Creating for the Future

SWCC Group Q3 FY3/2023

Progress in Financial Results for the Third Quarter andInitiatives to Achieve the Full-Year Plan
Feb 3,2023

SWCC SHOWA HOLDINGS CO., LTD.(TSE Prime: 5805)

1. Progress in Q3 FY2022 Financial Results andInitiatives to Achieve the Full-Year PlanFY2022: Full-year Forecasts
Net sales(Unit: 100 million yen)
2300

8.9%
Increase

Operating income(Unit: 100 million yen)

10.3 billion yen

110

2,170

2100
1001,992(YoY : 4.2% increase)

2.6%
Increase

105103
100Net income attributableto owners of parent

95

1900

Ordinary
income9.0 billion yen(YoY : 3.8% decrease)

90
1700

Dividend/
Payout ratio

85

1500

FY2021 Actual

FY2022 Plan80

FY2021 Actual

FY2022 Plan

60 yen / 20%(YoY : 10 yen increase)

Despite the impact of further price hikes in raw materials and disruptions in the supply chain, we plan to increase profit due to the effects of various
measures and structural reforms.

3

FY2022 Factors of Changes in Full-year Plan
Factors of changes in net sales

2,200億円+ ¥15.7 Billion

2,150億円

Energy andInfrastructure
Business

2,100億円
2,050億円
2,000億円
1,950億円-¥0.5 billion

End ofFY2021¥199.2 billion+ ¥3.4 billion+ ¥4.5 billion+ ¥1.5 billion

End ofFY2022

Other businessElectronic equipment
And components
Business

Communication andIndustrial devices
Business¥217.0 billion

Energy and Infrastructure business 6.0 billion yen
Electronic equipment and components business 9.0 billion yen

Impact of higher
copper prices

Communication and Industrial devices business 0.7 billion yen

Factors of changes in operating income
End ofFY2021¥10.0 billion- ¥1.0 billion
Slower profitgrowth due tocopper priceimpact+ ¥2.7 billion- ¥2.8 billion+ ¥0.2 billion
Price hikes in raw
materials, etc.

Profit increase
due to sales
increase+¥0.8 billion
Pass-on sales price
Structural reforms and cost reduction+ ¥0.4 billion

End ofFY2022

Elimination of
temporarylosses¥10.3 billion[Initiatives for the current fiscalyear]
In order to achieve the profit
targets, we will ensure stabledemand and recover from theslower profit growth due to theimpact of increase in copper prices
and the push down of profit due tothe soaring raw material and otherprices through structural reforms,
increase in selling prices andreducing costs.
In particular, we expect to see
benefits from the integration of
SFCC production and sales andthe reorganization of
telecommunication cableproduction bases as part ofstructural reforms during theperiod under review.

4Measures for Soaring Raw Material Prices< Full-year plan: Expected changes inoperating income >-¥2.8bn+¥2.7bn

Soaring raw
materials,
etc.

Energy and Infrastructure Business(transportation/fuel/other secondary materials/electricity costs)
The difference,which was 200
million yen at thetime of Q2,
recovered to 100
million yen in Q3.

Increasing
selling
prices andreducing
costs

Initiatives

Construction-related business: Increased selling price further (including energy costs) from JanuaryPower Infrastructure business: Steadily increased selling prices to electric power companies and private-sector
equipment manufacturers.
Seismic isolation and vibration suppression business: Established a material supply scheme from ordering
companies and price negotiations for major customers.

Electrical Equipment and Components Business(fuel/varnish/electricity cost)All products: Introduced the surcharge system to pass on the increase in prices ahead of the industry asa countermeasure to soaring energy costs related to production. Introduced the surcharge system to passon the increase in prices ahead of the industry as a countermeasure to soaring energy costs related toproduction.
Enamel wire: Introduced market-linked system for varnish price.

Communication and Industrial Devices Business(copper, production costs, other secondary materials, electricity costs)
Communication cables business: Implemented price revisions with expanding target products to combat soaring
secondary material prices and rising electricity prices.
Wire harness business: Increased selling prices reflecting rising copper prices and effect of exchange rates;
proposed alternative materials for wire harnesses.
Precision devices business: Increased selling prices reflecting rising material and production cost.

