SWCC groups

Financial Results for the Fiscal Year
Ended March 2019
Creating for the Future

SWCC SHOWA HOLDINGS CO., LTD.
(TSE 1: 5805)
May 20, 2019http://www.swcc.co.jp/

Today’s topics
1. FY3/19 Financial Results
FY3/19 Progress of Mid-Term
Management Plan

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

2. FY3/20 Business Strategy
FY3/20 Full-year Forecasts
3. Rolling Medium-Term Management
Plan
http://www.swcc.co.jp/2Overview of Financial Results for FY3/19 (FY2018)
Performance: Showed strong performance. Sales increased by 5.3% YoY and profits
increased by 5.8% YoY.

・ As price competition remains severe in the domestic electric wire market for construction and electric power sales,demands for optical fibers from overseas countries rapidly decreased from 4Q. Energy and infrastructure-related
demand is strong.
Net Sales/Operating Income
Growth in both sales and profits of the Power Systems and(Comparison with Previous Fiscal Year and Forecast)
Device operations contributed to overall performance.
(Unit:100 million yen)

1,800

Measures: Growth Businesses and New
Businesses

・ Aim to optimize prices for Construction and ElectricPower Sales.
・ Promote new business model for the Power System
operations.
・ Promote measures to ensure a stable supply of copper
products for automobiles.
・ Reduce expenses by improving operational efficiency.

1,700

1,681

80

Operating income

1,500
62

100
90

Net sales

1,600

1,400

1,771

1,750

63

70
66

60
50
40

1,300

30

1,200

20

1,100

10

1,000

0
FY3/2018
Results

FY3/2019 Plan

FY3/2019
Results

3

Historical performance■ Reduce the risk of fluctuations in earnings due to copper prices as a result of the shift to the structure that can create earnings
through ongoing group structure reforms. Sales and profits for FY3/19 increased YoY■ Medium-term management plan "Change SWCC2022" is being promoted. Plan to announce rolling medium-term plan at the timeof announcement of 2Q results.
(Unit:100 million yen)
2,500

Financial Crisis
Falling copper prices
due to the global
recession(Unit:100 million yen)
70
Net sales
Alliance with
FUTONG Group(China)Ordinary income

Sluggish demandin Japan andoverseas

Enhance earnings
capability throughstructural reform
Slump in Chinese
market

56
49

30

24
7

1,500

12

7

10

4
△8

50

△ 10

△ 15

△ 22

△ 30
500

△ 46

2009/3.

△ 50
2010/3.

2011/3.

2012/3.

2013/3.

2014/3.

2015/3.

2016/3.

2017/3.

2018/3.

2019/3.

4

Macroeconomic environment• Domestic copper prices (on a yen basis) have remained stable despite a slight decline sincesummer.

• Shipments of copper wire in Japan remained stable.
Thousandyen/tonChange in Copper Shipment Volume (t)200,000(Monthly Average) Domestic Copper Prices-Latest 12 Months

1,100
1,000

150,000

900
800
100,000

700
600
500

50,000Comparison between April 2018 and March 2019
Annual appreciation 97%

400
300

0
2016 Apr.Jun.

200

Apr.
2018

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: Japan Electric Wire Manufacturers Association

Jan
2019

Feb

Mar

Jul.-Sep.

Communication

Oct.-Dec.

Electric power2017 Jan.Mar.

Apr.-Jun.

Electrical machinery

Jul.-Sep.

Oct.-Dec.

Automobile

2018 Jan.Mar.

Apr.-Jun.

Jul.-Sep.

Electrical construction and sales

Oct.-Dec.

Jan.- Mar.
(Est.)

Other domestic demand

Source: Japan Electric Wire Manufacturers Association

5FY3/18: Consolidated statements of income (YoY)• Increase in sales and profits. Net sales increased by 5.3% YoY.
Ordinary income increased by 0.3 percentage points, with composition ratio at 3.2%.

