SWCC SHOWA HOLDINGS CO., LTD.
Financial Results Briefing for the Fiscal Year Ended March 2022
May 20, 2022

Event Summary[Company Name]

SWCC SHOWA HOLDINGS CO., LTD.

[Company ID]

5805-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for the Fiscal Year Ended March 2022

[Fiscal Period]

FY2021 Q4[Date]

May 20, 2022

[Number of Pages]

32[Time]

09:30 – 10:30(Total: 60 minutes, Presentation: 35 minutes, Q&A: 25 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers][Analyst Names]*

1
Takayo Hasegawa

Koichi Hariya
Eiji Maeda

President and Representative Director,(Group CEO)Ichiyoshi Research Institute Inc.
SMBC Nikko Securities Inc.

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A.

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Presentation
Moderator: The time has arrived, and we will now begin the financial results briefing of SWCC Showa Holdings
Co., Ltd. I would like to begin by introducing today's attendees. This is Ms. Takayo Hasegawa, President andGroup CEO.
Hasegawa: My name is Hasegawa. Thank you for joining us today.
Moderator: This briefing is live streaming on web as well. The questions-and-answers session is scheduledwith priority given to questions from the on-site participants. Please note that online participants may enterquestions at any time. Please understand that we may not be able to answer all questions due to time
constraints. This briefing is scheduled to end at 10:30 AM. Please note that business cards exchange andgreetings are possible after the briefing, if you wish to do so.
Hasegawa, President, will now start the presentation.
Hasegawa: Good morning. My name is Hasegawa of SWCC Showa Holdings Co., Ltd. Thank you for taking timeout of your busy schedule today to attend our financial results briefing for the fiscal year ended March 31,
2022. Since there is some distance from you, I would like to give my presentation unmasked.
There are three major topics today. Let me start my explanation.

First, let me talk about the fiscal year ended March 31, 2022, or FY2021.
The summary of the results is as follows: net sales of JPY199.2 billion, operating income of JPY10 billion,
ordinary income of JPY9.9 billion, and net income of JPY9.4 billion.
The domestic electric power business had a variety of circumstances, but it was a year of steady growth fromour business perspective. However, as you all know, copper price is still high, and the price of petrochemical
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products, transportation costs, and various other items rose in tandem with the soaring price of crude oil inthe second half of the year. Looking back the past fiscal year, the automobile production cutback had a slight
impact on our business in the second half of the year.
As for the figures for each, I have just mentioned.

Looking at the previous fiscal year, the figures for FY2020 were significantly affected by COVID-19 and dropped,
so we were able to achieve positive results in all items as a percentage of change.
The net income of JPY9.4 billion includes JPY2.2 billion gain from the sale of our Ebina plant, which is ourhighest record. The highest profit before that was in FY2019, so even if we did not have the profit from Ebina
plant, we would have made a reasonable profit in FY2021.

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Let me explain a little about the increase or decrease in performance.
As I mentioned at the beginning of this presentation, copper price was high. Since more than half of ourbusinesses use copper, there is no doubt that copper price has had a significant impact on our sales.
Compared to last year, last year, FY2020 and FY2021, sales increased by JPY37.5 billion, of which JPY29.8
billion was due to copper price. The amount of copper shipped increased compared to FY2020 and FY2021,
so you can see not only that copper price has increased, but also the profitability of each business has
improved.
We are often asked about the impact of copper price on each of our business segments. So we have included
the impact of copper price on net sales in each segment and it is written in the material.
Operating income was affected by copper price by JPY29.8 billion in net sales, and profits were boosted by
JPY1 billion with the same reason. As I have said in the past, we have been trying to manage copper businessin a way that operating income is not affected by copper price fluctuations. However there is positive figureof JPY1 billion in this situation.
As I mentioned earlier, the profitability of our domestic business has been increasing, so we have JPY2 billion
there. The structural reforms that have been implemented since FY2019 have resulted in positive results.
However, there is an impact of resource prices, and that has come out as a negative impact. The other JPY400
million allowances means an operating income of JPY10 billion.

