konica minolta, inc. business technologies …...market overview：market size and future displays...

Konica Minolta, Inc.

June 13, 2019

Kazuyoshi HataSenior Executive OfficerGeneral Manager, Corporate Planning Division and Investor Relations Konica Minolta, Inc.

Evolution


Business Technologies ＆ IndustrialBusiness briefing


Positioning of businesses explained today

Business Unit Core Business Growth Business New Business

Office

IT service Solution

Workplace Hub

Measuring Instruments

Visual Inspection

Planetarium

Performance Materials

New film

IJ components

Optical components

QOL

Status monitoring Digital Manufacturing

Imaging Solutions

Healthcare Ultrasound Medical IT

Bio-healthcare(Precision medicine)

Production Print Marketing services

Textile

Industrial Printing

Materials OLED

Bundled provision of IT services

Cloud

Overseas partners Outing and businesstrip destinations

Remote work

Office

Bizhub i-serise

Materials and components field

Optical systems for industrial use field

Office

Industrial

Healthcare

Professional print

1


Breakdown of businesses explained today

56%21%

9%

11%3%

56%

16%

3%

25%

FY2018

Revenue Breakdown

¥1059 billion

FY2018

Operating Profit Breakdown

Industrial Business

New Business

Office Business

Professional Print Business

HealthcareBusiness

Of the businesses explained today, Core and Growth

Business account for 97% of earnings. (except WPH)

w/o New Business & corporate

2


Comprehensive strengths of Konica Minolta that can be demonstrated through Value Chain

Value Chain

CorporateR＆D

Headquarters

ProductionPrint

IndustrialPrinting

OfficePerformance

Materials

IJ Components

Measuringinstrument

Toner

IJ headInk

IQ-501

Lightsource color

Object colorVisual quality

Info

rmatio

n in

dustry

Physical representation media|Visual painting, Industrial Printing ,commercial printing ,office printing, office equipment, and business technologies industries

Electronic representation media | Display industry

3



Physical representation mediaVisual painting, Industrial Printing ,commercial printing ,office printing,

office equipment, and business technologies industries

Value Chain

Electronic representation mediaDisplay industry

KuzuharaSenior Executive Officer

Kamezawa Executive Officer

TaikoSenior Executive Officer

Info

rmatio

n in

dustry

CorporateR＆D

Headquarters

ProductionPrint

IndustrialPrinting

OfficePerformance

Materials

IJ Components

Measuringinstrument

Toner

IJ headInk

IQ-501

Lightsource color


4


Konica Minolta, Inc.Performance Materials Business

June 13, 2019

Noriyasu KuzuharaSenior Executive OfficerDivision President of Material & Component Business HeadquartersKonica Minolta, Inc.

Evolution


Overview of Materials and components Business

Performance Materials Business

Today's structure

6


Business Unit Core Business Growth Business New Business

Office

IT service Solution

Workplace Hub

Measuring Instruments

Visual Inspection

Planetarium

Performance Materials

New film

IJ components

Optical components

QOL

Status monitoring Digital Manufacturing

Imaging Solutions

Healthcare Ultrasound Medical IT

Bio-healthcare(Precision medicine)

Production Print Marketing services

Textile

Industrial Printing

Materials OLED

Bundled provision of IT services

Cloud

Overseas partners Outing and businesstrip destinations

Remote work

Office

Bizhub i-serise

Materials and components field

Optical systems for industrial use field

Office

Industrial

Healthcare

Professional print

Revenue Breakdown

within the company

OP Breakdown

within the company


11%

33%

7


Optical systems for industrial use fieldSupporting quality control in all industries with object and light color measuring technology.

Automobiles and building materials

Display , lights Food, Pharmaceuticals, and Cosmetics

Paper, apparel and plastics

Materials and components fieldLeveraging our advanced technology to provide key devices that are essential to the industry.

<Performance Materials＞Display film

<IJ components >Ink jet head

<Optical components>Lens unit and optical

elements

Strengthening Industrial Business

Profitability

Expansion of applications

Expand customer base


8



FY17 FY18 FY19

Revenue (A) 118.2 116.7 130.0

YoY +16% -1% +11%

YoY wo/Forex - -1% -

Operating profit (B) 23.5 20.9 25.0

Normalized OP(C) 23.5 20.9 25.0

% (C/A) 20% 18% 19%

Growth driver ofOptical systems for industrial use field

• Measuring Instruments: Expansion of OLED applications such as smart watches.

• Contributing to Smartphone Productivity Improvement.

• Capture business opportunities other than smartphones.

• Launch of Visual Inspection Business.

Growth driver ofMaterials and components field

• Performance Materials: High value-added product shift achieved 11% revenue increase.

• IJ components: Achieved 19% revenue increase.

• Performance Materials : Introduce new resin film to yield higher value-added functional films.

• IJ components : Introduce new products head to acquire new markets.

[¥ Billions]Growth driver

9



Expanding Business Domains by Advancing Input and Output with Full-Scale Digitization.

