Report
2019-2020
Year ended December 31, 2019

Fully drawing out
unbounded energy
In 1945, as Japan entered the post-war era, our founder,
Masao Horiba, realized the limitations to carrying out researchat a university and established HORIBA RADIO LABORATORY
to pursue his own research. He went on to found HORIBA,
Ltd. in 1953 and was inaugurated as the first president. About
10 years after becoming president, Masao Horiba started
studying medical science in hopes of bringing the company
into a new field. His studies allowed him to understand thatthe makeup of the human body cannot be explained withlogic. This realization greatly changed Masao Horiba’s values.
He saw that humans possess capabilities that cannot be fully
explained with the power of science, and he wanted to fully
draw out those capabilities. Masao Horiba realized that healways got results with creative ideas, when he pursued workwith Joy and Fun. Because of this, he embarked on a
mission to construct a company thatgave its employees the opportunity towork with Joy and Fun.

Cover Story

What isOmoshiro Okashiku– Joy and Fun?

1950
HORIBA pioneers the firstglass electrode pH meter
manufactured in Japan.

Sticking to principles and ear
What embodied Masao Horiba’s corporate philosophy of “Joymeasurement system. At the time, although Masao Horiba

1st President (Founder)

1953-1978

Masao Horiba

1945

1953

HORIBA RADIOLABORATORY
was established.

HORIBA, Ltd.
was established.

1945

01

1950

Sales outside of Japan

Sales in Japanー Operating income

Results up to 1977 are on a non-consolidated basis and results from 1978 are on a consolidated basis.
Sales from 1991 are divided into overseas sales and domestic sales.

1955

1960

1965

Making “Joy and Fun” thecompany motto
When HORIBA reached its 25th anniversary in 1978, Masahiro
Oura was appointed as the second company president and, at thesame time, “Joy and Fun” formally became the company motto.
Unchanged since our founding the sentiment that there must be
Joy and Fun in work was finally put in writing.

Philosophy

Employees run an organizationby themselves for realizing“Joy and Fun”

Strategies

At the 25th anniversary celebration, the company announced thefounding of an employee welfare company called HORIBACOMMUNITY CORPORATION (HOCOM). Founded as part ofefforts to create an environment for employees to joyfully engage inwork, HOCOM’s bedrock philosophy is to equitably share the gains
created at HORIBA with all
employees in a manner that
includes them in company
management and building
rules that they can fully
support. Still today, HOCOM
is owned and operated byour employees.

Growth by fostering unity+2&20·VIRXQGLQJLQ

ning the joy of self-actualization

Governanceand Fun” was the MEXA, launched in 1965, an engine emission
had instructed the halt of development on an emission
measurement system, Masahiro Oura, who would later
become the company’s second president, had covertly continued
the project as the head of the Development Division. Shortly after,
this came to light, and Oura endured withering rebuke, but he madean ardent appeal to continue development. Being swayed by theearnestness of this appeal, Masao Horiba gave his consent. The
result was MEXA, which became a mainstay product contributing to
HORIBA's success.

In order to create the technology for a standard gas generator
needed for measurement instruments, HORIBA and othercompanies combined investments to found Standard
Technology Inc. (later becoming HORIBA STEC Co., Ltd.),
with Masao Horiba as its first president. Initially, there wereconcerns over corporate culture issues that could arise fromhaving employees seconded from multiple companies, butsince all of the new company’s employees faced the same
predicament, it engendered a spirit of commonality andcommitted effort. In 1980, their efforts
produced a mass flow controller
embodying technology fostered in the
manufacturing of a standard gas
generator.
1980
Launch of the first mass flow
controller manufactured inJapan.

Results

1965
Launch of “MEXA,” aglobal brand for emission
measurement systems.

2nd President

1978-1992

Masahiro Oura

1978

“Joy and Fun” becomes thecompany motto

1970

1975

1980

1985

1990

HORIBA Repor t 2019-202002

Cover Story

Growth on a global scale
After Atsushi Horiba was appointed as president in 1992, rapid globalization ensued.
HORIBA has grown through acquisitions of technologies that we did not possess
in house, and their accompanying markets. More important than anything,
however, are the people working at the acquisition target. Ensuring that
employees work with Joy and Fun, then drawing out their limitless capabilities, iswhat we make into the driving force of HORIBA. By conveying this philosophy
and creating a shared awareness, we can build relationships of close, mutual
trust even in overseas locations with entirely different backgrounds and cultures
than Japan. As a result, we have succeeded in generating strong synergies.

アタリ

1996

1997

2005

2015

2018

Acquired ABX S.A. (now
HORIBA ABX SAS) in
France.

Acquired Jobin Yvon
S.A. (now HORIBAFrance SAS) in France.

Acquired MCT(Mechatronics) businessof Carl Schenck AG in
Germany.

Acquired MIRA, Ltd.
(now HORIBA MIRA
Limited.) in the U.K.

Acquired FuelCon AG(now HORIBA FuelCon
GmbH) in Germany.

Engaging in work with anownership mindset
In 2016, we started operating HORIBA BIWAKO E-HARBOR, Biwako
Factory. The true purpose of opening this site was “sengu,” or thetranslocation of technology. The younger generation carries on thelong-existing production processes HORIBA has developed in Kyoto
over the past 70 years. This process transfers technologies andunspoken knowledge to the next generation, while also having theeffect of bringing about new technology from the new ideas of theseyoung professionals. “Sengu” of technology instills a mindset ofownership in each and every employee. Stated otherwise, by thinking
for oneself and taking action, and they will begin to go forward. Many
employees now have a personal understanding of the importanceand benefit of engaging in work with an ownership mindset.

3rd President

1992-2017

Atsushi Horiba(serving as Chairman &Group CEO since 2018)

1992

03

1995

2000

2005

2010

2015

Continuing to challenge
ourselves and have astart-up mentality
Philosophy

From 2018, we set course with a new management
structure. Masayuki Adachi was appointed as
HORIBA, Ltd.’s president. With the start-up mindset
the Company has had since it was founded, we willbuild an R&D framework to allow us to further
strengthen HORIBA technology and take on thechallenge of creating new products and services.
Pictured (from right): Juichi Saito, Executive Vice Chairman & Group COO,
Atsushi Horiba, Chairman & Group CEO,
Masayuki Adachi, President & COO

Strategies

An R&D-focused company founded ontechnology and human resources
GovernanceEvery year, HORIBA dedicates close to 10% of revenue to research anddevelopment. Furthermore, over 200 of our approximately 8,000 employees havedoctoral degrees. Relentlessly investing in both technology and human resources
while being an R&D-focused company that values specialized skills is the style ofbusiness that HORIBA has emphasized to date. By maintaining this style, we
believe that we move closer to realizing our company motto of “Joy and Fun.”

Net sales in Fiscal 2019200.2

billion yen

Sales outside of Japanbillion yen

2018-

Results

138.0

4th President

Masayuki Adachi

Operating income

20.9

billion yen

Sales in Japan

62.1

billion yen

2018

2019

HORIBA Repor t 2019-2020

04

CEO MESSAGE

In 2019, we formulated a new Mid-Long Term Management Plan, MLMAP2023.
As HORIBA approached the target it had announced, and the businessenvironment changed drastically, it was necessary for us to formulate
a new target.
This was because of a disparity between the arising issues that HORIBA had
to tackle and those in the former management plan.
In a dynamically changing world, we will demonstrate the value of HORIBA, bypartnering with our customers, to get through difficult times.

05

Philosophy

Amid the various changes insociety, now is the time for
HORIBA’s true value, which has
been built throughmeasurement technologies, tobe demonstrated.

Strategies

Atsushi Horiba
Chairman & Group CEO

Governance

HORIBA’s strengths are unique technologies and humanresources with new ideas

HORIBA’s history shows that we can withstand suchturbulence. Our resilience to such turbulence comesfrom the ability to identify the essence of thechanges and our pride in our technologies.

Our original technologies, which we have been
earnestly developing since our foundation, arerecognized globally. The fact that we have about 50
group companies around the world and about 60%of the group’s approximately 8,000 HORIBARIANs*
are non-Japanese prove this. In the process of
becoming the current HORIBA, we have focused on
developing human resources who have an aesthetic
eye for identifying the essence of things, and who
continue to take on challenges with new ideas thatare not bound by conventional wisdom andprecedents. These are significant strengths of
HORIBA today.

Results

Almost 20 years of the 21st century have passed
and the world is in turbulence due to climatechange, resource and energy issues, rapid
economic growth and development in Asia, thearrival of the 5G era, etc. Further, the infectious
disease COVID-19 has spread bringing new crisis.
Now the world is in an unexperienced storm. The
automotive and semiconductor industries, which are
HORIBA’s core businesses, are significantly affectedby these changes, and we need to respond to them.

* HORIBARIANs: All HORIBA workers are regarded as family andcalled HORIBARIANs.

HORIBA Repor t 2019-2020

06

CEO MESSAGE

From a supplier to a partner, to be closer to customers
For Fiscal 2019, net sales were 200.2 billion yen(down 4.9% year-on-year) and operating income was
20.9 billion yen (down 27.5% year-on-year), downfrom the record high of fiscal 2018. The impact of thesemiconductor market was very large, but we wereable to secure an operating income margin of 10%
because of HORIBA’s balanced management, which
has brought about our sustainable growth to date,worked well this time as well.
As noted, in 2019, we formulated our Mid-Long Term
Management Plan, MLMAP2023, two years ahead ofschedule, and are aiming for sales of 300 billion yen
in 2023. We know that our customers facechallenges finalizing their future direction because of
the great changes in social conditions as mentioned
above. Now is the time for HORIBA to demonstrate
its power and support.

So far, we have primarily contributed throughmeasurement technologies and products that makeuse of those technologies. However, with
MLMAP2023, we are expanding our business into thearea of data management, in which we analyze thedata obtained by HORIBA’s products and solve
customers’ issues from a new approach. In otherwords, HORIBA, which used to be a supplier, will
become a partner who joins with customers to getthrough difficult times. MLMAP2023 shows the path
HORIBA will take into the future, and it is our target tomake ourselves undergo major change.

Now is the time for HORIBA todemonstrate its power.
MLMAP2023 shows the path
HORIBA will take into the future.

07

The key to further globalization is to “win the war of information”

Strategies

One of the reasons HORIBA actively acquires
overseas companies is to obtain such diversely andhighly educated human resources. Within the
HORIBA Group, which values new ideas, we canutilize their perceptions and ideas more effectively;

I believe that HORIBA’s way of thinking is recognizedglobally. As a result, we believe that HORIBA and ouroverseas companies are able to benefit from eachother, even though the acquisition of foreigncompanies by Japanese companies is often said tobe difficult. Another thing I think about globalization isthat valuable information cannot be obtained merely
by staying in Japan. As ICT in society develops, theamount and speed of information transmitted areincreasing tremendously. However, the important
thing is to know what and where that valuable
information is. In order to know this, we must obtainthe latest and most accurate information with ourown eyes and ears, rather than rely on indirect
information; in other words, it is to win the war of
information. We believe that we must improve ourinsight and sensitivity to identify essential informationand must look five to ten years ahead.

Philosophy

There would be no growth if we focused only on theJapanese market and Japanese human resources.
Our global human resources play an active role in
HORIBA, and I feel this is possible because of thedifference between education in Japan and overseas.
Where Japan tends to emphasize memory and theamount or depth of knowledge, Western countries,
as well as Asian countries such as China, focus on
education that fosters the creative ideas of students.
Even if students try something and fail, they properly
analyze the reason for the failure to learn from it.
I think that this is education that nurtures humanresources that are able to try again and again, which
HORIBA cherishes.

position, and HORIBARIANs who have been with thecompany their entire career warmly welcome newly
recruited people in mid-career. This is because
everyone can truly share the joy of having morecolleagues with the necessary abilities for HORIBA.
We have an environment where we can contribute tosociety and the world, and challenge ourselves. The
happiness of being in such an environment, alongwith individual dreams, combine to brighten thecompany.

Results

I feel that companies need unique corporate culture.
Companies in Kyoto tend to avoid recycled ideas andattach importance to originality, and HORIBA is no
exception. I think that it is something like “company
dignity” rather than a mere “brand” for differentiation.
When overseas companies ask to join the HORIBAGroup, I believe it is because of HORIBA’s dignity.
I believe that the realization of this dignity is due tonone other than the nature and everyday behavior of
HORIBARIANs.

GovernanceBe a company with unique culture!

People who visit the company often say, “it seems
that every employee works so energetically andenjoyably.” At HORIBA, there is no corporate tradition
that is tied to length of service in the company or

HORIBA Repor t 2019-2020

08

CEO MESSAGE

Refine your sensitivities and create large-scale ideas thatare not bound by conventional concepts
HORIBA invests approximately 10% of its sales into
R&D. This policy will not change in the future. Again,
new ideas are not born if we don’t take onchallenges without fear of failure. In order to do so,human resources filled with a willingness to take onchallenges are essential. I think that, in actuality,
R&D expenses are expenses for acquiring andraising people.
The source of HORIBA’s value is measurement
technologies. This will remain the same. However,products, of course, and the direction and methodof sales, in other words, the branches and leaves,will naturally change. These changeable parts
require sensitivities rather than precedent or
knowledge. Sensitivities will be refined if we work inaccordance with HORIBA’s corporate motto, Joy
and Fun. Generally speaking, things also require“play,” such as gaps and looseness. I feel that one of
the meanings of Joy and Fun is the scale of suchplay; that is, the scale of ideas that are not bound by
conventional concepts.
Of course, we cannot ignore the financial
performance of the company, such as sales andprofits. However, it is not just about increasing thenumber of sales. It is essential to determine how we
can increase the number of customers who choose
and need HORIBA. In order to do so, I think amanagement spirit that greatly cares for customers
who understand true value, like that of along-established Japanese Kappo* restaurant, isnecessary. I myself never thought of operating thecompany only for the purpose of avoiding deficits.
That is because it would conflict with the way
HORIBA should be, and the long-term perspective
would be neglected.
* Kappo: Kappo is a high-quality, somewhat formal restaurant that serves withthe menu determined by the chef, who is able to provide a wide variety ofJapanese cuisine using fresh foods of the day and also taking account of
conversation over the counter during the meal.

My thoughts on Joy and Fun
Joy and Fun is all about “challenge.” Thatis the most interesting. If you attempt
something, it often doesn’t work.
However, sometimes it works. The morethings fail, the greater the feeling of
fulfillment from success. Failing is no
problem. I think it is better to experiencevarious failures when you are young, aslong as you don’t lose your life.
From the left:

Atsushi Horiba
Chairman & Group CEO

Masayuki Adachi(Doctor of Engineering)President & COO
Chairman of theSupervisory Board of
HORIBA FRANCE SAS

09

Intellectual curiosity creates dreams

HORIBA and HORIBARIANs value our dreams. With
the goals set by MLMAP2023 in mind, we willenvision each dream and work toward its realization.
We believe that the repetition will bring good results,
and we will renew our feeling to make our best
efforts. I ask for your continued understanding andsupport in 2020.

Strategies

At the end of 2019, I gave a lecture to the fifth
graders at an elementary school in Kyoto. There wasa question and answer session after the lecture, and I
received many intuitive and direct questions thatapproached the core of my lecture.

I managed to answer the first question. Then a handquickly went up again. This was repeated again andagain. I was impressed that education that develops
intellectual curiosity is also being conducted in Japan,
and at the same time, I strongly felt that everyone had
a dream.

Philosophy

There are various issues to be solved in society, but I
think that the root of the solutions to these issues ishuman resources. In addition to developing humanresources at the company, I think that improving
education for children, who may join the company inthe future, is something that I, as the CEO of thecompany, should do. Thus, I have worked as thechairman of the Kyoto Kyoiku-Konwakai*(Educational Meeting) since 2008.

April 2020

Atsushi Horiba* Kyoto Kyoiku-Konwakai: a volunteer group that aims to create a place for gathering,learning, and transmitting information together, for schools, faculty members, students, andeven companies gathering there, and even the educational industry such as cram schools,
regardless of region or position.

Chairman & Group CEO

Governance

From the left:

Hideyuki Koishi
Senior Corporate Officer
President of HORIBA STEC Co., Ltd. (Japan)

Results

Jai Hakhu (Doctor of Engineering)
Executive Corporate Officer
Chairman & CEO of HORIBA Instruments Incorporated (U.S.)
President of HORIBA ABX SAS (France)
Chairman of HORIBA India Private Limited (India)

George Gillespie (Doctor of Engineering)
In the KUTSUKI Training center “FUN HOUSE”

Juichi Saito

Masao Okawa

Takashi Nagano

Executive Vice Chairman &Group COO
President of HORIBA
Europe Holding SASUManaging Director
General Manager of theGeneral Administration
Division

Director
Chairman of HORIBA
KOREA Ltd. (South Korea)

Senior Corporate Officer
Board Leader of GLOBAL ATS BOARD
Executive Chairman of HORIBA MIRA Limited (U.K.)
Photographs were taken at the Global Budget Meeting (GBM) in
December 2019 where executives from overseas gathered to
discuss their plans for the coming year. GBM is introduced in the
CFO message from page 45.
Since April 2020, Hiroo Chihara (President and CEO, HORIBATechno Service Co., Ltd.) and Dan Horiba (President and CEO,HORIBA Advanced Techno Co., Ltd.) have newly assumed theposition of Corporate Officer.

HORIBA Repor t 2019-2020

10

Report2019-2020
Publication of the integrated
HORIBA Report 2019-2020
We are publishing the HORIBA Report with the hope that
institutional investors with a long-term perspective will takean interest in HORIBA and will get a better understandingof our company. Also, we believe that our message tolong-term institutional investors will be informative for all of
our stakeholders as well.
HORIBA’s stakeholders encompass a wide diversity ofparties, including institutional investors, customers,
business partners, employees, and the regions where eachof our Group companies are located.
These diverse stakeholders can also be described as
investors in HORIBA who have an ultra-long-term
perspective and who can enjoy the profit from HORIBA’s
growth. As HORIBA users, component suppliers, residents
of areas with our business offices, and employees
supporting our business, stakeholders invest in us so that
we can achieve sustainable, long-term growth.
As a result, it can be argued that their expectations of
HORIBA are aligned with those of institutional investors
with a long-term perspective. This is the reason why
HORIBA will continue publishing the integrated report,
HORIBA Report, for such institutional investors.
Also, starting with the current Report, we have changed toa fiscal year notation of two years.
The HORIBA Report is the new title of what we used to call
the Annual Report, which was our Securities Report giving
an overview of each previous year’s business and the title
included the fiscal year of closing.
An additional reason for using single-year fiscal year
notation in reports was that December 31 is the end of theaccounting period for HORIBA, Ltd.
In contrast, the primary objective of the HORIBA Report isto be an integrated report giving an understanding of
HORIBA’s management philosophy and future strategies toinstitutional investors with a long-term perspective investingin HORIBA’s future corporate value. Starting with thisreport, we are changing fiscal year notation (in this case,2019-2020) so that investors can proceed with
future-oriented investments by understanding topics for thecurrent year and also our thoughts for the future.

11

The HORIBA

Philosophy

01 Cover Story
05 CEO Message
11 Editorial Policy
13 HORIBA’s value creation
cycle

Regarding our use of the term “owners”(shareholders)
HORIBA fully recognizes the importance of its
shareholders and frequently refers to them as “owners.”

