Fanuc : Consolidated Quarterly Financial Results For the six months ended September 30, 2020

(TRANSLATION)

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Consolidated Quarterly Financial Results

(based on Japanese standards)

For the six months ended September 30, 2020

		October 29, 2020
Company name: FANUC CORPORATION	Stock exchange listing: Tokyo Stock Exchange
Stock code:	6954	URL: https://www.fanuc.co.jp/eindex.html
Representative: (Title) President	(Name) Kenji Yamaguchi
Contact:	(Title) Manager, Public Relations	(Name) Keisuke Fujii TEL: [phone]

Scheduled date of filing quarterly report: November 6, 2020

Scheduled date of commencing of dividend payments: December 1, 2020

Availability of supplementary briefing material on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Scheduled

1. Consolidated Financial Results for the Six Months Ended September 30, 2020 (April 1, 2020 - September 30, 2020)

(1) Consolidated Results of Operations

				(% represents changes from the previous corresponding Six-month period.)
Six months	Net sales			Operating income		Ordinary income	Net income
ended				attributable to owners
September 30																		of parent
	Millions of yen		%	Millions of yen			%		Millions of yen		%		Millions of yen		%
2020	230,411		(11.7)		32,321			(34.1)				38,220		(33.1)	28,112			(30.0)
2019	260,953		(24.4)		49,024			(50.2)				57,090		(49.0)	40,185			(50.8)
Note: Consolidated	comprehensive income:	April-September 2020:	¥34,359 million 59.1%
						April-September 2019:	¥21,593 million (75.9)%
Six months	Net income			Net income
ended			per share
per share
September 30			(diluted)
2020	Yen			Yen
146.55			-
2019	208.91			-
(2) Consolidated Financial Position
	Total assets		Net assets			Equity ratio
	Millions of yen		Millions of yen				%		90.2
September 30, 2020	1,503,237		1,363,826
March 31, 2020	1,512,499		1,362,865						89.6	2020: ¥1,355,100 million
(Reference) Equity: September 30, 2020: ¥1,355,196 million			March 31,
2. Dividends
						Dividends per share
	1st Quarter		2nd Quarter	3rd Quarter		Year-end	Full year
			Dividends
FY2019	Yen			Yen			Yen			Yen			Yen
-				125.35				-			174.65		300.00
FY2020	-				87.93
FY2020										-			-			-
(forecast)

Note: We have changed the forecasts of dividends from the latest ones.

Note: The year-end dividends for the year ended March 31, 2020 consist of ordinary dividends of ¥103.79 and special dividends of ¥70.86.

Note: The forecasts of year-end dividends for the year ending March 31, 2021 will be disclosed promptly upon their availability.

3. Consolidated Financial Forecasts for the Year Ending March 31, 2021 (April 1, 2020 - March 31, 2021)

(% represents changes from the previous fiscal year.)

	Net sales		Operating income	Ordinary income	Net income	Net income
		attributable to
		per share
							owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Fiscal period	502,500	(1.1)	85,400	(3.3)	96,300	(6.3)	71,800	(2.1)	374.30

Note: We have changed the forecasts of financial results from the latest ones.

Note: Actual results may differ from these forecasts, subject to various conditions, including how far the coronavirus (COVID-19) will further spread, and when the pandemic will end. We will promptly publish new information, which may greatly affect actual results if any, upon their availability.

*Notes

(1) Changes in Significant Subsidiaries during the period

(changes in specific subsidiaries that caused change in scope of consolidation) : No

(2) Adoption of Simplified and Specifically Applied Accounting Method for Quarterly

Consolidated Financial Reporting	:	No
(3) Changes in Accounting Principles and Accounting Estimates, and Revisions/Restatements
1.	Changes associated with changes in accounting standards	:	No
2.	Changes in accounting principles other than 1	:	No
3.	Changes in accounting estimates	:	No
4.	Revisions/restatements	:	No

(4) Number of shares outstanding (Common shares)
1. Number of shares outstanding at the end of the period (including treasury stocks)	204,031,841
September 30, 2020	201,922,097	March 31, 2020
	shares		shares
2. Number of treasury stocks	10,100,486	March 31, 2020	12,205,848
September 30, 2020
	shares		shares
3. Average number of shares during the period	April-September 2019	192,359,131
April-September 2020	191,823,779
	shares		shares

• The report of the quarterly financial results is not subject to audit by certified public accountant or audit firm.
• Any forward looking statements such as financial forecasts described in this report are subject to uncertain factors such as supply and demand trends, industry competition, economic conditions, and others in major markets. Actual results may differ from these forecasts. The forecasts of the year-end dividends for the year ending March 31, 2021, will be disclosed promptly upon their availability.

