Slide 1: Financial Results Briefing for the Second Quarter of FY Ending December 2024
HIOKI E.E. CORPORATION Financial Results Briefing for the Second Quarter of the Fiscal Year Ending December 31, 2024 (Securities Code: 6866) July 2024 © 2024 HIOKI E.E. CORPORATION
Slide 2: 1. Company Overview
1. Company Overview Photograph: The four seasons at HIOKI Forest Hills: Summer © 2024 HIOKI E.E. CORPORATION
Slide 3: Overview
Overview ■Name HIOKI E.E. CORPORATION ■Businesses Development, manufacture, sale, and service of electrical measuring instruments ■Founded June 1935 ■Incorporated January 1952 ■Capitalization ¥3,299 million ■Representative Takahiro Okazawa, President ■Head Office 81 Koizumi, Ueda‐shi, Nagano Prefect
Slide 4: 2. Second Quarter Results and Full-year Forecast
2. Second Quarter Results and Full-year Forecast Photograph: HIOKI Forest Hills © 2024 HIOKI E.E. CORPORATION
Slide 5: Performance: Key Considerations
Performance: Key Considerations Factors • There are concerns that the global trend towards decarbonization may be slowing in some countries and markets. • Growth in EVs, particularly in China, is slowing in the short term, with orders for battery- and energy-related instruments declining. Second qua
Slide 6: 1H 2024 Performance Overview
1H 2024 Performance Overview 1H 2023 1H 2024 Results Percent of sales Results Percent of sales (%) Year‐on‐year (%) (millions of yen) (%) (millions of yen) Order volume 20,186 99.3 19,465 104.3 96.4 Sales 20,334 18,662 91.8 Cost of sales 10,729 52.8 9,520 51.0 88.7 Selling, general, and administrati
Slide 7: 1H 2024: Factors Impacting Operating Income
1H 2024: Factors Impacting Operating Income (Millions of yen) Average exchange rates during period 6,000 1H 2023 1H 2024 USD ¥134.84 ¥152.25 5,000 CNY ¥19.45 ¥21.05 KRW ¥0.1042 ¥0.1127 4,000 △1,945 +316 △194 3,000 +622 4,545 2,000 Decreased 3,344 Improvement Increased fixed gross in gross 1,000 prof
Slide 8: Trend in Order Volume by Product Category (by Quarter)
Trend in Order Volume by Product Category (by Quarter) (Millions of yen) 12,000 11,005 10,097 1,065 9,967 Automatic test 9,450 9,181 9,498 equipment 1,005 9,020 8,842 920 9,000 820 1,465 8,482 573 776 7,876 733 782 1,359 814 1,573 1,331 Data recording 1,367 1,314 1,309 equipment 646 1,516 1,023 1,21
Slide 9: Trend in Sales by Product Category (by Quarter)
Trend in Sales by Product Category (by Quarter) (Millions of yen) 12,000 10,028 10,306 Automatic test 9,483 575 9,229 9,591 9,551 equipment 9,006 995 606 9,111 9,000 8,287 501 944 1,336 706 695 1,002 7,595 1,413 1,371 Data recording 945 1,362 1,524 1,306 1,479 1,365 equipment 833 1,264 6,000 904 Ele
Slide 10: Orders by Market Application
Orders by Market Application (Millions of yen) 2021 2022 2023 2Q 2024 results 9,000 6,000 3,000 0 Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Automatic test Data recording Batteries Devices Energy Maintenance equipment equipment © 2024
Slide 11: Sales by Market Application
Sales by Market Application (Millions of yen) 2021 2022 2023 2024 (revised) 2025 (plan) 2Q 2024 results 9,000 6,000 3,000 0 Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Domestic Overseas Automatic test Data recording Batteries Devices Energy Maintenance e
Slide 12: Trend in Quarterly Sales and Operating Profit
Trend in Quarterly Sales and Operating Profit Sales and operating profit (millions of yen) Operating profit rate 25,000 25.0% 20,000 20.0% 15,000 15.0% 10,000 10.0% 5,000 5.0% 0 0.0% 1H 2022 2H 2022 1H 2023 2H 2023 1H 2024 Sales 15,882 18,489 20,334 18,820 18,662 Operating profit 3,140 3,930 4,545 3
Slide 13: Trend in Overseas Sales (by Quarter)
Trend in Overseas Sales (by Quarter) Export sales as a percentage of total sales (target: 70% or greater) (Millions of yen) 59.9% 67.4% 63.2% 63.4% 60.9% 16,000 12,000 8,000 4,000 0 Domestic Export Domestic Export Domestic Export Domestic Export Domestic Export 1H 2022 2H 2022 1H 2023 2H 2023 1H 202
Slide 14: Management Targets
Management Targets Operating income rate on overseas sales: 20% Percentage of overseas sales: 70% or greater Return on equity (ROE): 10% or greater © 2024 HIOKI E.E. CORPORATION 14
Slide 15: 2024 Business Forecast
