Financial Results
Summary Material

Management Strategy for Future
November 16, 2021
2021/05/19

SHIBAURA MACHINE CO., LTD.

Management Strategy for Future1) Business Environment2) Progress of "Management Reform Plan"
3) Commitment to ESG

2

External Business Environment◼ Manufacturing Industry PMI trend (reference: 50)◼ Amount of orders received for machine tools
Statistics by Japan Machine Tool Builders‘ Association

65
60

58.4
55.9
53.2
50.6

55
50

1492

100
millionyen

October 2021

DomesticSameperiod ofpreviousyear
Export

4540

U.S.

35

China202011202112345678Statistics by The Japan Society of Industrial Machinery Manufacturers(nation-wide/13 companies)

251157

No. ofunit
2020

10 Month◼ Orders received (units) for injection molding machines

India

2019

9(Preliminary report)

Japan

30

122021
Domestic✓ Business conditions were robust despite
several risk factors including COVID-19,difficulty in procurement of parts/materials
and increasing procurement cost.

Sameperiod ofpreviousyear

Export2020

3

10 11 122021

12

3

45

6

7

89 Month

Consolidated Orders Received/Consolidated Sales◼ Consolidated Orders Received/ Consolidated Sales100million
yen

700
600
500
400
300
200
1000

FY191Q

2Q

FY203Q

4Q

1Q

Orders received

Sales

2Q

3Q

4Q

FY211Q

2Q◼ Amount of orders received by segment
100
million 600
yen500Large orders received
for LiB separator film
production lines for EV

400
300

200
1000

FY191Q

2Q

3Q

FY204Q

Metal & plastics industrial machine

1Q

2Q

3Q

Machine tools
44Q

FY21

1Q

Control systems/others

2Q

Progress of "Management Reform Plan"

5

Framework of "Management Reform Plan"
Quantitativetargets

Sales

Operating profit ratio

payout ratio

ROETarget value for
FY2023135 billion yen

8.0

Prospect of 40%

8.5

(During the period of“Management Reform Plan”)

Consolidated basis【Management reform centered on reorganization】
 Abolish the “division system” and employ “company system” to further promote total optimization even.

Specificmeasures establish am ”R&D Center” and “Production Center” which bear enhancement of production efficiency andQCD* as common.
 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】
 Promotion of growth investments aimed for expansion of purposes to fields expected to grown in the future.
*QCD: Quality, Cost and Delivery

Investment plan/Financialstrategies【Implement a financial strategies aimed for enhancement of return on equity(ROE)】 Allot cash-on-hand to investments towards change into a profitable company, and enhance profitability andcapital efficiency

6

FY2021 Plan
◼ FY2021 sales (half term)◼ Management Reform Plan520

Unit: 100 million yen

1168
128975297

551350384336
108294

H1 '21

H1 '21H2 '21H2 '21

Forecast

Results

Forecast

Forecast

As of May(revised)

As of May60772◼ FY2021 operating profit (half term)

907
35626(4.3)27239(1.5)-29

FY2019593

1091071060

540

46

Operating profit ratio 8.0ROE 8.5

1200537()shows an operating profit ratio.

(3.5)(3.2)

19198
FY2020

FY2021

FY2022

FY2023Elimination
Other measures《Cause of the deteriorated profit ratio in H2 of FY21》

Machine tools

Because of an impact of rising procurement costs asa result of increased sales of general purposemachines (Injection, die casting and machine tools)

Metal & Plastics Industrial Machine
Operating profit

7

Probability of achievement of FY2023 sales target
Estimation of backlog asat the end of March2023 as a premise ofFY2023 sales◼ Trend of order backlog
Unit: 100 million yen‘22 sales target

1200‘18 sales

1174‘19 sales‘21 sales forecast

1168(1260)

1130‘20 sales

926

937

923

843
698

*

657

End of Mar. '18

End of Mar. '19

End of Mar. '20

End of Mar. ‘21*

End of Mar. '22
Forecast

End of Mar. ‘23
Estimation* An increase in order backlog due to change of revenue recognition criteria in April
2021

Order backlog formation is strong toward achieving FY2023 sales of 135 billion yen.
8

Action in FY2021
Focused measures inFY2021

Continued measures
in FY2021(Unit: 100 million yen)

+ 70
Reduction in fixed cost

Increases in capital
investment,
R&D/personnel
investment

Decreasein variable
costs

Reorganization ofunprofit
ablebusiness
es

Investment
inexpansionof sales

Effect of Productivity
improvement/increase
in revenue3108(8.0)

