FY19Q3
F i n a n c i a l
R e s u l t s
February 4, 2020@Station Conference Tokyo

7741.T[ADR:HOCPY
H O YAUS]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 meeting.
© 2020 HOYA CORPORATION All Rights Reserved

Presentation MC:
It is time to begin the HOYA financial results presentation for the third quarter of the fiscal
year ending March 2020.
We understand many other companies are conducting their presentations today as well andwe thank you for your attendance here.
First, allow me to introduce today’s presenters.
Mr. Hiroshi Suzuki, CEO.
Mr. Ryo Hirooka, CFO.
Due to the scheduling conflict, Mr. Eiichiro Ikeda, COO and executive officer in charge of theInformation Technology segment, is not able to attend today.

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 third quarter.
Following CFO Hirooka, CEO Suzuki will provide an overview of performance in ourInformation Technology and Life Care segments.
The remainder of our time until 4:00 PM will be open for questions and answers.
Beginning with the presentation before last, we no longer distribute printed presentationmaterials due to considerations of resource conservation and environment. Thank you foryour understanding.
Without further ado, CFO Hirooka will begin his portion of today’s presentation.

2

Financial Overview(¥bn)

Q3 FY18

Q3 FY19

YoY

YoY(%)

Revenue

143.4

146.5

+3.1

+2%

Pretax Profit

39.7

38.3

-1.4

-3%

Net Profit

33.1

29.7

-3.5

-11%

cf. Profit fromordinary operating
activities*

39.9

38.3

-1.6

-4%

*Herein after “Operating Profit”

Revenue increased driven by HDD substrates and LSI blanks.
However, profit declined due to factors including a reactionary
decline in contact lenses related to the consumption tax hike.
© 2020 HOYA CORPORATION All Rights Reserved

3

Ryo Hirooka, CFO:
Please look at the presentation materials projected on the screen and the sections highlighted
on the P/L on P.7 of the financial results supplementary materials.
Revenue amounted to ¥146.5 billion, up ¥3.1 billion (+2%) year on year
Quarterly profit before tax was 38.3 billion, down 1.4 billion (-3%) year on year
Quarterly profit was ¥29.7 billion yen, down ¥3.5 billion (-11%)3

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

YoY

YoY(%)

Revenue

150.1

146.5

-3.6

+6.7

+5%

PretaxProfit

38.7

38.3

-0.3

-1.0

-3%

Net Profit

29.9

29.7

-0.2

-3.2

-10%

Average Rates(A)Q3 FY18(B)Q3 FY19

Variance

US$
EURO
BAHT

¥112.58¥128.21¥3.42¥109.33¥121.53
¥3.62

+2.9%
+5.2%
-5.8%

(¥bn)

© 2020 HOYA CORPORATION All Rights Reserved

4

Ryo Hirooka, CFO:
Next, I will address the impact of foreign currency translation. Please turn your attention to
the lower section on the P/L on P.7 of financial results supplementary materials.
The Japanese yen continues to demonstrate strength against the US dollar and the euro. We
also see movement in the baht, which has an impact on our costs.
This chart shows the impact of foreign currency translation to the Japanese yen on ourbusinesses in each country when we consolidate for finance reporting.
In real terms, revenues amounted to ¥6.7 billion (+5%) after excluding the impact of foreign
currency translation.
Foreign currency translation had a negative ¥300 million impact on quarterly profit before
tax, which amounted to ¥1.0 billion (-3%) in real terms.

4Notes RE: Special Items
Comprehensive Income Statement
Q3 FY18(¥bn)

IncomeExpenses
D&A

Pretax Profit

Q3 FY19

YoY

145.1
105.4

148.2
109.8

+3.1
+4.4

6.5

8.7

+2.2

39.7

38.3

-1.4

Depreciation and amortization increased ¥2.2 bn due tothe adoption of a new lease accounting policy (otherexpenses decrease, resulting in a net-neutral impact
related to total expenses).
© 2020 HOYA CORPORATION All Rights Reserved

5

Ryo Hirooka, CFO:
There were no fluctuations of special note during Q3.
Depreciation and amortization increased ¥2.2 billion year on year; however, this increase wasdue to the application of new lease accounting standards, rather than factories currently
under construction.
Please turn your attention to the bridge chart on P.11 of financial results supplementarymaterials.

