CMK CORPORATION

Securities Cord No : 6958

Creating the future2019 Business Report
Year Ended March 31, 2019

Financial Highlights

POINT・ ‌Given the increasing reliance of automobiles on electronics, orders for mainstay products designed forautomotive use remained strong.
・ ‌Operating income declined, reflecting the adverse impact of the currency rate fluctuations and a deteriorationin the operating rate associated with a temporary adjustment to the supply-demand situation in Japan.

▌Net sales▌Operating income

HDI PWBs
Double-sided PWBs

(Millions Yen)
100,000

86,89480,00060,00040,00020,000075,37026,941

Multilayered PWBs
Others90,23037,044

3,767
3,000

1,500

15,270

7,287

7,637

7,339

FY 2017

FY 2018

FY 2019

14,8610▌Net assets／Equity ratio
Net assets

51,54955,892

FY 2018

FY 2019▌Cash dividends

55,849

（%）
60

(Yen)
12.0

10.0

10.0
50

51.5

FY 2017Equity ratio

55.5
40,0002,652

41,784

14,291(Millions Yen)
60,0004,266

26,246

21,86631,924(Millions Yen)
4,500

11.0

8.0

49.9

6.5
6.0

20,000

40

4.0
2.0

0

1

FY 2017

FY 2018

FY 201930

0

FY 2017

FY 2018

FY 2019

Message from the President

I would like to take this opportunity to express my gratitude
to our shareholders for the consistent support they haveshown us over the years. It is my pleasure to present theoperating results for the 59th fiscal year (from April 1, 2018 toMarch 31, 2019).
I ask for your continued understanding and further support in
the years to come.
June 2019

Isao Osawa

President and CEO

Financial Results for the Fiscal Year Ended
March 31, 2019

The CMK Group takes steps to execute capital spending for
production capacity expansion and enhance productivity inresponse to the increasing demand, primarily for automotive
PWBs. As a result of these efforts, consolidated net sales

During the consolidated fiscal year under review, thetotaled ¥90,230 million (up 3.8% year on year).

Japanese economy was faced with growing uncertainties

Operating income totaled ¥3,767 million (down 11.7% year

caused by the uncertain outlook for the global economy, whileon year), reflecting the adverse impact of currency rateconsistent improvements were seen in the employment/

fluctuations and the deterioration of the operating rate

personal income environment supported by the strong

associated with a temporary adjustment in the supply-demand

domestic demand. In overseas economies, the United Statessituation in Japan.

continued to see strong consumer demand, while European

Ordinary income totaled ¥3,770 million (down 3.7% year on

countries and China saw signs of setbacks in the growth ofyear) along with a decline in operating income, and profit

their economies.

attributable to owners of parent came to ¥2,015 million (downGiven this situation, the automotive PWB market, which is the

44.6% year on year) due to a valuation loss associated withkey market for the CMK Group, is continuing to see risingsome of the investment securities.

demand with the increasing reliance of automobiles onelectronics, given the market shift towards PHVs and EVs amidtightening environmental regulations.
2

■Business domain with competitive advantage in automotive electronics

Infotainment

Climate control

Single-sided

Double-sided

Multilayered

HDI

Value-added
products

Body electronics

Market growthpotential

Required quality and reliability

Powertrains
Driving control and safety

Powertrains

Driving control and safety

Engine management system
ECU for HV/EV
Batteries
Power Control Units (PCUs)
Variable Valve Timing System, etc.

Image sensors
Millimeter wave radar
LiDAR
Driver support system
Brake control system, etc.

Body electronics

Climate control

Head-up display
Meter panels, etc.

Mirror control
Power seat, etc.

Infotainment
Driver status monitor
Telecom equipment for automobiles, etc.

Future Outlook
We aim to achieve further enhancements in profitability and
The automotive PWB market, which is the key market for thecapital efficiency, focusing on three priority measures including

CMK Group, is continuing to see rising demand with the“30 billion yen capital investment,”“Company restructuring”

increasing reliance of automobiles on electronics, given theand“Company quality improvement”in pursuit of growth ingrowing popularity of PHVs and EVs with tightening

high value-added products centered on automotive PWBs.

environmental regulations. Meanwhile, it is expected that theWe aim to achieve 100 billion yen in sales, 8.0 billion yen incompetitive situation will intensify further in the global arena.

operating income (representing 8% of sales), and ROE of 10%

Given this situation, the CMK Group has developed thein FY2021 through consistent steps to implement the 30 billion

