Consolidated Financial
Results 1Q FY2023

August 10, 2023

Index• Results Highlights• 1Q FY2023 Results• 1Q FY2023 Results by Segment• FY2023 Outlook• Future Initiatives

1Company Profile
Company NameHIRANO TECSEED Co., Ltd.

Representative

Kaoru Okada, President

Paid-in Capital¥1,847,821,000 (as of end-June 2023)

Headquarters

101-1, Kawai, Kawai-cho, Kitakatsuragi-gun, Nara Pref. 636-0051, Japan

Group Companies（wholly-owned）• HIRANO GIKENKOGYO Co., Ltd. • HIRANO K&E Co., Ltd.

Number of Employees

320 (Consolidated: 416, as of end-June 2023)

Securities Code6245 (Industry: Machinery)2

Results Highlights
1Q FY2023 results

FY2023 earnings forecasts
1Q FY2023

Net Sales¥12,584mn

Operating Income¥629mnOperating Income
Margin5.0%

YoY＋¥3,358mn＋36.4％-¥45mn-6.7％-2.3pts

FY2023 forecasts
Net Sales¥41,000mn

Operating Income¥2,920mn

Operating Income
Margin7.1%

YoY-¥1,423mn-3.4％-¥173mn-5.6％-0.2pts

Topics1Q FY2023 results✓ Net sales rise on capture of demand for lithium-ion battery-use anode coating equipment in the Coating and Laminating Machinery
Segment and for semiconductor materials-use coating machinery such as for multi-layer ceramic capacitors (MLCC) and polyimide films
in the Industrial Machinery Segment✓ Operating income margin falls on sharp rise in costs (mainly for industrial materials and personnel)

FY2023 earnings
forecasts✓ Expect slight YoY decline in net sales as a consequence of sales booking postponement resulting from change in clients’ delivery
locations✓ Expect a similar slight YoY decline in operating income despite efforts to pass through higher costs via price negotiations where
necessary✓ No change to either the net sales or operating income forecasts
3

1Q FY2023 Results

Overview of 1Q FY2023 Results
1Q FY2023 results

1Q FY2023 results overview✓ Large 1Q order decline owed to the concurrence of strong advance orders
in FY2022 and earlier, particularly for lithium-ion battery-use anode
coating equipment, weak orders as client closely monitored prices, andspecification adjustments for changes in clients’ delivery locations

1Q FY22

1Q FY23

Change

YoY %

a

b

b-a

(b-a)/a25,838

1,812-24,025-93.0％Net Sales

9,226

12,584+3,358+36.4％

Operating
Income

674

629

-45

-6.7％

Operating
Income Margin

7.3％

5.0％

-2.3pts-

Ordinary Income

734

675

-58

-8.0％

Ordinary Income
Margin8.0％

5.4％-2.6pts-

Net Income

505

467

-37

-7.5％

Net Income
Margin5.5％

3.7％-1.8pts-(Unit: ¥million)

Orders✓ Net sales rise on capture of demand for lithium-ion battery-use anode
coating equipment in the Coating and Laminating Machinery Segment andfor semiconductor materials-use coating machinery such as for MLCC andpolyimide films in the Industrial Machinery Segment✓ Operating income margin falls on sharp rise in costs (mainly for industrial
materials and personnel)

boostordersfromto2Q
FY2023✓ Initiatives
We will step toup thefollowing
initiatives
respondto further increase in✓ We will step up the following initiatives to respond to further increase indemand, particularly for EV-use lithium-ion batteries:• Shrink design times via the sharing and standardization ofcomponents• Search for business partners• Boost production capacity

5

1Q FY2023 Results by Segment(Unit: ¥million)
OrdersConsolidated total

Net Sales
Operating Income
Operating Income Margin
OrdersCoating and Laminating
Machinery Segment

Net Sales
Operating Income*2
Operating Income Margin
OrdersIndustrial Machinery
Segment

Net Sales
Operating Income*2
Operating Income Margin
OrdersOthers, Adjustments

Net Sales
Operating Income*2

Operating Income Margin

1Q FY22

1Q FY23ab

25,838
9,226
674*1
7.3％
24,499
6,657
485
7.3％
715
2,262
429
19.0％
623
306
25
8.3％

1,812
12,584
629*1
5.0％
849
10,441
650
6.2％
626
1,720
287
16.7％
337
422
20
4.8％

ChangeYoY %b-a(b-a)/a-24,025＋3,358-45-2.3pts-23,650＋3,784165-1.1pts
-89
-542
-142
-2.3pts
-286
＋116
-5
-3.5pts-93.0%+36.4％-6.7％-96.5％+56.8％+34.1％-12.5％-24.0％-33.1％-45.9％+38.0％-21.1％-*1 After adjustment for SG&A not assignable to any reporting segment*2 Operating income equivalent to segment profit in the quarterly results report.

