To Our Shareholders

We will unite as the Mabuchi Groupto further improve corporate value steadily.

Hiroo Okoshi
Representative Director andPresident CEOBusiness Results for Fiscal 2019
We report on the consolidated performance for the fiscal
year ended December 31, 2019 (January 1 to December 31,2019).
Consolidated net sales for fiscal 2019 were 131.8 billion
yen. Operating income for fiscal 2019 was 17.5 billion yen.
Profit attributable to owners of parent was 14.2 billion yen.
Please see the table below for the rate of change.

Financial Highlights
Thousands ofU.S. dollars

Rate ofchange

2019

2019

YoY¥131,807$1,203,058-7.9%

Millions of yen

2018
Net sales ¥143,116
Operatingincome21,243

17,544160,131-17.4%

Profit attributableto owners of parent

22,925

14,234

129,920-37.9%

Total
assets267,050

268,2442,448,375-0.0%

Net assets

244,454245,172

2,237,788

+0.3%

3

MABUCHI MOTOR CO., LTD.

Exchange rate: U.S.$1 = ¥109.56

During the fiscal year ended December 31, 2019 (fiscal2019), the trend of a slowdown in the global economy
became stronger, amid concerns regarding trade and theeconomic environment.

Economic Environment of Major Countries/Regions
The U.S. economy saw increased consumer spending
against a backdrop of continued improvement in theenvironment for hiring, and continued to show solidgrowth. The pace of growth in the European economy
remained sluggish on stagnant manufacturing in Germany,
amid signs of exports for the region as a whole bottoming
out. In Japan, the economy was showing gradual growth on
increased capital investment and growth in consumer
spending from an improving hiring environment. Growth inemerging market economies slowed overall, with adecelerating pace of growth being seen in China.
With regard to markets related to the Mabuchi Group’sproducts, the automotive products market contracted onweakness primarily in Europe and China despite a solid North
American market. The consumer and industrial products market
saw a continued contraction in markets for some applications.

Annual Report 2019

Sales by application market and rate changes from theprevious year are as follows:

Sales by Application Market
Net Sales
Application by Market

Rate ofchange

Millions of yen

Thousands ofU.S. dollars

Automotive ProductsMarket¥97,959$894,113-6.0%

Consumer and Industrial
Products Market

33,840308,872-12.9%

Exchange rate: U.S.$1 = ¥109.56

For more information on products by application market,
see Segment Information on pages 7–8.

Main Efforts and Results of the Current
Fiscal Year
Against this backdrop, the Mabuchi Group has been working
to address the issues of “Acceleration of growth in the power
window lifter motor business,” “Expansion of medium-sized
and small automotive motor sales and new applications,”“Development of new applications in the consumer andindustrial products sector,” “Pursuing laborsaving and nextgeneration manufacturing innovation,” and “Implementationof a global base strategy.” Specifically, we proactively
introduced and implemented various measures to increase
sales and market share, develop new markets, and further
improve efficiency and product quality, and achieved
successes that will lead to future business growth. This
included making significant progress in our efforts to obtainapproval from a third major North American automaker, using

Net Sales/Gross Profit Ratio
32.8(Millions of yen)
30.4
143,143

140,69932.2
146,925

our high market share in small automotive motors and ourexperience in brushless motors to achieve a higher rate oforder acceptance by participating in customers’ productdevelopment from the initial stages, gaining large-scale orders
in both growth markets including light electric vehicles and in
existing markets, being on track to achieve the targets of thePhase 3 Laborsaving Plan (FY2017–FY2019), and pursuing
local production for local consumption at the global level andaddressing changes in the trade and economic environment.

Future Efforts
Acceleration of Growth in the Power Window LifterMotor BusinessAt the power window lifter motor business, Mabuchi Motor
China has been established as a regional headquarters(management company) to respond promptly to the drasticchanges being seen in the Chinese market, and the businesshas been working to address changes in the environment
quickly, expand its marketing function, and strengthen its
sales structure. Specifically, this has included accelerating theswitch to new standard motors for power window lifters,
where we have a large market share in China, to meetcustomers’ higher level of requirements. The business has
won a new large-scale contract and is working to increase its
market share further. In Europe, as in China, the competitiveenvironment is changing significantly, and we arestrengthening the R&D function at European sales bases tobe able to respond more quickly, particularly in technologicalaspects. These efforts have led to inquiries from potential
new customers who are currently using our competitors’
products. Orders under a contract won from a high-end

Operating Income/Operating Income Ratio
31.0
143,116

31.1(Millions of yen) 16.0
22,961

17.2
24,22516.424,066

14.8

13.3

21,243

131,807

17,5442015
Gross profit ratio (%)

2016

2017

2018

2019

2015

2016

2017

2018

2019

Operating income ratio (%)

4European automaker in fiscal 2018 are also showing steady
growth in the models equipped with our products. In theUnited States, we are aiming to win orders from a third North
American automaker, and continue to strengthen our unified
sales structure for the Americas and develop new products.

Expansion of Medium-sized and Small Automotive
Motor Sales and New Applications
Medium-sized automotive motors for applications including
power seats and electric parking brakes are an area forwhich continued market expansion can be expected going
forward in light of today’s emphasis on automobile safety,
comfort, and economy, and a variety of new applications isemerging. The Mabuchi Group will continue to develop new
products for new applications. We will work toward sales
growth through increased sales of highly competitive
application-specific standard products to new customers.
For small automotive motors, we will maintain and enhance
our superiority in existing applications where Mabuchi has
overwhelming strength, while also proactively developing
and increasing sales of competitive new products in
response to new inquiries including for new applications,based on the Company’s strengths and factors including
a product’s marketability and profitability.

