Business Strategy of Industrial Solutions August 18, 2010 Fuji Electric Holdings Co., Ltd. Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 1
1.Business Outline 2.Market Trends 3.Business Policies 4.Growth Strategies 5.Performance Trends / Targets Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 2
Business Organization Contributing to energy saving and improved productivity through safe and environmentally friendly solutions born out of fusing Fuji Electric s quality products and plant technologies Components 12% Measuring instruments Sensors 12% Industrial facilities Proposing optimal power supplies and power receiving and distribution substation equipment for industrial facilities Providing improved reliability by offering maintenance, replacement, etc. Industrial facilities 56% FY2009 Consolidated Net Sales 108.0 billion Systems/Plants 88% Drive/Control 32% Drive/Control Proposing energy saving and rationalization solutions for production and manufacturing facilities Providing improved reliability by offering maintenance, replacement, etc. Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 3
Major Products Providing environmentally friendly products and energy saving products, as well as those that are safe and secure Drive/Control Measuring instrument / sensors Safety instruments Plant control systems PLC Plants utilizing electrical power High-voltage inverters (No.1 domestic share) Major fields: all areas of the iron and steel, chemical plants, and food and drug industries, etc. Measuring instruments Gas analyzers (No. 1 domestic share) Industrial facilities Various sensors Temperature adjustment instruments Electronic furnace power supplies High-capacity rectification equipment (No.2 global share) Heating units for induction furnaces High-voltage drop/dip compensators Major fields: all areas of the iron and steel, smelting and refining of non-ferrous metals, and chemical plant industries, etc. molded-case transformers (No.1 domestic share) Major fields: all areas of the iron and steel and social fields Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 4
1.Business Outline 2.Market Trends 3.Business Policies 4.Growth Strategies 5.Performance Trends / Targets Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 5
Size of the Environment and Energy Saving Market Market size trillion 20 15 10 5 0 Projected change of size of the environment and energy saving market (Domestic) 3.1 1.5 1.6 10.6 6.3 4.4 15.6 9.3 6.4 2000 2010 2020 Effective utilization of resources Water and sewerage treatment equipment Dust collection and stream sanitation Measurement and analysis of harmful substances Environmental management systems Technologies and products to lower environmental impact and prevent environmental pollution Energy-saving consulting ESCO projects Environmentally friendly materials New energy (solar, wind power), energy saving, and energy management Rate of average annual growth of the environment and energy saving market 2000 2020: 8.4% * Compiled by Fuji Electric based on data released by various ministries and other government offices Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 6
Market Trends Related to Overseas Operations ( 万 トン) 60,000 (Ten thousand tons) 各 国 の 粗 鋼 生 産 推 移 Crude steel production in various countries Overseas capital investment billion FY2009 (actual) FY2010 (plan) YoY rate 50,000 40,000 中 国 欧 州 日 本 米 U.S. 国 インド India 韓 国 China Europe Japan Korea Manufacturin g % 200 Amount Percent of total investment Amount Percent of total investment 10/09 1,315.3 64.3 1,893.3 68.5 43.9 Capital investment 2010 年 度 in 設 fiscal 備 投 2010 資 ( 対 (Compared 2009 年 度 with ) fiscal 2009) 187.9 30,000 150 20,000 10,000 0 '03 '04 '05 '06 '07 '08 '09 100 50 0-50 55.5 43.9 44.0 37.2 19.6 22.5 5.9 10.7 Japan 国 内 海 Overseas 外 国 内 海 外 国 内 海 外 国 内 海 外 国 内 海 外 -21.5 Non-ferrous metals 製 造 業 Automobiles 自 動 車 電 気 機 械 Chemistry 化 学 非 鉄 金 属 Manufacturing Electrical machinery Compiled by Fuji Electric based on The Industrial Structure Vision 2010 released by the Ministry of Economy, Trade and Industry Source: Development Bank of Japan, Survey on Planned Capital Spending, August 3, 2010 Rapid growth of production in China and India Overseas capital investment by domestic companies increased for the first time in 3 years Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 7
1.Business Outline 2.Market Trends 3.Business Policies 4.Growth Strategies 5.Performance Trends / Targets Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 8