2024 Business Forecast 2023 results 2024 initial forecast 2024 revised forecast Results Percent of sales Cumulative results Percent of sales Cumulative results Percent of sales Year‐on‐year (millions of yen) (%) (millions of yen) (%) (millions of yen) (%) (%) Sales 39,154 42,000 40,000 102.2% Cost o
Slide 16: Trend in Sales and Operating Profit
Trend in Sales and Operating Profit Sales and operating profit (millions of yen) Operating profit rate 40,000 40.0% 30,000 30.0% 20,000 20.0% 10,000 10.0% 0 0.0% 2020 2021 2022 2023 2024 Sales 21,664 29,322 34,371 39,154 40,000 Recurring profit 2,469 5,750 7,070 7,955 8,000 Recurring profit rate 11.
Slide 17: Trend in Overseas Sales
Trend in Overseas Sales Export sales as a percentage of total sales (target: 70% or greater) (Millions of yen) 50.7% 58.6% 63.9% 63.3% 62.9% 30,000 20,000 10,000 0 Domestic Export Domestic Export Domestic Export Domestic Export Domestic Export 2,020 2,021 2,022 2,023 2024 (revised) Japan 10,690 12,1
Slide 18: Outlook: Earnings and Dividends per Share
2023 Outlook: Earnings and Dividends per Share Dividend policy: Deliver a return on shareholdersʼ investments by adopting a stable annual dividend base of a consolidated dividend on equity (DOE) of at least 2% per share and a target consolidated dividend payout ratio of 40%. ROE Earnings and dividen
Slide 19: 3. Initiatives to Achieve the Full-year Outlook
3. Initiatives to Achieve the Full‐year Outlook Photograph: The four seasons at HIOKI Forest Hills: Summer © 2024 HIOKI E.E. CORPORATION
Slide 20: Sales Growth by Region
Sales Growth by Region China South Korea Europe U.S.A. 204.1% Japan 258.6% 271.8% 231.7% India Taiwan 420.1% 126.9% 135.8% Indonesia Singapore 2023 results 2020 results 253.1% 139.4% Figures: Growth rate © 2024 HIOKI E.E. CORPORATION 20
Slide 21: Transition to Markets and Account-based Sales Gains Momentum
Transition to Markets and Account-based Sales Gains Momentum Sales Chinese sales subsidiary Department Sales Department Market coordinators Market coordinators Artistʼs conception: East (battery, automotive, (energy, electronic Wholesale Japan Technical Center etc.) components, etc.) coordinator (Yo
Slide 22: Consolidating Sales Subsidiary Data and Market-oriented Product Development
Consolidating Sales Subsidiary Data and Performing Market-oriented Product Development HIOKI INDIA PRIVATE LIMITED Opened the Indore Branch. Focusing on developing customer Germany relationships in the central part of the country. U.S.A. South Korea UAE China India HIOKI ELECTRIC (THAILAND) CO., LTD
Slide 23: Future Demand Trends
Future Demand Trends Data recording Domestic, international: Demand for loggers for use in thermal management and equipment charge/discharge measurement will grow. China: Investment in boosting production of EV cells will slow. India: Brisk investment in module pack equipment will drive increased de
Slide 24: Growth Strategies
Growth Strategies Developing products featuring unique Hioki technologies Developing market‐focused businesses Achieving carbon neutrality under the GHG Protocol © 2024 HIOKI E.E. CORPORATION 24
Slide 25: Overview of Growth Strategies and Policies
Overview of Growth Strategies and Policies Product development featuring unique Hioki Medium- and long-term perspective Growth technologies strategies Reorganization to generate medium- and long-term growth for Global digital transformation (DX) strategy Market-focused increasing business developmen
Slide 26: Future Directions of HIOKI's Businesses
Future Directions of HIOKIʼs Businesses Bringing products to every field that will use electric energy as infrastructure in the future Focusing development resources on the key markets that comprise a new social system Transition to Effective use of Digital transformation (DX) alternative energy ele
Slide 27: Resolving Societal Issues to Realize a Decarbonized Society
Resolving Societal Issues to Realize a Decarbonized Society Principal measurement applications in key markets Major new-product launches from end of 2023 to 2Q 2024 Solar power Battery industry Mobility Semiconductors Datacenters Heat pumps Hydrogen industry electrification Electronic components DX