Regarding our use of HORIBA and HORIBA, Ltd.
In this Report, HORIBA is used to refer to the HORIBAGroup as a whole, while HORIBA, Ltd. is used to refer tothat entity within the Group.

Market Share
Market shares stated in this report are HORIBA’s
estimates as of fiscal 2019.

Regarding the importance andcomprehensiveness of information in the
HORIBA Report 2019-2020
We have selected financial and non-financial informationthat we believe to be of high importance for inclusion in the
HORIBA Report 2019-2020.
For more detailed information, please see our website.
The PDF version of the HORIBA Report 2019-2020 is alsoavailable through our website.

HORIBA Report

HORIBA’s

HORIBA’s

Governance

15 Changes in HORIBA’s

45 CFO Message

55 Financial data

49 Corporate governance

62 Corporate data

17 Five “measurement”

Results

Strategies

Strategies

business environment

Philosophy

HORIBA’s

53 Board of directors andbusinesses

corporate auditors/
corporate officers

19 Special Feature:
MLMAP2023

35 Business outline

Disclaimer regarding future plans and forecasts

HORIBA, Ltd. and its domestic consolidated subsidiaries had
formerly recognized revenue mainly on a shipping basis.
However, starting from fiscal 2016, HORIBA, Ltd. and its
domestic consolidated subsidiaries changed their revenue
recognition method to recognize revenue on acompletion-date-of-installation or delivery-date basis under theterms and conditions of the relevant contracts. The amounts inor before fiscal 2015 are not retrospectively revised.

This HORIBA Report contains certain statements describing
future plans, strategies, and performance forecasts of
HORIBA, Ltd. and its affiliated companies. These statements
reflect forecasts estimated on management’s assumptions
and beliefs based on the information available as of April 30,
2020. Actual performance may differ due to unforeseen
circumstances in the operating environment and other factors.

Governance

Change in Revenue Recognition Standard

ResultsWidevariety

WebsiteRange ofTargetReaders

HORIBA Report

IR information

CSR information

Web Link

Web Link

2019-2020

Limited
Summary

Contents

Details and data

HORIBA Repor t 2019-2020

12

HORIBA’s Value Creation Cycle“Everything begins with measurement”
HORIBA’s technology supports solutions tosocial issues
HORIBA uses analytical and measurement technologies to supply products that support solutions to social issues.
We believe that having customers use HORIBA analytical and measurement solutions while we ourselves growas a company helps create a sustainable society and fulfill our social responsibility.

Creating social value
Creating economic
value

Measurement
technologies

Process & Environmental

Medical-Diagnostic

SemiconductorCore
technologies

Fivebusinesses

Automotive Test
Systems

Talents(HORIBARIANs)

Fivebusinesses

Invisible values
Organizational
structures

Talents

Technologies
Brand

Customers

Detailed information regarding HORIBA’s
CSR activities can be found on our website:

If we are to achieve on-going corporate
growth, we must aim to improve financial
metrics such as net sales and profits, while atthe same time taking care of our non-financial
values, such as talents and technologies.
HORIBA considers its brands, organizational
structure, talents, technologies, andcustomers to be invisible values and invests inthem continuously.

Web Link
Click!

13

Scientific

Solving social issues
Philosophy

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Governance

Creating economic value
Field support
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Global business making and selling
more than 1,000 products of various kinds
Top-level shares in niche markets
Profit generated year after year)\ZPULZZNYV^[OZ\WWVY[LKI`
continuous investment(Maintained an operating income level above 10%)Social issues confronted
by HORIBA
Building a sustainable
society
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environment
Realizing a safe,
WSLHZHU[ZVJPL[`,TWV^LYPUNYLNPVUZCreating jobs

Related goals
in the SDGs*

Results

Creating social value
Signatory tointernational initiatives<UP[LK5H[PVUZ.SVIHS*VTWHJ[(UNGC)HORIBA, Ltd. supports theinitiatives of the United Nations
Global Compact since we becamea signatory in 2012 through theagreement of top management.

Promoting diversity
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The social value that
HORIBA creates on its
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society and generating
NYLH[LYZVJPHS]HS\L* “SDGs” refers to the Sustainable Development Goals unanimously adopted by the United Nations General Assembly in 2015.

HORIBA Repor t 2019-202014

Environmental changes surrounding HORIBA

Environmental changes
surrounding HORIBA
Changes in the external environment

Paradigm shift
in the industry

Improvements inhealthcare services

Necessity of efficientenergy usage(Fuel cells, batteries)

Transformation of
infrastructure

Coming to the fore ofsocial issues(Paris Climate Agreement, SDGs)

Changes in the types ofenergy supply & storage

Emergence ofa data-centric society

Achieving asustainable
society

Diversification ofprimary energy sources(Petroleum, natural gas,
renewable energy)

The environment surrounding HORIBA is changing with increasing rapidity, such as rising interest in
solving social issues, starting with avoiding a pandemic, and also including the acceleration ofadvanced technology, and structural changes in the automotive industry. Communication andenergy networks are experiencing especially substantial impacts from these changes.
From a variety of perspectives, HORIBA’s measurement technologies are supporting thetransformation of communication and energy networks, as well as the development of people andsociety.

15

HORIBA’s analytical and measurement technologies
contribute to an energy recycling society
By combining various technologies and supplying products and services matching market needs,
we will contribute to achieving a sustainable society

Philosophy

Fuel cell test systems(Development of fuel cells)

St

Stack gas analyzers

or

ion

(Raising efficiency of
power plants)e

Hydrogen fuelcells

Strategies

nerat

Renewableenergy

ag

Ge

Raman
spectrometers(Analysis and evaluation ofbattery material components)

Lithium ion
batteries
Thermal power
generation

Battery electricvehiclesFuel cell vehicles

Process
measurement
equipment(Management of
petroleum refining process)Battery test systems(Development of batteries)

Gasoline/hybrid vehicles

Smart homes
Air pollution analyzers(Measurement of pollutants)

Water quality meters

GovernanceInternal combustion
engines

Offices andfactories

Utilization(Measurement of industrial
wastewater)

Emission measurement systems(Improvement of internal-combustion
engine performance)

Four-wheel drive
test systems(Development of vehicles)

Results

Mass flow controllers(Response to growth in demand forautomotive semiconductors)

HORIBA Institute for
Mobility and Connectivity
In August 2018, we signed an agreement with the
University of California, Irvine in the United States tosupport the establishment of the HORIBA Institute for
Mobility and Connectivity. With this Institute playing acentral role, we will strive to create businesses that,from the perspective of next-generation energy
networks, and specifically the theme of mobility, takeon the challenges of social issues and contribute to
the energy industry overall.

Hosting the Masao Horiba Awards
We founded the Masao Horiba Awards in 2003. The 2019
awards, which was the 16th year of the program, had thetheme of advanced analytical and measurement technologies
for efficient control systems to maximize the performance ofelectric power and battery usage. Akira Yoshino, winner of theNobel Prize in Chemistry, served as chair of the selection
committee and the award recognized essential research inbuilding an energy-based society.
Going forward, we will strengthen collaboration withresearchers and academic institutions as we aim to expand
businesses focused on electric power and battery usage.

HORIBA Repor t 2019-202016

Five “measurement” businesses

Five “measurement” businesses

Automotive Test Systems
Emission measurement systems

Stack gas analyzers

Global market
share

Share ofsegment sales

Japan market
share

Share ofsegment sales

80%

41%

50%

32%

Driveline test systems
Major products andmarket shares

Global market
share

Note: Market shares quoted
are HORIBA’s estimates.

15%

Share ofsegment sales

4%• Automotive emission
analyzers• Onboard emission
measurement systems• Engine test systems• Brake test systems• Fuel cell test systems• Battery test systems• Vehicle development
engineering• Testing engineering• Lease andmanagement of R&D
facilities

H-1 series of industrial water
quality analyzers
Japan market
share

Share of segment
sales

20%

36%

(Total of water quality
analyzers)(Total of water quality
analyzers)• Water quality analysis and examination
systems• Air pollution analyzers• Environmental radiation meters• Process measurement equipment• Automotive manufacturers• Automotive component manufacturers• Government agencies• Electric power companies• Government agencies• Manufacturers

Product
applications• Development of new gasoline, diesel, and hybrid
powertrains• Certification and quality control of completed vehicles• Inspection of in-use vehicles• Measurement of wastewater and gaseousemissions• Monitoring of environmental pollution

Major risks andopportunities• Changes in emission gas regulations• The automotive industry’s capital spending and
R&D investments• Changes in environmental regulations bygovernment agencies• Developments in energy efficiency
improvement at factories and power
generation plants

Major customers

P.35
17

Process & Environmental
Instruments & Systems

P.37

Semiconductor
Instruments & Systems

Scientific
Instruments & Systems

Hematology analyzers

Mass flow controllers

Raman spectrometers

Global market
share

Share ofsegment sales

Global market
share

Share ofsegment sales

Global market
share

Share ofsegment sales

7%

76%

60%

86%

30%

23%

• Hematology and CRP analyzers• Hematology analyzers• Immunology analyzers• Clinical chemistry analyzers• Blood glucose analyzers

Global market
share

Share ofsegment sales

80%

11%

Strategies

Chemical concentration monitors

Philosophy

Medical-Diagnostic
Instruments & Systems

pH meters
Japan market
share

Share ofsegment sales

50%

9%

• Medical testing centers• Small-to medium-sized hospitals• Physicians in private practice• Semiconductor production equipment
manufacturers• Semiconductor device makers• Manufacturers/Research institutions• Universities/Government agencies• Electric power companies• Diagnostic testing• Medical checkup• Controlling flow of gases and liquids,
monitoring of cleaning fluid concentrations insemiconductor manufacturing processes• Quality control inspections of semiconductors
and LCDs• R&D• Product quality testing• Criminal forensics• Changes in total healthcare
expenditures caused by changes in
populations and other factors• Changes in medical insurance systems
in different countries• Capital spending of semiconductor
manufacturers and others in association withfluctuating demand for semiconductors• Production trends of manufacturers ofsemiconductor production equipment• Changes in R&D budgets at government
agencies, universities, and research
institutions• Changes in the private sector’s R&D spending
and capital spending for production• Fluorescence
spectroscopy/fluorescence lifetime
spectroscopy• Optical components;
spectrometers anddetectors• Gratings

Governance• Reticle/mask particle detection systems• Residual gas analyzers• Vaporizers• pH meters• Particle-size
distribution analyzers• X-ray fluorescenceanalyzers• Elemental analyzers

Results

P.39

P.41

P.43
HORIBA Repor t 2019-2020

18

FEATURES

MLMAP2023
Mid-Long Term Management PlanONE ST

Contribute to the developm
and transform ourselves
My ideas on MLMAP2023
HORIBA announced a new Mid-Long Term Management
Plan, MLMAP2023, in August 2019. There are two major
reasons why we decided to formulate MLMAP2023 twoyears ahead of schedule. One is that, in 2018, we cameclose to achieving our 2020 profit target set out in
MLMAP2020, which covered the period from 2016 to
2020. We believe that outcome was the result of ourinvestments and balanced management carried out withlong term perspective. The other reason is that thebusiness environment surrounding HORIBA is changing
rapidly. For example, the structure of the automotive
industry is changing and the spread of technologies suchas AI and IoT has been advancing. HORIBA aims tocapture business opportunities from such tremendous
changes. Also, I realized that HORIBA had to change itself
drastically in order to go into the next stage. Under the new
management structure (more on page 4), we willaccumulate our capabilities and take necessary actions,
speedily responding to changes in the businessenvironment, so we can open up new era. With thosestrong intentions and motivations, we launched
MLMAP2023 with the slogan of ONE STAGE AHEAD.

Masayuki Adachi Ph. D.
President, HORIBA, Ltd.

My thoughts on “Joy and Fun”
I believe we can recognize Joy and Fun typically after we haveovercome difficulties. When I was the president of a groupcompany in the US, the financial crisis occurred. For thecompany to survive, I confronted crises everyday, whilefeeling my bad luck. However, once we made it through due tothe strong teamwork of local employees, I realized a realdelight which has been my treasure. Now we face the crisis of
an infectious disease. I feel fighting spirit because I
experienced the financial crisis, called a once in a century
disaster, as the president of a group company in the US.

19

Go forward with three priority
measures to achieve the plan
We formulated three priority measures in MLMAP2023. The
first measure is Market Oriented Business. We will focus on
the leading three business fields of the megatrends: Energy& Environment, Materials & Semiconductor, and Bio &Healthcare. These fields are essential for the developmentof society and well being.
We will expand our business into those fields with thestrong collaboration of our five business segments.
The second measure is Solution Provider Beyond Life
Cycle Management. HORIBA will strengthen its data
management businesses by providing operational data
monitoring systems that help customers improve theAGE AHEAD
efficiency of facility operation, and by providing
consultations to customers to find solutions via analysis ofmeasurement data. To respond to the needs of automationor outsourcing against the backdrop of the acceleration of
the development cycle and reforms in the way of working,we will establish a business model that is always in

210.5

300.0
billion yen

1.5 times growthfrom 2018

Net Salesin 2023

billion yen
Net Salesin 2018

40.0

partnership with the customer.

200.2

billion yen
Net Sales in 2019

Stage of a Super Dream Team, which is to develop andbusiness is human resources. We will further promote theBlackJack Project and the Stained Glass Project (more on

28.8

billion yen
Operating
Income in 2018

pages 31-32) on a global basis so as to establish a flat

20.9

billion yen
Operating
Income in 2019organization that narrows the distance between top

2018

management and the frontline. In addition, we will develop

MLMAP2016-2020

a working environment where each and every employee

billion yen
Operating
Income in 2023

Strategies

The third measure is HORIBA Core Values – The Next
enhance the value of human resources. The driving force ofPhilosophy

ent of society with measurement technologies,
into a new HORIBA

2019

2020

2021

2022

2023

MLMAP2019-2023

feels motivation for working. On top of that we aim to
Operating Income

Governance

Net Sales

generate optimal profits and balanced growth while
continually investing, using the HORIBA Premium Value asa KPI (more on page 47).

We can succeed by abandoning
complacency and doing our utmost

It is also necessary to enhance industry-academia

As the leader of MLMAP2023, I relentlessly push many

HORIBA aims to be a pioneer in introducing new styles ofprojects to proceed quickly, in accordance with the spirit ofcollaboration utilizing the benefits of Kyoto, where we canthe corporate motto, Joy and Fun. We have no brighteasily access many high-quality educational institutions andfutures if we adhere too much to past successfulcompanies with unique cutting-edge technology.

experiences or relax on the highly profitable business just in

We are confident that HORIBA is a measurement

front of us. I will encourage each and every employee totechnology company customers can rely on, as we can bework with a sense of ownership and venture spirit;close to them and offer appropriate solutions when they

however, without being too afraid of making mistakes.

have problems. We aim to be a company that will resolve

Additionally I will push forward our point-added policy,social challenges associated with the development of

HORIBAЉs unique personnel evaluation systems (more onindustry, and will contribute to the acceleration ofpage 31). With respect to our businesses, I feel a lot of

innovation. If, in five years, I look back on society, themomentum from 2019 for the future growth of HORIBA,

company and myself and find that all of them havewith the launch of “CELL 0,” a facility for the evaluation ofchanged in a good way, our visions will have come true.

batteries for electric vehicles, and the start of construction

I will encourage management to accomplish our visions

on the new facility in China and a new Headquarters forwith all my heart and mind.

Results

HORIBA Techno Service Co., Ltd.

collaboration as well as industry-industry collaboration, andApril 2020

HORIBA Repor t 2019-2020

20

FEATURES

Overview of MLMAP2023
The background of the transition
to MLMAP2023

MLMA

Achieved the target level of
MLMAP2020 (started in 2016)

Mid - Long Term

Invested to expand business scale and areas at
a time of drastic changes in the industrial structure
Achieved the target profit level
in December 2018 due to the strategy alongwith the change of the business model

Acquired new businesses
through M&A

Responded to next-generation
automotive technologies○ MIRA Ltd. (U.K.),
FuelCon AG (Germany), etc.

Operating Income

Net Income

Achievement level 96%

Achievement level 112%30.0 28.8

Strengthened R&D andproduction capabilities

billionyen

Invested 40 billion yen
in 3 years○ HORIBA BIWAKO E-HARBOR○ Aso plant expansion, etc.

MLMAP2020
Planbillionyen

2018
Results

20.0 22.3
billionbillionyen

yen

MLMAP2020
Plan

2018
Results

Slogan:ONE STAG
Open up a new era for70th anniversary, by
HORIBA Group understructure sta

Immediately responded toaccelerated business changes.

Net Sales
Operating Inc
Net Income

1.Turning point in theautomotive industry

Electrification &Autonomous driving

2.Accelerating advancesin technology development

AI & IoT

Bio &Healthcare

Advancedmaterials

ROE

Environmental
protection

SDGs & ESG
investments

Workstylereform andDiversity

Total return r

3.Increasing interest in
solving social issues

New entrants

Initiatives and achievementsfrom previous MLMAPs
・Established “One Company” management
and the matrix organization structure

・Promoted “One Company” management(Spread use of the matrix organization and appointed corporate(Globalized shared services and the ERP system)

officers from overseas group companies, etc.)

・Growth through balanced management(Increase profit of medical-diagnostic andsemiconductor segments)

21

MLMAP2010(2006-2010)

・Accelerated growth by investment in
profitable businesses(Automotive test systems and semiconductor
instruments & systems)

MLMAP2015(2011-2015)

MLMAP2023
Mid-Long Term Management Plan

PRIORITY MEASURE

Management PlanE AHEAD

300.0
billion yen
30.0

atio

To develop analysis and measurement solutions, utilizing HORIBA’s
core technologies, in the leading three business fields of megatrends
PRIORITY MEASURE

2

Solution Provider BeyondLife Cycle Management
To support customers’ businesses from all aspects,
from installation to replacement
PRIORITY MEASURE

3

HORIBA Core Values—The Next Stage of Super Dream Team—To enhance the organizational structure that fosters resilient
human resources, which are the driving force of all business operations

Segment Strategy

Regional Strategy

10%
or moreLong term growth strategy in fivebusiness segments withwell-balanced management

Business expansion in emerging markets,
China and India

Technological Strategy

Human Resource Strategy

Create new value by utilizing uniquecore technologies

Develop human resources by believing
in people and drawing out theirmaximum potential

Target30%

Exchange rate: 110 yen per U.S. dollar/125 yen per euro・Acquired new business through M&A andstrengthened R&D and production capabilities*

Resultsbillion yen

Governance

ome

40.0
billion yen

Market-Oriented Business

Strategies

2023, the company’s
unifying the power ofthe new management
rted in 2018.

Philosophy

P2023

1

MLMAP2023

MLMAP2020(2019-2023)(2016-2020)*more on page 21 about achievement of MLMAP2020

・Expanded the water measurement business(Integrated resources into HORIBA Advanced Techno Co., Ltd.)・Enhanced the diversity promotion project(Stained Glass Project)

Symbol: Hawk
Find targets from a heightened perspective,
accomplish the objectives at the fastest speed

HORIBA Repor t 2019-2020

22

FEATURES

Priority Measures
PRIORITY MEASURE

1Market Oriented BusinessTo develop analysis and measurement solutions, utilizing HORIBA’s coretechnologies, in the leading three business fields of megatrends
By combining the technologies, sales channels, production facilities, and customer networks that HORIBA’s five business segments
possess globally, HORIBA intends to provide analysis and measurement solutions that respond to customers’ needs.

