Financial ResultsThe 1st half of FY2020

June 2nd 2020Process Technologies for Tomorrow

President : Yoshio Hosokawa

http://www.hosokawamicron.co.jp/en/

I. Financial SummaryThe 1st half of FY2020

II. Summary and Progress of the 16th Mid-term Business Plan (FY2018-FY2020)

1

I. Financial SummaryThe 1st half of FY2020

2

(100 million yen)

FY20191st halfActual Actual Plan year-on-year

Booking 305 318 － 104.2%Sales 282 266 240 94.1%Gross Profit 102 93 － 90.4%　　Ratio of gross profit to sales 36.4% 34.9% － -1.5%pOperating Income 32 18 12 57.0%　　Ope. Income to sales 11.6% 7.0% 5.0% -4.6%pExchange RateUS$(Yen/US$) 111.54 108.84 105.00EURO(Yen/EURO) 126.96 120.21 120.00

FY20201st half

Bookings were steady even under these unprecedented global economic conditions, but Sales & Operating income fell short due to some large orders with long delivery times.

Financial Summary (consolidated)

Negative influence by effect of exchange rate was 960 million yen in sales

We applied a new accounting standardApplied Sales : 149 million yen

3

211 212 230 271 282 266

262 234 264

296 270 473 446 495

568 553 545

34.4% 35.7% 36.4% 36.9% 36.3% 34.9%

5.2%8.2%

10.2% 11.5% 10.7%7.0%

0%

10%

20%

30%

40%

50%

60%

0

100

200

300

400

500

600

2015 2016 2017 2018 2019 2020

GPRSales (100million yen)

FY

Sales (1stH) Sales (2ndH) GPR Ope. Income Ratio

* until FY2015 includes business of confectionary and bakery

US$ 119.30 111.89 111.26 110.45 110.08 108.84Euro 136.84 124.11 122.85 131.48 124.18 120.21

Trend (consolidated)4

（計画）

Summary of consolidated results

<Summary>Bookings were steady in spite of slowing down global economy in a influence of the coronavirus, but sales and operating income fell short.

■Powder processing business Bookings for electronic materials including LIB increased significantly. Bookings for the Chemical & Food markets were steady and minerals decreased after

being robust in FY2019. Bookings performance varies in each markets, but consolidated bookings increased of

2.3% compared to the previous corresponding period. Bookings for in-house recycle in America was active.

■Blown film business Sales and profit decreased due to low expected amount of sales from the beginning of

this fiscal year. Bookings for USA, South Europe, and Asia remained robust at least this 1stH.

5

Business segment (consolidated)<Powder processing business> Japan : Good for LIB, chemicals, and foods Europe : Steady for chemicals and foods America : Active for in-house recycle of plastics

Booking, Sales, Backlog Ope. Income, Ope. Income ratio

75.1%

24.9%

Ratio in total sales

Blown film

Powder processing

6

FY

Business segment (consolidated)<Blown film business> Europe : Robust bookings for high-functional

multi layer film America : Good for mono layer film of industrial use

Blown film

Booking, Sales, Backlog Ope. Income, Ope. Income ratio

Powder processing75.1%

24.9%Ratio in total sales

7

FY

175 175

267 264 229

0

50

100

150

200

250

300

350

1 Q

2 Q

3 Q

4 Q

1 Q

2 Q

3 Q

4 Q

1 Q

2 Q

3 Q

4 Q

1 Q

2 Q

3 Q

4 Q

1 Q

2 Q

3 Q

4 Q

1 Q

2 Q

3 Q

4 Q

2015 2016 2017 2018 2019 2020

Boo

king

, Sal

es, B

ackl

og (1

00m

illio

n ye

n)

FY

Booking Sales Backlog

8

Trends of Booking, Sales, Backlog (consolidated)

Cumulating backlog due to orders with long delivery times from the last FY and good booking in this the 1stH

Focusing to win orders and sales recognition towards the end of the 2ndH.

Cumulating backlog due to orders with long delivery times from the last FY and good booking in this the 1stH

Focusing to win orders and sales recognition towards the end of the 2ndH.