Development of New Applications in the Consumer
and Industrial Products Sector
In the consumer and industrial products sector, in addition
to business activities based on existing small brush motors,
we are stepping up development and pursuing increased
sales of brushless motors to cultivate new applications andPower Window Lifter Motor Sales Results(Billions of yen)3515030

Under both the Phase 1 (fiscal 2011 to fiscal 2013) andPhase 2 (fiscal 2014 to fiscal 2016) Laborsaving Plans toachieve laborsaving exceeding 30% during the three-yearperiod, we achieved laborsaving exceeding 30% as plannedand production process innovation progressed significantly.
Under the Phase 3 Laborsaving Plan, which covered thethree years from fiscal 2017 to fiscal 2019, we also achieved
our challenging target of 30% laborsaving compared withfiscal 2016. In addition to laborsaving, these activities have
led to a major strengthening of our equipment development
capabilities. We are further refining our Next-generation
Manufacturing Innovation, which achieves both high(Billions of yen)

60(%)

Sales amount
Sales quantity (2016 = 100%)

15050

25100

2040100

3015501020501050

Pursuing Laborsaving and Next-generation
Manufacturing Innovation

Small Automotive Motor Sales Results(%)

Sales amount
Sales quantity (2016 = 100%)

create new demand. With regard to brushless motors forlight electric vehicles, we have a steady pace of shipments
to customers for both new applications and existing
applications. We continue to receive many customer inquiries
regarding brushless motors for light electric vehicles, and areworking to develop new additional applications in addition
to light electric vehicles and strengthen our sales activities towin orders for a greater variety of applications. We continue
to strengthen our sales of motors for personal care products
by developing motors for new high-end products being
launched by customers. The consumer and industrial
products sector has a short cycle from development to sales,and we are seeking to develop motors simultaneously withcustomers’ product development. We will strive to meetcustomers’ expectations by building further on thetechnologies we have developed to date.

2016

2017

2018

2019

00201620172018

2019

0* P W: Power window lifters
PS: Power seats
EPB: Electric parking brakes

5MABUCHI MOTOR CO., LTD.

Annual Report 2019

product quality and productivity using our expertise inautomation and efficiency enhancement acquired throughthe combination of laborsaving and activities including thedevelopment of innovative core production lines. The twomain specific activities we are pursuing are to minimize thecost of manufacturing and to establish an international
specialization system for manufacturing technologies, andwe are steadily pursuing these initiatives along with humanresource development and organization-building.

Implementation of a Global Base Strategy
To respond to changes in the manufacturing environment
and address customers’ increasing needs for motor
production located close to their own factories, Mexico
Mabuchi was established in Mexico in August 2014 as our
first production base in the Americas, and Poland Mabuchi
was established in Poland in January 2017 as our firstproduction base in Europe. Our implementation of a global
base strategy, including the establishment of theseproduction bases, is contributing to our ability to respond to
the drastic changes in external environment seen in recentyears. In China, the establishment of a regional
headquarters is strengthening our ability to address local
needs. Initiatives in the Americas include increasing ourproduction line capacity and raising productivity at Mexico
Mabuchi. In particular, we have achieved stable supplies tocounter the effects of the respective country’s trade policies
through cooperation between America Mabuchi andMexico Mabuchi. In Europe, Poland Mabuchi is working tocommence mass production and raise productivity, to beable to provide a high level of customer service based on
local production for local consumption.

Shareholder Returns
Mabuchi maintains a basic policy of actively returning profits
to shareholders in accordance with its business results. We
do this while also providing funds from internal reserves forcapital expenditure, research and development which arenecessary for the growth of the Company, and while
maintaining our financial soundness.
Under this policy, apart from when business results areremarkably sluggish due to a sudden deterioration in thebusiness environment, we consistently distribute an annual
ordinary dividend of 30 yen per share as payment of along-term stable dividend, plus an additional special

dividend equal to 30% of the consolidated net income
divided by the number of outstanding shares, depending on
the performance of the Company.
We will continue to consider repurchasing more treasury
stocks as necessary, as a way of flexibly responding tochanges in the share price and the business environment,
and as a means of fulfilling our capital policy and returning
profits to shareholders.
It is our policy to appropriate internal reserves to further
strengthen and deepen our existing businesses and to invest
in areas of growth, with a view to increasing corporate value.

Cash Dividend
In consideration of short-term uncertainties in the businessenvironment, we paid a dividend of 135 yen per year for thetwo-year period from fiscal 2018 through fiscal 2019 only,
without consideration of consolidated net income. For fiscal
2020, we plan to extend the special measure by one year tomaintain the same full-year dividend amount of 135 yen per
share despite the uncertain operating environment due tothe global spread of the new coronavirus. However, in theevent of significant changes in business operation forecast,the dividend forecast will be reevaluated as appropriate. The
basic dividend policy does not change the basic calculation
criteria, and this special measure is for a limited period.

Fiscal 2019
Full-year: 135 yen per share (ordinary: 30 yen/special: 105 yen)Interim: 67 yen per share (ordinary: 15 yen/special: 52 yen)
Year-end: 68 yen per share (ordinary: 15 yen/special: 53 yen)

Fiscal 2020 (plan)
Full-year: 135 yen per share (ordinary: 30 yen/special: 105 yen)

Acquisition of Treasury Stock
The Company decided to purchase treasury stock to return
profits to shareholders and improve capital efficiency. The
repurchase of treasury stock is planned to take place during
the period from February to December 2020, with amaximum of 3 billion yen and 1.2 million shares.
The repurchase of our treasury shares will take place forthe sixth consecutive year since 2015. We determined therepurchase by taking into account comprehensively future
growth investments including M&As and alliances, mediumterm business plans, and the market environment. The
treasury stock to be acquired this time will not be cancelledin consideration of the effective use for future funds.

6