Hirose Electric : Financial Results for the Second Quarter of Year Ending March 31, 2024 (Consolidated)

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Financial Results for the Second Quarter of the Year Ending March 31, 2024 [IFRS] (Consolidated)

November 1, 2023

HIROSE ELECTRIC CO., LTD. https://www.hirose.com/corporate/en/Tokyo Stock Exchange - Prime Market 6806

Kazunori Ishii, President and Representative Director

Keiji Hara, General Manager of Accounting Department, Administration Group

[phone]
Scheduled date of filing of Japanese quarterly securities report:	November 10, 2023
Scheduled date of dividend payable:	December 1, 2023
Supplemental materials:	Yes
Earnings presentation held:	Yes (For institutional investors and analysts)
	(Amount Unit: Yen in Millions)
	(Amounts are rounded to nearest million yen)

1. Consolidated Financial Results for the First Half of the Year Ending March 31, 2024 (From April 1, 2023 to September 30, 2023)

(1) Consolidated Operating Results (Cumulative)							(Percentage represents year-on-year changes)
																	Quarterly profit	Total amount of
			Revenue		Operating profit	Profit before tax		Quarterly profit	attributable to owners	quarterly
																	of parent	comprehensive income
				%				%		%			%				%		%
FY2023		82,910	(12.5)		17,191		(36.7)	19,680	(32.7)		12,597	(39.0)	12,597		(39.0)	25,585	(9.9)
1H
FY2022		94,704	19.6		27,170		37.3	29,247	43.5		20,636	39.5	20,636		39.5	28,409	101.0
1H
						Basic quarterly earnings per share		Diluted quarterly earnings per share
											Yen						Yen
FY2023.1H										365.87					365.83
FY2022.1H										594.23					594.12
																						(Yen in millions)
(2) Consolidated financial position
				Total assets			Total equity	Equity attributable to			Ratio of equity attributable
						owners of parent				to owners of parent
																							%
FY2023.2Q					411,496				365,882			365,882						88.9
FY2022					401,357				349,853			349,853						87.2

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2. Dividends

			Annual dividends
	1st quarter end	2nd quarter end	3rd quarter end	Fiscal year end	Total
	Yen	Yen	Yen	Yen	Yen
FY2022	―	220.00	―	280.00	500.00
FY2023	―	220.00
FY2023 (Forecast)			―	220.00	440.00

(Note) Revision of previously announced dividend forecast: Yes

3. Forecast of Consolidated Business Performance for the Year ending March 31, 2024 (April 1, 2023 to March 31, 2024)

(Yen in millions) (Percentage represents year-on-year changes)

		Revenue		Operating profit	Profit before tax		Profit attributable to	Basic earnings
				owners of parent	per share
				%			%		%			%	Yen
Fiscal year end	172,000		(6.1)	38,500		(17.6)	41,000	(15.6)		29,000	(16.3)	842.25
(Note) Revision of previously announced business forecast: None
*Notes
(1) Changes in Significant Subsidiaries during This Period
(changes in specified subsidiaries resulting in the change in scope of consolidation)	: None
(2) Changes in Accounting Policies and Changes in Accounting Estimates:
1.	Changes in accounting policies required by IFRS		: None
2.	Changes in accounting policies due to other reasons	: None
3.	Changes in accounting estimates				: None

1. Number of Shares Issued (Ordinary Shares)
   1. Number of shares issued at the end of the period (including treasury shares)

As of September 30, 2023:	36,250,438	As of March 31, 2023:	37,227,089
2. Number of treasury shares at the end of the period:
As of September 30, 2023:	1,816,740	As of March 31, 2023:	2,799,173

3. Weighted-average number of shares outstanding during the period (quarterly cumulative): For the six months ended September 30, 2023: 34,430,998

For the six months ended September 30, 2022: 34,727,578

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*This financial results report is not subject to audit by certified public accountants or audit firms.

*Explanation for appropriate use of forecast and other notes (Cautionary statements with respect to forward-looking statements)

Forward-looking statements, such as forecast of business performance, stated in this document are based on information currently possessed by Hirose or certain assumption that Hirose has deemed as rational. We cannot make any assurances that the contents mentioned in these forward-looking statements will ever materialize. Actual financial performance could be significantly different from our expectations as a result of various factors. For the assumptions used and other notes, please refer to "1. Overview of Operating Results and Financial Condition (3) Future Outlook" on page 6.

