For Institutional Investors/Analystssts

November 29, 2018
KAGA ELECTRONICS CO., LTD.

・ Summary of Financial Results for the 2nd Quarter
Ended September 30, 2018

P‐ 3・ Financial Highlights

P‐ 4〜 8・ Balance Sheet/Cash Flows

P‐ 9〜11・ Forecast for the Fiscal Year ending March 2019

P‐12〜13・ Supplementary Information

P‐14〜17

KAGA ELECTRONICS CO., LTD.
Managing Director2Summary of Financial Results for the Second Quarter Ended September 30, 2018

FY2019/3 2QResults

 At ¥115.3 billion, net sales by and large maintained the same level year‐on‐year,
driven by EMS business.
 Operating income and net profit both declined, which had been factored in at thebeginning of the period.
* Causes of the decreases: production adjustments resulting from model switching at major
customers, upfront expenses of new overseas sites at their start‐up phase, etc.

Overview of themain businesssegments

 Electronic components business: EMS business for medical equipment was slow, but thatfor automotive and air conditioning devices maintained steady performance.
Components sales business remained sluggish.
 Information equipment business: PC‐related business was sluggish but sales of housingrelated home electric appliances and commercial facilities-related LED installation
business continued to show robust growth.
 Net sales ¥290 billion, ordinary income ¥8 billion, profit ¥7.3 billion, ROE 9.9%.

Forecast forFY2019/3

 Along with the acquisition of Fujitsu Electronics, consolidation is scheduled to beeffective from the forth quarter.
 Expected to achieve net sales and ROE targets in the final fiscal year of the Medium‐
term Management Plan.
 Aiming to achieve record profit in 14 years with 7.3 billion yen profit projection
including negative goodwill related to the acquisition.

Shareholderreturn

 Commemorative dividend (dividend increase) to be paid, in celebration of the 50 thanniversary.
 Interim dividend of ¥35 per share, consisting of ordinary dividend of ¥30 andcommemorative dividend of ¥5.

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

3

(Million Yen)FY2018/3

FY2019/3

2Q Results

2Q Results

YoY

Net sales

116,582

115,383‐1,199Gross profit

16,21816,023

‐195

13.9%

13.9%

‐SG&A

11,824

12,251427

Operating income

4,394

3,772‐622

Ordinary income

4,703

4,049

‐654

Profit attributableto owners of parent

3,516

2,750

‐766

EPS (Yen)

128.16100.25‐27.91Gross profit margin© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

4

（Net Sales/Segment Income）（Million yen）

Net Sales
116,582
6,075
1,142
23,446

115,383
9,379
1,404
21,143

Segment income

TotalTotal

YoY： -1,199

OthersYoY：＋3,304

YoY： -622

4,394
198
111

SofwareYoY：+262

Others

3,772
216

1,116

143

YoY ： + 18

Software
YoY： ＋ 31

864
Information equipment

Information equipmentYoY： -2,302

85,918

YoY ： -252

83,455
Electronic component

2,893

YoY： -2,463

2018/3
2Q Results

2019/3
2Q Results

2018/3
2Q Results

2,474Electronic componetnt
YoY ： -419

2019/3
2Q Results

Note: Figures of each segment income are not inter‐segment adjusted.
Total amount is inter‐segment adjusted (operating income).
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

5

（Million yen）

Net sales/Segment income

90000

85,918/Net Sales/Segment Income

83,455

YoY5000

 Net Sales-2,463million yen 2.9％down

 Segment Income -419million yen 14.5％down
4500

4000
80000

EMS business for automotive and airconditioning devices maintained a steadyperformance.

3500

70000

2,893

3000

2,474

60000

2500

Components sales business remained sluggish,notably for home electric appliances from theeffect of production adjustments at major
customers.

2000

50000

1500

40000

1000

30000

500

2018/3
2QResults© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2019/3
2QResults

6

（Million Yen）

Net sales/Segment income/24,000/

23,446YoY
 Net Sales

Nets Sales
2000

Segment Income-2,302million yen 9.8％down Segment Income -252million yen 22.6％down

1800

21,14322,0001600

20,0001400

Sales of housing-related home electric appliancesand commercial facilities-related LED installation
business showed robust growth.

