Financial Results for Q1 FY2020 (Apr to Jun 2020)and Prospects for FY2020

July 22, 2020

6807 Japan Aviation Electronics Industry, Ltd.
Copyright ©2020, Japan Aviation Electronics Industry, Ltd.

AgendaI.

Financial Results for Q1 FY2020

II.

Prospects for FY2020

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Technology to Inspire Innovation

2

Technology to Inspire Innovation

Ⅰ. Financial Results for Q1 FY2020（From April 1, 2020 to June 30, 2020）※ Amounts less than 100 million JPY are rounded off.
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3

Net Sales and IncomesTechnology to Inspire Innovation(JPY in 100 millions)

Q1 FY2019
3 months ended

Q4 FY2019

Q1 FY2020

Year/Year
ChangeSequential
ChangeJun 30, 2019 Mar 31, 2020 Jun 30, 2020 Q1FY2020/Q1FY2019 Q1FY2020/Q4FY2019

Net Sales

452

510

433

-1996%-76

85%

Operating
Income2530-17-43--48-

Ordinary
Income

5.6%

5.9%

-4.0%

2631

-16-42-

-47

-

5.8%

6.1%

-3.7%

20

24

-13-33--37-

to Net Sales

4.4%

4.7%

-3.1%

Average
Exchange Rate
(JPY/USD)

109.9

108.9

107.6

to Net Sales
to Net Sales

Net
Income-2.3

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-1.3

4

Net Sales by Market Segment

Technology to Inspire Innovation(JPY in 100 millions)
3 months ended

Q4 FY2019

Q1 FY2020

Jun 30, 2019

Mar 31, 2020

Jun 30, 2020

MobileDevices

192

Automotive

Component
Ratio

43%

235

166

37%

Industrial &Infrastructure

71

Others
Total
Domestic
Sales
Overseas
Sales

Year/Year
ChangeQ1 FY2019

Component
Ratio

46%

221

178

35%

16%

65

235%

452

Sequential
ChangeQ1FY2020/Q1FY2019 Q1FY2020/Q4FY2019

Component
Ratio

51%

29115%-1494%

12228%-4474%-5669%

13%6415%

-790%

-199%

336%

276%

3114%

-681%

100%

510

100%

433

100%

-1996%-7685%

143

32%

158

31%

133

31%

-1093%-2584%

309

68%

352

69%

300

69%

-997%

-5285%

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5Connector Business
Sales by Market Segment(JPY in 100 millions)

Year/Year
Change

395

380

96％

Mobile Devices

Automotive

192

115%

154

221

68%

105

Industrial &Infrastructure

114%
41
36
PC・LCD・TV
1312Others
Q1/FY2019
Q1/FY2020

Segment Profit(JPY in 100 millions)

7.4%

Returnon Sales

Sales：96% (of Q1 FY2019)▶ Mobile Devices

Sales increased for the specific products
Sales to smartphone customers in China
decreased▶ Automotive

Sales decreased due to customers and ourplant shutdowns and operation
restrictions at our production sites.

▶ Industrial and Infrastructure

Although temporary demand recovery
was seen, overall demand remained
stagnant mainly in the domestic FAmarket.

Operating Income: Minus 3.47 billion yen
from the previous year

29.4

Q1/FY2019Technology to Inspire Innovation

-5.3
-1.4%
Q1/FY2020▶ Profit decreased due to erosion of
profitability and deterioration ofproduct mix in the automotive market

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6UIS Business(JPY in 100 millions)Technology to Inspire Innovation

Sales by Market Segment
Year/Year
ChangeAutomotive

10149%

Industrial &Infrastructure795%

Q1/FY2019▶ Automotive (In-Vehicle Touch Panels)
Sales significantly increased
compared with the same period lastyear due to expansion of vehicle
models adopting film sensors andexpanding production. (Sales declined

22127％

17

Sales; 127% (of Q1 FY2019)