Business Policies Basic policy Aiming to realize a low-carbon society and to improve customer satisfaction; we will contribute to environmental friendliness, energy saving, and improved production efficiency by integrating quality products, engineering, control technologies, and maintenance Key measures Enhancing factory solutions Reduce plant energy consumption and improve production efficiency by consolidating power electronics, measuring instruments, and control systems Expanding overseas operations Expand the plant business by focusing on China and Asia, and introducing quality products (high-capacity rectification equipment, high-voltage inverters, etc.) Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 9
Business Domain Optimizing all areas of factory operation = factory solutions Domestic Growing need for energy saving and environmental measures geared toward creating a low-carbon society Revised Energy Saving Law, improved CSR Increased capital investment related to energy saving and the environment Overseas Focused on China and Asia Reinforced production facilities Enhanced compatibility with energy saving and the environmental friendliness Increased demand for industries related to materials Increased introduction of environmentally friendly products (Government measures) Key high-value-added products Highly reliable systems/technologies Plant engineering that has achieved strong results Maintenance and services that provide security Power electronic technologies Measuring/control technologies Core technologies Energy-saving technologies Induction heating technologies Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 10
Business Strengths Highly reliable systems/technologies Power electronics and energy-saving technologies Control systems for iron and steel plants Maintenance and services that provided security Information/measuring systems Power monitoring systems Key high-value-added products 24 hour call center Plant safety/maintenance Lifespan evaluation Safety consulting Develop comprehensive solutions geared toward the production and manufacturing facilities of factries through the integration power electronics and measuring and control technologies Provide improved environmental friendliness, productivity, safety, and security High-voltage inverters Large-scale rectifier facilities Industrial electric heating Mold-case transformers Measuring equipment Controllers Project management EPC Field engineering Energy management Plant engineering that has achieved strong results Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 11
1.Business Outline 2.Market Trends 3.Business Policies 4.Growth Strategies 5.Performance Trends / Targets Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 12
Growth Strategy 1: The Concept of Factory Solutions Proposing solution packages that realize the overall optimization of operations Comprehensively providing production management, quality improvement, and energy-saving PDCA : Plan (Clarify) Do (Analyze) Check - Act Company office Network Factory office Clarify, analyze, and optimize supply and demand related to energy (Solution package) Clarify supply and usage of energy Integration of energy monitoring Electrical power Steam/Gas Heat/Electrical power/steam Water/Electrical Power Air Power distribution equipment Boiler Power generation facilities Production facilities Water provision facilities Water drainage facilities Compressors Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 13
Growth Strategy 1: Factory Solutions Energy-Saving Business Model Provide solutions that maximize customers profit through the cycle of Measure - Analyze - Check - Act Overview of Factory solutions energy-saving business model Steps Measure Analyze Check Act Customer profit Clarification of energy consumption Compliance with laws and improved corporate value Simplification of reports Acceptance toward ideas for energy saving measures Clarification of the effects of energy saving Reduction of energy consumption (energy saving) Value provided by the Company Measuring instruments Analytical systems Support for compiling reports Energy-saving consulting Energy-saving facilities Overall business model Offer one-stop support ranging from sales of measuring and analytical instruments to introduction of energy-saving facilities (Whole-factory energy-saving solutions) Provide the optimal business model matched to customer needs Individual business model Clarification Evaluation/Consulting Energy-saving facilities Strengths of the Company Possesses competitive products ranging from measuring instruments to those used to act on issues uncovered Sales systems compatible with comprehensive solutions Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 14
Growth Strategy 2: Strategies to Expand Factory Solutions Expand overseas businesses based on domestic performance Strengthen whole-factory solutions Facilities + clarification and evaluation packages Strengthen the business of clarifying and evaluating energy consumption (Develop packages and new solutions) Introduced factory solutions into Fuji Electric s model factories Develop factory solutions for overseas factories Develop the overall business model for domestic factories Systems/equipment for overseas factories Systems/equipment for domestic factories Increased sales 2010 2011 2012-2015 Solidify business model Expand business Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 15
