Konica Minolta, Inc.

Medium Term Business Plan

- Announced on May 9th, 2014 -

Shoei Yamana,
President and CEO
Konica Minolta, Inc.
 New Medium Term Business Plan

1
 1-1. Basic Policy

Realize sustainable profit growth

Evolve the “genre-top” strategy and create value

Transform into a customer-centric company

Have customer insight and understand their needs
All actions and business processes of Konica Minolta should be based
on pursuing customer value

Establish a strong corporate structure

Build a strong corporate structure by pursuing sturdy production
operations and restructuring of corporate administration

2
 1-2. Financial Targets

FY2013 FY2014 FY2016

results outlook targets

Net sales ¥943.8bn ¥1 trillion ¥1.1 trillion or more

Operating income ¥58.1bn ¥62.0bn ¥90.0bn

Operating income
6.2% 6.2% 8% or more
ratio

ROE 4.6% 5.6% 10% or more

Assumed FOREX U.S. dollar = ¥100 U.S. dollar = ¥100 U.S. dollar = ¥100
euro = ¥134 euro = ¥135 euro = ¥135
(Japanese Generally Accepted (Japanese Generally Accepted (International Financial
Accounting Principles, J-GAAP ) Accounting Principles, J-GAAP ) Reporting Standards, IFRS)
3
 1-3. Financial Targets -by Segment

[￥billions]
FY 2013
Results FY 2014
Outlook FY 2016
Targets
Net Sales
Marresults
2014 outlook
Mar 2015 targets
Mar 2016
Business Technologies 729.8 800.0 917.0
　　Office Services 567.1 600.0 680.0
　　Commercial/Industrial print 162.8 200.0 237.0
Industrial Business 116.1 110.0 140.0
　　Performance Materials 58.3 49.0 60.0
　　Industrial Optical Systems 57.8 61.0 80.0
Healthcare 82.4 90.0 100.0
Group Overall 943.8 1,000.0 1,100.0

FY 2013
Results FY 2014
Outlook FY 2016
Targets
Operating income results outlook targets
Mar 2014 Mar 2015 Mar 2016
Business Technologies 63.9 8.8% 72.0 9.0% 90.0 9.8%

Industrial Business 15.2 13.1% 12.0 10.9% 17.5 12.5%

Healthcare 4.5 5.5% 7.0 7.8% 10.0 10.0%

Group Overall 58.1 6.2% 62.0 6.2% 90.0 8.2%

4
 Strategies and Policies for Each Business

5
 2-1. Strategy Overview for Office Services Business

 Enhance solution proposal capabilities by providing services and solutions

for digital workflows of customers
 Consequently increase MIF and PV disruptively
Business Framework Strategy Scenario

Sales (¥bn)
 Strengthen ability to provide OPS/GMA/ITS services Increase OPS/GMA sales
 Establish a customer response team to support GMA cases (vs FY13)
680.0
 Strengthen operations at GSC (Global Support Center)
IT service solutions
 Customer response capabilities (customize, multi-vendor, etc.)
600.0 FY16 ¥60.0bn
567.1  Strengthen system at APAC

OPS/
GMA  Expand IT service business Percentage of hybrid proposals
 Gain BPM know-how (horizontally deploy vertical solutions)
 Strengthen foundation of KM cloud 100%
 Use BIC to provide new services (direct sales in Japan, US, Europe)

Office products

 Strengthen solution-proposing capacity and reinforce Ratio of MFP sales/color PVs

sales channels to increase MIF and color PV
(FY13 = 100 in this index)

FY13
FY13 FY14
FY14 FY16
FY18 FY16 118 / 130

6
 2-2. Strategy Overview for Commercial/Industrial Print Business

Drastically increase PV at printing companies disruptively by transforming current printing

order flows through KM’s unique MPM and Kinko’s
Business Framework Strategy Scenario

Sales (¥bn)
237.0  Develop and launch new production printing products Ratio of PP machine sales/color
 Get mid-size and up Commercial Print customers with MPP PVs
Industrial Printing (FY13 = 100 in this index)
machines
200.0  Expand KM PV with High Volume users FY16 125/150

162.8
 Global development of MPM service Increase MPM sales
 Expand to US and AP region (vs FY13)
MPM
 Use Charterhouse’s know-how and M&A
(MPP) FY16 ¥20.0bn

 Full-scale launch of industrial printing business Increase industrial printing sales

Production Print
 Gain “Genre-top” applications (vs FY13)
 Show synergy with capital tie-up partner MGI
 Enter industrial printing market by using electrophotographic FY16 ¥20.0bn
technology
 Bring KM-1 to market, cultivate customers

FY13
FY13 FY14
FY14 FY16
FY16

7
 2-3. Operating Income Growth in Business Technologies Business

Cost reduction
Strengthen sales
+30.0 abilities

Sales volume Service-providing

abilities

＋70.0 Strengthen
development
M&A, etc.

