SWCC Group

Medium-Term Management Plan
"Change SWCC2022"
Rolling Plan (2019)

Creating for the Future
SWCC SHOWA HOLDINGS CO., LTD.
(TSE 1: 5805)

https://www.swcc.co.jp

Toward Achieving "SWCC VISION 2026"

Contributing topeople's lives withsupporting society
with trusted products
and services

Becoming a growing
company that creates
added value throughthe Group's strengths

Discovering customer
needs with "quick,""passion," and"thought and action"

Contribute to sustainable development ofsociety through supporting publicinfrastructures

Mid-Term Management Plan
“Change SWCC2022”

FY2022 Target1. Strengthen profitability of core businesses
2. Create new businesses
3. New development of overseas businessNet sales: 200 billion yen

Energy andInfrastructure
Operations

New businessCommunication andIndustrial Devices
Operations

Electrical Equipmentand Components
Operations

Focus on coretechnologies

Promote active
participation ofdiverse humanresources

Operating income: 10 billion yen
Operating income margin: 5% or over

Production
Innovation with IT
technology

ROE: 10% or over2

“SWCC VISOIN2026”
Mid-Term Management Plan

【Change SWCC2022】

Contributing to people's lives withsupporting society with trusted products
and servicesBecoming a growing company that creates
added value through the Group's strengths

Discovering customer needs with "quick,""passion," and "thought and action"

Basic Policy
1. Strengthen profitability ofcore businesses
2. Create new businesses
3. New development ofoverseas businessMeasures to support the policy
・ Innovation of operations and production
with AI and IoT・ Focus on core technologies
・ Utilize open innovation
・ Personnel system reform and humanresource development
・ Promotion of Work Style Reform3Energy and Infrastructure operations

Anti-vibration
component
SICONEXLightingcomponents

General-purpose
electric cables

High-voltage
power cable
Seismic isolationmaterials

Anti-vibration
component

General-purpose
electric cables

Anti-vibration
componentCommunications and Industrial
Devices Operations
Wire harness

Leakage coaxial
cable
Communication
cablesCommunication
cablesWire harness

Wire harness
Communication
cablesCommunication
cablesPrecision devices

Electrical Equipment andComponents Operations

Magnet wire

Heater alloy wire

Magnet wire

Magnet wire
Copper Alloy

Oxygen free copper
MiDIP

Change SWCC2022 Measures“Change SWCC2022”
1. Strengthen profitability of core businesses
・ Business structural reform⇒ Improve profitability and stable production by strengthening
domestic production systems
・ Business profitability assessment ⇒ Improve return on invested capital by introducing ROICmanagement⇒ Dealing with low-margin businesses and withdrawing from
unprofitable businesses
・ Promotion of centralized purchasing and development purchasing through group procurement
・ Building Smart Factories utilizing AI and IoT
2. Create new businesses
・ Creation of new businesses by Group-wide production, sales, and technology project teams
・ Develop new products by creating core competencies and elemental technologies and identifyingneeds
・ Promote DX* solutions based on IT technology cultivated by manufacturer-affiliated IT companies
3. New development of overseas business・ Expansion of the wire harness and electronic wire business and the copper and magnet wirebusiness・ Strengthening the Overseas Governance System*DX stands for Digital Transformation/ Digital Innovation.

7

Medium-Term Management Plan Numerical Target (KPI)(Unit:100 million yen)

FY2018ResultFY2022
Mid-TermManagement Plan

FY2019Forecast

VISION
2026

1,771

1,730

2,000

2,100

Operating income

66

73100150

Ordinary income

5666

95150

Net income attributableto owners of parent

454866100

3.8%4.2%

5% or over

7% or over

7 yen

10 yen50 yen or over

120 yen or over

（4.6％）（6.2％）（Approx. 20％）

（Approx. 35%）

Interest-bearing debt

466

452

380 or under

300 or under

DE ratio*

134%

113%

70% or under

40% or under

Net assets

356

401

550 or over

800 or overEquity Ratio

28.1%

31.3%

38% or over

50% or over

ROE

13.5%

12.8%

10% or over

10% or over

ROIC

5.6%

6.1%

7% or over

9% or over

Net sales

Operating income
marginDividend/Payout ratio*Debt-to-equity ratio is calculated based on shareholders' equity.

8

Measures for Energy and Infrastructure Operations■ Vision
Continue to provide the best total solution in the domestic infrastructure domains (electricpower, construction wire, seismic isolation)

Shipments of Copper Cables(Thousands of tons)

800
600
400

■ Priority measures[Strengthen profitability of core businesses]
・ As for sales for the electric power industry, capture demand for measures to strengthen
national resilience and the spread of renewable energy, etc., and expand business bystrengthening construction capabilities and new technologies.
・ Strengthen profitability of construction-related products by increasing market share andefficiency
・ Improve profitability by integrating seismic isolation and anti-seismic businesses
・ Shift management resources to highly profitable businesses through selection andconcentration (Sale of rubber wire business)

200
0FY2015
Communication

FY2016

Electric power

FY2017

Electrical machinery

FY2018Automobile

FY2019FY2023

Construction and Electric Power Sales

Other domestic demand

Source from Japan Electric Wire Manufacturers Association

Electricity-related demand
140*Comparison with FY2018 as 100.

