SWCC groups

Supplementary Material
for the First Quarter of the Fiscal YearEnding March 2021

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

July 31, 2020

https://www.swcc.co.jp

FY3/2021 1Q Overview of Financial Results
Results: Lower sales and profits YoY due to the impact of the newcoronavirus (COVID-19) infections

・ In the Energy & Infrastructure operations, sales and profits decreased reflecting delays in construction works due tothe impact of COVID-19 in construction-related applications.
・ In the Communications and Industrial Devices operations, sales and profits decreased due to a decline in sales ofconstruction-related applications despite steady sales of communication cable for data centers.
・ In the Electronic equipment and Components operations, sales and profits decreased due to a decline in automobile
production and sluggish demand for electrical machinery applications.
* Implemented flexible production adjustments and reduced unnecessary and non-urgent expenses by thoroughly
implementing measures to prevent the outbreak of COVID-19.
1Q Progress Rate (Net Sales/Operating Income)
1Q Progress rate

Full-year policy:① Implementation of flexible and speedy judgments and measures throughthe integration of corporate headquarters and business segments② Strengthen profitability of core businesses through business innovation③ Penetration of the concept of ROIC management, promoting and21％

Sales Plan
162 billion yen

10％Operatingincomeplan
6 billion yen

strengthening business reforms with an awareness of the cost of capital④ Maintain efforts to launch new businesses and lay a path for development2

Macroeconomic Environment• Domestic copper prices (on a yen basis) are currently on an upward trend due in part to the economicrecovery in China.
• Domestic copper wire shipments declined significantly, mainly in construction and electric power sales.
(-16% YoY)
(Thousandyen/ton)Copper Cable Shipment Volume (tons)(Monthly Average) Domestic Copper Price Trends

900.0

200,000

800.0

168 thousand ton

700.0

142 thousand
ton
Est.

150,000

600.0
500.0
100,000

400.0
300.0

Down 14.1％ YoY

50,000

200.0
100.0
0.00
AprMayJunJulAug

Sep

Previous year

OctNovDec

Jan

Current year

FebMar2018 AprJun
Communication

Source from Japan Electric Wire Manufacturers Association

Jul-Sep

Oct-Dec2019 Jan-

Apr-Jun

Jul-Sep

Oct-Dec

2020 Jan-

Apr-JunMarPlan

Mar
Electric power

Electrical machinery

Automotive

Electrical construction and sales

Other domestic demand

Source from Japan Electric Wire Manufacturers Association3

1Q Consolidated Statements of Income (YoY)• Net sales decreased by 21.4% YoY and operating income decreased by 62.7% YoY.
Sales and profits declined due to a sharp drop in demand caused by the impact of COVID-19, but the demand
will be on a recovery-trend from 2Q.
(Unit:100 million yen)

FY20191Ｑ Actual

Composition%FY2020
1Ｑ ActualComposition%

YoY%

Net sales

430－338－△21.4%

Gross profit

5412.5％4112.1％△24.2%

Operatingincome173.9％

61.8％△62.7%

Ordinary
income153.5％

61.7％△62.2%Net income
attributable toowners of parent

112.6％

41.2％△64.6%
4

Quarterly Performance Trends(Net sales: Comparison with past 3 years)
FY2018Changes in quarterly net sales(Unit:100 million yen)

FY2019FY2020

600
400

424

430

430

430

464

454

434

418

338

200
01Q

2Q

3Q
FY2018Changes in Cumulative Net sales(Unit:100 million yen)2,000

1,772 1,711
1,318 1,293

1,500854

1,000500

FY20194Q
FY20204244301,620 Est.

860

33801Q

2Q

3Q

4Q

5

Changes in Quarterly Business Results(Operating income: Comparison with past 3 years)
Changes in quarterly operating income(Unit:100 million yen)
30

26

20

23

FY2018FY201925211712

FY2020181010601Q

2Q

3Q

4Q
FY2018(Unit:100 million yen)

FY2020Changes in cumulative operating income

10086806860
434020FY20191266

60 Est.

45

2317601Q

2Q

3Q

4Q

6

Segment Information (YoY)• Sales and profits fell in each segment due to the impact of COVID-19. After 2Q, we will be on arecovery-trend.
FY20191Q Results(Unit:100 million yen)
Net sales

FY2020
1Q Results

Operatingincome

Net sales(Profit margin %)Energy andInfrastructure
Communication andIndustrial Devices
Electrical equipmentand Components
Others(New business)
Total

211

125

180

161

△2（△1）
17（3.9％）5

Operatingincome△32△63△14△2△44△1△1△1△92△10（4.4％）87（0.9％）

11（7）
430

Net sales（3.1％）（6.8％）

132

Operatingincome(Profit margin %)（5.6％）

76

Change0（0.4％）

10（6）
338

△2（△1）
6（1.8％）

7Energy and Infrastructure operations Results & Forecast(Unit:100 million yen)

1,200

120
Net sales
Operating income

Net sales (1Q)
Operating income (1Q)

1,000925 Est.

885

867
800

10080
61600

60

4343 Est.

400

200
199

7211 1220180
50FY2018

FY201940

FY2020 Est.

* The Company has partially recategorized its segments from FY3/2019 3Q.

