FinancialResults
Briefing
FY2023

1 May 2023

FY2023

Summary of Earnings

DAIHATSU DIESEL MFG. CO., LTD.

22

SummaryPOINT⚫ Sales and profit increased significantly compared with the previous year
⚫ Engine sales, SCR (selective catalytic reduction equipment) and maintenancerelated business were strong(Million yen)

YoY difference33

FY2022 results

FY2023 results

Net sales

57,59972,113

14,513

25.2

Operating income

2,092

3,601

1,509

72.1

Ordinary income

2,506

3,660

1,153

46.0

Net income

1,968

2,948

979

49.8

Basic earnings
per share

62.01

93.3731.36

50.6

Total assets

89,26895,3776,108

6.8

Equity ratio

48.2%

47.9%

Increase / Decrease-(%)

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Net Sales and Earnings for the InternalCombustion Engine Section
POINT⚫ Revenue increased due to an increase in the composition ratio of high-priced large and dual-fuel engines and strong sales⚫ The ratio of marine engines for overseas increased⚫ Section profit increased due to the recovery of maintenance demand with the easing of movement restrictions post-COVID-19

Net sales * Including maintenance related(Million yen)

Marine-use (Japan)
Land-use (Japan)

Marine-use (overseas)
Land-use(overseas)

67,85170,00060,00050,00053,14053,877

687

475

7,880

9,717

(Million yen)

6,000

5,420

10,414

4,500

3,906
36,42722,21430,0003,000

25,49020,000

2,561

1,500
22,35918,195

20,427

FY2022

FY2023

0FY202144* Including maintenance related

583

40,00010,000Earnings for the internal Combustion engine section

0
FY2021

FY2022

FY2023Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights ReservedUnit Sales and Maintenance-related Net Sales⚫ Unit sales increased due to increased demand centered on container ships⚫ Maintenance-related revenue and profit increased, mainly in Europe, the UnitedStates and Southeast Asia.

POINT

Maintenance-related net sales

Units sold
(Unit: Units)

Marine-use (Japan)
Land-use (Japan)

Marine-use (overseas)
Land-use(overseas)

35,0001000

30,217900

30,000

800

745

700

87

749
658

80

25,000221

20,000

67

600
500

217

26,38915,000300

10,000
438

375

446
5,000

100
00
FY2021

55

24,592216

400

200(Million yen)

FY2022

FY2023

FY2021

FY2022

FY2023Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Earnings Forecasts
ForecastPOINT⚫ Although sales of large and dual-fuel engines are expected to increase, profit will decrease⚫ Unitincreased due
to increased
demand centered on container ships
due tosales
the intensificationof pricecompetition.
⚫ Maintenance-relatedandprofit increased,centered
Japan investment
andWe are planning positiverevenue
investment, including
capital investment
andon
researchforthe handlingAsia.
of new fuels
Southeast(Million yen)

FY2024FY2023 results

ForecastIncrease/decrease (%)

Net sales

72,11376,000

5.4

Operating income

3,601

3,000-16.7

Ordinary income

3,660

3,000-18.0

Net income

2,948

2,000-32.2

Basic earnings per share(yen)

93.37

62.79

-32.8

Annual dividend (yen)

28.00

19.00

-32.1

Payout ratio (%)

30.0

30.3

-

* Exchange rates: March 2023 (Results): ¥134.39, March 2024 (Estimate): ¥125.00

66

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights ReservedOrder backlog⚫ Overseas: Orders for bulk carriers increased⚫ Japan: Orders for large and dual-fuel engines for car carriers and bulk carriers increased

POINT

Change in order backlog compared withprevious year
Million yen Marine-use (Japan)
Land-use (Japan)

70,00050,000Marine-use (overseas)
Land-use (overseas)

Other

60,00049,14913598
5,544
23,002

19,99115%
Small andmedium

782

DF85%
Large
23%

+35.1%

31,080Large
85%

Small andmedium, etc.
37%+36.0%

20,00010,000

Small and medium
15%

64,416862
4,513

40,00030,000

Proportion of order backlog by model as ofMarch 2023

27,178Large DE40%077

FY2022

FY2023Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Market Environment and theCompany’s Business Model

DAIHATSU DIESEL MFG. CO., LTD.

