developed products with unprecedented concepts
 Flat-type dynamo (in-wheel-well dynamo)
Striving to expand sales as a space-saving alternative to the chassis
dynamo and, at the same time, seeking the possibility of applying thisproduct to testing equipment for self-driving vehicles in the future.

<Main body of dynamo><To replace chassis dynamos (lower roller)><Also applicable to testing ofself-driving vehicles> Low-inertia high-speed rotation (20,000 rpm) dynamo
At present, sales efforts are ongoing for EV/HEV motor generator tests (1axis configuration).
Aiming to commercialize a 20,000 rpm dynamo of “Slender Type” that canbe used for FF and FR (3-axis configuration) and 4WD (5-axisconfiguration) tests.

23

3-5. ESG Initiatives (1)Contributing to the establishment of safe and secure social
infrastructure and its sustainable development
The Company’s products (motors and inverters) are widely adopted by railway
operators, automotive manufacturers, and for plant facilities, and contribute toreducing environmental burden and establishing and developing social infrastructure.
Efforts are made particularly on penetration of energy-saving products towardachieving sustainable development goals 7 and 13.
“SDG 7: Affordable and clean energy”“SDG 13: Climate action”<The Company’s products are widely used in society.>24

3-6. ESG Initiatives (2)Specific initiatives:

Environment• Production and sales of high-efficiency, energy-saving productsElectric equipment for railroad rolling stock
Industrial motors and inverters
Contribution to energy conservation in China and ASEAN
countries• Contributing to renewable energy
Biomass power generation and small hydropower generation

Society• Contribution to the development of social infrastructure, including urban
transportation in Japan and abroad• Contribution to enhancing productivity in supply chains in Japan andabroad• Provision of lectures to local governments and education institutions
 Conducted an endowed course on railway ecology at Yokohama
City University• Promoting comfortable workplaces for employees (support for diverse
work styles)
 Improving the environment for teleworking

Governance• Having outside directors account for one-third of board members• Introduction of an operating officer system that clearly separates
supervision and execution
25

Thank you for your interest.
https://www.toyodenki.co.jp<Inquiries>
Toyo Denki Seizo K.K.
PR, IR, and CSR Department, Management Planning Division
TEL: +81-3-5202-8122
Email: contact@toyodenki.co.jp

Disclaimer• Statements concerning financial results forecasts are based ondata available as of the date of publication of this material andassumptions concerning the elements of uncertainty that willaffect future business performance as of the date of publicationof this material. Actual financial results may differ depending ona variety of factors.
• Forward-looking statements contained in this material are thejudgments of the Toyo Denki Group based on data available atthe time of publication of this material. Such statements anddescriptions are by no means comprehensive.

27