5Life Care Earnings
Q3 FY18

Q3 FY19

YoY

YoY(%)

Revenue*

93.9

92.5

-1.4

-2%

Pretax Profit

19.1

15.3

-3.8

-20%

cf.Operating Profit

19.6

15.7

-3.9

-20%

20.9%

16.9%

-4.0pt(¥bn)

cf.OP Margin*External revenue© 2020 HOYA CORPORATION All Rights Reserved

6

Ryo Hirooka, CFO:Life Care segment sales amounted to ¥92.5 billion, a decrease of ¥1.4 billion (-2%) year on
year
Segment profit (profit before tax) amounted to ¥15.3 billion, ¥3.8 billion lower (-20%) year
on yearLast-minute demand prior to the consumption tax increase in the prior quarter (Q2) resulted
in a dip for contact lens sales and profits during Q3. While not on the scale of contact lenses,
eyeglass lenses also experienced lower sales in Japan due to the increase in consumption tax.
Please turn your attention to P.9 of financial results supplementary materials.

6

Life Care Earnings (CCB)
Previous
Rate

Current
Rate

FX
ImpactYoY

YoY(%)

Revenue*

95.1

92.5

-2.6

+1.2

+1%

Pretax Profit

15.3

15.3

+0.0

-3.8 -20%

cf.Operating Profit

15.7

15.7

-0.0

-3.9 -20%(¥bn)*External revenue© 2020 HOYA CORPORATION All Rights Reserved

7

Ryo Hirooka, CFO:
Foreign currency translation had a -¥2.6 billion impact on Life Care segment results; real
sales growth amounted to ¥1.2 billion (+1%).
Segment profit (profit before tax) were not impacted by foreign currency translation to any
appreciable degree.
Please turn your attention to the second chart on P.9 of the financial results supplementarymaterials.

7

IT Earnings
Q3 FY18

Q3 FY19

YoY

YoY(%)

Revenue*

48.3

52.7

+4.4

+9%

Pretax profit

21.5

23.5

+2.0

+9%

cf.Operating Profit

21.6

23.6

+2.1

+10%

44.7%

44.9%

+0.2pt(¥bn)

cf.OP Margin*External revenue© 2020 HOYA CORPORATION All Rights Reserved

8

Ryo Hirooka, CFO:
Information Technology segment sales for the third quarter amounted to ¥52.7 billion, an
increase of ¥4.4 billion (+9%) year on year
Segment profit (profit before tax) amounted to ¥23.5 billion, ¥2.0 billion higher (+9%) year
on yearIn the previous quarter (Q2), customers in Korea secured greater inventory in connection
with stronger export controls, resulting in higher sales. The rebound during the current
quarter resulted in a slight decrease in profit ratios.

8

IT Earnings (CCB)
Previous
Rate

Current
Rate

FX
ImpactRevenue*

53.6

52.7

-1.0

+5.4 +11%

Pretax profit

23.8

23.5

-0.3

+2.3 +11%

cf.Operating Profit

24.0

23.6

-0.3

+2.4 +11%

(¥bn)

YoY

YoY(%)*External revenue© 2020 HOYA CORPORATION All Rights Reserved

9

Ryo Hirooka, CFO:
The impact of foreign currency translation on Information Technology segment sales was ¥1.0 billion; in real terms growth was ¥5.4 billion (+11%)
Real segment profit (profit before tax) amounted to ¥2.3 billion (+11%) after excluding theimpact of foreign currency exchange
Please turn your attention to the second chart from the bottom related to the Information
Technology segment on P.9 of the financial results supplementary materials.

