Horiba, Ltd. · TSE:6856

Horiba — Credit Suisse 2018 Japan Kyoto Conference

45 slides from Horiba's conference presentation, Sep 18, 2018

1. Slide 1: Financial Information

   Financial Information HORIBA, Ltd. September, 2018 © 2018 HORIBA, Ltd. All rights reserved. 1

2. Slide 2: Contents

   Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile [Disclaimer] Plans and forecasts in this presentation that do not constitute historical facts are predictions concerning future business results. These sta

3. Slide 3: Contents

   Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 3

4. Slide 4: Review of the First Half of 2018

   Review of the First Half of 2018  Escalating global trade tensions  Decline in emerging markets currencies due to tightening by the Fed in External the U.S. Events  Temporary subdued capital spending despite robust demand for semiconductors  Automotive electrification, emission regulations  Enh

5. Slide 5: Summary of the First Half Results of 2018

   Summary of the First Half Results of 2018 Reached a record high in sales, profit and dividend(first half) Significant increase in sales and profit in Automotive and Semiconductor P&L segments, year-on-year Semiconductor was weak in 2Q compared to 1Q. Total asset were ¥268.7bn, up to ¥2.8bn, due t

6. Slide 6: 2018 First Half Results

   2018 First Half Results （Billions of Yen） 2017 1st half 2018 1st half Forecast Previous vs vs vs Results Beg. of the year Forecast Results 2017 Forcast Previous ： Record-high (as of Feb. 13) (as of May 9) 1st half Beg. of the year Forecast Sales 87.3 96.0 102.0 99.9 +12.6 +3.9 -2.0 Operating Profit

7. Slide 7: 2018 First Half Results by Segment

   2018 First Half Results by Segment （Billions of Yen） Sales Operating Profit 2017 2017 2018 1st half 2018 1st half 1st half 1st half ： Record-high vs vs Forecast Previous vs vs Forecast Previous vs vs Forcast Forcast Results Beg. of the year Forecast Results 2017 Previous Results Beg. of the year For

8. Slide 8: Contents

   Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 8

9. Slide 9: Market Overview for the Full Year 2018

   Market Overview for the Full Year 2018 Strong appetite for investment in the global automotive sector due to tighter Auto emission regulations in Japan & Asia and innovation for electrification & autonomous driving Increase in demand due to tighter environmental regulations in emerging P&E countries

10. Slide 10: Exchange rate

    Exchange rate (Yen) 2017 Actual 2018 Previous Results Forecast Forecast 1sf half Full year Forecast 2nd half (as of Aug. 3) (as of May 9) 1Q 2Q 1st half USD 112.34 112.16 110 108.22 109.12 108.67 111 110 EUR 121.66 126.70 130 133.14 129.96 131.55 128 130 1 yen O.P. sensitivity for 2018 Forecast (Yen

11. Slide 11: 2018 Forecast

    2018 Forecast (Billons yen) 2017 2018 Forecast Previous vs vs vs Results Beg. of the year Forecast Results 2017 Forcast Previous ： Record-high (as of Feb. 13) (as of May 9) 1st half Beg. of the year Forecast Sales 195.3 210.0 218.0 212.0 +16.6 +2.0 -6.0 Operating Profit 26.8 29.0 34.0 31.0 +4.1 +2.0

12. Slide 12: 2018 Forecast by Segment

    2018 Forecast by Segment (Billions of Yen) Sales O.P. 2017 2018 2017 2018 ： Record-high vs vs Forecast Previous vs vs Forecast Previous vs vs Forcast Forcast Results Beg. of the year Forecast Results 2017 Previous Results Beg. of the year Forecast Results 2017 Previous Beg. of the Beg. of the (as of

13. Slide 13: Contents

    Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 13

14. Slide 14: Auto: First Half Results and 2018 Forecast

    Auto First Half Results and 2018 Forecast (Billions of yen) Sales 2018 First Half Results 【Half year】 Sales and O.P. O.P. ＋ EMS※1 Europe - Solid demand after new regulations 42.7 46.2 38.7 China, India - Demand increase for compliance 34.0 30.6 32.7 26.6 28.1 with new regulations ＋ MCT※2 Lower profi

15. Slide 15: Auto: Effect of enhanced emission regulations

    Auto Effect of enhanced emission regulations Status of the next-gen. emission regulations HORIBA BIWAKO E-HARBOR achieved record-high output  Sales of EMS business Production at HORIBA BIWAKO E-HARBOR 2015 2018 (Before the start of E-HARBOR) Up 25% (forecast) ¥39.8bn ¥49.0bn  Emission regulations

16. Slide 16: Auto: Enhanced engineering capability

    Auto Enhanced engineering capability Increase in solution provision for the HORIBA MIRA in the U.K. opened automotive development process es MIRA Technology Institute  Vehicle testing system (Subaru Corp.) Jointly invested with the LLEP* in the U.K. ・Provide the powertrain testing system that repro

