News - Fiscal 2017
News
Notice Regarding the Establishment of a Beverages-Related Joint Venture Company

April 27, 2017

This is to notify that Sumitomo Heavy Industries, Ltd. (hereinafter referred to as “SHI” or the “Company”) and its subsidiary Izumi Food Machinery Co., Ltd. have established a beverage machinery related joint venture company with Germany-based Krones AG (hereinafter referred to as “Krones”) to develop the Asia region.

1. Purpose of Establishing a Joint Venture Company
SHI Group has earmarked the beverage machinery business as a growth field and has worked over the years to strengthen its capabilities in this area. In particular in Asia, economic development has meant that the sales volume for tea and coffee-related drinks has increased, resulting in greater demand for beverage machinery. Germany-based Krones is a manufacturer of beverage machinery that was established in 1951. It is a global company with approximately 14,000 employees and a sales and service network spanning 82 countries. The company has strong distribution channels not only in Europe, but also in the future growth market of Asia.

Through the establishment of this joint venture company, SHI Group aims to capitalize on the know-how and supply chain of Krones and accelerate the development of its beverage machinery business in the Asia region.

2. Profile of Joint Venture Company
(1) Name
    Krones-Izumi Processing Pte. Ltd.
(2) Address
    49 Kim Yam Road, Singapore
(3) Name and Title of Representative
    Dr. Matthias Weinzierl, General Manager
(4) Business Operations
    Engineering activities targeting facilities that manufacture soft drinks, juice, tea, coffee, water, milk, soy sauce
    and other beverages (excluding food, ice cream, alcoholic drinks) in the Asia Pacific region (excluding Japan,
    China and India).
(5) Paid-Up Capital
    SGD 2 million
(6) Capital Contribution
    Asia Food and Beverage Consulting Group Pte. Ltd. (a Krones Group company) – 51.0%
    Integrated Packing Systems FZCO (a Krones Group company) – 22.0%
    Sumitomo Heavy Industries, Ltd. – 13.5%
    Izumi Food Machinery Co., Ltd. – 13.5%

3. Profile of Krones AG
(1) Name
    Krones AG
(2) Address
    Böhmerwaldstraße 593073, Neutraubling, Germany
(3) Name and Title of Representative
    Christoph Klenk, Chairman
(4) Business Operations
    Manufacturing and distribution of beverage production lines, beverage bottling machinery, and packaging
    machinery.
(5) Paid-Up Capital
    EUR 40 million
(6) Date of Establishment
    1951
(7) Major Shareholders and Shareholdings
    Familie Kronseder Konsortium GbR (51.58%)
(8) Net Sales
    EUR3,391 million
(9) Total Number of Employees
    14,433 (as at the end of December,2016)

4. Profile of Izumi Food Machinery Co., Ltd.
(1) Name
    Izumi Food Machinery Co., Ltd.
(2) Address
    4-2-30 Shioe, Amagasaki-City, Hyogo Prefecture, Japan
(3) Name and Title of Representative
    Ken Nanataki, President and CEO
(4) Business Operations
    Manufacturing and distribution of plant and equipment for the production of various food and beverages
    including cold beverages (fruit juices, tea, coffee, etc.), condiments and preparations, dairy products (milk,
    ice cream, yoghurt, etc.), and pharmaceuticals and related drinks.
(5) Paid-Up Capital
    JPY120 million
(6) Date of Establishment
    March 1948
(7) Major Shareholders and Shareholdings
    Sumitomo Heavy Industries, Ltd – 60.0%
    Nihon Spindle Manufacturing Co., Ltd. – 40.0%
(8) Net Sales
    JPY6,400 million
(9) Total Number of Employees
    172

5. Key Timeline of Transaction
(1) Date that Memorandum of Understanding was Finalized
    April 25, 2017
(2) Commencement Date of Operation
    June 2017 (Estimated)