For Institutional Investors/Analystss

Kaga Electronics Co.,Ltd.
Financial Results Briefing Material
for the First Half of the Fiscal Year Ending March 31, 2020

November 28, 2019
KAGA ELECTRONICS CO., LTD.
TSE 1st section 8154

Index Consolidated Financial Results
for the 1H of the Fiscal Year ending March 2020
Summary
Financial Highlights /Financial Highlights by Business Segment
Balance Sheet Main Items/Cash Flows
Forecast for the Fiscal Year ending march 2020

P- 3
P- 4〜15
P-16〜19
P-20〜21

 <Reference> Segment disclosure associated withthe start of the Medium-Term Management Plan

P-22〜27

 About Kaga Electronics’ EMS Business
The Strengths of Kaga Electronics’ EMS
Main Production Bases
Main Products
Growth scenario
Key Measures and Specific Action
Overview of Each Action

P-28〜31
P-32〜34
P-35〜38
P-39
P-40〜41
P-42〜46

 Positioning of “Medium Term Management Plan 2021”

P-47

For Institutional Investors/Analystssts

Consolidated Financial Results
for the First Half of the Fiscal Yearending March 2020
Six months: April 1, 2019 – September 30, 2019

KAGA ELECTRONICS CO., LTD.
Managing Director

Eiji Kawamura

Summary of Financial Results for the First half Ended September 30, 2019

FY202020/3 2Q
Results● Close to twofold increase in net sales with contribution from theconversion of Fujitsu Electronics to a subsidiary.
● Income increases at all income levels, from operating income to profit;
operating income and ordinary income at record highs.
 Growth both in sales and profits, in terms of both cumulative total of the
6 months and the most recent 3 months, underpinned by effects ofcorporate acquisitions and steady EMS business. First half closed on astrong note vis-à-vis full-year forecasts.

Overview of
the Electronic
Component
segment

 Sales expansion in the EMS business notably in the areas of medical
equipment and automotive devices.
 In the components sales business, strong performance of LED lightingsand other consumer devices; contribution from new revenue sources ofmobile phones and automotive devices as a result of the FujitsuElectronics business addition.

Overview oftheInformation
Equipment
segment

 Strong sales of PCs for individuals, schools, and educational institutions
driving overall growth of PC sales.
 The LED installation business affected by a pause in replacement demand
from major customers. Decline of sales in housing-related home electronic
appliances business from the effect of delivery date adjustments bycustomers.

Forecast for
FY2020/3● After careful assessment of uncertain outlook in the businessenvironment and in view of solid progress made in 2Q, no revision to fullyear performance forecasts presented at the start of the fiscal year.
 No change in exchange rate assumptions used for the performance
forecasts.

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

3

Financial Highlights（ 6 months）（ Million yen ）2Q Results

2Q Results

YoY

Forecasts

Progress
Rate

Net sales

115,383

230,63099.9%

430,000

53.6%

Gross profit

16,023

23,771

48.4%

46,500

51.1%

13.9%

10.3%

-3.6ptSG&A

12,251

18,531

51.3%

39,50046.9%

Operating income

3,772

5,239

38.9%

7,000

74.9%

Ordinary income

4,049

5,546

37.0%

7,000

79.2%

Profit attributableto owners of parent

2,750

3,502

27.4%

5,000

70.1%

(Yen)

100.25

127.6227.37

182.17-

US$ (Yen)

110.26108.631.63

110.00-Gross profit margin

EPS
FOREX

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

4

Financial Highlights by Business Segment（ 6 months）（Million yen )Net Sales

Segment income

230,630
9,510
1,332
19,968

Total

Total

YoY︓＋115,247＋99.9%

YoY︓ +1,467＋38.9%

OthersYoY ︓

Others

＋131
＋1.4%

YoY ︓

SofwareYoY ︓115,383

Sofware

-72
-5.1%

YoY ︓

-96
-67.2%

5,239

9,379
1,404
21,143+42+19.6%

199,818

Information equipment
YoY ︓-1,174
-5.6%

3,772

Electronic component
YoY ︓＋116,363+139.4%83,455

Information equipment

216
143
864

259
46
618

YoY ︓

-246
-28.5%

Electronic component

4,238

YoY ︓ +1,764＋71.3%

2,474
2019/3
2Q Results

2020/3
2Q Results

2019/3
2Q Results

2020/3
2Q Results

Note: Figures of each segment income are not inter-segment adjusted.
Total amount is inter-segment adjusted (operating income).
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

5

Financial Highlights: Electronic Component Segment （6 months）（ Million yen ）Net sales/Segment income

YoY Net sales ＋116,363million Yen 139.4％UP
 Segment+1,764million Yen 71.3％UP
Income199,818

Steady performance of the EMS businessled by medical equipment and automotive
devices
The components sales business enjoys
strong performance of LED lightings andother consumer devices, and contribution
from new revenue sources of FujitsuElectronics' mobile phones and automotive
devices businesses.