Medium-term Management Plan 2019, covering the period

yen capital investment aimed at enhancing production capacityfrom FY2019 through FY2021, with a medium- to long-termand productivity, the structural reforms of business processes

vision aiming to“redevelop the business structure to provide

to achieve higher profitability, and the company quality

an even more rewarding work environment for employees withimprovement driven by the promotion of ESG initiatives along

greater customer satisfaction.”with the consistent efforts to maintain or enhance our financial

Among the automotive PWBs with potential for further

3

soundness.

growth, the CMK Group defines powertrains and driving control

We will remain committed to enhancing our corporate value

and safety including engines, brakes and preventive safetywith the aim of achieving stable dividend payments as a way ofdevices that require particularly high quality and reliability as adelivering shareholder returns.

strategic business domain in which it has a competitive

We are grateful to all our shareholders for their understanding

advantage.

and support.

Consolidated Financial Statements

Consolidated Balance Sheet

Thousands of
U.S.Dollars

Millions of Yen

FY2019FY2018

Consolidated Statement of Income

FY2019FY2019Current assets

61,06652,277 $553,284

Non-current assets

44,072

42,346399,311

Property, plant and equipment

37,50334,788339,793

339

371

3,071

6,228

7,185

56,428

50

50

453

105,189

94,674

953,057

Intangible assets
Investments and other assets
Deferred assets
Total assets
Liabilities
Current liabilities

25,91730,397

234,819

Non-current liabilities

23,422

8,384

212,213

Total liabilities

49,34038,782447,041

Net assets
Shareholder's equity

50,251

48,828455,295

Capital stock

22,30622,306202,102

Capital surplus

16,628

16,628150,656

Retained earnings

14,451

13,027130,932

Treasury shares(3,134)(3,134)(28,395)

Accumulated othercomprehensive income

2,208

3,670

20,005

Non-controlling interests

3,389

3,393

30,705

Total net assets

55,84955,892506,016

Total liabilities and net assets

105,189

94,674

953,057

FY2018FY2019For the year
For the year
For the year
ended
ended
ended
March31,2019 March31,2018 March31,2019

As of
As of
As of
March, 2019 March, 2018 March, 2019

AssetsThousands of
U.S.Dollars

Millions of Yen

Net sales

90,23086,894 $817,522

Cost of sales

77,18074,036699,284

Gross profit

13,05012,857

118,238

Selling, general andadministrative expenses

9,283

8,591

84,108Operating income

3,767

4,266

34,130Non-operating income

633

438

5,735

Non-operating expenses

630

787

5,708

3,770

3,917

34,157Extraordinary income

207

62

1,875

Extraordinary losses

1,005

260

9,105

Profit before income taxes

2,972

3,718

26,927

Income taxes - current

602

541

5,454

Income taxes for prior periods

222

－

2,011

Income taxes - deferred

(101)

(478)

(915)

Profit

2,249

3,656

20,376

233

17

2,111

2,015

3,638

18,256

Ordinary income

Profit attributable to noncontrolling interests
Profit attributable to owners ofparent4

Sales by application

AV equipment

1.3％

Others

16.2％

Digital still camera

1.9％

FY 2019

Mobilecommunications

2.3％

Amusement

1.6％

FY 2018

5

Car electronics

76.7％

FY 2018

FY 2019

Change■ Car electronics

72.0%

76.7%

4.7%

■ Amusement

3.6%

1.6%

△2.0%

■ Mobile communications

2.9%

2.3%

△0.6%

■ Digital still camera

2.5%

1.9%

△0.6%

■ AV equipment

1.1%

1.3%

0.2%

■ Others

17.9%

16.2%

△1.7%

TOPICS

Medium- and Long-Term Vision“Changing our business structure to promote customer
satisfaction and create more rewarding working environment”

Aiming at becoming a leading global company in a niche business specialized in highly reliable
PWBs and providing‘the highest level of reliable products’in the market, we will meetstakeholders’expectations and deliver the welfare and growth of our employees■Outline of the medium and long-term strategy

Market environment

Advantages of CMK・‌‌PWB market is growing, mainly supported by Mobile communications andproducts for automotive use
・‌‌With the widespread adoption of electrification, automated driving and 5G,
further increase in demand and requirements for quality and reliability are
expected・‌‌The industrial equipment sector and Medical equipment sector are regarded
as a market likely to grow in the future, where superior quality and reliability
are required similarly to the automotive sector・‌The share of products for Powertrain and Driving control and Safety is justbelow 50% of the sales of automotive products・‌The global share of HDI PWBs for automotive use is approximately 40% (CMK’s
assumption)・‌Product analysis capability and Quick response according to customer’s request
based on our technology and experience we have acquired over many years.
・‌Long-term supply and Quality assurance system based on stable financial base.
・‌Sharing of roadmaps with major automobile parts manufactures

