RIKEN KEIKI
Medium-termManagement Plan

(From FY2023 to FY2025)
June 2023

RIKEN KEIKI Co., Ltd.

Securities Code: 7734

Table of Contents for the Medium-Term Management Plan

1. Medium-term Management Vision
2. Review of Surrounding Environment

3. Group Strategic Priority
4. Key Management Index

2

1. Medium-term Management Vision
1-1. Management Philosophy and Management Policy

Management Philosophy

We are a pioneer in creating safe working
environments for workers.
Management Policy
RIKEN KEIKI endeavors for its operations to be in full legal compliance, to strive forpreservation of the environment, and to maintain our high level of social responsibility as agood corporate citizen.
• Manage our research and development in an efficient manner, to create useful and needed
products that will be suitably profitable, to assure excellent and sustainable company growth.
• Contribute to society by producing high-quality products and enhanced services to assist ourcustomers in creating safe working environments.
• Reward stockholders by operating in a profitable manner to continually increase our corporate
value.
• Develop mutually beneficial bilateral cooperative relations with vendors by providing stablebusiness transactions.
• Create a rewarding working environment, to provide challenge and satisfaction for all
employees, and also provide adequate compensation for their work efforts to assist inproviding comfort and stability to their personal lives.
3

1. Medium-term Management Vision
1-2. Direction of the Medium-Term Management Plan

[Medium-term Management Vision]

In response to sustainable social and customer needs such as for the IoT anddecarbonization, the RIKEN KEIKI Group will develop new technologies and expand
overseas markets to aim for a global company that achieves sustainable growth byutilizing the power of ‘people’ and ‘technology’
1

Direction of
the Mediumterm
Management
VisionWhich customer
industry to focus
on?

⚫ Sales for the electric and semiconductor industries account for about 45% of the total sales(non-consolidated). We will expand to other industries while maintaining and improving thesales for these segments that account for a large share.
⚫ Vision: In the domestic market, we will consolidate our base by maintaining the sales levelin the semiconductor industry, which has been our main strength, while strengthening
sales for the infrastructure industry (gas, electric power industry, etc.), the petrochemicalindustry (decarbonization and new energy industry), and the machinery industry(especially manufacturing of lithium-ion batteries), where demand is forecasted to increase
due to the expected stable trend in the market.

Which overseas
market to focus on?

⚫ Which areas and segments we will focus in terms of sales in order to expand sales inoverseas markets, and strategies therefor⚫ Vision: In overseas markets, we will aim to further expand the market share of thesemiconductor industry in Asia and expand sales to North America and Europe. In North
America, we will continue to expand the market share of portable products, which are
currently the mainstay, and will strengthen sales of stationary products and maintenanceassociated with them.

2

3
Response to newtechnologicaldevelopments⚫ Strategies for focusing on technology development in response to changes across theindustry (decarbonization, IoT)
⚫ Vision: In order for the gas detection industry to respond to changes such as
decarbonization, carbon neutrality, and the IoT, RIKEN KEIKI group will lead thedevelopment of technologies and commercialization, including basic development, andsecure the safety of customers to realize a sustainable society.

42. Surrounding Environment

Internal Environment
Growth in net sales✓ The average annual growth rate had been 3–4% until FY2020.
However, the sales growth rate in the last two periods achieved
double-digit growth due to the rapid expansion of capital expenditure
for the semiconductor industry and lithium-ion battery factories, andthe large increase in demand for gas detectors.

Increase in percentage of overseas sales✓ Overseas sales have been increasing year by year, and the ratio ofoverseas sales to total sales has grown to over 40%. Focusing on
overseas markets will become even more important for RIKEN KEIKI
in the future.

Changes in percentage of sales by device type✓ The percentage of sales of stationary gas detection alarms has been
increasing year by year, and maintenance sales associated with thesales of stationary products have been strong, thus maintaining stablesales results.

Changes in sales by product and maintenance✓ Although the ratio of maintenance sales has relatively been on a
downward trend due to rapid growth in product demand and sales inrecent years, maintenance sales have steadily increased in line withsales of stationary products, and stable performance improvement is
expected in the future.

Growth in operating income✓ Along with the growth in sales, operating income is steadily increasing
every year. In particular, in the last three years, we have achieved
high productivity, with operating income margin exceeding 20%.

Results of shareholder returns✓ The basic policy is to provide continuous and stable dividends bycomprehensively taking into consideration the dividend payout ratio,
the ratio of dividends to shareholders’ equity, financial conditions, etc.

External Environment
PEST analysis of the environment surrounding RIKEN
KEIKI✓ The environment surrounding the overall manufacturing industry haschanged rapidly in recent years. Examples include measures toaddress carbon neutrality with a view to realizing a sustainable
society, a worldwide chip shortage, increased export and investment
restrictions due to the U.S.-China conflict destabilizing the situation,soaring raw material prices, introduction of smart factories and theuse of AI and data. These changes represent both risks andopportunities for RIKEN KEIKI group.

