October 25, 2019
FDK CORPORATION
President: Ryo Nagano
Code: 6955 Second Section, TOKYO
Contact: Nobuyuki Watanabe
General Manager, Business Promotion Div.
(Tel: +81-3-5715-7400)

Information on the FDK Group Strategy Framework 10 years’ scheme andMid Term Business Plan “R1”

The FDK Group has formulated and developed “Mid-Term Business Plan 1618” as a means to strengthen
our foundational business which has returned to developing materials focusing on powders, and to improve
our presence as an “Leader in Energy Management Systems Across Multiple Platforms” through providing
products that make use of battery and electronic business synergies to the industrial and consumer markets.
In attempting to development for differentiating ourselves from our competitors, we have worked hard todevelop high energy density cathode materials for small all-solid-state SMD battery, to establish sample
specifications, and to develop batteries with wide temperature, high capacity, and long-life characteristics.
We have also worked hard on developing compact modules with high density characteristics. Although wewere able to obtain some results in discovering and developing new fields in the industrial market such as
onboard accessories for automotive, meters, and security in order to expand sales in growing markets, bothsales and operating profits diverged significantly from our initial plans due to strict market competition andstagnant markets.
In order for us to strengthen our business structure and improve our corporate value, we need to brush up
on our vision for FDK Group and meet the expectation of our various stakeholders. Toward that end, wehave formulated 10 years’ scheme as our “Status-to-be-in-10-years’” now, and the Mid Term Business Plan
“R1” covering what needs to be done during the first three (3) years (from FY2020 to 2022) of this period.
Please see the presentation material for more details on both the “10 years’ scheme” and the “Mid TermBusiness Plan “R1”.

October, 2019

十年之計
莫如樹木

FDK Group
Strategy Framework
10 years’ scheme Mid Term Business Plan “R1”

* 10 years’ scheme is nothing but to grow a tree
(Excerpt from Guan-zi)

0. Preamble• As Mid Term Business Plan is being made, FDK Group’s Vision is brushed up
and “10 years’ scheme” as our “Status-to-be-in-10-years” is generated torespond to various stakeholders’ expectation.
• In order to accomplish Status-to-be-in-10-years”, we also created a roadmap tofill the gaps between now and future and set the first 3 years (FY20 to FY22) asFDK Mid Term Business Plan “R1”. The basic principle is as follows:
1. To continue reformation & business transformation, positioning FY19 as Year0
2. To concentrate fundamental issues as a preparation to step up during R1
3. To maximize Return on Investment including Year 0• “R1” means the first plan of “R”eiwa era and also our commitment to“R”eformation, “R”efresh/”R”evival is contained in “R”.
2

Review of MTP ”1618”
Outline of MTP “1618”: Enhancing the presence of the company as manufacturer of system management for energies
by developing differentiated products and Expansion in growth market

Major efforts

Outcomes

Developdifferentiatedproducts• Develop new material toward next generation• Develop wide range products from materials tosystem products corresponding to diverse
market needs• Developed high energy density cathode materials for small all-solid-state SMD battery, andestablished sample specification• Developed batteries with wide temperature, higher capacity, and longer-life characteristics
to meet the needs of markets such as onboard accessories for automotive, meters, andresidential smoke detectors, and developed compact modules with higher density
characteristics

Expansion in
growth market• Secure and expand sales channels for battery
and electronic devices in global market• Expand new products in the market that utilize
synergy of Battery and Electronic technologies• Although sales fell far below goals due to strict competition and market stagnation,
obtained some results in discovering and developing promising new growth fields in theindustrial market (such as onboard accessories for automotive, meters, and security)• Although it will take some time to shift into high gear, we continue to make progress indeveloping businesses in markets such as system products, sensor beacons, IoT devices
such as loggers, and wearable products

