Optorun Co., Ltd.

Earnings Announcement
For the First Half of the Fiscal YearEnding December 2018
August 10, 2018

IndexI. Outline of the financial results

P2

Ⅱ. AppendixP 111

● Financial Highlights (consolidated)● Orders Received and Order Backlog● Net Sales● Net Sales by Categories● Operating Profit● Research and Development Expenses● Balance Sheet● Cash Flows2

Financial Highlights (Consolidated)
Big increases in sales and earnings
Higher sales of optical thin film coaters in the smartphone and LED sectors; coaters for surveillance camera
lenses and IoT applications (biometric authentication, automotive components, etc.) are major sources of growth.
Negative impact of U.S.-China trade friction and low stock prices in China was small; close ties with customers
are essential as their demands increase for more advanced film formation technologies and faster deliveries.
(Million yen)

1H FY12/2017

1H FY12/2018

GrowthNet sales

8,971

21,811+143.1%

Gross profit
Gross profit
marginOperating profit

4,009

8,985+124.1%

44.7％

41.2%

―

1,750

5,425+210.0%

Operating margin

19.5%

24.9%

―

Ordinary profit1,733

5,719+229.9%

Profit attributable toowners of parent

819

3,972+385.0%

3

Orders Received and Order Backlog(Million yen)Orders Received

Vacuum deposition equipment is 70% oforders and sputtering coaters is 30%, pointing
to growth of the equipment category

Order Backlog

60,00052,52750,00044,16940,00046,29836,574

Smartphones
Large volume of orders in China, Korea and other East
Asian countries
Strong orders for coaters for 3D and glass back covers
Camera lenses
More growth in orders for high-performance coaters from
Chinese surveillance camera manufacturers

30,00025,171

23,939
Biometric authentication
Increase in orders involving 3D (facial) authentication

20,00010,672

Automobiles
Increase in orders involving cameras and sensor panels

10,0003,50002015/122016/122017/122018/12

1H
4

Net Sales
40,000(Million yen)

33,38530,000+143.1％
20,000

Camera lenses (surveillance)
Increase in sales to surveillance camera manufacturers
in China

15,278 14,903
1H FY18
21,811

10,0001H FY17
8,97102015/122016/12• Higher sales for smartphone applications tomanufacturers in North America as well as
in China and Korea; strong demand fordecorative coatings for smartphone 3D andglass backings• Sales divided evenly between smartphones
and all other categories→ Increase in sales involving surveillancecameras, the IoT and LEDs

2017/122018/12

IoT (biometric authentication)
Increase in sales for 3D (facial) authentication
IoT (automobiles)
Increase in sales involving cameras, sensors and LCD
screens
LEDs
The LED lighting market is growing and potential growthof the market for micro-LEDS has increased significantly5Net Sales by Categories
The growth of applications for optical thin films
Many companies in North America, China, Korea, etc. require coaters for smartphone applications.
Other market sectors are growing too, particularly surveillance camera lenses, the IoT (biometricauthentication, automobiles) and LEDs. Demand for coaters is strong as a result.

4.1

4.4

％
6.2

8.2
9.1

million yen

Smartphone
camera lense

1H FY2018

Full year FY2017

33,385

6.6

74.2

20.5

21,811Million yen

50.3

IoT

Biometricauthentication,automobiles

LED

16.4

Other6Operating Profit(Million yen)
8,000

1. Sales of sputtering coaters inNorth America, China and Korea
contributed to earnings.

7,327

7,000
6,000

+210.0％2. Higher sales of vacuum
deposition equipment also
contributed to earnings growth.

1H FY18
5,425

3. Use of outsourcing to cut timeused at factories for production
processes raised the volume ofproducts shipped.

5,000
4,000
3,000

2,435

2,380

2,000
1,000
0

1H FY171,750
2015/122016/122017/122018/12

7

Research and Development Expenses(Million yen)

R&D expenses

R&D to sales (RHS)

4,000

7.47.8
3,400

3,500
3,000
2,500

4.8

2,466

2.

Reinforced the R&D infrastructure
consisting of the Japan head officeand operations in China and Taiwan
and increased the R&D workforce.

3.

Focusing on new smartphonefunctions, increasing speed of IoT
sector progress (biometricauthentication, automotive use),
increasing performance ofsurveillance cameras and LEDs, andequipment that combines
semiconductor and opticaltechnologies

(%)
8.0
7.0

5.0

4.4

4.0

+122.3％1,500

3.0666

1H FY181,603716
1H FY177215000

Using resources for R&D is thehighest priority due to the reliance ofOptorun on R&D activities.

6.0

2,000

1,000

1.

