Financial Results Briefing
First Half of Fiscal 2016
(Ended November 30, 2016)

January 13, 2017
Toyo Denki Seizo K.K.

Program- NEXT100

 Briefing on Financial Results: 25 minutes
1. Overview of Financial Results for
the First Half of Fiscal 2016
2. Consolidated Financial Forecast for Fiscal 2016
3. Current Status of the Medium-Term
Management Plan Q&A: 30 minutes

1. Overview of Financial Results for
the First Half of Fiscal 2016
(June 1–November 30, 2016)

- NEXT100

1-1. Overview of Consolidated Financial Results

Lower revenues and operating income due to the carryover effects of Q1, but ordinary income andother items will be close to the forecast.
Net Sales andOperating Income
Ordinary IncomeOrders ReceivedLower than the forecast, due to the sluggish performance of the Industrial Systems segment at
the start of the fiscal year.
Generally in line with the forecast, due to foreign exchange rates turning in our favor from theforecast.
Some orders for international projects were moved back, but overall orders increased year on(Billions of yen)year.
1H
FY2014

1H
FY20151H
FY2016

YoYChange(%)

Difference(%)

Net sales19.07

18.75

18.14

-0.61

-3.2%

-1.86

-9.2%

Operating income
(%)

0.58
(3.1%)

0.61(3.3%)

0.18
1.0%-0.43 -70.7%-2.3%－-0.32-64.2%

Ordinary income

0.87

0.71

0.33

-0.38

-52.8%-0.07-16.8%Net income
Net income per share
(yen)

0.52

0.47

0.24

-0.23

-49.5%-0.03-11.7%

53.45

49.10

25.13

-23.97－-0.29ー

Orders received

19.60

19.13

20.92

+1.79

+9.4%

-1.68

-7.4%

Ratio of overseas
sales to net sales

42.6%

33.1%

27.4%

-5.7%

－－3- NEXT100

1-1. Reference: Overview of Consolidated Quarterly Earnings
Earnings picked up in Q2.

(Billions of yen)

Fiscal 2016
1st Quarter

2nd Quarter

1st Half(3 months ended
Aug. 31, 2016)(3 months ended
Nov. 30, 2016)(6 months ended
Nov. 30, 2016)

Net sales

7.77

10.37

18.14

Operating income

-0.53

0.71

0.18

-0.13

0.29

0.16

Ordinary income

-0.66

0.99

0.33

Net income

-0.45

0.69

0.24

Orders received

10.84

10.08

20.92

Ratio of overseas sales to net

27.7%

27.1%

27.4%

Non-operating income/loss

4

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

Consolidated

Changes in gross margin-¥10 million
Increase/decreasein profitability-¥70 million

Changes inplant profitability-¥200 million

Changes inoverhead expenses-¥140 million
Increase/decreasein profitability+¥30 million

YoY change-¥420 million

Eliminations
and other-¥40 million

1H/FY2015

1H/FY2016¥610 million¥180 million51-3. Non-Operating Income and Expenses
Breakdown
Net interest and dividends+¥110 million
Gain on foreign
currency exchange+¥10 million
Non-operating income
Equity in gain of equity+¥150 million
method investments+¥20 million
Other+¥10 million- NEXT100

Income tax, other-¥100 million¥180
million¥330
million¥230
millionOperatingincomeOrdinary
incomeNet
incomeNote: Currency exchange rates
End of May 2016:¥110.94/ US$1.00
End of August 2016:¥103.18/US$1.00
End of November 2016:¥112.42/ US$1.00

6

- NEXT100

1-4. Segment Performance: Transportation Systems

Some orders for international projects were postponed, but orders in Japan increased. Orders
received increased overall, while net sales and segment income remained level year on year.
(Billions of yen)Orders Received and Order Backlog
Orders received (bar)Order backlog (point)

200
20300
30
25.17

24.60

25.08

100
10505

12.86

Segment income (bar)Net sales (line)

