70th Fiscal Term

Annual Report

From April 1, 2016 to March 31, 2017

To Our Shareholders

Business Overview
During the fiscal year ended March 31, 2017, the Japanese economy
remained on a moderate recovery trend thanks to such factors as the
improved employment and income environments and monetaryeasing while earnings of exporting companies were significantly
affected by the rapid appreciation of the yen started from thebeginning of 2016.
Overseas, the future prospect has been uncertain due partly toeconomic growth slowdown in China and emerging economies andincreasing sense of cautions for various geopolitical risks.
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

Kazunori Ishii

high-value-added products in the pursuit of swifter responses to

President and Representative Director

increasingly sophisticated market needs. However, due to the impact

We are pleased to report the results of operations for fiscal 2016, theyear ended March 31, 2017 (the 70th fiscal term, from April 1, 2016
to March 31, 2017).

of the strong yen, consolidated net sales for the year under review
amounted to ¥115,103 million, a decrease of 4.3% year on year.
Operating profit decreased 1.1% year on year to ¥28,482 million,

Financial Highlights■ Net sales■ Ordinary profit

Millions of yen
140,000

Millions of yen
124,987

125,726

120,000
100,000■ Profit attributable to owners of parent
Millions of yen

40,000120,284

34,747

115,103

30,51630,00095,93825,00034,962
29,79967th

68th

21,104

21,35615,00069th

70th

13,50820,00060,00010,00040,00010,0005,000

20,0000fiscal term
66th

122,948

20,00022,38680,00022,439

67th

68th

69th

70th

0

fiscal term
66th

67th

68th

69th

70th

0

fiscal term
66th

ordinary profit decreased 2.3% year on year to ¥29,799 million andIn this business environment, the Group intends to pursue leading-

profit attributable to owners of parent increased 1.2% year on year

edge technologies, conduct more efficient distribution andto ¥21,356 million.

concentration of resources and consistently carry out reforms andWith regard to the management environment in which the Groupinnovations. Such aggressive initiatives also include the reinforcement

operates, the Japanese economy remained on a moderate recoveryof high-value-added product development capabilities to meet

trend thanks to such factors as the improved employment andmarket needs, the promotion of manufacturing efficiency and further

income environments and monetary easing while earnings ofimprovement of product quality, all of which would serve to improveexporting companies were significantly affected by the rapid

our cost competitiveness. At the same time, we will work to promote

appreciation of the yen started from the beginning of 2016.

globalization with an eye to dispersing risk across production bases

Overseas, the future prospect has been uncertain due partly toand growing and expanding our businesses going forward, develop

economic growth slowdown in China and emerging economies anddomestic and overseas sales channels, and strengthen ourincreasing sense of cautions for various geopolitical risks.

management foundations toward profitable growth in an effort toThe Group will focus on further sales growth in the automobile field

improve our corporate value.

along with an expansion in automotive electronics, and the growthof the industrial machinery/equipment and communications

We look forward to your continued support and encouragement.

equipment fields. We will also focus on maintaining and expanding
our mass production businesses for smartphones, etc., where furtherJune 2017

Kazunori Ishii

price competition is expected to be driven by consumers’ preferences

President and Representative Director

for lower-priced products.

■ Basic earnings per share■ Equity ratio & Ordinary profit ratio to net sales

Yen%800100652.68400YenOrdinary profit ratio to net sales

300

90674.25
596.31600

Equity ratio■ Dividends per share

611.81

250

807020060

390.48

50

150

4020
fiscal term
66th

67th

68th

69th

70th

240

69th

70th

140

50

100240

100

30

200

230
200

0

fiscal term
66th

67th

68th

69th

70th

0

fiscal term
66th

67th

68th

2

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 ratioincluding 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.
83.6%

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.
Consolidated segment net sales for the year under review decreased 2.3% year on year to¥96,256 million and operating profit increased 1.2% year on year to ¥26,128 million due to theNet sales

impact of the strong yen.
(Millions of yen)

120,000
98,55596,25669th

70th

90,00060,00030,00003fiscal termCoaxial Connectors
Coaxial connectors are a special type of high-performance connector used primarily for
microwave and other high-frequency signals. Their applications include microwave

Sales ratio

communications devices, satellite communications equipment, electronic measuring instruments,

10.6%

or smartphones, mobile phones, switching and transmission equipment and other electronicequipment. Optical fiber connectors and coaxial switches are also included in this segment.
Consolidated segment net sales for the year under review decreased 11.6% year on year to¥12,226 million and operating profit decreased 17.4% year on year to ¥2,087 million.
Net sales(Millions of yen)

20,00015,00013,82912,226

10,000
5,000
0

69th

70th

fiscal term

Other Products
Sales ratio
5.8%
The other products segment includes medical electronics and health equipment such as interference wave EMSs, micro switches andinstruments for connectors.
Consolidated segment net sales for the year under review decreased 16.2% year on year to ¥6,619 million and operating profit decreased
39.7% year on year to ¥266 million.

