FY20Q1

F i n a n c i a l
R e s u l t s

July 28, 2020 Earnings Conference

7741.T[ADR:HOCPY
H O Y AUS]C O R P O R AT I O N[With Memo]
Please be aware that this memo isposted for reference and is not averbatim record of all statements
made at the earnings call.
© 2020 HOYA CORPORATION All Rights Reserved

Presentation MC:
It is time to begin the HOYA financial results presentation for the first quarter of the fiscal
year ending March 2021.
From the standpoint of preventing the spread of COVID-19, we will once again make ourannouncement via teleconference. We apologize if there are any circumstances make thisteleconference difficult to hear or for any interruptions due to technology issues.
Today’s presenters are Mr. Hiroshi Suzuki, CEO, Mr. Ryo Hirooka, CFO, and Mr. Eiichiro Ikeda,
CTO.

1

1. Financial Results [Ryo Hirooka, CFO]
2. IT Business Overview
3. Life Care Business Overview
4. Summary
5. Q&A© 2020 HOYA CORPORATION All Rights Reserved

2

Presentation MC:
As for today’s agenda, CFO Hirooka will cover earnings results for the fiscal first quarter.
Following CFO Hirooka, CTO Ikeda will discuss the HOYA Information Technology segment.
Finally, CEO Suzuki will provide an overview of performance in our Life Care segment.
The remainder of our time until 4:15 PM will be open for questions and answers.
Those of you participating via PC, please refer to the materials shared on your screens.
Without further ado, CFO Hirooka will begin his portion of today’s presentation.

2

Financial Overview(¥bn)

Q1 FY19Q1 FY20

YoY

YoY(%)

Revenue

140.8

109.3

-31.5

-22%

Pretax Profit

37.0

31.9

-5.1

-14%

Net Profit

30.1

25.6

-4.5

-15%

cf. Profit fromordinary operating
activities*

38.5

31.3

-7.2

-19%

Sales declined due to the impact of COVID-19;however cost
reductions minimized the impact on profits.
(Pretax Profit Margin 26.3%→29.2%)© 2020 HOYA CORPORATION All Rights Reserved

3

Ryo Hirooka, CFO:
I will conduct my portion based on the materials you see on your screens.
HOYA revenue amounted to ¥109.3 billion, down ¥31.5 billion (-22%) year on year.
Quarterly profit before tax was ¥31.9 billion, down ¥5.1 billion (-14%) year on year
Quarterly profit was ¥25.6 billion yen, down ¥4.5 billion (-15%)
COVID-19 has mainly impacted sales in our Life Care segment.
Meanwhile, profits did not decrease to the same degree as sales since we implemented
temporary reductions in costs.

3

Constant Currency Basis (CCB)(¥bn)

Previous
Rate (A)Current
FX Impact
Rate (B)YoY

YoY(%)

Revenue

111.7

109.3

-2.4

-29.1

-21%

Pretax Profit

32.2

31.9

-0.3

-4.8

-13%

Net Profit

25.9

25.6

-0.2

-4.3

-14%

Average Rates(A)Q1 FY19

(B)Q1 FY20

Variance

US$
EURO
BAHT

¥109.67¥122.87¥3.47¥107.38¥118.74
¥3.39

+2.1%
+3.4%
+2.3%

© 2020 HOYA CORPORATION All Rights Reserved

4

Ryo Hirooka, CFO:
Next, I will address the impact of foreign currency translation.
The bottom section of this slide presents our main currencies, which consist of the U.S.
dollar, the euro, and the baht. Compared to last year, the yen was slightly stronger related tothese currencies; however, there was no significant impact in real terms.
In real terms, the year-on-year change in revenues amounted to minus ¥29.1 billion (-21%)
after excluding the impact of foreign currency translation.
In particular, profits have not been affected by foreign exchange rates.

4Notes RE: Special Items
Comprehensive Income Statement(¥bn)

Q1 FY19

IncomeQ1 FY20

YoY

142.4

113.7

-28.7

0.6

3.9

+3.3

1

Expenses

105.4

81.8

-23.6

2

Pretax Profit

37.0

31.9

-5.1

Other Income

1

Recorded a revenue related to a settlement in the U.S.

