Hirose Electric : Quarterly Financial Report (First Quarter)

English translation

【Document to be filed】Quarterly Financial Report

【Provisions to base upon】Article 24-4-7, paragraph 1 of the Financial Instruments and Exchange Act 【Filing to】Director-General of the Kanto Local Finance Bureau

【Date of filing】August 10, 2023

【Fiscal Period】1st quarter of 77th term (from April 1, 2023 to June 30, 2023) 【Company name】HIROSE ELECTRIC CO., LTD.

【Title and name of representative】Kazunori Ishii, President

【Location of head office】2-6-3 Nakagawa Chuoh, Tsuzuki-Ku, Yokohama, Kanagawa, Japan 【Telephone number】[phone]

【Contact person】Keiji Hara, General Manager of Accounting Department

【Place of contact】2-6-3 Nakagawa Chuoh, Tsuzuki-Ku, Yokohama, Kanagawa, Japan 【Telephone number】[phone]

【Contact person】Keiji Hara, General Manager of Accounting Department

【Place where the document to be filed is available for public inspection】Tokyo Stock Exchange, Inc. (2-1,Nihonbashi-kabutocho,Chuo-ku, Tokyo, Japan)

【Company Information】

1. Overview of the Company

1. Changes in major management indicators

			(Yen in millions)
	76th Fiscal Term	77th Fiscal Term
	Consolidated Cumulative	Consolidated Cumulative	76th Fiscal Term
	First Quarter	First Quarter
Fiscal period	From April 1, 2022	From April 1, 2023	From April 1, 2022
to June 30, 2022	to June 30, 2023	to March 31, 2023
Revenue	46,574	40,455	183,224
Quarterly profit before tax or	14,507	10,652	48,591
profit before tax
Quarterly profit attributable to	10,052	6,021	34,648
owners of parent
Quarterly comprehensive income	18,386	16,368	40,974
attributable to owners of parent
Equity attributable to owners of	334,702	356,655	349,853
parent
Total Assets	389,938	403,861	401,357
Quarterly earnings per share	286.89	174.89	1,002.04
-basic (Yen)
Quarterly earnings per share	286.84	174.87	1,001.87
-diluted (Yen)
Ratio of total equity attributable to	85.8	88.3	87.2
owners of parent (%)
Cash flows from operating	11,783	10,540	45,648
activities
Cash flows from investing	16,600	(7,155)	6,403
activities
Cash flows from financing	(26,031)	(9,837)	(34,171)
activities
Balance of cash and cash	72,795	83,494	88,029
equivalents at end of the quarter
(Notes)

1. We prepare the condensed quarterly consolidated financial statements, and the transition of the major management indicators are not included.
2. The financial data above are based on the condensed quarterly consolidated financial statements and consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS).

2. Description of Business

There were no significant changes in our business during the first quarter of the fiscal year ending March 31, 2024. There were also no changes in major subsidiaries.

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1. Business Overview

1. Risk Factors
   Regarding the business and financial situation stated in this report, there were no matters that may have significant impact on the investment decision and no significant changes in the risk factors stated in the annual securities report for the previous fiscal year during the three months ended June 30, 2023.
   There were no material events.

2. Management Analysis of Financial Position, Operating Results and Cash Flows Forward-looking statements below were determined as of June 30, 2023.

1. Overview of Operating Results

In the first 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 first quarter decreased by 13.1% to JPY 40,455 million compared to the same period of the previous fiscal year. Operating profit decreased by 30.2% to JPY 9,057 million, and quarterly profit attributable to owners of parent decreased by 40.1% to JPY 6,021 million as compared with the first quarter 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 this connector 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 quarter of the fiscal year ending March 31, 2024 decreased by 14.2% to JPY 36,067 million, operating profit decreased by 32.8% to JPY 8,044 million compared with the first quarter of the fiscal 2022.

[Coaxial connectors]

Coaxial connector is 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 quarter of the fiscal 2023 decreased by 7.6% to JPY 2,796 million. Operating profit decreased by 13.7% to JPY 725 million.

