Supplementary Material
on Financial Results

Management Strategy for Future

May 22, 2023
SHIBAURA MACHINE CO., LTD.

Management Strategy for Future1) Management Reform Plan and ProgressEvaluation
2) Management Reform Plan - Tasks for FY2023
3) Next Medium-Term Management Plan

BSF : LiB separator film production lines2Management Reform Plan andProgress Evaluation

3

Framework of "Management Reform Plan"
Quantitative
Targets
Target Values
for FY2023
Consolidated basis

Sales

135 billion yen

Payout Ratio

Operating ProfitRatio

Prospect of 40%

8.0%(During the period of“Management Reform Plan”)

ROE8.5%[Management Reforms Centered on Reorganization]

SpecificMeasures(1)

Abolish the “division system” and employ “company system” to further promote total optimization even.

(2)

Establish am “R&D Center” and “Production Center” which bear enhancement of production efficiency andQCD* as common.

(3)

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](4) Promotion of growth investments aimed for expansion of purposes to fields expected to grown in the future.
*QCD: Quality, Cost, Delivery

Investment plan/
Financialstrategies[Implement a Financial Strategies Aimed for Enhancement of Return On Equity (ROE)](5) Allot cash-on-hand to investments towards change into a profitable company, and enhance profitability andcapital efficiency

4

Implementation Measures and Assumed Effects(Impact on Operating Profit)
Achieve the operating profit of 10.8 billion yen in FY2023 by steady implementation of thereduction of fixed cost and reduction of procurement cost through the management reform
centering on reorganization.
(Unit: 100 million yen)+70
Fixed cost reduction

Capital investment
and R&D/humaninvestment increase
portionVariablecost
cutting

Unprofitablebusiness
restriction

Investment
to increase
sales

Productivity
improvement/
revenue increase
effect108(8.0%)
340
2

15

1438
(Operating
profit ratio) (3.2%)

33

Outsourcing
cost andlaborcost
increase

Costreduction

2019

94

FY2018operatingprofitIncreased
depreciation
cost relating
to capital
investment

Increased
cost relating
to R&D andhumaninvestment

Personnel
reduction
throughvoluntary
retirement

Procurementcost(materialcost ratio)
cutting

ROE
4.9%

5

Businessorganization/officeconsolidation
effectSales
Effects ofpromotion
productivity
cost (agentimprovementcommissions,etc.)
increase

Revenue
Increase
effectOthers

FY2023Operatingprofit

ROE
8.5%

Management Reform Plan Measures and Progress2020
1st Half

Businessreform

2021
2nd Half

1st Half

2nd Half

1st Half

2023
2nd Half

1st Half

2nd Half●Organizational reform (establishment of company system, RDC, production center)●RDC (Consolidated to Sagami)

Businessmanagement

2022●Relocation of Head Office(Numazu to Tokyo)●Integration of Fuji Seiki●Management accounting system (visualization of business management)●Engineering department: New 3D-CAD system (DX)

Humanresources●New HR system (management)●Early voluntary retirement●New HR system (union members)●Sales activity management system
Sales reform●Closure of UK distributor●Service business Reinforcement initiative●Small injection molding machines: Shift production to overseas (Japan to China and Thailand)●Relocation of injection molding machines production department (Numazu to Sagami)
Plant reform●Shift production of general-purpose robots to overseas (Japan to China)〇New plant in India starts operation

Preparation / Design /Construction

6〇Logistic center business starts

Management Reform Plan's Evaluation(At End of 3rd Year)
management reform
measures
Company system(1)(Reorganization)

Progress evaluation (at end of 3rd year)
Fast as planned

Slower than planned• Nurture sense of unity, reduce overlapping tasks• Subsidiary reorganization

Improvement of• Different plants in and outside Japan used for(2) production efficiency
different models
and QCD• Integrate injection molding and die casting
businesses completely(for only manufacturing departments)—

