First Half Results for the Fiscal YearEnding March 31, 2023

November 30, 2022

Table of contents

1. RESULT HIGHLIGHTS
2. FULL-YEAR OUTLOOK
3. RESULTS AND FULL-YEAR OUTLOOK OF
EACH BUSINESS FIELD

4. TOPICS

11. RESULT HIGHLIGHTS

2

Consolidated Net Sales> Net sales for Telecommunication Business decreased due mainly to slumping demand in someareas, delays in construction schedules and longer lead time for orders for components.
> Net sales for Radio Frequency Business decreased slightly affected by longer lead time for orders
for components, although capital expenditure demand was on a recovering trend.

Consolidated Net Sales
13.1 billion yen
YoY change
Down 1.68 billion yen(down 11.3%)
Telecommunication
9.1 billion yen
YoY change
Down 1.65 billion yen(down 15.4%)
Radio Frequency
3.9 billion yen
YoY change
Down 0.03 billion yen(down 0.8%)

3Consolidated Operating Income› Consolidated operating income dropped due to a fall in net sales, as well as spikes in material
prices, procurement costs, power bills, etc.

Consolidated
operating income-1.19 billion yen
YoY change
Down 0.91 billion yen

4Segment Income (Consolidated)› Profit decreased for Telecommunication Business due to a drop in net sales and spikes inmaterials and logistics costs.
› Profit rose for Radio Frequency Business thanks to efforts to improve operational efficiency,
despite a spike in material prices.

Telecommunication-0.38 billion yen
YoY change
Down 1.08 billion yen(-)

Radio Frequency
0.58 billion yen
YoY change
Up 0.04 billion yen(up 7.5%)5

Overview of Consolidated First Half Results› Ordinary income fell 0.72 billion yen year on year as operating income decreased.
› Similarly, quarterly net income decreased 0.65 billion yen year on year.
■ Overview of 1H consolidated results(Millions of yen)

1H FY3/22
results
Net sales
Telecommunication
Radio Frequency
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income
Operating margin
Telecommunication
Operating margin
Radio Frequency
Operating margin
General and administrative expenses, etc.
Ordinary income
Ordinary income margin
Net income attributable to shareholders of parent company

14,87010,793
4,025
12,140
2,729
3,011
-281
-1.9%
697
6.5%
542
13.5%
-1,521
-181
-1.2%
18

1H FY3/23
results
13,185
9,133
3,994
11,523
1,662
2,854-1,192
-9.0%
-387
-4.2%
582
14.6%
-1,387
-906
-6.9%
-637

YoY change
AmountPercentage-1,684-1,659-31-617-1,067-156-910-1,084--11.3%-15.4%-0.8%-5.1%-39.1%
-5.2%
-

40
133
-724
-655

7.5%
-

Note 1: Net sales of Other segment omitted

62. FULL-YEAR OUTLOOK

7

Consolidated Net Sales and Operating Income Outlook› We expect full-year net sales of 37.0 billion yen, unchanged from the initial forecast.
› We see the impact of a spike in material prices to remain, just as in the first half, but expect full-year
operating income to increase slightly.

8

Segment Outlook (Consolidated)› We expect Telecommunication Business’ margins to drop, accounting for the risk of spikes in material
prices and changes in product makeup.
› We expect both revenues and profits increase for the Radio Frequency Business in view of a recovery
trend in capital expenditure-driven demand.

93. RESULTS AND FULL－YEAR OUTLOOKOF EACH BUSINESS FIELD

10

Mobile Communications-Related Field
1H
Full year

Telecommunication

Net sales dropped due mainly to revisions in customer equipment plans and delays inconstruction schedules caused by longer lead time for orders for components.
We expect full-year net sales to fall as we anticipate a similar trend will continue.

1H results
3.9 billion yen
YoY change
Down 1.4 billion yen(down 26.8%)
Full-year forecasts
11.2 billion yen

YoY change
Down 2.1 billion yen(down 15.9%)

11

Fixed Wireless Communication-Related Field
1H
Full year

Orders and construction schedules were pushed back due to longer lead times for orders formaterials and components, but demand recovered from a slump caused by the pandemic.
We expect net sales to increase year on year as orders show a recovery trend.

1H results
2.0 billion yen
YoY change
Down 0.04 billion yen(down 2.0%)

Full-year forecasts
7.0 billion yen
YoY change
Up 1.4 billion yen(up 27.1%)

12

Broadcasting-Related Field
1H

There was no major change in capital expenditure-driven demand from broadcasters, and net
sales were largely unchanged from the year-earlier level.

Full year
year
Full

We expect full-year net sales to increase 1.0 billion yen year on year supported by a recovery
trend in demand.

