FY2016-2020
Mid-term Business Plan
“ Value Creation 2020 ”
PUNCH SPIRIT～Return to the founder’s spirit～
March 11, 2016

（Security code：6165）

Contents

 Review of “ Value Creation１５ ”
 “ Value Creation 2020 “◆ Outline◆ Policy◆ Management Objectives
 Top Message

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

1

Review of “Value Creation 15”Performance results

x 10Sales(Billion JPY)

FY2015 Sales Over 32 Bil. JPY Operating income Over 2.0 Bil. JPY

4037.0Sales

3000.721.70.8

1052.0OperatingProfit
OrdinaryProfit

1.6

1.21.21.11.2

ROE 4.3％

1[ Ordinary Profit ]Increase +0.8 Bil JPY
Annual Rate 26.1%up[ Net Income ]Increae +0.9 Bil JPY
Annual Rate 77.9%up

0.2
FY2012[ Operating Profit ]Increase +1.2 Bil JPY
Annual Rate 41.4%up

1.7

Net
Income0.7

FY2012VS
FY2015 (Est.)[ Sales ]Increase +12 Bil. JPY
Annual Rate 13.9%up

29.4

25.02015334.3

3525

Operating
Income(Billion JPY)

0FY2013

FY2014FY2015

9.6％

10.1％

8.0％

[ROE]+3.7pt

Lowered by public offering
All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

3

Evaluation of Priority Initiatives
Globalization
Expansion to India, SEA,
Europe and Americas

Expansion ofnew markets
Entry to undevelopedmarkets◎ Implemented M&A - Acquired production capacity andmarkets (South East Asia)◎ Secured sales channels (Europe)◎ Established a business foundation (India)◎Aquired AS9100◎ Implemented marketing at the new markets◎ Clarified target customers in the new field

Reform of profitability◎ Established R&D system (China and Japan)◎ Expanded sales of high-value-added products (Japan)◎ Expanded line-up and sales of strategic products (China)◎ Expanded cemented carbide products business (SEA)）

Impact of FX
Rate fluctuation[ Sales ]・Achieved target a year advance・Boosted sales amount in JPY

Conversion to ahigh profitability
business model[ Profit ]・Slightly short to target
・Depressed profitability in export

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

4

Outline of Value Creation 2020

Linkage of Priority Initiatives of “Value Creation”
Value Creation 15

Value Creation 2020 “what Punch Group wants itself to be in 2020”

Globalization

Establishment of5-pole sales system・Establishment of solid sales system inEurope and Americas
・Capturing Globalized customers

Expansion of newmarkets

Improvement ofCustomer service

・Supported by the customers
・Improvement of technical capabilities

Promotion of highprofitability business withreinforcement of R&D

・Expansion of high-value- added
products
・Cost reduction (Manufacturing reform）

Reform of working style・Improvement of operational efficiency
・Optimal work-life balance
・Realization of diversity

Conversion to a highprofitability business
model

PUNCH SPIRITAll Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

6

What’s Punch Spirit?

PUNCH SPIRIT= Return to the founder’s spirit =Challenge

Through “Challenge” to unexplored field, achieve selfdevelopment and contribute to the society.

Imaginative &Innovative

Exert our “Imaginative and Innovative” powers on
every job and overcome difficulties persistently
toward the realization of our dreams.

Create “Open and Honest” workplace throughOpen & Honest esteeming the individuality and the diversity of
everyone of our team members.

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

7

Concept of Value Creation2020

Toward “The World’s Punch”
Construction of World 5-Pole System
Japan, China. Southeast Asia & India, Europe, Americas■Reform of self-Consciousness“Manufacturing” “Sales”■Reform of System“Working style” “HR system”■Reform of “Corporate culture”

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

8

Core strategy of Value Creation 2020ChinaJapan
5-PoleSales System
Improvement ofCustomer Service

Promotion ofHigh Profitability
Business withReinforcementof R&D

SoutheastAsia, IndiaEuropeAmericas

Sales flow construction
Global sourcing
Expansion of business with global companies
Reverseengineering
Reconstruction of manufacturing system (standard products & special-order products)
・Starting operations in Vietnam factory・Manufacturing expansion of special parts in Japan and China
・World-wide supplying of mold/die parts
Food-related industry
Aerospace-related industry
medical-related industry

Reform ofWorking Style

Strengthening of management and organization withDevelopment of global human resources

