HIROSE ELECTRIC CO., LTD.
Financial Results Briefing for the Fiscal Year Ended March 2021
May 7, 2021

Event Summary[Company Name]HIROSE ELECTRIC CO., LTD.

[Company ID]

6806‐QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for the Fiscal Year Ended March 2021

[Fiscal Period]

FY2020 Annual[Date]

May 7, 2021

[Time]

10:30 ‐ 11:44(Total: 74 minutes, Presentation: 40 minutes, Q&A: 34 minutes)[Venue]Webcast[Number of Speakers]

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Kazunori Ishii
Hiroshi Fukumoto

President and Representative Director
Corporate Board Director, Group President,
Administration GroupManager, IR Office, Administration Group

Hideo Suzaki

1Presentation
Suzaki: Good morning. We will now start HIROSE ELECTRIC CO., LTD.’s financial results briefing.
Thank you very much for joining us today. I’m Suzaki from HIROSE ELECTRIC’s IR Office.
This is another web‐based briefing, the fifth in a row on a quarterly basis. The presentation will be based only
on voice and materials, but we will try to explain as clearly as possible.
As for the contents of today's presentation, Suzaki will first explain the financial results for the fiscal year
ended March 2021 based on today's material, though we disclosed the Financial Statements Summary on theTokyo Stock Exchange yesterday. Next, Administration Group President Fukumoto will explain the shareholder
return policy and the appointments of Directors after the transition to a Company with an Audit & Supervisory
Committee, which were also announced yesterday. As for the medium and long‐term growth strategy,
President Ishii will give an explanation based on the material for today.
We will be taking questions during the remaining time of the meeting. The meeting is scheduled to end at
11:30 a.m., but if there are many questions, we will extend the meeting by up to 15 minutes.
First, I would like to give you a brief explanation about the operation of this web‐based presentation. There
are two kinds of materials for this meeting‐‐Business Results for FY2020 and 2021 Medium and long‐term
Growth Strategy. You can download the PDF files from the download link on the screen you are seeing. In
addition, the Financial Statements Summary, announced yesterday, and other press releases are also available
on our website, which can be accessed by clicking on the HIROSE ELECTRIC IR page link at the bottom of thescreen.
Please note that the participants are free to turn the pages of the presentation materials. We will tell you thepage number before explaining the content of the page.
Finally I will explain how to enter your question. Please note that we will basically respond to each question
one by one, but if there are identical questions, we may combine them into one answer.

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We will now begin to explain the financial results. First, please see page 3 of Business Results for FY2020. Thisis a summary of the business results.
In the fiscal year ended March 2021, or FY2020, orders received were JPY142.38 billion and sales were
JPY133.54 billion due to growth in orders for consumer and mobile devices, recovery of orders in the second
half of the year for the automotive market, and growth in orders for smartphones. Both orders and sales hit
record highs. Compared to the previous year, sales increased 9.7% YoY, operating profit increased 37% YoY,
and the operating profit ratio was 20.9%.

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Next, page 4. This shows graphs of quarterly changes in sales and operating profit.
On the far right are the figures for Q4 of the year under review. Due to seasonal factors, the figures in Q4 tend
to be lower than those in Q3. However, the declines in the latest Q4 were less than expected, with sales of
JPY35.06 billion and operating profit of JPY6.64 billion.

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Next, page 5. This is a summary of the financial results.
In fiscal 2020, sales were JPY133.54 billion, up 9.7% YoY. Operating profit was JPY27.88 billion, up 37% YoY.
The operating profit ratio was 20.9%. Earnings before income tax were JPY28.33 billion, and net profit was
JPY19.92 billion.
Total assets were JPY370.5 billion, the shareholder’s equity ratio was 88%, and income per share was
JPY549.10.
The exchange rates were JPY106.06 to the USD, JPY123.70 to the EUR, and JPY9.17 to KRW100.

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Next, page 6. This is a major change from the previous year.
Of the sales increase of JPY11.77 billion, those at non‐consolidated HIROSE increased by JPY8.55 billion andthose at subsidiaries increased by JPY3.22 billion.
The cost of sales improved by 0.2 percentage points for the full year, down from 57.8% to 57.6%. The main
reason for this is that sales in Q4 were strong and the ratio of fixed costs improved.
The SG&A expense ratio improved by 2.4 points. The amount of SG&A expenses decreased from JPY30.47
billion in the previous fiscal year to JPY30.19 billion.
The financial revenue / expense account balance worsened by JPY400 million. However, due to the weakeningof the JPY in Q4 compared to Q3, the foreign exchange loss decreased.