 Management targets
Sales

Operating income
ratio

Target

100 billion yen

7%

Actual72.1 billion yen

1%

ROIC

Net debt-to-equity
ratio

15% or more
1.7%

30% or more
19%

Total asset
turnoverNet debt equity
ratio

1.6

0.1

1.3

1.0

Although we were able to make progress in making rapid management decisions and making mutual use of management resources through absorbing subsidiaries,
and were able to promote streamlining by making thorough cost reductions, we were unable to keep up with changes in our business environment (such as sudden
increases in material costs, fluctuations in exchange rates, and stricter competition) and were therefore unable to reach any of our indicators
31. FDK Group’s Vision
FDK group contributes to development of electronics realizing 3E (Environmental Conservation, Energy Saving,
Economic Development) through the development and supply of Batteries and Electronic Devices based oncustomer satisfaction, and aims at becoming the “Leader in Energy Management Systems Across Multiple
Platforms” providing customers with high-efficiency intrinsically safe products.
(From previous “Mid-Tem Business Plan 1618”)

FDK group, as a Smart Energy Partner,
assemble advanced technologies,
would like our customers to best utilize electric energy in a safeand efficient manner, and contribute to materialization anddevelopment of sustainable society.
42. FDK Group’s Status-to-be
Vision

FDK group, as a Smart Energy Partner, assemble advanced technologies,
would like our customers to best utilize electric energy in a safe andefficient manner, and contribute to materialization and development ofsustainable society.

Whom: Entities that support people’s daily life and society, and individual
users

Status-to-be
Status that
Vision ismaterialised

What: To provide offerings that enable customers to best utilize clean andsafe electric energy (Batteries/Engineering,Next Generation Batteries, Power Management Solutions)
When: FY2029 (10 years later)
Goals: Sales 80 billion Yen (New Business 30%)
Operating Profit ratio 7.5％5

2. FDK Group’s Status-to-be: Value Chain To proactively take advantage of ecosystem, increase value ofour offerings with various partners, and enable customers toutilize electric energy in diversified ways.
FDK Group ecosystem
FDK Group

Vendors

Customers

Batteries/
Engineering
Next Generation
Batteries

Manufacturing
Partners

Power Management
Solution

Solution
Partners

Stable Utilization ofClean & Safe
Electric Energy

Contribution tomaterializationand evolvementof sustainablesociety2. FDK Group’s Status-to-be: Offerings
To add various functions & features onto unique value of our current
offerings (reliability, safety, environment protection) and respond tousers’ expectations to use electric energy in a wider range ofapplications.
Durability

Next
Generation
Batteries

ConcisenessLonger Life

Batteries/Engineering,Electronic Devices

HigherCapacity

Reliability

SafetyHigherPower

Environment
Protection

Co-Creation
Rapid
ChargeSolution Package
7

LifeEstimation

Power Management
Solution2. FDK Group’s Status-to-be: Business Portfolio Transition
 Assets of current portfolio are used to revitalise and reform FDK
R1(FY2020-22)

Engineering

R2(FY2023-25)

R3(FY2026-28)

To cultivate new industries

10 year later
FY2029Engineering

Strengthen
engineering
Batteries

To grow with profit

Batteries

Team up fordevelopment

To ramp-up volume
ElectronicDevices

Utilization ofassets

To establish a new business model
8

Next GenerationBatteries
Power ManagementSolutions

2. FDK Group’s Status-to-be: Battery Applications
 Offerings that provide users with stable utilization of clean and safe electricenergy will be widespread across the society.
Small All-Solid-State SMD• RTC/SRAM/MCU• GPS Backup• Touch Pen• IoT Wireless Sensor

MH/Air• Large ScaleStorage BatteryNi/ZincLithium• Mobility Backup• Automotive Starter• Smart Meter• Telematics• IoT SensorAlkaline• Home Appliance

Ni/MH• In-vehiecleAccessary• Railway Crossing• Heavy Machinery
Start-up• Home Appliance

Large Scale Storage
Battery
SmartFactory

HomeAppliance

Smart Meter
Railway Backup

In-vehiecle Accessary

SMD (Surface Mount Device): A surface-mounted part
RTC (Real-Time Clock): A clock (or integrated-circuit that provides this functionality) built into a computer or other device

9Automotive Starter2. What the FDK Group needs to become: Scenarios using next generation batteries Next generation battery business that support smart future cities
New batteries (concise-higher capacity, higher reliability and higher durability) will bring opportunities in use in varioussituations
Smart Retail Store

Smart Factory & Mobility

Batteries installed in IoT devices used to communicate
with cloud computing or management center-> Small all-solid-state SMD battery (high durability,high output, compact)

Batteries installed to vehicles, factory equipment, andother machines requiring stable operation-> Nickel-zinc (compact, long life)

