Financial Results for First Half FY2020(Six months ended September 30, 2020)
December 8 th, 2020

Mitsuyasu Watanabe,President and COO

OSAKI ELECTRIC
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved1Summary
1. 1H FY2020 Financial Results• YoY decrease in sales and profits due to impact from COVID-19, in addition to low demand
for smart meters in Japan• Sales were in line with the previous forecasts. Profits were better than expected due tohigher production and cost reduction

2. FY2020 Full-Year Forecasts
FY2020 forecasts remain unchanged while impact of the worldwide spread ofCOVID-19 on business environment is unclear

Sales Target: 80 Bn yen (COVID-19 impact: -12 Bn yen)
Operating Income 1.5 Bn yen (COVID-19 impact: -2.7 Bn yen)

3. Progress on Mid-term Management Plan•

While some delays in meter installation, COVID-19 has little impact on the mid-term

demand for smart meters•

Overseas: Responsive to country/regional needs, and multi-production sites for BCP•

Japan: Concentrate on added-value for smart meters, and successful launch of newbusinesses
CopyrightCopyright (C)(C) 2020
2020 OSAKIOSAKIELECTRIC
ELECTRICCO.,CO.,LTD.
LTD.All
AllRights
RightsReserved
Reserved2

Agenda1. 1H FY2020 Financial Results
2. Progress on Mid-term Management Plan
3. ESG

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved3

１. 1H FY2020 Financial Results
1-1 Sales and Profits
1-2 Balance Sheets
1-3 Cash Flows

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved41-1-1 Sales and Profits
YoY■Decrease in sales and profits due to impact from COVID-19,in addition to low demand for smart meters in Japan

Changes from Previous Forecasts■Sales: In line
■Operating income：Better than expected due to higher production
and cost reduction

FY2020 Forecasts■ Unchanged from initial forecasts (as of May 27, 2020) while impactof the worldwide spread of COVID-19 on business environment is unclear（¥Mn）
FY2019 1H
ActualPrevious Forecasts

FY2020 1H
ActualNet Sales

43,58036,00035,734

Operating Income

2,033

200

Ordinary Income

1,946
845

Profit attributable toowners of parent

FY2020 1H

Previous Forecasts

FY2020Forecasts-7,846-266

80,000767-1,265+5671,500200744-1,201+544

1,600-600-202-1,047+398

100

YoY

Changes fromCopyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved51-1-2 Results by Segments
YoY■Smart meters & solutions in Japan:
Decrease in sales and profits due to impact from COVID-19,
in addition to low demand for smart meters in Japan■ Smart meters & solutions in overseas:
Decrease in sales and profits due to impact from COVID-19,
in addition to decrease from a one-time project in Middle East and Cambodia
in the previous year（¥Mn）
FY2020FY2019 1HResultsQ1

Q2

43,58019,347

16,38735,734-7,846

Smart meters & solutions in Japan

24,152

11,097

11,211

22,308-1,843

Smart meters & solutions overseas

19,050

7,816

5,100

12,916-6,134

Others

932

585

318

903

-29

Adjustments

-555

-151

-242

-393

+162

2,033

669

98

767

-1,265

Smart meters & solutions in Japan

1,327

557

391

948

-379

Smart meters & solutions overseas

561

22-246-224-786

Others

135

86

-43

43-91

8

3-3

0-7

Net Sales

Operating income

Adjustments

1H Results

YoY

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved61-2 Balance Sheets■ Accounts receivable decreased due to lower sales caused by the impact fromCOVID-19 and the collection of accounts receivable in overseas.
■ Inventories decreased due to curb procurement of parts and materials overseas■ Appropriation of increase in cash from improvement of operating CF to repaymentof borrowings. (Net Cash: ¥0.4 billion ⇒ ¥6.7 billion)■ Capital Adequacy Ratio improved due to decrease in borrowings. (47.8% ⇒ 52.2%)
September 30th,March 31st, 2020
2020（¥Mn）

Changes

Factors

97,96288,369-9,592 Accounts Receivable -7,388

Current Assets

56,98049,417-7,563 Inventory -2,100

Fixed Assets

40,981

38,952-2,02939,32430,490-8,834Current Liabilities

25,934

17,296-8,638Fixed Liabilities

13,39013,194-195

58,63757,879-758

Capital46,79046,167-622

Non-controling

11,303

11,201

-101

544

509

-34

47.8%

52.2%

+4.4%

AssetsLiabilities

EquityOthers
Capital Adequacy Ratio

Total debt -4,824

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved71-3 Cash Flows■ Operating cash flows improved significantly due to a decrease（¥Mn）
in accounts receivables and inventories

