March 28, 2024

PRESS RELEASEKOITO MANUFACTURING CO., LTD.
Representative Director: Michiaki Kato, President(Stock Code: 7276 Prime Market, TSE)
Inquiries: Takahito Otake, Senior Managing Corporate Officer(Tel: +81-3-3443-7111)

Announcement Regarding the 1st Medium-Term Management Plan
KOITO MANUFACTURING CO., LTD. (“KOITO”) announces that KOITO resolved the 1st Medium-Term
Management Plan for the three-year period from FY2025 to FY2027 at the Board of Directors held on March 28,2024 as follows.
Please refer to the attached document for details.

1. Background the Formulation of the 1st Medium-Term Management Plan
In the automotive industry, there are concerns about a decline in the market share of Japanese OEMs in theglobal market, the increasing shift to EVs in China and elsewhere in the world, and the expected accelerationof the spread and advancement of ADAS (Advanced Driver Assistance Systems) and autonomous driving
technologies.
In addition, while population growth and rising income levels are expected in emerging countries, theexternal environment surrounding our company remains uncertain and is expected to become even morechallenging in the future due to soaring labor costs and declining labor force participation in developedcountries.
Under these circumstances, as the first step toward achieving KOITO VISION "Lighting the Way for Our
Sustainable Future" formulated in November 2022 and the "Management Plan 2030", we have formulated
the "1st Medium-Term Management Plan" with the basic policy of laying the foundation for significant
growth as a leading company of automotive lighting equipment by "strengthening profitability" throughinvestments in automation of production lines and other investments for future growth and rationalization.
2. Basic Policies of the 1st Medium-Term Management Plan
(1) Building a Strong Revenue Base・In order to build a strong revenue base, we will promote rationalization activities appropriate to eachplant, such as reviewing product design / structure and innovative manufacturing through make use ofdigital technology, such as automation of production lines, to further strengthen our competitiveness.
(2) Expansion of Sales and Production System・Achieve 5% CAGR growth on consolidated net sales through increasing sales to Japanese OEMs
exceeding the automotive market growth, as well as doubled sales to non-Japanese OEMs.
・In line with expansion of sales, we will strengthen our production system at multiple sites aroundthe world, including Mexico, Brazil, India, and Japan.
(3) Investment in Growth to Create Products and Technologies Required by Society
・Under the basic theme of "light", we will invest for the future growth, mainly in mobility business.
・Investment decisions are made based on appropriate criteria and processes, withdrawal conditions are set
for each investment, and monitoring is conducted regularly.

13. Financial Strategy(1) We will make proactive investments while securing financial soundness(2) We will implement buybacks for optimizing capital structure and implement shareholder returns bystably increasing dividend level.
4. Management Indicators
・Toward FY2031, we set targets for FY2027: net sales of 1 trillion yen or more, operating profit
margin of 8%, and ROIC and ROE of 9% or more.
FY2027
TargetFY2023
Actual＜Profitability＞
Net sales¥864.7 billion

FY2031
KOITO VISION¥1 trillion or more
CAGR 5%－CAGR 5%(FY2025-FY2027)

Operating profit margin＜Capital efficiency＞
ROICROE

5.4%

8%

10% or more6.6%
4.9%

9% or more
9% or more

10% or more
10% or more

5. Shareholder Return Policy(1) We aim to achieve shareholder returns of 200 billion yen or more (cumulative total for the five-year
period from FY2025 to FY2029).
(2) Regarding dividends, based on the basic policy of stable and continuous dividend payments,
we aim to maintain a consolidated dividend payout ratio of 40% or more.
In addition, as part of the above-mentioned shareholder return measures, the Board of Directors today
approved a resolution on matters related to the acquisition of own shares.
For details, please refer to the "Announcement Regarding Determination of Matters Related to Acquisitionof Own Shares" announced today.
(Reference)
In formulating the 1st Medium-Term Management Plan, we invited outside experts to the CapitalManagement Committee meeting (five times in total) to discuss medium- to long-term management
strategies.
Attendee of the Committee (3 external and 1 internal / Michiaki Kato, President and COO of KOITO)
Taneki Ono

New York State Attorney
Former Partner Managing Director of Goldman Sachs
Former Senior Managing Executive Officer of Japan Post Holdings Co., Ltd.
Outside Director of PCI Holdings, INC.
Outside Director of AVILEN, Inc.

Koji Nitto

Former Director, Senior Managing Executive Officer, Chief Financial Officer (CFO),Global Strategy HQ of OMRON Corporation
External Director of Wacoal Holdings Corp.
Director of Japan Association for CFOs
Member of Corporate Restructuring Study Group, Ministry of Economy, Trade andIndustry (FY2021)

Haruya Uehara

Outside Director of KOITO
Senior Advisor of Mitsubishi UFJ Trust and Banking Corporation2

Lighting for Your Safety

The 1st Medium-Term
Management Plan(FY2025-FY2027)

March 28, 2024
KOITO MANUFACTURING CO., LTD.