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I would like to talk about resources.
A chart in the upper left corner shows comparison of the copper price of FY2020 and FY2021. Our businessprojects were conducted with approximately 1.5 times higher copper price throughout the year. The price of
crude oil, which is the basis for petrochemical products, has risen. The price of raw materials has soared byabout 1.5 times compared to FY2020.
We made a policy of asking our customers to add to our prices, and we are dealing with it accordingly. We
have raised our prices several times since about the second half of last year, and we announced it in writing.
We disclosed our information and have strongly asked our customers to understand that we have no choice
but to raise the price for various reasons.
In particular, construction-related wires and general windings. Although it is difficult to raise prices due tofierce competition in this area, we have passed on the cost of the product to the customer.

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5The following table shows the sales of each segment by composition ratio.
In terms of sales ratios, energy and infrastructure has not changed that much. In the first half of the year, theproportion of sales of electrical equipment and components, which has a strong car business, increased a little,
and the proportion of sales of communication and industrial devices, mainly communication cables and wire
harnesses, has dropped a little.
In terms of earnings, the year was supported by energy and infrastructure, particularly electric power, andautomotive electrical components.

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Let me explain a little about each of our businesses. The first is energy and infrastructure business.
As I mentioned, energy and infrastructure business was firm. It was because wires for construction accounted
for a certain percentage and the sales have increased from the impact of copper price. However, the main
source of revenue is electric power. Looking at operating income, it was very high in the third quarter whenelectric power construction work was concentrated.
Although it looks like decrease in the fourth quarter, we have allocated an allowance for the collection risk
after reviewing the contents of the allowance since we have reached a certain point of completion for theconstruction projects that have been carrying out in the Middle East. With this, there was JPY400 million
decrease. I hope you can see that the fourth quarter is a bit lower due to these special factors as we responded
to the risks.

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Electrical equipment and components.
In electrical equipment and component business, we saw a very strong flow of EVs in the first half of fiscal
year and copper shipments were 1.5 times higher than in FY2020. Since automobile factories were not able
to operate due to shortage of semiconductors and such, we saw a slight slowdown in the second half of theyear.
Sales figures are large due to copper price hike. Although windings and windings for electric power weresteady and strong, there was a drop in automobile in the fourth quarter that led to less revenue.
However, the amount of copper throughout the year did not decrease compared to the FY2020 level, and theresults of FY2021 show 4% increase in the amount of copper.

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Communication and industrial devices.
This was settled with flat in operating income, but I think it can be said that this was still the toughest business.
FY2021 was the year of major restructuring in this business. We have just curved our a wire harness businessto China and started production in our domestic wire harness business, where we make harnesses, and in
Aomori business where we make wires for harnesses.
Also, we have streamlined production by consolidating metal communication-related products, which are
expected to become a tougher market in the future, into one location, the Sendai branch.
Also, we have dropped production volume of copy parts-related products and curved out heavily to Vietnam.
We carried out various structural reforms in FY2021. In this context, we have been working hard to keep
profits stay in this business.
We are hopeful that the effects of the reorganization will start to emerge, and although it is still very small in
the four quarters, we expect that the effects of the reorganization will start to emerge this year.

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9This is a balance sheet.
As copper price has become higher, trade receivables and inventories have increased a little, and current
liquid assets and accounts payable have also increased due to the copper price. Then we are allocating the
fixed assets to investment side, so fixed assets are also increasing.
The balance sheet has become a little larger than before.

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10Next is about the mid-term management plan.
We issued a new medium-term management plan in last November. The mid-term management plan thatwas in effect until last year covered the period from 2018 to 2022, so we have been working on the plan withFY2022 as the final year.
As of the end of FY2021, we were able to achieve all profit-related items, including operating income,dividends, equity ratio, and ROIC. I believe with everyone's support that we were able to bring forward our
five-year plan by one year, or rather, to settle it in four years.
The DE ratio is 67% at the end of last fiscal year.