18,000

1,116

1200

Sales of PCs and PC peripherals were slow.

16,0001000

864
14,000800

12,000600

10,000
400

8,000

200

2018/3
2Q Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2019/3
2Q Results7

(Million Yen)

Net sales
116,582

YoY Japan

115,383

70,288Japan

4.7％down

 North America-593 million Yen 12.9％down

 Europe＋241 million Yen 13.6％up

 East Asia

73,789-3,500 million Yen＋2,653 million Yen

7.3％upJapan: PC sale , amusement machine businessand golf equipment sales were sluggish.
Overseas:East Asia and Europe also increased due to
steady growth in EMS business.

4,580
1,779

3,987
2,020

North America

Europe36,43339,0862018/3
2Q Results

2019/3
2Q Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

East Asia

8

(Million Yen)

Total assets
125,751

128,755

Total liabilities and net assets

130,811
126,376

125,751

59,819128,755

58,123126,376

57,369130,81157,564
Total liabilities

Current assets

103,684

104,069

103,178

104,264

65,932

70,63169,00673,247

Non‐current assets

22,067

24,68523,19826,5472017/3

2018/32017/92018/9Total net assets

2017/3

2018/32017/92018/9Note: “Partial Amendments to Accounting Standard for Tax Effect Accounting” etc. (Accounting Standards Board ofJapan (ASBJ) Statement No. 28, February 16, 2018) have been adopted from the beginning of the first quarterof the fiscal year ending March 31, 2019. Accordingly, deferred tax assets are presented under investments
9© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved. and other assets, while deferred tax liabilities are presented under non‐current liabilities section.

(Million Yen)

