71

st Fiscal Term

Annual Report

From April 1, 2017 to March 31, 2018

To Our Shareholders

Kazunori Ishii
President and Representative Director

We are pleased to report the results of operations for fiscal 2017, theyear ended March 31, 2018 (the 71st fiscal term, from April 1, 2017
to March 31, 2018).

Business Overview
During the fiscal year ended March 31, 2018, the Japanese economy
followed a moderate recovery trend thanks to such factors as the
improved employment environment, increase in exports and firm
capital expenditures.
Even overseas, the U.S., European and Chinese economies
remained firm despite sense of cautions for 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
high-value-added products in the pursuit of swifter responses toincreasingly sophisticated market needs. In the fourth quarter,
however, the Group was impacted by a slowdown in the smartphonebusiness and the strong yen.
As a result, consolidated net sales for the year under review
amounted to ¥125,280 million, an increase of 8.8% year on year.
Operating profit increased 0.6% year on year to ¥28,649 million,
ordinary profit decreased 1.9% year on year to ¥29,234 million andprofit attributable to owners of parent decreased 8.6% year on yearto ¥19,526 million.
The Company posted a currently projected ¥798 million in income
taxes as “income taxes for prior periods” because there is a greater

Financial Highlights■ Net sales■ Ordinary profit

Millions of yen
140,000

124,987■ Profit attributable to owners of parent

Millions of yen
125,726

120,000

120,284

115,103

40,000125,280

34,747

Millions of yen

30,51630,000100,000

25,00034,962
29,79922,948
21,104

21,35669th

70th

20,00029,234

19,52615,00080,00020,00060,00010,00040,00010,0005,000

20,0000fiscal term
67th

1

22,439

68th

69th

70th

71st

0

fiscal term
67th

68th

69th

70th

71st

0

fiscal term
67th

68th

71st

probability that the Tokyo Regional Taxation Bureau will issue awritten notice of reassessment based on transfer pricing taxation
related to inventory exports from the Company to its consolidated
subsidiary HIROSE KOREA CO., LTD. The Company works toundertake management that always stresses compliance and adheresto the taxation system in all the countries that it operates in. The
Company considers the transactions that were pointed out this time
were legitimate, and if a formal written notice of reassessment isreceived in the future, the Company will respond in an appropriatemanner, such as filing an objection.
With regard to the management environment in which the Group
operates, the Japanese economy will maintain a recovery trend forreasons including an increase in exports and greater labor-saving
investments due to labor shortages, but conditions are expected to
be uncertain on account of exchange rate fluctuations and rising raw
material prices, etc.
Overseas, although the U.S. and European economies remainstrong, it is expected that the future prospect will remain uncertain
due partly to increasing sense of cautions for various geopoliticalrisks and concerns about trade friction between the U.S. and China.
The Group will focus on further sales growth in the automobile
field along with an expansion in automotive electronics, and thegrowth of the industrial machinery/equipment and communications■ Basic earnings per share
Yen

%
100
652.68

We look forward to your continued support and encouragement.
June 2018

Kazunori Ishii

President and Representative Director■ Equity ratio & Ordinary profit ratio to net sales

800

Equity ratio■ Dividends per share

Ordinary profit ratio to net sales

Yen
480

500

90

674.25596.31600

equipment fields. We will also focus on maintaining and expanding
our mass production businesses for smartphones, etc., where further
price competition is expected to be driven by consumers’ preferences
for lower-priced products.
In this business environment, the Group intends to pursue leadingedge 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.

611.8180

560.87

400

70
60

400

300

50
200

40

200

230

240

240

68th

69th

70th

30

200

100

20
10

0

fiscal term
67th

68th

69th

70th

71st

0

fiscal term
67th

68th

69th

70th

71st

0

fiscal term
67th

71st

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 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.
85.5%

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 increased 11.3% year on year to¥107,153 million and operating profit increased 1.1% year on year to ¥26,407 million.

Net sales(Millions of yen)

120,000
90,00096,256

107,153

60,00030,000
0

3

70th

71st

fiscal 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,

10.2%

or smartphones, switching and transmission equipment and other electronic equipment. Opticalfiber connectors and coaxial switches are also included in this segment.
Consolidated segment net sales for the year under review increased 4.1% year on year to¥12,731 million and operating profit decreased 0.3% year on year to ¥2,081 million.
Net sales(Millions of yen)

15,00012,226

12,731

70th

71st

10,0005,000

0fiscal term

Other Products
Sales ratio
4.3%
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 18.5% year on year to ¥5,395 million and operating profit decreased
39.4% year on year to ¥161 million.

