Financial Results for 1H of FY2019
and Prospects for FY2019
October 28, 2019
6807 Japan Aviation Electronics Industry, Ltd.
Copyright ©2019. Japan Aviation Electronics Industry. Ltd

AgendaTechnology to Inspire Innovation

I.

Financial Results for 1H of FY2019

II. Prospects for FY2019
III. Initiatives for recovery

Copyright ©2019. Japan Aviation Electronics Industry. Ltd

2

Technology to Inspire Innovation

I. Financial Results for 1H of FY2019(From April 1, 2019 to September 30, 2019)※ Total may not correspond to the total value of the items since amounts less than
100 million JPY are basically rounded off

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3

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

FY2018FY2019Year/Year
Change1H

1H FY2019/
1H FY2018

1H

2H

Net Sales

1,180

1,042

Operating
Income

94

79

72

7.9%

7.6%

7.1%

106

74

74

9.0%

7.1%

7.3%

77

58

59

6.5%

5.6%

5.8%

110.3

111.6

108.6 (Average)(to Net Sales)

Ordinary
Income(to Net Sales)

Net
Income(to Net Sales)

Exchange Rate
(JPY/USD)

1,008 -172

vs. 1HFY2019Projections

1H FY2019
Projections
anounced
Apr, 2019

85%

-22

98%

1,030

-22

77%

-5

93%

77

-32

69%

-1

98%

75

-18

76%

3

105%

56

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4

Difference from Projection▶ Sales: 100.8 billion yen, -2.2 billion yen

Technology to Inspire Innovation

 Sales decrease in automotive market due to decline in car production
affected by sluggish global automobile sales (-2.7 billion yen versus
projection)

 Connectors for mobile devices exceeded projection (+2.2 billion yen)Orders that reached a high level in second quarter will contribute tosales in the 2H of the fiscal
 Industrial & Infrastructure market continued to be challenging▶ Ordinary Profit: 7.4 billion yen, -0.1 billion yen Almost secured the forecast level despite of decline in sales andappreciated yen of 1.4 yen against the USD from the projected level, by
restraining costs and improving non-operating profit & loss.

▶ Net Profit: 5.9 Billion yen, +0.3 billion yen
 Overachieved projection due to extraordinary profit from the sale offormer Taiwan plant property
Copyright ©2019. Japan Aviation Electronics Industry. Ltd

5

Net Sales and Incomes
Technology to Inspire Innovation▶ Automotive and Industrial & Infrastructure market continued
to be stagnant since 4Q of FY2018▶ Sales and profits increased in 2Q of FY2019 due to theemerging demands for new smartphone models
618

Net Sales
562

604(JPY in 100 millions)

556
438

Ordinary
Income452

Operating
Income

42

55

51

51

61 57

46 47
18 18

1Q/FY2018

2Q/FY2018

3Q/FY2018

4Q/FY2018

26 27
1Q/FY2019

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2Q/FY20196

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

FY20181H

2H

FY2019Year/Year
Change1H

1H FY2019/
1H FY2018

vs. 1H 2019
Projections

1H FY2019
Projections
anounced
Apr, 2019

Component
Ratio

Connector 1,062

917

891

88%

-172

84%

-14

98%

905

UIS

43

48

39

4%

-5

89%

-6

86%

45

Aerospace

70

82

75

7%

5

107%

-1

99%

76

Others

4

4

4

ー

-1

81%

0

74%

4

1,180 1,042

1,008

100%

-172

85%

-22

98%

1,030

Total

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Connector BusinessTechnology to Inspire Innovation

Sales by Market Segment
Year/Year
Change(JPY in 100 millions)

1,062

Mobile Devices▶ Mobile Devices

84%

1,000

891
582

Sales: 84% (of 1H FY2018)

82%

477

• Products with built-in procured
components has significantly declined• Sales to Chinese smartphones OEMs roseto the same level as in the 1H of FY2018• USB Type-C “DX07 series” decreased fromthe year-earlier period▶ Automotive
Automotive

342

Industrial &Infrastructure

104

PC・LCD・TV
0 Others

34
1H FY2018

93%

317

70%
71%

73

25
1H FY2019• Decreased from the year-earlier period
due to reduced production of major
customers▶ Industrial & Infrastructure• Market continued to be sluggish since thelatter half of FY2018

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UIS BusinessTechnology to Inspire Innovation

Sales by Market Segment(JPY in 100 millions)
50

Sales: 89% (of 1H FY2018)

