Creating for the Future

SWCC Group
Small meeting for the First Quarter of the Fiscal Year Ending March 2023

昭和電線ホールディングス（株） 東証プライム（5805）

August 30, 2022

SWCC SHOWA HOLDINGS CO., LTD. (TSE Prime: 5805)

Summary of First Quarter Financial Results

東証一部（5805）

FY2022 Q1

Overview of Financial Results

Business
environment⚫ Due to the long-term situation in Russia and Ukraine and the impact of lockdowns in China andShanghai, raw material and logistics prices have risen and the yen has depreciated, and theglobal supply chain continues to be disrupted⚫ Demand for automobile-related products declined due to a shortage of semiconductors.
⚫ In the electric wire industry, overall demand for electric wire declined slightly.
⚫ Average domestic copper prices rose YoY.

Net sales

Overall sales increased YoY due to higher copper prices, despite a decrease in copper shipments.
【Status by Major Business Field (YoY)】
Electric power infrastructure: Although the number of large-scale projects declined, we captured
demand related to renewable energy.
Automobiles: Demand for high-performance products is sluggish due to the impact of automobile
production cutbacks that have continued since last year.
Industrial Devices: Demand increased, but the impact of global supply chain disruptions continued.

OperatingincomeProfits down YoY. Despite reviewing sales prices and cutting costs in response to soaring raw
material prices, our performance was affected by delays in passing on higher prices for some products,
reduced automobile production, and global supply chain disruptions.

3Key Points of the Financial Results for Q1 FY2022
Q1 YoY Change

Q1 Progress rate

Sales increased but profits decreased YoY due tohigher copper prices, despite a decrease in copper
shipments.

Net sales

OperatingincomeUp
10.7%(Unit: 100
million yen)

Down
16.0%

452

Full-year
plan

FY18-21
Avg.
progress
rate

Q1
progressrate

Net sales

2,170

23.2%

23.1%

Operatingincome

103

17.9%

20.9%

(Unit: 100
million yen)

500

26

FY2021

Net sales progressed on a par with normal year.
Operating income has exceeded the 4-year averages.

FY2022

FY202122

FY20224

Q1 Consolidated Statements of Income(Unit: 100 million yen)

FY2021Q1 Actual

FY2022
Q1 Actual

FY2022Full-year planYoY ％Progress rate％

Net sales

452

500

2,170

10.7

23.1

Operatingincome

26

22

103

▲16.0

20.9

Operatingincome margin
(%)

5.7

4.3

4.7

ー

ー

Ordinary
income

26

23

103

▲12.8

22.2

Net income
attributable toowners of parent

17

16

75

▲4.6

21.9

5

1Q: Change Factors for Net sales and Operating income (YoY)
Change factors for net sales+¥5.5 billion+¥0.3 billion
Energy andInfrastructure
Business

FY2021Q1¥45.2 billion-¥1.6 billion

Electronicequipment
andComponents
Business

Effect of rise incopper prices【Change factors】+¥0.7 billion-¥0 billion

Communication andIndustrial
devices
Business

Others

FY2022
1Q¥50 billion

Change factors for operating income
FY2021Q1¥2.6 billion-¥0.2 billion
Decrease inprofitincrease due
to copper
price impact-¥0.5 billion-¥0.2 billion+¥0.3 billion+¥0.2 billion

FY2022
1Q

Structural reforms
Price hikes in
Sales
price
Down
in
sales
due
to
raw materials,
automobile production shift and cost
¥2.2 billionetc.
cutback
reduction

１．Net sales
Increased mainly by passing
cost increases due to higher
copper prices on selling prices
in a timely manner.
２．Operating income
Decreased due to delays inpassing on cost increases forsome products and a decreasein sales due to reduced
automobile production in theElectrical Equipment andComponents Business.
【Future Initiatives】
Covered mainly by measures topass on higher sales prices,
reduce costs, and promote
structural reforms in responseto the downward pressure on
incomes from soaring raw
material and other prices.

6

1,10080

Q1 Results by Segment and Full-year
Plan 70
1,000
Electronic Equipment and Components
Business
900

Energy and Infrastructure Business
Construction
Seismic isolation/
OthersElectric power infrastructure
Operating income

300(Unit: 100 million yen)
230

1,100

1,095

1,0002068900
258 17

14

200
66%

70%

152

179

7%

62

25%

400

16

5%

FY2021 Q1Operatingincomemargin

100

13

00

FY2022 Q1

6.3%

6.5%

5%

6
54

Full-year

6.2%

Copper price impact: Net sales up by 2.5 billion yen.
Both sales and profits increased YoY due to revisions to sales prices
and cost reductions to secure appropriate profits In the construction
business and capturing highly profitable demand for renewable energy
in the electric power infrastructure.