Optimal resource• Early Voluntary retirement program(3) allocation—• Relocate personnel to extrusion machine business
Fixed cost reduction• M&A: Talks held with multiple enterprises, leading
to no successful contracts➔ Negotiations to be held continuously• Numazu Plant's reorganization ➔ Delayed withmore priority given to boosting extrusion machine
production(4) Growth investment• New plant in India(starts operations in latter half of 2023)• DX investment ➔ Gain to be reaped from now• Capital investment to boost extrusion machine
production(5) Financial strategies• Logistics (utilize plant grounds)—• Sell off unused recreational facilities for employees(6) Other• Extrusion machine business (BSF)'s growth7• Delayed sales, production in COVID-19• Surging procurement costs ➔ Impact detailed onnext page

Management Reform Plan
Effects of Reform for progress◼ Progress Evaluation at of the Year Ended March 31, 2023
Through negotiation of higher selling prices, we aim torecover a contribution to sales up to FY2023 of
3.0 billion yen

FY2021 cost UP (Result)
FY2022 cost UP (Result)
FY2023 cost UP (Forecast)

1.5 billion yen
2.0 billion yen
1.0 billion yen
4.5 billion yen

15.0 billion yen(FY2023 Forecast)

340
Deviation of approx. -6.0 billion yen(Operating profit ratio)

21438(3.2%)

1993

15

108 (Unit: 100 million yen)
(8.0%)

On target

20× M&A◎ BSF

Improved profitability of overseas
production plants

3Effects started to appear during thecourse of achievement

Deteriorated

4
Completed

FY2018operatingprofitROE
4.9%

Increased
Increased
depreciation cost relating
cost relating to R&D andto capital
human
investment
investment

Personnel
reduction
throughvoluntary
retirementOutsourcing
cost andlaborcost
increase

Cost
reduction

Business
Procurement
Sales
Effects oforganization/
cost
promotion productivity
office(material
cost (agent improvement
cost ratio) consolidation commissions,effectcuttingetc.)
increase

8Revenue
Increase
effectOthers

FY2023OperatingprofitROE
8.5%

Management Reform Plan
Tasks for FY2023

9

Probability for Sales Achievement for FY2023‛23 Sales
target◼ Transition of Order Backlog

1800

Unit: 100 million yen‛22 Sales

2092
Of which, 154.4
billion yen is for
extrusion machines

1231‛18 Sales

1174‛19 Sales‛21 Sales

1168‛20 Sales

1407

1077926
937

923
698

*
843

657

FY2017
Order backlog

2018
Order backlog

2019
Order backlog

Expected to achieve thetarget of 135 billion yen due
to increase in extrusion
machines sales

2020*
Order backlog

2021
Order backlog*Increase of order backlog due to the change of the revenue recognition criteria made in April 2021.

102022
Order backlog

Extrusion Machines Business Expansion■ Prediction of car-mounted LiB
capacity improvement◼ BSF sales prediction
Total car-mounted battery capacity estimated at 7300 GWhfor 2023-2030 period2025 ➔ 20305915 GWh
55 million units

2021 ➔ 2025

2780 GWh
2856Capacity per BSF line
100 million ㎡/year＝ 8 GWh/year (capacity, yield rate taken into account)
Needed unit number for FY2023-2030 period: about 912 lines(about 115 lines/year)

Current production capacity to be up from 4 lines to 6 lines(48 lines/year ➔ 72 lines/year)
Form alliance, framework by end of FY2024

10Secure annual sales of 100 to 150 billion yen through 2030
'19'20'21'25xEV sales forecast is quoted fromFuji Keizai Co., Ltd.(2022.8).