A/D

D/ATransformation

Dramatic improvement in

accuracy requirements

Expanding

application

Optical input

Touch-input

LCD OLED

Printing

Products supporting output function

Products supporting input function

Expanding Expanding10



Genre-Top value provider in a large industrial (display) supply chain.

Output Provided：Improving the value of Customer’s Roadmap.

ResinMachining fluid Film

Processed film

Polarizing plate

LCD panels

LCD TV

End customer needs

❷

❸

Optical systems for industrial use

Materials and components

❶Feedback

Technology trend

(1) High-quality customer information

Value chain assets・ Market, technology and trend

(2) Concentrate and specialize in areas of strength

Genre-Top core

(3) Rationalization between processes is valuable

Improving the value of customer roadmaps by integrating sales, development, and production.

11


Performance Materials Business

12


Business domains and Characteristics

● 4 optical films on the LCD screen.● 4 films with different characteristics.

PVA

Structure of LCD panels

Retardation film

PVA

Retardationfilm

Plain TAC

Surface-treated TAC

Structure ofpolarizer

Panel/coating manufacturer

Hardness,Coating appropriateness

Front polarizer

Rear polarizer

Liquid-crystal cell

Panel manufacturerOptical properties

(retardation)

Polarizer manufacturerProcessability

Function Road-mapLeading customer segment

13


Market Overview：Market Size and Future

Displays are a stable market, with an increase in panel area of 4% annually.Panel manufacturers expand production capacity at large panel factories (G10.5).

Polarizer manufacturers expand production capacity at ultra-wide polarizer factories.

0%

50%

100%

150%

200%

0

50

100

150

200

250

300

350

400

2015 2016 2017 2018 2019 2020 2021 2022 2023

Avera

ge p

anel are

a s

ize (

Rela

tive)

Panel are

a

Sales area of panels Panel production capacity Average Area Size (Relative)

G10.5

Average panel area size (Relative)14


Supply chain of Performance Materials Business

Increase the value of the customer's roadmap by getting good information through deep contact with a limited number of customers.

5 or more5 or more(several companies for each material)

10 or more 20 or more 100 or moreMajor Number of players

Film manufacturerRaw materialsmanufacturer

Polarizermanufacturer

Panel manufacturer

Set manufacturer

Coating manufacturer

3 or more

15


Business Transition and Transform~SHINKA Medium-Term Strategies

1990s'~2013

Phase-1Business creation

~ Period of rapid expansion

2014~2018

Phase-2Transform

2019~

Phase-3Evolution during

maturation

Strategy

● Consistent “Genre-Top” strategy.● Products ⇒ Focus on increase the value of the customer's roadmap.

• Notebook PC and mobile growth.• TV expandied rapidly centered on

VA Mode.

• Emergence of competitors other than TAC.

In-house production.Water-resistant.⇒Acrylic, PET, COP

• To increase the size of TVs.• Mobile diversification

Water-resistant.• Driving by Chinese forces.

CompetitionsEnvironment

16


Strategy Phase-1 :Period of rapid expansion of panels

2000 2010 2019

Thin film(40μTAC)

Notebook PC mobileThin demand

TV large sizeHardness and solidity issues

Small mobile devicesUltra-thin demand

VA retardation

Film(VA-TAC)

For TVThin film(60μTAC)

Ultra-thinfilm

(20μTAC)

TV early daysSimple configuration

Pla

ne film

Reta

rdatio

nfilm

Tth

in film

Phase-1 “TAC monopoly era” : Providing the necessary value as a trend leader in the industry.

1st

1st

1st 1st

17

Konica Minolta, Inc.2000 2010

Thin film40μTAC

Notebook PC mobileThin demand

TV large sizeHardness and solidity issues

Small mobile devicesUltra-thin demand

VA retardation

Film(VA-TAC)

For TVThin film60μTAC

Ultra-thinfilm

20μTAC

TV early daysSimple configuration

Pla

ne film

Reta

rdatio

nfilm

Tth

in film

1st

1st

1st 1st

Strategy Phase-2 :Transform to SHINKA in Medium-term management plan(2014-2018)

Phase-2 ”Emergence of other resin” : Providing value through aggressive changes capturing market changes.

Increase in TV using IPS

Changes in marketingDemand for waterproof

IPS retardation film (IPS-TAC)+Taiwan OEM

VA retardation film (VA-TAC)With high waterproof

PET film combination

Strengthen features

• Actively utilize.• Value expansion of

TAC retardation.

2018

In response

Phase-3

PET

COP/ acrylic

PET

COP/ acrylic 1st

Emergence of other resin

18


Phase-2 : Financial performance

0

200

400

600

FY15 FY16 FY17 FY18

Sale

s (¥

billions)

● Aggressive shift in product mix led to a turnaround in sales.● Revenue 11%UP in FY2017⇒FY2018.

Performance Materials Business revenue trend60

40

20

19


Vision of Phase-2

Strengthen retardation film (VA：waterproof, IPS：begin in earnest )

Initiatives for the next growth strategy (use of factories).

