Hirose Electric : Q&A Summary of Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 2024

HIROSE ELECTRIC CO., LTD.

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

Q&A Summary

Q1:

How will sales and profit of 3Q FY2023 compared with 2Q FY2023?

A1：

The profit of 1H FY2023 decreased due to the factors such as lower factory operating ratio, change of the product portfolio and loss on valuation of fixed asset. We prospect that 3Q sales will be a little higher than 2Q because sales for Automotive/Mobility-related and Smartphone segments will keep being good. And we have an image that 3Q profit will be improved compared to 2Q including the expected achievement by the measures for improving the performance in FY2023.

Q2：

How do you see the progress at the timing of 2Q FY2023 for each segment?

A2:

For General Industrial was weaker than our assumption. For Consumer/Mobile Equipment was as we expected For Automotive/Mobility-related and for Smartphone were better than our expectation. And in the case of excluding currency exchange rate fluctuations, Consumer/Mobile Equipment was lower than the assumption, Smartphone was as expected.

Q3：

How was the sales for Smartphone on area-by-area?

A3：

As for all areas, the sales increased to meet each device manufacturing.

Q4：

Regarding to the trend of General Industrial market, how do you see the present and the future trend?

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A4：

We recognize that currently there are variations between customers but for General Industrial market as a whole, period of inventory adjustment is going longer than our previous expectation, and the situation of excess inventories including on market is going longer. With the uncertainty of the recovery in 4Q FY2023, our FY2023 sales forecast is slightly low. However, we have many good new projects contribution in mid-term perspective, and we strengthen the actions for the future.

Q5：

Currently the level of inventories for Industrial equipment manufacturers including FA makers seem to be still high right now, do you see the recovery trend? And regarding to 3Q sales for General Industrial, will it be lower than 2Q?

A5：

We do not see the clear tendency of inventory reduction for Industrial market currently. However, we consider that the tendency to show some improvement in 3Q is the key, and we expect orders to recover in 4Q. We assume that the sales for General Industrial in 3Q will not sharply drop from 2Q as we still have the backlog to ship.

Q6：

What do you think of the capital policy and shareholder's return?

A6：

Based on our basic policy on dividend payout ratio of 50%, we revised the dividend amount. As we have mentioned that acquisition of treasury stocks for JPY40 billion has been projected from FY2021 to FY2025, at this time we execute JPY10 billion share buyback and the amount of buyback in 3 years came to JPY40 billion in total. We will consider to execute the acquisition of treasury stocks in a timely manner. Our target of achieving ROE 10% by FY2025 continues.

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Q7：

As for the inventory not realized in this period, how is the impact on 1Q and 2Q profit?

A7：

QonQ from March 31, 2023, it contributed JPY1.5 billion to 1Q profit but there was JPY0.4 billion loss in 2Q. Therefore, 1Q and 2Q large gap of profit by JPY -1.9 billion was caused.

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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