7%

20
10
0

50%

43%

16

155

350
50100(Unit: 100 million yen)

500
49%

72

7%

10

76
11

78

56% 403

46%

300
12%

86

44%

68

100

32%

226

00

FY2021 Q1

FY2022 Q1

5.4%

4.0%

2.2%

Copper price impact: Net sales up by 2.8 billion yen.
Sales increased and profits decreased YoY as sales for heavy electricmachinery and industrial equipment were firm, but sales of highperformance products for the automobile industry were affected by theautomobile production cutbacks that continued from the previous 2Q.

36%

10
0

Full-year

32

20

200

61

295

0

18%

45%

5

25

200

51%

20

150

15

150

33%

12

21%

26

100

2

30%

10

88

5

50

17

19%

57

00

FY2021 Q1Operatingincomemargin

35

25

25

250

69

30

400

30

10
300

40

0

OperatingincomemarginWire harness
Operating income

600

6

30

200 26%

65

50

Communication cable
Precision devices

715

70010

143

40
100

28

800

8

50010
300

27%

755

600

100

0

69%

60

Other high-performance
products
Operating income(Unit: 100 million yen)
200
70

60

800
700

80

High-performance products
oxygen free copper
General-purpose products

Communication and Industrial Devices Business

FY2022 Q1

7.4%

2.2%

0
Full-year
8.5%

Copper price impact: Net sales up by 200 million yen.
Sales increased but profits decreased as price review was delayed
despite the effect of reorganization of domestic production bases in thecommunication cables business. Industrial devices were also affected bysupply chain disruptions.

7

Q1 Balance Sheet (Comparison with the previous fiscal year-end)(Unit: 100 million yen)

Total assets
Trade receivables
Inventories
Currents assets
Total liabilities
Interest-bearing debt
Total net assets
Shareholders equity
Shareholders equity
ratio (%)
DE ratio (%)

March 31,2022

June 30,
2022

Change

1,474

1,537

64

527
260
587

522
287
615

▲５
27
28

884

937

53

392

454

63

589
583
39.5

600

11

592
38.5

10
▲１

67.2

76.7

9.5

【Fixed assets】
Increased due to various capital
expenditures (upgrades and increased
production). In addition, the Company
contributed 2.1 billion yen in special
premiums to the pension assets of theretirement plan.

【Interest-bearing debt】
Increase in working capital due to special
premiums and soaring copper prices.

【Shareholders equity ratio 】
Despite an increase in shareholders' equity,
total assets decreased 1% from the end of
the previous fiscal year due to an increase
in total assets.

【DE ratio】
Shareholders' equity increased, butinterest-bearing debt also increased,
resulting in a 9.5% increase from the end of
the previous fiscal year.

8Energy and Infrastructure Business
Growth Strategy

東証一部（5805）

Energy and Infrastructure Business

Growth Strategies to Achieve the Medium-Term Management Plan
１． Reinforcement of Electric Power Infrastructure Business(Unit: 100 million yen)

68

1,000

979

65

900

800
700 66%

706

69%

755

63%

617

600
Construction
Electric power infrastructure
Seismic isolation/Others

500

70Operating
income margin
after taking
60into accountthe impact of
50copper prices
is more than
7%.
40

400

30

300

20

Operating income

200 26%
100
0

8%

279
84

26%

5%

286

31%

6%

54

FY2020 2022年度
FY20212021年度303
1059

FY2022
2026年度Operating income
margin (%)

6.0

6.2

・・・・・

8.2

Copper value

1,136

1,150※

・・・・・

870※

(¥／kg)※Planning assumptions

Strategies for increasing production and securing humanresources in anticipation of market expansion

80

0

Future growth potential

80

1,095

1,069

1,100

・ De facto standardization of strategic products “SICONEX🄬”.
・ Investment plan to increase production of strategic product “SICONEX🄬”
・ Locally produced and locally consumed cloud construction
human resources strategy

２．Improvement of Profit Structure of Coated Wire Business

Structural Reforms to Strengthen Market Competitiveness・Gross profit improvement through improved customer convenience andservice・ Establishment of a demand-linked, production and supply system.
・Improve business processes through AI and data utilization.