120100■ Core Technology (Strengths)
・ SICONEX, high-performance power components
・ Seismic isolation and anti-seismic devices

8060
40100

104105FY2018FY2019FY2020116123121116FY2021

FY2022

FY2025

FY2030200
Source: Prepared based on our forecasts using various data

9Earnings Plan for Energy and Infrastructure Operations(Unit:100 million yen)
1,200

120
売上高
Net sales

営業利益
Operating income

1,032 Est
1,000

100873 Est

834
800

80600

52 Est6055 Est

39400

40200

2000
FY20182018年度FY2019 E
2019年度E※Est：EstimatedFY2022E2022年度E■ Features: Our core businesses① Power cables connecting from power stations to houses② SICONEX, high-performance power components③ Electric wires and seismic isolation components used inbuildings■Net sales:
・ Increase in sales of electric power infrastructure bystrengthening national resilience and capturing demand forrenewable energy
・ Increase in sales of general-purpose electric cables due toincrease in market share, despite decrease in demand forconstruction
・ Seismic isolation and anti-seismic business remained flat.

■Operating income:・ Steady earnings continued in the electricity infrastructure
・ In general-purpose electric cable for construction and electricpower sales and seismic isolation and damping component
business,improve profit margin by improving efficiency andlabor saving, etc.
Operating income margin: 5.3% (FY2018: 4.7%)
10

Measures for Communication and Industrial Devices operations■ Vision
Become the best trustworthy partner with products that meet customers' needs inthe informations and communications market, which continues to grow globally with
5G and Industry 4.0.
■ Priority measures[Strengthen profitability of core businesses]
・ Improve customer service by optimizing domestic manufacturing bases andstrengthening logistics
・ Develop and expand sales of high-value-added products for overseas markets
・ Dissolution of Daiji Co., Ltd. and streamlining of the Group's wire harness business[New development of overseas business]
・ Expand production bases for wire harnesses and precision devices (China andVietnam)
・ Launch of a development base for the wire harness business・ Strengthening affiliations with business partners■ Core Technology (Strengths)
・ Proposing wide variety of product technologies, from cable to processing anddevice to meet customer needs
・ Global management resources in Japan and overseas

IoT Market Demand ForecastOthersHealthcare
Distribution
Automobile
Security
EnergySource: 2017 Nomura Research Institute“Expansion of the IoT market and utilization of IoT in Japan”

Sales Ratio by production base of Communication andIndustrial Devices
Domestic bases

27%

Overseas bases

73%

32%
FY201868%

FY202011Earnings Plan for Communication and Industrial Devices Operations(Unit:100 million yen)
500

50Net sales

Operating income

400365 Est

360
309 Est4030 Est

300

302219 Est

200

20100

1000
FY2018FY2019 E

FY2022 E■ Characteristics: provision of communication cablesand industrial devices for global various markets.
■Sales:・ Increased sales of cable for communication
infrastructures, reflecting expansion of 5G
communications network
・ Capturing new demand for products for automotive andinformation industry equipment (wire harnesses andprecision devices), where sophistication is accelerating■Operating income:・ Increase profits from steady sales of value-added
products such as communication cable and processed
products
・ Increase profitability by expanding overseas production
bases for wire harnesses and precision devices※Est：EstimatedOperating income margin: 8.2% (FY2018: 6.1%)
12

Measures for Electrical Equipment and Components Operations■ VisionGenerate new profits through synergies among wire, magnet wire, and processing■ Priority measures[Strengthen profitability of core businesses]
・ Efficiency improvement through reorganization of domestic wire business(Absorption-type Merger of Tamagawa Electric Wire Co., Ltd. by SWCC SHOWAUNIMAC LTD.)・ Expand earnings by increasing production of high-grade wire materials anddeveloping high-performance magnet wires to meet growing demand for in-vehicle
products
・ Develop downstream strategies including processing technologies, Oxygen freecopper MiDIP, and Copper Alloy Wire through active use of open innovation[New development of overseas business]
・ Global expansion through cooperation with overseas partners
・ Commercialization of thin magnet wire products using high-grade wire materials(Oxygen free copper, Copper alloy wire)

Forecast of Annual Sales ofElectric Vehicles(Unit: thousands of units)

30,00025,000

HEV
PHEV
EV

20,000

6,600

6,300

15,00010,00012,900

5,000
0

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Source: Prepared based on our forecasts using various data

