72

nd Fiscal Term

Annual Report

From April 1, 2018 to March 31, 2019

To Our Shareholders

Business Overview
During the fiscal year ended March 31, 2019, the Japanese economy
followed a moderate recovery trend until the end of the first half ofthe year with favorable employment conditions, strong exports andcapital investment, but became somewhat sluggish in the second halfof the year due to a decrease in demand and inventory adjustment
on the back of a slowdown in the Chinese economy.
Even overseas, while the U.S. economy remains strong, the Chinese
economy shows a slowing trend, and the outlook is uncertain due tothe lingering trade friction between the U.S. and China.
Under such conditions, the Hirose Electric Group, while expanding
the business globally, chiefly for the smartphone, automobile, andindustrial machinery/equipment markets, proceeded with efforts toreinforce our development, sales and production systems for new
high-value-added products in the pursuit of swifter responses toincreasingly sophisticated market needs. However, business for thesmartphone market has slowed down since the third quarter.
As a result, consolidated sales for the year under review amounted
to ¥124,590 million, a decrease of 0.4% year on year. Operating
profit decreased 17.5% year on year to ¥23,157 million, profit before

Kazunori Ishii
President and Representative Director

We are pleased to report the results of operations for fiscal 2018, theyear ended March 31, 2019 (the 72nd fiscal term, from April 1, 2018
to March 31, 2019).

Financial Highlights■ Sales■ Operating profit

Millions of yen

Interim

140,000
120,000

115,103

Millions of yen

Full year
125,143

124,590■ Profit attributable to owners of parent
Millions of yen

Full year

57,17562,054

61,96320,00015,08812,022

10,000

71st

72nd
IFRS

*The Group adopted International Financial Reporting Standards (IFRS) from the 71st fiscal term.

1

17,891

15,00010,000

10,13010,812

9,325

5,000

0
70th
JGAAP

19,10720,00028,06420,0000

Full year

21,35628,482

14,28940,000Interim25,00023,15780,00060,00040,00030,000100,000

Interim

0
70th
JGAAP

71st

72nd
IFRS

70th
JGAAP

71st

72nd
IFRS

tax decreased 11.9% year on year to ¥24,671 million and profit
attributable to owners of parent decreased 6.4% year on year to¥17,891 million.

edge technologies, conduct more efficient distribution andconcentration of resources and consistently carry out reforms andinnovations. Such aggressive initiatives also include the reinforcementof high-value-added product development capabilities to meetmarket needs, the promotion of manufacturing efficiency and further
improvement of product quality, all of which would serve to improve
our cost competitiveness. At the same time, we will work to promote
globalization with an eye to dispersing risk across production bases
and growing and expanding our businesses going forward, develop
domestic and overseas sales channels, and strengthen ourmanagement foundations toward profitable growth in an effort toimprove our corporate value.

With regard to the management environment in which the Group
operates, the Japanese economy will see greater labor-saving
investments due to labor shortages, but not a meaningful increase inexports and capital investment, and conditions are expected to be
uncertain on account of exchange rate fluctuations and rising raw
material prices, etc.
Overseas, although the U.S. economy remains strong, it is expectedthat the future prospect will remain uncertain due partly to increasing
sense of cautions for various geopolitical risks and a slowdown in the
Chinese economy due to trade friction between the U.S. and China.
The Group will focus on maintaining our mass production
businesses for smartphones, etc., and further sales growth in theautomobile field along with an expansion in automotive electronics,
and the growth of the industrial machinery/equipment andcommunications equipment fields.
In this business environment, the Group intends to pursue leading-■ Basic earnings per share
800%
611.81548.80489.46

400

200

0
70th
JGAAP

June 2019

71st

72nd
IFRS

100
90
80
70
60
50
40
30
20
10
0

Kazunori Ishii
President and Representative Director■	‌Equity attributable to owners of parent to total assets ratio& Operating profit to sales ratio

Yen

600

We look forward to your continued support and encouragement.

Equity attributable to owners of parent to total assets ratio
Operating profit to sales ratio■ Dividends per share
Yen
480

500
400

90.6

90.0

89.3

300

240

240

200
100

24.7

22.4

70th
JGAAP

71st

18.6
0
72nd

70th

71st

72nd

IFRS

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Overview by Product Segment

Multi-Pin Connectors
Our flagship multi-pin connectors include a variety of connector types such as circular andrectangular connectors, connectors for ribbon cables, connectors used for printed circuit boards

Sales ratio

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.
86.3%

Further expansion in demand is expected along with the further development of a sophisticatedinformation and communications networked society and an eco-friendly, energy conservationoriented society.
Segment sales for the year under review increased 0.4% year on year to ¥107,475 million
and operating profit decreased 16.1% year on year to ¥21,848 million.

