midtermplan 110603

Medium-Term Management Plan(E-Plan2013)

(April 1, 2011 to March 31, 2014)

MediumMedium--Term Management PlanTerm Management Plan((EE--Plan2013Plan2013))

((April 1, 2011 to March 31, 2014April 1, 2011 to March 31, 2014))

EBARA(6361)

May 10,

2011

Medium-Term Management Plan (E-Plan2013)

1. Overview of the Previous Medium-Term Management Plan(E-Plan2010)

2. E-Plan2013 Basic Groupwide Policies

3. Numerical Targets

4. Basic Policies and Principal Measures by Business

1

Table of Contents

Origin of the Name of the New Management Plan—E-Plan 2013

The “E” in E-Plan 2013 stands not only for EBARA and the Group’s concern for the natural environment but also for “enroll,” which expresses the idea of “participation by all personnel”; “enhance,” which expresses the concept that “the abilities of all staff members will be improved”; “enable,” which conveys the desire that “the objectives of this plan will be attained”; “excellent,” which expresses the Group intent to “create a superior corporate culture”; and “enroot,” which conveys the Group desire that “this culture will take root

Medium-Term Management Plan (E-Plan2013)2

1.Overview of the Previous Medium-Term Management Plan(E-Plan2010)

Ebara Boshan Pumps (China)

Futtsu Plant (Japan)

Efforts to Efforts to ““restructuring the Grouprestructuring the Group’’s management foundations management foundation””Moved steadily toward strengthening our business baseMoved steadily toward strengthening our business base

Subject of next agenda

・Expand our business operations to the global market.・Human resource training for global operations.

→

Address the issues in new Medium-Term Management Plan.

Improvements in the position of individual businesses

・Transfer of the functions of the Haneda Plant to the Futtsu Plant and promotion of a productivity innovation movement there.

Acceleration of our drive toward selection and concentration in the allocation of corporate resources.

・Withdrawal from unprofitable and non-core businesses.・Full start-up of operations at three pumps business plants in China.

Realignment of Environment Engineering businesses.

Implementation of improvements in internal control systems and strengthening of compliance.

Medium-Term Management Plan (E-Plan2013)3

Actual ResultsActual Results-- Unable to achieve the numerical targets, due to unexpected evenUnable to achieve the numerical targets, due to unexpected eventsts

563.0 575.0 590.0

401.6

501.1 485.8

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

Mar. 2009 Mar. 2010 Mar. 2011

Sales(Planned) Sales(Actual)

20.0

27.0

35.0

0.6

31.5

18.9

5.9%

7.9%

4.7%3.6%

0.1%3.9%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Mar. 2009 Mar. 2010 Mar. 2011-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%Operating Income (Planned)Operating Income (Actuial)Operating Income Ratio (Planned)Operating Income Ratio (Actual)

Sales Operating income (ratio)

Actual results Planned targets

Fiscal year ended March 31, 2009




ROE － 4.3 % 20.0 % 8.0 % or more

Debt/equity ratio(end of period)

1.5 1.4 1.1 0.9 or less

Shareholders’ equity ratio (end of period) 21.6 % 24.8 % 29.9 % 30 % or more

Comparison of Planned Targets and Actual Results


(Billion of Yen)(Billion of Yen)


Actual ResultsActual Results

4

・

Actual Results by business (Consolidated)

330.0325.0315.0

268.9295.9302.3

0.0

100.0

200.0

300.0

400.0

500.0

Mar. 2009 Mar. 2010 Mar. 2011

Planned Actual

162.0155.0150.0

51.6

130.3144.2

0.0

100.0

200.0

300.0

400.0

500.0

Mar. 2009 Mar. 2010 Mar. 2011

Planned Actual

98.0 95.0 98.067.950.552.7

0.0

100.0

200.0

300.0

400.0

500.0

Mar. 2009 Mar. 2010 Mar. 2011

Planned Actual

Sales (Billion of Yen)

Operating income (ratio) (Billion of Yen)

Fluid Machinery & Systems (FMS) Business

Environmental Engineering (EE) Business

Precision Machinery (PM) Business

16.721.0

13.0 16.020.0

21.5

8.0%6.1%

4.1%4.9%

7.4%5.6%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Mar. 2009 Mar. 2010 Mar. 2011-2%

0%

2%

4%

6%

8%

10%

12%Operating Income (Planned)Operating Income (Actual)Operating Income Ratio (Planned)Operating Income Ratio (Actual)

