Optorun Co., Ltd.

Financial Results (Second Quarter 2019)
August 8, 2019

Table of Contents

I. Financial results of Q2 ending December 2019

P2

II. Appendix

P121

Financial result highlights (consolidated)Composition of sales and category
Orders received and backlog
Operating profits
Sales (2019 Q2)
Orders received and backlog (2019 Q2)
Operating profits (2019 Q2)
Financial conditionCash Flow2

Financial Result Highlights (consolidated)
Strong rise in business performance

Diversification of sales composition progressed. Sales in non-North American markets account for 70%.
For smartphones, responded to demand for high-performance 3D, decorative film and camera modules mainlyfor China and South Korea. We also led the market for camera lens, IoT and LED applications, and sales werestrong.
Orders increased steadily in the first half of Q2; however, due to the impact of US-China trade friction, a waitand-see attitude to orders became stronger.
With increasing number of customers requesting shorter delivery times, close and detailed contact is essential.
Compared with the 2019 earnings forecast, the achievement rate in Q2 was 58% for sales, 64% for ordinary
profits, and 71% for net profits.
(million yen)

Q2 total ended December
2018

Q2 total ending December
2019

Sales

21,811

26,677+22.3%

Operating profit

5,425

7,396

+36.3%(24.9%)(27.7%)

Ordinary profit

5,719

7,262

+27.0%

Quarterly net profit
attributable to shareholders ofparent company

3,972

5,994

+50.9%

R&D expenses

1,603

1,478

Δ7.8%

(Operating profit margin)

Year-over-year―

3Composition of sales and category

Sales of sputtering equipment accounted for 60%, contributing to an increase in 2019 Q1.
Smartphone sales increased in the Chinese and South Korean markets, and the ratio of them to North
American market was 1:1.
.
Sales of camera lenses remained strong due to continued
functional enhancement.
For IoT, besides biometric authentication, orders and sales for sputtering equipment for vehicle-mountinstrumental panels were secured.
For LED, we booked sales on new DBR film deposition equipment.

(million yen)

Net sales

30,000Composition of sales by category
26,677
Smartphone

21,811
20,00010,000Period ended
December 2018

Q2 total ending
December 2019

44,763

26,677(million yen)(million yen)

Camera lens

Vehicle-mount, biometricauthentication, etc.

8,971
Other

0
2017/12
Q2 total

2018/12
Q2 total

2019/12
Q2 total4Orders Received and Backlog
Orders received and backlog(million yen)
50,000Orders received

Order backlog

46,298


40,00036,39830,532



30,00023,93920,00020,19817,982



10,000
02017/122018/12

Q2 total

Q2 total

2019/12

Q2 total<Total orders received in 2019 Q2>Orders received were at the same level as Q2of the previous year, reflecting a decline inorders in Q1 2019.
The order composition was 10:7 for vacuum
deposition equipment vs. sputtering
equipment.
Although 2019 Q1 was weak and Q2 showedsigns of recovery, the impact of US-China
trade friction became significant from thelatter half of the period.
For smartphones, orders from China, South
Korea, and Taiwan were firm. For camera
lenses, orders for high-performance film
deposition equipment from surveillancecamera manufacturers in China were strong.
For IoT, besides biometric authentication, wesecured orders for new equipment for vehiclemount instrumental panels and DBR/TCO film
deposition equipment for LED.
5

Operating profits
Operating profits(million yen)
10,000

27.7

9,000

24.9

8,000
7,000

<Total operating profits for 2019 Q2>
30.0

25.0

7,396

19.5

6,000

20.0

5,425

5,000

15.0

4,000
10.0

3,000
2,000

 Operating profit margin remained
high at 27.7% (+2.8% YOY) Cost ratio remained the same
year-on-year, and SG&A expenses
decreased by 2.9%, contributing
to improvement in operating profit
margin.
 Positive impact of increasedsales.

1,750
5.0

1,00000.0
2017/122018/122019/12

Q2 total

Q2 total

Q2 total
6

Sales (2019 Q2)<Sales for 2019 Q2>

Net sales

 Sales increased year-on-year to 12.7 billion
yen.

(million yen)
18,00016,22815,00013,975
12,701

12,00010,710

11,100

9,000
6,722
6,000

 For smartphones, Chinese and South Korean
manufacturers were active. Sales to NonNorth American countries account for 80%.
 We responded to demand for higher
performance 3D, casing-back-glass,decorative film, and camera modules.
 Sales of camera lenses for surveillancecamera manufacturers were strong.
 For IoT applications, we secured sales forvehicle-mount, biometric authentication,
semiconductor, and optical communications.

3,000

0
2018/12 2018/12 2018/12 2018/12 2019/12 2019/12
1Q
2Q
3Q
4Q
1Q
2Q

 Orders and sales of new DBR/TCO
equipment for LED and film deposition
equipment for vehicle-mount instrument
panels have begun.
7Orders Received and Backlog(2019 Q2)
Orders Received and Backlog(MILLION YEN)
50,00046,185Orders received< Orders received in 2019 Q2 >Order backlog

 Year-over-year orders remained
unchanged.

46,29840,11640,00039,22732,04330,53230,00020,00012,725
10,00011,213

11,191

10,047
5,833

6,790

 Orders were weak in Q1 of 2019 andshowed signs of recovery from Q2, but
the impact of us-china trade friction
became influential in the latter half of theperiod and orders slowed down again.
 However, the demand for highperformance film deposition issubstantial, and customer needs for highperformance film deposition equipment isstrong in general.

0
2018/12 2018/12 2018/12 2018/12 2019/12 2019/12
1Q
2Q
3Q
4Q
1Q
2Q

8

Operating profits (2019 Q2)
Operating profits(million yen)

6,000

Operating profit

32.0%

29.5%

4,990

5,000

 Operating profit margin was high at 25.7%.

