Medium-term Business Plan 2026

Connectfor Growth- The Future of Innovation, Connected by IKO Innovation, Know-how & Originality(May 16, 2024 version)

1

Table of Contents↪Management Philosophy ・・・・・・・・・・・・・・・・P2↪IKO VISION 2030 ・・・・・・・・・・・・・・・・・・・P3↪Review of the Previous Medium-term Business Plan・・P4↪Medium-term Business Plan 2026

“Positioning” ・・・・・・・・・・・・・・・・・・・・・・P5“Basic Policy”・・・・・・・・・・・・・・・・・・・・・・P6“Financial Targets” ・・・・・・・・・・・・・・・・・・・P7“Growth Strategy” ・・・・・・・・・・・・・・・・・・・P8,9“Capital Allocation for Growth” ・・・・・・・・・・・・P10↪Approach to Human Capital ・・・・・・・・・・・・・・P11↪Environmental Initiatives・・・・・・・・・・・・・・・・P12↪Sustainable Management ・・・・・・・・・・・・・・・ P13

Management Philosophy

2

The management approach that Nippon Thompson values

A Company Centered on Technology Development that Contributes to Society
Nippon Thompson is the enterprise trusted and relied upon by customers for the manufacturing and sales of important machinecomponents including, bearings and related equipment. We aim to be a technology-based company, that draws on our technologicalcapabilities and passion to solve our customers’ issues in order to evolve into a more visible global company.

Socialcontribution
layer

Contribution tothe environment and society

Customer
contribution
layer

Problem solving
for the customer

3 contributions
・Through IKO products we contribute to the technologicalinnovations of the machinery industry and to social development.
・Through eco-friendly corporate activities, we contribute to a richglobal environment.
・Through organizational activities, we strictly enforce and comply
with ethics, legal regulations and a moral code.

We fully understand the vision of customers and propose
solutions to achieve these visions through comprehensive
collaboration with production, sales, development, andadministrative organizations.

Organizational
culture/Code of Conduct
layer

Highly efficientmanagementFor
customers
Be the company trusted,highly regarded, andconsulted first.

We establish highly profitable operations
by effective agile activities.

Organizational
activity
layerConsidering and acting from ourstakeholders’ viewpoints

High value-added
products

We provide comprehensive, total
service through enhanced sales
capabilities, employee capabilities
and the development of unrivaled,high value-added products.

nnovation

now-howriginality

Revolutionary
thoughts and actions

Accumulation &utilization of tech. & info.

Highly creative
product development

Forshareholders

Forsuppliers

Be the company thatcan continuously
increase corporate
value.

Be the company to bea long-term win-win
partnership with.

GroupFor
Employees
Be the company whereemployees can fulfill theirprofessional needs through theirwork and keep their dream alive.

Forcompetitors
Be the company with thenumber 1 competitive
advantage in niche markets.

IKO VISION 2030

3“Challenges” and “Targets” for 2030
ManagementPhilosophy

A Company Centered on Technology Development that Contributes to Society

IKO VISION 2030

Collaborating with customers primarily and co-creating value as atechnology development-based company– co-creating a sustainable future –“Three Challenges of Growth Strategies”
to Achieve Our Long-Term Vision❶Establishing a global business structure❷Developing new products using core technologies❸Strengthening collaboration with partner companies
TargetFinancial

NonFinancial

Net sales

100 billion yen or above

Operating profit

15 billion yen or above

ROE

10％ or above

Market capitalization

100 billion yen or above

Carbon Neutral

GHG reduction target

Scope1, 2 Reduction of 42% or higher (compared to FY 2023)
Scope3(CA1)Reduction of 25% or higher (compared to FY 2023)

Diversity ＆ Inclusion

Increase the number of women in management positions by 5 times
or more (compared to FY 2023)
Increase the percentage of male employees taking childcare leave to85% or higher

Human capital

Produce many leaders on a global scale
GovernanceThorough Group governance that complies with laws, regulations and corporate philosophy

Review of the Previous Medium-term Business Plan

4Aiming for a stronger corporate structure resilient to fluctuations
Financial Targets
3-year average from FY 2022 to FY 2024