17. Slide 17: Auto: Investment plan for a battery evaluation testing facility

    Auto Investment plan for a battery evaluation testing facility Introducing an advanced evaluation concept to connect the real and the virtual Battery evaluation testing facility for electric vehicles(HORIBA BIWAKO E-HARBOR)  Assessment of the combination of a battery, powertrain, and a vehicle  Te

18. Slide 18: P&E: First Half Results and 2018 Forecast

    P&E First Half Results and 2018 Forecast (Billions of yen) Sales 【Half year】 Sales and O.P. 2018 First Half Results O.P. ＋ Stack gas analyzers: Sales increase in North America due to 8.9 9.3 9.2 9.7 - 8.2 8.4 7.7 8.0 enforced marketing; flattish demand in Japan ＋ Air quality monitoring: Demand growt

19. Slide 19: P&E: Initiatives for expansion into new markets

    P&E Initiatives for expansion into new markets Business growth in Asia Launch of “HAKARU※ EXpress” Expand the environmental regulation and monitoring business From a hardware sales business to a data sales  Delivery to and continued orders received from Ho Chi business using cloud computing  Insta

20. Slide 20: Medical: First Half Results and 2018 Forecast

    Medical First Half Results and 2018 Forecast (Billions of yen) Sales 【Half year】 Sales and O.P. 2018 First Half Results O.P. 13.9 13.7 13.8 12.7 ＋ Strong sales of new products in Japan 12.3 12.8 13.1 12.8 ＋ Sales increase in Europe in yen terms due to the weaker 1.3 1.2 1.5 1.2 yen 0.8 1.0 1.0 0.9 ＋

21. Slide 21: Medical: Initiatives for business expansion

    Medical Initiatives for business expansion Opened the application center (biochemical) New products to be launched globally to accelerate the U.S. business Mid and large-sized  To start full operation in August 2018 (plan) new product in Irvine, California “HELO Solution”  For application developm

22. Slide 22: Semi: First Half Results and 2018 Forecast

    Semi First Half Results and 2018 Forecast (Billions of yen) Sales 2018 First Half Results 【Half year】 Sales and O.P. O.P. ＋ Record-high sales and O.P. 32.3 28.5 27.6 ＋ Record-high production volume in Mass Flow Controllers 24.7 (MFC) 19.1 16.2 17.8 20.9 10.2 8.8 8.7 ＋ The Aso factory expansion boost

23. Slide 23: Semi: Strengthen supply capacity and global R&D

    Semi Strengthen supply capacity and global R&D Full-fledged production after the Aso expansion Opening of HORIBA Reno Technology Center Combined output at Aso and Kyoto Enhance a N. America development base in the focus area 350,000 MFCs per year Establish a global R&D capability Production status:

24. Slide 24: Scientific: First Half Results and 2018 Forecast

    Scientific First Half Results and 2018 Forecast (Billions of yen) Sales 2018 First Half Results 【Half year】 Sales and O.P. O.P. ＋ Sales increase in Japan and Europe on the back of 14.6 15.4 robust corporate R&D spending 13.1 13.6 12.3 13.3 12.5 11.5 ＋ Americas’ sales up for semicon makers' spectrosc

25. Slide 25: Scientific: Strengthen global bases and expand core business

    Scientific Strengthen global bases and expand core business Opening of HORIBA New Jersey Hosting of the RamanFest 2018 International Optical Spectroscopy Center Symposium on Raman technologies Start: Aug. 2018 Investment: App. ¥2.1bn Held on June 25 and 26, 2018 Place: Piscataway, New Jersey, the U

26. Slide 26: Contents

    Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 26

27. Slide 27: Shareholder Return

    Shareholder Return Basic policy -Dividend payment + Share buyback = 30% of Consolidated net profit to be targeted -Remaining earnings are retained internally for strategic investment (i.e. facilities, M&A) Per-share dividend (from 2008 to 2018 Forecast) 116 120 Dividends per share and Share buyback

28. Slide 28: Contents

    Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 28

29. Slide 29: HORIBA's perspectives on ESG investment

    HORIBA’s perspectives on ESG investment Contribution to the environment and society via its business; 【Examples】 Building of an open & fair governance structure Outside Directors with diverse Emission gas Innovation for electrification measurement system & autonomous driving experiences and skills C

30. Slide 30: HORIBA Premium Value to improve asset efficiency

    HORIBA Premium Value to improve asset efficiency Case of an improved asset efficiency in the MCT business  Improvement at Olomouc Factory (Czech) with a focus on production of standard Chassis dynamometers  Full review of production processes and supply chain and adoption of the Kanban pull system

31. Slide 31: Contents

    Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 31

32. Slide 32: Trend of Market capitalization

    Trend of Market capitalization ¥407bn ¥132bn on May 14, 2018 in Jan. 2008 (Record-high) ¥52bn in Dec. 2008 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 © 2018 HORIBA, Ltd. All rights reserved. 32

