Fiscal Year 2017/18 –Annual Results

May 25, 2018

1. Corporate Info

Corporate name SHIBAURA ELECTRONICS CO., LTD.

Start of operation March 3, 1953

Head office Kamiochiai, Chuo-ku, Saitama City, Saitama, Japan

Representative Hiroyuki Hashikura, President

BusinessManufacturing and sales of thermistor elements and applied products using them

(temperature sensors, humidity sensors, hygrometers, temperature controllers,

anemometers, etc.)

Capital 2,144 million yen (as of March 31, 2018)

Net sales 25.2 billion yen (FY2017 / Consolidated)

Ordinary income 3 billion yen (FY2017 / Consolidated)

Manufacturing

Sites6 sites in Japan, 3 overseas sites in Thailand and China

Number of employees

Approx.4,300 (as of March 31, 2018 / Consolidate)

Stock exchange

listingJASDAQ Standard, Tokyo Stock Exchange (Code number : 6957)

Share unit 100 shares

Head office of Shibaura Electronics Co., Ltd.

2. Thermistors and applied products using them

From -50℃ to 1,000℃. Thermistor technology produces high added value.

Shibaura’s thermistors cover from -50℃ to 1,000℃

Existing products(Glass coated thermistors)

high-value-added products(Glass coated thermistors for high temperature)

-50℃ 0℃ 50℃ 100℃ 300℃ 500℃ 1,000℃

Temperature range of consumer products

Shibaura’s original technology

●(Tuna) stock freezer●Refrigerator

●Air conditioner●EcoCute(CO2 heat pomp)

●Hot-water supply●Automotive(Water)●Dishwasher(Drying)●Rice cooker●Microwave oven●Automotive(HV & EV motors)

●Copy machine●IH cooker●Fan heater

●Automotive(EGR)

●Oven●Household equipment(Gas flame)

●Automotive(DPF)

3. Shibaura’s world shareNo. 1 share in the world. Shibaura’s thermistor temperature sensors are selected all over the world.

Source: Paumanok estimates

26%

The estimated market share in 2013 for NTC thermistor suppliers

Shibaura

Company A18%

CompanyB

14%

Company C

13%

Company D10%

Others

15%Company E4%

4. Consistent production systemVarious functions of the group

Shibaura Electronics

Research, development and

designing

-Fukushima

Thermistor element factory

Research on thermistor elements,

Basic research

-Tohoku -Iwate

-Kakunodate -Aomori

-Miharu

Mother factory

Technologies developmentNew & value-added products

Guidance for overseas factories

-Thai

-Shanghai

-Dongguan

Overseas manufacturing sites

Mass production

-Tohoku

-Iwate

-Fukushima

Test centers

Quality assurance

Design verification

Summary of Financial Results for FY2017 Ended March 31, 2018

(April 1, 2017 – March 31, 2018)

5. FY2017 sales and profit factors

Net sales 25,289 mil. yen +14.6% (year-to-year)Operating income 3,045 mil. yen +27.2% (year-to-year)Operating income margin 12.0 % 10.8% (previous period)ROE 11.2 % 9.7% (previous period)Dividend 75 yen (outlook) 60 yen (previous period)

• Sales increased for each application.

• Thermistor sensors for air conditioners and thermistor elements for

automobiles were in good shape.

• Factories were full operation.

• Cost decreased.

６. Statement of income (Summary)

FY2016 (ended Mar. 31, 2017) FY2017 (ended Mar. 31, 2018)

Amount Compositionratio Amount Composition

ratioComparisonwith last year

Net sales 22,071 100.0 25,289 100.0 14.6

Cost of sales 16,722 75.8 19,102 75.5 14.2

Gross profit 5,349 24.2 6,186 24.5 15.6

Selling, general and administrative expenses 2,955 13.4 3,141 12.4 6.3

Operating income 2,394 10.8 3,045 12.0 27.2

Non-operating income 84 0.4 88 0.3 4.8

Non-operating expenses 15 0.1 62 0.2 313.3

Ordinary income 2,463 11.2 3,071 12.1 24.7

Extraordinary income 0 0.0 0 0.0 ―

Extraordinary loss 17 0.1 36 0.1 111.8

Income taxes and others617 2.8 744 2.9 20.6

Net income attributable to owners of the parent 1,818 8.2 2,280 9.0 25.4

ROE（%） 9.7 ― 11.2 ― ―

(Amount: mil. yen, comparison: ％)

