Shimadzu Corporation (TSE Prime Market: Securities code 7701)

FY 2023 (Ended March 2024) Results & Financial Position

President and Representative Director, CEO Yasunori Yamamoto

May 13, 2024

This conference call includes statements about future projections based on current forecasts, but all such statements are subject to risks and uncertainties. Please note that actual results could vary from our projections.

Overview of Financial Results

01 Overview of Financial Results

Excellence in Science

&

Best for Our Customers

Copyright © Shimadzu Corporation. All Rights Reserved. | FY 2023 Results

2

2

Summary of Results

• AMI: Analytical & Measuring Instruments, MED: Medical

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Systems, IM: Industrial Machinery, AE: Aircraft Equipment

• AMI key models (LC: Liquid Chromatographs, MS: Mass

&

Spectrometer Systems, GC: Gas Chromatographs),

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TMP: Turbomolecular Pumps

Consolidated Results

  • Sales beat 500 bn yento 511.9 bn yen.
  • Operating Income beat 70 bn yento 72.8 bn yen.
  • Sales, Operating Income, Ordinary Income, and Net Income all hit record high for 4 consecutive years.

By Segment

  • Sales
    AMI set a record and drove results.

* +23.6 bn yen (+7%) growth YoY of 338.3 bn yen

  • Operating Income
    IM and AE profits contributed.

By Model

  • AMI key models grew mainly overseas for pharma, clinical, and environment, growing 10%.
  • Turbomolecular pumps (TMP) saw 3% growthas the decline in semiconductor sales was offset by growth in green sales.

By Region

  • All regions increasedincluding FX tailwind
  • In North America: First-half delays covered by pharma and PFAS projects.
  • In Europe: AMI, MED, and IM increased.
  • In China: faced a challenging market condition.
  • In India: LC and MS for pharma increased.

Copyright © Shimadzu Corporation. All Rights Reserved. | FY 2023 Results

3

Yasunori Yamamoto, President and Representative Director, CEO

Good afternoon, everyone and thank you for joining the Shimadzu Corporation full-year earnings call for the fiscal year 2023. We continued to deliver excellent results with key model growth in Analytical & Measuring Instruments (AMI).

Consolidated performance surpassed JPY500 billion in sales for the first time, reaching JPY511.9 billion. Operating income also exceeded JPY70 billion, achieving JPY72.8 billion. We managed to conclude with record highs in sales, operating income, ordinary income, and net profit for the fourth consecutive period.

A brief explanation by segment: The AMI segment reached a record high with JPY338.3 billion in sales, an increase of 7% YoY, driving the overall company performance. As for operating income, increases in the Industrial Machinery (IM), and Aircraft Equipment (AE) segments contributed to the overall growth in operating income.

Our key models in the AMI segment, which are Liquid Chromatographs (LC), Mass Spectrometers (MS), and Gas Chromatographs (GC), collectively achieved a growth of 10%. Particularly, there was significant growth in overseas pharmaceuticals, the clinical and environmental sectors.

Another product that has recently contributed significantly to sales is the Turbo Molecular Pump (TMP). Even though semiconductor market conditions last fiscal year were not great, this was offset by growth in green technologies, including thin-film manufacturing equipment for solar panels and construction glass, achieving an overall growth of 3%.

Regionally, all areas saw an increase.

3

Statement of Income

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・Net sales 511.9 BY, Operating Income 72.8 BY (OPM 14.2%), Ordinary Income 76.9 BY, Net Income 57 BY ・Actively promoting R&D expenses for future growth, R&D expenses increased to 21.5 BY, +13% YoY (R&D to sales ratio: 4.2%)

