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Automation Technology for the Future

Stock Exchange Code: 6407

Newsletter to Shareholders
for the 98th Fiscal Year

Annual results
Operating income /Ordinary income

Net sales¥115.7 billion

Operating income

Up 23.1%
YoY(Millions of yen)

115,700

8,107 8,094

96th FY

First, we would like to express our appreciation foryour continued support.

97th FY

98th FY

96th FY¥9.1billion(Millions of yen)

YoY

(Millions of yen, %)

7.9

6.2

12,472 12,469

9,580 9,771

9,142
6,958

5,459

97th FYUp 31.4%

Net income attributable toowners of parent
Net profit ratio
7.4

YoY

Operating income
Ordinary income

From April 1, 2017 to March 31, 2018

To our shareholders¥12.4 billion

Up 27.6%

Net income attributable to owners of parent

YoY

Ordinary income

94,012

88,117¥12.4 billion

Up 30.2%

Net income attributable to ownersof parent / Net income margin

98th FY

96th FY

97th FY

98th FY

Profit and loss (Millions of yen)
97th FY

98th FY(From April 1, 2016 to March 31, 2017)(From April 1, 2017 to March 31, 2018)

Net sales Cost of sales

For the 98th fiscal year of the Company (from April 1,2017 to March 31, 2018), we will now give an overview ofthe business, and a report on the settlement of accounts.

115,700

Net sales

94,012

Ordinary
incomeOperatingincome

9,771

9,580

The Japanese economy gradually improved during this fiscal year,

driven by a solid volume of personal consumption resulting fromimprovements in employment conditions and income environment.
Strong domestic demand and an increase in exports led to animprovement in corporate income, which was used for greater
capital investment to improve productivity, streamline operations,and save labor.
In terms of overseas economies, employment in the USA remained
favorable, resulting in strong personal consumption that enabled
expansion of production activities. European economies showed
recovery as a result of measures such as monetary easing. In
China, increases in infrastructure investment began to slow dueto government restrictions, but personal consumption provided afoundation for strong results.
Against this backdrop, the CKD Group’s consolidated net sales
came to ¥115,700 million (up 23.1% YoY), while operating income
was ¥12,472 million (up 30.2% YoY), ordinary income was ¥12,469
million (up 27.6% YoY), and net income attributable to owners ofparent reached ¥9,142 million (up 31.4% YoY).
Year-end dividends for the fiscal year have been set at ¥20 pershare. Combined with the interim dividend of ¥17 per share paid inDecember 2017, this results in an annual dividend of ¥37 per share.
We humbly request the further support and encouragement of ourshareholders as we move forward.

Issues to be addressed

We have developed a range of products that lead the industry inJapan. We are now actively introducing them to overseas customers
and expanding our business globally. In our automatic machineriesbusiness, we are strengthening our product handling, sales andservice framework so that we can expand our automatic packaging

machines for pharmaceutical and food products globally. In ourcomponents business, we are strengthening our sales and technicalsupport framework so that we can expand our products for special
purposes and products that meet industry needs into advanced
industries in the USA and Europe.
In addition to the business foundation we have built in Asia, weare also building new foundations in developing regions such as
Latin America and India, and strengthening our base in the USA andEurope to improve customer satisfaction.

Net income
Income attributable totaxes owners of parent

Operating Non-operating Ordinary Extraordinary
incomeincomeincomeexpenses

12,472

6,958

AssetsThe CKD Group is tackling the following issues through theopportunities, and are working on new initiatives and thedevelopment of products for new markets. The rise of IoT aroundthe world is something on which we can capitalize through measuresto make our products more advanced, such as strengthening theircommunication functions, enhancing sensors, as well as developing
preventive maintenance products.