1.0-2.04.0

0.9-12.5

-1.2

2.5%0.6%

-1.3% 1.8%

-0.9%

-8.6%-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

Mar. 2009Mar. 2010Mar. 2011-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%Operating Income (Planned)Operating Income (Actual)Operatiing Income Ratio (Planned)Operating Income Ratio (Actual)

9.0 10.0

-4.7

11.08.0

-2.7

-9.1%

11.2%10.5%

9.2%

-5.4%

11.8%

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

Mar. 2009Mar. 2010Mar. 2011-10%

-5%

0%

5%

10%

15%

20%Operating Income (Planned)Operating Income (Actual)Operating Income Ratio (Planned)Operating Income Ratio (Actual)


Sales (Billion of Yen) Sales (Billion of Yen)




NNewew MediumMedium--Term Management PlanTerm Management PlanEE--Plan2013Plan2013

First Steps toward Tackling the New Challenge of Solid GrowthFirst Steps toward Tackling the New Challenge of Solid Growth

WorkingWorking to establish a moreto establish a more--solid moresolid more--stable business structurestable business structure

5

Beyond 100 years in business, we look to the next 100 years, Beyond 100 years in business, we look to the next 100 years, and, to continue to be and, to continue to be ““an industrial equipment manufacturer an industrial equipment manufacturer

that makes extensive contributions to society by providing that makes extensive contributions to society by providing superior technology and services,superior technology and services,””


1. Promoting “regional production for regional supply” in priority areas and establishing an optimally located production and supply system from a global perspective - Moving with the Tides of Change

2. Working to enter new markets by expanding core business domains- Aiming for Solid Growth

3. Aiming to optimize “monozukuri”

(manufacturing) processes through scientific approaches - Internalizing Ceaseless Productivity Innovation into the Corporate/Organizational Culture

4. Expanding the functions of the corporate headquarters in keeping with the globalization of business domains - Restructuring Group Management through Strengthening Group Headquarters/Global Headquarters Functions

1. Promoting “regional production for regional supply” in priority areas and establishing an optimally located production and supply system from a global perspective- Moving with the Tides of Change

2. Working to enter new markets by expanding core business domains- Aiming for Solid Growth

3. Aiming to optimize “monozukuri”

(manufacturing) processes through scientific approaches- Internalizing Ceaseless Productivity Innovation into the Corporate/Organizational Culture

4. Expanding the functions of the corporate headquarters in keeping with the globalization of business domains- Restructuring Group Management through Strengthening Group Headquarters/Global Headquarters Functions

Basic Groupwide PoliciesBasic Groupwide Policies

2. E-Plan2013 Basic Groupwide Policies (1/6)

6


CContinuity iontinuity in En E--Plan2010Plan2010

7


Increase in demand from the oil and gas industry, mainly in the emerging countries; electric power and energy; water supply infrastructure; and other areas

Trend toward yen appreciation

Trend toward oligopoly among customers in the information and communication technology fields

2008 2010 2013

E-Plan2010･･･Period to strengthen our management foundation

E-Plan2013･･･Period to establish a more-solid and more-stable business structure

External environment

Overall Policies under the Plan

Global human resource development-An issue for follow-up

The Group’s Concern as a Manufacturing Enterprise

Improving the Environment

■Selectivity and Concentration■Establishing a Business Base

from a Global Perspective■Improve Cash Flow

■Global human resource development■Restructuring Group governance, including risk management

“Monozukuri” (manufacturing) processes through scientific approaches

Our Motto, “EBARA Walking with Its Customer ”

Internal Control Systems and Operating Efficiency

“Producing locally and consuming locally”

Group headquarters/Global headquarters

Support

■

Increasing cost competitiveness ■Speed up Operations■Carefully tailored responses to customer needs

Core business

Priority regions

Strengthening the Business Base for Sustained Growth

Chief Concerns in Implementing This Plan

Implementing Corporate Activities That EmphasizeCompliance


1. Promoting 1. Promoting ““regional production for regional supplyregional production for regional supply”” in priority areas in priority areas and establishing an optimally located production and supply systand establishing an optimally located production and supply system em from a global perspectivefrom a global perspective

-- Moving with the tides of changeMoving with the tides of change

China

India

the United States

Southeast Asia

the Middle East

Brazil

Select as strategic priority regions, mainly from among the emerging countries and regions.

China, Southeast Asia, the Middle East, India, Brazil and the United StatesEffective utilization of existing facilities.Manufacturing in the locations that are optimal from a global perspective.

