Financial Results Briefing
First Half of Fiscal 2019(Ended November 30, 2019)
January 15, 2020
Toyo Denki Seizo K.K.

Program Briefing on Financial Results: 30 minutes
1. Overview of Financial Results for First Half ofFiscal 2019
2. Outlook for Financial Results for Fiscal YearEnding in May 2020
3. Topics

 Q&A: 20 minutes

11. Overview of Financial Results forFirst Half of Fiscal 2019
(From June 2019 to November 2019)

1-1. Overview of Consolidated Financial Results
Net sales were comparable to the results of a year earlier. Operating income
significantly improved and the Company posted profits in the first half as planned.
100 million yen
Published value Published value ratio

YoY Change
1H FY2018

1H FY2019

Net Sales

196.3

193.9-2.4-1.2%

Operating Income-1.2

3.0+4.2－(1.5%)

Ordinary Income-0.2

Net Income[Net income pershare (yen)]%(November 2019)%

201.0-7.0

96.5%

－

3.0+0.0

100.0%－－(1.4%)(+0.0pt)－

3.8+4.0－

4.0

-0.2

95.0%

1.4

4.7+3.2 +221.4%

4.0+0.7

117.5%

15.62

52.63

+37.01－44.73+7.90－Orders received

192.1

203.4

+11.2

+5.9%

200.0

+3.4

101.7%

Ratio of overseas
sales to net sales

22.9%

20.8%

- 2.1pt－(%)

31-2.

Factors for increase and decrease in operating income (YoY change)

Operating income covered the depreciation burden (approximately 220 millionyen) associated with the installation of the Shiga Ryuo Plant and posted profits.
300 million yen
Improved
420 million yen
year on year

Increase insubsidiary profits+90 million yen
Change in selling, general& administrative expenses+70 million yen

Plant profit/loss+100 million yen
Improvement ingross margin+180 million yen-120 million yen<1H FY2018>

Factors for decrease inoperating income-20 million yen<1H FY2019>
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1-3.

Breakdown of non-operating income/expenses andextraordinary income/loss
Non-operating
income / expenses+80 million yen• Dividend income+160 million yen• Interest expense/
commission fee-40 million yen• Foreign exchange losses-40 million yen

Extraordinary
income / loss
+410 million yen• Gain on sales ofinvestment securities+410 million yen
790 million yen

Income taxes

470 million yen

380 million yen
300 million yen

300 million yen

140 million yen-20 million yen

1H FY2018-120 million yen

OperatingincomeOrdinary
incomeIncome before
income taxes

1H FY2019
Net income51-4. Segment Performance Transportation Systems
Segment income was comparable to the level of a year earlier despite lower sales.
Orders are on a recovery trend.
 Orders received and order backlog
300

 Net sales and segment income
300

Order backlog

Net sales(100 million yen)Segment income

30

257.7
218.2

233.1200200Net sales

Orders received

126.2

20111.9

128.5
100100

126.5

131.2

11.4

10.5

Segment income0121.3

10.10
1H FY2017 1H FY2018 1H FY2019

100
1H FY2017 1H FY2018 1H FY2019• Orders received increased for JR and China, and turned to a recovery trend.
• Segment income was comparable to the level of a year earlier although net sales declined due to theimpact of a decrease in orders received in the previous fiscal year.
61-5. Segment Performance Industrial Systems
Effects of Ryuo integration (increase in production efficiency) contributed toincreasing productivity.
 Orders received and order backlog

 Net sales and segment income (100 million yen)

100

100
Order backlog

80

75.9

83.0
74.3
73.9

60

Net sales

8060

108Net sales

67.1

Segment income

52.9

64.5

57.7

657.3
40

Orders received

4.8

4020202Segment income

004-0.3

1.2

0

1H FY2017 1H FY2018 1H FY2019

1H FY2017 1H FY2018 1H FY2019-20-2• Orders received declined due to new large-scale projects in the previous year. Testing devices continued
to be steady.
• Net sales and segment income increased due to the significant growth for testing devices. New largescale projects also contributed to performance.
71-6. Segment Performance Information Equipment Systems
Orders received, net sales and segment income all increased.
 Orders received and order backlog
20

 Net sales and segment income (100 million yen)
20

Net sales

Segment income

10

Order backlog

15.9

13.8
10

Orders received

7.6

10

Net sales

7.0

6.2

7.2

7.9

52.4

6.7
4.2

Segment income

1.20.3001H FY2017 1H FY2018 1H FY2019

01H FY2017 1H FY2018 1H FY2019• Orders received increased in response to consumption tax revisions and compound issuing device
projects.
• Net sales and segment income increased in response to consumption tax revisions.
8

1-7. Consolidated Financial Position
100 million yen
2015年 6月末2May 31, 2019 0Nov 30, 2019

ChangeRemarks

1

Total Assets

580

580

+0

Current assets

260

257-3

Fixed assets

319

323

+3

Total Liabilities

331

325-6

131

138

+7 November 30, 2018: 177 (-38.5)

248

255

+7 available-for-sale securities: +642.8%

44.0%

Of which, net interestbearing debt

Net Assets
Shareholders’ equity
ratio (%)

Unrealized holding gain/loss on+1.2pt

92. Outlook for Financial Results for
Fiscal Year Ending in May 2020

2-1.

