〈1〉Financial Results Presentation Material

Direction ofDirection of Medium-term Growth Strategy

2016 May 10th2016, May 10Hirose Electric Co.,Ltd.

P id tPresidentKazunori Ishii

〈2〉

Cautionary Statement

In this material, there are descriptions based on current estimation by Hirose Electric.

Hirose cautions you that a number of important risks, uncertainties and others could cause actual results to differ

f fmaterially from those discussed in the forward-looking statements. Thank you for your understanding.

〈3〉Hirose : Growth image

Maintain high profit management and grow sales in the medium termMaintain high profit management and grow sales in the medium-term

Forecast

Actual Future Direction

(hundred million yen / fiscal year)

ast

( )1,250

959948

Sale

s

2016 decrease but bottom out for continuous added-value growth

〈4〉Hirose: Application image

Office machinery New market

2015 Slowdown in smartphone

New mobile phone

Office machinery

2015p

growth and expansion of new information terminal(See P 5 6 for more)

Automotive

(See P.5,6 for more) Accelerating preparation for

next core businessInner: FY2015Outer: FY2020

2020

Double-wheeled growth plan -“smartphone + consumer”

Consumer

2020 smartphone + consumer and “automotive/industrial + infrastructure”(See P 7 8 fore more)

Communication

(See P.7,8 fore more)Industrial

Accelerate medium-term management and grow continuously

〈5〉Production trend of smartphone

■Smartphone which had continued double-digit growth will slow down to single-digit afterSmartphone which had continued double digit growth will slow down to single digit after 2016, but is still expected to increase by tens of millions unit per year.

(hundred million yen / year) [Production trend forecast of smartphone/mobile phone](hundred million yen / year)

1 7 1 673% 84% 86% 88% 90% 91% 92%

80%

100%

20

25

17 7 18.4 18.9 19.4 19.8

[Production trend forecast of smartphone/mobile phone]

6.4 4.6

2.8 2.4 2.2 1.9 1.7 1.6

46%60% 60%15 14.6 15.0 16.0 17.0 17.1 17.7

9.612.4 14.3 15.3 16.2 17.0 17.7 18.2 9.8

8.1

15%

44% 39%29%

7%

33%

20%

40%

5

10

4.86.9

15%7% 6% 5% 4% 3%

0%02011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: HRS estimation

スマートフォン フィーチャーフォン スマートフォン対前年⽐成⻑率(右軸) スマートフォン⽐率(右軸)Smartphone Feature phone Smartphone YoY growth ratio (right axis)

Smartphone ratio (right axis)

Smartphone market will continue mild growth

〈6〉Expansion of new information terminal market

■ Real cloud society will arrive with each wearable device and IoT module connecting■ Real cloud society will arrive, with each wearable device and IoT module connecting internet by communication function devices with smartphone, tablet etc. as host device

Smart glassSmart glass Head mounted displayHead mounted displaySmart glassSmart glass

Activity trackerActivity tracker Smart watchSmart watch

*Wristband

Cloud

-type

Information terminal connected to internet will become more various and smaller

DroneDrone Action cameraAction camera Communication robotCommunication robot

Information terminal connected to internet will become more various, and smaller and space-saving connectors will be needed

(Smartphone market product use will enhance)

〈7〉IoT to each market

■ New product service system utilizing IoT will spread to various market

Manufacturing/FactoryInformation /

■ New product, service, system utilizing IoT will spread to various market

Consumer

Smart House

Manufacturing/Factory

Smart Factory

Information / Communication infrastructure

(Industrie 4.0 etc)

Automotive/Bicycle Medical equipmentAutomotive/Bicycle

Smart Mobility

Medical equipment

Smart MedicalSmart Network

New connector needs will arise in many marketNew connector needs will arise in many market

〈8〉Hirose : Application strategy image

■ Basic direction

《Synergy effect》

■ Basic direction

Con

Conmm IndInd

infrastinfrast

AutoAuto

Cost & Speed capabilities

nsumer

nsumer

arketarket

dustrialdustrialtructuretructureom

otivom

otivSmartSmart NetworkNetwork

r r l l e & e &

veve

High spec & quality capabilities

G-WING(Hirose Medium-term vision)

[Consumer] & [Automotive, Industrial infrastructure] Double-wheels of continuous growth!

〈9〉Hirose : Strategic investment for the future

“Key trend” : “IoT (Connecting to everything)” “Cloud” “ECO”

“Key technology” : Enhance “High speed”, “High-frequency”, “High-power”, “Smaller”

Strategic investmentStrategic investmentgg

Technology development◆High speed, high-frequency transmission technology

Factory / Equipment◆Reinforce domestic/overseas factory

IT infrastructure◆Reinforce each main system

transmission technology◆Large current, environment resistanttechnology◆Mold processing, plating technology

◆Ultraprecise process equipment◆Testing/assessment facility for automotive / industrial

◆Enrich communication system◆Equip decision-making support system

We will use cash prioritizing investment based on medium-

〈10〉Hirose : Growth investment and Shareholder returnp g

term growth strategy and then aim for better shareholder return

Sh h ld tShareholder return1. More active dividend

Utilized cash

Growth investment

R&D investment(Technology for high speed transmission high current etc)

Raise dividend payout ratio to approximately 40%(Accumulated dividend payout ratio from FY2011

with good balance

(Technology for high-speed transmission, high current, etc)

Factory / equipment investment(New factory of Hirose Korea, enhance testing facility, etc)

to FY2015 was 35.0%)

2. Continue share buyback

( y , g y, )

ＩＴ investment（Backbone global expansion, strengthen informational

i ti t )

Aim for better total shareholder return(Accumulated total shareholder return ratio

communication etc)

M&A / Partnership(Enhance existing business, commence new business, (Accumulated total shareholder return ratio

fromFY2011 toFY2015 was 62.4%)(Enhance existing business, commence new business,

collaborate with other companies, etc)

By “growing profit and improving to appropriate shareholders’ equity”, we aim to return to over 8% ROE on and after FY2018!

[Appendix]Dividend per share/Payout ratio/Return ratio of last 5 years(2011-2015)

Accumulated 5 years total shareholder(Yen)

〈11〉

77.1%60.7%

85.6%100.0%500 Accumulated 5 years total shareholder

return ratio: 62.4%

41.9% 46.7%50.0%

400

230 24035.5% 35.9% 30.6% 34.2% 40.2%

0 0%

300

A l d 5 di id d

130 140

200230 0.0%

200

Accumulated 5 years dividend payout ratio: 35.0%

130 140-50.0%

100

-100.0%0 100.0%0

2011 2012 2013 2014 2015(FY)

〈12〉

<<<New fiscal year: FY2016>>>

A li h “G WING”!!Accomplish “G-WING”!!

-This will be the starting year of “Hirose’s forthcoming launch and jump”Hirose s forthcoming launch and jump -