83,455

4,238
2,474

売上 2019/3 利益

2Q Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

売上 2020/3 利益

2Q Results

6

Financial Highlights: Information Equipment segment （6 months）（ Million yen ）Net sales/Segment income

YoY

300 00500 0

280 00450 0

260 00400 0

240 00350 0

220 0021,143300 019,968200 00250 0

180 00200 0

160 00150 0

140 00864

 Net sales
 Segment
Income-1,174million Yen

5.6％Down-246 million Yen 28.5％Down

PCs and PC peripherals for individuals,
schools, and educational institutions record
strong sales.
Pause in replacement demand for commercial
facilities-related LED installation business,sales decline in the housing-related homeelectric appliances business

100 0

618
120 00500

100 000

2019/3
2Q Results

2020/3
2Q Results

7© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Effect of Fujitsu Electronics conversion to subsidiary (FY2020/3 2Q Results)※In million yen, figures in ( ) are simple sums. Actual figures of Fujitsu Electronics for the previous period are for reference only.

Net Sales

Gross profit / Gross profit margin

Fujitsu Electronics contributes to consolidated results,
EMS business drives Kaga Electronics' sales growth(231,265)
230,630
111,215

Kaga Electronics posts increase in gross profit, FujitsuElectronics sees improvement in gross profit margin
23,771(23,476)
7,423
300 00250 00FujitsuElectronics 115,882

FujitsuElectronics
200 00

119,415150 007,453

16,348201 9

Fujitsucomsolidated
Electronics

Kaga
Electronics
加賀電子

2019/3
2Q Results

富士通エレクトロニクス

13.9%

13.7%

10.3%

6.7%

201 9

2019/3
2Q Results

25.00 %

20.00 %

15.00 %

10.00 %

5.00%

FujitsuElectronics

加賀電子

富士通エレクトロニクス

Kaga
Electronics

0.00%
連結

comsolidated

2020/3 2Q Results

Both Kaga Electronics and Fujitsu Electronics secure
income growth
5,239
1,291
(4,521)
3,948
Fujitsu

6,132

FujitsuElectronics
150 00100 00Kaga
Electronics

18,53140.00 %

30.00 %

Both Kaga Electronics and Fujitsu Electronics curb SG&A
(18,955)

45.00 %

35.00 %

Operating income / Operating income marjin

200 0075.00 %

50.00 %

SG&A / SG&A ratio
250 0080.00 %

55.00 %

6.4%

2020/3 2Q Results

85.00 %

60.00 %

0連結

90.00 %

65.00 %Kaga 16,023
Electronics
500 0

95.00 %

70.00 %

100 00Kaga 115,383
Electronics

100 .0 0%

700 0

600 0

500 0

6,704

12,400

10.6%

10.4%

Electronics
400 0

8.0%

12,251

5.5%

500 0

201 9

Kaga
Electronics
200 0

2019/3
2Q Results

100 0

Kaga
Electronics
加賀電子

Fujitsucomsolidated
Electronics
富士通エレクトロニクス

3.3%

300 0

5.8%

0

749

3.3%

連結

2020/3 2Q Results

1.2%

3,772

2.3%

0.6%

0
201 9

2019/3
2Q Results

Kaga
Electronics
加賀電子

Fujitsucomsolidated
Electronics
富士通エレクトロニクス

連結2020/3 2Q Results(note) With respect to gross profit and operating income, figures presented above are before consolidation adjustments
between the two companies. For reference, after consolidation adjustments, gross profit stood at ５million yen,

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.
and operating income came to ５ million yen.

8

Net Sales by Region （6 months）（Million Yen)

Net sales

YoY Japan230,630

 North America +9,833million Yen 246.6％UP+10,092million Yen 499.5％UP
 Europe Asia135,214 [58.6%]+64,925million Yen 92.4％UP+30,395million Yen 77.8％UPJapan

115,383[100.0%]

70,288 [60.9%]

13,821[6.0%]

12,112[5.3%]

North America
Europe

3,987
2,020

[3.5%]

39,086[33.9%][1.7%]

2019/3
2Q Results

69,482 [30.1%]

Asia

2020/3
2Q Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

9

Financial Highlights （3 months）（million Yen）

2019/32020/32020/3

2Q Results

1Q Results

2Q Results

Net sales

59,889109,564

Gross profit

8,381

11,062

12,708

51.6%

14.9%

14.0%

10.1%

10.5%

-3.5pt

0.4pt

SG&A

6,098

9,212

9,319

52.8%

1.2%

Operating income

2,282

1,850

3,389

48.5%

83.1%

Ordinary income

2,369

2,045

3,500

47.7%

71.1%

Profit attributableto owners of parent

1,601

1,350

2,152

34.4%

59.4%

(Yen)

58.38

49.20

78.42

20.04

29.22

US$ (Yen)

111.46109.90107.35

-4.11

-2.55

Gross profit margin

EPS
FOREX

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

YoY

121,066 102.1%

QoQ

10.5%

10

Financial Highlights by Business Segment①（Net Sales）（Million Yen)