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Next, please turn to page 7. This is a variation analysis compared to the previous year.
The foreign exchange impact of the strong JPY slashed sales by JPY860 million, operating profit by JPY910
million, and earnings before income tax by JPY1.1 billion.
The increase in depreciation cost, which lowered operating profit and earnings before income tax by JPY860
million, respectively, was due to prior investments and in line with our plan.
The increase in freightage and packing expenses was mainly due to higher transportation costs caused by
COVID‐19. Gain on the sale of land, insurance income, and loss due to flood damages in Koriyama were theeffects of temporary items in the past. This section will be supplemented on the next page.
The decrease in travel and overseas travel expenses is due to a cost reduction caused by the restriction ofactivities amid the COVID‐19 pandemic.
Loss on retirement and sale of fixed asset is a decreased amount from the previous year.

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Now, please see page 8. The following are supplementary graphs of changes in operating profit excluding
temporary factors.
There was nothing special for Q2 and thereafter of the fiscal year under review, so this is mainly a review ofthe previous fiscal year.

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Next, page 9 shows the balance sheet.
First, the part of assets. The increase in cash was due to the postponement of interim tax payment and adecrease in capital expenditure.
Trade and other receivables increased due to an increase in accounts receivable arising from the increased
sales.
The rise in inventories came in response to the impact of increased orders, especially in Q4.
The increase in other financial assets was due to an increase in non‐speculative claims and other assets aswell as a rise in time deposits.
As a result, the total asset balance was JPY370.5 billion.

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Next, on page 10, we will look at the parts of liabilities and net assets of the balance sheet.
Payables and other debt increased due to an increase in accounts payable because of increased production in
Q4.
Income taxes payable increased due to the postponement of the interim tax payment, mentioned earlier.
The increase in net assets and others is due to foreign currency translation adjustments resulting from thedepreciation of the JPY at the end of the year under review.

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Next, please see page 11. This is the trend of capital investment and depreciation.
Capital investment for FY2020 totaled JPY12 billion and depreciation was JPY15.2 billion. The depreciation
amount was close to what we had planned at the beginning of the year, but the total investment of JPY12
billion was less than expected, due to fewer investment amounts in the first half and Q4. We carried over partof planned investment to the current fiscal year.
For FY2021, we forecast capital investment of JPY17 billion and depreciation of JPY16.5 billion.
As for R&D expenses, the actual amount for FY2020 was JPY10.2 billion, and we forecast the R&D amount at
JPY12 billion for FY2021.

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Page 12 shows the ratios of overseas production and overseas sales.
The overseas production ratio was 48% in FY2020.
The overseas sales ratio for FY2020 was 76%, down 1 percentage point from 77% in Q3 of the year. This result
was due to the impact of an increase in sales to general industrial machinery as a trend by application seen in
Q4.

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Next, please see page 13. This is the trend of the number of employees.
In fiscal 2020, employees in Japan decreased slightly, while overseas employees increased. Overseas, thenumber of employees increased to respond to production at plants in Malaysia and China.

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Page 14 shows the distribution of shareholders.
In the fiscal year ended March 2021, foreign corporations and individuals decreased their holding ratios, while
the ratio of domestic financial institutions increased.

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Next, please see page 15. The following six slides are about sales by application.
The first one is about general industrial.
Overall sales for industrial machinery were strong due to an increase in sales for factory automation‐related
applications. Orders were also strong in Q4, and we expect sales in the first half of the current fiscal year to
be relatively strong.

15Page 16 shows sales for smartphones.
Sales in Q4 declined from Q3, partly due to seasonal factors, but for the full year of fiscal 2020, sales were up
6% YoY. As sales in the year under review were high, we expect the current year's level to be flat YoY.

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Page 17 shows automotive and mobility‐related sales.
As a result of the growth in the second half of the year, annual sales in FY2020 were up 3% YoY, recovering an
uptrend. We expect that sales will shift from recovery to growth in the future.

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Page 18 shows sales for consumer and mobile equipment.
Since remote work has taken root, demand for personal and small consumer devices increased, resulting incontinued strong sales in FY2020.