6Factors for Change in 1Q FY2023 Operating Income(Unit: ¥million)

Operating income
rises on higher sales

Operating income
falls on inability tooffset fixed costs
from sales decline

7

1Q FY2023 Balance Sheet
Assets(Unit: ¥million)

End-FY2022

Current Assets

End-1Q FY2023

Value

Value

ChangeCurrent Assets

48,15846,309-1,848Fixed Assets
Tangible Fixed
AssetsIntangible Fixed
AssetsInvestments andOther Assets
Total Assets

12,363

12,925

＋562

7,408

7,476

＋67

672

632

-39

4,283

4,816

＋533

60,522

59,235＋562

Current Liabilities

23,42821,781‐1,647

Fixed Liabilities

1,096

1,026

-70

Net Assets

35,99736,428

+431

59.5

61.5

+2.0pts

Equity Ratio (%)

Down ¥1,848mn✓ Sales receivables and contract assets up ¥3,628mn due to rise in net sales✓ Cash and deposits related to production activity down ¥1,076mn, advancepayments down ¥1,030mn✓ In Other Assets, consumption tax receivable down ¥1,359mn on consumption
tax return, ¥2,099mn in marketable securities reaching maturity

Fixed Assets Up ¥562mn✓ Investment securities up ¥546mn on higher valuation of securities holdings

Liabilities
Current Liabilities Down ¥1,647mn✓ Procurement liabilities up ¥1,543mn on rise in production activity✓ Short-term borrowings down ¥3,490mn

Fixed Liabilities

Down ¥70mn

Net Assets
Net Assets

Up ¥431mn

8Change in Notes and Accounts Receivable - Trade, and Contract
Assets, and Electronically Recorded Monetary Claims - Operating(Unit: ¥million)

Accounts receivable

Contract assets

9

1Q FY2023 Results by Segment

Order Backlog, Net Sales, and Orders in the Coating and Laminating Machinery Segment
Order backlog, net sales, and orders in the Coating and
Laminating Machinery Segment

Highlights in the Coating and Laminating Machinery Segment(Unit: ¥million)
Order backlog

Net sales

Orders90,00080,000Marketconditions✓ Solid growth in the lithium-ion battery market(particularly in the EV market), growth expectations forNorth America and Southeast Asia

Orders✓ Orders increased in FY2022 on advance orders inanticipation of continued growth in the EV market, with aresulting fallback this year, as well as weak orders as client
closely monitored prices, and specification adjustments
for changes in clients’ delivery locations

70,00060,00050,00040,000✓ Aim to work through the order backlog, develop andstrengthen business partnerships, boost production
capacity, and pursue sharing and standardization ofcomponents to tap into expected further market growth

30,00020,00010,000
0
FY20
FY21
FY22
FY23
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q 2Q 3Q 4Q 1Q 2Q2 3Q3 4Q4 1Q 2Q3 3Q2 4Q2 1Q
1Q
FY20

FY21

FY22

Net sales✓ Net sales up YoY, mainly in energy-related areas, on
progress in working through orders generated by increasein production volume

FY23

11

Order Backlog, Net Sales, and Orders in the Industrial Machinery Segment
Order backlog, net sales, and orders in the Industrial
Machinery Segment

Highlights in the Industrial Machinery Segment(Unit: ¥million)
Order backlog

Net sales

Orders

18,000Marketconditions

16,000✓ Market being driven by film making systems forsemiconductor materials applications, such as MLCC andpolyimide films✓ Demand rising particularly in China

14,00012,00010,0008,000

Orders✓ Orders declined YoY despite receipt of orders from clientsin regions such as Japan and China

Net sales✓ Net sales down YoY despite film making systems forelectronic materials applications becoming the main focus

6,000

4,000
2,000
0
FY21
FY22
FY23
FY24
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q 2Q 3Q 4Q 1Q 2Q2 3Q3 4Q4 1Q 2Q5 3Q6 4Q7 1Q
1Q
FY20

