FY18Q3
F i n a n c i a l
R e s u l t s
Feb 1, 2019@Station Conference Tokyo

7741.T[ADR:HOCPY
H O YAUS]C O R P O R AT I O N© 2019 HOYA CORPORATION All Rights Reserved

11. Financial Results [Ryo Hirooka, CFO]
2. IT Business Overview
3. Life Care Business Overview
4. Summary
5. Q&A© 2019 HOYA CORPORATION All Rights Reserved22Financial Overview(¥bn)

Q3 FY17Q3 FY18

YoY

YoY(%)

Sales

136.8

143.4

+6.7

+5%

Pretax Profit

34.7

39.7

+5.0

+14%

Net Profit

27.7

33.1

+5.4

+20%

cf. Profit fromordinary operating
activities*

33.2

39.9

+6.7

+20%

*Herein after “Operating Profit”

Achieved record-high quarterly sales and profit.
© 2019 HOYA CORPORATION All Rights Reserved

3➢Revenue amounted to ¥143.4 billion, up ¥6.7 billion (+5%) year on year
➢Quarterly profit before tax was ¥39.7 billion, up ¥5.0 billion (+14%)➢Profit for the quarter amounted ¥33.1 billion, up ¥5.4 billion (+20%)

3

Constant Currency Basis (CCB)
Previous
Rate (A)Current
Rate (B)FX Impact

YoY

YoY(%)

Sales

145.8

143.4

-2.3

+9.0

+7%

PretaxProfit

40.0

39.7

-0.3

+5.3 +15%

Net Profit

33.4

33.1

-0.3

+5.7

Average Rates(A)Q3 FY17(B)Q3 FY18

Variance

US$
EURO
BAHT

¥112.74¥133.17¥3.43¥112.58¥128.21
¥3.42

+0.1%
+3.7%
+0.3%

(¥bn)

© 2019 HOYA CORPORATION All Rights Reserved

+21%

4

➢With the generally rising value of the Japanese yen, currency exchange rate fluctuations had a -¥2.3
billion impact on sales➢Assuming exchange rates level with the same period in the prior year, real growth would have been ¥9.0
billion (+7%)➢The impact of foreign currency exchange on quarterly profit before tax was a -¥300 million; in real terms
growth was ¥5.3 billion (+15%)4Notes RE: Non-Operating Items
Comprehensive Income Statement
(¥bn)
Sales
Finance Income
Other Income
Total Revenue
ExpensePretax Profit
1

2

Q3 FY17
136.8
0.4
2.3
139.4
104.7
34.7

Q3 FY18
143.4
0.9
0.8
145.1
105.4
39.7

YoY
+6.7
+0.5
-1.5
+5.7
+0.7
+5.0

1
2

Other income decreased by ¥1.5bn due a litigation
settlement related to patents in the year-ago quarter.
Foreign exchange loss increased ¥0.9bn. However, total
expense remained level due to reduced costs.

© 2019 HOYA CORPORATION All Rights Reserved

5➢Other gain/loss decreased ¥1.5 billion, mainly due to ¥1.6 billion in settlements related toeyeglass lens patents that occurred during the same period of the prior fiscal year
➢Revaluation of assets denominated in foreign currencies resulted in foreign exchange loss of¥900 million, consisting of ¥300 million in foreign exchange gain for the prior fiscal year and¥600 million in foreign exchange loss during the current fiscal year
➢However, our efforts to reduce expenses held overall expenses to a minor increase year onyear

5Life Care Earnings
Q3 FY17Q3 FY18

YoY

YoY(%)

Sales*

90.1

93.9

+3.8

+4%

Pretax Profit

17.0

19.1

+2.2

+13%

cf.Operating Profit

16.1

19.6

+3.5

+22%

(¥bn)

cf.OP Margin

17.8%

20.9% +3.1pt*External Sales© 2019 HOYA CORPORATION All Rights Reserved

6➢Life Care segment sales amounted to ¥93.9 billion, an increase of ¥3.8 billion year on year
➢Segment profit (profit before tax) rose ¥2.2 billion, reaching ¥19.1 billion

6Life Care Earnings (CCB)
Previous
Rate

Current
Rate

FX
Impact

Real
YoY

Real
YoY(%)

