〈1〉Financial Results Presentation Material

Direction ofMedium-term Growth Strategy

2016, May 10th2016
Hirose Electric Co.,Ltd.
PresidentPid t
Kazunori Ishii

〈2〉Cautionary Statement
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 to differ
materially fromf
those discussed in the forward-looking
fstatements. Thank you for your understanding.

Hirose : Growth image〈3〉

Maintain high profit management and grow sales in the medium
medium-termterm
ActualForec
ast

Future Direction(hundred million yen / fiscal year)

1,250(959Sales948)

2016 decrease but bottom out for continuous added-value growthHirose: Application image
Office machinery〈4〉

New market

New mobile phone
2015
Automotive

Inner: FY2015
Outer: FY2020

Consumer
2020
CommunicationIndustrial

 Slowdown in smartphonepgrowth and expansion of new
information terminal(See P
P.5,65 6 for more) Accelerating preparation fornext core business Double-wheeled growth plan smartphone + consumer“smartphoneconsumer”
and “automotive/industrial +infrastructure”(See P.7,8P 7 8 fore more)

Accelerate medium-term management and grow continuouslyProduction trend of smartphone〈5〉■Smartphone
Smartphone which had continued double-digit
double digit growth will slow down to single-digit
single digit after
2016, but is still expected to increase by tens of millions unit per year.
(hundred million yen / year)
25[Production trend forecast of smartphone/mobile phone]73%

2015105

14.6

15.0

16.0

17.0

60% 4.6
46%
6.4
8.1
9.8
29%
33% 44%
39%
12.4
15%
9.6
6.9
4.884%

17.1
2.8

14.3

86%

17 7
17.7
2.4

15.3
7%

15%

88%

18.4
2.2

90%

18.9
1.991%

19.4
17
1.7

100%
92%

19.8
16
1.680%

60%

16.2
6%

17.0

17.7

18.2

40%
20%

5%

4%

3%

00%
2011

2012

スマートフォン
Smartphone

2013

2014

フィーチャーフォン
Feature phone

2015

2016

2017

2018

Smartphone YoY growth ratio (right
スマートフォン対前年⽐成⻑率(右軸)
axis)

2019

2020

Smartphone ratio (right axis)
スマートフォン⽐率(右軸)Source: HRS estimation

Smartphone market will continue mild growthExpansion of new information terminal market〈6〉■ Real cloud society will arrive
arrive, with each wearable device and IoT module connecting
internet by communication function devices with smartphone, tablet etc. as host device
Head mounted display

Smart glass

Smart watch

Activity tracker

Cloud*Wristband-typeDrone

Action camera

Communication robot

Information terminal connected to internet will become more various
various, and smallerand space-saving connectors will be needed(Smartphone market product use will enhance)

IoT to each market〈7〉■ New productproduct, service
service, system utilizing IoT will spread to various market

Consumer
Smart HouseAutomotive/Bicycle
Smart Mobility

Information /Communication
infrastructure

Manufacturing/Factory
Smart Factory(Industrie 4.0 etc)

Medical equipment
Smart Network

Smart Medical

New connector needs will arise in many market

Hirose : Application strategy image〈8〉■ Basic direction《Synergy effect》

Smart Network

High spec & quality capabilities

dustriallIndinfrasttructure
e&Autoomotivve

Connsumerr
marketCost & Speed capabilities

G-WING(Hirose Medium-term vision)[Consumer] & [Automotive, Industrial infrastructure]
Double-wheels of continuous growth!

Hirose : Strategic investment for the future〈9〉“Key trend” : “IoT (Connecting to everything)” “Cloud” “ECO”“Key technology” : Enhance “High speed”, “High-frequency”, “High-power”, “Smaller”
Strategicg investment
Technology development◆High speed, high-frequency
transmission technology◆Large current, environment resistanttechnology◆Mold processing, plating technology

Factory / Equipment

IT infrastructure◆Reinforce domestic/overseas factory◆Reinforce each main system◆Ultraprecise process equipment◆Enrich communication system◆Testing/assessment facility forautomotive / industrial◆Equip decision-making supportsystem

Hirose : Growth investment and Shareholder return〈10〉

We will use cash pprioritizingg investment based on mediumterm growth strategy and then aim for better shareholder
returnGrowth investment
R&D investment(Technology for high-speed
high speed transmission,transmission high current,current etc)

Factory / equipment investment((New factoryy of Hirose Korea,, enhance testingg facility,y, etc))

ＩＴ investment

Sh h ld return
Shareholdert
1. More active dividend
Utilized cashwith good
Raise dividend payout ratio tobalance

approximately 40%(Accumulated dividend payout ratio from FY2011
to FY2015 was 35.0%)

2. Continue share buyback（Backbone global expansion, strengthen informationalcommunicationi ti etc)t )M&A / Partnership(Enhance existing business, commence new business,collaborate with other companies, etc)

Aim for better total shareholder return(Accumulated total shareholder return ratio
fromFY2011 toFY2015 was 62.4%)

By “growing profit and improving to appropriate shareholders’ equity”,
we aim to return to over 8% ROE on and after FY2018!

[Appendix]

500

Dividend per share/Payout ratio/Return ratio of last 5 years(2011-2015)

(Yen)

77.1%

Accumulated 5 years total shareholder
return ratio: 62.4%

60.7%
400

300

200

35.5%

41.9%

46.7%

35.9%

34.2%
230

AccumulatedA
l d 5 years dividend
di id dpayout ratio: 35.0%

130

30.6%
200

85.6%

〈11〉

100.0%

50.0%

40.2%
240

0 0%
0.0%

140
-50.0%

1000-100.0%
100.0%
(FY)

2011

2012

2013

2014

2015

〈12〉

<<<New fiscal year: FY2016>>>

AAccomplish
li h “G“G-WING”!!
WING”!!
-This will be the starting year ofHirose s forthcoming launch and jump”
jump “Hirose’s