1/22

FY2019 Investor Briefing

May 29, 2020

2/22

FY2019 Outline of Financial Statement

Executive Vice President and CFO

KOHEI OHGAKI

3/22

57,386 54,161

-1,834 -244 -707 -185 -834

-2,651 -3,000

0

3,000

6,000

9,000

12,000

15,000

-15,000

0

15,000

30,000

45,000

60,000

75,000

Net Sales Operating Profit Ordinary Profit Net Profit

5.6% DOWN

FY2019 FY2018 Unit: Million yen

<Consolidated> Financial Results

Net Sales Profit

4/22

55,000 54,161

150

-244

450

-185

200

-2,651 -3,000

0

3,000

6,000

9,000

12,000

15,000

-15,000

0

15,000

30,000

45,000

60,000

75,000

Net Sales Operating Profit Ordinary Profit Net Profit

<Impact of COVID-19 in 4Q> Net Sales -920 Operating Profit -640

1.5% DOWN

FY2019 FY2019 Forecast published on Jan. 28, 2020

Unit: Million yen

<Consolidated> Financial Results

Net Sales Profit

5/22

3,480 3,108 7,188 6,122

18,415 16,976

1,296 817

28,841 27,382

0

10,000

20,000

30,000

40,000

50,000

60,000 Material costs

Amount paid to subcontractors

Labor costs

Expenses

Depreciations

-1,834 -244 [-3.2%] [-0.5%]

50.6%

1.5%

31.3%

11.3% 5.8%

50.3%

2.3%

32.1%

12.5%

6.0%

FY2018 FY2019

59,220 54,405 [103.2%] [100.5%]

• Improved by 0.5% in ratio of material costs & amount paid to subcontractors

52.6％ → 52.1％ • Decreased by 2.0%

in ratio of labor costs & expenses 44.6％ → 42.6％

(Because of the reduction of fixed costs)

Unit: Million yen

<Consolidated> Operating Expenses

[ ]: Sales Ratio

Operating Profit/Loss

6/22

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

Total ＋1,590 million yen

FY2018 110.87JPY/$ → FY2019 109.04JPY/$

Unit: Million yen

<Consolidated> Analysis of Changes in Operating Profit Analysis of factors for increase/decrease

of consolidated operating profit ［ FY2018 vs. FY2019 ］

After adjusting impact of foreign exchange rates

Average exchange rate for each term

Operating loss for

previous term -1,834

Impact of foreign

exchange rates (weak RMB)

301

Reduction in fixed costs (labor costs/expenses/

depreciations) 1,621

Increase in variable costs

-347

Operating loss for this term

-244

Inventory write-down in joint venture

in previous term 740

Decrease in sales amount

-725

7/22

279 264

-22 -4

520 491

350

-692

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200 Foreign exchange profit/loss

Revenue from and expenditure to real estates

Financial account balance

Others

FY2018 FY2019

1,127 59 [0.2%]

-707 -185

[2.0%]

[-1.2%] [-0.3%]

Unit: Million yen

<Consolidated> Non-operating Profit and Loss

Ordinary Profit/Loss

[ ]: Sales Ratio

Foreign exchange gain 350 million yen → loss -692 million yen 1. FY2018 Exchange rates at the beginning vs. at the end of the term

Yen weakened by 4.75 yen 2. FY2019 Exchange rates at the beginning vs. at the end of the term

Yen strengthened by 2.16 yen

8/22

-153 -9 -199 -72 -148

-2,953

1,316 54

195

-3,500

-3,000

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

Gain on sales of investment securities

Gain on sales of fixed assets

Loss on impairment

Loss on disposal of fixed assets

Others

-3,165 303 -1,137 228

-834 -2,651 [-1.5%] [-4.9%]

FY2018 FY2019 1,011 -2,980

－ -286

(Others)

Unit: Million yen

<Consolidated> Extraordinary Profit and Loss

[ ]: Sales Ratio

Profit before taxes Income taxes

Net Profit/Loss

Loss attributable to non-controlling interests

9/22

FY2019

FY2018 Reporting Segment

Others* TOTAL CS Division

SCI Division

R&D Center Total

Net Sales 21,712 35,180 471 57,365 21 57,386

Operating Profit (Loss) 258 (862) (316) (919) (914) (1,834)