1 KOITO VISION
FY2031
Operating2030年度
Profit Margin

10% or more

ROEROE

10％以上% or more
10

営業利益率 10％以上
10％以上% or more
ROIC*
ROIC 10*ROIC= (operating income - income taxes)/average invested capital

Enforcement of Corporate Foundation

Sustainable Growth

Coexistence with the Earth and Society

Strengthen the corporate foundationby promoting activities aimed atenhancing reliability from all
stakeholders

Contribute to the reduction of traffic
accidents through the development ofworld-leading cutting-edge
technologies, and achieve Group's
growthBecome a company that is required bysociety through business activities that
contribute to resolving social issues*KOITO VISION was announced in November 2022.

2 External Environment
Economic and social situation◆Population growth and rising incomes in ASEAN countries,

Employment environment◆Soaring labor costs associated with inflation in various◆Increased geopolitical risks, such as U.S.-China Trade Friction

countries around the world◆Declining labor force in developed countries due to fallingbirthrates and aging populations◆Shortage of human resources in the manufacturing industry,
especially in the U.S.

Automotive industrySustainability

India, and other emerging economies◆Rise of Non-Japanese OEMs
◆The shift to EVs are increasing worldwide, mainly in China.

◆Prevention of global warming by realizing a decarbonized

On the other hand, there are signs of a return to HVs in someareas
◆Spread and advancement of ADAS and autonomous driving
technologies◆Accelerate efforts to realize a sustainable society(Prompt response to the business environment and improved
management transparency)

society (TCFD, GHG reduction)

Issues to be addressed by the company

Diversification of client
portfolio

Technical developmentbased on the characteristics
of each client/region
Long lamps, center lamps, ADB*, etc.
*Adaptive Driving Beam

Labor saving byautomation, and energy
saving by light weightproducts, etc.

Further strengthen
corporate governance3 Positioning and Basic Policies of the 1st Medium-Term Management Plan
■ Basic Policies of the 1st Medium-Term Management Plan:
Lighting the Way for Our Sustainable Future

As the first step toward achieving KOITO VISION, creating a foundation for
significant growth as a leading company of automotive lighting equipment by"strengthening profitability" through investments in automation of productionlines and other growth investments and rationalization

FY2031 (Forecast)
Operating profit margin
ROICROE

FY2027 (Forecast)
Operating profit margin

5%
FY2022-FY2024Gradually recover from the impactof automobile production decline
due to COVID-19, semiconductor
shortages, etc.
Sales recovers as automobile
production recovers
Rationalization activities wereimplemented in response todeteriorating earnings due to inflationand other factors

10% or more

8%

FY2023 (Result)Operating profit margin

Strengthening profitability

Significant growth

1st Medium-Term Management Plan(FY2025-FY2027)

2nd Medium-Term Management Plan
(FY2028-FY2031)

Strategy(1) Building a strong revenue base(Innovative product structure / manufacturing)
Strategy(2) Expansion of sales and production system(Continue to increase sales to Japanese OEMsand expand sales to non-Japanese OEMs, etc.)
Strategy(3)Investment for further growth to create
products and technologies required by thesociety

Begin reaping the results ofinvestments for growth
New businesses expected to drive
profit growth
Consolidated operating profit margin is
expected to recover to 10% or more,
due to improvement of profit margin in
the Americas, China, Japan, etc.

4.1 Strategy(1) Building a Strong Revenue Base
■ In order to build a strong revenue base, we will promote rationalization activities appropriate to each plantto further strengthen our competitiveness.
Reviewing product design / structure
Achieve cost reductions throughthe evolution of LED standard units

Target cost of LED Units

50% reduction

Current unit
(Benchmark)

Next unit(Market launch target for FY2027)

Promote innovative manufacturing through make use of digital technology, such as automation of production lines
30% reduction in manufacturing costs [Automation / Digitization / Optimization]
Components

Assembly
Preventive
maintenance

Logistics
TraceabilitySensor

AI camerainspection

Shipping
information
Automatedwarehouse

Processing-less Unmanned assembly

AGVAutomatization

Good or bad judgement with AI camera

Fully automatedAutomated loading / shipping warehouse

Digitalization

Prevent maintenance by utilizing DX

Strengthen procurement / manufacturing traceability
for quality assurance

Quick understanding production / shipping information

Optimization

Processing-less and treatment-lessProcessing-less and jig-lessShortest transportation time in the plant by using sensors

4.2 Strategy(2) Expansion of Sales and Production System■ Achieve 5% CAGR* growth on consolidated net sales through increasing sales to Japanese OEMs exceeding theautomotive market growth, as well as doubles sales to non-Japanese OEMs. *vs FY2023(mn vehicles)

