Alps Alpine : Consolidated Financial Results

July 29, 2022

Consolidated Financial Results for the Three Months Ended June 30, 2022 [Under Japanese GAAP]

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Scheduled date to file Quarterly Securities Report: Scheduled date to commence dividend payments: Preparation of supplementary materials on quarterly earnings: Holding of quarterly earnings performance review:

ALPS ALPINE CO., LTD.

Prime market of the Tokyo Stock Exchange 6770 https://www.alpsalpine.com/e/ir/index.htmlToshihiro Kuriyama

President & CEO

Satoshi Kodaira

Senior Vice President & CFO, Administration (TEL: [phone])

August 8, 2022

―

Yes

Yes (Conference call for analysts and institutional investors)

(Amounts are rounded down to the nearest million yen, unless otherwise noted)

1. Consolidated performance for the three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022)

1. Consolidated operating results

(Percentages indicate changes over the same period of the previous fiscal year)

	Net sales		Operating income	Ordinary income	Net income attributable
		to owners of parent
Three months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
June 30, 2022	204,978	17.3	1,730	249.6	7,266	―	2,613	―
June 30, 2021	174,798	29.0	495	―	205	―	(4,345)	―

(Note) Comprehensive income
For the three months ended June 30, 2022:	¥19,720 million	[―%]
For the three months ended June 30, 2021:	¥24 million	[―%]
	Basic earnings	Diluted earnings
	per share		per share
Three months ended	Yen			Yen
June 30, 2022		12.67		12.67
June 30, 2021		(20.98)		―
(2) Consolidated financial position
	Total assets		Net assets	Equity ratio	Net assets per share
As of	Millions of yen		Millions of yen	%	Yen
June 30, 2022		714,233	404,939	56.4	1,960.39
March 31, 2022		743,520	425,308	52.4	1,879.42
(Reference) Equity
As of June 30, 2022:	¥402,708 million
As of March 31, 2022:	¥389,426 million

2. Cash dividends

					Annual dividends
	June 30		September 30		December 31	March 31	Total
Fiscal year ended March 31,	Yen		Yen		Yen	Yen	Yen
―	10.00		―	10.00	20.00
2022
Fiscal year ended March 31,	―
2023
Fiscal year ending March 31,		20.00		―	20.00	40.00
2023 (Forecast)
(Note) Revisions to the cash dividends forecasts most recently announced: None

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023)

(Percentages indicate changes over the same period of the previous fiscal year)

	Net sales		Operating income	Ordinary income	Net income attributable	Basic earnings
		to owners of parent	per share
	Millions of		%	Millions of	%	Millions of	%	Millions of	%	Yen
	yen			yen		yen		yen
Six months ending	412,000		12.1	19,500	84.8	19,500	100.9	12,500	473.9	60.33
September 30,
2022
Fiscal year ending	835,000		4.0	47,500	34.9	47,500	17.9	33,000	43.7	159.26
March 31, 2023

(Note) Revisions to the consolidated earnings forecasts most recently announced: None

• Notes
• 1. Changes in significant subsidiaries during the period (changes in specific subsidiaries resulting in the change in scope of consolidation): None
  2. Application of accounting treatments specific to preparation of quarterly consolidated financial statements: None
  3. Changes in accounting policies, changes in accounting estimates and restatement:
  4. 1. Changes in accounting policies due to revisions to accounting standards: None
     2. Changes in accounting policies due to other reasons: None
     3. Changes in accounting estimates: None
     4. Restatements: None
  5. Number of issued shares (common stock)
  6. 1. Total number of issued shares at the end of the period (including treasury stock)

As of June 30, 2022	219,281,450 shares
As of March 31, 2022	219,281,450 shares

1. Number of shares of treasury stock at the end of the period

As of June 30, 2022	13,858,945 shares
As of March 31, 2022	12,076,076 shares

1. Average number of shares during the period (cumulative from the beginning of the fiscal year)

For the three months ended June 30, 2022	206,258,503 shares
For the three months ended June 30, 2021	207,128,743 shares

• Quarterly earnings reports are not subject to quarterly review by external auditors.
• Explanation and other special notes concerning the appropriate use of earnings forecast (Notes on forward-looking statements)
  The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to ALPS ALPINE CO., LTD. (the "Company") and certain assumptions deemed to be reasonable, and are not intended to guarantee the achievement of these forecasts. Actual results may differ materially from the forecasts due to various facto rs. Please refer to "1. Qualitative Information on Financial Results for the Three Months Ended June 30, 2022, (3) Information regarding consolidated earnings forecast and other forward-looking statements" on page 3 of the attached materials for the assumptions used in the forecasts and notes regarding the use of the forecasts.

