Industrial Systems & General-Purpose
Machinery Business Area Briefing
September 27, 2023

Yasuhiro Shigegaki
Managing Executive Officer; President of Industrial
Systems & General-Purpose Machinery Business Area

Today’s Presentation(1) Process for Achieving FY2025 Performance Targets(2) Measures to Maximize Cash from Vehicular
Turbochargers(3) Growth Strategies in Priority Core Businesses
Embed and evolve rotation machinery, heat treatment and surface
engineering, and lifecycle businesses

Copyright © 2023 IHI Corporation All Rights Reserved.

1. Executive Summary

Resolve social
issuesHelp decarbonize industry and reduce its
environmental impact

Management
goals¥530 billion in revenue and ¥40 billion in operating profit by fiscal 2025

Strengths

Vehicular turbochargers
Generate cash by consistently capturing demand and improving profitability. Help
decarbonize by investing in fuel cell systems and other strategic businesses

Rotating machinery
Priority corebusinesses

Growth strategies

Maximizecash

Grow by bolstering global products and services
focusing on compressors and launch products inhydrogen, ammonia, and other gas markets

Thermal and surface treatment
Focus on decarbonization, semiconductors, andlifecycle businesses and capturing equipment sales
and contract processing demand to achieve growth

Embed and evolve lifecycle businesses
Extensively tap digital infrastructure with a view to the entire value chains of customer business activities,
expand the scope of business activities, create new value, and drive further lifecycle business growthTechno- High-speed rotation, heatand control technology
logiesCapitalProvide automation and labor-saving
solutions for shrinking workforces

Solid delivery record

Copyright © 2023 IHI Corporation All Rights Reserved.

Mass production
technology

Digital solutions

Integration

Wide product range

Diverse talent

Global network32. Industrial Systems & General-Purpose Machinery
Business Area Outline
Transportation
machinery
8%
Parking 11%

Share ofconsolidated IHI
revenue

Logistics andIndustrial
Systems
8%

Other 6%
Vehicular
turbochargers
43%

Revenue¥436.5billion(FY2022)

Thermaland surface
treatment
11%
Rotating machinery 13%

32%

Gas handling

Key products

Vehicular
turbochargers

Position

Billions of yen

Rotating machinery

Materials andprocesses
Thermal and surface
treatment

600

Orders
Revenue
Operating profit
Operating margin(right axis)

6%

400

4%

200

2%

0

0%
FY2019 FY2020 FY2021 FY2022 FY2023(Forecast)Logistics

Logistics andindustrial systems

Parking

Transportation
machinery

Turbochargers

Process gas turbo compressors

In-line equipment

Automated warehouses

Elevator parking

Continuous unloaders

Vehicular superchargers

General-purpose turbo
compressors

Heat and surface treatment
contract processing

Shuttles and servers

Underground parking

Jib climbing cranes

Vehicular turbochargers
No. 3 globally
No. 1 in Japan

LNG boil off gas
compressors
No. 1 globally
General-purpose turbo
compressors
No. 1 in Japan

Surface treatment
equipment
No. 1 globally
Vacuum heat treatment
furnace and hot presses
No. 1 in Japan and No. 4
globally

Copyright © 2023 IHI Corporation All Rights Reserved.

Large automatedwarehouses
No. 4 in Japan

Mechanical parking
systems
No. 1 in Japan

UnloadersNo. 1 in Japan

Source for market share figures: IHI

4

3. Business Environment Outlook and Assumptions
Turn growth prospects into business opportunities in a fast-changing operating climate

Shrinkingworkforce

Declining internal combustion engine markets

Increasing electrification and semiconductor
demandGrowing automation need

Supply shortages and long delivery times forelectrical and electronic components

Surging materials, energy, and labor costs

Increasing
geopolitical risks

Resolvechallenges ofdecarbonization
and reducing
environmental
impacts

Progressive supply chain decoupling

Copyright © 2023 IHI Corporation All Rights Reserved.