(Unit:100 million yen)

FY2017
ResultComposition%

FY2018ResultComposition
%

YoY
%

Net sales

1,681

-

1,771

-

+5.3%

Gross profit

216

12.9%

217

12.3%

+0.3%

Operatingincome

62

3.7%

66

3.8%

+5.8%

Ordinary
income

48

2.9%

56

3.2%

+14.5%Net income
attributable toowners of parent

37

2.2%

45

2.6%

+22.3%
6

Quarterly Performance (Net Sales: Comparison with the Past 3 Years)

400

FY2016Net Sales by Quarter(Unit:100 million yen)
600
357

389

423

370

409

430

456

464

FY2017442

383

FY2018
427

454

200

0
1Q

2Q

(Unit:100 million yen)

3Q
FY2016

Changes in net sales

1,771

2,000
1,317

1,500
1,000
500

FY20174Q
FY2018

357

389

423

727

798

853

1,110

1,552

1,681

1,254

0
1Q

2Q

3Q

4Q

7

Quarterly Performance (Operating Income: Comparison with the Past 3 Years)
Changes in quarterly operating income(Unit:100 million yen)
30

21

20

11

12

12

15

10

FY201623

FY2017FY2018

21

21
15

11

10
0
△ 10

△2

1Q

2Q

3Q

4Q
FY2016(Unit:100 million yen)

FY2017FY2018Changes in operating income

80

62

60

47

40
11

20

12

26
10

22

45

66

42

21

0
△ 20

△2
1Q

2Q

3Q

4Q

8

Segment Information (YoY)• Electric Wire and Communication System operations recorded higher sales and lower profits. Magnet Wire operations
recorded lower sales and profits.
• Energy System and Device operations recorded higher sales and profits

FY2017(Unit:100 million yen)

FY2018ChangeNet sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeElectric Wire

781

23

833

16

+52

-7

Power System

263

17

289

25

+26

+8

Magnet Wire

212

2

202

2

-10

-0

Communication
System

208

14

217

13

+9

-1

Device

202

11

212

16

+10

+5

Others

15

-5

18

-6

+3

-1

Total

1,681

62

1,771

66

+90

+4
9

FY2018 Performance by operation<Power System operations><Electric Wire operations>■Core: Operating income declined although■ Demand for electric power infrastructure
demand for construction and electric poweris strong mainly for measures against
sales continues to be firm.
aging of facilities and renewable energy.
■Growth: Both sales and profits performed
strongly in the high-performance wire rods, a ■ Higher demand for construction
growth field.
continued.
(Unit:100 million yen)
Net Sales (Basis)

1000
800
600

Operating income
781
696

138

200

558

40

187

23

■ Sales declined due to the impact of exclusionof consolidated subsidiaries in China.
(Unit:100 million yen)

(Unit:100 million yen)
Net sales
400

300

289

263

246

30

646

40

400

30

300

25
200

16

15

50

■ Although sales of products for electricalequipment were firm,
demand is sluggish for domestic infrastructureand electronic components.

Net sales
Operating income

Operating income

833

163
618

400

Sales Growth<Magnet Wire operations>

200

10

100

30
212

198

20

100

8

10
2

0

0
FY2016FY2017FY2018

202

17

20
10

20

40

0

0
FY2016FY2017FY20182

0
FY2016FY20172

0

FY201810

FY2018 Performance by operation<Communication System operations><Device operations>■ Domestic demand remained strong.
■ Rapid deceleration in demand for optical fiber from overseas
markets since the beginning of 4th quarter. Profits declined due toa sharp decline in prices of optical fiber for overseas markets andinventory write-downs.

■ Overseas demand for copying rollers and wiring
harnesses is firm.
■ The seismic isolation business was favorable,
Profits increased by introducing high value-added
products.

(Unit:100 million yen)

(Unit:100 million yen)
Net sales
Operating income

400

40

30

14
10

13

0
FY2016FY201730

FY2018

20

200

10

100

0

0

212

202

199

200
100

300

217

208

40

Operating income

300
195

Net sales

400

20

16
10

10

11

0
FY2016FY2017FY201811

Consolidated balance sheet(Comparison with the previous fiscal year-end)
・ Equity ratio was 28.1% (up 1.5 points from the end of the previous fiscal year)
Change18/3/31※