5Energy and Infrastructure Business

Progress in Q3 Results and Initiatives to Achieve Full-Year Plan
Initiatives to achieve the full-year plan

Progress in Q3 results against full-year plan

◆Manufacturing of polyvinyl chloride (PVC) insulated wires at
the Ibaraki Plant in the coated wire business

Positive factor
 Improved profitability by integrating production and sales of joint venture (coated wirebusiness)
 Contributed to Q3 sales by investing in increased production of SICONEX ®
 Steadily increased selling prices
Q4 Outlook
 Expecting sales of projects for private-sector plants scheduled in 3Q due to leveling ofdemand

IV has consolidated production at its
Ibaraki plant and started full-scale
production in October.
Reduce fixed costs and improved
production efficiency.
Copper production up 15%.

Progress
rate:
73.9%

◆Secure strategic inventories in anticipation of construction
demand (large-scale projects) for semiconductor factories,
etc. in the coated wire business

Full-year¥83.1 billion

258

Q3 cumulative

293281◆SICONEX® production
1Q
2Q
3Q
increase plan
¥7.2 billion
0 100200300400500600700800900
1,000
1,100
1,200
OperatingincomeProgress
rate:
71.6%

Production capacity increasedby 2 billion yen in FY2023 to
1.5 times.
Production increased instages from Q3, contributing
to sales growth as planned.

Full-year¥5..2 billion
Q3 cumulative

171Q
016
2Q193QIV

Overall effects of structural reform
Q3: 200 million yen¥112.5 billion
Net sales

Ibaraki Plant

Effects of structuralreforms: ¥200million

Sales growth plan*

FY2026FY2022FY2017220140100*Sales results for FY2017 are set at 100

1006

Electronic Equipment and Components Business
Progress in Q3 Results and Initiatives to Achieve Full-Year Plan
Initiatives to achieve the full-year plan

Progress in Q3 results against full-year plan

◆Penetration of highly transparent systems forincreasing selling prices, such as the fuel surcharge
system and varnish market price linkage system.

Positive factor

Ensured demand from Europe for high-performance magnet wires.
Returned to domestic production of general-purpose products for heavy electrical machineryand implemented price improvements.
Negative factor
Shipments of products for xEV continued to decline due to a shortage of semiconductors.
Q4 outlook
Despite the continued impact of reduced automobile production, both sales and profits areexpected to meet targets in response to changes in market conditions.

<Structure linked to varnish market price>

Varnishmanufacturers
Marketlinked¥64.3 billion
Net sales
Progress
rate:

71.5%

OperatingincomeProgress
rate:

86.0%

Customers
Marketlinked◆Transferred part of manufacturing of general-purpose wires to partner

Full-year

companies and concentrated resources on automotive products¥46.0 billion

155

Q3 cumulative

01Q

144

2Q
3Q
¥1.8 billion
200
300 400

100◆Prepare for a recovery in demand in xEV by reviewing the161

production system and promoting the introduction of new facilities
500

600

700

Full-year¥1.5 billion

6

Q3 cumulative

1Q
04
2Q

53Q

Dramatic reduction inenergy consumption
Reduction of
CO2 emissions

Introduction of energy-saving equipment onwinding production lines

Mie Branch

7Electronic Equipment and Components BusinessChanges in Market Conditions and Responses in FY2022
Shipment by Product Category

Changes in market conditions

・Partial return to domestic market due
to customer preference for stablesupplyHeadwind
Tailwind

300%

250%

200%

Measures150%

19

Shifted product portfolio in response to market changes.
As a result, Q3 operating income achieved 86% of target.
After improving prices, we increased the production volume ofgeneral-purpose products, mainly those for heavy electricalappliances. Operating income was secured by offsetting thedecline in sales of automotive products. In addition, 2 years
ahead of the plan, we will upgrade MiDIP ® production toward
the market recovery.

Steady growth inEurope (xEVapplications)

Declaration of state of emergency

Heavyelectricmachinery(Estimated using the pre-COVID figures as 100)350%

Outbreak and spread of COVID-Automotive・Shipments decreased due to ashortage of semiconductors.
However, sales of the high-performancemagnet wire have recovered.

Production adjustments due
to reduced vehicle
production, preparation oflarge repair program in 2H
ahead of schedule.

