SWCC Group
Financial Results for the Second Quarter of
the Fiscal Year Ending March 2019
Creating for the Future

SWCC SHOWA HOLDINGS CO., LTD.
(TSE 1: 5805)
November 8, 2018

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

Today’s topics

1. Group Overview and History

Creating for the Future

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

2. FY3/19 2Q Financial Results
FY3/19 Full-year Forecasts

3. Medium-term Management Strategy
http://www.swcc.co.jp/
2Creating for the Future

SWCC Group

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

Group Overview and History

http://www.swcc.co.jp/
3Corporate profile
Company name

SWCC SHOWA HOLDINGS CO., LTD.

Establishment

May 26, 1936

Contents of business

Management of subsidiaries engaged in the manufacture and sale of electric wires andcables, etc.

Head office

Cube Kawasaki, 1-14, Nisshin-cho, Kawasaki-ku, Kawasaki City, Kanagawa

Capital stock

24,221 million yen (Number of shareholders: 15,856 shareholders) As of March 31, 2018

Fiscal year end

March 31

Number of
employees

33 (consolidated: 4,757) As of March 31, 2018

Directors

Takayo Hasegawa, President and CEO
3 other full-time directors and 3 outside directors
1 full-time auditor and 2 outside auditors

Subsidiaries

21 domestic and overseas, 4 equity-method affiliates, and 1 otherTakayo Hasegawa, President and CEO

Apr. 1984 Joined the Company
Jun. 2005 Deputy Director of Technical Development Centerand Manager of Superconducting Project
Apr. 2010 Managing Director of SWCC SHOWA CABLE
SYSTEMS CO., LTD., Corporate Officer of theCompany, General Manager of The Technology
Planning OfficeJun. 2013 Director of the Company
Jun. 2018 Representative Director and President of theCompany (present)4About SWCC Group(FY2017 results)-Holding companySWCC SHOWA HOLDINGSElectric Wire
operations

Power System
operations

Magnet Wire
operations

Communication
System operations

SWCC Showa Cable Systems,
Fuji Electric Cable, SDS,
Showa Recycle, etc.

SWCC Showa Cable Systems,
Shoukou Equipment Industry,
SDS, STEC, etc.

Unimac, Tamagawa Magnet
wire, SDS,
SWCC Showa (Shanghai)

SWCC Showa Cable Systems
Aomori Showa Electric Cable,
SDS, AXIO, etc.

Electric
Wire Wire
Electric

EnergySystemPower System

Device operations

SWCC Showa Cable Systems,
Daiji, Showa Science,
SDS, Fuqing Showa Precision
Electronics, etc.

Magnet wire
wire
MagnetCommunication systemsystemCommunication

Others

SWCC Showa Cable
Systems,
Logis-Works, etc.

DeviceDevice(FY2017 results)

5

SWCC's management philosophy- “All in the Name of Trust”■ Management philosophy[SWCC Group expands the circle of trust.]■ Statements "Creating for the Future"
SWCC Group will create new value for a better future.

6

Historical performance■ Reduce the risk of fluctuations in earnings due to copper prices as a result of the shift to the structure that cancreate earnings through ongoing group structure reforms■ In FY3/19, the initial forecasts have been upwardly revised.
■ Medium-term management plan "Change SWCC2022" is being promoted from this fiscal year
(Unit: Million yen)

Enhance earnings
capability throughstructural reform

Financial Crisis
Falling copper prices dueto the global recession
operations alliancewith FUTONG
Group (China)

Sluggish demandin Japan andoverseas(Unit: Million yen)

Slump in Chinese
market7

Changes in Sales and Profit by Segment■ Consistent structural reforms to build a foundation for profitability in all segments■ Increased profitability of highly value-added power systems, communication systems, and devices■ Acceleration of structural reform of Magnet Wire operation(Unit: Million yen)

(Unit: Million yen)

Profit ratio%:2.9% 6.6% 1.2% 6.6% 5.6%

8

Copper prices and its impact on our sales•

Copper prices hover between $5,000 and $7,500 due to strong demand in China.

•

Fluctuations in copper prices affect Electric Wire operations and the Magnet Wire operations, which account for about 60% of sales. We are focusing on
growth areas and segments that are not affected by copper price fluctuations, and are continuing to implement management structure by
improving income through structural reforms.