Sales(Millions of yen)

120,000

107,475

107,033

90,00060,00030,000
0

71st

72nd
IFRS

3

Coaxial Connectors
Coaxial connectors are a special type of high-performance connector used primarily for
Sales ratio

microwave and other high-frequency signals. Their applications include microwave

9.9%communications devices, satellite communications equipment, electronic measuring
instruments, or smartphones, switching and transmission equipment and other electronicequipment. Optical fiber connectors and coaxial switches are also included in this segment.
Segment sales for the year under review decreased 3.3% year on year to ¥12,303 million andoperating profit decreased 36.8% year on year to ¥1,207 million.

Sales(Millions of yen)

15,00012,723

12,303

10,000

5,000

0

71st

72nd
IFRS

Other Products

Sales ratio

3.8%

The other products segment includes micro switches and instruments for connectors.
Segment sales for the year under review decreased 10.7% year on year to ¥4,812 million and operating profit decreased 10.5% year on year to¥102 million.

Sales ratio

Sales

3.8%

(Millions of yen)

8,000
6,000

5,387

4,812

4,000
2,000
0

Sales

71st

72nd
IFRS

(Millions of yen)

8,000
6,000
4,000

5,387

4,812

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Consolidated Financial Statements
Consolidated Statements of Financial Position
Account item

(Millions of yen)

Current fiscal year

Previous fiscal year

As of March 31, 2019

As of March 31, 2018

AssetsCurrent assets

235,088

Consolidated Statements of Income
Account item

(Millions of yen)

Current fiscal year

Previous fiscal year

From April 1, 2018
to March 31, 2019

From April 1, 2017
to March 31, 2018

Sales

124,590

125,143

Cost of sales

69,972

67,357Gross profit

54,61857,78630,91429,214

Other income

496

494

Other expenses

1,043

1,002

Operating profit

23,15728,064

Finance income

1,527

905

Finance costs

13

954

Profit before tax

24,67128,015

Income tax expense

6,780

8,908

Profit attributable to owners ofparent17,891

19,107

247,716

Non-current assets

106,347

93,462

Total assets

341,435

341,178

Selling, general andadministrative expenses

Liabilities
Current liabilities

26,58528,564Non-current liabilities

7,520

7,895

Total liabilities

34,10536,459EquityShare capital

9,404

9,404

Capital surplus

11,314

11,674

Note: Amounts less than ¥1 million are rounded to the nearest million yen.

Consolidated Statements of Cash Flows
Account item

Retained earnings

303,349

334,505

Previous fiscal year

From April 1, 2018
to March 31, 2019

From April 1, 2017
to March 31, 2018

Operating activities

28,18230,561△23,213△58,316

Investing activities△31,154△31,425

6,476

7,452

Financing activities△14,298△11,839

Total equity attributableto owners of parent

307,330

304,719

52,322

69,396

Total equity

307,330

304,719

Total liabilities and equity

341,435

341,178

Treasury shares
Other components of equity

Note: Amounts less than ¥1 million are rounded to the nearest million yen.

5(Millions of yen)

Current fiscal year

Cash and cash equivalents, endof the year

Note: Amounts less than ¥1 million are rounded to the nearest million yen.
Transition to the International Financial Reporting Standards (IFRS)The Group adopted the International Financial Reporting Standards (IFRS) from the fiscal year ended March 31,
2019. “Sales” under IFRS is equivalent to “Net income” under Japanese GAAP. Items other than finance income/expenses that had been presented in “Non-operating income/expenses” and “Extraordinary income/losses”
under Japanese GAAP are now presented in “Other income/expenses” and included in operating profit or loss
under IFRS. As a result, the scope of operating profit is different between Japanese GAAP and IFRS.

Overview of Consolidated Statements of Financial Position

(Millions of yen)Previous fiscal year

Current fiscal year

Previous fiscal year

As of March 31, 2018

As of March 31, 2019

As of March 31, 2018

Total assets
Cash andcash equivalents
69,396

Trade andother receivables
31,502

341,178

Current
assets247,716

Total assets

341,435

235,088

Property, plantand equipment
62,745Intangible assets
2,267

Intangible assets
2,623

Non-current
assetsNon-current
assets93,462

106,347

Total liabilities
and equity

341,178

341,435

36,45934,105

Liabilities

Trade andother receivables
29,540Property, plantand equipment
56,203

Other financial
assets32,640

As of March 31, 2019

Total liabilities
and equity
Liabilities

Cash andcash equivalents
52,322Current
assetsCurrent fiscal year

EquityEquity304,719

307,330

Equityattributableto owners ofparent to total
assets ratio
89.3%

Other financial
assets38,596Equityattributableto owners ofparent to total
assets ratio
90.0%

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

Current fiscal year

From April 1, 2017
to March 31, 2018

From April 1, 2018
to March 31, 2019

Sales

Sales

125,143

124,590

23,157

Operatingprofit tosales ratio

22.4%

Profit attributableto owners of parent
19,107

Operating profit
28,064

Finance income Finance costs
1,527
13

Income tax expense
6,780

Operatingprofit tosales ratio

18.6%

Operating profit

Profit before tax
24,671

Profit attributableto owners of parent
17,891

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Introduction of Our New ProductsNew
products

The Company launches many new products every year into the market. The following product series are part of our recent introductions:

ZE064W Series
The ZE064W Series are connectors for waterproof interfaces that can be widelyused for eco-friendly cars, such as hybrid and electric vehicles, the demand forwhich is increasing worldwide. Connectors for automotive applications must beof high quality, and withstand vibrations and high temperatures. The ZE064W
Series are highly vibration proof connectors that can operate at hightemperatures up to 125°C and can be adopted for devices that are used underparticularly severe conditions, such as drive system devices. The ZE064W Series
has also achieved the difficult goal of combining high quality with reduced size
through structural optimization. These products have drawn high praise fromthe automotive industry, where demands for space and weight reduction are
increasingly strict.