Net Sales

Operating Income

Operating Margin

Net Income

YoY: +29.7 bn yen / +6%

YoY: +4.5 bn yen / +7%

YoY: +0.1pt

YoY: +5.0 bn yen / +10%

511.9 bn yen

72.8 bn yen

14.2%

57.0 bn yen

Units: Billions of yen

Full-Year

YoY

FY 2022

FY 2023 Changes

%

Net Sales

482.2

511.9

+29.7

+6%

Business

Operating Income

68.2

72.8

+4.5

+7%

Operating Margin

14.1%

14.2%

+0.1pt

Results

Ordinary Income

70.9

76.9

+6.0

+8%

Profit Attributable to Owners of Parent

52.0

57.0

+5.0

+10%

Exchange Rate

Exchange

Average Rate: USD (Yen)

135.51

144.66

+9.15

+7%

Effect

Rates

Average Rate: Euro (Yen)

141.02

156.85

+15.83

+11%

Net Sales:

R&D Expenses

19.0

21.5

+2.5

19.6 bn yen

CAPEX

22.5

22.5

-0.0

Operating

Income:

Depreciation and Amortization

17.5

18.6

+1.0

6.5 bn yen

*Figures are rounded to the nearest hundred million yen.

Copyright © Shimadzu Corporation. All Rights Reserved. | FY 2023 Results

4

It may not match the notational total or difference.

Moving on to the income statement, sales were JPY511.9 billion, a 6% increase YoY as I mentioned earlier. Operating income was JPY72.8 billion, up 7%, and the operating margin was 14.2%, a increase from last year's 14.1% by 0.1 points.

Profit attributable to owners of parent was JPY57 billion, marking a 10% increase. This is mainly due to the impact of exchange rates, which contributed more significantly than the growth in operating income.

Furthermore, we are strategically investing in future growth. One area is R&D expenses, which have increased by JPY2.5 billion from last year, reaching JPY21.5 billion.

4

YoY Change in Operating Income

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OP increased to 72.8 bn yen, up 4.5 bn yen YoY.

Sales Effort: GP increased by higher sales in AMI, IM, and AE, and greater value added pursued.

+9.9 bn yen

Manufacturing Effort: GP margin improved by improving plant balance against soaring prices of parts/materials.

+2.3 bn yen

Increased Growth Investment: Investment for future growth such as HR and R&D increased.

10.0 bn yen (OP pull)

Bn yen

FX

Sales Effort

Manufacturing

Growth

Increase in

Effort

Investment

Expenses

Gross profit

Soaring prices of

Increased HR

increased by

parts/materials -2.4

Investment -7.5

higher sales +4.3

Greater value

Plant balance

Increased R&D -2.5

added pursued

improved +4.7

(price

revision) +5.6

FY2023

FY2022

H1

FY2023

Copyright © Shimadzu Corporation. All Rights Reserved. | FY 2023 Results

5

This slide shows the factors contributing to the YoY change in operating income.

The impact of foreign exchange was JPY6.5 billion, contributing positively.

The most significant factor in increasing operating income was the effort on the sales front. As noted below, increased sales led to a JPY4.3 billion increase in gross profit. Additionally, by emphasizing the added value and having customers recognize the value of our products through our sales activities (price revision), we managed to increase profit by JPY5.6 billion, contributing a total of JPY9.9 billion to the profit increase.

On the manufacturing side, although we faced a struggle with a JPY2.4 billion increase in material costs. we achieved a JPY1.1 billion cost reduction and other improvements, such as enhanced factory profitability, which added JPY3.6 billion, resulting in a net gain of JPY2.3 billion.

On the other hand, as part of growth investments, we spent an additional JPY7.5 billion on human resources and JPY2.5 billion on R&D, which together pushed down profits by JPY10 billion.

Additionally, expenses increased by JPY4.1 billion as COVID-19 restrictions ended, leading to more travel and consequently higher travel and advertising costs.

In total, these factors resulted in a JPY4.5 billion increase in operating income, bringing it to JPY72.8 billion for the year.

5

Sales and Income by Segment

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AMI drove sales, +23.6 bn yen YoY. OP was driven by IM and AE, +2.3 and +1.8 bn yen YoY respectively.

