Fuji Electric : Management Plan for FY2024 with script

Management Plan for FY2024

Fuji Electric Co., Ltd.

April 25, 2024

© Fuji Electric Co., Ltd.

Good Afternoon, I am Shiro Kondo, President and COO of Fuji Electric.

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Schedule for Financial Results, Management Plan and

Medium-term Management Plan Briefing

April 25 (Thu.) FY2023 Financial Results Briefing

FY2024 Management Plan Briefing

May 23 (Thu.) FY2026 Medium-term Management Plan Briefing

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I would like to explain our new management plan for FY2024.

Next three years from this FY 2024 will be our new three-yearmedium-term management plan period.

Today's explanation is about the management plan for FY2024, and we will hold a briefing for the medium-term management plan on May 23rd.

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Contents

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1. FY2024 Management Plan

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Now let me start my explanation on the FY2024 management plan.

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Operating Environment for FY2024 Management Plan

Opaque political and economic conditions

Market Outlook

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The market environment for FY2024 is uncertain for both political and economic situation. Under such a circumstance, I would like to explain how we view the market as an assumption for this management plan.

First, we expect strong performance will continue for plant-related projects, renewable energy, data centers, semiconductor plants, total equipment upgrades in the Energy Segment, as well as capital investment in plant system in the Industry Segment.

As for components, this plan incorporates expected market recovery from the second quarter for ED&C components and from the second half for factory automation and industrial semiconductors.

We expect power semiconductors for electrified vehicles and renewable energy applications to remain strong.

We expect vending machine demand in the Food and Beverage Distribution segment will remain unchanged from the previous year. However, for store distribution, we assume it would be difficult to make up for the absence of large-scale orders for counter fixtures of convenience stores in the previous fiscal year.

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Summary of Consolidated Management Plan for FY2024 (YoY Comparison)

Targets of higher sales and profit along with operating profit ratio of more than 9.8%

FY2024 management plan beginning with minimal target

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Next, I will provide a summary of the full-year plan for consolidated financial results for FY 2024.

We target to record sales and profit increase year-on-year with net sales of 1 trillion 114 billion yen, up 10.8 billion yen, operating profit of 109 billion yen, up 2.9 billion yen, and the operating profit ratio of 9.8%.

The exchange rate is 140 yen to the US dollar, which is conservative considering the exchange rate around 155 yen for the past few days, but we set our assumption as 140 yen with anticipation of its fluctuation in the future.

We plan to increase profit attributable to owners of parent by 1.1 billion yen to 76.5 billion yen.

ROE is 12.3%, and ROIC will be explained in more detail in the medium-term management plan briefing, but we will operate based on the concept of maintaining ROIC of 10% or higher as we consider investment efficiency and capital efficiency, and investing for growth.

ROIC for FY 2024 is planned to be 10.6%. With profit attributable to owners of parent and other factors, equity ratio is expected to be 49.3% and net D/E ratio will be 0.2 times.

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Breakdown of Changes in Operating Results for FY2024 (YoY Comparison)

Higher profit as impacts of higher fixed costs outweighed by benefits of cost reductions as well as increases in sales and production volumes

(Billion Yen)

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This slide shows breakdown of changes in operating results.

The increase in fixed costs reflects accelerating investment in human resources, as well as increase in R&D and capital costs. We intend to maintain growth and distribution properly in a virtuous circle.

We plan to increase profit by offsetting this fixed cost increase by increasing sales and production volume and cost reductions.

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Incoming Orders for FY2024 (YoY Comparison)

Orders unchanged year on year as increases in growth fields and industry component orders compensated for absence of large-scale orders recorded in previous fiscal year

※FY2023 results reflect the organization reform conducted in FY2024

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Full-year incoming orders are projected to be 1 trillion 110 billion yen, unchanged from the previous year.

As shown at the bottom, the major impact on this plan is the large-scale orders in the previous fiscal year with a total value of over 50 billion yen for power generation plants, social solutions, and equipment construction projects. We plan to compensate the absence of these orders by expanding operations in growth fields and demand recovery for industrial components mentioned above, to make orders unchanged year-on-year.

Specifically for components, we anticipate recovery from the second quarter or the second half of the fiscal year, and plan to achieve year-on-year order increase by 19 billion yen for automotive semiconductors, 7.7 billion yen for industrial semiconductors, and over 10 billion yen for ED&C components and factory automation, respectively.

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Performance Outlook and Priority Measures by Segment

Energy / Industry

Now let me explain performance outlook and priority measures by segment.

First is the Energy segment. Net sales are planned to be 348 billion yen, up 5.2 billion yen year-on-year. One of the contributing factors is the recovery of ED&C components business.

In addition, operating profit is expected to increase due to the effects of increased sales volume and cost reductions.

As for priority measures, orders for renewable energy-related business, especially power battery systems, etc., will grow quite rapidly. We will make sure to firmly produce the effects of integrating power generation plants and energy management businesses

We expect comprehensive electrical equipment business for data centers and semiconductor factories to remain strong, and we intend to increase orders in these areas. In addition, we will launch new key products for ED&C components business.

Next is the Industry segment. Net sales are projected at 414 billion yen, down 5.9 billion yen year-on-year. Excluding the impact of the absence of a large project in equipment construction in the previous year, net sales will be increased year-on-year.

We plan profit increase by considering the effects of higher sales volume and cost reductions in factory automation business and IT solutions business.

As for priority measures, we will further strengthen local production for local consumption, mainly with low-voltage inverters, to reduce lead times and costs in each region.

In addition, we are expanding our overseas operations with a focus on India, where net sales have increased over five-fold in FY2023 compared to FY18. We will further strengthen this area.

Furthermore, we will enhance our manufacturing solutions in the use of digital technology.

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