Sales*

96.0

93.9

-2.1

+5.9

+7%

Pretax Profit

19.4

19.1

-0.3

+2.5 +15%

cf.Operating Profit

19.9

19.6

-0.3

+3.8 +24%(¥bn)*External Sales© 2019 HOYA CORPORATION All Rights Reserved

7➢Foreign currency translation had a -¥2.1 billion impact on Life Care segment results; real
sales growth amounted to ¥5.9 billion➢Real segment profit (profit before tax) amounted to ¥2.5 billion after excluding the impactof foreign currency exchange

7

IT Earnings
Q3 FY17Q3 FY18

YoY

YoY(%)

Sales*

45.5

48.3

+2.8

+6%

Pretax profit

18.2

21.5

+3.3

+18%

cf.Operating Profit

18.2

21.6

+3.4

+19%

39.9%

44.7%

+4.8pt(¥bn)

cf.OP Margin*External Sales© 2019 HOYA CORPORATION All Rights Reserved

8➢Information Technology segment sales for the third quarter amounted to ¥48.3 billion, an
increase of ¥2.8 billion year on year
➢Segment profit (profit before tax) rose ¥3.3 billion to ¥21.5 billion

8

IT Earnings (CCB)
Q3
FY17

Q3
FY18

FX
Impact

Real
YoY

Real
YoY(%)

Sales*

48.5

48.3

-0.2

+3.0

+7%

Pretax profit

21.6

21.5

-0.1

+3.4 +19%

cf.Operating Profit

21.7

21.6

-0.1

+3.5 +19%(¥bn)*External Sales© 2019 HOYA CORPORATION All Rights Reserved

9➢The Information Technology segment incurred almost no impact from foreign currencytranslation➢In real terms, segment sales increased ¥3.0 billion after excluding the impact of foreign
currency translation; segment profit (profit before tax) increased ¥3.4 billion in real terms

9Earnings by Sub-Segment
Healthcare Sales
Eyeglass Lenses / Contact Lenses(¥bn)

Q3 FY17Q3 FY18

YoY

YoY(%)

67.3

69.3

+2.0

+3%

Sales*

Constant Currency Basis(¥bn)

Previous Rate

Current Rate

Real YoY

Real YoY(%)

70.8

69.3

+3.5

+5%

Sales**External Sales© 2019 HOYA CORPORATION All Rights Reserved

10➢Health care related products (eyeglass lenses, contact lenses) sales were ¥69.3 billion, up¥2.0 billion (+3%) year on year
➢Foreign currency translation had a -¥1.5 billion impact; real sales growth amounted to ¥3.5
billion after eliminating this impact

10Earnings by Sub-Segment
Medical Sales
Endoscopes / IOLs(¥bn)

Q3 FY17Q3 FY18

YoY

YoY(%)

22.8

24.6

+1.8

+8%

Sales*

Constant Currency Basis(¥bn)

Previous Rate

Current Rate

Real YoY

Real YoY(%)

25.2

24.6

+2.4

+11%

Sales**External Sales© 2019 HOYA CORPORATION All Rights Reserved

11➢Medical-related products (endoscopes, intraocular lenses, etc.) sales were ¥24.6 billion, a¥1.8 billion (+8%) increase year on year
➢Foreign currency translation had a -¥600 million impact on performance; in real terms
growth was ¥2.4 billion (+11%)11

Earnings by Sub-Segment
Electronics
Masks & Blanks / HDD Substrates(¥bn)

Q3 FY17Q3 FY18

YoY

YoY(%)

34.3

38.3

+4.0

+12%

Sales*

Constant Currency Basis(¥bn)

Previous Rate

Current Rate

Real YoY

Real YoY(%)

38.3

38.3

+4.1

+12%

Sales**External Sales© 2019 HOYA CORPORATION All Rights Reserved

12➢Electronics related products (glass substrates for semiconductors, LCD-related products,
and hard disk drives) sales amounted to ¥38.3 billion up ¥4.0 billion (+12%) year on year
➢Foreign currency translation had almost no impact on this business (-¥100 million); real
sales growth amounted to ¥4.1 billion

12Earnings by Sub-Segment
Imaging
Camera Lenses, Etc.