■ Core Technology (Strengths)
・ One and only DIP-forming manufacturing technology for Oxygen free copper MiDIP and High Performance
Square Magnet Wire available in Japan・ Technology for designing and manufacturing copper and aluminum13

Earnings Plan for Electrical Equipment and Components Operations(Unit:100 million yen)

700

70
Net sales

Operating income

600

60522

513 Est491 Est

500

50

400

40300

30200

20

14 Est
100

108

5 Est

00
FY2018FY2019 E※Est：EstimatedFY2022 E■ Characteristics: Strategic products of Oxygen freecopper MiDIP and copper-silver alloys manufactured by
the Japan's only dip forming systems■Sales:・ Increase of production and sales of Oxygen free copperMiDIP in line with expanding automotive demand (FY2022:
1.5 times the FY2018 level)
・ Expansion of high-performance magnet wire products for invehicle use (production of general-purpose magnet wiredecreased)
・ Increase in sales of copper alloy wires for automotive andmedical applications■Operating income:・ Improve profitability by developing and expanding sales ofdownstream products by adding processing technology tohigh-grade wire materials
・ Expand profits by increasing sales of high value-addedproducts (Oxygen free copper MiDIP and copper alloys)
Operating income margin: 2.7% (FY2018: 1.6%)
14

Earnings Plan for Overseas Subsidiaries and Affiliates(Unit:100 million yen)200

25Net sales

Operating income

180

150 Est160
14020131

124 Est120

1512 Est

10080

1060

6 Est

40

552000FY2018FY2019 E

FY2022 E■ Priority measures① Expansion of the mobility field・ Strengthen bases in Vietnam and China to capture demand・ Strengthen cooperation with joint venture partners and develop
new products② Expansion of copper business with the Futong Group・ Expansion of sales channels by promoting cost reductions atChinese bases■ Areas of Focus① Expansion of wire harnesses and electronic wire domains
Redevelopment of Harness Plants in China and Vietnam② Expansion of copper business in China
Expand sales of high-grade EV wire and magnet wire
③ Expansion of electric power equipment components
business with SHOWA-TBEA (Shandong) Cable Accessories
Co., Ltd.
Expand sales for transformers and rail vehicles■Operating income:
Improve productivity by promoting automation, labor saving, andcost reduction
Operating income margin: 8.0% (FY2018: 3.8%)

15

Targeted Sales Composition by MarketNew
business
5%Newbusiness
3%
Newbusiness2%

Automobile
14%

Industrial
equipment
20%
FY2018CommunicatNet sales: ¥177.1 bnion
Operating income:6%¥6.6 bn（4%）

Construction
41%

Electric
power
17%

Automobile
Industrial
20%
equipment
15%
Communic
FY2022ation
Net sales: ¥200 bn
5%
Operating income: Electricpower¥10 bn（5%） 15%
Construction
42%

Industrial
equipment
20%

Automobile
25%

FY2026

Net sales: ¥210 bn
Operating income:Communic¥15 bnation（7%） Electric
5%
power
15%
Constructio
n30%

+
M&A

16New businesses: Expansion of IT business
Promotion of DX* solutions
RPA & AI Operations

・ Automation of not only routine work but also non-routine work
- Speech recognition and AI-OCR utilization
・ Integration with full-scale AI system and self-reliant system
・ Utilization of digitalized business systems

50% increase in sales

Next-Generation Infrastructure Operations

・ Data collection and analysis using IoT sensors
・ Utilization of various big data
・ Next-generation infrastructures and services by 5G and WiFi6

Integrated Certification Core Operations

FY2018FY2022・ New user information management for threats andconvenience- Cloud certification measures- Biometric certification and SSO
・ New certification needs- Managing access to IoT devices- RPA scenario control management* DX stands for Digital Transformation/ Digital Innovation.

17

New Initiatives for Labor Saving and Automation
Building Smart Factories that Combine AI, IoT and TOC (Theory of Constraint)
Formed a special team and started activities in October 2019
Selected as a model covering wire manufacturing plant

Aim for completion by FY2022

Level 3
Labor saving by robots

Level 2
Full networking

Level 5
Automated unmanned
production line

Level 4Introduction of AI and cloudtechnology

Level 1

Digital-broadcast
standard

Develop next-generation human resources for company-wide deployment
18

Investment During the Period of The Medium-termManagement Plan (Investment and R&D)
(Unit:100 million yen)
60

Normal investment

New investment[Investments]
FY2018 Result: 3.5 billion yen

Research and Development

50

Cumulative investment from FY2020 to 2022:

16 billion yen or more
Cumulative investment to strengthen new businesses andoverseas businesses:
3.0 billion yen or more
Accumulated investment to strengthen domestic production
system:40

