Ryosan Company, Limited
Supplementary Materials for
FY2020 First Half Financial Results
Results for the six months ended September 30, 2020
FY2020: Fiscal year ending March 31, 2021

November 26, 2020

Financial Results for FY2020 First HalfBusiness Plan for Full Year FY2020

NoticeBusiness forecasts and all statements related to the future contained in this document
are based on information currently possessed by Ryosan Company, Limited (Ryosan)
and on certain assumptions which are judged to be rational. Actual business performance
may differ greatly depending on a variety of factors. The following is a list of major factors:
Economic conditions in key markets (Japan and the rest of Asia), rapid changes
in consumption trends and supply-demand balance for products• Sharp fluctuations in the dollar-yen exchange rate
• Substantial fluctuation in prices in capital markets•

22

Financial Results for
FY2020 First Half

Consolidated Statements of OperationIn the consolidated first half of fiscal year 2020 (H1 FY2020), both net sales and operating income declined against thesame period of the previous fiscal year (YoY), amid slumping demand due to the COVID-19 pandemic.
Ordinary income decreased 10.8% YoY to ¥1.6 bil, a figure eased by factors such as foreign exchange gains caused by therevaluation of foreign-currency-denominated liabilities.
Net profit advanced 37.4% to ¥1.4 bil, buoyed by factors such as sale of investment securities.

（単位：億円）(Unit: ¥Bil)

H1 FY19

H1 FY20

AmountAmountChangeNet Sales

116.4

97.1

–16.5%

Gross Profit

9.2

8.1

–11.8%(% of Net Sales)(7.9%)(8.4%)(+0.5pt)

Operating Income

1.81.2–33.7%(% of Net Sales)(1.6%)(1.3%)(–0.3pt)

Ordinary Income

1.8

1.6

–10.8%(% of Net Sales)(1.6%)(1.7%)(+0.1pt)

1.0

1.4+37.4%(0.9%)(1.5%)(+0.6pt)

46.15

63.39

+37.4%

108.63106.92–1.6%

Net Profit(% of Net Sales)
EPS (¥)US Dollar Average Rate (¥)

33

Factors in Increase/Decrease of Net Sales and Ordinary Income

Financial Results for
FY2020 First Half

 Factors in the decline in net sales YoY include the effects of the COVID-19 pandemic (¥15.5 bil) and adecrease in transactions prompted by counter measures for profitability enhancement (liquidation of lossmaking businesses) (¥2.5 bil).
 Ordinary income declined ¥200 mil YoY, as positive factors such as counter measures for profitability
enhancement (reduction of personnel and other expenses, as well as reduction of interest expenses
through shedding of inventories) and foreign exchange gains* failed to offset the decline in sales.
Figure 2. Ordinary Income (billions of yen)

Figure 1. Net Sales (billions of yen)Counter measures forprofitability
enhancement

1.8

116.4

+0.7

Foreignexchange
gains

+0.2
Reduction ininterest
expenses

Demandrelated
tostayingat home+2.5

Contraction
in existing
businesses–18.0
Effects of
COVID-19

H1 FY19–15.5

1 9 年 度上期 既 存 事 業縮小

巣 ごもり

Decline in
expenses +0.2

Decrease intransactions due
to countermeasures forprofitability
enhancement(elimination ofloss-making
businesses)

Decline ininventoryrelated
expenses–2.5

New
business+1.5
Effects ofchanges
in foreignexchange
rates

1.6

Decline inpersonnel
expenses

+0.2

+0.3

+0.3
97.1

Other
declines

Decline in
net sales

–1.4

–1.4

–1.4規 模 縮 小等

為替

H1 FY20

その 他 減 少 新 規 ビ ジネス 2 0 年 度上期

1 9 年 度上期 売 買 差 益
H1FY19*Foreign-currency-denominated assets and liabilities are balanced with foreign-currency loans
payable. Foreign exchange gains and losses in gross profit are hedged using foreign exchange
gains and losses generated by foreign-currency loans payable.

在庫

人件費経費支払利息

為替差益

2 0 年 度上期
H1FY2044

Financial Results forFY2020 First HalfSegment Information

 In the Semiconductors business, net sales declined 17.3% YoY due to a slowdown in the automotive businessresulting from the COVID-19 pandemic. Operating income dropped 42.7% YoY, impacted by the fall in net sales
and ad hoc costs associated with changes in supplier policies.
 In the Electronic Components business, a favorable trend in the consumer business, derived from demandassociated with staying at home, was more than offset by a decline in the automotive business, causing bothsales and income to decline.
 The Electronic Equipment business suffered declines in both sales and income due to a significant decrease inlarge projects in the automotive business.

