FY2016-2020 Mid-term Business Plan...FY2016-2020 Mid-term Business Plan “ Value reation 2020 ” PUNCH SPIRIT ～Return to the founder’s spirit～（Security code：6165） March

FY2016-2020 Mid-term Business Plan

“ Value Creation 2020 ” PUNCH SPIRIT

～Return to the founder’s spirit～

（Security code：6165）

March 11, 2016

Review of “ Value Creation１５ ”

“ Value Creation 2020 “

◆ Outline

◆ Policy

◆ Management Objectives

Top Message

Contents

1 All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

Review of “Value Creation 15”

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD.

25.0

29.4

34.3 37.0

0.7

1.2

1.7

2.0

0.8 1.1

1.6 1.7

0.2

0.7

1.2 1.2

0

1

2

3

0

5

10

15

20

25

30

35

40

FY2012 FY2013 FY2014 FY2015

x 1

0

Sales

Operating Profit

Performance results

Sales (Billion JPY)

Operating Income

(Billion JPY)

Ordinary Profit

Net Income

ROE 4.3％ 9.6％ 10.1％ 8.0％

Lowered by public offering

FY2012 VS

FY2015 (Est.)

[ Sales ] Increase +12 Bil. JPY Annual Rate 13.9%up

[ Operating Profit ] Increase +1.2 Bil JPY Annual Rate 41.4%up

[ Net Income ] Increae +0.9 Bil JPY Annual Rate 77.9%up

[ROE] +3.7pt

[ Ordinary Profit ] Increase +0.8 Bil JPY Annual Rate 26.1%up

FY2015 Sales Over 32 Bil. JPY Operating income Over 2.0 Bil. JPY

3

Globalization

Expansion to India, SEA, Europe and Americas

Expansion of new markets

Entry to undeveloped

markets

Conversion to a high profitability business model

Reform of profitability

◎ Implemented M&A - Acquired production capacity and markets (South East Asia) ◎ Secured sales channels (Europe) ◎ Established a business foundation (India)

◎Aquired AS9100 ◎ Implemented marketing at the new markets ◎ Clarified target customers in the new field

◎ Established R&D system (China and Japan) ◎ Expanded sales of high-value-added products (Japan) ◎ Expanded line-up and sales of strategic products (China) ◎ Expanded cemented carbide products business (SEA)）

Impact of FX Rate fluctuation

[ Sales ] ・Achieved target a year advance ・Boosted sales amount in JPY

[ Profit ] ・Slightly short to target ・Depressed profitability in export

Evaluation of Priority Initiatives

All Rights Reserved. Copyright ©2011-2012 PUNCH INDUSTRY CO.,LTD. 4

Outline of Value Creation 2020

Improvement of Customer service

Promotion of high profitability business with reinforcement of R&D

Establishment of 5-pole sales system

Reform of working style

・Supported by the customers ・Improvement of technical capabilities

・Establishment of solid sales system in Europe and Americas ・Capturing Globalized customers

Globalization

Expansion of new markets

Conversion to a high profitability business

model

Value Creation 2020 “what Punch Group wants itself to be in 2020” Value Creation 15

PUNCH SPIRIT

・Expansion of high-value- added products ・Cost reduction (Manufacturing reform）

・Improvement of operational efficiency ・Optimal work-life balance ・Realization of diversity

Linkage of Priority Initiatives of “Value Creation”


PUNCH SPIRIT = Return to the founder’s spirit =

Open & Honest

Imaginative & Innovative

Challenge Through “Challenge” to unexplored field, achieve self-development and contribute to the society.

Exert our “Imaginative and Innovative” powers on every job and overcome difficulties persistently toward the realization of our dreams.

Create “Open and Honest” workplace through esteeming the individuality and the diversity of everyone of our team members.

What’s Punch Spirit?


■Reform of self-Consciousness “Manufacturing” “Sales”

Toward “The World’s Punch”

■Reform of System “Working style” “HR system”

Construction of World 5-Pole System Japan, China. Southeast Asia & India, Europe, Americas

■Reform of “Corporate culture”

Concept of Value Creation2020


Japan China Europe Americas

Improvement of Customer Service

Promotion of High Profitability Business with Reinforcement of R&D

Reform of Working Style

Reconstruction of manufacturing system (standard products & special-order products) ・Starting operations in Vietnam factory ・Manufacturing expansion of special parts in Japan and China ・World-wide supplying of mold/die parts

medical-related industry

Strengthening of management and organization with Development of global human resources