(Unit: USD/t)(Unit: 100 million yen)

(Unit: Yen/kg)

Copper(Unit: %)Copper9

Global copper market trends•

China accounts for more than 50% of global copper consumption. By application, electricity facilities and household electrical appliances
are in order.

•

In June 2017, the International Copper Association (ICA, New York) announced that copper demand is expected to increase to 1.74
million tons in 2027 (about nine times the 2017 forecast) due to the rapid spread of electric vehicles (EVs).

(Net thousand ton)

World Copper Consumption (Net thousand ton)

China

US

Germany

Japan

Italy

BrazilTaiwanOthersDemand composition ratio by industry in 2016

South Korea

OthersElectrical equipment

Application
Architecture

Power

Transportation

Power: Power equipment(transmission and distribution
equipment) etc.
Home Appliances: Air conditioning
heat exchanger etc.
Transportation: Automobile wiring
etc.
Construction: valves, water faucet
fittings, etc.
Electronic equipment: Lead frame,
plug, connector etc.

Consumer electronics

Source: Japan Oil, Gas and Metals National Corporation

Source: Sumitomo Mitsui Banking Corporation Research Report10Capital and business alliance with FUTONG Group in China• In 2011, we entered into a capital and business alliance with
FUTONG Group, one of the leading Chinese telecommunications
cable companies.
• We have three new business areas: EV/Automotive, FA,
Healthcare. Particularly, accelerate expansion in China where is
the largest market for EVs and automobiles. (However, equity inearnings of the joint venture plant 49:51)

http://www.futonggroup.com.cn/en/(Link)

11

Creating for the Future

SWCC groups

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

FY3/19 2Q Financial Results

http://www.swcc.co.jp/12Macroeconomic environment• Domestic copper prices rose in April-July (on a yen basis) compared with the same period of theprevious year, and copper shipments remained stable in August-September despite a YoY decline.

Thousandyen/tonMonthly average of domestic copper prices (12-month)

1,100
1,000
900
800
700
600

Comparison between October 2017 and
September 2018
Annual appreciation 88%

500
400
300
200

Oct
2017

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

2018

Source: Source from Japan Electric Wire Manufacturers
Association

Source: Source from Japan Electric Wire Manufacturers
Association

13

First Half Summary
Performance: Revised upward its profit in full-year forecasts in 1H FY3/19
・ Although price competition remains severe in the electric wire market for construction and electric powersales, other infrastructure-related demand exceeded expectations.
Sales and incomes grew in the Communication and Devices operations, which contributed to overall
growth.
2Q results were basically in line with the revised forecast.

FY2018Initial forecast

FY2018(100 million yen)
Revised forecast

Strategy: New areas
・ Steady improvement in profitability
・ Responding to Growth Fields and New Fields
・ Uncertainty in the external environment in 2H

14

Upward Revisions to Business Forecast: Please refer to the release on July 31, 2018.
• Revised upward on a income basis for 1H, and full-year of FY3/19 forecasts(Unit: Million yen)

1H (Million yen)

FY3/18 2Q
Previous results

FY3/192Q Earnings Plan

FY3/192Q Results

Vs. plan
Percentage change

YoY
PercentagechangeNet sales

79,884

Initial target
85,00085,00085,3680.4%

6.9%

Operating income

2,619

1,200

2,100

2,263

7.8%

△ 13.6%

Ordinary income

2,147

700

1,700

1,861

9.5%

△ 13.4%

Net profit

1,030

500

1,200

1,305

8.8%

26.6%

Full year (Million
yen)

FY3/18Previous results

FY3/19Initial plan

FY3/19
Revised plan

Vs. plan
Percentage change

YoY
Percentagechange168,186

175,000

175,000-

4.1%

Operating income

6,276

4,500

5,400

20.0%

△ 14.0%Ordinary income

4,892

3,500

4,500

28.6%

△ 8.0%Net income

3,737

2,600

3,300

26.9%

△ 11.7%

Net sales15

2Q consolidated statements of income (YoY)• Net income attributable to owners of parent rose by 26.6% YoY to 1.3 billion yen.

