Investors’ Guide FY 2023
Year ended March 31, 2024

Japanese GAAP

Leadership in Total Motion Control
Jun 19, 2024

Primary Objectives
HDSI focuses our expertise and management resources on “Total Motion Control,”developing and producing Precision Control Equipment and Components for a broad range of applications.
HDSI aims to become a world industry leader, as a highly skilled precision engineering expert with pioneering spirit.
HDSI will strengthen our management processes and our flexibility to become a winner in the dynamic business environment.

Schematic Concept of Total Motion Control１Management Philosophy
HDSＩ conducts management based on the following management philosophy.
1.Respect for the Individual
HDSＩ aspires to be a company where the rights of every individual employee are respected, and where individuals can pursue ameaningful, cultural, and worthwhile life.
We will make HDSＩ a company that believes in each employee’s aspirations, supports independent activities, creates an environment
where employees can maximize their abilities through work, and where abilities and performance are rewarded.
2.A Meaningful Company
HDSＩ wants to be recognized as a meaningful, superior company which manifests creativity, has personality and distinctive
characteristics, and whose management foundation is based on ceaseless research and development activities and a constantemphasis on quality—a company where the entire organization finds meaning in making utmost efforts.
3.Coexistence and Co-prosperity
HDSＩ is supported by many different parties including our employees, customers, shareholders, materials and parts suppliers, affiliatedcompanies and trading partners.
We make our best efforts to create attractive products, services, compensation, working environments, and trading relations to satisfy
all these concerned parties.
4.Contribution to Society
HDSＩ broadly contributes to society and industry through our corporate activities as a good corporate citizen. The products andservices we provide directly and indirectly contribute to the betterment of society.
We aspire to be a company that helps to improve the environment and the quality of the communities where we are located.

2

Basic Policy of Sustainability
Basic Policy of Sustainability (approved on March 25, 2022）
As a technology and skills-based organization in pursuit of Total Motion Control, the HDSI Group aims to enhance
corporate value and realize a sustainable society by contributing to technological innovation for the betterment ofsociety. We intend to achieve these goals based on our management philosophy comprising four pillars: Respect
for the individuals, be a meaningful company, coexistence and co-prosperity, and contribution to society.

Our mission
Light
Compact

High torque

Hollow

Contributeto theHigh strength

DevelopHigh accuracy
positioning

Advance
Efficiency
improvementNew
production
methods

Newmaterials

of industrial
society3

History of Sales（Million ¥）History of Sales（Non-consolidated basis）

50,000Aerospace
Mobility

45,000

Advance Medical
Technology

40,000Flat Panel Display
Manufacturing Equipment

35,00030,000

Semiconductor Equipment

25,00020,000Demand Drivers

15,00010,0005,000

0Robotics
Working Machines
71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 （FY）

4

Operational Risks
1.Plant and Equipment Investment Trends

Because the majority of HDSI Group’s products are sold as components for industrial machinery such as industrial robots, semiconductor
manufacturing equipment, and flat-panel display manufacturing equipment, plant and equipment investment trends have an influence on theoperating performance of the HDSI Group.
In particular, for semiconductor and flat-panel display manufacturing equipment industries, while there is large growth from improved
conditions in the semiconductor device and panel markets and from manufacturing technology innovations, an unexpected market contraction
resulting from supply-demand adjustments or other developments could adversely affect the operating performance of the HDSI Group.

2.Research and Development Results

The HDSI Group develops and puts on the market distinctive, high-value-added products by intensively allocating resources to the researchand development division as a technology and technical skills organization in the motion control field. A delay in the market release or market
penetration of the resulting new products despite the continuous allocation of resources to research and development could adversely affectthe operating performance of the HDSI Group.

3.Product Quality

The HDSI Group has received ISO9001 certification and otherwise strives to strengthen its quality assurance system to boost customer
satisfaction and gain market advantages. Nevertheless, the emergence of unexpected product defects or other quality issues could adversely
affect the operating performance of the HDSI Group.