SG＆A change
90.0
(65.0)
63.9 Price
(9.0)

FY13 FY16
(¥bn)
8
 2-4. Strategy Overview for Healthcare Business

 Increase MIF by providing integrated solutions combining advanced diagnostic performance modality (DR and
ultrasound) and medical information (diagnostic information and medical documents)
 Provide one-stop locally connected solutions to small- and medium-sized hospitals and clinics

Business Framework Strategy Scenario

Sales (¥bn)
100.0  Gain “genre-top” position in cassette-type DR systems Increase DR sales
New domains
 Increase rate of participation in business negotiations (vs FY13)
(e.g., package sales that include X-ray systems)
90.0
Medical IT  Provide new diagnostic value (video, Talbot, etc.)
FY16 ¥14.0 bn
82.4  Expand B2B business, invest in sales channels

Modality growth area:

DR, ultrasound  Increase sales of ultrasound diagnostic imaging systems Increase US sales
 Develop markets and channels by marketing portable products (vs FY13)
 Establish top of market with high-picture-quality probes
(orthopedic, mammary gland, and internal medicine market)
FY16 ¥7.0bn

CR, film, purchase  Strengthen medical IT services Increase IT service sales

 Cloud services (vs FY13)
(digital medical charts, receipt computers, PACS)
 Expand information portal service menu
FY16 ¥8.0bn
 Increase customers under contract with regional partnerships,
FY13
FY13 FY14
FY14 FY16
FY16 at-home solutions

9
 2-5. Strategy Overview for Industrial Optical Systems Business

Evolve proposal capabilities cultivated in the sensing business and create new value through devices and systems, including
solutions and services, for major customers in industrial fields with high growth potential

Business Framework Strategy Scenario

Sales (¥bn)
 Sensing business Increase sensing
80.0  Obtain GMA for light-source color measuring device (mobile, business sales
Optical systems lighting, automobile manufacturers) (vs FY13)
 Strengthen product development capacity through synergy
with IS
61.0
FY16 ¥15.0bn
57.8
 Industrial and professional lenses and components Increase replacement
 Concentrate management resources (replacement lenses, lens and projector sales
Sensing instruments projectors) (vs FY13)
 Improve customer intimacy

FY16 ¥13.0 bn

 Transform business portfolio FY16 ¥5.0bn

US売上増（対FY13)
 Cultivate new fields using optical and micromachining
technology Create ¥10bn business in
Lenses, components  Accelerate business development in partnership with Corporate FY16 70億円
five years
R&D department

FY13
FY13 FY14
FY14 FY16
FY16
10
 2-6. Strategy Overview for Performance Materials Business

Anticipate customer needs in growth fields and create new businesses based on our unique technologies
accumulated through areas ranging from photo film development to OLED development

Business Framework Strategy Scenario

Sales (¥bn)
 TAC film
 Use membrane technology to gain customers for small and Ratio of new products to TAC sales
60.0
58.3
medium-sized mobile applications, develop new fields
 Gain customers with new products that respond more FY16 60%
New functional film strongly to TV needs
49.0  Cut costs by enhancing production efficiency

 Window film Increase sales of new

 Cultivate sales channels (in-company, B2B) performance materials

 Barrier film (vs FY13)

 Gain display customers
TAC film
FY16 ¥15.0bn

 OLED
 Develop applications taking advantage of characteristics, gain (¥50bn by FY20)
customers
 Establish mass-production technology, cut costs

FY13
FY13 FY14
FY14 FY16
FY16

11
 3-1. Manufacturing Reform, SG&A Expenses Reform

Transform to a strong corporate structure

Manufacturing reform Consolidated gross

margin ratio
Maximize profitability
of product by implementing PLM Target 50% or more
+2% over FY13
Reduce production costs

SG&A expenses structure reform Consolidated SG&A

expense ratio
Increase efficiency of business Target 40% or less
SG&A expenses -2% over FY13

Corporate reform Reduce ¥5.0 bn

12
 3-2. Maximize Profitability of Products by Introducing PLM

• Maximize profitability throughout each product’s life cycle, with a view to total optimization.
• Calculate life cycle profit or loss for each model and link it to the business’s overall plans.

