Financial Results Briefing
for the Fiscal Year Ended
May 2022
July 15, 2022
Toyo Denki Seizo K.K.

Program■ Briefing on Financial Results: 40 minutes
1. Overview of Financial Results for Fiscal Year
Ended May 2022
2. Outlook for Financial Results for Fiscal YearEnding May 2023
3. Medium-Term Management Plan

■ Q&A: 20 minutes

1

1.

Overview of Financial Results for
Fiscal Year Ended May 2022
(From June 2021 to May 2022)

1-1. Overview of Consolidated Financial Results
Sales and profits decreased from the previous fiscal year due to the resurgence of COVID-19 anddifficulties in procuring members. Net income fell into the red due to impairment losses in Industrial
Systems. Orders have bottomed out with a slight increase year-on-year.

100 million yen
FYE May
2021

FYE May2022

YoY Change

FYE May 2022%

Published value

Published value ratio
%

331.4

301.5

-29.8

-9.0%

330.0

-28.5

91.3%

Operating Income

4.2

1.7

-2.5

-59.4%

2.5

-0.8

68.4%

(%)

(1.3%)(0.6%)(-0.8 pt)-

(0.7%)(-0.2 pt)-

Ordinary
Income

7.5

7.6

＋0.0

+1.2%

6.0

＋1.6

127.6%Net Income

9.7

- 9.3

-19.0

-

7.0

-16.3

-

[Net income per share (yen)]

109.38-104.02-213.40-78.28-182.30

-

ROE

4.1%

-4.0%

-8.1 pt-

Ordersreceived

300.5

304.4

＋3.9

+1.3%

310.0

-5.6

98.2%

Ratio of overseas
sales to net sales

15.9%

14.5%

-1.4 pt-

Net Sales3

<Reference> Review of the Business Environment for the Fiscal Year
Ended May 2022

Industrial
Systems

Transportation
Systems

Business Environment<Domestic> Affected by factors such as a decrease in the number ofpassengers, railway operators are reviewing plans to build new rolling stock.
As orders for new rolling stock are decreasing, we are seeing an increase inequipment upgrades aimed at long-term use of existing trains, mainly by
private railway companies.
<Overseas> In China, the pace of economic growth slowed as the zeroCOVID policy imposed urban lockdowns, tightened restrictions on activities,
and depressed consumer spending.
<Domestic> Although capital investment by customers is on a recovery
trend, it was affected by requests to refrain from face-to-face business. Due tothe rapid shift to electrification, some equipment plans for testing machines
for automobile development were reconsidered.
<Overseas> Due to continued restrictions on sales activities, such as
restrictions on overseas travel, some orders for equipment requiring detailed
arrangements continued to be affected.

41-2. Factors for Increase and Decrease in Operating Income (YoY change)
Although profit decreased due to the drop in net sales, the declining profit margin
was suppressed by cutting expenses.
Improvement in gross margin (nonconsolidated)+00 million yen

Decrease insales (nonconsolidated)-530 million
yen

Increase in subsidiary profits, etc.
+10 million yen
Plant profit/loss (non-consolidated)+10 million yen
Reduction in selling, general& administrative expenses(non-consolidated)+220 million yen

420 million
yen

170 million
yen<FYE May 2021><FYE May 2022>51-3. Breakdown of Non-Operating Income/Expenses and Extraordinary
Income/Loss
Non-operating
income/expenses+590 million yen
Operating income +equity in profit ofunconsolidated
subsidiaries andaffiliates" wasunchanged from theprevious year at 410
million yen due to the
expansion of thebusiness of the Chinese
subsidiary.

Extraordinary
income/loss-1.99 billion yen• Equity in profit ofunconsolidated
subsidiaries andaffiliates+240 million yen• Foreign exchange gain
+220 million yen• Dividend income+150 million yen• Other-20 million yen

Income taxes• Gain on sales ofinvestment securities+360 million yen• Impairment loss on fixed
assets-2.25 billion yen• Other-100 million yen

760 million yen
170 million yen

Operating
IncomeOrdinary
Income-1.23 billion yen-930 million yen

Income before
income taxes

Net
Income6

1-4. Segment Performance Transportation Systems
Orders remained at the same level as the previous year. Although sales decreased, segment
profit was close to the previous year’s level.
◼ Net sales and segment income◼ Orders received and order backlog