Sales ratio

Net sales

4.3%(Millions of yen)

8,000
6,619
6,000

5,395

4,000
2,000
0

70th

71st

fiscal term

Net sales(Millions of yen)

8,000

4

6,619
6,000

5,395

Consolidated Financial Statements
Consolidated Balance Sheets
Account item

(Millions of yen)
Current fiscal year

Previous fiscal year

As of March 31, 2018

As of March 31, 2017

AssetsConsolidated Statements of Income
Account item

(Millions of yen)

Current fiscal year

Previous fiscal year

From April 1, 2017
to March 31, 2018

From April 1, 2016
to March 31, 2017

Net sales

125,280

115,103

Current assets

251,113

252,709

Cost of sales

67,50961,097

Non-current assets

88,34473,987Gross profit

57,77154,005

Total assets

339,458

326,696

29,121

25,522

Operating profit

28,64928,482

Ordinary profit

29,23429,799Profit before income taxes

28,392

29,336

Income taxes

8,865

7,980

Profit attributable to owners ofparent19,526

21,356

Liabilities
Current liabilities

28,22923,471

Non-current liabilities

7,445

6,931

Total liabilities

35,67530,402

Net assets
Shareholders’ equity

291,040

283,217

Capital stock

9,404

9,404

Capital surplus

11,463

11,223Retained earnings

328,489

321,493

Selling, general andadministrative expenses

Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Cash Flows△58,316△58,903

Accumulated othercomprehensive income

12,531

12,721

Share acquisition rights

210

Total net assets
Total liabilities and net assets

Treasury shares

Previous fiscal year

From April 1, 2017
to March 31, 2018

From April 1, 2016
to March 31, 2017

Operating activities

29,28928,093354

Investing activities△30,078△10,585

303,783

296,293

Financing activities△11,839△10,798

339,458

326,696

Cash and cash equivalents, endof the year

69,32381,884

Note: Amounts less than ¥1 million are truncated.

5

Account item

(Millions of yen)

Current fiscal year

Note: Amounts less than ¥1 million are truncated.

Overview of Consolidated Balance SheetsPrevious fiscal year
As of March 31, 2017
Total assets

326,696

Cash and deposits
185,247

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

Property, plantand equipment
44,027
Intangible assets
1,565

Non-current
assetsInvestments andother assets
28,39473,987(Millions of yen)

Current fiscal year

Previous fiscal year

As of March 31, 2018

As of March 31, 2017

Total assets

339,458

Cash and deposits
186,566

Notes andaccounts
receivable - trade29,998Current
assets

251,113

Property, plantand equipment
52,036
Intangible assets
1,897

Non-current
assetsInvestments andother assets
34,41088,344

From April 1, 2016
to March 31, 2017

As of March 31, 2018

Total liabilities
and net assets

Total liabilities
and net assets

Current liabilities
23,471

326,696

Liabilities

Non-current
liabilities
6,931

30,402

Shareholders’equity283,217
Accumulated othercomprehensive
income12,721

Liabilities

339,458
35,675

Net assets

Net assets

296,293

303,783

Equity ratio
90.6%

Current liabilities
28,229Non-current
liabilities
7,445

Shareholders’equity291,040
Accumulated othercomprehensive
income12,531Equity ratio
89.4%

Overview of Consolidated Statements of IncomePrevious fiscal year

Current fiscal year

(Millions of yen)

Current fiscal year
From April 1, 2017
to March 31, 2018

Net sales

Net sales
115,103

Income taxes–current 8,955
Income taxes–deferred △90125,280
Non-operating income
1,768
28,649Ordinary
profit ratio
to net sales

25.9%
Operating profit
28,482

Profit attributableto owners of parent
21,356
Ordinary profit
29,799Ordinary
profit ratio
to net sales

23.3%

Ordinary profit
29,234Non-operating expenses
1,184
Operating profit

Profit attributableto owners of parent
19,526
Profit before income taxes
28,392Extraordinary losses
842

6

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:

FH65 Series
FH65 Series are FPC/FFC connectors guaranteed to operate at hightemperatures up to 125°C.
For applications such as automotive cameras, there has recently been rapid
growth in needs for products that guarantee 125°C heat resistant, which is why
these highly reliable connectors were developed.
Compared to similar existing connectors, FH65 Series connectors have an
extremely low profile, small size, and greater FPC/FFC retention force becauseof the outstanding tab structure, and it is expected that they will be widely used
not only in automotive electronics but also industrial machinery and consumer
use equipment.

