SWCC SHOWA HOLDINGS CO., LTD.
Q2 Financial Results Briefing for the Fiscal Year Ending March 2023
November 9, 2022

Event Summary[Company Name]

SWCC SHOWA HOLDINGS CO., LTD.

[Company ID]

5805-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q2 Financial Results Briefing for the Fiscal Year Ending March 2023

[Fiscal Period]

FY2022 Q2[Date]

November 9, 2022

[Time]

10:00 – 11:03(Total: 63 minutes, Presentation: 41 minutes, Q&A: 22 minutes)[Venue]Webcast[Number of Speakers]

1
Takayo Hasegawa

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Presentation
Moderator: The time has arrived and we will now begin the Q2 financial results briefing of SWCC SHOWAHOLDINGS CO., LTD.
First, I would like to introduce the attendees. This is Takayo Hasegawa, President and Group CEO.
Hasegawa: My name is Hasegawa. Thank you for your time today.
Moderator: Ms. Hasegawa is an only attendee today.
We plan to end at 11:00 AM. Please note that all on-site participants are invited to exchange business cards
and greet each other after the briefing.
Now, Ms. Hasegawa, President, will give an explanation.
Hasegawa: Good morning, ladies and gentlemen. I am Hasegawa of SWCC SHOWA. Thank you very much fortaking time out of your busy schedules today to attend our Q2 financial results presentation.
As you have just been introduced, I would like to take some time to explain the financial results. Thank you
for your time today.
I will begin with an overview of the H1 financial results, and then I will discuss what we will do in H2 to achieve
our goals.
Last year, we launched our medium-term management plan, and this year is the first year of the plan. I would
like to touch some of the new things we are trying to achieve at the end of this presentation.

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First, I would like to explain the financial results for H1.
As you all know, the economic environment has been in the midst of the pandemic that seems to havesubsided a little, but the invasion of Ukraine by Russia in February has made the situation very unstable. As
the pandemic dawned, inflation increased and the yen depreciated significantly.
From our point of view, the depreciation of the yen has of course kept copper prices high, but the soaring
prices of petrochemical products and energy costs, which we will explain later, have also had an impact on
our business. This will continue in the future.
In this context, the environment for the electric wire business has not increased significantly. In thisenvironment, the automobile industry has been affected by the semiconductor problem, which has caused
automobile manufacturers to halt operations at their plants.
The other major issue for us was the impact of the lockdown in China, and our plant in the suburbs of Shanghai
was affected by it, and this has had various effects as topics.

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I would like you to see the numbers.
As you may have seen from the figures we announced on the 4th of last week, the automobile industry, inwhich we manufacture oxygen-free copper, which is used in car motors, has a certain characteristic, has been
affected considerably to slow operation in H1 of this fiscal year.
As a result, there was a considerable decrease in copper shipments. However, copper prices increased by anaverage of 10% compared to H1 of the previous fiscal year, so although there was a decrease in shipments,
net sales increased by 8%. Looking at operating income, we have disclosed an operating income of JPY4.3
billion, 14% decrease.
As for the volume of copper shipped, we have changed our business portfolio and have withdrawn some ofour copper cable products, which has resulted in a decrease in copper prices. Overall the automobile
environment affected us considerably.
If you look at the progress rate, the H1 progress rate is 41.8% in terms of operating income. Since most of ourwork is related to infrastructure, we generally work in H2, and H1 accounts for 35% to 40% of the total, andH2 is used to make up the rest. Despite the adverse effects of the economic environment, H1 of the fiscal year
has seen a steady accumulation of profits toward the target figures.

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4Next is the consolidated statement of income.
As you can see from these figures, we changed our full-year plan in September. Although we have raised net
income attributable to shareholders of the parent company as a result of the termination of the retirement
benefit trust agreement, we have not made any changes to that figure and have maintained the target value
as it is.
As I mentioned earlier, the progress rate for Q2 exceeded 40%, which is one of the guidelines, and as you cansee, H1 of the fiscal year went almost in order.