(¥bn)

Q3 FY17Q3 FY18

YoY

YoY(%)

11.2

10.0

-1.2

-11%

Sales*

Constant Currency Basis(¥bn)

Previous Rate

Current
Rate

Real YoY

Real YoY(%)

10.1

10.0

-1.1

-10%

Sales**External Sales© 2019 HOYA CORPORATION All Rights Reserved

13➢Imaging related products sales amounted to ¥10.0 billion, down ¥1.2 billion (-11%) year
on year➢The impact of foreign currency translation on this business was minor at -¥100 million; real
sales fell ¥1.1 billion

13

Balance Sheet
Q2 FY18(¥bn)

Non-current Assets
Current Assets
CapitalNon-current Liabilities
Current Liabilities
Total
1

237.8
479.4
591.8
16.0
109.4
717.2

Q3 FY18

QoQ

234.8
485.0
596.6
15.6
107.5
719.8

-3.1
+5.6
+4.8
-0.4
-1.8
+2.6

1

Cash and cash equivalents increased by ¥20bn.
Other short-term financial assets decreased by ¥15.3bn.

© 2019 HOYA CORPORATION All Rights Reserved

14➢The Company’s balance sheets did not show any major fluctuations for the quarter➢Cash and cash equivalents increased ¥20.0 billion, while short-term financial assets
decreased due to a transfer of time deposits; these factors contributed to a ¥5.6 billion
increase in current assets

14

Cash Flow
Q3 FY17(¥bn)

Q3 FY18

YoY

Operating CF

31.5

34.1

+2.6

Investing CF

0.3

7.9

+7.7

Financing CF-36.7-16.3 +20.3

Cash & Cash Equivalents
at the end of the term

228.6

272.3 +43.7

1

1

Financing CF outlays decreased significantly, as there wasa share buy-back totaling ¥26.2 in the year-ago quarter.

© 2019 HOYA CORPORATION All Rights Reserved

15➢Cash used in financing activities declined ¥20.3 billion year on year. While outlays increased¥5.5 billion due to an increase in interim dividends, the Company paid ¥26.2 billion for sharebuybacks during the same period in the prior fiscal year (transaction not repeated thisquarter)➢While not reflected in Q3 cash flows, the acquisition of Mid Labs/Fritz Ruck was completed
in January; we plan to show ¥19.5 billion in acquisition costs under cash used in investing
activities for Q415

Q4 & Full Year Guidance✓ In Q4, although sales decline in Imaging due to market factors is expected,
overall sales will grow steadily mainly driven by Life Care Business.
✓ Expect profits to increase significantly, as there was an impairment loss related
to an oversea subsidiary in Q4 FY17.

FY18 Q4
(¥bn)

Sales
Pretax Profit
Net Profit

Q4 FY17Q4 FY18

139.7
33.7
27.3

+3.7
+7.6
+7.8

+3%
+29%
+40%

FY17

FY18

YoY

YoY(%)

135.9
26.2
19.5

YoY

YoY(%)

FY18 Full Year
(¥bn)

Sales
Pretax Profit
Net Profit© 2019 HOYA CORPORATION All Rights Reserved

535.6
124.2
99.2

564.0
147.0
120.2

+28.4
+22.8
+21.0

+5%
+18%
+21%
16

➢We expect to record fiscal 2018 revenue of ¥564.0 billion, profit before tax of ¥147.0 billion,
and net profit of ¥120.2 billion

16

1. Financial Results
2. IT Business Overview [Eiichiro Ikeda, COO/CTO]
3. Life Care Business Overview
4. Summary
5. Q&A© 2019 HOYA CORPORATION All Rights Reserved

1717

IT Snapshot
YoY Sales Growth (Like-for-Like)+1%

HDD Substrates

+27%

-4%

Masks & Blanks(LSI/FPD)

Imaging+8%© 2019 HOYA CORPORATION All Rights Reserved

18➢In addition to higher revenues and profits, our Information Technology segment achieved
higher profitability➢Masks & Blanks sales rose 27%, HDD Substrates sales rose 1%, and Imaging sales fell 4%➢We indicate a decrease in Imaging sales of 10% on page 13; the difference is that thischart represents year-on-year changes only for those products we will continue to sell

18

Overview by ProductThis Quarter
EUV sales more than doubled driven by aggressive R&D,
now accounting for 23% of blanks sales. DUV also
showed strong growth driven by leading-edge products.