88

Market Trend for Marine Cargo
Source: The Shipbuilders’ Association of Japan

Global shipping capacity

Global ocean cargo volumes, by product

千(Unit: Billion tons)

14

Iron ore
Grain
Crude oil
Other

CoalContainers
Petroleum products(Million DWT)

2,500

Tankers
タンカー

バルクキャリア
Bulk carriers

コンテナ
Containers

その他
OtherAverage increase of
3.2% since 2015

122,000

101,500861,0004500

2002006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2006 2008 2010 2012 2014 2016 2018 2020 2022

(Estimate)⚫ Although ocean cargo volumes fell due to COVID-19 in 2020, they have recovered to pre-pandemic levels.
⚫ Container ship demand settled down for a while, but it is growing centered on bulk carriers.

99

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Market Trends for Newbuild Vessels
Volume of work in hand, by country

Volume of orders received, by country(Unit: Million tons)

Japan
China
Other countries total

South Korea
European countries total

21100(Unit: Million tons)

200Japan
China
Other countries total

1804121608050604013211920192020

58544525187847560

33012031310780221141338

2120140100
11South Korea
European countries total

132021402062022435560282122212019

2020

2021

End ofDecember 2022

0Source: The Shipbuilders’ Association of Japan⚫ There was a rebound from the large orders of 2021 and orders have grown with certainty only in China.
⚫ Looked at by country, the Chinese market exceeds 50%.

1010Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Sales Breakdown/Market Share (end of FY2023)
Sales BreakdownMarket Share (Auxiliary Engines for Large Ocean-going Vessels)

Business

Internal combustion
engines

SectionNumber of ships in service from January to December 2022

Marine-use

Application

Other6%<Share in Japan>

DAIHATSUDIESEL

48%(Breakdown)

111194%

Auxiliary power
generators

84%

Land-use 16%

Export 55%
Domestic 45%

91%

Main propulsion
9%
systems

DAIHATSUDIESEL<Share overseas>

27%

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Company’s Business ModelPOINT⚫ We are building a business model that makes money not only from engine sales,
but also from after-sales maintenance.
⚫ Technical capabilities in after-sales service are key.
Number of ships with the company’s engines

Stable capture of
earnings over life-cycle▶ Although the number of ships
with the company’s engines
will be flat in 2022, they
increase steadily by 1.8%
each year on average.
▶ The provision of service value
for stable operations is key.

(Ships)

9,000
8,500
8,000
7,500
7,000
6,500
6,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
* Not including technical partners in China

1212Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Company’s Business Model (Maintenance)
15 years ago

Sales approx. ¥15.0 billion

NowSales approx. ¥30.0 billion

Shifting to the offensive

Holding the line
⚫ Business focus was selling engines to builders ofnew vessels.
⚫ Sales for the after-sales-service did not really exist.

Majorincrease⚫ Promoting strategic maintenance proposals forship-owners and ship-management customers⚫ Narrowing down target customers and sales
expansion activities aimed at post-COVID-19
demand recovery

Current initiatives⚫ Build services that provide people, goods and information accurately using DX⚫ Build an abnormality diagnosis and maintenance support system by accumulating engine data.
⚫ Build a comprehensive maintenance contract system for digital equipment, including DF engines.

PeopleGoods1313Information

Business that delivers peace of mind to customers⚫ People: Be close to customers and provide them with generous support⚫ Goods: Supply the parts required when they are required⚫ Information: Provide the information required for the safe operation of engines

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Volume of work in hand, by country(Unit: Milliontons)
200JapanSouth Korea

180
412Growth Strategy
160
140

413120100

31375

1078458548060402045435560

2821222120192020

2021

END OFDECEMBER
2022

0Source: The
Shipbuilders’
Association of JapanDAIHATSU DIESEL MFG. CO., LTD.

141414Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Direction to Take Mission
We will achieve our two missions in order to balance a rich society and natural environment.

1515

Supporting the safety andsecurity of people’s lives

Protecting the rich naturalenvironment

We play a role in the social
infrastructure of the sea and land.

Facing up to global environmental
problems, we will convert to clean energy.

