Amada : Medium-term Business Plan 2025（with script）

AMADA CO.,LTD.

Medium-Term Business Plan Announcement Presentation

May 19, 2023

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In the context of Amada's medium-term business plan 2025, which is aimed at our Long-Term Vision 2030, I would like to explain our medium-term business plan for the next three years, looking ahead from the new structure to the medium to long term.

Before I start explaining this medium-term business plan 2025, I would like to explain the overall flow.

To begin with, we will review Amada's management activities since 2016 and where we stand today. Next, I will talk about understanding changes in the external environment and setting medium- and long-term goals for reform. And finally, our growth strategy that was already announced last year, which is focused on the long-term target of 2030 and sales of JPY500 billion. In order to achieve our Long-Term Vision 2030, I would like to explain how we will create the figures for the next three years.

In our medium-term business plan 2025, we have set a goal of JPY400 billion in sales, and I will explain how we will steadily achieve this goal. Next, with an eye on our long-term growth strategy, I would like to explain the challenges that we have initiated over the past three years to leap forward to further growth. Third, I will explain where to invest management capital and how to grow, and as for capital policy, I will explain cash allocation and shareholder returns. And fourth, as for ESG management and system reinforcement, I will explain our corporate social responsibility and initiatives.

These are the outline of this presentation.

I will now explain the contents in accordance with these points.

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First is the review of Amada's management activities and where we stand today.

We started our medium-term business plan in 2016, and two years later, in FY2018, we posted sales of JPY338.1 billion and operating income of JPY45.1 billion, record highs at the time.

However, there was a subsequent downturn due to the US-China trade friction and the COVID- 19 pandemic in 2020. In 2021, demand stagnated due to uncertainty about the future of global economic activity, caused by material shortages and price hikes in steel, semiconductors, electronics, and other materials, as well as rising energy costs due to Russia's invasion of Ukraine. We were not able to expand our business performance in line with our original medium-termfive-year plan.

This slowdown in economic activity was reversed in FY2021, creating significant demand. And in the previous fiscal year, FY2022, we were able to expand our sales, including contracts and revenues, to a record high of JPY365.6 billion. While some companies are struggling with material shortages and price hikes due to rapid demand growth, influenced by measures of countries for economic recovery, Amada has been able to continue to manufacture products and has built a structure that is resilient to manufacturing risks that will lead to profitability.

Thus, as an example, a manufacturing plant in North Carolina, USA, was launched in 2019 as an investment with an eye to growth. By manufacturing locally in the North American market, we are able to secure an overwhelming supply volume against competing European manufacturers, who mainly import from Europe, and we are able to contribute to sales without interrupting orders for shipments.

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Despite these global economic risks, looking at the status of achievement of specific strategic measures set forth in the 2016 Five-YearMedium-Term Plan, the first fiber laser ratio expansion achieved its target of 80% at an early stage and reached 96% in FY2021.

Second, the automation ratio for bending products was 33%, compared to a target of 30%, and third, the ratio of after-sales service, which is a sustainable business, was 32%, compared to a target of 30%. The fourth, the ratio of overseas sales to total sales, was 59%, compared to a target of 55%.

These four themes represent the status of strategic business transitions as KPIs and are in line with our growth strategy.

For capital policy, in terms of six years targeted for the medium-term business plan of FY2016, the dividend payout ratio was 57.1% on average, compared to a target of 50%, and the Company returned profits to shareholders. Also, two share buybacks and cancellations resulted in a total return ratio of 69.3% on average.

In summary, we have not achieved ROE on sales against the previous medium-term business plan, partly due to changes in the social and economic environment, but we have switched to internally focused products, expanded earnings from services, increased our overseas ratio and automation ratio, and promoted shareholder returns.

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Amada will continue to grow sustainably, aiming to become a 100-year company.

In the medium-term business plan 2025, we will focus on strengthening the management foundation, introduce new products, and promote a clear plan to achieve sales of JPY400 billion and ROE of 8% or more through a sales strategy centered on AGIC.

As the subsequent long-term strategy toward 2030 aims to achieve net sales of JPY500 billion and ROE of 10% or more, this medium-termthree-year period is a period of preparation for making a leap forward to the next stage of growth, and this year will be the start of new activities. This activity will address new markets and industries with new technological developments.

In considering the next three years, starting this fiscal year, and the medium-term business plan 2025, we believe that Amada's current corporate environment will lead to future growth strategies by responding to each of its businesses, including intensifying global competition, investment in growth areas, ESG management as a social responsibility, business expansion, and shareholder returns. The medium-term business plan 2025 summarizes these as key themes.

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