[Other products]

This segment includes micro switches and instruments for connectors. Segment sales for the first quarter of the fiscal 2023 increased by 6.2% to JPY 1,592 million, operating profit increased by 87.7% to JPY 288 million.

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1. Overview of Cash Flows

Cash and cash equivalents at the first quarter of the fiscal year ending March 31, 2024 decreased by JPY 4,535 million to JPY 83,494 million compared to the end of the fiscal year ended March 31, 2023.

a. Cash flows from operating activities

Cash flows from operating activities increased by JPY 10,540 million. (In the fiscal 2022.1Q, it increased by JPY 11,783 million.) This increase was mainly due to a rise in capital by appropriating quarterly profit before tax, JPY 10,652 million, and depreciation and amortization, JPY 4,098 million.

b. Cash flows from investing activities

Cash flows from investing activities decreased by JPY 7,155 million. (In the fiscal 2022.1Q, it increased by JPY 16,600 million.) This is mainly due to proceeds from payment for purchase of tangible fixed assets, JPY 10,568 million.

c. Cash flows from financing activities

Cash flows from financing activities decreased by JPY 9,837 million. (In the fiscal 2022.1Q, it decreased by JPY 26,031 million.) This is due to dividends paid, JPY 9,640 million.

1. Analysis of financial condition

Total assets of FY2023.1Q increased by JPY 2,504 million to JPY 403,861 million compared to the end of the previous consolidated fiscal year mainly because fixed assets and other financial assets increased. Total liabilities decreased by JPY 4,298 million to JPY 47,206 million due to the decrease in corporate tax payable, trade and other payables. The quarterly profit was recorded and other components of equity including translation adjustment increased. As a result, total equity increased by JPY 6,802 million to JPY 356,655 million. The ratio of total equity attributable to owners of parent resulted 88.3%, increased by 1.1% compared with the previous consolidated fiscal year end.

1. Assumptions used for accounting estimates

There are no significant changes in the accounting estimated from "Management Analysis of Financial Position, Operating Results and Cash Flows" stated in the annual securities report of FY2022 and assumptions used for the estimates.

(5) Research and development

Our research and development expenses for the three months ended June 30, 2023, were JPY 2,094 million. As the achievement of research and development activities, fixed assets including tools appropriated to JPY 738 million. When these amounts are added up, the total of R&D investment amount was JPY 2,832 million. There were no significant changes in research and development activities for the period.

3. Material Agreements, etc

There were no decision or conclusion of significant business agreement during the three months ended June 30, 2023.

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3. Information on the Company

1. Information on the Company's Shares

(1) Total number of shares, etc.

① Total Number of Shares

	Class		Total number of shares authorized to be issued (Shares)
	Ordinary share				80,000,000
	Total				80,000,000
②Issued Shares
				Stock exchange on which
	Number of shares issued as	Number of shares	the Company is listed or
Class	of the end of first quarter	issued as of the filing	authorized financial	Description
(Shares)	date (Shares)	instruments firms
	(June 30, 2023)	(August 10, 2022)	association where the
				Company is registered
Ordinary				Tokyo Stock Exchange, Inc.	The number of shares
36,250,438	36,250,438	per unit of shares is
share	(prime market)
			100 shares
Total	36,250,438	36,250,438	−	−

(Note) The number of shares issued as of the filing date do not include the share issued by share acquisition rights from August 1, 2023 to the filing date of this report.

1. Information on the share acquisition rights, etc.

• Details of share option plans

Not applicable.

• Other information about share acquisition rights Not applicable.

1. Information on Moving Strike Convertible Bonds Not applicable.
2. Changes in the total number of shares issued, common stock, etc.

	Change in the	Balance of the	Change in	Balance of	Change in capital	Balance of
	total number of	total number of	common stock
Date	common stock	reserve	capital reserve
issued shares	issued shares	(Yen in
	(Yen in millions)	(Yen in millions)	(Yen in millions)
	(Shares)	(Shares)	millions)
May 15, 2023*	(976,651)	36,250,438	−	9,404	−	12,007

(Note) This is the decrease due to the cancellation of treasury shares.

1. Major shareholders Not applicable.

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