Horiba, Ltd. · TSE:6856

Horiba — 15th CLSA Japan Forum 2019

70 slides from Horiba's conference presentation, May 21, 2019

  1. Slide 1: 15th CLSA Japan Forum 2019

    15th CLSA Japan Forum 2019 HORIBA, Ltd. May 21, 2019 © 2019 HORIBA, Ltd. All rights reserved. 1

  2. Slide 2: Key topics

    Key topics 1. HORIBA’s action to response to Electrification 2. Contribution for the energy industry as a whole  Providing effective energy solutions to meet “Well-to-wheel” 3. Semiconductor market trend 4. Anniversary of Foundation  65th anniversary of HORIBA, Ltd.  200 year anniversary of Jobin

  3. Slide 3: HORIBA, Ltd. 65th Anniversary of Foundation in 2018

    HORIBA, Ltd. 65th Anniversary of Foundation in 2018 Global growth through M&A In 1996, ABX S.A. was acquired in France In 2005, MCT (Mechatronics) Business of (now HORIBA ABX SAS) Carl Scheck AG was acquired in Germany In 1997, Jobin Yvon S.A. was acquired in France In 2018, FuelCon AG. was acquired

  4. Slide 4: Jobin Yvon 200th Anniversary of Foundation in 2019

    Jobin Yvon 200th Anniversary of Foundation in 2019 © 2019 HORIBA, Ltd. All rights reserved. 4

  5. Slide 5: Product at the Time of Its Startup

    Product at the Time of Its Startup HORIBA Jobin Yvon pH Meters Fresnel Lens for © 2019 HORIBA, Ltd. All rights reserved. a Lighthouse 5

  6. Slide 6: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 6

  7. Slide 7: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 7

  8. Slide 8: Review of 2018

    Review of 2018  Overheated US-China trade friction  Intensified Brexit uncertainties External  Tighter automotive emission regulations and electrification trend Events  Slowdown in capital spending for semiconductors from the second half of 2018  New Management of HORIBA Group started  Enhance

  9. Slide 9: Summary of 2018 Results

    Summary of 2018 Results Achieved record-highs in sales, profit and dividend Increase in sales and profit in Automotive and Semiconductor segments, year-on-year P&L Semiconductor sales were weak in the second half of the year due to changes in market conditions Total asset were ¥278.1bn, up ¥12.2b

  10. Slide 10: 2018 Results

    2018 Results (Billons of Yen) 2017 2018 Forecast Forecast vs vs vs : Record-high Results (as of Feb.13) (as of Nov.9) Results Forecast Forecast 2017 (as of Feb.13) (as of Nov.9) Sales 195.3 210.0 207.0 210.5 +15.1 +0.5 +3.5 Operating Profit 26.8 29.0 27.5 28.8 +2.0 -0.1 +1.3 O. P. % 13.7% 13.8% 13.3

  11. Slide 11: 2018 Results by Segment

    2018 Results by Segment (Billons of Yen) Sales Operating Profit 2017 2018 2017 2018 vs vs vs vs vs vs Results Forecast Forecast Results Forecast Forecast Results Forecast Forecast Results Forecast Forecast : Record-hjgh (as of Feb. 13) (as of Nov. 13) 2017 (as of Feb.13) (as of Nov.9) (as of Feb. 13

  12. Slide 12: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 12

  13. Slide 13: Market Assumptions for 2019

    Market Assumptions for 2019 Strong appetite for investment in the global automotive sector due to tighter Auto emission regulations mainly in Asia and innovation for electrification & autonomous driving Increase in demand due to tighter environmental regulations in emerging P&E countries Recovery in

  14. Slide 14: Exchange rate

    Exchange rate (Yen) 2017 2018 2019 Results Results Forecast vs 2018 USD 112.16 110.44 110 -0.44 EUR 126.70 130.35 125 -5.35 1 yen O.P. sensitivity for 2019 Forecast (Yen appreciation) USD -243 million yen EUR -12 million yen © 2019 HORIBA, Ltd. All rights reserved. 14

  15. Slide 15: 2019 Forecast

    2019 Forecast (Billons of yen) 2017 2018 2019 : Record-high Results Results Forecast vs 2018 Sales 195.3 210.5 218.0 +7.4 Operating Profit 26.8 28.8 29.0 +0.1 O. P. % 13.7% 13.7% 13.3% -0.4p Ordinary Profit 26.6 28.3 28.5 +0.1 Net Income attribute to Owners of Parent 16.2 22.3 20.0 -2.3 Net profit p

