April 14, 2023
To Whom It May Concern
FDK CORPORATION
President: Ryo Nagano(Code: 6955 Standard, TOKYO)
Contact: Nobuyuki WatanabeGroup Vice President of Corporate Group(Tel. +81-3-5715-7400)

Information on the FDK Group Strategy Framework 10 years’ scheme and
Mid Term Business Plan “R2”

In order for the FDK Group to further strengthen our management structure and improve our corporate value
to meet the expectations of our various stakeholders, we formulated a 10 years’ scheme for our “Status-to-be in
FY2029.” Having done that, we deployed the Mid Term Business Plan “R1” during the first three (3) years(FY2020 to 2022) of this period with the aim of achieving that status-to-be.
During the R1 period we worked to undertake the following:
1) Stabilize current businesses and establish growth with profit;
2) Proactively cultivate new business as a Segway to the next generation; and3) Establish a corporate culture that each employee makes a personal effort to satisfy customers in a selfdisciplined way.
In terms of management targets, consolidated sales are expected to exceed our FY2022 target despite theexecution of share transfers, including for a subsidiary which manufactured alkaline batteries. Meanwhile,
while we have secured profitability in terms of our operating profit, figures are expected to fall short of our initialplan due to a lack of resilience against the challenges presented by the deterioration of the external environment,such as rising raw material prices.
Under these circumstances, we will improve our business portfolio in order to realize our status-to-be at theend of our 10 years’ scheme. We are pleased to inform our Mid Term Business Plan “R2” that is based on theelements of “Accelerate the profitable growth of core businesses,”, “Develop and launch of new businesses,”and “Cultivate culture of mutual acknowledgement and enhancement.”
Please see the presentation material for more details concerning our Mid Term Business Plan “R2”.

April 2023

© 2023 FDK CORPORATION

十年之計
莫如樹木

FDK Group
Strategy Framework
10 years’ scheme Mid Term Business Plan “R2”

* ⼗年之計莫如樹⽊: 10 years’ scheme is nothing but to grow a tree
(Excerpt from Guan-zi)0. Our Philosophy/Vision
Our
Philosophy

Inspiring transformation; shaping the future and creating happiness.

VisionFDK Group, as a Smart Energy Partner, assemble advanced
technologies, would like our customers to best utilize electricenergy in a safe and efficient manner, and contribute to thematerialization and development of sustainable society.

© 2023 FDK CORPORATION2

1. 10 years’ scheme: Vision/Status-to-be and Mid Term Business Plan R1
1. Vision
FDK Group, as a Smart Energy Partner, assemble advanced technologies, would like our customers to best utilize electric energy in a safe and efficientmanner, and contribute to the materialization and development of a sustainable society.
2. Status-to-be (Status that Vision is materialized)
Whom: Entities that support people’s daily life and society, and individual users
What: To provide offerings that enable customers to best utilize clean and safe electric energy(Batteries/Engineering, Next Generation Batteries, Power Management Solutions)

When: FY2029 (10 years later)
Goals: Sales 80 billion Yen (New Business 30%) / Operating Profit ratio 7.5%

The initial 3 years of 10 years’ scheme was to focus on fundamental issues as a preparatory period for step-up.
In FY19 as Year 0, we continued reformation and business transformation.
We would maximize RoI for R1 (FY20-22), including Year 0.

FDK Group engaged in the following till FY22 toward our Vision and Status-to-be:1) Stabilize current businesses and establish growth with profit;
2) Proactively cultivate new business as a Segway to the next generation; and3) Establish a corporate culture that each employee makes a personal effort to satisfy customers in a self-disciplinedway.
© 2023 FDK CORPORATION

3

1. FDK Group’s Status-to-be: Value Chain
 Proactively take advantage of a developing ecosystem, increase value of ourofferings with various partners, and enable customers to utilize electricenergy in diversified ways.
FDK Group ecosystem
FDK Group

Vendors

Customers

Batteries/
Engineering
Next Generation
Batteries

Manufacturing
Partners

Electronic Devices/
PMS

Stable Utilization of
Clean & Safe Electric
EnergySolution
Partners

PMS: Power Management Solutions© 2023 FDK CORPORATION

4Contribution tomaterializationand evolvementof a sustainable
society1. FDK Group’s Status-to-be: Offerings Add various functions & features onto unique value of our current offerings (reliability, safety,
environment protection) and respond to users’ expectations to use electric energy in a wider
range of applications.
Next Generation
Batteries