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I would like to continue to explain the outlook for this fiscal year, FY2022.
In FY2022, compared to last year, operating income is JPY10.3 billion, a figure that seems to have stalled a bitcompared to last year’s of JPY10 billion. Ordinary income is also JPY10.3 billion, and net income is JPY7.5
billion. We aim to raise the dividend by JPY10 and set a target of JPY60.
As I have said from the beginning, high resource prices will continue this year, and it will take some time forthe automobile industry to get back on its feet. These figures are based on the assumption that there will bea certain impact on the profits of the segments and sub-segments related to them.
We appreciate your understanding that we have given these figures in consideration of the various risks
involved, especially with the great pressure of raw material price hikes.
I have been in this position for four years now, and I have implemented various reforms, and the effects ofthese reforms have gradually emerged. These figures are drawn as an offset to various risks.

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I would like to talk about each segment.
Operating income of JPY6.8 billion for energy and infrastructure. As I mentioned earlier, price competition for
construction cables is intensifying, but the market for electric power, which is the main pillar of our earnings,
is very strong. Therefore, the strategy of SICONEX, in which we sought to earn more money by proposing
services and packages rather than by earning copper volume, and SICOPLUS, which includes construction work,
will continue to be applied this year as it was three years ago.
Electrical equipment and components. Operating income is JPY1.6 billion, a bit lower than last year. As I
mentioned earlier, this is based on the assumption that the auto industry will probably stand still for a little
longer.
However, as you are all aware, the trend toward EVs and xEVs, including plug-in hybrids, has stalled in various
areas, but I believe it is steady along with the trend toward decarbonization. We believe that with the rise of
the automotive industry, our products and our sales will increase effectively.
Then, communication and industrial devices. We are expecting operating income of JPY2.5 billion as thereforms are taking effect. However, the biggest negative impact of this business is the lockdown in China.
Since we have shifted our production base to China, it would be a little stressful if that base did not operational
at 100%, so we have taken that into account in the figures we have given you.

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I would like to talk about detailed strategy and main aspects of each segment.
Energy and infrastructure. I mentioned earlier that electric power is firm, and I am certain that the market willcontinue to expand over the long term.
Three or four years ago, I remember that there was a discussion about the domestic electric power market
would not grow, but there has been a move toward renewable energy and the strengthening of the power
grid, which the Prime Minister mentioned. At the time we created our medium-term business plan, we had
not yet included the impact of strengthening the power grid, but we did include a portion of market expansion
through renewable energy. This business is growing more than we expected with those trends.
In light of this, we will continue to strengthen SICOPLUS and SICONEX to make our business model stronger. I
believe that FY2022 is a year to prepare for this. We are in the process of increasing production capacity for
the SICONEX factory in Sagamihara. We expect the factory to be completed by the middle of 2023, which will
enable us to increase production by 1.5 times compared to the previous year.
However the number of electricians has been declining due to Japan's declining population and various otherfactors. Last year, in cooperation with the EXIO Group, we established a training center for construction
personnel. The first term students have successfully graduated, and the second term students started thismonth. We are determined to continue with this kind of strategy to increase production while increasing thenumber of construction workers.
For construction training, we acquired a company earlier this year that makes full use of AVR, or virtual reality,
and we would like to incorporate AVR technology into our training system for more efficient training.

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Then there is electrical equipment and components.
As I mentioned earlier in regard to electrical equipment and components, I am certain that the EV market will
be expanding. We wanted to make sure that our facilities were up to par while the market is sluggish like now.
We will renovate the dip-forming facility to produce oxygen-free copper in May, and expand the heater wireline at the Sendai Plant. We are currently making materials for heaters for car seats and steering wheels, andwe are preparing to increase these by 35% this summer, and construction is underway.
Also, we are trying to do a solid winding wires jobs for automobiles, and while developing new manufacturingmethods, we are adding new colors under the concept of making products efficiently, without making large
investments as we have done in the past.

