th6 Mid-Term Business Plan

Fiscal Years 2018 - 2020

Synergy Transformation~ Creating a Growth Engine ~6737
May 16th, 2018

Disclaimer Regarding Forward-Looking Statements
Any statements in this document, other than those of historical fact, are forward-looking statements about the future
performance of EIZO and its group companies, which are based on management’s assumptions and beliefs in light ofinformation currently available, and involve risks and uncertainties. Actual results may differ materially from these forecasts.
Note: “20F” appearing in this presentation means “fiscal year 2020”, that is fiscal year ended March 31, 2021.
Details of the Market Group
Market Group

Market / Use⚫ Financial institutions⚫ Public authorities⚫ Educational facilities⚫ Office use⚫ High-end home use⚫ Medical imaging⚫ Diagnostic applications⚫ Operating rooms⚫ Publication / Printing / Photo editing⚫ Video production⚫ Air traffic control⚫ Maritime⚫ Security & surveillance⚫ Other industrial fields

Business & Plus (B&P)

Healthcare (HC)Creative Work (CW)
Vertical & Specific (V&S)
Amusement (AMU)

LCD-mounted pachinko and slot machines

Other (OTH)

Maintenance services and commissioned development ofsoftware1© 2018 EIZO Corporation. All Rights Reserved.

1. Review: 5th Mid-Term Plan
(Fiscal Years 2015 - 2017)
2. Direction: 6th Mid-Term Plan
(Fiscal Years 2018 - 2020)
3. Business Strategy by Key Markets
4. Return to Shareholders
2© 2018 EIZO Corporation. All Rights Reserved.

1. Review: 5th Mid-Term Plan
(Fiscal Years 2015 - 2017)
2. Direction: 6th Mid-Term Plan
(Fiscal Years 2018 - 2020)
3. Business Strategy by Key Markets
4. Return to Shareholders
3© 2018 EIZO Corporation. All Rights Reserved.

Review: 5th Mid-Term Plan
Achieved financial goals
17F Actual
Net Sales
Operating Income
Operating Margin

JPY 84.0 Bil. (+1.0 Bil.)
JPY 8.5 Bil. (+0.2 Bil.)
10.2% (+0.2 pt )(vs plan)4© 2018 EIZO Corporation. All Rights Reserved.

Review: 5th Mid-Term Plan

Targets “10/15/150”

5© 2018 EIZO Corporation. All Rights Reserved.

Review: 5th Mid-Term PlanHC/CW/V&S: Expanded business successfully◼ HC◼ Strengthened business lines driven by M&A and resulting
synergy
2015 Nov.
2016 Jul.

HC system integration businessEndoscopy monitor business◼ Business growth in Priority and Strategic Markets◼ CW◼ Expanded sales in the M&E field worldwide starting fromHollywood
6© 2018 EIZO Corporation. All Rights Reserved.

Review: 5th Mid-Term PlanHC/CW/V&S: Expanded business successfully◼ V&S◼ Increased business in ATC, Maritime, Security &Surveillance, but did not achieve sales targets

AMU: Maintained No.1 position◼ Reinforced partnerships with agile R&D andmanufacturing reacting to the market◼ R&D reorganization◼ Strengthened manufacturing through sourcing capability
and production flexibility
7© 2018 EIZO Corporation. All Rights Reserved.

Review: 5th Mid-Term PlanProfitable operation◼ Increased high-value product portfolio
HC/CW/V&S sales distribution ratio 17F 52% (14F 45%, +7pt)◼ Achieved higher productivity with a new factory andproduction lines◼ Improved labor productivity driven by “Work-StyleReform”

8© 2018 EIZO Corporation. All Rights Reserved.

Review: 5th Mid-Term Plan(JPY Billion)

B&PHC

CW

V&S

AMU

OTH

Operating Margin

120.0

12.0%

10.2%
9.0%

100.0

80.0

60.0

40.0

20.0

72.5

74.8

6.8%

78.2

10.0%
10.0%

84.0

83.0

7.2
15.2
7.8
5.7

5.0
12.0

8.0%

15.0
7.3

6.0%

4.9
15.2
6.86.3

4.5
18.4

20.7

23.4

26.0

15.5

17.9

16.8

18.1

18.5

14F

15F

16F

17F

17F Plan

8.8
15.1
6.6
5.5

6.2%

6.9
5.4

4.0%

29.7

25.2
2.0%

0.0

0.0%

9
© 2018 EIZO Corporation. All Rights Reserved.

1. Review: 5th Mid-Term Plan
(Fiscal Years 2015 - 2017)
2. Direction: 6th Mid-Term Plan
(Fiscal Years 2018 - 2020)
3. Business Strategy by Key Markets
4. Return to Shareholders
10© 2018 EIZO Corporation. All Rights Reserved.