2015/122016/122017/122.0
1.0

2018/12
（E）

0.0

8

Balance Sheet(Million yen)Dec. 31 2017
AmountJune 30 (1H FY2018)%

Amount%Change＋60

Cash and deposits

52,25519,893

92.6%
35.3%

52,316
11,022

91.8%
19.3%

(8,871)

Notes and accounts
receivable - trade

3,380

6.0%

8,088

14.2%

＋4,707

Inventories

25,10744.5%

30,01252.7%＋4,904

Allowance for
doubtful accounts(181)(0.3)%(392)(0.7)%

(210)

Other

4,055
4,169
56,42532,0387.2%
7.4%
100.0%
56.7%

3,585
4,682
56,99830,0966.3%
8.2%
100.0%
52.8%

(469)

(1,941)

Notes and accounts
payable - trade
Short-term interestbearing debt

7,303

12.9%

4,928

8.6%

(2,375)

9,193

16.3%

5,366

9.4%

(3,827)

Other

15,541

27.5%

19,802

34.7%+4,260Non-current
liabilities
Long-term interestbearing debt

1,780

3.2%

2,224

3.9%

＋444

432

0.8%

331

0.6%

(101)

Other

2.4%
59.9%
40.1%

1,893
32,321
24,6773.3%
56.7%
43.3%

＋545

Total net assets

1,347
33,81822,606＋2,070Total liabilities andnet assets

56,425100.0%

56,998100.0%＋573

Current assets

Non-current assets
Total assets
Current liabilities

Total liabilities

Inventory growth and repayment ofdebt＋512＋573

Increase in advances along with growthin orders

Increase in retained earnings+1,497

9Cash Flows(Million yen)

1H FY2017

1H FY2018
Major factors

AmountAmountChangeCash flows from operating
activities(6,425)(2,304)+4,121• Increase in net income• Increase in advances alongwith growth in orders

Cash flows from investing
activities(2,062)(926)+1,136• Cash used for investments
increased• Repayments of short-termloans payable• Dividend payments

Cash flows from financing
activities

8,626(5,413)(14,040)

Effect of exchange ratechange on cash and cash
equivalents

(18)

(226)

(208)

Net increase (decrease) incash and cash equivalents

119(８,871)(8,990)Cash and cash equivalents
at beginning of period

5,357

19,893+14,536

Cash and cash equivalents
at end of period

5,477

11,022＋5,54510

● Forecast for FY12/2018 (Consolidated)● Shareholder Distributions● FY2020 Target (Medium-term management plan2018-2020)11

Forecast for FY12/2018 (Consolidated)(Million yen)

FY12/2017(Actual)

FY12/2018(Forecast)

ChangeNet sales

33,38543,800+31.2%

Operating profit

7,327

8,100+10.5%

Operating margin

21.9%

18.5%

―

Ordinary profit

7,095

8,200+15.6%

Profit attributable toowners of parent

4,815

5,700+18.4%

 In 2018, we anticipate a continuation of demand for high-performance optical thin film coaters
as new smartphones continue to add more advanced capabilities. The reduction insmartphone output early in 2018 will probably have only a small negative effect.
 In the LED sector, we expect orders for film coaters to remain strong for lighting products
and LEDs used in smartphone biometric authentication systems.
 We also foresee growth in orders for automotive applications, including cameras, proximity
sensors to prevent collisions, head-up displays and other products.
 Continuing progress involving the IoT will probably broaden demand for optical thin film
coating used to make lenses and optical sensors.

12

Shareholder Distributions
Consistently returning earnings to shareholders
Dividend per share(Yen)
45.0

Dividend Policy
The policy is maintain sufficient funds
for R&D activities, strengthening
manufacturing operations, starting new
モルガン・スタンレー
businesses
and other requirements andto use remaining funds as much as
possible for shareholder distributions.
The goal is consistent dividend
payments with a consolidated payout
ratio of about 30%.

(%)
45.0

Payout ratio (RHS)

40.0

40.0

35.0

35.0

29.7

30.0

30.022.7

25.0
20.0

30.1

25.0

40

16.0

42

20.0

15.0

15.0

10.0

10.0

5.0
0.0

6.7
2015/125.0

9.3
2016/122017/122018/120.0（E）* There was a 1-to-1,000 share split on March 18, 2017 and a 1-to-3 share split on October 13,
2017. Earnings per share in 2015, 2016 and 2017 have been adjusted to reflect these stock
splits.

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FY2020 Target (Medium-term management plan 2018-2020)
Strategic priorities

Sales & Operating profit(Million yen)
60,000

Sales

Operating profit

52,70050,00040,00033,38530,00020,00010,00007,3272017/1210,400

2020/12(Target)1

Use strengths as a company withhighly advanced technology
development skills to speed up R&D
for the creation of thin film formationequipment with new capabilities.

2

Leverage aggregate businesscapabilities that rank among the best in
the world by building a stronger
infrastructure for the unified
management of activities (R&D,production, sales, administration) inJapan, Shanghai and Taiwan.
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Disclaimer, Precautions and Inquiries
This presentation was prepared by using assumptions based on economic,social and other conditions as of August 10, 2018 and the reasonable
judgments of management. The information in this presentation may berevised without prior notice in the event of a change in the business climate orsome other event.
This presentation contains forward-looking statements. These statements
incorporate assumptions that reflect current outlooks, forecasts and risk
factors. There are many uncertainties that may cause actual performance todiffer from these statements.
These risk factors and uncertainties include, but are not limited to, industry
and market conditions, changes in interest rates and exchange rates, andother items associated with the Japanese economy and global economy.
Even if there is new information, a future event or some other item that affects
the outlook, Optorun has no obligation to update or revise the forward looking
statements in this presentation.
Inquiries

E-mail：ir-info@optorun.co.jp TEL：049-239-3381

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