Business Location8



22.Working to enter new markets by expanding core business domains.Working to enter new markets by expanding core business domains-- Aiming for Aiming for ssolid olid ggrowthrowth

①

Fluid Machinery & Systems (FMS) Business

・

Pumps Business (Custom Pumps、Standard Pumps、Fluid Related Plant)

・

Compressors and Turbines Business (Compressors and Funs)

・

Chillers Business

②

Environmental Engineering Business

③

Precision Machinery Business

Green letters：business of pursuing growthBlue letters：business of pursuing stability

Dividing our core businesses into business of pursuing growth and business of pursuing stability.

9



〔Business of pursuing stability〕

Environmental Engineering Business→

To position the O&M business as the core profit base and aim for solid growth in the EPC business.

Chillers Business→

Capture rapidly growing demand for more-pleasant living environments in other emerging countries.

2. Working to enter new markets by expanding core business domai2. Working to enter new markets by expanding core business domainsns-- Aiming for Aiming for ssolid olid ggrowthrowth

2012 2014 2016

〔Business of pursuing growth〕

〔Business of pursuing stability〕

Fiscal year ending March 31, 2016Sales-sizeMore than 1.5 times

Solid Growth

E-Plan 2013 Next medium-term management plan

〔Business of pursuing growth 〕

→

Development of new products and markets that use the Group’s existing resources.

→

Draw on resources outside the Group through M&A and other means.

O&M: Operation & MaintenanceEPC: Engineering, Procurement,

Construction

10



・

The “monozukuri” (manufacturing) process(marketing, development, sales, planning, procurement, manufacturing, inspection, and logistics)Promoting a shift from implicit knowledge to formal knowledge.Optimization by adopting logical scientific approaches.

・Implementing a productivity innovation movement at all Group bases, including those located overseas, with key domestic bases as the core.

33. Aiming to optimize . Aiming to optimize ““monozukurimonozukuri”” (manufacturing) processes through (manufacturing) processes through scientific approachesscientific approaches

-- Internalizing ceaseless productivity innovation into the corporaInternalizing ceaseless productivity innovation into the corporate / organizational culturete / organizational culture

・Restructuring Group operating systems to make them suitable for a company that is developing its activities globally.→ Requirements for world-class corporate governance, human resource training.

4. 4. Expanding the functions of the corporate headquarters in keepingExpanding the functions of the corporate headquarters in keeping with with the globalization of business domainsthe globalization of business domains

Futtsu Plant“FIT” (Custom pumps)

Fujisawa Plant (PM)“Mindora” program in componentM-Zero program in system

Ongoing productivity innovation movement

“Mindora”

program

11



In the final year of E-Plan2013(fiscal year ending March 31, 2014)

Return On Invested Capital (ROIC) 8% or more

※ROIC: Net income/invested capital

To reach this target without an overemphasis on either ROE or D/E ratio.

Targets we must achieveTargets we must achieve -- Maximizing Maximizing pprofit with rofit with llimited imited rresourcesesources

Key Management Indicator

In the final year of E-Plan2013 (fiscal year ending March 31, 2014)

Operating income ratio9% or more

ROE

ROIC 8% or more

D/E ratio

12

3．E-Plan2013 Numerical targets


①Fluid Machinery & Systems (FMS) Business

・

Pumps Business (Custom Pumps, Standard Pumps, Fluid Related Plants)・

Compressors and Turbines Business (Compressors and Funs)・

Chillers Business

②Environmental Engineering Business

③Precision Machinery Business

Medium-Term Management Plan (E-Plan2013)Basic Policies and Principal Measures by Business

4. Basic Policies and Principal Measures by Business

13

Green letters：business of pursuing growthBlue letters：business of pursuing stability


BBusiness usiness EEnvironmentnvironment

Basic Management PoliciesBasic Management Policies-- Transformation to a Transformation to a bbusiness usiness ssystem ystem aaiming for the iming for the wworldorld’’s s ttop op llevelevel

355 374406

495543

590639

687739

0

200

400

600

800

1990 1995 2000 2007 2015 2020 2025 2030 2035

The productivity innovation movement will be implemented at the global production bases of major businesses.Strengthen the field of service & support.

Focus on the markets which are expected to grow in the years ahead, mainly within the priority regions.

Working to make a full-scale shift to an approach involving production, sales, and service based in each market.

Increasing demand for oil & gas, power generation and water-related infrastructure in the emerging countries and regions.