0■ Characteristics: Our Core Businesses① Power cables connecting from power stations to houses② SICONEX®, our proprietary power device component③ Electric wires and seismic isolation components used inbuildings*Established a joint venture sales company with Furukawa
Electric Co., Ltd. from this term (our shareholding ratio: 60%)

◆ Demand for construction-related applications declined reflecting
the postponement of construction works due to COVID-19.
◆ Demand for electric power infrastructure applications declined
temporarily due to construction plans in line with the Tokyo
Olympic and Paralympic Games.
■ Full-year forecast: Demand for capital investment and housing
starts is expected to decline due to the impact of the COVID-19,
but demand for electric power infrastructure, warehouses, anddata centers applications is expected to recover in the 2H of thefiscal year.
The planned net sales of 92.5 billion yen and operating incomeof 4.3 billion yen.
Operating margin: 4.6% (6.9% in the previous fiscal year)

8Communications and Industrial Devices operations
Results & Forecast(Unit:100 million yen)

500

50

Net sales

Net sales (1Q)

Operating income

Operating income (1Q)

400

40327

305

300275 Est.

302518200

2016 Est.

1001078376 561

300FY2018

FY2019FY2020 Est.

■ Characteristics: Global provider of communication cables
and industrial devices◆ Demand for telecommunications cable for domestic 5G services
was firm, but construction-related application demand fell due tothe postponement of construction work due to COVID-19.
◆ Industrial device-related application sales decreased due to theimpact of the business suspension of customer plants causedby the worldwide spread of COVID-19.
■ Full-year forecast: Domestic telecommunication infrastructure
has been expanded, and the GIGA School Project became
active. In precision devices, promote structural reform in
response to changes in the supply chain due to COVID-19.
The planned net sales of 27.5 billion yen and operating incomeof 1.6 billion yen.
Operating margin: 5.8% (8.2% in the previous fiscal year)* The Company has partially recategorized its segments from FY3/2019 3Q.

9Electrical equipment and Components operations
Results & Forecast(Unit:100 million yen)600
Net sales
Operating income
523500Net sales (1Q)
Operating income (1Q)

3025471400

20360 Est.

300

15200

1086100134

5 Est.

132
310FY2018FY20195870FY2020 Est.

0

■ Characteristics: Strategic products of Oxygen freecopper MiDIP® and copper-silver alloys manufactured by
the one and only dip forming systems available in Japan.

◆ Demand fell sharply due to production adjustments byautomobile manufacturers caused by the impact of the corona
problem.
◆ Demand for general-purpose magnet wires for electricalmachinery applications, such as capital investment,
decreased due to COVID-19.
■ Full-year forecast: Progress is underway to transformbusiness from conventional general-purpose products tofocus on high-value-added products. We expect the market torecover in the 2H of the fiscal year and an increase in theratio of eco-friendly vehicles. We aim to improve profitability
by expanding sales of its strategic products for Oxygen freecopper MiDIP® and copper alloys, and by increasing
production of magnet wire for automobile.
The planned net sales of 36 billion yen and operating incomeof 0.5 billion yen
Operating margin: 1.4% (1.2% in the previous fiscal year)10Consolidated Balance Sheet(Comparison with the previous fiscal year-end)
・ Equity ratio was 33.1% (up 0.8 points from the end of the previous fiscal year)
March 31,2020

June 30,2020

4346+3

Accounts receivableand other receivables

412

372

△40217
45717

221
48
687＋4＋3△31

Property, plant andequipment

399

399

△0Intangible assets

1414△1Investments and otherassets

94

95+1508508△0Inventories
OthersTotal current assets

Total fixed assets

March 31,2020

ChangeCash and deposits

174△12Short-term borrowings

295

305＋9Others

157
638
119

139617109△18△21△106868+0

Total long-term liabilities

187

178

△9Total liabilities

825795△30242576238400242576239400

0＋0
△0+0
△0

1,225

1,194

△31

Total current liabilities
Long-term debt
OthersCapital stock

OthersTotal net assets

1,194

△31

Change186

Retained earnings

1,225

June 30,2020

Notes & accounts
payableCapital surplus

Total assets(Unit:100 million yen)

Total liabilities and netassets

11Impact of COVID-19• The impact on 1Q performance was limited within the scope of assumption at the time of the announcement of thefinancial results in May.
• It is expected that the market will gradually recover from 2Q and begin a full-fledged recovery from the 2H of thefiscal year.
Market Environment (1H)
Energy andInfrastructure

Communicationand Industrial
Devices

Electricalequipment andComponents
Others(New business)

Measures

Domestic

・ Construction work temporarily postponed in 1Q
resumes・ Strong demand for power infrastructure

・ Production system to respond to demand fluctuations
・ Strengthening the renewable energy grid interconnection
business model

Domestic

・ Construction work temporarily postponed in 1Q
resumes・ Demand for expansion and improvement oftelecommunications infrastructure increases.

Overseas

・Demand is recovering from 2Q although it was
sluggish in 1Q

Domestic
Overseas・ Automobile manufacturers continue to makeproduction adjustments
・ Increase in the proportion of eco-friendly
vehicles in the future・Strengthen the production system to respond to structuralchanges in the automobile industry and an increase in theproportion of eco-friendly automobiles

Domestic・Demand for telework-compatible systems isstrong
・Increase in demand due to the acceleration oftelemedicine and Smart Work・Reinforcement of telework-compatible system products・Strengthen sales promotions in response to increase demand for
medical materials, systems and services due to the accelerationof telemedicine and smart work

・Capturing demand from 5G startup, GIGA School Project, etc.
・Structural reform of new supply chains and local production for
local consumption (China, Southeast Asia)

12

FY3/21Full-year Forecast

・ Full-year business forecasts remain unchanged from the announcement
on May 15.
(Unit:100 million yen)

FY2019ActualComposition%

FY2020
PlanComposition%

Net sales

1,711－

1,620－

Gross profit

237

13.9％

－－

Operating income

86

5.0％

60

3.7％Ordinary income

79

4.6％

55

3.4％

55

3.2％

402.5％Net income
attributable toowners of parent13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
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