Sales of AMI:

Sales of MED:

Sales of IM:

・Key models increased in the Healthcare and ・Our flagship product, Angiography

・Industrial Furnaces for EV ceramic

Green domains.

Systems, drove well globally, +48% YoY

manufacturing increased.

・PCR reagents decreased, -6 bn yen YoY

・In Japan, sales decreased due to

・TMP increased for solar panels and

OP of AMI:

reactionary decline of large projects

construction glass.

・Investment for future growth such as R&D

and supplementary budget.

OP of IM:

and HR increased.

OP of MED: Decreased due to lower

・Increased with higher sales and

・Highly-profitable LC struggles in China.

sales and increased investment for

greater value added pursued.

future growth.

Sales of AE:

・Increased for both commercial aircraft and defense.

OP of AE:

・Increased by improved profitability in addition to higher sales.

Units: Billions of

yen

AMI

MED

IM

AE

Other

Adjustments

Total

Sales (outside) and operating

Net Sales

Operating Income

Operating Margin

income (inside) by segment

FY 2023

YoY

FY 2023

YoY

FY 2023

YoY

Other

Changes

%

Changes

%

Changes

AE

6% 1%

IM

338.3

+23.6

+7%

57.5

-0.1

-0%

17.0%

-1.3pt

1%

13%

72.3

-3.6

-5%

4.8

-0.8

-14%

6.6%

-0.7pt

10%5%

65.4

+2.4

+4%

7.2

+1.8

+32%

11.0%

+2.4pt

MED

6%

29.5

+5.5

+23%

3.7

+2.3

+167%

12.6%

+6.8pt

14%

AMI

6.5

+1.8

+37%

1.0

+0.4

+75%

11.4%

+3.0pt

78%

66%

-

-

-

-1.5

+0.9

-

-

-

511.9

+29.7

+6%

72.8

+4.5

+7%

14.2%

+0.1pt

Copyright © Shimadzu Corporation. All Rights Reserved. | FY 2023 Results

6

By segment, while Medical Systems (MED) saw a decrease in sales, all other segments experienced increases. Particularly, AMI saw a significant increase in sales, and AE grew substantially in operating income.

Regarding operating income, AMI and MED posted decreases, while IM and AE showed increases, leading to an overall positive outcome. Profits decreased due to an increase in R&D expenses for AMI as a result of R&D ahead of schedule.

Operating income for MED declined due to a decline in sales but increased for IM and AE as sales increased.

As a result, as you can see in the sales and operating income charts to the right, AMI accounts 66% of sales and 78% of operating income.

6

AMI Key Models and TMP

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・AMI Key Models (LC, MS, and GC) increased for the Healthcare and Green domains and academia.

・TMP decreased for semiconductor manufacturing equipment but increased for green-related(thin-film solar panel manufacturing equipment, etc.)

AMI Key Models

LC for pharma increased in Japan, North America, Europe, and Other Asian Countries.

+10% YoY LC MS GC Bn yen

185.5

169.3

150.4

Nexera XS inert

126.6

135.7

Liquid

Chromatograph

TMP

+3% YoY

  • TMP for semiconductor manufacturing equipment decreased.

• TMP for green-related(thin-filmBn yen

solar panel manufacturing)

30.9

31.9

increased.

27.5

MS for academia in Japan and for clinicals in Europe increased.

GC for the Green domain increased globally.

LCMS-8060NX

Liquid Chromatograph

Mass Spectrometer

FY2019

FY2020

FY2021

FY2022

FY2023

Brevis GC-2050

＊Also refer to p.28 of supplementary materials.

Gas Chromatograph

20.8

17.1

FY2019 FY2020 FY2021 FY2022 FY2023 ＊Also refer to p.38 of supplementary materials.