'30

Demand expected to grow in 2030 or later, too, giventhat more EVs, power storage stations, and otherfacilities are introduced under decarbonization trend

11Structural Reform of Existing Businesses
market growth potential

system to increase
production

Extrusion

Expand business into markets
additional China

Precision
Mobilize humanresources
Focus on high-margin
products• Globalized new models• Focus on markets in India, North
America, and Europe

Machine tools
Scale
down

Die casting
General-purpose
RobotsInjection
Integration of Injection and Die Casting
1: the manufacturing divisions [done].
2: the engineering divisions [In 1st half FY 2023].

Injection : Injection molding machines
Die casting : Die casting machines
Extrusion : Extrusion machines
Precision : High-precision machine tools

Business Scale12Expansion of India Market(Injection molding machines)
Sales promotion of injection molding machines
to the fast-growing India market
Increase of medium to large machines(In particular, for the automobile industry)•Growth of the markets of white goods, building materials,
containers, and automobiles is expected due to thepopulation growth.

•The Japanese automobile industry is expected to commencebusiness in India in several years time.

Demand for switching fromhydraulic machines to electric machines

Increased production of medium tolarge hydraulic machines•

Led by the medical/container industry and Japanese
automobile manufacturers•

Rate of electrification
FY2021 11.5% ⇒ After 10 years - 31.5% forecast

Start of production of small electric machines

Mid-April 2023 timeframe(Construction begins)Starts operationin 2nd half FY 2023

Currently 1,200 units/year ⇒ Plan to build a plant capable of producing up to4,000 units/year in combination with the current plant
Aiming for 3200 units/year at the start of operation

13

Progress of Investments(for operations in FY2023)◼ India plant (new)◼ MFLP Zama(Sagami logistics center)

Starts operation in 2nd half FY 2023

◼ India plant (Component processing facility forinjection molding machines)

Starts business in 2nd half FY 2023

◼ Component processing facility for LiB
separator film production lines
Screw element processing equipment

BM-1000Q

4 units to start operation in 1st half FY 2023
(2 of them are in operation)

Starts operation in 2nd half FY 2023

Vertical start-up of capital investment projects to help increase profits in FY2023
14

Developing New High-Value-Added Products
Shibaura Machine Group Solution Fair Oct. 31 (Tue.) - Nov. 2 (Thu.)-- Aim to realize a resource recycling society connected by advanced technologies -“Sustainability, circular economy and digitization”

1) Commitment to EVs (CASE) and other relevant fields
that play part in GX
Category

Abstract

Battery cover, separator, battery assembly process

IDEM

● ●PC

●

1

Secondary battery

2Car body,interior/exterior
designBiomass plastic, composite material, aluminum welding

3

Drive system

Motor cover and the like4

Self-driving
technology

Sensors (lenses), electric control system (CASE)

5Electric power

Power storage, wind power generation, smart grid

● ●6

FCVSeparator, electrode, hydrogen infrastructure facilities● ● ● ●

● ● ● ●●

2) Pursuing sustainability with DX
Systematize exhibited machines and propose high-value-added
solutions for customers by utilizing IoT

15

● ●

●

I : Injection molding machines
D : Die casting machines
E : Extrusion machines
M : Machine tools
P : High-precision machine tools
C : Control systems

Next Medium-TermManagement Plan(from FY2024)*The next medium-term management plan is currently being formulated and is not yet finalized.

16Megatrend
Growth market

ESG
management

Investment inIndia

E: Environment

World‘s largest population

Renewable energy

Decarbonizedsociety

Dwindlingbirthrate

Offshore wind
power generation

6 Chinese makers
among top 10companies

Intensified international competition

5th largest GDP(expected to place 3rd in 2027)

China plus 1

EV

Secondarybattery

Shrinkingworkforce

Automation,
labor reduction

Chinese makers
account for 60%

Personnel costs
Rising wages

Prolonged
Russia-Ukraine war

Higherenergy prices

Commodity
price hikes
Costs up

* Light blue sections in thick circles represent fields where our Group has chance of expanding our presence or profit

17

Contribution to Global Environment (Decarbonized Society)Business domain falls mainly into Ｅ (environment)
Power distribution,
recharging