Profitability
Product A

Sales company
management by Sales

Sales company
Designing Production Maintenance

Development
department
function, as practiced

department
Production
up to now
(Profitability management by Product B Designing Production Sales Maintenance
function)

Product C Designing Production Sales Maintenance

Product-specific Profitability management through entire process

PLM leader from start of development to end of sales

Profitability structure 2007 2008 2009 2010 2011 2012 2013 2014 2015
over a product’s life Development
Design
prototyping
Product
prototyping Mass production
cycle
Sales Hardware
Hardware Hardware
Hardware
Sales Non-hardware
Hardware
Non-hardware Non-hardware Non-hardware Non-hardware
Production Production Production Production
Costs Development
Development
costs
Development costs

Manufacturing
Production
costs
costs costs costs costs
Development costs Sales costs Sales costs Sales costs Sales costs
costs Sales costs Development costs
costs Manufacturing costs

Cumulative Development costs

profit or loss Costs

13
 3-3. Reduce Production Costs Through Manufacturing Reform

Achieve cost competitiveness and restore our strength as a manufacturer by

leveraging innovative technical capabilities and practicing all-out global procurement.
Strategy Major Policies

 Enhance productivity and lower Establish design-in and front-loading processes in

collaboration with R&D divisions and suppliers
costs through process innovation
Boost work efficiency and reduce loss by using
ICT

 Strengthen manufacturing through Greatly reduce component costs through new

production technologies
production technology capabilities
Cut costs by letting suppliers use our internal
and disruptive technical innovation technologies (strengthen technology procurement
capabilities)
Reduce costs by practicing optimal purchasing
worldwide
 Expand global procurement and
optimize business locations Achieve the best production efficiency of any
Japanese company based in China and stabilize
procurement and production by not overly
focusing operations on China
14
 3-4. Corporate Reform

Make fundamental changes to the corporate functions necessary

to survive the intense global competition
Strategy Scenario Major Policies

 Enhance management mechanisms Optimize responsibilities and authorities associated with

function and localize appropriately, and practice borderless
and optimize from a global organizational collaboration
perspective
Achieve efficiency by standardizing work and
 Increase efficiency of functions and reconsidering functions
work, reduce costs by optimizing
system scale
Unify (build) foundations and mechanisms, e.g., IT
infrastructure, global HR system, and project management
 Build up global platform Maintain foundation for global management analysis

Build and promote innovation mechanisms

 Transform corporate functions so Carry out a Group HR enhancement program
they can contribute directly to Carry out program to transform corporate culture and
business organization
Increase brand value

15
 Key Points of the New Medium Term Business Plan

16
 4-1. Aiming for 10% ROE

Focus on ROE as an important management benchmark and aim to achieve an ROE of 10% or more in FY2016

10% or more
・Proceed with the business portfolio transformation,

Profitability
Net income ratio
improve profitability of existing businesses, and achieve
4.6%
5.0% an operating income ratio of 8% or more
Net income ratio ・Increase non-operating/extraordinary income
or more
2.3%
×
× ・Improve asset efficiency through measures such as

Efficiency
Total assets
turnover ratio selling off idle assets and reducing inventories with an
Total assets
awareness of balance sheet management
turnover ratio
100% ・Actively provide returns to shareholders
97% or more
× ×
Soundness

・From the perspective of financial soundness, maintain

Financial leverage
an equity ratio of 50% or more and a net D/E ratio of
Financial leverage
206% zero
200% ・Maintain a credit rating of A

FY2013 FY2016

17
 4-2-1. Investment Plan for Achieving Transform
(R&D Expenses)

R&D expenses ¥240bn (three-year cumulative total)

 Keeping these expenses at 8% or less of net sales, work to strengthen existing businesses and cultivate new ones

R&D expenses to net sales ratio

9.4% • Strengthen technologies which compliment cloud and
8.8%
,200 7.5% 7.5% 10.0% Business mobile applications
• Develop new low-cost engine
,000 0.0%
Technologies • Develop industrial inkjet hardware, ink, etc.
[￥billions]
• Develop differentiating functions for DR/ultrasound
800 -10.0%
80.0 Healthcare • Develop high-sensitivity detection (sample, pathology)
72.5 technology, etc.
600 71.5 71.2 -20.0%
• Strengthen existing performance materials business, develop
400 -30.0%
Industrial new fields
• Strengthen industrial/professional optical units, etc.
200 -40.0%

• Develop integrated sensor/image processing systems

0 -50.0% Others • Develop next-generation office systems, etc.
FY11
11年度 FY12
12年度 FY13 FY14-FY16
13年度 14-16年度
Average
平均
New Medium Term Business Plan
Results
TRANSFORM 2016
18
 4-2-2. Investment Plan for Achieving Transform
(Capital expenditure/Investment and financing)

Capital expenditure/
Investment and financing
¥240bn (three-year cumulative total)

 Make priority investments in FY14, produce results by FY16.

