Financial Results for 1H of FY2020
and Prospects for FY2020

October 28, 2020

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

AgendaTechnology to Inspire Innovation

I.

Financial Results for 1H of FY2020

II.

Prospects and strategy for FY2020

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

2

I. Financial Results for 1H of FY2020(From April 1, 2020 to September 30, 2020)※ Effective from the beginning of the first quarter of the current fiscal year, the Company haschanged its accounting policy and revised the calculation method of retirement benefit obligations
and service cost. Accordingly, the key management indicators for the same quarter of the previous
fiscal year and the previous fiscal year have been adjusted to reflect the retrospective applicationof these changes.
※ Total may not correspond to the total value of the items since amounts less than 100 million JPY
are basically rounded off
Copyright ©2020. Japan Aviation Electronics Industry. Ltd

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

FY2019FY2020

vs. 1HFY2020
Projections

1H FY2020
Projections
anounced
Jul, 2020

1H

2H

Net Sales

1,008

1,073

972

-36

96%

17

102%

955

Operating
Income

71.1

69.1

9.2

-61.9

13%

-0.8

92%

10.0

(to Net Sales)

7.1%

6.4%

0.9%

73.0

69.3

7.9

-65.1

11%

2.9 158%

5.0

7.2%

6.5%

0.8%

58.2

52.3

4.3

-53.9

7%

0.8 123%

3.5(to Net Sales)

5.8%

4.9%

0.4%

Exchange Rate
(JPY/USD)

108.6

108.8

106.9

Ordinary
Income(to Net Sales)

Net
Income1HYear/Year
Change1H FY2019/
1H FY2018

-1.7

-0.9

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

107.8

4

Performance in 1H of FY2020
Technology to Inspire Innovation

JAE has focused on ensuring business performance as well as
fulfilling our responsibility for supplying products to customers
under the circumstances of the sharp drop in demand andoperational restrictions triggered by COVID-19 crisis▶ Operating conditions of overseas production sites for manufacturing
automotive connectors and harnesses.

 Expanded production by improving
productivity under lower-than-normal staffing

Actual staffing

Demand for automotive market rapidly
recovered from June

Temporary strengtheningof quarantine

 JAE Philippines: Operation was suspended from March 17
Resumed operations in April in a limited scope under the quarantine
 JAE Tijuana: Operation was suspended
1H Operation status at JAE Philippinesfrom April 14. Gradually resumed
Production output
operations from early May
Normal staffing Both sites maintained employment
 Production at alternative facilities andexpedited shipment was conducted

Apr

May

Jun

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

Jul

Aug

Sep

5

Year on Year Changes in Operating Income
Technology to Inspire Innovation

1H of FY2019
7.11 billion yen
Exchange
rate changes

Decrease inoperation of
production
sites

Revenue decrease
due to product mix
Cost forexpedited
shipment andrises inmaterials
cost

1H of FY2020
0.92 billion yen

Reduction of
fixed costs
Copyright ©2020. Japan Aviation Electronics Industry. Ltd

6

Sales by Market Segment
Technology to Inspire Innovation

Demand bottomed out, particularly in the automotive and mobile device markets,
in Q1, and sales increased in Q2▶ Mobile Devices: Demand from Chinese smartphone OEMs sharply declined in
Q1, however, sales were on a recovery track in Q2 due to the new model
release in Q2▶ Automotive: Demand recovered sharply from June onward, mainly fromJapanese customers▶ Industrial & Infrastructure: Market began to follow a gradual recovery trend in
spite of the variation among markets
556(JPY in 100millons)

563

452
MobileDevices

Automotive
Industrial &Infrastructureothers

538

510
433

284

192

290

273

235
221

166

178

183

178

71
23

67
28

65
26

65
33

64
27

69
30

Q1/FY2019

Q2/FY2019

Q3/FY2019

Q4/FY2019

Q1/FY2020

Q2/FY2020

122

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

167

7

Net Sales and Operating Income
Technology to Inspire Innovation▶ In Q1, we posted a loss owing to demand decrease mainly in theautomotive market and production restrictions of our production bases▶ Sales recovered from Q2 and profitability improved due to increase of
capacity utilization and productivity of production bases.
(JPY in 100 millions)