Year/Year
Change43

89％

39
Automotive

23

100%

25

23

▶ Automotive (In-vehicle touch panel)• Mass production of new film sensors
shifted into full swing.
Maintained the same level of sales as
the previous year covering the decline in
the automotive market▶ Industrial & Infrastructure
Industrial& Infrastructure

20

77%

15

• Market remained sluggish for operation
panels for semiconductor manufacturing
equipment and teaching pendants for
robots0

1H FY2018

1H FY2019

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9Aerospace BusinessTechnology to Inspire Innovation

Sales by Market Segment(JPY in 100 millions)80

70

Year/Year
Change75▶ Industrial & Infrastructure

107%
60

Industrial &Infrastructure and40 others

52

Sales: 107% (of 1H FY2018)

52

102%

• Sales of sensors for oil drilling
continued to be strong• Low sales of linear motors forsemiconductor manufacturing
equipment due to declining demand▶ Defense & Space
20
Defense &
Space

18

123%

23

• Sales of products for aircraft androcket etc. increased due to a large
number of projects’ delivery resulting
in the first half of fiscal year

0

1H FY2018

1H FY2019※Sakes to Industrial & Infrastructure includes automotive sensors

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10

Operating Profit by Business Segment
Technology to Inspire Innovation(JPY in 100 millions)

FY20181HConnector
UIS
Aerospace
OthersTotal

FY20192H

1H

Year/Year
Change

106

87

85

-21

10.0%

9.5%

9.5%

3

1

-2

8.0%

2.5%

-5.0%

7

11

10

1.6%

13.8%

13.6%

-23

-20

-22

1

94

79

72

-22

-5
3

7.9%
7.6%
7.1%
※ Percentages(%) for FY2018 and 1H FY2019 indicate Operating Income to Net Sales Ratios.
Copyright ©2019. Japan Aviation Electronics Industry. Ltd

11

Technology to Inspire Innovation

II. Prospects for FY2019(From April 1, 2019 to March 31, 2020)

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12

Business Environment and Outlook
Technology to Inspire Innovation▶ Business Environment
 Demand for smartphones is expected to remain strong despite ofuncertainties in the 4Q
 Automotive and industrial & infrastructure markets is not expected torecover in the latter half

▶ Downward revision of earnings forecasts▶ No change in direction of expanding the business opportunities
in the mid-term
 Gain business opportunities through the launch of 5G
 Accelerate efforts in the expanding automotive markets related to CASE
 Investment in new products launches and future business expansion

Focus on securing revised forecasts and recovery from the next
fiscal year onward
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13

Prospects for FY2019
Technology to Inspire Innovation(JPY in 100 millions)

1H

Net Sales
Operating
Income(to Net Sales)

Ordinary
Income(to Net Sales)

Net
Income(to Net Sales)
Exchange rate

Year/Year
ChangeFY2019FY20182H
Projections

FY2019Projections

FY2019/FY2018

2,221 1,008 1,022 2,030 -191
173

72

73

145

7.8%

7.1%

7.1%

7.1%

180

74

66

140

8.1%

7.3%

6.5%

6.9%

135

59

46

105

6.1%

5.9%

4.5%

5.2%

110.9

108.6

vs. FY2019
Projections-28

FY2019Projections
announced
Apr, 2019

91%

-120

94%

2,150

84%

-40

78%

185
8.6%

-40

78%

-40

78%

180
8.4%

-30

78%

-30

108 (JPU/USD)

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78%

135
6.3%
110

14

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%

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15

Prospects of Sales by Market Segment
Technology to Inspire Innovation▶ Mobile Devises: Demand expected to remain strong despite ofuncertainties in the 4Q▶ Automotive: Connectors to remain sluggish
UIS to exceed the first half by the full-scale mass production of
new film sensors▶ Industrial & Infrastructure: Not expected to recover mainly in FA segment.
All businesses are expected to be on a par with the first half
（JPY in 100 millions） 1,180

MobileDevices

582

1,042

1,008

1,022

466

477

463

Automotive

369

360

343

357

Industrial &Infrastructure

171
57

153
63

137
51

143
59

1H FY2018

2H FY2018

1H FY2019

2H FY2019

OthersCopyright ©2019. Japan Aviation Electronics Industry. Ltd

Projections

16

Capital Investment & Depreciation
Technology to Inspire Innovation▶ Capital investment to be executed for new products mainly in theautomotive and mobile device/5G sectors
240(JPY in 100 millions)
222
176
CapitalInvestments
89.3

86

126

112

110

114

Depreciationand others

108

111

219
1H FY2017

2H FY2017

91

93

100

191
1H FY2018

107

200

2H FY2018

1H FY2019

2H FY2019
Projections(Depreciation and others include disposal of fixed assets)