(Method of obtaining supplementary materials on the financial results)

We are planning to hold a financial result briefing for institutional investors and analysts on Thursday, November 2, 2023, online. The presentation materials distributed in this briefing will be published on our website on the day.

(English translation)

This is the statement translated into English from the Japanese original of "Financial Results for the Second Quarter of the Year Ending March 31, 2024." In the event of any discrepancy between this English translation and the Japanese original, the later shall prevail.

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Table of Contents of Attachment
1. Overview of Operating Results and Financial Condition	5
(1)	Overview of Operating Results	5
(2)	Overview of Financial Condition	6
(3)	Future Outlook	6
2. Condensed Quarterly Consolidated Financial Statements and Primary Notes	7
(1)	Condensed Quarterly Consolidated Statement of Financial Position	7
(2)	Condensed Quarterly Consolidated Statement of Profit or Loss and Comprehensive Income	9
(3)	Condensed Quarterly Consolidated Statement of Changes in Equity	11
(4)	Notes on Condensed Quarterly Consolidated Financial Statements	12
(Note regarding the going concern assumption)	12
(Note regarding the case of significant fluctuation in shareholders' equity occurs)	12
(Segment information)	12
(Significant subsequent events)	14

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1. Overview of Operating Results and Financial Condition

1. Overview of Operating Results

In the second quarter of the fiscal year ending March 31, 2024, the Japanese economy showed a recovery in personal consumption due to the normalization of the economy, and an improvement in business confidence in the service industry due in part to the recovery of inbound demand. However, business confidence in the manufacturing sector weakened due to a global decline in capital investment and a drop in demand for semiconductors. In overseas market, the economic outlook remains uncertain in Europe and the United States due to high inflation and a tightening financial environment. Meanwhile, in China, the economic outlook is becoming unpredictable due to prolonged sluggishness in exports caused by slow growth in the real estate market and global demand for goods.

Under this situation, Hirose group has been expanding global business mainly for smartphone market, automotive market, and industrial market. And we have been promoting reinforcement of development, sales, and production system for new products with highly added value to respond advanced market needs quickly. As a result, the sales for the automotive business remained solid, but sales for the industrial and consumer electronics were sluggish.

The revenue in the second quarter decreased by 12.5% to JPY 82,910 million compared to the same period of the previous fiscal year. Operating profit decreased by 36.7% to JPY 17,191 million, and quarterly profit attributable to owners of parent decreased by 39.0% to JPY 12,597 million as compared with the first half of fiscal 2022.

The business results by reportable segments are as stated below. [Multi-pin connectors]

Our flagship multi-pin connectors include a variety of connector types such as circular connectors, rectangular connectors, connectors for ribbon cables, connectors for printed circuit boards, connectors used for FPCs (flexible printed circuits boards) and nylon connectors. This kind of connectors are used widely, such as for smartphones, tablet PC, communication equipment, automotive electronics, measuring and control equipment, FA equipment, and medical electronics equipment, as well as other industrial equipment. We expect that demands for these connectors will grow associated with progress of advanced information and telecommunications network society, and energy saving society considering environment in the future. Segment sales for the first half of the fiscal year ending March 31, 2024 decreased by 13.3% to JPY 74,245 million, operating profit decreased by 39.4% to JPY 15,240 million compared with the first half of the fiscal 2022.

[Coaxial connectors]

Coaxial connectors are a special type of high-performance connector used primarily for microwave and other high-frequency signals. This is used mainly for antenna connection of Wi-Fi and Bluetooth for smartphone and PC, GPS antenna connection for automobile and high-frequency signal connection for wireless communication device and electronic measuring instruments. Optical fiber connectors and coaxial switches are also included in this segment. Segment sales for the first half of the fiscal 2023 decreased by 4.5% to JPY 5,827 million. Operating profit decreased by 10.5% to JPY 1,538 million.

[Other products]

This segment includes micro switches and instruments for connectors. Segment sales for the first half of the fiscal 2023 decreased by 3.3% to JPY 2,838 million, operating profit increased by 33.9% to JPY 413 million.