Phase-1 Phase-2

Kobe Factory300 million m2～

KobeFactory

300 million m2

TaiwanOEM

KobeFactory

Thin film(40μ, 20μTAC)

VA retardation

film(VA-TAC)

Plane film(60μTAC)


VA & IPSretardation

film(VA-TAC & IPS-TAC)

20


Phase 3： After that SHINKA medium-term management plan

Use of new resins to help customers realize their roadmaps.

2019

TAC film

（Retardation film

& Thin film)

Further strengthening.

Support for strengthening

customer’s roadmap

using new resins*."Value" means...

Our waterproof materials↓

Providing Value Exceeding Existing COP/ Acrylics

* New resin：Resin different from TAC

21


Differences in casting methods

Molten type

Belt-type Drum-type

Solution type

ResinResin

+ Functional agents

Thick film with emphasis on productivity

Thin film filmRetardation film

General method for making acrylic and COP

Manufacturing method of TAC Casting method

22

Ourmanufacturing method


Phase-3：Value of new resins

Contributing to increaseing the value of the customer’sroadmap and the expansion of our strategy freedom.

TAC filmNew resin film

Existing COP/ acrylics ⇒Molten typeExisting

COP ＆Acrylic

TAC

STANDARD SPECIAL SPECIAL&PROGRESSIVE

VA & IPS retardation filmFor large size TV

Ultra-thin film for mobile

(Small and medium size display)

OLED-TV

Touch screen panel

⇒ Solution type (Resin + Functional agent)

・Protective film less・ Laser cutting

Appropriateness Granted

・ Ductility

(Folding)

・ UV cuts

Absorption

:

<Evolving Platform>

・・

New resin*(SANUQI®, SAZMA®)

* New resin：Resin different from TAC23

Our manufacturing method


Vision of Phase-3

Evolve from “TAC film manufacturer” to “Optical film manufacturer”.Acquire increased production capacity and customer contact capacity at the same time.

Phase-2New resin* film

Functional retardationultra-thin film

KobeFactory

Phase-1

Kobe Factory300 million m2～

KobeFactory

300 million m2

TaiwanOEM


VA retardation

film(VA-TAC)

Plane film(60μTAC)


VA & IPSretardation

film(VA-TAC & IPS-TAC)

* New resin：Resin different from TAC

24


New resin* products aim for revenue increase over 30% by FY22.

Expanding Business fields： Into Digital Input/Output fields ＆ Revenue increase over 30% in new field

Thin filmfor mobile

Retardation film

for TV

Plain film(60μTAC)

Thin filmfor mobile

Retardation film

for TVUltra-thin film

forsmall mobile

Retardation film

for Largesize TV

filmfor foldable

Anti-reflection

filmfor OLED TV

filmfor TSP**

Digital input/output field

Products supporting output function(improved visibility)

Products supporting input function

Retardation film field TSP **field

TAC resin New resin*

SHINKA

Maximize customer synergies from the IJ components business

TAC resin

* New resin：Resin different from TAC**TSP：Touch screen panel

25



Physical representation mediaVisual painting, Industrial Printing ,commercial printing ,office printing,

office equipment, and business technologies industries

Value Chain

Electronic representation mediaDisplay industry

KuzuharaSenior Executive Officer

Kamezawa Executive Officer

TaikoSenior Executive Officer

Info

rmatio

n in

dustry

CorporateR＆D

Headquarters

ProductionPrint

IndustrialPrinting

OfficePerformance

Materials

IJ Components

Measuringinstrument

Toner

IJ headInk

IQ-501

Lightsource color


26


Konica Minolta, Inc.Measuring instrument Business

June 13, 2019

Hitoshi KamezawaExecutive OfficerGeneral Manager, Sensing Business UnitKonica Minolta, Inc.

Evolution


Overview of Measuring Instruments Business

Environment and strategy for display measurement

Strategies in Appearance and Visual inspection

Group synergies

Today's structure

28


Overview of Measuring Instrument Business

Light source color measurement 74% Object color measurement 26%

Providing light and color measurement using at ease.

Mobile devices, home appliances and lighting

Color adjustment of display products.

Optical uneven inspection of display products.

Performance evaluation and quality control of LED lighting.

Automobiles, Food, Printing, Construction and Fibers

Color quality control of automobile exterior and interior parts.

Grading by Food Color..

Color matching of printed materials.

Factors causing fluctuations in measuring instrument demand (mainly light source color measurement products).

Expansion of manufacturing factory and production lines.

Emergence of new inspection needs based on innovation.

Expansion of display product applications.

29


Worldwide supportGlobal

customer contact

Agile

development system

Software ＆ Hard

technology


Global multipolar development system

Global Sales with Supply Chain Pressure

Genre-Top software and hardware technologies

Customer supportSystem

Genre-Top strategies= “Customer value chain assetsx Achieving high added value by sustainably utilizing Genre-Top cores".

Color, display measuring Japan, the United States, and Germany

30


FY18

• Rebound from the previous fiscal year's OLED.

manufacturing capital investment.

