Creating for the Future

SWCC Group
Supplementary Material for the Third Quarter of the Fiscal Year Ending March 2023
February 3, 2023

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

1. FY2022 Q3 Overview of Financial Results

東証一部(5805)

FY2022 Q3
Businessenvironment






Overview of Financial Results
Construction-related demand recovered due to the resumption of construction work reflecting thenormalization of socioeconomic activities.
Rising raw material and energy prices worldwide and disruptions in the global supply chain continued.
Demand for automobile-related products continued to decline due to a shortage of semiconductors.
Overall demand for electric wire was flat YoY.
Average domestic copper prices rose YoY.

Net sales

Overall sales increased YoY due to higher copper prices, despite a decrease in copper shipments.
[Status by major business field]
Electric power infrastructure: Despite a slight decrease compared to the previous Q3 when the project wasconcentrated, demand remained firm.
Automobiles: Demand for high-performance products was sluggish due to the impact of automobile production
cutbacks that have continued since two years ago.
Industrial Devices: Recovered due to revisions to material procurement and other factors, despite being affected bysupply chain disruptions.

Operatingincome

Operating income improved from Q3 onwards, but falls year-on-year due to delays in the reorganization of domestic
production bases for communication cables up to Q2 and the continued impact of production cuts in the automotive
sector.

*On January 20, 2023, we announced the "Report on the Results of Investigations Concerning Improper Quality Control of Our Group Products." The impact of this matter on our businessresults was deemed immaterial. Please refer to page 10 for details of our efforts to strengthen our quality control and auditing systems to prevent recurrence.

3Key Points of the Financial Results for Q3 FY2022
Q3 YoY Change
Net sales(Unit: 100 million yen)

1,472

FY2021

Operating income

Up
7.3%

1,580

FY2022Q3 Progress rate

Down
14.0%

82

FY2021

71

FY2022(Unit: 100million yen)

Full-yearPlan

FY18-21Avg.
progressrate

Q3
Progressrate

Net sales

2,170

73.8%

72.8%

Operatingincome

10373.9%

68.8%

Copperprices

1,150 yen／kgーー(Planning assumption)

4

Q3 Consolidated Statements of Income(Unit: 100 millionyen)

FY2021Q3 Actual

FY2022Q3 Actual

FY2022Full-year plan

Progressrate%

YoY%

Net sales

1,472

1,580

2,170

7.3

72.8

Operatingincome

8271103▲14.068.8

Operatingincome margin(%)

5.6

4.5

4.7--

Ordinary
income8369103▲17.066.8

Net income
attributable toowners of parent

526490

22.7

71.3
5

Q3 Change Factors for Net sales and Operating income (YoY)
1,700億円
1,600億円
1,500億円

Change factors for net sales
FY2021
Q3+¥12.4 billion -¥0.6 billion

1,300億円-¥4.6 billion +¥3.3 billion +¥0.2 billion

Energy andInfrastructure
Business

1,400億円¥147.2 billion

FY2022
Q3

ElectronicEquipmentandComponents
Business

Effect of rise incopper prices
Energy and Infrastructure Business: 5.5 billion yen

OthersCommunicationand Industrial
devices Business

Foreign exchange
impact: 2.8 billion yen¥158 billion

Electrical Equipment and Components Business: 6.4 billion yen
Communication and Industrial Devices Business: 0.5 billion yen

1,200億円

Change factors for operating income
90億円

FY2021
Q380億円
70億円
60億円
50億円
40億円
30億円
20億円

¥8.2 billion-¥0.9 billion
Slower profit
growth due
to copper
price impact-¥2.2 billion+¥0.6 billion+¥2.1 billion-¥0.7 billion

Price hikes in
raw materials,etc.

Decrease inprofit due tosales decrease,etc.

FY2022Q3Structural reforms

Increase in selling
prices and cost
reduction¥7.1 billion【Change factors】
1. Net sales
Increased mainly by passing cost
increases due to higher copper prices on
selling prices in a timely manner.
Foreign exchange effects include about
2.8 billion yen in the Communication andIndustrial Devices Business.
2. Operating income
Decreased due to delays in increase in
selling prices for some products until Q2
and a decrease in sales due to reduced
automobile.
Foreign exchange impact was minimal,adding 900 million yen.
[Future Initiatives]
In order to achieve the profit targets, weare working to secure stable demand
from Q4 onwards and are taking various
measures to combat the soaring raw
material prices, such as increase in
selling prices, reducing costs, andrestructuring.