Table of Contents of Accompanying Documents

1. Results of Operations and Financial Position

2

1. Results of Operations 2
2. Financial Position 3
3. Financial Results Forecasts 4

2. Consolidated Quarterly Financial Statements

5

1. Consolidated Quarterly Balance Sheet 5
2. Consolidated Quarterly Statement of Income and
   Consolidated Quarterly Statement of Comprehensive Income 7

Consolidated Quarterly Statement of Income	7
Consolidated Quarterly Statement of Comprehensive Income	8

1. Consolidated Quarterly Statement of Cash Flow 9

3. Other Information

10

1. Changes in Significant Subsidiaries during the period 10
2. Adoption of Simplified and Specifically Applied Accounting
   Method for Quarterly Consolidated Financial Reporting 10
3. Changes in Accounting Principles and Accounting Estimates, and
   Revisions/Restatements 10
4. Note on Premise of a Going Concern 10
5. Note on the Substantial Change in Shareholders' Equity 10

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1. Results of Operations and Financial Position

(1) Results of Operations

Regarding the circumstances surrounding the FANUC Group during the first six-month period of the fiscal year ending March 31, 2021 (April 1, 2020 - September 30, 2020), the market conditions became harsh owing to factors including an ongoing global trend of reduction in capital investment due to the impact of the spread of the coronavirus (COVID-19). However, in addition to recovery first taking place in China, other regions also rebounded gradually in the latter part of the period. The FANUC Group has striven to maintain the delivery of products and service activities for our customers while placing utmost priority on preventing the spread of COVID-19. In addition, to deal with changing market conditions, we fortified our corporate structure by reducing expenses, reviewing unnecessary and non-urgent capital investment, and streamlining business operations, among other measures.

During the six months from April to September 2020, FANUC posted consolidated net sales totaling ¥230,411 million, down 11.7%, consolidated ordinary income totaling ¥38,220 million, down 33.1%, and net income attributable to owners of parent totaling ¥28,112 million, down 30.0%, compared with the corresponding period of the previous fiscal year.

An overview of the results for each business division is as follows:

In the FA Division, demand in the machine tool industry, the primary market for FANUC CNC systems, recovered and remained strong in China. Demand in India is also undergoing a gradual recovery, mainly associated with agricultural machinery and motorcycles. Domestic demand in Japan, as well as in South Korea and Taiwan remained sluggish, and demand continued to decline in Europe as well, where the impact of lockdowns was significant in the first quarter. Nonetheless, every region is seeing gradual increases in demand with exports to the Chinese market. Global demand for lasers remained sluggish, and severe competition with overseas manufacturers continues. As a result, net sales in the FA Division amounted to ¥67,427 million, down 12.2% compared with the corresponding period of the previous fiscal year.

In the Robot Division, sales remained strong in China on account of IT-related sales, in addition to sales associated with EVs, construction machinery, heavy machinery and other types of machining equipment. In the Americas, sales for general industries were robust, and incorporating EV-related demand for the automobile industry, sales trended toward recovery. On the other hand, sales in Japan and Europe were sluggish. As a result, net sales in the Robot Division amounted to ¥88,037 million, down 10.7% from the corresponding period of the previous fiscal year.

In the Robomachine Division, sales of the ROBODRILLs (compact machining centers) increased, buoyed by gradually rising demand in the computer and tablet markets in China. Although sales of ROBOSHOTs (electric injection molding machines) decreased year-on-year, we focused efforts on expanding sales mainly in the medical market. With regard to ROBOCUTs (wire-cut electric discharge machines), sales fell in line with the sluggish market. As a result, net sales in the Robomachine Division

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amounted to ¥39,451 million, down 3.3% compared with the corresponding period of the previous fiscal year.

The Service Division received fewer requests for the Company's services on account of suspended operations at customers' factories and falling factory operating rates, among others, due to the impact of lockdowns in countries throughout the world. However, requests for the Company's services are on a recovery trend in line with the resumption of economic activities. As a result, net sales in the Service Division amounted to ¥35,496 million, down 20.8% compared with the corresponding period of the previous fiscal year.

1. Financial Position

• Assets, Liabilities and Net Assets

Total assets were ¥1,503,237 million, down ¥9,262 million compared with the end of the previous fiscal year.

Total liabilities were ¥139,411 million, down ¥10,223 million compared with the end of the previous fiscal year.

Total net assets were ¥1,363,826 million, up ¥961 million compared with the end of the previous fiscal year.

