Financial Results Briefing
for the Six Months EndedNovember 30, 2022
January 13, 2023
Toyo Denki Seizo K.K.

Program■ Briefing on Financial Results: 30 minutes
1. Overview of Financial Results for the Six
Months Ended November 30, 2022
2. Financial Results Forecast for the Fiscal YearEnding May 31, 2023
3. Medium-Term Management Plan

■ Q&A: 30 minutes

11. Overview of Financial Results for theSix Months Ended November 30, 2022
(from June 1, 2022 to November 30, 2022)

1-1. Overview of Consolidated Financial Results
Net sales fell from the same period of the previous year and operating loss
decreased due to factors such as difficulties in procuring parts and materials anddelivery delays, although orders received increased significantly and the businessis on a recovery trend.
100 million yen
6M FYEMay 2023
Forecast

YoY Change

Changes vs.
Forecast

6M FYEMay 2022

6M FYEMay 2023

Ordersreceived

142.1

170.7

＋ 28.5+20.1%

163.0

＋ 7.7

104.7%Net sales

148.0

138.2

- 9.8

- 6.6%

160.0- 21.8

86.4%

Operatingprofit

- 3.6

- 0.8

＋ 2.8ー- 0.8＋ 0.0

100.0%

Ordinary
profit- 0.8

1.9＋ 2.8ー

1.6＋ 0.3

118.8%

Profit1.80.2- 1.6- 85.7%

3.0- 2.8

6.7%[Profit per share (yen)]

20.82

2.98

- 17.84－

33.56- 30.58－

Ratio of overseas
sales to net sales

14.9%

18.0%

＋ 3.1pt－%%3

<Reference> Review of Business Environment for the six months
ended November 30, 2022
Business Environment

Transportation
Business<Domestic> Although the number of railway passengers is gradually
recovering, there is no prospect that the number will recover to the prepandemic level, partly due to changes in behavior patterns. The recovery
in capital investment by customers has been slow.
<Overseas> In China, due to the behavior restrictions imposed by thezero-COVID policy, the turnout is below pre-pandemic levels and theeconomic recovery is not robust.

IndustryBusiness<Domestic> Restrictions on face-to-face sales activities have been
eased, and capital investment for plant production in many industries
continues to recover. However, some customers are reconsidering theircapital investment plans due to a shortage of materials.
<Overseas> Although the economies of many countries are recoveringmoderately, the future remains uncertain due to geopolitical risks, rising
raw material prices, and shortages of parts.

4

1-2. Factors for Increase and Decrease in Operating Profit(YoY change)
Despite the impact of the decline in net sales, the deficit was reduced due toimproved profitability and reduced depreciation burden from the impairment of
non-current assets in the Industry Business in the previous fiscal year.

Decrease in netsales (nonconsolidated)-110 million yen

Plant profit/loss (non-consolidated)+140 million yen(Depreciation +150 million yen)
Reduction in selling, general &administrative expenses (non-consolidated)+110 million yen(Depreciation +30 million yen)
Increase in subsidiary profits, etc.
+110 million yen
Improvement in gross margin (nonconsolidated)+40 million yen-360 million yen
6M FYE May 2022

+280 million yen-80 million yen
6M FYE May 20235

1-3. Breakdown of Non-Operating Income/Expenses andExtraordinary Income/LossNon-operating
income/expenses+270 million yen• Dividend income+120 million yen• Share of profit ofentities accounted forusing the equity
method+80 million yen• Foreign exchange gains+70 million yen• Interest expenses-20 million yen• Other+10 million yen

Extraordinary
income/loss+80 million yen

Income taxes• Gain on sale ofinvestment securities+400 million yen• Gain on sale of noncurrent assets+150 million yen• Business structuralreform expenses-470 million yen

270 million yen

190 million yen
20 million yen-80 million yen

Operating profit

Ordinary profit

Profit before
income taxes

Profit61-4. Segment Performance: Transportation Business
Orders received increased. Segment profit increased by improving profitability
despite lower net sales
 Orders received and order backlog

300

300
Orderbacklog

217.4200
Ordersreceived

100

 Net sales and Segment profit

86.6

202.6

30

223.5
20200
110.7

106.4
100

10.6Segment
profit0Segment profit

Net sales

Netsales

89.0(100 million yen)

FYE
FYE 1H6M
FYE 1H6M
1H6M
FY2020
FY2021
FY2022
May 2021
May 2022 May 2023

0101.110.3

90.9
1011.9FYE
FYE 1H6M
FYE 1H6M1H6M
FY2020
FY2021
FY2022
May 2021
May 2022 May 20230• Orders received from JR, private railway companies and China increased.
• Net sales increased mainly to JR and China, but declined due to a decrease in sales toprivate railway companies.
• Segment profit increased by improving profitability.
71-5. Segment Performance: Transportation Business—Factors
for Increase and Decrease in Income
Despite the impact of the decline in net sales, segment profit increased thanks toefforts to improve gross margins and reduce expenses

