2018-2020 Mid-term Management Plan€¦ · Copyri ght © 2019 TOTOKU ELECTRIC CO., LTD. All Rihts Reserved. Corporate Plannin Dept. #3 0 2018-2020 Mid-term Management Plan December

0Copyright © 2019 TOTOKU ELECTRIC CO., LTD. All Rights Reserved. Corporate Planning Dept. #3

2018-2020Mid-term Management Plan

December 6, 2019

TOTOKU ELECTRIC CO.,LTD


C o n t e n t s

1

1. Position of 2020 Mid-term Management Plan

2. Performance of FY20193. Equipment Investment4. R&D5. Marketing Strategy6. New Product7. The Renewal of Ueda Factory

2Copyright © 2019 TOTOKU ELECTRIC CO., LTD. All Rights Reserved. Corporate Planning Dept. #3 2

2 0 2 0 M T M P

To Growth Path

Improvement of Corporate Value

Contribution to Stakeholders

I n t h e P a s t

M a n a g e m e n t P r i n c i p l e

D N A o f T O T O K U ’ s S p e c i a l t y

From Structural Reform to Growth Path1. Position of 2020 MTMP

Structural Reform

Profit Improvement

Structural Improvement

Vision

Medium-TermManagement Plan

3Copyright © 2019 TOTOKU ELECTRIC CO., LTD. All Rights Reserved. Corporate Planning Dept. #3 32017 2020

Safety and Health

MeaningfulWorkplace

Improvement of Treatment

High Qual ity

Appropriate Pr ice

Quick Del ivery

Constant Purchasing

Appropriate Pr ice

Technical Cooperation

Consistent Dividend

Ris ingShare Value

Improvement of Corporate Value

Environmental Conservation

Regional Contr ibution

Consciousness as a Corporate Cit izen

Chal lenge to Reinvention

Sticking to Numerical Targets

Priority to Safety and Compliance

M a n a g e m e n t R o a d M a p1. Position of 2020 MTMP

We will change ourselves toa group of companies which can

grow permanently andcontribute to all

stakeholders.


C o n t e n t s

4




Consolidated Sales and Operating IncomeMillion Yen・% 2019 2019 2020 2019

ConsolidatedSales 19,000 16,800 21,000 +4,200

ConsolidatedOperating

Income2,300 1,730 3,000 +1,270

OperatingIncome Ratio 12.1 10.3 14.3 +4.0

（8,602）

（989）

（11.5）

Original Forecast New Forecast Plan Vs. Forecast

2. Performance of FY2019

• We h a v e m a d e a n d d i s c l o s e d t h e o r i g i n a l f o r e c a s t o n t h e b a s i s t h a t t h e m a j o r p r o d u c t s r e c o v e r i n t h e 2 n d h a l f o f F Y 2 0 1 9 , h o w e v e r, w e h a v e r e v i s e d i t b e c a u s e o f t h e d e l a y o f e c o n o m i c r e c o v e r y.


12,310

8,580

110 21,000

Million Yen

2020 Plan

Consolidated Sales of Each Business Field2019 2Q

Achievement

51.2％


(2Q 6063)11,799

(2Q 3,381) 6,847

140

Cable & Heater Device Others

18,786

2018

12,020

6,860

120 19,000

10,790

5,890 120

16,800

2019 ForecastOriginal Plan

（2Q 2,958）

（2Q 5,581）


1,500

1,620

▲120

3,000

Million Yen

Consolidated Operating Income of Each Business Filed

2020 Plan

2019 2QAchievement

57.2％


(2Q 899)1,605

(2Q 298) 638

▲131

Cable & Heater Device Others

2,113

2018

1,553

914

▲168

2,300

1,300

600

▲170

1,730

ForecastOriginal Plan

（2Q 362）

（2Q 701）

2019


O v e r a l l B u s i n e s s The performance of FY2019 will be lower than the

original forecast both in the sales and the profit• The economic recovery is quite slow even at the 2nd half of FY2019

against our forecast. The performance is lower both in Cable & Heater field and Device field than the original forecast at the end of the 1 st half, therefore we have revised down the forecast 10.6% in sales and 18.1% in operating income.