4.Fluctuations in Foreign Exchange Rates

The HDSI Group has two consolidated subsidiaries in the US, one consolidated subsidiary in China, one consolidated subsidiary in South
Korea, and one consolidated subsidiaries in Germany which has nine consolidated subsidiaries in Europe, and we are actively advancing
internationalization in our businesses. Consequently, foreign exchange rate fluctuations sometimes have a negative effect on the businessactivities of the HDSI Group. Foreign exchange rate fluctuations also affect the yen-equivalent value of the Group’s assets and liabilities andrevenues and expenses from transactions denominated in foreign currencies, and may have a negative effect on the HDSI Group’s operating
results and financial conditions.

5.Retirement Benefits Obligations

Harmonic Drive Systems and some HDSI consolidated subsidiaries have defined benefit pension plans or lump-sum retirement benefit plans.
Revisions of the assumptions for calculating retirement benefits obligations and retirement benefits expenses, changes in the investment
environment for pension assets, and other financial developments could adversely affect the Group’s operating performance and financial
conditions.

6.Other Risks

Changes in the economic and political environment and the occurrence of natural disasters, wars, terrorism, and other unpredictable events
that cannot be avoided by the HDSI Group alone could adversely affect the Group’s operating performance and financial conditions.
*The above is a summary version. For full details, please refer to the latest Annual Securities Report “Yukashouken Houkokusyo” ( in Japanese).

5Mid-term to Long-term Management Strategies and Management Targets
Mid-term to Long-term Management Strategies
The Group promotes its unwavering mission of contributing to social and technological innovation through motion control
technology. Market for mechatronics and precision speed reducers, in which we participate, is contributing greatly to the emerging
social and technological innovation, including electrification of vehicles and surgical robots, and such demand is expected tocontinue to expand. At the same time, with the acceleration of automation as demand for collaborative robots in addition to a newmarket for “human-like robots” is expected to increase amid the worldwide labor shortage. To properly capture these growth
opportunities, the Group aims to further strengthen its business foundation. We also pursue activities for achieving sustainable
society through our business, based on the new medium-term management plan (fiscal years 2024-2026) which was newly
formulated, with the whole group united. Moreover, we aim to enhance corporate value over the medium to long term by maintaining
a balance between defensive and offensive approaches in our management strategy, and by solving issues to be addressed in the
new medium-term management plan in order to achieve our missions and new long-term vision.

Basic Policy of Sustainability

Based on our management principles on four pillars: 1) Respect for the individual, 2) a meaningful company, 3) coexistence and coprosperity, and 4) contribution to society, the HDS Group, a group of technological and engineering experts providing total motion
control, aims to realize sustainable society and increase its corporate value by contributing to technological innovation for better
society.

Our Group's Mission

To contribute to technological innovation in society through motion control technology

Long-term Vision
The best provider of total motion control in harmony with the future

Materiality-Maximize the value of human capital-Achieve QCDS that goes beyond customer expectations-Take on the challenge of developing new technologies and new skills that coordinate with changes in the environment-Contribute to creating a sustainable society through corporate activities-Establishment of a management foundation in harmony with the times

6Mid-term to Long-term Management Strategies and Management Targets
Mid-term Management Plan for fiscal years 2024–2026-Take on the challenge of “value creation and transformation” –Basic policies(a) Sustainable growth of all businesses with an emphasis on profitability-Develop new drivers for growth-Thorough implementation of QCDS+Speed to meet customer expectations(b) Strengthen management resources (people, things, money, information) that can adapt to changes in the environment-Realize an organization where individual growth and diverse skills are demonstrated and respected-Growth investment aware of capital efficiency-Strengthen the financial foundation and governance(c) Initiatives to enhance corporate value that will continue into the future-Promote Net Zero-Appoint and hire diverse personnel-Develop products that promote the reduction of customers’ environmental load

Target Management Indicators
Towards realizing sustainable growth and long-term enhancement of corporate value, the Group has newly added ratio of operating
profit to net sales of 15% or more and a ratio of net sales to EBITDA of 25% or more as a “cash generation ability indicator” for net
sales as indicators in the medium-term management plan (fiscal years 2024–2026) as the Group’s important management indicators.
As an important financial indicator, in addition to return on equity (ROE), ROIC is a new indicator. Assuming that a comparable capital
cost (WACC) is approximately at the 9% level, setting a target of return on equity (ROE) and ROIC at 10% or more, we aim to
improve return on capital through conducting management aware of the operational efficiency of invested capital.