Expandbusinesses ingrowthmarkets
Rotating machinery
Thermal and surface
treatment

Plant-wide carbon neutrality progressing

Growing lifecycle demand for existing products

Digitaltransformation
progress inindustry

Growth initiatives

Provideautomation
solutionsEmbed andevolvelifecycle
businesses
Logistics andindustrial systems

Expand lifecycle
businesses andservice networks

Parking
Transportation
machinery

Improve profitability of existing
businesses
Vehicular turbochargers

Priority Core Businesses

Risingenvironmental
responsivenessneeds

Business climate

All business
units

Cash
maximization

Social environmentchanges54. Business Area Earnings Growth Story
Achieve FY2025 management targets by focusing on improving profitability andexpanding service businesses to capture growth in growth markets whileembedding and further evolving lifecycle businesses
Revenue(Billions of yen)

Process for achieving Group Management
Policies 2023 targets

Process for long-term
earnings growth

Expand business ingrowing markets
P13～ ・Rotating machinery

500
5,000

P16～

400
4,000

Industrial
systemsoverall

3,000
300
2,000
200

P20～

・ Improve profitability
・ Embed and evolve lifecycle businesses

P7, 8～

Vehicular
turbochargers

1,000
100
00

P7

2022
FY2022

Group
Management
Policies 2023

2023
FY2023

・Segment
targets

P8～

・ Capture demand

Enhance
profitability
2024
FY2024・ Optimize resources
2025
FY2025

Revenue

FY2022436.5(Billions of yen)
Copyright © 2023 IHI Corporation All Rights Reserved.

・ Thermal andsurface treatment

Operating profit (margin)

FY2023

FY2025

forecasts

targets

460.0

2030
FY2030530.0

FY2022

FY2023

FY2025

forecasts

targets

18.0

24.0

40.0

4.1%

5.2%

7.5%
6

5. Process for Achieving FY2025 Operating Profit Target
Improve profitability of industrial systems and products business by reflecting
costs in prices and capturing orders, reaching operating profit target by enhancing
profitability of vehicle turbochargers while expanding lifecycle businesses
Operating profit by business segment(Billions
500 of yen)

400
40

Industrial systems and産業システム・製品事業
lifecycle
businesses
産業システム・LCB
Vehicular
turbochargers

30
300

車両過給機systems &Industrial
products business

1

200
20

2

10
100

3

0
Forecasts

-100
-10
2020
FY20202021
FY20212022
FY2022

Factors in FY2022 performance• Electrical component and other supply
shortages and long delivery times
Profitability of industrial systems andproducts businesses deteriorated
Copyright © 2023 IHI Corporation All Rights Reserved.

2024
FY20242025
FY2025Initiatives in FY2023 and beyond• Slow automobile production recovery• Soaring materials and equipment, energy,
and labor costs

2023
FY2023

1• Return to profitability in product businesses by reflecting
costs in prices• Enhance profitability overall of industrial systems business by
reinforcing earnings base and accelerating global expansion

2

Embed and evolve lifecycle businesses to expand business3

Improve profitability of vehicular turbochargers by increasing
prices, cutting procurement costs, and generating new orders76. Growth Strategy: Maximize Cash from Vehicular Turbochargers(1) Business Overview

Business overview
Small turbochargers (including for vehicles, industry,and leisure applications)

Products
Number of
employees(consolidated)

At March 31, 2023: 3,019

Production sites

Kanagawa, Nagano, Germany, Italy, China, Thailand,and United States

Cumulative salesof vehicularturbochargers

・FY2000
・FY2014
・FY2022

Global competitiveness
IHI
Company A
Company B

10 million units
50 million units
100 million units

Global share 20%
Domestic share 50%

Company C
Others

Source: Third-party research and IHI

Vehicular turbocharger production sites
Germany

Japan
China

Kanagawa

NaganoUnited States
Italy
Thailand

Copyright © 2023 IHI Corporation All Rights Reserved.