1H results
1.1 billion yen

YoY change
Down 0.09 billion yen(down 8.0%)
Full-year forecasts
4.0 billion yen
YoY change
Up 1.0 billion yen(up 33.5%)

13

Solutions-Related Field
1H
Full year

In the first half, we won orders for the Ministry of Internal Affairs and Communications’ local
5G development and testing project.
We plan to aggressively make investments and develop demand to expand business in thisnew growth field.

1H results
0.01 billion yen
YoY change
Up 0.01 billion yen(-)
Full-year forecasts
0.3 billion yen
YoY change
Up 0.2 billion yen(-)

14Other Field
1H
Full year

Net sales were largely unchanged from the year-earlier level as a demand trend similar to lastyear’s prevailed.
We expect net sales to increase as we anticipate demand increases mainly for solar power
equipment and construction work to install lighting.

1H results
1.9 billion yen
YoY change
Down 0.08 billion yen(down 4.1%)

Full-year forecasts
4.1 billion yen
YoY change
Up 0.1 billion yen(up 3.9%)15

Induction Heating Equipment-Related Field
1H

Net sales remained unchanged from a year-earlier level, affected by longer lead times forcomponent orders, although capital expenditure-driven demand was on a recovering trend.

Full year

We expect full-year net sales to show a significant year-on-year increase of about 2.1 billion
yen as demand recovers gradually.

1H results
2.8 billion yen
YoY change
Up 0.05 billion yen(up 2.0%)
Full-year forecasts
7.8 billion yen
YoY change
Up 2.1 billion yen(up 38.8%)

16

Contract Heat Treating Service-Related Field
1H
1H
Full year

Net sales remained largely unchanged from a year-earlier level, affected by production
adjustment moves by automakers.
As we anticipate a similar trend will continue, we expect full-year net sales to remainunchanged from a year-earlier level.

1H results
1.1 billion yen
YoY change
Down 0.08 billion yen(down 7.4%)

Full-year forecasts
2.3 billion yen
YoY change
Down 0.04 billion yen(down 1.7%)

17

New Radio Frequency Areas Business-Related Field
1H
1H

There are a number of projects in a testing phase currently but none has generated sales yet.

Full year

We will work to win orders in the second half by continuing aggressive sales efforts.

1H results- billion yen
YoY change(-)
Full-year forecasts
0.08 billion yen
YoY change
Up 0.08 billion yen(-)

18

4. TOPICS

19

Initiatives in Telecommunication Business (1)› Started delivery of the radio unit for NTT DOCOMO’s commercial 5G services.
› DKK’s first delivery of wireless equipment, marking our full-fledged entry in the wireless equipment
market.

Radio unit for 3.4 GHz-band, compliant to the O-RAN fronthaul interface specification
The macrocell radio unit is a device installed with the basestation antenna and forms a large communication area.
Base station controller

O-RAN fronthaul interface◀ Radio unit

Antenna•

Started to sell wireless equipmentfrom selling only antennas.

•

We now are able to sell the devices
in combination with antennas, which
increase the opportunities to gain
profits.

•

Promote the development of a sub-6
band O-RAN common platform in 2H.

→

As the unit has the worldstandard specifications, itenables construction offlexible networks not
restricted by base station
controllers from specificvendors.

Radio unit

20

Initiatives in Telecommunication Business (2)› Promote to develop antennas for frequencies higher than millimeter waves, with Beyond 5G and 6G in
mind.
› Aim to develop more advanced antennas through joint development projects with material makers.

Future initiatives in Telecommunication Business[Background of millimeter wave antenna development]
Millimeter wave antennas are prone to performance deterioration due
to losses of transmission lines or when exposed to spurious radiationfrom wiring.
We developed circuit board for millimeter wave antennas (right photo:
red frame) jointly with Shin-Etsu Chemical Co., Ltd., which provided
materials.

We developed antennas that have stable electrical properties andmechanical strength at high frequency bands.
We will work to prepare for the eras of Beyond 5G and 6G.
▲ Left: Omni-antenna Right: Sector antenna21

Initiatives in Telecommunication Business (3)› Working with other companies to promote local 5G business, aiming to contribute to smartification.
› Offering solutions combining our network-building technologies and other companies’ technologies.

Initiatives in local 5G business[Tests on robot control under local 5G environment]
Local 5G system construction
Radio wave area design

Wide-ranging
applications
Smart glasses

Solutions

CamerasDronesetc…

Resolve customer-specific issues by offering solutions
through alliance with partners

22Initiatives in Radio Frequency Business› Designed and developed superheated steam equipment. Can make equipment suggestions suited toprocessed items.
› Currently, working on projects with a focus on industrial waste disposal and processing foods.

DKK’s superheated steam equipment•

Generate superheated steam using high-frequency induction heating.
[Process of generating superheated steam]

Water

Superheated steam

Steam

Heat using high-frequency induction heating•

Superheated steam of up to 700℃ can be generated in short
time.