Management Indices Targets
The HDS Group has established the following management indices targets.
- Profit Margin:

At least 20%- Return on Equity (ROE):At least 10%

7

Sales Composition by Application Fields（Non-consolidated basis)

Turnover (%) in FY 2023
13.3%

30.6%

23.0%
14.8%
5.1%

5.4% 1.6%

Robotics

Semiconductor Equipment

Flat Panel Display Equipment

Gearbox for Motor Manufactures

Machine Tools

Optical Devices

Measuring Machines

Printing Machines

Transporter

Excavation System for the Oil

Medical Equipment

Aerospace

Automotive

Others8

Semiannual Sales Composition by Application Fields（Non-consolidated basis)

26,522(Million ¥)25,00024,361

2,450

2,452

20,000

2,341

1,716

1,053
1,297

930
1,186

15,11415,00010,00013,462

1,926

12,777

12,427

1,875

3,263

3,323

803
905
5,000

0

663

4,538

3,990

4,891

282
2,348

First period
1Second2period

First period
3672

FY 2022

Semiconductor Equipment
Gear box Motor Manufactures
Optical Devices
Excavation System for the Oil
Automotive

Flat Panel Display Equipment
Machine Tools
Transporter
Medical Equipment
Others

640
645

4,206
164
1,870

FY 2023

Second4 period

Robotics
Printing Machine
Measuring Machines
Aerospace9

Operating Results
During the fiscal year ended March 31, 2024
Overview of Operating Results for the Fiscal Year under Review
Future of the world economy increased uncertainty during this fiscal year under review due to factors such as further instability of the internationalsituation, strong inflationary pressures and surge in resource and raw material prices, in addition to the slower growth in the Chinese economy. The
situations concerning orders received by the Harmonic Drive Systems Group (hereinafter “the Group”) generally became tough owing to continuous
cutbacks in future orders received by customers who were concerned about demand trends, reflecting slower capital investment in China’s
manufacturing industry, stagnancy of investment in new facilities for cutting-edge semiconductors, and others. On the other hand, although it cannot
be said that Japan is experiencing a full-on recovery, it can be confirmed that orders received have bottomed out, and orders received from
customers whose inventories of our products have been optimized have begun to return, albeit gradually. As a result, consolidated orders received
decreased by 20.9% year on year to ¥44,104 million.
Consolidated net sales for the fiscal year under review have especially been significantly affected by sluggish orders received in Japan, which has
continued from the previous fiscal year, and amounted to ¥55,796 million, down 22.0% year on year.
Regarding net sales trend by application, net sales for industrial robots decreased significantly, due to factors such as slower capital investment in
China, the main market, in addition to cutbacks in capital investment in EVs. Net sales for semiconductor manufacturing equipment also decreased,
especially in the cutting-edge area, where new indications of investment such as in data center application and generative AI application wereshown; however, there was no full-scale progress in the fiscal year under review. On the other hand, net sales for advanced medical applications
such as surgical robots rose reflecting steady demand growth, mainly from customers in the United States of America. Net sales for automotive
applications steadily progressed, due to gradual improvement since the latter half of the previous fiscal year in production adjustment by customers
caused by the semiconductor shortage.
In terms of profit and loss, depreciation cost increased as a result of investment made to enhance production capacity. In addition, the lower
operating rates of production plants in Japan during the fiscal year under review also affected the results, and operating profit decreased to ¥124
million, down 98.8% year-on-year. In addition, loss attributable to owners of parent was ¥24,806 million (profit attributable to owners of parent of¥7,595 million in the previous fiscal year) due to the recording of ¥28,159 million of impairment losses of intangible assets related to Harmonic Drive
SE, a consolidated subsidiary, and other factors.
In terms of net sales by product group, speed reducers totaled ¥39,432 million, down 30.8% year on year and mechatronics products reached¥16,363 million, up 12.6% year on year. They accounted for 70.7% and 29.3% of the total net sales, respectively.
In fiscal year 2023, which is the final year of the medium-term management plan for fiscal years 2021-2023, we worked on various measures set out
in the plan.
On the sales front, we worked to acquire orders with a greater sense of urgency in solving customer issues on a case-by-case basis. In the
exhibition area, continuing from the previous year, we held the “Mechatronics Show” again on August 31 and September 1, featuring three major
manufacturers of core motion control components (THK Co., Ltd., SMC Corporation, and the Company). Through the appeal of the combined
strength of each company, the show provided an opportunity for attracting many visitors and having substantive business negotiations.