157

from Q4/FY2019, due to customer’sproduction shutdowns)

Q1/FY2020Segment Profit(JPY in 100 millions)Operating income: Minus 120 million yen
from the previous year

Returnon Sales

-0.4
-2.1%
Q1/FY2019▶ Industrial and Infrastructure
Sluggish market continued

-1.5
-6.9%
Q1/FY2020▶ Fixed costs burden increased due tosharp decline in sales, while mass
production system enhancement wasbeing done

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Aerospace Business(JPY in 100 millions)Technology to Inspire Innovation

Sales by Market Segment

Sales：77% (of Q1 FY2019)Year/Year
Change3877％

29

Industrial &Infrastructure
and Automotive

2963%

18Defense &Space

9123%

11Q1/FY2019

Q1/FY2020

Segment Profit(JPY in 100 millions)

18.0%

6.8

Operating Income: Minus 750 million yen
from the previous year

Returnon Sales

-0.7

-2.2%
Q1/FY2019▶ Industrial & infrastructure, andAutomotive
Sales decreased due to sluggish
demand of sensors for oil drilling.
Semiconductor production equipment
are on a recovery trend

Q1/FY2020▶ Profit margin declined due to thesignificant decrease in sales of sensorsfor oil drilling

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First Quarter, Monthly Situation

Technology to Inspire Innovation▶ Net sales in May declined more than anticipated due to sharp decline in mobiledevices and delay in operation resumption at Philippines and Tijuana plants which
manufacture products for automotive markets.
Recovery in June owes to the release of new models for mobile devices and therestart of operations at automotive-related plants.
▶ Operating income returned profitable in June after bottoming out in May due torestarting operations of automotive-related plants.
Sales-20%month bymonth

Mobile Devices-20%
month by
month

+30%
month bymonthAutomotive
Industrial &(億円)
Infrastructure
PC・LCD・TV
OthersOperating income※Forecast is
forecast as ofend of April

ActualForecast Actual

Forecast Actual

ActualMarAprMay

JunCopyright ©2020, Japan Aviation Electronics Industry, Ltd.

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Technology to Inspire Innovation

Ⅱ. Prospects for FY2020

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Assumptions for the earnings forecasts▶ Business Environment

Technology to Inspire Innovation

 Resumption and Expansion of economic activities in Asia, Europe and North
America to further continue
 Assuming that decline in demand by the novel coronavirus (COVID-19)
diseases remains insignificant
 No further operational restriction to JAE production sites▶ Market Environment: Mobile Devices:

Production for new models to gain momentum from Q2
Demand for smartphones in the 2nd Half will fall slightly below the previous yearlevel

 Automotive:

Production by major Japanese customers continue to recover.
Production and sales conditions remain tough for major European customers(Overall vehicle production level shall be around 90% in Q2 and same level in the 2H
compared to the previous year)

 Industrial and Infrastructure:

Demand for FA and semiconductor-related products to recover from the 2H of fiscal
year.
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11Prospects for FY2020

Technology to Inspire Innovation(JPY in 100millons)
FY2019FY2020

1H

2H

1H
2H
Projections
Projections Projections

Net Sales

1,008

1,073

2,081

955

975

Operating
Profit

71.1

69.1

140.2

10.0

Ordinary
Profit

7.1%

6.4%

6.7%

73.0

69.3

7.2%

Net Profit

to Net Sales

to Net Sales

to Net Sales
Average
Exchange Rate
（JPY／USD）

Dividend（JPY）

Capital Investment

1,930

Year/Year
Change-151

93%

50.0

60.0 -80.2

43%

1.0%

5.1%

3.1%

142.35.0

45.0

50.0 -92.3

6.5%

6.8%

0.5%

4.6%

2.6%

58.2

52.3

110.5

3.5

33.5

37.0 -73.5

5.8%

4.9%

5.3%

0.4%

3.4%

1.9%

108.6

108.8

108.7

107.8

108.0

107.9

202040101020FY2019FY2020245

200

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35%

33%

12

Sales by Market Segment (Projection of 1st Half)

