Sato : Financial Results Briefing Materials for 1st Quarter of FY2025

August 12, 2025

SATO Corporation

Q1 FY2025 Financial Results

(Three Months Ended June 30, 2025)

Securities Code: 6287.T

Apr- Jun 2025 ResultsESG FocusActions toward realizing optimal cost of capital and enhancing shareholder value

Apr- Jun 2025 ResultsESG FocusActions toward realizing optimal cost of capital and enhancing shareholder value

Summary

• Q1(Apr-Jun) Results

  • Consolidated sales increased (+0%), while OI decreased (-18%) year on year.

    % in parentheses indicate year-on-year changes.

    • Overseas base business: Sales (-5%) and OI decreased (-13%).

    • Overseas primary labels business: Sales increased (+2%) while OI decreased (-57%).

    • Japan business: : Sales (+4%) and OI increased (5x).

  • Sales and OI exceeded the plan in the Japan but fell short of the plan overseas.

    • Overseas, our factories for the base business in Asia and Oceania performed well, pushing up results above the plan. However, overall sales and OI fell short of the plan, as the primary labels business in Russia was impacted by the appreciation of the ruble against the euro and by increased costs incurred for the expansion of production capacity.

    • In Japan, we delivered results that exceeded the plan driven by the recovery of mechatronics sales.

Sales and OI by Business Segment

（Millions of JPY）

Consolidated Results

（Millions of JPY）

FX sensitivity for FY25: Assuming a 1-yen depreciation of the Japanese yen against the US dollar and an equivalent depreciation against other currencies, the estimated impact for the full-year FY25 would be an increase in sales of JPY 561 million and an increase in OI of JPY 35 million.

Average FX for Apr-Jun 2025: JPY 144.59/USD, JPY 163.80/EUR (Apr-Jun 2024: JPY 155.85/USD, JPY 167.84/EUR)

* EBITDA = Operating Income + Depreciation + Amortization (Incl. Goodwill)

·Depreciation for Apr-Jun 2025: JPY 1,405 million (Apr-Jun 2024: JPY 1,270 million)

·Amortization for Apr-Jun 2025: JPY 3 million (Apr-Jun 2024: JPY 38 million)

*1 Sales and OI excluding those of Russian subsidiaries are shown on p. 40. 6

Major Gains/Losses in OI

(Millions of JPY)

Consolidated Consolidated

-426

-181

2,359

+366 -264

(Figures exclude those of the Russian subsidiaries)

+420

-201

1,922

+301 -387

FY24

Net Sales Gross Profit, etc. SG&A Excludes FX Impact

FX Impact FY25

FY24

Net Sales Gross Profit, etc. SG&A Excludes FX Impact

FX Impact FY25

7

Overview

• Includes the impact of IAS 29, Financial Reporting in Hyperinflationary Economies ("Hyperinflation Accounting") in Argentina.

  Major Gains/Losses in OI

  （Millions of JPY）

  Sales

  	FY24	FY25	Change
  				YoY	In local currencies
  Base business Total Sales Primary Lablels business Total Sales	13,355 5,966	12,628 6,109	-726 +143	-5.4% +2.4%	+0.4% +2.9%
  Total Sales	19,321	18,737	-583	-3.0%	+1.2%
  Gross Profit Gross Profit %	7,964 41.2%	7,083 37.8%	-881 -3.4pt	-11.1% -	- -
  Base business Operating Income Primary Lablels business Operating Income Elimination Operating Income	1,277 1,301 7	1,118 561 -50	-159 -740 -57	-12.5% -56.9% -	-7.3% -54.7% -
  Operating Income	2,586	1,629	-956	-37.0%	-33.3%
  Operating Income %	13.4%	8.7%	-4.7pt	-	-

  • The base business was brisk in Asia and Oceania, but overall sales decreased, impacted by unfavorable foreign exchange rates affecting operations mainly in Europe and the Americas.

  • Sales of the primary label business increased helped by favorable foreign exchange rates, despite drops in demand in Russia caused by changes in the tax regulations.