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Now please look at the change in sales from the same period last year.
As I mentioned earlier, the average copper price has increased by 10%, resulting in JPY9 billion increase insales. Excluding the impact of the copper price, the negative impact was seen in the electrical components &components business and automobile where the oxygen-free copper is mainstay.
The communication & industrial devices segment handles communication cables, wiring harnesses for home
appliances, and parts for copiers. Since last fiscal year, we have moved most of our production bases overseas.
We have moved them to China and Vietnam. With this moving, foreign exchange gains of JPY1.6 billion are
included here.
Looking at our earnings, the price hike of raw materials has pushed down our earnings by JPY1.3 billion. In
response, we have been raising our selling prices since early fall of last year to reflect the sharp rise in the costof materials and electricity, gas, and other power sources. We have been raising our prices since the last fall
while talking with customers. We are still working on it, and we have recovered JPY1.1 billion as a result of
these activities. There is a bit of a delay in the timing of the project, so we are a little short of the price of raw
materials, but we have recovered JPY1.1 billion, and we have also recovered JPY200 million through thestructural reforms that we have been carrying out since 2019.
As I mentioned earlier about our overseas business performance, our sales are JPY1.6 billion in foreignexchange gains, but the ratio of our overseas sales is approximately 10%. Looking at this, we do not have abusiness structure that is affected by the ups and downs of the exchange rate. Although there is a foreignexchange gain of about JPY40 million, it does not seem to push up or down the business performance.

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6Here are the earnings forecast by segment.
As I mentioned earlier, there have been various changes in the social environment, including relatively firm
domestic infrastructure, electrical equipment & components, where the automotive industry has largely
stopped, and telecommunications and industrial devices, where the impact of the lockdown in China has beensignificant. Based on this, we have carried forward a few profit targets for each segment.
The earnings target for the energy & infrastructure segment was JPY7.2 billion instead of JPY6.8 billion, forthe electronics & components segment JPY1.8 billion instead of JPY1.6 billion, and for the telecommunications& industrial devices segment JPY2.5 billion to JPY1.9 billion, which was a bit of a halt. However, the overall
impression is not that something has stopped significantly, so we have left the full-year earnings target as itis.

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I would like to explain in detail by segment.
First of all, our mainstay energy & infrastructure business has been steadily increasing sales and profits despite
the various circumstances. These sales include JPY4.1 billion of copper price effects.
As I mentioned earlier, the electric power business and the electric wire business for construction are not ina state of major fluctuation, and I believe that these businesses will generate solid earnings.
In the electrical equipment & components business, there are three major business segments within the subsegment we call "sub-segment". Oxygen-free copper called MiDIPR, dip-foaming for automobile, is shown as
deep green. As you can see, despite the rise in copper prices, sales have fallen so far, which shows how muchthe car related businesses has stopped.
However, as you can see from this business, the ratio of sales of general-purpose products has increased. Thisis due to the yen's depreciation and various supply chain disruptions in the pandemic, which have caused
customers to return to the domestic market and domestic procurement has increased significantly.
In addition, we have been reviewing our portfolio in this segment and have shifted our product lineup to highvalue-added products. Also we have made firm requests to our customers for price increases. Therefore wehave been able to increase the sales of general-purpose wires, which have not been profitable up to now, but
we have made some progress in this area.
As I mentioned earlier in the energy infrastructure section, the electric power industry is not doing so badly
in Japan, so electrical equipment & components that supply windings for electric power are now able tosupport the business. Although the operating profit margin is not as high as it should be, I believe that we are
becoming more profitable and is on the way to a profit structure that will allow it to secure a reasonable levelof profit.
I am a little late in saying this, but the impact of the copper price is included in the JPY4.6 billion in sales.