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Communication and industrial devices.
The main issue is starting operation at the production base in China.
We are now in a very difficult situation due to the lockdown, and we are trying to diversify our procurementby having multiple logistics routes instead of the single route we had before, so that logistics will not be
disrupted in the event of a lockdown somewhere.
I think it is a time to be patient.

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Cash flow.
Cash flow in FY2021. Copper price has risen significantly and operating cash flow. The increase in tradereceivables has caused a slight drop here.
We plan to make capital investment of JPY6.7 billion in FY2022, which you can see here.
As for the investments for this year, there are many things to be done [about], such as global warming, as wellas the enhancement of each project. We need to strengthen our bases, reinforcing earthquake resistance,then reinforcing infrastructure, so that even if something goes wrong, we will still be able to make solid
products.
We have also budgeted a small amount of money to establish a rational system in FY2022.

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The medium-term management plan is as announced in November. Looking at FY2022, as I mentioned earlier,the situation seems to have stalled a bit, but we will continue to operate with a firm focus on our goals.

Next, I would like to talk a little bit about ESG. Since we are involved in many businesses related to social
infrastructure, we believe that we have solutions for various social issues.
Although we operate in segments, we try to provide a business model that is consistent with social issues
throughout the segments. Given the importance of the project and the expectations of our stakeholders, weare now managing the project by implementing various measures one by one.
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ESG targets and figures are announced in various places, but they can be a bit confusing, so I have laid out
here. CO2 emissions, then the problem of waste, mainly plastics, then the problem of water consumption,then the rate of adoption of renewable energy, and the percentage of female managers.
We have listed the numerical values for the FY2025 target, the mid-term target for FY2030, and the long-termtarget for FY2050.
As for TCFD, we are putting it together now, and we expect to be able to disclose it, probably next week.

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19CO2 reduction.
This is the area getting the most attention.
We have been involved in CO2 reduction activities since 1993, and have been gradually reducing CO2
emissions by setting internal targets under a voluntary plan.
Between 1993 and 2013, we reduced CO2 emissions by about 30%.
In response, we have set a mid-term target of 35% by 2030, and a long-term target of 25% by 2025 years after
the end of the Voluntary Plan, with the goal of becoming carbon neutral by 2050.
One of the indicators is how to use renewable energy, and we also want to use new technologies, including
how to replace old equipment with more efficient energy-saving equipment. We are now in the process ofcreating and promoting a project while considering these issues.

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Then there is the “S.”We are implementing various measures.
In particular, we have introduced a new personnel system that we treat employees in a matrix that matches
their job responsibilities and abilities and abolish the seniority system from 2019.
This new personnel system is implemented in manager class to start with. In the last fiscal year, we have beenworking to change our personnel system so as not to lower the motivation of our senior staff, and also to
improve benefit to support various ways of life.
As for promoting women in active roles, we started this last fiscal year, although it was a late start. The
percentage of female employees in management positions is not very high, in fact there are not many female
employees to begin with. Among them, the percentage of managers and line managers.
With certain goals in mind, we now need to educate, and not only educate our female staff, but also educate
our male employees in various ways and have them take it. We are now in the process of making progress.

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Then there is the DX promotion system.
Our company must move forward with DX. We started with factory DX to begin with, and we are in the processof introducing IoT rather than DX in various areas after three years of factory DX.
The Digital Innovation Promotion Office was established directly under the President, and the members of
this office are playing a central role in increasing the number of personnel involved in various digital
innovations in the factory, sales, logistics, and office areas.
By the end of 2021, we started with six personnel in this office and now we have total of 90 [inaudible] key
personnel. We are currently working on digital innovation with the idea of expanding and connecting them.
One of the things I think we need to do properly this year is to digitize the product certificates. We disclosed
our quality problems last year, which caused concern to many of you, but we are now focusing on digitalizationof quality certification and quality assurance without human intervention.
Then there is the covered line, which is the cash cow in our portfolio. As I mentioned earlier, sales of
construction wires are still not that high, although the rate of return is now gradually increasing.
It is true that we have not yet reached our company-wide profit target. We are still doing business in aconventional manner, so we would like to do this a cash cow business with high efficiency by connecting it to
DX and logistics.
There are many areas that need work, but there are still many areas where we can improve efficiency, so weare now considering starting this year in earnest.

