Meidensha : Results Briefing for FY2023.Q2

MEIDENSHA CORPORATION

RESULTS BRIEFING FOR THE FISCAL 2023 1ST HALF

October 30, 2023

Akio Inoue, President & Executive Officer

Copyright © MEIDENSHA CORPORATION All Rights Reserved.

Table of Contents

P1. Table of Contents

P2. Summary

P3. Impact of Changes in the External Environment on Results (1H Results)

P4. 1H Results Overview (PL, BS, CF)

P5. Capex, Growth Investment, R&D Expenses

P6. 1H Results and Full Year Forecast by Segment

P7. Impact of Changes in the External Environment on Results (Full Year Forecast)

P8. 1H Results and Full Year Outlook of Major Segments / Analysis of Operating Income P12. Initiatives Aimed at Enhancing Corporate Value

P14. Topics Business Activities and Sustainability

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1. FY2023 1H Results Summary

Orders: ¥179.8 billion Net sales: ¥119.0 billion Operating loss: ¥2.3 billion Final loss: ¥1.6 billion

(Net income attributable to owners of the parent)

YoY change	Orders (+¥21.6 billion)
Difference from initial forecasts	Orders (+¥26.8 billion)

Net sales (+¥7.3 billion)

Net sales (+¥1.0 billion)

Operating loss improved (¥2.5 billion)

Operating loss improved (¥1.8 billion)

		YoY comments
				2Q	YoY	Change from
					Results	change	initial forecast
	-	Power Infrastructure	Both sales and income increased in Power T&D due to growth in Singapore and North America, and	Net sales	+ 6.9	+ 1.2
				improvement in India	Operating income	+ 3.2	+ 1.5
				Both sales and income increased in Power & Energy due to progress in projects from abundant order
				backlog
	-	Public, Industrial &	Sales and income decreased in Social Infrastructure Systems due to delays in progress of work on some	Net sales	(3.9)	(1.0)
		Commercial Sector	projects	Operating income	(1.3)	(0.4)
				An increase in income was secured in Railways due to improvement in project costs despite a decrease
				in sales of overseas projects
				Sales remained flat in Water Infrastructure, but income decreased due to an increase in costs on some
				projects
	-	Mobility & Electrical	Sales and income increased in Motor Drive Solutions due in part to an improvement in the mix, and sales	Net sales	+3.0	+1.7
		Components	and income increased in the EVs due to a recovery in production by customers	Operating income	(0.3)	+0.1
				Sales decreased and income significantly decreased in Electronics Products due to market deterioration,
				and sales and income increased in Mobility T&S due to an increase in existing load
	-	Field Service	The timing of sales from the previous fiscal year being delayed created existing load resulting in an	Net sales	+1.3	+0.6
		Engineering	increase in sales and income	Operating income	+0.9	+0.5

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2. Impact of Changes in the External Environment on Results (1H Results)

The impact of rising material prices in the first half manifested as anticipated at the start of the fiscal year In addition to the increases in income from Power Infrastructure, Mobility & Electrical Components and Field Service Engineering, the weakened yen also made a contribution

■ Factor analysis of operating income (Comparison of initial forecast and results for FY2023 1H)

(Billions of yen)

FY20231H				FY20231H
initial
			results
forecast
		Segments with	Improved	(2.3)
		increased income	income
(4.2)		from initial	due to
	forecasts	weak yen
		* Excluding foreign exchange
		elements	(0.3)
	Segments with
	decreased
	income from	(1.9)
	initial forecasts
	(0.4)

Public, Industrial & Commercial Sector Decrease in sales from initial forecast Total -¥1.0billion

Power Infrastructure, Mobility

• Electrical Components and Field Service Engineering Increase from initial forecast Total +¥3.5 billion

Net impact of rising material prices in 1H Initial assumption -¥1.6 billion

-> Result -¥1.6 billion = As assumed

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3. FY2023 1H Results Overview

Posted record orders and net sales, and ended the half with the lowest operating loss in 18 years

	FY2021	FY2022	FY2023	FY2023			Difference
		YoY change	from
(Millions of yen)	1st Half	1st Half	1st Half	1st Half	YoY change %
（C-A）	forecast
	Results	Results (A)	forecast (B)	Results (C)
			（C-B）
Order	125,549	158,188	153,000	179,852	113.7%	21,664	26,852
Net sales	98,950	111,742	118,000	119,047	106.5%	7,304	1,047
Operating	(2,750)	(4,892)	(4,200)	(2,366)		2,526	1,833
income
Ordinary income	(2,734)	(3,957)	(4,200)	(1,622)		2,334	2,577
Net income
attributable to	(2,180)	(2,746)	(3,000)	(1,616)		1,130	1,383
owners of the
parent
Total assets	263,956	282,780		304,510	107.7%	21,730
Net assets	95,671	103,144		113,833	110.4%	10,689
Total interest bearing debt	44,064	43,342		48,602	112.1%	5,260
Shareholders' equity Ratio	35.0%	35.3%		36.4%		1.2%
FCF	7,203	9,455		9,682		227

* Total interest bearing debt: Short-term borrowings + Long-term debt + Commercial paper + Bonds payable