We cancelled our treasury shares exceeding the 5% of the total number of issued shares (2,109,744 shares, ¥22,095 million) on May 29, 2020 based on the shareholder return policy that we announced on April 24, 2020. (This policy is written in the Consolidated Annual Financial Results for the Year ended March 31, 2020.) (There was no effect on the amount of total net assets.)

• Cash Flow

Cash and cash equivalents (hereinafter "Cash") for the first half of the current fiscal year amounted to ¥497,471 million, down ¥17,537 million from the end of the previous fiscal year.

(Cash flow from operating activities)

Cash provided by operating activities during the six months ended September 30, 2020 amounted to ¥47,121 million, down ¥25,842 million compared with the same period of the previous fiscal year. This was mainly due to the decrease in income before income taxes.

(Cash flow from investing activities)

Cash used in investing activities during the six months ended September 30, 2020 amounted to ¥31,073 million, down ¥21,425 million compared with the same period of the previous fiscal year. This was mainly due to the decrease in the purchases of property, plant and equipment.

3

(Cash flow from financing activities)

Cash used in financing activities during the six months ended September 30, 2020 amounted to ¥34,385 million, down ¥80,450 million compared with the same period of the previous fiscal year. This was mainly due to the decrease in dividends paid.

(3) Financial Results Forecasts

The Company anticipates that in addition to strong IT-related demand, demand for robots will increase, and as such, forecasts consolidated financial results for fiscal 2020 (the fiscal year ending March 31, 2021), as follows.

However actual results may differ from these forecasts, subject to various conditions, including how far the coronavirus (COVID-19) will further spread, and when the pandemic will end. We will promptly publish new information, which may greatly affect actual results if any, upon their availability.

For the fiscal year 2020 (April 1, 2020 through March 31, 2021)

(Millions of yen)

	Previous forecast	New forecast	Comparison with
	(released on
	Previous forecast (%)
	July 28, 2020)
Net sales	423,300	502,500	18.7%
Operating income	38,500	85,400	121.8%
Ordinary income	47,700	96,300	101.9%
Net income	34,500	71,800	108.1%
attributable to owners
of parent

Note: The currency rate applied to the period from October 1, 2020 to March 31, 2021 is averaged at 100 yen/US dollar and 120 yen/Euro.

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2. Consolidated Quarterly Financial Statements

(1) Consolidated Quarterly Balance Sheet

			(Millions of yen)
		March 31, 2020	September 30, 2020
Assets
	Current assets
	Cash and bank deposits	405,861	402,246
	Notes and accounts receivables, trade	85,266	83,715
	Marketable securities	126,700	126,700
	Finished goods	65,122	69,114
	Work in progress	51,979	46,357
	Raw materials and supplies	25,450	28,583
	Other current assets	10,833	10,913
	Allowance for doubtful accounts	(831)	(786)
	Total current assets	770,380	766,842
	Noncurrent assets
	Property, plant and equipment
	Buildings	310,060	313,699
	Land	146,085	147,168
	Other, net	140,991	127,148
	Total property, plant and equipment	597,136	588,015
	Intangible assets	10,219	9,921
	Investments and other assets
	Investment securities	83,337	90,518
	Others	51,883	48,398
	Allowance for doubtful accounts	(456)	(457)
	Total investments and other assets	134,764	138,459
	Total noncurrent assets	742,119	736,395
	Total assets	1,512,499	1,503,237

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			(Millions of yen)
		March 31, 2020	September 30, 2020
Liabilities
Current liabilities
	Notes and accounts payables, trade	26,974	27,345
	Accrued income taxes	9,270	8,458
	Warranty reserves	8,306	7,619
	Other current liabilities	56,413	46,413
	Total current liabilities	100,963	89,835
Long-term liabilities
	Net defined benefit liability	44,652	45,558
	Other long-term liabilities	4,019	4,018
	Total long-term liabilities	48,671	49,576
Total liabilities	149,634	139,411
Net assets
Shareholders' equity
	Common stock	69,014	69,014
	Capital surplus	96,265	96,265
	Retained earnings	1,351,122	1,323,984
	Treasury stock, at cost	(127,822)	(105,810)
	Total shareholders' equity	1,388,579	1,383,453
Accumulated other comprehensive income
	Valuation difference on available-for-sale	5,058	10,680
	securities
	Foreign currency translation adjustment	(26,608)	(27,942)
	Remeasurements of defined benefit plans	(11,929)	(10,995)
	Total accumulated other comprehensive	(33,479)	(28,257)
	income
Non-controlling interests	7,765	8,630
Total net assets	1,362,865	1,363,826
Total liabilities and net assets	1,512,499	1,503,237

