Financial Results Briefing
Fiscal 2016 (Ended May 31, 2017)

July 13, 2017

Toyo Denki Seizo K.K.

Program- NEXT100

 Briefing on Financial Results: 25 minutes
1. Overview of Financial Results for Fiscal 2016
2. Consolidated Financial Forecast for Fiscal 2017
3. Current Status of the Medium-term Management
Plan: “NEXT 100 : Beyond 100 years, Ver. 2”

 Q&A: 30 minutes

1. Overview of Financial Results forFiscal 2016
(June 1, 2016 – May 31, 2017)

1-1. Overview of Consolidated Financial Results- NEXT100Both sales and profits were largely in line with previously announced forecasts.
(100 million yen)

FY2015FY2016

YoY change(%)

Publishedfigures

Net sales

397.4

406.6

+9.2+2.3%

410.0

Operatingincome (%)

16.3

15.7-0.6-4.1%

16.0(4.1%)(3.9%)(-0.2%)—

Ordinary income

14.9

16.6+1.7+11.5%

17.0

Net income

8.8

11.7+2.8+32.0%

11.0[Net income per share (yen)]

92.33

123.87+31.54

—

ROE

3.7%

4.9%

+1.2%

—

Orders received

398.9

433.5

+34.6

+8.7%

Ratio of overseas
sales to net sales

31.8%

31.1%-0.7%—420.0• Net sales and orders received: Record highs since 2000.
• Operating income: Unchanged year on year.
• Net income: Achieved more than 30% increase YoY.
3

<Reference>
Trends of Consolidated Orders Received and Net Sales
100 million yen- NEXT100
Orders received: 433.5

Orders received

Net sales

Net sales: 406.6

450

400

350

300

250

200

01/5

06/5

11/5

16/5 17/54

1-2. Factors Contributing to YoY Changes in Operating
Income- NEXT100

Non-consolidated operating income decreased YoY due to declines in gross margin andplant profitability, but operating income at subsidiaries increased YoY.
<Consolidated><Non-consolidated>
Increase in profitability+¥130 million
Increase inprofitability+¥190 million
Changes in grossmargin-¥140 million
Changes in plant
profitability-¥150 million<FY2015>¥1,630 million

Changes inoverhead expenses-¥120 million

Consolidation
adjustment+¥30 million<FY2016>¥1,570 million
YoY change-¥60 million
5- NEXT100

1-3. Non-operating Profit and Loss
Non-operating income+¥90 million<Breakdown>• Dividend income+¥220 million• Interest expenses-¥120 million• Equity in gain ofequity-method
investments+¥60 million• Other+¥20 million

Income tax, other• Loss on foreign
currencyexchange-¥10 million• Commission,etc. for newloans-¥80 million¥1,570 million¥1,660 million¥1,170 million

Operating income

Ordinary income

Net income

Note: Currency exchange rates• End of May 2016: ¥110.94/USD 1.00
• End of May 2017: ¥110.96/USD 1.00

6

1-4. Segment Performance: Transportation Systems- NEXT100

Net sales, segment income, and orders received increased YoY as a result ofcapturing strong domestic upgrade demand.
 Net Sales and Segment Income

300

268.6267.5

 Orders Received and Order Backlog

281.9

50 350Net sales

250

40Segment
income200150

31.1

29.6

30.7

(100 million yen)

250

30

293.6

300 Orders

270.9

received247.5

Orderbacklog

246.1

245.5

FY 2014

FY 2015

258.3

200

20 1501001001050

5000
FY 2014

FY 2015

FY 2016

0FY 2016• Chinese high-speed railways are in a period of transition to standard-gauge trains.
• Orders received for domestic private railway projects increased significantly.
• Strong orders at subsidiaries (door operating equipment for buses in Japan) also
contributed to the growth of segment income.