7. Sales amount by applicationConducting aggressive marketing activities targeting automotive manufacturers as well as domestic and overseas energy-saving and green–oriented manufacturers

5,736

6,167

7,099

3,810

4,363

5,053

3,349 3,316 3,771

2,253 2,283 2,612

1,917 2,036 2,355 2,219

1,971 2,061

1,269 1,361 1,525

708 575 813

FY 2015

FY 2016

FY 2017

FY 2015

FY 2016

FY 2017

FY 2015

FY 2016

FY 2017

FY 2015

FY 2016

FY 2017

FY 2015

FY 2016

FY 2017

FY 2015

FY 2016

FY 2017

FY 2015

FY 2016

FY 2017

FY 2015

FY 2016

FY 2017

素子 空調機器 家電 自動車 住設機器 ＯA 産業機器 計測器 他

(Mil. yen)

Thermistorelements

Airconditioners

Home appliances

Automotive Householdequipment

Industrial equipment

OA Measuringinstruments,and others

8. Sales by application

Automotive

Air conditioners

Home appliances

Household

equipment

OA

Industrial equipment

Others

FY 2016Ended Mar. 31, 2017

30.0%

20.3%17.3%

Automotive

Air conditionersHome

appliances

Household

equipment

OA

Industrial equipment

Others29.6%

20.7%17.1%

FY 2017Ended Mar. 31, 2018

9. Balance sheet (Summary)

Mar. 312017

Mar. 312018 Change

Current liabilities 6,581 7,760 1,179

Account payable 3,266 3,749 483

Short-term loan payable 709 831 122

Others 2,604 3,180 576

Noncurrent liabilities 1,189 1,656 467

Long-term loanpayable 772 1,167 395

Others 417 488 71

Total liabilities 7,770 9,416 1,646

Net assets 19,343 21,468 2,125

Total liabilities and net assets 27,113 30,885 3,772

Mar. 312017

Mar. 312018 Change

Current assets 18,901 21,387 2,486

Cash and deposits 6,348 7,130 782

Account Receivable 6,472 7,373 901

Inventory assets 5,091 5,699 608

Others 989 1,183 194

Noncurrent assets 8,212 9,498 1,286

Property, plant and equipment 7,300 8,477 1,177

Intangible assets 138 132 -6

Investments and other assets 773 888 115

Total assets 27,113 30,885 3,772

Assets Liabilities and shareholders’ equity

(Mil. yen)(Mil. yen)

15,971

18,126 18,441 19,343

21,468

68.8 68.170.6 70.9 69.4

0

10

20

30

40

50

60

70

80

0

10,000

20,000

Mar. 31, 2014

Mar. 31, 2015

Mar. 31, 2016

Mar. 31, 2017

Mar. 31, 2018

10. Balance sheet items

Total assets

22,998

26,462 25,987 27,113

30,885

Mar. 31, 2014

Mar. 31, 2015

Mar. 31, 2016

Mar. 31, 2017

Mar. 31, 2018

3,786

4,340

4,799 5,091

5,699

Mar. 31, 2014

Mar. 31, 2015

Mar. 31, 2016

Mar. 31, 2017

Mar. 31, 2018

Inventory assetsShareholders’ equity and

equity ratio

(Mil. yen) (Mil. yen)(Mil. yen)

11. Cash flows

-314

308

-1,068 -1,235

-4

FY2013 FY2014 FY2015 FY2016 FY2017

Cash flow used in financing activities

-1,127 -1,169 -1,544

-1,224

-1,931

2,006 2,042 2,108

2,514 2,701

879 879 564

1,290 770

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

FY2013 FY2014 FY2015 FY2016 FY2017

Free cash flow(Mil. yen) (Mil. yen)

1,217

1,392 1,282

1,369

1,700

1,769 1,562

1,214

1,941

4,500

12. Capital expenditure, depreciation, R&D expenditure

Capital expenditure Depreciation Research and development expenditure

445 435 438

724 750

(Mil. yen) (Mil. yen)(Mil. yen)

FY2018 Ending March 31, 2019Business outlook

(April 1, 2018 – March 31, 2019)