Net Sales

556

563
510

452

Operating
Income

538
433

46

25

39

30

27
-17

Q1/FY2019

Q2/FY2019

Q3/FY2019

Q4/FY2019

Q1/FY2020

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

Q2/FY20208

Connector BusinessTechnology to Inspire Innovation

Sales by Market Segment
Year/Year(JPY in 100 millions) 891
856
Change96％

MobileDevices

477

104%

494

Sales：96% (of 1H FY2019)▶ Mobile Devices• Sales to US customers increased• Demand from Chinese Smartphone
OEMs declined▶ Automotive
Automotive

317

80%

254

Industrial &Infrastructure

112%
81
73
27
25
1H/FY2019
1H/FY2020

PC・LCD・TV
OthersSegment Profit(JPY in 100 millions)

9.5%
84.7
1H/FY2019

Returnon Sales

3.1%
26.2
1H/FY2020• Sales decreased due to shutdowns andoperation restrictions at customers andour own plants▶ Industrial and Infrastructure• Demand continues to stagnate althoughrestart of operation was observed insome areas

Operating Income: Minus 5.86 billion yen
from the previous year
▶ Profits decreased due to a decline indemand in the automotive market andproduction restrictions of our production
bases

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

9UIS BusinessTechnology to Inspire Innovation

Sales by Market Segment(JPY in 100 millions)

Automotive

39

Year/Year
Change
118％

23

126%

15

105%

45

Sales：118% (of 1H FY2019)▶ Automotive (In-Vehicle Touch Panels)

1H/FY2019

29

16
1H/FY2020• Sales significantly increased comparedwith the same period last year due toexpanding production of film sensors inspite of the demand decrease impact▶ Industrial and Infrastructure• Sales generally flat year-on-year due tocontinued sluggish market

Segment Profit

Operating Income: Plus 150 million yen
from the previous year

Returnon Sales

-1.9

-0.4
-0.9%

-5.0%
1H/FY2019▶ Profitability of in-vehicle touch panels
improved and turned to profit in Q2,
resulting to reduction in losses in 1H

1H/FY2020

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

10

Aerospace BusinessTechnology to Inspire Innovation

Sales by Market Segment(JPY in 100 millions)75

Industrial &Infrastructure
and Automotive

52

Defense &
Space

23

Year/Year
Change
90%

67

42

80%

25

112%

1H/FY2019

Sales：90% (of 1H FY2019)▶ Industrial & infrastructure, andAutomotive• Sluggish demand of sensors for oil
drilling due to drop in oil prices• Linear motors for semiconductor
production equipment are on a gradual
recovering trend

1H/FY2020

Segment Profit(JPY in 100 millions)

12.7%

Returnon Sales

3.8%

9.5

2.5

1H/FY2019

Operating Income: Minus 700 million yen
from the previous year
▶ Profit decreased due to a sharp decreasein sales of sensors for oil drilling

1H/FY2020

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

11

II. Prospects and strategy for FY2020(From April 1, 2020 to March 31, 2021)

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

Assumptions for the Earnings Forecasts
Technology to Inspire Innovation▶ Business Environment
 Expansion of economic activities in Asia, Europe and North America tofurther continue
 Assuming that that there will be no further significant decline in demandor lock-down due to COVID-19▶ Market Environment
 In spite the recovering smartphone market, there are concerns of USChina trade conflict impacting the demand, and uncertainty are still
remaining in the Q4
 Recent robust demand in the automotive market is expected to continue
 Industrial & infrastructure market is expected to recover moderately, but
situation varies among customers and equipment

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

13

Prospect for FY2020
Technology to Inspire Innovation▶ Full-year outlook remains unchanged despite revision of exchange rate assumptions(JPY in 100 millions)

FY2019FY2020

1H

1H

Projections

Year/Year
Changevs. FY2020
Projections

vs. FY2020
Projections
announced
Jul, 2020

Net Sales

1,008

2,081

972

1,930

-151

93%

0

1,930

Operating
Profit

71

140

9

60

-80

43%

0

60

7.1%

6.7%

0.9%

3.1%

73

142

8

50

7.2%

6.8%

0.8%

2.6%

58

111

4

37

(to Net Sales)

5.8%

5.3%

0.4%

1.9%

Average
Exchange Rate
（JPY／USD）

108.6

108.7

106.9

106.0

(to Net Sales)

Ordinary
Profit(to Net Sales)