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

9

Policy of Value Creation2020

5-Pole Sales System
Expansion of sales base to Europe and Americas【UK】【Japan】【Germany】【China】【Turkey】【America】【Korea】【Thailand】【Taipei】【Vietnam】【India】【Philippines】【Malaysia】【Indonesia】【Australia】

Punch group【Singapore】

Sales distributor

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

11

Improvement of Customer Service (1)Improvement of Customer satisfaction with global sourcing
Order from Europe/Americas /Asia

Supplying from optimum production base

EuropeChina

Americas

Japan

Southeast Asia
India

Global sourcing

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

12

Improvement of Customer Service (2)Resolve the customer’s problem with 3D scanner (Reverse engineering)

Manufacturingcompany

Mold/Diecompany

Mold/Diecomponents
company

Customer’s problem
Disappearance of drawings byelimination/consolidation

Reproduce Mold/Die Component
All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

13

Promotion of High Profitability Business
Optimization of punch group production system starting from the Vietnam factory
Investment and run-up（FY2016-2018）①

Commencement of Operation of theVietnam factory

Full-scale start of Punch Group New
Production System（FY2019～）①

Reinforcement of Production capacity of theVietnam factory② Reduction of manufacturing cost in Japan② Transfer of Production items in Japan③③Transfer of Production items in China

Reinforcement of production capability forspecial-order products in Japan

Punch Group will realize its overwhelming high profitability
with cost reduction and risk distribution
All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

14

Reinforcement of R&D
More business in the growing markets and less fluctuation by economic condition
The photos in this page are images.

Food

MedicalAerospace

Get certificates , Invest R&D and machines

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

15

Reform of Working Style
Strengthening the organization by the employee-oriented management.

Change “Manufacturing”

Make our daily lives more convenient by providing mold and die components.

Change “Sales methods”

Sell more differentiated products, rather than the ones that are easy to sell.

Change “Working styles”

Work for the improvement of efficiency and productivity.

Change “Corporate culture”

Act on our own initiative to achieve the excellent company.

Change “HR system”

Enhance global HR and HR development program.

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

16

Value Creation 2020
Management Objectives

Management Objectives (1) Sales and Income by stages
Full-scale start of Punch GroupNew Production System(FY2019- )Investment and run-up（FY2016-2018）[ FY2020 ]Sales
above 4.7 bil JPY
Op Income above 3.3 bil JPY
Sales
Net Income above 2.3 bil JPY
Reinforce sales in Japan, Asia, Europeand the Americas.
Superiority
Reinforce the superiority in special-orderproducts.

[ FY2018 ]Production
GroupSystemSales
above 4.2 bil JPY
Op Income above 2.5 bil JPY
Net Income above 1.7 bil JPY

Start up quickly with Vietnam Factory in autumn 2016.
Enhance effectiveness of R&D and Reinforce the marketing function.

[ FY2015 ] (Forecast)

Salesabove 3.7 bil JPY
Op Income above 2.0 bil JPY
Net Income above 1.2 bil JPY
All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

18

Management Objectives (2) Sales and Income (yearly)
FY2020
Sales Over 47 Bil. JPY Operating income Over 3.3 Bil. JPY Net income Over 2.3 Bil. JPY

x 10

Establish a new production base in Vietnam！

37.0

Sales

37.0

42.0

39.0
Operating income

34.3
30.0

2.8

29.4

2.5
1.7

20.0

47.0

44.5

Baton exchange zone
40.0

2.0

2.0

(5.4%)(5.4%)

2.23(6.0%)

2.01.1(7.0%)

2.3

1.2

1.4

1.5(3.8%)(3.8%)

1.72(4.9%)(4.5%)(4.0%)

1(3.5%)(3.2%)FY20132013年度FY20142014年度FY20152015年度FY20162016年度FY20172017年度FY20182018年度FY20192019年度FY20202020年度

9.6%

10.1%

8.0%

9.0%

9.0%

10.0%

10.0%

11.0%

0.7

4(5.6%)(3.9%)
10.0

3.3(6.3%)(5.0%)

1.1

Operating income（Billion JPY）
5x 10

Sales
（Billion JPY）
50.0

Net income(2.4%)0.0

ROE0

Value Creation １５

Value Creation 2020

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

19

Sales transition by regions
Breakdown of“Asia etc.”
for FY2020

VC2020Billion JPY

50
VC15403020292.1

343.0373.7

373.5

394.2

424.7

44
5.3

47
5.9

19.8

21.1

22.4

16.2

17.4

17.3

18.2

14.4

15.2

15.6

16.0

16.7

17.5

18.1

18.7

2013

2014

2015

2016

2017

2018

2019

2020

13.0

10Americas
etc
20%

Europe29%

Southeast
Asia &India
51%

Asia etc.

