Progress and Outlook ofMedium-term Business Plan
(April 2016 - March 2019)
July 5, 2017

ZUKEN Inc.
Tokyo Stock Exchange, First Section
Securities code: 6947

Contents

 First-year Progress Report for the Medium-term Plan
 Product Category and Regional (Overseas) Performance Overview and Outlook

1

First-year Progress Report for the Medium-term Plan

1. Medium-term Sales and Earnings Targets and Results for FY3/17
Millions of yen

Sales

Operating Profit

Millions of yen

4,000

30,00026,00025,00021,952

22,700 22,199

24,000
3,000

2,600

YoY

20,000

(+1%)

1,900

2,000

15,0001,500
10,0001,000775

1,596
YoY(+106%)5,00000
Mar. 2016(Results)

Mar. 2017
Mar. 2017
Mar. 2017(Plan)(Results)

Mar. 2018(Plan)

Mar. 2019(Plan)

Mar. 2016(Results)

Mar. 2017
Mar. 2017
Mar. 2017(Plan)(Results)

Mar. 2018(Plan)

Foreign exchange rate assumptions for FY3/17 were 110 yen/USD and 125 yen/EUR.
Average exchange rates in FY3/17 were 108 yen/USD and 119 yen/EUR.

3

Mar. 2019(Plan)

2. Financial Summary (1998 - 2017)
Sales and Operating Profit

Billions of yen

24.0

Sales

22.0

19.0

15.0

16.0

17.0

19.0

18.0
15.0

14.0

16.0
14.0

15.0

Operating profit
21.0 21.0

19.0
17.0 17.0

16.0

18.0

22.1

19.0

12.0

9.5

17.0

7.0
Billions of yen

9.0

4.5

2.1
4.0

0.9 1.0

2.0 1.9 1.9

1.3

2.8
1.4
0.8

0.1
0

2.3

0.2

-0.3 0.2

0.3 0.6

-1.0

4

1.0

0.7

1.5 2.0
0-0.5

Sales reached new record high3. Components of Change in Sales from FY3/16 to FY3/17 (1)Billions of yen

0.51(0.86)

0.46

0.13
Zuken
21.9
(Operating profit: 0.77)

Groupcompaniesin Japan

Overseassubsidiaries

Foreignexchange
impact(Note)(Operating profit: 1.59）

FY3/16
Average exchange rates in FY3/16 were 120 yen/USD and 133 yen/EUR.
Average exchange rates in FY3/17 were 108 yen/USD and 119 yen/EUR.
Note: Impact of foreign exchange rates on sales of overseas subsidiaries

522.1

FY3/17

3. Components of Change in Sales from FY3/16 to FY3/17 (2)FY3/16

FY3/17

Millions of yen(Ratio to total sales)(Ratio to total sales)

Zuken (Parent company)

8,754

8,885(40%)(40%)

Overseas subsidiaries

6,991

6,642(32%)(30%)

Group companies in Japan

6,206

6,670(28%)(30%)

Operating profit

FY3/16

FY3/17

YoYchangeZuken (Parent company)

431

546+115

Overseas subsidiaries

34484+449

Group companies in Japan319

492+172

Millions of yen* Excludes transactions among group companies.

6YoYchangeSales (*)

+131(348)+464

4. The Zuken Group Business Domains
Networksecurity

Electronic Design Automation(EDA)

Enterprise PLM Solutions(PLM and other solutions)

Solutions and services for
implementation and designs requiredfor developing electronic products

BOM, knowledge management andother enterprise IT solutions andservices for manufacturers

Embedded
SW/IP

7Solutions for Electrical/Control
Designs and Mechanical
Designs(Wire harness CAD/3D CAD andother products)
Electrical and control designs for vehicles
and industrial machinery
Solutions and services for 3D mechanicaldesigns

Services andother support

Zuken Tec

5. Reinforcing Operations for the Age of IoT Manufacturing(1) Focus on System Design

Society Based on the IoT“Connected” Products

Innovation in NPI*
Required by Customers

Model-Based System Engineering
Model-Based Development(2) Enhance System Integration Capability
Convergence of solutions and process consulting
Not excluding integration of third parties’ technologies
 Platform strategy(3) Extensive Involvement in R&D Projectsof Advanced Technologies
i.e. Open innovation (with universities and othercompanies)*NPI: New Product Introduction