19/3/31

Cash and deposits

47

49

+2

Accounts receivableand other receivables

397

434

219
46
709

Property, plant andequipment

18/3/31※(Unit:100 million yen)
19/3/31

ChangeNotes & accounts
payable

219

212

-7

+37

Short-term borrowings

344

335

-9

213
45
741

-6
-1
+32

Others

136
699
132

150
697
121

+14
-2
-11

396

392

-4

69

67

-2

Intangible assets

15

12

-3

Total long-term liabilities

201

188

-13

Investments and otherassets

115

96

-19

Total liabilities

900

885

-15

526

500

-26

Capital stock

242

242

0

Capital surplus

55
-35
73
335

55
10
49
356

0
+45
-24
+21

1,235

1,241

+6

Inventories
OthersTotal current assets

Property, plant andequipment

Total current liabilities
Long-term debt
OthersRetained earnings
OthersTotal net assets
Total assets

1,235

1,241

+6

Total liabilities and net
assets*Certain reclassifications have been made to conform to accounting standards.

12

Financial indicators
Gross margin/Operating income margin (%)
16.0
14.0

13.5

13.0

12.0

12.9

10.5

10.0

12.3

12.3

■ Continually improve gross margin andoperating income margin■ Maintain ROE at above 12%■ Strengthen the financial base with improving
the equity ratio

10.0
400

8.0
7.4

6.0
4.0

350

2.7

2.0
0.0

3.8

3.7

300

0.6

0.7

40

Equity Ratio
26.5

23.6

35
26.5

28.1 30

25
20

20.6

15
0.7

250

10

-2.0

5
FY3/2015

FY3/2016

Gross margin

FY3/2017

FY3/2018

Operating income margin

FY3/2019
ROE

200

0
FY3/2015 FY3/2016 FY3/2017 FY3/2018 FY3/2019

Shareholders' equity

Shareholders' equity ratio

13

Investment Plan (Capital/Overseas Investment) & CF
FY2018
Forecast¥3.6 billion

Capitalinvestme
nts

Japan and overseas:
3.2 billion yen

Depreciat
ion
expenseNew:¥400
millionConsolidated Cash Flows
80¥3.2 billion(Unit: 100 million yen)

69

68

60
FY2018Results¥3.5 billion

Capitalinvestme
nts

Japan and overseas:
3.1 billion yen

Depreciat
ion
expenseNew:¥400
million¥3.0 billion

47

46

40
20
0
FY2017<Principal Investments in FY2018>

FY2018-20[Japan: 2.3 billion yen in Japan, Overseas: 0.8 billion yen]
Facility upgrades, rationalization and labor saving, equity-method investments[New]・ Capital investments in growth fields and new fields

-40

-33
-41

-60

-36

-30

Operating CF

Investment CF

Financing CF

Cash & Equivalents at Year-end

14

FY2018 Progress of Medium-Term Management Plan (Measures)
Basic Policy of Medium-Term
Management Plan 2022

③ New development ofoverseas business② Create new businesses① Strengthen businessprofitability

Progress report of the measures
Restructuring of overseas management system
Started operations at the Vietnam Plant
Alliance with Futong Group/ Strengthened Joint Projects

Business in China/Asia
Restructuring of development and marketing
Investment in venture capital

Toward Creation of New business

Introduced ROIC management
Changed and strengthened the governance system
Started introducing IoT to production lines

Ongoing reform of our profit structure15

FY2018 Progress of Medium-Term Management Plan (KPI)(Unit:100 million yen)

FY2017
Result

FY2018
Mid-Term
Management Plan

FY2018ResultVISION2026

Net sales

1,681

1,771

1,950

1,950

Operating income

62

66

70

90

Ordinary income

48

56

64

86

Net income attributable toowners of parent

37

45

43

55

Operating income

3.7%

3.8%

3.6%

4.6%

Dividend/Dividend Payout
Ratio

5 yen

（4.0％）

7 yen（4.6%）

20 yen or more
(approx. 20%)50 yen or more
(approx. 30%)

Interest-bearing liabilities

490

466

400 or less

300 or less

DE ratio ※

149%

134%

90% or less

50% or less

Net assets

334

356

470 or over

600 or overEquity Ratio

26.5%

28.1%

35% or over

40% or over

ROIC

5.4%

5.6%

5.8% or over

6.0% or over

Reviewed theMedium-term planin 1H FY2019※ Debt-to-equity ratio is calculated based on shareholders' equity.