140
14

13.03

2.0
20
12.73

12.76

250
25 12012150
1512.55

Net Sales and Segment Income

13.68

0

1.6
16200
1020 100

141.4

808
150
15606
100
10404
50
5202

10
1.0

0

15.5_2Q
1H/FY2014 16.5_2Q
1H/FY2015 17.5_2Q
1H/FY2016

1.818121.2

1.35

80.8
1.33

1.31

60.6

40.4
20.2

001H/FY2014
15.5_2Q 1H/FY2015
16.5_2Q

1H/FY2016
17.5_2Q
7

- NEXT100

1-5. Segment Performance: Industrial Systems

Orders received remained level year on year. Net sales and segment income were down year onyear due to the effects of Q1.
(Billions of yen)Orders Received and Order Backlog
Orders received (bar)Order backlog (point)

10010
6.82808

Net Sales and Segment Income

7.04

880 707770 60
65.72660
550606

440

404
6.45

330
5.86

5.92

202

Segment income (bar)Net sales (line)

220

5.66

10
1.0
5.68
4.915054043030.412021110 10001H/FY2014
15.5_2Q 1H/FY2015
16.5_2Q

1H/FY2016
17.5_2Q

50.50.50

0.15001H/FY2014 1H/FY2015
15.5_2Q
16.5_2Q

1H/FY2016
17.5_2Q

8

- NEXT100

1-6. Segment Performance: Information Equipment Systems

Orders received increased significantly due to capturing major projects. Net sales and segment
income also increased.
(Billions of yen)Orders Received and Order Backlog

Net Sales and Segment Income

Order backlog (point)

Orders received (bar)

151.5

1.33

15
1.550.540.4101.0101.0

Segment income (bar)Net sales (line)

1.00.1
0.47

0.36

0.32

30.3

0.50.05

20.20.05

1.31

0.47
0.550.550.1
10.01

00.0-0.02
0.58

0.40000.170 ▲-0.1
101H/FY2014
15.5_2Q 1H/FY2015
16.5_2Q

15.5_2Q 1H/FY2015
16.5_2Q 1H/FY2016
17.5_2Q1H/FY2014
-0.05
-0.5

1H/FY2016
17.5_2Q
9

- NEXT100

1-7. Consolidated Financial Position(Billions of yen)

FY2015
Nov. 30, 2015

May 31, 2016

FY2016
Nov. 30, 2016

54.350.2

51.2

+1.0

Current assets

27.1

25.5

26.2

+0.7

Fixed assets

27.2

24.7

24.9

+0.2

Total liabilities

29.5

26.5

27.9

+1.4

10.8

8.3

9.6

+1.3

24.8

23.7

23.3

-0.4

45.7%

47.1%

45.5%

-1.6%

Total assets

Of which, interest-bearing debt
Net assets
Equity ratio

YoY ChangeAssets• Current assets: Increase in inventory (+¥0.5 billion)
Net Assets• Increase in retained earnings (+¥0.05 billion) and treasury stocks (-¥0.3 billion), others

102. Consolidated Financial Forecast
for Fiscal 2016

- NEXT1002-1. Consolidated Financial Forecast for Fiscal 2016

The forecast reflects conditions until now. Net sales, ordinary income, and net income are projected
to increase year on year.
(Billions of yen)

FY2015ResultFY2016
Forecast

YoY
ChangeNet sales

39.74

41.00

+1.26

Operating income
(%)

1.63
(4.1%)

1.60(3.9%)-0.03

Ordinary income

1.49

1.70

+0.21

Net income

0.88
93.52

1.10
115.62+0.22+22.1030

30±039.89

42.00

+2.11

Net income per share (yen)Difidend forecast (yen per share)
Orders received12

- NEXT100

2-2. Segment Outlook(Billions of yen)

FY2016(Full YearForecast)

Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Adjustment

Net sales

27.50

12.00

1.50

0.00

41.00

Segment income /Operating income

2.89

0.95

0.25

-2.49

1.60

Orders received

28.00

12.50

1.50

0.00

42.00

Total13

3. Current Status of the MediumTerm Management Plan

3-1. Medium-Term Management Plan
“Next 100: Beyond 100 years, Ver. 2”- NEXT100

Aiming to strengthen the management foundation as a 50 billion yen company
under the slogan: “Beyond the 100-Year Mark.” Period covered: FY2013–FY2017 (June 2014–May 2018)*“Ver. 2” period: FY2015-FY2017 (June 2016–May 2018)
 Fundamental Policy Performance Targets
NEXT100
FY2014FY2015FY2016FY2017(Forecast)(Final year)#Net sales

39.61

39.74

41.00

46.00

Operating income(Operating incomemargin)

1.59

1.63

1.60

2.40

(4.0%)(4.1%)(3.9%)(5.2%)

Ordinary income

2.05

1.49

1.70

2.50

Net income

1.10

0.88

1.10

1.70

Overseas net sales(Ratio of overseas
sales to net sales)

15.06

12.65

-23.00(38.0%)(32.0%)-(50%)

15

3-2-1. Strengthening International Competitiveness- NEXT100(Transportation Systems)
Made steady progress adapting to changing business conditions in China.

1. Development of driving gear units for
European-specification trains used in Chinese
high speed railways

3. Order for pantographs for extension ofBeijing Subway Line 6.
4. Order for pantographs for Chengdu LRV

2. Development of driving gear units forstandard China high-speed trains.

At InnoTrans 2016 in Berlin (world’s largest trade fair for railtechnology): Positive interest in driving gear units andpantographs for high-speed rail.

Pantographs for Beijing Subway16

3-2-2. Strengthening International Competitiveness- NEXT100(Transportation Systems)
Made steady progress adapting to changing business conditions in China.
Began providing electrical equipment and maintenance services in China.
Changzhou Ruiyang Transmission Technology and Beijing Jingche Shuangyang Traction System
made progress in developing their maintenance business.
10,000(maintenance of electrical equipment for Beijing subway)

9,000

Net Sales (millions of yen)

Changzhou Ruiyang Transmission Technology Co., Ltd.
朗鋭東洋
(manufacturing of gear drive units for subways in China)

8,000

7,000
6,000

Beijing Jingche Shuangyang Traction System Co., Ltd.
京車双洋

湘洋電気Hunan Xiangyang Electric Co., Ltd. (assembly of invertersand other equipment for subways in China)

東洋USA
Toyo Denki USA, Inc. (assembly of inverters and otherequipment for US market)

5,000
4,000
3,000

Changzhou Ruiyang Transmission
Technology: Increased theproduction capacity for gear drive
units by 50%.

2,000
1,000

017(Forecasts)

3-3-1. Building a Stable Business Earnings Structure- NEXT100(Transportation Systems)
Capitalized on increasing demand for new and upgrade equipment in Japan.

Delivered electrical equipment for the Train Suite Shiki-Shima luxury sightseeing
train operated by East Japan Railway Company (JR-East) to launch in May 2017.

18

3-3-2. Building a Stable Business Earnings Structure- NEXT100(Transportation Systems)
Strong demand for door operating equipment and inverters.

Strong demand for door operating equipment, driven by in-bound tourism growth in Japan.
Developed new electrical door operating equipment for rail cars and initiated testing in actual cars.

Door operating equipment for buses

Electrical door operating equipment forrail cars (mock-up for exhibiting purposes)
19

- NEXT100

3-3-3. Building a Stable Business Earnings Structure(Transportation Systems)
Strengthened products and solutions to reduce energy.
E3 Solution System (energy storage system) adopted for Tama Monorail.
Supplies power during normal operation and emergency power when power is cut off.