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

Q3 FY18

Q3 FY19

YoY

YoY(%)

69.3

66.8

-2.5

-4%

Revenue*Constant Currency Basis(¥bn)

Previous Rate

Current Rate

YoY

YoY(%)

68.6

66.8

-0.7

-1%

Revenue**External revenue© 2020 HOYA CORPORATION All Rights Reserved

10

Ryo Hirooka, CFO:
Health care related products (eyeglass lenses, contact lenses) sales were ¥66.8 billion, down
¥2.5 billion (-4%) year on year
Sales amounted to ¥700 million (-1%) in real terms after excluding the impact of foreign
currency translation
Contact lens sales were 8% lower after the consumption tax increase as a result of frontloaded demand in earlier quarters.
Eyeglass lens sales struggled in America, where profit ratios also declined. Two main factors
contributed to this decrease in profit ratios. The first factor was costs for up-front
preparations and test production incurred during Q3 as we enter the final states of launching
our new plant in Vietnam. In addition to Beyond production increases in Vietnam, we also
experienced the impact of added costs due to consolidating other bases to improve overall
production efficiencies. The second factor was an increase in commercials and new productlaunch costs designed to improve sales in Europe. This decline in marginal profit overlappedwith the increase in costs.
Please turn your attention P.10 of the financial results supplementary materials referencing
sales by product and the impact of foreign exchange rates on each product.

10

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

Q3 FY18

Q3 FY19

YoY

YoY(%)

24.6

25.7

+1.1

+5%

Revenue*Constant Currency Basis(¥bn)

Previous Rate

Current Rate

YoY

YoY(%)

26.5

25.7

+1.9

+8%

Revenue**External revenue© 2020 HOYA CORPORATION All Rights Reserved

11

Ryo Hirooka, CFO:
Medical-related products (Endoscopes , intraocular lenses, etc.) sales were ¥25.7 billion, a¥1.1 billion (+5%) increase year on year
Sales increased ¥1.9 million (+8%) in real terms after excluding the impact of foreign
currency translation
Endoscope sales rose 2%, experiencing strong double-digit growth in Europe.
Intraocular lenses grew 30% owing to business acquisitions and 10% on a like-for-like basis.
Costs related to post-merger integration for business acquisitions added up, resulting indecreased profit ratios.

11

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

Q3 FY18

Q3 FY19

YoY

YoY(%)

38.3

43.9

+5.6

+15%

Revenue*Constant Currency Basis(¥bn)

Previous Rate

Current Rate

YoY

YoY(%)

44.7

43.9

+6.4

+17%

Revenue**External revenue© 2020 HOYA CORPORATION All Rights Reserved

12

Ryo Hirooka, CFO:
Electronics related products (glass substrates for semiconductors, LCD-related products, andhard disk drives) sales amounted to ¥43.9 billion up ¥5.6 billion (+15%) year on year
Sales rose ¥6.4 billion (+17%) in real terms after excluding the impact of foreign currencytranslation
Sales of EUV blanks products continued to be strong. Sales of optical (DUV) in Korea wereslightly lower than Q2 due to a rebound from the inventory buildup in Q2.
Sales of 3.5” HDD substrates increased more than the decrease in 2.5” products, with HDD
substrates 17% higher overall year on year.

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

(¥bn)

Q3 FY18

Q3 FY19

YoY

YoY(%)

10.0

8.8

-1.2

-12%

Revenue*Constant Currency Basis(¥bn)

Previous Rate

Current
Rate

YoY

YoY(%)

8.9

8.7

-1.1

-11%

Revenue**External revenue© 2020 HOYA CORPORATION All Rights Reserved

13

Ryo Hirooka, CFO:
Imaging related products sales amounted to ¥8.8 billion, down ¥1.2 billion (-12%) year on
year
Sales were ¥1.1 billion lower (-11%) in real terms after excluding the impact of foreign
currency translation
Sales of camera-related products continue to contract. The surveillance camera market is also
experiencing sluggishness. However, at sales of ¥8.8 billion compared to our overall
revenues, this contraction is having less of an impact.