HORIBA aims to transform itself into an entity that accelerates
innovation in the three leading business fields of the megatrends.
Process &Environmental

Automotive
Test

ScientificPower generation

Mobility
Main Targets

Corresponding
business segments

Water

Energy /Environment

Improvement of
the environment

Field

Analysis andmeasurement solutions

Clinical tests

making full use of
HORIBA’s core
Semiconductormaterials
Semiconductor

Materials /Semiconductor

technologies

Bio /Healthcare

PharmaCellular
Biology

Scientific

Genetics

Advancedmaterials
Drug development

23

Scientific

MedicalDiagnostic

MLMAP2023
Mid-Long Term Management Plan

PRIORITY MEASURE

2
Philosophy

Solution Provider BeyondLife Cycle Management
To support customers’ businesses from all aspects, from installation to replacement
HORIBA has built a business model that comprehensively supports customers by offering optimal applications chosen from a wide
variety of product groups. HORIBA will expand business into the data management field, contributing to solving customers’ issues byquantifying information that has been invisible.

Accurate facility management using data from operations

Data fromoperations

Integrate equipment
sales withhigh-value-added
supportStrategies

Support the efficient operation ofcustomers’ facilities

Consulting with analysis technologies
Offer new value via analysis of measurement data

Measureddata

Always with You
HORIBA is always on the customer’s side
Governance

PRIORITY MEASURE

3

HORIBA Core Values—The Next Stage of Super Dream Team—To enhance the organizational structure that fosters resilient human resources,
which are the driving force of all businesses

Bringing management closer to the front-line

Promoting diversity

An original HORIBA KPI to indicate
asset efficiency

The BlackJack Project

The Stained Glass Project

HORIBA Premium Value(more on pages 31-32)(more on pages 31-32)

Results

The driving force of all businesses is human resources. HORIBA has undertaken various initiatives in the development of humanresources as well. We will enhance those activities and accelerate both the transformation of existing businesses and the creation of
new businesses. Also, HORIBA will accelerate activities to optimize asset efficiency and bring about balanced growth of profit andcontinual investing.

(more on page 47)

HORIBA
Premium
Value=

Operating
Incomeー

Cost ofCapitalHORIBA Repor t 2019-2020

24

FEATURES

Segment Strategy
MLMAP2023 Segment Strategy

Automotive Test Systems

2023
plan

120.0 billion yen
Operating12.0 billion yen
incomeSales

Application driven business
Provide the best applications in four business areas. Establish a position as a vital partnerin the automotive development field by solving the challenges that customers face.

❶ Emissions: Engine/exhaust gas❷ Energy Efficiency: Electrification● Strengthen existing areas: Provide a diverse regulation-compliant line-up, and● Cell 0 : Respond to demand for evaluation and testing of batteries and fuel cells for

systems that help shorten the development process.
● Enter growth areas: Provide solutions as packages that contribute to the R&D and

optimization of combinations of engines, batteries, and motors to go along with theelectrification of vehicles.

❸ CAV*2: Connected and autonomous driving system● “Drive/Turn/Stop”: Expand business that utilizes multi-purpose tests for autonomousvehicles and test facilities to verify an autonomous parking function (opening in2021).
● “Protect”: Opened the Vehicle Resilience* Technology Centre, and are expanding a3comprehensive approach that combines cyber security and functional safety.
*2 CAV: Connected and Autonomous Vehicle*3 Vehicle Resilience: Solutions that eliminate threats associated with advanced vehicle technologies

25electric vehicles.
● Test in the LoopTM*1: Propose a highly-efficient R&D environment for electric vehicles(more on page 36 about Cell 0 and Test in the LoopTM).
*1 Test in the Loop is a registered trademark of HORIBA, Ltd.

❹ Enterprise Data Management forDevelopment: Overall vehicle-related R&D● Contributing to front-loading: Provide high-value-added services that reduce

man-hours and shorten development processes (front-loading) by combining a coresystem that integrates and manages analysis and measurement data, and HORIBAMIRA Ltd.’s knowledge in engineering and testing.

MLMAP2023
Mid-Long Term Management Plan

MLMAP2023 Segment Strategy

2023
plan

Sales
Operatingincome28.0 billion yen
2.8 billion yen

Philosophy

Process & Environmental
Instruments & Systems

HORIBA as a worldwide player who analyzes the entire earth
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Strategies❶ Expand business in emerging

countries: approaches toenvironmental regulation❷ Open up markets in developed

countries: improve industrial
processes❸ Grow globally in the water

monitoring business● Expand market share in Asia.
● Develop a new business model with “HAKARU● Enhance localization of production and engineeringthat flexibly respond to local needs.
● Bring business models successfully expanded withand efficiency of power generation plants,
semiconductor manufacturing factories, and others.
● Contribute to reduction of costs and manpower infactories by enhancing the data managementbusiness.

MLMAP2023 Segment Strategy

Medical-Diagnostic
Instruments & Systems

2023
plan

Express,” which combines technologies and services.
Please see our website for more on"HAKARU EXpress" (in Japanese only)

Governanceregional partners to other countries.

● Respond to demands for improving the environment

Web Link
Click!

Sales
Operatingincome40.0 billion yen
4.0 billion yen

To be a Preferred Partner([SDQGWKHSURGXFWSRUWIROLRIURPVPDOOVFDOHDQDO\]HUVWRLQFOXGHODUJHVFDOHDQDO\]HUV
DQGDFFHOHUDWHJOREDOEXVLQHVVH[SDQVLRQ5HDOL]HIXUWKHUEXVLQHVVH[SDQVLRQLQWKHILHOG
RI,Q9LWUR'LDJQRVWLFVResults❶ Sales development in thesmall- and medium-sized market● Enhance the line-up of products that use the μTAS*

technologies acquired from Rohm Co., Ltd.
● Expand business in the clinical chemistry category
through business alliances.
* Micro Total Analysis System❷ Entering the large-sized market● Expand sales of mid-to-large-size hematology

instruments.
● Enter the large-sized market through a long term
alliance with Siemens Healthcare Diagnostics Inc.
(U.S.)❸ Capturing emerging markets(India and China)● Develop products which respond to local needs, andexpand global sales network and supply chain.
● Strengthen local production capability and thereagent supply structure.

HORIBA Repor t 2019-2020

26

FEATURES

Segment Strategy

MLMAP2023 Segment Strategy

Semiconductor
Instruments & Systems

77.0 billion yen
17.7 billion yen

Sales

2023
plan

OperatingincomeShape the market, sell the solution
Evolve the company into a comprehensive supplier that provides high-value-added solutions
for all semiconductor manufacturing processes, from R&D to aftermarket services.

❶ Enhance existing fields❷ Extend coverage❸ Take up challenges in new fields● Enhance R&D operations and the supply chain in● Develop applications which increase the efficiency of the● HORIBA’s measurement and control equipment isJapan, the U.S., and Asia.
● Proactively launch new products and further
expand the market share of mainstream products
such as Mass flow controllers and chemical
concentration monitors.

process control of semiconductor production equipment(SPE).
● Expand the product line-up in the particle detection area
which supports the development of EUV* technology.

installed on the periphery of SPE and generates.
data. Provide an environment that enables the useof this data and contribute to improving
semiconductor manufacturing processes.

*Next generation lithography technology that exposes with extreme ultra violet rays

MLMAP2023 Segment Strategy

Scientific
Instruments & Systems

35.0 billion yen
3.5 billion yen

Sales

2023
plan

OperatingincomeCore Technology Provider
Apply the core technology cultivated as a founding business in the megatrend market. Maximize
synergy while leading “HORIBA as a provider of technology” in cooperation with each segment.

❶ Advanced materials and Bio● Maximize synergies by effectively using resourcesfrom three global bases (i.e. Japan, France, andthe U.S.) and provide innovative solutions (advancenano-level spectroscopic analysis technology,
develop applications for analysis ofpharmaceuticals and in drug discovery, etc.).

❷ Energy, Semiconductor,❸ One-to-One Customization and● Expand business by using the sales channels● Accelerate customization to contribute to optimization ofand Waterof other business segments (develop
secondary batteries, evaluate and analyze
next-generation materials for semiconductors,
increase efficiency of water management atwater treatment plants, etc.).

Global Engineerin

production processes and monitoring of quality (automatedmeasurement, visualization of analytical data, etc.).
● Global engineering to develop products responding to customer
needs (developed the new pH meter in Singapore).

TOPICS

Expand the water measurement business
HORIBA Advanced Techno Co., Ltd., in which we integrated the watermeasurement businesses, is expanding business with the analyticaltechnologies and sales channels of three segments: Process & Environment,
Semiconductor, and Scientific. We accelerate business globally since demand
for water measurement is expected to expand in the future.

27

Net sales in water-related businessBillionsof yen20

Process & Environmental
Semiconductor
Scientific

22.0

12.0

14.1

15.6

14.7

2018

2019

10

0

2016

2017

2023 (plan)

MLMAP2023
Mid-Long Term Management Plan

Regional Strategy
MLMAP2023 Regional Strategy

China47.0 billion yen

Sales

Philosophy

2023
plan

Realize further growth by responding to sea changes in technology
Invest aggressively at a higher level than ever before. Realize high growth through strategic
action based on the keywords Speed, Integration, and Evolution.
Started construction of a new facility in China

Scientific analysis
application center

Automotive testing labs

Image at completion● Install battery and fuel cell test systems, chassis● Profit from being based in the area of China● Enable tests that combine vehicles, realmachines, and simulation

Construction of a new facility in Jiading, Shanghai
Opening in 2021/Total cost: approx. 9.0 billion yen

Manufacturing

Technical center● Enhance local engineering and supply capacity● Provide services according to the product life

for gas and water monitoring systems

cycle, from installation to after-sales service● Establish a production system to supply the● Train service engineers who belong to HORIBA

and distributors

semiconductor market in China

MLMAP2023 Regional Strategy

Sales

13.0 billion yen

Governance

2023
plan

India

Strategies

where new energy is being developed, andcollaborate with academia and companies indevelopment of applications● Provide material analysis, testing support, andtraining in analysis

dynamos, and driveline test systems

Think Big. Grow Bigger.
Strengthen the sales and service networks rooted in the local society. Provide
high-value-added analysis and measurement technologies.
Enhance engineering and facility capability
Automotive Test

Enhance the supply network

Process & Environmental

Medical-Diagnostic
Capture growing demand for clinicaltesting that is due to population growth.

Provide products and technologies
that meet local needs.

Enhance the supply network tomaintain stable volume and quality.

The technical laboratory, opened in July 2019

Results

Establish local bases to strengthen
engineering capability.

Reagent production and logistics line at Haridwar

TOPICSTo Change to a Solution-proposal Style Business
Enhance ability to gather andtransmit information by integrating
functions
Expand the analysis lab, themaintenance facility, and thetraining space

MLMAP
2023

Start of construction of a new HQfor HORIBA Techno Service Co., Ltd.

Maintenance services using operating data
Consulting using measurement data

Integrate equipment sales withhigh-value-added support

Opening in 2020
Total cost: approx.
3.8 billion yen

HORIBA Repor t 2019-2020

28

FEATURES

Technology Strategies
HORIBA’s technology has grown while we remain focused on how we can be of use to people and the planet. Starting with the first glass electrode pH
meter made in Japan, and moving into mass flow controllers and emission measurement systems (both of which have large market shares), we havecontinued to roll out products and applications necessary to society. Like the branches of a tree, these core technologies for analytical and measurement
instruments have spread and multiplied. Going forward, we will strengthen synergies from the resources of our five businesses as we pursue
acquisitions focused on technologies and human resources. At the same time, we will leverage industry-academia-government collaboration andinter-industry collaboration as we strive for corporate transformation that accelerates innovation through measurement technologies.

Focus initiatives for achieving MLMAP2023

Faster-paced development inunion with customers

Strengthening technology
in the data management field

In order to further strengthen our forte, which is our framework forcraftsmanship in partnership with customers, we are carrying out
organizational restructuring that deepens the ties between our R&D
Departments and Sales Departments. We engage in fast-paced product andapplication development under a framework where we review specifications
with customers and move forward while taking their feedback into account.

We are targeting business expansion by leveraging the strength ofhigh-quality data generated during analysis and measurement. We areundertaking development projects that include expanding our lineup of
applications that offer efficient data management and usage, as well assoftware for ensuring data integrity, which is an area exhibiting increasingneeds as analytical and measurement instruments become incorporated in
the IoT.

HORIBA’s core technologies
and signature products being
put into MLMAP2023’s
three focus fields

Energy /Environment
Mobility

The three focus fields of
MLMAP2023

Water

Power
generation(More on page 23)

Environmental
improvement
Water quality analysis
and examination
systems

Emissionmeasurement
systems

Stack gasanalyzers

HORIBA’s
core technologies(selected based on
their size of sales)

Infrared measurement

Air pollution
analyzers

Gas flow control

Technology to analyze

Technology to measure andcomponents in gas in real time

instantly control the flow of fluids

Automotive Test
Systems
Scientific

29

Raman
spectrometers

Process &Environmental

Automotive Test
Systems
Semiconductor

Process &Environmental

MLMAP2023
Mid-Long Term Management Plan

Attempting to create new value with
innovative core technologies
Philosophy

Recent themes for the Masao Horiba Awards

Creating new technologies and businesses through stronger
industry-academia and inter-industry collaboration

Materials / Semiconductor
Advanced Analytical and Measurement Technology in the Semiconductor Manufacturing Process

2019

Advanced Analytical and Measurement Technologies for an Efficient
Control System to Maximize the
Performance of Electric Power andBattery Usage

Energy / Environment

Next
award
focus

Materials /Semiconductors

Bio / Healthcare

Strategies

Since our founding, HORIBA has launched a large number of products through collaboration with universities andresearch institutions. We founded the Masao Horiba Awards in 2003 as part of our desire to give back to the analyticaland measurement industry that has buttressed our growth to date. By supporting young researchers and engineersinside and outside Japan, while also deepening industry-academia collaboration, we are contributing to the accelerationof innovation and promoting research projects with an eye toward long-term growth. At the awards ceremony each year,
award recipients and HORIBA development team members are able to build new relationships and enjoy face-to-faceinteraction with experts in each field. In this way, the event functions as a venue for open innovation.
Going forward, we will strive to advance our initiatives through joint development and technological tie-ups with othercompanies as we pursue inter-industry collaboration. In doing so, we will create new technologies and businesses with
unprecedented speed.

2018

Optical/Spectroscopic Measurement
Technologies for Life Science

Bio /Healthcare
Clinicaldiagnostic

DNA

Raman
spectrometers

Materials forsemiconductors

Pharmaceutical

Cells

Governance

Advancedmaterials

Drugdiscovery
Spectroscopic
ellipsometers

Chemicalconcentration
monitors

Hematology
analyzers

Elemental
analyzers

Fluorescenceand absorbance
spectrometer
Blood glucose
analyzers

Mass flow
controllers

Nanoparticle
tracking analysis
systems

Results

Particle analysis

Spectroscopic analysis

Liquid analysis

Technology to measure particles(diameter, number, weight,
and components)

Technology to analyze materials
by using ultraviolet light,
visible light, and near-infrared light

Technology to measurecomponents in, or characteristics of,liquids, such as pH, sodium,acids, alkalis, and glucose

Automotive Test
Systems

Process &Environmental

MedicalDiagnostic

Semiconductor

Semiconductor

ScientificProcess &Environmental

MedicalDiagnostic

Semiconductor

Scientific

Scientific

HORIBA Repor t 2019-2020

30

FEATURESFEATURE

Human Resources Strategies
The strength of people is the driving force for achieving business growth. At HORIBA, we use the phrase “talents” to convey that our employees are ourmost important assets. As evidenced to date by our BlackJack Project and Stained Glass Project, we have continuously striven to maximize theindividuality and skills of our employees. Going forward, through unique HORIBA human resource strategies, we are committed to putting our company
motto of “Joy and Fun” into concrete practice, while also building structures that allow each and every employee to shine.

Policies for fostering
human resources

The dedicated website for the Stained
Glass Project provides details of
HORIBA’s unique approaches tosupporting our human resources.

Web Link
Click!

Three
approaches behind
our diverse
human resources
strategies
Stained Glass
Project

BlackJack
Project

Basic human resources policies
When HORIBA was founded, it was a forerunner of today’s student start-up companies, so we are committed tofostering human resources imbued with the spirit of entrepreneurship.

Open and Fair

Point-added policy

Two-way communication

We ensure that important information and rules are shared
openly so that there is free communication within thecompany.
We provide fair opportunities for uniquely individual anddiverse human resources to challenge themselves.

HORIBA’s point-added policy doesn’t confer any points, even if
there is no failure, unless an employee takes on challenges.
Points are conferred for taking on challenges. If successful,
further points are conferred. This system supports andrecognizes ambitious human resources, while valuing thestart-up mindset.

Information is not conveyed, but rather it is shared. In order toremove the barriers of executives and organizations, andachieve true reciprocal communication in the process, weemploy various systems, such as global gatherings whereideas are directly voiced to management, as well as birthday
gatherings for employees.

HORIBA’s
five pillarsof “omoi”

For each and every employee to personally attain our company motto of “Joy and Fun,” we firmly hold and implement five omoi:● To be a part of a collaborative community, at the forefront of new ideas and creations.
● To achieve goals and make life memorable by fostering the highest intellectual potential.
● To reach across the globe to expand learning that captures key business developments, wherever they occur.
● To be proud of sharing what I do and what HORIBA delivers.
● To be helpful to the world and its people.

* Here, the Japanese word “omoi” is used to engender shared values among global employees.

31

MLMAP2023
Mid-Long Term Management Plan

Fully drawing out the unbounded energyof people
Philosophy

Measures to foster human resources
Fostering “omoi” and have it flower globallyWith programs such as our long-standing overseas recruitment and dispatching efforts (since the1980s), we have been working from an early stage to foster global leaders desiring challenges.
Additionally, we actively promote employee exchanges among Group companies inside and outside
Japan. Through mutual stimulation and by broadening perspectives, we are accelerating the pace ofgrowth for our human resources.

For two years in a row, 2019 and2020, HORIBA has been selected aspart of the Health and Productivity
Stock Selection Program and theNadeshiko Brand, which are jointly
judged by the Ministry of Economy,
Trade and Industry and the Tokyo
Stock Exchange.

Strategies

Wilson Chan, who spearheaded business expansion in the
ASEAN region at HORIBA Instruments (Singapore) Pte Ltd., wasappointed, in 2020, Head of the Science/Semiconductor
Segment Strategy Department at HORIBA, Ltd. He is honing his
skills as a global leader and building up further broad-based
management experience.

External evaluation

The Stained Glass Project—Helping diverse personalities and abilities shine

Three
Principles ofConduct

1 Transcend unconscious partitions and maximize individual abilities
2 Leverage two-way communication to maximize team capabilities
through mutual understanding
3 Pursue job satisfaction with a challenging spirit

Health and Productivity
Stock Selection Program

GovernanceIn the Stained Glass Project, which serves to promote diversity, we have stipulated Three Principles ofConduct, and, through more active exchange of human resources among Group companies, arestrengthening activities on a global level. Furthermore, we are working to further promote our Good
Place Work System, a telework/remote working program that is helping us achieve work-life balancealongside productivity improvements and adopted at all Group companies inside Japan in January
2019. At the same time, we are working to establish work styles that flexibly adapt to changes in theexternal environment.