Price competition intensifying due to the influence of exchange rate fluctuations and emerging EPC contractor.

Active capital investment in industrial facility and building construction in the emerging countries and regions.

Reference: EIA ”IEO 2010”. May 2010

Estimate of the world energy consumption(Quadrillion Btu)

Cryogenic Pump14

4. Basic Policies and Principal Measures by Business - FMS(1/4)

→

Providing customers the EBARA Group products that they want at competitive prices and with the desired lead times.

→

Growth with market.

→

Strengthen marketing activities by building close ties with both customers and end users in each region.


(esp) the emerging countries

Global market

Boiler feed pump for power plants

Standard API pump for oil industry

Large horizontal split type compressor

Stainless steel vertical multistage

pump

Initiative for Individual IssuesInitiative for Individual IssuesMarket Market SStrategytrategy-- Growing in Growing in ttandem with the andem with the gglobal lobal eenergy, nergy, wwater, and ater, and iindustrial ndustrial iinfrastructuresnfrastructures

Market

Segment

Oil & Gas Power generation

Water-related infrastructure

Carbon Capture & Storage

（New market）

Chemical industry

Steel industry

General constructi on and

industrial

Water supply and

sewerage systems

Pumps business

Compressors and turbines business

Chillers business

15SSLD-type, in-line pump

Aiming for improved energy conservation



Priority regions：Japan, China, Southeast Asia, the Middle East, India, Europe, North America, South America

Initiative for Individual IssuesInitiative for Individual IssuesGlobal Global SStrategytrategy-- Full Full ccoordination ofoordination of pproduct roduct sstrategy, trategy, ssales ales sstrategy, and trategy, and pproduction roduction sstrategytrategy

Product strategy・・・Emphasize marketing by region and identify region-specific product strategies

Production strategy・・・Implement coordinated production activities by making clear the core products that are common across all regions and the production bases for major parts, and by clarifying the roles of its production bases to differentiate products by region.

Sales Strategy・・・Upgrade and expand its sales network and create supply chains, based on its sales strategy for each region.

Full Coordination of strategies

16

Sales Strategy

Product strategy

Sales strategy

Product strategy

Sales Strategy

Product strategy

Sales strategy

Product Strategy

Sales strategy

Product strategy

Sales strategy

Product strategySales strategy

Product strategy

Sales strategy

Product Strategy

ChinaJapan

Southeast Asia

North America

South America

EU

The Middle

East

India


Production

Strategy

Global Supply Chain


Numerical Numerical TTargets argets

・

In the final year of E-Plan2013 (Fiscal year ending March 31, 2014)

Sales ¥350 billion or moreOperating income ratio 8.3% or more

23.0

15.0

29.0

8.3%7.2%

5.6%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Mar. 2012 Mar. 2013 Mar. 20140%

2%

4%

6%

8%

10%

320.0350.0

270.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

Mar. 2012 Mar. 2013 Mar. 2014


17


Billion of Yen Billion of Yen


Business Business EEnvironmentnvironment

Basic Management PoliciesBasic Management Policies-- Establishing a Establishing a mmanagement anagement bbase for ase for sstable table ggrowthrowth

Fluidized-bed incinerator

To establish design standards that combine our experience based on track record with a scientific basis

→

Strengthen competitiveness by improving the efficiency of operations.

To obtain new orders for incineration plants by presenting proposals that offer technological differentiation

→

Securing an amount of orders needed to generate profits on a continuing basis

Strengthen its waste incineration O&M business which is a secure profit base

→

Establishing a stable management foundation

Environment-related capital investment in private sector.

In public sector・Large-scale repair on existing facilities.・Improvement work on core facilities for reduce the emission of

greenhouse gases.・Renovation work on existing facilities.

・O&M business on comprehensive long-term contracts.・Increase of DBO (Design, Built, Operation) project in EPC business.

Continue to be steady.

Changes in the market.

Continue to be low level.

18

4. Basic Policies and Principal Measures by Business - EE(1/3)

Wastes

Combustion gas

Sand(Bed materials)

Separator

Air

Non-combustible materialsand sand

(bed materials)


Initiative for Individual IssuesInitiative for Individual Issues-- Improving Improving pprofitability through the rofitability through the eeffective ffective ddevelopment of the EPC evelopment of the EPC bbusiness and the usiness and the

uunification of EPC and O&M nification of EPC and O&M ooperationsperations

Promote generating orders for O&M business on comprehensive long-term contracts, improvement work on core facilities, and renovation work on existing facilities.Integrate the activities of departments in charge of comprehensive, long-term contracts with its departments responsible for maintenance and operation to strengthen the profitability management of comprehensive, long-term contract projects.Establish a waste incineration technology center, improve its design standards by combining its experience based on an abundance of delivery records with a scientific basis.

