Kaga Electronics Co., Ltd.

Financial Results Discussion
for the First Quarter of the Fiscal Year ending March 2024
Main Questions and Answers
Date of earnings announcement: Thursday, August 3, 2023

<Points to note>
Kaga Electronics does not hold a financial results briefing for the first quarter, but we have summarized questions
and answers from IR interviews with analysts and investors after financial results were announced, in the form of“Main Questions and Answers.” Please be aware that it is not a transcription of all matters discussed, but rather abrief summary created at Kaga Electronics’ discretion.
Please also note that the statements contained in this document that relate to the future, such as results forecasts,
are based on information currently available to Kaga Electronics and certain assumptions that have been judged
to be reasonable. Actual performance, etc. may differ substantially due to a range of factors.

Q: What factors were behind the strong earnings in 1Q compared with forecasts?
A:

In the electronic components business, as expected at the start of the fiscal year, spot sales
mostly disappeared, but the impact of customers’ inventory adjustments was more limited
than we expected, and as a result, earnings exceeded our internal forecasts. The informationequipment business and other segments also performed well.

Q: What factors were behind the year-on-year decrease in income at Kaga FEI?
A:At Kaga FEI, sales increased year on year thanks to growth in sales of Socionext products, but
income decreased owing to the fact that spot sales mostly disappeared, as well as a valuation
loss and provision of allowance for doubtful accounts associated with the filing of a petition forcommencement of civil rehabilitation proceedings by a business partner, etc.

Q: What factors were behind the increase in profit margin for Excel?
A:

The profit margin improved as a result of changes to the sales mix, such as a decline in theoverseas liquid crystal business.

Q: Inventories have been increasing since the end of the previous fiscal year, but what is
the future outlook?

A:

At a fundamental level, our inventories are all based on orders and actual demand fromcustomers, but in the component sales business we sometimes hold inventories for a certain
period of time as a result of requests from customers, and the amount of such inventories has
increased by about 14 billion yen since the end of the previous fiscal year.
Going forward, we will work to achieve appropriate levels in terms of the position of ouramount of inventory and turnover by the end of the fiscal year.

Q: It appears that progress is good, with earnings outperforming your forecasts. Do you
not intend to make upward revisions to your earnings forecasts?

A:In 1Q, progress was strong, with both sales and each level of income outperforming ourinternal forecasts. We have, however, maintained our earnings forecasts from the beginning of
the fiscal year based on our cautious view of the impact of inventory adjustments, as weexpected at the beginning of the fiscal year, as well as future trends in demand, amid anuncertain management environment, including concerns about the spread of inflation andprolonged geopolitical risk. In the future, we will make an appropriate assessment concerning
revisions to earnings forecasts based on progress in 2Q.