FY2019 is totally slow because of influence of the slow economy

• The sales will be lower than the original forecast because the demand to Contact Probe, Magnet Wire and Railway Cable has decreased as well as Heater Products. Sales expansion of High Performance Coaxial Cable also delay.

• The operating income will be much lower than the original forecast in Contact Probe, and lower in Magnet Wires, Wiring Cables and Heater Products than the original forecast because of the sales decrease.

• The new factory established last year in Philippines is operated as planned. The profit recovered.



C a b l e & H e a t e r

⾃動⾞

The delay of sales expansion of High Performance Coaxial Cable and the decrease of Railway Cable

• Sales expansion of , which is one of our important products, still delay.

• Railway Cable and Wiring Cables are quite slow because of the decrease in demand.

The strong situation of TIW• The situation of TIW is strong and its performance will be as the

original forecast. TIW is a base of our company’s sales and profit.• The investment for production increase has completed in FY2018.

The slow situation of Seat-Heater• The investment for production increase has completed in this 1st half.

The sales of this product has been increasing steadily, however the sales of this FY will be lower than the original forecast.



D e v i c e - 1 -

The decrease in sales of Contact Probe• Because of the slow economy and the decrease in demand of semi-

conductor related field, the sales decreased vs. the same period of the last year and decreased a lot vs. the original forecast. The inventory adjustment has ended and the demand seems to be getting to increase, but still weak. The equipment investment for production improvements and quality improvement has completed in the 1st half, and we can produce immediately once the demand recovers.

• The profit is lower than the original forecast because of the decrease of the profitable products and the lower production ratio influenced by the decrease in demand of the big customers.

• The lower performance of Contact Probe is one of the reasons of the lower performance of Device field vs. the original forecast.



D e v i c e - 2 -

Suspension Wire’s profit recovers• The inventory adjustment of our customers has ended and the sales

recovered. The sales and the profit will be as the original forecast.

Plated Wire’s profit decreases• The sales of Magnet Wires of our subsidiary in Chana has decreased

mainly because of the influence of the trade conflict between the U.S. and China. The performance will be lower than the original forecast.

• The lower performance of Plated Wires is one of the reasons of the lower performance of Device field vs. the original forecast.


Successful establishment of the new factory of our subsidiary in Philippines

• The new factory of our subsidiary in Philippines has been established last year. The factory is now successfully operated. The profit recovered.


C o n t e n t s

12




Equipment Investment: Progress

4,200Million Yen

3. Equipment Investment

Cable and Heater 474 M i l l i o n Ye n

Device 446 M i l l i o n Ye n

R&D・Others 178 M i l l i o n Ye n

Tota l 1,098 M i l l i o n Ye n

（2Q）302 Million Yen




Forecast of equipment investment in 2019

To t a l A m o u n to f

I n v e s t m e n t（ C o n s o l i d a t e d ）

2 0 1 8 - 2 0


To fur ther growth with appropriate and t imely equipment investment

Cableand

Heater

407 708 167

2018-2020Plan

2018

3. Progress of Equipment Investment

Device

2019Forecast

1,0984,200

1,2822,380

(2Q 731)Million Yen

474(2Q 302)

446(2Q 353)

178(2Q 76)

Cableand

Heater

R&D,Others

Equipment Investment: Progress

R&D,Others Device


C o n t e n t s

15




R & D : P r o g r e s s4. R&D

Development of High Frequency Measuring Jig• The measuring jig for 12.5GHz semi-conductor, which is the fastest

one in the world, is on sale.• We have started to develop measuring jig for 26GHz semi-conductor

of the next generation.

Development of High Heat Resistance Flexible Flat Cable for Automobile

• We are developing high heat resistance materials for automobile.

Development of Probe for Inspecting Narrow Pitch Semi-Conductor

• We are developing elemental technologies for contact probe for narrow pitch.


R & D : P r o g r e s s4. R&D

Development of New Materials for High Sensitive Temperature Sensor

• We are working on prototype heater wire of better temperature sensing characteristics.

Development of Copper Clad Laminate• We are studying improvement of heat resistance characteristics

required by customers.


With or ig ina l technologies , deve lop new products which only TOTOKU can .