Slide 28: Resolving Societal Issues through Electrical Measurement
Resolving Societal Issues through Electrical Measurement Hydro Wind Mechanical energy Generators Solar power Light energy Motors Lights Inverters Electric Heaters, loss energy Batteries (discharging) Fuel cells Batteries (charging) Thermal energy Power plants Electrolysis Chemical energy Fossil fuel
Slide 29: Multiple New-product Launches to Resolve Societal Issues
Multiple New-product Launches to Resolve Societal Issues through Electrical Measurement: A Major Contributor to Performance in 3Q and Beyond Using energy efficiently Expanding volume production applications for • Thanks to progress in power semiconductors, high‐voltage, high‐ solar power current, hi
Slide 30: Reorganization to Generate Medium- and Long-term Growth
Reorganization to Generate Medium- and Long-term Growth We will reorganize three teams to Global DX Planning Department accommodate significant change in the external environment. Products and Technological marketing Technological: Developing the advanced development technologies needed by new busin
Slide 31: Strengthening the Hydrogen Business
Strengthening the Hydrogen Business, Which Has Inspired High Medium- and Long-term Growth Expectations We’ve launched a Hydrogen Energy Solutions team as an in‐house venture. We’ve booked orders from AIST, JAXA, and others. Hioki’s strength lies in its ability to provide solutions that can accommoda
Slide 32: 3 Growth Strategies
Pursuing Medium- and Long-term Growth by Implementing a Global DX Strategy Unified group Implementing next- management Developing market-focused generation security businesses Strengthening global Establishing the Global data management 3 growth DX Planning Department Integrating internal and extern
Slide 33: New Human Resources Program: The HiCareer Program
New Human Resources Program: The HiCareer Program Purpose Policies • To empower employees to build their own Boost motivation (engagement and employee-friendliness) by combining individual purpose with careers and grow while gaining a sense of the Companyʼs management policies in a sophisticated man
Slide 34: Initiatives to Boost Productivity and Profitability
Initiatives to Boost Productivity and Profitability The Ueda No. 2 Plant, which is located close to the Head Office Plant, began operating on July 8, 2024. We’re working to optimize production structures, including at the Head Office and Sakaki Plants, as we look to secure enough production capacity
Slide 35: Corporate Governance and Sustainability Initiatives
Corporate Governance and Sustainability Initiatives To develop a deeper understanding of the status of operational execution throughout the Group, we decided to start holding Board of Directors meetings in regions where we have overseas subsidiaries, starting in 2024. In July, meetings were held in
Slide 36: Publication of the Integrated Report (3rd Edition)
Publication of the Integrated Report (3rd Edition) © 2024 HIOKI E.E. CORPORATION 36
Slide 37: Contributing to a Sustainable Society and Vision 2030
Going forward, we will contribute to the realization of a sustainable society by providing high-quality products and services for use in customersʼ decarbonization initiatives as we strive to realize Vision 2030. © 2024 HIOKI E.E. CORPORATION 37
Slide 38: 4. Reference Materials
4. Reference Materials Photograph: HIOKI Forest Hills © 2024 HIOKI E.E. CORPORATION
Slide 39: Performance and Employee Head Count since HIOKI's Establishment
Reference Materials Performance and Employee Sales and recurring profit Head Count since HIOKIʼs Establishment (Millions of yen) Sales Number of employees Recurring profit 40,000 2015 1,200 Consolidated subsidiary timeline HIOKI Innovation Center, the 1994 HIOKI Forest Plaza Corporation 1991 1998 HI
Slide 40: HIOKI Group Business Diagram
Reference Materials HIOKI Group Business Diagram Sales breakdown Customers Global markets [Sales] HIOKI USA CORPORATION [Sales] HIOKI SINGAPORE PTE. LTD. China instruments business Electrical measuring [Sales] [R&D, manufacturing, and sales] [Sales] PT. HIOKI ELECTRIC INSTRUMENT HIOKI (Shanghai) Mea
Slide 41: Reference Materials
Reference Materials
Slide 42: Long-term Management Policy: Vision 2030