Net Profit

3.1%

-92

35%

0

50
2.6%

-74

33%

0

37
1.9%

2H：105.0

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

14

Prospects for Net Sales by Business Segment
Technology to Inspire Innovation▶ No change from assumptions as of July
(JPY in 100 millions)
FY20191H

FY2020

Projections

1H

Projections

Year/YearchangeConnector

891

1,836

856

1,680

-156

92%

UIS

39

90

45

100

10

112%

Aerospace

75

149

67

145

-4

98%

Others

4

7

3

5

-2

72%

1,008

2,081

972

1,930

-151

93%

Total

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

15

Prospects for Net Sales by Market Segment
Technology to Inspire Innovation(JPY in 100 millions)

FY20191H

FY20201H

Projections

Year/Year
Changevs. FY2020
Projections

FY2020
Projections
announced
Jul, 2020

Mobile Devices

477

1,001

494

905

-96

90%

0

905

Automotive

343

704

289

641

-63

91%

10

631

Industrial &Infrastructure

137

267

133

279

12

105%

0

279

51

109

56

105

-4

96%

-10

115

1,008

2,081

972

1,930 -151

93%

0

1,930

711

1,475

682

70.5%

70.9%

70.1%

Others
Total

Overseas
Overseas
Sales Ratio

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

16

Quarterly Sales Results and Prospects (Mobile Devices)
Technology to Inspire Innovation▶ New models remained robust over Q3, while demand from Chinese
smartphone OEMs recovered and sales of specified products declined sharply▶ Demand decrease expected in Q4 due to seasonality in the smartphone market(JPY in 100 millions)

COVID-19 impact addition toseasonality

Launch of new model
Decline in demand of
specific products
Seasonality

290

Q3/FY2019

235

221

Q4/FY2019

Q1/FY2020

273

Q2/FY2020

225

186

Q3/FY2020

Q4/FY2020

Projections

Projections
Quarterly/Fiscal Year

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

17

Quarterly Sales Results and Prospects (Automotive)
Technology to Inspire Innovation▶ Demand mainly from Japanese customers is expected to recover from Q2 andcontinue beyond Q3▶ By region, following China, demand is expected to recover around the world▶ Amid a tight inventory across the entire supply chain, we will correspond by
reviving production system and increasing efficiency to cope with therecovering demand
Deceleration due to global
lockdowns impacting
demand and operation(JPY in 100 millions)

183

Demand recovery mainly fromJapanese customers

178
122

Q3/FY2019

Q4/FY2019

Q1/FY2020

167

175

177

Q2/FY2020

Q3/FY2020

Q4/FY2020

Projections

Projections
Quarterly/Fiscal Year

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

18

Initiatives to Achieve Full-Year Outlook (1)Technology to Inspire Innovation

Revive and strengthen production system that haveshrunk due to reduced demand▶ Revive production systems that have shrunk due to reduced
demand in the mobile device and automotive markets in spite ofmanpower restrictions and new normal conditions▶ Improve production efficiency by optimizing production lines Further accelerate manpower and space savings by semi and fullautomated systems▶ Enhancing supply chain Deploy multi-site production of automotive cable harnesses
and interior connectors for mobile devices

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

19

Initiatives to Achieve Full-Year Outlook (2)Technology to Inspire Innovation

Continue to win new contracts and develop new
products under COVID-19 crisis▶ Sales Activities Use IT tools to promote remote business negotiations and host webinars
 Strengthening Digital Marketing• Promote MA (marketing automation), activities using online exhibitions, feature
web-sites, SNS, etc.

▶ Product development and start mass production
 Launch overseas production facilities remotely/Cost reductions through remote kaizen• Launched at 3 sites in the 1H of the fiscal year
Planned expansion to other production sites
in the 2H

 Develop products in key markets for growth

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

20

Growth Initiatives (Automotive)
Technology to Inspire Innovation

EV (Electric Vehicle)

ADAS / Autonomous Large-current/high-voltage
connectors adopted for EV ofEuropean carmakerStarted delivery of mass
production productsin this fiscal year Expand globally, focusing on
Japanese customers, including
connectors for sensing cameras

High-current,
high-voltage connectors

Connector for digital camera

Safety (Air Bags)

User Interface Panel Adopted by multiple global
customers, including largest EV
carmaker leading the industry, in
addition to existing European
customers

 Enhance mass production to cater
recovering demand, mainly for SUV
models for the North American
market Developed all-transparent touch
panel without frame

AK Squib connectors for airbags

Frameless all-transparent
Full Touch Sensor

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

21

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 October 28, 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 factorsthat affect actual business results, etc. are the political and economic situations in Japan, the US, Asia and so forththat involve regions where JAE conducts business operations, demand fluctuations for JAE products (including
software products) in the market, deflationary pressures caused by severe competition, the ability to continue
supplying over our 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 managementtargets and other forecasts due to a worsening global economy and the global financial situation, stagnation in thedomestic and overseas 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.