Going Forward
LSI Blanks

Expect EUV blanks growth to continue, withcommercialization starting this year. Grow leading-edge
products on DUV.

This Quarter
Saw growth by tapping into the Chinese market as wellas capturing the strong demand for developing newpanel designs for smartphones.

Going Forward
FPD/LSI Masks

Continue to focus on high-resolution products below Geneight. Keep attention focused on the cycle of panel
design R&D, as well as changes in competition.

© 2019 HOYA CORPORATION All Rights Reserved

19

Mask Blanks for Semiconductors➢EUV sales more than doubled, now accounting for more than 23% of blanks sales.
➢Even in the weakening optical (DUV) end market, sales increased 16%. As the major
semiconductor manufacturers have announced, 7nm products are trending favorably. This
had a beneficial impact on our sales of blanks, where we hold a high share of the market.
➢[Supplementary materials on page 34]
FPD/LSI Masks➢The Chinese market, where FPD mask factories are being put into production, contributed
to grow➢While smartphone unit production has slowed, panel exterior design development continues
to be active, and we were able to capture this demand➢Capturing demand steadily for the rising Chinese market will be a key for future growth19Overview by ProductThis Quarter

HDD
Substrates
HDD Substrates

2.5” sales decreased due to SSD penetration. 3.5” sales
almost tripled, now accounting for 19% of sales.
Going Forward
Expect the sluggish data center CAPEX to ramp up
during H2 2019. Continue to expand 3.5” sales.

This Quarter

Imaging
Imaging

Contraction of the point-and-shoot camera market andthe slowdown of security camera market led to a decline
in sales.

Going Forward
Continue to develop new applications and high valueadded products.

© 2019 HOYA CORPORATION All Rights Reserved

20

Glass Substrates for Hard Disk Drives➢Sales growth of 3.5” substrates for data centers compensated for sales declines of 2.5”
substrates due to SSD penetration, resulting in slight overall sales growth➢Sales of 3.5” substrates have risen to account for 19% of sales➢[Supplementary materials on page 33]
Imaging-Related Products➢While the point-and-shoot camera market contracts, we continue to capture a rising shareof the high-function markets for full-size single-lens mirrorless camera lenses and otherproducts➢Of late, sales of lenses for surveillance cameras have slowed; we aim to develop a variety
of applications for these products

201. Financial Results
2. IT Business Overview
3. Life Care Business Overview [Hiroshi Suzuki, CEO]4. Summary
5. Q&A© 2019 HOYA CORPORATION All Rights Reserved21

21Life Care Snapshot
YoY Sales Growth (Like-for-Like)

+16%
+4%

Eyeglass Lenses+8%

Contact Lenses

Endoscopes

+6%

±0%

Other

IOLs

+7%
© 2019 HOYA CORPORATION All Rights Reserved

22➢By product type, sales of eyeglass lenses increased 4%, sales of contact lenses increased
8%, sales of endoscopes rose 16%, and sales of intraocular lenses remained flat

22

Overview by ProductThis Quarter
Sales increased in all regions. Sales to independent
retailors in Europe were robust. Performance Optics drove
sales in the Americas.

Going Forward
Eyeglass Lenses

Plan to raise capacity in response to expanding sales
channels and increasing volume.

This Quarter
Accelerated new store roll-outs. Closed four stores while
opening stores at better locations within the same area.
No. of stores at quarter-end: 283（New 9/Closed 4）

Going Forward
Contact Lenses

Increase same store sales by raising ARPU. Continue toroll out new stores for sustainable growth.