2

The Company has made significant temporary cost
reductions to limit the impact of the reduction in
marginal profit.

© 2020 HOYA CORPORATION All Rights Reserved

5

O1

Allow me to explain the special factors we experienced.
During the quarter, we concluded a settlement regarding a past M&A transaction in the U.S.
We reversed the liability related to this matter, and recorded other profit of ¥3.0 billion.
We held down expenses groupwide as Life Care segment sales fell significantly. With the
exception of depreciation and amortization, we hare holding expenses down in line with sales.
As a result, we reduced expenses by 22% compared to the same period in the prior fiscal
year.
(Please turn your attention to P.7 of financial results supplementary materials)

5スライド 5
O1

ノート部分申し送り末尾の補足資料のページは英語のページに合わせています。
One World Link2, 2020/07/31

Life Care Earnings(¥bn)

Q1 FY19Q1 FY20

YoY

YoY(%)

Revenue*

93.8

61.9

-31.9

-34%

Pretax Profit

17.3

10.3

-7.0

-40%

cf.Operating Profit

18.2

9.3

-8.9

-49%

19.4%

14.9%

-4.5ptcf.OP Margin*External revenue© 2020 HOYA CORPORATION All Rights Reserved

6

Ryo Hirooka, CFO:Life Care segment sales amounted to ¥61.9 billion, a decrease of ¥31.9 billion (-34%) year
on yearProfit before tax amounted to ¥10.3 billion, ¥7.0 billion lower (-40%) year on year.
Profit from regular sales activities were about half of what we recorded in the same period of
the prior fiscal year.
We will discuss circumstances by product later; however, sales in our Life Care segment fellsignificantly in April and May as economic activity slowed. Given these circumstances, wetook aggressive action to reduce costs, limiting the impact on profits.
In June, sales returned to a level close to the prior fiscal year.

6Life Care Earnings (CCB)
Previous
Rate

Current
Rate

FX
ImpactYoY

YoY(%)

Revenue*

63.6

61.9

-1.7

-30.2

-32%

Pretax Profit

10.3

10.3

+0.1

-7.0

-41%

cf.Operating Profit

9.3

9.3

-0.1

-8.8

-49%

(¥bn)

*External revenue© 2020 HOYA CORPORATION All Rights Reserved

7

Ryo Hirooka, CFO:
Foreign currency translation did not have such a significant impact during the quarter.
Overall, sales declined 30% and profit fell by half.

7

IT Earnings(¥bn)

Q1 FY19Q1 FY20

YoY

YoY(%)

Revenue*

46.0

46.2

+0.3

+1%

Pretax profit

20.5

21.7

+1.2

+6%

cf.Operating Profit

21.2

22.5

+1.3

+6%

46.0%

48.6%

+2.6ptcf.OP Margin

Resulted in unusually high margins due to a temporally cost reduction
measure not limited to Life Care but also including IT.
*External revenue© 2020 HOYA CORPORATION All Rights Reserved

8

Ryo Hirooka, CFO:
Information Technology segment profit before tax amounted to ¥46.2 billion, ¥0.3 billion
higher (+1%) year on year.
Profit before tax amounted to ¥21.7 billion, ¥1.2 billion higher (+6%) year on year.
Our Information Technology was comparatively unaffected by COVID-19, and we recorded
segment sales essentially even with the same prior in the prior fiscal year. Profit ratios werehigher, however, as we engaged in groupwide cost reduction activities.

8IT Earnings (CCB)
Previous
Rate

Current
Rate

FX
ImpactYoY

YoY(%)

Revenue*

46.9

46.2

-0.6

+0.9

+2%

Pretax profit

21.9

21.7

-0.3

+1.5

+7%

cf.Operating Profit

22.7

22.5

-0.3

+1.6

+7%

(¥bn)

*External revenue© 2020 HOYA CORPORATION All Rights Reserved

9

Ryo Hirooka, CFO:
The Information Technology segment was not impacted to such a significant degree by
foreign currency translation, and growth in real terms was essentially the same.