(Unit: 100 million yen)

FY2017
2Q Actual

Composition%

FY20182Q Actual

Composition
%

YoY
%

Net sales

798

-

853

-

+6.9%

Gross profit

101.9

12.8%

97.6

11.4%

△ 4.2%

Operatingincome

26.1

3.3%

22.6

2.7%

△ 13.6%

Ordinary income

21.4

2.7%

18.6

2.2%

△ 13.4%

Net income
attributable to ownersof parent

10.3

1.3%

13.0

1.5%

+26.6%

16

Changes in net sales (YoY)

Deviceoperations

OthersCommunication System
operations

+36

798

Electric Wire
operations

Power System
operations

MagnetWire
operations

853

+3
+10

+1

+1
+4

+55
(Unit: 100 million yen)

FY2017FY20182Q Actual

2Q Actual17

Change in operating income (YoY)(Unit: 100 million yen)

△ 3.5
+1.8

Deviceoperations

Magnet Wire
operations

Communication System
operations△ 1.5
Power System
operations

Electric Wire
operations

26.1

△ 0.8

+0.4
Others

△ 4.2

+0.8

22.6

FY2017FY20182Q Actual

2Q Actual18

2Q Segment Information (YoY)• Electric Wire, Energy System, and Magnet Wire operations recorded higher sales and lower profits

The Communication Systems and Device operations saw higher sales and profits

FY2017
2Q Actual(Unit: 100 million yen)

FY20182Q Actual

OperatingincomeNet sales

ChangeOperatingincomeNet sales

Net sales

OperatingincomeElectric Wire

366

11.7

402

7.5

+36

△ 4.2

Power System

122

5.2

132

4.4

+10

△ 0.8

Magnet Wire

102

1.2

103

△ 0.3

+1

△ 1.5

100

4.8

103

6.6

+3

+1.8

Device

100

5.2

104

6.0

+4

+0.8

Others

8

△ 2.0

9

△ 1.6

+1

+0.4

Total

798

26.1

853

22.6

+55

△ 3.5

Communication
Systems

19

Electric Wire operations(Unit: 100 million yen)

366

325

402

■ Characteristics: There are two main business areas.
① Core area: Buildings, facilities, and all other generalpurpose products for use in electric wires and cables② Growth area: High-quality and High-performance wires usedin automobiles, etc. (Oxygen free copper, Copper and silver
alloy, etc.)■ Sales increased by 3.6 billion yen YoY to 40.2 billion yen
owing to the contribution in growth area. Pricing competitionin core business areas remained fierce, with operating profit
falling by 420 million yen to 750 million yen.
■ ① Core area: Continued strong demand for construction
applications. However, operating income declined.
② Growth areas: Both sales and profits performed strongly inthe high-performance wire rods, a growth field.

20

Power System operations(Unit: 100 million yen)

■ Characteristics: In the Power Systems operations, weare capturing substation demand, mainly for high-valueadded cable connection materials, and improving
profitability. Using the epoxy technologies developed in
SICONEX products, we are making our products
earthquake-resistant, safe, and environmentally friendly.
We are offering products with excellent workability.
■ Net sales increased ¥1.0bn, up ¥1.0bn YoY, but due tothe recording of additional costs that are expected to be
incurred in the ongoing overseas replacement work, net
sales decreased ¥80 million to ¥440 million.
■ Renewal demand from electric power companies andreplacement demand from private-sector companies
remained firm.

21Magnet Wire operations(Unit: 100 million yen)

■ Characteristics: Magnet wires are used in motors andcoils in various fields. We are strengthening mass
production of high-efficiency flat-angle enamel radiation
for motors used in HEVs and EVs. Supply products forelectronic components that are compact and thinner.

■ Net sales remained unchanged from the previous fiscal
year due to the rise in copper prices, but operating
income declined ¥150 million to ¥30 million due to thedecrease in sales volume and the recording of allowancefor doubtful accounts for receivables from a Chinese
subsidiary that was excluded from the scope of
consolidation.
■ Demand for heavy electric appliances was sluggish, but
sales of electronic components for automobiles were firm.

22Communication System operations(Unit: 100 million yen)

■ Characteristics: In the Telecommunications Systems
operations, for use in information and communications,
it handles many products, from optical fibers to metal cables
and electronic wires. With the rapid spread of IoT and the
spread of FA, the company manufactures and sells various
cables as electronic wire products compatible withindustrial open networks. Going forward, we will promote
expansion in the Chinese market through collaboration with
FUTONG Group, a capital alliance partner.
■ Sales increased ¥0.3bn YoY to ¥10.3bn, and operating
profit rose ¥180mn to ¥660mn.
■ Despite a slight decline in demand for communication
cables in Japan, sales of high value-added accessories
increased. Optical fibers expanded mainly to overseas
markets.