Durability

ConcisenessLonger Life

Batteries/Engineering, Electronic Devices

HigherCapacity

Reliability

SafetyEnvironment
Protection

Co-Creation
Rapid
Charge© 2023 FDK CORPORATION

Solution Package

5Life
Estimation

Increased
PowerPower Management
Solutions (PMS)2. Review of Mid Term Business Plan R1: Three Pillars (1)Stabilize current businesses and establish growth with profit

Outcomes

Build of a foundation for future growth in three businesses• Ni-MH batteries: Seed to expand industrial applications• Lithium batteries: Consolidate production sites and promote
improvements in efficiency• Electronic Devices business : Promote and stabilize structural reforms

Areas ofimprovement

Respond to market changes• Modulation of Ni-MH and Alkaline battery business:
Worsen of profit situation due to an inability to respond to market fluctuations andrising raw materials prices during the pandemic• Decline in sales for Engineering:
Delays in the acquisition of new projects occurring during the pandemic due to the
curbing of investments in the auto industry© 2023 FDK CORPORATION

6

2. Review of Mid Term Business Plan R1: Three Pillars (2)Proactively cultivate new business as a Segway to the next generation

Outcomes• Small all-solid-state SMD batteries: Sample shipments with a view to starting the business.
Promotion of development through the introduction ofinternal and external knowledge• Rechargeable Ni/Zinc batteries: Sample shipments with the expectation of commercialization• MH/Air rechargeable batteries: Move to demonstration tests which utilize solar charging(research project commissioned by the Ministry of theEnvironment).
Conducting of discussions with partners for practical application• Power Management Solutions: Promotion of specific projects and development of elemental
technologies

Areas ofimprovement

Major delays in commercialization of Small all-solid-state SMD batteries© 2023 FDK CORPORATION

7

2. Review of Mid Term Business Plan R1: Three Pillars (3)Establish a corporate culture that each employee makes a personal effort to satisfy customers
in a self-disciplined way

Outcomes

Initiatives aimed at turning our company into a company that employees are proud of and withworkplaces they would recommend to their friends and family• Formulation of our philosophy with the participation of all employees and the unification of work
uniforms• Introduction of a new personnel system and implementation of talent management• Systematization and expansion of our education system• Promotion of work style reforms, including countermeasures against COVID-19• Strengthening governance and efforts undertaken with respect to sustainability, SDGs anddiversity• Initiatives undertaken with respect to adding vitality to internal improvement activities andinitiatives aimed at the improvement of employee satisfaction

Areas ofimprovement• Aftereffects of structural reform: System for the support of life stage transitions/labor shortages,
motivation• Delays in the introduction of a new personnel system• New employee development system which emerged during the pandemic (correspondence
taking place only online)• Lack of younger employees/leveraging of older employees• Inadequate governance/internal controls (overseas subsidiaries, information security, etc.)© 2023 FDK CORPORATION

8

2. Review of Mid Term Business Plan R1: Numerical Figures•
Outcomes••

Areas ofimprovement•••

Business expansion despite having conducted businesshandovers
Recovery of YR 0 investment (profit of 610 million over 4
years)
FY22: Sales profitability maintained despite environmental
deterioration

FY2022 target is not expected to be achieved
Lack of resilience against external environmental
degradation
Delay in investments due to new battery delays

FY20-22
Cumulative
forecast

Mid Term Plan R1Cumulative target

Consolidated sales (JPY 100 million)

1,857.5

1,760.5

Operating profit ratio

2.5%

3.2%

ROIC (Return on Invested Capital)

4.3%

5.9%

FY2019Year 0 Results

FY2020
ActualFY2021
ActualFY2022
Forecast

Mid Term Plan R1
FY2022 (target)

Consolidated sales (JPY 100 million)

621.2

615.4

614.6

627.5

600

Operating profit ratio

1.4%

2.8%

3.4%

1.2%

5.1%

ROIC (Return on Invested Capital)

2.1%

5.9%

6.4%

0.6%

9.9%

Investments into new businesses, etc.
* Cumulative amounts are shown inparentheses below

0.6

9.6

2.7
(12.3)

1.4(13.6)