Initial targets
Operating 4.5 billion yen or above
profitROE

5% or above

Upwardrevision

Targets after revision
7 billion yen or above
7% or above

Results（Billions ofyen）

Net sales

FY202262.2

FY202368.2

FY202455.0

Basic Policy❶ Deepening
Strengthen the Present
Deepening Existing
Businesses❷ Expanding
Create the Future
Expanding
New Technologies& New Markets❸ Embracing
ChangeStrong Management Foundation
Behavior Change・Organizational
Capacity Change・Digital
Transformation• Differentiation and enhanced added value throughproduct development based on both “product out”
and “market in” approaches• Strengthen responsiveness of supply chain delivery
by shortening lead times and improving
productivity• Search for strategic technology alliance partners
for such as joint development, and OEM• Initiatives to develop new products and businesses(use of accumulated data and knowhow)• Strengthening competitiveness by reformulating
the global supply structure• Initiatives to improve the break-even point(per capita productivity and asset efficiency)• Develop change leaders to promote DX strategic
themes• Promote sustainable management

5.8

3-year average

9.4

3.1

11.0％

3.6％

6.1

3-year average

ROENo setting

61.8

3-year average

Operatingprofit

Set targets
for 3-year
average

6.7％

7 billion
yen or
above

7% or
above

7.1%

Although various measures were promoted,
the target for operating profit was notachieved due to sudden changes to thebusiness environment in the final fiscal year.

Medium-term Business Plan 2026 "Positioning"

5“Focused Investment in Areas of Strength” and “Upfront Investment in Foundation for the Future”
Aiming for a highly profitable organization
Achieved record net sales and second highest
operating profit ever (net sales of 68.2 billion
yen and operating profit of 9.4 billion yen), andevolved into a highly profitable organization

for Growth

4th Medium-Term Business Plan (2023)
Establishing “Value Enhancement & ValueCo-Creation”

Capacity expansion in Vietnam /Making UBC a subsidiary
Invested in production bases and China,and began preparing a structure to realize
100 billion yen in net sales

2nd Medium-Term Business Plan (2017)Shift to “Offensive Management”

Connect

IKO VISION
2030

Point

3rd Medium-Term Business Plan (2020)
Establishing a “Highly ProfitableOrganization”

 Boldly investing in strong products,markets, and regions
 Upfront investment of capital inbusinesses that will be the foundation
for the future
Basic Policy for Medium-Term Business Plan 2026

1st Medium-Term Business Plan (2014)
Formulating Our Vision, Direction, andLong-Term Vision for the Company

Formulating our long-term vision
Set financial targets of 100 billion
yen in net sales and 15 billion yen in
operating profit

Heightening profit awarenessExiting from unprofitable projects andrealizing transformation into a highly
profitable organization

FocusedEnhancement in“Areas of Strength”

Rebuilding the“Global BusinessStructure”

Profitability andEfficiency

GrowthMedium-term Business Plan 2026 "Basic Policy"

6

Enhancing “IKO’s Strengths” and rapidly securing “Growth Opportunities”
A critical 3-year period to achieve “IKO VISION 2030” and practically implement growth strategies

FocusedEnhancement in“Areas of Strength”

Rebuilding the“Global BusinessStructure”

Profitability andefficiency

GrowthCapital is invested in the "corporate strength"that forms the foundation.
System capable of swiftly
responding to high variety
production

Planning and development
system

Improve of capital efficiency
Diversity of human resources and connecting
across functions

Growth potential

Investment in growth areas- The Future of Innovation, Connected by IKO Innovation, Know-how & Originality
Profitability and efficiency

Medium-term Business Plan 2026 "Financial Targets"

7“High Growth” + “Stable Profits” on average over the 3-year period: leading to IKO VISION 2030
Point

IKO VISION 2030

We aim to exceed the “operating profit” and an “ROE” achieved in FY 2023, when werecorded the highest net sales, by FY 2027. We are also targeting an operating profit of
9 billion yen or more and ROE of 8% or higher on average over a 3-year period.