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Finally, we have telecommunication & industrial devices. This is a slight deviation from our original plan at the
beginning of the year, and I think this is something we need to reflect on.
In the last fiscal year, we consolidated three communication cable manufacturing sites into one in Sendai. We
planned to streamline the business and make it more profitable, but we were still a little late in launching the
new entity through the integration.
Since H1 is over and things have returned to normal after this summer, we expect that it will operate smoothly
through H2, but it is difficult to make up for the delay in H1. In these circumstances, sales and revenues are
up a bit from copper prices, but profitability is down.
As I mentioned earlier, the lockdown in the Shanghai area in China has had a significant impact. We also havea production base in Vietnam, but the lockdown in Vietnam took place in February, followed by a lockdown
in March, April, and May in the suburbs of Shanghai, which resulted in a temporary drop in the capacity
utilization rate.
Since the summer, we have been able to return to the budget in order. We are now approaching the fiscal
year budget, so we expect that we will be able to meet the schedule, although the fiscal year ends in Decemberin overseas business as they go with calendar year schedule. Even so, we are not sure that we will be able to
make up for the delay in H1 of the fiscal year, so we have taken a slightly stricter stance and lowered ourrevenue goal to JPY1.9 billion for the fiscal year.

This is the balance sheet.
As you can see from the figures in the balance sheet, inventories have increased a bit because of this highresource price. As for fixed assets, there is the issue of pension assets, which I mentioned earlier at the
beginning of this presentation, and here we see an increase of JPY2.6 billion.

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9With that, working capital has gone up a bit and interest-bearing debt has gone up. We have been making
steady progress in lowering this level, but now that we are at a standstill, we are now making a serious effort
to return to the rounds.

As a result, cash flow and operating cash flow are negative. As I mentioned earlier, we will solve this problem
in H2 of the fiscal year, and we, management team, is now working together to strengthen profitability andearn cash through various measures.
Capital expenditures have not changed so far. There have been some delays in receiving equipment, but for
the time being, there will be no changes.

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I would like to continue by introduce our initiatives for H2.
For H2 of the fiscal year, the figures disclosed at the beginning of the fiscal year remain unchanged. We aretargeting the same figures as presented at the beginning of the fiscal year, including net sales, operating
income, and dividends.

Let me talk a little bit about the increase or decrease for the full year.

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We believe that copper prices will remain high to some extent and maintain the current level. We expect thecopper price increase to have a positive impact of JPY15.7 billion on sales throughout the year.
Therefore, we are expecting sales increases of JPY6 billion in energy & infrastructure, JPY9 billion in electronics& components, and JPY700 million in communication & industrial devices from the impact of the copper price.
The electrical components & components business posted a large negative growth in H1 of the fiscal year,
and we expect that the negative growth of the previous fiscal year will not recover throughout the entire year.
Although there has been some movement currently, I believe that we need to take a very strict look at thesituation in order to be prepared for risks.
We are also expecting JPY4.5 billion increase in telecommunication & industrial devices, which is slightly
affected by foreign exchange rates, compared to the previous year.
Then profit. Operating income, as I mentioned earlier about the high cost of raw materials, is expected tohave an impact of JPY2.8 billion for the full year. I mentioned earlier that the impact in H1 was JPY1.3 billion.
In H2, raw material prices, including petrochemicals, are higher than in H1, and as you all know, electricity
costs have recently increased significantly as our production costs. We are currently estimating JPY2.8 billion,
including that area.
We expect JPY2.6 billion in profit to be secured through price pass-through and cost reductions. As I
mentioned earlier, it is not possible to immediately pass on the price. Since there will be a delay, it is notenough to meet the plan.
We are also considering a positive impact of JPY700 million due to structural reforms. As you can see here,
we established a sales company with Furukawa Electric, a company that manufactures construction wires
called SFCC, in FY2020 and this year we integrated our production lines with SFCC as part of the integrationof production and sales. This is from July. We have increased our shareholding ratio to 80%, and we expectthat this will have a positive effect, including the rationalization of manufacturing bases and distribution,
which we will begin to implement in earnest from now on.