In 2012, HORIBA’s top management

issued its Physical and Mental Health
Promotion Declaration. Inclusion in
the 2020 Health and Productivity
Stock Selection Program was
granted out of recognition for various
initiatives conducted in pursuit ofthis declaration’s goals.

The BlackJack Project, which is a unique HORIBA
activity for improving one’s work, functions by sharing
frontline information with management, and has
become firmly established in HORIBA’s corporate
culture. Going forward, we will strengthen activities in
rapidly growing regions within Asia, while also further
spreading the project throughout the Group, andpromote activities that bring management objectives tothe frontlines of business.

Results

The BlackJack Project—Supporting robust organizational strength

Nadeshiko Brand
Our inclusion in the Nadeshiko Brand
2020 was awarded out of recognition
for our initiatives promoting diversity,
primarily our Stained Glass Project.

Every year, we hold a World Cup competition that selects
the best thematic idea among the representative themes
from each country. In 2019, as in the previous year, thegold medal was given to an overseas Group company
project. Looking beyond the top prize winner, there isevidence of thorough support for the project globally due
to three of the top four awardees being overseas Group
members.

HORIBA Repor t 2019-2020

32

FEATURESFEATUREThe Executive Vice Chairman & Group COO’s approach to the development of human resources.

Enhance the development of HORIBARIANs globallyfor sustainable growth

Juichi Saito Executive Vice Chairman & Group COO
Focus on human resource development to achieve MLMAP2023
The management plan is something that needs to beof own country. We can find a variety of specialists who

updated according to the trends of the times. To dohave very deep insight into specific markets orthat, we need to correctly grasp the changes of thetechnologies and so on. While enhancing theirexternal environment and business circumstances. In

strengths, we, management, will instill the HORIBA way

this respect, I feel great significance and response toof management by sharing our management policy,

the fact that we formulated MLMAP2023 two years

company history, and unique corporate culture. In thisearlier. To achieve MLMAP2023, my mission is toway, we will enhance the development of resilient

support President Adachi, the leader of this plan, andhuman resources by extending each leaders’ strengths

devote myself to the development of human resources

and uniqueness.

who are the driving force of the business. Broadexperiences can cultivate a good sense of balance andleadership in business. HORIBARIANs who havepotential to be leaders will be given a certain career
path which provides management experience outside

33

MLMAP2023
Mid-Long Term Management Plan

“I want to do good things for the world and the earth.”

face-to-face communication. I visit various offices,

Having such motivation, many people who have awhen I can, and make good use of talking directly withgreat desire to work globally and are brimming withthe younger generation of employees at corporate

vitality, join our company. This is also the uniqueness of

events. What I learn from these discussions is change

HORIBA. To cherish and extend their value, we let thein the way of working and setting priorities. What isyounger generation make presentations at global

important to the younger generation is not only income

conferences, and give those who raise their hand an

and position, but also how much their work is

opportunity to be assigned to overseas offices at ancontributing to society. They may have been affected byearly stage. As such, we have set up many “stages”

the deep concern about global environmental issues,

where the next generation can shine even more.

Strategies

As management, what I consider most important is

Philosophy

What actions need to be taken for the next generation ofhuman resources, which I notice through talking with people

and big changes in society.

Support bold projects and light the future of HORIBA
better business plan. Some projects may not be

actions need to be taken than ever before. As an

approved or may result in failure. However, both

R&D-oriented company that opens up new markets

HORIBA and I have also reached success and grownwith high technological capability, we may faceafter overcoming many failures. I also expect the next

situations where we need to make bold investments.

generation of management to establish a resilient

At the same time, HORIBA does not stop a project

HORIBA through such experiences. To achieve

easily once we decide to invest, because HORIBA's

MLMAP2023, and eternal growth beyond that, I willpolicy is to invest with a long-term perspective. That is

execute my mission throughly.

GovernanceTo achieve sustainable growth, many more kinds of

why we need to be committed when we start.
Supporting such bold first steps is my role. In my
career, I have experienced all five of HORIBA’s
segments. Making use of that experience and thoroughResults

discussion, I will strongly guide the establishment of aApril 2020

Aggressively trying challenging work that I could never do by myself. Sometimes, it was not
successful. However, such experiences are now assets for me. I expect the young generation to
My thoughts on
tackle challenges and face them without fear of failure. Our role as management is to support“Joy and Fun” such attempts and lead to ensure no serious damage, even if it results in failure.

HORIBA Repor t 2019-2020

34

Business outline

Mobility x Measurement

Automotive Test Systems

2019 results■ Expansion of sales in Asia ahead of theSales breakdown

introduction of new emission regulations

ECT* business
11%3■ Increase in demand for fuel cell test systems

Amid robust sales of emission measurement systems,
sales expanded in the MCT business. Profit declined
due to an increase in R&D expenses and a decline inprofit margin, caused by factors including changes in

Sales by region
Americas 12%

Japan
27%

EMS*1 business 63% Europe 31%

Asia 30%

ITS* business
1%
4

2019
Net sales

81.0

the geographical sales mix. In 2019, we opened the
CELL 0 evaluation and testing facility for electrified
vehicle batteries and fuel cells within HORIBA BIWAKO
E-HARBOR, Biwako Factory, and worked to expand ourelectrification-related business.

billion yen

MCT*2 business 25%*1 Emission Measurement Systems *2 Mechatronics (MCT); measuring instruments for vehicles*3 Engineering Consultancy & Testing *4 Intelligent Transport Systems

Medium-term market trends

OutlookAs a background of globally tightening environmental regulations, the automotive industry is moving ahead with
development of next-generation mobility that will lead to cleaner cars and the transformation of society. The
measuring instrument market is expected to continue growing to meet technological requirements for exhaust gas
reduction, electrification, and connected and autonomous driving. Moreover, in response to the increasing burden
placed on automotive-related manufacturers by increasingly complex development processes, demand is
expected to remain strong for high-precision analytical and measurement equipment and for measurement
solutions that offer development efficiency and verification process improvement.

Net sales and operating
income (Billions of yen)■■ Net sales(left)

Operating income(right)120

Planned value set in the Mid-Long
Term Management Plan “MLMAP2023,”
announced in August 2019
80

73.3

49.5
40

35.7 38.6

55.0

43.2
5.8

79.6

120.0

15

12.0

Operatingincome planfor 202381.0

1064.2 62.2 7.6 7.7
Image at completion (opening at the end of 2021) —Three-fold enhancement of production capacity by 2023

6.4
4.4

2.8 4.4 4.2

5

3.5

1.6
0

0

2010 11

35

12

13

14

Aiming for growth in the electrification field
through proactive investment

15

16

17

18

19

2023
(Plan)In November 2019, we made the decision to construct a newbuilding for HORIBA FuelCon GmbH (Germany), which develops,
manufactures, and sells battery and fuel cell evaluation and test
systems. As electrified vehicle demand rises worldwide, the market
for evaluation and test systems for batteries and fuel cells is
expected to grow. Through this enhancement of production
capacity, we seek to leverage HORIBA’s global network to expand
our business.

Providing powerful support for the efficiency of vehicle testing and acceleration
in automotive development
HORIBA’s automotive Emission Measurement Systems (EMS) are used by national certification bodies throughout the world and hold a global market
share of 80%*. HORIBA provides complete test and measurement solutions to the world’s leading automotive manufacturers, including test systems
for engines, chassis, powertrains, brakes, and catalysts. We are also able to respond to wide-ranging demand in the Engineering Consultancy &Testing (ECT) business, offering a wide variety of products and services ranging from the development of batteries for electric vehicles to autonomous
driving technology, in addition to providing vehicle performance testing and R&D expertise.
* HORIBA’s estimates

Philosophy

BUSINESS TREND
Inauguration of CELL 0, an evaluation and testing
Progression of emission
01 facility
02
for electric vehicle batteries and fuel cells
standards by region/country■ Region/country standard

RDE regulations
take effect
Adoption of WLTP

Euro 5

Europe Euro 6b

RDE regulations
take effectEuro 6d

Testing method

Post Euro 6

Adoption of
WLTP

Post new long-term regulations

Japan

Strategies

Year 2018 regulations(Attachment 42)

Tier 2

U.S.
  



Market forecasts of vehicles,

China Ⅳ

China

Vehicleswithengines

India

BEV
FCV

Scheduled start ofRDE regulations

Bharat Stage Ⅵ
2014

2015

2016

2017

2018

2019

Present

2020

2021

2022

2023

2024

2025

Sources: Graph by HORIBA based on materials of the Ministry of Economy,
Trade and Industry; Ministry of Land, Infrastructure, Transport andTourism; Japan Automotive Manufacturers Association Inc.; and others* Modified by HORIBA based on IEA data from Energy Technology Perspectives 2017 © OECD/IEA 2017.
License: www.iea.org/t&c. It provides a long-term global scenario to limit the rise in global temperature to well
below two degrees Celsius (2°C), as set out in the Paris Agreement.

Promotion of BEVs and FCVs

● Increase in HEVs and PHEVs● Increase primarily through sales of gasoline/

diesel vehicles in emerging nations

Internal-combustion engines willcontinue to be an essential sourceof power moving forward

HORIBA’s exposure by business domain
Fuel cell vehicles (FCVs)

20 million units(15%)

Battery electric vehicles (BEVs)

120

2019
Plug-in hybrid vehicles (PHEVs)

ECT

Increase in the ratio of
BEVs and FCVs▼

Compressed natural gas (CNG)/
Liquefied petroleum gas (LPG)

EMS
Increase in vehicles
with engines

60

Hybrid electricvehicles (HEVs)

MCT
Increase in the ratio of
vehicles with electric
powertrains(HEVs/PHEVs/BEVs/FCVs)＋

Strengthening of fuelefficiency and exhaustgas regulations▼

DieselIncrease in need to
improve engines

Gasoline

Need for measurement
when engines,
electric motors,
and batteries are
combined (HEVs/PHEVs)＋
New demand formeasurement(BEVs)▼
Increase in demand formeasurement equipment▼

Diversification in vehicle
development
Increase in demand
for testing
Increase in outsourcingof development fromautomakers

3 businesssegments
Process &Environmental
Semiconductor
Scientific

Results

Passenger
vehicle sales(Millions of units)

New regulations
equivalent to Euro 6

122 million units

102 million units(85%)

China Ⅵ b

Bharat Stage Ⅳ● Tightening of CO2 emission regulations

Passenger vehicle
sales in 2040

China Ⅵ a

China Ⅴ
China Ⅵ

● Progress in vehicle

electrification technology

LEV Ⅲ (PM 1mg/mile regulations)

Governance

03 by power source*

CFR1066

LEV Ⅲ

Our approach to next-generation mobility development: Test in the Loop™
At the CELL 0 facility established within HORIBA BIWAKO E-HARBOR,
Biwako Factory, we are able to evaluate and test batteries and fuel cells,
as well as flexibly connect test systems to electric motors, powertrains,engines, and actual vehicles and models in the adjacent test cell. This
enables system optimization and highly accurate performanceverification of components and systems at the stages of automotive
development and design in an environment replicating that of actual use,
to support efficient development of electrified vehicles.

Federal Tier 3

California

Progress in thedevelopment of
next-generation
vehicle technology,
strengthening ofenvironmental
regulations▼
Increase in demand for
power generation,
automotive
semiconductors,
and batteries
Increase inmeasurement demand
related to the environment

0

2010

2020

2030

2040

2050

2060

HORIBA Repor t 2019-2020

36

Business outline

Global Environment
x Measurement

Process & Environmental
Instruments & Systems
2019 results■ Increase in sales of water quality analyzers in Japan

Sales breakdown
Other
14%

■ Decrease in operating income due to increase in

R&D expenses, etc.

Stack gas analysis 32%

Sales by region
Americas 13%

Japan 52%

Europe 13%

Increased sales of water quality analyzers in Japan andair pollution analyzers in Europe, among other factors,
led to increased sales. Operating income declined due
to factors including an increase in R&D expenses. In
2019, in response to the strengthening of environmental

2019
Net sales

19.5

regulations targeting ships, we began sales of water
quality monitors for ship exhaust emissions scrubbers
and worked to capture new markets.

billion yen

Air pollution
analysis 18%

Water quality
analysis 36%

Asia 22%

Medium-term market trends

Outlook

The Paris Agreement on controlling climate change and the Sustainable Development Goals (SDGs) were adopted
in 2015. Awareness of environmental conservation is growing on a global scale. Emerging countries are facing
requirements to comply with regulations and environmental improvement, and strong demand is anticipated.
In developed countries that have mature environmental regulations, there is potential for product replacement
demand as well as for growth in the field of manufacturing and production process improvements aimed at
improvement of quality and economic efficiency. HORIBA will meet the diverse demand brought about by changes
in the growth phases of society.

Net sales and operating
income (Billions of yen)■■ Net sales(left)

30

28.0
2.5

Planned value set in the Mid-Long
Term Management Plan “MLMAP2023,"
announced in August 2019

2.0

20

1.6
14.7

14.5
11.7

2.8

EG-100 water quality
monitor for ship exhaustemissions scrubber

1.5
1

0

0

13

Water
discharge
monitor
P

1.0

12

14

15

16

17

18

19

EmissionscrubberWater
intakemonitor

Water intake

1.6

1.7

0.8

37

Operatingincome planfor 20232

19.3 19.5

1.2

2010 11

Exhaust emissions

3

16.7
16.7 17.4 2.0
16.4

13.7

10

Water quality monitor to meet ship
exhaust emissions regulations

Operating income(right)2023(Plan)

Exhaust emissions
Ship

Water
discharge

Seawater

Exhaust emissions-related regulations have been extended tooceangoing vessels, and environmental regulations concerning
sulfur concentration in ship fuel oil are being tightened. Scrubbers
used to clean exhaust emissions are increasingly being retrofitted
to existing engines. HORIBA offers water quality monitors thatmeasure water intake and discharge in scrubbers. We will continue
contributing to society through measurement technologies that
protect the global environment.

HORIBA helps develop measurement technology for global environmental preservation,and production and quality management processes
We supply a broad range of analysis and measurement instruments for analyzing air pollution, water quality, and soil quality. We play an important rolein gas measurement and monitoring of industrial wastewater in the energy and heavy industries such as electric power, steel, and chemical industries;
purified water management for medical and semiconductor use; and water quality monitoring and control for food, as well as cosmetics fields. In
essence, HORIBA’s analytical and measurement technology contributes to leading technological innovation, which supports public safety, security,and health in addition to global environmental preservation. This also means that we help achieve sustainable development, as advocated by the
Sustainable Development Goals (SDGs).

Philosophy

BUSINESS TREND

01 Changes in measurement needs Increased awarenessContribution to productivity
improvementof global environmental
preservation

Phase for improving
industrial processes
Phase for improving the environment
Strategies

DemandSDGs
The Paris
Agreement

Approaches to environmental regulations
Product sales/Repair/Maintenance
Developing
countries

High productivity/Optimization/Data management
Emerging
countries

Developed
countries

Phase of social growth
Emerging Countries (Southeast Asia, etc.)

Demand for measurement within production and manufacturing
processes to contribute to improvement

Approaches to environmental regulations

Industrial process improvement

Needs

Respond to local needs
Enhance localizationof production andengineering

China

India

・Designation of industrial pollution
・Obligation to measure theenvironment
・Environmental compliance of thermal
power generation

Gas

Improvewater
quality

Bring successful businessmodels to other countries
Develop businesswith local partners

Industrial
process
measurement

・Reinforcement of low-concentration
exhaust emissions regulations
・Expansion of VOC regulations
・Subdivision of atmosphericmonitoring zones

Electronic
industry/marketIndia

・BOD regulations

Improve combustion
efficiency inpower plants
Capture demand forfactory-related water
quality/gas measurement

Comprehensive
support insemiconductor
manufacturing

Realize a skill
transfer and reduction
in manpower infacility management

Data
management

・Adopt local specifications

Enacting fundamental measures to deal with air pollution problems, such as
the globally widespread issue of fine particulate matter (PM2.5), is possible
only by clarifying the mechanisms of occurrence. Our PX-375 Continuous
Particulate Monitor with X-ray Fluorescence is able to simultaneously analyze

PM2.5 and other air
pollution issues areshared worldwide

ResultsGas measurement: complying with globally-expanding
environmental regulations through air pollution monitoring

Higher productivity
in the petrochemical
sectorHakaru EXpress

industry-academia
China ・Local
collaboration

Water

New measurement solutions
for manufacturing andproduction processes

GovernanceImproveairpollution

02

Developed Countries

Demand for measurement of emissions sources at the endpoints ofproduction and manufacturing processes

PM 2.5
Continuous
Particulate
Monitor with X-ray
Fluorescence
PX-375

Identification of sources of air pollution
Elucidation of mechanisms of occurrence

constituent elements and measure the mass concentration of PM2.5. It is
used in air pollution monitoring in both emerging and developing countries.

Toward prompt and appropriate
corrective measures

HORIBA Repor t 2019-2020

38

Business outline

Health x Measurement

Medical-Diagnostic
Instruments & Systems
2019 results■ Robust sales in the private practitioner

Sales breakdown

market in Japan

Clinical chemistry,
Blood glucose
16%

Although sales grew in the private practitioner market in
Japan, sales declined overall due to weakening of theeuro which led to a decline in yen-denominated net
sales. Operating income declined due to factors
including an increase in R&D expenses.
In 2019, we worked to expand our product lineup in the

Immunology 7%
Other 1%

Sales by region
Americas
20%

Japan
25%

Europe
33%

Asia
22%

2019
Net sales

25.3

domestic private practitioner market and to build a sales
promotion structure for the hospital market.

billion yen

Hematology 76%

Medium-term market trends

OutlookGlobal population is rising mainly in emerging countries and healthcare costs are generally on a rise. In developed
countries, there is an increasing demand for high-precision, efficient medical devices, so as to realize more
efficient medical services. Moreover, in Japan and other developed countries, medical cost control and preventive
medicine initiatives are moving forward in response to the aging of society. There is a centralization of medical
treatment at specialized hospitals and at testing centers that collect large numbers of test specimens, as well as
decentralization occurring through regional medical treatment. Needs are increasing in each of these directions,and a bipolar division of testing is expected to advance.

Net sales and operating
income (Billions of yen)■■ Net sales(left)

40.0

40Planned value set in the Mid-Long Term
Management Plan “MLMAP2023,”
announced in August 201930

26.8 27.0 27.4 26.5
22.5

23.4

25.1

26.0

4.0

2.4

10

1.9

2

1.8

1.7

1.3

0

0

2010 11

39

4

Operatingincome planfor 2023

2.8

2.3

12

13

14

15

16

17

18

For small- and medium-sized hematology
analyzers (private practitioners)

For large-sized
hematology analyzers

Stable operationof equipment

Businessstreamlining

Improvement of
testing efficiency

・Predictive maintenancesupport・Maintenance・Electronic medical
records
・Data linkage

・Measurement data management
・Automation of result verification

25.3

20

2.4 2.4

8

6

22.4

3.1

Contributing to the improvement of efficiency
at sites for medical care through the use of IT

Operating income(right)19

2023(Plan)At medical treatment sites, efficiency improvements are moving forward
in terms of both testing, which measures physical capabilities, anddiagnostics, which determines the state of health and state of a disease.
HORIBA offers domestic private practitioners an electronic medical
record collaboration system and a maintenance management systemfor predictive maintenance that avoids stoppages in equipment usage.
In addition, for hospitals introducing large-sized hematology analyzers,
we provide applications that support data management, including
business process improvement and testing quality. These contribute toefficiency in both testing and diagnostics.