H1 FY19（単位：億円）(Unit: ¥Bil)

Results

Electronic
Components

Electronic
Equipment

Total

Results

Change69.2

57.2–17.3%

Operating Income

0.8

0.46

–42.7%(% of Net Sales)(1.2%)(0.8%)(–0.4pt)

Net Sales

38.0

34.0

–10.3%

Operating Income

1.19

0.97

–18.8%(% of Net Sales)(3.1%)(2.8%)(–0.3pt)

9.2

5.8–36.5%

Operating Income

0.17

0.03

–77.4%(% of Net Sales)(1.9%)(0.7%)(–1.2pt)

Net Sales

116.4

97.1

–16.5%

Operating Income

1.88

1.25

–33.7%(% of Net Sales)(1.6%)(1.3%)(–0.3pt)

Net Sales

Semiconductors

H1 FY20Net Sales55

Financial Results for
FY2020 First Half

Trend in Net Sales and Operating Margins by Quarter Net sales in FY2020 bottomed out in Q1 and recovered to ¥53.6 bil in Q2.
 Operating margin declined to below 1% due to elimination of inventory in Q4
FY2019 and a reduction in net sales in Q1 FY2020 but recovered to 1.8% in Q2.
Net Sales (Unit: ¥Bil)
80

Operating Margin

Semiconductors

63.5

65.4

5.2

6.3

Electronic Components

5.7

57.4

57.9
4.7

20.7
19.440

2.5%

2.3%

2.0%
38.6

Operating Margin

63.2
4.8

19.6

Electronic Equipment

38.3

38.1

17.6
1.6%
34.9

18.7

58.5
4.4

57.9
4.2
18.7

19.2

4.0%

52.8
3.4
17.4

53.6
2.9
3.0%

43.5
2.9

19.2

14.8
1.4%
34.4

1.8%

1.9%

34.7

35.0

5.0%

2.0%

1.8%
31.9
0.3%

31.5

25.7

1.0%

0.6%

00.0%
Q1

Q2

Q3
FY18Q4Q1Q2

Q3FY19Q4

Q1Q2
FY2066

Financial Results forFY2020 First HalfSegment Trend Information
In trends by region, no significant changes are recognized. In trends by application, automotive business, which was most
severely impacted by the COVID-19 pandemic, declined. Trends by product revealed an expansion in sales ofelectromechanical components amid firm consumer sales, driven by demand associated with staying at home.
By Region

By Product

4%

5%

4%

Others

43%

43%

44%

Asia

53%

H1 FY1852%

H1 FY1952%

8%

14%

11%

13%
17%

48%

H1 FY1812%

H1 FY193%
4%

1%
7%
3%
4%

2%
4%
3%
3%

Facilities Equipment
Systems Equipment
Power Supplies
Display Devices

24%

26%

29%

Electromechanical
Components

4%

4%

5%

Memory

17%

17%

17%

Discrete
Semiconductors

39%

38%

37%

System LSIs

H1 FY18

H1 FY19

H1 FY20H1 FY20

9%Others12%

IndustrialEquipment
Information &Communication

18%

Consumer

16%

16%

53%

1%
8%

Japan

By Application
8%■ Semiconductors ■ Electronic Components■ Electronic Equipment

45%

H1 FY20

Automotive77

Consolidated Balance Sheet / Consolidated Statements of Cash Flow

Financial Results for
FY2020 First Half The consolidated balance sheet is little changed from March 31, 2020.
 Cash flow from operating activities in H1 FY2020 decreased by ¥6.3 bil amid an increase in inventories due toproduction adjustments by business partners and a decline in notes and accounts payable–trade. Cash flows
from financing activities increased by ¥2 bil, driven by factors such as an increase in short-term loans payable.

(Unit: ¥Bil)

As of Mar. 31,
2020

As of Sept. 30,
2020

Increase andDecrease

Total Assets

137.7

137.8

+0.1

Current Assets

121.7

122.3

+0.6

Non-Current Assets

15.9

15.5

–0.4

Liabilities

52.8

52.3

–0.5

Net Assets

84.9

85.5+0.6

61.7%

62.1%

+0.4%

Net Assets to Total Assets (%)(Unit: ¥Bil)