■ROE: 10％ or above■Operating profit: 15 billion yen or above■Net sales : 100 billion yen or above■Market capitalization：100 billion yen or above

Connect

120

11.0%
11.0%

11.0%

Actual Results for
3-year average

Operating:6.1billion yen
profit

100ROE:7.1％

for Growth

Set targets for
3-year average

10.0%
10.0%

Operating:9.0billion yenprofit

ROE

12.0%
12.0%

:8.0％
8.0%
8.0%

80

6.7%

6.7%

6.0%
6.0%

ｃ60

94
94
9.4ｃ
40

3.6%

4.0%
4.0%

3.6%
3.6%

58
5.8

20

2.0%
2.0%
Operating profit

31
31
3.1

ROE
0

0.0%
0.0%
FY2022

2021年度FY2023
FY20232022年度Medium-Term Business Plan 2023

FY2024FY2024

2023年度FY2025
FY20252024年度FY2026FY20262025年度Medium-Term Business Plan 2026

FY2027
FY20272026年度Medium-term Business Plan 2026 "Growth Strategy"

8Strengthening sales for key industries
Net sales composition ratio (FY 2024)

Change in net sales (including targets) and growth industries

Electronics

Machine Tools

15.3%

5.3%

Domestic/
Overseas Distributors

Transportation

48.0%

Equipment

Other Machinery

4.4%

27.0%

2013
2014
2015
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2030
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 2022
2024 2023
2025 2024
2026 2025
2027 2026 2030
2031 2030
2013
2014
2015
20162016
20172017
20182018
2019 20192020 20202021 2021
2022
2023
2024
2025
2026
Electronics
MachineTransportation
Equipment
OtherMachinery
Electronics
MachineTools
Tools #REF!
TransportationEquipment
Machineryエレクトロニクス
工作機械
輸送機器
その他一般機械#REF!
#REF!
#REF! OtherRecognizing the external environment[Economic and Social Situation]

Semiconductor
Production Equipment(Electronics)

・Increasing population in emerging countries and decreasing
working population in developed countries
・Increasing geopolitical risks
・Sharply increasing labor costs associated with inflation in countries
around the world

Industrial robots・Medical equipment(Other Machinery)[Industry and Technology]
・Increasing demand for automation due to labor shortages
・Technological innovation and expansion for industrial robots andmedical equipment due to AI utilization and other factors[Sustainability]・Suppressing rising temperatures through realization of adecarbonized society
・Accelerating initiatives for realizing a sustainable society

Point

We aim to promote sales of high value-added products ingrowth areas (such as semiconductor production equipment,industrial robots, and medical equipment) and expand sales tohighly profitable markets focusing on aftermarket sales.

Medium-term Business Plan 2026 "Growth Strategy"

9

Accurately understanding social issues and expanding markets, and focusing on enhancing strengths
Technologicalinnovation due to AI
utilization
Realizing adecarbonized society

Automation due tolabor shortages

Semiconductor
Production equipment

Medicalequipment

Industrialrobots

social issues
Expandingmarkets

Point

Sharply increasing
labor costs

Increasing needs for miniaturization and high functionality arebusiness opportunities for growth
IKO Mech-unit solutions

Enhancing production capacity (global production)
We will prepare mainly for rapid expansion of

To address demand associated with labordemand for semiconductor-related products andshortages, we will supply high value-added

aim to improve global production capacity,

products through proposals for IKO Mech-unit

including building new factories in Vietnam.

adoption.

Open innovation

Development of region- and industry-specific products
We will develop and support customization ofWe will proactively work on joint development

specialized products through technology

with universities and companies, and resolutely

marketing by industry and by region.

take on the challenge of new areas and newbusinesses.

FocusedEnhancement in“Areas of Strength”

Rebuilding the“Global BusinessStructure”

Profitability and efficiency

GrowthSystem capable of swiftly
responding to high variety
productionPlanning and development system

Medium-term Business Plan 2026 “Capital Allocation for Growth”

10Capital strategy that realizes growth investment and proactive shareholder returns
Medium-Term Business Plan
2023

Point

Medium-Term Business Plan
2026

Together with aiming to increase profitability, achievesustainable growth, and improve capital efficiency, we will also
implement initiatives to strengthen shareholder returns, and aim
to exceed a price-to-book ratio of 1.0 as soon as possible.