9

Earnings by Sub-Segment（¥bn）

Q1 FY19Q1 FY20

YoY

YoY(%)

Health Care

70.4

43.9

-26.5
(-25.3)-38%(-36%)

Medical

23.3

18.0

-5.3
(-4.8)-23%(-21%)

Electronics

37.0

40.3

+3.2
(+3.7)+9%(+10%)

Imaging

9.0

6.0

-3.0
(-2.8)-33%(-32%)(Eyeglasses/Contact
Lenses)(IOLs/Endoscopes/Ar
tificial Bone)(Mask & Blanks/HDD
Substrates)*Inside the parentheses are growth rates on a constant currency basis© 2020 HOYA CORPORATION All Rights Reserved

10

Ryo Hirooka, CFO:
■Health care related products (eyeglass lenses, contact lenses) sales were ¥43.9 billion,
down ¥26.5 billion (-38%) year on year
The figures in parentheses represent results and change ratios excluding the impact offoreign currency translation. real basis a decrease of ¥25.3 billion (-36%)year on year.
Eyeglasses and contact lenses were impacted significantly by COVID-19.
Eyeglasses
Eyeglass retail stores in particular closed all over the world. Some countries recorded almost
no sales between April and May. In June, retail stores began to reopen with the resumptionof economic activity, returning to normal levels in line with the prior fiscal year. While we saw
better and worse performance across different countries in July, we did see quite a few
customers come back to our stores.
Contact Lenses
Contact lens sales fell by a wide margin in April and May due to the suspension of business in
response to the declaration of a state of emergency. Customers began returning after thedeclaration of a state of emergency was rescinded.
■Medical-related product (intraocular lenses, endoscopes, etc.) sales amounted to ¥18.0
billion, a ¥5.3 billion decrease (-23%).
Sales amounted to ¥4.8 billion (-21%) in real terms after excluding the impact of foreign
currency translation
Intraocular Lenses
In Europe and the U.S. in particular, cataract surgery is considered elective, and sales of
intraocular lenses decreased year on year. Demand has gradually returned with the10resumption of economic activity in June. Performance in Europe outpaced the same period in
the prior fiscal year. In July, sales to clinics and other customers began returning to normal;
however, we have not seen a recovery overall. Even if cataract surgeries are postponed, they
will be performed eventually. Although there will be differences by country, we expect to see
a gradual recovery.
Endoscopes
Circumstances vary by country. Endoscopies have not been performed as hospitals havebeen busy dealing with COVID-19.
■Electronics-related product (blanks, HDD substrates) sales amounted to ¥40.3 billion up¥3.2 billion (+9%) year on year.
Mask Blanks
Mask blank sales for semiconductors were strong, unaffected by COVID-19.
HDD Substrates
2.5-inch sales were down, compensated by 3.5-inch sales.
Imaging related products sales amounted to ¥6.0 billion, down ¥3.0 billion (-33%) year on
year
Sales of camera-related products continued to decline significantly. Demand for cameras
stagnated due to COVID-19, and we do not believe the market will recover. Therefore, it isimportant that we capture sales of surveillance cameras and other products, building a
structure that generates the same level of sales and cash flows we have now. The impact on
the group as a whole has become relatively small, accounting for only 1% to 2% as a factor
in sales decreases.

10Balance Sheet(¥bn)

Q3 FY19Q1 FY20

QoQ

Non-current Assets

289.8

288.3

-1.5

Current Assets

521.2

499.3

-21.9 1

Capital

629.3

637.2

+7.9

Non-current Liabilities

49.4

49.5

+0.1

Current Liabilities

132.4

100.9

-31.5 2

Total Assets

811.0

787.6

-23.4

1

Decrease of cash -16.5bn yen

2

Decrease in trade and other payables due to lower
demand -15.6bn yen© 2020 HOYA CORPORATION All Rights Reserved

11

Ryo Hirooka, CFO:
Current assets have decreased due to a decrease in cash stemming from payments of income
tax and dividends. Current liabilities were significantly lower due to a decrease in notes andaccounts payable trade related to lower demand in our Life Care segment.

11

Cash Flow(¥bn)

Q1 FY19Q1 FY20

YoY

Operating CF

35.4

10.8

-24.7

1

Investing CF

-10.9

-6.5

+4.4

2

Financing CF

-37.7

-19.8

+17.9

Cash & Cash Equivalents
at the end of the term

273.8

301.5

+27.7

1

Decline in operating cash flow due to lower profits.