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

23

[Reference] Net Sales by Business Segment
Technology to Inspire Innovation(JPY in 100 millions)

FY20191H

2H

FY2020Year/Year
Change1H

1H FY2020/
1H FY2019
Component
Ratio

891

945

856

88%

-35

96%

UIS

39

51

45

5%

7

118%

Aerospace

75

73

67

7%

-8

90%

4

3

3

ー

-0

92%

1,008

1,073

972

100%

-36

96%

Connector

OthersTotal

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

24

[Reference] Operating Profit by Business Segment
Technology to Inspire Innovation

Lower row indicates return on sales(JPY in 100 millions)

FY20191H

Connector
UIS
Aerospace
OthersTotal

FY20202H

1H

Year/Year
Change

84.7

88.6

26.2

9.5%

9.4%

3.1%

-1.9

-2.5

-0.4

-5.0%

-4.8%

-0.9%

9.5

3.2

2.5

12.7%

4.4%

3.8%

-21.3

-20.2

-19.1

2.2

71.1

69.2

9.2

-61.9

7.1%

6.4%

0.9%

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

-58.6
1.5
-7.0

25

[Reference] Prospects for Net Sales by Business Segment
Technology to Inspire Innovation(JPY in 100 millions)

FY20182H
FY2019Projections Projections

1H
Connector

Year/Year
ChangeFY20191,979 1,062

vs. FY2019
Projections

FY2019/FY2018

703 1,765 -214

FY2019Projections
announced
Apr, 2019

89%

-110

94%

1,875

UIS

81

43

52

95

14 117%

-5

95%

100

Aerospace

152

70

90

160

8 105%

-5

97%

165

8

4

5

10

1 112%

0

96%

10

-120

94%

2,150

OthersTotal

2,221 1,180

850 2,030 -192

91%

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

26

[Reference] Capital Investment & Depreciation
Technology to Inspire Innovation(JPY in 100 millions)

245

222

CapitalInvestments

110

112

126

91

100

93

191
1H/FY2018

2H/FY2018

119

111

96

97

Depreciation

204
1H/FY2019

2H/FY2019and others

1H/FY2020(Depreciation and others include disposal of fixed assets)

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

27

[Reference] Connectors for ADASTechnology to Inspire Innovation▶ ADAS（Advanced Driver Assistance System)

Connector for
onboard camera
MX55 Series
Connectors’ point of connection
Electronic
Mirror Camera(Side Mirror)
Surround view camera (side)

Surround view camera (front)

ADAS
ECU

Connector for bodybased ECU
MX77 SeriesCompact waterproof
in-line connector
MX80 Series

Surround view camera (rear)

MirrorMonitor

Back guide camera

Rear mirror
monitorElectronic
Mirror Camera(Rear Mirror)

Electric
Mirror ECU

Navigation
Monitor
MirrorMonitor

ADAS Sensor
ADAS Camera

Connector for highspeed transmission
MX68 Series

Surround viewmonitor ECU

Electronic
Mirror Camera(Side Mirror)
Surround view camera (side)
ECU : Electronic Control Unit

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

28

[Reference] Connectors for Electric Vehicle
Technology to Inspire Innovation▶ EV（Electric Vehicle）

EV Charging

Connector for battery
monitoring ECU

High-current, highvoltage connector

Service Plug

Service Plug: Plug for safe operation by shutting off power circuit during
maintenance, etc. (electric shock prevention purpose)

Ln-car charger
AC/DC
DC/DC

ECU

KW Series

Standard
charging
inlet
Rapid
charging
inlet

High-current
high-voltage line
Signals line

Motor

InverterBattery

Drive / Regenerative
Braking Energy
Transmission

Service
Plug

Battery
Monitoring
ECU【Potential point ofconnection for connectors】
High-current
high-voltage
connector

Copyright ©2020. Japan Aviation Electronics Industry. Ltd

Signal connector

29