16

ESG Initiatives: 2018 CSR Report• The Group will celebrate its 90th anniversary in 2026. As we reachthis milestone, we are striving to fulfill our social mission and achieve
stable growth, with the goal of becoming a company that canchange in accordance with the environment and maximize its
corporate value.

ES
http://www.swcc.co.jp/environment/report/pdf/2018/csr1800.pdf

G● Contributing to environmental protection and sustainable development of society through company
business● Reduction of CO2 and VOC● Effective use of resources● Promoting the development and commercialization of environmentally-friendly products● Actions for Biodiversity Conservation● Implementation of occupational health and safety activities● Sustained improvement of quality management effectiveness● Promoting Employee Work-Life Balance and Creating an Environmentally Friendly Work Environment● Maintain and improve good communication with stakeholders● Thorough compliance● Strengthening cyber security measures● To manage and reduce important risks in business activities● Improving Transparency through Information Disclosure

17Verification of CSR Activities in FY2018• Achieved almost all targets in FY2018
Core subject

E

Environment

Human rights and Labor practices

S

Relationships with business
partners
Relationship with Customers
Relationship withstakeholders
Local communication

G

Governance

FY2018 Target

Goals

・ Achievement of targets based on the Group's 6th Voluntary Action Plan for the Environment○

・ Contribution with development and commercialization of environmentally-friendly products○・ Continuous actions for Biodiversity Conservation○

・ Promoting activities and creating a comfortable working environment○

・ Increasing the percentage of employees taking annual leave○・ Elimination of occupational accidents based on a spirit of "Safety first and foremost" (restructuring of on-site activities)△

・ Continued investment in employee education○

・ Dissemination of CSR Procurement Guidelines (Promotion of Dialogue with Business Partners)○

・ Revision of Our Guidelines for Green Procurement○

・ Expanding customer satisfaction surveys△

・ Continuous efforts to improve quality (dissemination of quality cost thinking and reduction of failure cost by 10%)△・ Active disclosure of corporate information via the Web and dialogue with investors○

・ Active involvement with local communities and continued contributions to local communities○

・ Thorough legal compliance and continuous education○

・ Strengthening cyber security measures○

・ Expanding risk management bases through BCM activities○

・ Improving transparency through information disclosure (formulate and disclose information disclosure guidelines)△

18Creating for the Future

FY2019 Business Strategy&

SWCC SHOWA HOLDINGS CO., LTD.
(TSE 1: 5805)

FY3/19 Full-year Forecast

http://www.swcc.co.jp/19

FY2019: Group Management Policy
1. Implement speedy decisions and measures toexpand profits by strengthening corporate functions andestablishing a new business segment structure
2. Strengthen promotion of business management with anawareness of the cost of capital with introducing a newconcept of ROIC management
3. Promote new challenges and new initiatives toward
recovery of overseas business20

FY2019: Strengthening Corporate Governance■ New organizational structure from April 1, 2019
① Transition to a Company with an Audit and Supervisory Committee (Transition after approval at the Ordinary
General Meeting of Shareholders in June)② Strengthening and expanding the Executive Officer System
To strengthen and expand authority, clarify responsibilities, and ensure speedy and efficient business execution③ Strengthening Group Management and Internal Controls

General meeting of shareholders
Board of Directors (Holding company)
Nominating
Committee

Remunerationcommittee

President and Representative Director(Holding Company)(Group CEO)

Audit Committee
Internal Audit
DivisionGroup Executive Committee (Executive Committee)
Energy andInfrastructure
operations

Communications andIndustrial
Device operations

Electrical Equipment
and Components
operations

New business(Include Others)

I
n
d
e
p
e
n
d
e
n
t

Corporate21

Topics: Segment Change from FY2019■ Change to segments based on the Group's strategy
Shift from a segment focused on traditional product lines to a segment based on business fields and business strategies,
and promote restructuring of core businesses, growth businesses, and expansion of new businesses beyond theframework of group companies.

