DMG Mori : Third Quarter Results IR Conference Consolidated financial settlement Q&A

Dear investors,

We announced our financial results for the third quarter of FY2018 on November 7, 2018. This document is a summary of Q&A to our results.

Agenda

・Management analysis

・Selected questions (including anticipated ones) and answers

Management Analysis ＜Key message＞ １． Focused on multi-axis, automation, and connected solutions at IMTS in the United States and AMB in Germany ２． Increased average order price by 8% through value-creating proposals ３． Expanded and renovated FAMOT to a cutting-edge digitized factory ４． Increased accumulated sales cash flows of FY2018 Q3 to JPY 22.5 bn (JPY 3.6 bn year-on-year)

５． Revised annual order intake and turnover forecasts upwards ６． Normalization of supply chain network as a challenge in FY2018 Q4 and onwards ７． Continued efforts to increase turnover, profit, and dividends in FY2019

We successfully concluded two major exhibitions in September 2018, IMTS in the United States and AMB in Germany. We have already upgraded our exhibition contents by helping our customers to first-hand experience the benefits of multi-axis, automation, digitization and connected solutions. This approach resulted in an increased number of orders with automation from 17% in FY2017 to 24% in FY2018（Jan-Sep）. Accordingly, average order price increased by 8% to JPY 35.1 mil in FY2018（Jan-Sep） from JPY 32.6 mil in FY2017（Jan-Sep）. Our continued efforts to strengthen direct sales (except for Japan), in-house engineering and direct service led to gaining trust from customers and capturing market demand. Once again, we made an upward revision of our full-year order forecast from JPY 480 bn to JPY 490 bn.

In production, FAMOT factory has been expanded and renovated with the most advanced digitization. It is now an experimental facility of Industry4.0/Connected Industries, where CELOS, operating software for machining developed by DMG MORI, collaborates with 3 group companies: ISTOS, a company designing software for production planning; WERKBRiQ, a software designer for preventive and conventional maintenance; DMG MORI Software Solutions, a designer of Technology Cycles. With the significantly-increased productivity, FAMOT is now capable of meeting market demands for CMX and CLX series in shorter lead time. It has also enhanced production capacity of key components equipped on DMG MORI machines, such as large-sized casting parts and spindles, which will lead to higher production efficiency and cost reduction for the whole group.

While capturing market demand successfully, normalization of supply chain network remains as a challenge to production. DMG MORI produces key mechanical components such as spindle units, ball screws and turrets in-house, because they define machine tools' accuracy, performance and durability. At the same time, in-house production of such components gave us a competitive advantage to shorten production lead time. However, procurement from external suppliers, including that of linear guides, sheet metal, and machined parts, is still delayed in Q3 (July-September). This resulted in higher cost in production and logistics. We intend to solve the remaining challenges in supply chain by Q4, and recover the integrated strength in sales,production and services.

With the above-mentioned background, FY2018 full-year turnover forecast is revised upward from JPY 470 bn to JPY 480 bn. However, the operating profit remains at JPY 38 bn., carefully considering the cost increase due to a challenging situation in the supply chain. Free cash flow, which is equivalent to sales cash flow minus investment cash flow, is successfully accumulated to JPY 22.5 bn by Q3 (JPY 3.6 bn year-on-year), and the net interest-bearing debt has been reduced as planned.

FY2019 business plan is under development, and the details will be announced at the full-year financial report on February 2019. Current targets are approximately JPY 500 bn in turnover, JPY 40 bn or more in operating profit, and continuously higher dividend than during the current term. The focus area in FY2019 includes: 1) Adapting ourselves to the biggest industrial transition in a decade with multi-axis machines, digitization, diversified material and additive manufacturing, 2)

Efficient management of Global Parts Centers in Iga, Munich and the United States using AI technology, 3) Seeking new investment opportunities, thanks to the increasingly stable synergy effect with AG, well-managed cash flow and the net debt equity ratio of 0.5 times in the foreseeable future, 4) Continuous efforts in better working environment and investments to develop employees' skills. By implementing the four initiatives, we will ensure the business growth by 2020 and beyond.

Q&A

Table of contents

Q: Describe the order intake development of machine tools in FY2018 (Jan-Dec)..................5Q: Which is the major factor for the order intake increase: higher order price or higher volume?

...................................................................................................................................................5

Q: Describe the order intake forecast of FY2019 (Jan-Dec).....................................................5

Q: How is the order intake in Chinese market?.........................................................................5

Q: Describe the outcome of IMTS and AMB. ............................................................................ 6

Q: Why is the production volume lower than planned? ............................................................. 6

Q: Describe the potential impact of FAMOT factory renovation. ............................................... 6 Q: Describe positive and negative factors against accumulated operating profit by Q3 (Jan-

Sep). .......................................................................................................................................... 7 Q: Why does the full-year operating profit forecast remain the same, while the turnover forecast

is revised upwards? ................................................................................................................... 7 Q: As for FY2019 full-year business forecast, describe the background for JPY 500 bn in

turnover and JPY 40 bn or more in operating profit. ................................................................. 8

Q: Based on the guidance of FY2019, what is the expected outcome in the cash flow? ......... 8

Q: Describe your dividend payout policy for FY2019. ............................................................... 8

Q: How does the dumping of vertical machining centers in China affect DMG MORI? ............ 9

Q: Describe the order intake development of machine tools in FY2018 (Jan-Dec).

A: We have revised FY2018 full-year order forecast upwards from JPY 480 bn to JPY 490 bn and expect year-on-year increase of 9%. Order intake of machine tools hit the bottom in the 2nd half of FY2016 but has recovered ever since. The year-on-year growth rate is rather moderate, as the industry went through significant growth in the 2nd half of FY2017, but the order intake remains at a high standard. The orders to DMG MORI show solid development in Japan and Europe, while they started to adjust in the United States and China recently. The general machinery, aircraft and medical industries as well as SMEs (Small Medium Enterprises) have supported stable orders.

Q: Which is the major factor for the order intake increase: higher order price or higher volume?

A: The accumulated order intake of machines (excluding parts and service) by FY2018 Q3 (Jan-

Sep) was increased by 14% on year-on-year basis. The number of machines has been increased up by 6% and the average order price by 8%, therefore the latter was the main growth factor.

Higher share of high-end machines, such as multi-axis and mill-turn machines and more packaged solutions with peripheral equipment and software resulted in higher average order price.

Q: Describe the order intake forecast of FY2019 (Jan-Dec).

A: According to VDW/Oxford Economics' announcement in October, global demand for machine tools in FY2019 will rise by 4% from FY2018. DMG MORI currently targets 2% order increase from this year to JPY 500 bn. Despite our less optimistic view over the market, we believe that the value-creating solutions we are offering, such as multi-axis machines, automation, and cutting-edge machines like Additive Manufacturing, have been gradually appreciated via direct sales in overseas and first-hand engineering and service around the world, and will hopefully lead to higher average order price and order intake next year.

Q: How is the order intake in Chinese market?

A: Our order inflow rose by 28% y/y in 9-month (Jan-Sep) and by 12% y/y in 3-month (Jul-Sep),

the figure of which was better than that of JMTBA (Japan Machine Tool Builders Association). A couple of factors contributed to our healthy order growth; the government encourages the sophistication of manufacturing industry, and our Chinese customers such as truck, buses and energy related builders accelerated the introduction of high valued added machines like 5-axis, multi-axis and horizontal machines with automation system including peripheral equipment and 5