Hello, I am Tetsuji Yamanishi. Thank you for taking the time to attend TDK’s performancebriefing for Q1 of FY March 2025. I would like to explain the highlights of our consolidatedresults.

I would like to start with the key points of Q1.
The global economy remained unstable in Q1 due to the continued economic slowdown inChina and the impact of the unrest in the Middle East, although North America remainedrobust and Europe showed signs of economic recovery. The yen continued to weakensignificantly against the U.S. dollar and the euro.
In the electronics market, which has a large bearing on our earnings, an increase inreplacement demand and other factors resulted in a recovery in the production of Informationand Communication Technology (ICT) related products, such as smartphones and notebookPCs, on a year-on-year basis. Demand for nearline Hard Disk Drives (HDDs) for data centersalso recovered strongly. In the automotive market, demand for battery electric vehicles(BEVs) showed signs of slowing, resulting in lower component demand than we hadexpected at the beginning of the fiscal year. As a result, net sales for Q1 was up 3.1% yearon year. Due to the recovery in component demand in the ICT market, sales of rechargeablebatteries, passive components and sensors all increased, while growth in sales of passivecomponents and sensors to the automotive market slowed due to slower sales of BEVs.
Medium capacity batteries for the industrial equipment market became a full joint venturebusiness in the period under review. On a year-on-year basis, our consolidated net salesdecreased, as did sales of passive components and sensors.
Operating profit increased 120% year on year due to the sharp depreciation of the yen, anincrease in sales of products for the ICT market, as well as rationalization and the benefitsfrom restructuring implemented in the previous fiscal year.

Next, I would like to present an overview of our Q1 results.
There was an increase of about JPY 53.8 billion in net sales and an increase of about JPY11.1 billion in operating profit due to exchange rate fluctuations against the U.S. dollar andother currencies. Including this impact, net sales were JPY 518.8 billion, an increase of JPY15.4 billion, or 3.1%, year on year, and operating profit was JPY 57.9 billion, an increase ofJPY 31.6 billion, or 120%, year on year. Profit before tax was JPY 69.6 billion, an increase ofJPY 48.6 billion, or 231%, year on year, including approximately JPY 8.0 billion in foreignexchange gain. Net profit attributable to owners of parent was JPY 59.6 billion, an increase of305% year on year. Earnings per share amounted to JPY 157.15. In terms of exchange ratesensitivity, we estimate that a change of JPY 1 against the U.S. dollar will affect operatingprofit by about JPY 2 billion a year, the same as our previous estimate, while a JPY 1 changeagainst the euro will have an impact of about JPY 0.3 billion a year, a decrease from theprevious estimate.

I will now move on to Q1 segment results.
In the Passive Components segment, sales to the ICT market, such as for smartphoneapplications, increased, while demand from the industrial equipment market remainedsluggish, and sales to the automotive market, such as for BEVs, slowed down. As a result,net sales were JPY 143.1 billion, a slight increase of 1.6% year on year. Operating profit wasJPY 13.9 billion, a slight decrease of 1.5% year on year.
Profit of ceramic capacitors decreased due to a decline in sales to the industrial equipmentmarket and the impact of a rise in fixed costs to accommodate production increases, althoughsales to the automotive market increased. Sales and profit of aluminum electrolytic capacitorsand film capacitors decreased as a result of a decline in sales to the industrial equipment andautomotive markets. Inductive devices increased in terms of both sales and profit as sales tothe automotive and ICT markets rose. Sales of high frequency components increased due tohigher sales to the ICT market, and profitability also improved. Piezoelectric material productsand circuit protection components posted lower sales due to a decline in sales to theautomotive market, while profit increased partly due to foreign exchange gains.

In the Sensor Application Products segment, net sales amounted to JPY 44.1 billion, up13.6% year on year. Operating profit was a loss of JPY 0.7 billion.
Sales of temperature and pressure sensors increased reflecting a rise in sales to theautomotive market, while profit decreased as a one-time gain from the sale of assets wasincluded in the previous year. In magnetic sensors, sales and profit of both Hall sensors andTMR sensors increased due to a rise in sales for smartphone applications. In MEMS sensors,the profitability of microphones improved as sales to the ICT market increased, while sales ofmotion sensors for industrial equipment applications declined. This resulted in a decrease insales and profit for MEMS sensors as a whole.

In the Magnetic Application Products segment, net sales rose sharply by 43.9% year onyear to JPY 55.0 billion, and a positive operating profit was secured, including approximatelyJPY 2.3 billion in one-time gains for HDD heads.
In HDD heads and HDD suspension assemblies, demand for nearline HDD heads for datacenters increased 1.5 times year on year, resulting in a return to profitability for HDD headsand HDD suspension assemblies as a whole even when excluding one-time gains. For HDDheads, the sales volume increased 1.9 times year on year. However, it was slightly below thebreak-even volume after the restructuring, and the product remained slightly in the redexcluding one-time gains. The sales volume of HDD suspension assemblies exceeded thebreak-even volume, and the product returned to profitability.
Although sales of magnets declined due to lower sales to the automotive market, profitabilityimproved.

In the Energy Application Products segment, net sales decreased 4.4% year on year to JPY262.9 billion, while operating profit rose 71.9% year on year to JPY 55.3 billion.
Rechargeable batteries decreased in terms of sales due to a decline in selling pricesresulting from lower material prices and a decrease in consolidated sales due to thecompletion of the transfer of the medium capacity battery business to the JVs, while the salesvolume of small capacity batteries for smartphones increased due to a rise in demand fromthe ICT market. As a result, sales for the segment as a whole decreased slightly from theprevious year. On the other hand, operating profit increased significantly thanks to volumegrowth, effects of rationalization, and foreign exchange gains.
Power supplies for industrial equipment saw a decline in terms of both sales and profit asdemand for industrial equipment applications failed to recover, while power supplies for EVssaw a decline in sales but an improvement in profitability.