Smart Home & OfficeBatteries installed in various devices with high functionality
used indoors and outdoors-> Small all-solid-state SMD battery (high durability,long life, rapid charging)
Nickel-zinc (high durability, long life, rapidcharging)

Smart Infrastructure
Batteries for spare and storage can be placed
anywhere to support infrastructures of society-> Hydride/air (large capacity, inexpensive,high durability)

10And to discuss MTP
FDK Group
New Mid Term Business Plan(‘20-22)
R1(First MTP of REIWA era)
The initial three years of 10 years’ scheme is our new MTP

0. Strategic Direction of FDK Group’s new Mid Term Business Plan “R1”
1. Vision
FDK group, as a Smart Energy Partner, assemble advanced technologies, would like our customers to best utilize
electric energy in a safe and efficient manner, and contribute to materialization and development of sustainable society.
2. Status-to-be (Status that Vision is materialised)
Whom: Entities that support people’s daily life and society, and individual users
What: To provide offerings that enable customers to best utilize clean and safe electric energy(Batteries/Engineering, Next Generation Batteries, Power Management Solutions)
When: FY2029 (10 years later)
Goals: Sales 80 billion Yen (New Business 30%) Operating Profit ratio 7.5％

The initial 3 years of 10 years’ scheme is to focus on fundamental issues as a preparatory period for stepup. In FY19 as Year 0, we continue reformation and business transformation.
We would maximise RoI of R1 (FY20-22) including Year 0
FDK Group is engaged in the following till FY22 toward Vision and Status-to-be:1) To stabilize current businesses and establish growth with profit;
2) To proactively cultivate new business as a Segway to next generation; and,3) To establish a corporate culture that each individual makes best endeavor to satisfy customers
in a self-disciplined way12

1. R1 Business Portfolio• To stabilise two pillars of Ni-MH and Lithium Businesses• To revitalise Alkaline business and re-establish brand value• To strengthen Engineering• To explore a growth/revitalisation scenario of Electric Module under a business concept• To seed and ramp-up new businesses and Co-Creation with partners

Ni-MH
Cash Cow underpinnedby 5 pillars

Alkaline
To strengthen domesticadd-value business
Revitalise Brand value

LithiumExpansion of new
applications including Invehiecle accessories.
To be the 2nd cash cow

Electric Module
To increase business value
To explore new concept

Engineering
To strengthen automotiveindustry businessTo support internal
engineering

Towards new growth

New Business
Ramp-up/Seeding

13

Next Generation Batteries
Solutions
Co-Creation

1. R1 Business Portfolio [new battery development plan]
Overview

Uses (possible)

Mass production launch
period (planned)

1) Small all-solid-state SMD
battery• Consisted only of solid-state materials• No concern about the fire, explosion orleakage• Adopt manufacturing methods that resemble
those for compact electronic parts (CHIP typecapacitors)• For RTC backup for industrial
equipment, etc.
• Batteries for use in energy
harvesting and for IoT devices, etc.

FY2020 3Q

2) Rechargeable nickel zincbattery• Rechargeable batteries that use nickel for thecathode and zinc for the anode• Battery use our technologies our Ni-MH
battery and alkaline battery

Replacements for lead-acid battery

FY2022

3) Metal-hydride air
rechargeable battery• Rechargeable batteries that use air (oxygen)for the cathode and a hydrogen absorbing
alloy for the anode
For stationary power sources• Battery have high energy density per volume
and one of the next generation battery notable
14FY2022(field testing)2. And Game: FDK’s new culture required to execute plan
Responsibilities to employees

Customer satisfaction

andPromises toshareholders(do it all)15

Contributions to society3. Culture of always striving autonomously
Think Hard, Act Fast

For the company

ExecuteCommunicate

Self-sufficiency
16

FDK Group“10 years’ scheme” andMid Term Business Plan “R1”in numbers
It all comes down to numbers

Management targets
FY2022 (target)

FY2019 (forecast)

Consolidated sales:

60 billion yen

Operating profit ratio:

1.2%

ROIC:

1.8%

Consolidated sales:

60 billion yen

Operating profit ratio:

5.1%

ROIC :

9.9%

Investment in︓ ５５億円
next generation batteries:
5.5 billion yen

18Technology creating a better future