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Page 19 shows sales for telecommunications infrastructure equipment and office automation equipment.

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Please turn to page 20. This is the annual sales forecast by application for fiscal 2021.
General industrial‐related sales will increase 8% YoY. Sales for smartphones will be down 2%. Sales forautomobiles will be up 10%. Sales for consumer/mobile equipment will be up 1%.

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Next, please see page 21. This is a summary of the earnings forecast.
For FY2021, sales are expected to be JPY138 billion, operating profit JPY26.5 billion, the operating profit ratioat 19.2%, earnings before income tax JPY26.5 billion, net profit JPY19 billion, and net income per share
JPY523.64. We plan to pay an annual dividend of JPY260 per share, up JPY20. The dividend payout ratio will
be 49.7%.
The exchange rate assumptions for the year are JPY104 to the USD, JPY129 to the EUR, and JPY9.70 to KRW100.
That is all the explanation from me.
Next, Administration Group President Fukumoto will explain our medium‐term capital policy and theappointments of officers in connection with the transition to a company with an audit & supervisorycommittee.

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Fukumoto: Good morning. I am Hiroshi Fukumoto from the Administration Group. I would like to explain
pages 22 through 27.
First of all, regarding medium‐term capital policy, , as we had difficulty in foreseeing the future of ourbusinesses amid the COVID‐19 pandemic, we postponed the announcement of the capital policy by one year.
I would like to briefly explain the content of the policy again.
In fact, we issued a press release yesterday, but today I would like to explain the policy based on page 22 of
this material.
First of all, I would like to talk about our shareholder return policy, which includes dividend, number 1 on theleft side, and treasury stock, number 2 on the right side.
Regarding dividend, our basic policy is to maintain a payout ratio of 50% for FY2021 through FY2024.
We have raised the basic payout ratio of 40% set for FY2016 to FY2020 to 50%.
As a result, the dividend for FY2021, the current fiscal year, will increase by JPY20 per share, which wasreported in today's Nihon Keizai Shimbun. The annual dividend will rise from JPY240 to JPY260.
On the other hand, we will buy back treasury shares up to JPY40 billion for the four years to FY2024.
As an additional note, we continue to cancel any treasury shares that exceeded 5% of our total shares issued
every year.

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By combining these two factors, as described in the middle, we will improve capital efficiency by enhancing
the medium‐term shareholder return policy, and more importantly, further improve profitability. The idea is
to raise the profitability from 20% or so to even higher.
Implementing the above, we will work to improve return on equity, and aim to achieve an 8% ROE by FY2024.
Underneath, as a postscript, there are descriptions of three items. In short, in the event of various
unpredictable changes, natural disasters, or the need for large amounts of M&A funds, we would like toreview this policy. However, this remains our shareholder return policy until FY2024.
As for the details of the current fiscal year's share buyback plan, we will make an announcement as soon as it
is determined.

Please move on to page 23. We showed an image of how to use operating cash flow and free cash flow.
The first is operating cash flow. From FY2021 to FY2024, we aim to generate a little less than JPY150 billion ina cumulative amount of operating cash flow, probably around JPY149 billion.
The first thing to say is how to use the amount. It will include ordinary capital investment, such as some new
SCM systems and buildings. In addition, we have set a certain portion for strategic investment.
This means that we need to make effective use of capital in order to expand our businesses in the medium tolong term. We are also considering whether we should focus on the mainstay connector area or some otherareas, and whether we should aim to acquire new technologies or strengthen manufacturing.

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Then there is M&A, or capital injection into some other companies. This is still under consideration, but assoon as it becomes clear, we will announce it to the public.
The remaining portion is free cash flow. FCF is depicted in the lower right picture.
As a result, the cumulative free cash flow for the four years is estimated to be around JPY26 billion, a little
less than JPY30 billion.
So we will pay dividends and buy back our own shares for the four years based on our shareholder return
policy. The total amount of shareholder return for both of these items will be approximately JPY82 billion.
As a matter of course, this will reduce our financial assets. In addition, we will be able to reduce the amountof equity capital.

Please see page 24. This is our ROE, which was 5% in FY2019 and 6.3% in FY2020.
Our understanding is that the so‐called cost of shareholders' equity is somewhere between 5.8% and 6.4%.
We placed these figures though they can vary depending on how a variety of parameters are set. We areaware that we must raise our ROE further, and we are aiming for an 8% ROE by 2024 as the first step.
Therefore, by FY2024, we will work to improve profitability, combine the shareholder return measures I
mentioned earlier, reduce shareholders’ equity based on share buybacks, and improve ROE.