Long-term Management Policy: Vision 2030 Mission Why do we Our mission at Hioki is to contribute to societyʼs peace of mind and contribute to development by promoting customersʼ safe, effective use of energy through society? electrical measurement. Vision Beyond Measure 10 years in the Hioki will be
Slide 43: Five Types of Sustained, Ongoing Innovation for Vision 2030
Five Types of Sustained, Ongoing Innovation in Companywide Functions for Realizing the Vision 2030 Innovation is the process of gaining customers by forging new connections. Creating new customer value Building new production structures Building relationships for collaborating creatively with custom
Slide 44: HIOKI Product Organization and Fields of Use
Reference Materials HIOKI Product Organization and Fields of Use HIOKI meets customer needs ranging from advanced R&D to production lines and on‐site electrical work in every industry with about 300 products. Overall R&D Field organization Production lines maintenance Automatic testing Package and b
Slide 45: Trend in Orders by Product Category (by Half)
Reference Materials Trend in Orders by Product Category (by Half) (Millions of yen) 25,000 Automatic test 20,186 equipment 20,000 19,547 19,465 1,825 1,798 17,324 1,493 16,896 Data recording 15,664 15,503 2,726 1,422 2,774 1,596 2,904 equipment 15,000 1,652 1,974 2,337 2,727 2,307 2,227 Electronic m
Slide 46: Trend in Sales by Product Category (by Half)
Reference Materials Trend in Sales by Product Category (by Half) (Millions of yen) 25,000 Automatic test 20,334 equipment 20,000 18,489 1,570 18,820 18,662 1,445 1,312 1,697 Data recording 15,882 2,749 14,639 2,677 equipment 14,683 2,886 2,844 15,000 1,778 1,847 1,440 2,168 Electronic 2,140 2,156 me
Slide 47: Actual Sales by Geographic Region: Japan
Reference Materials Actual Sales by Geographic Region: Japan • Companies and research institutions continue to make robust investments in Sales Ratio by R&D as they pursue decarbonization. Instruments for use in development of Product Category 9% 10% water electrolysis systems and electrification of
Slide 48: Actual Sales by Geographic Region: China
Reference Materials Actual Sales by Geographic Region: China 1% • We are transitioning sales structures from a territory basis to a market basis. Sales Ratio by 6% 6% Growth in principal industries such as batteries and solar panels is slowing. We are Product Category strengthening sales efforts tar
Slide 49: Sales by Geographic Region: Southeast Asia
Reference Materials Actual and Forecasted Sales by Geographic Region: Southeast Asia (except Indonesia; including Oceania) • The number of purchase agreements involving flagship products for EV and battery Sales Ratio by Product Category 7% applications will trend up. 15% • Investments to build data
Slide 50: Sales by Geographic Region: Indonesia
Reference Materials Actual and Forecasted Sales by Geographic Region: Indonesia 2％ 3％ • Orders slowed during the first quarter as a result of a national election. We opened Sales Ratio by an office in Surabaya. Product Category 7% • We will work to build a Hioki ecosystem by forging relationships wi
Slide 51: Actual Sales by Geographic Region: Americas
Reference Materials Actual Sales by Geographic Region: Americas (North and South America) 2％ • A slowdown in EV demand is causing investment in related markets to shrink Sales Ratio by 5％ and face delays as manufacturing industry output trends down. Product Category 9% • We will focus on the energy
Slide 52: Actual Sales by Geographic Region: South Korea
Reference Materials Actual Sales by Geographic Region: South Korea • Major South Korean automakers are facing significant challenges related to the 2％ Sales Ratio by 5％ “chasm” phenomenon in the adoption of EVs. We will work to increase sales in Product Category 6％ the new renewable energy and elect
Slide 53: Actual Sales by Geographic Region: Europe
Reference Materials Actual Sales by Geographic Region: Europe 2％ 3% • Demand for automotive applications is declining due to contraction of the EV Sales Ratio by market. We will increase sales in the recorder segment by strengthening Product Category 9% solutions. 17% • We will strengthen offerings