FY21

FY22

FY23

12

FY2023 Outlook

Main Assumptions on Business Conditions
All-company✓ Monitor client-side capex trends and continue to improve lead time management and productivity in order to achieve medium- to long-term growth bytapping into new market demand✓ Expect full-year net sales to fall YoY owing to delivery delays necessitated by adjustment in product specifications in line with change in clients’ delivery
locations✓ Expect a similar YoY decline in operating income despite efforts to pass through higher costs after price negotiations where necessary

Coating and Laminating Machinery Segment✓ Lithium-ion battery demand solid and expect further growth. Notable expansion especially in North American market and plant already established in theregion to respond to this. Expect start up of turnkey projects and strong maintenance demand going forward.
✓ While Hirano Tecseed is renowned as a global leading company particularly for lithium-ion battery-use anode coating equipment owing to its high technicalproficiency, lead times are lengthening due to a shortage of production capacity✓ To address this, we will step up efforts to shrink design times via sharing and standardization of components, search for business partners, and boost
production capacity

Industrial Machinery Segment✓ Earnings growth being driven by demand for film making systems for semiconductor materials applications such as MLCC and polyimide films✓ Policy focused on maintaining and expanding MLCC share, where sustained market growth is expected14

FY2023 Earnings Forecasts
FY2022

FY2023(Unit: ¥million)ab

Net Sales

42,423Operating Income

YoY
Change b-a

YoY % (b-a)/a

41,000-1,423

-3.4%

3,093

2,920

-173

-5.6%

Operating Income Margin

7.3％

7.1%

-0.2pts-

Ordinary Income

3,219

3,000

-219

-6.8％

Ordinary Income Margin

7.6%

7.3%

-0.3pts-

Net Income

2,243

2,100

-1.4

-6.2%

Net Income Margin

5.3%

5.1%

-0.2pts

-

ROE

6.4%

5.8%

-0.6pts

Dividends Per Share

¥56

¥56

¥0

15

FY2023 R&D Expenditure, Capex, and Depreciation Expenses
R&D expenditure

Capex and depreciation expenditure (consolidated)(Unit: ¥million)(Unit: ¥million)
Total

Capex

Industrial Machinery Segment

Depreciation expenditure

1,500

Coating and Laminating Machinery Segment
400

1,000

300
142

144

119

200

1,500
380

1,176
500

100

179

172

185

564

580

551

625

700

279
0

0
FY2020

FY2021
ActualFY2022

FY2023
Forecast

FY2020

FY2021
ActualFY2022

FY2023
Forecast

16

Future Initiatives

Coating process and product/service area
✓ A global leader in the manufacture of coating machinery (coaters) that handle everything from unwinding, coating, drying, andwinding on a single dedicated line

Product/service area
Materials

Preparation✓ Manufacture andprocurement of the basematerials and coating
solution materials✓ Blending of various
materials with particularproperties and the solvent

Unwinding✓ Unwinding of the basematerial

Film making

Coating✓ Application of the coating
solution to the basematerial✓

Post-processing・
Inspection✓ Post-processing of thecoated product, such as
slitting, and the inspection
process

Drying✓ Drying of the coating
solution solvent

Commercialization✓ Shipped as anintermediate material orfinal productWinding✓ Winding of the coatedproduct

Requires expertise to apply
an even coating of thesolution to thin materials
such as films, metal foils,
papers, and fabrics

18

Business Model and Strengths/Characteristics✓ Strength in planning/design that matches the needs of leading global companies, provision of everything from marketing to after-sales services

Marketing

Planning/
Development

DesignManufacture/
Assembly

Installation

After-sales
services

In-house
manufacture of corecomponents

Business model

Outsourcing of mass-produced components

Business partners

Co. A

Co. B

Strengths/Characteristics✓ By producing to order ✓ Coating-industry✓ Designs by engineers with ✓ Component massand modifying products
leading cutting-edgestrong technical expertiseproduction andto match clients’technology
and knowledge enables
assembly outsourced
wishes, we can fullycompliance
with
a
range
of
to business partners✓ Cooperation with global
explore client needs
industryandclientneeds(fabless model)
leading companies via✓ Raise client satisfactionlevels via proposalbased marketingTechnicum and its test ✓ Creates high-precision✓ In-house manufacturemachines that can(accurateof core components
utilize clients’ materials
machining/control)that require advanced
manufacture/stable designs techniques