Outlook for Financial Results for Fiscal Year Ending in May 2020
(Consolidated)

Orders received of 43.0 billion yen, net sales of 42.0 billion yen, operating incomeof 0.9 billion yen - No change from the initial plan
100 million yen
FY ended in May 2019
(Result)
2Q

Full year

FY ending in May 2020
2Q (Result)

Full year(Forecast)YoY Change
Full year

Net Sales

196.3411.7

193.9

420.0+8.3

Operating Income-1.2

5.5

3.0

9.0+3.5(%)(1.4%)(2.1%)

Ordinary Income-0.2

4.9

3.8

11.0+6.1

Net Income

1.4

6.9

4.7

9.0+2.1[Net income per share (yen)]

15.62

75.27

52.63

100.65+25.3830.0

Dividend per share (yen)Orders received

192.1

406.8

30.0
203.4

430.0

+23.2
112-2. Forecast of Financial Results (by Segment)
100 million yen
Transportation

FY ending inMay 2020
Forecast(Full year)

YoY ChangeIndustry

Information
Equipment

Net sales

267.0

138.0

15.0Segment income

28.0

9.5

2.5

Orders received

273.0

145.0

12.0

Net sales-5.3+14.6-0.8

Segment income+3.7+3.0-0.4

Orders received

+12.2

+16.6

-5.5

123. Topics

3-1. Medium-term Management Plan - Numerical Targets
Stably generating profits and steadily pursuing measures to establish a leanbusiness operating structure.
(100 million yen, %)FY ended in
May 2019(Result)

FY ending inMay 2020(Plan)FY ending inMay 2022(Plan)

411.7

430Over 470

5.5920(1.4%)(2.1%)(4.3%)

Ordinary Income

4.9

1124

Net Income

6.9716

Investment gain on equity
method

0.1

1.2

4.0

ROE

2.7%

3.3%

5.0%

Payout ratio

39.9%

30.0%

30.0%

Transportation Systems

272.3

290

310

Industrial Systems
Information Equipment
Systems

123.3

130

150

15.8

1010

Net Sales
Operating Income(Operating margin ratio)<Net sales by segment>

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3-2. Medium-term Management Plan - Progress
Steady progress in the first two years (fiscal year ended in May 2019 and fiscal
year ending in May 2020).
 Expanding the overseas business
Expanded the maintenance business for municipal transportation in China andbegan manufacturing pantographs.
Will begin production of energy-saving permanent magnet motors in China inMarch 2020.

 Establishing a stable business earnings structure
Integrated production sites in the Industrial Systems segment with the aim ofenhancing production efficiency. Began operation of the Shiga Ryuo Plant.
 Developing foundations for expanding production capacity
Upgraded core systems with the aim of enhancing production efficiency.
Implemented an automatic conveyance system linked with the production systemat the Shiga Ryuo Plant.
 Promoting ESG
Contributing to the environment and society and reinforcing our corporate
governance.
153-3. Status of Overseas Business Activities in the Transportation Systems
Segment
The two newly established affiliates in China are performing steadily. The joint
venture firm’s business form is entering a transition stage.
Beijing Jingche Shuangyang
Traction System(million yen)
Net sales
1,500

Operating income
600

1,000

400

500

20000
2015 2016 2017 2018 2019 2020
(Forecast) (Plan)

Net sales

Operating income• Promoted the maintenance business inBeijing.
• The maintenance business for Beijing
Olympic vehicles will be operated full scale
in 2020 and onward.

Chengdu Yonggui Toyo
Rolling Stock Equipment (million yen)
Operating income

Net sales
40040200

20002018-200
Net sales

2019

2020

(Forecast)(Plan)-20
Operating income• Promoted the pantograph business inChengdu.
• Performance exceeded the plan and the firm
recorded profits in only its second year ofestablishment.

163-4. Status of Overseas Business Activities in the Industrial Systems Segment
Established Chinalco Toyo, the first overseas manufacturing site in the Industrial
Systems segment, in June 2019.