13. FY2018 (ending March 31, 2019) business outlook

FY2017Actual

H1 FY2018outlook

H2 FY2018outlook

FY2018 full yearoutlook

Net sales25,289 13,500 14,000 27,500

（14.6） （8.8） （8.7） （8.7）

Operating income3,045 1,570 1,600 3,170

（27.2） （2.5） （5.6） （4.1）

Ordinary income3,071 1,500 1,670 3,170

（24.7） （-4.8） （11.6） （3.2）

Net incomeattributable to owners of the parent

2,280 1,120 1,250 2,370

（25.4） （-0.0） （7.8） （3.9）

(Amount: mil. yen, comparison: ％)

( ): Year-to-year comparison

14. Net sales and operating income

14,546 13,099

16,548 17,086 16,143

18,757

20,113 21,261

22,071 25,289

27,500

1,214

869

2,055 1,778

849

1,366

1,889 1,663

2,394

3,045 3,170

0

2,500

5,000

0

15,000

30,000

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Outlook

Net sales Operating income

（Mil. yen） （Mil. yen）

15. Sales amount by application

5,736 6,167 7,099

8,100

3,810

4,363 5,053

5,800

3,349 3,316 3,771 3,800

2,253 2,283

2,612 2,800

1,917 2,036 2,355 2,500

2,219 1,971 2,061

2,100

1,269 1,361 1,525 1,600

708 575 813 800

FY2015

FY2016

FY2017

FY2018*

FY2015

FY2016

FY2017

FY2018*

FY2015

FY2016

FY2017

FY2018*

FY2015

FY2016

FY2017

FY2018*

FY2015

FY2016

FY2017

FY2018*

FY2015

FY2016

FY2017

FY2018*

FY2015

FY2016

FY2017

FY2018*

FY2015

FY2016

FY2017

FY2018*

素子 空調機器 家電 自動車 住設機器 ＯA 産業機器 計測器 他

(Mil. yen)

*FY2018 shows outlook

Thermistorelements

Airconditioners

Home appliances

Automotive Householdequipment

Industrial equipment

OA Measuringinstruments,and others

Business Deployment

16. Growth strategy

Further enhancement of research & development system

Focus on “green-oriented”, “energy-saving” and “safety-related” fields

Aggressive expansion into overseas markets

Enhancement of production system

Aggressive investment toward market share expansion

17. Enhancement of production systemAggressive investment toward

market share expansionAomori constructed its 3rd building.Shanghai moved to expand floor space.

Thai constructed its 5th building.

Fukushima constructed its 2nd factory (Matsukawa).

Fukushima renovated the acquired adjacent factory.

Kakunodate constructed its 3rd building.

Tohoku constructed its 3rd building.

Fukushima will start construction of its 10th building.

Sep. 2012

Dec. 2013

Apr. 2015

Jul. 2017

Sep. 2017

Dec. 2017

2018

Thai will complete the construction of its 6th building.Jun. 2018

18. Enhancement of production system (The 6th building of Thai Shibaura Denshi)

The 6th building of Thai Shibaura Denshi will become Shibaura’s biggest thermistor sensor factory, which is proud of high production capability to ensure responding customers’ various orders.

1. Total investment:

Shibaura’s biggest thermistor sensor factoryThai Shibaura Denshi

The 6 building of Thai Shibaura Denshi will be completed soonIt’s production space increases by 30 %

Investment outline of the 6 building of Thai Shibaura Denshi

Approx. 800 million yen

4. Start of operation: July 2018

2. Purpose: To construct a factory next to the existing one (adjacent area)

3. Area of the factory:

Two-story building,approx. 9,600㎡

19. Aggressive expansion into overseas markets 1/2

Automotive Home appliances, Household equipment, Air conditioners

Overseas competitors

(America, Europe, China and other Asian

countries)

European, American, Japanese, and Chinese thermistor manufacturers, andEuropean and American platinum sensor manufacturers

European, American, Japanese and Chinese thermistor manufacturers

Market environment Increasing demand for HV & EVStill demand for application for engine car

Home appliances: Rice cockers for China, coffee maker, IH cocker, microwave oven are mainly manufactured in China.China: Increasing demand for sensors due to computerization promoted by domestic production, high-tech trends, and measures for PM 2.5 in accordance with “Made in China 2025”strategy.