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Page 25 shows the pictures of our responses to stakeholders.
Although many things have been said in recent years, all stakeholders are very important.
In particular, I believe that the source of our continued growth with profitability will come from our employees.
Therefore, the new personnel system named here will include various measures to raise employees’
motivation, to promote the growth and vitality of people and the organization, and to provide humantreatment that matches employees’ achievements and that is acceptable. I can't go into details, but that's
what we're aiming for.
Naturally, as shown on the top middle, we will continue a stable supply of high added value and high quality
products to customers. In addition, it is important for us to continue to conduct fair transactions with our
trading partners in compliance with laws and regulations.
Moreover, on the lower left, we placed the picture of Community. This is a bit of a misnomer if we sum it up
in one word, actually it might be community and general society.
Our headquarters is located in Yokohama, and our factories are located in the Tohoku region, so we will
cooperate with the relevant communities to contribute to society. Or we will ensure accurate tax payments
based on high profits. If you pay your taxes properly, this is one way to contribute to society. In addition, we
would like to strengthen our response to sustainability, which has been a key topic of a lot of discussions
recently.
Also, for our shareholders, of course, we need to ensure the continued growth of our businesses and provide
appropriate returns. And we are also forcusing on governance improvement. We are moving forward with25

the goal of publishing the integrated report by September 2021. The integrated report will be viewed not onlyby shareholders but also by all stakeholders.
While we strive to achieve a balance between investment for growth and shareholder returns, we will
promote the effective use of assets, and operate our businesses prioritizing continued growth andsustainability in the future.

Please see page 26. This shows how many Directors are appointed associated with the transition to a Company
with an Audit & Supervisory Committee.
The purpose of establishing the Audit & Supervisory Committee is written here.
We will establish the Audit & Supervisory Committee, a majority of whose members consists of Outside
Directors, and grant Directors who are Audit & Supervisory Committee members the right to vote at meetingsof the Board of Directors. By doing so, we will strengthen audit and supervisory functions of the Board of
Directors and of the legality and validity of business execution. In the end, we are determined to enhance andenrich our corporate governance much more.

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Page 27 shows the specific executive appointments.
The change in personnel is subject to the approval at the ordinary general meeting of shareholders to be heldon June 25.
The upper part shows 10 Directors, excluding Directors who are Audit & Supervisory Committee Members.
There are a number of people who have been reappointed, including President Ishii, who is here today, but
in the fifth and sixth rows from the top marked yellow, there are two new Directors. One is Shin Kamagata,Group President, Administration Group. The other is Jun Inasaka, Deputy Group President, Engineering Group.
In the lower part, we show three Directors who are Audit & Supervisory Committee Members. The current
Audit & Supervisory Board Members will be appointed as Directors who are Audit & Supervisory Committee
Members.
On the bottom right corner, we showed that the ratio of Outside Directors will be 38.5%, with five Outside
Directors out of the 13 Directors.
On the bottom left, there is a description that I, Fukumoto, will retire from the Director position as of June 25.
I will leave HIROSE ELECTRIC.
To be astonishing, I have been in charge of the financial results presentations for as long as 14 years since
May 2007. I have received a lot of tough questions and comments from you, analysts, and sometimes wordsof encouragement. Although I will be stepping down, I believe that the IR function itself has beenstrengthened since the IR Office was established as a dedicated organization 2 years ago.

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In addition, I would like to ask for your reassurance that my successor will take care of the shareholder return
policy and various other matters that have been announced.
Thank you very much for everything. I would like to conclude my explanation.
Suzaki: Next, President Ishii will explain the 2021 Medium and long‐term Growth Strategy. The presentationmaterial is a separate one other than the material for the financial results, so please prepare the material
titled 2021 Medium and long‐term Growth Strategy from the screen you are watching.