10Operating Results
Aiming to expand adoption opportunities for the Company’s products, we exhibited at exhibitions related to the space industry, etc. in order toexpand to other new uses.
In terms of R&D, we worked on evolving the flagship product, the HarmonicDrive® strain wave gearing, as well as focused on joint research withexternal research institutes, continuing to develop and commercialize elements that are potentially essential to next-generation motion control
technology. In particular, we applied the latest weight reduction technology and construction method development for new development projects,
contributing to customers’ new technological transformation. In the field of mechatronics, in addition to the development of next-generation drivers(control devices), focused on developing torque sensors and enhancing value-added products, we strengthened a new technological foundation.
On the production front, Japanese factories continued to operate at a low level due to impacts of sluggish orders received. The Company saw thisas a chance and worked on reforms and improvements that could only be done at this time, aiming to further improve productivity and quality,
anticipating growing demand. Utilizing information systems, we introduced the “MES (Manufacturing Execution System)” at the Ariake Plant, forreal-time management, grasping the status of manufacturing processes and managing forecasts and actual results, and providing instructions andsupport. In addition, with the aim of further improving and passing on skills of employees, improvements in operations and promoting multi-skilledworkers were conducted based on the key phrase of “eliminated waste” for all processes.
We have been progressing with the complete transfer of production capabilities of our mechatronics product from the Company to Harmonic
Winbel Inc. (a consolidated subsidiary), a new manufacturing base. Alongside this, production capacity is also being increased, with the transfer
scheduled to be completed in October 2024.
We also increased production capacity at our overseas production sites in Germany and the United States in anticipation of increased demand in
the future. Furthermore, we transferred product production to increase locally produced products for customers in each region, with the aim of
maximizing production efficiency within the Group.
In terms of quality, we significantly expanded the “visualization” of various manufacturing data, and strengthened our quality control framework.
We also focused on coordination with each Group company and worked to maintain and raise our Common Global Quality initiative as we
promote production transfers.
As part of our sustainability initiatives, the Sustainability Committee was established in April 2023, and we have adopted a system in which
management themselves promote initiatives. Furthermore, materiality was partially reviewed in November of the same year, and we are working
to further clarify the Group’s issues. We are promoting the sustainability activities of the Group, such as establishing an “SDGs Proposal System,”
where all employees can actively participate and not just be told what to do.

11Operating Results
Performance of reportable segments is stated below:＜Japan＞
Net sales increased for automotive application resulting from a recovery of car production in line with a relaxation of the supply-demand balance
for semiconductors. Meanwhile, demand declined for industrial robots, semiconductor manufacturing equipment, flat panel display manufacturing
equipment, and other general industrial machinery applications owing to softness in capital investment trends in Chinese electronics andsemiconductors, and the inventory adjustments of our products by customers and distributors of the Group. As a result, net sales decreased by
42.9% year on year to ¥25,971 million. Segment profit (ordinary profit) decreased by 64.6% year on year to ¥4,513 million due to the effect of
decreased sales.
＜North America＞
Exchange rates of the yen remained weak, and demand increased for advanced medical applications (surgical robot-related) and amusement
application. As a result, net sales increased by 22.3% year on year to ¥13,284
million. Segment profit (ordinary profit) increased by 21.4% year on year to ¥1,707 million due to the effect of increase in sales.
＜Europe＞
Exchange rates of the yen remained weak, and demand increased for cutting-edge semiconductor manufacturing equipment, despite a decreasein demand for industrial robots. As a result, net sales increased by 8.7% year on year to ¥16,540 million. Segment profit (ordinary profit) decreasedby 65.7% year on year to ¥214 million due to depreciation of ¥1,898 million on intangible assets posted at the time of acquisition of shares in
Harmonic Drive SE.