- 17F Business Model

As a Visual Technology Company with display technologies at our core,
we expanded our business domain by developing world-leading, highquality, reliable products and offering monitor solutions.
11© 2018 EIZO Corporation. All Rights Reserved.

18F - 20F Transformed Business Model

We will further expand our Healthcare, Creative Work, and Vertical & Specificbusiness units and create new opportunities in untapped markets withcomprehensive solutions that encompass the “Capturing”, “Recording/Distributing”,
12and “Displaying” of images.

© 2018 EIZO Corporation. All Rights Reserved.

Growth Engine –“Imaging Chain Innovation”

13© 2018 EIZO Corporation. All Rights Reserved.

Mid-Term Plan - Targets

14© 2018 EIZO Corporation. All Rights Reserved.

Sales and Operating Margin - Goals(JPY Billion)
120.0

B&P

10.2%
100.0

80.0

60.0

HCCW

V&S

AMU

OTH

10.8%
9.6%

91.0

84.0

84.0

7.2
15.2
7.8
5.7

3.0
11.2
9.5
7.0

3.0
11.7
12.5
7.5

29.7

34.8

37.8

40.0

Operating Margin

11.3%

12.0%

97.0

vs17F 10.0%

3.0
13.5

89%
8.0%

13.3
8.2

169%

40.5

136% 4.0%

143%

20.0

6.0%

2.0%

18.1

18.5

18.5

18.5

17F

18F Plan

19F Plan

20F Plan

0.0

102%
0.0%

15© 2018 EIZO Corporation. All Rights Reserved.

R&D
 Increase investment to accelerate “Imaging Chain Innovation”(JPY Billion)

R&D

Investment

8.0

7.2

6.6
6.0

5.9

R&D / Net Sales

1.6

1.2

7.8

12.0%

2.0

10.0%

1.0

8.0%

7.8%

7.9%
4.0

2.0

7.9%

7.0%

4.9

6.0%

5.5

5.4

5.7

4.0%

2.0%

0.0

0.0%
17F

18F Plan

1619F Plan

20F Plan© 2018 EIZO Corporation. All Rights Reserved.

CAPEX 18F: Acquire two new facilities in Germany to enhance R&D andproduction capabilities → JPY 32 Bil.
 19F - 20F: Plan additional logistics and R&D facilities in Japanfor future growth
CAPEX(JPY Billion)

Depreciation

8.0

2.5 - 6.0

2.5 - 6.0

19F Plan

20F Plan

6.0

4.0

6.4
2.0

2.0

2.6

2.5

0.0
17F

18F Plan17© 2018 EIZO Corporation. All Rights Reserved.

M&A Continue to enhance business models
M&A – Historical 2005 ~ 2018
Imation Corp. (Japan)
HC system integration
business

EXCOM AG (Switzerland) Siemens AG (Germany)
HC business
Sales and Marketing

Tech Source, Inc. (USA)ATC business

Avnet Europe Comm. VA (Europe)
Sales and Marketing

Carina System Corp. (Japan)
Image capture anddistribution in Operating
room field

Panasonic Healthcare Corp.
(Japan)Endoscopy businesseg-electronic GmbH(Germany)
ATC, V&S business18© 2018 EIZO Corporation. All Rights Reserved.

Selling, General and Administrative Expenses
 Continuous improvement on operational efficiencies driven by AI / RPA*
The rise in SG&A expenses will be kept under 3% vs 17F (excl. R&D, investment, M&A)
 Expenses for investment and sales expansion will increase to drive business*Robotic Process Automation
Personnel(JPY Billion)

30.0

R&D

Other

23.0%

22.2%21.9%

21.2

20.0%

19.3

20.2

6.8

15.0%

6.6

6.6
6.7

7.3

10.0%

20.8%
20.0

17.5
5.9

10.0

5.5

SG&A / Net Sales

6.2

25.0%

5.0%

6.2

6.5

6.9

7.2

17F

18F Plan

19F Plan

20F Plan

0.0

0.0%

19

© 2018 EIZO Corporation. All Rights Reserved.

1. Review: 5th Mid-Term Plan
(Fiscal Years 2015 - 2017)
2. Direction: 6th Mid-Term Plan
(Fiscal Years 2018 - 2020)
3. Business Strategy by Key Markets
4. Return to Shareholders
20© 2018 EIZO Corporation. All Rights Reserved.

Healthcare“Imaging Chain Innovation” expands our business domain
 Comprehensive solutions toencompass the “Capturing”,“Recording/Distributing” and“Displaying” of images© 2018 EIZO Corporation. All Rights Reserved.

Healthcare“Imaging Chain Innovation” expands our business domain
 Diagnostics◼ Further competitiveness through evolving ourdiagnostic workflow concept◼ Drive the sales in strategic markets (US,China, India, Middle East + Southeast Asia)
 Operating Room
◼ Acceleration of Endoscopy monitor business◼ Business synergy with Carina System Co.,Ltd.
22© 2018 EIZO Corporation. All Rights Reserved.