© 2019 HOYA CORPORATION All Rights Reserved

23

Eyeglass Lenses➢By region, sales in Japan rose 3%, sales in Europe rose 3%, sales in APAC increased 5%,
and sales in the Americas increased 4%➢In Japan, we experienced a temporary increase in sales due to disasters affecting thefactories of our competitors; we expect the market to remain challenging➢We had been experiencing double-digit growth in the Americas; however, growth has
slowed due to increased measures among our competitors. We expect this development tobe temporary in nature.
Contact Lenses➢We have experienced success through new store openings and favorable sales of high-unitprice products➢While we are not seeing significant growth in the contact lens market, the population ofyounger contact lens wearers is growing, which we see as a positive sign23Overview by ProductThis Quarter
APAC sales decreased while Japan and Europe increased.
Secured same-level sales compared to the year-ago quarter.

Going Forward
IOLs

Recover APAC performance as quickly as possible.
Facilitate integration with Mid Labs and Fritz Ruck,
acquisitions recently completed.

This Quarter
Launch of new products and reinforcing sales force
resulted in strong sales in Europe and the Americas.
Profitability improved due to sales expansion.

Going Forward
Endoscopes

Expect strong sales by gradually launching new products,
including scopes and video processors.

© 2019 HOYA CORPORATION All Rights Reserved

24

Intraocular Lenses➢Our Chinese distributor channel continued to be sluggish; however, overall performanceremained level as we compensated via sales in Japan and Europe, where we engage in direct
sales
Endoscopes➢We have experienced temporary positive developments, including a major deal in Europe,
where growth was in excess of 25%; at the same time, we are making steady improvements
to our sales structure➢Meanwhile, we are keeping our eyes on the risk of customers holding off buying until the
introduction of new products by competitors; we are also watching for aggressive sales
tactics by competitors241. Financial Results
2. IT Business Overview
3. Life Care Business Overview
4. Summary [Hiroshi Suzuki, CEO]
5. Q&A© 2019 HOYA CORPORATION All Rights Reserved

25➢While cash on hand has increased, we have not made any changes in our approach to cash
allocation; we remain committed to using reserve funds for shareholder returns➢If we do decide to engage in a share buyback, we will want to time such with a downward
phase in stock prices25

1. Financial Results
2. IT Business Overview
3. Life Care Business Overview
4. Summary
5. Q&A© 2019 HOYA CORPORATION All Rights Reserved

26

26

Q&A -1
Q

Glass Substrates for Hard Disk Drives
The markets related to HDDs for PCs and servers is sluggish. What is the HOYA
outlook for the glass substrate business?

A(Market Conditions)
Data center HDD demand from major cloud vendors has declined, while HDD
inventory has increased and production has fallen off. Demand for the next six
months will likely be sluggish.
(HOYA Sales)
3.5” substrate sales have not been as impacted by sluggish demand as much as
the rest of the market. This is because we have grown our share of the market as
customers move from traditional aluminum to glass. Also, data centers are
replacing low-capacity HDDs in data centers to higher capacity products, and our
glass substrates are used in high-capacity HDDs.
Falling NAND prices have caused sales of our 2.5” substrates to continue todecline, as HDDs are being replaced by SSDs in PCs and mission-critical servers(around 50% of our 2.5” substrate sales).
Our outlook for combined sales of 2.5” and 3.5” substrates in the next period andbeyond indicates a likely phase of overall decline for the second half of fiscal 2019,as the drop in 2.5” substrates outpaces the growth of 3.5” substrates. We intend
to generate steady growth as we win new customers over the medium term.

© 2019 HOYA CORPORATION All Rights Reserved

27

27

Q&A -2
Q

Blanks for Semiconductors
How has HOYA been able to capture a steadily rising share for optical (DUV)?

A

We not only have optical (DUV) technology, but also technology for EUV, which will
enjoy greater adoption in the future. We believe our ability to offer comprehensive
solutions is one strength over our competition.
Beyond gaining greater market share, the number of masks/blanks used in
cutting-edge products for optical (7nm) are increasing, showing the potential for
growth of the market as a whole.

Q

Glass Substrates for Hard Disk Drives
At present, up to nine aluminum substrates are used for one drive. At what
number of substrates and when do you foresee HOYA glass substrates being usedby the HDD manufacturers who are using aluminum right now?

A

We expect to see HDD manufacturers use glass substrates beginning at 10
platters (18TB HDD), which is likely to happen sometime in 2021.