23

Device operations(Unit: 100 million yen)

■ Characteristics: In the device operations, the Company
manufactures and sells rollers and wiring harnesses forcopiers, and overseas sales are boosted by strong demandin the growing Southeast Asian market. Seismic isolationmaterials for construction are manufactured in the Seismic
Isolation business. The company boasts the second largest
share of the domestic market by offering a full lineup of
products.
■ Net sales increased ¥0.4bn YoY to ¥10.4bn, and operating
income rose ¥0.08bn to ¥0.6bn.
■ Overseas demand for copying rollers and wiring harnesses
is firm. Overseas sales account for 46% of total sales in theElectronic Devices and Components segment.

24Consolidated balance sheet(Comparison with the previous fiscal year-end)
・ Equity ratio was 27.3% (up 0.7 points from the end of the previous fiscal year)
18/3/31*

Change18/9/30

18/3/31※

Cash and deposits

47

33

△ 14

Accounts receivable andother receivables

397

415

Inventories

219

Others(Unit: 100 million yen)
18/9/30

ChangeNotes & accounts payable

219

201

△ 18

+18

Short-term borrowings

344

370

+26

223

+4

Others

136

142

+6

46

45

△1

Total current liabilities

699

713

+14

709

716

+7

Long-term debt

132

116

△ 16

Property, plant andequipment

396

394

△2

Others69

67△2Intangible assets

15

12

△3

Total long-term liabilities

201

183

△ 18

Investments and otherassets

115

120

+5

Total liabilities

900

896

△4

526

526

0

Capital stock

242

242

0

Capital surplus

55

55

0

△ 35

△ 23

+12

Others73

72△1

Total net assets

335

346

+11

1,235

1,242

+7

Total current assets

Property net

Retained earnings

Interest-bearing debt 49.0 ⇒ 49.8 billion +¥0.8 billion

Total assets

1,235

1,242

+7

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

25

Investment Plan (Capital/Overseas Investment) & CF
FY2016
Result

FY2017
Result

FY2018
Forecast

Capitalinvestments
Depreciation
expenseCapitalinvestments
Depreciation
expenseCapitalinvestments
Depreciation
expense¥2.9 billion in Japan and overseas

New
¥300
millionTotal ¥3.2 billion(Unit: 100 million yen)

¥2.9 billion¥3.0 billion in Japan and overseas

New
¥400
millionTotal ¥3.4 billion¥2.9 billion¥3.2 billion in Japan and overseas

New
¥400
millionTotal ¥3.6 billion¥3.2 billion< Major Investment Plans for FY2018>【Japan and overseas】Renewal of facilities, rationalization and labor saving【New business】 Capital investments in new business2Q investment results¥1.92 billion
Domestic ¥1.24 billion
Overseas ¥680 million

26

SWCC network
Domestic bases

Overseas bases■ Main Offices
Kanagawa, Osaka, Nagoya, Sapporo, Sendai, Hiroshima, Fukuoka■ Major Offices
Shanghai, Hong Kong, Taipei, Singapore■ Major manufacturing sites
Aomori City, Aomori Prefecture; Shibata-gun, Miyagi Prefecture; Watari-gun, Miyagi Prefecture; Sakata City,
Yamagata Prefecture; Koga City, Ibaraki Prefecture; Ota Ward, Tokyo; Sagamihara City, Kanagawa Prefecture
Ebina City, Kanagawa Prefecture; Isehara City, Kanagawa Prefecture; Minami Alps City, Yamanashi Prefecture;
Toyokawa City, Aichi Prefecture; Inabe City, Mie Prefecture; Akaiwa City, Okayama Prefecture■ Major manufacturing sites
Tianjin City, China, Xintai City, Shandong Province, China, Jiaxing City, Zhejiang Province, China,
Zhejiang Province, Hangzhou Fuyang District, China, Fuqing City, Fujian Province, China
Dongguan City, Guangdong Province, China, Hanoi City, Vietnam

Sagamihara Office(Sagamihara City, Kanagawa Prefecture)

Mie Office(Inabe City, Mie Prefecture)

Sendai Office(Shibata-gun, Miyagi Prefecture)

Ebina Plant(Ebina City, Kanagawa Prefecture)

Aichi Plant(Toyokawa City, Aichi Prefecture)

Koga Plant(Koga City, Ibaraki Prefecture)

Jiaxing Showa Interconnect Products Co., Ltd.
(Jiaxing City, Zhejiang Province, China)