Reporting Segment Others* TOTAL CS

Division SCI

Division R&D

Center Total

Net Sales 18,670 35,137 281 54,088 73 54,161

Operating Profit (Loss) 141 10 (279) (127) (117) (244)

Unit: Million yen

<Consolidated> Segment Information

*Others: Other components business, lease, real-estate rental, and worker dispatching undertaking

10/22

Mar. 2020

50,204 10,514 12,332

6,426 19,872

25,575 6,569

15,153

24,629 7,996

49.6％

Differential

(8,509) (374)

(2,164) (1,645) (4,557)

(4,526) (223)

(3,712)

(3,982) －

0.9％

（Ｂ） （Ｂ－Ａ） Mar. 2019

58,713 10,889 14,496

8,071 24,430

30,101 6,792

18,865

（Ａ）

28,612 7,996

48.7％

Unit: Million yen

<Consolidated> Cash Position

Assets Cash and cash equivalents

Accounts receivable Inventories

Fixed assets

Liabilities

Net assets

Accounts payable and accrued expenses Interest-bearing debt

Common stock

Capital adequacy ratio

11/22

FY2018 FY2019

Cash flow from operating activities 1,608 6,345 Working capital (679) 3,931 Profit before taxes 303 (3,165) Depreciation 3,664 3,292 Others (1,680) 2,287 Cash flow from investing activities (2,091) (2,525) Free cash flow (483) 3,820 Cash flow from financing activities 997 (4,176) Increase/decrease in interest-bearing debt 1,614 (3,707) Increase/decrease in treasury stock (344) (114) Dividends paid (264) (325)

Initial balance 10,482 10,776 Final balance 10,776 10,437

Unit: Million yen

<Consolidated> Cash Flow Position

12/22

At second quarter end At fiscal year end Annual

FY2019 0.00 yen 40.00 yen 40.00 yen

FY2020 Forecast TBD TBD TBD

(2) Annual Dividend

(1) Forecast of Consolidated Financial Results

Net Sales Operating Profit (Loss)

Ordinary Profit (Loss)

Net Profit (Loss)

FY2019 Million yen % Million yen % Million yen % Million yen %

54,161 (5.6) (244) － (185) － (2,651) －

FY2020 Forecast 47,000 (13.2) 200

－

700

－

300 －

Financial Forecast and Annual Dividend %: Increase (decrease) ratio to previous term

13/22

President, CEO and COO

YASUMITSU IKEDA

FY2019 Result and FY2020 Prospect

14/22

21,712 18,670 18,536

35,180 35,137

28,024

471 281

410

21 73

30

0

20,000

40,000

60,000

80,000

FY2018 Result FY2019/Jan Revised Forecast

FY2019 Result FY2020 Forecast

CS SCI R&D Others

146%

99%

87% 94%

60%

55,000 57,386 54,161 47,000

80%

86%

100%

98%

Net Sales by Product Div. (FY2018-FY2020) Unit: Million yen %: Compared to

previous term

1H: 108.93JPY 2H: 108.00JPY 108.00JPY 109.04JPY 1USD=110.87JPY Exchange

rate

15/22

258 141 604

-861

10 -101

-316

-279 -281

-914

-117 -21

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

FY2018 Result FY2019/Jan Revised Forecast

FY2019 Result FY2020 Forecast

CS SCI R&D Others

150 -244 200 -1,834 0.4%

1H: 108.93JPY 2H: 108.00JPY 108.00JPY 109.04JPY 1USD=110.87JPY Exchange

rate

Unit: Million yen Profitability (%)=Profit/Sales

Operating Profit by Product Div. (FY2018-FY2020)

