Optorun Co., Ltd.

Financial Results(December 2019)Table of Contents

I. Outline of FY2019 Financial Results

P2

II. Outlook

P131

● Financial Highlights● Net Sales by Categories/Region● Orders Received and Order Backlog● Operating Profit● Research and Development Expenses● Net Sales (4Q19)● Orders Received and Order Backlog(4Q19)● Operating Profit (4Q19)● Balance Sheet● Cash Flows2

Financial Highlights (Consolidated) Significant increase in earnings despite fall in sales. Full year results show a clear recovery
after sales bottomed out in 3Q19.
 CGS ratio reduction project contributed to significant cost cutting for vacuum deposition
equipment.
 Accounting Gains for capital investment by technology contributed to profit increase.
 Development of new type coaters is materializing; full-scale marketing activity to secure
FY2020 orders is underway.
 Despite significant impact of U.S. - China trade friction throughout 2019, last minute efforts in
4Q19 contributed to sales and orders.
(Million yen)

FY2018FY2019YoY

Net sales

44,76342,822(4.3)%

Operating profit

10,69010,879+1.8%

Operating margin

23.9%

25.4%+1.5%

Ordinary Profit

10,992

11,031+0.3%

After Tax profits

7,745

9,101

+17.5%
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Net Sales by Categories/Region••••

Share of smartphones in total sales increased as a result of sales to North American smart phone manufacturer andChinese and S. Korean.
Camera lenses, IoT, and LED sales were solid.
Scheduled delivery to North American smartphone manufacturer has been completed, negotiation for new orders hasstarted.
Orders seemed to be recovering from 4Q19 and the trend has carried over to 2020.

Net Sales by Categories

Net Sales by RegionFY2018

FY20194

Orders Received and Order Backlog
Orders Received and Order Backlog (annual)
Orders Received

52,527(million yen)
50,00040,00030,000Order Backlog

36,57425,171

44,16939,820 39,227
36,062
32,46820,00010,0000(million yen)
20,000FY2016FY201914,103
11,191
6,790
3,976

5,000
0

FY2018Orders Received (Quarterly)

15,00010,000FY2017

1Q19

2Q19

3Q19

2019 Orders Received

 Orders were volatile up to 3Q19 due tothe impact of U.S. – China trade frictions.
 Political outlook and appetite for capitalexpenditure improved in 4Q19.
 new orders were received from a North
American smartphone manufacturer in4Q19. New order negotiation iscontinuing for FY2020.
 Other positive factors include, (i)Chinese and Korean smart phone
manufacturers are eager to order forback glass coating,face ID and highperformance camera module, (ii) Increased orders from Chinesesurveillance camera manufacturers forhigh end camera lenses.
 Ratio of vacuum coaters
Sputtering : Evaporation = 5:4
 Started receiving orders for newtechnology models. Full-scale marketingstarted for 2020.

4Q195

Operating profit
Operating profit
Operating Profit
Operating Margin (right axis)(million yen)

30.0

14,00012,00010,000(%)

21.9
15.9

8,000

23.9

25.4

10,690 10,879

7,327

25.0

20.0

15.0

6,000
10.0
4,000

2,380

5.0

2,000
00.0
FY2016FY2017FY2018FY2019FY2019 Operating profit
 Operating margin improved(+1.5%)
 Contributing factors included
lower CGS ratio (-2.3%), slightincrease in SG&A (+0.8%) .
 Positive impact from lower CGS
ratio for vaccum evaporationcoaters thanks to CGS reduction
project by Shanghai factory.
sputtering coater sales also
contributed profitability
improvement.
6Research and Development Expenses
Research and Development Expenses
R&D Expenses(million yen)

7.4

4,000

3,000

4.8

vs Sales (right axis)

6.9
3,103

7.4

(%)
8.0
7.0

3,172

6.0
5.0

2,466

4.0
2,000
3.0

1,000

0

2.0

716

FY20161.0

FY2017FY2018FY20190.0

FY2019 R&D Expenses
New coater R&D activities madeprogress, and adoption of various
new technologies is beginning toshow results Development of double-sided sputtering
coater/flat sputtering coater/ALD
coater/optical telecommunication coater
are in completion.
 Enhanced cross-company R&D activities
covering Kawagoe, Shanghai, Taiwan
and Finland accelerated. Head office isfor basic research and overseas forapplied research.
 Various new business areas including
mini LED, vehicle mounted 3D parts anddisplays and optical telecommunication
to incur new demands for coaters in2020.