BM46 Series
For 5G mobile communication devices, space saving and smaller internal parts
are crucial design concerns, not to mention the use of high-frequency bands
that can realize high-speed communications. The Company has developedboard-to-board connectors that can transmit multiple high-frequency RF signals(BM46 Series) for 5G mobile devices. This BM46 Series makes use of the design
and manufacturing know-how the Company developed with coaxial and boardto-board connectors on the consumer market to create products usable withhigh-frequency bands that are still miniaturized enough for use in mobile
devices. As a forerunner in the industry, the BM46 Series has already beenslated for adoption in many 5G mobile devices. The Company also plans to
expand the product lineup going forward to lead the growing 5G market.

7

FX26 Series

The FX26 Series are board-to-board connectors that have been developed
specially for the internal connections of drive system devices such as inverters
and motor controllers, which are key components of hybrid and electric vehicles.
Traditionally, board-to-cable connectors have been heavily used for internal
connections inside drive system devices. However, as production volume
increases, their difficult assembly and high cost have become an issue. The
FX26 Series have adopted a structure that can realize high reliability withfloating and vibration proof characteristics and thereby can replace board-tocable connectors to provide easier assembly and lower cost. They are also
notable for their space-saving design, with a 1 mm pitch, and heat resistance
up to 140°C, making them also excellent products in terms of design freedom.
As a result, many customers are using these products or inquiring about them.

SMP Series
The present evolution of wireless technology is promoting high-frequency
applications that can secure a broader bandwidth and enable high-speed
communications. In line with this technological trend, the Company has
developed small-size SMP connectors that can be used up to 40GHz for
millimeter-wave band (30GHz or more) applications. The SMP connectors arecompliant with MIL-SPEC, the standards for U.S. military use. These connectors
have adopted a push-on lock fitting method and are most suitable for highdensity mounting due to the ease of fitting.
Their applications include a wide range of fields such as high-speedtransmission equipment, wireless equipment, and measuring equipment.

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.

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

8

Corporate Data

Company Profile (As of March 31, 2019)

Stock Information (As of March 31, 2019)

Trade name

HIROSE ELECTRIC CO., LTD.

Total number of shares issued

Date of incorporation

June 15, 1948

Number of employees

Consolidated: 4,836 (excluding part-timers)(Excluding 2,050,423 shares of treasury shares)
Number of shareholders
4,128

Capital stock¥9‚404‚379‚401

Directors and Audit & Supervisory Board Members (As of June 27, 2019)
Kazunori Ishii
Mitsuo Nakamura
Director
Yukio Kiriya
Director
Hiroaki Okano
Director
Hiroshi Fukumoto
Director
Hiroshi SatohDirector
Sang-Yeob Lee
Outside Director
Kensuke Hotta
Outside Director
Tetsuji Motonaga(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

Major Shareholders (Top 10)
Name of shareholder

Senior Managing Director

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

Accounting Auditor

Number ofshares held

Ratio ofshareholding

Hundreds of shares%

JPMorgan Chase Bank 380055

38,216

10.48

State Street Bank and Trust Company 505223

31,6108.67

Hirose International Scholarship Foundation

31,476

8.63

Japan Trustee Services Bank, Ltd. (Trust Account No. 4)

20,857

5.72

The Master Trust Bank of Japan, Ltd. (Trust Account)

15,757

4.32

Japan Trustee Services Bank, Ltd. (Trust Account)

12,997

3.56

HS Kikaku Co., Ltd.

12,215

3.35

Mizuho Trust & Banking Co., Ltd. Trust Account 0700065

8,707

2.39

Mizuho Trust & Banking Co., Ltd. Trust Account 0700066

8,652

2.37

Japan Trustee Services Bank, Ltd. (Trust Account No. 5)

5,650

1.55

Note: ‌In addition to the 10 major shareholders above, the Company owns 20,504 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./3,386 persons
38,623 hundred shares (10.03%)
Financial institutions/48 persons
107,976 hundred shares (28.04%)
Securities companies/28 persons
4,321 hundred shares (1.12%)

KPMG AZSA LLC
Foreign corporations, etc./487 persons
177,480 hundred shares (46.08%)

9

36,462,729 shares

Other corporations/179 persons
56,729 hundred shares (14.73%)

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

The Company’s Web site

https://www.hirose.com/corporate/en/?lang=en[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.

10