FY17Q4
F i n a n c i a l
R e s u l t s
May 10, 2018@Belle Salle Yaesu
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.

© 2018 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© 2018 HOYA CORPORATION All Rights Reserved

22

Financial Overview
Q4 FY16Q4 FY17YoY

YoY(%)

Revenue

126.3

135.9+9.6+8%

Pretax Profit

24.4

26.2+1.7+7%

Net Profit

19.0

19.5+0.6+3%

cf. Profit fromordinary operating
activities*

26.933.0+6.1+23%(¥bn)*Herein after “Operating Profit”

Profits grew despite impairment losses at offshore subsidiaries.
Operating profit surged due to margin expansion in the Life Care Business.
© 2018 HOYA CORPORATION All Rights Reserved33

Constant Currency Basis (CCB)(¥bn)

PreviousRate (A)Current
FX Impact
Rate (B)

Revenue

135.4

135.9PretaxProfit

26.1

Net Profit

19.4

Average Rates(A)Q4 FY16(B)Q4 FY17Variance¥112.85¥120.17¥3.24¥107.47¥132.29¥3.43+4.8%-10.1%-5.9%

US$EUROBAHT© 2018 HOYA CORPORATION All Rights Reserved

YoY

YoY(%)+0.6+9.1+7%

26.2+0.1+1.7+7%

19.5+0.1+0.5+2%44

Notes RE Non-operative Items
Comprehensive Income Statement

Q4 FY16(¥bn)

IncomeExpenditure
Impairment Loss

Pretax Profit
1127.5
103.1
0.2
24.4

Q4 FY17137.1
110.9
5.6
26.2

YoY+9.5+7.8+5.4+1.7

1Mainly due to a goodwill impairment of an acquired company
based in Brazil (eyeglass lens business). Weakening of BRL led toincreased purchasing costs, lowering the profitability than the timeof acquisition.
However, the company is steadily gaining market share in-line with
the initial plan, and will remain as an important headquarter inLatin America.

© 2018 HOYA CORPORATION All Rights Reserved

5

Weakening of the Brazilian real led to increased purchasing costs from group companies.
Despite a temporary rebound in the Brazilian domestic economy, we are not optimistic about
future growth rates. Accordingly, we have recorded write downs in connection with thiscompany.
Our Brazilian subsidiary is growing steadily in real terms, outperforming competitors by awide margin.

5Life Care Earnings
Q4 FY16

Q4 FY17

YoY

YoY(%)

Revenue*

83.8

91.9

+8.1

+10%

Pretax Profit

12.3

10.9-1.4-12%

cf.Operating Profit

13.2

18.1

+4.9+37%

15.7%

19.7%+4pt(¥bn)

cf.OP Margin*External revenue© 2018 HOYA CORPORATION All Rights Reserved66

Life Care Earnings (CCB)
PreviousRateCurrent
Rate

FX
Impact

Real
YoY

Real
YoY(%)

Revenue*

90.3

91.9+1.6+6.5+8%

Pretax Profit

10.510.9+0.4-1.9 -15%

cf.Operating Profit

17.8

18.1+0.3+4.6 +35%(¥bn)*External revenue© 2018 HOYA CORPORATION All Rights Reserved77IT Earnings(¥bn)

Q4 FY16 Q4 FY17

YoY

YoY(%)

Revenue*

41.6

42.6+1.1+3%

Pretax profit

13.6

15.7+2.1+16%

cf.Operating Profit

14.9

16.1+1.2+8%

35.9%

37.7%+1.8pt

cf.OP Margin*External revenue© 2018 HOYA CORPORATION All Rights Reserved

8Profit before tax profit grew higher than profits from regular operating activities. This result
was due to the disaster-related write downs in FY16 (Kumamoto earthquakes).

8IT Earnings (CCB)
(¥bn)

Q4
FY16Q4FY17FXImpact

RealYoYReal
YoY(%)

Revenue*

43.7

42.6-1.1+2.1+5%

Pretax profit

16.0

15.7-0.3+2.4 +18%

cf.Operating Profit

16.4

16.1-0.3+1.5 +10%

*External revenue© 2018 HOYA CORPORATION All Rights Reserved

99Balance Sheet
Q3 FY17Q4 FY17

Non-current Assets

219.5

204.5

-15.1

Current Assets
Capital

436.5
540.0

446.2
530.7+9.7-9.3

Non-current Liabilities

16.6

15.7-0.9

Current Liabilities
Total

99.3
656.0

104.3
650.6+4.9-5.3

(¥bn)

1

QoQ
1

Mainly due to an impairment loss and amortization of intangible
assets. Also, assets denominated in foreign currencies decreased dueto FX fluctuations.