  16. Slide 16: 2019 Forecast by Segment

    2019 Forecast by Segment (Billons of yen) Sales Operating Profit 2018 2019 vs 2018 2019 vs : Record-high Results Forecast 2018 Results Forecast 2018 Auto 79.6 85.0 +5.3 7.7 9.0 +1.2 P&E 19.3 20.0 +0.6 2.0 2.0 -0.0 Medical 26.0 28.0 +1.9 1.8 2.0 +0.1 Semi 57.7 55.0 -2.7 17.0 15.0 -2.0 Scientific 27.7

  17. Slide 17: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 17

  18. Slide 18: Auto 2018 Results and 2019 Forecast

    Auto 2018 Results and 2019 Forecast (Billions of yen) Automotive Sales Breakdown 2018 Results EMS MCT ITS ECT 85.0 79.6 73.3 10.0 65.4 9.3 1.0 62.2 8 1.2 ＋ EMS Higher demand in China and India due to new 4.2 1.6 18.2 21.0 1.6 7.2 regulations 1.6 18.3 ＋ 19.7 13.2 - MCT※1 One-off expenses, including a

  19. Slide 19: 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

  20. Slide 20: 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 Japan vehicles(HORIBA BIWAKO E-HARBOR)  Assessment of the combination of a battery, powertrain, and a vehicl

  21. Slide 21: Auto Expanding Business Domains (FuelCon Acquisition)

    Auto Expanding Business Domains (FuelCon Acquisition) Acquisition of FuelCon AG Established 2001 Sales Breakdown  A leading German developer of fuel cell Sales 11,504k EUR (2017) and battery test systems for electric Operating profit 199k EUR (2017) Lithium ion vehicles Fuel cell test systems batte

  22. Slide 22: Auto More solutions, addressing electrification challenges

    Auto More solutions, addressing electrification challenges Acquisition of FuelCon AG (Germany) Open an advanced lab to strengthen battery test business 【September 2018】 for vehicle electrification 【Main business】 HORIBA BIWAKO E-HARBOR Cell Zero Development and production of ① fuel cell and battery

  23. Slide 23: Auto Expanding Business Domains (Support to the UCI)

    Auto Expanding Business Domains (Support to the UCI) Support to the UCI for a new institute  Committed support to the University of California, Irvine (UCI) to establish the Horiba Institute for Mobility and Connectivity (HIMAC)  Enhance industry and academia partnering in the energy sector of the

  24. Slide 24: Industry-academia tie-up to respond to change in the automotive industry

    Industry-academia tie-up to respond Auto to change in the automotive industry Contributing to boosting efficiency in Promoting development of connected the accelerated simulation-based automotive development /autonomous driving technology  Improve development of test equipment allowing  Ensure saf

  25. Slide 25: P&E 2018 Results and 2019 Forecast

    P&E 2018 Results and 2019 Forecast (Billions of yen) 2018 Results Supplied water quality analyzers (tap water) to Kuala Lumpur ＋ 【Stack gas analyzers / Process measurement equipment】 Sales increase in North America by sales efforts Received ＋ 【Air quality monitoring】 repeat orders in Demand growth i

  26. Slide 26: Promote localization for business expansion

    P&E Promote localization for business expansion Localization according to trends in developed/emerging markets yields good results HORIBA Group’s main 【Germany】 【USA】 bases in the P&E segment Enhance Enhance Stack gas analyzer manufacturing/sales 【China, Asia】 sales/product dev’t Record shipment of

  27. Slide 27: Medical 2018 Results and 2019 Forecast

    Medical 2018 Results and 2019 Forecast (Billions of yen) 2018 Results Latest test system ＋ Strong sales of hematology analyzers in China and India ＋ - Increase in R&D expenses for achieving greater competitiveness Solution Operation of the large-scale ＋ Acquisition of a micro-blood analysis system (

  28. Slide 28: 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 new product in Irvine, California “HELO Solution”  For application development in

  29. Slide 29: Medical Broaden technologies and product functions

    Medical Broaden technologies and product functions Acquisition of a micro-blood analysis system Broader functions of products business from Rohm Co., Ltd. help solve social challenges 【Main business】 【Technology characteristics 】 HORIBA’s hematology analyzers Development of μTAS1 Enable offering of