Select and focus on the sectors where we can make use of ourcompany’s great advantages

Focusing on the key business sectors, select targets based on applications and PWB types
Achieving growth in the area of high-value-added products, mainly focusing on the automotive product market■Medium-term Management Plan 2019

Management policy:
Remain focused on high value-added products centered on automotive products withour competitive advantage in pursuit of higher profitability and capital efficiency.

Numerical management targets:

100

94.0

90.2

86.8

（Billions of yen）
8.0

Three key objectives for achieving our medium-term management plan
■ Sales

Capital spending:¥30 billion

To enhance production capacity and productivity

Structural reform
initiatives

To promote structural reform initiatives for each business process
in marketing, production, procurement, and human resourcesmanagement in pursuit of stronger earnings capabilities.

Corporate quality
enhancement

Promotion of ESG initiatives and maintenance/enhancement of financial soundness

4.2■ Operating income

3.7

4.0

FY2017 FY2018 FY2019（Results）（Results） （Plan）

FY2021（Our target）

Operatingmargin

4.9％

4.2％

4.3％

8.0％

ROE

7.2％

3.8％

5.1％

10.0％
6

Operating Results by Region■Sales by region
Europe & North America
China

19%
Southeast Asia

Japan

8%

57%

16%
Global TOPICS

7

CMK ELECTRONICS (WUXI) CO.,LTD. (HDI PWBs)

CMK CORPORATION (THAILAND) CO.,LTD (Double-sided PWBs, Multilayered PWBs, HDI PWBs)・‌Investment activities are・‌Investment activities areunderway with the aim

underway with the aim ofof improving the current

enhancing production

production capacity bycapacity by approximately

approximately 20% in

25% in response to the

response to the growing

growing demand for

demand for HDI PWBs in

powertrains and driving

the automotive sector.

control and safety.

Sales Japan(Up 2.1% year on year)

Operating¥1,961million
income(Down 27.2% year on year)¥16,796million

Sales
Chia

Southeast
Asia

Europe&North
America¥51,520million

(Down 2.0% year on year)¥1,620million

Operating
income(Up 33.7% year on year)¥14,849million

Sales


(Up 17.1% year on year)¥273million

Operating
income(Down 2.7% year on year)¥7,064million

Sales


Operating
income(Up 6.6% year on year)¥409million(Down 0.7% year on year)

Overview of the fiscal year

Auto production in Japan remained strong, primarily driven bybrisk exports. Coupled with this, the increasing reliance ofautomobiles on electronics technologies contributed to the salesof the CMK Group. Sales amounted to ¥51,520 million (up 2.1%
year on year), assisted by the growth in demand for automotive
products. Operating income for the segment totaled ¥1,961 million(down 27.2% year on year) due to deterioration in the operation
rate associated with a temporary adjustment in the supplydemand situation in Japan.

Overview of the fiscal year

Auto sales in terms of units made by Japanese car manufacturers
remained strong, despite a setback in the growth of the economy.
Given this market situation, total sales during the period came to¥16,796 million (down 2.0% year on year), primarily reflecting adecrease in sales to the amusement industry, partially offset by anincrease in sales of automotive products. Meanwhile, operating
income for the segment totaled ¥1,620 million (up 33.7% year onyear), primarily reflecting an improvement in productivity.

Overview of the fiscal year

The economies of Southeast Asian nations remained firm in termsof consumer spending, driven by the strong employment andpersonal income environment. Thailand saw growth in car sales interms of volume. We achieved sales of ¥14,849 million (up 17.1%
year on year), primarily assisted by the strong demand forautomotive products. Operating income for the segment totaled¥273 million (down 2.7% year on year), primarily reflecting theappreciation in the value of the Thai baht against the US dollar.

Overview of the fiscal year

While unit sales of automobiles remained flat in both theUnited States and Europe, we achieved an increase in salesof products for automotive use, with sales of ¥7,064
million (up 6.6% year on year). Meanwhile, operating
income for the segment came to ¥409 million (down 0.7%
year on year).

