MANAGEMENT VOICE

VOL.

6

I was appointed as an outside director at the general meeting of shareholders in June 2018, and havebeen performing my duties since then. Nowadays, the importance of corporate governance and the rolesof independent outside directors are emphasized. I have been thinking over what I can do from the viewpoint of an independent outside director and giving opinions and proposals from an objective viewpoint, toenhance our corporate value and then bring benefits to our stakeholders, including shareholders.
As international situations are rapidly changing, I think that our business environment will be unstable for awhile, but I will do my best so that our company will implement necessary measures, including productivity(From April 1, 2018 to March 31, 2019)improvement, and grow as a better company.

Nao Tsuchiya,
Outside Director

We would appreciate your continued support.
Securities code: 6787

Corporate data (As of March 31, 2019)
Corporate ProﬁleName
Established
Capital44th Report toShareholders

Financial highlights
Net sales

Stock Information

MEIKO ELECTRONICS CO., LTD.
November 25, 1975
12,888 million yen

No. of Employees 11,899 (consolidated)(Japan: 815) (overseas: 11,084)
Outline of Business Design and manufacturing and sales of
PCBs and auxiliary electronics business

Number of Shares Authorized

70,000,000 shares

Number of Shares Issued

26,173,942 shares

Number of Shareholders

6,910(excluding treasury stock of 629,378 share)

Principal Shareholders
Number of shares held
% of shares held
(thousands of shares)

Name of shareholder

Yuichiro Naya

Executives
President & CEO

Yuichiro Naya

Director and Senior Managing Executive Officer

Takahide Hirayama

Director and Senior Managing Executive Officer

Masakuni Shinozaki

Director and Managing Executive Officer

Takahiro Matsuda

Director and Managing Executive Officer

Junya Wada

Director

Yoon Ho, Shin

Director

Nao Tsuchiya

Audit & Supervisory Board Member (Standing)Hitoshi Iyomoto

Audit & Supervisory Board Member

Takashi Harada

Audit & Supervisory Board Member

Takayuki SatoAﬃliated Companies
Yamagata Meiko Electronics Co., Ltd. Auxiliary electronics business
Meiko Tech Co., Ltd.
Auxiliary electronics business
Meiko Techno Co., Ltd.
Auxiliary electronics business
Meiko Electronics (Guangzhou Nansha) Co., Ltd. Auxiliary electronics business
Meiko Electronics (Wuhan) Co., Ltd.
Auxiliary electronics business
Meiko Elec. Hong Kong. Co., Ltd.
Auxiliary electronics business
Meiko Electronics Vietnam Co., Ltd.
Auxiliary electronics business
Meiko Electronics Thang Long Co., Ltd. Auxiliary electronics business
Meiko Electronics America, Inc.
Auxiliary electronics business
Meiko Electronics Europe GmbH
Auxiliary electronics business

4,703

17.97

Japan Trustee Services Bank, Ltd.
(Trust Account)

1,997

7.63

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

1,123

4.29

780

2.98

JAPAN POST BANK Co., Ltd.
BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC/FIM/LUXEMBOURG FUNDS/UCITS ASSETS

755

2.88

Meiko Kosan Co., Ltd.

608

2.32

Yuho, Ltd.

521

1.99

Trust & Custody Services Bank, Ltd. (Security Investment Trust Account)

437

1.67

Seiichi Naya

435

1.66

The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)

430

1.64

*The Company owns treasury stock of 629,378 shares and is excluded from theabove principal shareholders. The percentages for the total number of issued
shares have been calculated after excluding treasury stock.

Shareholding Structure (Common Stock)
Individuals and others 49.94%
Financial institutions 25.92%
Foreign institutions and others 12.94%
Other institutions

5.92%

Treasury stock

2.35%

Financial instruments business operators 2.93%

Shareholders’ Information
Fiscal year

April 1 to March 31 of the following year

Annual shareholders’ June
meeting
Record dateYear-end dividends: March 31
Interim dividends: September 30
Transfer agent

Transfer office
Address forsending mails

Contact

Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku, Tokyo,
100-8233 Japan
Sumitomo Mitsui Trust Bank, Limited Stock
Transfer Agency Dept. 1-4-1 Marunouchi,
Chiyoda-ku, Tokyo, 100-8233 Japan
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Dept.
2-8-4 Izumi, Suginami-ku, Tokyo,
168-0063 Japan
Tel: 0120-782-031

Stock exchange JASDAQ (Standard), Tokyo Stock Exchange
Method ofpublic noticeElectronic public notice in our official page
Official Page:
https://www.meiko-elec.com/ir/pa.shtml
In the event of an accident or other
unforeseen
eventsthat
prevent
publication of the electronic public notice,
it will be published in The Nikkei.