    Operating income

    • Negative factors

    • Asia/Oceania base business

    • Factories

    -316

    -94

    • The Americas base

      business

    • Asia/Oceania base business

    • The Americas primary labels

    • Asia/Oceania base business

    1,629

    FY24

    Net Sales

    Gross Profit, etc.

    Excludes impact of FX

    SG&A

    FX Impact

    FY25

    • Europe primary labels

    • Europe base business

    2,586

• The base business was brisk in

• Positive factors

  +294

  -841

  Asia and Oceania, but OI for overseas decreased due to a temporary increase in SG&A expenses in Americas caused by the reversal of allowance for doubtful accounts recorded in Q1(Apr-Jun) FY24.

• OI of the primary label business declined due to increased costs in

Europe. 8

Quarterly Sales and Operating Income

30,000

25,000

20,000

15,000

10,000

5,000

0

Sales (LHS) OI (RHS)

（Millions of JPY）

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY23

FY24

Q1

FY25

3,000

2,500

2,000

1,500

1,000

500

0

Base Business — The Americas

（Millions of JPY）

• Includes impact of IAS 29, Financial Reporting in Hyperinflationary Economies ("Hyperinflation Accounting") in Argentina.

Quarterly Sales and Operating Income

Sales

• In the US, sales decreased due to the negative impact of foreign exchange rates, despite high-value projects for print and apply systems and increased demand for consumables.

• Sales decreased in South America due to the negative impact of

  6,000

  4,000

  2,000

  Sales	4,353	4,412	4,293	4,274	4,568	4,294	4,503	4,768	4,264
  YoY	+3.3%	-6.0%	-7.2%	+14.6%	+4.9%	-2.7%	+4.9%	+11.5%	-6.7%
  OI	197	80	352	-92	318	54	-24	28	164
  YoY	+17.0%	-75.5%	-13.1%	-	+61.3%	-32.9%	-	-	-48.4%

  0

  600

  Sales (LHS)

  OI (RHS)

  Q1

  Q2

  Q3

  Q4

  Q1

  Q2

  Q3

  Q4

  FY23 FY24

  Q1

  FY25

  400

  200

  0

  -200

  foreign exchange rates, despite

  strong demand amid inflation.

  Operating Income

• OI decreased, impacted by a temporary increase in SG&A expenses caused by reversal of allowance for doubtful accounts recorded in the US in Q1(Apr-Jun) FY24.

• OI decreased in South America due to increased personnel and other costs amid inflation.

  Base Business — Europe

  （Millions of JPY）

  	FY24	FY25	Change
  				YoY	In local currencies
  Total Sales	3,221	3,129	-92	-2.9%	-0.7%
  Operting Income	105	109	+4	+4.3%	+6.0%

  Sales

• In Europe, sales decreased due to sluggish investments caused by economic downturns.

• The overall health care vertical remained strong.

  3,400

  Quarterly Sales and Operating Income

  Sales (LHS)

  OI (RHS)

  Q1

  Q2

  Q3

  Q4

  Q1

  Q2

  Q3

  Q4

  Q1

  FY23 FY24 FY25

  600

  3,200

  3,000

  2,800

  2,600

  2,400

  400

  200

  0

  Operating Income

• OI remained flat, as the decrease in sales mentioned above was offset by well-controlled SG&A expenses and improved sales mix.

  Sales	2,991	2,714	3,008	2,999	3,221	3,028	3,106	3,121	3,129
  YoY	-6.4%	-16.9%	-4.5%	+7.5%	+7.7%	+11.6%	+3.3%	+4.1%	-2.9%
  OI	487	108	219	78	105	144	73	85	109
  YoY	2.9x	-47.1%	+11.2%	-60.9%	-78.3%	+33.8%	-66.2%	+9.0%	+4.3%

  8,000

  6,000

  4,000

  2,000

  Sales	4,431	4,679	5,120	4,790	5,564	5,483	5,718	5,251	5,234
  YoY	+4.8%	-3.9%	+8.2%	+17.3%	+25.6%	+17.2%	+11.7%	+9.6%	-5.9%
  OI	318	490	769	537	853	854	1,151	671	843
  YoY	-10.0%	-19.3%	+4.9%	2.0x	2.7x	+74.2%	+49.7%	+25.0%	-1.1%