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Then there is governance. I became President in June 2018, and we have been implementing major structuraland governance reforms from 2019 to today.

We are considering changing from a holding company structure to an operating company structure in orderto change the way once again from our group management that we announced in March.
The details are as follows.

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Currently, there are six subsidiaries under the direct control of Holdings, of which Cable Systems, whichhandles electric power, and Unimac, which handles in-vehicle equipment, will be merged into Holdings. We
are preparing to start a new operating company under the name of SWCC Corporation in April next year.
There are many companies that are now adopting a holding company structure, but we are in the process of
returning to an operating company structure. We are often asked why. Considering our business, we havedivided it into segments, each segment and the six individual companies directly controlled. They are quite
multi-layered in terms of business area.
If these areas are placed under a holding structure, it will be difficult to speed up management reform
especially the indirect divisions and integration of various areas. It is difficult to take a control in these area
since we have to do DX in the future. We have been working here for three years with a very strong
governance system, and we would like to speed up the process, increase efficiency, and make the Company
more profitable.
We are also streamlining our indirect departments in the form of shared services. We believe that there arestill many areas where we can do more, and we would very much like to make this happen in this integration.

This is the last slide.
We are finally beginning to receive various evaluations from outside the Company in the form of third-party
assessments of our sustainability performance.
As I said, there are various good and bad points in the business, and also various areas that need to be
improved in governance. We have a lot of things to do, but we would like to continue to operate our businesswith the aim of achieving a corporate structure that will be increasingly valued by our customers and increase
the value of the Company.
I would like to end my presentation. Thank you very much.

