Financial Resultsfor the First Half of FY2016

(April 1, 2016 - September 30, 2016)

Japanese economycontinued to face adversity due to stagnant consumer spending in spite of the steady employment and income environment, yen appreciation and economic slowdown in developing countries.

1. Business environment

Global economyGlobal economyremained on a recovery trend with consumer spending.

increased uncertainty due to Brexit.

clearly slowed down with further downside risks.

US

China

EU

1. Yen appreciation

2. Lack of manpower

3. Low price of crude oil4. Environmental issues (COP22）

Factors around Shibaura

4. Environmental issues (COP22）5. Climate change (large typhoons, earthquakes…)

6. Advancement of IT (AI, IoT, automonous driving…)7. M＆A (capital and business alliance）

Net sales 11,050 mil. yen +4.6% (year-to-year)

Operating income 1,076 mil. yen +31.7% (year-to-year)Operating income margin 9.7 % 7.7%

2. Sales and profit factors

• Thermistor elements for automobiles and thermistor sensors for air

conditioners continued strong.conditioners continued strong.

• Thermistor sensors for small home appliances recovered.

• Overseas sales decreased due to unfavorable foreign exchange rates.

• Decrease in manufacturing costs.

• Product mix – increased sales of high margin products.

3. Statement of income (Summary) 1H FY2015

ended Sept. 30, 20151H FY2016

ended Sept. 30, 2016

Amount Composition ratio Amount Composition

ratioComparisonwith last year

Net sales 10,565 100.0 11,050 100.0 4.6

Cost of sales 8,333 78.9 8,486 76.8 1.8

Gross profit 2,231 21.1 2,564 23.2 14.9

Selling, general and administrative expenses 1,413 13.4 1,487 13.5 5.2

(Amount: million yen, comparison: %)

Operating income 817 7.7 1076 9.7 31.7

Non-operating income 40 0.4 50 0.5 22.5Non-operating expenses 9 0.1 118 1.1 1,150.0

Ordinary income 849 8.0 1,008 9.1 18.8

Extraordinary income 112 1.1 0 0.0 －Extraordinary losses 114 1.1 10 0.1 △90.4

Income taxes 253 2.4 309 2.8 22.1

Net income 594 5.6 688 6.2 15.9

15,872 16,490

14,546 13,099

16,548 17,086 16,143

18,757 20,113

21,261

11,050 2,457 3,000

4,000

5,000

15,000

20,000 Net sales Operating income

22,400（Mil. yen） （Mil. yen）

（Net sales) (Operating income)

4. Net sales and operating income

11,050 2,180

2,457

1,214 869

2,055

1,778

849

1,366

1,889 1,663

0

1,000

2,000

0

5,000

10,000

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

2,000

■ Outlook (ending Mar. 2017)■ End of Sept. 2016

(Outlook For full year）

Mar. 31, 2016

Sept. 30,2016 Change

Current liabilities 5,897 5,842 △55

Account payable 3,134 2,959 △174

Short-term loan payable 923 792 △130

Others 1,839 2,089 250

Mar. 31, 2016

Sept. 30,2016 Change

Current assets 17,930 17,243 △687

Cash and deposits 6,381 5,707 △674

Account receivable 5,860 6,211 351

Inventory assets 4,799 4,657 △141

5. Balance sheet (Summary)Assets Liabilities and shareholders’ equity (Mil. yen)

Noncurrent assets 1,649 1,399 △250

Long-term loanpayable 1,241 997 △243

Others 408 401 △6

Total liabilities 7,546 7,241 △305

Net assets 18,441 17,641 △799

Total liabilities and net assets 25,987 24,882 △1,105

Others 889 666 △222

Noncurrent assets 8,057 7,639 △417

Property, plant andequipment 7,217 6,829 △387

Intangible assets 143 143 0

Other assets 695 666 △29

Total assets 25,987 24,882 △1,105

21,688 20,828 22,998 26,462 25,987

24,882

0

10,000

20,000

End of Mar. 2012 End of Mar. 2013 End of Mar. 2014 End of Mar. 2015 End of Mar. 2016 End of Sept. 2016