2018-2020Plan

2018

4. R&D

Million Yen

R & D : S p e n d i n g

2019Forecast

730240248

488(2Q 124)


C o n t e n t s

19




5 . M a r ke t i n g St r a t e g y

Target MarketIGBT t r ans fo rmer fo r moto r i nve r te r of E V(e l e c t r i c veh i c l e s and hyb r id ca r s )

Market ForecastWe expec t tha t the marke t w i l l i n c rea se w i thave rage g rowth of 17 ％ pe r yea r. The marke t i sexpand ing as we expec t .

High Voltage Composite Wire

Our St rategyThe orde r s a re inc reas ing as we expec t . Ou rp roduc t i on capac i t y i s a l so expand i n g to keepthe inc reas ing o rde r s . F rom n ow on , we a rego ing to re sea rc h the poss ib i l i t y fo r o the r u ses .



High Performance Coaxial Cable

Target MarketInformation equipment for USB3.1 standard, semi-conductor inspection equipment and others

Market ForecastAt this time, our sales have not expanded in semi-conductor inspection equipment field nor in USB3.1equipment field (VR related field), but the markets arestill our target in mid-term. There is a new possibility ofsales expansion in 5G market.

Our St rategyBecause the possibility in 5G market is the mostfavorable at this time, 5G field is our priority for themeantime.



Triple Insulated Winding Wire

Target MarketPower Transformer

Market ForecastThe sales has decreased a lot in 4Q of FY2018, then isnow recovering. We expect that demand to our TIW willgrow according to downsizing and higher performanceof electric device in mid-term.

Our St rategyBy using characteristics which are appropriate fordownsizing, high speed, high frequency and lower loss,we are aiming at bigger expansion of sales than themarket growth. And we will try to enter EV market withTIW.



Heater Wire for Seat

Target MarketHea te r Wi re fo r Sea t

Market ForecastWe expec t tha t the marke t w i l l i n c rea se w i thave rage g rowth of abou t 3% per yea r.

Our St rategyKeep ing the good re l a t i onsh ip w i th the cu r ren tcus tomer s , we w i l l e xpand our sa l e s more thanthe marke t g rowth ra te w i th n ew produc tdeve lopment and fu r the r sa l e s expans ion ac t i v i t y.



Contact Probe

Target MarketInspection for Substrate and Semi-Conductor

Market ForecastThe current situation of semi-conductor inspection market isweak, but we expect that the average growth of the market willbe nearly 8% per year in mid-term. Further downsizing andhigher performance of substrate will be required for automaticdriving and technology development of AI. Our company’spossibility of expansion will be higher accordingly.

Our St rategyIn order to develop new market and expand our share and sales,we will develop thinner and stronger probe for downsizing andhigher performance of substrate.



Microwave Coaxial Cable Assemblies

Target Market5G , H igh F requency Dev i ce

Market ForecastWith b ig expans i on of 5G marke t , we fo recas texpans ion of demand of re l a ted h igh f requencydev i ce s and cab le s . We expec t expans ion ofdeman d fo r c ab le s w i th t he ave rage g rowth ofmore than 15% per yea r. I t c an be though t tha tthe marke t i t s e l f i s g row ing as ou r fo recas t .

Our St rategyI n o rde r to a vo id lo s ing the chance of expans ionof ５ G re l a ted demand , we w i l l f o cus on brandes tab l i shment , s a l e s expans ion ac t i v i t y,pu rc has ing and proces s improvement .


C o n t e n t s

26




GeeDOME Type TIW -1-6. New Product

Special Magnet Wire with Ferromagnetic Layer• is a special magnet wire of which copper wire

is clad with ferromagnetic, which has a characteristic to stickto magnet when it is approached magnet, and theferromagnetic layer is coated with the insulation material. Wehave developed the new type of TIW, of which conductor islitz wire of stranded GeeDOMEs and insulated with the threekinds of tapes wound by our original tape winding technology.