300

Net Sales

Orders received

300

257.1

Segment income

Net Sales

200

Order
backlog

188.1
214.6

188.0 200
208.0
100

0

0
FYE May
2021

FYE May
2022

194.5

40

Segment
income100

FYE May
2020

60

242.6
215.2

241.0

(100 million yen)

24.7

22.1

21.9

20

0

FYE May FYE May FYE May
2020
2021
2022

• Orders from private railway companies, China and overseas companies (excluding China) increased, but those from JR
companies decreased.
• Sales to JR were more or less unchanged from the previous year, but sales to private railways, China, and overseas (otherthan China) decreased.
• Segment profit was around the previous year’s level due to improved profitability despite a decrease in revenue.

71-5. Segment Performance Transportation Systems: Factors for Increase
and Decrease in Income
Although sales and subsidiaries’ profits (from bus door closing equipment and others)
decreased, profit continued to be at the previous year’s level due to improvement of grossprofit margin and cutting expenses.

Decrease in sales(non-consolidated)-280 million yen
Decrease insubsidiary profits,
etc.
-70 million yen
Plant profit/loss (nonconsolidated)-10 million yen

Improvement in grossmargin (nonconsolidated)+280 million yen
Decrease in selling,
general & administrative
expenses (nonconsolidated)+30 million yen

2.21 billion yen

2.19 billion yen<FYE May 2021><FYE May 2022>8

1-6. Segment Performance Industrial Systems
Despite lower sales and profits, orders have bottomed out with a slight increase.
◼ Orders received and order backlog◼ Net sales and segment income
Net Sales

150

150

Orders received

111.9

105.9

Segment income

30

130.2

106.8

100

105.4

99.0

100
Order backlog

50

Net Sales(100 million yen)

53.5

Segment income

54.1

62.0

50

10

10.0

7.1
0

0

FYE May
2020

20

FYE May
2021

FYE May
2022

4.7

0

FYE May FYE May FYE May
2020
2021
2022

• Orders received for processing equipment and power supplies increased, but those for testing equipment
decreased.
• Net sales decreased due to a drop in sales for testing equipment, processing equipment, and power
supplies.
• Segment income slipped due to lower net sales.
91-7. Segment Performance Industrial Systems: Factors for Increase andDecrease in Income
Despite the efforts to cut expenses, segment income decreased due tolower net sales and a decline in gross profit margin.

Decrease in grossmargin (nonconsolidated)-290 million yen
Decrease in sales (nonconsolidated)-150 million yen

Plant profit/loss (nonconsolidated)+50 million yen
Increase in subsidiary
profits, etc.
+60 million yen
Reduction in selling, general& administrative expenses(non-consolidated)+80 million yen

710 millionyen

470 million
yen<FYE May 2021><FYE May 2022>10

1-8. Segment Performance Information Equipment Systems
Sales and profits continued to decline due to the impact of curbs on facility upgrades byrailway operators.

◼ Orders received and order backlog

Net Sales

30

20◼ Net sales and segment income

Segment income

30

20

16.1
9.4
Order backlog

5.3
0
FYE May
2020

30

Net Sales

Orders received

10(100 million yen)

6.3
1.0
FYE May
2021

2.6

17.7

20

10.6
10 Segment income
4.6

7.9

2.6

1…
0

0
FYE May2022

10

FYE May
2020

FYE May
2021

FYE May2022• Orders increased, but the impact of curbing facility upgrades continued.
• Net sales fell due to the impact of curbing facility renewal.
• Segment income slipped due to lower net sales.
111-9. Consolidated Financial Position
100 million yen
22015
End of June
May 31, 0 May 31,
2021

1
5

2022

ChangeRemarks

519.6

469.1

-50.5

Current assets

253.0

241.8

-11.1

Fixed assets

266.6

227.2

million yen-39.4 -2,200
Investment securities: -1,300 million yen

Total liabilities

279.5

249.0

-30.5

98.8

73.0

-25.7

240.0

220.1

-19.9 securities: -800 million yen

46.2%

46.9%

+0.7ptTotal assets

Equipment, etc. for Industrial Systems:

Of which, net interestbearing debt

Net assets
Shareholders’ equity
ratio

Unrealized holding gain/loss on available-for-sale12

1-10. Trends in Consolidated Cash Flows
100 million yen
FYE May
2018
Cash flows from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment

Cash flows from financing activities
Free cash flow

Cash at the end of the period
Interest bearing debt
Net interest-bearing debt

FYE May
2019

FYE May
2020

FYE May
2021

FYE May
2022

-15.7
-30.8
-34.4
41.4
-46.5

37.2
-10.1
-22.7
-20.1
27.0

21.4
0.4
-6.4
-11.2
21.8

17.7
-1.5
-5.4
-9.7
16.2

25.0
2.8
-3.5
-23.5
27.9

15.5
161.7
146.1

22.4
154.2
131.8

32.9
145.5
112.5

39.6
138.4
98.8

44.4
117.5
73.0

• Operating cash flow increased due to a decrease in accounts receivable-trade andinventories.
• Investment cash flow increased due to the sale of investment securities and others.
• Free cash flow has remained positive in recent years.
• Net interest-bearing debt decreased to 7.3 billion yen (down 2.5 billion yen year-on-year).
13

2.

Outlook for Financial Results for
Fiscal Year Ending May 2023

2-1. Outlook for Financial Results for Fiscal Year Ending May 2023
(Consolidated)
Orders received of 34.6 billion yen, net sales of 34.0 billion yen, and operating income of
450 million yen.
100 million yen
FYE May 2022
(Results)

FYE May 2023
(Forecast)

YoY
Change2Q

2Q

Full year

Full year

Full year

Net Sales

148.0

301.5

160.0

340.0

+38.4

Operating Income

-3.6

1.7

-0.8

4.5

+2.7

(%)

(-%)

(0.6%)(-%)(1.3%)(+0.7pt)

Ordinary Income

-0.8

7.6

1.6

7.0

-0.6

Net Income

1.8

-9.3

3.0

8.0

+17.3

[Net income per share (yen)]

20.82-104.02

33.56

89.48

+193.5030.0

Dividend per share (yen)Orders received

142.1

304.4

30.0
163.0

346.0

+41.5
15

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

Net Sales

Industrial

ICT Solution

210.0

118.0

12.0

22.0

9.0

2.0

208.0

124.0

14.0

＋15.5

＋19.0

＋4.1

YoY Change Segment income

＋0.1

＋4.3

＋0.6

Orders received

＋20.0

＋17.2

＋4.6

FYE May 2023
Forecast (Full Segment income
Year)
Orders received
Net Sales* In the fiscal year ending May 2023, the reporting segment will be changed from
“Information Equipment Systems” to “ICT Solution Systems.”
16

<Reference> Assumptions for Outlook for Financial Results
The business environment assumed in the outlook for the financial results for the fiscal year
ending May 2023

Business Environment

Transportation
Systems- In Japan, the number of railway passengers is expected to recover gradually against the
backdrop of a certain degree of containment of COVID-19 outbreak. Although investment
in new rolling stock plans continues to be restrained, demand for replacing aging rollingstock equipment is expected to increase, mainly in private railways.
- In China, although there remains a risk that the zero-COVID policy will be reactivated,
an expansion of infrastructure investment can be expected. In addition, since there areplans to extend high-speed railways and urban transportation, we can expect demand
for maintaining existing rolling stock as well as an increase in the construction of new
rolling stock.

Industrial
Systems- Although there is concern about a shortage of members, a recovery in orders for
production equipment can be expected, including customized system products that
require detailed discussions.
- We have high hopes for the reinforcement of infrastructure facilities such as emergency
power generation equipment for national resilience.
- The introduction of test equipment that assumes engine drive is being partiallyreconsidered due to the electrification of automobiles, but we will expand sales of thetest machines (in-tire house dynamo) in anticipation of the testing of advanced
driver-assistance systems (ADAS).

17

3.

Medium-Term Management Plan

3-1. Review of the Four Years of the Previous Medium-Term Management
Plan
Numerical Targets and Results of the Medium-Term Management Plan "Revitalize
2020/2022" (from fiscal year ended May 2019 to fiscal year ended May 2022)
100 million yen
2018/5ResultNet Sales

2020/5Plan

2022/5ResultInitial plan Reviewed plan

Result

425.2

430.0

390.7

×

More than 470

360.0

301.5

×

3.6

9.0

10.6

○

20.0

6.0

1.7

×

(0.9%)(2.1%)(2.7%)○(4.3%)(1.7%)(0.6%)

×

Ordinary Income

5.1

11.0

12.0

○

24.0

8.0

7.6

△

Net Income

6.9

7.0

10.8

○

16.0

7.0

-9.3

×

Equity in profit of unconsolidated
subsidiaries and affiliates

1.1

1.2

-0.3

×

4.0

1.0

2.4

○

ROE

2.7%

3.3%

4.4%

○

5.0%

3.0%

-4.0%

×

Payout ratio

68.2%

30.0%

24.8%

△

30.0%

30.0%

-

-

Operating Income(Operating margin ratio)*Fiscal year ended May 2018 includes
commemorative dividend.