  0

  Base Business — Asia/Oceania

  	FY24	FY25	Change
  				YoY	In local currencies
  Total Sales	5,564	5,234	-330	-5.9%	-0.1%
  Operting Income	853	843	-9	-1.1%	+4.7%

  （Millions of JPY）

  Sales (LHS)

  OI (RHS)

  Q1

  Q2

  Q3

  Q4

  Q1

  Q2

  Q3

  Q4

  Q1

  FY23 FY24 FY25

  Quarterly Sales and Operating Income

  1,500

  1,000

  500

  0

  Sales

• Sales were lower as brisk business in the manufacturing vertical in Thailand and high-value retail projects in the Philippines were not enough to offset the drops in the demand for products of Argox, our Taiwanese subsidiary, caused by excess inventory in its indirect sales channels

• In Australia, sales continued to be robust, driven by high-volume RFID project.

  Operating Income

• Although printer exports to sales companies in the Americas remained strong, improving the OI of our factories, overall OI was flat due to decreased sales at Argox in Taiwan, as mentioned above.

• OI expanded due to the high-volume project in Australia mentioned above.

  Primary Labels Business

  		FY24	FY25	Change
  					YoY	In local currencies
  The Americas Achernar (Argetina) Plakorar (Brazil)	Total Sales	960	922	-38	-4.0%	+21.5%
  	Operating Income	255	135	-120	-47.0%	-29.2%
  Europe Okil/ X-pack (Russian)	Total Sales	4,904	5,089	+184	+3.8%	-0.9%
  	Operating Income	1,028	413	-614	-59.8%	-61.6%
  Asia/Oceania Hirich (Vietnam)	Total Sales	101	97	-3	-3.5%	+6.7%
  	Operating Income	17	12	-5	-29.4%	-22.0%
  Total Sales	Total Sales	5,966	6,109	+143	+2.4%	+2.9%
  	Operating Income	1,301	561	-740	-56.9%	-54.7%

  （Millions of JPY）

  * Includes the impact of IAS 29, Financial Reporting in Hyperinflationary Economies ("Hyperinflation Accounting") in Argentina.

  Quarterly Sales and Operating Income

  Sales (LHS)

  OI (RHS)

  8,000

  6,000

  4,000

  2,000

  0

  Q1

  Q2

  Q3

  Q4

  Q1

  Q2

  Q3

  Q4

  Q1

  FY23 FY24 FY25

  Sales

  4,676

  5,297

  5,226

  4,661

  5,966

  6,416

  5,775

  4,796

  6,109

  YoY

  -1.7%

  -6.2%

  -14.6%

  +2.5%

  +27.6%

  +21.1%

  +10.5%

  +2.9%

  +2.4%

  OI

  1,118

  1,509

  1,136

  775

  1,301

  1,290

  1,198

  409

  561

  YoY

  4.3x

  +55.2%

  -18.9%

  -29.5%

  +16.4%

  -14.5%

  +5.4%

  -47.2%

  -56.9%

  2,000

  Sales

• Sales in Europe increased due to favorable foreign exchange rates, despite weaker demand in Russia resulting from changes in tax regulations.

• Sales in the Americas decreased due to the negative impact of foreign exchange rates, despite solid demand amid inflation.

  1,500

  1,000

  500

  0

  Operating Income

• In Europe, OI decreased due to increased costs resulting from production capacity expansion and rising raw material prices.

• OI in the Americas decreased due to higher personnel and other inflation-driven cost increases.

