DMG Mori : Summary of Consolidated Financial Statements for the Third quarter of Fiscal Year 2019 ended September 30, 2019 (IFRS basis)

Date: November 7, 2019

Summary of Consolidated Financial Statements for the third quarter of Fiscal Year 2019 ended September 30, 2019 (IFRS basis)

(All financial information has been prepared based on the original Japanese-language document, Summary of Consolidated Financial

Statements for the third quarter announced on November 7, 2019)

Listed company name:	DMG MORI CO., LTD.
Stock exchange listing:	First Section of Tokyo Stock Exchange
Code Number:	6141	URLhttps://www.dmgmori.co.jp
Company Representative:	Masahiko Mori, President
Contact Person	Hirotake Kobayashi, Vice President, Accounting / Finance HQ, Executive Officer
Phone:	[phone]

Filing date of quarterly financial statements: November 13, 2019

Estimated starting date of dividend paying: No

Preparation of supplementary explanatory materials: Yes

Holding of quarterly earnigs release conference: Yes

1． Consolidated business results of the third quarter ended September 30, 2019 (January 1, 2019 to September 30, 2019)
											(Note: All amounts less than one million are disregarded)
(1) Consolidated business results									(% of change from same period in the previous year)
													Income attributable to	Total comprehensive
		Sales revenues	Operating result		Earnings before Taxes	Quarterly profit
													owners of the parent	income
		million yen		%	million yen		%		million yen	%	million yen	%	million yen	%	million yen		%
Third quarter				△1.1
	349,342		28,573		21.5	24,158	20.5	15,602	14.0	15,266	14.4	12,403		21.7
ended September 30, 2019
Third quarter
	353,238		16.5	23,507		57.9	20,055	71.4	13,685	92.2	13,350	94.9	10,190		3.8
ended September 30, 2018
		Basic earnings per	Diluted earnings per
		share		share
				Yen			Yen

Third quarter

118.68118.29

ended September 30, 2019 Third quarter

103.75102.91

ended September 30, 2018

(Note) Basic earnings per share is based on the earning amount which excludes earnings attributed to owners of hybrid capital.

1. Consolidated financial position

Ratio of equity

Equity attributable to

Equity per share attributable to

Total assets

Total Equity

attributable to owners of

owners of the parent

owners of the parent

the parent

million yen

million yen

million yen

%

yen

September 30, 2019

536,122

119,322

115,989

21.6

945.52

December 31, 2018

528,423

114,166

111,113

21.0

910.25

(Note) Ratio of equity attributable to owners of the parent and equity per share attributable to owners of the parent are based on the equity amount which includes

amounts of hybrid capital.

2．Dividends

Dividends per share

Record Date

1Q

2Q

3Q

Year-end

Annual

yen

yen

yen

yen

yen

December 31, 2018

-

25.00

-

25.00

50.00

December 31, 2019

-

30.00

-

December 31, 2019 (Forecast)

30.00

60.00

(Note) Revision of dividend forecast in the current quarter: No

3．Consolidated earnings forecast for Fiscal Year 2019 (January 1, 2019 to December 31, 2019)

(% of change from same period in the previous year)

Income attributable to

Sales revenues

Operating result

Basic earnings per share

owners of the parent

million yen

%

million yen

%

million yen

%

yen

Full Year 2019

485,000

△3.2

37,000

2.0

19,500

5.3

151.15

(Note)

Revision of consolidated earnings forecast in the current quarter: Yes

・Reflecting the order decrease in the first half of the year, which is a reaction to the strong demand in market growing until last year, we have made a downward revision of sales revenues from the previous announcement released on February 12, 2019. On the other hand, as a result of continuous efforts to improve gross profit and reduce costs, operating result and income attributable to owners of the parent are expected to exceed the figures given in the previous announcement. For details, please refer to the "1. Qualitative Information Regarding Quarterly Settlement of Accounts (3) Explanation of forecasts and other projections" on page 4.

・Exchange rate used for consolidated earnings forecast for fiscal year 2019: JPY 109.0 /USD, 122.0 /EUR

4. Others

1. Changes in significant subsidiaries during the third quarter ended September 30, 2019: No
2. Changes in accounting policies applied and changes in accounting estimates
3. 1. Changes in accounting policies required by IFRS: Yes
   2. Changes in accounting policies other than the above: No
   3. Changes in accounting estimates: No
4. Number of shares outstanding (Common shares)
5. 1. Number of shares outstanding at the end of the period (including treasury shares)

September 30, 2019:	125,953,683	December 31, 2018:	125,953,683
2. Number of treasury shares at the end of the period
September 30, 2019:	3,713,813	December 31, 2018:	4,456,599

3. Average number of outstanding shares during the period (cumulative from the beginning of the period)

January - September 2019: 121,874,521

January - September 2018: 120,928,409

(Note) The Company implemented trust-type employee stock ownership incentive plan in April 2018. Therefore, the shares of the company held by DMG MORI Employee Shareholders Association Exclusive Trust are included in the number of treasury shares at the end of period (1,935,900 shares as of September 30, 2019) and the number of treasury shares deducted in calculating the average number of outstanding shares during the period (2,110,190 shares as of September 30, 2019).

• Information regarding implementation of quarterly review procedures

These quarterly financial results are not subject to quarterly review procedures.

• Proper use of the earnings forecasts and other notes

The above forecast is based on information available as of the release of this report and assumptions of several uncertain factors which may affect the company's results. Actual results might be different from the above estimates due to subsequent changes in the circumstances. Regarding Fiscal Year 2019(Forecast), please see "1. Qualitative Information Regarding Quarterly Settlement of Accounts (3) Explanation of forecasts and other projections" on page 4.