<Net sales by segment>
Transportation Systems

279.4

290.0

242.6

×

310.0

220.0

194.5

×

Industrial Systems

117.6

130.0

130.2

○

150.0

130.0

99.0

×

28.0

10.0

17.7

○

10.0

10.0

7.9

×

Information Equipment Systems

193-2. Reasons for non-achievement of the previous Medium-Term
Management Plan

Major factors behind the failure to achieve the Medium-Term
Management Plan

Industrial
Systems

A significant increase in demand was expected against the backdrop of
the investment effect in Shiga Ryuo. Although the first half progressedmore than planned, we saw a significant drop in demand due to the
COVID-19 pandemic in the second half. Further, it was not possible torespond to the rapid electrification changes in the field of automotive
testing machines.

Transportation
Systems

Because we could not build a stable business profit structure, we wereunable to respond to changes in the business environment caused by thedecrease in railway passengers amid the COVID-19 pandemic in thesecond half.

Information
Equipment
Systems

In station service equipment, we were affected by the trend of generalpurpose terminals and the curtailment of investment by railway operators
due to the COVID-19 pandemic, and were not able to capture demand in
the DX and IoT fields other than station service equipment.

Profits andLosses

Net income fell into the red due to the recording of impairment losses on
business assets related to Industrial Systems.
20

3-3. Results and Issues of the Previous Medium-Term Management Plan

Outcome◆ Development of a robust business structure has progressed with the completion of
integration in Industrial Systems at Shiga Ryuo Plant.
◆ Progress has been made in strengthening the urban traffic maintenance businesssystem with local subsidiaries/affiliates in China.
◆ Commercialization of new dynamo (ITHD, fast slender) for CASE-compatible
automotive test equipment◆ Proposal to CBM using IoT technology◆ Establishment of Sustainability Policy and Commencement of Sustainability
Initiatives

Challenges

Results and Issues of Basic Policies and Major Measures◆ Promoting the development of new products unique to the Company byreorganizing our core technologies and matching them with changes in market
needs accompanying changes in the environment◆ Thorough enhancement of our business profitability by improving profitability anddeepening verification of low-profit projects◆ Reconstruction of the company-wide personnel strategy, human resource
development based on the company-wide strategy, strengthening of workforce, andraising the level◆ Concrete initiatives for sustainability (decarbonization, human rights, and gender)21

3-4. New Medium-Term Management Plan
Under the new Medium-Term Management Plan, we will promote efforts to achieve "regeneration andtransformation of Toyo Denki" in order to "restore and improve the corporate value." Numerical targets
will be disclosed in the next fiscal year.

◆ Under the previous Medium-Term Management Plan "Revitalize 2020/2022," we could not
obtain sufficient earning power to respond to major changes in the business environment,such as the decrease in the number of railway passengers due to the COVID-19 pandemic
and the review of test equipment for the electrification of automobiles. As a result, theCompany fell far short of the target value.

◆ In light of the Company’s challenges, the new Medium-Term Management Plan (term: fiscal
year ending May 2023 to fiscal year ending May 2026) aims to achieve "revitalization andreform of Toyo Electric" in order to "restore and improve the corporate value."<Basic Policies>(1) “New businesses and expansion of products”(2) "Thoroughly improving the profit structure of existing businesses," and(3) "Improving asset efficiency with an awareness of capital costs."
By working on these items, strengthen the management foundation drastically to achieve an
ROE of 8% or more at an early stage.

22

3-4. New Medium-Term Management Plan
Priority Initiatives for Structural Reform over the Next Year
◆ In addition to focusing on the following initiatives, we will work to establish an organizational
structure that supports these initiatives aimed at under the new Medium-Term Management
Plan, strengthen the workforce, which is the core of management resources, and reform
human resource strategies to revitalize the organizational culture.