12

Results ⅰ Net Sales, EBIT
（Consolidated basis)

Net Sales

EBIT

EBIT=Ordinary income + Interest paid - Interest income（Million ¥）（Million ¥）71,52770,00060,00050,00040,00012,00010,90951,786
AVE. 5-yr
37,48757,08755,796

10,000

9,233

8,000

37,0346,000

30,000

4,508
AVE. 5-yr

4,000

20,0002,000

10,000

1,434
650

316
0

2019

2020

2021

2022

2023 （FY）

0

2019

2020

2021

2022

2023 （FY）

13

Results ⅱ EBIT to Net Sales Ratio, EPS（Consolidated basis)

EBIT to Net Sales Ratio

EPS
（¥）

90

（%）

35.0

0

30.0

79.67

69.02

-11.38

6.88

2019

2020

2021

2022

2023

-23.36 AVE. 5-yr

25.0

-90
20.0

16.2
15.0
10.0

15.3

7.5 AVE. 5-yr

2020

2021

2022

2023

-261.00

Dividends paid per share

1.2

0.8
2019

（FY）

-270

3.9

5.0
0.0

-180

（FY）

FY

2019

2020

2021

2022

2023

Dividends(¥)

20

20

21

28

20

The net loss attributable to owners of the parent for FY2023
includes ¥28,159 million in impairment loss on intangible assets
related to a consolidated subsidiary, Harmonic Drive SE.

14

Results ⅲ Total Assets, Equity Ratio（Consolidated basis)

Equity Ratio

Total Assets（Million ¥）（%）

160,000
140,000
120,000

154,336
131,848
35,988140,028
38,117100

143,289
45,872

90

52,175

80

119,14270

100,000

47,45750

60,00040

101,910

97,417102,160

67.4

66.6

20

20,0000

70.0
AVE. 5-yr

30

71,68440,00069.0

60

80,00095,859

73.3

73.5

10
2019

2020

2021

2022

2023

0
（FY）

2019

2020

2021

2022

2023

（FY）

Current
Assets an impairment
Fixed
The Company
recognized
lossAssetsof ¥28,159 million on
intangible fixed assets in FY2023, in conjunction with theconsolidation of Harmonic Drive SE as a subsidiary.

15

Sales Structure by Regions（Consolidated basis)

By Regions（Million ¥）By Regions

70,00057,087
6,092

12.2

15,22250,00013,17037,487
4,555

30,00020,00010,000
0

100.0

7,014

60,00040,000（%）

71,527

12,6346,240
14,056
2019

10,85837,034
3,691

75.0

10.7

9.8

26.4

23.1

21.3

11.6

15.2

33.7

16,540

13.9
50.0

9.6

29.6

23.8

16.6

13,284

5,144
31,18038,43125.0

2021
North America

2022
Europe2023 （FY）
Other Region

49.7

54.6

53.7

37.5

20,617

18,421

Domestic

5,354

6,643

9,775

2020

55,796

10.0

0.0

2019

37.0

2020

Domestic

2021

North America

2022

Europe2023（FY）

Other Region

16

Sales Structure by Product Types（Consolidated basis)

By Product Types（Million ¥）By Product Types（%）

71,52770,000100.0

14,52760,00057,08730,000

20.8

17.3

79.2

82.7

2020

2021

20.3

55,796

29.3

75.0

9,852

50,00040,00025.2

16,36337,48737,034

9,456

7,714

50.0

57,00074.8

47,23520,00039,432
28,031

29,319

2019

2020

79.7

70.7

25.0

10,0000Reducers

2021

2022

Mechatronics

2023

（FY）

0.0

2019

Reducers

2022

2023 （FY）

Mechatronics

17

Profitability EBIT to Total Assets Ratio, ROE（Consolidated basis)（%）

EBIT to Total Assets Ratio

ROE

（%）

30

20
15

25

10
5

20

0

15

-5
-10

10

5

0

6.6

3.1
AVE. 5-yr
0.2

1.0

2019

2020

6.4

2020

-2.7
AVE. 5-yr

2021

2022

2023

（FY）

-15

7.1

-20
-25

0.5
2021

0.7

-1.1
2019

7.5

2022

2023

（FY）

-30

-27.1

18

Stability Interest Coverage Ratio, Debt / Equity Ratio（Consolidated basis)