Co. C

Co. D

✓ Support for machinery
start up by dispatching
only engineers to client
plants✓ Shortening lead times
by raising thecompleteness of inhouse pilot production✓ Adaptable response toafter-sales service toraise client satisfactionlevels by establishment
of Customer Support
Division, assistance inmodifications,
machinery upgrades,
component supply

19

Main customer industries and final products✓ We develop a variety of hi-tech coating machinery for a broad range of markets

MLCC

Electronic
circuit boards

Solar cells

Lithium-ion
rechargeable batteries

Polyimide films

Electronicmaterials-related

Energy-related

Next-generation
batteries

High-performancefilmsHouseholdproduct-related

Display-related

Adhesive tapes

Non-wovenfabric products

Optical films, etc.

LCD displays

Smartphones

20

Long-Term Vision 2030: Our Objectives(reprint of materials published in May 2023)

Our objectives for FY2030

Global leader in coating machines～ Enhance corporate value by establishing a stable revenue base ～◼ Cutting-edge fields: No. 1 market share in energy and electronic materials◼ Globalization through expansion of overseas network from sales/manufacturing/maintenance◼ Contribute to industrial development and the global environment through coating technology
21Basic Principles: Key Strategic Themes(reprint of materials published in May 2023)

Key strategic themes to create a stable revenue base
1

Strong push toward
standardization/mass production

Raising overall profitability through the pursuit of shifts to standardized formats and mass
production models and the reduction in manufacturing costs by cutting raw material costs and thenumber of in-house processes

2

Enhancing customer service structure

Establishing a system of services to benefit customers as a one-stop shop for everything fromdevelopment, manufacturing, installation and ancillary work, pilot operations, and manufacturing
startup through to maintenance3

Continued strengthening of global
development

Continuing to expand our overseas network structure including marketing, manufacturing andmaintenance work through alliances with local partners, especially in North America, Europe, andAsia

4

Pursuing smart factory technologies

Strengthening technologies that contribute to labor saving, automated operations, and higher
productivity at customers’ factories via predictive maintenance and troubleshooting, with a focus
on remote technologies

5

Business development that embodies
market needs

Pioneering business development rooted in our core technologies that contributes to greater
functionality and advancement in production technologies in next-generation growth areas

Expanding human capital

Developing and expanding our workforce, particularly in our core strength of engineers, andcreating work environments and a corporate culture in which diverse human resources can get job
satisfaction

6

22

State of Key Strategic Themes as of 1Q FY2023✓ Gradually prepare measures that will take time to show results, while implementing fast-acting measures
Strong push toward
standardization/mass production✓ Machinery component standardization/sharing
Reduce design and production processes steps via component standardization/sharing using DX methods✓ Production of mass-produced components at overseas plants
Pursue manufacturing optimization by producing/assembling mass-produced components at overseas plants

2

Enhancing customer service structure✓ Create customer service structure to raise client satisfaction levels
Raise client satisfaction levels and diversify revenue streams by establishing Customer Support Division to
respond to modification, upgrade, component supply demand

3

Continued strengthening of global
development✓ Strengthen North American operations with an eye on further growth in the lithium-ion battery market
Start up North American base to capture untapped North American market and enable swift response toturnkey projects and after-sales maintenance. Pursue development of business partnerships.

1

4

Pursuing smart factory technologies

5

Business development that embodies
market needs

6

Expanding human capital✓ Pursue digital twinning via cooperation with Siemens (OTCM: SIEGY)
Pursue shorter lead times by embarking on digital twinning for the entire transportation/coating/drying
process✓ Remote diagnosis using edge computing technology
Pursue construction of a remote maintenance structure to respond to diverse needs✓ Joint development of high-value-added components with partner companies
Improve technological edge in the lithium-ion battery market through joint development of high-precision
bearings✓ Focus on EV peripheral machinery
Focus on growing market share in coating machinery for ceramics used in EV peripheral equipment✓ Train engineers in order to raise production capacity
Expedite training of engineers using video learning✓ Implement executive officer system, recruit external HR, reform director compensation structure
Implement executive officer system, recruit external HR in growth areas. Commitment to results via
introduction of earnings-linked compensation structure.
23

ROE Targets✓ Shareholders’ equity cost running above historical average, but ROE has recently fallen behind. Target ROE of 10% or more in 2030.
Current