•

Time required for processing is shortened, contributing to
reducing the amount of energy used.
[Markets on target currently]
Contributes to resolving social issues in
the areas of SDGs and ESG.

(Industrial waste-related) (Food processing)▲ Cyclone-method superheated steam
equipment

Patent No. 7063948

23

Initiatives in Improving Governance› Think of how the Board of Directors should be and introduce improvements in focused effort.
› Put effort also into raising awareness about compliance of organization.

Towards improvement and enhancement of corporate governance
Organization

Board of Directors•

Change Director terms of office•

2 years => 1 year•

Change ratios of Director compensation
components

Basic compensation

Expand divisions obtaining ISO 27001
certification to enhance information
security

Other•

Reduce cross-held shares

70 Performance-linked
30
compensation

Number reduced

About

•

Add KPI for Directors’ bonuses
Net income
attributable to shareholders ofparent company

•

NEW

+

Consolidated
operating income

Provide compliance education

0.3 billion 2 issues
About 3.7 billion yen /37 issues

Cut at least 2.6 billion yen/ Cut at least 20 issues

End-March 2022

End-March 2025

End-September 2022

24

Initiatives on Workplace Culture and Environment› Conducted an employee satisfaction survey and, going forward, analyze the survey result andintroduce measures to improve workplace environment.
› Disclosed Scope 1 and 2 data for FY2019–FY2021; work to calculate Scope 3 currently underway.

Toward better workplaceenvironment•

Hired external service to conduct an“engagement survey,” or an employee
satisfaction survey•

Maintain a diverse employee makeup,
increase shares of females and midcareer hires in the management ranks,and promote an environment in which
diverse opinions are respectedGreenhouse gas monitoring andreduction target•

The largest source of emissions is the power
use by plants, representing about 75% of
total[FY2019]
From offices, etc.
From plants

Cut

Number of employees with disabilities▲ Over a period from April 2021 until end of November 2022•

Aim to reduce emissions by at least 30%
from the level in FY2019 by 2030•

Consider switching to energy-saving
equipment and use of renewableenergy as reduction measures

Share of mid-career hires inmanagerial positions:

6.4%
5.9%

30%

7

0

Share of females inmanagerial positions:[FY2030]

16.3%

15.3%

▲ Over a period from April 2022 until end of September 2022

25

Initiatives for Capital Strategy› Formulate specific execution plans for investment strategies disclosed in Medium-Term Business Plan.
› Actively make both capital and development investments to optimize business portfolio.

To achieve optimum capital composition and support investment strategies to ensure growth

Investment strategy

Optimum capital composition•

Review existing 7.0 billion yen
commitment line and sign a three-year,
total 11.0 billion yen contract afresh•

D/E ratio was 0.09 at the end of
September 2022.
Work to strengthen growth investment
Fiscal year
ended March2022

Six months
ended
September 2022

Net sales

33.9 billion yen

13.1 billion yen

Net income

0.7 billion yen-0.6 billion yen

D/E ratio

0.01

0.09

ROE

1.5%

-

•

No change in investment amounts
targeted in Medium-Term Business Plan
“DKK-Plan2025”
R&D investment

6.0 billion yen

Capital expenditures

Other investments

4.0 billion yen 4.0 billion yen

M&A•

Design plans, conduct survey and havediscussions on M&A and set up an
investment committee as a body todeliberate matters to be submitted to theBoard of Directors•

No change in the amount of up to 4.0 billion
yen in investment, which will be used forshareholder returns if no M&A planmaterializes
26

Shareholder Returns› Maintain active shareholder return measures disclosed in Medium-Term Business Plan.
› Share buybacks announced in February this year completed; the portion in excess of the total
number of shares issued by 10% canceled.

Policy on shareholder returns•

No change in target set in Medium-Term Business Plan “DKK-Plan2025”[Target]Target shareholder returns totaling 10.0 billion yen forthree years from the fiscal year ended March 2022
Payout ratio
•

40%

DOE

2%

Paid out interim dividend of 30 yen per share
FY3/21:45 yen•1.5%

We will remain actively committed to taking measures to enhance shareholder returns

Dividend payouts•

Lower limit

FY3/22:★FY3/23:60 yen 30 yen 30 yen

Year-end dividend also planned to be 30 yen

Share buybacks•

Completed share buybacks worth 2.5
billion yen•

Partial cancellation

Total number of cancelledshares:1.98 million

18.31%
Ratio to the precancellation
total number ofshares issued,
excludingtreasury stock

27

APPENDIX

28

Overview of Consolidated FY3/23 Outlook■ Overview of full-year consolidated outlook(Millions of yen)

FY3/22
results
Net sales
Telecommunication
Radio Frequency
Operating income
Operating margin
Telecommunication
Operating margin
Radio Frequency
Operating margin
General and administrative expenses, etc.
Ordinary income
Ordinary income margin
Net income attributable to shareholders of parent company
ROE