402(Operating
profit ratio)

151438(3.2)320 Productivity improvement

3 Effect of increase in revenue

1994

Operatingprofit forFY2018

ROE
4.9

Increase in Increase in Reduction in Increase indepreciation costs related personnel outsourcing
expenses
to R&Dthroughcosts/labor
related to relations/per voluntary
costs
capitalsonnelretirement
investment investment

 Other measures

Reductionin costs

Increase in
Decrease in
Effect ofEffect ofpromotional productivity
procurement corporate
expenses improvement
costs
restructuring(agency(material/integrationcommissions
cost ratio)of basesetc.)

9Effect ofincrease inrevenue

OthersOperatingprofit for
FY2023ROE
8.5

Reorganization of domestic offices in Japan (policy)
Plants reorganization along with the shift
from divisional system to internal company system

 Productivity
improvement

Machine tools plant

Control systems plant

Gotemba Plant

Sagami Plant

Consolidating machines
having similar
machinery mechanisms
 Aiming at
technological synergy
and improving
production efficiency

Machine Tools

Die Casting Machines(Sagami → Numazu)High-Precision
Machine tools

High-Precision Machine tools(Numazu → Gotemba)

Consolidating machines
having similar
machinery mechanisms
 Aiming at
technological synergy
and improving
production efficiency

Aiming at advancing
robot/IoT technologies
through collaboration
with R&D CenterIndustrial robots
Electronic
control systems

Injection Molding
Machines
Die Casting
Machines

Extrusion
Machines
Casting andMachining
Numazu Plant

Molding machines andmother factory
10

Control systems plant(Numazu/Mishima → Sagami)* A subsidiary Toei Electric(in Mishima) also plans
to move to Sagami.

Progress of production sites reorganization
 Productivity
improvement
CompanyPolicyConsolidating electric small- and medium-sized injection molding
machines in China and Thailand
Consolidating hydraulic injection molding machines in India
Consolidating small die casting machines in China and Thailand
Plants in Japan specialize in large injection molding machines,
large die casting machines and extrusion machines.

Targeted effectas of FY2023

Reviews the production system of general purpose machines.
Specializes in large special purpose machines and high-precision
machine tools.

 2 billion yenControlsystemsCompany
Transfers production of SCARA Robots to China.
Expands system engineering business.

CommonEstablishing a new machining factory (smart factory) in Numazu.

Metal &plastics
industrialmachineCompany

MachinetoolsCompany[Progresses]
 Transfer of overall production of small molding machines and SCARA Robots to overseas facilities
 Effect of reduction in outsourcing costs in Japan and cost reduction as a result of small variety mass
production in overseas production facilities Starting SCARA Robots production in China from January 2022 due to delay of procurement ofsemiconductors (local procurement rate is 75).
 New plant is currently under construction on the site next to the India Plant.
 After COVID-19 infection subsides, production volume will increase leading to larger production scale.
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Progress of overseas production sites reorganization
 Productivity
improvement
H2 ‘20H1 ‘21

FromJanuary
2022

Transfer of SCARA
Robots production

China
Plant Increased local

Effect ofproduction
increase

FY2022

Small SCARA Robots
From Q2of 2022

procurement ratio

ThaiPlant

H2 ‘21

Transfer of productionof injection molding
machines of 180 t
class

Transfer of productionof injection molding
machines of 50 to 350 t
class

19 units
production/month29 units
production/monthMedium to large
SCARA Robots

60 units
50 units
production/month production/month

Consolidation of
hydraulic machines

Plant investment
plan

Consolidation ofIndia
hydraulic injection
Plant molding machines
Acquiring a neighboring site
12Plant
construction

Expansion of Extrusion Machines Business Effect of increase
in revenue◼ xEV Sales (EV + PHEV + HEV)50

As of 2025

Million units

xEV sales forecast: 25 million units
Required separator: 17.3 billion m2

255

221 lines required by FY2025

6◼ Equipment market outlook+221683441

20192020

Capable of providing high-precision (thin anduniform) and full-line engineering is our company’sstrength.
 Currently receiving new inquiries for 100 lines

Doubling present production capacity (24 lines 48 lines)

Continuing sales volume of 80 to 100 billion yen in
2024 and after

586 Line

289
352

173
2025

100
million m2

2030 Year

Separator shipment (100 million m²)
Required number of production lines
xEV sales forecast is quoted from Yano Research Institute Ltd. (2021.9).
On the assumption that separator use for 1 unit of xEV is 700 m2 andthat production capacity of 1 LiB separator film production line is 60
million m2, the number of lines required is calculated.