Income before income taxes and minority interests

FY2020
1H744

Increase/Decrease in cash
Japan

Overseas(Increase) decrease in notes and accounts
receivable

6,950

Increase

Increase(Increase) decrease in inventories

1,906-1,974-686
6,940-1,012-4,623-12-1,160-5,796

Flat
Decrease

Increase
Decrease

Increase (decrease) in notes and accounts payable
OthersOperating activities
Investing activities
Increase (decrease) in short-term debts
Increase (decrease) in long-term debts
OthersFinancing activities
Effect of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Decrease
Decrease

246
12,366
12,744
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved8

2. Progress on Mid-term Management Plan
2-1 Expanding profits in global businesses
2-2 Expanding value-added smart meter businesses

2-3 Developing new products and services

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved

92. Key Message
Mid-term demand for smart meters in energy infrastructure

remains strong, while impact of COVID-19 caused delays ininstallations• Overseas: Delays in installations, but demand unchanged
Responsive to country/regional needs, and multi-production sites for BCP(Business Continuity Plan)• Japan: Install to all households (by 2024) - ongoing•

A drop in demand from 2021 is anticipated to flatten•

Development of value-added smart meters to launch from 2024•

Sales channels to expand for smart building solutions including energy management
systems, automatic metering

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved10

2-1-1 Expanding profits in global businesses
Oceania
Sales (Bn yen)

5.0

3.8

FY2019
1st HalfEurope (UK)YoY
• Growing market needs, howeverplanned to decrease due to COVID-19• 1st Half showed smaller impact fromCOVID-19 compared to other regions• 2 nd Half expected to pick up in orders• Expect stable growth

4.5

4.1

2020
FY2020
1st Half Plan 1st Half Actual

FY2021 Outlook

Sales (Bn yen)YoY

FY2019
1st Half

4.2

4.2

2020
FY2020
1st Half Plan 1st Half Actual• Although in the rapid growth stage, weplanned conservatively due to COVID-19• 1st Half in line with the plan (UK undergone
lockdown in Q2)• 2 nd Half largely impacted from recent lockdown(Nov.-Dec.)

FY2021 Outlook• Observing market conditions after UK lockdown
lifted.
• Develop dual band communications hubs and 3phase meter which respond to customer needs
and contribute to the future profit growth
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved112-1-2 Expanding profits in global businesses
Asia
Sales (Bn yen)

4.7

Sales (Bn yen)
4.52.0FY2019
1st Half

Middle East and others

2.22020
FY2020
1st Half Plan 1st Half Actual

2.0

FY2019
1st Half

2.12020
FY2020
1st Half Plan 1st Half Actual

YoY• Planned a decrease in sales from one-time projects in Cambodia and Middle Eastin the previous year
• 1st Half in line with the plan
• Delay in smart meter projects in overall regions due to COVID-19
FY2021 Outlook• Preparing to deliver value-added services combining meters and solutions toboost growth when smart meter projects restart
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved122-1-3 Expanding profits in global businesses
Mass Production• Building an optimal manufacturing framework to leverage assets,including outsourcing, multiproduction sites for BCP (Business ContinuityPlan)
EDMI
Outsource

Communication hubs for UK(Romania)

Smart Meters for UK（Shandong, China）
Shenzhen,
China

Gas Meters for UK（Zhejiang, China）

Malaysia
Indonesia

Smart meters(Indonesia)

Gradually increasing outsourcing ratio to
respond to demand change flexibly
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved132-2 Expanding value-added smart meter businesses
Collaboration and Co-development for next-generation smart meters◼ Local 5G• Collaborating with Abit Corporation*, a field test equipment for Local 5G
is set up at Saitama R&D and Manufacturing Center• Developing communication gateway system for industrial smart meters

Local 5G
Equipment

Base station• Exploring business possibilities in developing high functionality/multipurpose smart meterswith 5G modules for industrial use• Collecting information of 4K images and sensors, and automatic guided vehicles at Saitama
Factory
By using Local 5G• Easy to install• High security• Real time

Testing
Low latency levels
4.6 GHz radio wave
Comparing Wi-Fi 6

クラウドで確認

Large Data
Transmission

Image of field test at Saitama Factory*Abit Corporation is a capital and business alliance of OSAKI.

