73rd Fiscal Term

Annual Report

From April 1, 2019 to March 31, 2020

TOP Interview

To Our Shareholders The business environment surrounding the Company is facing unprecedented difficulties with the slowdown of the Chinese economy,
the trade friction between the US and China becoming prolonged, and the global impact of the novel coronavirus disease (COVID-19).
The Company’s operating results for its 73rd business term (fiscal year ended March 31, 2020) were below the forecasts announced at
the beginning of the year on account of significant decreases in products for general industrial equipment and the stagnation in
products for the automotive market.
In this climate, we will focus on maintaining the existing mass-production business for the smartphone industry, etc., growing ourbusiness for the automotive field in tandem with the further growth of car electronics, and expansion into fields related to industrial
equipment and communications equipment.
We are placing particular attention on the popularization of 5G high-speed communication, the expansion in IoT demand, and theadvancements in automated driving, and we are actively focusing on new product development for such new markets and continue toconstantly pursue leading-edge technologies.
We are also working on achieving more efficient allocation and concentration of resources as well as reinforcing our development
capabilities for high value added products, promoting greater manufacturing efficiency and enhancing cost competitiveness.
By strengthening our management foundations toward sustainable, stable growth in an effort to improve our corporate value.
We look forward to the continual support and guidance from our shareholders.
Kazunori Ishii, President and Representative Director

President Kazunori Ishii Answers Questions FromHIROSE ELECTRIC’s Young Employees
President Kazunori Ishii answered questions from young employees at a round table
talk between the President and these young employees.

Q
Q
A
A

1

Efficiency is required, but recently the number of employees
has increased. Has there been a change in policy?
Our philosophy is to achieve maximum results with the least amount of
personnel, so we have continued with our policy of not increasing thenumber of employees easily thus far.
However, recruitment has significantly increased in recent years. This isbecause there has been an absolute shortage of human resources toimplement and promote the Mid-term Growth Strategy.
That is to say, right now is the time to preliminarily invest resources to takethis chance.
Even if the number of employees increases, we must not fall into waiting

for direction, not rocking the boat or leaving responsibilities to others.
For this, it is crucial to facilitate communication, and work to gain new
wisdom to connect with existing wisdom within the Company.
HIROSE ELECTRIC will continue with a small number of elite workers.
This is because we expect each and every employee to display their strengths
to the utmost and provide opportunities to do so as we wish to be acompany where everyone can accumulate a sense of achievement andgrowth through such implementation and achievements.
We are also aiming to be an even stronger company that can tie into
maximum results.

Q
Q
A
A

The Company has been expanding capital investment based on the Mid-term Growth Strategy,
but is this okay?
We are in a period where unexpected changes have been recurring. I believe that we wish to continue to be acompany that is unaffected by these changes and has continuous stable growth.
I believe that continuing to protect the well-being of our employees through this to be one of the Company’s
missions.
On the other hand, there is also the aspect of being forced into cost competition, and I am aware that those on thefront lines are wondering if we will be able to maintain this.
The business environment is difficult as it is not simple to work on automotives and industrial machinery/equipment.
However, this fight is a fight as a challenger to create HIROSE ELECTRIC’s new business model, which will connect tothe future.
That scenario is our Mid-term Growth Strategy, and we are making unprecedented investments and many
preparations.
We will continue to keep working, but we hope to compete with everyone as challengers.

Q
Q

What is necessary to get overseas employees, who have different cultures and environments,
to further understand HIROSE ELECTRIC’s philosophy?