Technology to Inspire Innovation

Market Environment to recover from Q2▶ Mobile Devices: Sales expected to recover in Q2 by new model releases▶ Automotive: Sales expected to increase by the recovery of both customer
demand and JAE production.
▶ Industrial & Infrastructure: Sales slightly recover in the latter Q2 despite thecontinued slump
556(JPY in 100millons)

563

452
284

290

522

510
433
235

MobileDevices

192

Automotive

166

178

183

178

Industrial &Infrastructureothers

71
23

67
28

65
26

65
33

221

Q1/FY2019

Q2/FY2019

Q3/FY2019

Q4/FY2019

122
64
27

Q1/FY2020

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272

151
69
29

Q2/FY2020
Projections

13

Prospects for FY2020

Technology to Inspire Innovation(JPY in 100millons)
FY2019FY2020

1H2H

1H
2H
ProjectionsProjections Projections

Net Sales

1,008

1,073

2,081

955

975

Operating
Profit

71.1

69.1

140.2

10.0

Ordinary
Profit

7.1%

6.4%

6.7%

73.0

69.3

7.2%

Net Profit

to Net Sales

to Net Sales

to Net Sales
Average
Exchange Rate
（JPY／USD）

Dividend（JPY）

Capital Investment

1,930

Year/Year
Change-151

93%

50.0

60.0 -80.2

43%

1.0%

5.1%

3.1%

142.3

5.0

45.0

50.0 -92.3

6.5%

6.8%

0.5%

4.6%

2.6%

58.2

52.3

110.5

3.5

33.5

37.0 -73.5

5.8%

4.9%

5.3%

0.4%

3.4%

1.9%

108.6

108.8

108.7107.8

108.0

107.9202040

101020FY2019FY2020245200

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35%

33%

14

Sales by Market Segment (Projection of 2nd Half)

Technology to Inspire Innovation

In spite of the recovery in market environment, sales for mobile devices ispredicted to decline▶ Mobile Devices: Sales for smartphones in China remain severe.
▶ Automotive: Sales in the 2nd Half is projected to be on par with the previous
year, as both customer demand and JAE production will recover from Q2.
▶ Industrial & Infrastructure: Sales of FA and semiconductor-related products
expected to recover.
(JPY in 100millons)

1,008

1,073

955

MobileDevices

477

525

Automotive

343

361

273

137
51

129
58

133
56

Industrial &Infrastructureothers

1H/FY2019

2H/FY2019

493

1H/FY2020

Projections

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975
412

358
146
59

2H/FY2020

Projections

15

Efforts to ensure business recovery
Initiatives to returnto profitability

Efforts to ensurebusiness recovery
in the second halfof FY2020

Technology to Inspire Innovation▶ Restructure production system and reduce indirect
costs matching with current demand▶ Postpone capital investments which does notdirectly link to the sales expansion in FY2020▶ Release new products for new models▶ Securing funding level in case of emergency▶ Catching up with the emerging demand Strengthen sales activities under remote work
Explore new business deals through digital marketing Start-up new facilities at overseas plants remotelyfrom Japan▶ Restructure Philippine, Tijuana and otherproduction sites by improving capacity utilizationand productivity in order to achieve lean cost
structure
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Technology to Inspire Innovation<Cautionary Statement>
The plans, strategies & results forecasts and targets for our company and our consolidated affiliates (hereinafterJAE) noted in these materials are forecasts and targets as of July 22, 2020, and include risks and uncertainties.
The targets noted in these materials are not projections, and do not reflect current projections by the management
team with regards to future results. Rather, these are targets to be attained by the management team throughimplementing business strategies.
Note that actual results may differ greatly from forecasts and targets, etc. based on various factors. Major factors that
affect actual business results, etc. are the political and economic situations in Japan, the US, Asia and so forth thatinvolve regions where JAE conducts business operations, demand fluctuations for JAE products (including softwareproducts) in the market, deflationary pressures caused by severe competition, the ability to continue supplying overour competitors, the ability to expand business operations in overseas markets, changes to the laws and regulations
concerning business activities, and their transparency, potential legal responsibilities, exchange rates, etc, and there
may be other factors beyond the ones listed here. Actual results may differ from management targets and otherforecasts due to a worsening global economy and the global financial situation, stagnation in the domestic andoverseas stock markets, etc. Note that descriptions concerning projections are current as of that day.
Although new risks and factors of uncertainty that occur at any anytime are evident, it is impossible to predict theiroccurrence or effects. In addition, details describing future predictions may not actually occur due to risk anduncertainties. Do not rely solely on these descriptions.