33. Slide 33: Operating Profit Analysis (vs 2017)

    Operating Profit Analysis (vs 2017) (Billions of yen) 2017 2018 Jan. – Jun. Jan. – Jun. Increase Exchange Cost of Impact for Exchange Increase Increase Goods Gross Impact for Increase Other 9.70 Sales Sales Profit Expenses R&D Cost Expenses 14.05 +11.66 -4.98 +0.06 -0.36 -0.44 -1.58 Increase Gross P

34. Slide 34: Impact of Fluctuation in Foreign exchange

    Impact of Fluctuation in Foreign exchange (Billions of Yen) Exchange rate impact (2018 First-Half Results) Exchange rate impact Sales +¥0.97bn O.P. -¥0.30bn for 2018 Forecast Sales Operating profit 1 yen impact of Sales and O.P. (Yen appreciation) Total USD EUR Total USD EUR Sales Auto +0.67 -0.13 +

35. Slide 35: Capital Investment, Depreciation, R&D

    Capital Investment, Depreciation, R&D (Billions of Yen) 2017 2018 2017 2018 vs Forecast Forecast vs First-Half First-Half Results Previous （as of May 9） （as of Aug. 3） 2017 Results Results Forecast Capital Investment 11.6 16.0 16.0 +0.4 - 5.5 5.7 Depreciation 7.5 7.5 7.5 -0.0 - 3.6 3.5 R&D 13.9 15.5

36. Slide 36: Consolidated Cash Flows

    Consolidated Cash Flows (Billions of Yen) 2018 2017 Variation First Half First Half Cash flows from operating activities +12.40 +16.27 -3.86 Cash flows from investing activities -4.43 -6.80 +2.37 Cash flows from financing activities -4.31 -7.10 +2.79 Cash and cash equivalents at end of year 61.47 54

37. Slide 37: Cash Balance

    Cash Balance (Billions of Yen) Total Loan Balance (Consolidated basis, each end of year) 46.7 44.7 42.0 40.5 Bond redemption Bonds Bonds In 2020 15.0 Bonds Cash※1 Bonds ※1 15.0 ※1 Cash※1 15.0 Cash Cash 47.8 51.9 58.3 61.4 15.0 Borrowed Long Long 19.2 Long Long from JBIC※2 16.8 18.7 18.3 ¥15.1bn Shor

38. Slide 38: Contents

    Contents 2018 First Half Results 2018 Forecast Business Segments Outline Shareholder Return Other Topics Financial Data Corporate profile © 2018 HORIBA, Ltd. All rights reserved. 38

39. Slide 39: Corporate Profile

    Corporate Profile Head Office Kyoto, Japan - Corporate motto - Foundation 1945 Incorporation 1953 Fiscal Year End December 31 Atsushi Horiba Chairman & Group CEO To have interest and pride in our work to enjoy our lives © 2018 HORIBA, Ltd. All rights reserved. 39

40. Slide 40: Business Segments

    Business Segments ・Emission Measurement Systems ・Test Automation Systems Automotive Test Systems ・Intelligent Transport Systems ・Engineering Consultancy & Testing(HORIBA MIRA, Ltd) ・Environmental & Process Systems ・Environmental Radiation Monitor Process & Environmental ・Environmental Regulation & P

41. Slide 41: Business Segments

    Business Segments Sales Breakdown by Segment Automotive Test Systems Sales: ¥195.3bn 13% Scientific Process & Environmental 26.1 38% （231） Automotive 73.3 Semicon （649） Medical 27% 53.3 （471） Medical P&E 25.1 17.4 （222） （154） Semiconductor 9% 13% Scientific ( ) =Segment Sales in MUSD % = Segment Sal

42. Slide 42: Market Share

    Market Share Global Domestic Automatic Blood Cell Counter Emission Measurement Systems Stack Gas Analyzers plus CRP 80% 20% 100% (As of December 31, 2015) Mass Flow Controllers Raman Spectrophotometers Gratings 60% 30% 35% ※Market shares quoted are estimates by HORIBA. © 2018 HORIBA, Ltd. All rights

43. Slide 43: HORIBA Worldwide

    HORIBA Worldwide Sales of FY2017 : ¥195.3bn (1,729 MUSD) Sales Ratio by Region The Number of Group Companies by region EU Japan (As of December 31, 2017) 21% 33% Americas Americas 9 17% Asia Europe 22 29% Asia 17 (4 in Japan, including HORIBA, Ltd.) Total 48 © 2018 HORIBA, Ltd. All rights reserved.

44. Slide 44: Employees by Region

    Employees by Region Americas Other Europe 2% Total Number of Employees 2% The U.S. 7,399 11% Germany Japan Total Asia : 4,041 8% Japan 54% 38% The U.K. 38% Total Europe： 2,414 11% France 33% Other 12% Asia Total Americas： 944 14%16% 13% (As of December 31, 2017) © 2018 HORIBA, Ltd. All rights reserv

45. Slide 45: © 2018 HORIBA, Ltd. All rights reserved.

    © 2018 HORIBA, Ltd. All rights reserved. 45

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