© 2018 HOYA CORPORATION All Rights Reserved1010

Cash Flow
Q4 FY16

Q4 FY17

Operating CF

36.9

39.5

+2.6

Investing CF-6.3-3.4+2.9

Financing CF0.3-9.7 -10.0

296.9

245.8 -51.0(¥bn)

Cash & Cash Equivalents
at the end of the term

1YoY

1

We purchased ¥9.7bn in stock this quarter as part of the ¥30bn sharebuyback; no share buybacks conducted during Q4 FY16.

© 2018 HOYA CORPORATION All Rights Reserved1111

Cash Allocation
Returned all free cash flow to shareholders in FY17.
Expect stronger cash generation going forward.

CAPEX

296.9

M&A(¥bn)

OperatingCash Flow

245.8

DividendShare
Buyback

OtherOpeningBalance

ClosingBalance*Year-end dividend to be ¥45.
© 2018 HOYA CORPORATION All Rights Reserved

12

At ¥245.8 billion, current cash on hand is somewhat high in our opinion.
We plan to continue our policy of returning free cash flows to shareholders, doing so with aneye toward the most opportune timing.
Other Matters
We plan to add one more external director, subject to approval at the general meeting ofshareholders.
(Mr. Hiroaki Yoshihara, an executive with prior experience including global managing partnerat an international accounting firm)121. Financial Results
2. IT Business Overview [Eiichiro Ikeda, COO/CTO]
3. Life Care Business Overview
4. Summary
5. Q&A© 2018 HOYA CORPORATION All Rights Reserved1313

IT Snapshot
YoY Revenue Growth (CCB)

-8%

+14%

HDD Substrate

Mask & Blanks(LSI/FPD)+20%Imaging+5%© 2018 HOYA CORPORATION All Rights Reserved1414

Overview by ProductThis Quarter
All product lines showed growth. EUV blanks drovestrong momentum, expanding to 18% of blanks sales.

Going Forward
LSI Blanks

Expect continuous growth of EUV blanks, increasing
CAPEX by chip makers will be a strong tail wind.

This Quarter
Sales in Korea recovered, growth seen in China.
LCD/OLED photomask for smartphones driving growth.

Going Forward
FPD Photomask

Growth expected not only for G10.5, but also for earlierthan-G8.5 formats (which HOYA is capable of making)which are likely to grow as well. Laser-focus on high-res
photomasks.

© 2018 HOYA CORPORATION All Rights Reserved

15

Mask Blanks for Semiconductors
EUV blanks grew significantly, in excess of 60% year on year.
According to information made public by an EUV exposure machine maker, nine devices areon order for the period from January through March. This indicates steady growth inexposure devices.
Further, the emergence of High NA and other new technologies indicate high potential forincreased development demand.
FPD Masks
FPD masks recorded double-digit growth.
Sales growth was particularly strong in China, which expanded to 30% of total FPD masksales.

15

Overview by ProductThis Quarter

HDD
Substrates
HDD Substrate

2.5-inch: Impacted by seasonality, which was absent in
the year-ago quarter.
3.5-inch: Expanded from 7% to 13% of division sales.
Going Forward

Offset decline of 2.5-inch via 3.5-inch substrate growth.
We expect serious growth beginning 2H this fiscal year.

This Quarter

ImagingImaging

Camera lens stable thanks to high-end point & shoots
and mirrorless cameras. Security camera lens continues
to grow.

Going Forward
Digital camera market rebound from the earthquake
likely to end soon. Expand new applications.

© 2018 HOYA CORPORATION All Rights Reserved

16Glass Substrates for Hard Disk Drives
Sales of glass substrates for hard disk drives fell 8%, within the scope of our expectations.
In general, Q4 is the time of the year when demand falls due to various external factors.
Internally, Tet (Vietnamese New Year) in Vietnam is a time of reduced production in ourVietnamese factory.
We recorded particularly high levels of sales in Q3 and Q4 of the prior year in response toNAND shortages at the time.
At the time of our last financial results announcement (Q3 FY17), only one company had
given qualification related to near-line servers. Our customer is progressing well, with fivecompanies gave approval presently.
We expect a switchover from mainstay 10TB hard disk drive equipment to 12TB devices(including those with HOYA glass substrates) to happen some time during the second half of
this fiscal year.
Imaging-Related Products
Adoption rates are growing for HOYA glass aspherical lenses (GMO) used in high-end
compact digital cameras and interchangeable lenses.