13

Balance Sheet(¥bn)

Q2 FY19Q3 FY19

QoQ

Non-current Assets

279.8

291.2

+11.3

Current Assets
Capital

516.9
637.0

522.3
652.8

+5.4
+15.9

Non-current Liabilities

31.4

31.1

-0.3

Current Liabilities
Total Assets

128.4
796.8

129.5
813.4

+1.1
+16.7

Capital increased by ¥15.9 bn, mainly due to the cancellationof treasury stock (¥22.3 bn).
© 2020 HOYA CORPORATION All Rights Reserved

14

Ryo Hirooka, CFO:
The increase in difference between non-current assets and PPE is the balance of factoryrelated assets posted for Vietnam (eyeglass lenses) and Singapore (EUV mask blanks), forwhich we have not started posting depreciation.
Capital increased net of the cancellation of treasury stock acquired during the first half of the
fiscal year.
Please turn your attention P.4 of the financial results supplementary materials for moredetails about our balance sheet.

14

Cash Flow
Q3 FY18(¥bn)

Operating CF

Q3 FY19

YoY

34.1

40.1

+6.0

6.5

8.7

+2.2

Investing CF

7.9

-11.7

-19.6

Financing CF

D&A

-16.3

-27.9

-11.5

Payments for lease liabilities

-

-2.3

-2.3

Cash & Cash Equivalents
at the end of the term

272.3

304.4

+32.1

Due to applying a new lease accounting policy, D&A(Operating CF) increased, while payments for lease liabilities(Financing CF) decreased; the net impact of this change wasneutral.
© 2020 HOYA CORPORATION All Rights Reserved

15

Ryo Hirooka, CFO:
Dividend payments of ¥16.9 billion and stock buybacks of ¥9.2 billion were the majortransactions under cash flows from financing activities.
See P.6 of our financial results supplementary materials for more regarding our statement ofcash flows.

15

Share Buyback
Share Buyback #1 :Closed at end of Oct.
Maximum Amount: ¥60 bn
Period: May 8, 2019 to October 28, 2019
Actual Amount Repurchased: ¥24.1 bn (canceled)
Share Buyback #2 :In Progress
Maximum Amount: ¥50 bn
Period: October 30, 2019 to April 23, 2020
Repurchased to date: ¥9.2 bn (as of Jan, 2020)HOYA repurchased shares worth ¥33.3 bn year-to-date(#1 & #2)
© 2020 HOYA CORPORATION All Rights Reserved

16

Ryo Hirooka, CFO:
Although we began stock buybacks in May 2019, we only purchased less than half of the¥60.0 billion we set as an upper limit. We have recommenced purchasing within a ¥50.0
billion framework.
We intended to purchase as many shares as we could; however, purchases only amounted to¥9.2 billion due to the share price situation.

16

Q4 & Full Year Guidance✓ We expect the tax-hike impact on our contact lens business to continue,
however the impact will ease QoQ.
✓ LSI blanks will maintain momentum driven by strong demand for EUV products.
✓ HDD substrate sales to decline QoQ due to seasonality (Chinese New Year).
However, we expect growth on a YoY basis.

FY19 Q4
(¥bn)

Sales
Pretax Profit
Net Profit

Q4 FY18

Q4 FY19

144.6
35.4
28.2

+3.1
+4.1
-1.1

+2%
+13%
-4%

FY18

FY19

YoY

YoY(%)

141.5
31.4
29.2

YoY

YoY(%)FY19 Full Year
(¥bn)

Sales
Pretax Profit
Net Profit

565.8
144.7
122.1

586.0
155.0
123.0

+20.2
+10.3
+0.9

+4%
+7%
+1%

17

Ryo Hirooka, CFO:
Our FY19 forecast calls for revenue of ¥586.0 billion, profit before tax of ¥155.0 billion, andnet profit of ¥123.0 billion.
Our assumed foreign currency exchange rates are 110 yen to the USD and 120 yen to the
EUR.
We have incorporated the impact of the Lunar New Year and fewer operating days into ourplan for Vietnam for Q4. Although we are seeing a gradual recovery from the dip caused by arush in demand for contact lens prior to the consumption tax increase, we expect the impact
to extend over the next six months.

