JVCKENWOOD : Q&A session at the earnings results briefing for Q2 of the fiscal year ending March 31, 2026

Q&A session at the financial results briefing

for the Q2 of the fiscal year ending March 2026 (FY2025)

Q: Regarding the Safety & Security (S&S) Sector's Communications Systems Business, I understand that the full-year earnings forecast for the S&S Sector has been revised downward due to the impact of component shortages. Although expected to be delayed compared with the outlook at the time of the Q1 financial results briefing, recovery from the impact is anticipated in H2. In that context, how are the market conditions for the Communications Systems Business? The North American public safety market has traditionally remained strong - is that strength further increasing, or are you seeing any signs of a slowdown? Also, what is the current status of demand in the enterprise market?

A: The North American public safety market remains strong, with continued demand for crisis management. We are targeting new orders of approximately 45% increase year-over-year in this area for the current fiscal year, and progress has been steady so far. We expect to maintain a core operating income margin of 30%, and we do not anticipate any significant changes in the market environment. In this market, some project requests for proposals include requirements for compatibility with Long Term Evolution (LTE). With the acquisition of ESChat, the likelihood of winning such projects has increased, and the business continues to follow a growth trend. In the enterprise market, although the slowdown has been as expected, we are enhancing our product lineup and continuing to address school-related demand as well as safety-related demand. By leveraging these strengths, we are maintaining a position to generate stable income.

Q: Please tell us about the company that operates ESChat, which you recently acquired. It is said to have a high market share globally - what was the background or process that led to the acquisition agreement? Also, in which markets or among which end users do you expect to generate post-acquisition synergies, and over what time frame?

A: We began collaborating with San Luis Aviation, Inc. around 2017 through a project at Dallas Fort Worth International Airport won by our Group company EF Johnson Technologies, Inc. The collaboration addressed requests from some airport personnel to connect smartphones with professional radio devices. Building on several joint projects since then, we agreed to fully integrate the company into our Group to further enhance synergies. When customers build private wireless radio systems in narrowband (frequency bands for professional radio systems), communication is lost once the device goes out of range. By using ESChat, it becomes possible to automatically switch to public cellular networks to maintain communication. This functionality represents the greatest synergy for our Group, as it enhances the added value of our Communications Systems Business and is expected to further increase our new order acquisition rate. The

development of LTE-integrated models is in process. In the North American public safety market, we are targeting sales of approximately US$400 million in fiscal 2030, though our ambition is to reach an even higher level. This acquisition represents a major step forward in entering the hybrid market.

Q: Would it be fair to say that your entry into the hybrid market has lagged behind competitors, resulting in missed opportunities?

A: Although the hybrid market has existed in North America for some time, in reality it has been developing at a very slow pace and has not expanded significantly. Therefore, we do not feel that we have missed out on opportunities. Although Competitor A has been very active in entering both the broadband and hybrid markets and we recognize that we are a late entrant, we believe we can capture market share through a solid and deliberate market entry.

Q: Could you tell us about your outlook for the Mobility & Telematics Services (M&T) Sector in H2? Although the full-year earnings forecast for the M&T Sector has been revised upward, profit for H2 is expected to decline compared to H1. At the same time, as you mentioned earlier, you have been making progress in addressing the U.S. tariff measures, and sales of products transferred to production locations in Malaysia in Q2 are expected to begin in Q3, suggesting a recovery trend toward H2. How do you view the outlook for the M&T Sector in H2?

A: Compared with the H1 results, we are taking a conservative view for H2. The main reason is that we recognize the U.S. market has been slowing due to the Trump tariffs. Although we have taken measures such as mitigating the impact of the U.S. tariff measures through production transfers and price adjustments, we have revised our full-year earnings forecast to reflect the overall market slowdown in the M&T Sector.

