Results Briefing for the First Half (Feb.–Jul.)of the Fiscal Year Ending January 31, 2023

September 1, 2022

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

Copyright 2022 © Ryoyo Electro Corporation

Overview of the First Half of
the Fiscal Year Ending January 2023

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Intentions for the fiscal year's performance forecasts
at the beginning of the year
＜Semiconductors & devices＞➢ The impact of the semiconductor supply shortage was severe at the beginning of the fiscal year
and is expected to continue until the latter half of the fiscal year.
➢ Sales for TVs, the company’s mainstay products, remained high, but the sense of overheating is
expected to subside.
＜ICT & solutions＞➢ Business related to online qualification verification is expected to peak in the fiscal year, with someprojects sliding from the previous fiscal year.
➢ Changes in forms of transaction for some large projects were expected to have an impact from thesecond half of the fiscal year.
＜Other＞➢ The impact on net sales of the Accounting Standard for Revenue Recognition, which was adopted in
the fiscal year ending January 2023, was expected to be insignificant.

Although sales were expected to be relatively strong through the first half,
both sales and profits were expected to slow down in the second half, mainly
due to changes in the environment for large projects.

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Profit/loss : Results
Both sales and profits increased, significantly exceeding the initial forecasts,
supported by continued favorable demand, especially in the semiconductor-related business.
➢ Gross profit margin exceeded 11% due to changes in sales composition andthe benefit of yen depreciation.
➢ Operating profit, ordinary profit and profit attributable to owners of parent
more than doubled year on year.
FY2022/1* FY2023/1*
H1
H1
ResultResult52.3
60.8(Billion yen)
Net sales

YoY Change+8.5%+16.4%+1.75+35.2%+4.7%

Gross profit

4.98

6.74

(%)

9.5%

11.1%

Selling, general and administrative expenses

4.03

4.22

+0.19

Operating profit

0.95

2.51

+1.56 +164.7%

(%)

1.8%

4.1%

Ordinary profit

1.13

2.48

+1.35 +120.2%

Profit attributable to owners of parent

0.83

1.78

+0.95

*FY2022/1: Fiscal year ended January 2022

+114.5%

FY2023/1: Fiscal year ending January 2023

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Factors impacting sales change➢ Semiconductors & devices sales increased year on year in all applications, with particularly strong
sales in industrials & others and PCs & peripherals.
➢ In ICT and solutions, sales of all products remained at high levels, except for software, which was
impacted by the change in the Accounting Standard for Revenue Recognition.
Semiconductors & devices(Net sales by application)

ICT & solutions(Net sales by product)

Year-on-year change: Up ¥7.6 billion

Industrials& others+3.8(Billion yen)

Year-on-year change: Up ¥0.9 billion

Embedded
I/O
devices PC/server/
networkequipment
Vehicle& others
Digital installation
+0.2
+0.1
+1.4
consumer+0.5 Communicationelectronics
+0.3
PCs &
Software+0.9
peripherals
-0.8
+2.1

FY2023/1
H1

FY2022/1
H1

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Supplement: Net sales by productSemiconductors & devices

ICT & solutions(Billion yen)

FY2023/1
H1

FY2022/1
H1

Semiconductors & devices
Net sales by productAnalog & power
semiconductors

ICT & solutions

Net sales by application

Communication
Digitalconsumerelectronics

Logic
semiconductors

Net sales by productPC/server/
network
I/O equipment

Vehicleinstallation
Memorysemiconductors
RF & opticalsemiconductors
LCDs
Other electronic
devices
FY2022/1
FY2023/1
H1
H1

SoftwarePCs &peripherals
Embedded
devices& others

Industrials &others

FY2022/1
H1

FY2023/1
H1

5

FY2022/1
H1

FY2023/1
H1
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First Half Performance Analysis andForecast for Second Half

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Key points of first half performance (YoY)
Main factors driving good performance in first half

Strong demand forsemiconductors

Profits boosted by rapid
yen depreciation

Degree of impact

Main factors
Year-on-year change(1)

Increase in projects due
to strengthened sales

Net sales

Operating profit+¥8.5 billion+¥1.56 billion

Base business (including demand increase amid
semiconductor supply shortage)(2) Spot projects amid semiconductor supply shortage(3) One-off business transactions due to specific factors‒(4) Impact of exchange rate shift(5)

Impact of adoption of the new Accounting Standard for
Revenue Recognition(6) Increased selling, general and administrative expenses
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Key points of first half performance (YoY)(Billion yen)

Net sales

FY2022/1
H1

Operating profit

FY2022/1
H1

FY2023/1
H1

FY2023/1
H1

Factors for change(1) Base business including favorable demand(2) Spot projects amid semiconductor supply shortage(3) One-off business transactions due to specificfactors(4) Impact of exchange rate shift(6) Increased selling, general and administrative
expenses