4,000

6. Balance sheet items

Total assets

Inventory assets

(Mil. yen)

(Mil. yen)

13,441 14,334 15,971 18,126 18,441 17,641

61.4 68.2 68.8 68.1 70.6 70.5

0

10

20

30

40

50

60

70

80

0

10,000

20,000

End of Mar. 2012 End of Mar. 2013 End of Mar. 2014 End of Mar. 2015 End of Mar. 2016 End of Sept. 2016

3,672 3,878 3,786 4,340 4,799 4,657

0

2,000

End of Mar. 2012 End of Mar. 2013 End of Mar. 2014 End of Mar. 2015 End of Mar. 2016 End of Sept. 2016

Shareholders’ equity and equity ratio(Mil. yen)

7. Cash flows

242

-1,047

-497 -518

1,087 955 967

1,151 940

1,329

-456

-80

654 422

-500

500

1,500

Free cash flow

(Mil. yen)

-1,411 -1,500

-131

439

-638 -430 -899

-900

0

900

End of Sept. 2014 End of Mar. 2015 End of Sept. 2015 End of Mar. 2016 End of Sept. 2016

Cash flow used in financing activities

(Mil. yen)

End of Sept. 2014 End of Mar. 2015 End of Sept. 2015 End of Mar. 2016 End of Sept. 2016

1,000

1,500

8. Capital expenditure, depreciation, R&D expenditure

851 1,305 2,625 1,409 1,769 1,562 511 0

1,000

2,000

End of Mar. 2011 End of Mar. 2012 End of Mar. 2013 End of Mar. 2014 End of Mar. 2015 End of Mar. 2016 End of Mar. 2017Outlook

1,600

1,350

(Cash-flow based)Capital expenditure

Depreciation

(Mil. yen)

(Mil. yen)

117 219 326 331 445 435 198 0

100

200

300

400

500

End of Mar. 2011 End of Mar. 2012 End of Mar. 2013 End of Mar. 2014 End of Mar. 2015 End of Mar. 2016 End of Mar. 2017

827 958 995 1,076 1,217 1,392 603 0

500

1,000

End of Mar. 2011 End of Mar. 2012 End of Mar. 2013 End of Mar. 2014 End of Mar. 2015 End of Mar. 2016 End of Mar. 2017

500

End of Sept. 2016

Research and development expenditure(Mil. yen)

Outlook

Outlook

9. Sales by application (based on 1H, ended September 30)

2,270

2,757

3,151

1,907

2,065

2,197

2,051

1,726

1,752 2,000

3,000

（Mil. Yen)

891

896

936

2,051

1,069

1,099 941

538

606

629 1,104

1,074

1,119

402 343

320

0

1,000

Sep

t. 20

14

Sep

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15

Sep

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16

Sep

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14

Sep

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15

Sep

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Sep

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15

Sep

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Sep

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Sep

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15

Sep

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16

Sep

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14

Sep

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15

Sep

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16

Sep

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14

Sep

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15

Sep

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Sep

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Sep

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15

Sep

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Sep

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14

Sep

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15

Sep

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16

素子 住設機器 空調機器 家電 OA 産業機器 自動車 計測器他Thermistorelements

Householdequipment

Airconditioners

Home appliances

OA Industrial equipment

Automobiles Others

Automobiles 29.6%

OA

Industrialequipment

Others

10. Sales by application (including thermistor element sales)

Air conditioners 20.5%

HomeAppliances

18.6%

Householdequipment

11. Sales by application: full year (outlook & 1H status for FY2016)

3,151

4,715

5,736

3,429

3,810 3,823

3,349 3000

4000

5000

6000Outlook for FY2016 (ending Mar. 31, 2017)

(Mil. Yen) 6,200

4,200

3,400

2,250 2,350

Status for 1H FY2016 (ended Sept. 30, 2016)