  30. Slide 30: Semi 2018 Results and 2019 Forecast

    Semi 2018 Results and 2019 Forecast (Billions of yen) 2018 Results HORIBA STEC’s 45th anniversary Record-high sales and operating profit Launched Japan’s first mass flow ＋ controllers in 1980 Boosted supply and enhanced development ＋ capability by the Aso factory expansion and opening Grew to achiev

  31. Slide 31: 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 Japan Establish a global R&D capability USA Productio

  32. Slide 32: Expand business to cover the entire semiconductor manufacturing process

    Expand business to cover the entire Semi semiconductor manufacturing process Diverse product line-up contributing to the overall semicon manufacturing process Material assessment Manufacturing process Quality control and waste water treatment Mass flow controller (Precision enhancement in Raman spec

  33. Slide 33: Scientific 2018 Results and 2019 Forecast

    Scientific 2018 Results and 2019 Forecast (Billions of yen) 2018 Results New product launched in 2018 X-ray analytical microscope XGT9000 ＋ Sales increase in Japan and Europe on the back of More accurate defect and robust corporate R&D spending foreign material analysis of products ＋ Recognized exp

  34. Slide 34: Expand core business and contribute to technology innovation

    Expand core business and contribute to Scientific technology innovation Acquisition of MANTA Instruments Inc. Contributing to technology innovation to obtain new technology  Acquired this U.S. start-up company that develops, manufactures and sells nanoparticle measurement  Prof. Gérard Mourou, who

  35. Slide 35: Core analytic technology supports cutting-edge progress

    Scientific Core analytic technology supports cutting-edge progress 20 years of technological integration of HORIBA and Jobin Yvon and new market development HORIBA celebrates 65th anniversary HORIBA’s strengths in Jobin Yvon’s strengths in measurement instruments for industry products for scientists

  36. Slide 36: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 36

  37. Slide 37: Shareholder Return

    Shareholder Return  Dividend payment + Share buyback = 30% of Consolidated net profit to be targeted Basic policy  Remaining earnings are retained internally for strategic investment (i.e. facilities, M&A) Dividends per share and Share buybacks Ordinary dividend: 125yen  2017 Results 116yen [Inte

  38. Slide 38: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 38

  39. Slide 39: 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

  40. Slide 40: "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 syst

  41. Slide 41: Workplace-rooted Workstyle Renovation

    Workplace-rooted Workstyle Renovation Stained Glass Project Introducing “Good Place” work system Step 1  Initial focus on engagement of women at Allowing flexible workstyle and aiming in 2014 workplace at capable employees to continue working Step 2  Start “work style renovation” workshop “Good Pl

  42. Slide 42: Awarded Nadeshiko Brands and Health & Productivity Stock Selection Program

    Awarded Nadeshiko Brands and Health & Productivity Stock Selection Program by METI and Tokyo Stock Exchange Activities aimed at realizing a better working environment highly evaluated from the stock market Evaluated the engagement based on our Diversity promotion activities "HORIBA Stained Glass Pro

  43. Slide 43: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 43

  44. Slide 44: Operating Profit Analysis (vs 2018)

    Operating Profit Analysis (vs 2018) (Billions of yen) 2017 2018 Jan. – Dec. Jan. - Dec. Increase Exchange Increase Exchange Increase Cost of Impact for Increase 26.8 Sales Goods gross Impact for R&D Cost Other 28.8 Expenses Expense +14.5 sales Profit -1.1 -0.1 -3.3 -7.9 -0.02 Increase +6.6 Exchange

  45. Slide 45: Impact of Fluctuation in Foreign exchange

    Impact of Fluctuation in Foreign exchange (Millions of yen) Exchange rate impact (2018 result) Exchange rate impact Sales +¥579mn O.P. -¥182mn for 2019 Forecast 1 yen impact of Sales and O.P. Sales Operating Profit (Yen appreciation) Total USD EUR Total USD EUR Sales Auto +581 -177 +586 -11 -41 +56

  46. Slide 46: Capital Investment, Depreciation, R&D

    Capital Investment, Depreciation, R&D (Billions of yen) 2017 2018 2019 Previous vs vs vs Result Forecast Result Previous Forecast 2017 2018 (as of Nov 9) Forecast Capital Investment 11.6 14.0 10.2 -1.3 -3.7 16.0 +5.7 Depreciation 7.5 7.5 7.2 -0.2 -0.2 7.5 +0.2 R&D 13.9 15.5 15.1 +1.2 -0.3 16.0 +0.8