Factors for change(1) Base business including favorable demand(2) Spot projects amid semiconductor supply
shortage(3) One-off business transactions due tospecific factors(5) Impact of adoption of the new AccountingStandard for Revenue Recognition

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Positioning for the second half of this year

Main factors driving good performance in first half
Strong demand forsemiconductors

Profits boosted by rapid
yen depreciation

Increase in projects due
to strengthened sales

Anticipated changes in the environment may affect our businesses not only in the second
half of this fiscal year but also in the next fiscal year and beyond

Positioning for the second half of the year
Measures and preparations for the next fiscal year ending January 2024 and thefinal year of the Three-Year Business Plan (the fiscal year ending January 2025)(Steady implementation of the three-year business plan and acceleration of alliance discussions)
Strategic framework of thethree-year business plan
• Expand and deepen
customer engagement• Pursue uniqueness• Increase productivity

Explore growth opportunities,
including alliances

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Main points of second half forecast of businessperformance
Anticipated changes in the second half of the year
➢ Changes in the business environment for large projects
・Diminished reaction in semiconductor business for TVs→ Although there is no change in the outlook for a slowdown from the momentum of rapid
expansion in the past two years, Ryoyo has updated the annual outlook based on the firsthalf performance results and other factors.

・Ending of some software-related businesses→ Although it was factored in the initial plan, the timing of business ending was slightly pushed
back from the initial plan.
➢ Receding demand due to improved supply-demand balance after the semiconductor supply
shortage, and shrinking spot projects→ While even now, the tide is turning in some fields/products, demand is expected togradually recede toward the end of the fiscal year.
➢ Uncertain exchange rate trends→ Even if exchange rates stay flat, they are expected to make a negative contribution
compared to the first half.

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Business Plan for the Fiscal Year Ending
January 31, 2023

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Profit/loss : Annual targets
Revised upward from initial plan based on first half results and current business trends.
Operating profit is expected to reach a 21-year record high.
➢ Net sales were revised upward from the initial reduced forecast to roughly the same level as theprevious year (slight increase).
➢ Operating profit, ordinary profit, and profit attributable to owners of parent exceeded the initial plan asof the first half of the fiscal year, and have been raised in the plan.
FY2022/1*(Billion yen)

FY2023/1*

YoY Change

Compared to Initial Target

Net sales

112.1

Initial Revised
Target Target
100.0
113.0

Gross profit

10.73

10.80

12.35

(%)
Selling, general and administrative
expenses
Operating profit

9.6%

10.8%

10.9%

8.47

8.50

8.75

+0.28

+3.2%

+0.25

+2.9%

2.26

2.30

3.60

+1.34 +59.4%+1.30+56.5%

(%)

2.0%

2.3%

3.2%

Ordinary profit

2.40

2.20

3.40

+1.00 +41.6%+1.20+54.5%

Profit attributable to owners of parent

1.87

1.53

2.35

+0.48 +25.4%+0.82+53.6%

ROE

4.7%

3.6%

5.4%

Result

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%

%

+0.9

+0.8%

+13.0

+13.0%+1.62 +15.1%+1.55+14.4%* FY2022/1: Fiscal year ended January 2022
FY2023/1: Fiscal year ending January 2023
Copyright 2022 © Ryoyo Electro Corporation

Factors impacting sales change➢ Semiconductors & devices: Despite strong uncertainty in the outlook, sales are expected to increase
mainly in the industrial sector and OA equipment and other PCs & peripherals due to favorable
conditions in the first half.

➢ ICT & solutions: Although impact from ending of large projects is anticipated in software business,sales of other items are expected to remain robust.
Semiconductors & devices(Net sales by application)

Industrials& others+4.6

FY2022/1
Results

ICT & solutions(Net sales by product)

Year-on-year change: Up ¥3.2 billion

Year-on-year change: Down ¥2.3 billion

VehiclePCs &installation
peripherals
+0.5
+1.9
Communication-0.7

Embedded PC/server/
devices
network& others+1.0+1.3
Digitalconsumerelectronics
-3.1

I/O
equipment+0.2(Billion yen)

Software-4.9

FY2023/1
Targets

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Supplement : Net sales by product
FY2023/1
Targets(Billion yen)

ICT & solutions

Semiconductors & devices

FY2022/1
Results

Semiconductors & devices

ICT & solutions

Net sales by productNet sales by application

Analog & power
semiconductors

Communication

Net sales by productPC/server/
network
Digital consumer
electronics

Logic
semiconductors

I/O equipment

Vehicleinstallation
PCs &peripherals

Memorysemiconductors
RF & opticalsemiconductors
LCDs

Embedded
devices& others

Industrials &othersOther electronic
devices
FY2022/1
Results

Software

FY2023/1
Targets

FY2022/1
Results

FY2023/1
Targets

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FY2022/1
Results

FY2023/1
Targets

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Shareholder returns➢ Dividend policy: Aim for a dividend on equity (DOE) of 5%.
→ In consideration of performance forecasts, the year-end dividend forecast has been revised
upward by 10 yen per share from the initial forecast.

