CMK CORPORATION（Stock code：6958）

Medium-term management
plan 2019
May 20, 2019
CMK CORPORATION

1Contents

１．Medium and long-term strategy
２．Medium-term management plan 20192

１． Medium and long-term strategy

3

１． Medium and long-term strategy①-1Market environment and Our business area
Trends of Automotive PWB market：CAGR(‘17-25)

1,000

Market scale (Billions of yen)

900

Socialenvironment

800

•••••

Economic growth of emerging countries
Strengthening of fuel efficiency regulation
Shortage of workers and Aging society
Strong demand for comfortability
Widespread adoption of 5G
Technology innovation etc.

700

HDI
10.0％

600

Automotiveindustry

500
400

Multilayered
1.7％

300

Semiconductor

Double-sided
3.1％

02017

2018

2019

2020

2021

2022

2023

2024

Single-sided

Double-sided

Multilayered

Source: prepared by CMK reference to Fuji Chimera Research[Comprehensive Study of In-Vehicle Electronics Devices and components 2019]

HDI• High integration, Multicore• Low power• Expansion of program
capacity

Automotive
electrification・
Down-sizedunitHigh density

2025

Results Prospect Forecast Forecast Forecast Forecast Forecast Forecast Forecast

Increase of global production volume
Electric motorization (HV/PHV/EV)
ADAS (Advanced Driving Assistance System)
Autonomous driving
Connected car
High functionality

200100•••••PWB• Demand increasing andfunctionality improved• Use of HDI PWBs expanding▶ Growing demand for HDI PWBs driven by the trend of high functionality and compact sized unit4

１． Medium and long-term strategy①-2Market environment and Our business area
Business area with competitive advantage in the application of automotive products：InformationandCommunication

Single-sided Double-sided Multilayered HDI▶ Advantages in the application
requiring high quality and reliability

Value-added Products

reliability

Body
Electronics
Climate Control

Market growthRequired quality
・Powertrain
Driving controland Safety

Driving controland Safety

Powertrain◎Engine Management System◎HV/EV ECU◎Battery◎Power Control Unit
◎Electric Variable Cam Timing etc.

Body
Electronics

Climatecontrol◎Image sensor◎Millimeter- wave Radar◎LiDAR◎Driver Support System◎Brake etc.

Information andCommunication◎Head-Up Display ◎Mirror Control ◎Driver Status Monitor◎Mater panel etc. ◎Power seat etc. ◎Communication module5for automotive use etc.

１． Medium and long-term strategy①-3 Market environment and Our business area
Trends of Powertrain and Driving control and Safety sector：
High power invertor
Hybrid Control SystemPowertrain

xEV
Strengtheningof fuel efficiency
regulation

Battery monitoring

fuelefficiency
improvement

ADAS

Safety measure

Large capacity

Cooling System
Electronic Control
Idle reduction
Various sensors

DrivingcontrolandSafety

High power

Autonomousdriving

Large current
Increased devices
Change in the installation
position from dashboard toengine room and/or
directly mount to engine（installation positionsecured）

Compact sizing

Millimeter- wave Radar

CameraReal time processing

Integrated vehicle
control system

Automatic control

Brake Control
Steering Control▶Higher quality and reliability required▶High specification required ～Market expanding～Heat-resistant・Heat dissipation

Various sensors

Collaboration control

High-speed
processing
High-speed
communication
Widespread
adoption of 5G6

１． Medium and long-term strategy①-4 Market environment and Our business area
Our new target business sectors：
Automobile
Mobile phone

Production volume／
Type of equipment

Consumerelectronics

PCOA

Industrialequipment

Medicalequipment

AVInfrastructure

Aerospace

Red underlined words denote the sectors
likely to have a direct impact human lives

Product life cycle (product warranty)▶ Other business sectors, in addition to automobile sector, where our highquality and reliability with competitive advantage are required(Expand our business in a new market expected to grow by the widespread
adoption of 5G in the new business sectors）

7

１． Medium and long-term strategy②Outline of the Medium and Long-term strategy
Market environment

Advantages of CMK• PWB market is growing, mainly supported by Mobile
communications and products for automotive use• With the widespread adoption of electrification, automateddriving and 5G, further increase in demand andrequirements for quality and reliability are expected• The industrial equipment sector and Medical equipment
sector are regarded as a market likely to grow in the future,
where superior quality and reliability are required similarly tothe automotive sector• The share of products for Powertrain and Driving control
and Safety is just below 50% of the sales of automotiveproducts• The global share of HDI PWBs for automotive use isapproximately 40% (CMK’s assumption)• Product analysis capability and Quick response according
to customer‘s request based on our technology andexperience we have acquired over many years.
• Long-term supply and Quality assurance system based onstable financial base.
• Sharing of roadmaps with major automobile parts
manufactures

Select and focus on the sectors where we can makeuse of our company’s great advantages

