NISSO CORPORATION【Main Q&AExplanation of Financial Results for the First Quarter of FY 3/2021】

Announced on August 20, 2020
The following content contains the main questions and answers from the questions
received after the announcement. In addition, some revisions and corrections have been
made to make the content easier to understand.
Q1: Although the automobiles and electronic devices industries bottomed out in 1Q, will
they recover from 2Q?
A1: In 1Q, in the automobiles-related industry, although production decreased gradually
due to a sharp decline in demand as a result of the spread of new coronavirus(COVID-19) infections in Japan and overseas, production conditions are on a gradual
recovery trend. The Account Companies, who are NISSO'S major clients, areexpected to recover production volumes from August onwards as originally planned,
and the number of orders to us is increasing accordingly. In addition, regarding theelectronic devices industry, as IT infrastructure investment remains strong, demandfor 5G-related semiconductors such as base stations is expected to increase, as wellas the demand for automobiles-related products, and demand for human resources
is expected to recover as a result of these factors.
Q2: Isn't the Full-year Consolidated Forecast announced this time, with the automobilesindustry on a recovery trend, quite conservative?
A2: Although NISSO's Full-year Consolidated Forecast was based on the assumption that
economic activity would gradually resume from 2H and that the businessenvironment of the Nisso Group would recover moderately, in the automobilesrelated industry, which is our main client, demand is recovering ahead of the forecast
made when calculating our earnings forecast. As the circumstances have changed
since the time of calculation, although it can be said that it is a conservative forecast,
the impact of the spread of COVID-19 infections in the future and the recovery
situation in all of the industries other than the automobiles-related industry is still
uncertain, so first of all, NISSO aims to achieve this consolidated earnings forecast
announced this time as early as possible.
Q3: Although SG&A expenses, mainly recruitment expenses, decreased, will they
increase from 2Q onwards?
A3: In 1Q, although recruitment expenses decreased due to a decline in demand, in 2Q,orders from clients gradually increased, and as a result, recruitment expenses areexpected to increase. In addition, although we will continue to control all otherexpenses in general, since we will continue to make investments related to education

and development that increase the added value of NISSO's employees andinvestments that we deem necessary for our growth, we expect that SG&A expenses
will increase from 2Q onwards.
Q4: What is the purpose (and effect) of the capital and business alliance with Cross
Compass?
A4: Although NISSO provides services such as human resources dispatching orcontracting, we believe that new technological innovations will advance atmanufacturing sites in the future, and that productivity and quality will increase byintroducing IoT, AI, robots, etc., to manufacturing sites. Under such circumstances,
we also had the opportunity to speak with clients, and realized that a new businessmodel to solve problems was necessary at the post-COVID-19 manufacturing sites.
Therefore, we have started discussions on a capital and business alliance with Cross
Compass, which is engaged in AI development and technology consulting, mainly tosolve problems in the manufacturing sector. Through this alliance, we will add the AI
technology and development capabilities of Cross Compass to our extensive
knowledge and human resources at our clients' manufacturing sites, create highvalue-added services called "Worksite Solutions by Humans and AI", and aim to build
a structure that can promptly respond to the problem-solving and needs at ourclients' manufacturing sites. With this realization, even if labor saving and automation
progress at manufacturing sites and the demand for conventional operators
decreases, we believe that it is possible to expand our business performance byresponding to new "needs" such as solving problems at manufacturing sites.
Q5: Will Other Businesses become profitable this fiscal year?
A5: With regards to the occupancy status of Building 6 (Sweetpea Higashi Totsuka), asa result of facility previews via the web and other possible measures, the number ofresidents has increased, and as of the end of July, the number of residents has
increased to 82. The capacity of Building 6 is 94 residents, and we will continue toincrease the number of its residents in the current fiscal year. By stabilizing thenumber of residents, we are aiming to achieve profitability within the current fiscalyear.
Q6: Will the number of skilled staff, centering on equipment maintenance personnel,
continue to increase?
A6:

Regarding equipment

maintenance,

such

as

semiconductor

manufacturing

equipment, where many skilled staff are employed, the demand from clients willcontinue to be high, and the number of skilled staff is expected to increase in
response to such needs. In addition to this equipment maintenance, NISSO will also

develop and train highly-skilled skilled staff who can provide high-quality services in
new sectors such as production technology.
As just described, we believe that in the future, NISSO will be able to respond to theneeds of various clients by increasing the number of skilled staff who are able torespond to the needs of new clients, in addition to providing equipment maintenancepersonnel to current clients who have high needs, and we believe that this will leadto the expansion of our business performance.