Net Sales
121,066

118,997
5,388
933
11,970109,564
4,412
437
10,126

5,097
895
9,842

Total
YoY ︓ +61,176 (102.1％)
QoQ ︓ ＋11,501 ( 10.5％)

Others
YoY
QoQ

︓
︓

YoY
QoQ

︓
︓

-178 ( -3.4％)685 ( 15.5％)

Software55,493
4,103
465
10,41759,8895,276
939
10,72558,3995,190
538
11,231-44 ( -4.7％)+ 457 ( 104.5％)

Information equipment

100,704

94,587105,230

YoY
QoQ

︓
︓

-883 ( -8.2％）-283 ( -2.8％)

Electronic component
YoY
QoQ

40,50742,94841,438

2019/3
1Q Results

2019/3
2Q Results

2019/3
3Q Results© 2018 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2019/3
4Q Results

2020/3
1Q Results

︓ +62,282 ( 145.0％)
︓ + 10,642 ( 11.3％)

2020/3
2Q Results

11Financial Highlights by Business Segment②（Segment Income）（Million Yen)

Segment Income
Total

3,389
186
108
429

YoY
QoQ

Others
YoY
QoQ

2,282
135
162

1,489

547

80
317

1,071

198
474

1,402

1,306

1,821

2019/3
3Q Results© 2018 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

YoY
QoQ

1,850
72
188

75
125

︓ -53 ( -32.9％)
︓-170 (
- %)Information equipment

2,617

YoY

︓ -117 (-21.5％)

QoQ

︓ +240 (127.4％)

Electronic component

1,621

YoY ︓ + 1,214 ( 86.6％)
QoQ ︓ +995 ( 61.4％)

981

-20
2019/3
2Q Results︓+ 51 ( 37.5％)
︓ + 114 (158.2％)

Software567-19
2019/3
1Q Results

1,976

︓ +1,106 ( 48.5％)
︓ +1,538 ( 83.1％)-61
2019/3
4Q Results

2020/3
1Q Results

2020/3
2Q Results

Note: Figures of each segment income are not inter-segment adjusted.
Total amount is inter-segment adjusted (operating income).

12Financial Highlights: Electronic Component Segment （ 3 months）（Million Yen)

Net sales/Segment income

YoY/ Net Sales/ Segment income

120 000

800 0

105,230700 0

 Net sales
 Segment
Income62,282million Yen 145.0％UP
1,214million Yen

86.6％UP

10,642million Yen

11.3％UP

995million Yen

61.4％UP94,587100 000

600 0

QoQ

800 00500 0

600 00400 042,9482,617

 Net sales
 Segment
Income300 0

400 00

1,402

1,621

200 0

200 00

100 0

0

0

2019/3
2Q Results

2020/3
1Q Results© 2018 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2020/3
2Q Results

13

Financial Highlights: Information Equipment Segment（3 months）（Million Yen)

Net sales/Segment income

YoY/

Net sales/

Segment income

300 0

120 0010,725

 Net sales
 Segment
Income-883million Yen

8.2％Down-117million Yen 21.5％Down

250 010,1269,842

QoQ

100 00

200 0

800 0

150 0

 Net sales
 Segment
Income-283million Yen

2.8％Down

240million Yen 127.4％UP

600 0

100 0

547

429

400 0

500

188
200 0

0

2019/3
2Q Results

2020/3
1Q Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2020/3
2Q Results

14

Net Sales by Region （3 months）（Million Yen)

Net sales

YoY Japan

121,066＋ 14,920million Yen

 AsiaQoQ

59,889 Japan
North America

2,059 [3.4%]
919 [1.5%]

7,216 [6.6%]
5,993 [5.5%]

74.4％UPJapan

61,843 [56.4%]

36,859 [61.6%]

99.1％UP North America ＋4,545million Yen 220.7％UP＋5,199million Yen 565.3％UP
 Europe

109,564

73,370 [60.6%]＋36,511million Yen

6,604
6,119

[5.5%][5.0%]

34,510 [31.5%] 34,971 [28.9%]

Europe＋11,527million Yen 18.6％UP

 Europe- 612million Yen 8.5％Down＋125million Yen 2.1％UP

 Asia＋ 460million Yen 1.3％UP

 North America

Asia

20,051 [33.5%]
2019/3
2Q Results

2020/3
1Q Results

2020/3
2Q Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

15

Balance Sheet: Main Items（Million Yen)

Total assets

213,761

Total liabilities and net assets

214,475

213,761

Total liabilities

Current assets

128,755

128,755
182,396

214,475

129,501

129,008

84,25985,466FY2019/3

FY2019/9

182,133
58,123104,069

24,68531,36432,341FY2018/3

FY2019/3

FY2019/9

Non-current assets

70,631FY2018/3

Total net assets

Note: “Partial Amendments to Accounting Standard for Tax Effect Accounting” etc. (Accounting Standards Board ofJapan (ASBJ) Statement No. 28, February 16, 2018) have been adopted from the beginning of the first quarterof the fiscal year ending March 31, 2019. Accordingly, deferred tax assets are presented under investments
and other assets, while deferred tax liabilities are presented under non-current liabilities section.
16© 2018 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Balance Sheet: Main Items（Million Yen)