Use Zuken Group synergies, partnerships and M&A8

6. Zuken Group Synergies for the IoT Age
Society Based on the IoT“Connected” Products
Innovation in NPI
Required by Customers

Network Security
and Data Storage
Design and Analytic Engineering Support

Zuken Tec
IP and Other Embedded SW/HW for
Industrial and In-vehicle Networks“Smart Factories, Smart Engineering”

Use all Zuken Group resources to supply a diverse array of infrastructure
products, elemental technologies and services required by the age of IoT
9Product Category and Regional (Overseas) Performance

Basic Policies and Core Strategies of Medium-term Business Plan

Create a new market for
E/E Designs PDM (Product Data Management )*E/E: Electrical & ElectronicAccelerate the business ofNext-generation Products with Automakers
Expand operations inNorth America and Asia
Use relationship with strategic customers in North America for development in the Asian supply chainPromote CR-8000 Design Force in the field of

Cutting-edge LSI, Packaging, PCB Technologies11Timely M&A
to consolidate the business foundations and take on the challengeof additional 1.0 billion yen sales

7. FY3/17 Sales by Product Category and Region (vs. FY3/16)
Sales by Product Category
Millions of yen(Pct. Changes)

25,00020,00015,00010,0005,000

21,952

22,199

3,940

3,699

4,545

4,497

4,471

4,701

(Pct. Changes)

25,000

(-6%)

(-1%)

20,00015,00021,952

22,199

1,182
4,339

1,426

(+21%)

3,965

(-8%)

1,619

1,469(-9%)

14,81015,338

FY3/16(Results)

FY3/17(Results)(+5%)

10,000

8,994

9,300

FY3/16(Results)

FY3/17(Results)

0(+3%)

5,0000Printed Circuit Board design solutions
Circuit design and IC solutions
IT solutions
Client services and others

12Sales by Region

Millions of yenAmericas

EuropeAverage exchange rates in FY3/16 were 120 yen/USD and 133 yen/EUR.
Average exchange rates in FY3/17 were 108 yen/USD and 119 yen/EUR.

AsiaJapan( +4%)

Major Products by Product Category and Related Group Companies
Major products by product category
Product Category

Printed Circuit Board designsolutions

CR-8000 Design Force
CR-8000 DFM Center
CR-5000 Board Designer

Circuit design and IC solutions

CR-8000 Design Gateway
CR-8000 System Planner
E3.series
Cabling Designer
Harness Designer

IT solutions
Client services and others

13Major Products

visual BOM
Knowledge Explorer
DS-2

Zuken Tec

Zuken Tec

Zuken Tec

Maintenance services for each productProduct Categories Used for the Medium-term Plan Explanation
The following product categories are used in discussions of the medium-term planin order to show more clearly the relationships between product categories in IR
materials and progress toward business performance goals.
Medium-term plan categories

Printed Circuit Board design solutions
Circuit design and IC solutions
IT solutions
Client services

14(1) Design Automation(2) Data Management Solutions

8. FY3/17 Sales by Product Category (vs. FY3/16)

Product Category

YoY
growthrate

FY3/16

FY3/17

YoYchange14,826

14,492(334)-2%(4,153)(4,432)+278+7%Data Management Solutions

7,125

7,707

+581+8%

Total Sales

21,952

22,199+246+1%Millions of yen

Design Automation(of which WH Design)15

9. Product Category Sales and Initiatives (1)Design Automation

Sales(Millions of yen)

16,000(Design Automation Sales)(Pct. Changes)

14,826

14,492

（-2%）

4,432

WH
Design14,00012,00010,000

8,000
6,000
4,000

4,153（+7%）

2,000
0

FY3/1616

FY3/17

FY3/17 Overview
 Lower yen translations of Europe/US sales
due to the yen’s strength caused sales todecline; Europe and US sales both increased
on a local currency basis
 Sales to the automotive industry were strong
worldwide
Sales in the electronic component sector are
slowly recovering
Initiatives and Goals
 Concentrating on sales growth in theautomotive and industrial machinery sectors
due to increasing use of electrical parts and IT
manufacturing processes Growth in use of new technologies andprocesses is especially rapid in theautomotive industry – Translate theseopportunities into business growth9. Product Category Sales and Initiatives (2)Data Management Solutions