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Question & Answer

Moderator [M]: We will now move on to the questions-and-answers session.
Hariya [Q]: My name is Hariya from Ichiyoshi Research Institute Inc. I would like to ask three major questions,so I will separate each question. The first question is about your operating income forecast for the current
fiscal year. It is a slight increase to JPY10.3 billion YoY.
On page six, you have listed the factors that contributed to the increase or decrease in operating income inthe last fiscal year. With the forecast of JPY300 million increase in profit for this fiscal year, do you have any
thoughts on these other than the factors on the list? For example, copper price is rising. What are your plans
for this fiscal year, given that you gained JPY1 billion last year?
Also, there was JPY600 million effect for the structure reform. What your thought about this for this fiscal
year? I know the construction project allocation for the Middle East will be eliminated, but do you have any
thoughts in this area?
Hasegawa [A]: Thank you. We do not consider including copper marginal gains when budgeting. Somesmelters and various other companies are disclosing the trend of copper price for this year. Somemanufacturers say that copper price is flat as they are now, while others say that they are likely to drop in thesecond half of the year. It is only to be understood that we do not include copper margins in our planning forthe year, so this part of the plan is not included.
As for structural reforms, last year’s total was JPY600 million, but the largest portion was in thecommunications and industrial device business. We believe that a certain amount will contribute to theincrease in profit there. Since the number of such projects has been increasing every year, we do not expect
to see a large increase from last year, but we expect the total to be the same this year as well.
Hariya [Q]: I understand. To change my question a bit, you mentioned earlier that you considered various
risks and stresses in preparing the forecast for this fiscal year. Could you tell us a little more specific that whatkind of risk was most important to you when you created the budget.
Hasegawa [A]: The most important issue we focused on this year was the rising cost of raw materials. In
particular, the price hike of materials for construction wire which is in the fierce competition and little
difference to tell between superior and inferior products. The sales price has been gradually rising as we haveasked our customers to swallow, but our salespeople have been in a really bad time for a long time, so it has
been difficult to change their mindset to raise the prices. We are well versed in the fact that we have to discusswith our customers and raise the price under the current circumstances. Therefore, we believe that thebiggest negative impact of material price hikes is on electric wires for construction.
Another area of major stress was in the area of automotive in electrical equipment and components. As
expected, the copper volume in the third and fourth quarters, as well as in the year before last, is down
compared to FY2020. Looking at the full year, the first half of the year was very strong as I mentioned earlier,so there was no decline in copper volume for the year as a whole, but a quarter analysis shows a decline incopper volume in the third and fourth quarters.
As you all know, that is not the case when it comes to the first quarter and whether there has been a dramatic
V-shaped recovery, so we are putting a lot of stress on that under the expectation that this situation may
continue for the first quarter, or even until the summer or so. Then there is the lockdown in China. It is possiblethat logistics may not come around for some time after the lockdown is lifted.
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These are three points that we are stressing about.
Hariya [Q]: Okay, thank you. The second question is about the electrical equipment and components that you
just mentioned. In particular, in the area of oxygen-free copper, I have calculated sales for the current fiscal
year and it will be about JPY40 billion, which is increase of JPY10 billion from the JPY30 billion sales of theprevious fiscal year.
The increase in the price of copper may be a factor, but as you mentioned earlier, the Company has announced
that it will increase production capacity by 50%. The first quarter may not be a big deal, but I wonder if you
are looking at an increase in production from the second or third quarter. I would like to confirm if myunderstanding is correct.
In addition, I believe that this segment is actually planned to increase revenues but decrease profits. What
will be the factors for lower profits in that area? Can you tell us about that area?
Hasegawa [A]: Thank you. As Mr. Hariya just mentioned, the overall trend toward to EV has not changed, so
once automakers' plants start operating, the situation should be similar to the first half of last fiscal year. So I
think it is about the timing when they start operation. We are ready for mass production, so once the businessis properly turned around in a certain way, we will return to the original. I believe that the situation will returnto what it was in the first half of last year.
One reason for this is that copper price is high, so even though the volume of copper shipped is the same, itappears to be an increase in revenue. Also, the current stagnation in terms of profit decline. In FY2021, copper
marginal gain was generated as a result, and operating income increased due to copper price. Since electric
equipment and components have a great deal [to do] with copper, it does [impact] sales and profit in thatbusiness and I have mentioned that we are seeing it as flat. Considering this situation, we are forecasting an
increase in sales but a decrease in profit; although it is not right to call it a target, rather forecast.
Hariya [Q]: Just to confirm, when the price of copper goes up, sales naturally go up. Last fiscal year, theCompany as a whole benefited from the copper price hike of about JPY1 billion, which fell quite a bit in theelectrical equipment and component division. You do not expect that to be the case this fiscal year. But
basically, copper price increases can be reflected in product prices, so although there are issues such as timelags and inventory stock, you are talking somewhat not essential. Is my understanding correct?
Hasegawa [A]: Yes, that's what I mean.
Hariya[Q]: Third and last question. I would like to know about energy and infrastructure. As I mentioned
earlier, SICONEX will be increasing production in earnest next year. Even before all the talk about restructuring
the power transmission and distribution network and the shortage of electricity, you were making plans toincrease production. On the other hand, I have heard that there will be a talk from government about
reorganization of the power grid around June this year.
In such a situation, depending on the content, I wonder if there will be some kind of measures for further
medium to long-term growth in the future. I am wondering if there is a possibility. Could you tell us about it?
Hasegawa [A]: Thank you. This is a very difficult question to answer, but as you say, the med-term plan does
not consider the expansion of the power transmission and distribution network. That's where this came from,equipment enhancement for manufacturing. We have increased the volume of the first batch by 50% to begin