Interest Coverage Ratio

Debt / Equity Ratio

Interest Coverage Ratio = Net Cash provided by operating activities / Interest paid-net（Times）（Times）
97.4
100

80

Debt / Equity Ratio = interest-bearing debt / total shareholders' equity

0.5

92.9

78.0
AVE. 5-yr

0.4
69.0

60

61.3

69.4

0.3

0.22
40

0.2

20

0.1

0

0
2019

2020

2021

2022

2023

（FY）

0.15
AVE. 5-yr
0.07

2019

0.23

0.17

0.06

2020

2021

2022

2023

（FY）

19

R&D Investments（Consolidated basis)（Million ¥）

（%）

25.0

4,000
3,500
3,000
2,500
2,000
1,500

3,613

2,908
AVE. 5-yr

3,012

15.0

2,444

2,195

6.6

5.9
2019

2020

5.3

4.6

2021

2022

R & D Expenditure

Fiscal Year

20.0

3,274

10.0

6.5

5.0
2023

（FY）

0.0

Percentage of Net Sales

2019

2020

2021

2022

2023

Number of R&D persons

139

144

139

137

141

Share of total employees (%）

12.7

13.0

12.1

10.3

10.5
20

Capital Expenditures（Consolidated basis)（Million ¥）15,00012,000

9,000

9,236
7,892

6,000

4,955

5,690

3,000

0

5,946
AVE. 5-yr

1,959

2019

2020

2021

2022

2023

（FY)

*Purchases of tangible and intangible fixed assets

21

Consolidated Balance Sheets（Million ¥）FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Current Assets

35,98838,17745,872

52,17547,457

Fixed Assets

95,859101,910

97,417102,160

71,684

Tangible fixed Assets

45,50041,991

43,96748,92648,147

Intangible fixed Assets

40,21241,00340,43540,332

12,897

Investment and other Assets

10,146

18,91513,013

12,901

10,639Total Assets

131,848

140,028

143,289

154,336

119,142

Total Liabilities

25,12929,96844,43350,38039,740Current Liabilities

5,127

7,954

14,127

16,467

11,719Long-term Liabilities

20,00222,01430,30633,91328,020Total Net Assets

106,718

110,059

98,856

103,955

79,401

Shareholders’ Equity

93,192

91,78489,18489,74762,048Other Comprehensive Income

3,435

11,104

9,671

14,207

17,353

Subscription rights to shares

625

－

－

－

－

9,464

7,170

－

－

－

131,848

140,028

143,289

154,336

119,142

Minority Interest （Non-controlling Interests)

Total Liabilities and Net Assets

The Company recognized an impairment loss of ¥28,159 million on intangible fixed assets in FY2023, in conjunction with theconsolidation of Harmonic Drive SE as a subsidiary.

22Consolidated Statement of Income（Million ¥）FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Net sales

37,48737,03457,087

71,52755,796Gross profit

12,003

12,582

22,42625,786

15,606

SG&A

12,198

11,716

13,686

15,561

15,481

Operating income (loss)

▲195

865

8,739

10,224

124

236

1,366

9,108

10,757570▲1,095

662

6,643

7,595

▲24,806

Ordinary income
Net income (loss) attributable to owners of parent

The net loss attributable to owners of the parent for FY2023 includes ¥28,159 million in impairment loss on intangible assets related to a
consolidated subsidiary, Harmonic Drive SE.