(New segment)(Previous segments)

Energy and Infrastructure operations

Electric Wire operations

Power System operations

Communication andIndustrial Devices operations

Magnet Wire operations

Communication System
operation

Electronic Devices andComponents operations

Device operations

New Business operations (incl. others)

22

Business and Product Introduction of New Segments- Holding companySWCC SHOWA HOLDINGSFY2018: Sales (External)/

Operating Income (Within)

Energy andInfrastructure
operations① Power cables and power equipment components connectingfrom power stations to houses② Protecting people's lives and infrastructure from electrical wires
used in buildings and disasters
Electric wires and seismic isolation components

Communication andIndustrial
Devices operations① High-speed, high-capacity communication cable② Wire harnesses for equipment, home appliances, and electronicequipment parts for copiers③ Copier components and vibration-damping and vibration-proof
components

Electronic Devices andComponents operations

Energy and Infrastructure

Communications and Industrial Devices

Electrical Devices and Components

New (incl. others)

New Business
operations (incl. others)① Oxygen free copper MiDIP® used in automotive parts andelectronic equipment② Copper alloys with superior strength, high conductivity, and flexion
resistance③ Magnet wires for various motors and coils① Expand new products and technologies in the EV, automotive andmobility fields② Develop new products and businesses in the fields of factory
automation, medical care, and networks③ Develop new business models in existing businesses

23Change to segments in line with growth areas
Energy and Infrastructure
operations

Communication andIndustrial
Device operations

New businessElectrical Devices andComponents operation

24

Introduction of ROIC management (since FY2019)
By implementing management that is conscious of the sustainable creation of returns in excessof the cost of capital, we will lead to the enhancement of corporate value by formulating capital
policies, reviewing our business portfolio, and allocating management resources.

ROIC

=

(Return on invested capital)

Operating income after
tax excluded

Invested capital>

WACC(Weighted-average cost ofcapital)25

FY2019: External environmental awareness• Business opportunity■ Steady demand for office buildings, etc. and demand for upgrading and urban developmentof aging buildings in the 70s■ Start of separation of power generation and transmission in 2020
■ The 5th Basic Energy Plan will be launched in the medium-to long-term (Cabinet decisionin 2018):
Response to 2030 and 2050 Initiatives with the aim of sustainable and autonomous energy supply in Japan
Response to 2030 Initiatives (26% reduction in greenhouse gases, energy mix), response to 2050 (80% reduction,
challenge for a carbon-free society)■ Introduction of next-generation telecommunications systems 5G in 2020
Start of the 4th Industrial Revolution (AI, IoT, robots, automatic driving, big data, etc.)■ Expanding technologies and decarbonization initiatives for the SDGs Community• Business Risk
■ Global economy slowdown: In April, the IMF lowered its global economic outlook to 3.3% from 3.5% in January. Expect
to improve in the second half of 2019 and to recover to 3.6% by 2020 (U.S.-China trade
friction, Brexit trends, emerging market risk, falling resource prices)■ Recession risks arising from the collapse of the asset bubble and financial failure due to continued monetary easing

26

Domestic Electric Wire Market Environment and Policy for 2019
(Energy and Infrastructure operations)(Unit: thousand tons)

400

FY2017
Forecast of Shipments by Demand Category(Electric wire) (Domestic)

350

321.7

2017 Actual

300
250

2022 Forecast

Demand Prospects for FY2019 by Electric Wire
Manufacturers Association
FY2019: 342 thousand tons (+1.5% YoY)

Demand by industry

200

155
149.2

150

82.2

100
50

338

■ The construction market is firm, mainly in metropolitan areas.
■ Electric Wire for Construction and Electric Power Sales: actively
capture the Olympic and redevelopment demand, and aim tofurther improve profitability through appropriate price sales andcost reductions.

50.1
10.3

0

57

74

52.7 59
20.7 229

Communication

Electric power

Electricalmachinery

Automobile

Construction andElectric Sales

Other domestic
demandExportation

Average growth rate from 2017 to 2022

2.6%

2.3%

1.0%

0.8%

Communication-2.7%

Electric power

Electricalmachinery

Automobile

Construction and Other domestic
Electric Sales
demand1.2%

Exportation,
20

Other
domestic
Automobile, demand, 52
84

Construction
and ElectricPower Sales, 342

Electricalmachinery,Communicati
148
on, 10

Exportation-2.1%

Source: Japan Electric Cable Manufacturers Association, 2018 Revision of Cable Demand Forecast and FY2022 Demand Forecast

