Amada : FY2022 3rd Quarter Financial Results Announcement Analyst and Investor Briefing Q&A (Summary)

Thursday, 9 February 2023.

AMADA CO., LTD.

FY2022 3rd Quarter Financial Results Announcement

Analyst and Investor Briefing Q&A (Summary)

【Speakers】

Tsutomu Isobe (Representative Director, President)

Kazuhiko Miwa (Director, Executive Officer, Executive General Manager of Financial Div.)

【Q&A】

1. What are your thoughts on the course of action to take for current management issues under the new president's management?

1. The remaining issue is the failure to increase market capitalization and share price. We recognize that the reason for this is the failure to improve ROE from the promotion of B/S reform and shareholder return plan. Under the new president, the core elements of the new mid-term plan include new business initiatives, further promotion of globalization, and improvement of ROE. We believe the main issues to be addressed are how to increase market capitalization and stock price.

1. In terms of 3Q results, how has the progress been compared with what was expected when 2Q results were announced?

1. The results were slightly below our internal plans. However, the assumed exchange rate as of 2Q was US$130/EUR130. Actual results exceeded the plan because the yen depreciated more than expected. In addition, all progress rates for the first nine months for revenue, operating profit, and profit exceeded 70%, which is reasonable considering the progress rates in the past. Production is slightly lower than expected due to the effects of parts and materials procurement. However, production volume is expected to be sufficient to meet the revenue target.

Q What are your expectations for 4Q orders by region?

1. At the time of the 2Q announcement, we had expected the 4Q orders to be down around 14%, but at this point, we expect the orders to be around the same level. In Japan, January results were up 1%. Of these, orders for sheet metal, the mainstay of the business, increased by nearly double digits. Given that last year, a comparative year, was also at a high level, it can be said that orders continue to be strong. On the other hand, overseas markets are in a negative trend. In North America, orders received in January last year were up 1.7 times YoY, and we expect such orders this year to be lower partly as a

reaction to that. However, there is a high level of market consensus, and a genuine willingness to make capital investments due to reshoring of production. In Europe, we are somewhat concerned about a decline in capital investment sentiment, given soaring energy prices and geopolitical risks. In the Asian region, since especially ASEAN has been lagging behind, it is expected to turn significantly positive.

Q Concerning the evolution in structure in the change of President from April, please tell us about the scope of the Chairman's role and duties.

1. The first would be personnel reforms. We want to implement personnel reforms that will enable us to become an industry leader in terms of wages from a long-term perspective rather than a short-term treatment. Second, from an ESG perspective, we would like to promote the social contributions we can make as Amada, such as running AMADA SCHOOL and industrial associations for our customers. The third is addressing governance. We plan to change outside directors this time but would like to make further reforms.

Q What are the challenges in terms of human resources, and what needs to be strengthened to improve profitability

1. We are currently planning to build a training center on the Isehara site, where our head office is located, as a new capital investment project. We recognize that Amada's value is its service capabilities.
   Therefore, we will utilize this facility to enhance our service capabilities by strengthening our training.
   Furthermore, we will use the newly opened Solution Center lab to improve our sales staff's knowledge and proposal capabilities and enhance our human resources. From these enhancements, the objective is to lower the SG&A ratio through more efficient sales and service activities.

1. Considering the trend of users who have already placed orders and constitute a high order backlog,

finding the right time to release new products would be difficult. What are your thoughts on this issue?

1. We aim to differentiate our new products from conventional ones by increasing their added value and changing their pricing. We intend to respond by pricing strategies based on the delivery schedule for the currently high level of order backlog.