100%

50%

0%

Heavy electric
重電machinery

一般General

Automotive
車載巻線
magnet wires

High-performance

高機能巻線
magnet wires

０FC
MiDIP®

Heater wires
ヒーター線
ヒータ線

8

Communication and Industrial Devices Business

Progress in Q3 Results and Initiatives to Achieve Full-Year Plan
Initiatives to achieve the full-year plan

Progress in Q3 results against full-year plan

◆Expanding the effects of reorganization of domestic
production bases in the communication cables business

Positive factor
 Effect of reorganization of domestic production bases for communication cables
 Penetration of increasing selling prices and proposals for alternative materials for wire harnesses Recovery of operations at production bases in China and Vietnam (relaxation of lockdown restrictionsin Shanghai)
Negative factor
 Delay in starting up domestic manufacturing bases until Q2 and increase in selling prices
Q4 outlook
 Expand profits in the communication cables business, where demand is expected to increase in Q4
 Further increase selling prices to combat price increases, including energy costs

Recovery of domestic communication
cables sales
Effects of structural reform incumulative Q3
400 million yen

Communication cables business: performance
before and after the restructuring of bases

8,0008.0%
7.0%

7,000

6.0%

Net sales
Operating income
margin5.0%¥34.5 billion
Net sales
Progress
rate:

74.8%

Full-year

6,000

780

Net sales
Progress
rate:

53.0%

2.0%

¥25.9 billion
Q3 cumulative

1Q

86
2Q
100

95
3Q
200
¥1.9 billion

300

400

Full-year

23

51Q
0

2Q

3Q

Delayed start-up andincrease of selling prices
after structuring reform

2021
1H2021上2021
2H2021下Effects of structural reform
Q2: 200 million yen, Q3: 200 million yen
Total: 400 million yen

2022上
2022
1H

1.0%
0.0%

2022下
2022
2H

◆Recovery from supply chain disruption in the wire
harness business・Penetration of proposals for alternative materials
・Cost reduction (reduction in subcontracted processing costs) due tothe end of disruption¥1.0 billion
Q3 cumulative

Improved productivity, including reduced
5,000
material and transportation costs, due toconsolidation of bases

4.0%

Profitability recovered due tostructuring reform effects andincrease of selling prices 3.0%

From Q4 FY2021
Partial restructuring effects(closure of Aomori Branch)

Overseas:
Recovery of industrial
device◆Capture recovery demand in precision device businessand expand sales
・Construction of a production system to support vertical start-up

9

2.Growth Strategies by Segment to Achieve
the Medium-term Management Plan

東証一部（5805）

Energy and Infrastructure Business

Growth Strategies① Outline of SICOPLUS® Strategy
SICOPLUS®: Cable/construction/maintenance solutions centered on strategic product SICONEX ® (components)
Products

De facto standardization strategy for SICONEX®

Local production for local consumption type
Cloud-based human resources strategy

People[Size comparison]

Net Sales Growth Plan*

・Shortening of construction time

FY2026・Aim to expand market share byleveraging product advantages
such as simplified joint design.

FY2022FY2017=

Construction
companiesnationwide

白テ ープ・Lightweigh/compact

Our
construction
personnel

Cooperatingcompanies

1150

1297

1600

1725

1892

Number oforders
available

SICOPLUS🄬🄬
human resources banks

Construction personnelDevelopment center220140

Training of construction
personnel using AVR®

100

*Net sales results for FY2017 are set at 100.

Production capacity to increase by 2 billion in FY2023: 1.5 times

Register the construction personnel learned at this center nationwide in the human resources bank to secure thepersonnel of cooperating companies and local construction companies nationwide.

11Energy and Infrastructure Business

Growth Strategies② SICOPLUS® Strategy Business Roadmap
Skillless connection method
Frist outerconducting

Construction using robots

Realizing laborsaving and skill-lessconnection work

Our unique new construction method
reduces construction time to 1/7 andconstruction cost to half.
From 2022

From 2020Promote de facto standards

Approx. 3times

Securing excellent
human resources andbuilding a program forearly training ofconstruction engineers

Renewal and expansion of powerplants
Development of transmission andsubstation network

Net sales
Construction
personnel

2021 Year2022 Year2023 Year2024 Year2025 Year

Renewal of aging facilities
Stabilization of renewable energysystem

2026 Year

66 77kV(Period of the Medium-Term
Management Plan)
CAGR of Electric Power Market :5-10%
Aiming for our net sales CAGR of 12%～2030 Year

12Extra-high voltage

Interconnection of large scale
renewable electricity154kV

Investment in Large-scale offshore
wind power generation

2021 Year ～2020 Year

From 2023

Ultra-highpressure

AVR®

Compared to FY2020

SICOPLUS🄬🄬 humanresources banks

275kV

Expand market shareby leveraging productadvantages

Establishment of Construction Personnel
Development Center
Mock sink road

Local production for local
consumption type
Cloud-based human resources
strategy
Sharing the personnel trained at
the Construction Personnel
Development Center andconducting construction
nationwide

Trenchlessmethods

Improve ProfitaInfrastructure Business

Growth Strategies Improve Profitability by Restructuring with ROIC

3 Measures for the New SFCC
1. Improve gross profit by improving customer
convenience and service
2. Build a demand-linked production and supply system
3. Improve business processing by utilizing AI and data