2

Cash outlays from investing activities decreased as large
investments are coming to an end.

© 2020 HOYA CORPORATION All Rights Reserved

12

Ryo Hirooka, CFO:
Payments related to equipment (EUV production line in Singapore, HDD substrate plant inLaos) have fallen since reaching a peak. Net cash used in investing activities has decreased.
Cash used in financing activities decreased compared with the prior fiscal year, when we usedcash for share buybacks.

12

Q2 & H1 Forecast
We expect the impact of COVID-19 on our Life Care Business to mitigate; however,
we expect sales of contact lenses to decline due to the rush demand before thetax hike in Q2 last year. We expect electronics-related products to be strong, while
weak momentum to continue in the imaging business.

FY20 Q2(¥bn)
Revenue
Pretax Profit
Net Profit

Q2 FY19
154.1
44.2
35.0

Q2 FY20
135.7
35.1
27.9

YoY
-18.5
-9.2
-7.2

YoY(%)
-12%
-21%
-20%

H1 FY19
294.9
81.3
65.2

H1 FY20
245.0
67.0
53.5

YoY
-49.9
-14.3
-11.7

YoY(%)
-17%
-18%
-18%

FY20 H1(¥bn)
Revenue
Pretax Profit
Net Profit© 2020 HOYA CORPORATION All Rights Reserved

13

While the current environment makes forecasts difficult, I want to address three points.
1.

Sales in our Life Care segment were higher in the prior fiscal year due to special factors.
Contact lens sales were 30% higher in the demand rush prior to the consumption tax
hike, while sales of eyeglasses in Japan were higher in Q2. Even in normal times, wewould have faced a high hurdle in outperforming prior-year results.

2.

Overall, Life Care segment sales have started to recover. However, it will take some time
for patients to return to hospitals until we see movement in Medical-Related Products. In
addition, eyeglasses have not recovered completely. Accordingly we forecast weakness in
our Life Care segment.

3.

Imaging-related products within our Information Technology segment due to challenges
in the digital camera market. Also, we saw a build-up of inventory among customers formask blanks for semiconductors in Q2 of the prior fiscal year experienced Japan-Korea
trade frictions. Traditionally, 2.5-inch HDD substrates experience strong game-related
demand in Q2; however, we expect to see a wider decline in sales as SSDs continue toerode demand.

131. Financial Results
2. IT Business Overview [Eiichiro Ikeda, CTO]
3. Life Care Business Overview
4. Summary
5. Q&A© 2020 HOYA CORPORATION All Rights Reserved

14

Presentation MC:
Next, Mr. Eiichiro Ikeda, CTO, will give his presentation about the Information Technology
segment.

14

IT Snapshot
YoY Sales Growth (Like-for-Like)

+14%

-32%

Masks & Blanks(LSI/FPD)

Imaging+5%

HDD Substrates© 2020 HOYA CORPORATION All Rights Reserved

+2%

15

(Eiichiro Ikeda, CTO)
Excluding the impact of foreign currency translation, Information Technology segment sales
grew 2% year on year.
By product, HDD Glass Substrate sales were up +5%, masks and blanks were up +14%, andimaging sales fell -32%.

15

Overview by Product

LSI Blanks

FPD Masks

EUV blanks continued to show significant growth mainly in
R&D applications. DUV sales were also solid. Despite
inventory buildup due to COVID-19, we expect solid
growth in Q2 and beyond. The impact of the tighter U.S.
regulations on Huawei is expected to be limited because
our products are still mainly for R&D, not mass production.

We experienced continued strong growth in the Chinese
market, capturing demand for OLEDs. Competition todevelop differentiated display designs for smartphones
continues. We will continue to focus on masks for smalland medium-sized OLEDs and other high value-added
products in China. Going forward, we may see some
impact from Korean customers’ LCD panel factory closure.