Copyright © Shimadzu Corporation. All Rights Reserved. | FY 2023 Results

7

AMI key models, which are LC, MS, and GC, together totaled JPY185.5 billion in sales and achieved a 10% increase YoY mainly in the Healthcare and Green Domains and academia.

Regionally, LC saw an increase in Japan, North America, Europe, other Asian countries such as India and Southeast Asian countries, primarily in the pharmaceutical sector. MS grew in Japan in academic and research settings, and in Europe in clinical applications. GC globally increased, especially in green- related areas such as impurity measurements in hydrogen and greenhouse gas measurements, showing a global rise.

To the side, we have results for the Turbo Molecular Pumps (TMP) which saw a 3% increase YoY, maintaining a solid performance with JPY31.9 billion in sales. TMP is a high-performance vacuum pump installed mainly in semiconductor manufacturing equipment and is a mainstay product of industrial equipment. Despite a decrease in the semiconductor sector, there was robust use in thin-film coatings for manufacturing solar cells and construction glass.

7

Sales by Segment

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Sales in Japan increased +2% YoY driven by AMI and AE. Overseas sales increased +9% YoY driven by Europe and Other Asian Countries.

Unit: Billions

FY

FY

YoY

Overview

of Yen

2022

2023

Changes

YoY

・AMI +5%: LC and MS for pharma increased. GC for new energy development, Testing Machines for new material development

211.1 215.6

+4.5

+2%

also increased.

Japan

・MED -15%: Decreased due to reactionary declines in supplemental budget and large projects in the previous year.

・IM -2%: Industrial Furnaces increased for ceramics, but TMP for semiconductor manufacturing equipment decreased.

・AE +19%: Defense field increased.

Overseas

271.1 296.3

+25.2

+9%

・AMI +2%: LC and clinical MS (MALDI) decreased for specific customers. Excluding this effect, sales increased +15%.

North

57.6

60.6

+3.0

+5%

・MED -1%: Hospital CAPEX stagnated.

America

・IM +3%: Hydraulic Pumps for forklifts increased.

・AE +37%: Commercial aircraft field increased.

・AMI +19%: LC for pharma, MS for clinicals and academia, GC for new energy development increased.

Europe

41.7

48.9

+7.2

+17%

・MED +12%: Sales increased in Eastern Europe where we focused.

・IM +12%: TMP for semiconductor manufacturing equipment increased.

・AMI +1%: LC for pharma and contract analysis decreased, but GC for new energy development and MS for clinicals and

China

96.7

99.9

+3.1

+3%

academia increased.

・MED +15%: Fluoroscopy Systems manufactured locally and Angiography Systems that we focused on increased.

・IM +10%: TMP for thin-film manufacturing equipment used to manufacture solar panels and construction glass increased.

・AMI +17%: LC and MS for pharma increased. GC for new energy development, Testing Machines for new material

Other

52.2

59.3

+7.1

+14%

development increased.

Asian

・MED +3%: Although Southeast Asia saw a reactionary decline in large projects of Mobile X-rays, Angiography Systems that we

Countries

focused on increased.

・IM +5%: Industrial Furnaces for ceramics increased.

Copyright © Shimadzu Corporation. All Rights Reserved. | FY 2023 Results

8

Here is a regional summary. In Japan, there was actually a decrease of about JPY7 billion due to COVID-19 PCR testing reagents and equipment. However, this was compensated by other models. LC for pharmaceuticals, MS for academia, GC for new energy sectors, and applications for lithium-ion batteries, which are in demand for automotive lightweighting, remained strong. This led to a 5% growth in AMI. AE also grew by 19%, resulting in an overall 2% growth in Japan. MED, however, faced a tough year with a 15% decrease.

Overall, overseas saw a 9% growth, driven by Europe and Other Asian Countries.

Particularly in Europe, a 19% increase in AMI played a significant role. The contributions were significantly from the LC for pharmaceuticals and MS for clinical use. MED and IM also grew.