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Direction to Take TARGET● Commercialization of new fuel-compatible engines● Construction of a servitization business (usingproducts to sell something as a service, not a oneoﬀ sale)Contributing to net-zero emissions and realizing asustainable society

1616

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Business Strategy Marine business
Developing engines that use new fuels● Methanol combustion engines: Aim for commercial engine shipments by the end of 2025
● Ammonia combustion engines: Aim for commercial engine shipments in the second halfof the 2020s● Promote early establishment of the hydrogen combustion engine● Enhancement of technology to remove nitrogen oxide, etc.
● Optimization of engine operating conditions (upgrading of sensing and controltechnologies)

Expanding sales of dual fuel (DF) engines
Challenge to achieve net zeroemissions● Acquisition of technologies for next-generation engines that use new fuels

Strengthening and expanding the licensing
business● Strengthening and expanding after-sales maintenance systems

1717Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Progress of the Mid to Long-Term Vision [1]Development of engines that use new fuels
Roadmap for new fuel development⚫ Achievement of the world’s highest level of combustion eﬃciency with methanol-fueled,ammonia-fueled and next-generation gas-fueled engines⚫ Enhancement of exhaust gas puriﬁcation technology⚫ Provision of various synthetic fuel-compatible engines
2022

2030

2040

2050

End of 2025
release target

MethanolBasic experiment➔ real machine test

Ammonia

Basic experiment➔ real machine test

Hydrogen

Basic test (FY2021 to FY2023) The basic test will be continued from FY2024

Biofuels

Responding to customers’ trial requests (preparing for future fuel conversion)

6DE28DF xConsider
3
implementing GHG-zero solutions such as fuel cells, carbon capture, and renewable
Other

1818

energyCopyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Progress of the Mid to Long-Term Vision [2]New construction of new fuel engine factory
Construction of new fuel handling factory(Himeji Factory)
New Himeji Factory
Aim for operation in 2027

Total investment of ¥10 billion
 New fuels (methanol, ammonia,hydrogen)Engine assembly and commissioningfactory Additional construction of new fuel(methanol) engine facility

 Plan for expansion of existing engine
factories

1919

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Progress of the Mid to Long-Term Vision [3]Joint research on new fuels with universities and companies◆ Started joint research with Oita University
 Development aimed at the realization of an effective ammonia-hydrogen combustion engine
 Analysis of toxic components in exhaust gases to establish more efficient combustion technology◆ Started joint research with the National Maritime Research Institute and Hitachi
Zosen Corporation
 Reformulation of ammonia fuel to hydrogen. Development of a system using hydrogen with a co-fired
or single-fired engine
 Construction of system from the fuel supply unit to post-combustion treatment unit

◆ Started joint research with Okayama University
 Development of highly efficient methanol engines
 Establish more efficient combustion technology with higher thermal efficiency and improvement ofignitability with mixed fuel◆ Started joint research with The University of Shiga Prefecture Research on a methanol combustion method suitable for diesel engines
 Establish more efficient methanol combustion technology

2020

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Progress of the Mid to Long-Term Vision [4]Completion of DF Engine Lineup< Examples of ships
equipped with DF engines >Dual-fuelengine
Car carrier

Container ship

2121

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Progress of the Mid to Long-Term Vision [5]Expansion of Licensing Business
Licensing (in China)⚫ Contract since 1982 Contract renewal in 40th anniversary year in 2022
⚫ Newly entered into a contract alliance for large engines and expanding the range of target models
Technology tie-up is being promoted with a view to creating engines that use new fuels⚫ Supporting ocean-going vessel order receipts to further expand market share
Licensed shipment output

Shaanxi Diesel Engine Heavy
Industry Co., Ltd.

Anqing CSSC Diesel Engine Co., Ltd.
[100kWm]

Anqing Diesel

30002500[100kWm]
400

Cumulative shipments: 4,000 units

Shaanxi Diesel

Cumulative shipments: 1,000 units
3002000
1500

200

1000
100500002014 2015 2016 2017 2018 2019 2020 2021 2022

22222014 2015 2016 2017 2018 2019 2020 2021 2022

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Business Strategy Digital Support Business
Sensingtechnology
Lower costof condition
monitoring
New customer
value

Development of digital support business● Analyze navigating data with AI to propose accurate
services● Development of technology to monitor engine conditionand enhancement of failure prediction and diagnosis
technology using AI● Acceleration of comprehensive maintenance contracts,including maintenance support and crew training

2323

Optimizationof total cycle
costs

Detection ofengine
defect signs

CMAXS
engine operation
support system

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Proposal sales using AI
Calculate therelationshipbetween thetiming ofreplacement andrun time

Calculateengine runtime pership

Each ship’s shipment history and demand forecast screen (sample)

Forecast
demand forparts
replacement

By using this system⚫ Promoting strategic maintenance proposals forship-owners and ship-management customers

Demand forecast
Actual shipments❘20172424

❘2018

❘
2019

❘
2020

❘
2021

❘2022

⚫ It is possible to visit customers when parts need tobe replaced.
⚫ We show customers the parts that need to bereplaced.