Contributing to a healthy life through in-vitro diagnostic systems
In the global market of in-vitro diagnostic systems; HORIBA provides instruments and reagents for blood sample testing throughout the world. The
segment’s business model is based on recurring revenues generated from sales of reagents. We aim to ensure stable earnings by expanding ourinstalled base of medical diagnostic instruments. In particular, HORIBA’s strength is in small and medium-sized hematology analyzers for point of caretesting (POCT)* in clinics and satellites in hospitals such as operating rooms, as well as small-to medium-sized hospitals and commercial laboratories.
* Point of Care Testing (POCT): A general term for testing performed at locations close to patients, such as private practitioner offices, diagnostic clinics, hospital wings, and outpatient clinics.

Philosophy%86,1(6675(1'01 Societal issues and business opportunities in the in-vitro diagnostic systems market
Shared issues

Societal phase

Developing
countries

Individual issues

Limited access to
medical treatment
Improvement ofpublic health

Reform of medical
systemsDrug-resistantbacteria
countermeasures

Advancement of aging
Developed
countries

Soaring medical costs

・Development andexpansion of medical
infrastructure

Business expansion in
still-growing emerging
markets

・Centralization andexpansion of testing

Strategies

Changes in medical
treatment demand

Contagious
diseasecountermeasures

Business opportunities
for HORIBA

Market forecast

Provision of solutions
that enhance
testing efficiency

・Growth of demand forindividual diagnostics
・Progress in preventive
medicine

Business expansion
in POCT markets
close to patients・Proper management andutilization of testing data

02 Provision of highly reliable rapid diagnostics
Overseas example

Governance

Medical infrastructure will expand and change in line with the development of society. In emerging countries, first, new medical infrastructure
will be introduced, and it will gradually expand. In developed countries, the testing market is undergoing a bipolar division, with thecentralization of testing for greater per-unit efficiency advancing against a backdrop of medical cost reductions occurring at the same time
as decentralization and localization of testing for rapid diagnostics and routine handling of chronic illnesses. Patients’ needs are diversifying
as well, and the provision of medical care tailored to individual patients is expected to progress.
HORIBA boasts strengths in private practitioner-oriented testing equipment used close to patients, while also providing solutions for
improving efficiency with large-sized hematology analyzers. We will continue to offer products and services that help resolve issues insociety.

A global network for product development

03 and reagent production

Domestic example

Japan

Development/production
base (Systems/Reagents)
Medium/large productdevelopment technologies

Development/production
base (systems/reagents)
Small product development
technologies

Results

FranceYumizen M100 Banalyst
Introduction of products inpediatric emergency
outpatient medicine(U.K.)

Introduction of new products forthe domestic POCT market

The speed and reliability of testing are both important in improving
POCT diagnostic efficiency. HORIBA sells systems that cansimultaneously measure both blood cell count and C-Reactive
Protein (CRP), a protein produced by the body in response tointernal inflammation, thereby achieving more rapid and reliablediagnostics. We will continue to offer unique technologies to bringabout a society in which people enjoy healthy lives.

India

China

Brazil

Production base
(Reagents)

Production base
(Systems/Reagents)

Production base
(Reagents)

With development bases in both France and Japan, HORIBA
supplies products globally. We have built a reagent production
system that allows us to stably supply test reagents, which areconsumables, in regions of large-volume use. We will accelerate
new product development to meet market needs and, leveraging
our global network, will expand our business in emerging
countries and their growing markets.

HORIBA Repor t 2019-2020

40

Business outline

Semiconductor Industry
x Measurement

Semiconductor
Instruments & Systems
2019 results■ Modest recovery from the end of the year

Sales breakdown

despite semiconductor manufacturers’
continued investment adjustment

Gas analyzers 2%

Capital spending by semiconductor manufacturers on
advanced processes for logic IC manufacturing
remained robust. However, capital spending related tomemory IC continued in an adjustment phase. While
sales to manufacturers of semiconductor manufacturing
equipment recovered slightly over the end of the year,
sales and operating income declined for the full year. In
2019, we undertook improvements in factory production
processes, such as automation of some processes andproduction line improvement aimed at the market
coming back, and addressed materials costs throughfinding new suppliers.

Chemicalconcentration
monitors
11%

Reticle/mask
particle detection
systems 1%

Sales by region
Americas 13%

Japan
35%

Europe 7%

2019
Net sales

47.1
billion yen

Mass flow controllers 86%

Asia
45%

Medium-term market trends

Outlook

An increase in processing volume at data centers and penetration of Artificial Intelligence (AI) and the Internet ofThings (IoT) have significantly boosted demand for semiconductors and the range of their use. In addition,
advances in technology and production process, such as miniaturization and 3D-integration semiconductor
production processes, have significantly impacted demand for semiconductor production equipment. The latest
semiconductor manufacturing processes require advanced gas flow control, and demand for highly precise flow
control is expected to continue.

Net sales and operating
income (Billions of yen)■■ Net sales(left)

Operating income(right)

80

60

20

77.0

Planned value set in the Mid-Long
Term Management Plan “MLMAP2023,”
17.0
announced in August 2019
15.6

17.7

57.7
53.3

Operatingincome planfor 2023
15

40

20

10.7

5

2.2
0

0

2010 11

41

12

13

14

15

16

17

18

19

Dry etching
CVD/ALD

10

4.8

4.9

Semiconductor manufacturing
processes

Sputtering

47.1
38.8
35.3
9.6
28.9 9.4
27.6
24.1
24.6
6.4
6.3
17.8

Mass flow controller applications

2023(Plan)In the semiconductor manufacturing process, mass flow controllers
regulate gas and liquid supply lines with great precision. These devices
are used as components in semiconductor manufacturing equipment, inprocesses such as deposition, etching, and heat treatment. As etchers
become more numerous on manufacturing lines due to increasing
3D-integration and miniaturization in memory ICs and logic ICs, we have
expanded sales in response to demand for space-saving mass flow
controllers with accurate and fast responsiveness. We will continue
supplying state-of-the-art key components and making contributions tothe semiconductor industry.

Contributing to yield enhancement and technology innovation in semiconductor manufacturing
processes with HORIBA’s flow control and measurement technologies
Mass flow controllers, used in the manufacturing process (front-end) of devices such as semiconductors, are a major product of the Semiconductor
Instruments & Systems segment. We have a leading global market share*, largely on the strength of our flow control technology that enables yieldenhancement and miniaturization in the semiconductor manufacturing process. We will provide solutions for responding to technological advances inthe semiconductor manufacturing process, in addition to measuring equipment such as chemical concentration monitors, and establish an important
position in the growing semiconductor industry.
* HORIBA’s estimates

Philosophy

BUSINESS TREND

01 Matrix of the semiconductor manufacturing process market and HORIBA’s technologies
Semiconductor manufacturing line
DeviceLogic ICManufacturing
equipment

Marketrequirements

Production
and supply

Cleaning

Flow control

Responsibility
as a supplier

Deposition

MeasureLithographCombineEtching

Generate

The growing use of telecommunications by individuals and the
spread of the IoT have generated enormous volumes of data,
dramatically increasing the demand for information storage andthe need for analysis such as machine learning. Against the
backdrop of this robust final demand, production volume of thelogic ICs needed for information processing and the memory ICs
needed for information storage has grown, and the semiconductor
manufacturing equipment market continues to expand.

Development

Substantive humanresources andequipment

As a supplier of key components for semiconductor
manufacturing equipment, HORIBA believes that our mission is tohone our technologies and provide stable supply, while
responding to technological advances in semiconductor
manufacturing processes such as miniaturization and
3D-integration.
In addition, as a data generator that provides analytical andmeasurement equipment, we believe that we can contribute tomore efficient failure prediction in manufacturing processes bycreating the data needed for machine learning.

Governance02 The demand environment in the semiconductor industry

Flexible production
structure

Strategies

Memory IC

HORIBA’s technologies

Manufacturing and mass production

Research into
state-of-the-art materials

FACILITY

PROCESS

Manufacturing factory

Production line

Need to research and develop
state-of-the-art materials

Need to confirm that values for water discharge andexhaust emissions from factory equipment are within
regulatory values

MATERIAL

Need to check chamber condition

Need to check condition of the reticle’s pellicle

Reticle/mask particle Particle Removers
detection systems

Monitoring offactory emissions

Endpoint monitors

Process gas monitors

Cleaning

Lithography

Managementof wastewater

Results

Raman Spectrometer

Radiation
thermometers

Deposition
Etching

Chemicalconcentration monitors

Glow discharge opticalemission spectrometry

X-ray fluorescence
Dissolved
analyzers
oxygen monitors
Water quality
analysis andexamination systems

Air pollution
analyzers

Stack gasanalyzers

Need to monitor optimal mixing anddilution of chemicals

Ellipsometers

Liquid source
Gas monitors vaporization system

Need to stabilize vaporization of liquid materials

HORIBA Repor t 2019-2020

42

Business outline

R&D x Measurement

6FLHQWLƓF,QVWUXPHQWV
& Systems
2019 results■ Decline in sales in Asia

Sales breakdown
Water quality
analysis 9%■ Increase in sales of high value-added

products tailored to customers
While sales of new products increased in theAmericas, sales to Asia and Japan declined,
resulting in an overall decline in sales. Operating
income increased due to an increase in sales ofhigh value-added products tailored to customers’
needs.
In 2019, as Jobin Yvon SAS (now HORIBAFRANCE SAS) celebrated the 200th anniversaryof its founding, we worked on promotions tomake further inroads with this historic brand.

Other 4%
Molecular &microanalysis
35%

Particlecharacterization
11%

Sales by region
Americas
28%

Japan
27%

Europe
20%

Asia
25%

2019
Net sales

27.1
billion yen

Optical components
23%

Elemental
analysis
18%

Medium-term market trends

Outlook

Amid global demand for solutions to societal issues, expectations are growing for state-of-the-art technological
R&D in fields such as advanced materials, biotechnology, energy, semiconductors, and water. As IoT and machinelearning evolve, it is expected that demand will grow for more accurate and precise measurement and analytical
data to improve efficiency in data-dependent industrial processes. State-of-the-art R&D is progressing throughcollaboration across organizations, and the open innovation movement is accelerating within industry, academia,
and government. We expect that measurement and analytical equipment manufacturers will play an ever-growingrole in this.

Net sales and operating
income (Billions of yen)■■ Net sales(left)

Operating income(right)Analysis of new and other materials

40

4

30

Operatingincome planfor 2023
3

25.6
20

35.0

Planned value set in the Mid-Long
Term Management Plan “MLMAP2023,”
announced in August 2019

20.8

22.0

27.0

25.7 26.1

3.5

27.7 27.1

22.9
20.4

2
Raman spectrometers

1.4
10

1.1

1.2 1.3
1

0.9
0.9 0.9

0.4

0.7
0.2

0

0

2010 1143

Nanoparticle analyzer

12

13

14

15

16

17

18

19

2023
(Plan)

Technological changes in the fields of energy and mobility, along withtrends such as higher performance in semiconductors, are increasing
the need for measurement and analysis, such as the analysis andevaluation of materials, including new materials. Our Scientific segment
will collaborate with other segments to bring its measurement andanalysis technologies to markets.

Supporting HORIBA’s core technology and generating the leading edge of scientific technology
HORIBA began its history with the R&D leading to Japan’s first glass electrode pH meter. HORIBA’s analyzers contribute to R&D activities at the frontlineof scientific technology exploring the unknown frontier of science by analyzing gases with infrared light, elements with x-rays, and conducting Raman
spectroscopy and fluorescent spectroscopy with spectrographic technology. Also, HORIBA’s analyzers are widely used in fields such as basic research,
forensic science, archaeological surveys, foreign object examination and defect analysis for pharmaceuticals, foods, and electronic components.
Additionally, the Scientific Instruments & Systems segment develops basic analytical methods and core measurement technologies, which play key roles
in providing new technologies to the four other business segments of HORIBA.

Philosophy

BUSINESS TREND

01 The Scientific Instruments & Systems business model
Existing businessTechnologies Global human resources
Raman
spectrometryHigh-end products

Approach

Academia/

Businesscreation in
the Scientificsegment

UnitedStatesCustomized
products

General-purpose
products

Industrial
processes

Japan

X-ray

research

Components

FieldsAdvancedmaterials/
Bio

Strategies

Markets

AdvancedElectrochemistry
Particle-size
distribution

Measurement equipment

FranceNanoparticle
measurement
Fluorescenceand absorbance
spectrometry

New development

Energy/Cross-segment
businesscreation

Semiconductors/
Water

Analyzers for life sciences
Micro-laser
Raman Spectrometer● Encapsulated drug component● Label-free analysis of cell state

Nanoparticle
Tracking Analysis System

Fluorescence andAbsorbance Spectrometer

GovernanceTransmission
Raman Spectrometer● Intermolecular interaction

quantity analysis

Parkinson’s disease drug analysis

Evaluation of differentiation stateof ES cells, iPS cells, etc.

● Exosome* particle diameter

distribution analysis

Evaluation of cohesive quality ofvaccine/antibody drugs

analysis● Simultaneous measurement ofabsorbance and fluorescence
Effective in quality
control of vaccines*Exosome: A granular substance of 50-150nm in diameter, secreted by various cells

Results

equipment manufacturer Jobin Yvon SAS (now HORIBA FRANCE SAS),
02 Opticalwhich joined the HORIBA group in 1997, celebrated its 200th anniversary in 2019.

New Product:
LabRAM SoleilTM,
the first multimodal
Raman microscope
designed for
UV-VIS-NIR imaging

The commemorative ceremony was held
in November 2019, with 465 participants.
Professor Gérard Mourou, recipient of
the 2018 Nobel Prize in Physics,
delivered the keynote speech.

HORIBA Repor t 2019-2020

44

CFO MESSAGE

HORIBA is maximizing corporate
value through investments withlong term perspective and asset
efficiency improvement initiatives
Masao Okawa

Managing Director and General Manager of General Administration Division
ProfileHe joined HORIBA, Ltd. in 2017. He had worked for the Bank of Japan since 1988 and accumulated global
experience serving in a variety of positions, including at Harvard Law School (LL.M.’94) and at the Bank forInternational Settlements in Basel, Switzerland, as well as Chief Representative of the office in Frankfurt,
Germany and Branch Manager of the Kyoto Branch of the Bank of Japan. Taking advantage of insights onfinance, governance, and global experience at the Bank of Japan, he is currently engaged in forming a global
financial strategy and enhancing compliance and corporate governance as HORIBA's General Manager ofGeneral Administration Division.

Results of HORIBA Group – Looking back on the year ended December 31, 2019
In fiscal 2019, net sales decreased 10.3 billion yen to 200.2 billion yen (down 4.9% year-on-year). Sales decreased in Japanand Asia, mainly due to semiconductor manufacturers’ capital expenditure adjustments. On the profit side, operating profit
decreased 7.9 billion yen to 20.9 billion yen (down 27.5% year-on-year), due to a decrease of sales and a change in thegeographical sales mix in the Automotive Test Systems segment and an increase in R&D expenses in new fields.
In accordance with these results, we declared a dividend of 130 yen per share as shareholder returns for the fiscal year
ended December 31, 2019. HORIBA has adopted a policy of setting its total shareholder return ratio, which includes
dividends and share buybacks, to about 30% of consolidated net income attributable to owners of parent. Moving forward,
we intend to raise corporate value through business growth and continuously provide returns to all of our owners(shareholders).

HORIBA’s growth cycle
HORIBA was established as an R&D-oriented start-up company and has grown by improving its technological capabilities
and providing products that meet the needs of society. We make good use of the wide variety of technologies we have,promote balanced management under a portfolio with our five business segments, and generate profits by continuing to sellhigh-value-added products. Profits which are gained from business activities are returned to our owners (shareholders), and,at the same time, they are used for R&D investment to generate seeds for future growth. My role is to provide support insuch a way that the cycle of growing the business, which consists of generating profits from business activities, turning
those profits into investments, and controlling cash flows, turns appropriately.
■ Geographical sales mix■ Dividend payments and total return ratio
%

Japan

Americas

EuropeChina

Asia (excluding Japan and China)

%

100

75

24.8

25.2

33.3

38.4

34.9

20.6

19.6

23.6

27.8

27.5

40.9

38.3

41.1

45.0

44.5

33.2

31.0

50

33.2

30.2

32.1

Sales
(BJPY)

45

Dividend per share (right)
Commemorative dividend− Total return ratio (left)

120(including commemorative
dividends and share buybacks)

90

Target 30%
in total
return ratio

52.1

56.5

65.0

65.9

62.1

2015

2016

2017

2018

2019

171.9

170.0

195.3

210.5

200.2

130
120

67

90

70
60

50

44

40
13

17

2009

2010

27.6

26.8
2011

2012

2013

2014

2015

35.4

30.0

30.6

28.2

2008

Yen
150

145

116

60

60

0

Change in dividend
policy in fiscal
2013 and after

85

30

25

0

150

2016

30

27.4

2017

2018

2019

0

In fiscal 2013, we switched from a non-consolidated dividend payout ratio, which isbased on non-consolidated net income at HORIBA, Ltd., to a total return ratio, which isbased on HORIBA’s consolidated net income.

The role of the our finance function in MLMAP2023

Philosophy

The social environment has changed drastically, and accordingly the role that the market expects HORIBA to play has beenchanging. Under the Mid-Long Term Management Plan, MLMAP2023, we promote the entry into new business areas andtransform our business structures by managing business resources properly. At the same time, our finance function, which
supports business activities, needs new challenges.
The first challenge is to improve asset efficiency. We promote management that emphasizes asset efficiency by using
HORIBA Premium Value (more on page 47), in order to invest aggressively to achieve strategic growth.
The second challenge is to strengthen our global finance structure. Business globalization has advanced, particularly inemerging countries. We strengthen the finance structure that supports stable business activities even in drastically changing
business environments. Also, we minimize financial risks in emerging countries by creating organizations rooted in the field.
The third challenge is to support a change of the business model. The data business which we will expand, goes hand inhand with the product life cycle, and it will be a different field from our existing business of providing high value-added
hardware, such as analysis and measurement equipment. We support the establishment of a business model that is
accepted by society and enables sustainable growth.

Basic approach to the financial strategy

1

Point

Maintain high ROE
As stated in our MLMAP2023, HORIBA aims
to achieve ROE at 10% or more in 2023. ROE
is one of our most important management
metrics.

Point

3

Link shareholder returns
to earnings growth

Improve capitalefficiency to maximize
corporate value

We set total returns (the combination of dividend
payments and share buybacks) to shareholders as
approximately 30% of consolidated net income.
This payout ratio reflects due consideration given to
ensuring stable management and retaining earnings
as capital for aggressive business development.

We conduct proactive investment, which is
expected to result in creating future corporate
value. Additionally, each group company andeach business segment sets and manages its
own capital efficiency targets to maximize
HORIBA’s corporate value.