Electric
power, 5127

Domestic Electric Power Market Environment and Policy for 2019
(Energy and Infrastructure operations)■ Electric power-related market continues to expand.
■ Capturing demand with a new business model for separation of power generation and transmission, renewable energy,
and renewable power infrastructure renewal. Aiming for operating income margin higher than FY2018 throughdifferentiated products and construction work.
"Connecting" new business models centered on "SICONEX®"Electricity-related demand for 2019: +4% YoY● New construction and expansion of substations with
distributed power sources

140※ Comparison with FY2018 as 100.
120

Power plant

Substations (renewable energy linkage)

Factory buildings

100
80
60
100

104

105

116

123

121

116

SICONEX
Unification ofdevicesShort
length m

66/154kV
SICONEX terminal

40

Large
numberof lines

20
66/154kV
Cable

0
2018

2019

2020 Year

2021 Year2022 Year2025 Year

2030 Year

Substations for private demand

H2
Large-scale renewableenergyHydrogen energy

Battery base

Solar

Wiring in the factory building

Source: Prepared by us based on our forecasts from various data28

Energy and Infrastructure operations(Unit:100 million yen)
1000

60

Net sales
800

Operating income
834

778

39
600

50

807

40

40

30
30

400
20
200

10

0

0
FY2017FY2018■ 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■ ① Capturing demand for electricity for separation of power
generation and transmission. Expand SICONEX® sales② Capture continued strong demand for Construction and ElectricPower Sales.
■ Strong sales of electric wires for domestic electric power andConstruction and Electric Power Sales.
Decreased by 2.7 billion yen YoY to 80.7 billion yen due todecrease in seismic isolation components and electricalequipment.
Operating income is forecast to increase by 0.1 billion yen to 4
billion yen.
Operating income margin: 5.0% (4.7% in the previous fiscal year)

FY2019 E※ FY2017 is a reference value calculated by us in a simple manner.

29

Communications and Industrial Electric Wire Market Environment
and Policy for 2019
(Communications and Industrial Devices operations)■ Although demand for optical cables is expected to surge in 2020 due to the introduction of 5G in the Chinese and other markets
worldwide, 2019 is a transitory period in the Chinese market. Global demand is expected to increase only 3% and oversupply is
expected to continue.
■ Demand for Ethernet-related cables and wire harnesses is growing as IoT advances steadily in various fields.
Strengthen proposal capabilities and improve business efficiency by integrating the management of telecommunications wires andwires with processed goods.
■ Copiers are on a gradual declining trend over the long term, but production volume is rising due to a strategy to expand market share.
Demand Outlook for the IoT Market

Optical Fiber Demand Outlook

600
Rest of World
Other Asia-Pac.
China
EuropeN. America

500
400
300
200
100
0

28.9
36.9
131.5

32.1
44.8

33.3
47.6

216.0

(Unit: Million ckm)

39.4
35.5

43.3

65.7

70.2

281.1

279.0

56.1

243.7

154.0
39.7
45.8

43.1

47.9

54.1

32.3
33.9

39.3
40.3

50.9

58.4

64.6

2013

2014

2015

2016

2017

2018

Resource: CRU Monitor Optical Fibre and Cable/ The Company's estimates

2019

2020
Resource: 2017 Nomura Research Institute[Expansion of the IoT market and utilization of IoT in Japan]

30Communication and Industrial Devices operations(Unit:100 million yen)
500

50

Net sales

Operating income

400

40
360

346

336

300

30
22

23
200

20

20

100

10

0

0
FY2017FY2018FY2019 E■ Characteristics: Providing communication cables forvarious markets and industrial devices on a global basis■ Overseas demand for optical fiber is in a temporary downturn
period.
In the Industrial Devices segment, the company will restructure
its business structure to strengthen its ability to respond to
customers, propose products, and develop products for 5G
use, which is expected to grow.
■ Net sales are expected to decline by 2.4 billion yen from theprevious fiscal year to 33.6 billion yen due to a temporary
slowdown in the overseas optical fiber market, despite strong
sales of telecommunications cables and industrial devices forthe domestic market. Operating income is forecast to be 2
billion yen due to the impact of market conditions for opticalfiber for overseas markets.
Operating income margin: 5.8% (6.1% in the previous fiscalyear)※ FY2017 is a reference value calculated by us in a simple manner.