Portfolio shift from FY2020 to FY2026
Electric power
infrastructure

Equipment Investment

Further investment

4.8 billion yen
Construction
Seismic isolation

Replacement investment
FY2020
FY2026

4.2 billion yen

Efficiency(EVA spread)10

Target Market of Electric Power Infrastructure Businesspower grid substation De facto
standardization SICONEX🄬

Transmission and substation
network development andreinforcement

Decentralized Grid Smart City

Large Business Entry

Ultra-high pressure and renewal
Expanding Substation Market
Baseload of profits

Decentralized Grid
Smart City

66~275kV
Network transmission systems
Overhead and underground lines

Private power
generation
Large-scalewind farms

Privateline

Thermalpower station
Thermal power
generation Renewal/new
construction
Power supply reinforcement
and renewal

Biomass power
generation

Solar power
generation

Hydrogenpower
generation

Privateline

Alliance with
EXIO Group Inc.

Smart
HousesElectric
automobile

Wind power
generation
Storagebattery

Large-scale solar power
Ocean wind power

Government Policy Expansion Market
Large-scale
Solar Power
Plant

Submarine
cable

Large-scale offshore
wind power

Expanding Offshore Wind Power Market
Other companies focus on submarine cable field
We are entering the offshore wind power
market in collaboration with
Entry into offshore wind power・14 government-initiated solicitation-type projects (14 trillion yen in total)

11

Target Customers and Sales Channels for PowerInfrastructure BusinessWe have two sales routes: 1) direct delivery of wires, components, and installation to electric power companies
and private plants with substation facilities, and 2) indirect delivery of power components to electric powercompanies and private plants with substation facilities through electric power equipment manufacturers.
Customers 1.
Electric power companies： 11
Private plants: several thousand companies

Electric
power
company

Wires, Components, Construction

Our
Products
当社製品

Power Equipment

A switch A switch

A switch

Components
Customer 2.
12 major electric power equipment manufacturers

12

SICOPLUS® Market Share Trends in the Substation Market
SICOPLUS® strategy will focus on the substation market while capturing demand for renewable energy
interconnection. We aim to achieve a CAGR of 12% by FY2026 by expanding our share of the substation market.
Major components of the electricity market
18,000Substation market (domestic electric power
and private demand) share transition

16,000Electric
supplyPower
Transformations
Electric power andprivate demandDistributionof electricity

14,000■■Electric power■■Private demand
ー Our Share

CAGR 12%Net sales 1.6倍

0.84Power company
substation

0.82

80%

12,0000.8

79%

10,000

0.78

8,000
6,000

Private Private
demand demand
74%

75%

0.76

74%

Substation equipment
for private plants

0.74
4,000

※Our target electric power
market Based on our research of
the FY2022 assumptions for ourtarget electricity market.

2,000

0.72

Electric Electric
power power

0
Our

Our

Our

Our

0.7
Our

whole
全体 company
当社

whole
全体 company
当社

whole
全体 company
当社

whole
全体 company
当社

whole
全体 company
当社

2022

2023

2024

2025

2026

*Company research

13

Making the strategic product "SICONEX🄬" the de facto
standard in the substation market
Taking advantage of the product's superiority in terms of light weight, compactness, short installation
time, and simple joint design, we will promote de facto standardization (standard specifications) in thesubstation and private demand markets to expand its market share.
Substation market Our shareand breakdown

1150

1297

1725

1600

1892

Mainframe installation& Cable processing

asse
mbly

Other

65% private
demandassembly

Other

Mainframe installation& Cable processing

Porcelain※Our assumption as of FY2022

74%【 Operational Engineering Comparison 】【 Size Comparison 】

Construction
shortened by 30%

74%

35%

【 Plugin structure 】

Electricpower

Our Share in the ElectricPower Industry【 Completely dry construction 】

While our share of private demand is90%, the electric power company shareis 50% in the FY2022 assumption. By

Pre-assembled and shipped from the factory

白テ ープ

Masking fixtures
Silicon Rubber AppearanceCenter conductor

Epoxy resin

53％

Plug-inbecoming the de facto standard further
expansion of market share is expected.

14

Investment plan to increase production of strategic products "SICONEX🄬"
Established a system to increase production to meet the growing demand in the electric power market against the backdrop of thenational strategy. Investment of 2 billion yen to increase production capacity by 1.5 times in FY2023, with phased production
increase starting in the second half of 2022, contributing to sales expansion. In addition, the Sagamihara Plant, which is investing
in increased production, plans various initiatives to improve production efficiency, such as automation.

送電網増強

Sales growth plan throughinvestment in increased production

Efforts to Improve Production Efficiency【 Shielded room forinspection 】【 Automatic productdispensing system 】【 Automated warehouse 】【 Automatedforklift truck 】

6 AxesRobot

FY2026220

FY2022140

FY2017

100

Sequentially from
September 2022 onward
Increase in the number ofinspections with highaccuracy

Scheduled to be introduced
in 2023Labor-saving andskilled skill-lessScheduled to be
introduced in July
2023Capable of storinglong products

Scheduled to be introduced
in July 2023Unattendeddelivery to automatedwarehouse

Investment effect of increased production: 1.3 times the output per worker is expected※ Actual sales for FY2017 as 100.

