Medium-Term Management Plan 2024：
PLAN2024（FY2022～FY2024）

Jun 2022

HOKURIKU ELECTRIC INDUSTRY CO., LTD© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Medium-Term Management Policy
We formulated the basic medium-term management policy forward to FY2026
that is five years ahead from now, and established PLAN2024 as a three-year
medium-term management plan from FY2022 to FY2024. In order to achievethat plan, we will respond based on the following medium-term management
basic policy while taking into account our corporate philosophy, long-term vision,and action guidelines, and meet the expectations of our stakeholders.

Medium-Term Management Policy
Until FY2021, we had promoted "Renewed Selection and Concentration"
activities for our business and worked to strengthen our business foundation.

From FY2022, based on the current activities, we will further strengthen theresilience of the business and further enhance the corporate value by developing
the business with recognition of sustainability and actively responding to various
changes (transformation) in the social environment .

© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Management GoalFY2024 (End of March 2025) PLAN2024

・ Consolidated sales
・ Consolidated operating income

JPY 46 Bn

JPY 2.8 Bn（ Consolidated operating margin 6%）
・ ROE
10%
FY2026 (End of March 2027) Forecast

・ Consolidated sales forecast
JPY 53 Bn
・ Consolidated operating profit margin forecast 7.5%
© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Business Results and Future Goals

Sales
JPY 40 Bn

Operating
IncomeJPY 2.0 Bn

OperatingMargin5.1%

Operating
IncomeJPY 2.8 Bn

500328300

OperatingMargin7.5%

15.0%

Medium-Term Plan
FY2022～FY2024387Operating
IncomeJPY 4.0 Bn

FY2026 Forecast( Sales in JPY 100 million)

600

400

OperatingMargin6.0%

FY2024 Target

FY2021 Results
700

Sales
JPY53 BnSales
JPY 46 Bn

460

404

Operating Margin

5.1%

6.0%

Medium-Term
Forecast

530
Operating Margin

7.5%

13.0%
11.0%
9.0%
7.0%
5.0%

200

2.2%

1.7%

3.0%

ROE
10％

100

1.0%

0-1.0%FY2019ResultFY2020Result© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

FY2021ResultFY2024
TargetFY2026
Forecast

4Corporate Philosophy / Management Vision / Action Guidelines

・ Corporate Philosophy••••Let’s create tomorrow
Work with sincerity
Be responsible and cooperative
Produce good products and contribute tothe development of society

・Management Vision
We aim to be a company that “Innovates
through manufacturing by taking on thechallenge of creating things that are not in
the world and that Contributes to society”.

・Action Guidelines
Management is “Business continuity”
and the lifeline of “Business continuity”
is “Expansion”. The key factor is to“Continue to be trusted by society”.
* Details are on the next page© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Corporate Philosophy / Management Vision / Action Guidelines
Corporate Philosophy
There have been no changes of the manufacturing spirit since our company was founded as stated in theCorporate Motto “Let’s create tomorrow”, “Work with integrity”, “Be responsible and cooperative”, and“Produce good products and contribute to the development of society”. We aim to be a highly trustworthy
company by customers and that contributes to society by developing and providing safe, secure,convenient and useful electronic component devices and modules.

Management Vision
We are targeting to be a company that “contributes to society by challenge of creating new things that are
not in the world and by creating innovation through manufacturing”. As “HOKURIKU of Sensors &Modules”, we will not only respond to previous requests, but also continue to grow in the future by
responding to new needs and issues from various sectors toward the realization of a sustainable society
as our top priority strategy.

Action Guidelines••••

We believe that Management is “Business continuity” and the lifeline is “Expansion”. The key factor isto “Continue to be a trustworthy company by society”. “Long-term expansion” cannot be achieved ifthe corporate brand value is damaged.
Complying with the Code of Conduct that we have established, we will promote sincere and ethicalcorporate activities.
Further enhancing the spirit of sincerity for quality and technology, we will act with a broad perspective
and high goals to make good products.
We will promote “Sustainability management” to earn the trust of society while acknowledging diversity
and enhancing the power of the organization by demonstrating various human resource capabilities.

© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Our Features
Our electronic component devices and modules are manufactured based on thespirit of sincerity and product development pursuing five core technologies, andrealize high value-added and high quality products that satisfy our customers.