• Increased customer numbers due to growth in ICT.

manufacturers and display manufacturers in China.

FY2019 policy

• Contributing to Smartphone Productivity Improvement.

• Capture business opportunities other than smartphones.

• Begin in earnest of visual measurement business.


Begin in earnest of visual measurement business while capturing changes in the number of display customers and their targets.

FY15 FY16 FY17 FY18 FY19(F)

+4%

+51%

-20%

+16%

Large investment related to OLED400

200

Measuring instrument

• Capturing medium-term growth trends by expanding customer base in China and South Korea and OLED applications.

¥ billions

20

40

31


Revenue

¥32.2 billion

20192018 2020 2021

Begin in earnest of Visual Inspection business.

New display solutions.

Launch of appearance measurement business.

Promotion of digital color management.

Continuation and expansion of existing business.


Aiming for high-earnings businesses, centered on Genre-Top strategies.

Measuring instrument group companies

Object color measurement

+ Light source color measurement

32


Environment and strategy for display measurement

33


Business opportunity

Approach the expanding supply chain, production process and application with 3 company solutions at each stage and each challenges.

SpecificationsPanel

adjustment

panel

Inspection

Module Inspection

device inspection

Panel manufacturers Assembly manufacturers

Wide range of applications

Display manufacturers

LCD

OLEDQD*

MiniLED

MicroLED

* QD = Quantum dots 34


3,000

3,100

3,200

2016 2017 2018 2019 (F) 2020 (F)

DisplayOverallsVolume Trend(M Units)

Display market trend Introduction of new equipment using new devices

Source:IHS Markit 2019

0

30

60

90

120

2016 2017 2018 2019 (F) 2020 (F)

SmartwatchVR/ARVolume Trend(M Units)

Smartwatch

VR/AR

Rapidly growing market for new devices

Capture the introduction of equipment for new devices due to the inflection point of the display market.

Future environment

Measuring instruments change due to technological innovation.

OLED, the MiniLED, the MicroLED, and others

Introducing new products and solutions

tailored to the characteristics of each display.

Measuring instrument and software-based compensation.

Contribute to yield improvement.

■ Successful Activities: OLED

2019：The calm of demand＆Share change, 2020：recovery

35


Strategies in the display measurement field

Continue to be the market leader in the display quality inspection solutions market.

Focus on trends in Asian markets, customers, and competitors.Aiming to provide value and expand business in response to changes in the market and customers.

Market share of more than 50%

: High-speed measurement, Ultra-low brightness measurement, and High reliability

: High accuracy, Industry standards

: High-speed and high-precision adjustment system for each pixel

&

36


Strategies in Appearance* and Visual Inspection

* Appearance = itching skin, mapping, contrast, etc.

37


Business foundation

Printing paperTextile

Plastic

Paint and Ink

Pharmaceuticals and Cosmetics

Building materials

Food and Agriculture

Automobile

* MIF = Number of measuring instrument units in operation in Machines In the Field markets

MIF* in a wide variety of markets, including automobiles, ICT, and chemical products: over 0.1 million units.

ICT

38


Evolution of interior and exterior materials, design and painting techniques.

Changes and Strategies Targeted in the Appearance and Visual Inspection field

“Increasing design, changes in materials and technologies, and improvement of production efficiency” are in parallel.Expand business through “Provide visual + color solution” which is difficult to quantify and automate.

Measuring Instrument business domains

Expanding

e.g. Vehicle exterior skin

e.g.color of automotive exterior

e.g. gloss of dashboard

e.g. Inspection of automotive exterior’s defects

GlossApiaLance

ColorVisual

Inspection

■ In the automotive industry

• Increased demand for quantitative color and visual indicators.

• Human eye dependent inspection cannot be increased.

39


Advance into the automotive visual inspection field and make strategic investments

Providing complete

automated visual

inspection Systems.

• Stable quality control

• Improve productivity and

efficiency

• Improvement of the work

environment

Measuring instrument business

Core Technologies

Customer asset

Globalautomobile company

Deep Learning

Konica Minolta

• Optical analysis technology

• Image processing• Lighting technology• High-sensitivity

camera

Current situation

Strong demand for

quality inspection

automation

Vision

Inspection of defects

dependent on human eye.

Background of Strategic Investment in the field of visual inspectionfor automobiles.

40


Strategic Investments ：Eines Systems, Inc.

Leading global company in visual inspection systems

Head Office: Valencia, Spain

Established: 1992 Employees: 66

Specializing in automated quality inspection systems for automotive production.

Expertise in European factory automation and agile development system.

Adopted by automobile manufacturers in Europe and North America.

41


Growth potential and vision of the automobile visual inspection market

Global automobile visual inspection forecasts

(¥ Billions)

Source: Our Analyses by Global Automotive Production Lines, etc.

Vision at 3-5 years from now

FY19 FY22 FY25

50

100

Complete automation of visual inspection from

current human eye dependent inspection.

Improving the value provided to automobile

companies. (quality improvement, efficiency

improvement, source flow improvement)

Global expansion of business utilizing Eines Systems

and our bases.

