Hirata’s Strategies

Financial/Capital Strategies
Cash Conversion Cycle

Summary of Fiscal 2022 and Recognition of Environment net sales, ¥10 billion in operating profit, a 10% operating
profit ratio, and ROE of 11% for fiscal 2024. To improve
capital efficiency, we will work to secure ROIC that exceeds
the weighted average cost of capital (WACC). In fiscal 2022,
we achieved net sales of ¥78.443 billion, operating profit of¥5.92 billion, an operating profit ratio of 7.5%, and ROE of7.5%. In addition, we secured ROIC of 7.1%, exceeding costof capital (WACC) of 5.5%.
We will continue to focus on profitability indicators such as
operating profit ratio, ROE, and ROIC and allocate resources
to expand business in growth markets while solidifying ourmanagement base, leading to long-term growth.

The Group receives orders for production equipment frommanufacturers of products in a wide range of fields, suchas electric vehicles (EVs) and other Automotive-related
Businesses, semiconductors, and other automatic labor-saving equipment. Therefore, due to changes in the economic
conditions in Japan and overseas, changes in the lifecycles ofcustomer products and other factors, fluctuations in capital
investment by business partners may affect performance.
The Medium-Term Management Plan (FY2022–FY2024)
has been positioned as a three-year period in which toexpand business in growth markets while generating profit
from existing businesses and solidifying our managementbase. We have adopted numerical targets of ¥100 billion in(Days)

CCC

200

215

216

214

222

232

59

62

70

75

72

74

217

223

222

210

215

214

75

76

70
Q1

Q479

225

65

Q3

Q4Inventories

Trade payables

5756
Q1Q2

FY2022

FY2021
Trade receivables

72

Q2247

FY2023

Cash conversion cycle

Financial Strategy in Current Medium-Term Management Plan (Cash Allocation Concept) 
Basic Financial Policy 
In terms of the strengthening of our finances, we will continue working to reduce interest-bearing debt, reduce interest
costs, and hedge risks through forward exchange contracts andother measures, as we have been doing, while maintaining a
disciplined D/E ratio level based on fluctuations in performance.
The cash conversion cycle (CCC) worsened year-on-year due
to an increase in length of the trade receivable turnover period,
an increase in length of the inventory asset turnover period due
to longer delivery dates for parts, and a decrease in length of thetrade payable turnover period due to changes in payment policies.
In addition to setting and increasing advance payments forlarge projects and long-term projects, we will continue to negotiate with customers for the early collection of trade receivables,
improve procurement lead times, and reduce inventories.

A major issue for the period of the current Medium-Term
Management Plan is to strengthen profitability in growthmarkets such as EVs and semiconductors. As customers’
capital investment in EVs and semiconductors is booming, wewill strengthen process control and manage the profitabilityof projects more thoroughly than ever before in response to
an increase in production load, as well as develop a system tofurther strengthen our financial base.
Specifically, we will promote front-loading such as cooperation between departments at the inquiry and sales stages,
resource management, 3D design, and preliminary verification
utilizing an emulator. Through these measures, we will curb
the occurrence of extraordinary expenses and improve theefficiency of assets such as accounts receivable and inventories.

Progress of Medium-Term Management Plan Management Index Targets

Net sales

Operatingprofit(Operatingprofit ratio)

Distribution of Net Cash Provided by Operating Activities

Net cash provided byoperating activities

34

First-Year Result(FY2022)

Second-Year Forecast(FY2023)

Automotive-related equipment

400

302

380

: Increase in orders

Semiconductor-related equipment

400289310: Improving production efficiency is an issue

Other automatic labor-saving
equipment, etc.

200191210: Continued investment despite declining FPD
business

Total

1,000784900: Expanding production capacity is an issue

State of Progress

Automotive-related equipment20(5%)

15.5(5.1%)‐*‐*: EV profitability improvement

Semiconductor-related equipment60(15%)

34.4(11.9%)‐*‐*: Passing on the cost of high component
prices is an issue

Other automatic labor-saving
equipment, etc.

20(10%)

9.1(4.7%)‐*‐*: Profitability worsened due to specificproducts

Total

100(10%)59.2(7.5%)

54.0(6.0%)

Disciplined D/E ratio level, repayment of interest-bearing debt, and cash
increases based on trends in earnings fluctuations
Consolidated dividend payout ratio of 20% or more: Improving profit margins in each segment
is an issue

Shareholder Return Policy 
The Group considers the return of profits to shareholders to
be one of the most important management issues. While
working to strengthen our financial position, as a general
guideline, we are aiming to maintain a consolidated payout
ratio of 20% or more, while taking into consideration consolidated performance and future business development, andstriving to achieve returns in a stable and continuous manner.

In FY2022, the consolidated dividend payout ratio was21.9%, and dividends per share came to ¥90. Goingforward, we will discuss shareholder return policies while
paying close attention to various changes, such as feedback
from shareholders and investors with regard to shareholder
returns and the business environment, without beingbound by a conventional shareholder return policy.

Changes in Dividends per Share and Consolidated Dividend Payout Ratio(Yen)(%)
60150

125.0

46.1
10060

21.6 (36.0%)

57.8 (96.3%): Responding to an increase in orders received
in the automotive and semiconductor fields

Investment in biological genetic resources(mainly plant genetic resources) R&D

400.8 (2.0%)

14.5 (36.2%): Delay in equipment arrangements due tothe impact of COVID-19

IT system-related investment

104.6 (46.0%)

6.0 (60.0%): Implemented major update of core systems

0Total11027.0 (24.5%)

78.3 (71.1%): Ensuring IT system-related investment during
the fiscal year under review is an issue

Dividends per Share125.0

100.0

32.2

Investment to strengthen production/development capacity

Hirata Integrated Report 2023

Financialstrengthening

Shareholder return* Forecast for operating profit by segment for the fiscal year ending March 31, 2024 has not been disclosed ended.

Cumulativecapital
investment(% increase(decrease))

Growth investments

We will implement capital investments (enhancement of production
and development capacity, research and development of plant genetic
resources, and investments related to IT systems) and investments to realize
the measures, such as M&A, stipulated in the Medium-Term ManagementPlan, while maintaining an awareness of the ROIC–WACC spread.

(Unit: 100 million yen)

Final-Year Target ofthe Medium-TermManagement Plan
(FY2024)

Segment

While effectively investing generated operating cash flows as growth capital for capital investment and M&A, targeting existing businesses and businesses in which future expansion is expected, we will also work to strengthen our finances by repaying interest-bearing debt and increasing cash on hand.

90.0
28.4

50

15.5

16.4

15.0

12.5

12.5

15.0

2011

2012

2013

2014

17.5

16.0

19.5

4021.9

23.8

65.0

65.0

40.0

16.6

25.2

20

2020

2021

02022 (FY)

30.0
2015201620172018

2019

Payout ratio

Hirata Integrated Report 202335