© 2020 HOYA CORPORATION All Rights Reserved

16(Eiichiro Ikeda, CTO)
Blanks for Semiconductors
Continuing from the prior fiscal year, sales rose not only for EUV, but also for all categories oflow, middle, and high-end in optical. EUV, in particular, rose roughly 50% year on year.
Customers increased inventory due to concerns about the impact of COVID-19 on the supply
chain. Increased demand for 7nm products and products for EUV research development
among our major customers drove sales growth. The driver in this business is customer
research and development in 2nm and finer, and we expect future demand for cutting-edge
products. There have been reports of inventory increases due to the impact of stronger
restrictions by the U.S. on Huawei. Sales of our cutting-edge products are also influenced byresearch and development, so we expect the impact of stronger restrictions to be limited. We
believe EUV will continue to grow against the backdrop of more exposure devices inoperation, increases in EUV layers as nodes advance, and a strong desire for development
among semiconductor manufacturers. Our new Singapore plant is ramping up as planned
overall and certifications from customers are moving forward smoothly. We are expand
production capacity as planned.
FPD Masks
FPD mask sales experienced growth in the high single digits compared to the prior year.
Although demand for LCDs was weak, sales were higher for OLED products and otherproducts in China, a growing market for the G8 and older products we HOYA targets. As aresult, sales and profits rose year on year. Display development applications continue assmartphones differentiate. Therefore, we will continue to focus regionally in China for highvalue-added high-definition masks centered on medium- and small-size OLED applications.
While OLED-related sales covered for the decrease in LCD applications, we should note thepotential negative impact on future LCD applications.

16Overview by Product

HDD
Substrates
HDD Substrates

Imaging
Imaging2.5" sales declined due to the temporary closure ofcustomer manufacturing sites, etc. Difficult conditions are
expected to continue in Q2 and beyond. This period for3.5" is normally a downturn in the industry's investment
cycle, but sales doubled compared with the previous fiscal
year due to special demand related to work from home andcustomer market share gains. Going forward, we expect
3.5" continue to offset the decline of 2.5.
Demand for photography-use products declined
significantly due to the negative impact of travel
restrictions, and store closures, and there is still no signof recovery in sight. Despite production adjustments insurveillance camera applications due to COVID-19, themarket is expected to grow from 2021 onwards due toan increase in high-performance models, including
models designed for disease control.

© 2020 HOYA CORPORATION All Rights Reserved

17(Eiichiro Ikeda, CTO)
HDD Glass Substrates
HDD overall experienced +5% growth year on year. A more detailed breakdown shows that
2.5-inch products were about 70% of prior year (-30%). Erosion by SSDs in the PC market
and decisions to switch to SSDs have been the main factors in the decline of the overall 2.5inch market. We expect 2.5-inch products will continue to experience negative growth in the
future. Demand for game consoles generally rises in the July-September quarter for the
Christmas shopping season. However, the disappearance of this seasonality leads us toproject lower performance in the July-September quarter as well. On the other hand, 3.5inch products nearly doubled performance in the year-ago quarter, as our customers
captured greater market share. As a result, 3.5-inch sales not only compensated for thedecrease in 2.5-inch performance, but also experienced higher overall results as we
projected.
3.5-inch products, which are designed for data enters, rose mainly due to growth in the 16TB
products of our customers.
Although demand increases or decreases over the short term, we recognize the importanceof having the three HDD manufacturers use our glass substrates in HDDs for data centers.
Even if HAMR-equipped products are delayed by our customers, increasing the number oflayers for installed substrates is the selected path, leading us to remain confident in our
expectations for demand in glass substrates. On the other hand, we do not anticipate making
a significant contribution to improving recording density in the MAMR camp. Therefore, we
are moving forward with both HAMR development and multi-layer programs. At present, one
company is using our glass substrates. However, we expect a shift to HAMR in the future to
improve recording density. This will require heat resistance necessitating a shift to glass. A
market turn toward increasing capacity through increased area will require a shift to more17

layers, making glass substrates the superior choice for thinner layers. We have seen nochanges among our customers with respect to these scenarios.
Our new plant in Laos is making steady progress in customer certification activities. We areprogressing in line with plan to begin mass production during the second half of this fiscal
year.
Imaging-Related Products
We have already assumed that digital cameras will experience negative growth. However,
COVID-19 has further accelerated contraction of the market. Production adjustments havecombined to result in a significant decrease compared to the prior fiscal year.
We do not expect demand in the digital camera market to return. Therefore, we plan to focus
on building sales for surveillance cameras and other applications.
It will take some time to cover the decline in sales for digital cameras with surveillancecamera applications. Accordingly, we believe that we need to reduce fixed costs.