Slide 54: Actual Sales by Geographic Region: India
Reference Materials Actual Sales by Geographic Region: India 3％ Sales Ratio by • Capital investment in EVs, batteries, household appliances, and new energy 10％ continues to be brisk, and orders remain strong. Product Category 16% • We opened a branch in Indore to provide geographic coverage of centr
Slide 55: Actual Sales by Geographic Region: Taiwan
Reference Materials Actual Sales by Geographic Region: Taiwan 2% • There are signs that the electronic device market is recovering. Sales Ratio by • Demand for automatic test equipment for semiconductor packaging is rising. Product Category 21% • Demand for improvements in energy efficiency is risin
Slide 56: Actual Sales by Geographic Region: Other
Reference Materials Actual Sales by Geographic Region: Other 1H 2024 results: ¥150 million インド We established a sales subsidiary in Dubai, UAE, in July. 290百万円 Going forward, we will focus on increasing sales in the Middle Middle East and North Africa. The HVAC maintenance industry is East thriving
Slide 57: Capital Investment and Depreciation Allowance
Reference Materials Capital Investment and (Millions of yen) Depreciation Allowance (Tangible and intangible) 5,000 Capital investment Depreciation allowance 4,000 3,000 4,600 2,000 3,341 1,000 1,870 1,437 1,580 910 1,181 914 1,122 1,152 0 2020 2021 2022 2023 2024 plan © 2024 HIOKI E.E. CORPORATION
Slide 58: Cash Flows
Reference Materials Cash Flows (Millions of yen) 20,000 +1,665 △2,108 △1,227 Amount of 15,000 ＋303 decrease △1,368 Purchases of tangible fixed assets 10,000 △1,889 Dividend payments △1,227 14,745 Income before taxes, etc. ＋3,604 13,376 Depreciation expenses 5,000 ＋749 Decrease in allowance for bonus
Slide 59: Share Buyback
Reference Materials Share Buyback Reasons for share buyback • To return more profits to shareholders • To facilitate the implementation of dynamic capital policies that accommodate changes in the business environment Details (1) Type of shares being acquired: Hioki common stock (2) Total number of s
Slide 60: Sustainability Timeline
Reference Materials Sustainability Timeline We’ve undertaken a series of sustainability initiatives in accordance with The Hioki Philosophy, and we will continue to pursue new initiatives as we work to realize Vision 2030. The Hioki ISO 14001 certification EMS organizational structures Vision 2030 S
Slide 61: Improving Value-added Productivity: Concurrent engineering
Reference Materials Improving Value‐added Productivity Concurrent engineering In HIOKI’s approach to product development, departments come together organically with the goal of improving productivity. © 2024 HIOKI E.E. CORPORATION 61
Slide 62: Development Capability: Unique Products Built around Core Technologies
Reference Materials Development Capability: Unique Products Built around Core Technologies ●Patent program that motivates inventors ●R&D spending as percent of sales: Greater than 10% (Rights or (Millions of yen) Trend in R&D Expenses patents) Trend in Industrial Property Rights 8,000 14.0% 1,600 30
Slide 63: Production Capability: Manufacturing Calibrated to Sales Velocity
Reference Materials Production Capability: Manufacturing Calibrated to Sales Velocity Aggressively practicing a “Quality First” approach Quality from the standpoint of the “Sangen Principle” based on the 5S philosophy Enhancing initiatives at the source of development Cost Minimizing cost through le
Slide 64: Sales Capabilities: Customer-focused Solutions Sales
Reference Materials Sales Capabilities: Customer-focused Solutions Sales Domestic sales Global sales • Direct marketing to domestic customers • Group companies: 12 facilities • About 60 sales staff at 11 domestic • Realizing market potential in partnership facilities with overseas distributors • PR
Slide 65: Note on the Information in This Presentation
Note on the Information in This Presentation Plans, forecasts, strategies, and other information in this presentation relating to future business performance were compiled on the basis of currently available data and by their nature incorporate a certain degree of risk and uncertainty. Actual perfor