Inventories

Accounts receivable/Accounts payable

40.7

50, 000

（Day）

77.1

40. 0

45, 000

34.9

77.0

（ Day）

77.4

80. 0

Inventory turnover

A/R turnover

120 ,000

30.8
63.3

40, 000

30. 0

100 ,000

66.1

70. 0

A/P turnover

65.3

60. 0

35, 000

50. 0

20. 0

30, 000

Notes and A/R

80, 000

40. 0

Inventories

25, 000

10. 0

60, 000

30. 0

40,02620, 000

101,507

34,792

97,510Notes and A/P
20. 0

0.0

77,88415, 000
40, 000

10, 000

74,696
10. 0

19,455-10.0
20, 000

49,841
36,3920.0

5,0 00

0
0

-10.0

-20.0

FY2018/3

FY2019/3

FY2019/9

note︓Inventory turnover＝ Inventories ÷ Cost of Sales × 365（day）（2019/9、183day）© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

FY2018/3

FY2019/3

FY2019/9

notes︓・Notes and A/R are amounts including Electronically recorded monetaryclaims-operating
・A/R turnover ＝ Notes and A/R ÷ Net sales
× 365（day）
・A/P turnover ＝ Notes and A/P ÷ Cost of sales × 365（day）
17（2019/9、183day）Cash and Deposits/Interest Bearing Debt/Cash Flows（Million Yen)

Cash and deposits
0.43

Cash flows（times）

0.45
0.5 0

D/E ratio

0.13
-0.03

50, 000

-0.11
0.0 0

Net D/E ratio-0.31

Cash flows fromoperating activities

40, 000-0.50

Cash and deposits

11,684 12,242

10,077-1.00

30, 000

-1.50

1,898

42,931
20, 000

30,80335,003-1,547

34,570-4,173-2.00

32,851-4,938-1,899-6,86010, 000

-2.50

8,900
0

-3.00

FY2018/3

FY2019/3

FY2019/9

Interest bearing debts-2,811FY2018/3 FY2018/9
2018/3末

-746

-685

2018/9末Cash flows frominvesting activities
Cash flows fromfinancing activities

FY2019/3 FY2019/9
2019/3末

2019/9末

note︓D/E ratio＝ Interest bearing debts ÷ Shareholder’s equity
Net D/E ratio ＝（Interest bearing debts - Cash and deposits） ÷ Shareholder’s equity© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

18

Major Business Indicators（Million Yen)

Equity ratio

ROE

54.8
9.5%

260 ,000

35.8

10.9%

（Forecast）

6.4%

36.2
40. 0

210 ,000

20. 0

Total assets

213,761

160 ,000

2.7

Net profit margin

2.8

Financial leverage

2.8

0.0

(20.0)

214,475

110 ,000

1.8(40.0)

60, 000

128,755
70,556

Shareholders’ equity

76,604

77,617(60.0)

1.8

Total asset turnover

1.4

10, 000(80.0)FY2018/3

FY2019/3

FY2019/9-40,000© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

FY2018/3

FY2019/3

FY2020/3（Forecast）(100.0)19Forecast for the Fiscal Year ending March 2020 (announced on May 14, 2019)（million yen）

FY2019/3

FY2020/3

Results

Forecasts

YoY

Net sales

292,779

430,000

46.9%

Gross profit

35,54646,500

30.8%

12.1%

10.8%

SG&A

27,97639,50041.2%

Operating income

7,570

7,000

-7.5%

Ordinary income

7,859

7,000

-10.9%

Profit attributableto owners of parent

8,014

5,000

-37.6%EPS（Yen）

292.07182.1710.9

6.4

Gross profit margin

ROE

(%)

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

-

20Effect of Fujitsu Electronics conversion to subsidiary (FY2020/3 Forecust)
Net Sales

Gross profit / Gross profit margin

Prudent projection for net sales in view of uncertainty in the
future business environment

Gross profit margin to be flat y-o-y for Kaga Electronics, up
1 pt for Fujitsu Electronics(468,995)

195,000

430,000(46,725)

500 00FujitsuElectronics
400 00Fujitsu 233,306
Electronics

235,000

14,000Kaga
Electronics

80.00 %

70.00 %

32,50065.00 %

60.00 %

13.8%

50.00 %

7.2%

32,13510.8%

45.00 %

40.00 %

35.00 %

30.00 %

25.00 %

20.00 %

15.00 %

6.3%
Kaga
Electronics

FY2019/3

FujitsuElectronics
富士通エレクトロニクス

連結

0
201 9

Consolidated

FY2020/3

13,500Kaga
Electronics

FujitsuElectronics

0.00%
連結

Consolidated

FY2020/3

Fujitsu Electronics’ contribution to income to remain limited

500 00(37,998)

5.00%

富士通エレクトロニクス

Operating income / Operating income marjin

Expenses to increase for both companies due notably tolaunch of new facilities and IT-related spending
400 0010.00 %

