HOYA : Quarterly Report for the three months ended Sep.30,2020

October 27, 2020

Quarterly Report

2nd Quarter : 3 months ended September 30, 2020

Interim(1st Half) : 6 months ended September 30, 2020

Consolidated (HOYA CORPORATION and Consolidated Subsidiaries)

Part .1

2nd Quarter : from July 1 to September 30, 2020

1. Quarterly Consolidated Financial Highlights : p.1
2. Results of Operations : p.2
3. Quarterly Consolidated Financial Statements
4. 1. Quarterly Consolidated Statement of Financial Position : p.4
   2. Quarterly Consolidated Statement of Cash Flows : p.6
   3. Quarterly Consolidated Statement of Comprehensive Income : p.7
   4. Segment Information : p.8

＜Reference＞Supplementary data for 2nd Quarter : p.11

Part .2

Interim(1st Half) : from April to September 30, 2020

1. Interim Consolidated Financial Highlights : p.12
2. Interim Consolidated Financial Statements
3. 1. Interim Consolidated Statement of Financial Position : p.13
   2. Interim Consolidated Statement of Cash Flows : p.15
   3. Interim Consolidated Statement of Comprehensive Income : p.16
   4. Segment Information : p.17

＜Reference＞Supplementary data for Interim Period : p.20

Notes:

1. HOYA's fiscal year (FY) : from April 1 to March 31 of the following year.
2. These financial statements are excerpt translation of Japanese "Kessan Tanshin "and have been prepared for the references only of foreign investors.

HOYA CORPORATION

This report is provided solely for the information of professional analysts who are expected to make their own evaluation of the company. This report contains forward-looking statements that are based on management's assumptions and beliefs in light of the information currently available to it and therefore you should not place undue reliance on them.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from that anticipated in these statements. These factors include changes in economic conditions, trends in our major markets, currency exchange rates, etc.

We accept no liability whatsoever for any direct or consequential loss arising from any use of this report.

Part.1

October 27, 2020

1. Quarterly Consolidated Financial Highlights

HOYA CORPORATION and Consolidated Subsidiaries

1. Performance for the three months ended September 30, 2019 and 2020 (All operations *Notes)

( The yen amounts shown therein are rounded off to the nearest million.)

		Three months ended	Variance
(1)Revenue and Profit before tax	Sep. 30, 2019	Sep. 30, 2020			(%)
	Revenue	154,129		140,313			-9.0
	Profit before tax	44,221		40,193			-9.1
	Ratio of profit before tax(%)	28.7%		28.6%
	Profit for the quarter	35,032		31,841			-9.1
	Ratio of profit for the quarter(%)	22.7%		22.7%
	Profit attributable to owners of the Company	34,866		31,846			-8.7
	Ratio of profit attributable to owners of the Company(%)	22.6%		22.7%
	Basic earnings per share (yen)	92.45		84.97
	Diluted earnings per share (yen)	92.29		84.83
		As of
(2)Financial Position	Jun. 30, 2020	Sep. 30, 2020
	Total assets	787,606		825,941
	Total equity	637,183		663,597
	Equity attributable to owners of the Company	653,078		679,226
	Ratio of assets attributable to owners of the Company	82.9%		82.2%
	Assets attributable to owners of the Company per share (yen)	1,742.64		1,812.22
		Three months ended
(3) Conditions of Cash Flows	Sep. 30, 2019	Sep. 30, 2020
	Net cash generated from operating activities	44,653		48,354
	Net cash used in investing activities	-11,080		-8,698
	Free cash flow	33,573		39,656
	Net cash provided by (used in ) financing activities	-7,465		-1,844
	Cash and cash equivalents at end of period	298,430		337,444
2.Dividends per Share
		Year ended/ending
		Mar.31,2020	Mar.31,2021
	Interim (Yen)	45.00		45.00
	Year-end (Yen)	45.00		TBD
	Annual (Yen)	90.00		TBD
3.Other
		Three months ended
		Sep. 30, 2019	Sep. 30, 2020
	Capital expenditure	12,602		11,251
	R&D expenses	6,513		6,047

Notes:

"All operations" means here that the figures are including not only "Continuing operations" but also "Discontinued operations".

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from that anticipated in these statements. These factors include changes in economic conditions, trends in our major markets, or currency exchange rates.

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2. Results of Operations

1) General Overview

HOYA Group sales for the second quarter of the consolidated fiscal year under review (three months from July 1 to September 30, 2020) amounted to 140,313 million yen, a decrease of 9.0% from the same period of the previous fiscal year (three months from July 1 to September 30, 2019).