Establish Genre-Top position in automotive visual

inspection.

Automated remediation of defects and the

development and introduction of All-in-1 models

through technological synergies with us.

Infancy

Expansions

5.0

10.0

42


Group synergies

43


Group Synergy 1: Examples of Technology Core Spread in this Business

Spread of “core” supporting Genre-Top position by each business is Konica Minolta power.

Core Technologies(Color measurement technology)

Customer valueCommitment to providing

Labor saving in the printing processContribute to improvement of color quality

44


Segments that maximize each other's customer relationships

：Performance Materials Business ＆ Measuring instrument Business

Our Company

Performance

Materials

Business

Measuring

Instrument

Business

Proposals at the R & D stageEffective use of differences in timing of investments in

Performance Materials Business ＆ Measuring instrument Business

CustomerR&D

Production and inspection processes

Reserve

Line equipmentReserve

For mass productionMaterials purchase

R & D stageManufacturing

Stage

Measuring instrumentfor inspection

Propose Sale

Materials development

Mass production of materials

Group Synergy 2: Expansion of Spread of customer relationships in each business

Measuring Instrumentfor Valuation

45


Konica Minolta, Inc.Business Technologies Business briefing

June 13, 2019

Toshimitsu TaikoSenior Executive OfficerLead Officer responsible for Business TechnologiesKonica Minolta, Inc.

Evolution


Today's structure

Overview of strengthening Business Technologies Business profitability (Earning power)

Office Business Strategies(Customers, Market opportunities and Our position)

Professional Print Business Strategies (Customers, Market opportunities and Our position)

Reduce administration and indirect costs expenses (Earning power)

Reducing production costs (Earning power)

47


Strengthening Business Technologies Business Profitability (FY2017→FY2018→FY2019)

Medium-Term Management Plan Cost Reduction

FY17 FY18 FY19

① Reduction of production costs

4.3 2.1 4.4

② Reduction of service costs 1.9 2.5 2.5

③ Administration and indirect costs (structural reforms)

-3.1 2.6 6.1

Total 3.1 7.2 13.0

Revenue/operating profit (¥ Billions)

FY17 FY18 FY19

Office 583.4/ 44.9 587.9 / 47.2 595.0/52.5

Professional Print 214.3 / 9.3 227.7 / 13.8 240.0/17.5

Business Technologies Business

Company overall

・ Strengthen profitability in Core Business・ Gross profit increase in Growth/New Business

Continue to make upfront investments in Growth and New businesses

FY17Result

FY18Result

FY19Result

May 13 2019Forecast

May 11 2019 Announced

[¥ Billions]

48


Office

FY17 FY18 FY19

Revenue (A) 583.9 587.9 595.0

YonY +5% +1% +1%

YoY (W/O Forex) +0% +2% -


Normalized OP (C) 41.6 49.6 52.5

% (C/A) 7% 8% 9%

Growth driver ofOffice Business

• Improve service profitability by increasing color Seg.4+.

• Service costs reduction measures centered on shift left.

• Opportunities to expand color MFP sales in China, India and Central and Eastern Europe.

• Creation of a high-profit model through the introduction of hybrid sales and scientific methods.

• Reduction of production costs.• Review of personnel, particularly in

Europe and the U.S..• Structural reform in Europe and North

America.(Europe:Back office outsourcing and setup center integration,U.S.: Integration of locations)

• Effect of new products.• Provision of customer value by

bizhub i Series & Workplace Hub.• Ongoing reduction of production

costs measures.• Effect of personnel review.• Reliable effects of structural

reform.

[¥ Billions]

* Operating profit is transient(Excluding structural reform, etc.)FY2017: 3.3 billion, FY2018: ▲2.4 billion

49


Office：Profitability of Services Seg.C4&C5 (Color Seg4&5)

Expansion of sales of Seg.C4&C5 contributed to increase in MIF and PV.As a result, non-hard revenue and gross profit increased.

42%52%

FY13 Q1

14%FY18 Q4

21%27%

37% 37%45%

100114

100100

100 100

108101

102

SegC4+C5SegC4+C5 SegC4+C5 SegC4+C5

SegC4+C5

Color and other

96

102100

A3 color MFP Unit Sales

YoY growth rate

* Color sales exceeded 0.4 million units (company records)

Index based on the FY2013/1Q of the 4 main sales companies as 100

Color total

Color Seg4

50


Reduction of service costs

Long-life replacement parts reduce the frequency of replacement.

Replacement timing forecast and failure prediction function to maintain the machine collectively, reducing machine downtime and reducing the number of service personnel dispatches.

Reduce the number of service personnel dispatches by remote maintenance.(monitoring operation results, updating firmware)

Expand application to reseller partners.

