NITTOKU ENGINEERING : Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018

August 4, 2017

Representative: Nobushige Kondo, President

Contact: Hiroshi Isoda, Executive Officer, General Administration Division Executive General Manager Tel: +81-48-837-2011

Scheduled date of filing of Quarterly Report: August 10, 2017

Scheduled date of payment of dividend: -Preparation of supplementary materials for quarterly financial results: YesHolding of quarterly financial results meeting:None

Note: The original disclosure in Japanese was released on August 4, 2017, at 15:00 (GMT +9).

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter Ended June 30, 2017 (Apr. 1, 2017 - Jun. 30, 2017)

2. Consolidated results of operations (Percentages represent year-on-year changes)

   Net sales		Operating profit		Ordinary profit		Profit attributable to owners of parent
   Three months ended Jun. 30, 2017 Three months ended Jun. 30, 2016	Million yen 5,401 4,882	% 10.6 (1.4)	Million yen 683 430	% 58.6 -	Million yen 698 501	% 39.3 758.5	Million yen 491 349	% 40.9 36.3

   Note: Comprehensive income (million yen) Three months ended Jun. 30, 2017: 685 (- %)

   Three months ended Jun. 30, 2016: (117) (- %)

   Net income per share	Diluted net income per share
   Three months ended Jun. 30, 2017 Three months ended Jun. 30, 2016	Yen 27.23 19.33	Yen - -

3. Consolidated financial position

4. Total assets	Net assets	Equity ratio
   As of Jun. 30, 2017	Million yen	Million yen	%
   	37,647	23,438	62.1
   As of Mar. 31, 2017	33,695	23,006	68.1

   Reference: Shareholders' equity (million yen) As of Jun. 30, 2017: 23,376 As of Mar. 31, 2017: 22,948

5. Dividends

   Dividend per share
   1Q-end	2Q-end	3Q-end	Year-end	Total
   Fiscal year ended Mar. 31, 2017 Fiscal year ending Mar. 31, 2018	Yen - -	Yen 14.00	Yen -	Yen 14.00	Yen 28.00
   Fiscal year ending Mar. 31, 2018 (forecast)	14.00	-	14.00	28.00

   Note: Revisions to the most recently announced dividend forecast: None

6. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2018 (Apr. 1, 2017 - Mar. 31, 2018)

7. (Percentages represent year-on-year changes)

   Net sales		Operating profit		Ordinary profit		Profit attributable to owners of parent		Net income per share
   First half	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
   	13,500	22.9	1,800	44.9	1,830	36.4	1,300	42.1	71.95
   Full year	25,500	9.5	3,150	9.6	3,200	6.9	2,300	3.2	127.30

   Note: Revisions to the most recently announced consolidated earnings forecast: None

   * Notes

8. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None

   Newly added: - Excluded: -

9. Application of special accounting methods in the preparation of the quarterly consolidated financial statements: None

10. Changes in accounting policies and accounting-based estimates, and restatements

11. Changes in accounting policies due to revisions in accounting standards, others: None

12. Changes in accounting policies other than 1) above: None

13. Changes in accounting-based estimates: None

14. Restatements: None

15. Number of outstanding shares (common stock)

16. Number of shares outstanding at the end of the period (including treasury shares)

    As of Jun. 30, 2017: 18,098,923 shares As of Mar. 31, 2017: 18,098,923 shares

17. Number of treasury shares at the end of the period

    As of Jun. 30, 2017: 30,969 shares As of Mar. 31, 2017: 30,969 shares

18. Average number of shares outstanding during the period

19. Three months ended Jun. 30, 2017: 18,067,954 shares Three months ended Jun. 30, 2016: 18,068,173 shares

    • The current quarterly financial report is not subject to quarterly review procedures.

    • Explanation of appropriate use of earnings forecasts, and other special items

    - Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to the Company's management at the time the materials were prepared. These materials are not promises by the Company regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons. For discussion of the assumptions and other factors considered by the Company in preparing the above projections, please refer to page 3 of the attachments "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements."