  47. Slide 47: Consolidated Cash Flows

    Consolidated Cash Flows (Billions of yen) 2018 2017 Variation Cash flows from operating activities +19.5 +28.2 -8.7 Cash flows from investing activities -11.0 -13.1 +2.1 Cash flows from financing activities -3.2 -9.0 +5.8 Cash and cash equivalents at end of year +62.8 +58.3 +4.5 Free cash flows +8.5

  48. Slide 48: Cash Balance

    Cash Balance (Billions of yen) (Consolidated basis, each end of year) Total Loan Balance 46.7 44.7 44.0 Bond 42.0 redemption Bonds In 2020 Bonds Bonds 15.0 15.0 Cash*1 Bonds Cash*1 Cash*1 Cash*1 15.0 15.0 58.3 62.8 47.8 Long 51.9 Long Long Borrowed Long 16.8 19.2 18.7 17.0 from JBIC*2 Short Short Sh

  49. Slide 49: Contents

    Contents 2018 Results 2019 Forecast Business Segments Outline Share Holder Return Other Topics Financial Data Corporate profile © 2019 HORIBA, Ltd. All rights reserved. 49

  50. Slide 50: Business Segments

    Business Segments Sales Breakdown by Segment Automotive Test Systems Sales: ¥210.5bn (1,897MUND) 13% Scientific Process & Environmental 27.7 (250) Automotive 79.6 38% Semicon (717) Medical 57.7 27% (520) Medical P&E 26.0 19.3 Semiconductor (234) (174) 12% 10% Scientific ( ) =Segment Sales in MUSD %

  51. Slide 51: HORIBA Worldwide

    HORIBA Worldwide Sales of FY2018 : ¥210.5bn (1,897 MUSD) Sales Ratio by Region The Number of Group Companies by region EU Japan (As of December 31, 2018) 22% 31% Americas Americas 9 16% Asia Europe 22 31% Asia 18 (4 in Japan, including HORIBA, Ltd.) Total 49 © 2019 HORIBA, Ltd. All rights reserved.

  52. Slide 52: Employees by Region

    Employees by Region Americas 2% Total Number of Employees Other Europe 2% The U.S. 7,943 10% Total Asia : 4,315 Germany Japan 9% 55% Japan 38% The U.K. 38% Total Europe： 2,637 10% 33% France Other 12% Asia Total Americas： 991 14% 17% 12% (As of December 31, 2018) © 2019 HORIBA, Ltd. All rights reser

  53. Slide 53: Business results trend for 20 years/Targets/Progress of MLMAP

    [Ref.] Business results trend for 20years/Targets/Progress of MLMAP (Billons of yen) Continuous growth in Sales/Operating Profit/Net Income Sales Growth in two times for 10 years from 2010 250.0 20152020 CAGR:7.8% 218.0 210.5 Sales Operating Profit Net Income 195.3 Operating Profit 28.8 29.0 30.0 1

  54. Slide 54: HORIBA BIWAKO E-HARBOR

    HORIBA BIWAKO E-HARBOR © 2019 HORIBA, Ltd. All rights reserved. 54

  55. Slide 55: Biwako factory "HORIBA BIWAKO E-HARBOR"

    Biwako factory “HORIBA BIWAKO E-HARBOR”  Consolidating development, design, and production operations of gas measurement equipment at a single location  Doubling of production capability and shortening delivery time to one-third by using a new production methodology  Comprehensive engineering ser

  56. Slide 56: Business impact from next emission regulations

    Business impact from next emission regulations Global convergence of emission regulations  Accelerating introduction of unified emission regulations (US and EU in 2017, Japan in 2018)  Need to upgrade equipment due to change in testing method  Bench test in labs  Need to upgrade exhaust gas anal

  57. Slide 57: Response to Automotive Electrification

    Response to Automotive Electrification CELL0(Zero) CELL1 CELL2 CELL3 E-LAB at HORIBA BIWAKO E-HARBOR © 2019 HORIBA, Ltd. All rights reserved. 57