Fuqing Showa Precision Electronics Co., Ltd.
(Fuqing City, Fujian Province, China)

FUTONG SHOWA WIRE & CABLE (HANGZHOU) CO., LTD.
(Zhejiang Province, Hangzhou Fuyang District, China)

SWCC Showa (VIETNAM) Co., Ltd.
(Hanoi, Vietnam)

Showa-TBEA (Shan Dong) Cable Accessories Co., Ltd.
(Xintai City, Shandong Province, China)

SWCCDAIJI VIETNAM INTERCONNECT
PRODUCTS CO.,LTD.
(Hanoi, Vietnam)

27

FY3/19 Full-year Forecast• Unchanged from the full-year forecast disclosed on July 31 (upwardly revised)(Unit: 100 million yen)

FY2017
ResultComposition%

FY2018
Plans

Composition%

YoY change%

Net sales

1,681

-

1,750

-

+4.1%

Gross profit

216.4

12.9%

-

-

-

Operatingincome

62.7

3.7%

54

3.1%

△ 14.0%Ordinary income

48.9

2.9%

45

2.6%

△ 8.0%Net income
attributable to ownersof parent

37.3

2.2%

33

1.9%

△ 11.7%28

FY3/19 Segment Forecast(Unit: 100 million yen)

FY2017
Result

FY2018Plan

ChangeNet sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeElectric Wire

781

22.6

835

15.3

+54

△ 7.3

Power System

263

17.5

270

15.9

+7

△ 1.6

Magnet Wire

212

2.4

209

1.5

△3

△ 0.9

Communication
System

208

13.8

222

15.8

+14

+2.0

Device

202

11.3

197

10.6

△5

△ 0.7

Others

15

△ 4.9

17

△ 5.1

+2

△ 0.2

Total

1,681

62.7

1,750

54.0

+69

△ 8.7
29

Creating for the Future

SWCC groups

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

Mid-Term Management Plan

http://www.swcc.co.jp/30Vision "SWCC VISION2026"
Medium-Term Management Plan "Change SWCC2022"

Visioning
Fiscal Year 2018-2022
Second step
Fiscal Year 2016 - 2017
First step

Fiscal Year 2008 - 2015
Stagnation period

Record continuous loss
Deteriorating financial
standing

Fiscal Year 2023-2026
Third step

Realization of stable
growthMedium-term plan 2016 - 2018
Achieved two years ahead ofschedule

First Step (Fiscal Year 2016 - 2017)
Mid-Term Plan 2016 - 2018 【Structural Reform, Recovery of Trust andEstablishment of Existing Business】

Company that can change
according to the environment
and maximize its corporate
value

To fulfill our social mission

while achieving stable growthSecond Step (FY 2018 - 2022)
Change SWCC 2022 【Structural Reform, Growth Strategy】

31

SWCC VISION 2026
Mission (raison d'etre: purpose for the business)
Providing solutions that are needed by society andthat support people's lives
Value(Employee Values: Attitudes toward the Realization of Our Mission)
Identify customers' needs through[Fast], [Passion], and [Thinking]32Medium-Term Management Plan: Earnings Plan
(Unit: 100 million yen)

Two years ahead of the schedule!

△ 91.5ResultMid-Term Management Plan

Vision33

Medium-Term Management Plan: Segment Sales/Operating Income
Plan(Unit: 100 million yen)

(Unit: 100 million yen)34

Forecast for electric wire and cable-related demand
Thousand ton

FY2021 Shipments Forecast by Demand Category (Domestic)(Ten thousand units)

2018: forecast, after 2019: expectation

FY2016 Result
FY2021
Expectation

Demand in various
industries

Growth of electricvehicles2016
Communication

Electric
powerElectricalmachinery

Automobile

Construction
Other domestic
Electricity Sales
demand

2017

2018

2019

2020

2021

2022

2025

2030

2035

Exportation

Source: Fuji Keizai's Global Market Survey of HV, PHV, and EV

Source: Electric wire telegram "FY2017 Revised Cable Demand Outlook and FY2021 Medium-Term Cable Demand Outlook"
100 million yen

Million ckm

Growth in demand for
optical cables

Source: Prepared by CRU Monitor Optical Fibre and Cable

OthersHealthcare
Distribution
Automobile
Security
EnergyGrowth in IoTdemandSource:2017 Nomura Research Institute[Expansion of the IoT market and utilization of IoT in Japan]