Litz Wire The First Layer

Conductor

The Second Layer

The Third Layer

Insulation Layers

Copper

Ferromagnetic Layer

Enamel Coated Layer


GeeDOME Type TIW -2-

Lower Current Loss is required for High Frequency Zone• When the currents on the two copper wires flow to the same

direction, you shall see a phenomenon that the current on thenear side to the neighboring wire faces the difficulty to flow(Proximity Effect). The reason why this kind of phenomenonhappens is that the magnetism gets into from theneighboring copper wire and generate current of the reversedirection to the original current.

• On high frequency band, the magnetic field fluctuates sointensely that proximity effect happens more frequently,therefore the current loss is bigger.

Current Density Distribution of Copper Wire (Cross-Section Image)Flow of current is getting worse from “Red” to “Blue”.

6. New Product



Lower Current Loss, Downsizing and Lower Heat-Generation• can lower proximity effect and current loss by

the characteristics of ferromagnetic which can block themagnetism. On the high frequency zone of 1,000kHz, it canlower the current loss about 30％ vs. copper wire.

• type TIW can improve the efficiency of highfrequency parts such as the transformer of the nextgeneration power semi-conductor, and contribute todownsizing and lower heat-generation of devices.

It is used as wiring material for parts such as

transformers.

▲30%

Copper Litz Wire

GeeDOME Litz Wire

Current Density Distribution of GeeDOME (Image)Current flows evenly.

6. New Product



Power Semi-Conductor of the next generationattracts people’s attention• The demand to power semi-conductor, which can control

and convert electric power, is now expanding. It can be usedfor controlling electric vehicle’s speed, converting power ofsolar battery to AC for transmission with stable frequency andactivating UPS with lower power to supply bigger powerduring blackout.

• Currently, people pay more attention to the power semi-conductor made from the materials of the next generationinstead of silicon. Power semi-conductor of the nextgeneration is used on higher frequency band, thereforecontribution to lower current loss on high frequency ismore required to wiring materials for transformers.

6. New Product



Expansion of the Next Generation Power Semi-Conductor’s market is expected• The next generation power semi-conductor will be used for

the main inverter of electric vehicle after 2020 and expansionof the demand is expected. It is expected that the globalmarket will be more than 680 billion Japanese Yen in 2030,which is 17 times of 2018. We also expect the expansion ofthe next generation power semi-conductor ’s market, in whichperformance of will be more appreciated.

6. New Product


C o n t e n t s

32




Construction of New Factory in Ueda Area -1-7. The Renewal of Ueda Factory

• The Ueda Factory (Ueda-city, Nagano prefecture) wasconstructed in 1961 and has been operating with theadditions and the renovations. Some buildings are aged andsome fundamental measures are required. For mid-termgrowth, it is necessary to demolish the oldest buildings in thearea and construct a new factory.

• Our plan is that the new factory is two-storied steel skeletonbuilding, its total floor space is about 8,200㎡, and itsconstruction cost will be about 1.6 billion Japanese Yen.

• The 1st floor will be production area and warehouse of TIW,and the 2nd floor will be production area of Contact Probewith office and canteen.

• The investment of production increase for the both productshas been completed but the current production areas arenarrow. The both products will be moved to the new factoryto improve production efficiency and work environment aswell as better distribution of goods.


Construction of New Factory in Ueda Area -1-7. The Renewal of Ueda Factory

• Solar power generation device will be installed on the roof tobe safer and easier to work and an environment-orientedfactory, as well as considering employee’s welfare.

• The construction will start in November this year and will becompleted in October next year.

Rendering of the New Factory


■ N o t e

T h i s d o c u m e n t e x p l a i n s o u r m a n a g e m e n t p o l i c y f r o m 2 0 1 8 t o 2 0 2 0 .

S a l e s , p r o f i t s a n d o t h e r s o n t h i s d o c u m e n t i s b a s e d o n i n f o r m a t i o n w h i c h w e c o u l d a c q u i r e . T h e c o n t e n t s o f t h i s m a t e r i a l h a v e a p o s s i b i l i t y t o c h a n g e a c c o r d i n g t o c h a n g e o f f u t u r e b u s i n e s s e n v i r o n m e n t .

Documents

2018-2020 Mid-term Management Plan€¦ · Copyri ght © 2019 TOTOKU ELECTRIC CO., LTD. All Rihts Reserved. Corporate Plannin Dept. #3 0 2018-2020 Mid-term Management Plan December