  58. Slide 58: HORIBA MIRA

    HORIBA MIRA Information on page 59 to 68 are as of acquired the company. © 2019 HORIBA, Ltd. All rights reserved. 58

  59. Slide 59: Overview of MIRA Ltd.

    Overview of MIRA Ltd. Business 1. Engineering Consultancy 2. Testing Services & Consultancy 3. MIRA Technology Park (Lease R&D facilities) Results Sales : 46.1MGBP(2014 Results) O.P. : 1.1MGBP(2014 Results) Employees 518 (As of December 31, 2014) Established 1946 Head office Nuneaton, Warwickshire,

  60. Slide 60: Core business streams

    Core business streams Engineering Consultancy  Sales:20MGBP Number of employee:240  Design and development for vehicle driving performance (Brake performance, electromagnetic compatibility performance)  Development services utilizing automatic driving and remote control technology Testing Service

  61. Slide 61: 2014 Results

    2014 Results Sales by Business field Sales by Region Americas India Other Others 3% 1% Asia China MIRA Technology Park 5% 1% 3MGBP 6% Europe Korea 8% 2% Engineering Consultancy Testing Services 20MGBP & Consultancy 44% 22MGBP UK 49% 80% Total Sales:46.1MGBP © 2019 HORIBA, Ltd. All rights reserved. 6

  62. Slide 62: Engineering Consultancy

    Engineering Consultancy It could cover all domains of Vehicle R&D Vehicle Engineering Controls & Next generation EV Functional Safety Future Transport Technologies © 2019 HORIBA, Ltd. All rights reserved. 62

  63. Slide 63: MIRA Technology Park

    MIRA Technology Park Various experiments using a large test course MIRA Technology Park 30 customers 1km Proving ground Test Site • Performance(4.5km) • Off road “35” Test Site • Wet surface Wind Tunnels(3)/EMC(9)/Crash • City Circuit lab/NVH Chassis/Battery test • Noise-Generating • Ride & Durabili

  64. Slide 64: MIRA Technology Park

    MIRA Technology Park Key Aspects:  Renting space to customers who want to be on site, ranging from day rates for workshop units to long term leases for bespoke dedicated R&D facilities  Total number of tenants:30  Locations: UK Key Customers & Markets:  Major OEM’s and Tier One suppliers from ar

  65. Slide 65: Location of MIRA

    Location of MIRA  MIRA was strategically located in the Midlands, the center of the UK automotive industry This area is famous for advanced vehicle Auto maker engineering incl. F1 teams, and many F1 team skilled resource (Mercedes, McLaren, Lotus, Williams etc.)  Independent from any automotive ma

  66. Slide 66: Future vision of HORIBA, Ltd. and HORIBA MIRA Ltd.

    Future vision of HORIBA, Ltd. and HORIBA MIRA Ltd. Shared Vision: Contribute to Global Sustainable Mobility Challenges currently faced Access to latest vehicle technology Grow in the global market and R&D information Become ready for changing Maximize use of key technologies, powertrain and future m

  67. Slide 67: Expand business portfolio

    Expand business portfolio Provide comprehensive solution of Automotive R&D Ems Engine PWT* Vehicle Cert. R&D R&D R&D Tools (EMS/MCT) Ems Engine PWT Vehicle Cert. R&D R&D R&D Process (Software) Tools (EMS/MCT) Engineering Consulting Process (Software) Ems Engine PWT Vehicle Cert. R&D R&D R&D Engineer

  68. Slide 68: HORIBA's analytical and measurement technologies contribute to the entire energy industry

    HORIBA’s analytical and measurement technologies contribute to the entire energy industry Energy production Transportation and storage Consumption and environment Electric vehicles, etc. Hydrogen storage, Power production fuel cell vehicles, etc. Four-wheel drive Stack gas test systems, etc. analyze

  69. Slide 69: © 2019 HORIBA, Ltd. All rights reserved.

    © 2019 HORIBA, Ltd. All rights reserved. 69

  70. Slide 70: Thank you

    Thank you Cảm ơn 감사합니다 ありがとうございました Dziękuję Grazie धन्यवाद நன்ற Merci 谢谢 ขอบคุณคร ับ Obrigado Σας ευχαριστούμε Tack ska ni ha Большое спасибо Danke Gracias © 2019 HORIBA, Ltd. All rights reserved. 70

HORIBA — 15th CLSA Japan Forum 2019 on 6ix