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(2) Consolidated Quarterly Statement of Income and
Consolidated Quarterly Statement of Comprehensive Income
Consolidated Quarterly Statement of Income		(Millions of yen)
	Six months ended	Six months ended
	September 30, 2019	September 30, 2020
Net sales	260,953	230,411
Cost of goods sold	164,390	156,680
Gross profit	96,563	73,731
Selling, general and administrative expenses	47,539	41,410
Operating income	49,024	32,321
Non-operating income
Interest income	2,059	1,237
Dividends income	1,008	744
Equity in earnings of affiliates	4,888	4,948

Miscellaneous income

Total non-operating income

Non-operating expenses

Foreign exchange losses

Loss on valuation of investment securities Miscellaneous expenses

Total non-operating expenses

Ordinary income

Extraordinary losses

Impairment loss

Total extraordinary losses

Income before income taxes

Income taxes-current

Income taxes-deferred

1,614	1,173
9,569	8,102
485	812
－	648
1,018	743
1,503	2,203
57,090	38,220
1,973
－
1,973	－
55,117	38,220
14,205	9,159
87	71

Total taxes and others	14,292	9,230
Net income	40,825	28,990
Net income attributable to non-controlling interests	640	878
Net income attributable to owners of parent	40,185	28,112

7

Consolidated Quarterly Statement of Comprehensive Income

			(Millions of yen)
		Six months ended	Six months ended
		September 30, 2019	September 30, 2020
Net income	40,825	28,990
Other comprehensive income
	Valuation difference on available-for-sale	296	5,621
	securities
	Foreign currency translation adjustment	(18,792)	824
	Remeasurements of defined benefit plans	1,355	934
	Share of other comprehensive income of affiliates	(2,091)	(2,010)
	accounted for using equity method
	Total other comprehensive income	(19,232)	5,369
Comprehensive income for the six months ended	21,593	34,359
September 30
Comprehensive income attributable to:
	Owners of parent	21,566	33,333
	Non-controlling interests	27	1,026

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(3) Consolidated Quarterly Statement of Cash Flow

				(Millions of yen)
			Six months ended	Six months ended
			September 30, 2019	September 30, 2020
	Cash flows from operating activities
	Income before income taxes	55,117	38,220
	Depreciation and amortization	22,209	21,725
	Impairment loss	1,973	－
	Increase (decrease) in allowance for doubtful	(222)	(55)
	accounts
	Increase (decrease) in net defined benefit liability	319	758
	Decrease (increase) in net defined benefit asset	455	437
	Interest and dividend income	(3,067)	(1,982)
	Equity in (earnings) losses of affiliates, net	(4,888)	(4,948)
	(Increase) decrease in receivables, trade	9,195	830
	(Increase) decrease in inventories	2,944	(1,103)
	Increase (decrease) in payables, trade	(9,393)	384
	Other	4,115	(2,995)
	Subtotal	78,757	51,271
	Interest and dividends received	9,721	5,633
	Income taxes paid	(15,943)	(9,961)
	Other	428	178
	Net cash provided by operating activities	72,963	47,121
	Cash flows from investing activities
	Payments into time deposits	(14,413)	(28,979)
	Proceeds from withdrawal of time deposits	14,228	14,345
	Purchases of property, plant, and equipment	(49,432)	(14,627)
	Other	(2,881)	(1,812)
	Net cash used in investing activities	(52,498)	(31,073)
	Cash flows from financing activities
	Purchases of treasury stock	(35,769)	(85)
	Dividends paid	(78,439)	(33,561)
	Other	(627)	(739)
	Net cash used in financing activities	(114,835)	(34,385)
	Effect of exchange rate changes on cash and cash	(12,361)	448
	equivalents
	Net increase (decrease) in cash and cash equivalents	(106,731)	(17,889)
	Cash and cash equivalents at beginning of period	607,714	515,008
	Increase in cash and cash equivalents resulting from	－	352
	merger with unconsolidated subsidiaries
	Cash and cash equivalents at end of period		500,983	497,471

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3. Other Information

1. Changes in Significant Subsidiaries during the period
   (changes in specific subsidiaries that caused change in scope of

	consolidation):	None
(2)	Adoption of Simplified and Specifically Applied Accounting Method
	for Quarterly Consolidated Financial Reporting:	None
(3)	Changes in Accounting Principles and Accounting Estimates, and
	Revisions/Restatements:	None
(4)	Note on Premise of a Going Concern:	None

1. Note on the Substantial Change in Shareholders' Equity:
   As resolved at the Board of Directors' meetings held on April 24, 2020, the Company cancelled 2,109,744 treasury shares on May 29, 2020. As a result, the Company's retained earnings and treasury stock each decreased by ¥22,095 million during the six months ended September 30, 2020.

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