17

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

18

Presentation MC:
Next, Hiroshi Sukuzi, CEO, will give his presentation about the Information Technology andLife Care segments.

18

IT Snapshot
YoY Sales Growth (Like-for-Like)+17%

HDD Substrates+17%

Masks & Blanks(LSI/FPD)-9%

Imaging+12%© 2020 HOYA CORPORATION All Rights Reserved

19

Hiroshi Suzuki, CEO:I will be giving today’s presentation on the Information Technology segment, as Mr. Ikeda,
our COO, was not able to attend today.

19Overview by ProductThis Quarter
DUV sales dropped slightly due to a customer building
stock last quarter. EUV sales grew 80-plus percent YoY.

Going Forward
LSI Blanks

New EUV fab in Singapore to start operations in April.
Start of mass production in H2 FY20 after qualification
process.

This Quarter
FPD Masks experienced growth through captured
demand in the Chinese OLED market (mainly G6).

Going Forward
FPD/LSI Masks

Expand OLED business, especially in China, as further
growth of the market is expected.

© 2020 HOYA CORPORATION All Rights Reserved

20

Hiroshi Suzuki, CEO:Blanks for Semiconductors
EUV grew approximately 15% quarter over quarter and approximately 80% year on year.
Optical (DUV) saw rising inventory levels among customers in connection with stronger
export controls to Korea. Sales this (Q3) quarter were slightly lower year on year as we
worked down inventory (there was no impact on EUV as we were not able to provide
products in amounts that built up at customers due to manufacturing capacity limits). In thecurrent environment, 7nm tapeout continued to grow as did DUV blanks. We worked down
inventory for customers in Korea during Q3, meaning the inventory buildup was just a
temporary factor. We have no issues with our fundamentals.
FPD/LSI Masks
It appears that Chinese manufacturers are struggling to get OLED launched. We see that
there will be demand in connection with the trial and error involved in ramping up patterns
for OLED panels. On the other hand, manufacturers in Taiwan cannot compete without
differentiation from China. In addition to adding features to existing products, this approachshould lead to mask demand.

20

Overview by ProductThis Quarter

HDD
Substrates
HDD Substrates

3.5” sales was 2.5x due to increased demand related todata centers. 3.5” products now account for 42% of total
sales.
Going Forward

New factory in Laos (producing 3.5” substrates) to shipsample products beginning in April. Mass production to
begin by H2 FY20 after qualification process.

This Quarter

Imaging
Imaging

Due to market contraction, our imaging-related sales
continued to decline.

Going Forward
Make proactive cost savings to protect profitability.

© 2020 HOYA CORPORATION All Rights Reserved

21

Hiroshi Suzuki, CEO:
Glass Substrates for Hard Disk Drives
Although sales were favorable, profits declined somewhat. This was due to the launch of our
new plant in Laos and product mix (decline of 2.5” and increase of 3.5”).
Traditional 95mm (3.5”) products present some insufficiencies for storage capacity and weare seeing more specifications for 97mm (3.5”) product. Although a 2mm difference seems
small, the larger circumference allows for increases on the order of terabytes. This will havean impact on our jigs, which will result in up-front costs. Although this factor will impact morethan just this quarter, we see this as basically a temporary factor.
Overall, the developing scenario indicates that 2.5” substrates for notebook PCs are being
replaced by flash memory, while 3.5” products for data centers are growing.
We are on the cusp of receiving certification 16TB units in connection with 3.5” products fordata centers and we have started shipments.
Hard disk drive makers in Japan have finished development for 16TB units. Another hard disk
drive maker in the U.S. is planning to launch an 18TB unit. During 2020, manufacturers areattempting the difficult challenge to deliver 18TB in the same form factor as 16TB. If theycannot do this, they may adopt glass substrates.
Imaging-Related Products
Sales of interchangeable lens for digital cameras decreased 20%. Surveillance cameras
provided some positive results. We are seeing a recovery, as inventory adjustments appear
to have finished a cycle. There is no movement in China domestically to upgrade surveillancecameras quickly as has been the pattern in the past, so there won't be a rapid growth phaselike we saw before. I do believe we have passed through the worst phase.