NormalOperation

Stores regenerative energy to supply power
when needed
Lithium-ion battery

Substation

Effectively use
regenerative energy(save energy)
ChargeDischarge

Substation

Powered xxx
travelRegenerative braking

Emergency
Operation

Reduce powertransmission loss
(save energy)

Supply power for train operation
Lithium-ion battery
Cutoff ofpower supply

Cutoff ofpower supply
Substation

Powered travel

Discharge

Supply emergency
power

Substation

Powered travel203-3-4. Building a Stable Business Earnings Structure- NEXT100(Industrial Systems)
Enhancements to testing systems for automobiles and processing equipment systems.
1. Testing systems for automobiles:
Gained more automaker customers
and expanded business to encompass
automotive component suppliers.

2. Printing machines:
3. Processing equipment systems:
Captured demand driven by 2020 Olympics.
Increased the capacities for electricalequipment, to strengthen the business ininternational markets. Development expected
to be completed in fiscal 2016.

21

3-3-5. Building a Stable Business Earnings Structure- NEXT100(Industrial Systems)
Strengthened efforts to expand the scope of the business, including meeting demand for distributedpower systems.

Leveraged extensive expertise in permanent magnet type synchronous generators and systeminterconnection for renewable energy applications (small-scale hydroelectricity, wind power,biomass energy, wave power, and tidal power)

Power conditioner

Kachugawa Small
Hydroelectric Power Plant(Tsuru City, Yamanashi
Prefecture)

EDG permanent magnet
type synchronous generator(10–750 kW capacity)
Kuji Wave Power Plant (Kuji City, Iwate Prefecture)22

3-3-6. Building a Stable Business Earnings Structure- NEXT100(Information Equipment Systems)
Received order for 50 commuter pass vending machines for the Transportation Bureau of the Cityof Yokohama, and began shipping the machines.

Projected to increase sales of composite ticket vending machines with enhanced security
authentication that are also suitable for upgrade demand from other rail operators.

• Compatible with a variety of tickets such as IC
cards, magnetic PET tickets, large magnetic
tickets cut from rolled paper, and Edmondson
old style tickets.
• About 20% less power consumed when instandby mode compared to conventional
units.
23- NEXT100

3-4. Establishing New Businesses

Joint development with Toyota Industries Corporation on data collection and analysis system forfuel cell forklifts.
Developed on-board data logger for remote data management system offered by Toyo Denki.
Collects operating data and uses cellular networks to store data on a cloud server for analysis.
Demonstration test: Link to data system (forenergy management and to verify CO2 reduction)

Cloud servers

Demonstration test data servers

Hydrogen
supplier

Demonstrationsite

Tablet, smartphone, PCData logger unit

Fuel cell forklift• View analysis
results• Hydrogen level• Power generation data,power consumption data
• Movement tracking24

- NEXT100

3-5. Restructuring Production System(Transportation Systems/Industrial Systems)
Nearing start of construction on new plant to significantly rebuild production capabilities.
 Main Purpose

Transportation Systems: Achieve 30% increase in production capacity at Yokohama Works.
Increase production capacity for VVVF, SIV, and KG.
Industrial Systems:

Centralization of business locations and functions in Shiga area
(currently spread out).
Expand development capabilities and achieve 30% increase inproduction capacity.

 General Data (Subject to Change)
Location: Ryuo-cho, Gamo-gun,
Shiga Prefecture
Start of construction: March 2017
Start of operation:
In phases starting from January 2018

Land: 34,400 m2 (compared with
55,300 m2 for Yokohama Works)

Computer rendering of completed plant25

Thank you for your interest.
https://www.toyodenki.co.jp/en/index.html

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 will affectfuture business performance as of the date of publication of thismaterial. Actual financial results may differ depending on a varietyof factors.
• Forward-looking statements contained in this material are thejudgments of the Toyo Denki Group based on data available at thetime of publication of this material. Such statements anddescriptions are by no means comprehensive.