 Concentrate investment in growth fields and new business areas to swiftly transform businesses.

¥240.0bn • Invest in new product production equipment and IT

Business systems

¥174.8bn Technologies • Expand MFP channels, strengthen IT services and

MPM, etc.
FY15 to FY16
• Scintillator and diagnostic ultrasound probe production
FY13
¥140.0bn Healthcare equipment
¥61.9bn • Expand channels to clinics, strengthen medical IT, etc.

• Strengthen existing fields in performance materials and

FY12 Industrial launch new ones
• Expand sensing instrument business field, etc.
¥68.0bn FY14

¥100.0bn
FY11 Others • New R&D building, maintain business sites, etc.
¥44.9bn
New Medium Term Business Plan
Results
TRANSFORM 2016
19
 4-3. Stance Towards Returns to Shareholders

Consider returns to shareholders as an important management issue

and work towards expanding and improving these returns

Aim to increase dividends while working towards the certain attainment of the goals
Dividend policy in the new Medium Term Business Plan

30 Trend of dividends per share

Results Forecast
Link to performance
20
2.5

10 20 20
Stable dividend 15 15 15 15 15 15

0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Common dividend Commemorative dividend

Acquisition of Proper judgments will be made in consideration of factors such as the progress of
treasury stocks investment for growth, the free cash flow outlook, and stock prices

20
 4-4-1. March 2015 (FY2014) Forecasts

Net sales : ¥1 trillion（YoY +6%）

Operating income : ¥62.0 bn （YoY +7%）

Net income : ¥26.0 bn （YoY +19%）

FOREX assumption: 1 US$ = ¥100 1 euro = ¥135

Dividend forecast : Increase by ¥2.5 per share on a year-on-year basis

for a total of ¥20 per share (total annual)
*Interim and year-end dividends: ¥10 per share each

21
 4-4-2. Key Points of FY2014 Performance Forecast

Achieve increased profitability while investing to speed up our

transformation and achieve sustained growth.
Analysis of operating income factors,
FY13 vs FY14 Cost reduction

Sales volume +12.0

Upfront investment
＋44.6 (8.0)

SG & A change 62.0

58.1 Price
(43.7)
(9.0)

FY13 FY14 (¥bn)

Breakdown of ¥8bn in upfront investment

Human investment in service businesses, building GMA support system, strengthening OPS growth
Provide service ¥4bn countries, strengthening BIC
Strengthening next-generation engine, developing technology that coexists with the cloud and mobile
R&D ¥2bn applications, developing high-picture-quality probes
New business ¥2bn Developing new performance materials businesses

22
 Supplementary Information

23
 Full-Year Forecasts for Year Ending March 2015(FY2014)
– Group Highlights

[￥billions]
Forecasts Results
Mar 2015 Mar 2014 YoY
Net sales (a) 1,000.0 943.8 6%
Operating income 62.0 58.1 7%
Operating income ratio 6.2% 6.2%
Ordinary income 57.0 54.6 4%
Net income 26.0 21.9 19%
Net income ratio 2.6% 2.3%
EPS [Yen] 50.49 41.38

CAPEX 60.0 47.4

Depreciation 55.0 47.4
R&D expenses 75.0 71.2
FCF 2.0 34.2 FOREX impact per 1yen movement
Investment and lending 40.0 14.5 (Full year/billions of yen)
Net sales Operating
income
FOREX [Yen] USD 100.00 100.24 USD 3.0 0.3
euro 135.00 134.37 euro 1.6 0.8

24
 Full-Year Forecasts for Year Ending March 2015 (FY2014)
– Segment Highlights

Outlook Results [\ billions]

Net Sales
Mar 2015 Mar 2014 YOY
Business Technologies 800.0 739.9 8%
　　 Office Services 600.0 567.1 6%
　　 Commercial/Industrial print 200.0 172.9 16%
Healthcare 90.0 82.4 9%
Industrial Business 110.0 116.1 -5%
　　 Industrial Optical Systems 61.0 57.8 5%
　　 Performance Materials 49.0 58.3 -16%
Others 0.0 5.3 -
Group Overall 1,000.0 943.8 6%

Outlook Results
Operating income
Mar 2015 Mar 2014

Business Technologies 72.0 9.0% 66.6 9.0% 8%

Healthcare 7.0 7.8% 4.5 5.5% 56%
Industrial Business 12.0 10.9% 15.2 13.1% -21%
Eliminations and Corporate -29.0 - -28.2 - -
Group Overall 62.0 6.2% 58.1 6.2% 7%

25