  Overview

  	FY24	FY25	Change
  				YoY
  Mechatronics Sales Consumables Sales	6,847 11,505	7,180 11,911	+332 +405	+4.9% +3.5%
  Total Sales	18,353	19,091	+738	+4.0%
  Gross Profit Gross Profit %	8,127 44.3%	8,935 46.8%	+808 +2.5pt	+9.9% -
  Operating Income	186	864	+678	4.6x
  Operating Income %	1.0%	4.5%	+3.5pt	-

  Mechatronics: Hardware (e.g., printers, automatic labelers, scanners, hand labelers), software and maintenance services. Consumables: Products such as variable information labels, RFID tags, primary labels (product labels) and ribbons.

  Major Gains/Losses in OI

  （Millions of JPY）

  Sales

• Mechatronics: Sales increased, driven by steady demand resulting from investment in efficiency improvement in the manufacturing vertical. Demand related to the revised logistics efficiency law also contributed.

• Consumables: Sales increased due

  to firm overall demand.

  Operating Income

• OI increased due to the abovementioned increase in sales, an improved product mix, increased printer exports and successful control of SG&A expenses.

  • Positive factors

  • Negative factors

  +588

  -129

  -87

  ・HR capital investments

  +306 ・Operating expense

  ・R&D costs

  ・GP on exports

  ・Product mix

  186

Net Sales

Gross Profit, etc.

Excludes impact of FX

SG&A

FY24 FX Impact FY25

Quarterly Sales and Operating Income

25,000

20,000

15,000

10,000

5,000

0

Sales (LHS) OI (RHS)

（Millions of JPY）

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY23

FY24

Q1

FY25

2,000

1,500

1,000

500

0

-500

Net Sales

Manufacturing *2

5,295

-1.8%

5,202

+8.3%

5,632

3,559

3,621

3,721

1,736

1,580

1,911

8,000

6,000

4,000

2,000

0

FY23 FY24 FY25

Production of advanced semiconductors remained strong due to elevated demand for applications such as generative AI. Investment in efficiency improvement continued as severe labor shortages drove demands for digital transformation.

Consumables and mechatronics sales increased in almost all industries, with a high-value project for print and apply systems in the electronic component industry and another one for automotive industry driving the latter.

Logistics *3

3,998

+3.6%

4,141

+6.5%

4,410

2,884

2,936

3,072

1,113

1,205

1,338

8,000

6,000

4,000

2,000

0

FY23 FY24 FY25

Due to the increased flow of goods driven by brisk ecommerce and inbound tourism, overall demand was strong. In addition to labor shortages, the revised logistics efficiency law limiting truck drivers’ overtime continued to drive demand.

Consumables sales increased across all industries as we captured the demand that continued to rise on higher freight volumes. As for mechatronics, sales increased driven by the effects of revised logistics efficiency law, continued demand from the inbound tourism, and a high-value project in the ecommerce industry.

Retail

2,366

689

+17.4%

2,777

1,815

962

+5.8%

2,938

2,033

905

8,000

6,000

4,000

2,000

0

FY23 FY24 FY25

In-store investments at supermarkets for digital transformation and efficiency gains continued to be strong. Investments in ecommerce are robust as well.

Consumables sales rose, as robust inbound tourism boosted the sales of merchandise. Mechatronics sales declined; the sale increase from the brisk merchandise sales was not enough to cover the lack of one-off high-value e-commerce project in the same period last year.

16

* 1 Since Q1 FY24, service sales are partially included in the mechatronics business. Graphs have been adjusted retrospectively.

* 2 Since Q1 FY25, sales from the manufacturing and public verticals have been combined. Graphs have been adjusted retrospectively.

Sales by Vertical 2/2 *1

• ：Mechatronics ■：Consumables (% indicates YoY change) (Millions of JPY)

Health Care

2,166

+4.7%

2,268

-1.6%

2,233

1,516

1,624

1,629

650

644

604

3,000

Food & Beverage

1,852

+11.4%

2,062

-7.9%

1,899

1,484

1,427

378

3,000

2,000

1,000

0

FY23 FY24 FY25

2,000

1,000

0

FY23 FY24 FY25

Investments in RFID to improve administrative efficiency and combat labor shortages continued. Demand is strong overall.