19


Comprehensive, long-term contract projects

Numbers of facilities in operation : about 160

Numbers of facilities in O&M by EBARA: about 80

Incineration technology

Gasification technology

Lineup with abundant model Large number of records and experience


4.0 4.04.5

8.7%8.2%8.0%

0.0

2.0

4.0

6.0

8.0

10.0

Mar. 2012 Mar. 2013 Mar. 20140%

2%

4%

6%

8%

10%

12%

49.0 52.050.0

0.0

20.0

40.0

60.0

80.0

100.0

Mar. 2012 Mar. 2013 Mar. 2014


20



・





Semiconductor fields・Oligopoly situation will be advanced by leading edge customers.

・Continue to be steady in SPE market during this period.

Basic Management PoliciesBasic Management Policies-- Securing a Securing a bbusiness usiness pposition that osition that wwill ill ggenerate a enerate a sstable, table, hhigh igh iincome ncome rratioatio

Expanding non-semiconductor fields （FPD, LED, etc.）

Expanding our business in non-semiconductor fields and strengthening service & support business.

Recruit and further develop the necessary human resources to win in global market competition.

CMP system21

4. Basic Policies and Principal Measures by Business - PM(1/3)

Business Business EEnvironmentnvironment

→

Creating a stable business position that will not be influenced by the semiconductor manufacturing equipment investment cycle.

→

Assign these personnel to key positions in Japan and overseas.


Concentrating its production in Kumamoto Plant, in the CMP business.

In the component products group, focus on expanding non-semiconductor business fields. (solar panels, LED, lithium-ion batteries, LCD industry)

Initiative for Individual IssuesInitiative for Individual Issues・・Entering Entering nnew ew mmarkets arkets lleveraging everaging eexisting xisting bbusinessesusinesses

-- Development of Development of nnew ew ddemand emand ooutside the utside the ssemiconductor industryemiconductor industry

Initiative for Individual IssuesInitiative for Individual Issues・・Optimizing Optimizing mmanufacturinganufacturing--rrelated elated pprocessesrocesses-- Maintenance of Maintenance of ccostost--ccompetitiveness through ompetitiveness through ddoubling oubling pproductivityroductivity

Promoting overseas production and overseas procurement.

Initiative for Individual IssuesInitiative for Individual IssuesImplementing a Implementing a ggloballobal sstrategytrategy-- Optimization of Optimization of pproduct and roduct and sservice ervice ssupply upply cchain through hain through cconcentration and oncentration and eexpansion of xpansion of

ooperating perating bbasesases

Implementing a productivity innovation movement in the system products group and component products group.

Implementing a full-scale launch of next-generation models in the businesses of CMP systems.

To enter new business fields such as TSV (through silicon via) processes, both in the system products group and component products group.

ESA series of vacuum pump offering high-speed exhaust

22



8.09.0

12.0

14.1%

11.7%10.7%

0.0

4.0

8.0

12.0

16.0

20.0

Mar. 2012 Mar. 2013 Mar. 20140%

3%

6%

9%

12%

15%

18%

77.085.0

75.0

0.0

20.0

40.0

60.0

80.0

100.0

Mar. 2012 Mar. 2013 Mar. 2014

23




・





EBARA Group (Consolidated)

Fiscal year ending March

31, 2012


31, 2013


31, 2014

Sales 405.0 456.0 497.0Operating income 28.0 37.0 46.5Net income 13.0 20.0 25.7

Overall EBARA Group Numerical Plans (Consolidated)Overall EBARA Group Numerical Plans (Consolidated)

In the final year of E-Plan2013(Fiscal year ending March 31, 2014)

Return On Invested Capital (ROIC)

8% or more

In the final year of E-Plan2013(Fiscal year ending March 31, 2014)

Operating Income Ratio

9% or more

Billion of Yen

24

Assumed Exchange Rate1USD=80JPY、1EUR＝110JPY、

1RMB＝12.25JPN

E-Plan2013 Numerical targets


This release contains forward-looking statements which involve certain risks and uncertainties that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward- looking statements which are valid only as of the date thereof. EBARA undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date thereof or to reflect the occurrence of unanticipated events.

25