Point

3

Continual investment
from long-term
perspective

Flow of cash

Point

Generating profit by providing
high-value-added products
and services globally

1

GovernanceCash flow
Business management
Business operation
based on balanced
management

2

Strategies

Point

Relationshipwith stakeholders
Flexible financing
We issued corporate bonds of 30
billion yen in October 2019 to fundthe bonds redemption in 2020 andbeyond.
Point

Shareholder return2

Results

Approach to continual investing
Investment
in R&DWe invest approximately 10% of sales in R&D, and continue this policy even in recessions, when many
companies reduce their investment. This has allowed us to increase market share when demand recovered.
We believe that continuous R&D investment is the source of our competitiveness.

Capitalexpenditure

Regardless of short-term declines in asset efficiency, we invest for the future from a medium- term perspective.
While high-level investment has continued in order to respond to changes in the market environment, we aim to
maximize return on investment in several years, taking into account the asset turnover ratio and cash flow foreach investment project.

Approachto M&A

From a long-term perspective, we have made friendly acquisitions of corporations that have unique technologies
that complement or have potential synergies with HORIBA’s technology portfolio. Our legal, intellectual property,
and finance departments have been actively involved in the due diligence process or so.

HORIBA Repor t 2019-2020

46

CFO MESSAGE

HORIBA Premium Value
It has been three years since the introduction of HORIBA Premium Value, an original KPI used in improving asset efficiency.
This HORIBA Premium Value has been incorporated into KPI processes such as budgeting, monitoring, and evaluating
business performance, and has been proactively supported by employees through personnel training. The PDCA cycle ateach business level has been steadily implemented, with concrete cases of improvement resulting. HORIBA will acceleratethese processes.
On the other hand, we are ready to invest so as to respond to the drastic changes in the external environment. Even if the
HORIBA Premium Value decreases in the short term, we aim to increase HORIBA Premium Value in the long-term.
We put priority on long-term sustainable developments and, as such, the introduction of HORIBA Premium Value will nothamper investment.
■ Tree of indices of asset efficiency

Formula
HORIBA
Premium Value=ーOperatingincomeCost ofcapital*
Budgeting

Value Driver
Net
sales

Cost of
sales

OperatingexpensesWorking
capitalFixed assets

Examples of activity targets
by segment
Inventory optimization

New sales channels
development

Business
performance
evaluation

Monitoring

Lead time reduction
New products launch

Early collection of accounts receivable* Invested capital × In-house rate of cost of capital. We apply an original benchmark that is based on HORIBA’s WACC andcomparable with operating income in connection with our cost of a capital target. Currently, evaluation is conducted byapplying the same rate to all regions and businesses and monitoring degrees of improvement.

■ CASE: Raising awareness through HORIBA Premium ValueHORIBA has promoted business improvement activities through the BlackJack Project(more on page 32). While the concept of HORIBA Premium Value has penetrated into
employee perspective, activities that consider the financial statement’s balance sheet
have been increasing.
For example, by thoroughly monitoring material levels and reviewing proper inventory
levels with statistical methods, we successfully shortened inventory turnover days at
HORIBA Ltd. Furthermore in manufacturing activities, there have been cases ofshortened lead times and reduced costs through process improvements.
We will apply these successes to group companies and aim to improve profitability andoptimize inventories.

Instill HORIBA Premium Value in employees throughthe in-house financial education

My thoughts on “Joy and Fun”
I enjoy watching professional American football games. The game is exciting to watch;creative strategies are used, while tactics are selected from various options, and thesestrategies and tactics are executed as one team. At the same time, each member of the teamresponds and adjusts flexibly to the opponent’s strategies and tactics. At HORIBA, every
employee contributes with motivation, and I always work with passion and flexibility as amember of HORIBA. I would be happy to look back at these things with “Joy and Fun.”

47

Unique global operation

Management
functions

Production andservices
Sales
R&D

Regional
control

Strategies■ HORIBA’s global matrix management

Philosophy

HORIBA expands its five business segments globally, and thefront lines of these organizations operate as small units.
Therefore, we develop organizations that can operate
independently, by building organizations rooted in the field. On
the other hand, we also need a system in the headquarters thatgathers on-site information and provides feedback. HORIBA holds global meetings (Global Strategy Meeting/Global Budget
Meeting) where the management teams of group companies come together once every six months. Through thesemeetings, we have succeeded in creating one company spirit as a group, while respecting local autonomy. HORIBA has
developed through M&A. HORIBA’s finance group, which also expands globally, takes a hands-on approach. There areapproximately 220 people in finance around the world, and all CFOs of the group are hired from local human resources. The
finance group holds an International Controllers’ Meeting (ICM), which is like the top management meeting, a global meetingfor managers of finance to come together. At the 2019 ICM, we discussed measures to improve investment efficiency. We
steadily share group policies by enhancing face-to-face communication while building an organization that benefits fromvarious local contributions. In order to achieve MLMAP2023, which supports the transformation of the business model, we
will make best efforts to strengthen corporate structure, to enable finance to support the business, and to further enhance
corporate value.

Plan and executethe strategy

Auto
P&E

Medical
Semi
Scientific

Governance

Japan

Asia

AmericasInternational Controllers’ Meeting：
The CFOs of each group company get together to discuss
financial issues and share necessary and updated information.

EuropePromote global operation

Results

HORIBA has promoted autonomy in business operation in each region globally.
We plan and execute business strategy based on Regional Strategy Units, which
are subdivisions of business segments and regions. Global meetings at both the
management level and the functional level are held to create one company spirit.

Emphasize cash flow
“Cash is King. Cash Flow is Queen!” This is the phrase that you often hear when facing a crisis. The global expansion of
COVID-19 and the accompanying recession have turned the world economy to crisis mode. Fortunately, HORIBA issued
corporate bonds for the first time in six years in 2019, and has secured cash liquidity. However, cash flow is necessary, notonly to respond to this economic crisis, but also to continue investment during and after it. The global finance group has
been responding to issues flexibly by using communication opportunities such as the ICM, which was held online this year,
and supports medium-term business growth by putting priority on cash flow.
April 2020

HORIBA Repor t 2019-2020

48

Corporate governanceCorporate governance
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Corporate governance structure diagram

General Meetingof Shareholders

Point 1

Choose to be a Corporation with
Audit and Supervisory Board
Point 2

We have appointed outside
directors since theestablishment of thecompany in 1953.

rol

nt
l co

Supervise/Monitor
Appoint/Dismiss

rna

Inte

ReportBoard of Directors
Directors:

ReportSelect/Dismiss
Business Execution
Instructions

8

Supervise

Number who are outside& independent directors: 3 (1 female)

3HUFHQWDJHRIRXWVLGH
GLUHFWRUVRQWKH%RDUGRI'LUHFWRUV2XWVLGHGLUHFWRUV

2014

2019

Outside directors:

Outside directors:

Directors: 6

Directors: 8

1

3

2014

17%

Discuss/Report

Representative
director

2019

38%
ReportEvaluation of the Board of Directors’ effectiveness
From December 2019 to January 2020, we distributed to all eight directors a questionnaire concerning the Board of
Directors’ effectiveness and received a response from each of them. The questionnaire had questions regarding thethree roles and responsibilities of the Board according to Basic Rule 4 of the Corporate Governance Code, thecomposition of the Board (number of members, diversity, knowledge, experience, ability, etc.), the number of
meetings, the hours of discussion, the items discussed, and the content of discussion. Reponses were received fromall members of the Board. The result was that the Board judged itself to be effective in its current state. In addition,
various opinions were shared concerning the contents of discussions held by the Board of Directors, such as calling
for the enhancement of qualitative reporting on business execution and that pre-briefings and opportunities for
explaining the background to resolutions to outside directors are ample as well as very effective.

6WUHQJWKVRI
+25,%$âV%RDUGRI
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LeadershipManagement
strategies

Industryknowledge

Global business

Sales andmarketingTechnology and
R&D

Governance

Legal affairs

Finance andaccounting

Appoint/Dismiss

Independent Auditor
Audit
and Supervisory
Board Members:

Corporate governance system

3

Appoint/Dismiss

Number who are
outside & independent
auditors: 2 (1 female)

HORIBA has adopted the type of organization defined as a“Corporation with Audit and Supervisory Board” in the Companies
Act. Based on this organizational design, HORIBA, Ltd. has

Point 2

Coordinate

appointed outside directors and Audit and Supervisory Board
Members since its founding in 1953 to avoid management with an

We have appointed
Audit and Supervisory
Board Members since
the establishment of
the company in 1953.

introverted approach.
In 2019, the Board met 12 times, had energetic discussions, andmade prompt decisions. In addition, HORIBA introduced a
corporate officer system in 1998 to make smooth and agile

Philosophy

execution of operations under the supervision and guidance of
directors.

Supervise/
Monitor

The Audit and Supervisory Board performs objective andFinancial Audit
Litigation, Exports,
Legal Affairs, Fixed Assets,
Public-Sector Grants,
Subsidiary Audits

appropriate auditing and monitoring of the work of the Board of
Directors, in cooperation with independent auditors, internal
auditing (Group Internal Audit Office, which is positioned directly
under Executive Vice Chairman & Group COO), and the Outside

Internal Auditing

Directors.

(Group Internal Audit Office)Integrated Management System (IMS)

Strategies(Quality, Environmental, Safety & Health,Quality of medical equipment, Business
continuity management, and Road traffic
safety management)

Coordinate

Supervise

ring

to
oni

M

Supervise

Operations Committee/
Management
Committee, etc.

Committees,
etc.*1s

Direct and
Order

s
ine n
Buscutio
Exe

ReportAdvise/Propose

Point 3

Co

p

Com

Governance

We have been employing a
corporate officer systemsince 1998.

ce
lian

tee

it
mm

Coordinate

e*

te
mit

2

%

%

%

Results

e
itte
om
C
m
l
om
ro
nC
Corporate Officers/
ont
o
C
i
t
o
Division Managers 21 in total*
isk
s
rom
Number who are women: 1;
d. R
PSupervise
line
t
r
e
L
i
R
,
d
a
non-Japanes:
6
S
i
A
F
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Report Principles

performance. The limits for compensation for directors
and outside directors are approved at the annual
general meeting of shareholders. Compensation for
directors (not including outside directors) for 2019 was

Total directors’ compensation

704 million yen in total.

*1 Committees, etc.: Refers to conferences and committees established and registered based on the “Regulations Concerning Conferences and Committees,” such as the Group Promotion Committee for Managementof Public Subsidies, and the Safety and Health Committee.
*2 HORIBA, Ltd. Risk Control Committee: Deliberates on issues related to risk management and approves relevant measures.

HORIBA Repor t 2019-2020

50

Corporate governance

Relationships with owners (shareholders) and investors
Open general meeting of shareholders

Constructive dialogue

Since its initial stock listing in the second section of the Osaka Securities

HORIBA abides by the “Basic Policy for Constructive Dialogue with Shareholders”

Exchange in 1971, HORIBA has held the annual general meeting ofas announced on our website (see below). We make efforts to explain ourshareholders on a Saturday so that a large number of owners are able tocorporate policy, financial condition, and corporate culture to our owners based on

attend the gathering. An informal gathering event is held afterwards to enable

the perspective of “fair disclosure,” and ask for their understanding and continued

shareholders to talk directly with management. (Due to the impact of the

support.

spread of COVID-19, however, this was not possible after the 2020 general
meeting of shareholders.)

The philosophy behind the shares we hold for strategic
purposes other than pure investment
HORIBA holds shares from companies that it believes are essential for raising
its medium- to long-term corporate value and considers various factors when

Please see our website for moredetails regarding our“Basic Policy for Constructive
Dialogue with Shareholders.”(in Japanese only)

For analysts and institutional investors

strategies and relationships with business partners and the maintenance ofEach year, our Board of Directors comprehensively considers elements■ Financial results briefing

Held four times per year
(Briefings for the first and third financial quarters are held
online and via telephone)associated with share retention, including return and investment amounts,
and makes judgments concerning the advisability of continued investment in
the same companies. We have established policies for situations in which we
determine that a company’s shares are inappropriate for retention, employing
response measures such as share curtailment, etc.

Click!

Status of IR-related activities

determining which shares to hold, including the strengthening of business
relationships with local communities.

Web Link■ Visitations and individual interviews (within Japan)

About 250 times■ Visitations and individual interviews (overseas)

Anti-takeover measures

About 80 times

HORIBA has not adopted anti-takeover measures. We reviewed the “Basic
policy on the persons to control decision making over the financial andbusiness policies of HORIBA,” which was announced in our Corporate
Governance Report.
Please see our website for moredetails regarding our Corporate
Governance Report.
(in Japanese only)

For individual investors■

Information sessions, etc.
Held about four times per year

Web Link
Click!

Risk management and complianceAppointment of Audit and Supervisory Board Members

HORIBA has established Group Risk Management Regulations, in order toThree new corporate auditors were appointed at the March 2020 General Meeting ofstrengthen its risk management framework, and broadly classifies risks into

Shareholders.

categories, including operation risks, risks related to development andmanufacturing, sales risks, and financial risks. A management system foraddressing these risks and a responsibility system that will manage crisis
situations whenever they occur are stipulated in the Regulations.
The HORIBA Risk Control Committee has taken on the responsibility of
responding to risk management issues and discussing and approving
possible countermeasures. This committee includes members from primarygroup companies within Japan and aims to strengthen frameworks related torisk management and compliance.
Compliance Committees, which promote awareness of compliance issues
and deliberate regarding related matters, were launched at primary groupcompanies within Japan quite some time ago. These committees also review
details included in internal reports, conduct hearings, compile their own
reports, and provide advice concerning the rectification of any confirmed
issues.

Pictured, from left

Atsushi Nakamine (Audit & Supervisory Board Member (Standing Auditor))
Reasons forappointment

HORIBA has established its Corporate Philosophy, Compliance Management
Provisions, and Code of Ethics to enhance its compliance framework and toprevent illegal acts. To facilitate early detection and correction of illegal acts,
we also established an internal reporting system that includes a lawyer
consultation service, as well as an internal e-mail reporting system. Throughthis system, we will continue to raise employee awareness and enforce

Tomoko Tanabe (Audit & Supervisory Board Member (Outside & Independent Auditor))
Reasons forappointment

observance of laws and regulations. In addition, we will hold seminars oncompliance for employees in management positions and request participants
to provide guidance to their staff.

She was appointed in order to utilize her advanced expertise andknowledge in medicine as a physician, as well as to benefit from hersuperior insight for corporate management for the management of theCompany.

Keiji Yamada (Audit & Supervisory Board Member (Outside & Independent Auditor))
Reasons forappointment

51

He has accumulated experience in the Accounting Division of theCompany, while likewise excelling in overseas management assignments
at the Company’s subsidiaries in France and serving as a substitute Audit& Supervisory Board Member from 2018. These factors support the
judgment of his ability to fulfill the supervision assignment and to beappointed to this position.

He was appointed in order for the Company’s management to benefit fromhis wide spectrum of knowledge amassed in a career with abundant
experience in regional government administration.

Messages from the Outside Directors

Outside Directors’ Perspective on HORIBA
April 2020

Leapfrogging conventional boundaries
Philosophy

If you look at the Automotive Test Systems segment, HORIBA’s transformation in recent years
shows a change from a business strategy centering on emission measurement systems to a
position in a strategic niche as automotive technology changes to that with the keyword of
CASE (Connected, Autonomous, Shared, Electric).
By aggressively carrying out global M&A on a platform of excellent technology, one could

Masahiro Sugita
Outside Director

argue that HORIBA has enabled itself to leapfrog conventional technological boundaries.
Successful M&A efforts expand the perspective of HORIBA as a whole, and I am thrilled tosee HORIBA is leaping to the next stage of business by taking measure of circumstances
appropriately. I recognize my duty as an outside director to contribute comprehensive
judgment and recommendations on the Board of Directors by leveraging broad-based
experience and knowledge spanning technology, business, and economics overall while

Strategies

learning from the expertise that other directors have in specific fields.

Treasures are right beside us
Going into my fifth year in this position, I have worked to seize every opportunity tounderstand HORIBA. The impetus for this was my belief that I cannot contribute to the
management decisions we face unless I have a firm grasp of HORIBA’s intrinsic nature. The
Mid–Long Term Management Plan (MLMAP 2023) formulated in 2019 (my fourth year in thisposition) is a strategy for business growth of 1.5 times over five years. In order to achieve this,Jiko Higashifushimi

growth cannot be achieved by an extension of each segment's current business. Although wehave acquired HORIBA MIRA Limited in the U.K. and have executed various other measures

GovernanceOutside Director

I strongly believe that each business segment will require profound transformation, that thisto address the trend of diversification in automotive development, most notably electrification,
we are still very much in the midst of efforts to expand concrete business in new fields.
I implore all employees, and especially experienced managers and young employees on thefrontlines, to have a strong sense of urgency, transcend the divisions and boundaries of eachbusiness, and tackle the challenges that exist. We must religiously ask, “what does thecustomer want?” and act based on that. I think that we have treasures lying right beside us.

Enhancing human resource capability is
our investment for the future
In the last few years, HORIBA has expanded their scope from measurement operations to a

Results

solution-oriented business with maximum use of measurement data. Although protecting our
body and natural environment from negative impacts remain our priority, our challenges lies indeveloping systems to identify social problems and to seek better solutions, through providing

Sawako Takeuchi
Outside Director
Doctor of Engineering
Doctor of Economics

high-performance, and high-function analytical measurement systems. In this context, weneed a new type of engineers who can understand cross-sector demand and set up R&D
strategies put forward for its social application. For example, we are trying to apply one of ourcore technologies, such as Raman Spectroscopy to life science area. To cope with thesecomplex needs, we need to open up customer network to reach cross-industrial areas and toestablish a corporate structure to be fit with these diversified human skills. The Board of
Directors must take an initiative to move forward this type of human resource strategy byintegrating this issue among top management discussion. This will lead to our long-term
corporate governance style by creating a bridge between past experiences and new scientificknowledge.

HORIBA Repor t 2019-2020

52

Board of directors and corporate auditors/Corporate officers

Board of Directors and Audit & Supervisory Board member (As of April 1, 2020)
Chairman & Group CEO

Executive Vice Chairman & Group COO

President & COO

Atsushi Horiba

Juichi Saito

Masayuki Adachi

1971 Joined OLSON-HORIBA Incorporated (U.S.)

1982 Joined HORIBA, Ltd.
1997 General Manager of the Engine Measurement
Planning & Development Department of HORIBA, Ltd.
2002 Appointed as President of HORIBA Instruments Incorporated
Appointed as Corporate Officer of HORIBA, Ltd.
2004 Appointed as Director of STEC, Co., Ltd.
(present HORIBA STEC Co., Ltd.)2005 Appointed as Director of HORIBA, Ltd. (to present)
Managing Director of HORIBA STEC Co., Ltd.
2008 Appointed as Executive Vice President of HORIBA STEC, Co., Ltd.
2012 General Manager of Corporate & Segment Strategy
Division of HORIBA, Ltd.
2013 Appointed as Executive Vice President of HORIBA, Ltd.
2016 Appointed as Executive Vice President andRepresentative Director of HORIBA, Ltd.
2018 Appointed as Executive Vice Chairman & Group COO
of HORIBA, Ltd. (to present)
Appointed as President of HORIBA Europe
Holding SASU (to present)

1985 Joined HORIBA, Ltd.
1999 General Manager of Emission Analysis R&D
Department of HORIBA, Ltd.
2003 General Manager of Engine Measurement
Systems Division of HORIBA, Ltd.
2005 General Manager of Automotive Test
Systems Division of HORIBA, Ltd.
2006 Appointed as Corporate Officer of HORIBA, Ltd.
2007 Appointed as President of HORIBA International Corporation(present HORIBA Instruments Incorporated)2010 Appointed as Senior Corporate Officer of HORIBA, Ltd.
2011 General Manager of Research & Development Division &R & D Steering Committee of HORIBA, Ltd.
2014 Appointed as Director of HORIBA, Ltd.
President of HORIBA Jobin Yvon SAS. (present HORIBA FRANCE SAS)
2016 Appointed as Chairman of Supervisory Board of HORIBA Jobin
Yvon SAS. (present HORIBA FRANCE SAS) (to present)
Appointed as Senior Managing Director of HORIBA, Ltd.
2018 Appointed as President & COO of HORIBA, Ltd. (to present)

Reason for Appointment as Corporate Director Positions

Reason for Appointment as Corporate Director Positions

Reason for Appointment as Corporate Director Positions

He served as President & CEO of HORIBA, Ltd. over the 26-year
period from 1992 to the end of 2017 and as Chairman & GroupCEO of HORIBA, Ltd. from 2018, during which he played a pivotal
role in spearheading the global growth of the overall HORIBA Group
while otherwise accumulating rich management experience. In viewof this solid background and further strengthening the Groupsolidarity and global development, he is considered highly qualified
to remain in the capacity of Director.