8

6. Growth Strategy: Maximize Cash from Vehicular Turbochargers(2) Market Trends

Impacts of pandemic disaster and semiconductor shortage gradually dissipating.
While long-term turbocharger demand should fall amid battery electric vehicle
uptakes, plug-in hybrid and other vehicle markets should remain at certain sizes

BEV ：Battery Electric Vehicle， PHEV ：Plug-in Hybrid Electric Vehicle

Automobile production trends

Changes in automotive market

Recovery from pandemic

Long-term trends• Overall semiconductor shortages on track toresolution, albeit with regional and customer variations• Production recovery pace slower than last year's
forecast for FY2023 (about. 91 million units)• Ratio of battery electric vehicles to increase, withproportion for internal combustion engines declining
accordingly, although situations should vary byregion• Decline rates should be large in Europe, while markets
should remain at certain sizes in China, North
America, India, and emerging countries

Millions of units

Millions of units

110

120

World passenger car production forecast
100
90
80
70

Feb.2021（’S&P Global Mobility's data）

Jan.2022（’S&P Global Mobility's data）

Jan.2023（’S&P Global Mobility's data）

Source: S&P Global Mobility global passenger car demand forecast
Copyright © 2023 IHI Corporation All Rights Reserved.

Vehicle production by powertrain

120%

100

100%

80

80%

60

60%

40

40%

20

20%

0

0%

ICE
Electric

Hybrid-Full
Fuel Cell

Hybrid-Mild
ターボ搭載比率
Proportion of vehicles
turbocharged

Projections as of March 2023 (Source: IHS Markit)

ICE : Internal Combustion Engine

9

6. Growth Strategy: Maximize Cash from Vehicular Turbochargers(3) Business Strategy: Existing Turbocharger Business

Unit sales of vehicular turbochargers are recovering from the pandemic’s impact,
and should return to pre-pandemic levels in 2025 from accumulated new orders
Unit sales of IHI’s turbochargers
Thousands of units③ Mild recovery

8,000
800
① Decrease from pandemic
and semiconductor shortage

6,000
600

② Post-pandemic normalization

Asia
North America

4,000
400

Europe
China
Japan

2,000
200

0
FY2018FY2019FY2020① Decline from FY2019 through FY2021 owing topandemic and semiconductor shortages② FY2022 saw normalization from pandemic andeliminations of semiconductor shortages, withmarket heading upward from a year earlier

Copyright © 2023 IHI Corporation All Rights Reserved.

FY2021

FY2022

FY2023

Forecasts

FY2025③ Automobile production should keep recoveringmoderately in FY2023 and beyond, with new orders
accumulating and on track to return to pre-pandemic
levels in FY2025.
10

6. Growth Strategy: Maximize Cash from Vehicular Turbochargers(3) Business Strategy: Existing Turbocharger Business

Generate stable cash flows in shrinking market over long term by steadily
implementing measures to boost profitability and capture demand
Key measures
Improve
profitability• Promptly pass on materials and equipment and energy cost hikes in prices• Secure profitability by reviewing specifications and rationalizing suppliers andcosts• Maintain robust ties with Japanese original equipment manufacturers

Consistently
capturedemand(OEMs)• Strengthen relationships with the former Big Three automakers throughorders while working with Japanese OEMs in North America• Receive orders for plug-in hybrid electric vehicles, a growing market, from
OEMs in China OEMs as well as in Japan and Europe

Expand aftersales services
business• Expand service network, focusing on Southeast Asia, and provide

Optimize
resources• Shift resources and reskill to develop fuel cell electric turbochargers

specifications matching market needs• Review scale of resources at each site in line with regional trends

Copyright © 2023 IHI Corporation All Rights Reserved.

11

6. Growth Strategy: Maximize Cash from Vehicular Turbochargers(3) Business Strategy: New Businesses

Help enhance fuel cell system efficiency to materialize a carbon-neutral economy

Commercialize and launch fuel cell electric turbochargers

Help resolve
decarbonization challenges

In 2018, we supplied the world's first electric turbocharger for fuel cell air supply
systems on mass-produced vehicles
Highlight

Signing technical cooperation agreement with AVL• HyTruck fuel cell system for commercial vehicles under development at
AVL, the world’s biggest automotive powertrain engineering company, isscheduled to fit our electric turbocharger in the HyTruck fuel cell systemthat it is developing for commercial vehicles
Electric turbocharger function in fuel cell vehicle
Highlight

Making progress in developing andmarketing products• Reliability of 20 kW mid-class electricturbocharger verified• Began delivering samples to several
customers• Looking to supply fuel cell systems for arange of applications
Copyright © 2023 IHI Corporation All Rights Reserved.