Creative Work
Establish market dominance by leading in the HDR era
 Solutions to improve work efficiency throughout
the HDR* content production workflow
 Seamless color management

 To enable all users to achieve professional-level
creation*HDR: High Dynamic Range

23© 2018 EIZO Corporation. All Rights Reserved.

V&S - Overall
Level up! Advancing technology, supply and support
 Further utilize EIZO’s comprehensive R&D
power including optical bonding, AR film, touch
panel, etc.

 Advanced environmental resistance
performance◼ MIL-STD Speedy customization through “Agile” R&D PLM* corresponding to long-term project
development*PLM: Product Life-cycle Management24© 2018 EIZO Corporation. All Rights Reserved.

V&S - ATCImaging chain supporting the efficient monitoring of air traffic End-to-end visual display solutions
and content management PLM, expert support and solution
development Capture No.1 market position25© 2018 EIZO Corporation. All Rights Reserved.

V&S - Maritime
Innovative solutions for onboard IT systems
 ECDIS monitor and beyond◼ “Industry's first” large-scale chart table LCD
monitor with touch panel for maritime routeplanning and navigation◼ Implementing EIZO technology into“Embedded” systems to complete uniquemaritime surveillance solutions

High Sensitivity Camera© 2018 EIZO Corporation. All Rights Reserved.

V&S - Security & Surveillance (1/3)
Target multiple security & surveillance environments
 Expansion of IP decoding monitor line-up◼ 4K support, size variation◼ Video Management System (VMS) Support

 Cross-selling with EIZO’s wide product line-up27© 2018 EIZO Corporation. All Rights Reserved.

V&S - Security & Surveillance (2/3)
Target multiple security & surveillance environments
 Strengthen our business model with
EIZO’s original cameraCamera Image data encoding/decoding, distribution
and analysis◼ FHD multi-screen simultaneous display◼ H.265*◼ VMS support◼ Utilizing AI technology*H.265： A video compression standard that enables efficient transmission with
4K and 8K video at approximately twice the compression rate of H.264

28© 2018 EIZO Corporation. All Rights Reserved.

V&S - Security & Surveillance (3/3)
Target multiple security & surveillance environments
 Optimal image display in multiple installations◼ High brightness◼ De-fog function◼ Housing options◼ Optical bonding29© 2018 EIZO Corporation. All Rights Reserved.

Amusement
Stay ahead of market changes to maintain No.1 position
 Define new ways of entertainment abidingto evolving regulations
 Realize further development efficiency byutilizing EIZO original tools
 Further strengthen cooperation withpartners
 Flexible production and supply adapted toneeds©SANYO BUSSAN CO.,LTD.

Further competitiveness to show EIZO’s presence30© 2018 EIZO Corporation. All Rights Reserved.

1. Review: 5th Mid-Term Plan
(Fiscal Years 2015 - 2017)
2. Direction: 6th Mid-Term Plan
(Fiscal Years 2018 - 2020)
3. Business Strategy by Key Markets
4. Return to Shareholders
31© 2018 EIZO Corporation. All Rights Reserved.

Return to Shareholders
Basic policy on profit distribution to shareholders- Returning profit to shareholders is a key management concern for EIZO Corporation, and we have followed a basic policy ofstable dividend payment in line with corporate growth. We return profit to shareholders on the basis of an overall considerationof securing retained profit for capital investments and R&D expenditures required for business expansion, financial status andfuture performance.

(JPY / Share)- Our target shareholder return ratio is 40% to 50% of net income.

Interim Dividend

10090100

Year-end Dividend

9080807080707070556050

10030303030
204040404050
2550
2550
2550
2555504560
40353030

2515
7.5
7.5

20
101502F

03F

04F

253005F

06F

4007F

4008F

252525252530

354009F

10F

11F

12F

13F

14F

15F

16F

45

50

17F

18F Plan

Dividend Payout
Ratio

11.3%

9.5%

14.4%

17.5%

20.6%

41.0%

229.7%

22.6%

31.5%

67.5%

66.7%

21.6%

38.5%

35.5%

30.1%

26.9%

33.8%

Shareholder ReturnRatio

11.3%

9.5%

14.4%

17.5%

20.6%

41.0%

375.2%

22.6%

31.5%

168.0%

66.7%

21.6%

38.5%

35.5%

30.1%

26.9%

33.8%

32

- Dividend Payout Ratio (Consolidated base)- Share buybacks 0.9 billion in 08F and 1.6 billion in 11F© 2018 EIZO Corporation. All Rights Reserved.

http://www.eizoglobal.com

33© 2018 EIZO Corporation. All Rights Reserved.