DF60F Series
The DF60F Series connectors were developed as a variation of the DF60 Series(wire-to-board connectors for internal power supply and relay connectors) witha finger protective structure considering the safety during work.
Because of Company’s unique structure, fingers cannot be inserted in to thefitting, securing high safety, and the products are perfect for connections where
there are concerns about discharge, such as battery modules for storage
batteries and UPSs.
Furthermore, sales demand for these products in the European and North
American markets are expected to increase by complying with safety standards,
including UL and TUV.

7

PQ50WA Series

The PQ50WA Series are the Company’s independently developed industrial IF
connectors for use in industrial robots, machine tools, semiconductor
manufacturing equipment, power supply used in devices such as factoryequipment, and signals.
To meet market demands, there are a wide range of them that meet numerous
specifications and have different numbers of cores, and as devices have become
smaller and smaller in recent years, there are needs for smaller connectors andpower/signal hybrid connectors. The PQ50WA Series meets the needs ofcustomers—in terms of smaller size, it employs high-density wiring
arrangement that reduces heat generation in power supply section, and thepower/signal hybrid design incorporates superior noise countermeasures.

BNC75 Series
The BNC75 Series with coaxial cable were developed to comply with 12G-SDI
standards for 4K high-speed signals at a time when the development of 4K/8K
high-definition video devices is moving forward in various fields, including
broadcast, medicine, and security.
The BNC75 Series are coaxial connectors that leverage the Company’s design
and manufacturing know-how related to “millimeter-wave” and “high-speed
multi-position” connectors and achieve extremely outstanding high-frequency
band characteristics.
Consideration is also being given to their use in various fields other thanbroadcasting, including medicine, education, art, movies and advertising, andtheir scope of application is expected to grow in the future.

Topics⃝New Building of ICHINOSEKI Testing Center Started Its Operation
A “new building of ICHINOSEKI testing center” was constructed in
the subsidiary ICHINOSEKI HIROSE ELECTRIC CO., LTD. With a floor
space of 2,600 m2, one of the largest among connector manufacturers,
the new building is ISO/IEC17025 certified and started its operation on
March 23, 2018. Reinforcing testing functions will improve theCompany’s ability to meet the needs of car manufacturers, industrial
machinery manufacturers and robot manufacturers. With a larger
amount of testing equipment such as vibration-temperature humidity
combined reliability test system, the testing functions can support
approximately twice the response capabilities both in quality andquantity, compared to existing equipment, for quality tests mainly
related to vibrations and heat, and for some products, it is possible toreduce the testing lead-time by 50%.

8

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 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.

9

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

Corporate Data

Company Profile (As of March 31, 2018)

Stock Information (As of March 31, 2018)

Trade name

HIROSE ELECTRIC CO., LTD.

Total number of shares issued

Date of incorporation

June 15, 1948

Number of employees

Consolidated: 4,597 (excluding part-timers)(Excluding 5,172,148 shares of treasury shares)
Number of shareholders
3,825

Capital stock¥9‚404‚379‚401

Directors and Audit & Supervisory Board Members (As of June 27, 2018)
Kazunori Ishii
Mitsuo Nakamura
Managing Director
Makoto Kondo
Director
Kazuyuki Iizuka
Director
Hiroaki Okano
Director
Yukio Kiriya
Director
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
Akira Seshimo
Outside Audit & Supervisory Board Member
Kentaro Miura
President and Representative Director

34,848,588 shares

Major Shareholders (Top 10)
Name of shareholder

Managing Director

Number ofshares held

Ratio ofshareholding

Hundreds of shares%

JPMorgan Chase Bank 380072

35,574

10.21

Hirose International Scholarship Foundation

29,977

8.60

State Street Bank and Trust Company 505223

27,262

7.82

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

19,315

5.54

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

14,975

4.30

Japan Trustee Services Bank, Ltd. (Trust Account)

12,234

3.51

HS Kikaku Co., Ltd.

11,6333.34

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

8,292

2.38

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

8,240

2.36

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

6,173

1.77

Note: ‌In addition to the 10 major shareholders above, the Company owns 51,721 hundred
shares of treasury shares. The ratio of shareholding is calculated after excluding treasury
shares.

Distribution of Shares
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

KPMG AZSA LLC

Distribution of Shares by Shareholder Type
Individuals, etc./3,088 persons
68,082 hundred shares (17.03%)

Financial institutions/56 persons
108,761 hundred shares (27.17%)

Securities companies/27 persons
3,988 hundred shares (0.99%)
Foreign corporations, etc./479 persons
165,289 hundred shares (41.30%)

Other corporations/175 persons
54,085 hundred shares (13.51%)

10

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

The Company’s Web site

https://www.hirose.com/jp/

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 “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.

IR Information

https://www.hirose.com/jp/ir/
Individual Investor Page

https://www.hirose.com/product/jp/pr/individual/