35

Composition of Net Sales (Major Companies by Demand Division)■ Automobiles: Capturing demand due to the evolution ofEV■ For electric power: Capturing demand in growth fields bypromoting shift to renewable energy■ For construction: Capturing Stable Demand forredevelopment and renewal of buildings■ Transportation: Capturing demand through use of ICT in
the railway sector, energy conservation andenvironmental measures, and responses to natural
disasters■ Electrical machinery: Capturing new demand from IoT,
FA & robotization, and healthcare■ Core wire sales: Respond to industry needs

FY2017■ Others: Promoting R&D including sales to logistics
companies and superconducting

36

Awareness of the External Environment: Business Activities for
Sustainable Growth
Global Trends: Keyword Infrastructure Renewal, Fourth Industrial Revolution, Renewable Energy
1. COP21 adopts the Paris Agreement, an international rule on global warming countermeasures
2. United Nations adopts the Sustainable Development Goals (SDGs)
Transformation of the electricity market throughseparation of power generation and transmission

Make logistics more efficient
Measures against aging of
infrastructureCore businessSpread of AI

Labor shortages due to the declining birthrate
and aging population

Improvement of the work
environment

Growth business

Expansion of IoT

Increase in EV and HV cars
Practical application of
automatic operation

New business

37

Medium-Term Management Plan 2022 Basic Policy
Continuous Structural Reforms

Basic Policy of
Medium-Term Management Plan 2022

1. Optimize group structure

1. Improving profitability

2. Reorganize production bases based on
medium-to long-term demand trends

2. Creation of new business activities

3. Reform low-profit, unprofitable businesses
4. Early restructure overseas businesses

3. New development of overseas businesses

38Mid-term Management Plan 2022: Strengthen business profitability• Rapid changes in the electricity market environment due to the paradigm shift. Demand for long-distance ultra-high voltage cables will not
grow due to the diversification of power sources. On the other hand, the number of high-voltage cable connections for the expansion ofequipment in substations increased due to the increase in cooperation with renewable energy. While the route length is short, the number ofcircuits and terminations are increasing, and by unifying the routes into SICONEX terminations, it is possible to save manpower andshorten the construction period, and it is aiming to strengthen profitability.
● Existing model: Construction and maintenance of conventional super high-voltage
long-distance networks
・ Development of large-scale projects for long-distance networks between power stations,substations, and consumers
・ Terminations are required at both ends only, thus a major portion of the project is cables (copper
volume).
Substations
Factory buildings
Power plant
Terminal A

Terminal B

Long
distancekm

Power stations andsubstations
275/154 kV large size
Extra-high-voltage
power cable

Terminal C● New construction and expansion of substations with distributed power sources

Power plant

Substations (renewable energy linkage)

Factory buildings

Terminal DLongdistance
km

Substations andfactories (consumers)
66/77 kV high voltage
cable

SICONEX
Unification ofterminations

Short
length m

66/154kV
SICONEX terminations

66/154kV
Cable
Large-scale renewable energy

Substations forprivate demandLargenumberof lines

H2
Hydrogen energy Battery base

Solar

Wiring in the factory building

39

SWCC Cable Systems: SICONEX• SICONEX, a component for electric power equipment, has been downsized to reduce weight.
Reduction of space and parts can save manpower and shorten the construction period.

Examples ofapplication of
SICONEX products

Direct molding
technology

Individual insulation
connection technology

Cable headtechnology

SwitchSwitchTransfor
mer

Joint

40

Medium-Term Management Plan 2022: Creation of New Businesses~ In addition to concentrating the Group's management resources to create new businesses,
expand business domains through Open Innovation, technology collaboration and M&A① EV/Automotive-related ② FA ③ Medical

41

SWCC “Oxygen free copper"• Oxygen-free copper, which has a high conductivity of 99.99% and excellent machining performancewith “the Dip Forming System”, the only available production method in Japan• Diverse applications not only for electric wires and cables, but also automotive components

42

SWCC “Copper and silver alloy”• Balance between high strength and high electric power factor, and flexibility and ultra-finemachinability• Diverse applications, including automobiles, medical devices, semiconductors, factory automationand industrial robots

SWCC

43

Developing new technologies• Development of superconducting cable system• Development of efficient transmission cable system in response to the global demand for conversion to
renewable energy. Approximately 5% of the total power generated in Japan is lost due to electricalresistance.
• We jointly built a superconducting cable in Tianjin, China, with the FUTONG Group. A yttrium-based
superconducting wire was used to pass the model test of the International High Power Systems Council(CIGRE). We will promote the practical use of superconducting transmission technology to make effective
use of electric energy, which has been lost as heat due to the electrical resistance of transmission lines.