936

2,197

1,752

941

629

1,119

320

1,805 1,917

2,193 2,219

1,153

1,269

2,204 2,253

791 708

0

1000

2000

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

Mar

. 201

5

Mar

. 201

6

Mar

. 201

7

素子 住設機器 空調機器 家電 OA 産業機器 自動車 計測器他Thermistorelements

Householdequipment

Airconditioners

Home appliances

OA Industrial equipment

Automobiles Others

2,0002,250

1,300

700

2,350

H1 FY2016results

H2 FY2016outlook

FY2016 full yearoutlook

Net sales11,050 11,350 22,400

(4.6) (6.1) (5.4)

1,076 924 2,000

12. FY2016 (ending March, 2017) business outlook(Amount: mil. yen, comparison: ％)

Operating income1,076 924 2,000

(31.7) (9.2) (20.2)

Ordinary income1,008 992 2,000

(18.8) (15.2) (17.0)Net incomeattributable to owners of the parent

688 812 1,500(15.9) (31.1) (23.6)

( ): Year-to-year comparison

Main measures to be taken during the 2nd half of FY2016during the 2nd half of FY2016

1. Enhance plant equipment for increased demand in the airconditioner market

2. Reduce cost

3. Improve product efficiency (e.g. automatization)

13. Main measures for 2H FY2016

4. Expand business in the automotive field

5. Reinforce R&D system

6. Industry-university collaboration

13-1. Sensors for air conditionersIndoor unit pipe

Room air

Outdoor unit pipe

Intake air

HV motor

Ambient air

Room air

Fuel

13-2. Sensors for automobiles

Intake air(quick response)

Water / Oil Transmission fluid

Battery

Thank you very much.

Disclaimer regarding forward-looking statements

The foregoing statements regarding future results reflect the Company‘s expectations based on information available at the time of announcement. The information contains certain forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

References

Definition of terms

A thermistor is a thermally sensitive resistor generally composed of semiconductor materials, and its resistance varies significantly with temperature.

Thermistors are economical and stable, and operate in the temperature range that covers the whole range necessary for ordinary temperature control. They therefore are used in a wide range of applications.

Shibaura produces NTC (negative temperature coefficient) thermistors only. They exhibit decreasing resistance with increasing temperature, and are used in

Thermistor<Reference>

They exhibit decreasing resistance with increasing temperature, and are used in temperature detection sensors. There are also PTC (positive temperature coefficient) and CTR (critical temperature resistor) thermistors.

PSB thermistor elementShibaura independently developed glass-encapsulated thermistors. With excellent thermal stability, mechanical strength and stability, they are now Shibaura’s main products.

PSB thermistors are formally patented products in major countries (Japan, the U.S., the U.K., Germany, France, Canada, Italy and Switzerland.)

Householdequipment

Solar system Shower toilet Water heater Highly efficient hot water supply system

1- 3 2 - 3 2 - 5 10 - 20

Airconditioners

Fan heater Room A/C Industrial A/C

2 - 3 2 - 5 5 - 15

Homeappliances

Microwave oven Rice cooker Refrigerator IH cooker

2 - 3 2 - 3 2 - 8 5 - 15

Number of thermistors installed in a product<Reference>

appliances 2 - 3 2 - 3 2 - 8 5 - 15

OAPrinter Copy machine Multi-functional

copier

2 - 3 2 - 3 3 - 5

Industrialequipment

Fire alarm Machine, robot Freezing showcase Freezing container

2 1 - 2 2 - 5 5 - 10

AutomobilesCar A/C Intake air, exhaust gas, water, fuel, oil Hybrid system

4 - 5 8 - 10 8 - 10

Glass coated thermistors Glass coated thermistors for(Existing products) high temperatures

-50℃ 1,000℃Shibaura’s thermistors cover from -50℃ to 1,000℃

Applications for various temperature ranges

0℃ 50℃ 100℃ 300℃ 500℃

(Tuna) stock freezer Hot-water supply IH cooker Automobile(EGR)

<Reference>

24

Applications

(Tuna) stock freezerRefrigerator

Air conditioner

EcoCute(CO2 heat pomp)

Dishwasherdryer

Automobile(Water temp.)

Rice cooker

Microwave oven

Automobile(HV & EV motors)

Copy machine

Fan heater

(EGR)

Oven

Household(Gas flame)

Automobile(DPF)

24