Decrease in net sales(non-consolidated)-190 million yen

Improvement in grossmargin (non-consolidated)+110 million yen
Plant profit/loss(non-consolidated)+90 million yen
Reduction in selling, general& administrative expenses(non-consolidated)+80 million yen
Increase in subsidiary
profits, etc.
+70 million yen

1,030 million yen
6M FYE May 2022

+160 million yen

1,190 million yen
6M FYE May 2023
8

1-6. Segment Performance: Industry Business
Orders received increased. Despite lower net sales, decrease in deficit due toimpairment effect in previous fiscal year Orders received and order backlog

 Net sales and segment profit

Segment profit

Net sales

1008060
40

Orderbacklog

58.4

55.1

Ordersreceived

77.3

10808Netsales

60

50.3

40Segment profit

57.5

43.7

42.1

64

3.7
2

20200

100

59.8
49.5

(100 million yen)

0- 0.9- 0.7

06M
FYE 1H
6MFY2021
FYE 1H
6M
FYE
1H
FY2020
FY2022
May 2021 May 2022 May 2023

FYE 1H6M
FYE
1H6M
FY2020
FY2021
FY2022
6M
FYE 1H- 20May 2021 May 2022 May 2023 -2△ 2• Orders received for processing equipment and testing equipment increased.
• Although net sales for processing equipment increased, segment profit fell due to a decreasein net sales for power supplies.
• Segment profit was down due to impairment effect in the previous fiscal year.
91-7. Segment Performance: Industry Business—Factors for
Increase and Decrease in Income
Despite the impact of material procurement difficulties, decrease in deficit due toimpairment effect in previous fiscal year

Decline in gross margin(non-consolidated)-40 million yen

Increase in subsidiary profits, etc.
+40 million yen

Decrease in net sales(non-consolidated)-10 million yen

Plant profit/loss (non-consolidated)+30 million yen(Depreciation +70 million yen)

-90 million yen
6M FYE May 2022

+20 million yen-70 million yen
6M FYE May 2023
10

1-8. Segment Performance: ICT Solution Business
Higher orders received and increased net sales and profit due to an increase insoftware improvements for station equipment Orders received and order backlog

 Net sales and segment profit

15151010

Orders received

Order backlog

02.1

3.4

96
6.0

5Segment profit

4.3

1.4
1.4
FYE 1H
6MFY2021
FYE
6MFY2022
FYE
1H6M
FY2020
1H
May 2021 May 2022 May 2023

Segment profit

Net sales

6.7
5

Net sales(100 million yen)

5.03

3.0
1.2

1.70

0.4

FYE 1H6M
FYE
FYE
1H6M
FY2020
FY2021
1H6M
FY2022
May 2021 May 2022
May 20230• Orders received and net sales increased due to software improvements for stationequipment.
• Segment profit increased due to a recovery in net sales.
111-9. Consolidated financial position
100 million yen
May 31,2022

JNovemberu30, 2022
nChangeRemarks

469.1

483.1

+ 13.9Current assets

241.8

258.1

+ 16.2 Trade receivables: +1,200 million yen

Non-current assets

227.2

224.9

- 2.2 yen

249.0

257.2

+ 8.2

73.0

86.0

+ 12.9

220.1

225.8

+ 5.7 securities: +600 million yen

46.9%

46.7%

- 0. ２ pt

Total assets

Total liabilities
Of which, net
interest-bearing debt

Net assets
Equity-to-asset ratio

Sale of corporate housing: -110 million

Valuation difference on available-for-sale122. Financial Results Forecast for theFiscal Year Ending May 31, 2023

2-1. Outlook for Financial Results for the Fiscal Year Ending
May 31, 2023 (Consolidated)
We revised forecasts: orders received of 34.6 billion yen, net sales of 34.0 billion
yen, and operating profit of 450 million yen.
100 million yen

FYE May 2022(Result)
2Q

FYE May 2023

Full year

2Q(Result)

Full year(Forecast)

YoY
ChangeFull year

Orders received

142.1

304.4

170.7

346.0

+41.5

Net sales

148.0

301.5

138.2

340.0

+38.4

Operating profit- 3.6

1.7- 0.8

4.5+2.7(%)（ー %)(0.6%)（ー %)(1.3%)(+0.7pt)

Ordinary profit

- 0.8

7.6

1.9

7.0

- 0.6

Profit1.8- 9.3

0.2

8.0+17.3[Profit per share (yen)]