H1 FY19

Increase andDecrease

H1 FY20

Cash Flow from Operating Activities

13.0

–6.3

–19.3

Cash Flow from Investing Activities

–0.1

0.3

+0.4

Cash Flow from Financing Activities

–6.1

2.0

+8.1

Cash and Cash Equivalents at the Endof the Period

21.1

20.5

–0.688Financial Results for FY2020 First HalfBusiness Plan for Full Year FY2020

99

Business Plan for
Full Year FY2020

Business Objectives
Full-year net sales and operating income in FY2020 are forecast to decline to ¥200 bil and ¥2.2 bil respectively. The downtrend indemand, particularly in the automotive business, from the impact of the COVID-19 pandemic in H1 is expected to linger.
Some temporary expenses associated with counter measures for profitability enhancement that occurred in the previous fiscal year
did not occur in the period under review. Accordingly, Ryosan is targeting an 84.3% increase in net profit YoY to ¥2.2 bil.

FY19

FY20

（単位：億円）(Unit: ¥Bil)

Full Year

1st Half

2nd Half Plan

Full-Year Plan

Change(FY20-19)

Net Sales

227.2

97.1

102.8

200.0

–12.0%

Gross Profit

17.7

8.1

8.0

16.2

–8.8%

(% of Net Sales)(7.8%)(8.4%)(7.8%)(8.1%)(–1.0pt)

Operating Income

3.1

1.2

0.9

2.2

–29.2%(% of Net Sales)(1.4%)(1.3%)(0.9%)(1.1%)(–0.3pt)

Ordinary Income

2.9

1.6

0.9

2.6

–10.9%(% of Net Sales)(1.3%)(1.7%)(0.9%)(1.3%)(+0.0pt)

1.1

1.4

0.7

2.2

+84.3%(0.5%)(1.5%)(0.7%)(1.1%)(+0.6pt)

50.96

63.39

30.51

93.90

+84.3%108.74

106.92105.00105.96–2.6%

Net Profit(% of Net Sales)
EPS (¥)US Dollar Average Rate (¥)

1010

Business Plan for
Full Year FY2020

Overview of Business Plan by Business Segments

 Ryosan expects a decline in full-year net sales, as growing contributions to revenues from newbusinesses will not be enough to offset a decline in the automotive business. Operating income isexpected to decrease due to ad hoc costs in new businesses.
 In the Electronic Components business, while trends in the consumer business are favorable, the impact
from the stalling automotive business will be significant. Both sales and income are expected to decline.
FY19(Unit:（単位：億円）¥Bil)

Full Year

Total

Full-YearPlan

Change(FY20-19)

61.2

118.5

–13.0%

1.16

0.46

0.03

0.50

–57.0%(0.9%)(0.8%)(0.1%)(0.4%)(–0.5pt)

Net Sales

74.2

34.0

34.9

69.0

–7.0%

Operating Income

2.14

0.97

0.92

1.90

–11.3%(2.9%)(2.8%)(2.7%)(2.8%)(–0.1pt)

Net Sales

16.9

5.8

6.6

12.5

–26.2%

Operating Income

0.38

0.03

0.110.15–60.9%(% of Net Sales)(2.3%)(0.7%)(1.7%)(1.2%)(–1.1pt)

Net Sales

227.2

97.1

102.8

200.0

–12.0%

3.10

1.25

0.94

2.20

–29.2%(1.4%)(1.3%)(0.9%)(1.1%)(–0.3pt)

Operating Income(% of Net Sales)

ElectronicEquipment

2nd Half Plan

57.2(% of Net Sales)

ElectronicComponents

1st Half

136.1

Net Sales

Semiconductors

FY20

Operating Income(% of Net Sales)

1111

Counter Measures for Profitability Enhancement in FY2020:
Expected Cost Reduction Effects

Business Plan for
Full Year FY2020

 Expenses were reduced by over ¥600 mil in FY2019.
 In FY2020, Ryosan expects to reduce costs by 15% more than originally planned. Among the factors inthis expectation, interest expenses are expected to decline due to falling USD interest rates, andexpenses such as personnel expenses and expenses from sales activities are also expected to decline.
Cost Reduction Forecast(Unit: ¥Mil)

Cost reduction: ■ Previously announced figure ■Additional effect
Cost increase: ■15% greater reduction
than originally forecast

15,852Distribution

FY19
original
planReduction ininterest
expenses
Reduction inpersonnelexpenses

15,226General
expensesreview

Distribution
Systemdepreciation
Reduction ininterest
expenses

SG&A+
Interest

FY19
results

14,540
Reduction inOfficepersonnel
consolidation
expenses
Reduction in
expensesfrom sales
activities

FY19

FY2020forecast

FY20
originalplan

FY2020 Forecast

1212

Business Plan for
Full Year FY2020

Trend in Monthly Orders Received

 Monthly orders received are on an improving trend, having bottomed out in May 2020.
 The most recent monthly figure for orders received, for October 2020, is higher than thatfor the same period of the previous fiscal year.
Monthly trend
Orders received

Oct.

