HOYA : Presentation for the three months ended Jun.30,2020

July 28, 2020 at 12:35 am EDT

F i n a n c i a l R e s u l t s

July 28, 2020 Earnings Conference

7 7 4 1 . T [ A D R : H O C P Y U S ]

H O Y A C O R P O R A T I O N

Financial Results [Ryo Hirooka, CFO]
IT Business Overview
Life Care Business Overview
Summary
Q&A

© 2020 HOYA CORPORATION All Rights Reserved	2

Financial Overview

(¥bn)	Q1 FY19	Q1 FY20	YoY	YoY(%)

Revenue	140.8	109.3	-31.5	-22%
Pretax Profit	37.0	31.9	-5.1	-14%
Net Profit	30.1	25.6	-4.5	-15%

cf. Profit from

ordinary operating 38.5 31.3 -7.2-19% activities*

Sales declined due to the impact of COVID-19;however cost reductions minimized the impact on profits.

(Pretax Profit Margin 26.3%→29.2%)

Constant Currency Basis (CCB)

(¥bn)	Previous	Current	FX Impact	YoY	YoY(%)
Rate (A)	Rate (B)
Revenue	111.7	109.3	-2.4	-29.1	-21%

Pretax Profit

32.2

31.9

-0.3

-4.8

-13%

Net Profit	25.9	25.6	-0.2	-4.3	-14%

Average Rates	(A)Q1 FY19	(B)Q1 FY20	Variance

US$	¥109.67	¥107.38	+2.1%
EURO	¥122.87	¥118.74	+3.4%
BAHT	¥3.47	¥3.39	+2.3%

Notes RE: Special Items

Comprehensive Income Statement
(¥bn)	Q1 FY19	Q1 FY20	YoY
Income	142.4	113.7	-28.7	1
Other Income	0.6	3.9	+3.3
Expenses	105.4	81.8	-23.6	2
Pretax Profit	37.0	31.9	-5.1

Recorded a revenue related to a settlement in the U.S.

The Company has made significant temporary cost reductions to limit the impact of the reduction in marginal profit.

Life Care Earnings

(¥bn)	Q1 FY19	Q1 FY20	YoY	YoY(%)

Revenue*	93.8	61.9	-31.9	-34%
Pretax Profit	17.3	10.3	-7.0	-40%

cf.Operating Profit	18.2	9.3	-8.9	-49%

cf.OP Margin	19.4%	14.9%	-4.5pt

*External revenue

Life Care Earnings (CCB)

(¥bn)	Previous	Current	FX	YoY	YoY(%)
Rate	Rate	Impact


Revenue*	63.6	61.9	-1.7	-30.2	-32%
Pretax Profit	10.3	10.3	+0.1	-7.0	-41%

cf.Operating Profit	9.3	9.3	-0.1	-8.8	-49%

*External revenue

IT Earnings

(¥bn)	Q1 FY19	Q1 FY20	YoY	YoY(%)

Revenue*	46.0	46.2	+0.3	+1%
Pretax profit	20.5	21.7	+1.2	+6%

cf.Operating Profit	21.2	22.5	+1.3	+6%

cf.OP Margin	46.0%	48.6%	+2.6pt

Resulted in unusually high margins due to a temporally cost reduction measure not limited to Life Care but also including IT.

*External revenue

IT Earnings (CCB)

(¥bn)	Previous	Current	FX	YoY	YoY(%)
Rate	Rate	Impact


Revenue*	46.9	46.2	-0.6	+0.9	+2%
Pretax profit	21.9	21.7	-0.3	+1.5	+7%

cf.Operating Profit	22.7	22.5	-0.3	+1.6	+7%

*External revenue

Earnings by Sub-Segment

（¥bn）	Q1 FY19	Q1 FY20	YoY	YoY(%)

Health Care	70.4	43.9	-26.5	-38%
(Eyeglasses/Contact			(-25.3)	(-36%)
Lenses)
Medical	23.3	18.0	-5.3	-23%
(IOLs/Endoscopes/Ar			(-4.8)	(-21%)
tificial Bone)
Electronics	37.0	40.3	+3.2	+9%
(Mask & Blanks/HDD			(+3.7)	(+10%)
Substrates)