• Possible collaboration withhigh-voltage equipment manufacturer• Possible integration with newbusinesses for new series of solutions

Using data of images and sensor• Detect defections in manufacturing,• Predict equipment failures• Monitor and analysis of operations
and movement/activity lines
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved14

2-3 Developing new products and services
Scalability of Smart Lock Systems
1. Attendance systems + Security
Collaboration with SEIKO Solutions• Based on employment contracts and work shiftschedules, authorizing entry by remote with Smart• Attendance Systems Smart locks• Work shift systems

locks for efficiency and security• Highly useful for offices and shops with many
temporary workers

2. Facial recognition + Body temperature
Smart locks with cameras for facial recognition and measuring body temperatures.
• Set at after-school facility for elementary students• Facial recognition for high security and entry without touching the door
• Alerting students to wear masks• Measuring body temperatures to prevent students with fever to enter the faiclity
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved153. ESG

OSAKI Group Statement for the Modern Slavery Act
OSAKI announced the Group statement for the Modern Slavery Act in
UK and Australia on November 17 th, 2020.
■OSAKI and its group companies, through their supply chain ofbusinesses, do not violate human rights or take part in activities
which lead to violation■OSAKI group ensures that we do not allow any violation of humanrights such as modern slavery or human trafficking, either directly orindirectly, in the business conducted by the Osaki Group.
Initiatives• Employee training and workshops• Development of self-evaluation systems• Development of systems for monitoring and guiding suppliers

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved

16

Global Energy Solution Leader
Providing tomorrow’s energy solution for a better societyAppendix
•
•
•
•
•

Financial data
Mid-term Management Plan (FY2020-24)
Global market
ESG Measures
Shareholders Return Policy

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved18

1H FY2020 Operating Profit Change (YoY)
Smart meters & solutions in Japan(¥Bn)

1.3-0.5

FY19 1H OP

Sales decrease+0.30.95

SG&A

FY20 1H OP-0.15
GP margindecrease

Smart meters & solutions overseas
0.55

+0.3
-0.2

+0.05
-1.1
FY19 1H OP

Sales decrease

GP margin
increase

SG&A

FY20 1H OP

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved

19

Sales by Region（Excluding intercompany sales）（¥Mn）
FY2019 FY2019 FY2019
FY2020 FY2020 FY2020
FY2015 FY2016 FY2017 FY2018
FY2019Forecasts
1Q
2Q
3Q
1Q
2Q
Consolidated
Net Sales

75,596 86,159 78,780 82,089 20,287 43,580 66,200 90,069 19,347 35,734

80,000Japan

55,150 63,236 59,927 57,735 11,526 24,915 38,449 53,475 11,643 23,130

50,000Overseas

20,445 22,923 18,852 24,353

8,760 18,665 27,751 36,593

7,703 12,603

30,000Oceania

7,049

9,110

7,807

9,522

2,549

5,021

7,363

9,422

2,211

4,116

8,500

Europe

3,471

5,248

3,858

4,449

2,229

4,454

6,833

9,558

2,375

4,181

10,500Asia7,962

7,431

6,168

7,086

2,019

4,706

6,835

8,841

1,336

2,164

6,500

Middle East,Others

1,962

1,133

1,017

3,295

1,961

4,482

6,718

8,770

1,780

2,141

4,500

Overseas
Sales Ratio

27.1% 26.6% 23.9% 29.7% 43.2% 42.8% 41.9% 40.6% 39.8% 35.3%*1 Figures from Annual Report FY2019.
*2 The Full-year Forecasts for FY2020 are based on the initial plan announced on May 27, 2020 because ofuncertainty in the market environment due to the lack of a convergence outlook for COVID-19.

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved

20Sales by product and service(Excluding intercompany sales)■Smart meters & solutions in Japan（¥Mn）

FY2015FY2016FY2017FY2018FY2019Meters25,55934,973

31,94731,14927,136

Monitor Control

2,665

2,605

2,585

2,856

3,055

Switchgears

8,208

8,066

7,144

7,097

7,847

VCTs
Others（adjustments）

3,965
12,977

4,400
12,206

4,925
11,694

4,772
10,374

4,767
9,012

Total

53,37662,25258,29656,251

51,819*Referential figures based on managerial accounting■Smart meters & solutions overseas（¥Mn）

FY2015FY2016FY2017FY2018FY2019Meters13,261

14,618

11,48914,65225,263

Monitor Control

6,781

8,092

7,132

9,299

11,227

Total

20,04322,71018,621

23,95236,490*Referential figures based on managerial accounting

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved21Mid-term Key Strategies

Expanding value-added smart meterbusinesses

Developing new products and services
Expanding profits in global businesses
Building resilient operational
structure