16/22

9,464 8,772 9,400

20,397 21,369 17,300

20,338 17,879 14,700

7,185 6,140 5,600

0

10,000

20,000

30,000

40,000

50,000

60,000

FY2018 Result FY2019 Result FY2020 Forecast

Industry/ Others Car Electronics Home Appliance

ICT

81%

107%

82%

91%

54,161 57,386

47,000

Reference: Net Sales by Market (FY2018-FY2020) Unit: Million yen %: Compared to

previous term

109.04JPY 108.00JPY 1USD=110.87JPY Exchange rate

ICT Home Appliance

Car Electronics

Industry/ Others

FY2019 Factors for increase/ decrease (vs. FY2018)

Decline in smartphone-related business for U.S. customers

Growth in STB-related business for U.S. customers

Global car sales slump

Decline in healthcare-related connector business

FY2020 Key targets

-5G -Wearable -VICs in China and the U.S. -Work from home

-Smart appliance -Set-top box -Home equipment -Game

-ADAS -V2X -EV/PHEV -TCU

-LPWA -Healthcare -Renewable energy -Non-electronics customers

17/22

1. Conduct business operation in response to the COVID-19 crisis

2. Restore profitability by reducing break-even point

3. Expand business and strengthen the corporate structure with an eye toward post COVID-19

FY2020 Priority Matters

18/22 SMK Group Operating Status (as of May 25)

Base Resumed from Attendance

Works

Japan Toyama

Not affected Hitachi

China

Shenzhen March 11 100% Dongguan March 10 100%

ASEAN

Malaysia May 4 90% Philippines April 13 (partially) 40%

North America Mexico May 4 (partially) 75%

Country/Region Working style Customer visit

Sales Offices

Japan Mainly work from home NOT allowed China Business as usual Allowed (partially not) Taiwan Business as usual Allowed (partially not) Korea Business as usual Allowed USA In principle, work from home NOT allowed Europe In principle, work from home NOT allowed Singapore, Thailand In principle, work from home NOT allowed Malaysia Business as usual NOT allowed

19/22

9,464 8,772 9,400

0

5,000

10,000

FY2018 Result FY2019 Result FY2020 Forecast

107%

Target Applications Key Promotion Products 5G Smartphone, tablet PC,

base station (including local 5G base station)

RF connector, board to board connector, Coaxial connector

Wearable Watch, earphone Board to board connector, board to wire connector, switch, battery connector

Smart wear Textile connector, RF module <COVID-19> Work from home

PC, tablet PC, Wi-Fi® router

Interface connector, board to wire connector, RF module

Unit: Million yen %: Compared to previous term

Approach to ICT Market

20/22

LPWA＋System R&D Center’s Approach to Smart Street Light business

NEC commenced the demonstration experiment of the smart street lighting employing SMK’s wireless module in Suginami Ward, Tokyo.

LoRaWAN® module (SMK)

Illuminance sensor

■Differentiated features

■Potential of smart street light (worldwide) FY2013: 3M ⇒ FY2020: 17M units ■Other applications

Location detection

Traffic survey

Disaster monitoring

Tilt sensing Strength evaluation

Highly versatile Connection reliability Waterproof, small Low cost

100

400 470

FY2019 FY2020 FY2021

■Sales target (LPWA＋System) (FY2019 sales amount is taken as 100)

21/22 New Approach: smk-X

Scope of smk-X Smile curve

Adde

d Va

lue

(Pro

fitab

ility

)

Product planning

R&D, Design, Manufacturing

Service

Business flow

22/22

All information in this material concerning the forecast of business achievements, projections of general business conditions and our business strategies is dependent on our conclusion made to a normally foreseeable extent applying information reasonably accessible to us at the time of preparation of this material. However, the reality is that it contains risks and uncertainties which may cause result to materially differ from business projections, stated or implied, due to situations which are unforeseeable under normal conditions, or of results which are beyond a reasonably foreseeable outcome at that time. Despite our active efforts to disclose information which is considered to be important to investors of our company, total dependence on the business projections in this material, stated or implied, must be refrained from when decisions of any kind are made regarding our company.

Notice

Notes on Trademark

* LoRaWAN® read mark is registered trademark owned by LoRa Alliance™ and any use of mark by SMK Corporation is under license. * Wi-Fi is a registered trademark or trademark of Wi-Fi Alliance. * Other products and company names listed in this material are the registered trademarks or trademarks of their respective holders.