5-Pole Sales System

Sales flow construction

Global sourcing Expansion of business with global companies

Food-related industry Aerospace-related industry

Southeast Asia, India

Core strategy of Value Creation 2020

Reverse-engineering


Policy of Value Creation2020

5-Pole Sales System

【Philippines】

【Malaysia】

【India】

【Japan】

【Australia】

【China】

【Singapore】

【Indonesia】

【Korea】

【Thailand】

【Taipei】

Punch group Sales distributor

【Vietnam】

Expansion of sales base to Europe and Americas

【Germany】

【Turkey】

【UK】

【America】


Improvement of Customer Service (1)

Europe Americas

Southeast Asia India

Japan China

Global sourcing

Order from Europe/Americas /Asia Supplying from optimum production base

Improvement of Customer satisfaction with global sourcing


Improvement of Customer Service (2)

Reproduce Mold/Die Component

Manufacturing company

Mold/Die company

Mold/Die components

company

Disappearance of drawings by elimination/consolidation

Customer’s problem

Resolve the customer’s problem with 3D scanner (Reverse engineering)


Punch Group will realize its overwhelming high profitability with cost reduction and risk distribution

Investment and run-up （FY2016-2018）

Commencement of Operation of the Vietnam factory

Reduction of manufacturing cost in Japan

Transfer of Production items in China

①

②

③

Promotion of High Profitability Business

Optimization of punch group production system starting from the Vietnam factory

Full-scale start of Punch Group New Production System

（FY2019～）

Reinforcement of Production capacity of the Vietnam factory

Transfer of Production items in Japan

Reinforcement of production capability for special-order products in Japan

①

②

③


More business in the growing markets and less fluctuation by economic condition

Food Medical Aerospace

Get certificates , Invest R&D and machines

Reinforcement of R&D

The photos in this page are images.


Reform of Working Style

Strengthening the organization by the employee-oriented management.

Make our daily lives more convenient by providing mold and die components. Change “Manufacturing”

Sell more differentiated products, rather than the ones that are easy to sell. Change “Sales methods”

Work for the improvement of efficiency and productivity. Change “Working styles”

Act on our own initiative to achieve the excellent company. Change “Corporate culture”

Enhance global HR and HR development program. Change “HR system”


Value Creation 2020 Management Objectives

Enhance effectiveness of R&D and Reinforce the marketing function.

Start up quickly with Vietnam Factory in autumn 2016.

Superiority

Sales

Production

Group System

Management Objectives (1) Sales and Income by stages

Sales Op Income Net Income

[ FY2020 ]

above 4.7 bil JPY above 3.3 bil JPY above 2.3 bil JPY

Reinforce the superiority in special-order products.

Investment and run-up （FY2016-2018）

Full-scale start of Punch Group New Production System

(FY2019- )


[ FY2018 ] above 4.2 bil JPY above 2.5 bil JPY above 1.7 bil JPY


[ FY2015 ] (Forecast) above 3.7 bil JPY above 2.0 bil JPY above 1.2 bil JPY

Reinforce sales in Japan, Asia, Europe and the Americas.


29.4

34.337.0 37.0

39.042.0

44.547.0

1.1(3.9%)

1.7(5.0%)

2.0(5.4%)

2.0(5.4%)

2.2(5.6%)

2.5(6.0%)

2.8(6.3%)

3.3(7.0%)

0.7(2.4%)

1.1(3.5%)

1.2(3.2%)

1.4(3.8%)

1.5(3.8%)

1.7(4.0%)

2.0(4.5%)

2.3(4.9%)

0

1

2

3

4

5

0.0

10.0

20.0

30.0

40.0

50.0

2013年度 2014年度 2015年度 2016年度 2017年度 2018年度 2019年度 2020年度

x 10

x 10

Value Creation １５ Value Creation 2020

Establish a new production base in Vietnam！

Management Objectives (2) Sales and Income (yearly)

Operating income Sales

FY2020 Sales Over 47 Bil. JPY Operating income Over 3.3 Bil. JPY Net income Over 2.3 Bil. JPY