(¥ Billions)Medium-Term

GoalsFY2017 results, FY2018 results, and FY2019 plans

3-year total FY17 FY18 FY19 total

To improve service costs 6.0 1.9 2.5 2.5 6.9

→Plan to achieve results exceeding the targets in the medium-term plan by expanding remote connections, converting to long-life consumables and parts, and expanding the range of models eligible for integrated maintenance

Shift left

Automatic system resolution

Self-resolution by end users

Solution with service desk

support

Remote-assisted resolution

Resolution through visits by engineers

Resolution timeCost of the service

High load

Small load

51


Office : Expand markets in China, India and Central and Eastern Europe

Continue to expand business in markets

(expansion of market, expansion of coloration rate)

with growth potential.

Color growth rate 24% (46 → 57 thousand units)

Color conversion rate 23 → 28%

Color sales growth rate 52% (2.3 → 3.5 thousand units)


Color sales growth of 12% (25 → 28 thousand units)


Our Company

Our CompanyOur Company (Thousands of units)

52


Office ：DX Progress

From Ownership to Use

Expansion of products and services Delivery models

Transaction

Subscription

■ IT services■ MFP/WPH services

Sales Process

Traditional approach

Scientific sales approach

From mono to koto

From experience and intuitionto data utilizationAI analysis

One Stop

Horizontal deployment and vertical deployment combinations

Providing Connected Office Value and Improving Earning Power

Strengthen customer engagement Strengthening Human Resources

Color Genre-Top Strategies.

→Solutions/Verticals→Strengthen proposal capabilities

through acquisition of MIT and ECM

→Workplace Hub(+ bizhub i series)

Reaching CxO and IT departments to realize hybrid proposals.

Customer value :Supporting the Improvement of Small and Medium-sized Enterprises’ productivity and concentration on Core Businesses.

Providing services such as IT and MFPs as 1 Stop services.

→Hardware, non-hard, and various services set together and Flat Rate subscription models launched.

Customer value :Avoiding monthly cost fluctuations and reducing the number of man-hours required for bill confirmation.

→Easy monthly cost control

Improve sales productivity by analyzing existing customers using AI.•Identify more profitable customer segments and implement efficient sales proposal activities.

・ Promote sales by incorporating scientific methods into traditional telesales processes.

Customer value :Providing optimal solutions in a short time and accurately to resolve difficulties.

through acquisition of MIT and ECM

53


To create distinctive and attractive products

Outstanding userexperience

Next-generation

MFP SecurityCost competitiveness at industry top level

[Background] Trends in customer needs and evolution expected in MFP Changes in remote working and other work styles bring evolution in the MFP role as part of

document-centered workflow.

In order to guarantee business continuity and corporate credibility, needs for information

security are growing more sophisticated.

Next-generation user interface

Mobile-like control panel allows for intuitive operation, and learning function enables optimization for individual user styles

GDPR-compliant, robust security

MFP in-out data monitoring and antivirus functionality added to bizhubSECURE service (first in industry)

Culmination of manufacturing innovation

New platform optimized by digital manufacturing

54


Customer Value Provided by bizhub i Series & Workplace Hub

"Connected Office"-4 value provision

Connect IT Flexible support for corporate IT utilization

through hybrid IT. (On-Pre/Cloud)

Released from IT management by providing comprehensive managed services.

Connect Security Securing IT security for IoT devices including

MFP and offices as a whole.

Ensuring a protective environment for important information.

Connect People Support for improvement of organizational and human workflow

and concentration on creative work.

Supporting cross-organizational and flexible collaboration.

Supporting decision-making through the use of data.

Connect Work Provide the latest application from a common global store

front when needed in a needed location.

Update/Back Update Workplace Hub・MFP to Update/Back Update.

Promoting the use of IT by enterprises

Enhancing the productivity and creativity of enterprises by revitalizing the use of IT by users

Ensuring Office Safety Maintaining MFP in the Current Status to Ensure System Availability

55


Customer Value Provided by bizhub i Series & Workplace Hub

√1: IT Platform + MFP

★2: Monitor the security status

★3: Edge computing

→ IoT + data business platform

★4: Backup services for customers' bizhub i/Workplace Hub settings and data

UTMSophos Technology

MFP

Security MANAGER

Wi-Fi STORAGE

USER

★1

★2

★3

CLIENT COMPANIES OFFICESKonica Minolta Marketplace

Konica Minolta DataCenter

Konica Minolta Service Engineer

StorageBackup

OngoingProactive

Management

Application

Internet

★4

Guest user

Wi-FiManagement

AssetManagement

UserManagement

ApplicationManagement

File Sharing

MultifunctionPrinting / Scan

Response to Individual CustomersApplication

56


64.5 64.0 68.0 67.1 66.1 63.9 65.7 64.6

55%50% 53% 49% 52% 50% 52% 49%

0%

20%

40%

60%

80%

0.0

20.0

40.0

60.0

80.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

FY17 FY18

Office：non-hard revenue

China and India: Increased MIF due to revenue growth.

Europe: Revenue declined at major sales companies.

Germany/Northern Europe: Legislative e-documents Trends.

Germany/France: PV decreased, Free to Fee/1 rate responded.

British: Decline in Public clicks. Strengthening Private Sector Focus.

