Results Briefing for the First Half (Feb.–Jul.)of the Fiscal Year Ending January 31, 2024

September 1, 2023

Prime Market, Tokyo Stock Exchange (Ticker Code: 8068)
https://www.ryoyo.co.jp/en/

Copyright 2023 © Ryoyo Electro Corporation

Overview of the First Half of the Fiscal
Year Ending January 2024

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Copyright 2023 © Ryoyo Electro Corporation

Intentions for the fiscal year's performance forecasts atthe beginning of the year and the trends in the first half
The fiscal year's performance forecasts
at the beginning of the year
Anticipated a challenging business environment(declines in both sales and profit) based on three main factors:
Adjustment fromsemiconductor market boom

Reduction of marginal gains due toexchange rate fluctuations

Ending oflarge-lot businessQ1 results➢ Achieved YoY increases in both sales and profit (on an operating profit basis) due mainly
to growth in the ICT business.
➢ Recorded share of profit of entities accounted for using equity method following the
adoption of the equity method for Ryosan.
→ Significant YoY increases in ordinary profit and profit attributable to owners of parent
Performance forecasts for the full year have been revised upward.

First half results
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First half results➢ Net sales increased in both semiconductors & devices and ICT & solutions.

➢ Gross profit rose despite a decline in profit margin mainly due to less boosting effect from semiconductor
spot projects and foreign exchange fluctuations.
➢ Selling, general and administrative expenses increased due to rise in labor costs, as well as the recordingof alliance-related expenses and allowance for doubtful accounts.
➢ The share of profit of entities accounted for using equity method was ¥4.46 billion, recorded as nonoperating income.
FY2023/1 FY2024/1
H1
H1
ResultResult60.8
65.1(Billion yen)
Net sales
Gross profit

YoY Change
+4.3

%
+7.0%

+0.15

+2.2%

6.74

6.88

11.1%

10.6%

Selling, general and administrative expenses

4.22

4.57

+0.35

+8.2%

Operating profit

2.51

2.31

-0.20

-7.9%

(%)

4.1%

3.6%

Ordinary profit

2.48

6.49

+4.02 +162.0%

Profit attributable to owners of parent

1.78

5.75

+3.97 +223.0%(Note) FY2023/1: Fiscal year ended January 2023

FY2024/1: Fiscal year ending January 2024(%)

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Half-year net sales and operating profit
The operating margin has remained above 3% since the firsthalf of fiscal year ended January 2023.
FY2023/1

FY2024/1

Benefited greatly from external factors
such as semiconductor market
conditions and foreign exchange rates

Benefited from growth in ICT-related
sales and improved profitability

2.51(4.1%)

Operating profit(%)

Net sales

0.95(1.8%)

52.3

2.18(3.2%)

2.31(3.6%)

69.1

65.1

H2

H1

(Billion yen)

1.31
(2.2%)

59.8

60.8

H2

H1

H1

FY2022/1(Note) FY2022/1: Fiscal year ended January 2022
FY2023/1: Fiscal year ended January 2023
FY2024/1: Fiscal year ending January 2024

FY2023/1

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FY2024/1

Copyright 2023 © Ryoyo Electro Corporation

Factors impacting sales change➢ Semiconductors & devices: Despite relative decline following the strong demand amid component
shortages, business expansion outside Japan and startup of new projects drove sales growth.
➢ ICT & solutions: Remained robust overall, including capturing demand related to the online eligibility
verification system, despite a decline in software sales due to ending of some projects.
Semiconductors & devices

ICT & solutions(Net sales by application)
Year-on-year change: Up ¥1.8 billion(Net sales by product)
Year-on-year change: Up ¥2.5 billion

Digital Communication
consumer+1.0
electronics+2.3
Industrials& others
Vehicle-0.4
installation PCs &peripherals
-0.5
-0.7

(Billion yen)

Embedded
I/O
devicesequipment
PC/server/ & others
+0.4
+1.0
network+2.5

Software
-1.4

65.1
60.8

FY2023/1
H1

FY2024/1
H1
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Copyright 2023 © Ryoyo Electro Corporation

Semiconductors & devices:
Promoting further globalization of business outside Japan
While our business outside Japan initially depended largely onreceiving orders from Japan, in recent years the ratio of businessoriginating outside Japan has been rising.
➢ In addition to existing sales for TVs, startup of mobile
device projects is also contributing this fiscal year.

Composition of sales inbusiness outside Japan(Results for first half of FY2024/1)

Chinese smartphone
manufacturers have adopted our
fingerprint authentication sensor.