7<Reference>
Trends of Orders Received for High-speed Railways in China- NEXT100

100 million yen

6050403020
10006.5 07.5 08.5 09.5 10.5 11.5 12.5 13.5 14.5 15.5 16.5 17.5

Period of transition tostandard-gauge trains81-5. Segment Performance: Industrial Systems- NEXT100

Segment income declined significantly due to the effects of adapting to designchanges in testing equipment (in 1Q).
 Net Sales and Segment Income

 Orders Received and Order Backlog

14 140140116.1

120 Net

120.2
110.7

12 120(100 million yen)

133.1
Ordersreceived

114.2

121.9

sales

10010.1

10 100Segment
income

880

660

40440

2022000080

8.4

7.4

60

FY 2014

FY 2015

FY 2016

Order backlog

66.3

FY 201471.5
60.2

FY 2015

FY 2016• Design man-hours increased sharply due to the development of multi-function
testing equipment in 1Q.
• Orders received recovered for processing machines and expanded foroverseas projects (power generators).

9- NEXT100

1-6. Segment Performance: Information Equipment
Systems

Large-scale projects for station operating equipment contributed to sales increase
and sharp segment income growth.
 Net Sales and Segment Income

 Orders Received and Order Backlog

13.8

1511.2Net
10 sales9.5Segment
income

5

3.00

0.7

0.9

FY 2014

FY 201510 20
81661248240
FY 2016(100 millionyen)

17.8

13.6
9.8

Ordersreceived

9.1

Orderbacklog

5.1
0.90
FY 2014• New types of complex ticket machine
contributed significantly to earnings.
 Also received new order in FY2017.

FY 2015

FY 2016

101-7. Consolidated Financial Position- NEXT100Measures for restructuring the production system made progress.
(100 million yen)
20May 31, 2016 May 31, 2017
152015年 6月末

Total assets
Current assets

YoY change502

549+47255

258+3

Main factors contributing to YoYchange

Property, plant and equipm ent: +33 (New Shiga RyuoWorks )Softw are: +5 (New m ission-critical system )Fixed assets

247

291+44

Total liabilities

265

303+3883

117+34 Related to the new Shiga Ryuo Works

236

246

+10 holding gain on available-for-sale securities: +447.1%

44.8%

Of which, interestbearing debt

Net assets
Equity ratio

Retained earnings: +9, Treasury stocks: -3, Unrealized

-2.3%

11

2. Consolidated Financial Forecast forFiscal 2017

2-1. Consolidated Financial Forecast for Fiscal 2017

- NEXT100

Net sales and orders received are forecast at ¥43.0 billion and ¥46.0 billion,respectively.
(100 million yen)

FY2016 (Results)

FY2017 (Forecast)

YoY change

ＮＥＸＴ100–Ｖｅｒ22Q

Full year

2Q

Full year

Full year

FY2017 (Full year)

181.4406.6

195.0

430.0

+23.4

460.0

Operating income
(%)

1.7

15.7

2.0

17.0

+1.3

24.0

Ordinary income

3.3

16.6

3.0

19.0

+2.4

25.0

Net income

2.3

11.7

3.0

15.0

+3.3

17.0

+34.37

Net sales(3.9%)(4.0%)[Net income per share (yen)]

123.87158.24

Dividend per share

30.0

30.0

Orders received
Year-end order backlog

209.2

433.5

210.0

460.0

(5.2%)

+26.5

338.9

13

- NEXT100

2-2. Segment Outlook(100 million yen)Transportation
Systems

YoY Change

Information
Equipment
Systems

295.0

115.0

20.0

Segment income

32.0

9.0

3.0

Orders received

310.0130.0

20.0

Net sales+13.1+4.3+6.2

Segment income+1.2+1.6

0.0

Orders received+16.4+8.1+2.2

Net sales

FY2017(Full yearforecast)

IndustrialSystems

14

3. Current Status of the Medium-termManagement Plan:“NEXT 100 :Beyond 100 years, Ver. 2”

- NEXT100

3-1. Strengthening International Competitiveness(Transportation Systems)
Growth in China will drive market expansion. The ASEAN and India market isprojected to expand gradually.