Ishii: Good morning again, everyone. This is Ishii, President of HIROSE ELECTRIC.
I would like to thank the many people who participated in this event. Also, thank you for your support andguidance to HIROSE’s business.
I will now give a digest explanation and report on the medium‐term plan, the FY2021 version. Please see page
3. This graph shows the medium‐ to long‐term growth image of HIROSE.
The bar showing the results for FY2020 is just at the center position of this slide. The clearly blue bar next to
it is the plan for FY2021. And as the dark blue arrow on the right side indicates, we plan to move toward solid,
continuous growth, as always.
We summarized the previous fiscal year, FY2020, in a few words at the bottom of the slide. In a nutshell, wemanaged to emerge in fiscal 2020 from a long period of stagnation.
And this time, we see FY2021 and FY2022 as a period to strengthen the foundation for the medium and longterm. What this means is that as we move towards a full‐fledged recovery from the previous year's emergence,28

we will spend this period, the two years of FY2021 and FY2022, aiming a solid company, doing solid businesses,
and improving the quality of each function.
For example, we were able to improve our operating profit by more than 30% in the fiscal year under review.
However, this includes cost savings due to the restrictions on movement amid the COVID‐19 pandemic andflood insurance payments. I have described the next two years as a period of strengthening our foundation,
because I want to take a good look at our current situation over the next two years, improve and reform ourissues, problems and challenges, and at the same time make a full‐scale recovery. Through this period, weplan to move on to a full‐scale recovery from fiscal 2023.

Please move on to page 4. This is a composition chart of applications. The pie chart on the left side shows theactual results for FY2020 on the inside and the forecast for FY2024 on the outside.
As for the results in FY2020, as the IR official reported earlier, I think there were three key points.
We took advantage of strong demand in the consumer market. We accelerated the next‐generation
communication infrastructure. There was a recovery in the industrial market. Internally, I believe that what
supported these efforts was the result of strengthening our initiatives that had been in place.
For fiscal 2024, we will grow our business with the three pillars as we expressed: Smartphones and Consumer
Equipment, Automotive, and Industrial and Infrastructure. While we will strengthen our initiatives for a next
round of growth, our goal for the medium term is to establish a well‐balanced business structure and acorporate structure that is respondent to changes in order to achieve sustainable growth.

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Through the experience of the COVID‐19 pandemic, I feel that HIROSE's well‐balanced business structure is
one of its strengths.

Please move onto page 5. This is a slide about a change in the market environment.
I will skip the explanation of New lifestyle and New values, as you are more familiar with them than we are.
Generally speaking, we have entered an era that requires us to be able to respond better and more strongly
to changes in lifestyles and values. We will improve the quality in many ways.
For example, we would like to improve our performance, product quality, and ability to react to social issues
by raising our capabilities of detection and response.

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Please move on to page 6. This slide shows the future growth market.
The changing and expanding needs are creating business opportunities for us to connect. We imagine that
more will be born in the future.

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Please see page 7. This slide shows an image for the medium‐term application strategy, and is almost thesame as in the previous plan. In our medium to long‐term plan it is called G‐WING. The name comes from theidea of creating wings that fly globally.
As I mentioned earlier, there are the three pillars of Consumer, Industry, and Automotive, and we will catch
four key technologies as we deem to be important: high‐speed, high‐frequency, high‐power, and smaller.
At the same time, we would like to add analytical capabilities and knowledge of the EMC room in the
Yokohama Center on the left side, where we have been strengthening our functions since three to four years,
and the Ichinoseki testing center on the right side, to reinforce our ability to propose leading‐edge, cutting‐edge, and differentiated solutions across fields, and make efforts to develop them for further continuous
growth.

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Please see page 8. This is the last slide from me.
In FY2021, we hope to make it a year of progress by strengthening our sensitivity and responsiveness.
The points to be reinforced remain the same as in the previous year: ability to develop technology, ability to
manufacture, and ability to execute global operation and localization in each area. By adding the fostering of
human resources to carry out these tasks, we hope to accelerate our ability to implement recovery andevolution. We would like to ask you for your continued support.
This is a brief report from me. Thank you very much.
Suzaki: That's all for the explanation from us.

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Disclaimer

In this material, there are descriptions based on current estimation by Hirose Electric.
Hirose cautions you that a number of important risks, uncertainties and others could cause actual results todiffer materially from those discussed in the *forward‐looking statements. Thank you for your understanding.

*Forward‐looking statements include, but are not limited to, those statements using words such as “believe,”“expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “may” or“might” and words of similar meaning in connection with a discussion of future operations, financial
performance, events or conditions. These statements are based on management’s assumptions and beliefs inlight of the information currently available to it.

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