with, but we are aware that depending on the trend, we may have to consider another increase in production.
Then again, the most difficult part is personnel for power construction. We can make things by adding facilities,
but it is very difficult to train people because we have to train technicians who have high expert knowledge.
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How can we create a cooperative system, or teamwork in a sense, in which people are allocated to ourbusiness, especially in the substation business? That is exactly what we are now examining and strategizing
about.
There are many reports from various committees and official minutes from the government, so we haveformed a special team to read various related documents. We are in the process of examining how much weshould increase production volume and what kind of teamwork is needed. I hope to be able to speak with you
again at this kind of meeting once the policy has been finalized within the Company.
Hariya [M]: I understand. Thank you very much.
Moderator [M]: We will now continue to have questions from participants on-site. Please raise your hand if
you have any questions. Then, please.
Abe [Q]: My name is Abe from Daiwa Securities. I would appreciate if you answered three major questions.
The first question is about the JPY800 million impact of material price hikes that you disclosed on page six,and how much of that was covered by price pass-through and price increases this fiscal year? Also, how muchof the impact of this material price hike is expected to be reflected in the new fiscal year's plan, and how muchof it is expected to be passed on? Please tell us about your assumption. This is the first question.
Hasegawa [A]: Thank you. Last fiscal year, we asked our customers to raise prices several times because wewere just in a phase of material price hikes. It is same for our company, but price does not go up right away,
or from this month, when we asked to do so. There is always a delay. In such a situation, where everything
could not be transferred, it appears in this form.
In terms of the current fiscal year, we have been able to pass on the cost of last year's request from this year.
However in terms of the current price of materials for petrochemical products, we expect the cost of materials
to remain at a high level this year with various measures taken last year, and it will give an impact on profit
gain/loss in this year.
We expect the impact to be about double of the one in last year, and we will pass this on in our prices. Evenso, we expect some impact from the high cost of raw materials, but our current policy is to pass on the costto our customers as much as possible. We are not only asking our customers for help, but we also need tothink about how we can innovate production within our own company. We are also working to improve
efficiency in areas that we have yet to tackle, such as the DX of coated wires I mentioned earlier, while working
to pass on prices.
Abe [Q]: Thank you very much. I have a feeling that it is easy to pass on the cost of the product in the industry,
but do you have a feeling that it is accepted by customers?
Hasegawa [A]: Since the end of last year or around the beginning of the new year, since price increases thishigh, the more customers are willing to accept it. Since it is difficult for sales person to talk about price raisein person, so the Company issued a letter or disclosed in public in the end by clearly stating this as a company
policy. With this effort, we feel it becomes easier to gain understanding from customer.
However, the point is that although last year's price hikes have settled down, we will be in a similar price hikephase again this year, so we will be following up closely on this. As for the atmosphere, I think customer
understand it.
Abe [Q]: Thank you very much. The second question is about the new factory in China. I think there was talkthat production being delayed a bit due to a shortage of materials in the past, but what about in light of the
lockdown add on to it? Is it better to assume that it is not operating at all?
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Hasegawa [A]: No, it is up and running.
Abe [Q]: It's the degree of operation.
Hasegawa [A]: In terms of operation capacity, it is not at 100%, but is operating. Since last year, it has beenquite difficult to procure supplies from Japan, and we have been instructed to increase the local procurement
rate. Especially the terminals, the materials used. Originally, we procured electric wires in China, but it wasdifficult for us to gain the understanding of our customers regarding terminals because we had to competewith them.
By explaining this to our customers and assuring them of the quality of our products, we have been able togain understanding from customer to use the terminals procured in China for a certain percentage. In such asituation, the operation rate is maintained at a certain level. This is not at the level of not operating at all, orthat the Chinese operations are in the red.
There are some circumstances like lockdown is suddenly declared by the authorities. So we are creating
multiple logistics routes and distributing production bases in several locations. We are taking various
measures to ensure that operations do not come to a halt.
Abe [Q]: Thank you very much. Lastly, I think you mentioned the ROE target of 10% or more in your mid-term
plan. I think the idea is to improve the financial structure at the same time. Do you envision ROE to be
maintained at around 10% during the medium-term management plan period?
Hasegawa [A]: Yes, you are right. In FY2019, ROE increased slightly to about 17%. As we take various measuresin the mid-term plan, we will obtain various figures for this area, but one of our important KPI items is tomaintain 10% or more, and we will not compromise on this point.
Abe [M]: Thank you, that's all.
Moderator [M]: We continue to take questions from participants on-site. Please raise your hand if you haveany questions. Then, please.
Maeda [Q]: My name is Maeda from SMBC Nikko Securities. Thank you for your presentation. I have one
question. In the forecast for the new fiscal year, I think that harnesses, in particular, have more weighted
profits in the second half of the year. I would like to know how much differences for other businesses in thebusiness environment and profit generation from the first to second half of the year.
Hasegawa [A]: Thank you. In the past, electric power business was profitable by completion of construction,
but we have revised the profit standard, so that it is not so much biased toward either the second half or firsthalf of the year, but is somewhat equalized in the quarter. This is electric power business.
The other two areas that will suffer in the first half of the year due to economic situation are automobiles, as
I mentioned earlier, electrical equipment and components, and harnesses, where Chinese lockdown isinvolved. We think it will be quite difficult in the first half of the year, especially the first quarter.
Maeda [Q]: Thank you. Also, you mentioned that automobile production is expected to return after thesummer, but automobile manufacturers have continued to lower their production plans this year, so howmuch of a risk buffer have you factored that in?
Hasegawa [A]: I cannot give you an exact figure here, but we are in close contact with our customers, and wewill decide on production volume based on demand trends for the months ahead. I've heard various stories
and it will be in May, June, or July, maybe even into the second quarter. Our company is quite close to