Cumulating backlog

6.9%9.8%

14.1%

6.7%2.9%

23.5%

6.6%

18.6%

2.8%3.8%

4.4%

9.6%

5.6%

14.1%

3.8%2.4%

22.4%

9.3%

20.9%

3.8%4.3%3.9%

Pharma 7.8%

Foods 6.4%

Chemicals 13.9%

Electronic materials8.8%

Polymer 1.5%

Blown film 25.6%

Minerals & Metals5.9%

After sales15.0%

Recycle 3.1%

Toll processing 3.5%

Others8.5%

Contribution by mills and mixers for LIB

Reactionary fall

Robust : Mill, Agglomerator, Mixer,

Robust

FY2018

FY2019

FY2020(1stH)

Booking trend (consolidated)9

By market

Booking trend (consolidated)

24.6%

10.7%

21.1%

38.7%

4.9% 25.2%

15.5%

21.1%

35.6%

2.5%

Japan25.3%

Asia17.3%

America19.8%

Europe36.2%

Others 1.4% Good for Electronic materials, Chemicals, and Pharmaceutics

Korea : Minerals, LIBVietnam : MineralsThailand : Blown film, Polymers

(Japanese company)China : Blown film, Chemicals, Minerals

FY2018

FY2019

FY2020(1stH)

Japan, Asia : Decreasing for Indonesia, Increasing for Korea, Vietnam, and Thailand(for China occupied 42% in Asia)

Europe : Decreasing for Germany and UK,Increasing for the Netherlands, France, and Russia

America : Fall in income for both business segments

10

By delivery area

Bookings were steady even under economic deterioration, but Sales & Operating income fell short due to some large orders with long delivery times.

Material business was steady.

(100million yen)FY20191st halfActual Actual year-on-year

Booking 73.1 86.1 111.4%Sales 73.9 65.7 89.0%Gross Profit 33.9 28.0 82.5%Ratio of gross profit to sales 45.9% 42.6% -3.3%pOperating Income 12.2 6.0 49.0%

　　Ope. Income to sales 16.6% 9.2% -7.4%p

FY20201st half

Financial summary (Hosokawa Micron Corporation)11

56 65 63

72 73 65

56

59 68

76 68

112 125 131

149 142 145

41.4% 42.5% 42.1% 44.1% 43.9% 42.6%

5.3%10.1% 10.6%

14.2% 12.7%9.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

20

40

60

80

100

120

140

160

2015 2016 2017 2018 2019 2020

GPRSales

(100million yen)

FY

Sales (1stH) Sales (2ndH) GPR Ope. Income ratio

12

Trend (Hosokawa Micron Corporation)

（計画）

II. Summary and Progress of the 16th Mid-term Business Plan (FY2018-FY2020)

13

[Business Policy] The Hosokawa Micron Group enhance its brand strengthen and profitability through the implementation of global marketing of the entire Group’s products

Basic policy & Progress

Promoting our global marketing effortPromoting our global marketing effort

Expand Aftermarket and Toll processing businesses and develop comprehensive services aiming for further customer satisfaction

Expand Aftermarket and Toll processing businesses and develop comprehensive services aiming for further customer satisfaction

Structure and execute Group strategies for sales, engineering, production,       R&D and Finance

Structure and execute Group strategies for sales, engineering, production,       R&D and Finance

Implement cost reduction and high‐value‐added product & technologydevelopment

Implement cost reduction and high‐value‐added product & technologydevelopment

Optimizing group business operationsOptimizing group business operations

Promoting information sharing among group companies Research of approach to focus market and enhancement

of group synergy

Promoting information sharing among group companies Research of approach to focus market and enhancement

of group synergy

Promoting aftersales & parts sales by utilizing total engineering performance

Devising business expansion by establishment of toll processing company in Brazil

Promoting aftersales & parts sales by utilizing total engineering performance

Devising business expansion by establishment of toll processing company in Brazil

Expanding the mountain range of powder technology by acquisition of Solids Solutions group.

Reinforcement and expansion of sales network by establishment of sales companies in Thailand and Poland

Expanding the mountain range of powder technology by acquisition of Solids Solutions group.

Reinforcement and expansion of sales network by establishment of sales companies in Thailand and Poland

R&D of new products to be consistent with high performance and cost down

Promoting the R&D project of IIoT

R&D of new products to be consistent with high performance and cost down

Promoting the R&D project of IIoT

Development of productive efficiency and improvement of working environment by renewal of new Osaka factory

Optimizing logistics by constructing the new logistic center in German

Development of productive efficiency and improvement of working environment by renewal of new Osaka factory

Optimizing logistics by constructing the new logistic center in German

14

The 16th Mid-term Business Plan (FY2018-FY2020)

Business plan (consolidated)