Nov.

Dec.

Jan.

FY19Feb.

Mar.

Apr.

Net sales

MayJune

JulyAug.

Sept.

Oct.

FY201313

Measures in H2 FY2020

Business Plan for
Full Year FY2020

 To improve its financial position further, Ryosan is grappling with measures in addition toremaining counter measures for profitability enhancement.
 Various projects are moving forward toward drafting the next Medium-term Business Plan.
Overall efforts to enhance profitability and raise
operating efficiency• In FY2019 Ryosan launched counter measures forprofitability enhancement.
• Ryosan is working on further cost reductions andinventory control.
Ryosan Long-term Vision: RS Innovation 2030
Three innovations for growthBusiness innovation
Ryosan will provide new
business models and added
value through proactive risktaking.
Network innovation

Channel innovation

Ryosan will strengthen its
Group-internal and external
supplier networks to respond toa wide variety of customer needs.

By revising and strengthening
sales channels, Ryosan will
expand its customer network
both in Japan and overseas.

Scope of Medium-term Business Plan
1. Business Promotion• Enhancement of sales channels to respond to customer
attributes• Industry-specific marketing strategies• Enhancement of product strategies
 Expansion of lineups
 Enhancement of methods of capturing marketneeds• Strategy for promotion of overseas business• New business Etc.

2. Internal controls• Raising operating efficiency• Application of digital technologies• Preparation of new personnel systems andtraining programs• Strengthening of risk management Etc.

1414

Continuing Response to the COVID-19 Pandemic

Business Plan for
Full Year FY2020

 Three employees in the Ryosan Group have tested positive for COVID-19 (as ofNovember 15, 2020).
 No incidents have occurred that have a significant impact on its business
continuity.
1. Management system• A Crisis Management Headquarters is established,headed by the President.
• Information on the status of infection and countermeasures is shared on a timely and appropriate
basis.
• Key measures; Determination of Group-wide policy anddisclosure policy

2. Main measures against infection• Working at home
• Staggered work hours• Use of online conferencing• Encouragement of hand disinfection andtemperature checks• Distribution of masks at overseas locations• Improvement of workplace environments. Etc.

 Monitoring of infection status and examinationand implementation of infection counter measures Analysis of impact on operations and businessresults

1515

Business Plan for
Full Year FY2020

Plan for Return to Shareholders

 The basic policy on dividends is to preserve a dividend ratio of 50% or more, tosupport a stable, high dividend.
 Ryosan aspires to reserve its retained earnings tor investments to support
sustainable growth.
Dividend per Share
Ordinary Dividend

Acquisition of Treasury Shares

Special Dividend

Dividend (yen)100242%75Year157%

7564%255050501,050

4.2

FY1900

FY20 (Plan)

503030Amount(¥Bil)

FY18Dividend Ratio

25No. ofAcquiredShares(Thousand)－－300Interim Year-end Interim Year-end Interim Year-end
FY18

FY19

FY20 (Plan)

1616

Reference: Initiatives to Provide New Value in the Automotive Field

Business Plan for
Full Year FY2020

 Instrument-panel design and function (low reflectivity, etc.) are growing in importance.
In these fields, Ryosan is providing Tier 1 customers with solutions to improve designand function in decoration and lamination and providing new options such as separatepurchases.
Proposed scope• Periphery of vehicle displays• Ryosan plans to expand to all fittings in
the passenger compartment, including
gauges and instrument panels

Example of measures by Ryosan• Ryosan provides decorative products such as
overlays for vehicle center displays andundertakes some of their lamination processes.

Decorativeproducts
Lamination

Ryosan provides solutions to enhance designability as well as functionality withvarious finishing techniques such as UV transfer.

Ryosan provides technologies for
combining various materials and parts.

1717

Reference: New Collaborative-robotics Projects

Business Plan for
Full Year FY2020

 Ryosan provides collaborative-robotics solutions that virtually anyone can use easily.
 Efforts focus on products by Siasun Robot & Automation Co., Ltd., which provides excellent costperformance, and Franka Emika GmbH, which enables high-sensitivity contact detection.
Product Features

Denpa Shimbun, August 21, 2020

• Superb safety, easy teaching, direct-teachingcapability, cost-competitiveness, high flexibility1818