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upstream production and materials, so there are places where automobile manufacturers' plants start tomove and various intermediate inventories are in place and coming up.
On the other hand, when it falls, it falls at the last. We are not sure if it is going to grow a lot from in the firstquarter to a little out of the it, although there will be a little time lag. The production volume of automobile
manufacturers changes in various environments. We have an oxygen-free copper dip system in place, so weare ready to start mass production when we are asked.
Maeda [M]: I understand very well. Thank you very much.
Moderator [Q]: We will continue with questions from online participants. We have a question from Mr.
Nakanishi of Iyasaka Asset Management. SG&A expenses increased approximately JPY650 million from thethird to fourth quarter. The increase seems somewhat larger than in previous years. Please indicate the main
factors.
Hasegawa [A]: I understand that you are talking about FY2021, and I would like to answer your question.
There are many things in SG&A expenses, but from the first quarter to the second quarter, or the third quarter,
the second half of the year is the time we were just starting to see an uptick in activity after ease of thepandemic. Demand has also risen a bit. In this area, SG&A expenses have been rising.
Some of the expenses related to the business reorganization, or relocation, are included in SG&A expenses,
although some of them are recorded as an extraordinary loss. So, I hope you understand that SG&A expenses
have risen including these expenses.
Moderator [Q]: We have another question from the same person. Regarding the lockdown in China, you have
explained the impact on the production side, but if there is also an impact on the demand side, please let us
know.
Hasegawa [A]: Thank you. So far, not much has changed in terms of demand and market. If anything, thedemand from customers is strong, with production not being possible due to a shortage of parts. We cannot
accommodate with customer’s demand, as we do not have enough parts. We are doing with understanding
from customers, but for those customers who insist on it, we transport parts by air or use days off and produce.
It uses cost. So there is no drop in demand at all right now, and we are still in a situation where production isstagnant.
Moderator [M]: The time has come so Q&A is now closed. Now we would like to end the financial results
briefing for SWCC SHOWA HOLDINGS CO., LTD. Thank you very much for taking time out of your busy schedule
to join us today.
Hasegawa [M]: Thank you very much.
[END]______________
Document Notes
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