30

2.5 billion yen

20

10

[R&D]
FY2018 Result: 1.1 billion yen

0FY2018

FY2019 E

FY2022 E

FY2022: 2.0 billion yen
Creation of new businesses, Development of new products,
Open Innovation
19R&D -Linking the Future with Technical Capabilities and Creativity-

Metal Materials

AIOrganic materials

MICore Technologies
Conductor
processing
technology
Resin molding
technology

Mobility

IoT

Open
Innovation

Automobile(EV)Railvehicle

Electrical design
High-voltage insulation
High frequency wave

BicycleCreating a humanfriendly andcomfortable society

Creating a safe andsecure Society

Smart Infrastructure

EnergySystemCreating an ecofriendly society
5G

Drone

Unmannedtransport

Smart Industry

Officeequipment

Industrialequipment

Superconduction

Data centerHealthcare

20

Shareholder Returns (Dividend Policy) & ROE Plans
EPS and Dividend (¥)/Dividend Payout Ratio/ROE (%)(Yen)
250.0(%)
25220 Est

200.0

20
160.9 Est

153.2
150.0

15

123.9
100.010※64.1

50 Est

50.0

50

57

10 Est0.00
FY2016※Est：EstimatedFY2017
EPS (yen)

FY2018FY2019 E

Dividend (yen)Payout ratio (%)

FY2022 E
ROE(%)

21

SWCC's Medium-and Long-Term Environmental Vision
Item

Mid-term Targets (2030)

Global Warming
Prevention

Reduce CO2 emissions: Reduce energy-derived CO2 emissions by 20%
compared to FY2013

Effective use ofresources

Reduce final disposal volume (landfill amount) by 50% from FY2018 level

Effective use ofwater resources

Reduce consumption and wastewater volume by 50% compared to FY2018Item

The SWCC Group is engaged in activities to support
the Sustainable Development Goals (SDGs).

Long-term Vision (2050) [Vision]

Global Warming
Prevention

Realize products that do not emit CO2 or carbon neutral products/Create products that resolve
environmental issues

Effective use ofresources

Promotion of sustainable use of resources and achievement of "0" for final disposal (landfill amount)

Effective use ofwater resources

Promoting the sustainable use of water resources

22

ESG Mid-Term Management Plan
Core Subjects
ESEnvironment

・ Achieve targets based on the Group's voluntary environmental action plan
・ Expansion of environmentally conscious products and contribution to society
through Products
・ Actions for biodiversity conservation

Human rights and Labour
practices

・ Promotion of proactive safety measures and elimination of occupational accidents
・ Continuously improve productivity by automating operations and saving labor ・ Promoting diversity to incorporate
various perspectives ・ Enhancing the mental and physical health ofemployees and promoting a work-life balance・ Creating a comfortable working environment by offering a wide range of working styles

Relationships with businesspartners

・ Communication with clients through CSR Procurement Guidelines

Relationship with Customers

・ Continuous customer satisfaction surveys and feedback on our response・ Continuous efforts to improve quality and achievement of quality cost targets
・ To strengthen monitoring of the quality status of each group company

Relationship with Stakeholders

・ Appropriate disclosure of financial information and enhancement of disclosure of non-financial information

Community Communication

GPolicy

Governance・ Continue and expand activities to actively engage with local communities and become a reliable manufacturer.
・ Thorough legal compliance and strengthening of monitoring functions
・ Continue to comply with the Corporate Governance Code and improve its effectiveness・ Establishment and operation of a cyber security system
・ Establishment of Information Disclosure Guidelines and appropriate information disclosure
・ Risk reduction activities and improving effectiveness through business continuity
management (BCM)23

Toward achieving the Mid-Term Management Plan
Strengthening the Overseas Governance System
Expansion of Copper and Magnet Wire operations
Expansion of Wire Harness and Electronic Wire BusinessNew development of overseas business
Promotion of DX solutions
Development of new products by identifying needs
Creation of new businesses by the Production and Sales
Technology Project Team

Creation of new businesses
Building Smart Factories Utilizing AI and IoT
Improving the Efficiency of Invested Capital through theIntroduction of ROIC Management
Business restructuring/Strengthening of domestic production
systemStrengthen profitability of core businesses
Management baseReinforcement of governance system by business segment system
Reforming the personnel system and human resource development tocreate innovation
24Creating for the Future
SWCC SHOWA HOLDINGS CO., LTD.
(TSE 1: 5805)

Contact
SWCC SHOWA HOLDINGS CO., LTD.
Corporate Planning Department,
Business Strategy Division
TEL:044-223-0520
E-mail:kouho@hd.swcc.co.jp
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 as a result of various factors.
Factors that could influence actual results include economic conditions, demand trends, rawmaterial prices, and exchange rate fluctuations, as well as other items not limited to the above.

https://www.swcc.co.jp