Superconducting cables and terminations operating in Tianjin

35 kV superconducting yttrium-based superconducting cable44Medium-Term Management Plan 2022: Expansion of Overseas
Business• Maintain and strengthen relationships with overseas partners (expand into Southeast Asia)~ Promoting the deepening of transactions with local companies other than Japanese companies

Business in China
People’s Republic of China

Expansion into
Southeast Asia

FUTONG GroupTBEA GroupSoutheast Asia

Vietnam
SVC (parts for officeequipment)
VSIP (wire harness)

People's Republic
Beijingof China
TSW (Magnet Wire)
FST (rough line)
JSIP (wire harness)
SSD (parts for officeequipment)
DSIP (wire harness)

STCA (electric power equipment
components)
SHA (sales company)
Network solutions (ASH)
FSH (electronic electric wires, roughwires, industrial wires)TaiwanHKG (sales
company)

TPE (Sales Office)Home Electric Power
Company (HE)
Huawei Electric wire Co.,Ltd.

Singapore

Indonesia

SIN (Sales Office)Republic of Indonesia
VOKSEL (electric
wires/cables)

45

Profit targets and capital investment in new business(Unit: 100 million yen)

Generate ¥1.1 billion in gross profit from new businesses by FY2022
Generate ¥3.8 billion in gross profit from new businesses by FY2026

Cumulative investment in new businesses of ¥5 billion or more by FY2026

46

Coefficient target for FY2026: KPI(Unit: 100 million yen)

FY2015ResultFY2022FY2017
ResultMid-Term Management
Plan

VISION2026

Net sales

1,697

1,681

1,950

1,950

Operating income

9.4

62.7

70.0

90.0

Ordinary income△ 14.6

48.9

64.0

86.0

Net income attributable toowners of parent△ 91.5

37.3

43.0

55.0

0.6%

3.7%

3.6%

4.6%

5 yen
(4.0%)

20 yen or more(about 20%)50 yen or more(about 30%)

Operating income margin
Dividends/Payout Ratio-

Interest-bearing liabilities

575

490

400 or less

300 or less

DE ratio ※

227%

149%

Not more than 90%

Not more than 50%

Net assets

257

334

470 or more

600 or more

Equity Ratio

20.6%

26.5%

35% or more

40% or more

※ Debt-to-equity ratio is calculated based on shareholders' equity.

47

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

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

E● 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

S● 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 stakeholdersG● Thorough compliance● Strengthening cyber security measures● To manage and reduce important risks in business activities● Improving Transparency through Information Disclosure

48

Results of FY2017 Environmental Conservation Activities• In fiscal 2017, we were able to achieve our targets, except for the promotion of zero
emissions, as shown in the table below.
Change in energy intensity unit

Activity Items

FY2017 Targets

ResultEvaluation

Reduce unit energy consumption by 2% or more fromthe standard value

Energy saving(CO2 reduction)

Reduce energy consumption by at least 1.3% of thestandard value through energy conservation
improvement measures

Reduce waste generation

Reduce emissions per unit of production by at least 2%
from the standard value

Promotion of zero emission

Maintain zero emissions at all production sites (10sites).
(Reduce the final disposal rate of waste to 0.5% or lessof the amount discharged)

Enhancement of control on
chemical substances

Reduce atmospheric VOC emissions by 7.2% or morefrom the standard value.

Increase EnvironmentContributing Products

More than 12 new registers of environment-contributing
products.

Biodiversity Conservation

Promote initiatives based on the Biodiversity Guidelines.