 Trends of vehicle stock globally (estimates)
Other, 38
India, 10
Other, 30
ASEAN, 20

India, 4India, 2Europe,52

Other, 30
ASEAN, 4

ASEAN, 2Europe, 52

USA, 26
USA, 22

China, 2China, 40

USA, 20

China, 100Japan, 50

Japan, 50

Europe,56

Japan,48

1998
156,000 vehicles

2016
202,000 vehicles

2040
300,000 vehicles

16

3-1. Strengthening International Competitiveness- NEXT100(Transportation Systems)
Make efforts to expand the subway business in China focusing on Beijing andChengdu.
Vehicle stock by city (Present estimate; dotted line indicates forecast)BeijingShanghai
Guangzhou
ChengduNanjing
ChongqingHangzhou
Wuhan

Tianjin
XianBeijing Jingche Shuangyang
Traction System Co., Ltd.

Ningbo(Converting into equity methodaffiliate)

ShenzhenCaptured demand for providing
maintenance services for electricalequipment of subway vehicles in Beijing.

Average ofother 26 cities

01,000

2,000

3,000

4,000

5,000

6,000

Captured growing demand for theproduction of pantographs inChengdu.

7,000

8,000

9,000
Vehicles173-1. Strengthening International Competitiveness- NEXT100(Transportation Systems)
Captured business opportunities by adapting to changes in the Chinese subway
market.
Beijing Jingche Shuangyang Traction System began providing maintenance services for electricalequipment of subway vehicles on a full-scale basis.
Also eyeing the possibility of business expansion by switching to local production of pantographs.

Trends of Net Sales

Million yen
7,000

Xiangtan Electric Manufacturing
Changzhou Ruiyang Transmission TechnologyBeijing Jingche Shuangyang Traction System

6,000
5,000
4,000
3,000
2,000
1,000
0
'09.5

'10.5

'11.5

'12.5

'13.5

'14.5

'15.5

'16.5

'17.5

'18.5

'19.5

(Forecast) (Forecast)18

3-1. Strengthening International Competitiveness- NEXT100(Transportation Systems)
Outlook for India and ASEAN region … The market is projected to grow gradually.

India

ASEAN

Population

Approx. 1.3 billion

Approx. 0.6 billion

Cities70 millionpopulation cities
and 80 cities with apopulation of half amillion25 cities with apopulation of one
millionMarkettrendsAbout 15 urban
railways
High-speed railway
project on the west
coast of India

About 20 urban
railways
High-speed railway
projects in Indonesia
and Thailand

Examine approaches to India andASEAN region by looking into market
trends and player’s moves, andreviewing the Company’s own
resources.

193-1. Strengthening International Competitiveness- NEXT100(Industrial Systems)
Adapted to changes in order-taking structures for Asia. Making efforts to further expand
orders by centralizing business locations and functions in Shiga Ryuo Works.
Million yen

Trends of orders in Asia
Testing

2,500

試験機
equipment

Electrical電機
equipment

Power-supply

電源
equipment

Promoted capturing demandfor power generators(biomass engine generators,etc.) in East Asia.

2,000
1,500

Developed new types ofinverter, which are in strong
demand in Asia.

1,000500

Strengthened approaches toTier 1 and 2 suppliers, mainlyin Korea and China.

02015.52016.5

2017.520

3-2. Restructuring Production System- NEXT100

Started construction of Shiga Ryuo Works, with completion scheduled forJanuary 2018 and full-scale operation for June 2018.
Concept of Shiga Ryuo Works
1) Overall concept• Enhance development capabilities and expand
business sectors.
 Expand net sales• Centralize business locations and restructure
production lines Achieve a 30% increase in production
efficiency.
2) Concept of enhancing product appeal• Motors:
Expand capacity/range
Low-inertia high-speed rotation• Inverters: Develop new types of inverter forAsia• Power generators:
Improve added value including theCompany’s own testing equipment.
• Testing equipment:
Strengthen development
capabilities and expand businesssectors.