加賀電子

FY2019/3

SG&A / SG&A ratio
39,500(8,727)100 00FujitsuElectronics
800 0

350 00300 0085.00 %

100 00加賀電子

FujitsuElectronics 13,191

90.00 %

55.00 %

13.6%

300 00Kaga 235,689
Electronics

450 0095.00 %

46,50075.00 %

14,590200 00201 9100 .0 0%

26,000

1,399

6,500

500

7,000

600 0

3.1%

250 0010.5%

200 0011.1%

150 00Kaga
Electronics
100 00500 024,807

6.9%

9.2%

Kaga
Electronics
200 0

5.6%

0
201 9

Kaga
Electronics
加賀電子

FY2019/3

Fujitsu
Consolidated
Electronics
富士通エレクトロニクス

FY2020/3

連結

2.8%
1.6%

400 0

7,328

0.3%

0.6%

0
201 9

FY2019/3

KagaElectronics
加賀電子

FujitsuElectronics
富士通エレクトロニクス

Consolidated
連結

FY2020/3※In million yen, figures in ( ) are simple sums. Actual figures of Fujitsu Electronics for the previous period are for reference only.
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

21

(Ref) Segment disclosure associated with the start of the Medium-Term
Management Plan
Continuous disclosure based on current segmentation according to legal financial accounting,along with voluntary disclosure based on segmentation in line with the new Medium-Term
Management Plan

Current segments

Segments in Medium-Term Management Plan

Legal financial accounting

Management Accounting

Components sales businessElectronic
components

 Sales of semiconductors
 Sales of general electronic
components
 Sales of various kinds ofdevices

EMS business Electronic equipment
manufacture contracting
services

Informationequipment

 Sales of PCs and PC
peripherals
 Sales of home electric
appliances and lighting fixtures
 Sales of photograph andimaging products

Software Production of CG video andsoftware

Others Sales of amusement
equipment Repair and support forelectronics equipment
 Sales of sports goods© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Electronic
components

 Sales of semiconductors
 Sales of general electronic
components
 Sales of various devices

EMS

 Electronic equipment manufacture
contracting services

CSI

 Sales of PCs and PC peripherals
 Sales of home electric appliancesand lighting fixtures
 Sales of photograph and imaging
products

Others Production of CG video andsoftware Sales of amusement equipment
 Repair and support for electronics
equipment
 Sales of sports goods
22

(Ref) Business segments of Parent company and Group companies
Electronic
Components

EMS

CSI

Others

●
●
●
●
●

(●)

●

●
(●)
(●)

(●)
●
●

(●)
●

(●)
●
●

(●)
●

●

(●)

●
●
●
●

KAGA ELECTRONICS CO., LTD.
Electronics Business Division
EMS Business Division
Communication Network Sales Division
Specific Industry Business Division
Strategic Customer Sales Division
Sales Promotion Division

●
●
●
●
●

Major Affiliates in JapanKAGA TECH CO., LTD.
KAGA DEVICES CO., LTD.
KAGA SOLUTION NETWORK CO., LTD.
AD DEVICE CO., LTD.
KAGA MICRO SOLUTIONCO., LTD.
DIGITAL MEDIA LAB., INC.
KAGA SPORTS CO., LTD.
KAGA AMUSEMENT CO., LTD.
KAGA TECHNOSERVICE CO., LTD.
FUJITSU ELECTRONICS INC.

●
●
●

●
●

Major Affiliates Overseas
KAGA TAXAN (SUZHOU) ELECTRONICS CO., LTD.
KAGA (SHANGHAI) ELECTRONICS CO., LTD.
KAGA (SHENZHEN) ELECTRONICS CO., LTD.
KAGA (H.K.) ELECTRONICS LIMITEDKAGA DEVICES (H.K.) LIMITEDKAGA (TAIWAN) ELECTRONICS CO., LTD
KAGA ELECTRONICS (THAILAND) COMPANY LIMITEDKAGA COMPONENTS (MALAYSIA) SDN.BHD.
KAGA ELECTRONICS INDONESIA, PT
KAGA ELECTRONICS (VIETNAM) CO., LTD.
KAGA (SINGAPORE) ELECRONICS PTE LTD
KAGA ELECTRONICS (USA) INC.
TAXAN MEXICO S.A. de C.V.
KD TEC s.r.o.
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

(●)

●
●
(●)
●
●
●
●

●
●
●
●
(●)
●
●
●
●
(●)
●
●
●

(●)

23

(Ref) Financial highlights by Business Segment ofMedium-Term Management Plan for the FY2020/3 2Q（6 months）（Million Yen)

Electronic
Component
EMS

CSI

OthersTotal

Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income

2019/32020/3

2Q Results

2Q Results

YoY

44,216

156,803254.6%

899

2,127

136.6%

43,031

46,945

9.1%

1,624

2,100

29.3%

21,143

19,968

-5.6%

864

618

-28.5%

6,991

6,912

-1.1%

310

316

2.1%

115,383

230,630

99.9%

3,772

5,239

38.9%

Note: Figures of each segment income are not inter-segment adjusted.
Total amount is inter-segment adjusted (operating income).
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