Focusing on the key business sectors, select targets based on applications andPWB types
Achieving growth in the area of high-value-added products, mainly focusing on
the automotive product market

8１． Medium and long-term strategy③Vision and Strategy

Vision“Changing our business structure to promote customer
satisfaction and create more rewarding working environment”
Aiming at becoming a leading global company in a niche business specialized in highly reliable PWBs andproviding ‘the highest level of reliable products’ in the market, we will meet stakeholders’ expectations
and deliver the welfare and growth of our employees

2019～2021

2022～

Priority measures‘Shift to highly-added value’ ‘A Smart Factory initiative’ ‘M&A and Alliance’

Medium-term management
plan 2019

Next・Medium-term
management plan

～Laying a solid foundation for real growth in thenext medium term management plan～～Stage for real growth based on our strength of
total quality～‘30 billion yen capital investment’ ‘Company
Restructuring’ ‘Company quality improvement’

Establish the basis of our further growth,
M&A and Alliance9１． Medium and long-term strategy④Priority measures
Three key objectives to deliver our medium and long-term vision
Shift tohighly-addedvalue

A SmartFactory
initiative

Shift current orders toward products with highly-added value mainly in theautomotive sector and establish a new foundation for further growth• Review our portfolio (Productivity enhancement) to achieve the shift of orders and optimize production system• Develop and establish market sectors other than automotive PWBs to make use of our advantages• Enhance research and development which support our strategy related to products with highly-added value

Realize a smart factory by making maximum use of IoT and AI• Improve production efficiency• Streamline key processes by utilizing AI（Use of AI in visual inspection equipment）• Realize a factory where IoT foretells problems with facilities, avoiding operation shut-down

Achieve accelerating growth through M&A and Alliance

M&A andAlliance• Departing from our self-sufficient business, aim at growing globally with a sense of speed• Enhance cost competitiveness by making use of OEM• Expand customer basis by adopting the related technology (Expansion of PWB mounting business)10１． Medium and long-term strategy④Numerical Management Targets
Targeting 10% or more operating profit margin through three key objectives

 Improve our product mix
 Promote our competitive advantage
 Establish new sectors (Industrial, medical, 5G etc.)

 A smart factory initiative
 Improve production efficiency
 Enhance cost competitiveness M&A and Alliance Acquire new customers
 Expand production capacity
 Enhance cost competitiveness

Shift to highly-added value

Profitability improvement

 Shift to highly-added value

Operatingmargin（Our Target）

2021
8％

2025
Above 10％11

２．Medium-term management plan2019

12

２．Medium-term management plan 2019

①Management policy
Enhancing profitability and capital efficiency by focusing on the area ofhigh-value-added products mainly in the automotive product market
where we can make use of our advantages
86.8

90.2

94.0

100

（Billions of yen）

8.0

Sales
Operating income

4.2

3.7

4.0

FY2017FY2018FY2019FY2021(Results)(Results)(Plan)(Our target)

Operatingmargin

4.9％

4.2％

4.3％

８.０％

ROE

7.2％

3.8％

5.1％

10.0％

13

２．Medium-term management plan 2019②Priority measures
Three key objectives to deliver our medium-term management plan
30 billion
yen capital
investment

Product capacity enhancement andProductivity enhancement

Companyrestructuring

Structural reform of business processes in Sales,Manufacturing, Procurement and HR to enhance
profitability

Company
quality
improvement

Promote ESG and maintain and enhance thefinancial soundness
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２．Medium-term management plan 2019③Priority measures～ Summary of capital investment ～30 billion yen capital investment (Production facilities, System, R&D)
Total amount 30 billion yen（Three years）

Production facilities

Productcapacity
enhancement

AutomatizationSystemProductivity
enhancement
・
Maintenanceandupdate

R&D Production facilities:
About 27.0 billion yen Take orders of products with highly-added value byenhancing production capacity
 Improve product quality and guaranteed quality andreduce costs through the investment intoautomatization and productivity enhancement

 System:
About 1.5 billion yen Improve guaranteed quality by the capital investment
making use of IoT
 Invest into ordering/production management
systems and IT infrastructure to make businessprocess reforms

 R&D:
About 1.5 billion yen

 Invest into research and development to deliver theshift toward highly-added value15

２．Medium-term management plan 2019

④Priority measures ～Company restructuring～Company-wide restructuring to enhance profitability

 Sales reform： Optimally allocate marketing function

 Production reform： Reform business processes from receiving

globallyorders to production and shipment

 Procurement reform ： Enhance the global procurement system
 HR reform： Establish HR system

Improving profitability and capital efficiency througheffective structural and business reforms

16

２．Medium-term management plan 2019⑤Priority measures～Company quality improvement ～Promoting ESG
 EnvironmentCarbon-Dioxide emission reduction
Water consumption reduction
Resource recycling
Renewal with energy-saving etc.