20.82- 104.02

2.98

89.48

+193.50Dividend per share (yen)30.0

30.0(Note) Revisions to the financial results forecast mostrecently announced: None14

2-2. Outlook for Financial Results (by Segment)
100 million yen
Transportation
Business

FYE May 2023(Forecast)YoY ChangeIndustryBusiness

ICT Solution
BusinessOrders received

208.0

124.0

14.0

Net sales

210.0

118.0

12.0

Segment profit

22.0

9.0

2.0

Orders received+ 20.0+ 17.2+ 4.6

Net sales+ 15.5+ 19.0+ 4.1+ 0.1+ 4.3+ 0.6

Segment profit15

3. Medium-Term Management Plan

3-1. Medium-Term Management Plan
Priority Initiatives for Structural Reform in the First Year of the Medium-Term
Management Plan (from fiscal year ending May 2023 to fiscal year ending May2026)
The following initiatives are being focused on. Numerical targets for the medium-term
management plan for the fiscal year ending May 2026 will be presented in July 2023
based on the initiatives made over the past year.

1

Initiatives toexpand new
businesses andproducts➊ Enhancement and acceleration of development of company-wide new
business areas with a development center as its core
(Creation of technologies and products and discovery of new business fields that
contribute to a decarbonized and sustainable society)➋ Expansion of business area from railway station operating equipment tooverall ICT through the ICT Solution Business Department(Establishment of the Company’s unique ICT business field by merging power electronics
with ICT)

2Thoroughimprovement inearnings structureof existing
businesses➊ Radical strengthening of profitability with plants and marketing in unison fromboth aspects of improving production efficiency and securing appropriate
sales prices➋ Further strengthening of profit-oriented operation in existing businesses toincrease investments in R&D and human resources

3

Improvement inasset efficiency
with awareness ofcapital cost

➊ Continued curtailment of cross-shareholdings and idle assets➋ Verification of capital efficiency by business segment and review ofreallocation of management resources17

3-2. Priority initiatives for structural reform in Medium-Term
Management Plan
Progress of priority initiatives for structural reform (six months ended November30, 2022)(1) Initiatives to expand new businesses and products
In June 2022, the newly established Development Center and the newly
reorganized ICT Solution Business Unit took the lead in strengthening andaccelerating the development of new business areas across the entire company.
<Examples of initiatives>

Industry
Business Unit

Transportation
Business Unit

 Real-time state monitoring system forrailwayDevelopmentCenter Cashless payment terminal solution
ICT Solution
Business Unit Evaluation facility compliant with ADAS
(Automated driving assistance systems)
 Power generation system using renewableenergy18

3-2. Priority initiatives for structural reform in Medium-Term
Management Plan
Progress of priority initiatives for structural reform (six months ended November
30, 2022)(2) Thorough improvement in earnings structure of existing businesses
 Initiated initiatives aimed at strengthening profitability at plants and in sales.
 In a business environment where raw material and resource prices are skyrocketing,individual projects have achieved results, but company-wide efforts are under way to
optimize sales prices, and the effects are expected in the future.
 Recorded business structural reform expenses as part of structural reforms in light ofchanges in the business environment.

(3) Improvement in asset efficiency with awareness of capital cost Continue to sell investment securities.
 We also sold idle real estate for 260 million
yen this fiscal year.

<Changes in sales of investment securities>
20(100million
yen)

15.5

10

7.8

6.9

20.5

21.5

4.6

6.2

0
19.5

22.5

23.5
(2Q)

19

3-3. Topics (expansion into China of transportation business)
Our joint venture company in China, which mainly provides maintenance services,
continued to generate strong financial results
Net sales

50

Changzhou Ruiyang
Transmission Technology Operating profit
5.030

Beijing Jingche Shuangyang
Traction System

5.0(0.1 billions of yen)

25

2.5

15

2.5

0

0.0

00.0

2018

2019

2020

Net sales

2021

2022 (expected)

2018

2019

2020

2021

2022(expected)

Operating profit• Regarding drive gear units, maintenance service has
expanded in addition to manufacturing of the units forrailway vehicles of new and existing subway lines.
New floor space for maintenance is added.

• The demand for maintenance of the Beijing subway
has arrived in earnest, and both net sales and profits
are increasing.
• In addition to our electrical products, we expanded
the use of electrical products made by othermanufacturers.

20

3-3. Topics (sales expansion using exhibitions)
Active participation in exhibitions at each division to expand sales of newproducts Transport Business Unit exhibits at “InnoTrans 2022”• Pantographs developed for overseas markets wereexhibited at “InnoTrans 2022,” which was held for thefirst time in four years.
• We receive a lot of inquiries about installing it oncommuter trains and high-speed trains in regions suchas the United States, India and the Middle East.