24

(Ref) Financial highlights by Business Segment ofMedium-Term Management Plan for the FY2020/3 2Q（3 months）（Million Yen)

Electronic
Component
EMS

CSI

OthersTotal

Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income

2019/32020/3

2Q Results

2Q Results

YoY

23,20884,698265.0%

635

1,651

160.0%

21,92722,425

2.3%

786

830

5.6%

10,725

9,842

-8.2%

547

429

-21.5%

4,028

4,099

1.8%

279

430

54.2%

59,889121,066

102.1%

2,282

3,389

48.5%

Note: Figures of each segment income are not inter-segment adjusted.
Total amount is inter-segment adjusted (operating income).
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

25

(Ref) Forecasts by Business Segment ofMedium-Term Management Plan for the FY2020/3（million yen）

Electronic
Component
EMS

CSI

OthersTotal

Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income
Net Sales
Segment income

FY2019/3

FY2020/3

Results

Forecast

YoY

145,042

282,000

94.4%

2,278

2,200

-3.4%

89,481

95,000

6.2%

2,667

2,800

5.0%

44,34440,000

-9.8%

1,906

1,500

-21.3%

13,912

13,000

-6.6%

554

500

-9.7%

292,779

430,000

46.9%

7,570

7,000

-7.5%

Note: Figures of each segment income are not inter-segment adjusted.
Total amount is inter-segment adjusted (operating income).
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

26

(Ref) Exchange Rate/FOREX Sensitivity

2019/3
2QResults（Yen）

2020/3
2QResults（Yen）（Half a Year basis）
Effect of 1% change(million Yen)

Net sales

Ordinary
incomeFY2020/3
Forex
Assumption
(yen)

USD

110.26108.63927

20110.00

THB

3.40

3.49

124

7

3.40

RMB

17.09

16.20

103

4

17.00

HKD

14.05

13.86

113

2

14.00

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

27

About Kaga Electronics’ EMS Business
Overview and Growth Strategy of EMS Business

KAGA ELECTRONICS CO., LTD.
Director

Motonori Toshinari
28

The Strengths of Kaga Electronics’ EMS (1): Convenience Store EMS
Kaga Electronics globally deploys a “Convenience Store EMS” that isconvenience and valuable for its customers.
Japanese EMS vs Taiwanese / Asian EMS

Focus on High
Reliability

Focus is on Substrate
Installation
Strong areas ofJapanese EMS
SIIX
UMC
Kaga Electronics, etc

Strong areas of Taiwanese/ Asian mega EMS

Low Volume
Focus on Cost

Foxconn、
Pegatron、
Flextronics, etc.

CompetitivenessHigh Volume

Convenience Store EMS vs GMS EMS＜KAGA ELECTRONICS＞
・ Low initial investment(Land and buildings rented,
Standardized interior construction)
・ Capable high mix, low volume production
・ Local production for local
consumption modelVS＜Japanese Major Competitors ＞
・ Large scale investment
・ Mass production type
Export model

Focus is on the
Assembly ofFinished Products
29

The Group’s Strength-(2)︓One Stop
Not just contract manufacturing but offer one-stop service from sales toafter-sales support
Planning/Design/
Development

Components
Procurement/Kitting

EMS/Contract
manufacturing

Sales/Distribution

KAGA ELECTRONICS

Support/After-sales service

KAGA TECHNO SERVICE

KAGA DEVICES

KAGA MICRO SOLUTIONSANKOH Engineering

KAGA SOLUTION NETWORKKAGA AMUSEMENTAD DEVICE

DIGITAL MEDIA LAB

KAGA TECHKAGA AMUSEMENTKAGA EMS TOWADAKAGA (Shanghai) / KAGA (H.K.)
KAGA (DAILIAN)
KAGA (TAIWAN)
KAGA (KOREA)

KAGA COMP(MALAYSIA)KAGA (THAILAND)/KAGA(VIETNAM)
KAGA (SINGAPORE)

KAGA（INDIA)KDTEC（Czech）
KAGA USA
Fujitsu Electronics© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

TAXAN MEXICO

Fujitsu Electronics
30

The Group’s Strength-(3)︓Global Network
Global EMS production system with 19 bases in 10 countries to respond swiftly andflexibly to customer needs.
∎ Expand sales to local Chinese companies∎ Installed mounting∎ Expand sales to European and the U.S. companies
equipment in Czech and∎ Expand sales to Japanese companies
started European operation
conducting sales in China∎ Increase production∎ Entered into Turkey inin Mexico shifting fromorder to strengthen
China
China
Europe business∎ Expand EMS business∎ Increase sales of components ∎ Established sales officein Chicago to enhancekitting businesssales activities in the U.S.
∎ Develop new customers

EuropeThe Americas

Japan

DetroitHungary
Czech
Germany

TurkeyItaly

SuzhouHubei
Dalian
Korea
Dongguan
Shengzhen
ShanghaiHong Kong
TaiwanIndia Thailand Vietnam
Philippines
Malaysia

San Jose
Sunnyvale

ChicagoBostonMexicoIndonesia

ASEAN
Sales base© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Production base

∎ Further deepening
relationsip with Japanesecustomers∎ Centralize theprocurement
operation to improve
efficiency
31

Introduction to Main Production Bases: China
Kaga Electronics (Shenzhen)

Kaga Technology (Suzhou) Electronics

Established

１９９９

Established

２００９

Number of
Employees

９５０

Number of
Employees

３６０

Products

Automotive-related units, industrial
equipment, OA equipment,
amusement equipment,
communications equipment.