U.S.: Cover monochrome decline with color shift.

Maintain revenue by providing MPS, including MIFs of other

companies.

Japan: PV has not decreased, but the impact of the price decline.

FY2019 forecast: Flat

Revenue & ratio of non-hard (¥ Billions)

YoY revenue increase in non-hard(Total YoY w/o FOREX)

YoY revenue increase in non-hard(Regional YoY w/o FOREX)

Japan Europe ChinaU.S. India

57


Profitability: Reduction of production costs

Basic Production Policy:

Realization of production that does not depend on people, places,

countries or fluctuations

Reducing production costs through production technologies and workflow reforms.

Accelerate localization of ASEAN procurement and reorganize Chinese business partners.

Improve product efficiency through collaboration between development and production, and promote cost reductions at the initial design stage.

2

1

3

58


Reducing production costs through Production Technologies and Workflow Reforms

MONOZUKURI trends based on IoT range from collection & accumulation of production data to visualization.Konica Minolta's Digital Manufacturing is to step from analytical to utilization.

Our present location

Traditional MONOZUKURI Phase 1 Phase 2 Phase 3 Phase 4

MO

NO

ZU

KU

RIpow

er

Manual work by workers▶Field power supported by technology and skills

Work that only people can do▶Creativity, creation of added value

Introduction of automatic equipment

▶ Standardization and automatic generation of data (introduction of digital equipment)e.g. Robots, automatic devices, automatic warehouses, etc.

Introducing ICT tools ▶ Automatically collect data：Deepening & Visualization of Batch Management and Data Analysis / Utilization at Edge / Cloud

Introduction of AI tools

▶Automatic analysis

Automatic FB (part)

Introducing ICT tools ▶ Automatic generation of visualization and improvement of analysis levele.g. M-Document, M-Karte

59


Reducing production costs through Production Technologies and Workflow Reforms (Benefits)

Trends in fixed cost

Labor cost: office equipment manufacturing plant labor costAmortization expenses: Technical Investments amortization expenses

Fixed cost of manufacturing plants (labor cost + R&D amortization expenses)

* Trends with FY2016 as 100

3 Major base FY16 FY17 FY18 FY19

Labor costs 9.49 8.72 8.64 7.23

Amortization expenses 0.50 0.73 1.05 1.45

Fixed cost 10.00 9.45 9.69 8.68

0.0

20.0

40.0

60.0

80.0

100.0

120.0

FY16 FY17 FY18 FY19

Fixed cost (labor cost + technological investments amortization expenses)

Labor costs Amortization expenses Fixed cost without measures

Fixed cost (labor cost + R&D amortization expenses) (¥ Billions)

2.0

4.0

6.0

8.0

10.0

12.0

60


Accelerate localization of ASEAN procurement

SIC (Smart Industrial Center)

SIC

Main body assembly

Unit assemblyParts

production

Malaysian factory

VMI warehouseOverseas

parts production

Unit assemblyParts production

parts production

parts productionin Malaysia

Technical support and collaboration

Share resources

Sharing information

Distribution within the area

Automation deployment

visions✓ We provide SIC with the results of digital

manufacturing's in-house practices.✓ Encouraging open innovation by participating

in SIC by partners from other industries.✓ SIC has business opportunities for our digital

manufacturing business.Suppliers who do not do business with us are also

expected to participate in SIC

Parts and units are also offered to plants other than us.

Since our Malaysian factory began operation in 2015, we have been working on quality improvement and cost reduction through digital manufacturing in-house with some partners.

Many of our partners participate in the Smart Industrial Center as one of the recommended policies of Industry 4.0 by Malaysian government, and promote efforts to further improve quality and reduce costs through open innovation.

Building a system that integrates manufacturing and logistics hub functions. Implement SIC Malacca. Currently, 7 companies in FY2017 and 5 more

companies have commenced operations in FY2019.

61


Improve product efficiency through collaboration between development and production, and promote cost reductions at the initial design stage

Expanding VE proposals from fields of manufacturing by inviting suppliers to participate from the initial stage of product development.

On the implementation front, we are deeply involved in on-site operations, and we are working with our suppliers to reduce costs.

Early stage of commercialization Fields of manufacturing

Strong collaboration to improve cost competitiveness

Reflecting Production Site Ideas in Design.

Customer

Development Production

From collaboration between development and productionto Integration of development and production.

Unit design Early realization of the VE plan Use of inexpensive materials

Unit assemblyInspection

Part processingIndirect operations

Konica Minolta technical members enter the field to implement effective VE proposals.

62


Professional Print Business

FY17 FY18 FY19

Revenue (A) 214.3 227.7 240.0

YonY +5% +6% +5%

YoY (W/O Forex) +1% +8% -


Normalized OP(C) 10.3 13.8 17.5

% (C/A) 5% 6% 7%

Growth Drivers ofProfessional Print Business

Production print• Increase in MIF/PV due to

sales expansion centered on color PP, and increase in non-hard revenue due to this increase.

