Hirose Electric : Q&A Summary of Financial Results Briefing for the 3rd Quarter of the Fiscal Year Ending March 2022

HIROSE ELECTRIC CO., LTD

Financial Results Briefing for the Third Quarter of the Fiscal Year Ending March 31 2022

Q&A Summary

Q1：

Please tell us the sales forecast of 4Q for general industrial, smartphone and consumer electronics.

A1：

Although we have slightly lowered the forecast of industrial because we have less operating days, basically the demand will continue at the same level. The sales for smartphone and consumer is expected to decrease because of changes in seasonality.

Q2：

In the 3Q, there was an increase in inventories. Could you explain about your plan?

A2：

Basically we control inventories according to products and customers. The scale of sales and production is increasing overall, so the level of inventories is slightly higher. When excessiveness of demand will settle down, inventories will be also controlled to go down.

Q3：

The order backlog is still relatively high. How do you think the outlook for the next fiscal year?

A3：

We are not able to talk about the plan for next fiscal year at this time. We have been requested to resolve the order backlog and we will actively work to resolve this issue in FY2022.

Q4：

Comparing the second and third quarters, the pace of increase in gross profit to the increase in revenue was relatively good. Could you please explain the reason?

A4：

Although the cost including material cost increased, the weaker yen and the increase in sales this time have improved our production efficiency. The profitability has increased as a result of these factors.

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Q5：

I think general industrial is currently in a tight situation and somewhat in confusion. How do you think the situation?

A5：

Although orders have settled down slightly, we feel that the level of tightness continues. We are reinforcing our effort to increase production capacity.

Q6：

Hirose upwardly revised business forecast of this fiscal year. Is there a possibility of revising the medium‐term plan?

A6：

Because of the upwardly revised forecast, we can move our medium‐term plan forward, and we are now reviewing the next medium‐term management plan.

Q7：

I think the sales would be higher than you expected. Regarding sales continuity, do you have any plan to utilize management resources?

A7：

In the beginning, we think we received orders in excess of our capacity. However in the latter half of the year, and we look ahead to the next fiscal year, we are beginning to think that we need to achieve this production capacity continuously to satisfy our customers. Therefore, we are planning to take aggressive measures for production facilities and various capacities.

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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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