15

Efforts to secure orders through a locally produced andconsumed cloud construction human resources strategy
As part of the SICOPLUS® strategy, we are also addressing the shortage of construction personnel due to the declining birthrate andaging population. Through efficient human resource training programs using our proprietary AVR® technology (a proprietary technologythat overlays live-action images on virtual reality images) and others, we will work with collaborating companies and local construction
companies to secure construction personnel throughout Japan and respond to future order growth.

Current state

Dispatch Kanagawa construction personnel to sites
throughout Japan. The number of possible
construction orders = the number of construction
personnel we have and has become a bottleneck.
Ordersavailable
Numberof cases＝

Our
Constructi
on
Personnel

Prospects
Construction personnel from all over Japan who have studied at the Construction Human Resource
Development Center in Sagamihara are registered in our human resource bank to secure personnel forcooperative companies and local construction companies nationwide. This enables us to secure orders
without being limited by the number of construction personnel we have.

Ordersavailable
Numberof cases

SICOPLUS🄬 personnel bank

Our＝

Constructi
on
Personnel

Cooperation
Business

Nationwide
Construction companies

Resources

Construction Human
Development Center

16

SFCC's Growth Strategy for
Manufacturing and Sales Integration

東証一部（5805）

New Structural Reforms➢ Structural reforms aimed at enhancing market competitiveness of the covered wire business3 Initiatives of the new SFCC
1. Improve gross profit by improving customer
convenience and services
Equity stake increased from
60% to 80%

Shift from sales companies
to manufacturing and sales
companies

ROIC Target

8%
3.6%

✓
✓

Expand sales of merchandises with
reduced impact on construction
Enhance delivery services

2.Construction of demand-linked, production andsupply systems
Priority
Initiatives

+４.4%

FY22

Priority
Initiatives✓✓

Shortening production, inventory, procurement
planning, and manufacturing LT in line with demand
Logistics reform

３.Improve business processes through AI and datautilization
Priority
Initiatives✓✓

Automation of manufacturing process planning
Visualization of production plans and inventory plans

FY26

18

New SFCC's Efforts to Improve Business Processes throughthe Use of AI and Data
Collaboration between the head office and the field to promote the coated wire DX project. Implemented
initiatives to improve operations and efficiency through the use of AI and data in material procurement,
manufacturing, logistics, and sales processes.
Production progress

Plant

management by performance
management system

OfficeUnder the direct control of the president

Coated Wire DX Project

By AI Copperbased
Forecasting

Based onshipment forecast
Inventory control

Logistics
Inventory data
sharing via smartphone

Cloud-based work
time monitoring
Appropriate inventory
management using AI
forecasting

Sales

Material
Mobilization

Marketingand Sales

Inventory Reduction

Digital Sales

Low cost
High turnover

ClientManufacturing& Assembly

Quality
Assurance

Digitization

Digitization

Smartening

Smartening

Process
Optimization

Visualization

AI-based Shipment
Forecasting

EC SalesCustomer
Support19

New SFCC Logistics Improvement Initiatives
Promote various initiatives to improve the overall efficiency of logistics management operations. Promoted the digitalization oflogistics management, visualized the actual status of six logistics centers nationwide, and improved the operational efficiency ofvehicle dispatch management.

Improving operational efficiency
of vehicle dispatch management

Visualization of delivery performance

Sharing the delivery status of distribution centers across the country in the cloud.
This will help visualize the actual situation and lead to improvements, such as
reviewing delivery areas.
Kawasaki Logistics
CenterChubu Regional
Logistics Center

Share driver arrival schedule information in the cloud toimprove the efficiency of vehicle dispatch management
operations, such as by reducing the number of inquiries.

＜ Current flow ＞
Recipie
nt

Sales
agent

Shipper

Logistics
CenterDriverConfirmation by phone or fax

Suspended operations＜ Future Flow ＞
Recipient

unnecessary

unnecessary

unnecessary

unnece
ssary

Sales
agent

Shipper

Logistics
CenterDriverunnecessary

Delivery schedule information sent via email

Decreased call handling※Details of the above initiatives will be published in the June 2022 issue of “Logistics Business Monthly”.

20

New SFCC Business Structure Reform ROIC Tree and Key KPIThe department in charge is responsible for managing KPIs to establish a profit structure that is not affected by copper price fluctuations.