Enquiries concerning shareholdings•Shareholders who need to update information onshareholdings, including change of address andmethod of receiving dividends, are advised to contact
the securities companies where securities accounts
are held.
•Shareholders who do not have accounts withsecurities companies and need to process paymentsof dividends are advised to contact Sumitomo Mitsui
Trust Bank, Limited Stock Transfer Agency Dept. asstated above.

118,910

million yen

Consolidated balance sheet(in million yen)

End of FY2017

At the end of this period(As of March 31, 2018)(As of March 31, 2019)

AssetsCurrent assets

56,36956,021

Noncurrent assets

53,94664,63449,73258,553210

269

Property, plant and equipment
Intangible assets

4,003

5,811

110,316

120,655

Current liabilities

48,92447,932

Noncurrent liabilities

28,34939,135

Total liabilities

77,27487,06829,63830,446

Capital12,88812,888

Capital surplus

Investments and other assets

Total assets
Liabilities

Net assets
Shareholders equity

11,745

6,464

Retained earnings

5,400

11,489Treasury stocks

−396

−396

3,403

3,141

Valuation diﬀerence on available-for-sale securities

21

△65

Deferred gains or losses on hedges

298

183

Foreign currency translation adjustment

3,512

3,322

Remeasurements of deﬁned beneﬁt plans

−428

−298

Cumulative other comprehensive income

Total net assets
Total liabilities and net assets

33,04233,587110,316

120,655

8,926
Previous period(year to date)(April 1, 2017 to March 31, 2018)

Headquarters: 5-14-15 Ogami, Ayase, Kanagawa, 252-1104 Japan
Tel: 0467-76-6001 (main)
URL:
https://w w w .meiko-elec.com/
Notes on Forecasts
The information in this report contains future forecasts, such as the plans and business results of the Company.
These forecasts are based on information available at the time when these forecasts were made and certain
preconditions that the Company believes to be reasonable. Please note that actual business results may differ fromthe forecasts herein due to a variety of factors.

(in million yen)

Cost of sales

90,11598,862Gross proﬁt

18,426

20,048Selling, general and administrative expenses

10,96911,121

Operating income

7,457

8,926

Non-operating income

1,081

1,752

Non-operating expenses

3,742

2,067

Ordinary income

4,795

8,610

Extraordinary income

344

1

Extraordinary losses

296

750

4,843

7,862

Income taxes

497

1,119

Net income

4,346

6,743

Net income (loss) attributable to non-controlling interests−26―

Net income attributable to owners of parent

4,373

6,743

In the automotive PCB field, the sales of through-hole PCBs that have six or more layers, HDI
PCBs, and heat dissipation boards have grown as demand increased. In the smartphone PCB
field, demand declined, but annual sales were unchanged from the previous term. HDI PCBs
performed well, as we received orders for IoT modules and substrates for AI appliances in otherfields.
As a result, we posted net sales of 118,910 million yen (+9.6%) year on year, operating incomeof 8,926 million yen (+19.7%) year on year, ordinary income of 8,610 million yen (+79.6%) year
on year and net income attributable to owners of parent of 6,743 million yen (+54.2%) year on
year, which means that we hit a record high in net sales and other profits.

Consolidated statement of cash ﬂows
Previous period(year to date)(April 1, 2018 to March 31, 2019)118,910Net income before income taxes

million yen

Current period

108,542

Net sales

6,743

million yen

Consolidated statement of income

Key points of the ﬁnancial results●Consolidated statement of income

Net income attributable toowners of parent

Operating income(in million yen)

Current period(year to date)(April 1, 2017 to March 31, 2018)(year to date)(April 1, 2018 to March 31, 2019)

Net cash generated from operating activities

10,42911,466

Net cash expended in investment activities−8,868−17,292

Net cash generated from (expended in) ﬁnancing activities−3,5301,956

The eﬀect of changes in the exchange rate on cash and cash equivalents

−35

98

Cash and cash equivalents at the beginning of the period

17,19615,190Cash and cash equivalents at the end of the period

15,19011,419●Consolidated balance sheet

Total assets stood at 120,655 million yen, an increase of 10,339 million yen from the end of the previous
consolidated fiscal year. This increase is mainly due to a decrease of 3,764 million yen in cash anddeposits, an increase of 922 million yen in notes and accounts receivable-trade, and an increase of 1,677
million yen in inventories, which were all recorded under current assets. Factors behind the increase in total
assets also included an increase of 8,820 million yen in property, plant and equipment and an increase of
1,807 million yen in investments and other assets, which were recorded under noncurrent assets.
Net assets totaled 33,587 million yen, an increase of 545 million yen from the end of the previous
consolidated fiscal year, due primarily to a decrease of 5,281 million yen in capital surplus after acquisitionof class-A preferred stocks and an increase of 6,089 million yen in retained earnings.