55(3 years)© 2023 FDK CORPORATION

9FDK GroupNew Mid Term Business Plan (’23-25)
R2© 2023 FDK CORPORATION1. 10 years’ scheme: Vision/Status-to-be and Mid Term Business Plan R2
1. Vision
FDK Group, as a Smart Energy Partner, assemble advanced technologies, would like our customers to best utilize electric energy in a safe and efficientmanner, and contribute to the materialization and development of a sustainable society.
2. Status-to-be (Status that Vision is materialized)
Whom: Entities that support people’s daily life and society, and individual users
What: To provide offerings that enable customers to best utilize clean and safe electric energy(Batteries/Engineering, Next Generation Batteries, Power Management Solutions)

When: FY2029 (10 years later)
Goals: Sales 80 billion Yen (New Business 30%) / Operating Profit ratio 7.5%

3. FY19: Structural reorganization/business restructuring implemented as the starting point of the 10 yearsʼ scheme (Year 0)
4. R1 (FY20-22): Strengthening the foundations of three existing businesses, promoting new business development, and fostering new culture

In R2 (FY23-25), we are seeing a business environment that is more severe than what we saw in R1. Amid thatenvironment, we will;
1) Enhance the resilience of our existing three major businesses by strengthening them,2) Accelerate the building of the groundwork for R3 and beyond by starting new businesses, and
3) Enhance the quality of our management by fostering a culture of self-directed ambition.
© 2023 FDK CORPORATION

111. Three Pillars of the Mid Term Business Plan R2
Accelerate the profitable growth of core businesses• Focus on growing markets and markets presenting high levels of added value• Optimization of business scales through structural reforms

Develop and launch of new businesses• Full-scale operation of a next-generation battery business and solutions business• Develop the elements for the more advanced generation battery business and solutions
business

Cultivate a culture of mutual acknowledgement and enhancement• Build a system that enables each individual to demonstrate his or her abilities• Improve the quality of management, including governance© 2023 FDK CORPORATION

122. Business Portfolio Based on Market Strategy Mapping (Pillars 1 and 2)• Increase the profitability of the entire company by growing our three largest existing businesses• Launch a next-generation battery and power solutions business to enhance their business presence• Engineering, which unperformed in R1, build of the foundation for growth through new business development.
Alkaline Batteries improve profitability with minimal operations.

Focus

Successful areas of application

Sales growth rate•••

Battery
infrastructure••

Industry/IoT
Mobility••

EV Battery-related
Appearance inspection
equipment

Engineering

Power Solutions

Alkaline Batteries

Next Generation
Batteries(All-solid-state &Ni/Zinc)••

In-vehicle/Power BU
Infrastructure/Mobility

Ni-MH

Pursuit of efficiency
Expansion of sales
channels

Business improvement

Profitability (gross margin ratio)© 2023 FDK CORPORATION

13

•
•

MetersIndustry/Medical

Lithium Primary••

Mobility/IT/Sensors
Semiconductors

Electronic
Devices/PMS

Mainstay3. Cultivate a Culture of Mutual Acknowledgement and Enhancement (Pillar 3)

Customers and Partners

Employees
Improve the quality of management by regularly
recognizing achievements through praise andencouraging development of our strengths

Improve products and services based on
close communication and trustandShareholders(Respond to all)Obtain appropriate evaluation for ourcompany through the timely dissemination of
information© 2023 FDK CORPORATION

Society

Deepen awareness and fulfill responsibilities
as a member of society

144a. Initiatives for DX - Company-Wide DX Project Kickoff Starting with “awareness of the current situation,” we will boldly redesign the areas of “manufacturing,” “indirect
operations,” and “collaboration with customers” based on digital technology.
Activities related to DX will be actively promoted by each business unit while aiming to improve corporate value,environmental management and transform our corporate culture and climate.

Increase incorporate value,
Environmental
management,
Carbon neutral[Key Messages]
 Management and workplaces come together to promotetransformation that makes the most of digital technologies
 When it comes to main measures, establish DX for manufacturing, cocreation with customers, and indirect operations (common to allcompanies) and subsequently promote data-driven enhancements,
digital twins for manufacturing, and so on[Actions]
 Utilize DX certification systems and promote the following strategies
 Manufacturing: Data-driven responses
 Coordination with customers: Building of a digital supply chain
 Indirect operations: Redesign of overall operations with IT tools
serving as the cornerstone Development of human resources: Improving IT literacy for
individuals spanning frommanagement to the entire
company Improvement of IT environments and strengthening ofcybersecurity measures© 2023 FDK CORPORATION

Manufacturing(DX forManufacturing)
Data-driven,
Carbonfootprint,
Handling of
small lots

