Toyo Denki Seizo K K : Notice Concerning Management Targets of Medium-Term Management Plan

	July 13, 2023
To Whom It May Concern,
Company Name	Toyo Denki Seizo K.K.
Representative	Akira Watanabe,
	President, Representative Director
	(Stock Code: 6505 TSE Standard)
Inquiries	Jun Nukina, Operating Officer, General
	Manager, Management Planning Division
	Tel.: [phone]

Notice Concerning Management Targets of Medium-Term Management Plan

Toyo Denki Group (hereinafter the "Group") is pleased to announce that it has revised its Medium-Term Management Plan 2026, which was announced on July 14, 2022, and whose final year is the fiscal year ending May 2026, and has established new management targets for three years from the fiscal year ending May 2024 to the fiscal year ending May 2026.

1. Background of the review

We positioned the fiscal year ended May 2023, the initial year of the Medium-Term Management Plan, as "a year to thoroughly take initiatives in structural reforms to increase profitability," carrying on from the fiscal year ended May 2022 when there was impairment treatment of business assets related to the Industrial Business segment. And initiatives toward revitalizing and transforming Toyo Denki have been strongly promoted. Also, we announced that the numerical targets of Medium-Term Management Plan 2026 toward the fiscal year ending May 2026 would be presented in July 2023, based on the progress and results of the structural reforms over the past year and the business environment.

2. Basic Policy of Medium-Term Management Plan 2026

The Group had decided to work on a new four-yearmedium-term management plan based on the achievements obtained along with remaining issues in the medium-term management plan Revitalize 2020/2022 (fiscal year ended May 2019 to fiscal year ended May 2022) that was implemented until the fiscal year ended May 2022. Meanwhile, the Group was not able to secure sufficient profitability to respond to major changes in the business environment, including the decrease in number of railway passengers due to the COVID-19 pandemic and a review of testing equipment for electrification of automobiles. As a consequence, results were substantially below what was planned.

Taking into account the issues the Company itself is facing which also became clear from the results, we have positioned Medium-Term Management Plan 2026 (fiscal year ending May 2023 to fiscal year ending May 2026) as a period to achieve revitalization and transformation of Toyo Denki so as to recover and improve corporate value.

To do so, we aim to achieve ROE of 8% or more by promoting three basic policies of the Plan: (1) expansion of new businesses and products, (2) thorough improvement in earnings structure of existing businesses, and (3) improvement in asset efficiency with awareness of capital cost.

	Three basic policies		Contents
	Expansion of new businesses and		Strengthen and expedite development of new business areas across
(1)		the company, and respond to electrification, DX, and
products
		decarbonization
	Thorough improvement in earnings		Drastically strengthen profitability of both factories and sales from
(2)		the viewpoint of improving production efficiency and securing
structure of existing businesses
		appropriate selling prices
	Improvement in asset efficiency		Continue to reduce cross-shareholdings, review capital efficiency
(3)		of each business and consider reallocation of management
with awareness of capital cost
		resources

3. Target management indicators

							(100 million yen)
			Medium-Term Management Plan 2026
Company-wide	FYE May	FYE May			FYE May			FYE May
(consolidated)	2022 results	2023 results			2024 plan			2026 plan
Net sales	301.5	310.2			345.0			400.0
Operating profit	1.7	5.1			6.0			20.0
(Operating
0.5%	1.7%			1.7%			5.0%
margin)
Ordinary profit	7.6	9.8			9.5			24.0
Profit	(9.3)	8.2			8.0			16.0
ROE	(4.0)%	3.5%			4.0%			8.0%
Dividend payout	－	32.7%			35.4%			30.0% or
ratio					more
Consolidated sales by segment
Transportation	194.5	198.5			218.0			250.0
Business
Industry	99.0	99.0			116.0			130.0
Business
ICT Solution	7.9	12.5			11.0			20.0
Business
(100 million yen)			Net sales

Medium-Term Management Plan 2026

Revitalization and

Transformation of Toyo Denki

(100 million yen)	Operating Profit/ ROE
	Operating	Operating	ROE
	profit	margin