(1) Efforts to expand
new businesses
and products(i) Strengthen and expedite development of new business areas across the company centered on
the development center newly established this term
(Creation of technologies and products that contribute to a decarbonized and sustainable society
and discovery of new business fields)(ii) Expanding the business domain from station service equipment to general ICT through the ICT
Solution Business Unit reorganized this period(Establishment of an ICT business field unique to the Company through the fusion of powerelectronics and ICT)

(2) Thoroughly
improving the
profit structure ofexisting
businesses(i) Drastically strengthen profitability of both factories and sales from the viewpoint of improving
production efficiency and securing appropriate selling prices(ii) Strengthen the operation of existing businesses with a greater focus on profitability, in order toincrease investment in R&D and human resources.

(3) Improving asset
efficiency with anawareness ofcapital costs(i) Continue to reduce cross-shareholdings and idle assets(ii) Review capital efficiency of each business and consider reallocation of management resources23

3-5. Topics
We exhibited our products at the Railway Technology Exhibition in Osaka and theAutomotive Engineering Exposition held in May.
◆ Railway Technology Exhibition in Osaka
We exhibited our products also in Osaka following the Railway Technology Exhibition in Makuhari at the endof last year.
The Company exhibited proposals for Condition Based Maintenance (CBM) using IoT technology.

Cloud
serverControl unit

◆ Automotive Engineering Exposition 2022 in Yokohama
We exhibited our products at a real exhibition held for the first time in three years.
A new dynamo (in-tire house dynamo) for CASE-compatible automotive test equipment was exhibited.

24

3-5. Topics
We started demonstration tests of a power storage system for superconducting flywheels
for railroads.

We have completed the delivery of a power storage system for superconducting
flywheels for railways commissioned by East Japan Railway Company, and therailway operator has started demonstration tests on the Chuo Main Line.
Through this project, we will work on constructing new power storage systems that
contribute to the improvement of energy efficiency in the railway sector, the stable
use of renewable energy, and the development of technologies, and contribute tobringing about a sustainable society, including decarbonization.

Discharging

Charging

Number of revolutionsof the flywheel

Power converter

Time

Charging
It absorbs the regenerative
power of the train andaccelerates the flywheel.

Discharging

Power storage system for superconducting flywheels

It supplies electric power to thetrain and the flywheel slows down.

When brake is applied,trains generate
regenerative electricity.

For Kofu and Shinjuku

During climbing and accelerating,trains consume electricity.
For Kobuchizawa andMatsumoto<Conceptual Image of System>25

<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 2022)(3) Net Sales：30.1 billion yen (ditto)(4) Number of employees ：1,193 (ditto)(5) Business lines(6) Production base

: Transportation
Systems
Industrial Systems
ICT Solution
Systems<Yokohama Plant>: Yokohama Plant
Shiga Ryuo Plant<Shiga Ryuo Plant>26

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

Pantograph

Variable Voltage Variable Frequency(VVVF) Inverter Controller

Industrial Systems: production, infrastructure
facilities, etc.

Automobile test system

Inverter

ED motor

Motor

Gear units

ICT Solution Systems: station service
equipment, etc.

Portable terminal for
conductor

Cloud-type remotemonitoring control system27

<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 as a guideline for contributing to the sustainable development of society.
organize the relationship between our efforts and the realization of the SDGs from the following threeperspectives to proceed with our future initiatives based on Corporate Philosophy, Environmental
Philosophy and Corporate Slogan.

The Group Corporate Slogan —Our Heart and Technology for the Future
Initiative in Products
and Services

Initiative in Production
Activities

Initiative in Valuing
People and Communities● Supply of decarbonized energy,
such as small hydroelectric power
generation● Popularization of energy-efficienttransportation, such as railroads
and electric vehicles● Efficiency of electrical equipment
and the spread of power storage
systems● Improving safety, etc. throughbarrier-free transportation● Reduction of energy consumption in
production● Study of solar power generation anddecarbonization of energy currently
used● Reduction of energy consumption
during transportation of materials andproducts● Recycling activities at production sites
and offices, etc.

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

28

Disclaimer• Statements concerning financial results forecasts are based ondata available as of the date of publication of this material andassumptions concerning the elements of uncertainty that willaffect future business performance as of the date of publicationof this material. Actual financial results may differ depending on
a variety of factors.
• Forward-looking statements contained in this material are thejudgments of the Toyo Denki Group based on data available atthe time 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
Email:contact@toyodenki.co.jp
29