Recognitionof the current
situation
Promotion ofdigitization

15

Coordinationwithcustomers(Sales DX)
Toward adigital supply
chain

Indirect
operations
Redesigningentireoperations withIT tools serving
as thecornerstone

Transformation of
our organizations,
corporate culture
and climate

4b. Efforts Aimed at Resolving Social Issues[Key Messages]
 Enhance the strengths of the business and raise social awareness byactively publicizing information on the initiatives being undertaken, whilefurther strengthening the qualitative responses undertaken, thereby
allowing us to subsequently enhance corporate value and contribute tosociety
Materiality[Actions]
 Implementation of PDCA cycles centered around the Sustainability
Promotion Committee Identify and respond to the contents of the International Sustainability
Standards Board, which will be of importance going forward.

Key Themes

ESG
Category

1

Provision of safe and secure electricenergyProvide products and solutions that serve to support a sustainable society

E/S

2

Coexistence with the global
environment

Responding to climate change and promoting a recycling-oriented society
Contribution to the materialization and evolvement of a sustainable society

E3

Promoting the active participation ofdiverse human resources

Creating an environment in which all employees can realize their full potential
Creating a healthy workplace where employees can continue growing their careers

S

Based on the perspectives of stakeholders, strengthen systems and supervisory functions torealize swift decision-making with transparency and objectivity ensured when it comes tocorporate management
Sustainable enhancement of corporate
4
Strengthening the foundation of our risk compliance system and strengthening internal
governancecontrol
Compliance with laws and social norms along with thoroughly undertaking conduct based onhigh ethical standards
5

Contributing to sustainability inregions, society and communities© 2023 FDK CORPORATION

Connecting with local communities and bringing to fruition a world full of smiles
16

S/G

S

Related SDGs

4c. Our Group’s View of Human Capital Management
Strengthen the links between management strategies and human resources strategies, leading to the achievement of management targets
Management Strategy (R2 and the 10 years’ scheme)
Portrait of what we should be aiming to be
HR strategy

Enhancement of the value ofhuman resources
Improve human skills, knowledge, experience andthinking skills

Reform relating to job satisfaction
Support for employee growth and the generating of motivation

Working environment reform
Creating an environment which serves to maximize
the performance of human resources

Evolution of oureducation system

Reskilling people torealize diverse ways ofworking

Create growth
opportunities throughinternal rotations

Active participation ofsenior employees

Telecommuting

Flex-time

Human resource
development throughcompetency evaluations
and 360-degree
evaluations

Side job system

Evolution of our HR
system(Performance evaluationand compensation)

Enhancement of
employee benefits
programs

Creating safe andsecure work
environments

Health and productivity
management

Providing motivation by promoting theuse of incentive points

Extension of retirement age and rehiring

Acquisition of diverse talent(Maximum leveraging of new graduate hiring, mid-career hiring, referral-based hiring, recruiter-based hiring and internships)

Culture-building, Diversity & Inclusion(Autonomy, praise one another, and acknowledge one another)© 2023 FDK CORPORATION

17

FDK GroupMid Term Business Plan “R2”in numbers
It all comes down to numbers© 2023 FDK CORPORATION

Management Target (1): Stable Management Operation under New Business Environment

Cumulative total for R2 period (target)

Cumulative total for R1 period (forecast)

Consolidated sales : 185.7 billion yen

Consolidated sales : 200 billion yen

Operating profit: 4.5 billion yen

Operating profit: 5 billion yen

ROIC: 4.3%

ROIC: 5%

Operating CF: 6.9 billion yen

Operating CF: 13 billion yen© 2023 FDK CORPORATION

19

Management Target (2): Strengthen Our Management Foundation
Cumulative total for R2 Period
Capital Allocation Policy

Net sales and operating profit ratio
JPY 100 million

680

700
621.2

615.4

614.6

5%

Strengthening of our financial
base
2 billion yen

627.5
4.1%

600

4%
3.4%

500
2.8%

400

3%

300

2%

1.4%
200

1%

1.2%

100

About 15% of
new areas

00%FY2019(actual)© 2023 FDK CORPORATION

FY2020(actual)FY2021(actual)FY2022(forecast)

FY2025(target)20

OperatingCF
13 billion
yen

Investment for growth in newbatteries, DX, etc.
2 billion yen

Strengthening of existing
businesses
9 billion yen

Technology creating a better future