Sales(Data Management Solutions Sales)(Millions of yen)

(Pct. Changes)

10,000
8,000

7,125

7,707

6,000
4,000
2,000
0

FY3/1617

FY3/17（+8%）

FY3/17 Overview
 Significant increase in Japan in sales of thenetwork security business (at ZukenNetWave) Received orders from major customers inNorth America and China for the core DS-2
data management system
Initiatives and Goals
 Start selling the new DS-E3 in Europe first,
mainly to major E3 users; start selling DS-E3
in Japan in the second half of FY3/18
 Start global marketing for the DS-E3 as aplatform product for electric and electronic(E/E) design data management
 Anticipate strong demand in network
security and PLM (Products LifecycleManagement) in association with growth ofthe IoT

Topics: E/E Design Data Management Solutions
Announcement of New Product
Data Management System
Proprietary forZuken’s PCB Design Solutions

Expand the Scope of System asElectric/Electronic Design DataManagement Platform to cover
Wire Harnesses Design
Sales of the DS-E3 started in Germany in May 2017 and are scheduled to begin
in Japan in October. Plan to sell this new system to major E3.series users in
Europe and North America, where the E3.series are widely used.

18

10. Overseas Sales and Initiatives
FY3/17 Overview

Overseas BusinessMillions of yen

8,000

6,000

4,000

Sales by Region(Pct. Changes)

7,141

6,860 （-4%）

1,182

1,426 （+21%）

4,339

3,965 （ -8%）

2,000

1,619

1,469 （ -9%）

FY3/16

FY3/170Americas

19EuropeAsia

 Americas – Strong sales, mainly for the E3 .series
 Europe – Firm demand for Zuken products among
existing key customers in the industrial machinery,automotive components and other industries(local currency sales up 4%)
 Asia – Strong orders from automotive components
companies in China and government owned
aerospace companies in India, but sales to major
Korean customers and Japanese companies in SE
Asia were down

Initiatives and Goals
 Americas –Increase data management productsales by continuing to focus on capturing orders
from strategic customers
 Europe – Reinforce marketing of new data
management products; promote key customers
migrate from CR-5000 to CR-8000
 Asia – Diversify customer segments in China andIndia to build a base for steady growth; strengthen
sales activities for local companies in SEA

Overview and Outlook

11. Medium-term Business Plan First-year Overview and Outlook
 Market conditions in Japan are slowly recovering.
Companies continue to make substantial investments in
new technologies and processes, specially in theautomotive and IoT related business sectors.
 Drive growth in Europe and North America with key
strategic customers by creating proposals for migrating to
the CR-8000 and through active promotion of the new DSE3 data management system.
 In Asia, although there is uncertainty over the market
conditions, aim to increase sales backed by India, wheredemand to our solutions is strong, and other sources ofgrowth.
No change in the medium-term sales and earnings targets.
21

12. Shareholder Distributions
Distributing profits to shareholders is one of the highest management priorities of the Zuken Group.
We will continue to consider suitable and highly effective methods of returning earnings toshareholders by taking into account business performance, operating conditions and other factors
while strengthening business foundation and financial soundness.

Policy

株主還元策の推移
Dividends and Purchasesof Treasury Stock

Commemorative/special
記念配当・特別配当 dividends
Purchase ofOrdinary
普通配当■自己株式取得
treasury shares
dividend（単位：円）
Unit: yen

1010110105101010Results Ordinary dividend

22101010

101010101010121414141414141720

2020

Purchase of treasury shares
Zuken has paid an annual dividend per share of at Jun. 2005 – Jun. 2006
2,000,000 shares
least ¥10 every year since its listing in 1987. TheNov. 2008 – Nov. 2009
636,500 shares
year-end dividend for FY3/15 was raised from ¥7 Feb. 2011 – Mar. 2011
2,000,000 sharesto ¥10, resulting in an annual dividend of ¥20
Total
4,636,500 shares
since FY3/16. Zuken plans to continue to increase(These shares were retired in
the dividend.
March 2011)
Commemorative dividend and special dividend
Commemorative dividends were paid in FY3/95
and FY3/06, and special dividend was paid inFY3/12. In FY3/16, a commemorative dividend of
10 yen per share was distributed.