21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 Reserved2222Life Care Snapshot
YoY Sales Growth (Like-for-Like)

+2%
+2%

-8%

Endoscopes*Includes tax
hike impact+0%

Eyeglass Lenses

Contact Lenses

Other

+10%
IOLs

-0%
© 2020 HOYA CORPORATION All Rights Reserved

23

23Overview by ProductThis Quarter
Japan sales declined due to the consumption tax hike etc.
High growth in Europe and Asia continued. New factory in
Vietnam started test production.

Going Forward
Eyeglass Lenses

Capture peak season demand (Q4). Gradually ramp up
the new Vietnam factory.

This Quarter
Reactionary decline related to consumption tax hike.
No. of stores at quarter-end: 326 (including acquisitions)

Going Forward
Contact Lenses

Continue to expand customer reach through new store
roll-outs and acquisitions in areas in which we have no
presence yet.

© 2020 HOYA CORPORATION All Rights Reserved

24

Hiroshi Suzuki, CEO:
Eyeglass Lenses
We have a high ratio of eyeglass lenses manufactured on a baht basis and sold on a eurobasis. A strong baht and weak euro is the worst pattern for foreign currency trends. This is
the main reason for a lack of profits. Our launch of a second plant in Vietnam has also had an
impact. While we could have posted results to asset accounts, we recorded expenses. These
expenses are a temporary matter. Also, a dip caused by the rush in demand prior to theconsumption tax increases has had an impact on Japan, where profitability is comparatively
high.
Contact Lenses
Contact lenses enjoyed approximately ¥4.0 billion in rush demand last quarter prior to theincrease in consumption tax. The impact of this up-front demand had a negative 13% to 14%
impact on customer numbers during this quarter. Some customers even purchased sixmonth and one-year supplies of contact lenses. We believe this development will have themost impact on Q3 results. On the other hand, we continue to expand outlets, adding nine
new stores and acquiring two more.

24

Overview by ProductThis Quarter
Achieved double-digit growth in APAC. Sales of standard
products in China was the main contributor.

Going Forward
IOLs

Prepare high-end product launch in China. We will launch
new products going forward including new-type injectors.

This Quarter
New product launch in the Americas was delayed. Sales
in Europe grew, as new product launches are proceeding.

Going Forward
Endoscopes

Launch new products going forward.

© 2020 HOYA CORPORATION All Rights Reserved

25

Hiroshi Suzuki, CEO:
Intraocular Lenses
Although sales grew in the double digits, post-merger integration for the company weacquired in January 2019 included the need to change product designs, forcing us to record
inventory revaluations. It would have been better if we had known this at the time ofacquisition, but we did not. This is another factor contributing to a temporary dip in profits.
Endoscopes
To date, we had been performing repairs close to the market; however, we are moving thiswork to Penang, Malaysia. While we are manufacturing endoscopes in Japan at present, we
also plan to move this work to Penang over time. As costs at our Japanese plants have notdecreased, these added costs have caused profitability to decrease. We expect this trend tocontinue through Q4, as well. We also had an issue in America where we experienced a delay
in receiving approvals that prevented us from rolling out new products.
Between Q4 and Q1 next year, we will engage in corrections related to endoscopes andeyeglass lenses. The basic issue is an internal problem more than anything else.

25

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

26

26

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

27

Presentation MC:
Next, we will begin our Q&A session.
Please raise your hand when asking questions and provide your personal name and the nameof your company.
Due to time limitations, we must limit questions to two per person. Thank you for yourunderstanding.