Products

Automotive-related units, medical
equipment, industrial equipment,
residential equipment, electronic
musical instruments,
communications equipment＜ Shenzhen Factory＞＜Suzhou First Factory (For Export)＞
32

Introduction to Main Production Bases: ASEAN
KAGA ELECTRONICS (THAILAND)KAGA ELECTRONICS (VIETNAM)

Established

２００２

Established

２０１７

Number of
Employees

６９０

Number of
Employees

１２０

Products

Automotive-related units, OA
equipment, air conditioning
equipment, industrial equipment

Products

Automotive-related units, airconditioning equipment, businessequipment, medical equipment<Thailand Factory>＜ Vietnam Factory＞
33

Introduction to Main Production Bases: Europe and the Americas
KD TECTAXAN MEXICO

Established

２００９

Established

２０１７

Number of
Employees

１２０

Number of
Employees

１６０

Products

Air conditioning equipment.

Products

Automotive-related units,business equipment, industrial
equipment.

＜ Czechia Factory＞＜Mexico Factory＞
34

Main Products: Various Substrates
Substrate for Office
Equipment

L Size Substrate forCommunications Equipment

Power Supply Substrate

LED-related Substrate

35

Main Products: Automotive-related UnitsLighting Units for Automotive

AC Inverter Units

36

Main Products: Various Units

Air Conditioner Unit

FA Equipment Touch Panel
Monitor37

Main Products: Various Finished Products

Automotive-related Products＜Automotive Navigation System＞

Medical Equipment＜Automated Medication Dispensing Cabinet＞

38

EMS Business Growth Scenario
Driven by the growth of in-vehicle, air conditioning, industrial
machinery, and medical/healthcare, we shall aim for drastic growthof business size of 1.5x that of FY2018
140 billion yen

1.5x

Fujitsu Electronics,
M&A

11％

Consumer,Communication etc.

10％

OfficeEquipment

10％
10％

Industrial
Machinery14％

Air Conditioning

20%

In-vehicle

25%

Healthcare

89.4 billion yen
19％
9％
12％
14％
23%
23％
FY2018Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

FY2021 Image

PointsOrganic
GrowthFujitsuElectronics

EMS Shift

Further

M&A In addition to our existing production capacity in China, ASEAN,
and Europe, we shall aim to expand business in growth areas suchas in-vehicle, air conditioning, and industrial machinery, throughfull scale investment in new bases in Vietnam, Mexico, Turkey, andIndia.
 We shall develop a “Key Device + EMS” approach for the major
customers of Fujitsu Electronics.
 We shall aim to further expand the size of the EMS business, andsearch for new M&A opportunities inside and outside of Japan.

39

Key Topics for EMS Business Growth
In parallel with the EMS shift of leading European and American
customers of Fujitsu Electronics, strengthening volume, quality, andcost, and comprehensively increasing business competitiveness incomparison with competitors.
Increasing of Production Capacity
 Responding flexibly to moves towards theshifting of production away from China inconjunction with the continuing US-China
trade issues, as well as moves towards a
return of the overseas production to Japandomestic in order to avoid exchange rate
fluctuations and soaring labor costs.

Strengthening of Engineering Capabilities No longer relying on general-purpose
equipment, using in-house engineering
capabilities, and internally developing
production equipment at an optimal cost for“convenience store EMS”, and increasing costcompetitiveness through this.

Strengthening of Manufacturing Capabilities Through the acquisition of Towada Pioneer,
the manufacturing know-how accumulated
over many years as an electronics specialist,
exceptional production personnel andproduction equipment. Further improving thequality level of the EMS business andstrengthening competitive advantage against
competitors by sharing resources including jig
design and quality assurance systems.
 Positioning the Towada Pioneer andFukushima New Plant as the "Mother
Factory", partnering with overseas bases, andpromoting overall optimization to strengthen
the management structure and to improvebusiness efficiency.