AA

It is necessary to aim for the same goal for HIROSE ELECTRIC to win globally.
However, we must also understand that the Japanese style is not absolute in global business.
In order to compete globally, it is necessary to develop and improve an environment to respond to change.
I would like to move forward on these initiatives together with all of you.
2

Financial Highlights■ Sales■ Operating profit

Millions of yen
140,000

InterimMillions of yen

Full year

125,143

124,590

40,000Interim■ Profit attributable to owners of parent
Millions of yen

Full year

25,000InterimFull year

121,765

120,000
20,00030,000100,000

17,891

23,15780,00062,054

61,96360,00060,26515,30515,00020,35820,0000

10,812

15,0889,325

10,00012,02240,00019,10728,064

8,573

11,53410,0005,000

20,000

0

0
71st

72nd

73rd

■ Basic earnings per share
Yen
800

Interim

0
71st

72nd

73rd

■ ‌Equity attributable to owners of parent to total assets ratio& Operating profit to sales ratio%

Full year

100

Equity attributable to owners of parent to total assets ratio
Operating profit to sales ratio

90
89.3

90.0

548.80

72nd

73rd

240

240

■ Dividends per share
Yen
500

InterimFull year

480

89.3

80
600

71st

400

70
489.4660300

420.3940024050310.6920040254.91

235.12

30

200
20

22.4

18.6

10
0

3

72nd

73rd

120

72nd

73rd

16.7

0
71st

120
100

0
71st

72nd

73rd

71st

*‌The Company distributed a special dividend as it
celebrated its 80th anniversary in the 71st fiscal term.

Overview of Consolidated Statements of Financial Position

(Millions of yen)Previous fiscal year

Current fiscal year

Previous fiscal year

As of March 31, 2019

As of March 31, 2020

As of March 31, 2019

Cash andcash equivalents
52,322

Trade andother receivables
29,540Total assets

Total assets

341,435

342,644

Current
assets235,088

Current
assets220,672

Other financial
assets38,596

Non-current
assets106,347

Non-current
assets121,972

As of March 31, 2020

Total liabilities
and equity

Total liabilities
and equity

341,435

342,644

34,10536,503Liabilities

Liabilities

Trade andother receivables
30,444

Property, plantand equipment
61,541

Property, plantand equipment
62,745Intangible assets
2,623

Cash andcash equivalents
50,561

Current fiscal year

EquityEquity307,330

306,141

Equityattributableto owners ofparent to total
assets ratio
90.0%

Intangible assets
2,519
Other financial
assets50,141Equityattributableto owners ofparent to total
assets ratio
89.3%

Overview of Consolidated Statements of Income(Millions of yen)Previous fiscal year

Current fiscal year

From April 1, 2018
to March 31, 2019

From April 1, 2019
to March 31, 2020

Sales

Sales

124,590

121,765

20,358Operatingprofit tosales ratio

18.6%

Profit attributableto owners of parent
17,891

Operating profit
23,157

Operatingprofit tosales ratio

16.7%

Income tax expense
5,900

Finance income
1,192

Finance costs
345
Operating profit

Profit before tax
21,205

Profit attributableto owners of parent
15,305

4

The direction of mid‐term business development and mid‐term capital policy under the influence of COVID‐19

1. The direction of mid-term business development
It is quite difficult to predict the medium term impact on our business from COVID‐19 at the moment. Nevertheless, we consider all
stakeholders including (1) Employees (2) Customers (3) Partners (4) Communities and (5) Shareholders to be important, utilize financial
assets and cash flows from operating activities generated in the future, and conduct our business by prioritizing sustainability.

(2) Customers

Development of products that cater to needs
and stable supply capacity(1) Employees
Stable employment andhuman resource training(3) Partners

HIROSE ELECTRIC

Multi-faceted support forbusiness partners(4) Communities(5) Shareholders

Contribute to communities including the environment,
pay appropriate taxes and comply with laws and regulations

Growth that enables stable and continued
investment with appropriate shareholder returns

2. Announcement of the mid-term capital policy
We have been considering the mid‐term capital policy (shareholder return policy), including share buyback at a certain scale in themedium term. However, business results in FY2020 are forced to be decreased sales and decreased profit. Especially in automotive
business, which we have strengthened resource input aiming for growth for the past several years, the business environment is
expected to be extremely severe for a while.
Under this situation, we proceed with reconstruction of the mid‐term business plan to realize sustainable and stable growth in the
future. We will announce the mid‐term capital policy after having an outlook of the reconstruction.
Even though situation is tough, we firmly maintain the dividend per share ¥240 in FY2020 as well and shareholder return in practice.
5

