Supplementary Material on Financial Results

Management Strategy for Future

November 15, 2023
SHIBAURA MACHINE CO., LTD.

Management Strategy for Future1) Management Reform Plan and ProgressEvaluation
2) Current initiatives for the next medium-term
management plan

BSF : LiB separator film production lines2Management Reform Plan andProgress Evaluation

3

Framework of "Management Reform Plan"
Quantitative
Targets
Target Values
for FY2023
Consolidated basis

Sales

135 billion yen

Payout Ratio

Operating ProfitRatio

Prospect of 40%

8.0%(During the period of“Management Reform Plan”)

ROE

8.5%

[Management Reforms Centered on Reorganization]

SpecificMeasures(1)

Abolish the “division system” and employ “company system” to further promote total optimization even.

(2)

Establish am “R&D Center” and “Production Center” which bear enhancement of production efficiency andQCD* as common.

(3)

Conduct personnel relocation and voluntary retirement toward optimal resource allocation and reduction offixed costs.

[Promotion of growth investments aimed for expansion of purposes to fields
expected to grow in the future](4) Promotion of growth investments aimed for expansion of purposes to fields expected to grown in the future.
*QCD: Quality, Cost, Delivery

Investment plan/Financialstrategies[Implement a Financial Strategies Aimed for Enhancement of Return On Equity (ROE)](5) Allot cash-on-hand to investments towards change into a profitable company, and enhance profitability andcapital efficiency

4

Implementation Measures and Assumed Effects(Impact on Operating Profit)
Achieve the operating profit of 10.8 billion yen in FY2023 by steady implementation of the
reduction of fixed cost and reduction of procurement cost through the management reform
centering on reorganization.
(Unit: 100 million yen)+70
Fixed cost reduction

Capital investment
and R&D/humaninvestment increase
portionVariablecost
cutting

Unprofitablebusiness
restriction

Investment
to increase
sales

Productivity
improvement/revenue increase
effect108(8.0%)
340
2

15

1438
(Operating
profit ratio) (3.2%)

33

Outsourcing
cost andlaborcost
increase

Cost
reduction

20

19

94

FY2018operatingprofitIncreased
depreciation
cost relating
to capital
investment

Increased
cost relating
to R&D andhumaninvestment

Personnel
reduction
throughvoluntary
retirement

Procurementcost(materialcost ratio)
cuttingROE
4.9%

5

Businessorganization/
officeconsolidation
effectSales
Effects ofpromotion
productivity
cost (agent
improvementcommissions,etc.)
increase

Revenue
Increase
effectOthers

FY2023OperatingprofitROE
8.5%

Management Reform Plan Measures and Progress
FY2020
1st Half

FY2021
2nd Half

1st Half

FY2022
2nd Half

1st Half

FY2023
2nd Half

1st Half

2nd Half●Reorganization(establishment of company system, R&D center, production center)
BusinessreformBusinessmanagement●A headquarters structure,●Absorpton-type merger of a domestic affliate
in Tokyo and Numazu●Closing an overseas affiliate (FUJISEIKI CO.,LTD.)(UK sales and service company)●Construction and operation of a management accountability system (visualization of business management)

Tecnology(DX)

Humanresources

Sales reform●Operation of a new 3D-CAD system●Introduction of a new HR system (managers)●Early voluntary retirement●Introduction of a new HR system (union members)●Sales activity management system●Small injection molding machines: Shift production to overseas (Japan to China and Thailand)●Relocation of injection molding machines production department (Numazu to Sagami)

Plant reform●Shift production of SCARA robots to overseas (Japan to China)●MFLP Zama
(logistics facility)●New Indian plant6

Management Reform Plan's Evaluation(As of the end of September 2023)
management reformmeasures(1)

Company system(Reorganization)

Progress evaluation
Fast as planned

Slower than planned• Nurture sense of unity, reduce overlapping tasks• Subsidiary reorganization• Integrate injection molding and die casting
businesses completely(The integration of manufacturing departments iscomplete, but technology departments are still notintegrated.)

Improvement of• Different plants in and outside Japan used for(2) production efficiencydifferent modelsand QCD—

Optimal resource• Early Voluntary retirement program(3) allocation—• Relocate personnel to extrusion machine business
Fixed cost reduction(4) Growth investment• New Indian plant(starts operations in latter half of 2023)• DX investment ➔ Gain to be reaped from now• Capital investment to boost extrusion machine
production(5) Financial strategies• Logistics facility business (utilize plant grounds)—• Sell off unused recreational facilities for employees(6) Other• Extrusion machine business (BSF)'s growth7• M&A: No successful➔ Negotiations to be held continuously• Numazu Plant's reorganization ➔ Delayed withmore priority given to boosting extrusion machine
production• Delayed sales, production in COVID-19• Difficulties in procuring electrical components,
rising procurement costs

Management Reform Plan
Effects of Reform for progress◼ Progress Evaluation at of the end of September 30, 2023
Through negotiation of higher selling prices, we aim to recover acontribution to sales up to FY2023 of 3 billion yen*