• IQ-501 effects.• Growth in color PP shares in

Europe, China, India, and ASEAN.

Industrial Printing• Accumulation of Genre-Top.

Marketing service• Promotion of digital solutions.

Production print• Effects of new product

introductions.• Thorough penetration of IQ-

501 superiority and promotion of value through upgrades.

Industrial Printing• Deployment of measures to

build MIFs on an ongoing basis.• Increase PV and non-hard

revenue.

Marketing service• Digital Solutions Continued.• New use of Kinko's stores.

[ ¥ Billions]

* Operating profit: FY2017 excluding transient effects (structural reform, etc.): 1.0

63


19.7 19.6 21.8 20.1 21.4 20.6 22.4 20.8

58%55% 58%

50%

59%54%

57%50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

FY17 FY18

China and India: MIF increased due to significant growth in both color and monochrome unit sales throughout the year.

Europe: Sales were strong throughout the year, mainly for color MPPs.

U.S.: Direct sales were affected by a drop in click prices despite an increase in PV, and inventory adjustments for toner in resale.

Japan: Emphasizing profitability, sales volume of color products were decreased but revenue were kept at the same level as.

FY2019 forecast: Maintaining high level, but factoring in the impact of falling prices in Europe.

Production print non-hard revenue

Non-hard revenue ・non-hard ratio(¥ Billions)

Non-hard revenue YoY Growth Rate(excl. forex impact) [Year-on-year comparison]

Non-hard revenue YoY Growth Rate (excl. forex impact) [By region]

Revenue & ratio of non-hard (¥ Billions)

YoY revenue increase in non-hard(Total YoY w/o FOREX)

YoY revenue increase in non-hard(Regional YoY w/o FOREX)

Japan Europe ChinaU.S. India

64


0

20

40

60

80

100

120

140

2016 2017 2018 2019 2020 2021

CS B2 1.9M to 10M EP

CS A3 1.9M to 10M EP

CS A3 1M to 1.89M EP

CS A3 301K to 999K EP

CS A3 101K to 300K EP

New Products in the production print HPP Field

LPP-low +ELPP + Offices

MPP-low + LPP-high

Our estimate

PV growth is shifting to high-segment areas, and PV acquisition in HPP area is key

PV in MPP market continues to increase significantly.⇒ We drive the market with MIF share top.

HPP market also expected PV growth.⇒ New entrants.

Our value provision is to improve productivity and to thoroughly automate, save personnel and skilllessly by enhance IQ functions.

LPP-HPP US

EP+IJ Color PV Forecast[Bil/A4]

EP: Electronic Photography, electrophotographic methodIJ: Inkjet, ink jet systemHPP: Heavy Production PrintMPP: Mid Production PrintLPP: Light Production PrintELPP: Entry Light Production Print

65


Solving problems of production print IQ-501 customers

Before printing In press After printing

• Automatic color adjustment

• Automatic front and back position adjustment

• Real-time color gradation correction

• Real-time adjustment of front and back positions

• Automatic inspection function

Reduction of time and labor for adjustment, etc.

Sense of security in investment and confidence in deliverables

Expand business by leveraging time-saving and labor

Prime issue for management

Contributing to eliminating the shortage of human resources and engineers

Business contributions through IQ-501

Growth in MPP Units Exceeding the Market

Due to an increase in system pricesIncrease in gross profit

25% increase in PV for some customers in Europe and North America

Customers valuing the IQ function curb falling click prices

Customers' problems Time and effort for color management and printing position adjustment.

Disposal due to errors or losses in operation, and re-execution of work.

Issues for stable operation due to lack of entrenchment of operators.

Our value provision

• Preparation of inspection report

• Cloud-Based color management

• Preparation of color management reports

66


Production print Shares in China, India, ASEAN, and Europe

Source: IDC

Accumulation of color Genre-Top in various regions

India China Europe

Vietnam Thailand Malaysia

67


Genre-Top in the Industrial Printing area

FY2018: Significant year-on-year revenue growth in all product lines and regions (127%)

The ability to acquire top market shares and sell out steadily evolves.

Digital decorative printing machine

In the Mid regionDigital label

Printer

B2 digitalPrinting presses (KM-1)

Share

No.1Share

No.2Share

No.1

68


Administration and indirect costs Cost Reductions (Major structural reform)

Structural reform

Outsourcing of specific operations by standardizing operations.Started operations in Northern Europe and Western Europe in the 4Q of the FY2018.

Integration and consolidation of set-up centers and operations for Western Europe (Germany, Austria, Belgium, and the Netherlands) into a central European warehouse.

Europe

United States

Operational rationalization through consolidation of bases.Connecticut bases are consolidated into New Jersey's North American headquarters.Transfer of personnel completed in December. (State tax breaks also used)

69

Cautionary Statement:The forecasts mentioned in this material are the results of estimations based on currentlyavailable information, and accordingly, contain risks and uncertainties. The actual results ofbusiness performance may sometimes differ from those forecasts due to various factors.

Remarks:Yen amounts are rounded to the nearest 100 million.

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