Sales ratio

Net sales

5.8%(Millions of yen)

10,000
7,500

7,900
6,619

5,000
2,500
0

69th

70th

fiscal term

Net sales(Millions of yen)

10,000
7,500

4

7,900
6,619

Consolidated Financial Statements
Consolidated Balance Sheets
Account item

(Millions of yen)
Current fiscal year

Previous fiscal year

As of March 31, 2017

As of March 31, 2016(Assets)

Consolidated Statements of Income
Account item

(Millions of yen)

Current fiscal year

Previous fiscal year

From April 1, 2016
to March 31, 2017

From April 1, 2015
to March 31, 2016

Net sales

115,103120,284

Current assets

252,709

235,308

Cost of sales

61,097

65,839Non-current assets

73,987

81,287Gross profit

54,00554,444

Total assets

326,696316,595

25,52225,650Operating profit

28,482

28,794

Ordinary profit

29,79930,516

Profit before income taxes

29,33630,527

Income taxes

7,980

9,423

Profit attributable to owners ofparent21,356

21,104(Liabilities)
Current liabilities

23,471

23,467

Non-current liabilities

6,931

7,298

Total liabilities

30,40230,765(Net assets)
Shareholders’ equity

283,217272,599

Capital stock

9,404

9,404

Capital surplus

11,223

11,116

Retained earnings

321,493308,530

Treasury shares△58,903△56,450

12,721

12,850354

Total net assets
Total liabilities and net assets

Selling, general andadministrative expenses

Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Cash Flows

Accumulated othercomprehensive income

Previous fiscal year

From April 1, 2016
to March 31, 2017

From April 1, 2015
to March 31, 2016

Operating activities

28,09336,037379

Investing activities△10,585

2,623

296,293285,830

Financing activities△10,798△17,917

326,696316,595

Cash and cash equivalents, endof the year

81,88475,392

Subscription rights to shares

Note: Amounts less than ¥1 million are truncated.

5Account item

(Millions of yen)

Current fiscal year

Note: Amounts less than ¥1 million are truncated.

Overview of Consolidated Balance Sheets

(Millions of yen)Previous fiscal year

Current fiscal year

Previous fiscal year

As of March 31, 2016

As of March 31, 2017

As of March 31, 2016

Total assets

316,595

Cash and deposits
164,746

Notes andaccounts
receivable - trade27,343Current
assets235,308

Total liabilities
and net assets

Total assets

326,696

Cash and deposits
185,247

Notes andaccounts
receivable - trade
28,485Current
assets252,709

Property, plantand equipment
36,697

Property, plantand equipment
44,027

Intangible assets
1,339

Intangible assets
1,565

Non-current
assetsInvestments andother assets
43,24981,287

Non-current
assetsInvestments andother assets
28,39473,987

Current liabilities
23,467
Non-current
liabilities
7,298
Shareholders’equity272,599
Accumulated othercomprehensive
income12,850316,595
Liabilities

30,765Equity ratio
90.2%

Non-operating income
1,683

Ordinary profit
30,516

Shareholders’equity283,217
Accumulated othercomprehensive
income12,721

Income taxes–current 7,849
Income taxes–deferred 130

115,10328,482

Operating profit
28,794Non-current
liabilities
6,931(Millions of yen)

Net salesOrdinary
profit ratio
to net sales

25.9%

Current liabilities
23,471Equity ratio
90.6%

From April 1, 2016
to March 31, 2017

25.4%

30,402

Net assets

Current fiscal year

Profit attributableto owners of parent
21,104

Liabilities

296,293

From April 1, 2015
to March 31, 2016

Ordinary
profit ratio
to net sales

326,696

Net assets

Previous fiscal year

120,284

As of March 31, 2017
Total liabilities
and net assets

285,830

Overview of Consolidated Statements of IncomeNet sales

Current fiscal year

Ordinary profit
29,799Non-operating expenses
366Operating profit

Profit attributableto owners of parent
21,356
Profit before income taxes
29,336Extraordinary losses
463

6Introduction of Our New Products

Newproducts

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

EF2 Series
The EF2 series are power in-line spring-structured terminal blocks that use anew connection method which does not use screws. A spring structure and asingle action positive lock structure are adopted for the connection.
Because screws are not used, the number of processes required for screw
tightening and additional tightening of loosened screws at the time ofconstruction and maintenance is cut and the hours required for operations arereduced. In addition, torque management has become unnecessary and acertain degree of connection quality is secured irrespective of operators’ skilllevels. The number of work processes related to screws at the time of annual/monthly inspections of buildings, etc., such as additional tightening of them canbe cut and thus the maintenance cost is expected to be reduced. Furthermore, it
is possible to “prevent unforeseen fire accidents” caused by loosened screws.
Currently, products that support three types of current capacity ((i) 94~175A, (ii)
310A and (iii) 400A) are placed on the market.

FH64MA Series
More and more smartphones and wearable devices are becoming thinner, andthe electronic components mounted on those devices are required to get eventhinner. Displays in particular require the component products to have theheight at the 0.5 mm level.
On the other hand, there is an issue of the worsened operability when electroniccomponents get lower. On this front, the recently developed FH64MA series
have achieved more smooth insertion of flexible printed circuit boards (FPCs)
and the retention force for FPCs, although being space-saving and achieving
the height at the lowest level in the world.