HIROSE TOPICSHIROSE employee quality training facility “Quality Awareness Exhibition Center”
We have established a “Quality Awareness Exhibition Center” as a facility to educate all employees in initiatives for the “Quality First
Principle”. The exhibition is separated into three areas: “Corridor for Learning from Failure”, “Activity of Recurrence Prevention” and “A
Place of Learning and Awareness”. The place is one for learning through an understanding of the status of quality from the past up
until the present, which leads to each individual taking action to fulfill their own role with an awareness that leads to future
improvement in business operations and reform activities on return to their workplace. We strive for activities that always aim to
maintain and improve quality of products and services to ensure that customers use HIROSE connectors with confidence.
This “Quality Awareness Exhibition Center” is a facility for employees and does not accept inspection by the general public.

● Structure of “Quality Awareness Exhibition Center”
Corridor for Learning from Failure

Activity of Recurrence Prevention

A Place of Learning and AwarenessAn area for becoming aware and learning through lessons on major quality issues thathave occurred from the past up until the present
An area to introduce activities to ensure the same mistakes are not repeatedAn area that leads to education about quality for all employees, teaching them about
approaches, methods and activities relating to quality

6

Overview by Product Segment

Multi-Pin Connectors

Sales

108,014

88.7%
Millions of yen (up 0.5% year on year)

Our flagship multi-pin connectors include a variety of connector types such as circularand rectangular connectors, connectors for ribbon cables, connectors used for printed
circuit boards including FPCs (flexible printed circuit boards) and nylon connectors.
The major applications of these connectors include a wide range of fields such as
smartphones, communications equipment and automotive electronics, as well as
industrial fields such as measuring and control equipment, FA equipment and medical
electronics equipment. Further expansion in demand is expected along with the further
development of a sophisticated information and communications networked society
and an eco-friendly, energy conservation-oriented society.
Segment sales for the year under review increased by 0.5% year on year to ¥108,014
million and operating profit decreased by 11.2% year on year to ¥19,406 million.

Coaxial Connectors

Sales

9,784

Sales

3,967

120,000

107,475

108,01453,22453,31372nd

73rd

90,00060,00030,0000

8.0%■ Interim

Sales (Millions of yen)

□ Full year

15,00012,303
9,784

10,000
6,469

4,982

5,000

0

72nd

73rd

3.3%
Millions of yen (down 17.6% year on year)

The other products segment includes micro switches and instruments for connectors.
Segment sales for the year under review decreased by 17.6% year on year to ¥3,967
million and operating profit increased by 13.0% year on year to ¥115 million.

■ Interim

Sales (Millions of yen)
8,000
6,000
4,812

3,967

4,000
2,000
0

7

□ Full year

Millions of yen (down 20.5% year on year)

Coaxial connectors are a special type of high-performance connector used primarily for
microwave and other high-frequency signals. Their applications include microwave
communications devices, satellite communications equipment, electronic measuring
instruments, or smartphones, switching and transmission equipment and otherelectronic equipment. Optical fiber connectors and coaxial switches are also included inthis segment.
Segment sales for the year under review decreased by 20.5% year on year to ¥9,784
million and operating profit decreased by 30.7% year on year to ¥837 million.

Other Products■ Interim

Sales (Millions of yen)

2,270

1,970

72nd

73rd

□ Full year

Introduction of Our Products
FX26 Series

BM46 Series

The FX26 Series is a lineup of board-to-board connectors for in-vehicle drive
system devices, which received the Innovation Award in the “Vehicle
Intelligence & Transportation” category at CES 2020, an electronic equipment
exhibition held in Las Vegas, USA in January 2020. While the use of electronic
drive system devices is expected to increase with the spread of electricvehicles, manufacturers are facing issues such as labor shortage and rising
wages, and the needs for efficiency improvements and automation ofassembly processes are rising. In the past, board-to-cable connectors were
widely used in the internal connection of drive system devices, although theyrequired manual assembly work. This product is a board-to-board connector
that is suitable for automation, which
has also realized high reliability andsmaller size based on our uniquedesign. The Award was granted asthese excellent functions and designs
were highly appreciated. Our
customers both in Japan and overseas
have already decided to adopt thisproduct. We will strive to contribute to
the evolution of the automotive
industry by continuing to promote its
sales.

