FY2017 - FY2019

Mid-term management plan

November 15,2016
FUNAI ELECTRIC CO.,LTD Past 15-years Summary Summary of Mid-term plan

 Growth Strategy
 Optimize resources
 Sales Forecast

Past 15-years Summary
100 Million yen

Sales
5,000
4,000

3,000
2,000
1,0000FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

6004002000△ 200△ 400OPNet Profit

 Heavily relying on LCD-TV has caused unstableperformance.
 We aim to make more stable profit.

2 Summary of Mid-term plan

We need to be a stable and profitable company
in fierce business condition
DisplayBusinessNorth America：Maximize the value of Philips brand :UHD and lager size
Japan：Start the exclusive business with YAMADA DENKI

Digital MediaBusinessNorth America : Expand UHD-Blu-ray player
Japan：Start the exclusive business with YAMADA DENKI

Office solution
Business

Expand sales channels, Develop new products
Expand C&I(B to B) and Micro fluidic business

New Business

Launch some new business with partners by utilizing ourown technologies3 Growth Strategy
 Display Business(LCD-TV）

 Digital Media Business（DVD、BD）
 Office Solution Business（Printers）
 New Business Display Business - Current situation
 As for display business, the sale wastransitioning between 120 billion JPY and160 billion JPY; however, it is expected tomark under 100 billion JPY in FY2017.
 We faced fierce competition at retailstores in the U.S. Non-name products are
spreading in Mexico, which resulted in ourslow sales.
 Although Philips brand often declared
losses in the past due to the slow sales ofhotel business and inventory adjustmentof LE business, the performance has been
improving recently.

100 million yen

Display Business Sales
1,800

1,636

1,600

1,436

1,330

1,400

1,209

1,199

FY2012FY2013

1,421
1,203

1,200
1,000
800
600
4002000

FY2010FY2011FY2014FY2015FY2016FY2017

Boost the unit sales by re-vitalizing Philips brand5 Display Business - Growth Strategy
Product Lines

Develop the product lines that has clear differentiationin each brand and increase competitiveness in the priceand something extra.

Enter into
Japan market

Getting an exclusive sales agreement with Yamada
Denki, which has the largest sales channel in Japan. wewill avert a price competition among retail stores andbuild a strong profit base.

Product lines in FY2015

Product lines in FY20176 Display Business – Sales Forecast Key Driver North America：Boost shelf keeping unit (SKU) in existingretail stores by maximizing the value of Philips brand Japan：Start the exclusive business with YAMADA DENKI
100 million yean

North America

MexicoJapanFY2017

FY2018FY2019

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.01,600.07

 Digital Media Business - Growth Strategy
100 million yen

 Digital Media business has been ona downward trend due to themarket shrinkage of DVD/BDplayers, and the poor sales of OEMsin Japan.
 The sound bar has been growing,
but it has not yet been able toprevent the total sales fromdecreasing.

Digital Media Sales
800699700656626600

5004003583953033002592001000
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

North America：Launch low-price UHD Blu-ray player
Japan：Launch in-house products in YAMADA DENKI
8 Digital Media Business – Sales Forecast Key Driver BD-Player：Boost shelf keeping unit (SKU) by increasing
price competitiveness BD-Recorder：Increase the market share in Japan100 million yen

DVD-Player
BD-Recorder

DVD-RecorderSound bar

BD-Player
OthersBD-Player (UHD)

FY2017FY2018FY2019

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.09 Office Solution Business － Current Situation
 Low-range inkjet printer’s sales faced fierce competition.
 Consumable supplies are slower than expected, led by theincrease of mobile devices and the spread of SNS
 Consumable business style has been changing due to thewidespread installation of CISS which has an external tank.
(CISS=Continuous Ink Supply System)

We will aim for surplus in FY2019 by expansion ofsales channels, new products, and new OEM business.
10 Office Solution Business － Growth Strategy
 Open up new sales channels such as office retail stores Plan the products and the sales strategy for major eSales channels
commerce
 Develop the products that can be used with specialized
paper such as leather and labels

New products

Co-development products with partner and explore newmarkets with new concept that is not persistent with theexisting printers for individual use

OEMWe will utilize OEM’s channels and aim at entering intonew markets. This plan has already been underconsideration with some prospective partners.

 Enter into C&I (B to B) markets
We aim to enter into the C&I markets within 1-2 years. The long andstable demands for the printers and maintenance services can be expected.
We are now under consideration of the partnership agreements withseveral major companies.
11 Office Solution Business – Micro fluidics
 What’s Micro fluidics?
It is the technology that can dispense and control liquids in Pico litre (atrillionth of a litre) quantities with a very high degree of precision. Themarket applying this technology is expected to be $ 8.15 B (about 840
billion yen) in 2019 as shown below.

 Strategy
Co-development has already started
with several major global companies.
The launch into the market is
expected to be in FY2019. We will be
supplying tens of millions of headparts per year, which will bring us astable and high profit.

（Our Research）

12 Office Solution Business – Sales Forecast Key Driver Inkjet-printer : We aim to gain stable revenue by expansion
MIF.(machines in field)
 C&I and Micro fluidic : We will start in full swing in 2018 andpromote investment towards future rapid growth.
100 million

IJP Hard

IJP Ink

C&I

Micro fluidic

Others

FY2017FY2018IJP Hard

FY20190.0

20.0

IJP Ink

40.0

60.0

C&I

80.0

100.0

120.0

Micro fluidic

140.0

160.0

180.0

13 New Business - Growth Strategy and Sales Forecast Key Driver①Entertainment②Health care

Promote the projectto achieve low-costand double sales.

Start to develop thecomponents ofmotorized beds for
the U.S. and aim forshipment in 2017.

Medical
100 million

Entertainment④Automotivemarket③MedicalStart contracted
manufacture ofdental CTs in 2016
and aim for orders
for the European
model.

Health care

Production of car LCD
backlight isincreasing. Meet therequest for larger
and various LCDs.

Automotive marketOthers

FY2017FY2018FY2019
0.0

10.0

20.0

30.0

40.0

50.0

60.0

14

 Optimize resources Strengthen the financial position through the sale ofassets.
→①

Transfer of subsidiary shares（February 2017 as scheduled）②

Under consideration on the sale of fixed
assets.

 Improve profitability by reducing fixed costs15 Sales Forecast

Consolidated Sales
FY2017 Forecast
1,345

100 million

FY2019 Forecast
DisplayDigital Media

2,000

Office Solution

New Business

FY2017FY20182,000

FY2019

0200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,00016