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I would like to talk about each segment in detail. First, our mainstay, energy & infrastructure business.
SICONEX, which I have been explaining for some time, is a high-voltage power component used in substations.
This is a very unique and strong product that SICOPLUS, the business model that put SICONEX as a mainstay
including service, is taking a more than 70% of the substation market.
We are currently investing in increasing production and upgrading the plant at the Sagamihara Plant. It willtake the entire 2023, but we are making good progress here, and it is a pillar of our revenue.
Secondly, as I mentioned earlier, in the area of electric wires in the construction industry, we will move theproduction line for vinyl-insulated wires, known as IV, from Furukawa Electric's plant in Tochigi to our Ibaraki
plant, and transfer the production line there. Thereby it will increase the operating rate by 15% at the Ibaraki
plant and increasing profitability. The operation has already been running since October.
Also, I am sure you are all aware of the expansion of our semiconductor plant, which may be after the newyear rather than in H2. We are now working to establish an inventory system that will enable us to supply thevarious types of electric wires that are expected to be used there.
As you can see in the section on responding to price hikes, construction wire is a highly competitive field, but
we are continuing to ask our customers to understand passing on the price.
As I mentioned earlier, electric power infrastructure is a product in which we have a considerable advantage,or rather, is close to being a one-of-a-kind product, and we are in the process of gradually passing on the price.
In any case, this business is now a pillar of our business.

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Electrical equipment & components business.
As I mentioned earlier, this may have been a bit of a difficult year for us, where the amount of oxygen-freecopper has been falling due to automobile-related issues. The other processes, such as melting the copperand applying the coating over the copper, known as winding, use a lot of power. We are currently raising
prices with asking understanding from our customers.
Therefore, we have introduced a fuel surcharge system, which is based on fluctuations in the price of crudeoil, which in turn changes the price of electricity. Vanish is made out of similar raw material so we made atransparent and price fluctuating model in a way, and we are now promoting transparent price shifting withthe consent of our customers. This is something we have never attempted before, and we believe it
contributes to the bottom line of this business.
Also, as I mentioned at the beginning, we are changing our product portfolio, and we are adjusting our
production line while deciding which products are better to be manufactured by us and which to be made by
our subcontractors.
The trend toward EVs is a definite, and according to discussions I have had with various companies, they are
all making firm plans to launch EVs in 2025 or 2026. We would like to establish a line structure that will allow
us to follow this trend. It may seem strange to call this pinch as a good opportunity, but we are adjusting our
production lines while factory operation is slightly slow down. We have received inquiries for various products
related to in-vehicle applications, especially windings, wires for EV motors, etc. We are currently preparing
the structure of our production lines for these products.

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I would like to continue by talking about the expected decrease in automobile production in the electricalcomponents & components business.
When we spoke at this table before, I mentioned that I thought it would start to decrease in H2. However,looking at the current situation, the shortage of semiconductors is still continuing. As I mentioned earlier,since we are a copper manufacturer, we handle a considerable amount of upstream products, and even if
automobile manufacturers' plants start to operate, there are inventories in various places, and unless thoseinventories are adjusted to a certain level, it is difficult for us to ship upstream products.
The semiconductor problem seems to be lingering a little longer than expected. The current forecast is for aslow and gradual recovery till the end of this fiscal year and I think it will be difficult to see a quick return tonormal as initially anticipated. Some says that it is a pretty conservative forecast, however, this is our forecast
considering risks.

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Communication & industrial devices.
As I mentioned at the beginning of this presentation, we had some difficulties and delays in starting up the
production lines in Sendai, which were dispersed among many different concepts and consolidated into theplant.
We also had some difficulties in H1 due to supply chain problems in wire harnesses, and a slight drop in
production of precision devices and copier rollers due to semiconductor problems at our customers. However,since the situation has returned to normal, we expect that H2 of the fiscal year will be profitable as planned.