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17

III. Initiatives for recovery

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18

① Gain business opportunities through 5G
Technology to Inspire Innovation▶ Various devices will be utilized by 5G in future▶ Secure business from smartphones and base stations as thefirst stepLong DistanceCore Network
Vending Machine

Automotive

Data Center

Stadium

Data Network
RSU

Car
Drone

Public Facility

Edge

Security

Wireless Infrastructure

Railway

Antenna
Base Station

OutdoorOffice/FactoryVR

Smartphone
Wearable

Machining Tool

Mobile Devises

TV
PC

RobotsSmart Factory

RSU：Roadside Unit

Home

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Capturing demand of evolving smartphones
Technology to Inspire Innovation▶ Changes in connectors for 5G
smartphones
 Additional interconnection points suchas antennas and 5G modems
 Coping with larger capacity ofbatteries and the increasing
sophistication of power management
 Miniaturization by increasing density(million units)

Smartphone shipments forecast
by communication method

1,500

1,000

5G

60%

40%

3G,4G
5G ratio5000(Percentage)

20%

0%2018 2019 2020 2021 2022 2023 CY
JAE estimate based on various data

▶ Secure opportunities from technologicalchanges and replacement demand Development and launch of newboard-to-board connectors
 Expanding production capacity
to further improve supply reliability

0.3mm Pitch
Board-to-board connectors

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Initiatives for 5G Base Stations
Technology to Inspire Innovation▶ Base stations began to be installed in conjunction with thelaunch of commercial 5G services in Japan Our environmental-resist​ant​ optical connectors and interior coaxial
connectors has been adopted by Japanese base station manufacturers
 Supply on a mass production basis has commenced in response to theservice area expansion after the launch of 5G commercial services
Major products used for 5G base stations

5G introduction Schedule in Japan

Compiled based on the Ministry of Internal Affairs and Communications website (fiscal year)

2018

2019

2020

Verification
Test
Frequency
assignment
Pre-service
Commercial
service2021

Optical interface
connectors

Interior coaxial
connectors

Connectors forfan docking

Environmentalresist​ant roundconnectors for power
supplyApr 10Frequency assignment
Sep
Rugby World Cup
July
Tokyo Olympics

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② Focus on CASE driven Automotive Markets
Technology to Inspire Innovation▶ Car manufacturer, Tier1, IT-related companies, etc. arefocusing efforts on CASE


Accelerating product development and sales related to CASE

Expanding products compliant with global standards• Develop connectors compliant withhigher-speed vehicle-mounted
networks• Expand productionof in-vehicle touch
panelsonnected

CE

lectric• Enhance line-up of
high-current andhigh-voltage connectors• Expand connectors for EV
charging devices• Enhance lineup andaccelerate lateralextension of connectors
for ADAS in-vehicle
cameraAutonomous

NEW
MX55J
for in-vehicle
CameraShared• Accelerate connectivity
with carry-on devices(smartphones, etc.)

Copyright ©2019. Japan Aviation Electronics Industry. Ltd

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Initiatives to Connected
Technology to Inspire Innovation▶ Technological changes and business
opportunities triggered by Connected

Sophistication of vehicle-mounted and external
networks• Adoption of ICT-related technologies such as
Ethernet and USBs
• Expansion of wireless (5G, V2X) communications• Advancement of communication modules



C A
E S

Antenna
Communication
ModuleGateway
Various ECUs

Increase in amount of data due to IT adoption
and diffusion of automobiles▶ Product enhancement by leveraging the know-how of ITC
Develop Gigabit Ethernet connectors, on-board coaxial
connectors, etc.
Global deployment of products compliant with
European and North American de facto standards

Metal Mesh Type
Film Sensor▶ Expand business of in-vehicle touch panels(film sensors)Expand sales and production by leveraging theadvantages of larger screen size
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Initiatives to ADAS and Safety System
Technology to Inspire Innovation▶ Connectors for in-vehicle
cameras for ADAS andautonomous driving





C A
E S
（JPY in 100 millions）

200
Approximately 70% of FY2023
sales target has been secured
Expanding product lineup anddeveloping next-generation
products
50
Accelerate promotion to Japanesecustomers▶ Squibb connectors for airbags
Sales of connectors for ADAS Cameras

Japanese
Overseas

FY2018FY2019FY2023

Projections

TargetExpansion of products compliant
with European de facto standards
Expand globally to manufacturers
in Europe, North America andChina
Copyright ©2019. Japan Aviation Electronics Industry. LtdNEWAK Squibb connectors
for in-vehicle airbags
MX72A/B