※ Amounts less than 100 million JPY are rounded off.
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［Reference］Connector BusinessTechnology to Inspire Innovation▶ Mobile devise: Sales to smartphone customers in China fall sharply from May▶ Automotive: Sales declined due to global operational restrictions for both customers
and at JAE▶ Industrial & Infrastructure: Overall market remained stagnant, despite a temporary
recovery in China

Sales By Market Segment（JPY in 100 millions）

496500508
437

3950284MobileDevices

192

Automotive

154

Industrial &Infrastructure
3612
PC・LCD・TV &Others Q1/FY2019

290

380

235

221

163

165

155

105

3712Q2/FY2019

3915
Q3/FY2019

3711
Q4/FY2019

4114
Q1/FY2020

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［Reference］UIS BusinessTechnology to Inspire Innovation▶ Automotive: Sales of in-vehicle film-type touch panel significantly declined due toshutdown of operations at customer production plants by COVIT-19 impact▶ Industrial & Infrastructure: Sluggish market continues due to slow recovery of themarket for machine tools and industrial robots

Sales By Market Segment（JPY in 100 millions）

212002823172220131615Automotive

10Industrial &Infrastructure

78787

Q1/FY2019

Q2/FY2019

Q3/FY2019

Q4/FY2019

Q1/FY2020

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［Reference］ Aerospace BusinessTechnology to Inspire Innovation▶ Industrial & Infrastructure: Demand declined sharply for oil drilling sensors due to thedrop in crude oil prices, however sales of linear motors for semiconductor
manufacturing equipment bottomed out

Sales By Market Segment（JPY in 100 millions）
5043383731

Industrial,Infrastructure,& Automotive0

Defense &Space299Q1/FY2019

292224182113Q2/FY2019

21119Q3/FY2019

Q4/FY2019

Q1/FY2020

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［Reference］Net Sales and Profits By Business Segment
Technology to Inspire Innovation(JPY in 100millons)
Q1 FY2019

Q4 FY2019

Q1 FY2020

Year/Year
ChangeSequential
Change3 months ended 30, Jun 2019 31, Mar 2020 30, Jun 2020 Q1FY2020/Q1FY2019 Q1FY2020/Q4FY2019

437380-1596%-5787%

Connector Segment Profit

395
29.437.9-5.3-34.7ー-43.2ーto Net Sales

7.4%

8.7%

-1.4%

1728

225127%-678%

Segment Profit-0.4-0.1-1.5-1.2ー-1.4ー

to Net Sales

-2.1%

-0.4%

-6.9%

4329

-977%

-1369%

Aerospace Segment Profit

38
6.8

2.5-0.7

-7.5

ー

-3.2ー

to Net Sales

18.0%

5.8%

-2.2%

22

2

0102%

0107%

-10.6

-10.1

-10.0

0.7ー

0.1ー

Sales

452

510

433

-1996%-7685%

Operation Profit

25.2

30.2

-17.5

-42.6ー-47.7ーto Net Sales

5.6%

5.9%

-4.0%Sales

Sales
UIS

Sales

Unallocatablecost/ Others

Total

Sales
Segment Profit

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22