8Corporate Data (As of March 31, 2019)

Name of listed company CMK CORPORATION(Securities code no.: 6958)
Date of establishment

February 25, 1961

Capital¥22,306,203,140

Number of employees

1,204 (Group total 4,990)

Executives (as of August 1, 2019)
Board of Directors▌Japan● CMK Products Corporation● CMK Finance Corporation▌Overseas

Executive Officers● CMK ASIA (PTE.) LTD.

President and CEO

Isao Osawa

Executive
Officers

Yoshiaki Ishizaka

Executive Director and
CFO

Akira Kurosawa

Executive
Officers

Masanori Kawashima● CMK CORPORATION (THAILAND) CO.,LTD.

Director and Executive
Officers

Hiroshi Hanaoka

Executive
Officers

Masaya Kuriyama

Director and Executive
Officers

Takahiro Shirai

Executive
Officers

Seiichi Kobayashi

Director

Tsuyoshi Ukyo

Executive
Officers

Hiroyuki Sato

Director

Rika Sato

Executive
Officers

Eizo Shibata● CMK ELECTRONICS (WUXI) CO., LTD.

Director

Fumio Haraguchi

Executive
Officers

Takahiro Tachikawa● CMK EUROPE N.V.

Board of Corporate Auditors

Executive
Officers

Akiharu Nakayama● CMK AMERICA CORPORATION

Standing Corporate
Auditor

Masayoshi Hagiwara

Takashi Ogasawara

Executive
Officers

Standing Corporate
AuditorMasashi Koike

Executive
Officers

Toshikazu Fujino

Corporate Auditor

Yukio Otaka

Executive
Officers

Naoki Matsuo

Akihiro Kakizaki

Executive
Officers

Yoshihisa Yamaguchi

Corporate Auditor

Our Website■ TOPICS■ PRODUCT■ COMPANY■ IR INFO■ CSR■ RECRUIT

We disclose detailed information on this website.

9

Primary Consolidated Subsidiaries● CMKC (HK) LIMITED● CMKC (SHENZHEN). LTD.
● CMKC (DONG GUAN) LTD.

Stock Information (As of March 31, 2019)

Total number of shares authorized
Total number of shares issued and outstanding

227,922,000

Major shareholders (10 largest)

63,060,164

Shareholders

7,702

Number of shareholders

100

Share trading unit
Shareholder Breakdown【Total 63,060,164shares】
Individuals and others

16,799thousand shares（26.6%）

Financial

23,792thousand shares（37.7%）

Securities ﬁrms

731thousand shares（1.2%） Foreign companies and individuals

7,457thousand shares（11.8%）
Other ﬁrms

14,279thousand shares（22.7%）

The Master Trust Bank of Japan, Ltd. (Trust account)
Takahiro Nakayama
Mizuho Bank, LTD.
The Foundation for Technology Promotion of Electronic Circuit Board
Japan Trustee Services Bank, Ltd. (Trust account)
The Dai-ichi Life Insurance Company, Limited
Hiroshi Hashimoto
Akiharu Nakayama
Trust & Custody Services Bank, Ltd. as trustee for
Kiraboshi Bank, Ltd.; retirement benefit trust accountre-entrusted by Mizuho Trust and Banking Co., Ltd.
Kyoden Area Net KK

Number of shares held Percentage(thousands)
(%)

4,574
2,836
2,576
2,500
2,386
1,895
1,890
1,886

7.7
4.7
4.3
4.2
4.0
3.2
3.1
3.1

1,745

2.9

1,735

2.9

Note:1．
‌Although the Company holds 3,863,270 shares of treasury stock, it is notincluded in the above list of major shareholders.
‌Treasury shares were excluded in calculating the shareholding ratios.
2．

Shareholders Memo
Fiscal year:

April 1 through March 31of the following year

Regular general
meeting ofshareholders:

Held in June each year

Date of record for March 31
end-of-year
dividends:
Date of record for September 30
mid-yeardividends:

Notification
method:Electronic notification(company website athttps://www.cmk-corp.com).
If notification cannot be madeelectronically, it will be made using
the Nihon Keizai Shimbun.

Transfer agent:Mizuho Trust & Banking Co., Ltd.
1-2-1, Yaesu, Chuo-ku, Tokyo, Japan
Stock Transfer Agency Bussiness
Planning Department

Contact address:

Mizuho Trust & Banking Co., Ltd.
8-4 Izumi 2-chome, Suginami-ku,
Tokyo 168-8507
0120-288-324

1043rd Floor, Shinjuku I-Land Tower Bldg., 6-5-1
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-1388, Japan
Tel.: +81-3-5323-0231 (main)
https://www.cmk-corp.com