© 2019 HOYA CORPORATION All Rights Reserved

28

28

Q&A -3
Q

Life Care
Can you tell us more about the steady growth rates in your endoscope businessand the revenue synergies related to the business acquisition within yourintraocular lens business?

A

Given the impact of new products and other factors, we are aiming for a steady
growth rate in the high single digit for endoscope sales.
We expect revenue synergies over the medium term for intraocular lenses to bearound 10% beyond simply combining our existing sales and sales from acquired
businesses.

Q

Capital Investment
Does HOYA plan to make capital investments in your businesses to increase
capacity?
Our aim for blanks is to increase capacity to correspond to the demand andschedules of our customers.
For HDDs, capacity will not necessary double, since production output is lower for3.5” compared to 2.5” due to differences in size. However, we foresee sales
growth in excess of production unit growth, since unit costs are higher than thatof 2.5” substrates.
For eyeglasses, we intend to build a production factory to mass produce lenses.
We will counter the low-cost manufacturers who have captured market share overthe past few years.

A© 2019 HOYA CORPORATION All Rights Reserved

29

29

Q&A -4Q

Earnings Forecasts
What exchange rates do you project for Q4 of fiscal 2018?

A

We are assuming US$1 to ¥105 and €1 to ¥125.

Q

Eyeglass Lenses
Please tell us more about the competitive environment in Europe, HOYA pricing
strategy, and current/future profitability.

A

The market environment in Europe is not very favorable. Price competition among
chain stores has intensified, placing more price pressure on lens manufacturers.
Our price strategy calls for higher prices through improved product mix. However,we see challenges in raising prices in the Japanese market.
In terms of profitability, we think we can aim for Q2 and Q4 profit ratio of 20% in
response to larger revenues in this business during those quarters. For the year,
we expect profit ratio to be slightly less than 20%.
Contact Lens Retail
What is your view of the Japanese contact lens retail market?

QA

We had viewed this as a mature market; however, recent research shows that theincrease in the contact lens wearing population has grown more than anticipated.
We want to accelerate our offensive in opening stores.

© 2019 HOYA CORPORATION All Rights Reserved30

30Appendix© 2019 HOYA CORPORATION All Rights Reserved3131Life Care QoQ Earnings
Revenuecf. Operating Profit / Margin

90.1

91.9

91.3

91.9

93.9

(¥bn)

(¥bn)

17.8%

16.1

Q3

Q4

Q1

FY17

Q2
FY18

Q3

20.9%
19.7% 19.5% 20.3%

18.1

17.8

18.7

19.6

Q4

Q1

Q2

Q3

Q3
FY17

FY18

*External Sales© 2019 HOYA CORPORATION All Rights Reserved3232IT QoQ Earnings
Revenuecf. Operating Profit / Margin

45.5

42.6

Q3

Q4

46.6

Q1

FY17

49.0

Q2
FY18

48.3

Q3

37.7%

(¥bn)

(bn)

39.9%

18.2

16.1

Q3

Q4
FY17

40.3%

18.8

Q1

42.7%

44.7%

20.9

21.6

Q2

Q3

FY18

*External Sales© 2019 HOYA CORPORATION All Rights Reserved33

33

Overview of HDD Glass Substrate Business✓ Expect further penetration by SSDs into the 2.5” substrate market (laptops etc.)
Aluminum substrates are likely to disappear after FY19, allowing HOYA tostrengthen its position further.
✓ While cyclicality exists (every 6-7 quarters), we expect 3.5” substrate market(equally as large as the 2.5” market) to grow steadily in the long run. HOYA
aims to penetrate the market by leveraging the advantages of glass substrates.
2.5”Substrate Market

3.5”Substrate Market for Datacenters
84%
73%

63%
55%

AL

48%

AL
GL

CY17

GL
CY18E

CY19E

CY20E

© 2019 HOYA CORPORATION All Rights Reserved

CY21E

CY17

CY18E

CY19E

CY20E

CY21E
34

➢We expect further penetration by SSDs into the 2.5” substrate market for HDDs(*penetration figures for laptops only)➢While the market for 2.5” substrates is eroding, manufacturers using aluminum substrates
are shifting capacity to 3.5”. As a result, our market share is increasing, serving as one factor
keeping declines in our 2.5” sales less than overall market declines.
➢While the overall market for data centers using 3.5” substrates is slowing, we are notexperiencing the same impact felt by the market as a whole. This is because our share forhigh-capacity products using our glass substrates is growing.
➢We will aim to grow in the future with replacements of 12TB products by 14TB and 16TB
products.