Consumables sales remained flat despite the absence of one-off high-value projects in the same quarter previous year, as the higher demand for RFID compensated it. Mechatronics sales decreased, impacted by the lack of high-value automation projects in the medical equipment industry.

Robust demand for automation and RFID solutions continued, as higher raw material and logistics costs and severe labor shortages keep affecting company operations.

Consumables sales decreased due to declines in sales of

specific products in food manufacturing industry.

In mechatronics, sales were boosted by high-value projects in the food service industry, but the increase wasn’t enough to offset the lack of a high-value project in the same period last year.

* 1 Since Q1 FY24, service sales are partially included in the mechatronics business. Graphs have been adjusted retrospectively. 17

RFID and Automation Sales

RFID and automation sales continued to be strong on the back of the robust demand related to digital transformation and labor shortages.

Despite the robust demand in manufacturing, RFID sales dropped, due to unfavorable comparison to a year ago period when we had one-off high-value projects in public and other verticals.

Automation sales increased, driven by high-value e-commerce projects in logistics.

(Millions of JPY)

RFID

Q1 FY25: -13.4% YoY

Automation*

Q1 FY25: +2.3% YoY

1,500

Mechatronics

Consumables

1,500

1,000

1,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY23 FY24 FY25

500 500

0 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY23 FY24 FY25

* Automation includes hardware and software sales (but not consumables, service and maintenance sales).

RFID and automation solutions sales continued to be strong, driven by labor shortages and robust demand for digital transformation.

RFID sales were up year on year, thanks to high-value projects in manufacturing.

Automation sales rose despite economic downturns in Europe, helped by large logistics projects in the US.

(Millions of JPY)

RFID

Q1 FY25: +33.4% YoY

Automation*

Q1 FY25: +25.4% YoY

1,500

Mechatronics

Consumables

1,000

1,000

500

500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY23 FY24 FY25

0 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY23 FY24 FY25

* Automation only includes hardware sales.

FY25 Forecasts (Millions of JPY)

+1.8%

←FY24

* EBITDA = Operating Income + Depreciation + Amortization FX assumption for FY25: JPY 140/USD, JPY 160/EUR Average FX for Q1 FY25: JPY 144.59/USD, JPY 163.80/EUR Average FX for FY24: JPY 152.62/USD, JPY 163.87/EUR

Apr- Jun 2025 ResultsESG FocusActions toward realizing optimal cost of capital and enhancing shareholder value

21

Reassessed social issues our business could help solve and identified areas of priority,

clarifying the direction we create value toward.

Materiality Overview Defined in 2019

Background

• Social issues, such as responsible production and consumption, resource depletion, population decline, labor shortages, and the growing importance of governance, are becoming increasingly complex and critical.

• This calls for a reassessment from a global perspective.

  Purpose

• To enable us to enhance corporate value sustainably through giving every ‘thing’ its own ID for seamless connection and being essential for solving social issues.

• To provide basis for decision-making in corporate management and capital allocation.

  Over a period of more than six months, the management and external experts held more than 11 discussions. Material issues were identified based on input from internal and external stakeholders. 22

  Redefine priorities for value creation as the basis for medium- to long-term management/business

  decisions.

  (7) Respecting human rights

  (3) Contributing

  to the circular economy (Environment)

  (8) Sustainable supplier management

  (2) Driving social and corporate value through innovation (6) Improving

  employee engagement

  Overview of Materiality Structure

  Materiality Map

  Realization of sustainability management

          Creating shared value (CSV) (1) (2) (3)      

  Addressing social issues through our core business

  High

  Very High

  ESG foundations for core business

  • Each material issue is overseen by an executive and tracked with a KPI, with progress reviewed regularly.

    Governance (8) (9) (10) (11)

    The supporting foundation

    (9) Corporate governance (10) Compliance (11) Risk management

Importance to stakeholders (Impact of SATO’s activities on environment and society)

Very High

• Progress has been made in existing and new businesses with CSV focus.

  (4) Responding to climate change

ESG FocusApr- Jun 2025 ResultsActions toward realizing optimal cost of capital and enhancing shareholder value

ROIC has consistently exceeded WACC.