(Access to supplementary material on quarterly earnings)

Supplementary material on quarterly earnings is available on the Company's website on Friday, July 29, 2022.

• Supplementary Materials - Contents

1．Qualitative Information on Financial Results for the Three Months Ended June 30, 2022.................................................................	2
(1) Information regarding operating results ....................................................................................................................................	2
(2)	Information regarding financial position ...................................................................................................................................	3
(3)	Information regarding consolidated earnings forecast and other forward-looking statements ..................................................	3
2. Quarterly Consolidated Financial Statements and Significant Notes Thereto......................................................................................	5
(1) Quarterly consolidated balance sheet...... .................................................................................... ..............................................	5
(2)	Quarterly consolidated statement of income and comprehensive income .................................................................................	7
	For the three months ended June 30, 2022 ................................................................................................................................	7
(3)	Notes to quarterly consolidated financial statements.................................................................................................................	8
	(Notes on going concern assumptions) .....................................................................................................................................	8
	(Notes on significant changes in the amount of shareholders' equity) ......................................................................................	8
	(Notes on changes in scope of consolidation, application of equity method)...........................................................................	8
	(Additional information) ...........................................................................................................................................................	8
	(Segment information) ..............................................................................................................................................................	9

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1．Qualitative Information on Financial Results for the Three Months Ended June 30, 2022

(1) Information regarding operating results

The global economy during the three months ended June 30, 2022, has continued a recovery trend as the restriction of movement has been removed, although there were concerns about the re-spread of infection of the novel coronavirus (COVID-19). However, the situation remains uncertain due to the global shortage of semiconductors, the continuation of tight supply and demand for logistics, the soaring cost of energy such as crude oil and natural gas due to the worsening situation in Ukraine, and the acceleration of inflation.

By region, in the United States, the economy remained resilient against the background of an increase in private consumption and employment situation. In Europe, economic activity, mainly in the United Kingdom and Germany, has recovered to pre-corona. In China, the growth has been sluggish due to supply-side constraints imposed by the lockdown implemented as zero-corona policy. In Japan, the economy was on a recovery trend on the whole, as exports and business fixed investment, particularly in the manufacturing sector, maintained their recovery trend.

In this business environment, we responded to soaring material and logistics costs, and worked to minimize the impact on business results by responding to rapid changes such as systematic production and maintaining sales by securing parts inventory.

Operating results for the three months ended June 30, 2022, are summarized below. Net sales shown below represent net sales to third parties, after elimination of inter-segment sales.

Segment information

From April 2022, we have re-constructed the business segments into "Component business" aiming to maintain and expand the profitable base in the business segment, "Sensor Communication business" positioned as a growth area in the future, "Module System business" aiming to optimize the profitability by improving activities. That way, we are working toward more balanced growth.

Accordingly, the classification of the reporting segment has been changed for the three-month period ended June 30, 2022. For further information, refer to "2. Quarterly Consolidated Financial Statements and Significant Notes Thereto, (3) Notes to quarterly consolidated financial statements (segment information), 4. Information concerning change of reportable segments".

Although a part of component products was influenced due to the lockdown caused by the spread of novel coronavirus infection in China, sales and operating income marked higher compared to the same period of the previous fiscal year, caused by good performance in the products for mobile electronics due to the good condition in the smartphone market and the good impact on the performance by depreciation of yen in the foreign currency exchange market.

As a result, total net sales in this segment for the three months ended June 30, 2022 was ¥59.3 billion, an increase of 40.7% and operating income was ¥5.3 billion, an increase of 215.5% compared to the same period of the previous fiscal year.

Sensors for mobile products were stable due to a good condition in the smartphone market. On the contrary, the automotive information device businesses have been influenced by the reduction in auto-maker's production due to semiconductor shortage and operating income was lower than that of the same period of the previous fiscal year due to the increase in cost caused by the material price escalation while net sales increased because of the depreciation of yen.