Now, I will explain some of the factors behind the changes in segment sales and operating profitfrom Q4 of FY March 2024 to Q1 of FY March 2025.
First, in the Passive Components segment, net sales increased by JPY 4.5 billion, or 3.3%, fromthe fourth quarter of the previous fiscal year, and operating profit increased by 30%, excludingone-time expenses of JPY 7.0 billion in Q4 of the previous fiscal year. Sales of ceramic capacitorsdecreased mainly as a result of a fall in BEV demand, and operating profit decreased due in partto a decline in volume and an increase in costs to accommodate production increases. Aluminumelectrolytic capacitors and film capacitors increased in terms of both sales and profit mainly due toan increase in demand from the industrial equipment market, such as for solar power equipment,despite a fall in sales to the automotive market. Inductive devices saw an increase in both salesand profit, driven by higher sales in all markets. High frequency components, piezoelectricmaterial products and circuit protection components were flat in terms of both sales and profit.
In the Sensor Application Products segment, net sales decreased by JPY 1.1 billion, andoperating profit declined slightly, excluding one-time expenses of JPY 3.3 billion in Q4 of theprevious fiscal year. Temperature and pressure sensors decreased in terms of both sales andprofit due to a fall in sales to the automotive market. Magnetic sensors saw a slight increase insales due to higher sales for smartphone applications, despite lower sales to the automotivemarket, but profit was flat due to an increase in fixed costs to accommodate production increases.
MEMS sensors decreased in sales as a result of a decline in the sales of motion sensors fordrone and automotive applications, although sales of microphones for the ICT market increased.
However, the deficit was reduced due to improved profitability in microphones.
In the Magnetic Application Products segment, net sales increased by JPY 3.2 billion, or 6.1%,and operating profit increased significantly, excluding one-time expenses of JPY 4.7 billion in Q4of the previous fiscal year and one-time gains of JPY 2.3 billion in Q1 under review. Due to therecovery of total demand for nearline HDDs, the sales volume of HDD heads increased byapproximately 9%, that of nearline HDD heads rose by approximately 26%, and that of HDDsuspension assemblies increased by approximately 2%. As a result, the HDD head business as awhole increased in terms of sales and also returned to profitability even when excluding the onetime gain in Q1 under review. As for magnets, while sales decreased, the deficit was reduced.
In the Energy Application Products segment, net sales increased by JPY 24.7 billion, andoperating profit increased by JPY 12.9 billion, excluding one-time expenses of JPY 2.0 billion inQ4 of the previous fiscal year. Rechargeable batteries increased in sales volume due to a rise indemand for small capacity batteries from the ICT market, market share gains and an increase inspot orders at the time of new product launches by customers. Medium capacity batteriesincreased in terms of both sales and profit due to higher sales for electric motorcycle applications.
Power supplies for industrial equipment decreased in terms of both sales and profit, while powersupplies for EVs saw an increase in sales and a reduction in loss.

Next is an analysis of the JPY 31.6 billion increase in operating profit for Q1. Operatingprofit increased by JPY 12.2 billion due to changes in sales, reflecting an increase in thesales volumes of rechargeable batteries, HDD heads and HDD suspension assemblies,although the sales volumes of passive components and sensors declined. The effects ofrationalization for cost reduction and restructuring amounting to JPY 10.2 billion absorbed theJPY 4.8 billion decline in profit caused by changes in selling prices.
SG&A expenses decreased by JPY 2.9 billion, including one-time gains of approximatelyJPY 2.3 billion in HDD heads, and the weaker yen boosted profit by JPY 11.1 billion. Thesecontributed to the JPY 31.6 billion increase in operating profit.

I would now like to discuss our projections regarding changes in segment net sales for Q2.
For Q2, we are not changing our exchange rate assumption of JPY 140 to the U.S. dollar,which we made at the beginning of the fiscal year. However, for the sake of comparison, mydiscussion will be based on the changes excluding exchange rate fluctuations.
In the Passive Components segment, we expect net sales to increase by 2–5% as a whole,mainly due to a slight increase in sales to the automotive market and an increase in sales ofinductive devices to the ICT market, despite continued weakness in sales to the industrialequipment market.
In the Sensor Application Products segment, we expect net sales to increase by 13–16% asa whole, reflecting a rise in sales of temperature and pressure sensors to the automotivemarket, a significant seasonal increase in sales of magnetic sensors for smartphoneapplications, and an increase in sales of MEMS sensors due to strong microphone sales.
In the Magnetic Application Products segment, our sales projection is an increase of 0–3%as a whole, as we expect HDD production to increase by approximately 5% and nearlineHDD production to grow by approximately 8%, as well as robust sales of HDD heads andHDD suspension assemblies and increased sales of magnets.
In the Energy Application Products segment, we expect net sales to increase by 21–24% asa whole, reflecting a significant rise in sales of small capacity batteries to the smartphonemarket, due in part to seasonality, an increase in sales of medium capacity batteries for ESSapplications, a decrease in sales of industrial power supplies due to continued weak demand,and an increase in sales of power supplies for EVs to the automotive market.

I would like to go over our full-year projections for FY March 2025.
Our Q1 results and our expectations for Q2 are ahead of the projections we made at thebeginning of the fiscal year. However, we are maintaining the full-year projections weannounced at the beginning of the fiscal year, as we believe we need to assess demandtrends in key markets in the second half of the year.
Our exchange rate assumptions for Q2 and beyond are also unchanged from those made atthe beginning of the fiscal year, which were JPY 140 to the U.S. dollar and JPY 156 to theeuro.
This concludes my presentation. Thank you for your attention.