Computer renderingof completed factory

5月立柱式

Factory building

R&Dbuilding

6月末 建屋21

3-2. Restructuring Production System- NEXT100

The new plant reached the mid-stage of construction process. New mission-critical system startedoperation.
Restructuring of production system will be completed upon increasing the production capacity fortransportation systems by restructuring the Yokohama Works.
2017
3 4Shiga RyuoWorks5678

Start ofconstruction

 Completion ofPartial-capacity
construction operation

Restructuring ofYokohamaWorks

New missioncritical system

2018
9 10 11 12 1 2 3 4 5 6 7100th anniversary of foundation

Start ofrestructuringFull-capacity
operation

Start of fullfledged
restructuringStart of operation

Current status of construction of Shiga
Ryuo Works at the end of June22

3-3. Establishing New Businesses and Technologies- NEXT100(Transportation Systems)
Added inverters based on SiC devices to the product lineup in response to needs
for space and energy savings.
Our first SiC device was adopted for upgrading the main circuit of Hiroshima Electric
Railway’s 3900 series.
Delivered VVVF inverter system and contributed to space, weight, and energysavings.

23

3-3. Establishing New Businesses and Technologies- NEXT100(Industrial Systems)
Developed multifunctional testing equipment. Our new motor, which rotates at20,000 RPM, entered the final stage of development.

•The new motor, which rotates at 20,000 RPM and supports EV/HEV
testing, reached the final stage of development.

•

Developed multifunctional testing equipment as measures to expand sales
to Tier 1 and Tier 2 suppliers.
This is the first torque converter with built-in clutch packs. (According toresearch conducted by the Company)

Newly developed testing equipment forautomobiles with torque converter with builtin clutch packs
24

3-3. Establishing New Businesses and Technologies - NEXT100(Industrial Systems)

Promoting proposals for effectively using natural energy
Working to effectively use natural energy sources such as small hydro, wind, biomass, wave
power, tidal power, and sunlight by leveraging the Company’s long-accumulated know-how inpermanent magnet synchronous generators and power system connections.

Power conditioner

Pumped small hydroelectric power
generator in Nikaho City, Akita
Prefecture

EDG permanent magnet
synchronous generator(supports 10-750 kW)

Yonekurayama Solar Power Plant inKofu City, Yamanashi Prefecture25

3-3. Establishing New Businesses and Technologies - NEXT100(Information Equipment Systems)
Received orders from Transportation Bureau of City of Yokohama in July 2016 andfrom Bureau of Transportation Tokyo Metropolitan Government in June 2017.
This complex ticketing system meets security certification requirements andupgrade demand of other railway business operators. We plan to promote sales ofthis system.

Supports various types of ticket such as IC
cards, magnetic PET tickets, magnetic
tickets that come in rolls, and Edmonsonstyle tickets.
• Achieves about a 20% reduction instandby power consumption compared
to conventional systems.
26

3-3. Establishing New Businesses and Technologies- NEXT100

Succeeded in achieving the world’s first dynamic wireless power transfer from a
coil array on the ground to a moving vehicle.
Jointly developed the second system (Unit No. 2) that enables power supply to avehicle from the road surface (announced by University of Tokyo on April 5, 2017).
Bi-directional wirelesspower generator

DriveCar-mountedcoil

WM coil

Recharge

Lithium-ion
capacitor

Discharge

MotorRegeneration

Carmounted
battery

Coil for dynamic
wireless power supply
Dynamic wirelesspower supply

Systempowersupply

Ground coilRoad

Wireless in-wheel motor (Unit No.2)

Configuration of second wireless in-wheel motorsystem(Academic-industrial collaboration with University of Tokyo and NSK Ltd.)27

3-4. Initiatives to Address Other Issues- NEXT100• Corporate Governance• Developing Human Resources• Handing down technologies and skills

28

Thank you for your interest.
https://www.toyodenki.co.jp<Inquiries>
PR, IR, and CSR Department, Management Planning Division
Toyo Denki Seizo K.K.
Phone: 03-5202-8122
Email：contact@toyodenki.co.jp

Disclaimer- NEXT100• 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 on
a 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.