Billions of yen

Growthinvestment

Main initiatives
Operatingcashflow Improving profitability and capitalefficiency

Sale ofassets

 Sale of cross-shareholdings(Less than 10％ of net assets)

15

Operatingcashflow

Growthinvestment

 Growth investment mainly into newfactories in Vietnam

Operatingcashflow

Ｒ＆Ｄ Continued investment for medium- tolong-term growth(Sales ratio of 2 - 3％)

1８.5

 Total return ratio of 50％ or higher
Shareholder
returns

 Comprehensively considering thesituation and flexibly implementing
share buybacks(before R&D
deduction)

CapitalInvestment

9.3

33(before R&D
deduction)

R&D
4.4
Shareholder
returns

4.5

Renewalinvestment

7R&D
5

Shareholder
returns
Sale of assets

410

Approach to Human Capital

11

Human resources strategy for realizing IKO VISION 2030
Initiatives for 2026

“Medium-Term Business Plan 2026
Human resources policy”
VISION 2030,” we will develop human resources who will
pursue “IKO’s Strengths” and “Global Business Structure,”
and strengthen organizational functions and capability.

❶ Humanresources
development

Orienting toward profitability, efficiency, and growth for “IKO

❷ Right people
in the rightroles

Connectfor Growth

Capital investment in“Enterprise Capability” thatwill be the foundationRightpeople intheright roles

Humanresources
development

Diversity❸ Diversity

Diversity of human resources
and connecting acrossfunctionsTargets to achieve by 2030
Training and production of“next-generation leaders”

Strengthening functions
for human resources
development

Implementing talentmanagement(introduction ofsystems)

Measures to help diverse
human resources excel
Measures to increase
engagement

Number of women in management
positions (compared to March 2022)
Percentage of male employees taking
childcare leave

Development of human resources that canmaximize their individual potential andproduction of many leaders on a global scale.

Maximizing organizational
functions and capability
Realization of the right people in the right roles
based on a balanced portfolio of humanresources that can maximize the functions andcapabilities of each organization with a small
number of elite personnel.

Connecting human resources
A personnel organization where a “corporateculture that recognizes each other's value
regardless of nationality, gender, or age” iscultivated, and where all employees feel their work
is worthwhile and pursue innovation.
FY 2024 actual results

FY 2031 targets

2x5x65％85％

Environmental Initiatives

12

Roadmap for achieving carbon neutrality[Details of activities for 2026]

Base fiscalyear

Scope1,2・Visualizing GHG emissions and enhancing information disclosure
・Improving production efficiency (such as reducing unreasonable, unfruitful, anduneven activities, and improving overall equipment effectiveness)
・Promoting steady energy-saving activities (such as turning off unnecessary
lighting and managing air-conditioning temperatures)
・Visualizing GHG emissions for each product and developing environmental
investment criteria
・Procuring additional renewable energy power sources, non-fossil certificates,and various types of credits
・Revising electricity plans.

GHG emissions

FY 2031 targets
Reduction of 42%or higher

FY2051 Target

Carbon Neutral
FY2023

FY2031FY2051

Base fiscalyear

Scope3others

FY 2031 targets
Reduction of25% or higher

・Visualizing Scope 3 emissions using secondary data and continuing
information disclosure
・Coordinating with suppliers and initiatives for obtaining primary data
・Strengthening human resources related to GX (green transformation)

Category1

Category１

GHG emissions

FY2023[Details of activities for 2026]

FY2031FY2051 Target

Carbon Neutral
FY2051

Sustainable Management

13

Enhancing sustainable corporate value by circulating “economic value” and “social value”

Economic Value

Social Value

FocusedEnhancement in“Areas of Strength”

Rebuilding the“Global BusinessStructure”

（ROE）

（PER）

Enhancing
corporatevalue

Environment

Connectfor Growth

Improve of PBRSocialGovernanceGroup Priorities
1.Promote corporate activities to realize a prosperous global environment
2.Contribute to technological innovation by leveraging core technologies
3.Contribute to social development by providing products that society needs
4.Realization of healthy, safe, and secure lives for people
5.Realization of a society in which a diverse workforce can play an active role

and are rewarded for their work
6.Continuous improvement of compliance governanceAchieving SDGs

Nippon Thompson Co., Ltd.
Corporate Planning Dept.
TEL：81(0)3 3448 5868
E-mail ：ir_information@ikonet.co.jp
HP：https://www.ikont.co.jp/eg

Although this document contains business forecasts etc., it was developed based on certain conditions,such as the current business environment and business policies.
Please be aware that these forecasts may differ from the actual results due to these variable elements.