FutureShareholders’ equity cost*

ROE

FY2022 actual

FY2022 actualLong-Term Vision 2030 target

6.8%～10.6%

6.4%

ROE 10 % or more

10-year average**

10-year average**

7.6%

8.2%

a level at which theequity spread is sustainable*Company estimate of shareholders’ equity cost based on CAPM**FY2013-FY2022

24

State of Current Initiatives and Future Initiatives✓ Implementing a variety of initiatives recently to raise corporate value. Aim to further expand disclosure going forward.
State of current initiatives
Long-term vision/
Growth strategies

Capital/Financial strategies✓ Long-Term Vision 2030 announced in May, fastacting measures implemented✓ Details of roadmap and schedule not yet announced✓ Direction of core growth investments in LongTerm Vision 2030 and shareholders returns
targets announced✓ Quantitative information such as investment
figures not yet announced✓ Executive officer system implemented

Organization/Governance

Sustainability

Future initiatives✓ Formulating medium-term business plan
including roadmap, schedule, KPI for
achievement of long-term vision✓ Aim for announcement in 1Q FY2024✓ Formulating capital allocation that balances
growth investment with shareholder returns
after consideration of optimal capital structure✓ Aim for announcement in 2Q FY2023✓ Director/executive officer compensation
structure reformed✓ Policy to promote improvement of governancebased on evaluation of the effectiveness of theboard of directors✓ Human capital initiatives announced in May✓ Policy to further expand/disclose human capital✓ Supply of coating machinery for lithium-ion
battery and other applications to assist inachievement of carbon neutrality✓ Focus on technological exploration inindustry/application areas likely to expand, suchas solid-state batteries
25Appendix

By Application ① Net Sales (quarterly)(Unit: ¥million)

14,00012,00010,000
8,000

6,000
4,000
2,000
0
1Q FY2021

2Q FY2021

Display-related

3Q FY2021

4Q FY2021

Electronic materials-related

1Q FY2022

2Q FY2022

Household product-related

3Q FY2022

4Q FY2022

Energy-related

1Q FY2023

Other

We applied Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the FY2021 consolidated accounting period. Figures for FY2021 are adjusted to reflect these standards.

27

By Application ② Orders (quarterly)(Unit: ¥million)

30,00025,00020,00015,00010,0005,000
01Q FY2021

2Q FY2021

Display-related

3Q FY2021

4Q FY2021

Electronic materials-related

1Q FY2022

2Q FY2022

Household product-related

3Q FY2022

4Q FY2022

Energy-related

1Q FY2023

Other

We applied Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the FY2021 consolidated accounting period. Figures for FY2021 are adjusted to reflect these standards.

28

By Application ③ Order Backlog (quarterly)(Unit: ¥million)

100,000
90,00080,00070,00060,00050,00040,00030,00020,00010,0000
1Q FY2021

2Q FY2021

Display-related

3Q FY2021

4Q FY2021

Electronic materials-related

1Q FY2022

2Q FY2022

Household product-related

3Q FY2022

4Q FY2022

Energy-related

1Q FY2023

Other

We applied Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the FY2021 consolidated accounting period. Figures for FY2021 are adjusted to reflect these standards.

29

Disclaimer
This document provides information intended solely to help readers’ understanding of HIRANO TECSEED CO., LTD.
Thus, we have no intention to solicit or encourage investment for securities or financial products mentioned in this document. Also, readers are advisedthat this document is not a disclosure document or statement of financial performance as required by Japan’s Financial Instruments and Exchange Act,Act on Investment Trusts and Investment Corporations, related cabinet orders, cabinet office ordinances or rules, the rules governing companies listed on
the Tokyo Stock Exchange, or any other applicable rules.
This document contains forward-looking statements, including forecasts of financial position, results of operations, and business-related matters, as well
as statements related to the plans and goals of the management of HIRANO TECSEED CO., LTD. There are a number of known and unknown risks anduncertainties that can cause its actual results or performance to differ materially from any explicit or implicit forecasts contained herein. These forwardlooking statements also rest on a number of assumptions with regard to our present and future management strategies, as well as the political andeconomical environments in which we will conduct its future business operations.
Although the information contained in this document is the best available at the time of publication, no assurances can be given regarding the accuracy,
certainty, validity or fairness of this information and we are not responsible for any error or inaccuracy in the information or data contained herein.
The content of this document can be modified or withdrawn without prior notice.

August 10, 2023
Contact:
General Affairs Division HIRANO TECSEED Co., Ltd .
https://www.hirano-tec.co.jp/en/contact/
Tel: +81-745-57-0681

2024/2/28

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