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FY2017 2Q Financial Results October 27, 2017 TOPCON CORPORATION President & CEO Satoshi Hirano

©2017 Topcon Corporation 1

FY2017 Full Year Plan

Ⅲ Appendix

Ⅰ FY2017 2Q Financial Results

Ⅱ

CONTENTS

FY2017 2Q Financial Results


Ⅰ. FY2017 2Q Financial Results Ⅰ-1. FY2017 2Q Financial Results

Ⅰ-2. Overview of 2Q


FY2017 1H <On a recovery>

Net Sales

Growth in sales and profit

Operating Income

1H Sales Trend Net Sales

(billion yen) Operating Income (billion yen)

0

4

8

0

10

20

30

40

50

60

70

FY20141H

FY20151H

FY20161H

FY20171H

5.9

59.4

4.5

62.9 57.9

3.8

68.0

4.6

Sales Operating Income Ordinary Income Net Income

Achieved announced target

YoY

Sales Operating Income

¥68.0B 117% ¥4.6B 122% ¥4.1B 183% ¥1.9B 294%

¥62.0B ¥4.0B


[Consolidated] FY2016/1H FY2017/1H

Actual Actual YoY YoY %

Announced on July 28th

Net Sales 57,939 68,046 10,107 117％ 62,000

Gross Profit (Gross Profit Ratio)

30,220 （52.2%）

34,545 （50.8%）

4,325

SGA 26,463 29,975 3,512

Operating Income (Operating Income Ratio)

3,757 （6.5%）

4,570 （6.7%）

813

122%

4,000 (6.5%)

Non-Operating Income (Expenses) -1,523 -481 1,042

Ordinary Income 2,233 4,088 1,855 183% 3,000

Extraordinary Income (Loss) -210 -263 -53

Income Before Income Taxes and Minority Interests 2,023 3,825 1,802

Net Income 634 1,867 1,233 294% 1,200

Interim Dividends ¥8 ¥10 ¥10

Exchange Rate (Average)

ＵＳＤ ¥106.43 ¥111.42 ¥4.99 ¥108.78

ＥＵＲ ¥119.12 ¥126.63 ¥7.51 ¥119.65

FY2017 1H Financial Results <Growth in sales and profits>

(unit: million yen)


[Consolidated] FY2016/1H FY2017/1H

Actual Actual YoY YoY %


Net Sales

Positioning 27,166 35,884 8,718 132% 31,000

Smart Infrastructure 14,958 17,042 2,084 114% 16,000

Eye Care 19,611 21,397 1,786 109% 20,000

Others 1,736 1,030 -706 59% 2,000

Elimination -5,533 -7,307 -1,774 -7,000

Total 57,939 68,046 10,107 117% 62,000

Operating Income

(Operating Income Ratio)

Positioning 2,472 （9.1%）

3,869 （10.8%）

1,397 157% 3,200

(10.3%)

Smart Infrastructure

1,377 （9.2%）

1,630 （9.6%）

253 118% 1,600

(10.0%)

Eye Care 1,269 （6.5%）

526 （2.5%）

-743

41% 500

(2.5%)

Others -93 （-5.4%）

-22 （-2.1%）

71

-

0 (-)

Goodwill Amortization -1,268 -1,433 -165 -1,300

Total 3,757 （6.5%）

4,570 （6.7%）

813

122%

4,000 (6.5%)

FY2017 1H Financial Results by Business <Significant Profit Growth in Positioning Business>

(unit: million yen)


FY2016/1H

FY2016/1H

FY2016/1H FY2016/1H FY2017/1H FY2017/1H

FY2017/1H

FY2017/1H

16.6 19.9 13.4 11.4 16.2 14.4

3.8

117％

123％ 115％

101％

3.8 FY2016/1H FY2017/1H

8.1 6.3

130％

FY2016/1H FY2017/1H

5.2

127％

4.1

Domestic and Overseas Sales (YoY)

POC=Positioning Company/ SIB=Smart Infrastructure Business/ ECB=Eye Care Business *”i-Construction” is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, Japan.