15 billion yen(*From 2nd half of FY2021 to 1st half of FY2023, roughly half of the effect has been realized.)(Operating profit ratio 8.3%)

FY2021 cost UP (Result)
FY2022 cost UP (Result)
FY2023 cost UP (Forecast)

1.5 billion yen
2.0 billion yen
1.0 billion yen
4.5 billion yen

FY2023 Forecast◎ BSF

108 (Unit: 100 million yen)
(8.0%)
340
Deviation of approx. -6 billion yen(Operating profit ratio)

21438(3.2%)

1993

Deteriorated

Completed

ROE
4.9%

Increased
Increased
depreciation cost relating
cost relating to R&D andto capital
human
investment
investment

Personnel
reductionthroughvoluntary
retirement

Outsourcing
cost andlaborcost
increase

2034FY2018
operatingprofit15

Cost
reduction

Due to sluggish market conditions forinjection molding machines,
operating rates at factories in China
and Thailand have declined.

Business
Procurement
Sales
Effects oforganization/
cost
promotion productivity
office(material
cost (agent improvement
cost ratio) consolidation commissions,effectcuttingetc.)
increase

8

Revenue
Increase
effectOthers

FY2023OperatingprofitROE
8.5%

Current Tasks for Next MidTerm Management Plan
(FY2024 - FY2026)• Structural Reform of Businesses• R&D, Capital Expenditures

9External Environment ①
Industry analysis (geopolitics)
Economic Security Issues

ChinaU.S.

Political and economic risks in China••••

Ban on export of semiconductorrelated products in China

Real estate market downturn
Declining birthrate and aging population
Youth unemployment rate worsening
Taiwan issue

Local production and consumption
with the aim of protecting andnurturing domestic industries

Transfer of production base of foreign company

India•

Suppressing price increases Slowing
down investment due to monetarytightening⇒Expecting recovery from Q4 FY2023•

EV-related investment is booming asEVs become a block economy

SE Asia

10External Environment②Expansion of EV market
Gasoline cars

Engine demanddecreased◼ Trends of EV sales ratio (By Region)

Die Casting Machine
decreased

China
About:25%
EuropeAbout:20%

ＥＶ
Battery demand
increased

2018

2019

2020

2021

2022

Reference: Ministry of Economy, Trade and Industry data

Integrated
aluminum molding(Giga-casting)

11Growth of BSF

Die Casting MachineincreasedFor EV

Solution proposal for EV
Proposing solutions to customer issues with products that are compatible with EVsEV
Rechargeable battery

Lightweight

Separator film

Assembly process(Automation)

Integrated
aluminum molding(Giga-casting)Large resin partmolding(bonnet , etc.)

Foam-molded

Extrusion machines

Control systems

Die casting machines

Large Injection
molding machines

Injection molding
machines

BSF

Dual-arm
collaborative robots(SCARA type)

Aluminumbonding

Large dies

Large machine tools

FSW(Friction Stir Welding)

12

Large Double Column TypeMachining Center

Structural Reforms (Overview)
Business Scale• Launch of new models• Growth in India, North America, Europe• Engineering solution products• Enhancing servicesDInjection
moldingmachines

Phase 1: Integration ofmanufacturing divisions(completed)
Phase 2: Integration ofengineering divisions

Focus on highmargin projects
Machine tools
Die castingmachines

Focus on lot sales

Extrusionmachines

E

Integration of injection
and die casting

Build a system toincrease production

CA

Increase sales per person
by liquidating fixed costs
Personnel shift

B

DGeneral purpose
RobotsDevelop China Plus One
markets (Europe)

High-precision
machine tools

ECut fixed costs

Profit Margin13

For EVA Extrusion Machines Business Expansion（Production capacity enhancement of BSF）◼

BSF Equipment Sales Plan

The production response tothe high backlog of orders(Unit: 100 million yen)

Production capacity enhancementfrom 4 lines to 6 lines

Order Backlog
Net Sales

Company-wide support for expanded scale⚫

1000

Adoption of BSF component processing equipment

Screw element machining
⚫

0

2021

2022

2023

FYBarrel machining

Shift personnel from other businesses(Mainly from the machine tool business)+30*April to October 2023••

Expand sales channels for BSF in India, U.S. and Europe in anticipation of the strengthening U.S. IRA.
Development of next-generation machine (high-speed, wide width)⇒Start accepting orders for the second half of FY2023, contributing to sales from FY2025 onwards*Order intake of the first half of FY2023 temporarily slowed down due to the transition from the existing machine to the next-generation machine.

14For EVA The future of Extrusion machines business◼ Compatible with automotive all-solid-state batteries

Lithium-ion batteries

Structure of all-solid-state battery

All-solid-statebatteries

Semi-solid battery

Solid electrolytes
Development
project

Separator film is also
used in semi-solidbatteries

BSF

Development
project

Utilization ofhigh-precision
coating machines(Improving the speed and accuracy of
existing machines)

Electrode materials mixing device（Batch production ⇒ Continuous production method）◼ Product composition of Extrusion machines business (Future)
Commencement of mass-production of
in-vehicle solid-state batteries
New precision coating machines, etc.

