HOYA : Quarterly Report for the three months ended Jun.30,2019

July 30, 2019

Quarterly Report

1st Quarter : 3 months ended June 30, 2019

Consolidated (HOYA CORPORATION and Consolidated Subsidiaries)

Part .1

1st Quarter : from April 1 to June 30, 2019

1. Quarterly Consolidated Financial Highlights : p.1
2. Results of Operations : p.2
3. Quarterly Consolidated Financial Statements
4. 1. Quarterly Consolidated Statement of Financial Position : p.4
   2. Quarterly Consolidated Statement of Cash Flows : p.6
   3. Quarterly Consolidated Statement of Comprehensive Income : p.7
   4. Segment Information : p.8
5. Projected Results for the First Half: p.11
6. ＜Reference＞Supplementary data for 1st Quarter : p.12

Notes:

1. HOYA's fiscal year (FY) : from April 1 to March 31 of the following year.
2. These financial statements are excerpt translation of Japanese "Kessan Tanshin "and have been prepared for the references only of foreign investors.

HOYA CORPORATION

This report is provided solely for the information of professional analysts who are expected to make their own evaluation of the company. This report contains forward-looking statements that are based on management's assumptions and beliefs in light of the information currently available to it and therefore you should not place undue reliance on them.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from that anticipated in these statements. These factors include changes in economic conditions, trends in our major markets, currency exchange rates, etc.

We accept no liability whatsoever for any direct or consequential loss arising from any use of this report.

Part.1

July 30, 2019

1. Quarterly Consolidated Financial Highlights

HOYA CORPORATION and Consolidated Subsidiaries

1. Performance for the three months ended June 30, 2018 and 2019 (All operations *Notes)

( The yen amounts shown therein are rounded off to the nearest million.)

	Three months ended	Variance
(1)Revenue and Profit before tax	Jun. 30, 2018	Jun. 30, 2019	(%)
Revenue	138,891	140,819	1.4
Profit before tax	35,220	37,045	5.2
Ratio of profit before tax(%)	25.4%	26.3%
Profit for the quarter	28,490	30,148	5.8
Ratio of profit for the quarter(%)	20.5%	21.4%
Profit attributable to owners of the Company	28,506	30,045	5.4
Ratio of profit attributable to owners of the Company(%)	20.5%	21.3%
Basic earnings per share (yen)	75.11	79.22
Diluted earnings per share (yen)	74.96	79.07
	As of
(2)Financial Position	Mar. 31, 2019	Jun. 30, 2019
Total assets	763,915	763,222
Total equity	627,707	611,330
Equity attributable to owners of the Company	623,155	606,808
Ratio of assets attributable to owners of the Company	81.6%	79.5%
Assets attributable to owners of the Company per share (yen)	1,640.02	1,607.04
	Three months ended
(3) Conditions of Cash Flows	Jun. 30, 2018	Jun. 30, 2019
Net cash generated from operating activities	25,781	35,440
Net cash used in investing activities	-32,169	-10,882
Free cash flow	-6,387	24,559
Net cash provided by (used in ) financing activities	-16,938	-37,747
Cash and cash equivalents at end of period	226,208	273,831

2.Projected Results for the First Half (Six months ending September 30, 2019) for All Operations

	Six months ended/ending	Variance
	Sep. 30,2018	Sep. 30,2019	(%)
Revenue	280,909	284,000	1.1
Profit before tax	73,625	74,000	0.5
Profit for the term	59,720	60,000	0.5
Profit attributable to owners of the Company	59,838	60,000	0.3
Profit for the term per share (Yen)	157.64	158.64	－

3.Other

	Three months ended
	Jun. 30, 2018	Jun. 30, 2019
Capital expenditure	6,228	11,140
R&D expenses	6,650	6,355

Notes:

"All operations" means here that the figures are including not only "Continuing operations" but also "Discontinued operations".

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from that anticipated in these statements. These factors include changes in economic conditions, trends in our major markets, or currency exchange rates.

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2. Results of Operations

1. General Overview

HOYA Group ( " the Company " ) sales for the first quarter of the consolidated fiscal year under review (April 1 through June 30, 2019) amounted to 140,819 million yen, an increase of 1.4% compared to the same period in the prior fiscal year.

Quarterly profit before tax amounted to 37,045 million yen with 30,148 million yen in profit, representing year-on- year increases of 5.2% and 5.8%, respectively.

Profit before tax ratio was 26.3%, representing a year-on-year increase of 0.9 points.