27

Q&A -1
Q

A

Q
A

Wadaki, Analyst, Nomura Securities
EUV Mask Blanks
As mask blanks for EUV enjoy especially strong performance, I have heard thatcompetitors have been increasing their share. How far do you expect sales to grow in
the future? I believe the number is probably ¥30 billion to ¥40 billion.
Hiroshi Suzuki, CEO:We plan to begin shipping from the new EUV product manufacturing line in Singapore
in Q2 of next year. Demand is rising in the present R&D phase. Once mass production
begins, we think our growth rates level out over time. Over the short term, we don’t
anticipate seeing full-capacity operation of our two EUV mask blanks manufacturinglines.

Wadaki, Analyst, Nomura Securities
Glass Substrates for Hard Disk Drives
Your insights are always helpful. What do you predict the future to be for storage harddisk drives and flash memory?
Hiroshi Suzuki, CEO:
Among hyper-scale cloud vendors, only Company G is showing strong growth.
Company A has not grown to that extent and I don’t expect the market to make alarge jump in growth.

© 2020 HOYA CORPORATION All Rights Reserved

28

28

Q&A -2
Q

A

Nakanomyo, Analyst, Jefferies Japan
EUV Mask Blanks
You mentioned that demand for blanks will level out as EUV exposure devices enter
into the mass production phase. Do you expect an increase in demand for blanks due
to an increase in the number of layers used for EUV exposure devices as a result of
future developments in miniaturization? Also, will an increase in devices (high-function
devices necessary for EUV exposure devices) lead to an increase in demand?
Hiroshi Suzuki, CEO:We believe that a real contribution of increased layers to demand for blanks will
happen after transitioning to the next node, probably some time around the year 2022.
I can probably count on my fingers the number of devices and designs that will be
used in the manufacture of EUV exposure devices.

Q

Nakanomyo, Analyst, Jefferies Japan
Eyeglass Lenses
You mentioned that you need to fix your eyeglass lens business in America. Can you
tell us more about the current situation? I believe performance was strong in America
through last fiscal year.

A

We have focused on developing chain stores in America, which is going well.
However, we have seen ongoing turnover in sales staff working with independent
stores. We are training new sales staff and we expect to see growth again in thequarter after next when these salespeople have been trained. This staff turnover has
been more a question of management in America than pay and benefits. We arereorganizing management for a new start.

© 2020 HOYA CORPORATION All Rights Reserved

29

29

Q&A -3
Q

A

Q

A

Nakanomyo, Analyst, Jefferies Japan
Eyeglass Lenses
Your major chain customers in Europe are planning to merge with theircompetition. Can you tell us more about your customer relationships moving
forward?
Hiroshi Suzuki, CEO:Due to certain procedures, receiving approvals by the European regulatory
agencies is taking longer than originally planned, but approval will happen at sometime. Specific negotiations with our customers are awaiting the final merger deal
approvals (from European regulatory agencies) between our customers and theircompetition. We have agreed to gradually wind down sales over time in a way thatis best for each party.
Yoshida, Analyst, CLSA Japan
Life Care
You mentioned a dip in performance due to front-loaded demand ahead of theconsumption tax increase. Can you tell us more about the causes behind the yearon-year decrease in profit ratios?
Hiroshi Suzuki, CEO:In simple terms, front-loaded demand, foreign currency translation, and otherfactors have had an equal one-third impact on profit ratios. Foreign currency
exchange had a larger effect than we expected, with a significant impact of the
weak euro and strong baht on eyeglass lenses.

© 2020 HOYA CORPORATION All Rights Reserved

30

30

Q&A -4Q

Yoshida, Analyst, CLSA Japan
Mask Blanks
You stated that full capacity for EUV mask blank manufacturing will not happen
immediately. How long of a period do you need for inspection devices, which
require a long lead time?

A

Hiroshi Suzuki, CEO:No one knows whether the current inspection devices are capable of next- nextgeneration inspections, so we are waiting until the picture becomes clearer before
we buy our next inspection devices.
We have to reconfigure the first manufacturing line, which we will be investing inafter the launch of our Singapore line.