Product Development

Manufacturing

Pursuit of New Technologies

Spirit of Sincerity

Material
Technology

CustomerFirst

DesignTechnology

Manufacturing
Technology
Evaluation
Technology

Analysis
Technology© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

Continuous
Improvement

Quality
Focused7

Recognition of current situation
Changes in social and business environment

Social Environment
Changes in the social environment with high uncertainty will be continued.
••••

Growing awareness and needs of decarbonization and environmentalprotection.
Labor shortage and rising labor wages due to declining birthrate and aging
population, and declining population.
Decline in growth of developed country, and growth in emerging countries.
Geopolitical risks such as regional conflicts and trade friction.

Business Environment
Situations that require response to changes in the business environment
will be continued.
• Decline in profitability due to commoditization of products.
• Evolution of digital technologies such as IoT, AI and expansion of DX.
• Transformation of the automobile industry such as electrification of vehicles andautonomous driving.
• Increasing awareness of sustainability such as SDGs and ESG.
© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Management / Business Strategy• Strengthening of core business, promoting of product development andcommercialization to meet new demand.
• Strengthening of the management based on sustainability efforts.
Strengthening of core business•Further expansion of new technologies (new products), new customers, and new fields.

•Continued investment in product development and optimization of business portfolio.

•Strengthening of business bases in consideration of BCP and global restructuringof overseas manufactured products.

Strengthening of marketing and promoting of commercialization•Strengthening of marketing of auto parts, various sensors, etc.

•Promotion of product development related to decarbonization,

Corebusinesselectrification of vehicles and DX.

Strengthening of the management base•Enhancement of corporate governance.

•Accelerating activities toward a sustainable society.

© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

Marketing&commercialization

Managementbase9

The strategy by businessCore business sales ratio
The core business grows steadily in a well-balanced manner.
- Sales ratio of electronic component devices (resistors, sensors, etc.)
FY2021 JPY19 Bn / 47% ➡ FY2024 JPY21.5 Bn / 46% （Sales growth rate 13%）

- Sales ratio of Module products
FY2021 JPY20 Bn / 49% ➡ FY2024 JPY22.5 Bn / 49% （ Sales growth rate 13% ）Core product strategy••••

Resistors / Electronic component devices will be increased significantly due tothe electrification of vehicles.
Temperature-humidity sensors / Electronic component devices sales will growby increasing the lineup.
Module products sales will be expanded by high-functional modules.
Mass production of new sensors required in a safe and secure society.

Mold and machinery• Focus on the mold for advanced PCB applications.
• Development of AI inspection equipment, etc. to suit the market trends.
© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Strategy : Growth of Core Business (Divisional Sales)

Steady growth in each Division
FY2021
Mold & Machinery

2%

FY2024
Others2%Reference

Mold &Machinery

1%
NewSensors

FY2026

Others3%

Mold &Machinery

1%
Electronic
Component
Devices

1%

47%

3%

NewSensors

Modules49%

OthersModules
Electronic
Component
Devices

49%

46%

2%
Electronic
Component
DevicesModules

52%

42%

Sales JPY 40.4 Bn© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

Sales JPY 46.0 Bn

Sales JPY 53.0 Bn

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Strategy : By Division
Business development & strategy of Portfolio

NewSensors※The size of circle represents the scale of sales

FY2021 ➡ FY2024 annual growth rate・Modules
・Resistors
・Sensors
MoldMachine

Value Highadded4%/Y
4%/Y
17%/Y

Sensors
Sensors
Resistors

Resistors

MoldMachineHigh Function
Modules

SmallModules© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

Big

GrowthCommon
ModulesLow

12Strategy : By Market
Strengthening and expanding of the system to focus on high growth potential and profitable field

Automobiles
Acceleration of business development for major transformationfrom gasoline-powered vehicles to environmentally friendlyvehicles （EFV）【Sales ratio for automotive】
58% FY2021➡ 64% FY2024（Environmentally Friendly Vehicles: 5% FY2021➡ 8% FY2024）(REF： 20% FY2026）Information and communication, industrial equipment,
home appliances, etc. (OA, etc.)• Strengthening of development of electronic component devices and modules
that contribute to CO2 reduction.
• Expansion of product line up to meet customer needs.