Disclosed figures and change ratios are for businesses with continuing operations. There were no discontinued businesses in the fourth quarter or in the same quarter of the previous year.

Sales of eyeglass lenses in health care related products in the Life Care segment decreased slightly year on year, while contact lens sales increased. Sales of medical-use endoscopes in our medical-related products domain decreased slightly, while sales of intraocular lenses for cataract rose significantly. The combined performance of these products drove the Company's Life Care segment sales higher year on year.

The Information Technology segment reported significantly higher sales of electronics-related semiconductor mask blanks. Sales of photomasks for LCDs and semiconductors were level year on year, while sales of glass substrates for hard disk drives were lower. Imaging-related product sales fell year on year. As a result, the Company was able to maintain Information Technology segment sales level with the same period in the prior fiscal year.

2) Segment Overview

The following discusses results by reportable segment. (Segment sales represent sales to external customers.)

Life Care

Sales of eyeglass lenses in Japan decreased year on year. In overseas markets, sales of high-value-added products drove growth in Europe leading to overall segment growth on a local currency basis. On a yen basis, however, sales decreased slightly due to the impact of foreign currency translation.

Contact lens sales rose year on year, mainly due to customer expansion efforts at existing Eyecity stores, increased sales of added-value products, and new store openings.

Medical-Related Products

Sales of medical-use endoscopes were strong overseas, mainly due to the impact of new products introduced during fiscal 2018. However, results were slightly lower on a yen basis due to the impact of foreign currency translation.

Sales of intraocular lenses for cataracts in Japan were solid. Overseas, contributions of our highly competitive Vivinex product and the impact of acquisitions combined for significant sales growth year on year.

As a result, sales for the Life Care segment grew 2.7% year on year, reaching 93,772 million yen. Segment profit decreased 0.7% year on year to 17,292 million yen.

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Information Technology

Sales of mask blanks for semiconductors grew significantly year on year. This growth was mainly due to active research and development for cutting-edge products and our capturing demand for mass-production launches.

While a sluggish market for external photomask shop resulted in lower sales of photomasks for semiconductors year on year, sales of photomasks for LCDs rose, mainly due to our efforts in the Chinese market, which is experience ongoing growth. Accordingly, sales of photomasks for LCDs and semiconductors were level with the same period in the prior fiscal year.

Sales of 2.5-inch glass substrates for hard disk drives, which account for the majority of substrate sales, decreased year on year, as notebook PCs and mission-critical servers shift from hard disk drives to solid state drives (SSDs). At the same time, sales revenues of 3.5-inch products grew significantly, adopted for nearline use in data centers, which are the end users of these products. This increase, however, was not sufficient to compensate for the decline in 2.5-inch product sales. As a result, sales were lower year on year for glass substrates as a whole.

Smartphones and other factors continue to erode the digital camera market, driving our sales lower.

As a result, Information Technology segment sales revenues declined 1.3% year on year to 45,976 million yen. Segment profit rose 7.5% to 20,480 million yen.

Other

The HOYA Group Other business segment consists of new businesses and businesses offering information systems services. The Other segment reported sales of 1,071 million yen, an increase of 4.8% year on year. Segment profit fell 16.4% to 60 million yen.

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3.Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Statement of Financial Position

(HOYA Corporation and its subsidiaries)						(Millions of Yen)
	As of		As of		Variance	As of
	Mar. 31, 2019	Jun. 30, 2019	Jun. 30, 2018
	Amount	(%)	Amount	(%)	Amount	(%)	Amount	(%)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment-net	111,077		135,952		24,875		105,543
Goodwill	42,843		41,622		-1,221		32,916
Intangible assets	44,308		43,161		-1,146		36,307
Investments in associates	349		1,350		1,001		1,462
Long-term financial assets	44,103		43,749		-354		42,662
Other non-current assets	2,960		680		-2,280		2,329
Deferred tax assets	10,162		9,892		-270		9,241
Total non-current assets	255,802	33.5	276,406	36.2	20,604	8.1	230,461	34.8
CURRENT ASSETS
Inventories	78,973		81,738		2,766		72,875
Trade and other receivables	110,847		105,869		-4,977		108,872
Other short-term financial assets	3,131		2,614		-517		4,895
Income tax receivables	820		1,025		205		923
Other current assets	20,946		21,738		792		17,901
Cash and cash equivalents	293,397		273,831		-19,566		226,208
Total current assets	508,113	66.5	486,816	63.8	-21,297	-4.2	431,674	65.2
Total assets	763,915	100.0	763,222	100.0	-693	-0.1	662,134	100.0

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