Growth Strategy 2: Expand overseas operations Bolstering overseas plants focused on China and Asia < Target Regions > China Asia Middle East <Key initiatives> Accelerate overseas expansion by leveraging quality products and plants Sales of high-capacity rectification equipment (Aluminum refining, soda electrolysis field) Expand sales of high-voltage inverters in China and Asia Develop factory solutions business overseas Key strategic areas High-capacity rectification equipment China High-voltage inverters Middle East Asia Sales offices Factory solutions Production bases Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 16
Growth Strategy 2: Expand Overseas Operations (High-Capacity Rectification Equipment) Expanding sales of high-capacity rectification equipment (Thousand ton) Estimated global demand for aluminum metals Japan USA Europe China India Demand for aluminum expected to increase greatly, particularly in China Large-scale projects and demand to replace aged facilities expected to increase due to the recovering performance of major aluminum smelters Other Asia regions (ASEAN+Korea) Strengths of the Company Capable of manufacturing equipment with high capacity World s highest capacity for a single unit Source: Japan Aluminum Association (data as of June 23, 2010) Buffalo 1% Areva 12% Friem 3% Brazil Others Robicon 3% Large-scale capital investment for overseas facilities predicted for the next several years Impressive delivery performance Delivers to countries around the world Highly evaluated for local process management Highly reliable equipment Fuji 26% ABB- Siemens 55% Share of S-Former(1990-2009) Capacity=45.6GW Australia High-capacity rectification equipment for aluminum smelter Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 17
市 場 規 模 (MUS$) Market size 市 場 規 模 (MUS$) 3,500 3,000 2,500 2,000 1,500 1,000 500 Others その 他 Japan 日 本 Asia アジア China 中 国 572 48 250 967 1,070 Growth Strategy 2: Expand Overseas Operations (High-Voltage Inverters) Develop overseas high-voltage inverter operations Change 地 域 in 別 markets 市 場 推 by 移 region 674 50 307 803 59 380 1,210 986 70 482 1,428 0 3500 Other その 2010 他 年 2011 年 2012 年 2013 年 3000 Cement セメント Mining 鉱 山 業 Change 種 別 in 市 markets 場 推 移 by industry 2500 Power 発 電 generation Petroleum 石 油 ガス gas 710 Iron 鉄 鋼 and steel 599 111 2000 186 511 99 150 535 485 1500 89 125 79 477 101 440 634 1000 406 508 423 351 500 414 512 620 780 0 2010 年 2011 年 2012 年 2013 年 Source: IMS Research 2010 <Targets> Asian regions, particularly China Improving the energy-saving qualities of high-voltage generators for facilities for the iron and steel, cement, petroleum and gas industries <Strength of the Company> Products that do not burden power supplies and electric motors The Company s proprietary control methods limit harmonics and power surges Advanced power electronics technologies Use of IGBTs manufactured in-house <Measures to expand operations> Bolster production at Chinese factories (Wuxi Fuji Electric) Enhance sales and engineering services Accelerate the expansion of the overseas factory solutions business by utilizing high-voltage inverters as a key product Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 18
1.Business Outline 2.Market Trends 3.Business Policies 4.Growth Strategies 5.Performance Trends / Targets Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 19
Performance Trends / Targets Net sales ( billion) 120 100 FY2011 Medium-term Management Plan Aim for net sales of 110.0 billion and ratio of operating income to net sales of 6% 108.0 110.0 99.0 80 60 40 20 Ratio of Operating Income FY2009 Actual FY2010 Forecast (2010/7/30) FY2011 Medium-term Management Plan (2010/2/25) 4% 2% 6% Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 20
Disclaimer 1. Statements made in this documents or in the presentation to which they pertain regarding estimates or projections are forward-looking statements based on the company s judgments and assumptions in light of information currently available. Actual results may differ materially from those projected as a result of uncertainties inherent in such judgments and assumptions, as well as changes in business operations or other internal or external conditions. Accordingly, the company gives no guarantee regarding the reliability of any information contained in these forwardlooking statements. 2. These documents are for information purpose only, and do not constitute an inducement by the company to make investments. 3. Unauthorized reproduction of these documents, in part or in whole, is prohibited. Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 21