Changes in the overall market size of the
manufacturing industry✓ The number of manufacturing establishments in Japan decreased in
the four years from 2017 to 2021. On the other hand, although thesize of the manufacturing industry fluctuated due to the impact of
COVID-19 in 2020, it is expected to remain stable in the future.

Changes in overseas market by area in thesemiconductor industry✓ The overseas semiconductor industry has surged since 2020. As
semiconductor production in the United States has been strengthened
since 2020, production in the United States and Europe has increased.

Changes in overseas market by area in the lithium-ion
battery industry✓ The production volume of lithium-ion batteries is expected to increase
globally from 2022 to 2030. This is because the use of lithium-ionbatteries for renewable energy and plug-in vehicles is spreading andwider applications may emerge due to declining prices, and themarket is expected to continue to expand.

We will continue to meet customer demand and achieve sustainable growth byaccurately grasping the environment surrounding RIKEN KEIKI described above
and flexibly responding to various internal and external environmental changes.
5

3. Group Strategic Priority
3-1. Business Growth Strategy for Achieving the Vision
We will aim to expand the market through three strategies and become a global company forindustrial gas detection and alarm equipments by leveraging the advanced technologicalcapabilities of RIKEN KEIKI group.
1.Domestic Market
StrategyStrengthening of sales and product development
to increase market share in the domestic market➢➢

2.Overseas Market
Strategy

Promotion and enhancement of global expansionof the Riken Keiki brand➢➢➢3.New Domain Strategy(Sustainability Strategy)

In response to the recent surge in demand and in order to establish areasonable production system, we will rebuild the supply systemthrough workforce investment and capital expenditure.
We will enhance price competitiveness by improving productivity
brought about by cost reduction.

We will develop various systems including workforce investment andeducational one at overseas subsidiaries.
In order to accelerate the sales expansion, we will accelerate the cyclefrom product planning to overseas market and standard certification anddevelop the market ahead of competitors.
In addition to product sales, we will strengthen the overseas
maintenance structure.

Creation of markets by developing newtechnologies in response to industry changes➢➢

We will work to strengthen the marketing system, including market
research, across the entire organization to improve our ability to collectdemand information.
We will enhance our ability to propose new products based on market
requirements of the entire industry such as decarbonization and carbon
neutrality.
63. Group Strategic Priority
3-2. Group Management Base for Achieving the Vision
We will focus on laying the groundwork for implementing our business growth strategy throughfive strategies to strengthen the foundation of RIKEN KEIKI group.
1.Workforce
Investment Strategy

Further promotion of workforce investment
management for globalization➢➢➢

2.Supply Chain
Strategy

Restructuring of the production system andsupply chain➢➢

3.DX Strategy

We will further promote workforce investment management that values all thepeople of RIKEN KEIKI group.
With the passing on of the technological capabilities of RIKEN KEIKI group in mind,
we will establish an education system to commit ourselves to improving the skills ofeach employee and raise the technological capabilities overall.
We will achieve corporate growth centered on the people of RIKEN KEIKI throughthe development of educational and working environments.

We will develop and review BCPs to ensure a stable supply of products even during
a pandemic or natural disaster, and will make efforts to reduce production risks.
In order to deal with a short supply of parts, we will work to build sustainable
relationships with subcontractors and restructure the supply chain, including areview of production capacity.

Aggressive and defensive DX by using data➢➢

We will work to promote defensive DX and also further improve quality andproductivity by enhancing our data management capabilities through the use of theelectronic maintenance form system (SmartREAS) and the introduction of ERP andsales support systems (SFA) for maintenance and management.
We will strive to create new business opportunities through aggressive DX,
including the use of data attached to gas detectors.

4.IoT Strategy
5.Governance Strategy

7

3. Group Priority Strategy
3-2. Fundamental Strategy for Achieving the Vision
We will focus on laying the groundwork for implementing our business growth strategy throughfive strategies to strengthen the foundation of RIKEN KEIKI group.
1.Workforce Investment
Strategy
2.Supply Chain Strategy
3.DX Strategy

4.IoT Strategy

From selling goods to providing services➢➢

5.Governance Strategy

In recent years, due to the development of IoT technologies and smart security
initiatives, preventive maintenance and data utilization using data obtained fromproducts (hardware) are required.
We will strive to generate revenue through a new business model from selling
goods to providing services based on communication technology, the use of apps,
and cloud support.

Review of the governance structure as a global
company➢➢

We strive to improve corporate value through risk management, compliance,
stricter governance, and enhanced IT security.
We will review the control system of not only entities in Japan but also overseas
subsidiaries as RIKEN KEIKI group, and strengthen governance as a global
company.

