Creating a new earnings pillar through the materials processing business

「In light of the lower expected future growth rate of the metal 3D printer market and intensifying competition, among other factors, the earnings originally anticipated could no longer be expected.」

「In the Digital Manufacturing business, as the earnings initially expected became unattainable due to a decline in the future growth rate of the metal 3D printer market and intensifying competition, the carrying amount of fixed assets was reduced to their recoverable amount, and the resulting reduction of ¥90,627 million was recorded as an impairment loss.」

「In the digital manufacturing business, sales of small and medium-sized systems declined, while sales of large systems remained strong, resulting in higher revenue.」

「Revenue increased due to strong sales of large systems by Nikon SLM Solutions AG. The operating loss narrowed due to the effect of higher revenue and the absence of one-time expenses incurred in the same period of the previous year.」

「There was an outlay of ¥7,847 million to acquire interests in subsidiaries from non-controlling interests in connection with the conversion of SLM and other companies into wholly owned subsidiaries.」

「In the advanced manufacturing business, PBF (Powder Bed Fusion) systems remained the mainstay of the metal AM market. The shift toward larger, more production-efficient systems led to a decline in unit volumes but an increase in average selling prices. As a result, the metal AM market expanded overall.」

「From the cumulative first quarter of the current fiscal year, we established the Advanced Manufacturing Business Division to strengthen the additive manufacturing business.」

「On 27 January 2023, through Nikon AM. AG, a subsidiary wholly owned directly by us, we acquired a majority of the shares of SLM Solutions Group AG (listed on the Frankfurt Stock Exchange; hereinafter, “SLM”) and made it a consolidated subsidiary. Percentage of voting equity interest acquired: 92.38%」

「On 27 January 2023, through Nikon AM. AG, a subsidiary wholly owned directly by us, we acquired a majority of the shares of SLM Solutions Group AG (listed on the Frankfurt Stock Exchange; hereinafter, “SLM”), including all shares issued upon conversion of SLM’s convertible bonds, and made it a subsidiary.」

「To provide innovative manufacturing solutions to customers worldwide and become a global leader in the field of metal additive manufacturing (hereinafter, “metal AM”), we decided, pursuant to a resolution of the Board of Directors dated 2 September 2022, to subscribe for a capital increase by SLM Solutions Group AG (listed on the Frankfurt Stock Exchange; hereinafter, “SLM”), a leading global provider of integrated metal AM solutions headquartered in Lübeck, Germany, and to launch a tender offer for all shares, including ordinary shares and convertible bonds, with a view to acquiring all of its shares. The tender offer was scheduled for completion by March 2023, subject to clearance under foreign investment regulations, confirmation that SLM was not insolvent, and the absence of capital policy measures, except in certain cases. The total funds required for the acquisition were expected to be €622 million (approximately ¥84.0 billion, assuming a 100% acquisition at ¥135.00 per euro), which we generally planned to fund with cash and cash equivalents on hand.」

「In the materials processing business, we are steadily developing customers by leveraging open innovation and the sales networks of our partners.」

「In the materials processing business, one of the focus areas under the medium-term management plan, we began accepting orders for subtractive processing machines capable of high-precision planar finishing and micromachining, in addition to metalworking machines that combine measurement and fabrication.」

「The Company acquired 66.65% of the shares of Morf3D Inc., a US contract manufacturer of aerospace components, for cash and made it a subsidiary. The date of acquisition of control was 2 April 2021. The Company has identified the materials processing business as one of the growth areas of focus under its medium-term management plan. Morf3D Inc. serves many leading aerospace manufacturers in Europe and the United States as customers and has obtained the necessary aerospace-related certifications. Following the acquisition of a majority interest in Morf3D Inc., the Company aims to expand its materials processing business by leveraging the company’s business platform.」

「To scale up the business, we are also strengthening our structure, including by establishing new internal organizations, and will further accelerate our M&A strategy while maintaining investment discipline.」

「First, as part of our efforts to create a new earnings pillar, we focused on developing and selling highly distinctive products using light. We accelerated the launch of the materials processing business by bringing optical processing machines to market and working to expand sales, developing next-generation models and promoting alliances with other companies capable of generating synergies.」

「Regarding the materials processing business, which we are particularly focusing on during this plan period, we began bringing optical processing machines to market. We launched our first product, Lasermeister 100A, in April 2019. In September of the same year, we announced our second product, a metal removal processing machine, and received numerous requests from customers for demonstration processing.」

「First, to create a new earnings pillar, we focused on launching the materials processing business, centered on 3D printers and laser processing machines, and advanced the development and marketing of our optical processing machine series.」