 Society Diversity and inclusion Promotion of work-life balance etc.

 Governance Enhancement of group management
 Extend checking functions of the Boardof Directors
 Improve and increase the contents ofinformation disclosed in English etc.

 Reporting our activity in ‘CMK Report’
We have renewed the existing ‘CSR report’ so that we canreport on our various activities related to ESG continually andin an easy-to-understand way⇒We will evaluate activity themes and the progress status
every year
～Examples of our activities～
・Social contributions activities (Thai factory) participatedin the Environmental Good Governance (organized byDepartment of Industrial Works, Ministry of Industry ofThailand Government) for the activities such as releasing ofyoung fish into local rivers and donations to public facilities
・Implemented Industrial Training and TechnicalInternship Program (Niigata factory)

Carrying forward the management focused on ESG toenhance the value of our company over a long period

17２．Medium-term management plan 2019

⑥Priority measures～Company quality improvement ～Maintaining and enhancing the financial soundness
Cash flow management in view of thecapital efficiency
Profitattributable toowners of parent
13.0 billion yen

Enhance the financial soundness forfurther growth
Improve the equity ratio（%)

Depreciation cost
16.0 billion yen

Efficientfunding

65
6055

Operating cash flow
29.0 billion yen＋α

50
45

40
35

Shareholder
returnCapital investment
30.0 billion yen

30
FY2017FY2018FY2019FY2020

FY2021(Results)(Results) (Prospect)(Plan)(Plan)

18

２．Medium-term management plan 2019⑦-1Numerical Management Targets
Targeting operating margin at 8% in the final fiscal year
（Billions of yen）

Results
FY2018

Medium-term management planFY2019

FY2020

FY2021

90.2

94.0

97.0

100

3.7

4.0

5.5

8.0

Operating margin

4.2％

4.3％

5.7％

８.0％

Profit attributableto owners of parent

2.0

2.7

4.2

6.0

110.37110.00110.00110.00Net sales
Operating income

Exchange rate
(USD/JPY)

19

２．Medium-term management plan 2019⑦-2Numerical Management Targets ～Sales breakdown～
Expanding sales of products mainly for Powertrain and Driving control and safety
in the automotive sector

Sales by application（Billions of yen）

100

38.0
New businesssector 1.0

Powertrain・

90.2

Others30.4

Others

16.5Powertrain・

21.1

Body electronics・

Driving control

Climate Control,and Safety

others44％

33％

Car electronics
69.1

Driving control
Body electronics・and Safety

Climate Control,46％

others32％
Information andCommunication

Car electronics

Information and82.5

Communication

22％

23％

Breakdown of products for automotive use
FY2018FY2021FY2018FY2021(Results)(Plan)（Results）（Plan）

20

２．Medium-term management plan 2019⑦-3Numerical Management Targets ～Changes in operating income～Planning 8.0 billion yen operating profit in the final fiscal year,
helped by a 4.3 billion yen increase in profit from FY2018
Improved
manufacturing yield
Decreased sales
and increased
prices and increased
productivity
procurement cost etc.

Profit increase due
to sales growth

2.1▲1.5（Billions of yen）
Cost reduction
by company
restructuring

0.9

2.7

8.0
3.7
0.0

FY2018FY2021

Operating income

Operating income(Results)(Plan)

21

２．Medium-term management plan 2019⑧Technology roadmaps
We will progress our developments in the fields high quality and high reliability required.
Application forautomotive use

Powertrain

Main products

PWB
requirement

InverterDownsizing
Heavy
copperMillimeterwave Radar
Driving
controland Safety
ADAS

Information
andcommunica
tion

HDI20192020

After 2021

Mass-production
Mass-production
Under Mass-production
Mass-production

MSAP

Trial

Thick RFPWBDevelopment
開発

Massproduction

Camera,Communication
module, Other
sensors

Thin PWB

Trial
開発

Massproduction

CameracontrolFinepattern

Trial
開発

Mass-production

LED Lamp

Copperbased

Communication
module for
automotive

Finepattern※RF means Rigid flexible PWB

Under Mass-production
Mass-production

Market needs
・Down-sized unit
・Reliability of high withstand voltage（ EV has higher voltage
than 10x voltage for gasoline vehicle ）・High heat-resistance performance（More than 1.5x conductive
reliabilities of consumer products）
・High current PWB for PHV or EV

・Requests of more down-sizing and more accuracy
improvement

・Thick RF PWB for higher stiffness
・Higher reliability of thin PWB for automotive use

・PWB combined higher density and higher stiffness

・Requests of higher heat radiation

・Requests of more down-sizing and more accuracy
improvement

22

Future-related information and descriptions in this material are justforward-looking statements and not guarantees for future achievements(Amounts are rounded, and % is rounded to one decimal place.)

END

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