7

Net Sales (4Q19)
4Q19 Net Sales Sharp increase in sales QoQ(+28.2%)Net Sales(million yen)
18,00016,22815,00012,000

11,10010,710 Vacuum evaporation coaters
accounted for 60% of sales.
Sputtering coaters accounted for30%.

13,975
12,701

9,071

9,000

6,722

7,073

6,000

3,0000

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

 Solid sales of smart phone backglass coating, face ID, high end
camera module.
 Responded to demands for highperformance surveillance camera.
 Secured sales in automotive,biometric authentication, andoptical telecommunication for IoT.
8

Orders Received and Order Backlog(4Q19)
Orders Received and Order Backlog
Orders Received
Order Backlog(million yen)
50,000 Sharp increase in orders received
QoQ (+10 billion yen).

46,185 46,298
40,116 39,227

40,00032,04330,00032,46830,532
27,43520,00012,725
11,213
10,000014,103
11,191

10,047
5,833 6,790

4Q19 Orders Received

3,976

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

 Orders were sluggish in 3Q19 as
customers took wait-and-see
approach as a result of the U.S. China trade friction, but
smartphones, camera lenses andIoT performed strongly in 4Q19.
 Among new type coaters, orders
were secured for double-sided
sputtering coaters, LED TCO film
vacuum deposition equipment,and automotive AS/AR coaters.
9Operating Profit (4Q19)
Operating profit(million yen)
6,000

5,000

Operating Profit

30.5%

30.8%

29.5%

4,126

25.7%

3,000

2,162

32.0%

 22.9% operating margin

28.0%（19.9% in 3Q19）

20.0%
16.0%

2,077 12.0%

2,000

1,405
4.1%
2730(%)

22.9%24.0%

3,269
19.9%

3,26319.5%

1,000

Operating Margin

4,990

4,000

4Q19 Operating profit

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

 CGS ratio reduced by 1.8%.
 SG&A ratio reduced by 1.2%,
Due to larger sales volume
for stable employee salaries
and R&D expenses.

8.0%
4.0%
0.0%

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Balance Sheet(million yen)
December 31, 2018
AmountCurrent assets

December 31, 2019
Ratio

AmountRatio

Changes

48,142

86.5%

47,193

83.5%

(948)

Cash and deposits

15,74028.3%

26,96947.7%+11,229

Notes and accounts
receivable - trade

6,837

12.3%

4,252

7.5%

(2,584)Inventories

24,48744.0%

15,17326.9%(9,313)

Allowance for doubtful
accounts(420)-0.8%(350)

-0.6%

+69

Other

1,497

2.7%

1,148

2.0%

(349)

Non-current assets

7,501

13.5%

9,315

16.5%

+1,813

Total assets

55,644100.0%

56,509100.0%+865

Current liabilities

25,922

46.6%

19,82535.1%(6,096)

1,652

3.0%

2,735

4.8%

+1,082

756

1.4%

510

0.9%

(246)

Income taxes payable

1,143

2.1%

545

1.0%

(598)

Advances received

20,10836.1%

13,98824.8%(6,120)

Other

2,261

4.1%

2,046

3.6%

(214)

1,658

3.0%

1,864

3.3%

+205

Long-term interestbearing debt

233

0.4%

165

0.3%

(68)

Other

1,425

2.6%

1,699

3.0%

+274

Total Liabilities

27,581

49.6%

21,68938.4%(5,891)

Total Assets

28,06250.4%

34,81961.6%+6,756

Total liabilities and net
assets55,644100.0%

56,509100.0%+865

Notes and accounts
payable - trade
Short-term interestbearing debt

Non-current liabilities•

Collection of receivables resulted inincreased cash and deposits•

Sales recognition pushed down
inventory level.