Electric turbocharger
Compressed air

Air
Hydrogen tank

Fuel cell

Power

Water

Drive motor

127. Growth Strategies: Priority Core Businesses—Rotating Machinery(1) Business Overview

Rotating machinery business products and services contribute to carbon neutrality
in industry, centered on compressors and separation equipment
Keybusinesses• General-purpose compressors: Supply compressed air efficiently for an array of plant
production processes• Process gas compressors: Contribute to various gas compression processes in oil and gas,chemicals, and other fields• Separators: Solid-liquid separation technology using high-speed rotation for separation,
dewatering, and other processes
Key products
Other 8%
Ship turbochargers
5%
Separators 9%

Compressors

compressors(FY2022)

48%

General-purpose
turbo-compressors

Number of
employees

Process gas compressor
30%

Separators

Revenue¥59.0
billionBusinessoverview

General-purpose

Sites

Process gas turbo
compressors

Screw decanter
centrifuge

1,153 (as of April 1, 2023)

Japan: Works in Kanagawa, Nagano, Shiga,
and Niigata prefectures
Overseas: China, Turkey, Taiwan, andSingapore

Strengthen solutions businesses that help plants conserve energy and shrink theirenvironmental footprints
Growthstrategies• Bolster global product and service structure by expanding overseas units• Expand product lineup for hydrogen, ammonia, and other new gas value chain markets
Copyright © 2023 IHI Corporation All Rights Reserved.
13•

7. Growth Strategies: Priority Core Businesses—Rotating Machinery(2) Compressor Market Trends

Compressor market should grow on need to reduce environmental impact andrising demand for hydrogen, ammonia, and other gases; we will broaden market
coverage by enhancing product lineup and expanding globally
Global compressor market trends
40

Process gas compressors

Growing rapidly with expanding demandfor hydrogen, ammonia, and other gases

35

Expand lineup and build
competitive edge in products

Billions of U.S. dollars

30
25Market scale

15

Creating new gas handling solutions forhydrogen, ammonia, and other carbonneutral gases becoming more mainstream,with process gas compressors likely to playleading roles

15.7

20
10.0

Compressor business growth trajectory

Process gas
compressors
CAGR* 5.8%

General-purpose compressors
10
5

12.0

General-purpose
compressors
CAGR 3.1%

Expand global business by reinforcing
units in Asia and other key regions

15.3

0
・・・
General -purpose compressors
Process gas compressors

Sources: Frost & Sullivan market research data and IHI
Copyright © 2023 IHI Corporation All Rights Reserved.

Anticipating higher demand for improved
energy efficiency and environmental
compliance; leveraging our strengths in highefficiency and oil-free products to expand
market coverage and help customers shrink
their environmental footprints*CAGR = Compound annual growth rate

14

7. Growth Strategies: Priority Core Businesses—Rotating Machinery(3) Business Strategies

Expand process gas compressor products and services lineup for ammonia,
hydrogen, and other new gas value chain markets
Hydrogen and ammonia application extensions in
gas value chain

Help resolve decarbonization
challenges

In hydrogen and ammonia gas value chain, compression, liquefaction, pumping, and other devices
are needed for production, storage and transportation, and utilization processes
利活用Products
deployed

Products with
deployment potential

Copyright © 2023 IHI Corporation All Rights Reserved.