Interview with the President

Aaaaaaaaaa

To our shareholders

Special feature

I would like to express my sincere gratitude to all shareholders and investors for the outstanding support.

In fiscal 2018, we invested 15 billion yen for constructing a new factory in Vietnam, etc. The production scale of the new factory will double in 3 years. In

Regarding investment plans and the strengthening of the financial standing
fiscal 2019, we plan to invest a total of 12.5 billion yen. Especially, we will invest for installing production equipment in the new factory in Vietnam and the

The following is a report summarizing the operating results for the term ended March 2019.

automation of other factories. From fiscal 2020, we plan to curb investment and reduce interest-bearing liabilities. By doing so, we will strive to improve
capital-to-asset ratio and the ratio of interest-bearing debts to sales.

Yuichiro Naya, President & CEO

Net sales
Operating income

Year on year

103

9.6%

economic downturn in China, etc. spread globally, due to the trade friction between the

74

89

14

19.7%

U.S. and China. In the automobile market, the consumption of substrates is augmenting

86

38

79.6%

due to the increase of electric components, but in the 4th quarter, demand was sluggish

4.4%

7.2%

Net income attributable toowners of parent

4.0%

5.7%

Exchange rate YEN/USD

110.66111.04

48
43

67

23

Sales
Automobiles

483

Smartphones

324

Others

278

Total

1,085

Operating income(Operating margin)

37
7.7%

27
8.3%

10

3.6%

74
6.9%

54.2%

FY2018(year to date)Year on year

Operating income
Sales Operating income(Operating margin) (growth rate) (growth rate)

Sales
547
325

39

64

2

7.1％

13.3%

5.4%

38

1

11

11.7%

0.3%

40.7%

1,189

we received orders for IoT modules and substrates for AI appliances in other fields.

7.5%

9.6%

19.7%

89

75

-14

-16.0%

63-23-26.8%

6.3%

Ordinary income(ordinary income rate)

7.2%

5.3%

Net income attributable toowners of parent(net margin)
Exchange rate

YEN/USD

86
67

53

5.7%

4.4%

111.04111.00-14

FY2018(year to date)

Sales
Automobiles

547

Smartphones

325

Others

317

Total

1,189

Operating income(Operating margin)

39
7.1%

38
11.7%

12

3.8%

89
7.5%

Sales
553
274
373
1,200

Smartphones

Digital home appliances

Forecast for
FY2019

6

1

7.2％

1.1%

2.6%

22

-51

-16

8.0%

-15.7%-42.1%

13

56

1

3.5%

17.7%

75

11

-14

0.9%

-16.0%

Storage

Industrial equipment and others

0

200

65

324
400

600

As for profits, there is concern over the drop in selling prices of products, theproductivity considerably, and deal with growing demand.

65
22

46
58

800

2019

2020

2021

[Unit: thousand m2/month]

Production capacity expansion plan（

Second Factory

In-vehicle through-hole PCBs
HDI PCBs for automobiles

Third Factory

HDI PCBs for smartphones(MSAP) Developed
in-vehicle products

）

（5）

（

）

*The parenthesis represents the figure out of the above one. (the number of lines for EMS)

Regarding dividends
Our company recognizes the increase of profits for shareholders as an important managerial mission, and will increase profits and dividends. For the

improve our performance and corporate value. We would appreciate your continued support and encouragement.

Sales plan for each spec in ﬁscal 2019

EMS and others

30

21

89

75

Results for
FY2018

41

1,000

1,200

79

76

Results for
FY201772

Four-layer PCB

Heat dissipation board

Forecast for
FY2019

44

13
53

18

2018

In order to live up to the support and expectations from stakeholders, including shareholders, we will take improvement measures with utmost effort, to69

46

Full-blown 5G communications

the third factory in Vietnam as soon as possible.

IoT

58

5G communications infrastructure development

dividends of surplus in the current term, we decided to pay a year-end dividend of 20 yen/share and a total of 35 yen/share, including an interim dividend.

Double-sided PCB

43

Integrated production line of MSAP

To establish an integrated production line of MSAP fromthe line used also for the conventional subtractive method,and improve yield and productivity considerably

structure through investment in automation and structural reform, and aim to construct

21

325

483

mass-producing them. Then, we will improve yield and

19

274

MSAP method

Single layer performance plan of the integrated line of MSAP

for MSAP substrates for enhancing profitability andestimated to increase.