(FY)

Not achieved in
2 sites

Change in unit of waste discharge volume

Implemented
measures(FY)

49

Fulfilling our social mission through our business activities
1. Fulfilling our social mission through our business activities and contributing to the sustainable development of societyP

2. Supporting a Safe and Secure Society through Environmentally Conscious Product Development Activities
3. Complying with laws and regulations and building good relationships with all stakeholders
Our business activities

World movement
Global Efforts to CurtailClimate Change (Paris
Agreement)
Establishment of
Sustainable Development
Goals (Initiatives for theUnited Nations SDGs)[Infrastructure & Electronic Devices Business]
Electric power cables, components, construction
Cables for electrical construction and sales
Communication cables/optical fibers
Seismic isolation materials and systems
Parts for copiersHarnesses for home appliances and industrial equipment
IT solutions
New business

Evaluating ESG as acompany,

wires

Be used for investment
decisionsvehicle/electronic components

High-performance, oxygen-free copper, in-vehicle heater
Wires for in-vehicle electric cables and windings for inSpecial electric wires for medical purposes and composite

Improvement of the work
environment through work
style reformA

Contributing to Environment & Society

SustainablegrowthDC

Through our business activities
Contributing to the sustainable development of theenvironment and society
・ Reduction of CO2 and VOC・ Effective use of resources
・ Promoting the development and commercialization ofenvironmentally-friendly products
・ Actions for Biodiversity Conservation
・ Implementation of occupational health and safety
activities
・ Work-life balance of employees
Promoting activities and creating a comfortable working
environment
・ In good relations with stakeholders
Maintain and improve communication

cablesGovernance・ To ensure thorough compliance and strengthen cyber security measures・ Management of important risks in business activities and improvement of transparency through reduction and disclosure of information, etc.

50

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 the same time, we will take comprehensive
measures to address a wide range of issues, including climate change countermeasures and environmental protection, in order torealize a sustainable society.
The SWCC Group will also promote SDGs initiatives.

51

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 atthe time of publication and contain potential risks and uncertainties.
Therefore, actual results may differ materially from those projected in the forwardlooking statements as a 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.

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

<Appendix>

Creating for the Future

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

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

Structural Reforms under the Previous Medium-Term Management
Plan
Comment

Reorganization andStreamlining

Effective useof assets

Toward Recovery
of unprofitable
operations
Toward Recovery
of Overseas
business① Reviewing the holding company functions and streamlining the organization② Reorganization of operating companies ⇒ Integration of three domestic consolidated operatingcompanies③ Continue structural reforms of the electric power system ⇒ Focus on domestic demand andimprove profitability④ Restructuring of Wire Harness ⇒ Reduction of Fixed Costs and Revision of Overseas Production
Structure⑤ Relocated head office functions (Minato-ku, Tokyo ⇒ Kawasaki City)① Utilization of idle facilities and land (electric power system)② Consolidation of group bases (distribution warehouses, sales offices)③ Sale of assets (investment securities)

Achieved the
medium-term plan
one year ahead ofschedule① Achieved profitability in all business segments② Overseas Magnet Wire subsidiaries continue to restructure with joint venture partners

54Mid-term Management Plan 2022: Strengthen business profitability
Item
1. Consolidation of Group management resources [Structural reforms]① To build a more efficient operation system② Consolidation and reorganization of production and distribution bases③ Consolidation, reorganization, and streamlining of group companies
Strengthening
business
profitability

2. Tie-ups with other companies
Effective use of facilities through business tie-ups, outsourcing ofproduction, consignment, etc.
3. Improvement of labor productivity
IT-based business improvement[Work process improvement ⇒ Work style reform][Downsizing or withdrawal from unprofitable businesses]

55Medium-Term Management Plan 2022:
Group’s Core Technologies
Material

Basic technology

Technology to focus on

Alloy blending technology
Alloy production
technology

Connecting
technology

Oxygen free copper
technology

CopperStretching technology
Atypical processing
technology

Insulating coating
technology

Thin

Aluminum
Technology of composite
formation

Conversion of
automobiles to
EV/HV
Weight reduction

Lightly

Moldingtechnology

Improveconvenience

StrongProduction
Innovation IoTBraiding technology
Stranding processing
technology

Fusion oftechnologies in linewith the changing
times

Massproduction
technology

56Medium-Term Management Plan 2022:
Expansion of Overseas Business
Item① Growth strategy of the joint venture in China
Partnership with FUTONG SHOWA WIRE & CABLE (HANGZHOU) CO., LTD.
Capturing EV-related demand in China

New
developmentof overseas
business② Growth strategy of the Device segment[Expansion to industrial equipment and automotive applications]
March 2018 Established a new company in Vietnam for the wire harness business③ Cooperation with overseas partners

Operating income of overseas subsidiaries: 440 million yen in FY2017 ⇒ 650 million yen in FY2022
Income of overseas equity method affiliates: -420 million yen in FY2017 ⇒ 400 million yen in FY2022

57

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