InterimYear-End

Full Year

Dividend
Payout
Ratio

Revised forecast

50

60

110

94.3%

5.0%

Initial forecast

50

50

100

129.7%

4.8%

Result

60

60

120

115.4%

5.6%

Dividend per Share (Yen)DOE

FY2023/1
FY2022/1

Expected indicators based on the revised performance forecast and dividend forecast

ROE

Dividend Payout Ratio

DOE

Over 5.0%

Less than 100%

5.0%

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Highlights

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Semiconductors & devices:
Driven by expansion of unique local businesses outside Japan➢ Amid the maturity of the Japanese market and the shift of production overseas by Japanesemanufacturers, semiconductor and device-related businesses have been expanding in recent years,
driven by the development and expansion of unique local businesses for local customers in Greater
China and other countries/regions.
• Overseas sales in the fiscal year ended January 2022 more than doubled from the fiscal year ended January 2019,
and the overseas sales ratio exceeded 30%.

• First-half sales in the fiscal year ending January 2023 were much higher year on year.

Percentage of unique local businesses
in businesses outside Japan

Trends in sales outside Japan
Unit: Billion yen(Figures in parentheses indicate
percentage of sales outside
Japan)

1st half of FY2019/1

1st half of FY2023/1• The number of customers increased for TVs, the company’s
mainstay product area.
FY2018/1• In addition to TVs, more local customers are adopting forsmartphones and other applications.

FY2019/1 FY2020/1 FY2021/1 FY2022/1 FY2023/1

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ICT & solutions:
Looking to further improve the presence of business with NVIDIA➢ Received Best Distributor of the Year award from NVIDIA (June 2022)
Ryoyo received the award in recognition of initiatives for medical (diagnostic imaging
including X-ray, CT, and MRI) and manufacturing (visual inspection and processmonitoring), which require high-precision image processing, as well as its dedicatedsupport and customer relations.

➢ Expanded to the Largest Product Lineup of any Japanese Distributor
Having expanded the product lineup, Ryoyo is now the distributor that handles thelargest number of NVIDIA products in Japan, and is promoting further market andneeds development and business expansion.

RTX / Quadro series(Graphics cards)

Jetson series(Embedded platforms)

NVIDIA Networking(Former MELLANOX products)

DGX series(AI supercomputers)

Data Center GPUvGPU(GPUs for DC/Servers) (Virtual GPU software)

NVIDIA Omniverse Enterprise(Virtualization platforms)

NVIDIA AI Enterprise(Data analytics software)

Starting to handle these new areas

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ICT & solutions:
Partnering with Aisin to promote DX on production floor➢ Ryoyo is partnering with Aisin Corporation to build an IoT management environment that makes fulluse of “AI × container technology” on Aisin's manufacturing lines.
AI

Container technology

Employing NVIDIA Jetson compact yet highperformance, low-power, low-cost computers asedge devices

Using Kubernetes management tool to support
the Docker open source software for building
container environments

Ryoyo promotes DX at manufacturing sites to resolve issues such as manpower
shortages and technology transfers as part of efforts to realize smart factories
Automation of visual inspections

Lines that don’t stop

Central management of AI implementation

Detection of installation errors,
missing parts, and defective parts

Avoiding line stoppages
caused by software

Creating environments where on-site
personnel alone can perform implementation
AI

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Other news : Earned the Kurumin certification as a company
supporting childcare➢ Ryoyo is committed to creating workplaces where employees can maintain a healthy lifestyle while
enjoying a good work-life balance and continue their employment even during life changes such as
childbirth, child-rearing, and nursing care.
➢ As part of these initiatives, Ryoyo has earned the Kurumin certification.

* Kurumin:
Based on the Act on Advancement of Measures to Support Raising Next-Generation Children, companies that haveformulated an action plan for employees' work and child-rearing, and have submitted notification to that effect, may
apply to receive certification if they have achieved the goals set forth in the plan and meet certain standards.

The Ryoyo Group will continue to position the promotion of work-life balance as animportant management issue and is committed to creating workplaces where employees
can make the most of their abilities to play an active role.
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Summary
Overview of the First Half
➢ Both sales and profits increased significantly, supported by continued favorable demand,
especially in the semiconductor-related business.
➢ Operating profit, ordinary profit and profit attributable to owners of parent more thandoubled year on year. (As of the first half, the annual forecast announced at the beginningof the fiscal year has been achieved.)
Annual Forecast➢ Sales and profit performance forecasts for the full year have each been revised upward.
➢ The revised operating profit target anticipates a 21-year record high.
➢ However, the outlook remains uncertain, and a slowdown compared to the first half of theyear is anticipated.
Other➢ In the second half, Ryoyo will focus on preparations and measures for the next fiscal year
and beyond.

➢ As for shareholder returns, Ryoyo will increase the year-end dividend forecast by 10
yen/share based on the basic policy of aiming for DOE of 5%.
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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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