As General Manager of the Corporate & Segment Strategy Division, he
has attained extensive experience in promoting operations with the
key focus on business strategies, corporate acquisition and othersectors. He has likewise built up an impressive overseas track record
through engaging in management duties of HORIBA, Ltd.’s U.S.
subsidiary and other assignments, further supporting the view that heis fully capable of unifying the overall Group in promoting programs ofrenewed global development as the Group COO from 2018. In view ofthis, he was appointed to the post of Director is desired.

He has achieved far-reaching experience in the R&D Division of
HORIBA, Ltd., while likewise excelling in overseas management
assignments at HORIBA, Ltd.’s subsidiaries in the United States andFrance and engaging in management duties of HORIBA, Ltd. as
President & COO of HORIBA, Ltd. from 2018. These and otherfactors support the judgment of his ability to further enhance
HORIBA, Ltd.’s technical prowess and propel the HORIBA Group toeven greater successes, resulting in his appointment to the positionof Director.

Director (Outside), Independent Director

Director (Outside), Independent Director

Director (Outside), Independent Director

Masahiro Sugita

Jiko Higashifushimi

1967 Joined Bank of Japan

1966 Joined Saitama Bank (present Resona Bank)

1989 General Manager of Matsumoto Branch, Bank of Japan

1988 Higashi-Kurume Branch Manager, Saitama Bank

1996 Director-General of International Department, Bank of Japan

1993 Entered Shorenin Religious Corporation (Kyoto City)

1998 Director of Overseas Investment Research Institute,
the Export-Import Bank of Japan

1994 Appointed as Head Deacon, Shorenin Religious Corporation

1972 Joined HORIBA, Ltd.
1977 General Manager of Overseas Technology
Department of HORIBA, Ltd.
1981 General Manager of Overseas Headquarters of HORIBA, Ltd.
1982 Appointed as Director of HORIBA, Ltd.
1988 Appointed as Senior Managing Director of HORIBA, Ltd.
1992 Appointed as President of HORIBA, Ltd.
1995 Appointed as President of STEC Co., Ltd.
(present HORIBA STEC, Co., Ltd.)
2002 Appointed as Chairman of HORIBA INSTRUMENTS(SHANGHAI) Co., Ltd.
2005 Appointed as Chairman, President & CEO of HORIBA, Ltd.
2016 Appointed as Chairman of HORIBA STEC, Co., Ltd. (to present)2018 Appointed as Chairman & Group CEO of HORIBA, Ltd. (to present)

Doctor of Engineering

Sawako Takeuchi

Doctor of Engineering, Doctor of Economics

2019 Appointed as Outside Auditor of Kataoka Corporation(to present)

1984 Visiting Researcher, Institute of Applied Mathematical andEconomic Sciences, France
1988 Deputy Director, Master of International Business (MIB) Graduate
Program, Ecole Nationale des Ponts et Chaussées (France)
1994 Chief Researcher, Long-Term Credit Bankof Japan Research Institute1998 Associate Professor, School of Engineering, Universityof Tokyo Graduate School
2002 Professor, Faculty of Economics, Toyo University
2004 Urban Development Sector (Economist / Analyst),
Asia-Pacific Division, World Bank
2005 Special Assistant to the Ministry of Foreign Affairs
Visiting Professor, Graduate School of Engineering, Kyoto University
2011 President, Japan Cultural Institute in Paris (Japan Foundation)2016 Appointed as Director of HORIBA, Ltd. (to present)
Advisor to the Ministry of Education, Culture, Sports, Science,
and Technology
2017 Specially Appointed Professor, Yamagata University
Faculty of Engineering
2018 Invited Professor, Tokyo College of Music (to present)
Invited Professor, Yamagata University Faculty ofEngineering (to present)
2019 Appointed as Outside Director of SAXA Holdings, Inc. (to present)

Reason for Appointment as Outside Director Positions

Reason for Appointment as Outside Director Positions

Reason for Appointment as Outside Director Positions

He has plentiful experience in international economic and financial
matters, penetrating knowledge and insights cultivated as a director
and corporate auditor at other companies and other assets arebeing put to valuable use in HORIBA, Ltd.’s management. In
consideration of these outstanding benefits, he was appointed tothe post of Outside Director.

He is renowned for his penetrating insight nurtured as Head Priestof Shorenin Religious Corporation. The counsel based upon thisbackground, together with his work experience at a financial
institution and other valuable personal assets have been effectively
utilized in HORIBA, Ltd.’s management operations to date. Taking
these contributions into consideration, he was appointed as an
Outside Director.

She has knowledge and wisdom as an engineering PhD, her
experience in France (an important base for HORIBA business
operations) and other overseas assignments and additional
achievements have been fruitfully utilized in HORIBA, Ltd.’smanagement platform up to this time. To continue to benefit fromthis background and expertise, she was appointed to an Outside
Director is respectfully requested.

1999 Appointed as Auditor of Bank of Japan
2003 Appointed as Outside Corporate Auditor (full-time) of Banyu
Pharmaceutical Co., Ltd.
2006 Appointed as Director of HORIBA, Ltd. (to present)

2003 Appointed as Representative Presiding Director andHead Priest, Shorenin Religious Corporation (to present)2016 Appointed as Director of HORIBA, Ltd. (to present)

2007 Appointed as Outside Corporate Auditor of the 77 Bank, Ltd.
2009 Appointed as Outside Corporate Auditor of Banyu
Pharmaceutical Co., Ltd.
2010 Appointed as Auditor of MSD K.K.
2013 Appointed as Outside Director of the 77 Bank Ltd. (to present)

Corporate officers (As of April 1, 2020)
Executive Corporate Officer

Corporate Oﬃcers

Jai Hakhu

Ken Mitera

Executive Vice President of HORIBA
Instruments Incorporated (U.S.)

Tadao Nakamura

Chief Director & President of HORIBA Instruments (Shanghai) Co., Ltd.
Chief Director & President of HORIBA (China) Trading Co., Ltd.
Chief Director & President of HORIBA Technology（Suzhou）Co., LTD.

Toshiya Higashino

President & COO of HORIBA Instruments Incorporated (U.S.)

Yasuo Yamashita

Deputy General Manager of General Administration Division

Hiroshi Nakamura

President of HORIBA Europe GmbH (Germany)(Doctor of Engineering)

Chairman of HORIBA Instruments Incorporated (U.S.)
President of HORIBA ABX SAS (France)
Chairman of HORIBA India Private Limited (India)

Senior Corporate Officers
Hideyuki Koishi

President of HORIBA STEC Co., Ltd. (Japan)

George Gillespie

Executive Chairman of HORIBA MIRA Limited. (U.K.)
GLOBAL ATS BOARD LEADER(Doctor of Engineering)53

Hiroo Chihara

President of HORIBA Techno Service Co., Ltd. (Japan)

Dan Horiba

President of HORIBA Advanced Techno Co., Ltd. (Japan)(Doctor of Engineering)Managing Director,

Director

Masao Okawa

Takashi Nagano

1988 Joined Bank of Japan

1985 Joined HORIBA, Ltd.

2003 Chief Representative in Frankfurt, Bank of Japan

1999 General Manager of the Engine Measurement Planning &Development Department of HORIBA, Ltd.

2013 General Manager of Takamatsu Branch, Bank of Japan
2015 General Manager of Kyoto Branch, Bank of Japan2018 Appointed as Managing Director of HORIBA, Ltd. (to present)

2001 General Manager of Engine Measurement Systems Divisionof HORIBA, Ltd.
2003 Appointed as President of HORIBA Europe GmbH2005 Appointed as Corporate Officer of HORIBA, Ltd.
2006 Appointed as Senior Corporate Officer of HORIBA, Ltd.

Philosophy

2017 Joined HORIBA, Ltd.
Appointed as Senior Corporate Officer of HORIBA, Ltd.
General Manager of General Administration Division & Tokyo
Branch Manager of HORIBA, Ltd. (to present)

2011 General Manager of Sales Division of HORIBA, Ltd.
Appointed as President & CEO of HORIBA Europe GmbH2013 Appointed as CEO of HORIBA Europe GmbH2014 Appointed as President of HORIBA KOREA Ltd.
2016 Appointed as Director of HORIBA, Ltd. (to present)
Appointed as Chairman of HORIBA KOREA Ltd. (to present)2018 Board Leader of GLOBAL ATS BOARD of HORIBA, Ltd.

Reason for Appointment as Corporate Director Positions

In view of his global experience compiled during his previous
service at a topflight financial institution, it is the belief that he isuniquely qualified to formulate global financial strategies andfunction in strengthening HORIBA compliance and corporate
governance. For these and other reasons, he was appointed to
Director.

The candidate has extensive experience at the Automotive Test
System Division and Sales Division, while holding management
positions at HORIBA German and South Korean subsidiaries andcultivating other pivotal knowledge through HORIBA, Ltd.’s overseas
operations. This background supports the assessment of his
credentials to expertly deal with the tumultuous changes thatcurrently characterize the automobile industry, leading to his
appointment to the position of Director.

Audit & Supervisory Board Member (Standing Auditor)

Audit & Supervisory Board Member (Outside & Independent Auditor)

Audit & Supervisory Board Member (Outside & Independent Auditor)

Atsushi Nakamine

Keiji Yamada

Tomoko Tanabe

1978 Joined HORIBA, Ltd.

1977 Joined Ministry of Home Affairs (present Ministryof Internal Affairs and Communications)1996 Internal Medicine I Resident of Kyoto Prefectural University of Medicine

1992 Director of Cabinet Legislation Bureau

2001 Chief Medical Resident of the said Medical Center

2002 Appointed as Corporate Officer of HORIBA, Ltd.

1999 Director of Kyoto Prefecture General Affairs Department

2005 Appointed as President & CEO of HORIBA ABX SAS
Appointed as Senior Corporate Officer of HORIBA, Ltd.

2001 Vice Governor of Kyoto Prefecture

2002 General Internal Medicine (GIM) Fellowship of The universityof Pennsylvania

2008 Appointed as President of HORIBA Europe Holding SASU

2006 Governor of Kyoto Prefecture (2nd term)

2004 Associate Professor of Medicine University of California, San Diego
Veterans Affairs Medical Center Medical Service Internal Medicine

2011 Appointed as Corporate Officer of HORIBA, Ltd. (to present)2010 Governor of Kyoto Prefecture (3rd term)2005 Associate Clerkship Director of University of California, San Diego2013 General Manager of Group Production Management Officeof HORIBA, Ltd.

2011 President of National Governors’ Association (1st term)

2008 Assistant Director of Sakazaki Clinic (present Oike Clinic, Chiinkai
Medical Corporation) Nakanoshima Clinic, Chiinkai Medical Corporation

2001 Appointed as Executive Vice President & COO of ABX S.A.
(present HORIBA ABX SAS)2018 Deputy General Manager of Global Business Divisionof HORIBA, Ltd.
Substitute Corporate Auditor of HORIBA, Ltd.
2020 Appointed as Audit & Supervisory Board Member (Standing
Auditor) of HORIBA, Ltd. (to present)2013 President of National Governors’ Association (2nd term)
2014 Governor of Kyoto Prefecture (4th term)
2015 President of National Governors’ Association (3rd term)
2017 President of National Governors’ Association (4th term)
2018 Advisor to the President of Kyoto Sangyo University,
Department of Policy Studies Professor (to present)
President of Kyoto Culture Foundation (to present)
2019 Appointed as Outside Director of Kawasaki Kisen
Kaisha, Ltd. (to present)
2020 Appointed as Audit & Supervisory Board Memberof HORIBA, Ltd. (to present)

1998 Internal Medicine Resident of Beth Israel Medical Center

Governance2014 Division Manager of IT & BPR Center of HORIBA, Ltd.

2002 Governor of Kyoto Prefecture (1st term)

Strategies

Reason for Appointment as Corporate Director Positions

2009 Oike Clinic, Chiinkai Medical Corporation Head of Lady’s Dock (to present)2010 Director of Shinyukai Holdings Co., Ltd. (to present)
Committee Member of Gender Equality Promotion Center,
Kyoto Prefectural University of Medicine(to present)2017 Appointed as Executive Vice President and Representative Directorof Kyoto Medical Club Co., Ltd.
2018 Appointed as President of the said Company (to present)
2020 Appointed as Audit & Supervisory Board Member of
HORIBA, Ltd. (to present)

Results* More on page 51 for reasons for appointment of Audit & Supervisory Board Member

Junior Corporate Oﬃcers
Akio Kinoshita(Doctor of Engineering)

Deputy General Manager (Electrification Business) of
Global Business Division
Deputy General Manager (Mobility Technology) of
Research & Development Division

Arnaud Pradel

General Manager of HORIBA ABX SAS (France)

Dale Poole

Executive Vice President of HORIBA Instruments
Incorporated (U.S.)

Rajeev Gautam

President of HORIBA India Private Limited (India)(

Doctor of
Bio-Technology)

Quality General Manager of Medical Business Division
General Manager of Sales Division
President of HORIBA KOREA Ltd. (South Korea)
General Manager of Global Business Strategy Division of
HORIBA Techno Service Co., Ltd. (Japan)
Principal of HORIBA COLLEGE, CSR
Haruko Nozaki
Masashi Nishimura Deputy General Manager (China Strategy) of
Global Business Division
Deputy General Manager of Research & Development Division,
Tsukasa Satake
Tokyo based
Narihiro Oku
Hitoshi Motokawa
Hiroyuki Urabe
Hideyuki Nishibun

HORIBA Repor t 2019-2020

54

Financial data

Financial data Eleven-year summary
2009.122010.122011.122012.122013.122014.12¥104,538¥118,556¥123,456¥117,609¥138,136¥153,065

Operating costs and expenses

99,394106,256

108,549

105,857

124,402135,851

Operating income

5,144

12,29914,906

11,751

13,733

17,214

Net income attributable to owners of parent

3,161

7,927

8,664

7,396

8,999

10,589

Capital expenditures

4,534

4,033

4,670

7,882

7,680

11,001

Depreciation and amortization

4,573

4,523

4,146

3,743

4,279

4,905

Research and development expenses

9,831

9,480

10,06010,092

10,774

11,986¥129,580¥137,290¥144,649¥153,836¥189,269¥207,335

27,59034,45935,76738,85849,246

51,109

6

1

126

4

25

149

34,50536,42539,24937,51647,38652,09723,363

24,843

26,28828,101

33,08534,83823,602

22,51622,92428,17933,32639,441

52

60

0

-

-

20

10,515

13,423

13,196

11,82916,40915,385

Liabilities with interest

18,34817,12818,35818,083

24,57728,412

Shareholders’ equity

79,906

84,01990,232

99,248114,209

123,924

Share price at end of fiscal period (Yen)

2,250

2,303

2,320

2,489

3,590

4,015

Number of employees (consolidated)

5,133

5,202

5,448

5,530

5,787

5,965

Net income—basic¥74.77¥187.46¥204.88¥174.87¥212.76¥250.28

Net income—diluted

74.68

187.11204.41

174.37212.01

249.281,889.58

1,986.77

2,133.44

2,346.45

2,699.88

2,928.82

13.00

17.00

40.00

50.00

60.00

67.00

Operating income to net sales (%)

4.9

10.4

12.1

10.0

9.9

11.2

Return on assets (%)

2.4

5.9

6.1

5.0

5.2

5.3

Return on equity (%)

4.0

9.7

9.9

7.8

8.4

8.9

Shareholders’ equity ratio (%)

61.7

61.2

62.4

64.5

60.3

59.8

Consolidated dividend payout ratio (%)

17.4

9.1

19.5

28.6

28.2

26.8

Nonconsolidated dividend payout ratio (%)

30.0

30.3

30.5

37.5

48.9

38.5

For the year
Net sales

At year-end
Total assets
Cash and cash equivalents
Trade notes andaccounts receivable

Affiliatedcompanies
Other

Inventories
Property, plant, and equipment, net
Trade notes andaccounts payable

Affiliatedcompanies
Other

Per Share Information

Net assets
Cash dividends

Financial Ratios

Notes: The stated amounts are rounded down to the nearest million yen from the year ended December 31, 2009, but are rounded (up or down) to the nearest million yen prior to that year.
1. The U.S. dollar amounts are provided solely for convenience at the rate of 109.56 yen to 1.00 U.S. dollar, the rate prevailing on December 31, 2019, on the Tokyo foreign exchange market.
2. HORIBA, Ltd. and its domestic consolidated subsidiaries had formerly recognized revenue mainly on a shipping basis. However, starting from fiscal 2016, HORIBA, Ltd. and its domestic
consolidated subsidiaries changed its revenue recognition method to recognize revenue on a completion date of installation basis or a delivery date basis under the terms and conditions of
the relevant contracts. The amounts in or before the fiscal 2015 are not retrospectively revised.
3. As of beginning of the fiscal year 2019, HORIBA, Ltd. and its consolidated subsidiaries apply the Partial Amendments to Accounting Standards for Tax Effect Accounting (ASBJ Statement
No. 28, February 16, 2018). These accounting standards applied retroactively for figures prior to the fiscal year 2018.The amounts in or before the fiscal year 2017 are not retrospectively
revised.