The BM46 Series received the Innovation Award in the “Mobile Devices &Accessories” category at CES 2020, an electronic equipment exhibition held in
Las Vegas, USA in January 2020. In recent years, new communications
standards have been developing rapidly as exemplified by the introduction of
5G, resulting in an increase of required antennas, which also means anincrease in the number of cables. With this increase, products using
conventional cable connectors have become crowded with cables. The Awardwas granted on the grounds that as a multi-RF capable board-to-board
connector, the product enables transmission in one package, contributing tosmaller devices, more flexible design, and productivity improvement.
Leveraging the Award, we will contribute to customers in the ever-evolving
consumer market as an opportunity to
expand the adoption of the product.
Furthermore, we will continue torelease future generations of BM46,
and are aiming to be the market
leader.

Hirose’s Connector
Workshop“There are many types of connectors!”
There are many types of connectors for a variety of use.
Let’s focus first on the difference based on where the connector is used.

Connectors for internal connections

Connectors for external connections

They are connectors to connect internal parts of an electronic
device. They enables, for example, board-to-board connection,board-to-antenna connection, and cable-to-cable connection.
There are available in a variety of forms depending on the typeand use of electronic equipment used.

They are connectors to connect an electronic device
with another electronic device.
There are many connectors for external connections
for which global standards, such as USB Type-C, havebeen established to ensure connectivity amongproducts of different manufacturers.

Use examples ・‌Connectors for internal power
supply (industrial equipment)

Use examples ・‌Connectors to connect themain-sub board (smartphone)・Type-C connectors (smartphones, PCs, etc.)

Example: Servo amplifier・Connectors for industrial equipment

・‌Connectors to connect the internalboard with screens and cameras(smartphone)8Group Network◎Domestic bases
TOHOKU HIROSE ELECTRIC CO., LTD.

Head Office

ICHINOSEKI HIROSE ELECTRIC CO., LTD.
Kikuna Office

KORIYAMA HIROSE ELECTRIC CO., LTD.
Yokohama Center
Kansai BranchWest Japan Sales Office

Chubu Sales Office

Kitakanto Sales Office◎Overseas bases
HIROSE ELECTRIC EUROPE B.V.
Hirose Electric (China) Co., Ltd.
HIROSE ELECTRIC (SUZHOU) CO., LTD.

HIROSE KOREA CO., LTD.
HIROSE ELECTRIC (DONGGUAN) CO., LTD.
HIROSE ELECTRIC INDIA. PVT. LTD.
HIROSE ELECTRIC (U.S.A.), INC.

HIROSE ELECTRIC MALAYSIA SDN. BHD.

HIROSE ELECTRIC TAIWAN CO., LTD.
HIROSE ELECTRIC SINGAPORE PTE. LTD.

9

P.T. HIROSE ELECTRIC INDONESIAHIROSE ELECTRIC HONG KONG CO., LTD.
HIROSE ELECTRIC HONG KONG TRADING CO., LTD.

Corporate Data

Company Profile (As of March 31, 2020)

Stock Information (As of March 31, 2020)

Trade name

HIROSE ELECTRIC CO., LTD.

Total number of shares issued

Date of incorporation

June 15, 1948

Number of employees

Consolidated: 4,737 (excluding part-timers)(Excluding 2,114,675 shares of treasury shares)
Number of shareholders
3,909

Capital stock¥9‚404‚379‚401

Directors and Audit & Supervisory Board Members (As of June 26, 2020)
Kazunori Ishii
Mitsuo Nakamura
Director
Yukio Kiriya
Director
Hiroshi Fukumoto
Director
Hiroshi SatohDirector
Sang-Yeob Lee
Outside Director
Kensuke Hotta
Outside Director
Tetsuji Motonaga
Outside Director
Masanori Nishimatsu(Standing) Audit & Supervisory Board Member Yoshikazu Chiba
Outside Audit & Supervisory Board Member Terukazu Sugishima
Outside Audit & Supervisory Board Member Kentaro Miura
President and Representative Director