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4. FY2023 1H Capex, Growth Investment, R&D Expenses

The full-year plan for capex will be revised (initially 13.7 -> now 11.3) due to some acceptance inspections

being next fiscal year

Annual figures for R&D are expected to be in line with initial forecasts

(Billions of yen)	(A)FY2022	(B)FY2023	YoY change(B)-(A)

1st Half	Results
Results

Capex and growth	5.1	12.3
investment
Capex	4.2	8.2
(ordinary capex)
Growth investment	0.9	4.1
(Capex in growth areas and
for partnership)
* Capital expenditure is based on acceptance inspection
R&D expenses	5.0	10.2

1st Half Results

4.6 3.6 1.0

5.0

Plan	1st	Half	FY
Results
11.3		(0.5)	(1.0)
9.8		(0.6)	1.6
1.5		0.1	(2.6)

10.7

(0.0)

0.4

2024 Mid- term Plan 4-year Targets

60.0 (40.0) (20.0)

40.0

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5. 1H Results and Full Year Forecast by Segment

Based on 1H results, the full-year forecasts for orders received and operating income were revised upward

(Billions of yen) (Top: Orders received, Middle: Net sales, Bottom: Operating income)

	FY2021	FY2022	FY2023		FY2023		Difference	Difference	Difference
			from FY2023
	1H results	Results (C)	1H results	Results (C)	1H results	Current		Initial		from FY2021	from FY2022	initial
		Forecasts		1H	1H
	forecast			forecast
Power	24.8	55.8	35.7	77.9	53.5	83.0		6.95		28.6	17.7	13.5
19.5	52.3	23.9	60.4	30.9	75.4		72.8		11.4	6.9	2.6
Infrastructure
	(2.3)	(1.8)	(2.2)	(0.5)	0.9	3.8		2.1		3.2	3.2	1.7
Public,	42.7	95.5	51.4	96.7	54.1	94.6		88.3		11.3	2.6	6.3
Industrial &	38.2	94.7	37.3	90.3	33.3	89.8		91.8		(4.9)	(3.9)	(2.0)
Commercial
Sector	0.8	6.1	(1.4)	2.3	(2.7)	2.3		2.7		(3.6)	(1.3)	(0.4)
Mobility &	28.3	65.3	39.8	80.2	39.9	81.5		81.5		11.6	0.1	0.0
Electrical	26.4	63.8	35.4	78.1	38.5	79.3		79.1		12.0	3.0	0.2
Components	(0.8)	(0.2)	(0.2)	1.6	(0.6)	(0.4)		0.3		0.1	(0.3)	(0.7)
Field Service	27.7	41.8	28.3	42.8	31.3	42.5		41.0		3.6	3.0	1.5
12.7	39.5	12.7	39.7	14.1	43.1		41.8		1.3	1.3	1.3
Engineering
	(0.0)	5.9	(0.6)	5.2	0.2	5.9		5.7		0.3	0.9	0.2
	1.6	3.2	1.6	3.2	1.6	3.2		3.2		0.0	(0.0)	0.0
Real estate	1.6	3.2	1.6	3.2	1.6	3.2		3.2		0.0	(0.0)	0.0
	0.5	1.1	0.6	1.3	0.7	1.4		1.3		0.1	0.1	0.1
	8.6	16.8	9.8	18.7	8.9	14.0		19.0		0.2	(0.9)	(5.0)
Other	7.0	16.8	7.7	16.6	7.6	16.1		18.4		0.5	(0.0)	(2.3)
	(0.2)	0.1	(0.0)	0.2	(0.0)	0.0		0.0		0.1	0.0	0.0
Eliminations &	(8.3)	(19.1)	(8.6)	(16.9)	(9.6)	(18.8)		(17.5)		(1.2)	(0.9)	(1.3)
(6.7)	(15.4)	(7.1)	(15.9)	(7.1)	(16.9)		(17.1)		(0.3)	(0.0)	0.2
corporate
(0.8)	(1.6)	(0.9)	(1.8)	(0.8)	(2.0)		(2.1)		(0.0)	0.0	0.1
Total	125.5	259.6	158.1	302.9	179.8	300.0		285.0		54.3	21.6	15.0
98.9	255.0	111.7	272.5	119.0	290.0		290.0		20.0	7.3	0.0
	(2.7)	9.4	(4.8)	8.5	(2.3)	11.0		10.0		0.3	2.5	1.0

Comments on full-year forecast for orders received

◆Full-year forecast for orders received in Power Infrastructure, Public, Industrial & Commercial Sector, and Field Service Engineering revised upward

• Figures in parentheses indicate the change from the initial full-year forecast by subsegment

◆Power Infrastructure (Power T&D +7.0, Power & Energy +6.5) - Power T&D grew significantly in Singapore and India in 1H.