➢ “Out-out” business* for local customers in Greater
China and other countries/regions expanded, witharound 70% of sales outside Japan coming fromtrades between countries/regions other than Japan.
*Transactions where a local subsidiaryoutside Japan sells products procured
either locally or from a country/region
other than Japan to a local company.

Promoting further globalization of businessoutside Japan, including localization ofbases abroad.
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Net sales
outside Japan¥23.4 billion

Business originating
outside Japan69%

Net sales outside Japan have morethan tripled in the past five years.
(First half of FY2019/1: ¥6.9 billion)
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ICT & solutions:
Leveraging online eligibility verification* business to explore
new businesses
Promoting environmental preparation for IT adoption in the
medical field, including the online eligibility verification business,
which has been expanding since last fiscal year
➢ In the medical field, we are developing business byproviding additional services and support such as
equipment installation, network setup, andmaintenance, in addition to selling equipment.

Sales trend in the medical field(Billion yen)

Reference: Overview of online eligibility verification businessEligibility verification terminal(setup and configuration)

×Win10 IoT×
PC (without OS)

Router

Installation
Maintenanc
e

5.4
3.2

4.2

6.2

3.5

Apps and Drivers

H1➢ Also, through the development of the online eligibility
verification business, we are establishing
relationships with new customers.

Leveraging the new customer base andexpertise gained through the online eligibility
verification business to accelerate initiatives
targeting the medical/nursing care fields
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H2

FY2022/1

H1

H2

FY2023/1

H1
FY2024/1

Online eligibility verification

Verification of patients’ insurance coverage for
medical treatment (eligibility information) online
using the IC chip in a My Number card or the code
number of a health insurance card. As of April
2023, adoption is mandatory, in principle, formedical institutions and pharmacies.
Copyright 2023 © Ryoyo Electro Corporation

Supplement: Net sales by productSemiconductors & devices
24.1期
FY2024/1
上 期
H1

37.8 (58.0%)
＋4.9%

23.1期
FY2023/1
上 期
H1

ICT & solutions(Billion yen)

27.3 (42.0%)

65.1＋10.0%

36.0 (59.2%)

24.8 (40.8%)

Semiconductors & devices
Net sales by product

ICT & solutions

Net sales by application

3.8
2.0
2.6

27.3

36.0
Analog & power
semiconductors

4.4

2.5

13.5
18.5

Net sales by product

37.8

37.8
36.0
4.0

60.8

Logic
semiconductors

Memorysemiconductors
RF & opticalsemiconductors
LCDs

5.1
FY2023/1
23.1期
上H1
期

Other electronic
devices

Digital consumer
electronics

19.0

3.0
1.6
2.2
7.4
FY2024/1
24.1期
上H1
期

1.6

Vehicleinstallation

7.5

PCs &
peripherals

10.8

3.6

Communication

Industrials &others

23.1期
FY2023/1
上H1期

15.8

7.7

5.3

PC/server/
network

3.7

I/O equipment

4.1

7.8

Software

6.4

8.1

Embedded
devices& others

1.1
6.8

10.4

24.1期
FY2024/1
上H1期

8

24.8

23.1期
FY2023/1
上H1期

9.0

24.1期
FY2024/1
上
H1期

Copyright 2023 © Ryoyo Electro Corporation

Business Plan for the Fiscal Year Ending
January 31, 2024

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Copyright 2023 © Ryoyo Electro Corporation

Annual forecast
While uncertainty remains about semiconductor market conditions,foreign exchange rates, etc., there are no major changes from theinitial second half forecast.
Semiconductors & devices➢ Polarization between sectors performing well and performing poorly will continue,
due in part to an adjustment from the market boom in the previous fiscal year.
➢ We have raised our forecast for business for TVs based on first half results.
➢ Business for mobile devices will be impacted by market cool-down.
→ While the full-year sales growth outlook remains unchanged,
the margin of growth has been reduced from the initial plan.
ICT & solutions➢ The impact of ending of some software projects will expand, and online eligibility
verification business is expected to gradually shrink.

→ Both factors have already been incorporated into the initial plan.
➢ Other businesses will likely maintain high levels against a backdrop of steady IT
investment by companies.
→ Due to the usual seasonality, we anticipate a greater contribution from Q4 than Q3.
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Copyright 2023 © Ryoyo Electro Corporation

Annual targets
First half results showed over 50% progress against the upwardly revised annual target
announced in May (Q1 earnings release), for both net sales and operating profit.