16

1. Financial Results
2. IT Business Overview
3. Life Care Business Overview [Hiroshi Suzuki, CEO]4. Summary
5. Q&A© 2018 HOYA CORPORATION All Rights Reserved

1717

Life Care Snapshot
YoY Revenue Growth (CCB)-1%+12%+5%Endoscopelike-for-like +2％+6%Eyeglass Lens

Contact Lens Other+8%© 2018 HOYA CORPORATION All Rights Reserved+14%
IOL

like-for-like +2％
1818

Overview by ProductThis Quarter
Robust growth in APAC and the Americas more than offset
the decline in Japan and Europe. Profit margins improved
dramatically.

Going Forward
Eyeglass Lens

Expand further in APAC and the Americas.
Pursue synergies with acquired companies.

This Quarter
Showed stable growth. Closed some stores at the end of
the year to improve efficiency.
No. of stores at year-end. 276（New 3/Closed 8）

Going Forward
Contact Lens

Continue to open new stores. Improve ARPU gradually bystrengthening sales of value-added products.

© 2018 HOYA CORPORATION All Rights Reserved

19Eyeglass Lenses
Both Japan and Europe saw declines of around 2%.
APAC rose between 5% and 6%.
The Americas experienced growth of between 6% and 7%.
Japan: While we took steps to improve product mix, our efforts did not align with thedirection of the market. As a result, we missed opportunities for sales.
Europe: Sales struggled as our competitors implemented fairly aggressive sales strategies.
Despite the mature nature of the market, we plan to revisit our strategy, as this region
accounts for a high ratio of sales.

19Overview by ProductThis Quarter

Intraocular Lens
IOL

Record-high quarterly sales driven by strong growth in
APAC and Europe.

Going Forward
Maintain double-digit growth through production
increase at new factory and sales growth geographically.

This Quarter
Downturn in the Americas, where we won a big deal theyear-ago quarter. Total sales flat due to growth in APAC.

Going Forward
Endoscope

Launch new products from high-end to low-end, targeting
emerging markets.

© 2018 HOYA CORPORATION All Rights Reserved

20

Intraocular Lenses
Supply shortages during FY16 capped growth for the period. Now that our new factory isoperating, we have removed this limitation.
As our market share in Japan is already high at 30%, growth has slowed. Accordingly, wehave turned our eyes to APAC and Europe for future double-digit growth.
Endoscopes
Development is recovering little-by-little after a period of sluggishness. Our performance
began turning upbeat in the second half of the year with the roll-out of a number of newproducts.

20

1. Financial Results
2. IT Business Overview
3. Life Care Business Overview
4. Summary [Hiroshi Suzuki, CEO]
5. Q&A© 2018 HOYA CORPORATION All Rights Reserved

2121

Summary & Future Outlook

490.0

505.7

427.6

535.6
478.9

110.3

118.9

129.5
109.7(¥bn)

(¥bn)

81.2

123系列14系列25

Life Care (incl. M&A) will be a key
growth driver. Focus on growing
areas in the IT Business.
© 2018 HOYA CORPORATION All Rights Reserved

123系列14系列25Outpace revenue growth due toLife Care margin expansion.
22

While Life Care experienced weak sales growth in FY17, the year benefited in a major way bystrong performance of Information Technology.
FY18 should have fewer issues of concern compared to FY17, as negative factors impacting
the Information Technology business have largely subsided. At the same time, we see more
upside factors for intraocular lenses and endoscopes in our Life Care business.

221. Financial Results
2. IT Business Overview
3. Life Care Business Overview
4. Summary
5. Q&A© 2018 HOYA CORPORATION All Rights Reserved2323

Q&A -1
Q

Glass Substrates for Hard Disk Drives
What is the current situation surrounding NAND supply?

AWe have not seen an excess in supply recently. Priority for NAND is given to use insmartphones. NAND won’t be used in PC storage without a significant surplus.
With more high-storage smartphones coming out, NAND supply is likely to be
somewhat tight.
Future supply balance will depend on how much NAND is used in smartphones.
Our conservative outlook is that looser demand/supply will drive down NAND
prices, as well as drive down demand for HDD and our 2.5-inch substrates. Thisdecrease should be offset by increased sales of 3.5-inch substrates, resulting in a
net-zero effect on our business.

QMask Blanks
Tell us more about the scope of the market for mask blanks for EUV in the future.
When will EUV mass production begin?

AThe increase of EUV exposure devices in the market is a positive for the mask
blanks market.
As it stands today, predicting future mask blanks demand once EUV mass
production begins is very difficult.
While predicting the timing of EUV mass production is difficult, we do not believe
there will be any front loading involved.

© 2018 HOYA CORPORATION All Rights Reserved24

24

Q&A -2
QLife Care
What is your target profit ratio?

AWe estimate our Q4 profit ratio (profit from regular operating activities)
to be slightly in excess of 18%. For FY18, we have set a goal to achieve
an average 20% profit ratio throughout the year.
The key here is growing sales in our Life Care core eyeglass lensbusiness. We plan to achieve our goals by raising the efficiency of oursales activities.