23

Consolidated Statement of Income（Million ¥）FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Cash flow from operating activities

10,950

9,555

9,881

10,85012,728Cash flow from investing activities▲12,537▲1,230▲4,703▲8,663▲5,950Cash flow from financing activities

2,362▲6,561▲6,663▲1,599▲8,122

Effect of exchange rate changes on cash and cash equivalents

▲33

▲108

256

567

363

742

1,654

▲1,229

1,154

▲980

18,342

19,996

18,767

19,921

18,941

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at end of year24

Share Price Trend
Share Price
HDSI’s Share Price (Closing)

6,000

Tokyo Stock Price Index (Closing)
（￥）

（￥）

3,000

Number of shares of common stock
5,000

2,500

issued and outstanding:
96,315,400 shares (As of March 31, 2024)

Number of shareholders:

8,302 persons (As of March 31, 2024)

4,000

2,000

Market capitalization:¥378,480,726,855 (As of March 31, 2024)

3,000

1,500

2,000

1,000

1,000

HDSI’s Share Price(Closing)

500

Tokyo Stock Price Index(Closing)

002023/42023/52023/62023/72023/82023/92023/10 2023/11 2023/12

2024/12024/2

Note: TOPIX is a stock index calculated and published for stocks
listed on the Tokyo Stock Exchange (TSE).
Harmonic Drive Systems Inc. is listed on the Standard Market of
the TSE.

2024/325

Investors’ Guide FY 2023
Year ended March 31, 2024

Appendix

Results forecasts on this document are based on the management’s decisions for future businessstrategies and performance, and may include risks from the business environment, uncertainties,
and other factors. For this reason, the understanding is that the actual business results may notagree with the business prospects as presented on this document.

May 20, 2024

26

Outlook for FY 03/25
FY 03/25 Outlook
Amid expectations of further uncertainty in the global economy, such as resource and raw material prices
remaining high due to instability of the international situation, and exchange rate fluctuations, in thebusiness environment of the Group in fiscal year 2024, product demand is expected to recover due toexpanding investment in automation, such as robots to make up for the decline in the working population,and expanding demand for cutting-edge semiconductors, which are necessary for expanding data centersand generative AI. As a result, with inventory adjustments of our products by customers and distributors,
we expect a recovery in orders received during the period.
In order to respond to this business environment, we will continue to maintain our high production capacity
and strengthen our supply chain system to ensure stable procurement of materials, further promote
productivity improvement and operational efficiency through proactive investment in IT, and strive forfurther quality, cost, delivery, service; product power enhancement, cost reduction, and lead-time
reduction), which were implemented as measures in the current medium-term management plan (fiscal
years 2021-2023).
In addition, we will promote the improvement of our ability to solve customer issues and the acceleration of
our response through the integration of sales and development technology, and focus on further expanding
our competitive advantage.
For the consolidated earning for the fiscal year ending March 31, 2025, based on the above businessenvironment, the Group forecasts net sales of ¥58,500 million, operating income of ¥2,700 million, ordinary
income of ¥2,700 million, and income attributable to owners of parent of ¥2,000 million.
27

Forecast ⅰ Net Sales, Operating Income（Consolidated basis)

Net Sales

Operating Income（¥ Million ）（¥ Million ）80,00071,52770,00060,00057,087

12,00055,79658,500

10,22410,0008,739

50,0008,000

40,00037,0346,000

30,000

Forecast

20,000

4,000

2,700

10,000
2,000

0

865
2020

2021

2022

2023

2024

Forecast

124

（FY）
0

2020

2021

2022

2023

2024

（FY）

28

Forecast ii

Operating Income to Net Sales Ratio, EPS（Consolidated basis)

（%）

EPS

Operating Income to Net Sales Ratio
（¥）
90.00

20.0

69.02

79.67
Forecast

15.3

15.0

0.00

14.3

10.0

21.06

6.88
2020

2021

2022

2023

2024

（FY）

-90.00

Forecast

4.6

5.0

2.3
0.0

-180.00
（FY）

0.2
2020

2021

2022

2023

2024

-270.00-261.00

The net loss attributable to owners of the parent for FY2023
includes ¥28,159 million in impairment loss on intangible assets
related to a consolidated subsidiary, Harmonic Drive SE.

29

Forecast iii

Dividends paid per share（Consolidated basis)

Dividends paid Per share
Dividends paid per share (left axis)（¥）
40

Basic Policy on Earnings Distribution

30

20

At HDSI, our basic policy is to distribute earnings inaccordance with operating performance.

28

20

21

20

20

Forecast

100While our general dividend policy is to maintain an annual
dividend payout ratio of 30% of net income attributable toowners of parent, we determine return to shareholders
through comprehensive considerations including dividend
continuity and the maintenance of sufficient internal
reserves.