55

HORIBA, Ltd. and consolidated subsidiaries

2015.122016.122017.122018.122019.122019.12

Millions of yen

Thousands of U.S. dollars¥170,093¥195,399¥210,570¥200,241$1,827,683

151,526

151,593

168,565

181,731

179,325

1,636,774

19,372

18,49926,834

28,83820,916

190,90912,882

12,962

16,281

22,313

15,481

141,301

16,30913,796

11,63910,23912,834

117,141

6,110

6,816

7,534

7,240

8,794

80,266

12,341

12,933

13,911

15,183

16,254

148,357

Millions of yen

Thousands of U.S. dollars¥265,920¥277,368¥315,133$2,876,350

47,85951,94058,33362,837

96,064

876,816

2

7

12

24

-

-

54,76953,71760,14059,087

59,121

539,62235,71740,28945,57355,13951,613471,093

56,97861,977

68,70168,73975,929693,035

-

77

91

101

-

-

17,63819,93523,18021,832

19,861

181,279

45,22747,15342,49644,51673,889674,415

129,581

132,654150,282

161,362

170,953

1,560,359

4,695

5,410

6,790

4,490

7,330

U.S. dollars 66.90

6,831

7,149

7,399

7,943

8,288
Yen

U.S. dollars¥307.74¥386.30¥529.24¥367.09$3.35

304.36306.38384.67526.98365.44

3.33

3,078.40

3,148.70

3,565.00

3,826.44

4,053.30

36.99

70.00

85.00

116.00145.00130.00

1.18

11.3

10.9

13.7

13.7

10.4

5.9

5.5

6.4

8.2

5.2

10.2

10.0

11.5

14.3

9.3

56.1

55.4

56.5

58.2

54.3

22.9

27.6

30.0

27.4

35.4

35.1

46.7

53.8

50.7

46.4

Results¥305.73

Governance¥239,657

Strategies¥231,032

Philosophy¥170,898

Shareholders’ equity = net assets - subscription rights to shares - non-controlling interests
Net income per share (Yen) = net income attributable to owners of parent / (average number of shares issued and outstanding in the fiscal period, corrected for treasury stock)
Net assets per share (Yen) = shareholders’ equity / (number of shares issued and outstanding, corrected for treasury stock)
Operating income to net sales (%) = 100 x operating income / net sales
Return on assets (ROA, %) = 100 x net income attributable to owners of parent / average total assets in prior fiscal period
Return on equity (ROE, %) = 100 x net income attributable to owners of parent / average shareholders’ equity in prior fiscal period
Shareholders’ equity ratio (%) = 100 x shareholders’ equity / total assets
Consolidated dividend payout ratio (%) = 100 x dividends paid / net income attributable to owners of parent
Nonconsolidated dividend payout ratio (%) = 100 x dividends paid / net income (nonconsolidated)

HORIBA Repor t 2019-2020

56

Financial data

Eleven-year summary

Net sales by segment

Millions of yen
240,000

210,570

We saw sales decline for the
first time in three years, in theyear ended December 31,
2019. This was due to a
decline in sales primarily inJapan and Asia, withsemiconductor
manufacturers adjusting theircapital spending.

200,000

19,361

195,399

19,500

Process &Environmental

27,170Scientific57,78547,191

Semiconductor

26,01225,335

MedicalDiagnostic

17,433

170,898 170,093
160,000

153,065
138,136
118,556 123,456 117,609

14,711

104,538

11,787

14,55822,913

12,022

20,82522,04027,676

24,69422,51423,48537,19235,751

38,678

2009

2010

2011

120,000

80,00020,503
12,483
22,33740,00013,70920,40624,153

17,861

16,465

16,75327,05925,73827,754
26,11753,30025,62735,38638,82827,447

26,56428,934

26,832

27,037

43,23049,52455,001

2012

2013

2014

22,40016,75425,18764,251

62,2072015

2016

200,241

73,36079,656

81,042

2017

2018

2019

Automotive
Test
Systems0

Net income attributable to owners of the parent and ROE
We saw net income
attributable to owners of theparent record its firstdecrease in seven years in
the year ended December
31, 2019 owing to a decline
in sales and operating
income, while ROE finishedat 9.3%.

Millions of yen

Net income attributable to owners of the parent (left)

Return on equity (ROE) (right)

25,00020,00022,313

11.5
9.7

10.2

9.9

15,000

7.8

8.4

10.0

16,281

12,882

12.0

9.3

8.9

4.0

7,927

8,664

9.0

15,481

12,962

10,58910,000

%
15.0

14.3

6.0

8,999
7,396

5,000

3.0

3,161
0

0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Cash flows
We continued high-level
investment in the year ended
December 31, 2019, including
the strengthening of our bases
globally and investment infacilities to handle demand forelectrified vehicles. Meanwhile,with investment adjustmentsin the semiconductor industry,
inventories decreased, leading
to a year-on-year increase in
cash flow from operating
activities, while free cash flow
resulted in the positive range,amounting to 14.2 billion yen.

Operating cash flow

Millions of yen

28,287

13,711
10,000

9,520-10,000

Free cash flow

26,63819,53620,000-4,191

13,395

11,964
6,954
9,143-2,821

15,076
11,455

5,504

6,965

-6,145-7,891-8,111

14,77015,871

15,12014,271
8,506

5,444
1,580

809

-9,875-10,427-15,872-20,000-13,167-11,029 -12,367

2017

2018

-30,000-30,642-40,000

2009

57

Investing cash flow

30,000

2010

2011

2012

2013

2014

2015

2016

2019

Accounts receivable (AR) and AR turnover (days)
Millions of yen

Trade notes and accounts receivable (left)

AR turnover (right) Days

70,00060,000Inventories and inventory turnover (days)
140

125

120

40,00034,511

36,426116

39,375117

115
53,72452,24654,77147,41160,152 59,111 59,121 120

120

112

102

51,613 100

50,000

93

108

85

100
40,00020,00040

10,00020

023,363

34,838

87

97

80

75

80

40,28935,71760

40

10,000

20

0

0

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Strategies

R&D expenditures and R&D expenditures to net sales
R&D expenditures to net sales (right)

24,84386

81

28,101
26,28845,57320,0002009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201918,00033,08574

30,000
60

81

76

80

37,520R&D expenditures (left)

Days

Inventory turnover (right)

55,13930,000Millions of yen

Inventories (left)

60,000

Philosophy

112

50,000116

125Millions of yen

Capital expenditures and depreciation and amortization%

12.0

Capital expenditures

Millions of yen

Depreciation and amortization

20,000

16,25415,00015,183
9.4
8.1

12,000

8.6

12,933
7.8 11,986 12,341

8.0

9,000

7.8
10,060 10,092
9,831
10,774
9,480

7.2

7.6

16,30910.0

13,911

15,000

8.1
7.2

13,796

8.0

11,6397.1

6.0

11,001

10,000

10,239
7,534

4.0
5,000

3,000

2.0

0

0

6,816

4,670
3,743

4,279

Return on assets(right)

%
14.0

4,905

0

Net income per share (left)

Yen

Net assets per share (right)

600

3,826

200,000

150,000

129,580
100,000

5.9 6.1

5.0

5.2

5.3

5.9

5.5

3,565

12.0
480

2,700

5.2

2.4

2,400

367

2,346
306

1,987

240

1,600

213

4.0

187

308

250

205
120

50,000

2,929
386

1,890
6.0

3,200

3,149

360

2,133

Yen

4,000

529

3,078

10.0

8.0

4,053

Results

315,133
277,368
265,920
239,657
231,032
207,335
8.2
189,269
144,649
6.4
153,836
137,290

250,000

7,240

Net income per share and net assets per share

350,000

300,000

8,794

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total assets and Return on assets
Total assets (left)

4,523

4,573 4,033 4,146

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Millions of yen

4,534

6,110

7,680

Governance

7,882
6,000

12,834

175

800

2.0

75
0

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201900

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

HORIBA Repor t 2019-2020

58

Financial data

HORIBA, Ltd. and consolidated subsidiaries
As of December 31, 2018 and December 31, 2019

Consolidated balance sheets

Millions of yen1

2018.12

Assets2019.12

Thousands of U.S. dollars2

2019.12Current assets:
Cash and cash equivalents
Trade notes and accounts receivable

Affiliated companies
Other

Allowance for doubtful receivables
Marketable securities
Inventories
Other current assets

Total current assets¥62,837
24
59,087(682)
1,899
55,1399,586
187,891¥96,064
59,121(796)
1,998
51,613
8,551
216,553$876,816
539,622(7,265)
18,236
471,093
78,048
1,976,569

13,69255,89424,784
3,018
17,729115,118(46,379)
68,73915,17761,03927,517
3,604
19,394
126,732(50,803)75,929138,526
557,128
251,159
32,895177,017
1,156,736(463,700)
693,035

8,314
44
4,636
(76)
2,917
15,836

10,571
40
3,605
13
(51)
2,933
17,11496,485365
32,904118(465)
26,770156,206

901
2,907
1,092
4,901
¥277,368

1,254
2,734
1,546
5,535
¥315,133

11,445
24,954
14,11050,520$2,876,350

Property, plant, and equipment:
Land
Buildings and structures
Machinery, equipment and vehicles
Construction in progress
Other property, plant, and equipment

Total
Accumulated depreciation

Net property, plant, and equipment
Investments and other noncurrent assets:
Investment securities
Investments in nonconsolidated subsidiaries and affiliates
Deferred tax assets
Net defined benefit asset
Allowance for doubtful accounts
Other investments and other assets

Total investments and other noncurrent assets
Intangibles:
Goodwill
Software
Other intangibles

Total intangibles
Total assets
Liabilities and net assets

2018.122019.122019.12Current liabilities:¥10,458
1,735
101
21,832
15,9203,514
17,475
1,265
2,012
3,681
77,997¥8,09916,06919,861
16,1642,004
19,169
1,188
2,369
3,545
88,472$73,922
146,668
181,279
147,535
18,291
174,963
10,843
21,62232,356
807,520

32,322
184
1,946
640
2,258
37,352
115,349

49,720
613
2,017
2,692
55,044
143,517453,815
5,595
18,41024,571
502,4091,309,939

Common stock
Authorized—100,000,000 shares
Issued and outstanding—42,170,448 shares (excluding treasury stock) at 12/2018
Issued and outstanding—42,176,228 shares (excluding treasury stock) at 12/2019

12,011

12,011

109,629

Capital surplus
Retained earnings
Treasury stock—362,304 shares at 12/2018 and 356,524 shares at 12/2019

18,717
132,329(1,428)
161,630

18,599141,689(1,405)
170,894

169,760
1,293,254(12,824)
1,559,821

2,788
(2)
(2,829)
(224)
(267)
549
106
162,018¥277,368

4,344
0(4,042)
(244)
58
651
10
171,615¥315,133

39,6490(36,893)(2,227)
529
5,941
91
1,566,401$2,876,350

Short-term loans
Current portion of long-term debt
Trade notes and accounts payable

Affiliated companies
Other

Accounts payable—otherAccrued income taxes
Advances received
Accrued bonuses to employees
Reserve for product warranty
Other current liabilities

Total current liabilities
Long-term liabilities:
Long-term debt
Deferred tax liabilities
Net defined benefit liability
Provision for loss on dissolution of the employees’ pension fund
Other noncurrent liabilities

Total long-term liabilities
Total liabilities
Net assets:
Shareholders’ equity:

Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains or losses on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans

Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

Notes: 1. The Japanese Yen amounts are rounded down to the nearest million.
2. The U.S. dollar amounts are provided solely for convenience at the rate of 109.56 yen to 1.00 U.S. dollar, the rate prevailing on December 31, 2019, on the Tokyo foreign exchange market.

59

HORIBA, Ltd. and consolidated subsidiaries
As of December 31, 2018 and December 31, 2019

Consolidated statements of income

Millions of yen1

2019.122018.12Net sales

Thousands of U.S. dollars2

2019.12¥210,570¥200,241$1,827,683

120,630
61,100181,731

117,624
61,701
179,325

1,073,603
563,170
1,636,774

28,83820,916

190,909

323
(440)
(473)
537
(22)
(76)
11
0
115
48
56
79

422
(496)
(439)
113
(44)
43
148
(154)
9
137
78
(182)

3,851
(4,527)(4,006)
1,031
(401)
392
1,350
(1,405)
82
1,250
711
(1,661)

28,917

20,734

189,247

6,375
203
6,579

4,956
268
5,225

45,2352,446
47,69022,33824¥22,313

15,50826¥15,481

141,548237$141,301

Operating costs and expenses:
Cost of sales
Selling, general and administrative expenses

Total operating costs and expenses
Operating income:Interest and dividend income
Interest expense
Foreign exchange gains (losses), net
Gain on sales of property, plant, and equipment
Loss on sales of property, plant, and equipment
Loss on disposal of property, plant, and equipment
Subsidy income
Foreign tax refund
Bond issuance cost
Gain on sales of investment securities
Gain on transfer of businesses
Gain on bargain purchase
Reversal of provision for loss on dissolution of the employees' pension fund
Other, net

Income before income taxes

Strategies

Total other income (expenses), net

Philosophy

Other income (expenses):

Income taxes:
Current
Deferred

Total income taxes
Net income
Profit attributable to non-controlling interests
Net income attributable to owners of parent

Yen1

2018.122019.12

U.S. dollars2

2019.12¥529.24526.98145.00Net income—basic
Net income—diluted
Cash dividends

Millions of yen

2018.12Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans

Total other comprehensive income
Comprehensive income

2019.12

Thousands of U.S. dollars

2019.12¥22,338¥15,508$141,548(1,848)(2)(3,989)(133)(5,973)¥16,364

1,555
3(1,220)(20)
318¥15,827

14,193
27(11,135)
(182)
2,902
$144,459¥16,348
16¥15,80719$144,277
173

Results

Net unrealized gains or losses on available-for-sale securities

$3.35
3.33
1.18

¥367.09365.44130.00HORIBA, Ltd. and consolidated subsidiaries
As of December 31, 2018 and December 31, 2019

Consolidated statements of comprehensive income

Net income
Other comprehensive income:Governance

Per share information:(Breakdown of comprehensive income)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Notes: 1. The Japanese Yen amounts are rounded down to the nearest million.
2. The U.S. dollar amounts are provided solely for convenience at the rate of 109.56 yen to 1.00 U.S. dollar, the rate prevailing on December 31, 2019, on the Tokyo foreign exchange market.

HORIBA Repor t 2019-2020

60

Financial data

HORIBA, Ltd. and consolidated subsidiaries
For the years ended December 31, 2018 and December 31, 2019

Consolidated statements of cash flows

Millions of yen1

2019.122018.12

Thousands of U.S. dollars2

2019.12

Cash flows from operating activities:
Income before income taxes¥28,917¥20,734$189,247

Depreciation and amortization

7,240

8,794

80,266

Increase (decrease) in allowance for doubtful receivables

(69)

105

958

Increase (decrease) in net defined benefit liability

(83)

1

9

Interest and dividend income

(323)

(422)

(3,851)

Interest expense

440

496

4,527

Foreign exchange losses (gains)

167

89

812

Loss (gain) on sales of property, plant, and equipment

(514)

(113)

(1,031)

Loss on disposal of property, plant, and equipment

76

44

401

Loss (gain) on sales of investment securities

(0)

(9)

(82)

(862)

(935)

(8,534)

Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Other, net

Subtotal(10,368)

2,852

26,031(596)(1,760)(16,064)

4,976

3,196

29,171

29,00133,075

301,889

Interest and dividends received

305

434

3,961

Interest paid

(439)

(465)

(4,244)(9,331)(6,405)(58,461)

19,536

26,638243,136

Increase in time deposits(1,403)(2,418)(22,070)

Decrease in time deposits

1,202

3,018

27,54632--(2,200)(2,000)(18,254)

Income taxes (paid) refund

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Decrease in time deposits restricted for use
Payments for purchase of marketable securities
Proceeds from sales or redemption of marketable securities

1,701

1,900

17,342

Payments for purchase of property, plant, and equipment(9,667)(11,762)(107,356)

Proceeds from sales of property, plant, and equipment

1,420

262

2,391

Payments for purchase of intangibles(611)(1,172)(10,697)

Payments for purchase of investment securities

(24)

(24)

(219)

0

13

118

(1,481)(182)(1,661)(11,029)(12,367)(112,878)

2,792(2,205)(20,125)

-

313

2,856

Repayments of long-term debt

(541)

(1,561)(14,247)

Repayments on finance lease obligations

(181)

(831)

(7,584)

Net decrease (increase) of treasury stock

(0)

(0)

(0)

(5,309)(6,110)(55,768)

Proceeds from issuance of bonds-

29,845

272,407

Dividends paid to non-controlling interests

-

(7)

(63)

Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation

-

(226)

(2,062)

Net cash provided by (used in) financing activities(3,240)19,215

175,383

Proceeds from sales or redemption of investment securities
Other, net

Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings

Cash dividends paid

Effect of exchange rate changes on cash and cash equivalents

(762)

(259)

(2,364)

Net increase (decrease) in cash and cash equivalents

4,503

33,227303,276

Cash and cash equivalents at beginning of year

58,33362,837

573,539

Cash and cash equivalents at end of year

¥62,837¥96,064$876,816

Notes: 1. The Japanese Yen amounts are rounded down to the nearest million.
2. The U.S. dollar amounts are provided solely for convenience at the rate of 109.56 yen to 1.00 U.S. dollar, the rate prevailing on December 31, 2019, on the Tokyo foreign exchange market.

61

Corporate data

Corporate information
2 Miyanohigashi, Kisshoin, Minami-ku Kyoto 601-8510 Japan
October 17, 1945

Incorporated

January 26, 1953

Net sales

200,241 million yen (Consolidated)

Fiscal 2019

Paid-in capital

12,011 million yen (Consolidated)

As of December 31, 2019

Number of employees

8,288 (Consolidated)

As of December 31, 2019

Fiscal closing date

December 31, annually

Annual Meeting of Shareholders

Held in March

Transfer agent

Sumitomo Mitsui Trust Bank, Limited

Stock listings

Tokyo Stock Exchange, First Section

Independent auditor

KPMG AZSA LLC

Philosophy

Head office
FoundedSecurities Code: 6856

Major shareholders

As of December 31, 2019

Name of shareholders

Japan Trustee Services Bank, Ltd.
PICTET AND CIE (EUROPE) SA, LUXEMBOURG REF: UCITS
National Mutual Insurance Federation of Agricultural Cooperatives
Atsushi Horiba
THE KYOTO CHUO SHINKIN BANKThe Bank of Kyoto, Ltd.
HORIBA Raku-Raku Kai
Japan Trustee Services Bank, Ltd. (trust account 5)
HORIBA Employee Shareholding Association

Percentage* (%)

2,446
2,397
2,252
1,682
1,040
837
828
804
802
710

5.80
5.68
5.34
3.99
2.47
1.98
1.96
1.91
1.90
1.69

Strategies

The Master Trust Bank of Japan, Ltd.

Shares (Thousands)

Governance* Percentages of shares are calculated by deducting own shares (356,524 shares).

Stock Price Trend
Foreign investors

Yen

Yen

25,00010,000Japanese companies

4.4%

Nikkei Stock Average (Nikkei 225) (left)
20,0008,000

15,000

6,000

10,000

4,000

Financial
institutions,
Securities
companies

1.5%

2.3%

Breakdown ofTypes of
Shareholders(6,882 in total)

Individual investors

91.8%
2,000

Japanese companies

Individual investors

6.2%
0

0
2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

1 year

3 years

5 years

18.2%

Breakdown ofOwnership
among
Shareholders(42,532,752
shares in total)

2020

TSR※

Investment
periodResults

HORIBA (right)

5,000

Foreign investors

Cumulative /Annual Rate

Cumulative

Annual Rate

Cumulative

Annual Rate

HORIBA

118.7%

175.9%

20.7%

196.2%

14.4%

including
TOPIX（ dividends ）112.1%

137.4%

11.2%

136.4%

6.4%

37.5%

Financial institutions,
Securities companies

38.1%* Total Shareholders’ Return：Total return on investment that combines capital gains and dividends

HORIBA Repor t 2019-2020

62

HORIBA, Ltd.

2 Miyanohigashi, Kisshoin, Minami-ku
Kyoto 601-8510 Japan
Phone: +81-75-313-8121

E-mail: ir-info@horiba.com
http://www.horiba.com/en_en/