17

1. Financial Results
2. IT Business Overview
3. Life Care Business Overview [Hiroshi Suzuki, CEO]4. Summary
5. Q&A© 2020 HOYA CORPORATION All Rights Reserved

18

Presentation MC:
Next, Hiroshi Sukuzi, CEO, will give his presentation about the Life Care segment.

18

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

-10%
-42%

-23%

Endoscopes-14%
Eyeglass Lenses© 2020 HOYA CORPORATION All Rights Reserved

Contact Lenses

Other

-43%
IOLs

-32%

19

Hiroshi Suzuki, CEO:As our CFO explained conditions related to Q1, I will discuss more recent developments.

19

Overview by ProductEyeglass Lenses

Sales declined due to restrictions on non-essential travel
outside the home and retail store closures. With therelaxation of regulations, retail sales resumed, and June
sales were at the same level as last year. Due to the lowlevel of economic sensitivity in the eyeglass market, we
expect the market to continue to recover steadily as
economic activity continues to increase. Production at our
new factory in Vietnam (No. 2) started on July after a delay.

Contact Lenses

As many as 40% of our stores were closed under the stateof emergency declaration; however the impact was limited
in part through online delivery. All stores reopened after
the state of emergency was lifted. There has been nooutflow of customers to online services, and sales are
currently returning to the same level as last year. We arealso examining future store development in a post-COVID19 era.

© 2020 HOYA CORPORATION All Rights Reserved

20

Hiroshi Suzuki, CEO:
Eyeglass Lenses
Demand for the April-May period, essentially stopped due to COVID-19, seems to haveflowed back in June. July performance was essentially level with the year-ago period, only
slightly underperforming. Even now, we see the pent-up demand from April-May flowing in.
The recovery in the United States has been slow, while Europe is nearly level with the prioryear. Recovery in Japan has been slightly slow, as well. Our plants in Hungary and Vietnam
are operating well in producing lenses; however, the four-to-six week lockdown in thePhilippines meant workers could not come into our plant there. As a result, we haveexperienced on-time delivery issues in Japan, which may be what is delaying performance.
Contact Lenses
Contact lens performance has recovered to about 91%-92% (-8%) of the prior year. We
believe the impact of teleworking has reduced overall demand for contact lenses, as many
people do not wear lenses unless they leave the house. It appears that the lenses not usedduring April-May have caused an excess supply. This is a different impact than what we saw
for eyeglasses. In Q1, we began home-delivery for contact lenses. As long as the lenses
ordered were the same, we sold and delivered lenses on an emergency basis even for
expired prescriptions. We were concerned that customers might go to the competition for
online sales, but this didn’t happen to the extent we feared, and customers are beginning toreturn to our stores. In this way, we believe that our business structure was not impacted inany significant way.

20

Overview by Product

IOLs

Endoscopes

Demand for IOLs declined during the COVID-19
pandemic, due to the cancellation or postponement ofcataract surgeries. Although it varies from market tomarket, there has been a slow recovery in clinics while
the recovery in large hospitals has been slow at the
moment. Since cataract surgery is not a purely "elective"
procedure, the number of surgeries is expected tocontinue to increase.
The impact of COVID-19 resulted in restricted access to
hospitals, reduced capital investment and delays ofcertain endoscopic procedures; However, we expect theback log of procedures to be conducted going forward.
Although performance depends on the future status of
infections, the company expects sales to recover in Q3 tothe same level as last year. We aim to obtain approval for
disposable bronchoscopes by the end of this year.