Japan North America

Europe

China Asia/Oceania Others

(Billion yen) (Billion yen) (Billion yen)

(Billion yen) (Billion yen) (Billion yen)

SIB: Growing sales in i-Construction Growing sales in IT Agriculture

POC: Growing sales in IT Construction Recovery in IT Agriculture ECB: Growing sales of Maestro

POC: Recovery in IT Agriculture ECB: Temporarily on sales downturn

POC: Growing sales in IT Construction SIB/ECB: Growing sales in India

POC/ECB: Growing sales in South America SIB: Growing sales in Middle East


3.8

3.4 -3.0

4.2

0.4

4.6

0

2

4

6

8

FY2016 1H Sales increase

and decrease,

Product mix

Fixed cost,

Lowering COGS

FX Effects FY2017 1H

(unit: Billion yen)

Operating Income w/o FX Effects

YoY 111%

YoY 1２2%

mainly

R&D Cost Increase

FY2017 1H Operating Income YoY Breakdown <Profit growth, Accelerate upfront investment>


Ⅰ. FY2017 2Q Financial Results Ⅰ-1. FY2017 2Q Financial Results

Ⅰ-2. Overview of 2Q


Overview of Each Business

Review of 1H Financial Results

FY2016/1H FY2017/1H

Actual Actual YoY % Announced on July 28th

Net Sales 27,166 35,884 8,718 132% 31,000 Operating Income (Operating Income Ratio)

2,472 (9.1%)

3,869 (10.8%)

1,397 157% 3,200 (10.3%)

Exch

ange

R

ate USD ¥106.43 ¥111.42 ¥108.78

EUR ¥119.12 ¥126.63 ¥119.65

(unit: million yen)

ー Negative factors Further acceleration of upfront investment (advanced technology

development, enhancement of distribution network)

Positive factors Sales growth in IT Construction supported by strong global construction investment (YoY 130%) Sales recovery in IT Agriculture with OEM sales growth (YoY 130%)



* "i-Construction" is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, JAPAN.


FY2016/1H FY2017/1H



1,377 (9.2%)

1,630 (9.6%)

253 118% 1,600 (10.0%)

Exch

ange

R

ate USD ¥106.43 ¥111.42 ¥108.78

EUR ¥119.12 ¥126.63 ¥119.65

(unit: million yen)

ー Negative factors Temporary production delay with production line transfer to

Topcon Yamagata

Positive factors Favorably prevailing the i-Construction in Japan (YoY 160%) Sales growth in IT Agriculture in Japan (YoY 300%)


ー Negative factors Continued upfront investment (Building an IoT business, R&D cost,

Enhancement of FDA acquisition) Temporarily on sales downturn in European market



Positive factors Turnover into surplus in 2Q "OP ¥1B" (Progress as planned) Sales growth of 3D OCT (YoY 120%) Sales growth of Fundus Camera (NW400) (YoY 130%)

FY2016/1H FY2017/1H



1,269 (6.5%)

526 (2.5%)

-743 41% 500 (2.5%)

Exch

ange

R

ate USD ¥106.43 ¥111.42 ¥108.78

EUR ¥119.12 ¥126.63 ¥119.65

(unit: million yen)


FY2017 Full Year Plan Ⅱ. Ⅱ-1. FY2017 Full Year Plan Ⅱ-2. Strategic Plans after 2H

Ⅱ-3. Summary


0

5

10

15

0

50

100

150

1H FullYear

1H FullYear

128.4 138.0

9.6

12.0

68.0 57.9

4.6

Results Plan

FY2016 FY2017

3.8 122%

-Operating Income YoY122%

126% Full Year Plan

-Sales YoY117%

1H Result

¥12B

¥138B ¥5B

-Operating Income

-Sales

YoY107%

YoY126%

Upward Correction

FY2016 Result and FY2017 Plan

Net Sales (billion yen) Operating Income

(billion yen)


［Consolidated］

FY2016 FY2017

1H Full Year 1H Full Year

Actual Actual Actual YoY (%)

New Plan Change YoY (%)


Net Sales 57,939 128,387 68,046 117% 138,000 5,000 107% 133,000

Operating Income (Operating Income Ratio)

3,757

(6.5%)

9,551

(7.4%)

4,570 (6.7%)

122%

12,000

(8.7%)

0

126%

12,000

(9.0%)