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16Third, I would like to talk about segment growth strategies and sustainability for the mid-term management
plan. First is the energy & infrastructure segment.
As I mentioned earlier, we are making steady progress here, and our business model, SICONEX and SICOPLUS,
which is our one-of-a-kind products, is steadily expanding.
As I mentioned earlier, we are increasing production at our plants, and we expect the market to continue togrow during the period of our mid-term plan and beyond. There are many factors to consider. Demand is
expected to grow in a variety of voltage classes, including renewal of aging facilities, investment in renewableenergy, upgrading and strengthening of substations, and strengthening of the power grid.
Then we foresee the labor shortage of electric construction worker. Last year, we proposed that we would
prepare an educational program called the Human Resource Development Center for construction and turnit into a business in a sense, and the people studying there are now in their third term.
The rest of our product line is easy for them to use. SICONEX is originally an easy-to-assemble component,
and we have also developed a skill-less connection method to enable those who learn at the center to perform
power installation in a simple manner.
It will take some time from now on, but we would like to take the people who have learned at the center andintegrate them into a cloud human resource center and dispatch them to our construction projects as well as
to our affiliated customers when they are short of construction staff. We would like to challenge in this area
as well.
Also, we are now focusing on robotization, for example, whether it is possible to automatically pull out aging
cables. We are now able to do such work to some extent, and development is progressing.
In any case, we are proud to say that this is a very unique initiative that will grow steadily.

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We also have a new construction wire company for energy infrastructure, which I mentioned earlier, which
was established as a joint venture with Furukawa Electric. We have 80% of share and the plant will beconcentrated at the Ibaraki to improve efficiency and profitability.

This business is not so much about profit margins but it is about capital efficiency which is not great, and it
has to carry a large amount of inventory. Until now, it has been viewed as an inefficient business because of
the need to carry inventories, especially copper. However, the market is not that volatile, and as a cash cow,
we believe that our business will improve if we can add DX to this market.
Until now, sales, manufacturing, and logistics were conducted in different departments and by different
companies, but now they are being connected by DX. We also have an AI team that can predict how muchproducts will sell, so we are currently working on ways to increase ROIC by making products based on suchpredictions, shortening lead times, and reducing inventory.
I mentioned earlier that the IV products manufactured at Furukawa have been transferred to the Ibaraki Plant,
but from now on, the process of drawing copper wire and processing it to a certain fineness for use in products,
which was previously done in Sendai, will now be brought to Ibaraki. We are planning to transform it into abusiness entity that contributes to the reduction of lead time, reduction of inventory, and improvement of
ROIC.

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A similar idea is also being used at electrical equipment & components. In the electrical equipment &components segment, we have oxygen-free copper, wires for automotive motors, and another wire for
automotive heaters. Heater wires are made of an alloy of copper and silver, and are manufactured at our
Sendai branch.
Even though we say Sendai branch, we have two plants now, and products are processed while moving backand forth between the two plants in Sendai. It is now being integrated into the Sendai Plant of the SWCC
SHOWA CABLE SYSTEMS。 This summer, we have a factory in Yamamoto-chow, and we are planning to bringin a more integrated production line from there so that we can produce all of our products here. This willcompress inventory by approximately 30%. As I mentioned earlier, copper and silver alloys are highly valued
even as inventory, so we are also trying to improve capital efficiency by reducing this kind of inventory.

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Next is about our overseas business.
As I mentioned earlier that it is about 10% of net sales but we are planning to grow this area more. We havebuilt a main plant for copier parts in Vietnam, and we have expanded that plant, but capital is stillconcentrated in China.
While we are also looking forward to China's economic growth, we must also take measures to deal withgeopolitical risks. We have an office in Shanghai, so we will change the governance system to one centeredon that office, and we will increase the ratio of local production for local consumption, which currently stands
at 74% to run our business within China.
Another thing is that it has been a long time since we have said “China plus one”, and we are planning toenhance our business in Vietnam. When think about various risks, we should make solid business plans about
China business which is centered within China, and a business other than China. We are now planning to invest
in our Vietnam business, especially in the wire harness for home appliances, in order to expand our overseas
operations in a slightly different way than we have in the past, while maintaining a good governance.