23,363(3)

12,4693,629367

9,142

Assets, liabilities, and net assets

medium- and long-term management strategies detailed in the“Challenge CKD 2018” medium-term management plan that began
in the fiscal year ended March 31, 2017.
We see the current changes in the world as new businessSelling,
general andadministrative
expenses

Net income
attributable toowners of parent

President Kazunori Kajimoto

Business review79,864

Liabilities and net assets(Millions of yen)

(Millions of yen)

132,820

106,361

Current assets

85,772

68,883

132,820

Total liabilities and net assets

106,361

Current assets

Noncurrent assets

Noncurrent assets

37,47747,048End of 97th FY

End of 98th FY

Current liabilities 29,645
Noncurrent liabilities 5,758

Noncurrent liabilities 9,687

Net assets

Net assets

70,95780,058End of 97th FY

End of 98th FY

98th FY(Millions of yen)

(From April 1, 2017 to March 31, 2018)

Cash and cash
equivalents at
beginning of period13,905

5,542

Net assets

Net cash ininvestingactivities(7,273)

Net cash infinancing
activities

68.9

Equity ratio (Millions of yen, %)

66.7
60.2

Current liabilities 43,074

Cash flows
Net cash byoperating
activities

Total assets

Total liabilities and net assets

Total assets
Total assets

Total assets / Net assets /Equity ratio

Cash and cash
equivalents at
end of period

2,559
14,799132,820
96,412
66,41996th FY

106,361
70,95797th FY

80,05898th FY

Topics
TOPIC 1

TOPIC 3

FP-U Flash Patri Series of inline inspection systemWe have launched the Flash Patri FP-U Series of built-in inspection
equipment for pharmaceutical packaging machines. The series enables
the inspection of misaligned cuts and printed marks on each tablet
sheet with an accuracy of ±1mm. This can prevent scanning failuresof barcodes containing tablet information due to incomplete printing,as well as ensure sealability of the tablet
quality, preventing it from deteriorating.
In addition, the measured degree ofmisalignment can be converted to usable
data, leading to improved productivity.

TOPIC 2TOPIC 5

Nitrogen gas extraction units NS Series

Nitrogen constitutes about 80% of the air. We have launched the Nitrogen gas
extraction units NS Series, which separates nitrogen and oxygen from the air, resulting
in a concentration of nitrogen with a purity of up to 99.9%. Nitrogen gas has a wide
range of uses, including anti-oxidation and explosion-proofing applications in foodprocessing, packaging processes and laser processing systems. Generally, this issupplied in the form of cylinders, etc., which require labor to refill and replace, but
the NS Series can be used anywhere compressed air is available, enabling trouble-freesupply of nitrogen gas.

TOPIC 4DSC-C Series speed controller with adjusting dial wins the iF DESIGN AWARD 2018

Offices and research facilities are not equipped with the compressed air supply
facilities using large compressors that can be found on production lines in factories,
and there is demand for air supplies that do not compromise the atmosphere inclean and quiet rooms to small facilities. To respond to such requests, we developed
the “ASU-S,” which integrates a quiet compressor, filter, regulator, valve and othercomponents into a compact carry case, allowing it to be transported easily. This not
only enables air supply to small facilities, but also allows compressed air to be used
in a diverse range of situations, where such equipment do not exist.

The DSC-C Series speed controller with adjusting dial has won the prize inthe internationally acclaimed iF DESIGN AWARD 2018. The development
goal for this product was to create the world’s smallest direct-mounted
speed controller, while resolving the ease-of-use and visibility problems
that are caused by miniaturization through good designs. In addition toexpanding sales of this item around the world, going forward we willcontinue to develop products that also have attractive designs.

The Company has begun joint development of an electric actuator with Taiwan’s Toyo Automation Co., Ltd.
(“TOYO”). In recent years, the shift to factory automation and IoT in production facilities is accelerating on a global
scale, and there is a rising need for equipment powered by electricity. By
incorporating into an electric actuator both the motor control technology
in which CKD excels, and TOYO’s core pneumatic cylinder technology, wewill be able to develop competitive products speedily and to deal with awider range of customer needs than previously possible, with the aim of
expanding the business further. Furthermore, in order to encourage joint
development and a further strengthening of the relationship, we haveinvested approximately ¥500 million in TOYO, acquiring the equivalentof 10% of its shares.

TOPIC 6

Portable air supply unit ASU-S

Joint development with Toyo Automation Co., Ltd.

