Amada : FY2022 Financial Results Briefing Q&A (Summary)

Friday, May 19, 2023

AMADA CO., LTD.

Medium-Term Business Plan 2025 Briefing: Q&A (Summary)

【Speakers】

Tsutomu Isobe (Representative Director, Chairman)

Takaaki Yamanashi (Representative Director, President)

【Q&A】

Q Should we see the new Amada Global Innovation Center (AGIC) visitor facility as a venue to solve new challenges and create new business models?

• Recently, our customers are focused on the improvement of productivity and taking on the challenge of new materials and processing. The value of the AGIC is that AMADA is providing a venue that makes these things possible, where the customer can work with AMADA engineers to break the status quo and we can work together towards the next growth.

Q What has been the response to the AGIC from existing, new and international customers?

• We have had a wide variety of customers view the AGIC, and especially the Innovation LABO, and all of them have evaluated it very favorably. Dozens of major manufacturers have said that they are always thinking about how to improve their own production capacity through production technology, and that by using this venue that AMADA is providing for processing measurement and verification, they will be able to work together with AMADA to improve their production technology. In addition, many customers in the sheet metal processing industry have said that they will be able to continue working towards the next growth together with AMADA.

Q What is your strategy and vision for the global deployment of the AGIC?

• We will connect the AGIC to visitor facilities in each country online and we will perform demonstration processing and customer proposals. We do not have any plans to build facilities on the same scale as AGIC in the overseas areas.

Q What is your growth strategy for the Asian region?

• Chinese manufacturers are currently introducing inexpensive products into the Asian and ASEAN markets. Over the next three years, AMADA aims to strengthen and grow its business in the region by performing local procurement and local production in order to launch relatively inexpensive products that match the needs in the region.

• Please tell us about your balance sheet reform. Are you going to perform any large-scale selling or other measures for items such as securities, real estate or accounts receivable?

• We will sell idle real estate and securities (especially cross-shareholdings) and advance the reduction of accounts receivable and inventory in order to generate approximately 20 billion yen to 30 billion yen in funds.
  For example, with regard to the reduction of inventory, by shifting to production in local areas, we will reduce our logistics costs and transportation lead times. In North America, we are currently producing about 60% of our

products locally and about 40% are imported from Japan. The move to local production has advanced further in Europe, but there are still a small amount of imports from Japan. In Asia, most of the products are imports from Japan. Going forward, we plan to further localize manufacturing and will reduce inventory to generate cash.

• In your goals for global market expansion up to 2030, why do you expect higher growth in Europe than in North America? There are a lot of competitors in Europe, but North America has traditionally had high sales, and there

are factors in the external environment that should be positive for business performance, such as reshoring and the IRA (Inflation Reduction Act).

• It is true that we are doing well in North America. We are hitting new record highs every quarter, and we can expect even further growth. However, in Europe, the share of the market taken by our company is low compared to that in other regions, so there is room for us to increase our share. We do have a lot of competitors in Europe, but we are very confident that our products have an advantage.
  In Europe, there are developed country markets and markets where there is potential for further development, such as in Eastern Europe, Northern Europe and Spain. In the developed country markets, we will further develop the solution business in which AMADA excels. In Eastern Europe and elsewhere, we will go on to launch inexpensive products that suit the markets, in the same way as in Asia and ASEAN.

Q Will AMADA be increasing product prices from now on?

• There are two directions we will take. The first of these is to raise the unit price with high-end machines that respond to the trend to automation. On the other hand, we also plan to launch cheaper products for Asia and ASEAN, Eastern Europe and South America.

• You gave areas such as e-mobility as new areas you will aim to enter in the future. I would like to know why you have not been able to expand your business in this area up until now, and why you will be able to expand it in the future.

• One factor was that until now, the sheet metal business and the micro welding business were aiming for different sectors, so we were not able to sufficiently generate synergy effects. We will maximize synergies from now on by restructuring our business.
  We are also investing in optical technologies such as ultrashort pulsed lasers, short-pulsed lasers, blue lasers, green lasers, and UV, so that we will be able to attack the e-mobility market. In October this year, at the Photonix exhibition of optical and laser technology in Makuhari, we plan to exhibit new optical technology and processing solutions, processing technology solutions, and new products.
  We are already carrying out a number of technical collaborations with manufacturers in Japan and overseas, and we plan to extend these to the e-mobility-related market.