Improved Driver
Profit to Sales Ratio

Marginal profit ratio

Gross margin ratio

FY2026 Target
Break-even sales 20%
decrease

ROIC(Compared to FY2022)

Logistics cost ratio

FY2026 Target
ROIC8%(Compared to
FY2022 +4.4％)

Fixed cost rate

Invested capitalturnover
FY2026 Target
10% reduction in
invested capital(Compared to FY2022)

SG&A ratio
Manufacturing costratio
Working capitalturnoverFixed assets
turnover

KPI

Gross profit margin by product type
(Manufacturing)
Gross profit margin by customer(Sales Division)
Warehouse Rates(Management)
Shipping Rates(Management)
SG&A per copper volume(Administrative)
Cost per copper volume(Manufacturing sector)
Inventory turnover period(Manufacturing division)
Turnover period of trade receivables(Operating division)
Turnover period of trade payables(Management Division)

21

Appendix

東証一部（5805）

Copper Price Impact on Our Business
The impact of copper price fluctuations on our business is minimal, except in the case of extreme fluctuations, due to our pastefforts to reduce the impact of copper price fluctuations ((1) Immediately reflecting copper market fluctuations in product prices
and optimizing inventories, (2) Expanding copper futures trading for future projects, and (3) Investing in growth in non-copper
businesses).
Consolidated results including
copper price effects

CAGR
Net sales 5.2％
Operating income 10.4％

Structuralreforms begin

100(Unit: 100 million yen)

2,000

103

76
1,500

63

1,000

1,682

1,772

1,711

1,992

2,170

1,617

60

20

0

0

Coppervalue(¥／kg)

3.7

3.8

5.0

4.7

5.0

4.7

757

747

682

770

1,136

1,150

103

63

120
100

86
76

1,500

80

66

60

1,000

1,682

1,734

1,734

1,615

1,692

1,724

500

40
20
0

0

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022E
OPM
（％）

100

2,000

40

500

Estimated for each year
using FY 2017 copper
quotation levels as standard.

(Unit: 100 million yen)

80

66

Structuralreforms begin

120
100

86

CAGR
Net sales 0.5％
Operating income 10.4％

Consolidated results
excluding copper price effects

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022E
OPM（％）
Coppervalue(¥／kg)

3.7

3.8

5.0

4.7

5.9

6.0

757

23

History with FUTONG GROUP CO., LTD. China
and future business development
History
Since 1993, we have been promoting technical cooperation and joint
ventures with Futong Group Co., Ltd. (hereinafter referred to as " Futong
Group") in the areas of telecommunication cables, optical devices, electronic
wires, and copper wire rods.
In May 2011, the Company entered into a capital and business alliance with
Futong Group in conjunction with the Group's business development in China.

Future business development

High marketing, sales, andmaterial procurement
capabilities in China.

Technological capabilities andtrack record in Japan as acomprehensive wire
manufacturer in Japan.

※Futong Group’s voting rights ratio
18.58% in May 2011 → 6.07% in August 2022

＜ Oxygen-free copper business expansion for xEV ＞
Amidst the drastic changes in the business environment surrounding the twogroups, ｗe have continued to study and discuss the details of the alliance.

To date, the copper joint venture with the Futong Group has been profitable
and has secured stable earnings. Continued collaboration in the copper
business for the xEV market in China, which is expected to continue to grow.

Global Electric Vehicle Sales Forecast

Capital tie-up ・ ・ ・ The initial objective has been achieved, and thecommon understanding has been confirmed that the Futong Group intends
to reduce its indirect holdings of the Company's shares.

Publication: Prepared by the Company from various data.
China only

Global Sales 2.4 million units in 2018
Estimated 2030 sales of 26 million
Assumes that the Chinese market for electric vehicles is about half of the global market.

Business partnership ・・・Shared a vision of continued collaboration on

The electric vehicle market is expected to expand
more than 10-fold in the future.

Driving motora joint venture with the Futong Group to expand its copper business in China,
including oxygen-free copper for xEV.

24

Forward-looking statements in this document are based on information available at thetime of publication and contain potential risks and uncertainties.
Therefore, actual results may differ materially from those projected in the forward-looking
statements as a result of various factors.

Creating for the Future

Factors that could influence actual results include economic conditions, demand trends,
raw material prices, and exchange rate fluctuations, as well as other items not limited tothe above.

Contact
SWCC SHOWA HOLDINGS CO., LTD.
STRATEGY SECTION,
BUSINESS STRATEGY PLANNING DEPT.
TEL:044-223-0520
E-mail：kouho@hd.swcc.co.jp

SWCC SHOWA HOLDINGS CO., LTD. (TSE Prime: 5805)