13LiB separator film production line

Expansion of High-Precision Machine Tools Business Effect of increase
in revenue(artificial heart, etc.)

AR/VR

Optical device
Optical component

Mirrorless singlelens

FY2018: 200 billion yen
FY2022: 530 billion yen
CAGR: 27.6

FY2020: 0.2 trillion yen
FY2030: 15 trillion yen
CAGR: 51.5

FY2020: 2.7 trillion yen
FY2025: 5.5 trillion yen
CAGR: 15.3

FY2018: 280 billion yen
FY2022: 370 billion yen
CAGR: 7.2UVM *ULG/ULC *USM others *GMP *Automobile lighting

On-vehicle
cameraSelf-driving (LiDar)

FY2017: 2.9 trillion yen
FY2023: 4 trillion yen
CAGR: 5.3FY2020: 1 trillion yen
FY2024: 2 trillion yen
CAGR: 18.9

FY2018: 70 billion yen
FY2030: 400 billion yen
CAGR: 15.6

Japanese lamp
manufacturers enteringin overseas market

Next generation
vehicle/safety standards
Laser optical system

Growing market of polygon
mirror for LiDar

MedicalOrder backlog:* Model name

End of Mar. 2021 4.2 billion yen  End of Sept. 2021 6.7 billion yen [ 2.5 billion yen]

Toward achieving FY2023 sales of 10 billion yen (FY2020 sales was about 5 billion yen),establishing a thermostatic chamber dedicated to assembly in Gotemba Plant 1 to start
increasing production and sales promotion from June 2022.
14

Management Reform Plan, Operation Reform Other measures
PolicyProgress in FY2021

Productionreform Re-examination of processing plant➢ Completion of identifying issues of theentire production

 Transfer toward overseas production
 Production reform of Metal & Plastics Industrial MachineCompany(Merger of injection molding machines and die castingmachines)

Sales andmarketingreform Survey of current situation and extracting
issues➢ Completion of extracting issues➢ Starting reconstruction of sales process Started operation of a system to visualize sales activities.
(monitoring negotiated amount and negotiation stagers)

 Establishment of a new HR system
HR system➢➢➢

Visualizationof business
management

 Application of a system for management members(from April 2021)
 Application of a system for union members
 Changed to start from April 2022 to provide targetedpeople with detailed explanations and promote dissemination

Partly incorporating job-based HR system
Starting a system for management
members (from April 2021)
Starting a system for union members(from October 2021)

 Automatic aggregation➢ Actual figures aggregation (from April 2021)➢ Budget and estimation calculation (from October 2021)
 Multiaxial analysis➢ Capable of grasping figures from unit sales to service sales
Taking measures in regions with weak sales andfurther reinforce activities in regions with strong sales

 Establishment of a management
accounting system➢ Starting automatic aggregation➢ Implementing multiaxial analysis function

15

Management risks at the moment
Item

Reason for price increase

Affected items within the company

Increasing costs of
raw materials
including steel andcopper Price hikes of materials including
iron ore Resurgence of Chinese market
and automobile industry

 Machine structures casting Sheet metals and frames
 Hydraulic equipment, motors andpiping parts
 Fastening parts including bolts

Increasing costs of
raw materials forcasting Price hikes of raw materials andscrap iron
 Rising crude oil price Machine structures casting

Increasing prices ofsemiconductors andelectric parts

 Increasing demand for displayunits Resurgence of automobile Parts of control panel andinternal building (wiring kit)

Increasing oceanfreight Lack of containers in the world Lack of harbor workers
 Rising crude oil price Import/export of products andparts

Impact of reduction by more than 1 billion yen in FY2021 (based on operating profit)

Sales prices increase by 3 for all models in all regions
16

Each Business Policy for FY2023
Metal & Plastics
Industrial Machine(Injection molding machinesand die casting machines)

Expanding business base as the core to shape figures
 Reallocation to use overseas production plants for different models
 Further promoting local production for local consumption

Metal & Plastics
Industrial Machine(Extrusion machines)

Positioned as additional business to shape figures As the business size is expanding,establishing the structure including reallocation of resources