Opening of the “‘Ohana nursery school” on-site day-care center

As part of our efforts to create an environment in which employees can workwithout worries when raising children, the Company has opened the “‘Ohananursery school” on-site day-care center at the Headquarters / Komaki Factory.
“‘Ohana” means “family” in the Hawaiian language, and represents our feeling thatthose who join the family of our employees are also the family of the Company.
In addition, by locating the facility to the side of the main gate of the Company,
we hope that it will be seen and loved by all employees, and take on a symbolic
existence that will lead to the emergence of an even better corporate culture.

Results by segmentAutomatic machinery
Sales of automatic packaging systems decreased
due to a downturn in capital investment for genericpharmaceutical products in Japan.
Industrial machinery, meanwhile, saw an increasein sales for both lithium ion battery production
systems and 3D solder paste inspection machines.
As a result, sales for this segment were ¥16,344
million (down 11.1% YoY). In addition to thedecrease in sales, an increase in research anddevelopment expenses along with the impact ofmaintenance costs that occurred during the second
quarter of the fiscal year saw this segment generate¥1,176 million in segment income (down 44.1%YoY).

Net sales

Net sales¥16,344 million

Down 11.1% YoY
16,954¥99,355 million

Up 31.4% YoY

Automaticmachinery

14.1％

18,38071,16375,631

Net sales
96th FY

97th FY

98th FY

Automatic packaging systems
Pharmaceutical products packaging

Component products¥115,700
million

96th FY

97th FY

Fine system devices

98th FY

In the domestic market, sales increased forsemiconductor production equipment parts due
to ongoing investment in refinement and 3D
memory, for machine tools due to strong demandboth domestically and overseas, and for FPD
production equipment parts.
In overseas markets, sales increases wereparticularly notable in South Korea, where strong
investment in semiconductor facilities is taking
place, and China, where there is ongoing capital
investment for purposes such as informationand communication equipment, rechargeable
batteries, and automation.
This resulted in sales of ¥99,355 million (up31.4% YoY) and segment income of ¥15,831
million (up 41.5% YoY).

Fluid control components

Labor-saving components

Food packaging

Component
products

85.9％Winding machines for lithium-ion batteries

3D solder paste inspection machines

Electric actuators

Pneumatic control systems

Company / stock information

Shareholder memo

Company profile (as of March 31, 2018)

Officers (as of June 22, 2018)Name

CKD Corporation

Directors

Established

April 2, 1943

President

Capital stock¥11,016,380,748

Head office

250, Ouji 2-chome, Komaki, Aichi,
485-8551, Japan
Phone: +81-568-77-1111

Director

Number of employees

2,248 (Consolidated: 4,284)

Main businesses

Development, manufacture, saleand export of automation
machinery, labor-saving
components, pneumatic controlcomponents, drive components,
pneumatic auxiliary components,
fine system components and fluid
control components

DirectorDirector
Director
Director
Director

Corporations

Financialinstitutions

10.15％

31.33％

Foreigncorporations,etc.

17.69％

29.23％

Executive Officer Tatsuya Nishio

Junichi Kagawa

Executive Officer Yoshinori Nozawa

Noriko Asai

Executive Officer Takuya Takahashi

Kazumasa Uemura Executive Officer Yoshikazu Yamauchi
Executive Officer Noriaki Ichimura
Executive Officer Toru Iwata

Executive Officer Kiyoshi Fukui

Executive Officer Katsuhiro Niidera
Executive Officer Kazuhide Okada

Executive Officer Katsunori Hayashida

Major shareholders (as of March 31, 2018)

Treasurystock

Number of Shareholding
shares heldratio(%)(thousand)

Name
Japan Trustee Services Bank, Ltd.
(Trust account)

3,826

6.18

The Master Trust Bank of Japan, Ltd.
(Trust account)

3,210

5.18

STATE STREET BANK AND TRUSTCOMPANY

3,189

5.15

CKD Shareholding Association

2,751

4.44

BBH FOR MATTHEWS JAPAN FUND

2,551

4.12

SUMITOMO LIFE INSURANCE COMPANY

1,914

3.09

Sumitomo Mitsui Banking Corporation

1,581

2.55

CKD Corporative Companies
Investment Association

1,572

2.54

The Dai-ichi Life Insurance Company,Limited1,400

2.26

Mitsui Sumitomo Insurance Company,
Limited

1,210

1.96

65

Annual General Meeting of Shareholders

Held in June each year

Record dates

Annual General Meeting of Shareholders: March 31 each year
Year-end dividend: March 31 each year
Interim dividend: September 30 each year
Also held as necessary on other dates, as set and publically announced in advance