7FX27 Series

The FX27 series are board-to-board connectors developed mainly for use inbase transmission stations and other communications equipment and industrialequipment. Generally, board-to-board connectors use two types of shape,
namely male and female connectors, for connection. Boards for communications
equipment and industrial equipment have had many different heights
depending on the application, and so far, it has been necessary to have a
product lineup with various heights.
The FX27 series have a structure with new concepts in which two connectors of
the same kind are in-lined by a “joint board,” which allows for the use of only
one type of connector. The difference in heights can be easily dealt with bychanging the “joint board.” In addition, the connector has floating which
absorbs the mounting tolerance of connectors and makes it possible to mount a
multiple number of connectors on one board.
The structure with these new concepts makes the designing of boards andstructures of equipment easier.

ZE05 Series
Small connectors (0.5 sq.mm) for engine control units (ECUs) have beendeveloped, which can be used for next generation automobiles like hybrid
vehicles and electric vehicles (EVs).
Demand for smaller ECUs and mounting of inverters on engines is going to be
the technological trend in the future and it is necessitated to achieve greater
heat resistance and anti-vibration performance than before.
In order to meet the needs, the Company has newly developed its proprietary
technology to counter vibrations and heat and launched the connectors that canwithstand 125°C and 30 G (waterproof). The Company plans to increase thenumber of poles and variations so as to meet the market needs.

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 Branch
Chubu Sales Office

Kitakanto Sales Office◎Overseas bases
HIROSE ELECTRIC EUROPE B.V.
HIROSE ELECTRIC (SHANGHAI) CO., LTD.
HIROSE ELECTRIC (SUZHOU) CO., LTD.

HIROSE KOREA CO., LTD.

HIROSE ELECTRIC (DONGGUAN) CO., LTD.
HIROSE ELECTRIC (U.S.A.), INC.

HIROSE ELECTRIC TECHNOLOGIES (SHENZHEN) CO., LTD.
HIROSE ELECTRIC MALAYSIA SDN. BHD.

HIROSE ELECTRIC TAIWAN CO., LTD.
HIROSE ELECTRIC SINGAPORE PTE. LTD.

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

8Corporate Data

Company Profile (As of March 31, 2017)

Stock Information (As of March 31, 2017)

Trade name

HIROSE ELECTRIC CO., LTD.

Total number of shares issued

Date of incorporation

June 15, 1948

Number of employees

4‚319 (excluding part-timers)(Excluding 5,224,434 shares of treasury shares)
Number of shareholders
3,519

Capital stock¥9‚404‚379‚401

Directors and Audit & Supervisory Board Members (As of June 27, 2017)
Kazunori Ishii
Mitsuo Nakamura
Managing Director
Makoto Kondo
Director
Kazuyuki Iizuka
Director
Hiroaki Okano
Director
Yukio Kiriya
Outside Director
Kensuke Hotta
Outside Director
Tetsuji Motonaga(Standing) Audit & Supervisory Board Member Yoshikazu Chiba
Outside Audit & Supervisory Board MemberTerukazu Sugishima
Outside Audit & Supervisory Board Member
Akira Seshimo
Outside Audit & Supervisory Board Member
Kentaro Miura
President and Representative Director

Major Shareholders (Top 10)
Name of shareholder

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, Akira Seshimo
and Kentaro Miura are 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%

State Street Bank and Trust Company

37,336

10.73

Hirose International Scholarship Foundation

29,977

8.61

State Street Bank and Trust Company 505223

27,657

7.94

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

19,077

5.48

HS Kikaku Co., Ltd.

11,633

3.34

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

11,123

3.19

Japan Trustee Services Bank, Ltd. (Trust Account)

10,537

3.02

Mizuho Trust & Banking Co., Ltd. Trust Account 0700046

8,292

2.38

Mizuho Trust & Banking Co., Ltd. Trust Account 0700047

8,240

2.36

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

5,937

1.70

Note: ‌In addition to the 10 major shareholders above, the Company owns 52,244 hundred
shares of treasury shares. The ratio of shareholding is calculated after excluding treasuryshares.

Distribution of Shares
Distribution of Shares by Shareholder Type
Individuals, etc./2,823 persons
68,839 hundred shares (17.20%)

Financial institutions/54 persons
101,477 hundred shares (25.35%)

Securities companies/28 persons
3,794 hundred shares (0.95%)

KPMG AZSA LLC
Foreign corporations, etc./456 persons
172,241 hundred shares (43.04%)

934,796,302 shares

Other corporations/158 persons
53,856 hundred shares (13.46%)

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 publicnotice.)[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 whereshareholders have their accounts. Shareholders who do not have accounts at securities companies
are requested to call the telephone number as stated below.

The Company’s Web site

https://www.hirose.com/

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:

http://www.smtb.jp/personal/agency/index.html[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 “specialaccount”) 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