6

80

1,100

1,000
Q3 Results by Segment and Full-yearPlan 70
Energy and Infrastructure Business
Construction
Seismic isolation/Others

900
800
700
600
500
400
300
200
1000201918171615141312111098765432
10(Unit: 100 million yen)
Electric power infrastructure
1,125Operating income

1,100
1,000
72
60
831
900
54782
800
52
700 50 777
600
584 500510
400 40300
29200 300208
205 100
59064
4220 Full-year
plan
FY2021Q3
FY2022 Q3

FY2022 Changes inoperating income

1716Q1

Q2

Figures in parenthesis:
effects of structuralreforms

1920(２)

(1)

Q3

Q4

Positive factor
 Improved profitability by integrating production and sales in the coated wire business Sales contribution from investment in increased production of SICONEX®
 Steady increase in selling prices
Negative factor
 Leveling of demand for power infrastructure business

900

Electronic Equipment andComponents Business
High-performance products
oxygen free copper
General-purpose products

80

Other high-performanceproducts
700
Operating income
643

70
60500
50
400
40300
30
20200
10100
00
10
98
765432
10460

441

227

21800(Unit: 100 million yen)200
3938600

18500 30280

400
300 205610307

15200100176220

FY2021 Q3

FY2022 Q300

Full-yearplan

FY2022 Changes inoperating income

6Q14Q25Q33Q4

Positive factor
 Recovery due to capturing demand from Europe for high-performance magnet wires
 Return to domestic production of general-purpose products for heavy electricalmachinery
Negative factor
 Continued decline in shipments of products for xEVs due to shortage ofsemiconductors

Communication andIndustrial Devices Business

60

Communication cable
Precision devices

50350300
403020020100
1000(Unit: 100 million yen)
Wire harness400
Operatingincome

259220107300

2019151250

13114200150 101086735059

FY2021 Q3

FY2022 Q3109 FY2022 Changes in
8 operating income
76543321(２)20Q2116

100

40Q13450780

Full-year
planFigures in parenthesis:
effects of structuralreforms

59(２)

(1)

Q3

Q4

Positive factor
Effect of reorganization of domestic production bases for communication cables
Penetration of increase in selling prices and proposals for alternative materials for wire harnesses
Recovery of operations at production bases in China and Vietnam
Negative factor
Delay in start-up of domestic manufacturing bases up to Q2 and increase in selling prices

720181614121086420

Q3 Balance Sheet (Comparison with the previous fiscal year-end)(Unit: 100 million yen)
Total assets
Trade receivables
Inventories
Current assets
Total liabilities
Trade payables
Interest-bearing debt
Total net assets
Shareholders equity
Shareholders equity
ratio (%)
DE ratio (％)

March 31,
2022

1,474
527
260
587

884
267
392

589

December 31,
2022

Change1,571

97

537
291
624

924

9303739250456▲1765647

58583
39.5639
40.7

56
1.2

67.2

71.4

4.2

【Fixed assets】

Increased due to various capital expenditures and higher
foreign exchange rates for fixed assets at overseas
subsidiaries.
In addition, we contributed 2.1 billion yen in special
premiums to the pension assets of the retirement plan.

【Interest-bearing debt】

Increase in working capital due to soaring raw material
prices and soaring copper prices.

【Shareholders' equity ratio】

Total assets increased, but shareholders equity increased
due to an increase in retained earnings and foreign
currency translation adjustments. As a result, total assets
increased 1.2% compared to the previous fiscal year-end.

【DE ratio】

Shareholders' equity increased, but interest-bearing debt
also increased, resulting in a 4.2% increase from the end of
the previous fiscal year.

<Recognition of current issues and future measures>
Inventories increased due to soaring copper prices
and securing inventories in anticipation of large-scale
projects in the 2H. Continue to optimize working
capital by ensuring inventories at appropriate levels
and promoting shorter debt collection periods.

82.Initiatives to Strengthen Quality
Management and Auditing Systems

東証一部(5805)

Initiatives to Strengthen Quality Management and Auditing Systems
The following preventive measures are described in "Report of Investigation Results Regarding Improper Quality Control of Our Group Products" dated January 20,
2023.

●Major Initiatives to Prevent Recurrence

Major measures to prevent recurrence include the introduction of a measurement data management system that automatically records test data, the rationalization ofpersonnel and appropriate personnel rotation throughout the Quality Assurance Division, the establishment and implementation of an education system, and theformulation of basic compliance policies. In the future, we will also develop reporting lines for promptly reporting to the top management of the Group regarding
inappropriate conduct related to quality, and strengthen our quality control and auditing systems in line with our transition to an operating company as of April 1, 2023.

●Strengthen quality control and auditing systems (from April 1, 2023)

First Line

Second Line

Third Line

Quality Assurance Department

Quality Control Department

Internal Audit Department

Overall qualityof productsand services

Monitoring bythe quality
assurance
department

Our Quality Assurance Department monitors thequality of the products and services of each businessdivision.

Supervision by an organization
directly under the President

The Quality Control Office, which is under the directcontrol of the president and specializes in quality
control, oversees the quality assurance businessesof our group.

Audit from an independent andobjective standpoint

The Internal Audit Department audits the First Lineand the Second Line from an independent andobjective standpoint and reports to the Board ofDirectors and the Audit and Supervisory Committee.

10Forward-looking statements in this document are based on information available at thetime of publication 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.

Creating for the Future

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 tothe 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)