Imaging	9.0	6.0	-3.0	-33%
			(-2.8)	(-32%)

*Inside the parentheses are growth rates on a constant currency basis

Balance Sheet

(¥bn)	Q3 FY19	Q1 FY20	QoQ
Non-current Assets	289.8	288.3	-1.5
Current Assets	521.2	499.3	-21.9	1
Capital	629.3	637.2	+7.9
Non-current Liabilities	49.4	49.5	+0.1
Current Liabilities	132.4	100.9	-31.5	2
Total Assets	811.0	787.6	-23.4

Decrease of cash -16.5bn yen

Decrease in trade and other payables due to lower demand -15.6bn yen

Cash Flow

(¥bn)	Q1 FY19	Q1 FY20	YoY

Operating CF	35.4	10.8	-24.7	1

Investing CF	-10.9	-6.5	+4.4	2

Financing CF	-37.7	-19.8	+17.9

Cash & Cash Equivalents	273.8	301.5	+27.7
at the end of the term

Decline in operating cash flow due to lower profits.

Cash outlays from investing activities decreased as large investments are coming to an end.

Q2 & H1 Forecast

We expect the impact of COVID-19 on our Life Care Business to mitigate; however, we expect sales of contact lenses to decline due to the rush demand before the tax hike in Q2 last year. We expect electronics-related products to be strong, while weak momentum to continue in the imaging business.

FY20 Q2

(¥bn)	Q2 FY19	Q2 FY20	YoY	YoY(%)
Revenue	154.1	135.7	-18.5	-12%
Pretax Profit	44.2	35.1	-9.2	-21%
Net Profit	35.0	27.9	-7.2	-20%

FY20 H1
(¥bn)	H1 FY19	H1 FY20	YoY	YoY(%)
Revenue	294.9	245.0	-49.9	-17%
Pretax Profit	81.3	67.0	-14.3	-18%
Net Profit	65.2	53.5	-11.7	-18%

Financial Results
IT Business Overview [Eiichiro Ikeda, CTO]
Life Care Business Overview
Summary
Q&A

© 2020 HOYA CORPORATION All Rights Reserved	14

IT Snapshot

YoY Sales Growth (Like-for-Like)

+5%

+14%

-32%

	Masks & Blanks
HDD Substrates	(LSI/FPD)	Imaging

+2%

Overview by Product

LSI Blanks

FPD Masks

EUV blanks continued to show significant growth mainly in R&D applications. DUV sales were also solid. Despite inventory buildup due to COVID-19, we expect solid growth in Q2 and beyond. The impact of the tighter U.S. regulations on Huawei is expected to be limited because our products are still mainly for R&D, not mass production.

We experienced continued strong growth in the Chinese market, capturing demand for OLEDs. Competition to develop differentiated display designs for smartphones continues. We will continue to focus on masks for small- and medium-sized OLEDs and other high value-added products in China. Going forward, we may see some impact from Korean customers' LCD panel factory closure.

Overview by Product

HDD Substrates

Imaging

2.5" sales declined due to the temporary closure of customer manufacturing sites, etc. Difficult conditions are expected to continue in Q2 and beyond. This period for 3.5" is normally a downturn in the industry's investment cycle, but sales doubled compared with the previous fiscal year due to special demand related to work from home and customer market share gains. Going forward, we expect 3.5" continue to offset the decline of 2.5.

Demand for photography-use products declined significantly due to the negative impact of travel restrictions, and store closures, and there is still no sign of recovery in sight. Despite production adjustments in surveillance camera applications due to COVID-19, the market is expected to grow from 2021 onwards due to an increase in high-performance models, including models designed for disease control.

Financial Results
IT Business Overview
Life Care Business Overview[Hiroshi Suzuki, CEO]
Summary
Q&A

© 2020 HOYA CORPORATION All Rights Reserved	18

Life Care Snapshot

YoY Sales Growth (Like-for-Like)

-10%

-42%

-23%

Endoscopes

-14%-43%

Eyeglass Lenses

Contact Lenses Other

IOLs

-32%

Overview by Product

Eyeglass Lenses

Contact Lenses

Sales declined due to restrictions on non-essentialtravel outside the home and retail store closures. With the relaxation of regulations, retail sales resumed, and June sales were at the same level as last year. Due to the low level of economic sensitivity in the eyeglass market, we expect the market to continue to recover steadily as economic activity continues to increase. Production at our new factory in Vietnam (No. 2) started on July after a delay.