Machine Tools

To be a source of profits
 Focusing resources on high-value added areas (high-precisionmachine tools/large and special purpose machines)

Control Systems

Expanding business base to shape figures
 Implementing SCARA Robots production in China to intensively
meet the automation needs of 5G smartphone parts
manufacturing factories in China and Southeast Asia
17

Business Portfolio Strategy (Long-term Vision 2030)
High-value-added/market expansion areas

Basic policy
Machine
Tools
CompanyNew

Focus on a specificdomains by selection
EnergyOpticsExpand/enhance• Multifunction machines• Ceramic cutting machines

Aircraft
Devices

Metal &Plastics
Industrial
MachineCompanyAutomobiles

Resource-saving

Extrusion machines→ business expansion throughinvestment

EnergyDevices

New materials

ControlSystemsCompanyNew
BusinessCompany

Specialize in external sales.
Strengthen systemengineering.
Labor-saving
Automation
Establish technology foradding new functions via
surface structure control
Automation

Devices•

Dissimilar material joining
machines• High pressure continuouspresses (all-solid-statebatteries, etc.)• Reactive extrusion
machines(biomass, etc.)• Collaborative robots• AGV• Large machines• Special, dedicatedmachines• Ultra-precision
processingmachines• Injection molding
machines• Diecastingmachines

Extrusionmachines• Small and generalpurpose machines

Digital transformation• System engineering
Injection and die casting→ Expand local production for
local consumption overseas

Reduce/withdraw• Robots• Servo motors,controllers• Film casting equipment: Electronic circuit market (nextgeneration communications)• Coaters: High-performance films, devices market (all-solidstate batteries, LiB ceramic capacitor, optical components,etc.)• Imprint equipment: Water purification and sterilization
market(Deep UV-LEDs)

18• Domestic productionof standard
hydraulic machines• Conical-type
extruders• NC, controllers(utilizing of externalalliances)

Initiatives to ESG

19

Sustainability Promotion Structure
Board of Directors
Supervision, instructions

ReportSustainability Promotion Committee
Chairman: President
Members: Executive officers in managerial positions
Secretariat
Corporate Strategic
Planning Division
Administration Dept., HeadOffice Dept.
ReportSupervision,
instructions

Companies, Head Office Dept.,
affiliated companies

Production Center
Supervision,
instructions

ReportCompanies, Head Office Dept.,
affiliated companies

R&D Center
Collaboration
Companies, affiliated companies

Promotion Structure Establishment [Done]Decision of corporate policyImprovement goals settingMeasures planning, implementation and evaluation by each subsection
20Environmental Action Plan
“Shibaura Machine’s CO2 reduction goal” Reduction of 50% or more by 2030 from the level of 2013
Item to be addressed

Provision of environment-conscious*product (ECP)* Products that are designed according to the“Environment-conscious product designingguide” that takes 3R into consideration

Plant energy saving

Long-term goal
FY2030CO2 emissions reduction amount3420
13013171819202530(FY)

Reduction of 14,000 t
CO2 emissions
Result per unit of production

50CO2reductionLCA(Life cycleassessment)

The 2nd Environmental Action Plan
FY202540
Reduction of 21,000 t

CO2 (1,000 t)

Prevention ofglobalwarming

CO2 (1,000 t)

Reference fiscal
year: FY2013

15.0

3101330.0

17181920

1917250.030 (FY)

Scope 3 activities

Understanding environmental load (includingoverseas)

Reduction activities

Use of renewable energies

Photovoltaic power generation accounting
for 7.5 or more of the energy use

Renewable energy power generationaccounting for 20 or more of theenergy use

Biodiversity preservation

biotope, tree planting in domestic plant premises

Cooperation in foresting business

Effective use of resources
Reduction of waste emissions per unit ofproduction (t/100 million yen)

2.0 (-58)

1.2 (-65)Control of chemical substances
Reduction of chemical substance emissions per unitof production (t/100 million yen)

42.5 (-45)

40 (-52)Establishing a global EMS** EMS: Environment Management System

External survey of infrastructure, internal survey of overseas environment, fostering overseas plant
environment leaders21

Activities with Various Products

22

Information is published on
the company website.

SHIBAURA MACHINE CO., LTD.
2-2, Uchisaiwaicho 2-Chome, Chiyoda-ku, Tokyo 100-8503, Japan
TEL: 81-(0)3-3509-0444
FAX: 81-(0)3-3509-0333
URL: https://www.shibaura-machine.co.jp

23