© 2020 HOYA CORPORATION All Rights Reserved

21

Hiroshi Suzuki, CEO:
Intraocular Lenses
Sales in China and Europe have returned to almost the same level as the previous year. In
Japan, patients have not yet returned to the hospitals. Although we see more patients visiting
clinics, large hospitals remain at around 70% to 80% of normal levels for this time of theyear. Recovery may be a slow process. Still, cataracts need to be treated surgically at somepoint. Therefore, demand is not likely to be eliminated.
Endoscopes
Sales in Europe were higher than the previous year. A large deal has had some impact on
performance; however, we saw special demand in Europe for a time, as bronchoscopes must
be used to see internally when inserting artificial respiration tubes into ICU patients sufferingfrom COVID-19. America has yet to return to 50% of regular levels, experiencing a slow
recovery. This could be due to the fact that most of the demand relates to the large intestines
in America. Globally, the number of inspections has fallen by 20%-30% compared to the prioryear. Since endoscopes are not consumables and are mainly used for inspections, we expect
this weakness in demand to continue for some time.
Artificial Bones
HOYA manufactures and sells artificial bones, although this business is not large in scale.
These products are used to treat fractures; however, the decrease in sales due to the impact
of COVID-19 was surprising.

21

1. Financial Results
2. IT Business Overview
3. Life Care Business Overview
4. Summary [Hiroshi Suzuki, CEO]
5. Q&A© 2020 HOYA CORPORATION All Rights Reserved

22

Hiroshi Suzuki, CEO:We hit the brakes hard in Q1 and reduced costs. We believe Q2 may be the time to spend
up-front costs. Merely because Q1 profit margins were good does not mean that Q2 will beeven better. We may want to sacrifice some profits for the sake of sales.

221. Financial Results
2. IT Business Overview
3. Life Care Business Overview
4. Summary
5. Q&A© 2020 HOYA CORPORATION All Rights Reserved

23

Presentation MC:
Next, we will begin our Q&A session.
Anyone with questions, please click the “raise hand” icon. If you are participating by phone,push the star button and the number nine. Please state your company and your name before
asking your question.
Due to time limitations, we must limit questions to two per person. Thank you for yourunderstanding.

23

Q&A -1
Yoshida, Analyst, CLSA Japan:

Q d1 Your personnel expense is ¥33.0 billion on a normal quarterly basis. Why was it ¥23.0

billion in Q1? What measures did you implement? Will Q2 see a return to normal levels?

A

Ryo Hirooka, CFO:
Although I can’t get into the details, we reduced salaries and future portions of bonuses,
since we did not know what the impact of COVID-19 would be on sales. We also enacted
a temporary furlough due to the suspension of activities. Other factors included
production adjustments and government subsidies. We implemented a variety ofmeasures, which is why we see this as temporary.
We are not going to do the same activities in Q2, and we expect expenses to return thesame level as the prior year. We will implement structural reforms for any businesses
that do not see a recovery in sales.

Q

Yoshida, Analyst, CLSA Japan:
You mentioned 2nm products for the first time. What progress are you making in
cutting-edge products?
Eiichiro Ikeda, CTO:
Since 3nm have been determined, we are seeing a shift toward 2nm development
under TSMC standards. Although development is not finished for 3nm, development
has shifted toward product smaller than 3nm under TSMC.

A© 2019 HOYA CORPORATION All Rights Reserved

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スライド 24d1

人件費personnel expenseとしております。
d3com, 2020/07/31

Q&A -2Q

Mori, Analyst, Mizuho Securities:
Has there been any changes in development, planned time to market, or marketability due
to COVID-19 for disposable endoscopes?

A

Hiroshi Suzuki, CEO:We have finished development and are now driving toward manufacturing. Due to thelicensing factors, we plan to introduce disposable endoscopes to the Market in November
or December of this year. Although demand for bronchoscopes increased temporarily
due to COVID-19, we do not usually see such large demand for ICU or ER applications. We
do expect demand other than ICU and ER to expand over the medium and long term,
which is why we want to launch this business. While we don’t believe there will be an
immediate effect on sales, we intend to enter into another field, since AMBU has nottalked about scale in ICU and ER, either. Once the emergency has ended, we plan tomove into other applications for disposable scopes.

© 2019 HOYA CORPORATION All Rights Reserved

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Q&A -3
Q

A

Damian Thong, Analyst, Macquarie Capital Securities
Sales of 3.5-inch HDD substrates were strong in Q1; do you forecast any change inthe future?
If your customer’s shares rise, will HOYA sales also rise further?
Eiichiro Ikeda, CTO:
I will discuss 2.5-inch and 3.5-inch separately. 2.5-inch sales for Q2 will not see the game
console-related sales they have in the past. 3.5-inch sales for customer 16TB models
were strong; however, we believe this growth is due to our leading other companies into
the market. 2.5-inch in Q2 will experience a significant decline, which is not likely to becovered by growth in 3.5-inch product. Overall, there should be no changes in thepattern in which 2.5-inch sales decrease, compensated for by increased 3.5-inch sales.