 Industry Business Unit exhibits at "AUTOMOTIVEENGINEERING EXPOSITION 2022 YOKOHAMA"• An in-tire house dynamo was exhibited at the"AUTOMOTIVE ENGINEERING EXPOSITION 2022
YOKOHAMA" held in Yokohama for the first time in 3years.
• Due to the effects of the exhibition, we have received
applications from many completed car manufacturers tocheck the actual machine, and we are conducting a tour.
21

3-3. Topics (initiatives for sustainability)
Sustainability Policy (Basic Policy)
The Group’s corporate philosophy calls for contributions to society, and its environmental
philosophy calls for efforts to protect the global environment as an important issue.
In order to realize these principles and contribute to the sustainable development of society,
we have established the Sustainability Policy and are working to achieve it.

 The relationship between our efforts and therealization of the SDGs is organized from threeperspectives• Initiatives in Products and Services• Initiatives in Production Activities• Initiatives to Value People and Local
Communities223-3. Topics (initiatives for sustainability)
Establishment of a sustainability promotion system
As of September 1, 2022, we have established an organization and system to promotesustainability and strengthened our initiatives.
 Sustainability Committee
Purpose: To enhance corporate value through company-wide promotion of sustainability
initiatives
Committee members: President and Representative Director (Chairman), Executive
Officers in charge
Role: Formulation of overall sustainability plan and progress evaluation
 Sustainability Promotion Office
Roles: Summary of sustainability issues, promotion and management of each policy, andinformation disclosure[2Q Initiatives]• Formulating specific roadmaps for products and services, the environment, andhuman capital, and promoting them throughout the company• Formulation of medium- to long-term targets for greenhouse gas reduction andwomen’s empowerment(To be disclosed in the February issue of the integrated report)
23

<Reference> Our company profile and business overview(1) Establishment: June 20, 1918 (104 years since establishment)(2) Capital stock：4.9 billion yen(consolidated: fiscal year ended May 31, 2022)(3) Net Sales：30.1 billion yen (ditto)(4) Number of employees：1,193 (ditto)(5) Business lines: TransportationBusinessIndustry Business
ICT Solution
Business(6) Production base

<Yokohama Plant>: Yokohama Plant
Shiga Ryuo Plant<Shiga Ryuo Plant>24

<Reference> Our company profile and business overview
We are contributing to the development of the railway and industrial
fields as a heavy electric machinery manufacturer with threebusinesses: Transportation Business, Industry Business, and ICT
Solution Business.
Transportation Business: products and systems for moving trains

Pantograph

Variable Voltage Variable Frequency(VVVF) Inverter Controller

Industry Business: production, infrastructure facilities,
etc.

Automobile test system

Inverter

ED motor

Motor

Gear units

ICT Solution Business: station service equipment,
etc.

Portable terminal forconductor

Cloud‐type remotemonitoring control system25

<Reference> Our company profile and business overview◆Sustainability Policy
The Group’s Corporate Philosophy calls for contributions to society, while its Environmental Philosophy calls for
efforts to protect the global environment as an important issue. And we have established our Sustainability Policy asa guideline for contributing to the sustainable development of society.
organize the relationship between our efforts and the realization of the SDGs from the following three perspectives
to proceed with our future initiatives based on Corporate Philosophy, Environmental Philosophy and CorporateSlogan.

The Group Corporate Slogan—Our Heart and Technology for the Future

Initiative in Products andServices

Initiative in Production
Activities

Initiative in Valuing Peopleand Communities● Supply of decarbonized energy, suchas small hydroelectric power
generation● Popularization of energy‐efficienttransportation, such as railroads andelectric vehicles● Efficiency of electrical equipment andthe spread of power storage systems● Improving safety, etc. throughbarrier‐free transportation● Reduction of energy consumption inproduction● Study of solar power generation anddecarbonization of energy currently used
● Reduction of energy consumption duringtransportation of materials and products● Recycling activities at production sites
and offices, etc.

● Support for school education by offering
university endowed lectures and accepting
school field trips in plants● Promotion of gender equality initiatives
and appointment of female managers● Protecting the local environment,
contributing to nature conservation, etc.

26

Disclaimer•Statements concerning financial results forecasts are based on data
available as of the date of publication of this material andassumptions concerning the elements of uncertainty that will affectfuture business performance as of the date of publication of thismaterial. Actual financial results may differ depending on a varietyof factors.

•Forward‐looking statements contained in this material are thejudgments of the Toyo Denki Group based on data available at thetime of publication of this material. Such statements anddescriptions are by no means comprehensive.
<Inquiries on this presentation>
Toyo Denki Seizo K.K.
PR, IR, and CSR Department, Management Planning Division
TEL:03‐5202‐8122
Inquiry form:https://www.toyodenki.co.jp/inquiry/inquiry.php
27