(in 100 million yen)Amusement

Subtractive method Subtractive method[Unit: thousand m2/month]First Factory

MSAP method, we will develop an integrated manufacturing lineof resources and exchange rates, but we will improve and fortify our management

Oﬃce equipment

Subtractive method

Conventional MSAP production method

As our company manufactures printed circuit boards with theaugmentation of fixed costs at the third factory in Vietnam, and the fluctuations in prices

8.3%

6.3%

547

Results for
FY2017frequency.

and substrates for AI appliances are projected to remain healthy, the sales of substrates

40

553

Results for
FY2018boards need to be compatible with higher definition and higher

receiving more orders in the promising HDI PCB field. While the sales of IoT modules

Sales plan for each product in ﬁscal 2019
Automobiles

manufactured with the MSAP method. Accordingly, printed circuitcomponents, etc. The demand for smartphone PCBs has recently recovered, but we are

Operating income
Sales Operating income(Operating margin) (growth rate) (growth rate)

Automatic driving
Real-time translation

This kind of environment is supported by printed circuit boards

4th quarter, but recover from inventory adjustment and due to the increase of electricalYear on year

Ultralow delay

real-time translation, telemedicine, etc. in networks without delay.

In the next term, it is estimated that the demand for automotive PCBs will drop in the(in 100 million yen)

Forecast for FY2019

High-resolution images
AR/VR training

Communications modules will actualize automatic driving,

for amusement using those substrates are expected to grow, and total sales are

Revenue forecast from each product in FY2019

Ultrahigh speed
Large capacity

high-speed communications will trigger a variety of revolutions.

Regarding the next term

-21.4%The demand for high-definition PCBs for smartphones is growing.

communications will be developed as social infrastructure andSmartphones exchange a large volume of high-definition data.

(in 100 million yen)

0.9%

7.5%

The fiscal year 2019 is the first year of 5G. It is expected that 5G

15

Existing Second Factory

Smart city
Simultaneous
multiple connections Remote control

5G communications and MSAP substrates

104

Enlargement of First Factory

・Expansion of the FPC business・Expansion of the EMS business・To cope with the increase of production of in-vehicle products
・Establishment of a line exclusively for HDI PCBs for automobiles

The year 2019 is the first year of 5G.

The third factory is exclusively for HDI PCBs.

boards have grown as demand increased. As for smartphone PCBs, demand declined,

89

First Factory

Construction of Third Factory・Line for fine smartphone substrates
・Establishment of an integrated
production line of MSAP
・Space for developed in-vehicle products

for in-vehicle products.

sales of through-hole PCBs that have six or more layers, HDI PCBs, and heat dissipation

but annual sales were unchanged from the previous term. HDI PCBs performed well, as

10possible. For next-generation products, we will bring out theAt the second factory, we will expand production scale especially

2Second Factory

and assemble components, so that integrated manufacturing is

These trends considerably affected the performance of our corporate group in the 4th

20.0%

39

1,200

Operating income(operating margin)

factory for producing FPC substrates, and factories which mountquarter, but annual sales and profits marked a record high. As for automotive PCBs, theYear on year
Results for Forecast for
FY2018FY2019
Increase/decrease Increase/decrease rate

1,189

loss is low for 5G communications. This factory is adjoined by asynergy between FPC substrates and EMS.

14.0%

Consolidated earnings forecast for FY2019

Net sales

in-vehicle products and multi-layered FPC whose transmission

the economic measures of the Chinese government, etc.

3.8%

12

317

manufacture heat-resistant and low-expansion materials fordue to inventory adjustment. The smartphone market, too, saw inventory adjustment and(in 100 million yen)

Third Factory

substrates and EMS. As for FPC substrates, it is required tothe slowdown in demand. On the other hand, demand has gradually recovered thanks to

Revenue from each product in FY2018
FY2017(year to date)

At the first factory, we will increase the production of FPC

In the field of electronic parts in the current consolidated fiscal year, the effects ofIncrease/decrease Increase/decrease rate

1,189
7.5%

(Third Factory) (Enlarged part of First Factory)

processes one after another from July 2019.

Regarding full-year business results(in 100 million yen)

1,085
6.9%

Ordinary income

Regarding the situation of the new factory in Vietnam
At the new factory in Vietnam, we plan to start manufacturing

Consolidated results for FY2018
Results for Results for
FY2017FY2018

Area of the premises: 170,000m2
Total area of the factories:
80,000m2 + 45,000m2 + 20,000m2

77
0

279

Flexible PCBs and others

299
200

400

■Variation in dividend

(yen)

447
800

Interim dividends

50

Year-end dividends

9
20

40

89

30

13

485

600

(in 100 million yen)

EMS business

222

177

■Capital investment

HDI PCB

502

222

300

(in 100 million yen)

Six layers or more

18

150

75

125

9
4

85

85

72

1000

Results for FY2018

1200

Depreciation

64

Forecast for FY2019 Forecast for FY2020 Forecast for FY2021

68

74

74

15

20
10
0

10
10

10

March 2017

March 201820
March 2019