◆Construct a demand-linked production/supply system through a
coated wire DX project.
FactoryOffices
Under the direct control ofProduction progress
management through theperformance managementsystem

the president

Coated Wire DX Project
Copperbased
forecast byAIDistribution

Material
Procurement

Inventory
management
based onshipment forecast

Sales

Shipping
forecast by AICustomers<ROIC Targets and Major KPI>

◆Reduce costs (transportation costs, etc.) by improving production
capacity at the Ibaraki Plant
Until now

Shippingand CO２cuttingFuture

Until now

Step 1: Wire stretching at Sendai Plant
Step 2: Transport from Sendai Plant to Ibaraki Plant
and convert it to cable

FutureStep1: Ibaraki Plant enables production
manufacturing of wire drawing and cable13Electronic Equipment and Components Business

Growth Strategy
Initiatives to recover demand in xEV market

Product-portfolio shifting from FY2020 to FY2026*Figures represent production output
Automotive (xEV)

FY2020For drivemotors

FY2022Growth potential

For electroniccomponents

FY2026

Heavy electricmachinery
For transformers[Efficiency production]
・In sectors with declining demand, break-even points improve by attracting, solidifying, orstopping[Reserve for increased production]
・Advance implementation of capital expenditure plans (Heater Wire, MiDIP®)
・Early introduction of flat-angle magnet wires mass production line
[Technology Development]
・Full-scale use of sensor technology
・Expansion of products for new areas of application (e.g. busbar for BEVs).

Automotive(gasoline vehicle)

Shift to a higher-margin business modelFor Promotor Starters

Wire rod
manufacturer

General-purpose products forheavy electrical machineries will
not be invested in equipment,
but will be ordered only for thosethat are profitable, so production
will decline in FY2026, but
profitability will increase.

For smallmotors

Magnet wire
manufacturers

Flat line (bare)

Copper plate

Flat enameled wire(with insulation)

High Performance
Oxygen-Free Copper
MiDIP ®

Profitability<Cumulative Capital Expenditures through FY2026>●Increased investments: 3.4 billion yen●Renewal investments: 3.2 billion yen

Vehiclemanufacturers

Increased added-value due tothe addition of magnet wire
processing to the wires alone

Wire rod

Our current core business areas

Production capacity:
5 times
FY2026 Targets

Fields to Focus on in the Future

14

Communication and Industrial Devices Business

Overseas: Progress in Restructuring the Wire Harness Business①Distribution of supply chains②Diversification of production bases③Promotion of local procurement and local
production for local consumption

Sep. 2020

Dissolved in September Transfer of manufacturing
2020and development
operations

DAIJI
Apr. 2020
Domestic sales
operations¥1.6 bn ofinvestment

ChinaFactory started operation in January 2022

SDS

China
DONGGUAN

VietnamHung Yen

JAXINGJAXING SHOWAINTERCONNECT
PRODUCTS CO., LTD.

DONGGUAN SHOWAINTERCONNECT
PRODUCTS CO., LTD.
SWCC SHOWA VIETNAM
INTERCONNECT
PRODUCTS CO., LTD.

Introduction ofsolar power
generation toreduce electricity
and CO2 emissions

Changes in the ratio of production sites before
and after structural reforms
VietnamJapan
FY2019 China

Net sales:
9.2 billion yen

JAXING SHOWAINTERCONNECT
PRODUCTSCO., LTD.

Total floor area
Approx. 35
thousand㎡

Ensure supply flexibility

Vietnam

FY2026

VietnamChina

Net sales plan:
18 billion yen

SWCC SHOWA VIETNAM
INTERCONNECT
PRODUCTS CO., LTD.

Planned relocation of plant in April 2023
Double thecurrent total
floor space
Total floor area
Approx. 5700㎡

15

Creating for the Future
Forward-looking statements in this document are based on information available at the time ofpublication and contain potential risks and uncertainties.
Therefore, actual results may differ materially from those projected in the forward-looking statements asa result of various factors.
Factors that could influence actual results include economic conditions, demand trends, raw material
prices, and exchange rate fluctuations, as well as other items not limited to the above.

Contact
SWCC SHOWA HOLDINGS CO., LTD.
STRATEGY SECTION,
BUSINESS STRATEGY PLANNING DEPT.
TEL:044-223-0520
E-mail:kouho@hd.swcc.co.jp

SWCC SHOWA HOLDINGS CO., LTD. (TSE Prime: 5805)