40

Major Initiatives

Enhancing of Production
Capacity

・ Capturing increased demand in conjunction with thereturn to domestic production

Strengthening of
Manufacturing Capabilities

・ Sharing of production know-how and excellent
production personnel
・ Mother plant for substrate installation

Strengthening of Engineering
Capabilities

・ Sharing of resources, such as production equipment
designs and jig production
・ Verifying own developed production equipment

Enhancing of Production
Capacity

・ Capturing increased demand in conjunction with thereturn to domestic production

Strengthening of
Manufacturing Capabilities

・ Mother plant for assembly of finished products

Construction ofThailand Second
Factory

Enhancing of Production
Capacity

・ Capturing the shift from Chinese production to avoid theeffect of US-China trade disputes

Joint Venture in
China

Strengthening of Engineering
Capabilities

・ Differentiation through internally developed production
equipment that is suitable for small sized lots of a variety
of products

Acquisition of
Towada Pioneer

Construction of
Fukushima New
Factory41

Overview of Acquisition of Towada Pioneer
Towada Pioneer Headquarters Factory

Acquisition Format
Conversion to group company throughacquisition of Towada Pioneer shares from
Pioneer on October 1, 2019.

Name After Acquisition
KAGA EMS TOWADA CO., LTD.

Address
Towada City, Aomori Prefecture

Business Content
Automotive electronic equipment,
installation of substrates in medical
equipment, assembly of finished Products© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Number of
Employees

Acquisition Price

165 (full time staff)

Undisclosed

42

Construction of New Fukushima Factory
Fukushima Factory

Name
KAGA MICRO SOLUTION CO., LTD.
Fukushima Factory

Address
Sukagawa City, Fukushima Prefecture

Scheduled Launch
October 2019

Business Content
Manufacture, repair, reuse, and recycling ofcommunications equipment, PCs, and PC
peripherals© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Number of
Employees

Investment Amount50(full time staff)

Approx. JPY 1.2 bn(Incl. land acquisition,buildings, machinery andequipment)
43Construction of Thailand 2 nd Factory
Amata Nakhon 2 nd Factory

Name
KAGA ELECTRONICS (THAILAND) CO., LTD.
Amata Nakhon 2 nd Plant

Address
Amata Nakhon Industrial Estate, Chon Buri,
Thailand

Scheduled Launch
December 2019

Business Content
Installation of substrates for multifunction
devices, printers and automotive related units© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Number of
Employees

Investment
Amount200(maximum of 350)

Approx. JPY 500 mil(Land and buildings
rented)44

Own Development of Production Equipment(1)“HATTEN” Solder BathCompany Establishment Scheme
October 2018: Establishment of a joint
venture by JT*,a Chinese production
equipment manufacturer and groupcompany Kaga Technology (Suzhou)
Electronics Co., Ltd.

Name of Joint Venture
SUZHOU HATTEN INTELLIGENTEQUIPMENT CO., LTD

Address
Suzhou City, Jiangsu Province, China

Business Content
Development, manufacture, and externalsale of production equipment for substrateinstallation※Official company name:深圳市劲拓自动化设备股份有限公司© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

45

Own Development of Production Equipment(2)"HATTEN" Substrate Installation
Automation Equipment LineCompany Establishment Scheme
December 2019: Establishment of a joint
venture by FAROAD*, a leading Chinese
manufacturer of substrate installationequipment, and group company Kaga
Technology (Suzhou) Electronics Co., Ltd.

Name of Joint Venture
蘇州路遠加賀実装技術開発有限公司

Address
Suzhou City, Jiangsu Province, China

Business Content
Development, manufacture, and external saleof substrate installation equipment sets
(operation to commence in December 2019)

Objectives of the Joint Venture※Oﬃcial company name: 深圳市路遠智能装備有限公司© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

・In-house development of optimal"automation equipment" for "small lot
production of many products"
・Realization of not only a significant reduction
in initial introduction costs, but also highquality and low-cost operation

46

Positioning of “Medium Term Management Plan 2021”
Organic
GrowthAim to become a competitive “World class+company”
Further M&A
Challenges
Towards the realization of“Japan’s No. 1 corporate group in
the industry”
Kaga
ElectronicGroup+
FujitsuElectronics

Increased
Sales

JPY500 billion

Expansion of
trading company business

Increased
ProfitRatio

JPY1 trillion

Further
expansion of
the EMSbusiness
Enhancement
and expansion ofoverseasbusinesswill lead to
growth of the EMS business
Quantitative
expansion of trading
company business

Qualitative improvement
through EMS business(Net Sales)

Medium Term Management Plan 2021
①Enhancement of Revenue Base ②Stabilization ofManagement Base ③Creation of New Business© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Medium toLong Term
Vision47

＜ｍemo＞

48

＜ｍemo＞

49＜ｍemo＞

50

＜ｍemo＞

51

＜ｍemo＞

52

＜ｍemo＞

53

“Everything we do isfor our customers”

20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629
Contact: Investor Relations & Public Relations Office
TEL:+81-3-5657-0106
FAX:+81-3-3254-7133
E-mail︓ webmaster@taxan.co.jp
https://www.taxan.co.jp© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

54

■ Forward-looking statements in these materials are based on information available to management
at the time this report was prepared and assumptions that management believes are reasonable.
Actual results may differ significantly from these statements for a number of reasons.
■ Display method in this material
Number : Truncated less than the display unit.
Ratio: After calculation in yen units, Round down one digit of Display unit.