GX, DX related (5G, IoT, etc.)• Product development that contributes to solve social issues (safety andsecurity, monitoring, decarbonization related).
© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Strategy : Growth of Core Business (Sales by Market)
Increase of net sales at automotive market & environmentally friendly vehiclesFY2021

FY2024EFV

5％HomeAppliances

8%

EFV

8％

FY2026
Home Appliances

EFV

5%

OthersOthers

20％

10%

15%

Others

HomeAppliances

Industrial 9%
Equipment

Industrial
Equipment

9%
Industrial
Equipment

Reference

10%
Automobiles

12%

58%

Information &Communication
Equipment

Information &Communication
Equipment

6%
Sales JPY 40.4 Bn

10%Automobiles

64%

8%

Sales JPY 46.0 Bn

Information & Automobiles
Communication
68%
Equipment

8%

Sales JPY 53.0 Bn※EFV・・Environmentally Friendly Vehicles© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

14Strategy : Manufacturing location• The production base will review the global production system to pursue
a resilient production system in consideration of (1) stable supply (riskmanagement, securing labor force), (2) local production for local
consumption, (3) sustainable business development (BCP), etc.
【Overseas production ratio】
60% FY2021 ➡ 66% FY2024 (Ref： 75% FY2026 ）ChinaTianjin Plant© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

Shanghai Plant

Dongguan Plant

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Strategy : Manufacturing location
ASEAN
Thailand Plant

Malaysia Plant•Five overseas manufacturing plants were established more than 10 yearsago. They are operated independently by local employees and have ability oftimely response to any changes. Enhancement of capital investment andexpansion of the factory will be carried out in the ASEAN region.
【ASEAN production ratio】
20% FY2021 ➡ 31% FY2024 (Ref： 45% FY2026 ）•Manufacturing plants in Japan will maintain the production scale. Smartproduction will be promoted by DX, Visualization, Improvement of businessprocesses, etc.

© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Strategy : Growth of core business (By manufacturing location)
・ Expansion of overseas production 60% FY2021 ➡ 66% FY2024
・ Expanding products from China base to ASEAN base・ Thailand factory expansion in 2022, ASEAN MFG ratio
20% FY2021➡ 31% FY2024
FY2024FY2021
Overseas60%

Overseas

Reference66%

FY2026
Overseas

JAPANCHINA

JAPAN

40%

40%

34%

ASEAN

20%
Sales JPY 40.4 Bn© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

CHINA

35%

ASEAN

31%
Sales JPY 46.0 Bn

75%
JAPANCHINA

25%

30%

ASEAN

45%
Sales JPY 53.0 Bn

17Promotion of Sustainability management
Sustainability Concept
We will continue to take on the challenge of developing products requiredby a sustainable society, and contribute to the development of asustainable society through the development and stable supply of highquality products that meet the needs of the times. We aim to achievecarbon neutrality in 2050.

【Main Efforts】
・ Initiatives for Climate Change (Decarbonization)

・ Strengthening of the compliance system

・ Improvement of employee engagement· Product development© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Sustainability and SDGS
We believe that tackling the social issues indicated by the SDGs will lead tothe creation of new business opportunities and business growth.
In order to accelerate our sustainability efforts, we have set important
issues to focus on and clarified the main issues to be addressed.
Details of our efforts will be disclosed on our website sequentially.
Focus onImportant issues(materiality)
Ｅ:(Environment)

Main Issues

Initiatives for Climate Change(Decarbonization)

46% reduction of CO₂ emissions in FY2030
Development of environmentally friendly products
Promotion of CO₂ reduction in factories

Engagement in the supply chain
environmental loading
management

Development of product with low environmental impact
Establishment of sustainable supply chain

Ｓ：(Society)

Diversity and Inclusion

Employee Engagement
Increasing ratio of female management staff

Ｇ：(Governance)

Risk management & Governance

Enhancing of risk management and compliance system

Product Quality

Continuous improvement of manufacturing process
Full Quality compliance© 2021 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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Financial strategy
Shareholder return policy
Continuation of stable dividends
Distribution based on business performance（Balance with retained earnings and dividends）
Enhancing corporate structure
We will raise the profit level by increasing sales and operating profit
margin, and aim to return profits to shareholders by increasing
dividends.

Return on equity (ROE)
We will strive to maintain ROE of 10% or higher by increasing theoperating profit margin and curbing retained earnings by increasing
dividends.

Enhancement of financial status
By investing in high value-added businesses and improving production
efficiency, we will secure cash flow and allocate it to sustainability,
investment in human capital, and reduction of borrowings.
© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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HOKURIKU ELECTRIC INDUSTRY CO., LTD

The business outlook described in this material was prepared by the Company
based on the information available at the time of preparation of this material, but
the results may differ significantly from actual performance due to various factors
such as changes in the economic environment and volatile electronics market
trends.
Therefore, please refrain from relying entirely on the business outlook and target
figures in this material. The Company is not liable for any loss that may occur asa result of using this material.
© 2022 HOKURIKU ELECTRIC INDUSTRY CO., LTD.

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