Ordinary Income 2,233 7,622 4,088 183% 10,000 0 131% 10,000

Net Income 634 4,395 1,867 294% 5,700 0 130% 5,700

ROE 7.4% 10% - 10%

ROIC 5.5% 7% - 7%

Dividends ¥8 ¥16 ¥10 ¥20 ¥20

Exchange Rate (Average) ＊

USD ¥106.43 ¥109.03 ¥111.42 ¥108.46 ¥107.03

EUR ¥119.12 ¥119.37 ¥126.63 ¥121.26 ¥117.50

FY2017 Full Year Plan (unit: million yen)

＊ Assumed exchange rate after October 2017 is ¥105/US$, ¥115/EUR


［Consolidated］

FY2016 FY2017

1H Full Year 1H Full Year

Actual Actual Actual YoY

(%) New Plan Change

YoY

(%)


Net

Sales

Positioning 27,166 60,602 35,884 132% 68,000 5,000 112% 63,000


14,958 33,091 17,042 114% 36,000 1,000 109% 35,000

Eye Care 19,611 43,148 21,397 109% 45,000 0 104% 45,000

Others 1,736 3,708 1,030 59% 4,000 0 108% 4,000

Elimination -5,533 -12,163 -7,307 -15,000 -1,000 -14,000

Total 57,939 128,387 68,046 117% 138,000 5,000 107% 133,000

Operating

Income (Operating

Income Ratio)

Positioning 2,472 (9.1%)

5,596 (9.2%)

3,869 (10.8%)

157%

7,000 (10.3%)

0

125%

7,000 (11.1%)


1,377 (9.2%)

3,939 (11.9%)

1,630 (9.6%)

118%

4,700 (13.1%)

0

119%

4,700 (13.4%)

Eye Care 1,269 (6.5%)

2,598 (6.0%)

526 (2.5%)

41%

2,800 (6.2%)

0

108%

2,800 (6.2%)

Others -93 (-5.4%)

10 (0.3%)

-22 (-2.1%)

24%

0 (-)

0

-

0 (-)

Goodwill Amortization -1,268 -2,593 -1,433 -2,500 -2,500

Total 3,757 (6.5%)

9,551 (7.4%)

4,570 (6.7%)

122%

12,000 (8.7%)

0

126%

12,000 (9.0%)

Exchange Rate

(Average)

USD ¥106.43 ¥109.03 ¥111.42 ¥108.46 ¥107.03

EUR ¥119.12 ¥119.37 ¥126.63 ¥121.26 ¥117.50

FY2017 Full Year Plan by Business (unit: million yen)



Ⅱ-3. Summary


1. Positioning

0

2

4

6

8

10

0

20

40

60

FY2015 FY2016 FY2017 Plan

60.6 68.0

62.0

7.0

5.6

2.4

Net Sales(billion yen)

Net Sales

Operating Income(billion yen)

Operating Income

■ IT Construction: Further expansion of the aftermarket/OEM sales with overwhelming superiority in technology

■ Drones: Sales growth in Survey/Agriculture/Measurement fields

■ IT Agriculture: OEM Sales growth with an increase in the cross selling

Focused Strategy

Strategic Plans after the second half


IT Construction: Further expansion of the aftermarket/OEM sales with overwhelming superiority in technology

-Improve work efficiency： Yield an accurate result even in the top gear, the third gear (conventionally, 2nd gear)

