Hirose Electric : Q&A Summary of Financial Results Briefing for the 1st Quarter of the Fiscal Year Ending March 2024

HIROSE ELECTRIC CO., LTD.

Financial Results Briefing for the First Quarter of the Fiscal Year Ended March 31, 2024

Q&A Summary

Q1:

How was the result for orders received for1Q FY23 by each segment?

A1：

Focusing on situation of our main segments, orders for "Smartphone", "Automotive/Mobility- related" and "Consumer/Mobile Equipment" increased but "General Industrial" decreased comparing to 4Q FY22. The volume of orders for "Smartphone", "Automotive/Mobility-related" and "Consumer/Mobile Equipment" was larger than volume of sales, however, orders for "General Industrial" was smaller than sales.

Q2：

Considering to 2Q numbers based on revised forecast for 1H, I have an impression that it is

a little short considering the usual seasonal increase that occurs in Q2. How is the outlook

on each segment?

A2:

Picking up for Consumer equipment including smartphone is equivalent as usual year. However, for General Industrial is weaker than our expectations which make the whole outlook weak.

Q3：

Regarding business trend of General Industrial segment, is there any difference between direct business and distributer business?

A3：

As for orders for General Industrial, there is no color-coding of distributors and direct sales. We believe that our customers' inventories were higher than we had expected,

rather than market conditions.

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Q4：

How is the forecast of sales for General Industrial from 2Q to 4Q? When will orders recover? And is there any risk for making a downturn about General Industrial business through 2H to FY24?

A4:

We expect JPY15 billion sales in４Ｑ at least. Our expectations of order recovery was pushed back to 4Q from the initial. When the order recovery delays furthermore, the results could be lower, but present forecast is accordance to our guidance.

Q5：

The quarterly sales for General Industrial was about JPY10 billion in FY20, however, FY23 yearly sales for this segment is JPY60 billion, which is JPY15 billion per Q in FY23 on average. General Industrial market didn't grow 1.5 times, which means Hirose grew more than the market. We understand that in the last year there was over-orders from customers. How is your analysis on business for General Industrial with considering actual demand?

A5:

The production lines of our customers seem to be running better than the operating status of Hirose's production lines. After inventory clearance process is back to normal, orders will be returned to us to a certain extent. Regarding to validity of JPY 60 billion, we understand this market has high potential and will grow in the mid-term, and we are preparing for that.

Q6：

Considering that the sales increase more than the market growth, I think Hirose's market share has increased. What was the opportunity for you to increase your market share?

A6:

Our new products for industrial segment acquire more opportunities to design-in, and those new products are appreciated at the same time. This is how we expanded the market share relatively.

Q7：

Regarding to the downward revision of the forecast for Consumer business, what are factors? Is there any change of customer's business trend?

A7:

We have already acquired the new projects of those production start in this year and remains unchanged basically. The sales tends to increase through 2Q to 3Q as usual. However, our

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understanding is that market condition as a whole isn't good and some customer's production timing seems to be moving back, that is why we shifted the forecast downward.

Q8：

Guidance of Automotive/Mobility-related business is good in stable. I would like to know the difference in regions and how you see the future.

A8:

Based on 1Q results, China business was lower than our expectation but Korea business was higher.

Q9：

Chinese EV market has been momentarily sluggish, and that was a factor of decrease in Automotive business in 1Q, according to your explanation, do you agree that the market is recovering?

A9:

Yes, we are already seeing a recovery trend.

Q10：

Any updates on capital policy and ROE 10% concept?

A10:

We have not changed our mid-termtarget for 2025 of achieving 10% ROE and 25% operating profit on a stable basis, explained in last May. At this point, we revised our guidance downward and we understand the situation is tough. We have set an internal goal of striving to achieve that goal every year. We are aiming for this goal as a medium-termfor external guidance.

Q11：

How is internal discussion on dividends and share buyback?

A11:

Dividend ratio 50% is our commitment, but we have discussion on amount of dividends and it is not determined yet. We capture that share buyback is a flexible execution option. Points of discussion are volume, timing and so on.

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Disclaimer

In this material, there are descriptions based on current estimation by Hirose Electric.

Hirose cautions you that a number of important risks, uncertainties and others could cause actual results to differ materially from those discussed in the *forward-looking statements. Thank you for your understanding.

*Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "may" or "might" and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. These statements are based on management's assumptions and beliefs in light of the information currently available to it.

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