Q

Nakamura, Analyst, JPMorgan Securities
Life Care
You mentioned that other factors accounted for one-third of the decline in profit ratios.
When do you expect to resolve those issues?

A

Hiroshi Suzuki, CEO, and Ryo Hirooka, CFO:
Costs related to intraocular lenses are temporary costs incurred only in this quarter
related to integration of a company we acquired. It will take some time to resolve theissues with endoscopes. Costs related to the No.2 plant for eyeglass lenses in Vietnam
reached a peak in Q3, so we don’t expect any issues next quarter. We have a positive
outlook for Life Care in Q4, while the Information Technology segment may see somechallenges due to seasonal factors (Lunar New Year).

© 2020 HOYA CORPORATION All Rights Reserved

31

31

Q&A -5Q

Yamamoto, Analyst, Mizuho Securities
M&A
You made an announcement about a takeover bid for NuFlare. However, over the
past ten years in your blanks business, you never formed any alliances with or
buyouts of semiconductor production equipment manufacturers. What haschanged? More than ten years ago, NuFlare conducted a third-party allocation ofshares. Were you not able to acquire them at that time?

A

Hiroshi Suzuki, CEO:
Photomasks can require modification after completion. To make good blanks
requires an increasingly close cooperative relationship with inspection device anddrawing equipment manufacturers. That’s not to say that an acquisition would
make the relationship better. But, the situation has changed quite a bit comparedto times in the past. This is how business needs to be done to succeed.
Ten years ago, when NuFlare Technology conducted their third-party allocation ofshares, we did not consider an acquisition. After that, we suggested that Toshiba
conduct the buyout, in response to which they asked us to wait and thenproceeded with the takeover bid.

© 2020 HOYA CORPORATION All Rights Reserved

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Appendix© 2020 HOYA CORPORATION All Rights Reserved3333Life Care QoQ Earnings
cf. Operating Profit / Margin

Revenue

93.9

96.3

93.8

100.4

21.6%

20.9%

92.5

18.8%

19.4%

(¥bn)

(¥bn)

16.9%

19.6

Q3

Q4

Q1

FY18

Q2
FY19

Q3

18.1

18.2

Q4

Q1

Q3
FY18

21.7
15.7

Q2

Q3

FY19

*External revenue© 2020 HOYA CORPORATION All Rights Reserved3434

IT QoQ Earnings
Revenuecf. Operating Profit / Margin
44.7%

52.4

48.3

(bn)

21.6

Q3

Q4

46.2%

44.9%

46.0

(¥bn)

43.7

52.7

46.0%
41.8%

Q1

FY18

Q2
FY19

Q3

18.3

Q3

Q4
FY18

21.2

Q1

24.3

23.6

Q2

Q3

FY19

*External revenue© 2020 HOYA CORPORATION All Rights Reserved

35

35Topics[Eyeglasses] New Factory in Vietnam Starts Operations
In November 2019, HOYA launched a new eyeglass lens production facility in
Quang Ngai, central Vietnam. The facility has two buildings on the eight-hectare
site, with a maximum capacity of 140 million units per year (stock lenses). Being
one of the largest plants in eyeglass lens capacity, it will cater to the increasing
global demand. Currently, the first building has
started test production. The second building will
start operations in early FY20.

HOYA Delivers MW10 to Schools for the Blind“We want to show starry skies to students of schools for the blind byproviding scotopic vision eyeglasses.” HOYA sponsored a crowd funding
project launched by Nippon Lighthouse, a social welfare service
corporation. The crowd funding collected JPY3.5 million which surpassed
the target of JPY3 million. Under this project, HOYA provided speciallypriced scotopic vision eyeglasses, HOYA MW10 HiKARI, to twelve schools
for the blind. We will continue to support the activity of this project.
© 2020 HOYA CORPORATION All Rights Reserved3636Notes✓ Accounting standard: IFRS✓ The fiscal year ending March 2020 is referred to as “FY19” 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
3737

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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