24

Initiatives to EV
Technology to Inspire Innovation▶ Enhancing connectors line-up
Sales of Connectors for EV
for EV and expanding global （JPY in 100 millions）
sales




Establish technology for highcurrent connectors exceeding
400A
Expand sales of connectors for
BMS mainly in China

100

High-current,
high-voltage connectors

0▶ Expand sales of connectors for EV
charging



C A
E S

Expanding to Europe, North
America, Asia and other regions
Develop and launch Combo-type forEurope and Japan-China harmonized
protocols type

FY2019Projections

FY2021
TargetFY2023
TargetKW Series Lineup
KW01

KW02

KW03

Quick-charge
Connector
125A/500V

V2H Connector
25A/450V

Charging & Discharging
V2G Connector
80A/500V

BMS: Battery Management System

Copyright ©2019. Japan Aviation Electronics Industry. Ltd

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Conclusion
Technology to Inspire Innovation

Achieve FY2019 targets
Implement initiatives toward the next fiscal year
and solidifying the foundation for growth Accurately grasp business opportunities related tosmartphones and base stations, in the midst oftechnological and market changes triggered by 5G
 Expand product line-up and grow globally by capturing theincreasing automotive demand over the mid-term by CASE
 Invest in new product launches for the aforementioned
initiatives and business expansions from the next fiscal year
onwardCopyright ©2019. Japan Aviation Electronics Industry. Ltd

26

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, 2019, 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 ©2019. Japan Aviation Electronics Industry. Ltd

28

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

FY20181H

2H

FY2019Year/Year
Change1H

1H FY2019/
1H FY2018

vs.
1H FY2019
Projections

1H FY2019
Projections
anounced
Apr, 2019

Component
Ratio

Mobile Devices

582

466

477

47%

-106

82%

22

105%

455

Automotive

369

360

343

34%

-26

93%

-27

93%

370

Industrial &Infrastructure

171

153

137

14%

-34

80%

-8

95%

145

57

63

51

5%

-6

89%

-9

85%

60

Total

1,180

1,042

1,008

100%

-172

85%

-22

98%

1,030

Overseas

848

726

711

OthersOverseas
Sales Ratio

71.9% 69.7% 70.5%

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29

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

FY2018

Year/Year
ChangeFY20191H

2H
Projections

FY2019Projections

vs. FY2019
Projections

FY2019Projections
announced
Apr, 2019

FY2019/FY2018

1,049

477

463

940

-109

90%

0

940

Automotive

729

343

357

700

-29

96%

-80

780

Industrial &Infrastructure

324

137

143

280

-44

86%

-30

310

Others

120

51

59

110

-17

92%

-10

120

2,221

1,180

1,022

2,030

-191

91%

-120

2,150

Mobile Devices

Total

Copyright ©2019. Japan Aviation Electronics Industry. Ltd

30

[Reference] Connectors for ADASTechnology to Inspire Innovation▶ADAS (Advanced Driver Assistance System) The number of on-board cameras andsensors tends to increase due to thepenetration of ADAS and automated driving
 Expand customers bases by utilizing prior
results in European and Japanese OEMs
Connection by connectors(rear-view)(side mirror)

Surround monitor camera

Surround monitor camera(Front-view)

MirrorMonitorSurroundmonitor
ECU

Locator Camera: Camera for position measurement

Rear view
camera(back mirror)

Electric Mirror
ECU
MirrorMonitorADAS
ECU

Back guide camera

Rear view
mirrorcameraNavigation
Monitor

Anti-collision
support camera
Locator Camera

MX68 Seriesconnector for highspeed transmission

Surround monitor camera

Side view
camera(side-view)

MX55 Seriesconnector forcameraSide view
camera(side mirror)

Surround monitor camera(side-view)

ECU : Electronic Control Unit

Copyright ©2019. Japan Aviation Electronics Industry. Ltd

31

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

Products for EV
Connector for Battery
Monitoring ECU

 Increase businesses based on
results from service plug andbattery monitoring ECU
 Development of 400A class highcurrent technology
Service Plug:High current, high voltage connector

Plug to shut off high voltage circuit to protect workers fromelectric shock during maintenance work

ECU

Service PlugOn-board
Charger
AC/DC
DC/DC

Standard
charging
inlet
Rapid
charging
inletHigh current, highvoltage line
SignalMotor

Invertor

Battery

Driving/
Regenerative
brakes energy【Potential for connectors】

Transmission

Service
Plug

Battery
Monitoring
ECU

Copyright ©2019. Japan Aviation Electronics Industry. Ltd

High current, highvoltage connector
Signal connector

32