China

Japan

0All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

20

Sales transition by industries
VC2020Billion JPY

5044

VC15403734308.34.520

8.3

4.0
6.5

4.9
6.8

4.9
6.8

11.5

39

10.7
10.0

8.9

7.8

6.0

Others

42
37

2947

5.4
7.0

5.8
7.5

6.2

7.9

6.6

8.4

ConsumerElectronics& Precision
Equipment
Electronic
Devices &Semiconductors

5.7
10

13.8

15.6

17.0

2013

2014

2015

17.0

17.8

18.8

19.7

20.6

2016

2017

2018

2019

2020

Automobile

0

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

21

Top Message

The Policy of the Return to Shareholders
To realize sustainable increase of corporate value

ROE =Net IncomeNet sales
The ratio of profit to sales

×Net sales
Total assets
total assets turnover

Total assets

×

Stockholder’s Equity
Financial leverage

Mid-term Business Plan “Value Creation 2020”

Operating Profit
Ratio

Assets
Effectiveness

Dividend Payout
Ratio[ Basic Policy for Dividend ]In addition to the stable and continuous dividends, targeting 30% as a consolidated payout
ratio based on the performance.
All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

23

The Company's CSR policy and Corporate Vision
The Company's CSR policy

Punch Industry pursues CSR-oriented managementthat continually supports manufacturing worldwide.
Corporate Vision

CustomercentricDirectsales

Integratedproduction

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

We aim to become theleading brand in the moldand die components
industry and achieve
high profitability
by leveraging ourcompetitive advantage
as a comprehensive
manufacturing and sales
company.

24

Communication with Stake holders[ Major communication method ]■Quality-enhancement initiatives■ Participation in the exhibition, etc.

BusinessPartners[ Major communication method ]■Shareholders' Meeting
Shareholders■Company briefings for individual
investors and participation in IR events And Other■Financial results briefings for
Investors
analysts and institutional investors■Information disclosure via corporatewebsite and IR tools

Employees

Punch GroupStakeholders[ Major communication method ]■Green Procurement
Local■Tree-planting activities■ Environment-friendly products making
Environment■ Reduction of CO2 emissions and industrial waste■ LED of the illumination

Company briefings forindividual investors

Local
Communities[ Major communication method ]■“Punch+” in-house newsletter■ Opinion exchange meeting withemployees representatives[ Major communication method ]■ Factory tour of students■ Joining volunteer■ Cosponsor of 2016 National SportsFestival■ Ecocap Movement■ Cleanup and BeautificationCampaigns■ Provide a part of the factory site forthe temporary housing for victimsof Great East Japan Earthquake.

Ecocap Movement

Volunteer activity in Kitakami city marathon

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

25

Tree-planting activities

Activities for the reinforcement of the corporate governanceThe best corporate governance system for Punch Group1) Separate “management” and “monitoring & supervising”
2) Support the quick and radical decision-making of management

3) Strive as one to raise the corporate value

Evaluation ofeffectivenessof
Board ofDirectors

Effective
utilization ofIndependent
outside director

Appropriate risk
management withaccomplishment of
the accountability

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

26

Thank you for your time

IR & PR Division, Administration Department PUNCH INDUSTRY CO., LTD. Phone: +81-3-5753-3130 E-mail: info-corp@punch.co.jp
Disclaimer Regarding Forward-Looking Statements
This report contains forward-looking statements regarding Punch Industry’s future plans, strategies, and forecasts. Such statements are
not based on historical fact, but are expectations, estimates, and forecasts based on information currently available. These expectations,estimates, and forecasts involve many potential risks and uncertainties, including changes to the economy, exchange rate variations,changes in the competitive environment, the outcome of current or future litigation, or the continued usefulness of capital procurement.
As a result, actual business results may differ materially from these statements. Accordingly, investors are cautioned not to place undue
reliance on forward-looking statements. Punch Industry is not obliged to amend these forward-looking statements based on new
information or future events.