FYSales Operating

IncomeOrdinary Income Net Income

Exchange RateUS$ EURO

100 million yen JPY JPY

2018 (actual) 568 65 66 42 110 131

2019 (actual) 553 59 60 41 110 124

2020

1st half (actual) 266 18 20 12 108.8 120.2

Plan* 545 50 50 33 105 120

15

300

350

400

450

Book

ing

(100

mill

ion

yen)

Powder processing

Increasing booking accuracy for promising markets (CASE, 5G, IoT, etc.) Enhancing sales activity by developing global network Promoting R&D and commercialization of optimizing customerʼs powder

process by applying IIoT & AI Contribution of film technology to circular economy

*including aftersales & toll processing

50

100

150

200

Book

ing

(100

mill

ion

yen)

60

80

100

120

2014

2015

2016

2017

2018

2019

2020

Book

ing

(100

mill

ion

yen)

FY Plan

18

20

22

24

2014

2015

2016

2017

2018

2019

2020

Book

ing

(100

mill

ion

yen)

FY plan

After-sales

Blown film *including aftersales

*Powder processing and blown film Toll processing

16

Booking trend & growth strategy

Growth strategy : Providing high-value-added technology

Continuous market(Minerals, Polymers, Chemicals)Continuous sales activity

Promising markets︓Materials for CASE,5G, IoT

(Battery, Magnet, Electric ceramics)Focusing sales activity

＋

Ultrafine mineral for manufacturing breathable film

Rubber chemicals for tire manufacturing Carbon black for tire

Chemicals of fire-retardant for electric cable

Lithium ion battery(LIB) for EV

Ceramics, Resins, Minerals for electronic parts

Neodymium magnet for motor

Ultra fine grinding for minerals

Solid state polymerization, drying of polymer

Drying of minerals, chemicals

Disintegration of rubber

Blending of powdery raw materials, Homogenizing powdery products

Ultra fine grinding of raw material of Neodymium magnet

Ultra fine grinding of filler for sealant of electronic parts and for plastics

Grinding of raw materials of LIB

Separation of particles by its size

Particle design for dry coating of ultra fine particles by smaller particles with different material

Machines

17

Growth strategy : Developing global network

Screw conveyorPneumatic conveyor Process monitoring

Examples of products and technology of Hosokawa Solids Solutions GmbH

18

Development of mountain range of powder technologyAcquisition of Solids Solutions group, which core business is materials handling.[pneumatic conveying, Feeder, Discharger, Control technlogy, etc. ]

※1 Comprised companies of the holding company, Hosokawa Solids Solutions GmbH ※2 Joint venture with DYNAMIC AIR Ltda.

For continuous growth of the mountain range of Powder Technologies

Acquisition, 2020.1

Acquisition, 2020.1

Launched, 2020.3Launched, 2019.10

Established, 2019.7

Sales & Engineering of materials handling equipment & technology

Sales & Engineering of materials handling equipment & technology

31bases, 20companies, 16countries

Sales of equipment of powder processing & blown film

Sales of equipment of powder processing

Toll processing

Complementary supply of equipment & partsCollaboration of R&D Sharing the latest

market information

Growth strategy : Development of IIoT to powder processing

Improving of yield & quality Countermeasure of aging

and short of hands Remote control

Improving of yield & quality Countermeasure of aging

and short of hands Remote control

HOSOKAWA GEN4®

The industryʼs first : Applying IIoT to powder

processMachine learning can advice the

optimum operating conditions and preventive maintenance

Demonstration experiment of milling system

5.0

5.5

6.0

6.5

7.0

Pow

er c

onsu

mpt

ion

kW/h Reducing power

consumption by 10%

General operating →conditions

Optimized conditions by machine learning

19

System

sensor Intermediate data

processing

CloudDevice for data transmission &

analysis

Reporting & data analysis

Remote analysisInspection

Action

Growth strategy : Contribution to circular economy

Promoting recycle of plastics

Difficult recycle due to difficult separation

Conventional multilayer filmMulti-materials (PE, PET ,PA, etc.) are layered for improving filmʼs characteristics

Mono-material filmMaterials are pasted together

Recyclable film

Functional Polyethylene

Sealant Polyethylene

Inks and solvent-free adhesive

Hosokawa Alpine joint to customerʼs

project

Hosokawa Alpineʼs machine gives the functionality to the blown film(MDO, Machine Direction Orientation)

20

(Cross sectional view of film)

(Stand-up pouch, etc.)

Same

material

•Please note that the business & future forecasts contained inthis document are forecasts determined by our companybased on the current business environment, and may differfrom actual business performance depending on the futurebusiness environment.

21