Superiority of Mastless MC System

FY2015 FY2016 FY2017

Global sales plan of IT Construction

Actual Actual Plan

（Amount）

✓Mastless ✓Weldingless ✓Cableless

-Easy installation / malfunction, prevent malfunction beforehand

Weldingless

Cableless

Antennas on the cabin

Mastless

IMU sensors


Kee Technologies

IT Agriculture: OEM Sales growth with an increase in the cross selling

Agriculture group in POC

A

Supplier Tractor Maker

B

C

D

E

Each company sells individually Past

Farm machine Industry


Topcon Precision Agriculture

（Ex ）

（Ex ）

（Ex ）

（Ex Kee Technologies）

Topcon Agriculture Canada

Topcon Electronics

Topcon Agriculture America

A

B

C

D

E

Significant growth in OEM sales

FY2015Actual

FY2016Actual

FY2017Plan

Topcon Agriculture S.p.A

Present The companies are unified to form one group

Maximization of synergy effect

（Headquarter）

Farm machine Industry

Supplier Tractor Maker

IT Agriculture: OEM Sales growth with an increase in the cross selling

Global sales plan of IT Agriculture （Amount）


Drone surveying without orienting point

World’s First

Drones for professional equipped with high- accuracy GPS receivers

Survey Agriculture Measurement

Drones: Sales growth in Survey/Agriculture/Measurement fields

FY2015Actual

FY2016Actual

FY2017Plan

Global sales plan of Drones （Amount）

Drone Sales: YoY 160%

Surveying - Current condition surveying and volume control

Agriculture - manage the growth status of crops Measurement - Maintenance of structures etc.

Professional duties


2. Smart Infrastructure

0

2

4

6

0

10

20

30

40



Net Sales


Operating Income

■

■

■

Focused Strategy


i-Construction: Into authentic “Diffusion” phase IT agriculture: Sales growth at domestic after market Total Station: Further expansion of profitability

33.0 36.0

33.1

4.7 3.9 3.9

* "i-Construction" is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, JAPAN.


FY2015Actual

FY2016Actual

FY2017Plan

i-Construction: Into authentic “Diffusion” phase

Education

Lack of headcounts of “i-Construction” technicians Industry issues

Over 3,000 Trainees YoY150%

Shirakawa Sep 2014 Launched

Kitakyushu Jul 2017 Opend

Ibaraki FY2017 Planning

Expand Training Centers

Kobe Jun 2016 Launched

4th

FY2015Actual

FY2016Actual

3rd

City of Kitakyushu established i-Construction Promotion Council

(From the right, Mayor of Kitakyushu Mr.Kitahashi, President Hirano)

Promotion activity to local governments

TOPCON’s Mission

4th Center

FY2017 Plan

Provide more satisfactory Education and Support

*”i-Construction” is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, Japan.

Domestic sales plan of IT Construction （Amount） Supply detailed training


IT Agriculture: Sales growth at domestic after market

FY2015Actual

FY2016Actual

FY2017Plan

Diffusion of IT Agriculture by retrofit system

The wheel with electric motor

The Console

GNSS Receiver

Overview of retrofit system

Regular Wheel

Automated by attaching to the existing tractors

Utilization of tractor maker's sales network

The wheel with electric motor

Company A Company B Company C

✓Easy installation within 1hour ✓Low Cost

- Productivity improvement - Labor saving (skill unnecessary) - Reduction of fertilizer and pesticide

Merit

Domestic sales plan of IT Agriculture （Amount）


Total Station: Further expansion of profitability

Total station production transfer to Topcon Yamagata (mother factory of eye care)

Opening Ceremony

From the right, Mayor of Yamagata Mr. Sato, GM of Murayama General Branch Office in Yamagata Prefecture Mr. Komabayashi, President Hirano New factory appearance

New factory interior view

Topcon HQ Factory

Eye Care Product


Topcon Yamagata

Total Station

Other measuring Prod.

Total Station Moved

Production transfer

Maximize production efficiency by consolidating production bases ⇒ Expand profitability


3. Eye Care

0

2

4

6

0

10

20

30

40

50



Net Sales


Operating Income

■ 3D OCT: Good sales performance worldwide

■ Accelerate upfront investment: Release of new products / FDA acquisition / Building an IoT business

■ Screening: Market expansion in emerging countries

Focused Strategy


43.8 45.0 43.1

2.8

4.9

2.6


3D OCT: Good sales performance worldwide

（Vision Expo West held in September）

FY2015Actual

FY2016Actual

FY2017Plan

Sales plan of 3D OCT (Amount)

Sales expansion at world's largest eyeglasses exhibition

Widely spread to clinical area of ophthalmologic practitioner

Triton

Strong sales in the world's largest, US market

(Las Vegas)

Maestro

Clinical to Research

Screening to Clinical


World diabetes population(2015)

FY2015Actual

FY2016Actual

FY2017Plan

Screening: Market expansion in emerging countries

-Chinese market grows rapidly (The examination at the screening center rapidly advanced)

(No. 2 in diabetes patients worldwide)

Promoted diabetes screening project led by the Chinese government, adoption of fundus camera (NW 400) advanced

・・・

・・・

・・・

(million)