QACash on Hand
In the past, you indicated an upper limit of ¥300 billion for cash on hand.
You commented that the current level of ¥240 billion is high in thepresentation. Has your policy regarding cash on hand changed?
We set an upper limit of ¥300 billion in cash on hand, assuming anaggressive approach to M&A. The high valuations of our targets prevented
us from acquiring as many companies as we initially predicted*. Given thissituation, we do not require such high levels of cash on hand.
*Potential synergies with our existing businesses provide upside factors thatlower the theoretical valuation of acquisition targets.

© 2018 HOYA CORPORATION All Rights Reserved2525

Q&A -3QAQGroup Management
We understand that HOYA uses strategic business units (SBU) operating
independently. Do you have any means for engaging in cross-unit businessmanagement?
To date, a vertically integrated approach has provided more benefits, mainly
due to the different nature of our businesses and the ability to clarify the scopeof responsibilities for each SBU. At the same time, there are commonalities
among SBUs. To growth further, we plan to create a matrix structure thatcombines both vertical and horizontal aspects of management.
Capital Investment
What will your approach to capital investment be for FY18?
Also, will the profit of your Life Care be greater than that of Information
Technology businesses?

More recently, we have come to see our Information Technology business as themore stable business, which is why we were not as active in investing. However,
we are experiencing a pressing need to update our production equipment.
Further, we plan to start investing again in growth fields (EUV mask blanks and3.5-inch substrates, for example) to increase sales. We don’t believe the profitof Life Care be greater than that of Information Technology businesses any timesoon.
© 2018 HOYA CORPORATION All Rights Reserved

A2626

Appendix© 2018 HOYA CORPORATION All Rights Reserved

2727

Consolidated Annual Results
FY16

FY17

YoY

YoY(%)

Revenue

478.9

535.6

+56.7+12%

Pretax Profit

110.8

124.2

+13.5+12%

Net Profit

86.9

99.2+12.4+14%

cf. Operating Profit

109.7

129.5+19.7+18％(¥bn)© 2018 HOYA CORPORATION All Rights Reserved

2828

Life Care Annual Results
FY16FY17

YoY

YoY(%)

Revenue*

314.4

352.9+38.4+12%

Pretax profit

54.756.4+1.7+3%

cf.Operating Profit

56.863.6+6.9+12%18.0%

18.0%+0pt(¥bn)

cf.OP Margin*External revenue© 2018 HOYA CORPORATION All Rights Reserved2929

IT Annual Results
FY16

FY17

YoY

YoY(%)

Revenue*

160.6

178.5+17.9+11%

Pretax profit

54.5

70.0+15.5+28%

cf.Operating Profit

57.5

70.1+12.6+22%

35.6%

39.2%+3.6pt(¥bn)

cf.OP Margin*External revenue© 2018 HOYA CORPORATION All Rights Reserved

3030

Annual Cash Flow
FY16FY17YoY

Operating CF

107.7

135.5

+27.8

Investing CF-27.5

-68.5

-41.0

Financing CF-64.3-117.3-53.0

Cash & Cash Equivalents
at the end of the term

296.9

245.8

-51.0(¥bn)© 2018 HOYA CORPORATION All Rights Reserved

3131

Life Care QoQ Earnings
Revenue*cf. Operating Profit / Margin

19.7%

83.8

Q4

82.8

Q1

FY1688.1

Q2
FY1790.1

Q391.9(¥bn)

(¥bn)

15.7%

17.8%
17.0% 17.5%

13.2

14.1

15.4

16.1

Q4Q4Q1Q2Q310

FY1618.1

Q4

FY17*External revenue© 2018 HOYA CORPORATION All Rights Reserved3232

IT QoQ Earnings
Revenue*cf. Operating Profit / Margin

41.6

43.6

46.8

45.5

42.6

14.9

Q4Q1

FY16Q2Q3FY17Q438.0%

(¥bn)

(bn)

35.9%

Q4

FY1616.6

Q1

41.0% 39.9%

19.2

18.2

Q2

Q3

37.7%

16.1

Q4

FY17*External revenue© 2018 HOYA CORPORATION All Rights Reserved3333

Notes✓ Accounting standard: IFRS✓ The fiscal year ending March 2018 is referred to as “FY17” throughout thisdocument.
✓ Figures less than ¥1 billion are rounded down. Accordingly, some discrepancies
may occur among totals. Ratios are calculated using actual numbers.
✓ 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© 2018 HOYA CORPORATION All Rights Reserved3434

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.

© 2018 HOYA CORPORATION All Rights Reserved3535