Sales
distribution
ratio

BSF
(Used for semi-solid
batteries and stationary
storage batteries)

Time

15

Negative
Electrode
LayersPositive
Electrode
LayersElectrode
LayersElectrode
LayersCurrently developing new coatingmachines to make the electrodelayer uniform and stable (duringFY2024)

For EV

B Response to Giga Casting of Die Casting Machines
Issues on the introduction of giga die casting machines on the customer side
• Substantial capital investment (3 to 4 billion yen/unit, melting furnace, and large crane)• Equipment transportation within Japan• Quality issues on integral molding (distortion by stress in addition to cavities)

Inclined towards the slightly cautious stance on the new production
method based on the issues described above◼ Our policy at the current point
Clamping capacity ofgiga castingApplicable productWeight including cast

6000～9000t

Front under panel and rear under panel

70～80kg

9000～12000t

Battery case and floor panel

100kg

12000～24000t

Integration of front, rear, and floor panels

200kg

Volume zone(target)

As one of the responses, we aim at development of the product that canform super large products with small clamping capacities by establishinga low-pressure technology*.
Clamping
sectionInjectionsection*Ex. Technology that achieves molded items produced with the clamping capacity of 3500t, which arenormally produced with the capacity of 6000t class.

16Solution for the issues• Issues on the joining technology to be prepared for further product size increase in the future

C Increase of Profitability of Machine Tool Business
Focus on high-value added models, triggered by
the increase of environmental awarenessDouble-column type large machining center
Large multifunction machine

Increase of opportunities of large
machine tools for molds that areincreasing in size and weight as a resultof introduction of giga casting
Increase of opportunities due to thereview of hydraulic power generation in
addition of wind power generation towards
realization of the carbon neutral target by2050

Giga casting

For EVFSW

Proposal for manufacturing of giga casting
equipment products by joining aluminium
molded products using a small die castingmachine through FSW(Friction Stir Welding)17

DResponse to the Growth Market, etc.
◼ European market

High-Precision Machine tools Precision Mold
(For Vehicle-mounted lens, Medical, Optical, etc.)

We will attack the sales blank areaof our group (1% sales ratio inFY2022) and aim to re-enter themarket.

Expand sales in Europe
as China plus one market◼ Indian market■Planned production of injection molding machines in India

Injection molding machines(units)3800

New Indian plant (expansion)

Electricmachines

Effect of new plant
expansion◼ Middle East Asia andAfrican market

Hydraulicmachines

1300

Shipped from India Plant
Expanding sales of injection molding
machine to the Middle East Asia and Africa
Expected 90 units in FY2023 ⇒ Targeted 300 units in FY2032
20*Cumulative sales volume to Africa in the last five years is 290 units.

18

21

22

23

24

25

26

27

28

29

30

31

32

FY

Reinforcement of Engineering Solutions

E (From Unit Sales to System Sales)
Issue of skill transfer

Decline of workforce

Soring labor cost

Customer requirement for turn-key and full automation

Realization of a production system that solves
customer issues by integrating the in-house andexternal technologies based on the control
technology and robot technology as the core.
◼ Automation of molding
machine post-processes◼ SCARA robot utilization example

Inspection, packing, and transportation ofproducts molded by injection molding machines

Ex．Application to food factories (substitution to
manual labor in workplaces in cold environment)

19

Rearrangement of Business Portfolio
FY2023 (Management Reform Plan) ⇒ FY2026 (Next Medium-Term Management Plan)
HighExtrusion*The size of balloon indicates the business scale.

Scaleexpansion

Injection

GrowthPrecision

Scale expansion/
profit rate improvement

Scaleexpansion
Control
Scale unchanged/
profit rate improvement

LowLow••

Die casting
Machine toolProfitability

High

The large-scale structural reform is completed in FY2023.
In the next medium-term management plan, the mission on profitability is to be clarified for eachproduct business and the portfolio is to be rearranged.

20

May materials
repostedPortfolio Rearrangement for Achieving Record Profit

FY2006

Unit: 100 million yen

Achieve record high profit*

Estimate

Sales estimated at around 200 billion yen forseveral years to come on a continual basis,
as proceeds from our core earner, brisk
extrusion machine business, will be
combined with those from other departments

1800
123

170

266

1231

91
296

1077
926

92

73

236

150
120

104
273

208

1415

70

57

772

35

42

643

755

00

859
20

4

19

20

Molding machines
Others21

Preferential
investment

2223

Machine tools
Elimination

24

25

26

Market growth potential

1167

00

00

Sales:
164.3 billion yen
Operating profit: 20.5 billion yenPeriod for next mediumterm management plan0000* Our Group's record high profit

Equipment

Personnelswitch

Extrusion

Business withsluggish growth

FYControl systems
Operating profit ratio

Profitability, asset efficiency

-30

21

Rearrange business portfolio,
with extrusion machine
business at its center

SHIBAURA MACHINE CO., LTD.
2-2, Uchisaiwaicho 2-Chome, Chiyoda-ku, Tokyo 100-8503, Japan
TEL +81-3-3509-0444 FAX +81-3-3509-0336 URL : https://www.shibaura-machine.co.jp/en22