Method of public notice

To be made public on the Company website. (https://www.ckd.co.jp/japanese/ir/bspl.htm)

Number of shares of one unit

100

Stock exchange listing

Tokyo Stock Exchange and Nagoya Stock Exchange, First Section (stock exchange code: 6407)

Websitehttps://www.ckd.co.jp/english/

Administrator of shareholder registry 1-4-1, Marunouchi, Chiyoda-ku, Tokyoand account management institution Sumitomo Mitsui Trust Bank, Limited
for special account
Administrator of shareholder registry 15-33, Sakae 3-chome, Naka-ku, Nagoya
Stock Transfer Agency Business Planning Department, Sumitomo Mitsui Trust Bank, Limited
and handling office(Mailing address)

2-8-4 Izumi, Suginami-ku, Tokyo 168-0063
Stock Transfer Agency Business Planning Department, Sumitomo Mitsui Trust Bank, Limited(Telephone inquiries)

0120-782-031(Website)

http://www.smtb.jp/personal/agency/index.html[Notifications and inquiries regarding changes of address etc. in relation to shares]
Shareholders who have an account with a securities company are requested to direct inquiries and notifications regarding changesof address, etc., to the securities company at which the account is held. Shareholders who do not have an account with a securities
company are requested to use the telephone number for inquiries given above.
[Special accounts]
For shareholders who were not using JASDEC (Japan Securities Depository Center, Incorporated) before the introduction of
the electronic share certificate system, we have opened an account (referred to as a “special account”) at the administrator ofshareholder registry, the above-mentioned Sumitomo Mitsui Trust Bank, Limited. Please direct inquiries regarding special accounts
to the telephone inquiries number given above.

Information on shareholders returns

Note: The above shareholding ratios have been calculated after excluding treasury stock.

[Reference] ● Countries and regions in which the CKD Group has established a base

［Asia］

From April 1 of each year to March 31 of the following year

Executive Officer Shinji Yuhara

Shinji Yuhara

Audit & Supervisory Board Member Takeshi Sawaizumi

Securities
companiesIndividuals

Masafumi Kokubo

Audit & Supervisory Board Member Naotaka Nanya

Breakdown by shareholder type10.18％

Katsuhito Okuoka

Standing Audit &Supervisory Board Member Shigeru Ohmori
Audit & Supervisory Board Member Koichi Hayashi

233,000,000
68,909,449
9,731

1.42％

Kazunori Kajimoto

Audit & Supervisory Board Members

Stock information (as of March 31, 2018)
Total number of authorized shares
Total number of issued shares
Number of shareholdersExecutive Officers

Managing
Executive Officer Katsuhito Okuoka
Executive Officer Masafumi Kokubo

Fiscal year

7bases［Americas］

bases

Shareholder benefits program(Yen)

In order to express our gratitude for the continuing supportof shareholders, and to further increase the investment
appeal of the Company’s shares, we have introduced ashareholder benefits program with the goal of increasing
the number of investors holding positions in our shares
over the medium- and long-term.
■Eligible shareholders
Shareholders listed in the shareholders registry as of March 31 each year,and those who own at least 100 shares (one unit) of the Company, areeligible.

5 bases■Timing of presentation of benefits
Dispatch of benefits is planned in late June each year.

［Europe］■Details of shareholder benefits
Number of shares heldPlants
Overseas sales bases
Distributors

Dividends

Details of benefits

100 or more but less than 500 shares

QUO gift card 500 yen value

500 or more but less than 1,000 shares

QUO gift card 1,000 yen value

1,000 shares or more

QUO gift card 2,000 yen value

3726
1330
1620

Full-year forecasts
40201314

1720

96th FY

97th FY

98th FY

99th FY

Dividend policy
With regard to returning profits toshareholders, the basic policy of the Company
is to raise corporate value by enhancing thebusiness foundation, and to further expand
the business through implementing capital
investments and investments in researchand development, etc., while in relation toshareholder returns, paying a stable dividend.