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved

22Mid-term TargetsAnnounced on May 27 th, 2020（¥Bn）

FY2019ActualFY2020
Forecasts

ROE

90.0
3.7
4.1%
3.5
1.2
1.3%
2.5%

80
1.5
1.9%
1.6
0.1
0.1%
0.2%

100
5.0
5.0%
4.7
3.0
3.0%
6.0%

105
6.0
5.7%
5.7
3.5
3.3%
7.0%

ー
8.0 or more
ーーーー
9% or more

CAPEX

2.3

2.8

2.5

2.5ー

Depreciation

2.9

2.7

2.6

2.6

ー

R&D Expenditures

3.2

3.2

3.2

3.2

ー

Net Sales
Operating income
OP margin
Ordinary income

Net income
NP margin

FY2021
Outlook

FY2022
Outlook

7.0%ROE

FY2024Mid-term Target

9% or more

6.0%
2.5%
FY20190.2%
FY2020

FY2021

FY2022

FY2024 Target

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved

23Mid-term Targets by Region
5th Year Target
OP ¥8 Bnor moreAnnounced on May 27 th, 2020
〈Sales〉

Middle Eastand others
Asia
Europe〈OP〉
Overseas

Oceania

JapanJapanNet sales
90.1

Net sales
80

8.8
Overseas
36.5

8.8
9.6

Overseas
30

9.4

53.5

OP
3.7
0.4

3.2

4.5
6.5

Overseas
45

10.5

20.0

6.5
9.0
21.0

OP5.0

11.5

10.5

8.550.0

Net sales
100
6.0
Overseas
8.5
48

Net sales
105

OP
6.0

2.8

2.2
OP
1.50

57.0

55.0

3.2

2.8

1.5

FY2019ActualFY2020

FY2021

Forecasts

FY2022

Outlook

Outlook

FY2024
Target

FY2019actualFY2020forecasts

FY2021
outlook

FY2021
outlookOverseas sales ratio

41%

38%

45%

46%

Overseas OP ratio

12%

0%

44%

47%

Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved

24

Global smart meter market
Types of electric meter standards

ANSI
Socket TypeNorth America, Taiwan,Philippines, etc.

IEC
Bottom Typeapprox. 80% of worldwide market

Target market for

OSAKI・EDMI
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved25

ESG Measures

Environment

Environment-conscious operations

CO2 reduction
Measures

Products and services
for CO2 reduction

Provide products and services for optimalenergy management in and out of Japan
Environmentfriendly Group

Waste reduction

Environment-friendly products
Reduce waste, increase recycling
Reduce chemical material waste

GovernanceManagement

Supervision

SocialSocially responsible operations

Technology

Safer and more secure society withmetering solutions technologies

Create new values by applying AI and IoTtechnologies for various services for safer andmore secure society

Diversity

Co-working in a diversified poolof people

Create new values in collaboration withpeople across all boarders of nationalities,organizations, etc.

Governance supporting
E&S

Elevate corporate value and minimize risks

Board effectiveness

Advisory committees
Executive officer system

Evaluate board effectiveness every year
continual efforts to elevate governanceSet the committees for appointment and compensation
Appoint an outside board as Chairman.
Majority are outside members
Attain fairness, objectivity and transparency
Introduction of executive officer system in June 2020
Ratio of Independent Directors: 29%Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved26

Shareholder Return Policy
Dividend Policy■Provide dividends in accordance with financial performance■In principle, providing either the higher of DOE (Dividend on Equity Ratio) of 2% orPay out ratio of 30%
FY2020(Yen)FY2016FY2017FY2018FY20191H Results/ForecastInterim/
year-end

8 / 1210 / 1010 / 1010 / 1010 / 10Annum2020202020Total dividendpaidAnnum959 Mn976 Mn978 Mn

978 MnPay out ratio

Annum

24.8%

36.6%

54.1%

81.7%

980.4%

DOE

Annum

2.5%

2.3%

2.2%

2.2%

2.2%

Dividend pershare

Policy on Share Buy-back■Placing higher capital efficiency as priority, consider the share buy-back option
while taking factors such as cash on hands, working capital, financial performanceand stock price trend, and investment opportunities into consideration
Copyright (C) 2020 OSAKI ELECTRIC CO., LTD. All Rights Reserved27

OSAKI ELECTRIC CO., LTD.
TSE 1st Section
Code: 6644

■Figures in the document are for reference and include unaudited figures.
■Forward-looking figures are based on data and information available up to the date of its announcement
and may differ significantly from actual results.
■Please refrain from copying the data, contents and other information subjected to copy right.