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On the topic of ESG, we issued an integrated report at the end of September about materiality. As you cansee in the report, we have established several themes in the materiality section, such as creating the future,
being friendly to the earth, living together, people shining, and becoming a better company. We have set KPIs,
target years and numerical targets, and are implementing measures to achieve them. We would like to reporton the rate of progress each year, so that everyone can see our direction and rate of progress based on thisapproach.

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CO2 reduction and decarbonization are also very important themes. We have been setting medium and longterm numerical targets for some time, with 25% reduction in 2025 compared to FY2013, and 35% reduction
by FY2030. Since we achieved the goal last fiscal year, we have raised our goal to a higher level.
We will reduce it 45% by 2025, and 50% by 2030 while introducing renewable energy resource to 30%. We
would like to continue to pursue environmentally friendly business practices, reduce CO2 emissions, andincrease the rate of renewable energy use as one of our major goals. I would like to continue to work towards
this goal.
This is all of our presentation this time but as I mentioned earlier, the business environment is changing at avery rapid pace. We will continue to watch closely as we take steps in advance to become a company that cangenerate solid earnings and make further contributions to the value of the Company and our shareholders. I
look forward to your continued guidance and encouragement.
Thank you very much. This concludes my explanation.

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Question & Answer
Moderator [M]: We will now move to the question and answer session.
We will first take questions from the audience. If anyone in the audience has any questions, please raise yourhand.
Hariya [Q]: My name is Hariya from Ichiyoshi Economic Research Institute. Two questions, please. I hope you
will allow me to ask one question at time.
The first question is about the roadmap for energy infrastructure and electric power infrastructure on page
20 of the document, which shows that the electric power market itself is growing at an annual rate of 5% to10%, and that SWCC SHOWA is aiming for 12% or even higher. The environment surrounding the electricity
market is quite fluid. There is of course the problem of nuclear power plants, the problem of power shortages,
the need to decarbonize, soaring electricity prices, and the fact that the major power companies are losing
money. I think there are quite a few variables that are unreadable in many ways and that we don't know what
will happen in the future. I wonder what kind of view you have to bring this number.
I would also be grateful if you could explain in a little more depth how confident you are in your ability tooutperform the market and the specifics of your SICOPLUS-centered approach. This is the first question.
Hasegawa [A]: Thank you.
As Mr. Hariya just mentioned, the electricity market is indeed affected by various factors, and I understandthat the mood toward renewable energy has been pushed back a little due to the recent energy shortage
caused by the operation of nuclear power plants. I understand that there are a number of things that are
happening.
However, in the case of our company, we do not build power grids by running long cables, but rather by
connecting substations to create connection points on the power grid. We are relatively strong because wehave a large share of this market, a shy of 25%, in the whole electric power market. In this context, whether
it is renewal of aging facilities, renewable energy, restart of nuclear power plants, or expansion of thermal
power generation, there will always be connection points. Rather than the market for long cables, I still believethat the market of connection point is quite stable while strengthening this area and changing over a certain
period of time.
In addition, in the area of electric power transmission, electric power companies have been talking about
consignment fees and revenue caps, so we believe that they are motivating to make solid plans for renewalof aging facilities and various other projects.
So, I think it is not such a big step back for this kind of investment, especially for investments centered onelectric power. We have been visiting various customers, making new proposals, and talking with them for along time, but I do not get the impression that there has been much backsliding.
Also, there are a few tricks in this one. The business model up to now has been centered on substations, which
is fine, but given the current demographic structure of Japan, there is a shortage of skilled construction
workers who can connect onsite. I am sure that a system that can secure these people, while still being
somewhat flexible, will be effective in the future. It is not uncommon to hear that there are no construction
hands even if there is work to be done.