Operating profit margin

30.8%

30.5%

<Operating profits for 2019 Q2>

27.0%

25.7%
4,126

22.0%

4,000

3,269

3,263 19.5%

17.0%

3,000
12.0%

2,162
2,000

7.0%
1,000

0

4.1%
273

2.0%
-3.0%

 Down 3.8% compared to 2019 Q1.
Cost ratio +2.9% and SG&A expenses +1%
were the factors.
 Note that the cost ratio was 60.4% (+2.9%YOY), but it was virtually unchanged at
57.8%.
(Description) Due to consolidated
accounting, +2.6% cost was posted tocancel Shanghai inventory gains, thus theactual cost ratio was 57.8% (same as 2019
Q1).
 SG&A expenses increased due to sales
decline (up +1% from the previous quarter)9

Financial condition(million yen)
As of end of December 2018
AmountAs of end of June 2019

Percentage

AmountPercentage

Change48,142

86.5%

47,95785.9%

Δ184Cash and deposits

15,74028.3%

26,08946.8%+10,348

Trade notes and accounts
receivable

6,837

12.3%

5,665

10.2%

Δ1,171Inventories

24,48744.0%

15,78028.3%

Δ8,707

Allowance for doubtful
accounts

Δ420

Δ0.8%

Δ483

Δ0.9%

Δ63

Other

1,497

2.7%

906

1.6%

Δ591

Non-current assets

7,501

13.5%

7,840

14.1%

+338

Total assets

55,644100.0%

55,798100.0%+153

Current liabilities

25,922

46.6%

22,68740.7%

Δ3,235

1,652

3.0%

3,463

6.2%

+1,811

756

1.4%

572

1.0%

Δ184Accrued corporate taxes

1,143

2.1%

1,161

2.1%

+17

Advances received

20,10836.1%

15,65828.1%

Δ4,450

Other

2,261

4.1%

1,831

3.3%

Δ430

1,658

3.0%

1,611

2.9%

Δ47

Long-term interestbearing debt

233

0.4%

208

0.4%

Δ25

Other

1,425

2.6%

1,402

2.5%

Δ22

Total liabilities

27,581

49.6%

24,29843.5%

Δ3,282

Total net assets

28,06250.4%

31,49956.5%+3,436

Total liabilities and netassets

55,644100.0%

55,798100.0%+153

Current assets

Trade notes and accounts
payableShort-term interestbearing debt

Non-current liabilities• Increase in cash and deposits due toincrease in sales• Decrease in inventories due toincreased sales• Decrease in advances received due
to posting of sales

10Cash Flow(million yen)
Total for Q2 2018

Total for Q2 2019
Main factors

AmountAmountChange

CF from operating activities

Δ2,304

14,232+16,536

CF from investment activities

Δ926

Δ1,079Δ153

CF from financing activities

Δ5,413

Δ2,389+3,023

Effect of exchange ratechanges on cash and cashequivalents

Δ226

Δ414

Δ187Change in cash and cash
equivalents

Δ8,871

10,348+19,219

Cash and cash equivalents at
beginning of fiscal period

19,893

15,740

Δ4,153

Cash and cash equivalents at
end of fiscal period (quarterly)

11,022

26,089+15,066• Decrease in inventories andadvances received due to sales
increase• Payment for investment incapital• Payment for dividends

11 Earnings forecast for period ending December 2019
 Dividends returned to shareholders

12Earnings forecast for period ending December
2019
We plan to increase sales and profits.
(million yen)
Period endingDecember 2019
Forecast

Period ended
December 2018
Achievements

Year-over-year

Sales

44,76346,000+2.8%

Operating profit

10,69011,300+5.7%(Operating profit margin)(23.9%)(24.6%)

Ordinary profit

10,992

11,300+2.8%

Net profit for this period
attributable toshareholders of parentcompany

7,745

8,400

+8.4%

R&D expenses

3,103

3,900+25.7%―

13Dividends returned to shareholders


Dividends for the period ended December 2018 (55 yen), 29.3% (dividend payoutratio)
Dividend forecast for the period ending December 2019 (60 yen), 29.6% (dividend
payout ratio)
Cash dividends per share

29.7(yen)

Dividend policy
We will secure the necessary internal
reserves for investment in R&D,
enhancement of production systems, anddevelopment of new businesses, etc., while
maximizing returns to shareholders.
We aim to achieve stable dividends with aconsolidated dividend payout ratio ofapproximately 30%.

Dividend payout ratio (right axis)

29.3

29.6(%)
30.0

60.0
25.0
50.0

22.7
20.0

40.0

30.0

55

60

10.0

40

20.0

15.0

5.0

10.0

9.3
0.00.02016/12*2017/122018/122019/12(forecast)

Implemented a stock split of 1:1,000 effective March 18, 2017 and a stock split of 1:3 effective October 13, 2017.
The dividends per share prior to December 2017 period have been corrected to reflect the above stock splits.

14

Disclaimer, precautions and contact information
The information in this document has been prepared based on the generally accepted
economic and social situation as of August 7, 2019 and certain assumptions that Our
Company believes are reasonable, but is subject to change without notice due tochanges in the business environment or other reasons.
Materials and information provided with this announcement include so-called "forwardlooking information" (forward-looking statements). These statements are based on
current expectations, predictions, and assumptions including risks and contain
uncertainties that could cause actual results to differ materially from these statements.
These risks and uncertainties include general industry and market conditions, andgeneral national and international economic conditions such as interest rates andcurrency exchange rate fluctuations.
Our Company is not obligated to update or revise the "forward-looking information"
included in this announcement, even if new information or future events arise.
[Contact]
E-mail:ir-info@optorun.co.jp

TEL:03-6635-9487
15