Chart from Group Management Policies 2023

15

8. Growth Strategies: Priority Core Businesses—Heat Treatment andSurface Engineering (1) About the BusinessWe meet performance requirements of materials in industrial areas offering
growth prospects by providing added value through heat treatment and surface
engineering technologies that deliver new functions for materials
Solutions: Equipment and processing services
Adding value through heat treatment and surface engineering technologies that deliver new
functions for materials
Engine parts

Faucets
Increased
strength

Decoration

Surfacemodification

JoiningAbrasionresistant gears(carburized)

Heat
treatment

Cooling plate

Artificial joints

Abrasion
resistance

SurfaceengineeringSocial issues

Heat
resistanceFor cell stacks
of fuel cells

Examples of materials needs

Increasing performance requirements for materials in decarbonization, digitization, and other growth areas
Connected,
autonomous, shared,and electric progress

Decarbonation

Electrification

Automation and laborsavings

Medical advancements

Living standard
improvements

Copyright © 2023 IHI Corporation All Rights Reserved.

Aviation
Turbine blades: Heat and abrasion
resistanceLife sciences

Semiconductors

Power semiconductor components:
Cooling

Medical devices: Abrasion resistance andbiocompatibility

16

8. Growth Strategies: Priority Core Businesses—Heat Treatment andSurface Engineering (2) Business Overview

The only manufacturer with both equipment and processing services
technologies in heat treatment and surface engineering fields
Extensive global network with strong local presences
Surface andHeatoutsourced

treatment

processing

equipment
24%

44%

Sites

Revenue

Businessoverview

¥47.8

8%

Equipment
Surfaceengineering

equipment 24%

Process-ing
services

processing services

9 in Japan and 50 overseas

Heat treatment(FY2022)
Heat treatment and252 in Japan and 1,525 overseas

Four globally competitive Group companies

billionStrengths

Number of
employees

Vacuum heat
treatment furnaces
and hot presses

No. 1 in Japan, no.4 in world

Surface engineering(Acquired in 2008) World no.1

(Acquired in 2015)

No.4 in Germany(Acquired in 2012)

World no.2

• Pioneer edge from ample variations and diverse usage and material applications• Solutions capabilities to improve range of offerings to meet customer needs• Ability to propose schemes incorporating equipment and processing services

Copyright © 2023 IHI Corporation All Rights Reserved.

178. Growth Strategies: Priority Core Businesses—Heat Treatment andSurface Engineering (3) Priority Segments
Heat treatment and surface engineering businesses growing on decarbonization,
semiconductors, and life sciences demand; will focus on medical, aerospace, anddecorative fields with core surface treatment and processing services businesses
Heat treatment and surface engineering

Surface engineering and processing services

Business market growth potentials
Surface engineering

CAGR 3.2%(Vacuum furnaces)

CAGR 6.7%(PVD/PACVD processing
equipment)

CAGR 4.1%

CAGR 6.2%(Heat treatment overall)(PVD/PACVD processing
services)

Sources: Mordor Intelligence 2022 and IHI

Growth drivers are decarbonization, semiconductors,
and life sciences sectors

Medicalcare

Aviation
Profitability

Processing
services

Equipment

Heat treatment

Segment profitability and growth

Decorative

Molds
Tools

Focus segments

Automotive

Contributing to growth and development of Group businesses
Lighten aero-engine parts andenhance productivity

Materials processing engineeringthat helps create key hardware
Ammonia, hydrogen, and nuclear fields(ultra-high temperature, high pressure, andcorrosion-resistant processing)

Copyright © 2023 IHI Corporation All Rights Reserved.

Market growth potential: CAGR

• Growth driver is surface engineering business, anindustry offering high growth potential and inwhich we are globally competitive• Focus on medical care, aviation, anddecorative fields, where we anticipate growth18

8. Growth Strategies: Priority Core Businesses—Heat Treatment andSurface Engineering (3) Priority Segments
Catering to expanding market for fuel cell vehicles and growing demand forsurface engineering for related materials
Developing in-line coating system for fuel cells

Help resolve
decarbonization challenges• Coating process makes fuel cells more durable and cuts costs• Attracted considerable interest and secured several orders from domestic and overseas automobilerelated manufacturers
IHI‘s strengths• Market recognition through coating technology for which we are among world leaders• High-performance coatings leading competition and earning high marks from customers• Advanced mass production technology based on process technology and production expertise amassed
in cultivating processing services businessCorrosion-resistant, conductive in-line coating system for fuel cell bipolar plate (nine chambers)
Copyright © 2023 IHI Corporation All Rights Reserved.