Embed

DiscardRenewableenergySecondary battery
Storage battery

CASE(reduced weight, self-driving)• Turbine• Pivot• Separator film
• Battery assembly line

• Foaming, carbon fibermolding• Reduced bodycomponents' weight• Sensor lens for selfdriving technology

BSF, Robots

Large injection molding machines, diecasting machines
High-precision machine tools, controlsystems

Machine tools

Recycle• Chemical recycle

Extrusion machines

Expand business and improve profitability via offering high-value-added products tocontribute to better global environment

18

Response to Auto Industry Trend
EVChinaEurope• Promote EVs as part of national
policies to be game changer• Move to make engine-relevant
technologies obsolete• Japanese cars driven out of market?

Struggle for supremacy

Reduce CO2 emissions
New fuel-poweredcarEurope(such as Germany, Italy)

Hydrogen engine
carJapan (partially)• Do not want others to be game changer• Want to maintain engine technologies'superiority• Want to protect employment for affiliatedand partner companies

Demand for batteries Continuous engine use →Expand BSF

Constant demand fordie casting machines
To respond either way,
nurture human resources with multiple
techniques and skills
via flexible personnel relocation

19

Aluminum frame introduction as
another business opportunity

Response to Geopolitical Risks• Japanese and South Korean automakers are
moving to expand or install dedicated EV
assembly lines in U.S.
• Japanese automakers are moving to set up
joint ventures for battery production in U.S.

Consumers

U.S. IRA
Condition to receive
income tax credit whenpurchasing an EV.

Purchase
Automakers in nations
other than 3 countries
Made in

Our Company

Chinese filmmakers

EVs finished in 3countries

Loadedbattery

Chinese batterymakers

A certain percentage of battery parts
are manufactured in FTA states orNorth America.

Delivered

In response to moves above,•Cash in on demand with electrically powered injection molding machines, given activecapital investment in EVs in North America•

Establish sales channels for BSF in U.S., Europe, and India as means to evade geopolitical
risks

20

Automation and Labor Reduction◼ Robot density in manufacturing(by country)

Robot number per 10,000 workers
in manufacturing(units)1200

Source: Nikkei (April 4, 2023)

Automobile assembly lines' automation

Robot density higher for countries alarmed strongly
at population declines
South Korea
Robots more aggressively put inplace in Japan, China, given theirshrinking workforce

1000
800

Singapore

600

Japan

400

U.S.

200

China
France00.51

1.52 (births)

Total fertility rate (2020)

Collaborative dual-arm robot

hundred billion yen◼ Manufacturing robot market (global)
15102022

2027<Customers' merits>• No layout changes necessary for existing production lines

5• No safety fences necessary0• 2-worker process ➔ 1 worker + 1 robot
Welding,
painting

Actuator

Assembly,transfer

Clean transfer

Source: Fuji Keizai (April 25, 2023)

21

Portfolio Rearrangement for Achieving Record Profit

FY2006

Unit: 100 million yen

Achieve record high profit*

Estimate

Sales estimated at around 200 billion yen forseveral years to come on a continual basis,
as proceeds from our core earner, brisk
extrusion machine business, will becombined with those from other departments

180 billion
123

170

266

1231

91
296

1077
926

92

73

236

150
120

104
273

208

1415

70

57

772

35

42

643

755

00

859
20

4

19

20

Molding machines
Others21

Preferential
investment

2223

Machine tools
Elimination

24

25

26

Market growth potential

1167

00

00

Sales:
164.3 billion yen
Operating profit: 20.5 billion yen

Period for next mediumterm management plan00

00* Our Group's record high profitEquipment

Personnel
switchExtrusion

Business withsluggish growth

FY

Control systems
Operating profit ratio

Profitability, asset efficiency

-30

22

Rearrange business portfolio,
with extrusion machine
business at its center

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