Inventories

Accounts receivable/Accounts payable
50.0

（Day）

40.7

30,000

36.0

34.9

34.9

40.0

83.6
80,000

77.1

78.5

76.7

（Day）
80.0

Inventory turnover

A/R turnover

70,00070.0

25,00030.0
60,000

69.9

65.3

64.8

65.2

A/P turnover

60.0

20,00050,00020.0

50.0

Notes and A/R

40,00015,00040.0

10.0

30,00010,00019,325

19,45522,076
19,13630.052,009

Inventories
0.0

20,00037,55349,841
36,39250,02435,512

Notes and A/P

48,35335,381

20.0

5,000
-10.0

10,00010.0

00

0.0-20.0

2017/3

2018/32017/92018/9© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2017/3

2018/32017/92018/910

（Million Yen）

Cash and deposits
35,000

0.15

0.13

0.14

0.13

Cash flows

0.20

D/E ratio
30,0000.00

25,00010,746-0.20

Cash flows fromoperating activities

10,07720,000

5,875
-0.40

30,80315,00030,39330,412

Cash and deposits

26,423

1,898
▲ 258

▲ 1,345-0.60

10,000▲ 6,118▲ 4,173▲ 1,265-0.80

5,000

9,805

8,900

9,573

9,554

0-1.002017/3

2018/32017/92018/9© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

▲ 685▲ 2,811

Interest bearing debts

2017/3末

2017/3

2018/3末

2018/3▲ 4,938

2018/9期

2017/9Cash flows frominvesting activities

Cash flows fromfinancing activities

2018/9期

2018/911

（Million Yen）

2018/3Results

2019/3
Forecasts

Medium‐TermManagement Plan
TargetYoY

Net sales

235,921290,000

54,079290,000

Gross profit

32,49835,5003,002‐13.8%

12.2%‐1.6pt‐SG&A

24,37927,8003,421‐

Operating income

8,119

7,700‐419‐

Ordinary income

8,740

8,000

‐740

10,000

Profit attributableto pwners of parent

6,490

7,300

810

‐EPS（Yen）

236.58266.04

29.46

‐

9.5

9.9

+0.4pt8.0%

Gross profit marginROE© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

12

（Million Yen）

2018/3

2019/3Results

Forecasts

YoY

172,248

227,200

54,95232%

Sgment income

5,312

5,200

‐112

‐2%

Information Net Sales
Equipment
Sgment income

47,58243,000‐4,582

‐10%

2,202

1,700‐502

‐23%

2,568

2,800

232

9%

172

300

128

74%

13,522

17,000

3,478

26%

308

500

192

62%

235,921290,000

54,079

23%

8,119

7,700

‐419

‐5%

Electronic
Component

Software

OthersTotal

Net Sales

Net Sales
Sgment income
Net Sales
Sgment income
Net Sales
Sgment income

Note: Figures of each segment income are not inter‐segment adjusted.
Total amount is inter‐segment adjusted (operating income).
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

13

（Net Sales）(Million Yen)

Net Sales

56,174
2,872
448
11,13260,4083,202
694
12,31461,873
57,4652,627399
11,2994,819
1,027
12,83659,88955,493
4,103
465
10,417

Total
YoY ：‐518
QoQ： ＋4,396

5,276
939
10,725

OthersYoY ： ＋2,073
QoQ : ＋1,173

SoftwareYoY ：QoQ：+245+474

Information equipment

41,721

44,197

43,13943,19040,50742,948

YoY ： ▲1,588
QoQ :+308

Electronic component
YoY ： ▲1,249
QoQ： ＋2,440

2018/3
1Q Results

2018/3
2Q Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

2018/3
3Q Results

2018/3
4Q Results

2019/3
1Q Results

2019/3
2Q Results

14（Segment Income）(Million Yen)

Segment Income
2,305
2,08846112

2,28237135

Total
YoY ：
QoQ :

▲23＋792

1621520358

2,219543757

Others1,5067280

1,489547

YoY ：
QoQ :

80＋89＋54

Software
YoY :
QoQ :

317＋49+181

543
Information equipment

1,539

1,616

1,402

1,353
1,071

2018/3
3Q Results

YoY :＋49

QoQ：+330▲ 19▲ 20
2018/3
2Q Results▲210＋229

Electronic component

802

2018/3
1Q Results

YoY ：
QoQ :

2018/3
4Q Results

2019/3
1Q Results

2019/3
2Q Results

Note: Figures of each segment income are not inter‐segment adjusted.
Total amount is inter‐segment adjusted (operating income).
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

15

（Reference）
Effect of 1% change（Million Yen）

Forex
Assumption
for 2H(yen)FY2018/3
2Q Results

FY2019/3
2Q Results

USD

111.06110.2613514110.00

THB

3.28

3.40

108

5

3.40

RMB

16.39

17.09

70

417.00

HKD

14.24

14.05

84

214.00（Yen）© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

（Yen）

Net sales

Ordinary
income16Electroniccomponents• Sale of semiconductors (general-purpose products and customizedproducts)• Sale of electronic components (transformers, condensers, cables,connectors, and switches, etc.), LED, and storage devices• Development, manufacture and sales related to EMS (airconditioning, office equipment, automotive devices, industrial
equipment, amusement machines, communication equipment,
medical equipment, etc.)

Informationequipment• Sales of PCs and PC peripherals, home electric appliances/lighting
fixtures, photograph and imaging products, original brand products,etc.)

Software• Production of computer graphics, planning and development ofamusement products, and other activities

Others• Repair and supports for electronics equipment, manufacture andsales of amusement equipment, and wholesale/retail of sports goods,etc.)© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

17

20 Kandamatsunagacho, Chiyoda‐ku, Tokyo 101‐8629
Contact: Investor Relations & Public Relations Office
TEL:+81‐3‐5657‐0106
FAX:+81‐3‐3254‐7133
E‐mail： webmaster@taxan.co.jp
https://www.taxan.co.jp

■ Caution on forward-looking statements
Forwarding look statements included in this document, such as performance forecasts, arebased on information that has been obtained at the current time and certain assumptions
deemed as reasonable by the company; actual performance, etc. may be significantly different
due to various factors.
■ Display method in this material
Number : Truncated less than the display unit.
Ratio: After calculation in yen units, Round down one digit of Display unit.