33,96825,908
7,959
53
0.2%
2,010
7.8%
1,058
13.3%
-3,015
448
1.3%
705
1.5%

FY3/23
forecasts
37,00026,710
10,180
100
0.3%
1,800
6.7%
1,350
13.3%
-3,050
400
1.1%
300
0.7%

YoY change
AmountPercentage
3,031
801
2,220
46
-

8.9%
3.1%
27.9%
88.3%
-

-210
-

-10.5%
-

291
-34
-48
-

27.6%
-10.7%--405--57.5%-

Note 1: Net sales of Other segment omitted

29

Results and Outlook of Consolidated Net Sales■ Overview of consolidated results(Millions of yen)

FY3/22

FY3/23Full year

Full year(results)(results)(results)

14,87019,09833,96813,18523,81437,000-1,684-11.3%

4,715

24.7%

3,031

8.9%

10,793

15,11525,908

9,133

17,576

26,710-1,659-15.4%

2,461

16.3%

801

3.1%

Mobile Communications

5,432

7,877

13,309

3,977

7,222

11,200-1,454-26.8%

-655

-8.3%

-2,109-15.9%

Fixed Wireless Communication

2,134

3,373

5,508

2,092

4,907

7,000

-42

-2.0%

1,533

45.5%

1,491

27.1%

Broadcasting

1,214

1,781

2,995

1,117

2,882

4,000

-97

-8.0%

1,101

61.8%

1,004

33.5%

0

127

128

17

372

390

17

-

244

-

261

-

2,011

1,954

3,966

1,928

2,191

4,120

-82

-4.1%

236

12.1%

153

3.9%

4,025

3,933

7,959

3,994

6,185

10,180

-31

-0.8%

2,251

57.2%

2,220

27.9%

Induction Heating Equipment

2,827

2,791

5,618

2,884

4,915

7,800

57

2.0%

2,124

76.1%

2,181

38.8%

Contract Heat Treating Service

1,197

1,142

2,340

1,109

1,190

2,300

-88

-7.4%

47

4.2%

-40

-1.7%

0

0

0

0

80

80

0

-

80

-

80

-

51

49

100

57

52

110

6

12.3%

2

5.8%

9

9.1%

Solutions
OtherRadio Frequency

New Areas Business
Other

Full year

2H

2H

Telecommunication

2H

1H

1H

Net sales

1H

YoY change(results) (forecasts) (forecasts) Amount Percentage Amount Percentage Amount Percentage

30

Results and Outlook of Nonconsolidated Net Sales■ Overview of nonconsolidated results(Millions of yen)

FY3/22

FY3/23Full year

Full year(results)(results)(results)

11,515

15,79527,310

10,586

19,41330,000

-928

-8.1%

3,617

22.9%

2,689

9.8%

9,401

13,07622,478

7,675

15,724

23,400-1,726-18.4%

2,647

20.2%

921

4.1%

Mobile Communications

5,353

7,498

12,852

3,845

6,954

10,800-1,508-28.2%

-544

-7.3%

-2,052-16.0%

Fixed Wireless Communication

2,119

3,298

5,418

2,077

4,822

6,900

-42

-2.0%

1,524

46.2%

1,481

27.3%

Broadcasting

1,108

1,656

2,764

1,037

2,762

3,800

-70

-6.4%

1,106

66.8%

1,035

37.5%

Cable Broadcasting

380

73

453

284

95

380

-95

-25.2%

22

30.3%

-73

-16.2%

Other

439

549

989

430

1,089

1,520

-8

-2.0%

539

98.1%

530

53.6%

2,281

2,554

4,835

2,757

3,542

6,300

476

20.9%

988

38.7%

1,464

30.3%

166

164

330

154

145

300

-12

-7.2%

-18

-11.4%-30-9.3%

Radio Frequency
Other

Full year

2H

2H

Telecommunication

2H

1H

1H

Net sales

1H

YoY change(results) (forecasts) (forecasts) Amount Percentage Amount Percentage Amount Percentage

Note: Of the figures for FY3/22, the ASBJ Statement No. 29 Accounting Standard for Revenue Recognition was applied only for the net sales result of 27,310 million yen.

31

Notes on Earnings Forecasts
Figures included in this document that are related todescriptions, including plans and policies and not past facts,are forecasts regarding future earnings. They are all calculated
based on management assumptions and views based on
information grasped by the company at the time of writing.
Therefore, these forecasts include risks and uncertain factors,
and actual results may differ from them due to a variety offactors.
Such potential risks and uncertain factors include changes in
economic situations and product demand levels in major
markets, fluctuations in the foreign exchange market, changes
in regulations in Japan and overseas, and accounting
standards and practices.
32