Quarterly profit before tax amounted to 40,193 million yen, and quarterly profit amounted to 31,841 million yen, down 9.1% respectively.

The quarterly profit margin before tax was 28.6%, maintaining the same level as the same period of the previous fiscal year.

Disclosed figures and change ratios are for businesses with continuing operations. There were no discontinued businesses in the second quarter or the same quarter of the previous year.

In the Life Care business, sales of eyeglass lenses, a healthcare-related product, declined slightly, while sales of contact lenses declined.

In medical-related products, sales of medical endoscopes and intraocular lenses for cataracts declined, and overall sales in the Life Care segment declined.

In the Information Technology business, sales of mask blanks for semiconductors for electronics-related products increased significantly, sales of photomasks for FPDs decreased, and sales of glass substrates for hard disks decreased. Sales of imaging-related products declined. As a result, overall sales in the Information Technology business decreased.

2) Segment Overview

The following discusses results by reportable segment. (Segment sales represent sales to external customers.)

Life Care

Demand for eyeglass lenses gradually recovered as governments eased their economic activity restrictions to curb the spread of COVID-19, although there were differences among countries and regions. As a result, our sales recovered to almost the same level as the previous year.

Sales of contact lenses declined due to a last-minute surge in demand before the consumption tax hike in the previous year, despite a recovery from the impact of COVID-19.

Sales of medical endoscopes have been on a recovery trend, but sales declined due to large orders received in Europe in the previous year and other factors.

Sales of intraocular lenses for cataracts declined, despite a recovery trend in sales revenue, mainly overseas.

As a result, sales in the Life Care segment amounted to 90,128 million yen, a decrease of 10.2%. Segment profit decreased by 14.1% to 17,735 million yen.

Information Technology

Sales of mask blanks for semiconductors increased significantly due to brisk research and development in cutting- edge products, including products for EUV (Extreme Ultraviolet), and our capturing demand for the launch of mass- production.

As for photomasks for FPDs, there was a trend for customers to prioritize mass production activities due to the rise in TV panel market prices stemming from working from home and learning from home demand. As a result, demand for photomasks for research and development decreased, resulting in a decrease in sales.

In hard disk glass substrates, sales of 3.5-inch products, which are expected to grow significantly in the future, increased robustly due to continued strong demand for near-line applications at end customers, which are data centers.

On the other hand, sales of 2.5-inch products declined due to the acceleration of the replacement of HDDs (Hard Disk Drive) with SSDs (Solid State Drive) and other factors, resulting in a decrease in sales for the segment as a whole.

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In lenses for cameras, in addition to erosion by smartphones for both digital cameras and interchangeable lenses, sales of lenses for cameras declined due to a decline in demand and sales for camera products caused by factors such as restrictions on outings caused by the impact of COVID-19 and a decrease in the number of photo-taking opportunities.

As a result, sales of lenses for cameras also declined, resulting in an overall decline in sales.

As a result, sales in the Information Technology segment decreased by 6.6% to 48,954 million yen. Segment profit decreased by 8.0% to 22,369 million yen.

Other

The Other businesses consist mainly of speech synthesis software business, information system services business, and new businesses. Sales in the Other business decreased by 4.8% to 1,231 million yen. Segment profit decreased by 44.7% to 127 million yen.

3) Subsequent events

Resolution on cash dividends

On October 27, 2020, a resolution was made by the HOYA CORPORATION ("The Company")'s board of directors for the payment of a cash dividend to shareholders of record on September 30, 2020 of 16,866 million yen (45 yen per common share).

Resolution on Share Repurchase

On October 27, 2020, a resolution was made by The Company's board of directors for share repurchase based on Article 39 of Articles of Incorporation pursuant to Article 459.1 of the Companies Act of Japan as outlined below.

The Company decided to acquire its own shares with the aim of shareholders benefit, improving capital efficiency and ensuring a flexible capital policy.

(1)	Class of share to be repurchased	Common stock issued by The Company
(2)	Total number of shares to be repurchased	4 million shares (maximum)
	（1.07% of total shares outstanding, excluding treasury stock）
(3)	Total amount to be paid for repurchase	40 billion yen (maximum)
(4)	Period of share repurchase	October 28, 2020 through Janurary 20, 2021
(5)	Method of repurchase
	Purchase on the Tokyo Stock Exchange based on discretionary investment contract
(6)	Others
	Purchased stocks are planned to be cancelled with the aim of shareholders benefit

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