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

ESG Strategy

DAIHATSU DIESEL MFG. CO., LTD.

2525

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

ESG Strategy (CO2 Reductions in Logistics)
Promotion of a modal shift
Rail container transportation of parts•••

Conversion of truck and other freight transportation to rail andmarine transportation
New construction of parts warehouse at Himeji Factory
Adoption of milk run (circular collection of supplied parts) system

Milk run● Collection of parts for delivery from numerous suppliersCompany CCompany B

Engine shipments from dedicated berths
at the Himeji Factory

Company DCompany A
Productionfactory

2626

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

ESG Strategy (Realization of a Sustainable Society
and Enhancement of Corporate Value)
Reduction of CO2emissions in production•••••

Renewable energy (solar panels at Moriyama Factoryand Himeji Factory)
500 million yen investment 2,000 kW
Transportation of electricity from Himeji Factory toMoriyama Factory: 50 MWh/year
Purchasing of forest credits from Shiga Prefecture•

Reduce CO2 emissions in production by 35% fromFY2013 level in FY2025
Reduce CO2 emissions in production by at least
50% from FY2013 level in FY2030
Aim for net zero emissions in FY2050
Medium to long-term targets for the reduction of CO2emissions in production

Realization ofnet zeroemissions(Base year )2727

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights ReservedESG Strategy (Health and Productivity Management
Outstanding Organization Certification)⚫ Positioning fiscal year 2022 as the “first year of ESG management (year of evolution),” thecompany acquired “Health & Productivity Management Outstanding Organization 2023”
certification.
⚫ We will promote health management and establish an environment and systems that allow
employees to work comfortably.

28
28

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

ESG Strategy (Human Capital Investment)
Safety initiatives
The Company places the highest priority on ensuring safety
and health in all its business activities and promotes creatinga safe and comfortable working environment.
● Fostering a safety culture● Promotion of health management

2929

Strengthening, expanding and fostering humancapital
The Company will accelerate investment in human resources, which is
the most important asset for realizing the Company’s purpose.
● Human capital management
Securing versatile human resources for new business areas
Fostering advanced professional human resources and nextgeneration leaders● Promoting diversity
Providing opportunities to utilize diverse human resources andmaximize their capabilities● Respect for human rights
Fostering a culture and promoting activities that respect the humanrights of all people involved in business activities● Promotion of work-life balance
Fostering work-style reform
Promotion of creating a rewarding work environment● Social contribution activities
Continue food bank activities, zero marine waste activities, andsocial contribution activities

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

The Mid to Long-Term Vision
Investment Plan

Other
technology
development

Investment ingrowthbusiness
Other
Strengthening
technology of production
development

3030

Investment fornet zeroemissions

Intangible
assets(including investmentin human capital)

Strengtheningof production

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights ReservedCompany Engine Delivery Destinations
Seikan passenger ferry

SEP vessel

RORO ship on the Nansei
Islands route

3131

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

Achieve net zero emissions while
accelerating selling services as apower supply company that leads
to the future

DAIHATSU DIESEL MFG. CO., LTD.

3232

Copyright © 2023 DAIHATSU DIESEL MFG.CO.,LTD. All rights Reserved

These materials contain statements relating to future earnings and business strategy, etc. Inherent inthese statements are risk and uncertainty; they form no guarantee of future performance. Please beaware that actual results may differ significantly from forecasts, due to changes in the businessenvironment, etc. Furthermore, information relating to companies other than the Company or theCompany group, etc., contained here has been taken from publicly available information, etc. No
verification of any kind has been undertaken by the Company, and no guarantee is offered regarding
the accuracy or appropriateness of such information. The information contained in these materials is
intended only for purposes of provision of information, and not for solicitation to purchase securities.

DAIHATSU DIESEL MFG. CO., LTD.

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