Germany is also expected to perform well following on from the previous year

• Power & Energy is due to transformer projects for the power companies and large hydropower projects contributing

◆Public, Industrial & Commercial Sector

(Social systems +5.0, Railways +1.5, Water Infrastructure -0.2)

• Social Infrastructure Systems performed well due to general private-sector projects along with public sector and facility projects
• Orders received for domestic projects in Railways were higher than anticipated in 1H
• Water Infrastructure is expected to be as initially forecast

◆Mobility & Electrical Components

(Motor Drive 0.0, EV+2.0, Electronics -1.5, Mobility T&S -0.5)

• Motor Drive Solutions is expected to be as initially forecast due to an increase in elevators and a decrease in injection molding
• In EVs, Orders received grew in 1H. 2H is expected to be in line with the initial plan
• In Electronics Products, semiconductor market conditions are likely to recover later than initially forecast
• Although inquiries are recovering in Mobility T&S, time is required for orders to be finalized

◆Field Service Engineering (+1.5)

• Solid demand continues for conventional maintenance and semiconductor equipment

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6. Impact of Changes in the External Environment on Results (Full Year Forecast)

The downward impact on full-year earnings caused by rising material prices is expected to be -¥4.5 billion (as initially forecast)

The strong Power T&D is expected to have a significant improvement in income, and the weak yen will also contribute to bolstering income

• Factor analysis of operating income (Comparison of initial forecast and this forecast for FY2023)

(Billions of yen)

Forecast net impact of rising material prices in full year

Initial forecast -¥4.5 billion -> Result -¥4.5 billion

Businesses with

Assumed exchange rate (USD)

increased sales

Initially 1USD = ¥125 -> 1USD = ¥135

and income

compared to

Businesses

Improvement in income

initial forecast

in businesses other

with decreased

* Excluding foreign

than those to the left

sales and

exchange elements

income

+0.3

+1.6

（1.3）

10.0	Power T&D, Motor Drive Solutions, EVs,
Social Infrastructure Systems, Electronics
and Field Service Engineering
Products, Mobility T&S
Increase from initial forecast +¥3.5 billion
Decrease from initial forecast -¥3.4 billion

Improved

income due to weak yen

+0.4

11.0

	FY2023 full-		FY2023 full-
	year initial		year
	forecast		forecast

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7-1.Net Sales and Operating Income Changes

(Billions of yen)

80.0	72.8	75.4		5.0
	44.4
	60.4	(Plan)		4.0
60.0		57.5
36.5	3.8
		3.0
		(2.2%)
40.0				2.0
	2.1
	(5.0%)	30.9	1.3	1.0
20.0	23.9
	(2.2%)
			0.0
0.0	(0.5)			-1.0

FY2022 Results	FY2023 Initial	FY2023 Current	FY2024 Medium -
		Forecasts		Forecast	term plan targets
Actual sales in 1st half		Net sales in 2nd half			Operating income each fiscal year

Figures in parentheses indicate the operating income margin

Comments on full year

◆Comparison with previous fiscal year

• Sales are expected to increase by ¥14.9 billion, and income is expected to increase by ¥4.3 billion
• Power T&D: Sales and income are expected to increase significantly year on year due to improvements in earnings in Singapore and India
• Power & Energy: Sales and income are expected to increase due to an increase in progressing projects in domestic power and hydropower projects

◆Change from initial forecast

• Sales are expected to increase by ¥2.6 billion, and income is expected to increase by ¥1.7 billion
• Power T&D: Growth in Singapore and Germany, along with the exchange rate were factors pushing up earnings
• Power & Energy: Although there is expected to be some drop due to sales being delayed by a fiscal year due to changes in processes and longer delivery times for parts and materials, we will aim for an increase in income through improvement in profitability of hydropower projects.

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7-2. <_public2c_ industrial="" _26_="" commercial="" sector="">Net Sales and Operating Income Changes

(Billions of yen)

(Billions of yen) 8.0

100.0	90.3	91.8	89.8	94.6
80.0	53.0		56.4	6.0
		(Plan)	6.1
				(6.4%)
60.0		(2.9%)		4.0
	(2.5%)	(2.5%)
40.0	2.3	2.7	2.3
	37.3		33.3	2.0
20.0
0.0				0.0
	FY2022 Results	FY2023 Initial	FY2023 Current	FY24 Medium term
		Forecasts	Forecast	plan targets

Net sales in 1st half Net sales in 2nd half Operating income each fiscal year

Figures in parentheses indicate the operating income margin

Comments on full year

◆Comparison with previous fiscal year

• Sales are expected to decrease by ¥0.5 billion and income is expected to decrease by ¥0.0 billion
• Social Infrastructure Systems: Sales and income are expected to decrease due to a decrease in public projects and delays in some construction work
• Railways: A decrease in sales and an increase in income are expected due to improvements in earnings from large projects in Singapore
• Water Infrastructure: Although the impact of delivery times of parts and materials remains somewhat, sales and income are expected to increase against the backdrop of an abundance of order backlog

◆Change from initial forecast

• Sales are expected to decrease by ¥2.0 billion and income is expected to decrease by ¥0.4 billion
• Social Infrastructure Systems: Sales and income are expected to decrease due to delays in construction work on some projects
• Railways: An increase in income is expected despite a decrease in sales, due to improvement of overseas income
• Water Infrastructure: Income is expected to decrease despite an increase in sales, due to the occurrence of costs on some projects

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