However, there is still room to enhance corporate value.

WACC=7% (including premium)

• Cost of equity is calculated using CAPM

• Our hurdle rates vary by geography and

15%

WACC and ROIC

WACC

ROIC

9.3%

10.0%

currency to account for differences in risk.

(e.g., JPY: 7%, USD: 8%, EUR: 7%)

10%

7.7%

8.5%

8.8%

5% 7.5%

5.8% 5.8%

0%

FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY30

Although ROIC exceeds WACC, the P/B ratio remains at around 1.

We believe this valuation gap reflects concerns over the company’s sustained growth.

(x)

P/B ratio Change

Operating income by business segment

2.5

2.0

1.5

Japan

Millions of yen

12,341 12,500

8,841

10,383

4,199 4,300

540

5,847

6,404

1,225

4,279 4,000

1,927

2,752

3,374

3,702

3,221

3,906 4,200

Elimination,

2,372

Elimination,

2,637

-907

1,724

415

-43

4,

15,000

10,000

Overseas (Base)

Overseas (Primary)

IDP

Elimination

1.0

5,000

0.5 0

89 53

IDP, -148

-5,000

0.0

FY20 FY21 FY22 FY23 FY24 FY25

Plan

FY26 Plan

（tentative）

Current MTMP

Previous MTMP

P/B ratio = ROE × P/E ratio

ROIC is used in place of ROE and broken down into a tree structure, with targeted initiatives

developed for each of its component.

Sales/profit growth

FY25 plan figures; FY24 results in parentheses

                 MTMP initiatives（FY24-28）            

assets

Fixed

• Improve profit margin of the Japan business

• Make investment decisions based on risk-based hurdle rates

* ROIC, which indicates overall capital efficiency, is set as a KPI as a substitute for ROE.

• Use business assets effectively

• Review profitability & risks of ongoing investments

• Create M&A synergies

• Build global information platform for corporate management

• Raise utilization rate of patents owned by the company

Building a solid business foundation for stable profit growth.

• Allocate resources to deepen business relationships with global key accounts

• Strengthen solution sales and enhance capabilities for consumables production

• Created new solutions through cross-functional collaboration to build stronger business relationships with global key accounts

• Built systems to replicate successful proposals across industries

Gross margin improvement

・Capture demand in key verticals

・Revise selling prices in timely fashion

・Launch new printers

・Shift to profit-based evaluation for sales

SG&A expenses

・Comprehensively overhaul value chain to improve productivity

・Control costs appropriately

• Strengthen collaboration with key customers in each industry and region and

  scale best practices

• Increase the focus on profitability through a phased shift to OI-based evaluation system

• Focused on selected key verticals and vertical-specific priority initiatives

• Secured gross margin through implementing planned price increases to reflect higher material costs

Japan

• Implement PSI* for printers to ensure stable supply and optimize inventory

• Review vendor-managed inventory agreements and replenishment operations in Japan

• Built a PSI framework for the printer business to ensure stable supply and optimize inventory

• Visualized consumable inventory in Japan that is slow-moving or held at third-party warehouses

Improving invested capital turnover ratio across functions to enhance capital efficiency.

P/E ratio

Property, plant & equipment

Intangible assets

Operating income exceeded the initial plan, but operating cash flow remained flat. We are working to optimize inventory.

Cash

IN

Millions of yen

Financing

Finance with agility

・Pursuit of optimal capital structure

556

329

Approx. 25,000

Increase

12,563

12,471

13,400

Operating CF

-2,337

-7,722

-2,405

-2,500

-9,022

-9,000

Shareholder return

Regular Investment

Growth investment

・Stable and progressive dividends

・Timely share buybacks

・Expand capacity to provide consumables and RFIDs Approx. 20,000

・Conduct M&As and capital investments to advance tagging technology

Maintain

wi Investity

th agil

Restore profitability

Invest in growth

30,000

20,000

10,000

0

Cash

OUT

-10,000

-20,000

-30,000

FY23 FY24 FY25 FY26 FY27 FY28 FY30