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We are already in the third phase since we have established a center, and we can consolidate the construction
personnel using our products in a sort of cloud, which is available per request, and when there is demand
from customers or partner manufacturers, we will also use our products there.
We have a human resource business, a human resource development center, and we have also created asystem that allows learners to learn in a virtual reality environment using AVR. I believe that we can expand
our business into areas that are not simply SICONEX's business, and that this will be one of the ways where
we will outperform the competition.
Hariya [Q]: I understand. Thank you very much.
Second question. I would like to know about your image of group reorganization. As it happens, Furukawa
Electric announced yesterday that they are letting go of TOTOKU Electric Wire. In terms of a subsidiary, I thinkthat although you have done a lot of work, you have not yet reorganized them to make it simpler. What isyour vision for the Company as they change name next spring?
In addition, there are so many wire manufacturers in Japan, both large and small, more than I expect. As you
mentioned earlier that we want to make construction in general as a cash cow, and this is of course the mostcomplicated part, as it involves customers. In order to make it a cash cow, I think it is necessary to change thecurrent situation in some way. I would like to hear your thoughts in this area. Those two are my questions.
Hasegawa [A]: Thank you.
Since I took office in 2018, we have sold or closed businesses that were not profitable. As you can see fromour current profit structure, profitability has increased despite the fact that the top line has not risen. I thinkthat what we have done in the first phase of structural reform has resulted in the current figures, and that wehave finally become a company that can generate a certain level of earnings even if various things happen
during the pandemic, although it would be strange to say normal in a sense.
This is really the first phase. Next year, the three companies will merge to form an operating company
structure rather than a holding company, and in a sense, the main businesses will be gathered there.
As you pointed out, the cash cow is the best, but there are many different companies in the market, and theattractiveness of the market and the issue of price are complicated. However, we are assuming that demand
will gradually decline, and we still need to carry out structural reforms and other measures. We have not yet
given a definite answer as to whether this structural reform will be a reorganization as what you justmentioned.
However, no matter what happens, if we don't strengthen our own business, we will not be able to develop
it in the future. We will first consolidate the businesses in the form of SFCC.I think we will use the current
management approach to raise ROIC, increase profitability, and make that a strong business first, and thenthink about the future.
We have not been able to clearly state the nature of our new business, and we have received a number ofcomments about this. We are now thinking about various things such as the human resources project that I
mentioned as well as new business using new technology. We will disclose them as soon as they become
concrete.
I believe that by presenting a new corporate structure as firmly as possible, we will be able to make our various
stakeholders understand our ideas.
Hariya [M]: I understand. Thank you very much.
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24Moderator [M]: Any other questions from the audience?
Abe [Q]: I am Abe from Daiwa Securities. I would like to ask three questions.
First questions is about the impact of reduced automobile production. I think the downward revision wasmade to the assumption that the impact would continue until the end of the fiscal year, but I am a little
concerned that the impact may remain for the next fiscal year as well. I would like to ask one by one.
Hasegawa [A]: It is true that this start-up period is taking longer than expected. This is not to say that we havemade a downward revision to this business by this. While the volume of oxygen-free copper, one of ourvarious products, has decreased, we do not believe that this is a major decline in terms of our business outlook.
The economic environment and various other factors are involved, and we believe that we are now in aposition to generate a certain level of revenue even under such circumstances. We have reviewed our productportfolio, lowered our break-even point, and now had a structure that is profitable even in such a difficult
environment.
Therefore, I believe that the automobile industry will gradually increase in the future, and will return to thecurrent level in the next fiscal year, so that when that happens, we will be able to generate even greater
profits. In this sense, I believe that this business is now in a muscular structure that will generate even greater
revenues when that happens.
We are also developing various products such as motor windings using oxygen-free copper with higher added
value. I think we are now reviewing our business structure so that we can expand into higher value-added
products, rather than just selling copper.
Therefore, we do not think that the stagnation of oxygen free copper is a negative thing.