Net income

ROE 9.6% 8.0% 9.0% 9.0% 10.0% 10.0% 11.0% 10.1%

FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Baton exchange zone

FY2019 FY2020

Sales （Billion JPY）

Operating income （Billion JPY）


Southeast Asia &India

51%Europe

29%

Americas etc

20%

14.4 15.2 15.6 16.0 16.7 17.5 18.1 18.7

13.0 16.2 17.4 17.3 18.2

19.8 21.1 22.4 2.1

3.0 3.5 3.7

4.2 4.7

5.3 5.9

29

34 37 37

39 42

44 47

0

10

20

30

40

50

2013 2014 2015 2016 2017 2018 2019 2020

Billion JPY

Sales transition by regions

Japan

China

Asia etc. VC15

VC2020

Breakdown of “Asia etc.” for FY2020


13.8 15.6 17.0 17.0 17.8 18.8 19.7 20.6

5.7 6.5

6.8 6.8 7.0 7.5

7.9 8.4

4.0

4.5 4.9 4.9

5.4 5.8

6.2 6.6

6.0

7.8 8.3 8.3

8.9 10.0

10.7 11.5

29

34 37 37

39

42 44

47

0

10

20

30

40

50

2013 2014 2015 2016 2017 2018 2019 2020

Billion JPY

Sales transition by industries

Auto-mobile

Consumer Electronics & Precision Equipment

Others

Electronic Devices & Semi-conductors

VC15

VC2020


Top Message

The Policy of the Return to Shareholders

[ Basic Policy for Dividend ] In addition to the stable and continuous dividends, targeting 30% as a consolidated payout ratio based on the performance.

Net Income

Net sales ROE = × ×

Net sales

Total assets

Total assets

Stockholder’s Equity

The ratio of profit to sales total assets turnover Financial leverage

Operating Profit Ratio

Assets Effectiveness

Dividend Payout Ratio

Mid-term Business Plan “Value Creation 2020”

To realize sustainable increase of corporate value


The Company's CSR policy and Corporate Vision

Direct

sales

We aim to become the leading brand in the mold

and die components industry and achieve

high profitability by leveraging our

competitive advantage as a comprehensive

manufacturing and sales company.

Punch Industry pursues CSR-oriented management that continually supports manufacturing worldwide.

The Company's CSR policy

Corporate Vision

Integrated production

Customer- centric


Communication with Stake holders

[ Major communication method ] ■Green Procurement ■Tree-planting activities ■ Environment-friendly products making ■ Reduction of CO2 emissions and industrial waste ■ LED of the illumination

[ Major communication method ] ■Shareholders' Meeting ■Company briefings for individual investors and participation in IR events ■Financial results briefings for analysts and institutional investors ■Information disclosure via corporate website and IR tools

[ Major communication method ] ■“Punch+” in-house newsletter ■ Opinion exchange meeting with employees representatives

Ecocap Movement

[ Major communication method ] ■Quality-enhancement initiatives ■ Participation in the exhibition, etc.

Punch Group Stakeholders [ Major communication method ]

■ Factory tour of students ■ Joining volunteer ■ Cosponsor of 2016 National Sports Festival ■ Ecocap Movement ■ Cleanup and Beautification Campaigns ■ Provide a part of the factory site for the temporary housing for victims of Great East Japan Earthquake.

Tree-planting activities

Local Communities

Local Environment

Employees Shareholders

And Other Investors

Business Partners

Company briefings for individual investors

Volunteer activity in Kitakami city marathon


Activities for the reinforcement of the corporate governance

Appropriate risk management with accomplishment of the accountability

Effective utilization of Independent outside director

Evaluation of effectivenessof Board of Directors

1) Separate “management” and “monitoring & supervising”

2) Support the quick and radical decision-making of management

3) Strive as one to raise the corporate value

The best corporate governance system for Punch Group


IR & PR Division, Administration Department PUNCH INDUSTRY CO., LTD. Phone: +81-3-5753-3130 E-mail: [email protected]

Thank you for your time

Disclaimer Regarding Forward-Looking Statements

This report contains forward-looking statements regarding Punch Industry’s future plans, strategies, and forecasts. Such statements are not based on historical fact, but are expectations, estimates, and forecasts based on information currently available. These expectations, estimates, and forecasts involve many potential risks and uncertainties, including changes to the economy, exchange rate variations, changes in the competitive environment, the outcome of current or future litigation, or the continued usefulness of capital procurement. As a result, actual business results may differ materially from these statements. Accordingly, investors are cautioned not to place undue reliance on forward-looking statements. Punch Industry is not obliged to amend these forward-looking statements based on new information or future events.

Documents

FY2016-2020 Mid-term Business Plan...FY2016-2020 Mid-term Business Plan “ Value reation 2020 ” PUNCH SPIRIT ～Return to the founder’s spirit～ （Security code：6165） March

FY2016-2020 Mid-term Business Plan...FY2016-2020 Mid-term Business Plan “ Value reation 2020 ” PUNCH SPIRIT ～Return to the founder’s spirit～（Security code：6165） March