As a result, total net sales in this segment for the three months ended June 30, 2022 was ¥19.9 billion, an increase of 5.2% and operating income was ¥0.1 billion, a decrease of 74.6% compared to the same period of the previous fiscal year.

The production of new cars by auto-makers which are our major customers decreased sharply compared to that of the same period of the previous year because the parts shortage such as semiconductor brought turmoil due to the lockdown caused by the increase in novel coronavirus infection in China.

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Automotive infotainment products were influenced by these factors and the operating income went lower than that of the same period of the previous fiscal year due to the cost increase brought by the material cost escalation although net sales rose up by depreciation of yen.

As a result, total net sales in this segment for the three months ended June 30, 2022 was ¥101.6 billion, an increase of 10.8% compared to the same period of the previous fiscal year and operating loss was ¥5.9 billion (net operating loss in the same period of the previous year ¥3.6 billion).

In the electronic parts industry, which is a major customer of the logistics business, the cargo movement of electronic parts has slowed because production of automobiles and electronic devices has not fully recovered, due to supply chain disruptions and semiconductor shortages caused by the lockdown in China.

With such a demand trend, in the Logistics Segment (Alps Logistics Co., Ltd., listed on the Prime market of the Tokyo Stock Exchange), the logistics business used an electronic component logistics platform centered on joint storage and joint collection and delivery, and expanded in three directions such as area, market, customer, and service expansion.

Through such activities, net sales increased due to an increase in import/export-related businesses such as air cargo handling and the effect of expanding sales to new customers.

As a result, net sales in the Logistics Segment for the three months ended June 30, 2022, amounted to ¥20.5 billion, an increase of 7.8%, and operating income amounted to ¥1.8 billion, an increase of 3.1% compared to the previous fiscal year.

On the consolidated basis for the three months ended June 30, 2022, the Group consisting of four operating segments noted above and other, recorded net sales of ¥204.9 billion, operating income of ¥1.7 billion, which were increases of 17.3% and 249.6%, respectively, compared to the previous fiscal year. Further, ordinary income of ¥7.2 billion and net income attributable to owners of parent of ¥2.6 billion were recognized, while ordinary income and net loss attributable to owners of parent were ¥0.2 billion and ¥4.3 billion respectively in the previous fiscal year.

1. Information regarding financial position
   Assets, Liabilities and Net Assets
   Total assets as of June 30, 2022 were ¥714.2 billion, a decrease of ¥29.2 billion from the end of the previous fiscal

year. Equity was ¥402.7 billion, an increase of ¥13.2 billion, and equity ratio was 56.4%.

Current assets as of June 30, 2022 were ¥443.7 billion, a decrease of ¥15.3 billion from the end of the previous fiscal year, due to factors such as a decrease in cash and deposits, trade notes and accounts receivable, as well as an increase in inventories.

Non-current assets as of June 30, 2022 were ¥270.5 billion, a decrease of ¥13.9 billion from the end of the previous fiscal year, due to factors such as a decrease in buildings and structures, land, intangible assets, net, as well as an increase in investment securities.

Current liabilities as of June 30, 2022 were ¥233.9 billion, a decrease of ¥0.3 billion from the end of the previous fiscal year, due to factors such as a decrease in provision for bonuses as well as an increase in trade notes and accounts payable.

Non-current liabilities as of June 30, 2022 were ¥75.3 billion, a decrease of ¥8.5 billion from the end of the previous fiscal year, due to factors such as a decrease in defined benefit liabilities.

The main reason in the decrease in assets and liabilities and the increase in investment securities mentioned above were the impact of change of Alps Logistics Co., Ltd and its 25 subsidiaries, both of which were consolidated subsidiaries, into equity-method.

(3) Information regarding consolidated earnings forecast and other forward-looking statements

The outlook for the global economy remains uncertain due to factors such as the turmoil in supply chain due to prolonged semiconductor shortage and the turmoil in logistics, the worsening situation in Ukraine, and soaring energy costs, and there are concerns about the negative impact on the macro economy as a whole.

Under the very severe business environment, we launched our second medium-term management plan in April 2022, set targets of consolidated sales of at least 800 billion yen and consolidated operating margin of 8% (ROE 10%)

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