We will upload additional explanation on November 7, 2019.

(Attached Documents) Index
1. Qualitative Information Regarding Quarterly Settlement of Accounts
(1)	Explanation of operating results ..............................................................................................................................	2
(2)	Explanation of financial position ..............................................................................................................................	4
(3)	Explanation of forecasts and other projections........................................................................................................	4
2. Quarterly Consolidated Financial Statements
(1)	Quarterly consolidated statements of financial position ..........................................................................................	5
(2)	Quarterly consolidated statements of income .........................................................................................................	7
(3)	Quarterly consolidated statements of comprehensive income................................................................................	8
(4)	Quarterly consolidated statements of changes in equity .........................................................................................	9
(5)	Quarterly consolidated statements of cash flows ..................................................................................................	11
(6)	Notes on going concern assumption .....................................................................................................................	13
(7)	Notes on quarterly consolidated financial statements ...........................................................................................	13

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1. Qualitative Information Regarding Quarterly Settlement of Accounts

1. Explanation of operating results

For the first three quarters of the fiscal year 2019 (from January 1 to September 30), the sales revenues were 349,342 million yen (2,847,130 thousand EUR), the operating result was 28,573 million yen (232,873 thousand EUR), and earnings before taxes were 24,158 million yen (196,894 thousand EUR). The income attributable to owners of the parent was 15,266 million yen (124,424 thousand EUR). (Euro amount is converted from yen at 122.7 yen, the average exchange rate between January and September 30).

DMG MORI facilitates shop automation and digitization, and a wider use of 5-axis control machines and multi-axis machines in the manufacturing industry as its business strategies. We provide the cutting-edge machines equipped with Technology Cycles together with automation systems and DMQP (DMG MORI Qualified Products) to help our customers achieve integration of manufacturing processes. At the Iga Campus, verification experiments on digital technologies will be carried out using the next-generation communication standard "5G." We introduced the web portal "my DMG MORI" as a service to directly provide customers added value through shop digitization. It enables customers to check basic information, manuals and on-site service histories of their machines by plant, to directly send requests for repair and recovery services online with pictures and images attached, and to learn the shipping status of spare parts.

Moreover, we took a stake in a production management software provider TULIP to support process improvement for SME (Small- to Medium-sized Enterprise) customers by use of digital technologies. Its manufacturing application platform, which is easy to use with intuitive operation, requires no professional programming knowledge, yet realizes improvement in manufacturing processes and the efficiency. The software has already been used in spindle production processes at the Pfronten Plant, Germany, contributing to higher productivity and better quality. We will strengthen the production capacity in an effort to respond to the future demand expected to grow as a result of such strategic approaches of the company. In India, we began outsourcing the production of a vertical machining center for the Indian market to Lakshmi Machine Works. In Japan, large-scale renovations of the Iga Campus and Nara Campus are scheduled in the long-term business plan until 2023.

For the technological aspect, we have developed the internal system for quick search of the past order and machine recovery records, using AI. The new system developed by the DMG MORI Emerging Technologies Laboratories links a keyword to multiple related words by use of the in-house manufactured AI, enabling engineers to search and identify the similar past records such as product specifications and reports more easily. As a result, it saves their time for preparing quotations, and designing, repairing and recovering machines regardless of the variation in their skill levels.

We will take orders for the NHX series equipped with the Zero Sludge Coolant Tank as standard in November. With our new technology, coolant is stirred in the tank, and fine sludge is efficiently collected to control accumulation. Making it a standard feature contributes to reduction in cleaning time and machine failure frequency, and improvement in efficiency at more customer shops. DMG MORI strives to achieve higher customer value and social value creation through the development of leading-edge technologies.

As for sales, we had a grand opening ceremony for the DMG MORI Technology Center in Czech in August, and the Famot Plant Open House in Poland in October, following the Innovation Days held at the Iga Campus in July. We also participated in EMO held in Hannover, Germany in September and MECT held in Nagoya in October. At EMO, we showcased 45 advanced machines including the world premiere models and 29 automation systems in the entire Hall 2 with an area of 10,000 m2. At MECT, we presented practical and technological know-how by giving live demonstrations on all the display models. Various technologies not on the show were also presented in the videos of digital factory consisting mainly of MATRIS, large-scale automation systems and CELOS. In November, we will have the Seebach Plant Open House in Germany to offer customers the opportunity to experience the DMG MORI's latest technologies.

Under the motto of "Play Hard + Be Dynamic," "Study Continuously + Be Open," and "Work Together + Be Innovative," the company supports physical and mental well-being and a fulfilled life for each employee. One of the company's clubs "BIRDMAN HOUSE IGA" won the 42nd Birdman Rally 2019 (hosted by Yomiuri Telecasting Corporation), where it proudly set a new record in the Human Power Propeller Division. The body components of the human-powered aircraft were machined on the company machines at the Iga Plant.

"DMG MORI Global One", the new boat of the DMG MORI SAILING TEAM, has been completed, and the launching ceremony was held in Lorient, France. The components were also produced on the DMG MORI machines. The team will participate in the qualifying races such as "The Transat" and "Transat NY-Vendée" after training in France and Portugal with a target for participation in "Vendée Globe 2020," a non-stop, solo, round-the-world yacht race without assistance, to be held in November 2020. We continue a research grant activity for MTTRF (Machine Tool Technologies Research Foundation), grant scholarship for doctoral course students through Mori Manufacturing Research and Technology Foundation, and hosting of the Cutting Dream Contest to contribute to further advancement of the manufacturing industry.

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