Annual target kept unchanged from the May revision
FY2023/1(Billion yen)

ResultH1
ResultFY2024/1
AnnualInitialH2
TargetAnnualTarget (Revised
Targetin May)YoY Change%

Progress
AgainstAnnualTargetNet sales

129.9

6.51

6.29

128.0

120.0

-1.9

-1.5%

50.8%

Gross profit

13.58

6.88

6.77

13.65

12.80

+0.07

+0.5%

50.4%

(%)
Selling, general andadministrative expenses
Operating profit

10.5%

10.6% 10.7% 10.7%

10.7%

8.89

4.57

4.78

9.35

9.20

+0.46

+5.2%

48.9%

4.69

2.31

1.99

4.30

3.60

-0.39

-8.4%

53.8%

(%)

3.6%

3.6%

3.2%

3.4%

3.0%

Ordinary profit
Profit attributable toowners of parent

4.48

6.49

2.41

8.90

6.50

+4.42

+98.8%

73.0%

3.06

5.75

1.75

7.50

5.50

+4.44 +145.4%

76.7%

ROE

7.0%

15.6%

12.1%

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Copyright 2023 © Ryoyo Electro Corporation

Factors impacting sales change➢ Semiconductors & devices: Sales in communications and industrials are expected to increase. The
outlook for digital consumer electronics, centered on TVs, is raised upward compared to the initial plan.
➢ ICT & solutions: No change from initial outlook. Sales are expected to increase year on year, as thedecrease in software will be offset by solid growth in other products.
Semiconductors & devices

ICT & solutions(Net sales by application)
Year-on-year change: Down ¥2.2 billion(Net sales by product)

Industrials
Communication & others
+0.6
+1.3

Reviseddownwards(narrower sales
increase)

Year-on-year change: Up ¥0.2 billion
Embedded
devices
PC/server/ & others+2.1
network+2.6

Revised upwards(narrower sales decline)(Billion yen)I/Oequipment+1.8

Digital
VehicleconsumerPCs &electronics installation
peripherals
-1.3
-0.9
-1.8

Software-6.3

No change in plan

129.9

128.0

FY2023/1
23.1期
Results(実 績)

FY2024/1
24.1期
Targets(計 画)

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Supplement: Net sales by product

24.1期
FY2024/1(計画)
Targets

77.0 (60.2%)-2.7%

51.0 (39.8%)

79.2 (60.9%)

50.8 (39.1%)

23.1期
FY2023/1(実績)
Results

79.2
8.8

77.0
Analog & power
semiconductors

Net sales by application
79.2
7.2

10.8

77.0
Communication

7.9
4.1
6.2
12.3

electronics

Logic
semiconductors

8.5

Other electronic
devices

FY2023/1
23.1期(実績)
Results

29.4

Net sales by product
51.0

50.8
11.9

7.2

PC/server/
network

I/O equipment

36.5

Memorysemiconductors
RF & opticalsemiconductors
LCDs

5.6
3.3
5.0

3.9

Vehicleinstallation

2.6

15.8

PCs &
peripherals

14.0

21.9

Industrials &others15.8

24.1期
FY2024/1(計画)
Targets

129.9

ICT & solutions

30.3 Digital consumer
39.9

128.0

+0.5%

Semiconductors & devices
Net sales by product(Billion yen)

ICT & solutions

Semiconductors & devices

22.5

24.1期
FY2024/1(計画)
Targets

23.1期
FY2023/1(実績)
Results

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15.3

16.4

23.1期
FY2023/1(実績)
Results

14.5

9.0

Software9.0

Embedded
devices& others

18.5

24.1期
FY2024/1(計画)
Targets

Copyright 2023 © Ryoyo Electro Corporation

Shareholder returns➢ Dividend policy: Aim for a dividend on equity (DOE) of 5%.
→ Based on the outlook for record-high profit attributable to owners of parent, the company
raised its planned dividend in May (Q1 earnings release) by ¥50 year on year.
Dividend per Share (Yen)Interim (Q2)

Year-End

Full Year

Revised plan in May

80

80

160

Initial plan

60

60

120

Result

50

60

110

FY2024/1
FY2023/1

Increase
dividend by ¥40
Increase
dividend by ¥10

Expected indicators based on performance forecast and dividend forecast

ROE

Dividend
Payout
Ratio

DOE

Revised plan in May

15.6%

43.1%

6.3%

Initial plan

12.1%

44.1%

5.2%

Result

7.0%

72.6%

5.1%

FY2024/1
FY2023/1

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Our Medium-Term Initiatives(Management Integration with Ryosan)

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A New Phase of Management Reform