5

(2) Overview of Financial Condition

Total assets of FY2023.2Q increased by JPY 10,139 million to JPY 411,496 million compared to the end of the previous consolidated fiscal year mainly because fixed assets increased. Total liabilities decreased by JPY 5,890 million to JPY 45,614 million due to the decrease in corporate tax payable, trade and other payables. Quarterly profit was recorded and other components of equity including translation adjustment increased. As a result, total equity increased by JPY 16,029 million to JPY 365,882 million. The ratio of total equity attributable to owners of parent resulted 88.9%, increased by 1.7% compared with the previous consolidated fiscal year end.

(3) Future Outlook

There is no revision of business forecasts for the full year which was announced on August 1, 2023.

For the dividend forecast, please refer to "Notice of Interim Dividend and Revision of Dividend Forecast" disclosed today.

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2. Condensed Quarterly Consolidated Financial Statements and Primary Notes

1. Condensed Quarterly Consolidated Statement of Financial Position

					(Yen in millions)
			As of March 31, 2023	As of September 30, 2023
Assets
Current assets
Cash and cash equivalents		88,029		90,382
Trade and other receivables		41,931		43,178
Inventories		27,735		26,836
Other financial assets		91,218		81,124
Other current assets		7,745		5,666
Total current assets		256,658		247,186
Non-current assets
Property, plant and equipment
	63,795		77,250
Right-of-use assets		5,277		5,349
Intangible assets		4,212		4,554
Other financial assets		63,466		69,298
Deferred tax assets		2,966		2,992
Retirement benefit asset		4,635		4,508
Other non-current assets		348		359
Total non-current assets		144,699		164,310
Total assets		401,357		411,496

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					(Yen in millions)
			As of March 31, 2023	As of September 30, 2023
Liabilities
Current liabilities
Trade and other payables			20,796		14,131
Lease liabilities			1,070		1,126
Other financial liabilities			11		48
Income taxes payable			8,205		5,521
Other current liabilities			7,005		7,656
Total current liabilities			37,087		28,482
Non-current liabilities
Lease liabilities			4,409		4,459
Other financial liabilities			130		99
Retirement benefit liability			290		310
Deferred tax liabilities			8,858		11,504
Other non-current liabilities			730		760
Total non-current liabilities			14,417		17,132
Total liabilities			51,504		45,614
Equity
Share capital
	9,404		9,404
Capital surplus		11,191		11,180
Retained earnings		345,201		334,264
Treasury shares		(39,840)		(25,850)
Other components of equity		23,897		36,885
Total equity attributable to owners of parent		349,853		365,882
Total equity		349,853		365,882
Total liabilities and equity		401,357		411,496

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1. Condensed Quarterly Consolidated Statement of Profit or Loss and Comprehensive Income (Condensed Quarterly Consolidated Statement of Profit or Loss)

		(Yen in millions)
	For the first half of the year ended	For the first half of the year ending
	March 31, 2023	March 31, 2024
	(From Apr 1, 2022 to Sep 30, 2022)	(From Apr 1, 2023 to Sep 30, 2023)
Revenue	94,704	82,910
Cost of sales	47,900	46,097
Gross profit	46,804	36,813
Selling, general and administrative expenses	19,783	19,165
Other income	221	199
Other expenses	72	656
Operating profit	27,170	17,191
Financial income	2,113	2,547
Finance costs	36	58
Quarterly profit before tax	29,247	19,680
Income tax expense	8,611	7,083
Quarterly profit	20,636	12,597
Quarterly profit attributable to:
Owners of parent	20,636	12,597
Quarterly Earnings per share:
Basic (yen)	594.23	365.87
Diluted (yen)	594.12	365.83

9

(Condensed Quarterly Consolidated Statement of Comprehensive Income)

(Yen in millions)

For the first half of the year ended March 31, 2023 (From Apr 1, 2022 to Sep 30, 2022)

For the first half of the year ending March 31, 2024 (From Apr 1, 2023 to Sep 30, 2023)

Quarterly profit

Other comprehensive income

Items that will not be reclassified to profit or loss

Equity instruments measured at fair value through other comprehensive income

Total items that will not be reclassified to profit or loss

Items that may be reclassified to profit or loss

20,636

671

671

12,597

1,357

1,357

Exchange differences on translation of foreign operations	7,120	11,645
Debt instruments measured at fair value	(18)	(14)
through other comprehensive income
Total items that may be reclassified to profit or loss	7,102	11,631
Total other comprehensive income after tax	7,773	12,988
Total quarterly comprehensive income	28,409	25,585
Total amount of quarterly comprehensive income attributable to:
Owners of parent	28,409	25,585

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