As many as 40% of our stores were closed under the state of emergency declaration; however the impact was limited in part through online delivery. All stores reopened after the state of emergency was lifted. There has been no outflow of customers to online services, and sales are currently returning to the same level as last year. We are also examining future store development in a post-COVID-19 era.

Overview by Product

IOLs

Endoscopes

Demand for IOLs declined during the COVID-19 pandemic, due to the cancellation or postponement of cataract surgeries. Although it varies from market to market, there has been a slow recovery in clinics while the recovery in large hospitals has been slow at the moment. Since cataract surgery is not a purely "elective" procedure, the number of surgeries is expected to continue to increase.

The impact of COVID-19 resulted in restricted access to hospitals, reduced capital investment and delays of certain endoscopic procedures; However, we expect the back log of procedures to be conducted going forward. Although performance depends on the future status of infections, the company expects sales to recover in Q3 to the same level as last year. We aim to obtain approval for disposable bronchoscopes by the end of this year.

Financial Results
IT Business Overview
Life Care Business Overview
Summary [Hiroshi Suzuki, CEO]
Q&A

© 2020 HOYA CORPORATION All Rights Reserved	22

Financial Results
IT Business Overview
Life Care Business Overview
Summary
Q&A

© 2020 HOYA CORPORATION All Rights Reserved	23

Appendix

Life Care QoQ Earnings

Revenue

(¥bn)	93.8	100.4	92.5
	88.3

		cf. Operating Profit / Margin
		19.4%	21.6%

			16.9%	16.2%	14.9%

	(¥bn)		21.7
		18.2
		15.7	14.3
61.9
			9.3

Q1	Q2	Q3	Q4	Q1	Q1	Q2	Q3	Q4	Q1
		FY19		FY20			FY19		FY20

*External revenue

IT QoQ Earnings

Revenue

cf. Operating Profit / Margin

46.0% 46.2% 44.9% 42.8%

48.6%

(bn)

	52.4	52.7		(¥bn)	24.3	23.6	22.5
46.0	45.7	46.2	21.2	19.5

Q1	Q2	Q3	Q4	Q1	Q1	Q2	Q3	Q4	Q1
	FY19			FY20		FY19			FY20

*External revenue

Notes

Accounting standard: IFRS
The fiscal year ending March 2021 is referred to as "FY20" throughout this document.
Figures less than ¥100 million are rounded down. Accordingly, some discrepancies may occur among totals. Ratios are calculated using actual numbers.
Like-for-Likefigures exclude foreign exchange and M&A impact as well as other extraordinary factors.
Profit from ordinary operating activities is calculated as reference information for investors; calculated by deducting finance income/costs, share of profits(loss) of associates, foreign exchange gain/loss and other temporary gain/loss from pretax profit.
We have omitted a detailed breakdown of financial statements.

Please refer to the tanshin or the quarterly report for detailed numbers. http://www.hoya.co.jp/english/investor/library.html

Forward Looking Statement

HOYA may make comments and disclose information which include forward-looking statements with respect to HOYA´s plans and future performance. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements and are based on management´s assumptions and beliefs in light of the information available when such statements were prepared, including exchange and interest rates, international situations, market trends and economic conditions, competition, production capacity, estimates of revenues, operating margins, capital expenditures, cash, other financial metrics, expected legal, arbitration, political, regulatory, clinical or research and development capabilities, results or practices, customer patterns or practices, reimbursement activities and outcomes, effects of pandemics or other widespread health problems such as the ongoing COVID-19 pandemic on our business, and other such estimates and results. HOYA does not guarantee the accuracy or completeness of such information and HOYA does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

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Hoya Corporation published this content on 28 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2020 04:35:14 UTC

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HOYA : Presentation for the three months ended Jun.30,2020

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