Hirose Electric : Q&A Summary of Financial Results Briefing for the Fiscal Year Ended March 2026

Ａ1

The BB ratio was 1.2 for general industrial equipment and 1.25 for telecommunications infrastructure. Other segments-smartphones, consumer devices, and automotive-all recorded ratios above 1.

Ａ2

At the previous Q3 briefing, AI server-related demand accounted for approximately 30% of orders in this segment. In Q4, this rose to around 40%. Demand for mezzanine connectors has been particularly strong.

Ａ3

Orders have two aspects. Semiconductor-related demand remains extremely strong, with customers' forecasts continuing to strengthen. At the same time, there are some elements of advance ordering due to component procurement dynamics. While we are carefully reviewing order quality by customer, overall demand driven by real needs appears to exceed such advance orders.

The JPY230 billion sales forecast represents a committed production and delivery volume, which we intend to execute.

Ａ4

In smartphones, we have a high exposure to high-end models, where customer outlook remains strong. For industrial equipment and telecommunications infrastructure-where market conditions are favorable and growth is strong-we have taken a somewhat cautious stance based on currently visible demand.

Ａ5

FA and industrial machinery-related applications are expected to show the strongest growth and will lead the segment. Medical equipment is also projected to grow at a near double-digit rate. Other sub-segments are expected to remain stable and continue to deliver positive growth.

Ａ6

We do not view current production levels as a hard ceiling. We expect further strength from some customers and will respond to additional upside as needed. Capacity allocation will be adjusted flexibly.

Ａ7

Probe application products include socket and connector-type components using ultra-small, high-density probes. Demand is increasing for connectors used in semiconductor testing processes and test fixtures, particularly for high-speed, high-performance ICs such as servers.

This reflects both overall semiconductor demand growth and expansion in high-performance devices, where our high-speed, high-density solutions-especially ultra-thin, short probes-are gaining strong traction.

In terms of profitability, we expect margins to be broadly in line with the company average based on the FY2026 sales outlook.

Ａ8

Approximately 70% of the increase is attributable to rising gold prices. Although market prices have stabilized somewhat, there is a lag in reflecting this in P/L due to inventory effects. Prices surged above JPY20,000 per gram in the second half of the previous fiscal year, and we assume JPY26,000-27,000 per gram for FY2026, which will have a significant impact.

We are also promoting initiatives to reduce gold usage, with some results already emerging. Accordingly, we do not plan to fully pass on cost increases through pricing but will also address them through cost reduction and product replacement, particularly for shorter lifecycle applications.

Ａ9

Gold price increases have been the main driver of cost inflation. We began price optimization efforts last year, but there is a time lag before the effects are fully realized. While the impact was JPY0.5 billion in FY2025, we expect full-scale contribution in FY2026.

These are not one-off price hikes but ongoing initiatives, and the forecast includes additional incremental effects.

Ａ10

There are some impacts, such as tighter supply and price increases for organic solvents used in plastics, as well as higher logistics costs including fuel surcharges. However, since metal materials account for a larger portion of our cost structure, the overall impact is currently limited.

We also work with suppliers to adjust prices downward once conditions normalize, so the duration of these effects is a key consideration.

Ａ11

While the impact was significant last year, we expect negotiations this year to be within the normal range of periodic price discussions. Market share has been maintained, and we continue to receive cooperation requests from customers, supporting stable relationships.

Ａ12

Our capital policy assumes steady shareholder returns from accumulated operating cash flow, which will contribute to improving ROE by reducing equity while increasing profits through top-line growth. At the same time, rather than focusing solely on maintaining margins, we intend to invest actively where necessary-such as in capacity, R&D, and new businesses. We would like this to be viewed as a proactive message that now is an appropriate time to invest for future growth.

This document contains statements based on Hirose Electric's current forecasts. These forward-looking statements involve known and unknown risks and uncertainties and other factors that may differ from the Company's actual results. Please note.