2020

2021

2022

2023

2024

For future business development, internal reserves aremostly invested in such areas as researching anddeveloping new products, expanding and improving
production facilities, and upgrading information
management systems. Internal reserves are also used foragile execution of capital policies.
（FY）

30

Business Activity － Products
Leadership in Total Motion Control

May 20, 2024

31

Total Motion Control
Our business Domain

Developing and producing Precision Control Equipment andComponents for a broad range of applications, focus on “Total
Motion Control”

Schematic Concept of Total Motion Control

32

History of Harmonic Drive Systems Inc.
1950 1960 1970
55
64
History

InventedHD

First
Introduced
to Japan

J/V

76

USM+
Hasegawa
Gear Works

1980
79
100%
subsidiaryof USM/
EMHART

1990
Current HDSI

2000
2010
95 98
ISO ISO
9001 14000 (IPO)

2020
20
50th
anniv
ersaryProducts

Equipments for Optical, Aero, Space and Environment

Semiconductor and Flat Panel Display Equipment

Our
GrowthBefore Dawn

Robotics
Harmonic Concert (Classical music concert)

Community
RelationsHarmonic Lecture Meeting

TRIAD

33

History of Sales（Million ¥）History of Sales（Non-consolidated basis）

50,000Aerospace
Mobility

45,000

Advance Medical
Technology

40,00035,000Flat Panel Display
Manufacturing Equipment

30,000

Semiconductor Manufacturing
Equipment

25,00020,00015,00010,0005,000

0Demand Drivers

Robotics
Machines Tools

71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 （FY）

34

Sales Structure by Product Types
Turnover (%) in FY 2023

0.8%

Controller

16.7%
Actuator（Non-consolidated basis）

8.6%

32.1%

HarmonicDrive®
(Component type)

41.8%
Planetary Gear

Reducers

HarmonicDrive®
(Unit type)35

Principle and Advantages of “HarmonicDrive®”
Flexspline

Circular Spline

Wave Generator
The flexspline is deflected by the wave
generator into an elliptical shape, so theflexspline teeth to engage with those of thecircular spline at the major axis and to becompletely disengaged across the minor axis.

A clockwise rotation of the wave
generator causes the flexpline torotate in the opposite direction while
subjecting it to elastic deformation.

When the wave generator rotates
one revolution clockwise, theflexpline moves counterclockwise by
two teeth relative to the circularspline.

Advantage of “HarmonicDrive®”
Compact Design/ Reduced WeightNon-backlash
Hollow Construction
High Reduction Ratio by Single Stage
High Efficiency
High Torque Capacity
High Positioning Accuracy and Repeatability
High Torsional Stiffness
Simple Installation and Assembly
Low Noise and Smoothness operation

36

Features and Benefits “ Compact and Lightweight”
Comprised of just three basic components

Compact and Lightweight

Circular Spline

Flexspline

Wave Generator
37

Features and Benefits “ Zero Backlash”

ΘBacklash
1,000mm

Clearance between
mated gear teeth
Backlash

Backlash

Backlash after 1m

Our Products

0.5 degrees

8.7mm

None

Transporters and Processing
Machinery

0.05～0.25 degrees

0.9mm～4.3mm

Robotics and Semiconductor
Equipment

0～0.02degrees

0～0.3mm

Applications
General Industrial
Machinery38

Feature Applications
Industrial robots
Hayabusa 1. 2 Photograph courtesy of JapaneVTOL

Aerospace Exploration Agency (JAXA)

Robotic Surgical System

Optical-infrared telescope “Subaru”
installed on Mauna Kea on the island of
HawaiiPhotograph courtesy of the National
Astronomical Observatory of Japan,
National Institutes of Natural Sciences

Cobot Photograph courtesy of Techman Robot Inc.

39

Target Segment Image
AccuracyHigh positioning
accuracy
Robotics,
Semiconductor Equipment

Normal positioning
accuracy
Transporters,
Processing Equipment etc.

Emphasis on
power
General Industrial Machinery*This graph is conceptual. The shape, size, and position of images
used do not accurately reflect market size or product positioning.

Price40