What I just mentioned is written in here, but we sell oxygen-free copper to coil manufacturers and motor
manufacturers. We also have a commercial distribution system in which we process and sell coiled wires forautomobiles, and although these are currently quite damaged, we have brought forward the shift to this side
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during the mid-term business plan. We are now able to move forward with development. In a way we were
given time to build muscular structure to transform our businesses. So I don't think the current situation isnegative in any way.
Abe [Q]: Thank you very much.
Second, I would like to know about the status of telecommunication & industrial devices. We have heard somevoices of declining demand, especially in Asia. Would you be able to tell us about harnesses and rollers fromyour point of view, even just your feeling of the current trends?
Hasegawa [A]: From our company's point of view, the home appliance business, in a sense, and the rollerbusiness, although they did come to a major halt after COVID-19, they have been recovering quite steadily
since H2, or rather, since H2 of the Japanese fiscal year, which is the Q4 of the overseas fiscal year. The
business has been recovering quite steadily.
After all, what had largely stopped has started to move after a certain period of time, so it is by no means bad
current situation. In terms of future trends, the data here is for 2019, before the pandemic, so I think this ismoderating a bit more. Since overseas demand is constant and home appliances are becoming newer andnewer, even if the increase is slightly slackened, I do not think it will have a big impact.
In the photocopier business, we have seen a one-time increase due to the progress of remote work trend,
and we are now at a stage where things are calming down a bit. I do not think that there has been much of adecline overall as we deal with not only general photocopier but high end models. As I said, customer shareis increasing at a certain rate, and I believe that we will be able to achieve the picture we have drawn in the
mid-term plan.
Abe [Q]: Thank you very much.
Lastly, I understand that you have updated your targets for renewable energy and CO2 reduction but as you
raise your targets, can you tell us about any improvements or reductions that will have a significant effect, or
any other measures that the President is expecting?
Hasegawa [A]: Thank you.
We have recently installed PPA at our Aichi Plant, and I believe that one of the measures we are taking is toincrease the introduction rate of renewable energy. We have been reducing CO2 emissions for a long timeand have already achieved more than half of the reduction.
In this context, we have already done a lot of things, such as energy-saving equipment. So one of the big things
there is to increase the rate of installation of renewable energy. The other thing I mentioned earlier is that
half of our electricity is used for copper casting and winding at the Mie Plant. With that in mind, I think we
can expect a significant improvement by converting that winding line, which is now heated by gas, toelectricity, and then using renewable energy for that electricity.
I am an engineer by nature, so I have many ideas for new power generation and other new technologies. I
would like to introduce such new technologies in the near future to achieve further reductions in energy
consumption but it is not easy to get done by us only. We would like to take on the challenge of introducing
new technologies and energy sources while taking into account future technological trends.
Abe [M]: I understand very well. Thank you very much.

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26Moderator [Q]: It will be time soon, but we have received questions from the website, so I will introduce
them. This question is from Mr. Nakanishi of Iyasaka Asset Management.
Regarding the H1 results for telecommunication & industrial devices, what was the amount affected by the
lockdown in China and the trouble in consolidating bases? Since operating income for H1 is JPY500 million
and the plan for H2 is JPY1.4 billion, can we assume that JPY900 million is the amount of the temporary
downward impact on profits?
Hasegawa [A]: Our initial profit target for telecom and industrial devices is JPY2.5 billion. And since this review
is for JPY1.9 billion, we hope you will consider the difference as having been lost in H1.
Both COVID-19 related and the delay in the start-up of the consolidated plant are temporary, and will basically
return once the consolidation is completed. Looking at earnings trends in H2 and at the end of H1, we havealmost recovered, so we do not think that our earnings target will be further damaged.
Moderator [M]: Thank you very much. Now that we have reached the time, we end the question and answer
session. This concludes the Q2 financial results presentation of SWCC SHOWA HOLDINGS CO., LTD. Thank youvery much for taking time out of your busy schedule to join us today.
Hasegawa [M]: Thank you very much.
[END]______________
Document Notes
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TollfreePortions of the document where the audio is unclear are marked with [Inaudible].
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides ananswer from the Company, or [M] neither asks nor answers a question.
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