SWCC Corporation
Institutional Investors Meeting(SWCC Value Creation Story: Future Business Growth and Capital Strategies)
Summary of Q&A Sessions
Date and time: Monday, December 18, 2023
Part I: 2:30-3:30PM / Part II: 4:00-5:00PMLocation: Nihonbashi Kabuto-cho, Chuo-ku, Tokyo■Energy and Infrastructure Business
Q: What is the outlook for profit growth of SICONEXⓇ and construction-related customer
trends?
A: We are currently considering whether additional investment in SICONEXⓇ is necessary
in response to the increasing demand for the renewal, strengthening, and offshore wind
power-related projects within the substation, as well as the improvement of thetransmission and distribution network. In addition, the rolling medium-term plan will take
into account factors not incorporated in the current plan, such as the new revenue cap
system introduced by electric power companies. In the construction sector, supply has notbeen able to keep up with the rapid increase in demand. As for the outlook for future
demand, in the near term, firm demand is expected for the Osaka Expo, semiconductor
plants, and metropolitan area redevelopment, but demand is expected to decline over themedium to long term, and with this in mind, capital investment should be considered
cautiously.
Q: Regarding SICONEXⓇ, please tell us whether the demand for renewal of aging
substation facilities will steadily increase or stabilize at a high level.
A: Normally, electric power companies would proceed with renewal of older, high-utilization
facilities under the revenue cap system, but since there is a shortage of construction
personnel due to the 2024 problem, the peak demand for renewal is likely to level off andremain stable at a high level.
In terms of human resource shortages, we are building a system to resolve them byincreasing the number of subcontractors to secure personnel and by redirecting our highly
skilled construction personnel to fields with high voltage ranks.

■Electrical Equipment and Components Business
Q: I've noticed from other companies' financial reports that there is intense pricecompetition in the market for BEV (Battery Electric Vehicle) E-Axle-related products. I
would like to confirm whether your company's products can generate revenue in themedium to long term despite this competition.
A：Although the competitive environment is tough, we believe that once the production
innovation line currently under development using AI and other simulation technologies iscompleted, we will be able to improve productivity, quality, and profitability and takeadvantage of our competitive edge.
■Communication and Industrial Devices Business
Q: Regarding the wiring harness business in China, can you tell us whether you expect toexpand profits in the future as you invest in growth, or do you think a change in strategy isnecessary?
A: Currently, wiring harnesses are products for home appliances, which are suffering very
badly due to the declining demand reflecting COVID-19 and the slowdown of the Chinese
and Vietnamese economies. As a recovery measure, our company is steadily shifting fromconsumer electronics to automotive applications. We are tying up with Chinese companies
to enter new harness fields, such as around cameras and sensors, as automated driving,etc., become more prevalent, rather than the main harnesses that our competitors
specialize in, and we believe this is a strategy that can contribute to achieving our mid-termbusiness plan targets.
■ Growth Strategies
Q: Regarding the growth investments that will expand from 2025 to 2026, when will theinvestments contribute to profits? Also, please tell us if you expect to achieve the operating
income target of 15 billion yen for FY2026 solely from existing businesses without M&A.
A: Growth investments will be used for M&A and new businesses related to the BD(Business Development) strategy, and are expected to contribute significantly to profits
from 2026 to SWCC VISION 2030.
On the other hand, capital investment in existing growth-driving businesses began in
FY2022 and is expected to contribute significantly to the FY2026 operating income target of
15 billion yen.

Q: On the occasion of the rolling mid-term budget, it appears that capital investment in
SICONEX and other products will peak out from the year after next.
A: The current business environment has changed significantly from the time when thecurrent mid-term plan was formulated, and there is a great possibility of making changes tothe investment plan.
Q: Could you be more specific about your BD strategy? Also, if there is a need forinvestment in existing businesses, I would like to hear your opinion on the idea of allocating
the investment to those businesses.
A: We agree with the concept of allocating funds to existing businesses that can recover
their investments, but considering the time horizon to 2030, we believe that it is necessary
to reform the portfolio by removing the stain from existing businesses through M&A andother means.
Q: Regarding the balance between profitability improvement and sales growth rate, is it
your policy to enter the growth phase in stages while maintaining a balance between thetwo, or will there be a time lag between prior investment and profit contribution?
A: In order to improve the sales growth rate, investment in increased production will benecessary. In such cases, the timing of profit contribution is naturally taken into
consideration, but since equipment is introduced upfront, there will be a period of time
when the investment temporarily wins out. We will work on rolling out the medium-term
management plan with an eye to reducing costs as much as possible and minimizing thetime lag between capital investment and the timing of profit contribution by improving
productivity at the same time.
In addition, the BD strategy plans to invest 20 billion yen to further improve profitability andachieve discontinuous growth by using M&A and other means to expand into new markets
and new areas based on core technologies.

■ Capital Strategy
Q: You sold your cross-shareholdings in August of this year. Will you be reviewing yourholdings further? I would also like to know what the cash obtained from the sale will beused for.
A: We have a policy of not having cross-shareholdings in principle. Although there are stillsome policy shares remaining, we plan to proceed with the sale of shares while negotiatingwith the counterparty. Regarding the use of the funds, there are options such as investment
for growth and shareholder returns, but we will be flexible in our approach throughdiscussions.
Q: Regarding shareholder returns, could you please inform us whether you plan to flexibly
respond in the future?
A: Until now, we have had a large amount of interest-bearing debt and have not provided
sufficient shareholder returns, but as we enter a phase in which we will be overcapitalized,
we will consider shareholder return measures such as dividends and share buybacks.
Q: You mentioned that you will generate cash by reducing working capital, but could you tell
us what KPIs you have set for the operational field and how you will proceed?
A: We are requesting the operational field to reduce working capital by 10 billion yen. The
focus is on how to control trade receivables and inventories as trade payables are difficult
to control. As for trade receivables, the number of negotiation partners is small but thepayment site is long, and sales will try to improve the situation by negotiating for a shorter
payment period. With regard to inventories, the accounting department will provide detailed
figures for improvement.
Q: Which will take priority in your efforts, obtaining a credit rating or reducing the DE ratio?
Also, please tell us to what level you plan to reduce the DE ratio.
A: We have been carrying a lot of interest-bearing debt, but we are approaching a phase
where we will become overcapitalized and our WACC will rise. In the current medium-term
plan, the amount of growth investment is set at 20 billion yen, but the optimal capital
structure will change significantly depending on how much will be needed for growthinvestment and BD strategy when rolling the medium-term plan.

■Others
Q: What changes have you experienced in transitioning from a holding company structure
to an operating company structure? Also, please let me know what you expect in the future.
A: The transition to a business company structure has fostered a sense of unity inmanagement meetings, leading to improved communication. As growth strategies havebecome a common challenge, I expect that discussions will deepen even further.
Q: Please tell us what you think about the succession plan to continue the transformation
over the long term.
A: Since 2019, President Hasegawa has been leading a strong transformation of theCompany, and her contributions to the traditional and conservative wire industry have been
widely recognized, including receiving the special award from Nikkei WOMAN "Woman ofthe Year 2024." While it is not necessarily required for the president to change within 5 or 6years, the timing for a succession will eventually come. We are constantly discussing a
succession plan to achieve the mid-term plan first, and then to ensure that the company
can continue its transformation under strong leadership in 2030 and 2040.