31

Automotive Materials Market Environment and Policy for 2019
(Electronic Components operation)■ Demand for high-efficiency drive motors and other products continues to grow due to the motorization and automation of automobiles.
High-grade wire rod materials. Respond to increased demand for magnet wires using a high-grade wire rod "Oxygen free copper MiDIP®".
Continue to invest for increasing production and ensuring stable supply.
■ Promote the rollout of Oxygen free copper MiDIP® in China and Southeast Asia.
■ Review the product portfolio to increase profit margins and begin activities to capture downstream products.
(Thousands of vehicle)

30,000

Annual Sales Forecast for Electric Vehicles

25,000

HEV
PHEV
EV

20,000Growth in electricvehicles

6,600

Strategic product
Oxygen free copper
technology「MiDIP®」

Copper and silver alloy

6,300

15,00010,00012,900

5,000

0
2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Source: Preparation based on our forecasts from various data32

Electrical Devices and Components operation(Unit:100 million yen)700

25

Net sales

Operating income

600
20

525

522

506

500
15

400
13
300
10

10

8

200

5
100

0

■ Characteristics: Strategic products of Oxygen freecopper MiDIP® and copper-silver alloys manufacturedby the Japan's only dip forming systems■ Capture robust demand for automobile-related products.
Aim to establish a comprehensive materials business byreviewing our product portfolio and integrating wire materials,
magnet wire, and processing.
■ Net sales are forecast to increase by 0.3 billion yen to 52.5
billion yen. Expect operating income of 1 billion yen due toincreased sales of strategic products for oxygen free copperand copper-silver alloys and improved profitability from highgrade magnet wires.
Operating income margin: 1.8% (1.6% in the previous
fiscal year)

0
FY2017FY2018FY2019 E※ FY2017 is a reference value calculated by us in a simple manner.

33

FY2019 Policy for New Businesses
EVs, automobiles,
Mobility field■ Promote the expansion of new products and technologies
・ Commercialization of high-speed image transmission cable for
automobiles
・ Expand industrial applications for wireless power supply products
・ Next-generation bicycle components products

FA, Healthcare,
Network field■ Develop new products and businesses linked to new businesses
・ Expand FA network and sensor network-related products
・ Expand IDM (certification technology) and work style innovation products (RPA)・ Create new medical device products through medical-engineering collaboration

Development ofexisting fields■ Develop new business models in existing businesses
・ Develop high-voltage construction simple joints and robotization of
construction (Technology Development for the Third Phase of the Electricity
Business Reform)
・ Enter and expand sales of high-voltage products for next-generation
Shinkansen
・ Accelerate initiatives for commercialization of superconducting34

FY3/20 Full-year Forecast
・ FY2019 results are assumed to be at the same level as FY2018.
(Unit:100 million yen)

FY2018ResultComposition%

FY2019Plan

Composition%

Net sales

1,771

-

1,730

-

Gross profit

217

12.3%

-

-

Operating income

66

3.8%

65

3.8%

Ordinary income

56

3.2%

58

3.4%

45

2.6%

45

2.7%

Net income attributableto owners of parent

35

Segment Information (YoY)• New Segment Plan

(Unit:100 million yen)

FY2018ResultNet sales

FY2019Plan

OperatingincomeNet sales(Profit ratio %)Operatingincome(Profit ratio %)Energy Infrastructure
Business

834

Communication and Industrial
Devices operations

360

Electrical Components
Business

522

Other (new businesses)

55
(36)

-3
(1)

62
(44)

-5
(1)

Total

1,771

66 (3.8%)

1,730

65 (3.8%)

39(4.7%)

22(6.1%)

8(1.6%)

807
336
525

40
(5.0%)

20(5.8%)

10(1.8%)

36

Investment Plan (Capital/Overseas Investment) & CF Plan
FY2018Results¥3.5 billion

FY2019Forecasts¥4.5 billion

Capitalinvestm
ents
Depreciat
ion
expenseCapitalinvestme
nts
Deprecia
tion
expense

3.1 billion yen in
Japan and overseas

New
¥400
million(Unit:100 million yen)

Consolidated Statement Cash Flows
100¥3.0 billion
Domestic and overseas 4.2 billion
yen