Strategies

To expand sales of related products in America, Europe, and China expecting demand for HV & EV.- For motor, battery, power semiconductor, and

charging inlet- To respond demand (in America, Europe, and

China) by each region’s OEM and suppliers of any tier. To continue to expand sales of productsrelated to engine car.

- To focus on change of product portfolio (demand fluctuation, such as ATF, application for engine car) associated with transition from engine car to HV & EV.

China: To expand sales in collaboration with distributors.

20. Aggressive expansion into overseas markets 2/2

Sales Division

Overseas Sales Department

Japan

China

Shanghai Shibaura Electronics*

Dongguan Shibaura Electronics*

Shibaura Electronics Hong Kong

Collaborate with a distributor

*Sales divisions of the manufacturing sites

Shibaura Electronics of America Corporation

Collaborate with a sales representative

Established in September 2015

America

Sales network in Europe, America, and China

Shibaura Electronics Europe (Germany)

Collaborate with a distributor

Europe

21. Focus on “green-oriented”, “energy-saving” and “safety-related” fields

Responding to the environmental needs which continue to increase globally

Larger share in growing fieldsExpanding applications

<<World trends>>Green-

orientedenergy-saving

highly-functional

safety-related

Thermistor elements

Household equipment

Air conditioners

Home appliances

OA

Industrial equipment

Automotive

-Colorization -Highly-functional (Non-contact)

-Green-oriented -Energy-saving -Safety-related

-Green-oriented -Energy-saving -Europe & Emerging Countries -Safety-related

-Green-oriented -Energy-saving -All electrification -Highly-functional -Emerging countries

-High quality -Wide temperature range -Large supply

-Green-oriented -Energy-saving -Production automatization -Robot

-Green-oriented -Energy-saving -Hybrid -EV

22. Further enhancement of study & development system

Enhancing study & development system further

Improvement of existing products

2

Collaborative research with academia

4

Development of new & improved products

1

Improvement of production efficiency –

automatization

3

23. Shareholder return

25 30 35 40 40 50 55 60

75 75

23.417.3 20.7

61.4

26.5 23.6 35.2

25.5 25.3 24.4

-100

-80

-60

-40

-20

0

20

40

60

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (Outlook)

Stable dividend

Dividend payout ratio (%)

Dividend (yen)

Thank you very much.

Disclaimer regarding forward-looking statements

The foregoing statements regarding future results reflect the Company‘s expectations based on information available at the time of announcement. The information contains certain forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

References

[Reference] Definition of terms

ThermistorA thermistor is a thermally sensitive resistor generally composed of semiconductor materials, and its resistance varies significantly with temperature.

Thermistors are economical and stable, and operate in the temperature range that covers the whole range necessary for ordinary temperature control. They therefore are used in a wide range of applications.

Shibaura produces NTC (negative temperature coefficient) thermistors only.

They exhibit decreasing resistance with increasing temperature, and are used in temperature detection sensors. There are also PTC (positive temperature coefficient) and CTR (critical temperature resistor) thermistors.

PSB thermistor elementShibaura independently developed glass-encapsulated thermistors. With excellent heat-resisting property, mechanical strength and stability, they are now Shibaura’s main products.

PSB thermistors were patented in major countries (Japan, the U.S., the U.K., Germany, France, Canada, Italy and Switzerland.)

[Reference] Number of thermistors installed in a product

Householdequipment

Solar system Shower toilet Water heater Highly efficient hot water supply system

[ 1 to 3] [ 2 to 3 ] [ 2 to 5 ] [ 10 to 20 ]

A/CFan heater Room A/C Industrial A/C

[ 2 to 3 ] [ 2 to 5 ] [ 5 to 15 ]

Homeappliances

Microwave oven Rice cooker Refrigerator IH cooker

[ 2 to 3 ] [ 2 to 3 ] [ 2 to 8 ] [ 5 to 15 ]

OAPrinter Copy machine Multi-functional

copier

[ 2 ] [ 2 to 3 ] [ 3 to 5 ]

Industrialequipment

Fire alarm Machine, robot Freezing showcase Freezing container

[ 2 ] [ 1 to 2 ] [ 2 to 5 ] [ 5 to 10 ]

AutomotiveCar A/C Intake air, exhaust gas, water, fuel, oil Hybrid system

[ 4 to 5 ] [ 8 to 10 ] [ 8 to 10 ][ ] :Number of thermistors in a product