36,267,145 shares

Major Shareholders (Top 10)
Number ofshares held

Name of shareholder

Senior Managing Director

Notes:
1. ‌Directors Kensuke Hotta, Tetsuji Motonaga and Masanori Nishimatsu areoutside directors as stipulated in Article 2, Item 15 of the Companies Act.
2. ‌Audit & Supervisory Board Members Terukazu Sugishima and Kentaro
Miura are outside audit & supervisory board members as stipulated in
Article 2, Item 16 of the Companies Act.

Accounting Auditor

Hundreds of shares

Hirose International Scholarship Foundation
JPMorgan Chase Bank 380055
State Street Bank and Trust Company 505223
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account No. 4)
Japan Trustee Services Bank, Ltd. (Trust Account)
HS Kikaku Co., Ltd.
Mizuho Trust & Banking Co., Ltd. Trust Account 0700065
Mizuho Trust & Banking Co., Ltd. Trust Account 0700066
Japan Trustee Services Bank, Ltd. (Trust Account No. 7)

31,47630,27729,87820,92020,022
16,285
12,215
8,707
8,652
6,805

Note: ‌In addition to the 10 major shareholders above, the Company owns 21,146 hundred
shares of treasury shares. The ratio of shareholding is calculated after excluding treasury
shares.

Distribution of Shares
Distribution of Shares by Shareholder Type
Individuals, etc./3,147 persons
38,199 hundred shares (9.96%)

Financial institutions/47 persons
119,959 hundred shares (31.25%)
Securities companies/32 persons
3,295 hundred shares (0.86%)

KPMG AZSA LLC
Foreign corporations, etc./506 persons
165,737 hundred shares (43.18%)

Other corporations/177 persons
56,625 hundred shares (14.75%)

10

Shareholder information
Fiscal term

From April 1 of a calendar year to March 31 of the next calendar year

Ordinary General
June every year
Meeting of Shareholders
Record dateOrdinary General Meeting of Shareholders: March 31 every year
Year-end dividend: March 31 every year
Interim dividend: September 30 every year
(As required, another record date may be decided with prior public
notice.)[Share-related notifications and inquiries regarding change of address, etc.]
Shareholders who have accounts at securities companies are requested to direct their notifications
and inquiries regarding change of address, etc., to their respective securities companies where
shareholders have their accounts. Shareholders who do not have accounts at securities companies
are requested to call the telephone number as stated below.
Number of shares in one 100
voting unit
Method of public notices The Company’s Web site below shall be used for its public notices.
〈https://www.hirose.com/jp/ir/〉
If an electronic public notice should fail due to accident or any otherunavoidable circumstances, the Company shall post a public notice in
the Nihon Keizai Shimbun.
Shareholders’ registermanager and accountmanagement institution
for special accounts

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Handling office ofshareholders’ registryadministrator

Securities Agency Department,
Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo(Mailing address)
Phone:

Securities Agency Department,
Sumitomo Mitsui Trust Bank, Limited
8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-0063
0120-782-031 (Toll free, available only in Japan)

URL:

https://www.smtb.jp/personal/agency/index.html[Special accounts]
For shareholders who was yet to have used JASDEC (Japan Securities Depository Center, Inc.) by theshare certificate dematerialization date, the Company opened a transfer account (hereinafter “special
account”) at Sumitomo Mitsui Trust Bank, Limited, as mentioned above, which serves as theshareholders’ registry administrator. You are requested to use the above telephone number when
making inquiries about the special account and notifications of matters such as change of address.

Recommended Contents ofthe HIROSE Website

1. R‌ ecommended
Connectors for
Automatic Operation/
ADAS (Advanced DriverAssistance Systems)
2. ‌Optimal Solutions forElectrical Equipment in
Buildings
Introduction Exampleof EF2 Series

3. Connector Q&A
Teach me! Dr. H

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