80
New
¥300
million

77

69

60

49

47

40

¥3.4 billion
20< Major Investment Plans for FY2019>0【Japan and overseas】Renewal of facilities, rationalization and laborsaving【New 】 Growth Fields, New Fields, Research and Development

FY2018FY2019 Forecast

-20
-40
-60

-36

-29

-30
-46

Cash flows from operating activities

Investment CF

Finance CF

Cash & Equivalents at Year-end of Year37

FY2019 Coefficient Target: KPI(Unit:100 million yen)

FY2018Result

FY2019Forecast

Net sales

1,771

1,730

Operating income

66

65

Ordinary income

56

58

Net income attributable toowners of parent

45

45

3.8%

3.8%

7 yen

10 yen

(4.6%)(6.6%)

Interest-bearing liabilities

466

440

DE ratio ※

134%

112%

Net assets

356

399

Equity Ratio

28.1%

31.3%

ROIC

5.6%

5.5%

Operating income margin
Dividend/Payout ratio※ Debt-to-equity ratio is calculated
based on shareholders' equity.

Reviewed the medium-termplan and formed a rollingplan in the 1H of FY2019
The KPI was also reviewed.

38

Shareholder Return (Dividend Policy) & ROE
EPS/Dividend (yen)/Dividend payout ratio/ROE (%)

(yen)

(%)
18

180
150.9

153.2

160
140

16
14

123.9

120

12

100

10

80

8

60

6

40

4

20

6.4

0

10

7

5

2
0

0
FY2016FY2017
EPS (yen)

Dividend (yen)FY2018
Payout ratio (%)

FY2019 E
ROE (%)

39

Creating for the Future

Mid-Term Management Plan

SWCC SHOWA HOLDINGS CO., LTD.
(TSE 1: 5805)

http://www.swcc.co.jp/40Vision "SWCC VISION2026"
Medium-Term Management Plan "Change SWCC2022"
Visioning
Company that can change
according to the environment
and maximize its corporate
value

To fulfill oursocial mission
while achieving
stable growth41Plan to disclose new Medium-Term Management Plan during 2019
FY3/18
Mid-Term Management Plan

■ Achieved the profit targets of in the medium100
term management plan announced last year90
3 years ahead of schedule!

2,000

1,900
1,800

80

1,700

70

1,600

60

1,500

50

1,400

40

1,300

30

1,200

20

1,100

10

1,000

0
FY3/19Net sales

FY3/20 E

FY3/21 E

FY3/22 E

Operating income plan

FY3/23 E

Medium-Term
Management Plan:
Scheduled to be announced with the FY2019 2Q
results

FY3/19 Results

42Main Points of Medium-Term Management Plan Rolling
Basic Policy of Medium-Term
Management Plan 2022

③ New development ofoverseas business② Create new businesses① Strengthenbusiness profitability

Increase overseas sales ratio
Expand wire harness business
Strategy for growth in the overseas copper businessBusiness in China/Asia
Early realization of new products and new businesses
Preliminary Development for Strengthening Priority Technologies
Promote open innovation

Toward Creation of New business
Review our portfolio of businesses
Withdrawal from unprofitable and low-profit products
Utilizing AI and actively introducing IoT

Ongoing reform of our profit structure
Deepening ROIC management, reviewing the personnel system, and enhancing
the personnel training system
43

SDGs Initiatives

In September 2015, the 2030 Agenda for Sustainable Development was unanimously adopted at the UN Summit.
The agenda consists of 17 goals and 169 targets. This goal is defined not only as a company, but also as an effort by industrialized countries, developing
countries, governments, schools, and individuals.
Based on the philosophy of "no one is left behind," by 2030, we will work to resolve social issues such as poverty, hunger, education, and health. At thesame time, we will take comprehensive measures to address a wide range of issues, including climate change countermeasures and environmental
protection, in order to realize a sustainable society.
The SWCC Group will also promote SDGs initiatives.

44

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

Contact

Forward-looking statements in this document are based on information available at the time 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
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.

SWCC SHOWA HOLDINGS CO., LTD.
Corporate Planning Department, Business
Strategy Division
TEL:044-223-0520
E-mail:kouho@hd.swcc.co.jp

http://www.swcc.co.jp/