199. Growth Strategies: Priority Core Businesses—Embed and Evolve
Lifecycle Businesses
Pursue further lifecycle businesses growth by leveraging digital platform withview to entire value chain of customer business activities

Embed lifecycle businesses

Evolve lifecycle businesses

Expand activities scope of lifecycle businesses
by focusing on customers’ overall operations

Create new value with broad perspectives thattransform conventional approaches todecarbonization and saving labor

Untapped global deployments

Automation and labor savings

Carbon-neutral compressors (including hydrogen and ammonia
Upstream and downstream and peripheral facilities andgas value chain and carbon dioxide capture and storage)
incorporation of products of other companies

Digital platform

Services menu expansion

Customer success dashboard

Industrial carbon solutions(collaborating with other areas)
Logistics value chain(automation, labor savings,
and optimization)

Entry into operations business

・・・

・・・

・・・

Product A

Product B

Product C

Product D・・・

Customer business activities value chain
Accumulate and extensively employ customer and product information across lifecycles
Copyright © 2023 IHI Corporation All Rights Reserved.

20

9. Growth Strategies: Priority Core Businesses—Embed and Evolve
Lifecycle Businesses
Step up efforts to embed and evolve lifecycle businesses and create new value

EvolveLogistics and industrial systems business
Significant automation of warehouse operations
with SKYPOD® picking system

Provide automation and laborsaving solutions

Mitsui Fudosan’s &mall logistics facility adopted SKYPOD, which has
contributed to warehouse automation and manpower savings and to lifting
shipping capacity and cutting costs

EvolveProvide automation solutions
Transportation machinery business
Automating on-premises transport machinery and equipmentwith digital platform

Automating existing crane operations and providing operational
optimization solutions resulted in unmanned nighttime shipping
preparations, contributing to labor savings and enhanced crane
operational safety

Embed

Parking businessMaximize existing facilities’ lifetime earnings throughparking operations and management businessEnter operations business

Leveraging strengths as an equipment manufacturer to develop parking
facilities operations, management, and maintenance business, thus
maximizing lifetime earnings from equipment by minimizing maintenancecosts while extending equipment service lives

Copyright © 2023 IHI Corporation All Rights Reserved.

21

Segment Vision
Segment vision is to provide optimal solutions for people, machines, andthe environment
Resolving all customer andindustry challenges
Segment
policyThreegrowthdrivers・Value
propositions

Delivering powerful
technologies and services

Striving to harmonize
people and machines

Generate earnings and cash growth by efficiently harnessing various types ofcapital while capturing business opportunities in growing markets
Gas handling

Materials and processes

Logistics• Leverage core components to
expand value provided todecarbonized energy sector• Expand value provided to newmaterials businesses based onmaterials processing technology• Revolutionize technology foradvanced materials• Broaden solutions value
based on robotics andautomation technologies• Provide solutions to optimize
logistics value chain

Deliver highperformancematerials

Streamline
resources andspace usage

Handle fuelconversion

Supply stableenergyAdvanced
production
processes

Optimizeoverall value
chain

Carbon neutrality

Strengths

Automation and labor savings

Technologies

High-speed rotation, heatand control technology

Mass production technology

Digital solutions

Integration

CapitalSolid delivery record

Wide product range

Diverse talent

Global network

Copyright © 2023 IHI Corporation All Rights Reserved.

22

Forward-looking figures shown in this material with respect to IHI’s performance outlooks and other mattersare based on management’s assumptions and beliefs in light of the information currently available to it, andtherefore contain risks and uncertainties. Consequently, you should not place undue reliance on these
performance outlooks in making judgments. IHI cautions you that actual results could differ materially fromthose discussed in these performance outlooks due to a number of important factors. These important factors
include political environments in areas in which IHI operates, general economic conditions, and the yen
exchange rate including its rate against the US dollar.