The first phase of reforms, which aimed at strengthening ourselves, iscomplete; this fiscal year we have entered the second phase including an
alliance with Ryosan.
20172017 to Previous FY

From Current FY

Began
reforms

ReformPhase 1

ReformPhase 2Business performancenearing losses(Recorded declines in bothsales and profit, unlike
industry competitors)

Restructured businessfoundations
Achieved performance targets(Net sales ¥110B / operating profit ¥3B)

Improved customer
evaluations

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Capture new growth
opportunities(Cooperation with Ryosan)

Copyright 2023 © Ryoyo Electro Corporation

Alliance with Ryosan Company, Limited
Aiming for business integration in April 2024

Announcement on May 15, 2023
Concluded a basic agreement for
management integration
Announcement on March 9, 2023

Acquired additional shares of Ryosan andmade it an equity-method affiliate
Announcement on February 7, 2023

Acquired 18.71% of Ryosan shares(percentage of voting rights)

Initiated detailed discussions for
management integration

Strengthened collaboration toensure the achievement of new
growth opportunities

Accelerated investigation anddiscussions on the form of thealliance between the twocompanies

Spring 2022

Started discussions on potential business synergies
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Purpose of management integration(From the March 2023 results briefing materials)

Working to maximize each company's unique management resources:
Outstanding relationships with customers, products and solutions
Business Structure &Products Handled

Customer BaseRyoyo Electro
Information Technology

RyosanMinimal overlap by both
Acceleration of new value
creation by combining
products and services

Potential synergies
Large

Pursuit of quality

Collaboration in existing
business areas(cross-selling, etc.)
Pursuit of quantity

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Post-integration sales scale
Combined net sales of the two companies will exceed ¥450 billion (based on the previous fiscal
year’s results), forming the new core group among Japanese electronics trading companies.

Net salesof Japanese electronics trading companies＜国内エレクトロニクス商社の売上高＞(Billion yen) 00（単位：億円）

300
3,000

Ryoyo Electro +ＲＥ＋ＲＳ
Ryosan

900
9,000

1,200
12,000

4,556
455.6

Ryosan
リョーサン
(ＲＳ)

菱洋エレ
(ＲＥ)
Ryoyo
Electro

600
6,000

3,257
325.7

1,299
129.9

(Based on each company’s FY2022 results; prepared by Ryoyo)

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Pursuing quantity ≠ Simply expanding scale

Pursuing quantity through this management integration

While a certain scale is important, we aim to expand customer
relationships that cannot be built overnight.
Expanding sales
scale

Expanding customer
engagement&

Pursuing synergies from the combination of Ryoyo’s strengths
in semiconductors and ICT with Ryosan’s customer base.

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Positive feedback loop of quantity and quality
Expand customer engagement and strengthen business models
by mutual positive feedback of quantity and quality.

Quantity

Quality

Strengthened customer baseEnhanced expertise

Pursuing the creation and provision of new value in
expanded customer engagement

Becoming a trading company chosen and needed by customers
Improving value enhancement across the entire value chain with a view toresolving challenges faced by end-users (customers of Ryoyo’s clients).

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Process for management integration

Current status➢ The two companies have agreed to aim for management integration around
April 2024.
➢ The method of integration and other necessary matters (company name,head office location, representative, etc.) are to be decided.

Provisional schedule
Conclusion of final agreement for the management integration: October 2023
Extraordinary shareholders’ meetings (both companies)*: December 2023
Effective date or implementation of the management integration: April 2024
*Extraordinary shareholders’ meetings will be held only if procedurally necessary

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Summary
Overview of the First Half
➢ Both net sales and operating profit remained at high levels.

➢ Ordinary profit and profit attributable to owners of parent increased significantly
year on year, partly owing to the recording of the share of profit of entities
accounted for using equity method.
Annual Forecast➢ First half results showed over 50% progress against the upwardly revised annual
target announced with the Q1 earnings, for both net sales and operating profit.
➢ Although uncertainty remains, the annual target is unchanged.
Our Medium-Term Initiatives (Management Integration with Ryosan)➢ Ryoyo's management reforms are entering the second phase aimed at capturing
new growth opportunities.

➢ The basis for integration is the pursuit of value enhancement through apositive feedback loop of quality and quantity.
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About this report

Note
The business results and forecasts for the future contained in this presentation
are based on certain assumptions deemed reasonable at the time of release.
Actual results may differ from the original forecasts due to economic conditionsand various other factors.

Contact

Public Relations Dept., Corporate Planning Div.
Ryoyo Electro Corporation
Tel: +81-3-3546-6331
E-mail: irmanager@ryoyo.co.jp

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