8

4. Key Management Index
4-1. Management Plan

STEP 1: FY2023
Strengthening of theManagement Foundation✓ We will establish a managementfoundation centered on humanresources of RIKEN KEIKI and
prepare for new segments.
✓ While maintaining the sales level inthe semiconductor industry, we will
strengthen sales for the
infrastructure industry (gas, electric
power industry, etc.), thepetrochemical industry(decarbonization and new energy
industry), and the machineryindustry (manufacturing of lithiumion batteries), where demand isforecasted to increase due to the
expected stable trend in the market.

STEP 2: FY2024

STEP 3: FY2025
Evolution to a Global Company✓ We will strengthen our marketing system
and work to enter new segments while
maintaining existing sales.

✓ We will maintain the top
market share in the domestic
market and become a global
company of top-class gas
detection alarms in theoverseas market, boasting thetechnologically advanced RK
brand.

Response to Changes andStrengthening of Overseas
Markets✓ In order for the gas detector industry to
respond to changes such as
decarbonization, carbon neutrality, andthe IoT, we as RIKEN KEIKI will lead thedevelopment of technologies andcommercialization, including basic
development, and develop new markets torealize a sustainable society.
✓ In overseas markets, we will aim tofurther expand the market share of thesemiconductor industry in Asia andexpand sales to North America and Europe.
In North America, we will continue toexpand the market share of portableproducts, which are currently themainstay, and will strengthen sales ofstationary products and maintenancesystems associated with them.

✓ We will lead the developmentof new technologies and newmarkets such as for carbon
neutrality and decarbonizationin order to raise brandawareness of RIKEN KEIKI in
overseas markets.

Sales
image

46.4 billion yen

50 billion yen or more

Operatingincomeimage

11.6 billion yen

12 billion yen or more
9

4. Key Management Index
4-2. R&D Expenditure
We will keep the R&D expenditure, the core of the Group Strategic Priority, at a level ofaround 6% in the ratio of R&D expenses to net sales➢

R&D Expenditure(Million Yen)

4,000

R&D Expenditure

10.0%

Ratio of R&D Expenditure to net sales

9.0%

3,500

8.0%
3,000
7.0%
2,500

6.0%

2,000

5.0%
4.0%

1,500

1,000

1,808

1,883

1,439

1,784

1,908

2,135

2,408

3.0%
2.0%

500

1.0%

0

0.0%
FY2016FY2017FY2018FY2019FY2020

FY2021

FY202210

4. Key Management Index
4-3. Capital Expenditure➢➢

In recent years, there has been some large-scale capital investment, such as the construction of the head
office building and the production center, but capital expenditure is expected to be around 2 billion yen
From FY2023 onward, we plan to increase production capacity in order to cope with the increase in sales inrecent years (installation of floors of the production center and introduction of production equipment) and toinvest in equipment for the introduction of ERP. In addition, we may develop bases to expand sales andmaintenance in Japan and overseas

Capital expenditure plan

(Million Yen)

6,000

5,000

4,000

3,000

Including construction costof production center(completion)

Including construction costsof production center (e.g.
construction starts) andacquisition of land for
Amagasaki construction

Includingconstruction costs
for the new head
office building

4,182

Including capital
expenditure such as
ERP implementation

4,298

Includingconstruction costs
for the new head
office building

2,815

Renewal of test andresearch equipment
and production
equipment

2,001
2,000

1,385
1,057
1,000

678

0
17年3月期18年3月期19年3月期20年3月期21年3月期22年3月期23年3月期11

4. Key Management Index
4-4. Changes in ROE
ROE is one of the key indicators for shareholders, and we will aim to maintain the level above
double digits while assuming a stable net income level.

➢

Changes in net income and ROE(Million Yen)

Net income

ROE

25.0%

12,00020.0%

10,000

8,000

15.0%

6,000
10.0%

8,670

4,000

5,964
2,000

4,127

3,174

4,099

4,342

5.0%

4,691

0

0.0%
FY2016FY2017FY2018FY2019FY2020

FY2021

FY202212

4. Key Management Index
4-5. Shareholder Return➢

The basic policy is to provide continuous and stable dividends by comprehensively taking into
consideration the dividend payout ratio, the ratio of dividends to shareholders’ equity,
financial conditions, etc.
Changes in dividend payout ratio (consolidated and non-consolidated)
Dividend per share (Yen)Consolidated dividend payout ratio (%)

Non-consolidated dividend payout ratio (%)(Reference) Dividend on equity ratio

100

30.0%

25.0%
80

80

80
20.0%

60
60

15.0%

36

40

40

42
10.0%

30
24

20
1.5%

1.8%

2.0%

2.0%

2.0%

2.6%

3.1%

2.8%

0

5.0%

0.0%
FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023(Plan)
13

The earnings forecasts and other forward-looking statements
contained in this document are based on information currently
available to the Company and certain assumptions deemed
reasonable by the Company. The Company does not promise
the achievement thereof. Actual results may differ significantly
due to various factors.