Chinalco Toyo Permanent-Magnet Electric Co., Ltd.
Chinalco Rare
Earth & Metals

Toyo Denki
Seizo

Beijing Ling
Yang Trading

35% investment

35% investment

30% investment

A group company of Aluminum
Corporation of China (Chinalco), theworld’s largest aluminum smelter
Beijing Jingche
Shuangyang
Traction System
Toyo Denki(Beijing)

NorthKorea

Beijing

Japan
Korea

China

Chinalco Toyo
(Changshu City)

Changzhou Ruiyang
Transmission Technology
Changzhou Yangdian
Zhanyun Transport
Chengdu Yonggui
Equipment
Toyo Rolling
Changsha
Stock Equipment
ChengduHunan Xiangyang
ElectricTokyoOsakaNagoya

Changzhou
ShanghaiAffiliates in the Transportation
Systems business
Affiliates in the Industrial SystemsbusinessAffiliates common to all businesssegments

Exterior and interior ofChinalco Toyo

At the ceremony for commencement of work
(held at the new plant on September 13, 2019)17

3-5. Status of Overseas Business Activities in the Industrial Systems Segment
Production Plan of Chinalco Toyo Established a permanent-magnet motor manufacturing company to respond toenergy-saving needs in China.
2020: Launch a plant with an annual production capacity of 5,000 units.
2023: Launch a mass-production line with an annual production capacity of 20,000units.
 Start with replacing plant facilities of Chinalco Group (holding 350,000 motors) withenergy-saving equipment.
 Start operation in March 2020, with full-scale operation scheduled for June 2020.
(Number of units)<Motor units production plan>

30,00020,00010,00002020/12 2021/12 2022/12 2023/12 2024/12
Manually operated line
Automated line

<Inspection of components at
the local supplier in China>18

3-6. Product Development (Transportation Systems)
Development of core circuit system that accommodates energy conservation

Delivered VVVF inverter using SiC elements and highefficiency totally-enclosed motor for Keisei Electric
Railway’s new 3100 series rolling stock.
As a result of the trial installation of the core circuit
system on Keisei Electric Railway’s 3000 series, wemanaged to save energy by 18% compared to theconventional system.

-18%
3000 series(conventional)* 3100 series:

3000 series:

3000 series(SiC + high-efficiency motor
applied)VVVF inverter using SiC-IGBT + high-efficiency totally-enclosed
motor
VVVF inverter using Si-IGBT + conventional induction motor<Totally-enclosed motor>

193-7. Product Development (Industrial Systems)
Testing devices for automotive development
 Flat-type dynamo (in-wheel-well dynamo)
Focusing on the commercialization of in-wheel-well dynamo that renews the concept
of conventional testing devices.
Verification of functions as a testing device is under way using actual vehicles.
 Low-inertia high-speed rotation (20000 rpm) dynamo
Commercialized 20000 rpm dynamo in the previous fiscal year and received the firstorder.
Having received inquiries on the product for HEV and EV applications, which are theoriginal targets, we are in the process of offering proposals.
Main part ofdynamo<In-vehicle flat-type dynamo><Low-inertia high-speed rotation dynamo>

20

3-8. ESG Initiatives (1)Contributing to the establishment of safe and secure social infrastructure and its
sustainable development
The Company’s products (motors and inverters) are widely adopted by railway
operators, automotive manufacturers, and plant facilities, and contribute to reducing
environmental burden and establishing and developing social infrastructures.
Efforts are made particularly on penetration of energy-saving products towardachieving sustainable development goals 7 and 13.
“SDG 7: Affordable and clean energy”“SDG 13: Climate action”<The Company’s products are widely used in society.>21

3-9. ESG Initiatives (2)Specific initiatives:Environment• Production and sales of high-efficiency, energy-saving productsElectric equipment for railroad rolling stock
Industrial motors and inverters
Contribution to energy conservation in China and ASEAN countries• Contributing to renewable energy
Biomass power generation
Small hydropower generation

Society• Contribution to the development of social infrastructures, including
urban transportation in Japan and abroad• Contribution to enhancing productivity in supply chains in Japan andabroad• Provision of lectures to local governments and education institutions• Promoting comfortable workplaces for employees (support fordiverse work styles)

Governance• Making outside directors account for one-third of board members• Introduction of an operating officer system that clearly separates
supervision and execution
22

Thank you for your interest.
https://www.toyodenki.co.jp<Inquiries>
Toyo Denki Seizo K.K.
PR, IR, and CSR Department, Management Planning Division
TEL: +81-3-5202-8122
Email: contact@toyodenki.co.jp

Disclaimer• Statements concerning financial results forecasts are based ondata available as of the date of publication of this material andassumptions concerning the elements of uncertainty that willaffect future business performance as of the date of publicationof this material. Actual financial results may differ depending on
a variety of factors.

• Forward-looking statements contained in this material are thejudgments of the Toyo Denki Group based on data available atthe time of publication of this material. Such statements anddescriptions are by no means comprehensive.

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