100

Global Automobile
Production Volume(bn yen)

Net sales (Consolidated)

1,200

Non-Japanese OEMs

Non-Japanese OEMs

Japanese OEMs

Japanese OEMs

80
1,000

+80%+14%60

Initiatives to expand sales to non-Japanese OEMsU.S.
 Expect to increase in sales / share due to new orders mainly from U.S.
OEMs
(Sales to U.S. OEMs in FY2027 will be approx. double the FY2023 level)
China Strengthen sales activities to Chinese OEMs by utilizing
GUANGZHOU KOITO Technical Center （established in 2022）

40

 Develop new products (long lamps, etc.) and expect to increase
sales / share for Chinese OEMs.
(Sales to Chinese OEMs in FY2027 will be approx. double theFY2023 level)

800+16%+8%2006000
FY2023(Result)

FY2027(Our estimate)

FY2023(Result)

FY2027(Target)

Long rear combination lamp with animation
function (Prototype)4.2 Strategy(2) Expansion of Sales and Production System■ In line with expansion of sales and market share mainly from non-Japanese OEMs,
strengthen our production systems at multiple sites around the world
Americas
6000
3100



In anticipation of solid market Trends in net sales / automobile production volume
2600(Americas)
5000
growth in the South America,+12%
our customers are revitalizing
2100
Automobile production
4000
capital investment, includingvolume1600
the construction of new3000
Sales for non-Japanese
production lines in Mexico,
1100
+31%
OEMs
Brazil, and other countries
2000
Sales for Japanese OEMs
600
Aim to increase orders,we also began considering
1000
expansion our plants in0
Mexico and Brazil.
Expand production capacity
overall in the Americas
600





Gujarat Plant in the western
500
India started operations to400
catch up with the growing
demand in India, which has
300
become the world's mostpopulous country200

Top-of-the-line plant with inspection robots utilizing cameras and AI(Natori City, Miyagi Pref. / scheduled to start operation in the fiscal year ending
March 31, 2027)
Apply as a model plant for automated equipment and horizontally spreadknow-how to other factories

Trends in capital investment (Consolidated)180.0 bn yen
5.0(Europe) ・Start operation of Gujarat Plant in the westernIndia
25.0（Asia）+80%
・Introduction of process combination equipment

100*Salesdoesn’t eliminate
inter-segment sales-400

FY2023（Result）

FY2027（Target）

15.0(China)India

102.0 bn yen

・Plant expansion in Mexico and Brazil
・Automation of manufacturing / transportation
processes in the U.S.

700

Automobile production
volume500
+67%

80.0
（Japan）

Sales for non-JapaneseOEMs

Sales for Japanese OEMs
300

Started operation in March
1002024*Sales doesn’t eliminate
inter-segment sales0100

FY2023（Result）

FY2027（Target）

55.0

・Capital investment in new products such as
long lamps
・Introduction of process integration equipment（Americas）

Trends in net sales / automobile production volume(India)

+14%

Japan

Cumulative total for
FY2021-2023

・Establishment of a new plant in the Tohoku
region (Top-of-the-line plant using robots / AI)・Capital investment for carbon neutrality andDX, etc.

Cumulative total for
FY2025-2027*Unit in the graph is bn yen

4.3 Strategy(3) Investment in Growth to Create Products andTechnologies Required by Society■ Under the basic theme of “light”, invest for the future growth, mainly in mobility business

Growth investments
Total investment：
50.0 bn yen for 3 years

Investment decision criteria and process
Make investment decisions based on appropriate criteria and processes
Establish withdrawal conditions for each investment and monitor them regularly

Investment decision criteria
 R&D investment in new businesses
 M&A will also be conducted if it isdetermined that it will lead tosustainable growth in the future Aggressively invest in carbon neutrality
as part of ESG investments

Future prospects
ROIC（8% or more）

Market size,
technologicalcapabilities,order probability, etc.

Cost structure（Break-even point）

Decision process in making investment
Each department incharge ofinvestment projects

Investment
Conference

Board ofDirectors

5 Medium-Term Business Plan / Operating Profit Margin Forecast by Segment■ Aim for consolidated overall CAGR of 5% or more through growth mainly in Japan and the U.S.
Consolidated
FY2023China（OPM）
FY2023

FY2027

3.4% → 5%Europe(Operating income )FY2023 -0.6 bn yen

864.7 bn yen

1 tn yen or more↓

Asia（OPM）
FY2023
FY2027

10.0% → 10%

Maintain a high profit
structure(Expansion of plantin India)* Above number doesn’t eliminate inter-segment income(Changes)(+16% or more)

Operating income 46.8 bn yen

80.0 bn yen or more (+71% or more)