Source: International Diabetes Federation

-Also adoption expected in the Indian market

Rank 1st 2nd 3rd 9th Total

Country China India USA Japan

Patients 109.6 69.2 29.3

7.2

415.0

% 26% 17% 7%

100% 2%

Sales plan of screening equipment

“Easy-To-Operate” Fundus Camera

Full-auto function

Fundus Camera and OCT for screening market

Screening devices TRC-NW400 & Maestro

(Amount)


Release of new products

FDA acquisition

Building an IoT business

FY2017 FY2018

Accelerate upfront investment: Release of new products / FDA acquisition / Building an IoT business

2017/4

Core organization of full-scale promotion of IoT

THS=Topcon Healthcare Solutions

THS established



Ⅱ-3. Summary


0

5

10

15

20

0

40

80

120


130.7 128.4 138.0

120.16 JPY/USD

132.36 JPY/EUR

109.03 JPY/USD

119.37 JPY/EUR

108.46 JPY/USD

121.26 JPY/EUR

12.0 9.6 8.8

Summary Trends of Financial Results Annually

Net Sales (billion yen)

Operating Income (billion yen)

Net Sales

Operating Income

Exc

hang

e R

ate


Topcon for Human Life 医・食・住


Appendix Ⅲ.


6.6

8.4 7.5

10.6

7.8 9.2

0.3

1.1

0.3

2.2

0.8 0.8

0.0

1.0

2.0

3.0

0.0

5.0

10.0

FY16/1Q 2Q 3Q 4Q FY17/1Q 2Q

Net SalesOperating Income

Net Sales (billion yen) Operating Income (billion yen)

1. Consolidated

8.8

10.8 10.5

13.1

9.1

12.3

0.5 0.8 0.4

0.9

-0.5

1.0

-1.0

0.0

1.0

2.0

0.0

5.0

10.0

15.0

FY16/1Q 2Q 3Q 4Q FY17/1Q 2Q



2. Positioning

3. Smart Infrastructure

12.8 14.3 13.6

19.9 17.2 18.7

0.7

1.7

0.5

2.6

1.7 2.2

-1.0

0.0

1.0

2.0

3.0

0.0

5.0

10.0

15.0

20.0

FY16/1Q 2Q 3Q 4Q FY17/1Q 2Q



26.2 31.7

29.5

41.0

31.6 36.5

0.7

3.0

0.7

5.2

1.3

3.2

-1.0

2.0

5.0

8.0

0.0

10.0

20.0

30.0

40.0

FY16/1Q 2Q 3Q 4Q FY17/1Q 2Q



4. Eye Care


Financial Results (Quarterly)


62.9 67.8 57.9

70.4 68.0 70.0

4.5 4.3 3.8

5.8 4.6

7.4

0.0

5.0

10.0

0.0

20.0

40.0

60.0

80.0

FY15/1H FY15/2H FY16/1H FY16/2H FY17/1H FY17/2H



16.2 16.8 15.0

18.1 17.0 19.0

1.9 2.0 1.4

2.5

1.6

3.1

0.0

2.0

4.0

0.0

10.0

20.0




31.4 30.6 27.2

33.4 35.9

32.1

1.7

0.7

2.5

3.1

3.9 3.1

0.0

2.0

4.0

0.0

10.0

20.0

30.0

40.0




1. Consolidated

19.5

24.3

19.6 23.5

21.4 23.6

2.1 2.8

1.3 1.3 0.5

2.3

0.0

2.0

4.0

0.0

10.0

20.0

30.0




2. Positioning

3. Smart Infrastructure 4. Eye Care


Financial Results and Forecast (Semiannually)


These materials contain forward-looking statements, including projections of future operating performance. Such statements are based on management’s best judgment, given the materials available to them at the time these statements are made. However, please be aware that actual performance may differ from projected figures owing to unexpected changes in the economic environment in which we operate, as well as to market fluctuations. The original disclosure in Japanese was released on October 27, 2017 at 16:30(UTC+9)

Inquiries: Corporate Communication Div. Investor Relations and Shareholder Relations Dept. TOPCON CORPORATION Tel: +81-3-3558-2532 E-mail: [email protected] URL: http://global.topcon.com/invest/

Cautionary Note regarding Forward-Looking Statements