© 2019 HOYA CORPORATION All Rights Reserved

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Q&A -4Q

Damian Thong, Analyst, Macquarie Capital Securities
At what timing will you capture new 3.5-inch customers?

A

Eiichiro Ikeda, CTO:
Customers other than our current customers have also started HAMR development, so
we have sent them samples for HAMR use. We have also sent substrate samples for 10layer HDD models prior to the move to HAMR. We understand that HDD manufacturers
would rather use aluminum as much as possible, and we cannot say at this point exactly
when our glass substrates will be adopted. However, the development roadmap for every
HDD manufacturer includes multi-layer and HAMR.
Hiroshi Suzuki, CEO:The 16TB lifecycle is surprisingly short, while the 18TB will be the main battleground. We
believe our customers’ market share in this area will affect our sales. The coming 20TB
model involves various elements (recording density, MAMR/HAMR); however, we see thisas a potential entry for new glass substrate customers 18 to 24 months from now. Until
then, we expect that competition for market share among HDD manufacturers will affectthe scope of of our sales.

© 2019 HOYA CORPORATION All Rights Reserved

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Q&A -5Q

Sugiura, Analyst, Daiwa Securities
Regarding the use of cash, you mentioned at the previous briefing that acquisitions hadpriority over share buybacks. Have you updated your stance since market share prices havestarted to recover?

A

Hiroshi Suzuki, CEO:We considered a number of M&A opportunities in connection with this basic priority;
however, we have not found any large acquisitions for the moment. If demand for cash
decreases, the impact of COVID-19 subsides, and the future becomes clear, we will
return profits to our shareholder through share buybacks and other means.

Q

Nihon Keizai Shimbun Reporter (Hiroi)
What is the HOYA stance on the KIOXIA IPO?

A

Hiroshi Suzuki, CEO:
Since I am an outside director for that company, I will refrain from making any
comments at this time.

© 2019 HOYA CORPORATION All Rights Reserved2828Life Care QoQ Earnings
Revenuecf. Operating Profit / Margin

19.4%

21.6%

93.8

100.4

92.5

(¥bn)

(¥bn)

16.9% 16.3%

88.4

18.2

21.7
15.7

61.9

Q1

Q2

Q3
FY19

Q4

Q1
FY20

14.9%

14.4
9.3

Q1

Q2

Q3
FY19

Q4

Q1
FY20

*External revenue© 2020 HOYA CORPORATION All Rights Reserved2929IT QoQ Earnings
Revenuecf. Operating Profit / Margin

46.0

Q1

52.4

52.7

Q2

Q3
FY19

(¥bn)

(bn)

46.0% 46.2% 44.9%

45.7

46.2

21.2

Q4

Q1

Q1

FY20

24.3

23.6

Q2

Q3
FY19

48.6%
42.8%

19.5

Q4

22.5

Q1
FY20

*External revenue© 2020 HOYA CORPORATION All Rights Reserved

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Notes Accounting standard: IFRS The fiscal year ending March 2021 is referred to as “FY20” 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.
http://www.hoya.co.jp/english/investor/library.html
3131

Forward Looking Statement
HOYA may make comments and disclose information which include forward-looking statementswith respect to HOYA´s plans and future performance. All statements, other than statements ofhistorical fact, are statements that could be deemed forward-looking statements and are based on
management´s assumptions and beliefs in light of the information available when suchstatements were prepared, including exchange and interest rates, international situations, market
trends and economic conditions, competition, production capacity, estimates of revenues,
operating margins, capital expenditures, cash, other financial metrics, expected legal, arbitration,
political, regulatory, clinical or research and development capabilities, results or practices,
customer patterns or practices, reimbursement activities and outcomes, effects of pandemics orother widespread health problems such as the ongoing COVID-19 pandemic on our business, andother such estimates and results. HOYA does not guarantee the accuracy or completeness of suchinformation and HOYA does not undertake any obligation to update any forward-looking
statements as a result of new information, future events or otherwise.

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