In Other Asian Countries, there was a 14% growth, driven by a 17% increase in AMI. In particular, LC and MS for pharmaceuticals in India were key contributors.

China managed a growth of 3% YoY. AMI grew by 1% by strategically converting backlog orders into sales, but orders remained challenging. MED and IM grew by 15% and 10% respectively, contributing to the overall growth.

8

Overview of Financial Results

02 FY 2024 Earnings Forecast

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9

9

Business Environment and Measures

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We expect uncertainty continues due to geopolitical risks, U.S.-China trade friction, and inflation. In the 4 domains, we focus on markets where demand is expanding and implement measures to provide End-to-End solutions.

Healthcare

Life Science Field

Business Environment

  • Pharma market expands by developing new drugs and by strengthening domestic production.
  • Chinese market remains sluggish.

Med-Tech Field

Business Environment

  • Clinical market expands.
  • Senior healthcare market expands.
  • Chinese market remains sluggish.

Measures < AMI >

  • Pharma: Propose 'Evolving Lab' *p.16
    Provide End-to-End Solution for North American Pharma *p.17
  • China: Implement Measures *p.23

Measures < AMI >

  • Clinical: Build Clinical Platform *p.18
  • China: Implement Measures *p.23

< AMI & MED >

• Expand Senior Healthcare Business *p.19

Material

Business Environment

  • R&D of new materials increases.
  • Investment in the chemical industry decreases. Measures
    < AMI >
  • Increase application for new materials, jig lineups,

and overseas sales of Test Machines. < IM >

• Expand sales of Industrial Furnaces for ceramics.

Green

Measures

Business Environment

< AMI >

• Provide End-to-End Solution for Hydrogen *p.20

•

R&D progresses toward

• Provide End-to-End Solution for PFAS *p.21

decarbonization.

< IM >

•

PFAS demand increases.

• Expand TMP sales for solar cells.

Industry

Business Environment

  • Semiconductor market recovers. Measures
    < IM >
  • Grow TMP Business *p.22

*Related topics slide pages

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10

Starting with the business environment, as I mentioned earlier, we continue to face geopolitical risks, and factors like US-China trade tensions and inflation are making the future highly uncertain.

During our current mid-term management plan, which started FY2023 and spans three years, we have positioned Healthcare, Green, Material, and Industry as our focus domains.

In Healthcare, we are concentrating on two fields: Life Sciences and Med-Tech. Life Sciences is seeing growth, particularly in pharmaceuticals and food, where the market is expanding due to increased drug development and a push for domestic production. However, the Chinese market, especially in pharmaceuticals, is expected to remain sluggish and not recover quickly. Our management strategy for pharmaceuticals involves 'evolving laboratories,' enhancing entire lab setups with our technologies, not just through products but also through accompanying software and other services. Specifically in North America, we aim to strengthen our solution offerings. For China, we intend to capture demand related to pharmacopoeias and traditional Chinese medicine. In Med-Tech, which covers clinical and medical products, the clinical market is expanding globally, including in Europe and China. Also in the medical products sector, we aim to expand into the senior healthcare market, particularly focusing on bone health and dementia.

In Green, there is a global push for decarbonization R&D. Additionally, environmental regulations, such as those concerning PFAS (Per- and polyfluoroalkyl substances) are becoming stricter. We plan to strengthen our business in these two directions, focusing on solutions for hydrogen and enhanced solutions for PFAS. In Industrial Equipment, we will continue to focus on expanding sales of turbo molecular pumps for solar cells.

In Material, the global development of new materials is progressing, and the move towards a circular economy is also part of the shift towards decarbonization, aiming to eliminate waste and enhance eco-friendliness. This area is drawing significant attention.

In Industry, our main focus is on the semiconductor market. The semiconductor market will recover due to AI-related developments, and we firmly capture this demand.

10

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Shimadzu Corporation published this content on 28 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 May 2024 00:20:04 UTC.