34

Overview of EUV Photomask Blanks✓ Sales from high-end products was less than 30% five years ago. Today, highvalue-added products account for around 60% of our blanks sales.
✓ HOYA aims to expand sales of products for mass production and R&D. The
number of EUV scanners shipped is steadily increasing, and it is likely that fullfledged production will start this year.
EUV Scanner Shipments

Mix Shift of Blanks Sales

R&D Phase

Mass Prod.

Shipment

41%

Cumulative Total

70%

70

Low-Mid
High

36%

EUV

40
22

30%
FY13 Q323%
FY18 Q3© 2019 HOYA CORPORATION All Rights Reserved

3

7
4

9

12

2

3

2013

2014

2015

2016

10

2017

30
18

2018

2019

2020

（Prepared by HOYA based on ASML materials
35➢Compared to five years ago, our ratio of high-value-added product sales for blanks hasgrown significantly.
➢Both EUV and optical DUV cutting-edge products (7nm, more recently) have grown.
➢The number of EUV exposure devices in the market has grown steadily, creating anenvironment for increasing blanks demand.
➢In particular, orders for High NA exposure devices (making possible the production of 3nm
products by raising the optical system aperture ratio higher than existing exposure devices)
indicate the high potential for market growth.

35

Status of Investments
CAPEX
3.5”HDD Substrate New Fab@Laos
Amount: ¥30bn
Start operations: H1 CY20

M&A
Acquisition of Mid Labs/Fritz Ruck
Amount: ¥19.5bn
Status: Acquisition process completed in
January 2019. Facilitate integration process togenerate synergies with IOL business.

EUV Blanks New Fab@Singapore
Amount: ¥25bn
Start operations: H1 CY20

Eyeglass New Plant@Vietnam
Amount: ¥6bn
Start operations: Early CY20

© 2019 HOYA CORPORATION All Rights Reserved

36➢We are working to put manufacturing equipment into production during the first half of2020 for 3.5” HDD substrates, EUV blanks, and mass-produced eyeglass lenses.
➢In terms of M&A, we have completed our acquisition of Mid Labs/Fritz Ruck for the purposeof generating synergies in intraocular lenses.
➢The company has equipment that uses ultrasonic waves to emulsify and then suction out
cloudy lens material during cataract surgery. This will allow us to offer a comprehensive
approach in conjunction with intraocular lenses.
➢The company also manufactures and sells a cutter used in vitreoretinal surgery, and we willconsider expanding our product portfolio in the ophthalmology sector.

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Notes✓ Accounting standard: IFRS✓ The fiscal year ending March 2019 is referred to as “FY18” throughout thisdocument.
✓ Figures less than ¥100 million are rounded down. Accordingly, some discrepancies
may occur among totals. Ratios are calculated using actual numbers.
✓ Like-for-Like figures exclude foreign exchange and M&A impact as well as otherextraordinary factors.
✓ Profit from ordinary operating activities is calculated as reference
information for investors; calculated by deducting finance income/costs,
share of profits(loss) of associates, foreign exchange gain/loss and othertemporary gain/loss from pretax profit.
✓ We have omitted a detailed breakdown of financial statements.
Please refer to the tanshin or the quarterly report for detailed numbers.
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Disclaimer

This report is provided solely for the information of professional investors andanalysts who are expected to make their own evaluation of the company. This
report contains forward-looking statements that are based on management’s
assumptions and beliefs in light of the information currently available to it andtherefore you should not place undue reliance on them. These forward-looking
statements involve known and unknown risks, uncertainties and other factorsthat may cause our actual results, performance or achievements to differ
materially from that anticipated in these statements. These factors include
changes in economic conditions, trends in our major markets, currency exchange
rates, etc. We accept no liability whatsoever for any direct or consequential loss
arising from any use of this report.

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