    Contents of Attachments

20. Qualitative Information on Quarterly Consolidated Financial Performance 2

21. Explanation of Results of Operations 2

22. Explanation of Financial Position 3

23. Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements 3

24. Quarterly Consolidated Financial Statements and Notes 4

25. Quarterly Consolidated Balance Sheet 4

26. Quarterly Consolidated Statements of Income and Comprehensive Income 6

27. Notes to Quarterly Consolidated Financial Statements 8

28. Going Concern Assumption 8

    Significant Changes in Shareholders' Equity 8

    Segment and Other Information 8

    1. Qualitative Information on Quarterly Consolidated Financial Performance (1) Explanation of Results of Operations

    In the first quarter of the current fiscal year, amid rising expectations for economic recovery mixed with cautious observations and analyses, the world economy saw accelerated evolution of the Internet, computers, electronic devices and IoT, as well as intensified competition for the development of robots, AI and electric vehicles, which were further propelled by governments' policies.

    All these progresses cannot possibly be achieved without the development of electronic components, IoT devices and motor systems, to which coils are key components. More recently, manufacturing of products and components equipped with such coils as key parts has become more FA-oriented, aiming to achieve labor savings, compatibility with microfabrication and precision engineering, and stable production and quality. While general-purpose production facilities require manufacturers to customize them to create products with better quality, most of our flagship products are precision factory automation lines which can readily create added values to products and components. To make it happen, the Nittoku Engineering Group (hereinafter, "the Group") should play a role as an industrial engineering agent who develops the facilities with knowledge not only of the characteristics of output products but also of material inputs for production. As such, we are striving to meet the changing needs of manufacturers of electronic components, IoT devices and motor systems who seek a "turn-key solution."

    To this end, we develop FA lines, equipment and systems through developing facilities utilizing our coil-related technologies, acquiring material knowledge, and at the same time leveraging on open innovation, alliance and M&A as necessary. We also offer world-wide service networks to support our customers as part of providing turn-key solutions.

    These efforts have borne a fruit. We have experienced a substantial increase in orders from leading companies across the globe in the electronics, electric, and automobile industries as we are one of the very few manufacturers with a capability to build up integrated precision FA lines providing a turn-key solution. In fact, orders from the automobile sector, the information & communications sector, and the AV & home appliance sector increased twofold, 70% and fourfold year on year, respectively.

    These precision FA lines are tailor-made to the need of each user, with our engineers fully engaged in almost all the processes including designing, procuring, processing, assembling, and adjusting as per user-requested specifications. As this manufacturing approach depends heavily on skills and know-hows cultivated personally for years, we are vigorously taking measures such as securing and training personnel, increasing both quality and quantity of our business partners and suppliers, and standardizing and communizing designs and components. Furthermore, we have helped small- and medium-sized domestic production equipment manufacturers to strengthen their technologies through the concept of open innovation and alliance with the Group, whereby we can increase our capability and expand the field of factory automation in which we work.

    Additionally, to meet manufacturers' changing needs steadily and speedily, we allocated approximately one billion yen for R&D programs for the current fiscal year, which is about two times more than the actual R&D expenditure for the previous fiscal year. The R&D programs will allow us to further develop control technology and FA systems, as well as an EV motor with an ultimate goal to develop relevant facilities. We believe that these efforts will make us a precision FA manufacturer who leads the globally exploding market of smart factory equipment.

    As a result, net sales increased 10.6% year on year to 5,401 million yen with operating profit of 683 million yen (up 58.6% year on year), ordinary profit of 698 million yen (up 39.3% year on year), and profit attributable to owners of parent of 491 million yen (up 40.9% year on year).

    Results by business segment were as follows.

    From the first quarter of the current fiscal year, the coil winding machine business segment was renamed to the winding system & mechatronics business segment. The change is only nominal and does not influence the segment information.