Operating profit margin

8%

5.4%

In addition to downsizing,strengthen profitability
through unique Chinese
strategies

FY2027 -0.5 bn yen
Aim to be profitable fromFY2028 onwards

Net sales

FY2027

JapanAmericas（Non-consolidated）（OPM）
FY2023
FY2027（OPM）
FY2023
FY2027

4.1% → 6%Establishment ofproduction system(Efficiencyimprovement)

0.6% → 5%

Improvement and expansionof production system(Capacity increase /Efficiencyimprovement)

6 Business Strategies to Improve Profitability (Consolidated)■ Achieve sales growth of approximately 5% per year, mainly in Japan and the U.S., while absorbing the impact of increased fixed costs
through rationalization and improving operating profit margin
Net sales / Operating income(Consolidated)

FY2023

FY2027

Net sales

864.7 bn yen

Operating income(Operating profit margin)

46.8 bn yen(5.4%)

Changes
From FY2023%1 tn yen or more

+135.3 bn yen or more

+16% or more

80.0 bn yen or more
(8%)+33.2 bn yen or more-+71% or more(+2.6%)FY2027 Analysis of consolidated operating income (vs FY2023)(bn yen)+33.2 bn yen Fixed costs ： Increase in depreciation and R&D expenses, etc.
 Others ： Labor-saving through automation of production lines, cost reduction of new products,

46.8

reducing power consumption through CN investment, improving the efficiency of indirect
operations by promoting DX, etc.

80.0

7 Financial Strategies<Basic Policy>
1. Make proactive investments while securing financial soundness
2. Implement buybacks for optimizing capital structure and implement shareholder returns by stably increasing
dividend level
Ensure financial soundness(2 months of monthly sales)
Cash flows from operating activities
FY2025-FY2027 (cumulative total for 3 years)

250.0 - 300.0 bn yen

180.0 bn yen
Cash flows from investing activities
FY2025-FY2027 (cumulative total for 3 years)

230.0 bn yen
Base business Investments
180.0 bn yen

Cash and cash equivalents
End of March 2024 (Forecast)

Included in theMedium-Term Plan

Strategic investments(Including M&A) Not included in theMedium-Term Plan
50.0 bn yen

320.0 bn yen
Shareholder return
FY2025-FY2029 (cumulative total for 5 years)

200.0 bn yen or more

8 Management KPIs
 Targets for FY2027 : Net sales of 1tn yen or more, operating profit margin of 8%, ROIC / ROE of 9% or more
 Aim for an operating profit margin of 10% or more, ROIC / ROE of 10% or more in FY2031

FY2023Results

FY2027
TargetFY2031
KOITO VISION<Profitability>
Net sales

864.7 bn yen

1 tn yen or more

-CAGR 5%

CAGR 5%(FY2025-FY2027)

5.4%

8%

10% or more

ROIC

6.6%

9% or more

10% or more

ROE

4.9%

9% or more

10% or more

Operating profit margin<Capital efficiency>

9 Shareholder Return Policy<Basic Policy>
1. Aim to achieve shareholder returns of 200 billion yen or more(cumulative total for 5 years from FY2025 to FY2029)
2. Regarding dividends, based on our policy of paying stable and continuous dividends, aim for a dividendpayout ratio of 40% or more(bn yen)Total amount of dividends(%)

Dividend payout ratio

40% or more

16144035

30.3%

1230

22.6%

1020.0%

20.3%

25

21.4%

820
14.7

6

11.5

4

8.0

8.6

9.0

Dividend
payoutratio of40% ormore

2

15
10500
FY2019FY2020

FY2021

FY2022

FY2023

FY2024-

10 Corporate Governance
Review of executive compensation system
 Aim for a system that is aware of long-term stock price, incorporate a compensation system linked
to stock price, such as TSR*, etc.
*Total Shareholder ReturnComposition of Board of Directors
Proportion ofOutside Independent Directors

4

 To enhance corporate governance, increase the percentage ofIndependent Outside and women Directors to improve the effectivenessof the Board of Directors, and pursue opportunities for discussion from awide variety of perspectives
 Continuing to strengthen the system with an eye on global standards

64 Outside Independent Directors out of 10 total members(2 women Outside Independent Directors out of 4)
Outside Independent Directors*Directors will be proposed at the general meeting of shareholders to be scheduled on June 27, 2024.

Disclaimer

This presentation contains forward-looking statements concerning
KOITO MANUFACTURING CO., LTD. and its consolidated subsidiaries’
future plans and performance, which are based on assumptions fromavailable information at the present moment.
Furthermore, they are subject to a number of risks and uncertainties
including, but not limited to economic conditions, worldwide competitionin the automotive industry, market trends, foreign currency exchange
rates, tax rules, regulations and other factors.
Koito therefore wishes to caution readers that actual results may differ
from our forecasts.