•

Sales recognition reduced
advances received

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Cash Flows(million yen)
FY2018FY2019Major factors

AmountAmountChangeCash flows from operating
activities

9,572

16,232+6,660Cash flows from investing
activities(2,964)(2,431)

533

Cash flows from financing
activities(10,053)(2,358)

7,695

Effect of exchange ratechange on cash and cash
equivalents

(707)

(213)

494

Change in cash and cash
equivalents(4,153)

11,22915,382

Cash and cash equivalents
at beginning of period

19,893

15,740(4,153)

Cash and cash equivalents
at end of period

15,74026,969+11,229

・ Decrease in accounts receivable・ Decrease in inventories
・ Equity investment in affiliatecompanies
・ Cash dividends payout

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● Forecast for FY2020● Strategy● Shareholder distributions

13

Forecast for FY2020
 Aim for higher sales and profits.
 Expecting performance recovery in 4Q19 to continue.
 The arising coronavirus issues in addition to the U.S. - China trade friction, isexpected to affect orders/sales. While hoping for an early abatement, all efforts
are to be made to realize already setting yearly budgets for sales and orders.
(million yen)

FY2019 Actual

FY2020 Forecasty-o-yNet Sales

42,822

46,200+7.9%

Operating Profit

10,87912,000+10.3%

Operating margin

25.4%

26.0%

+0.6%

Ordinary profit

11,031

12,000+8.8%

After Tax Profit

9,101

9,200+1.1%

Research anddevelopment expenses

3,172

3,300+4.0%
14Strategy
 Development of various new coaters are under way andabout to be completed shortly.
 Further strengthen R&D collaboration between head
office/Shanghai/Taiwan
 Accelerate diversification of coater applying areas fromsmartphone to IoT/5G/automobile/semiconductors/opticaltelecommunication, etc.
 Maintain/improve profitability: Enhance supplies of newtechnology driven coaters enabling high profitability
 M&A and investment: Enhancement of Group corporate
value and acquisition of new technologies.
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Shareholder distributions


FY2019 Dividend paid: 60 yen (27.7% payout ratio)
FY2020 Estimated dividend: 60 yen (27.7% payout ratio)

Dividend policy
The policy is to maintainsufficient funds for R&D,
strengthening manufacturing
operations, and new businessdevelopment, and distribute asmuch of the remaining funds as
possible to shareholders.
The goal is to realize consistentdividends with a consolidated
payout ratio of about 30%.

Dividend per Share(yen)Payout Ratio (right axis)

8070(%)

29.7

29.3

27.7

35.0

27.7

60

30.0
25.0

50

20.0

40
30
2040

55

60

60

15.0
10.0

10

5.0

0

0.0

FY2017FY2018FY2019FY2020(E)※ There was a 1-to-1,000 share split on March 18, 2017 and a 1-to-3 share split on October 13, 2017.

Earnings per share before FY2017 have been adjusted to reflect these stock splits.

16Disclaimer, Precautions and Inquiries
This presentation was prepared by using assumptions based on economic, social and otherconditions as of February 13, 2020 and the reasonable judgments of management. The
information in this presentation may be revised without prior notice in the event of a change inthe business climate or other events.
This presentation contains forward-looking statements. These statements incorporate
assumptions that reflect current outlooks, forecasts and risk factors. There are many
uncertainties that may cause actual performance to differ from these statements.
These risks and uncertainties include, but are not limited to, general industry and market
conditions, changes in interest rates and exchange rates, and other general items associatedwith the Japanese economy and global economy.
Even if there is new information, a future event or other items that affects the outlook, Optorun
has no obligation to update or revise the forward-looking statements in this presentation.

Inquiries:
E-mail：ir-info@optorun.co.jp TEL：03-6635-9487
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