Q: Could you comment on the likelihood of recovering production in the Communications Systems Business of the S&S Sector in Q4? As shown on slide p.20 of the Results and Forecast Briefing presentation, it appears that a fairly high level of production is planned for Q4. Have you secured the necessary arrangements to procure components and ensure sufficient production capacity to support this plan? How has the situation regarding the procurement of components changed from Q2 to Q3? In addition, could you tell us in more detail about the securing of orders for large-scale projects in H2? Also, as mentioned in the recent discussion about competitor A's financial results, how do you view the impact of the U.S. government shutdown?

A: The Communications Systems Business expects recovery in both production and sales in Q4. Particularly in the North American public safety market, production of the VP8000

tri-band digital professional radio is planned at 140% of the initial plan (excluding the impact of the supply shortage of components). As the profit margin on this model is high, we believe that a solid recovery can be achieved in Q4. In the enterprise market, the business aims to realize a recovery through new order acquisition for the NX-3000 and NX-5000 series, which are positioned in the mid- to high-price range. As for the certainty of recovery, purchases of the relevant components have been diversified across multiple suppliers, and the alternative designs are scheduled for completion in Q3. Accordingly, full-scale production is expected in Q4. In summary, the supply shortage of components will be resolved in Q4, enabling us to restore normal production levels.

As for large-scale projects in H2 in the North American public safety market, we are currently working toward acquisition of about two Awards. Our order backlog currently stands at slightly over US$130 million and is expected to increase further by the end of this fiscal year, contributing to revenue in the next fiscal year and beyond upon winning these projects. We believe there is a strong likelihood of securing these projects and will provide an update once they are officially confirmed.

Regarding the impact of the U.S. government shutdown, the relatively small- to medium-scale projects of state governments-our main target-are generally implemented under their own budgets, and thus at this point, there has been little significant impact. Since our business with the U.S. government is still quite limited, we expect almost no effect for the current fiscal year.

Q: Could you provide an update on the status of your business portfolio reforms? During the previous fiscal year, you made the decision to close the sales office in France. Regarding the sales offices for the Aftermarket Business within the M&T Sector, the healthcare business in the S&S Sector's Professional Systems Business, and the Media Business in the Entertainment Solutions Sector (ES), by when do you plan to complete a thorough assessment, and are there any updates on your policies?

A: Regarding the business portfolio reforms, we have been steadily advancing initiatives under the medium-term management plan VISION 2025, categorizing businesses into four quadrants from the perspectives of capital efficiency and growth momentum. Since VISION 2025 will be concluded this fiscal year, we are examining various directions for each business during the formulation of the next medium-term management plan. We aim to clarify the strategic direction of our sales subsidiaries in relation to existing businesses.

Q: I would like to confirm your shareholder return policy. During the Q2 earnings announcement for the previous fiscal year ended March 2025, share repurchases were announced, but no such announcement has been made this time. Am I correct in

understanding that the policy of a total return ratio of 30-40%, with approximately 60% allocated to share repurchases, has not changed, and that it is simply a matter of timing, so we may expect a flexible execution sometime in H2? Or is there any particular reason why a decision could not be made this time, or has there been any change in the policy?

A: The overall policy on shareholder returns has not changed at all. We continue to target a total return ratio of approximately 30-40%.

A: At this point, the only shareholder return announced for the current fiscal year is a dividend of 18 yen. The remainder, which does not yet reach the 30-40% total return ratio, is planned to be announced at an appropriate timing later. Since the full-year earnings forecast was only revised upward by a small margin this time, we wanted to take a bit more time to carefully consider the timing and scale of share repurchases.

Q: I would like to ask about the recovery from the impact of the U.S. Tariff Measures in the next fiscal year. During the current fiscal year, core operating income was negatively impacted by ¥3.7 billion, and some delays in price-pass through were noted. Will the next fiscal year see measures to offset this impact, or is it expected that a similar level of effect will continue in the next fiscal year? Also, in the Communications Systems Business within the S&S Sector, it appears that production could not fully meet the initial plan in the current fiscal year. Will production recovery continue into H1 of the next fiscal year, and could this contribute positively to core operating income in the next fiscal year?

A: In the next fiscal year, we expect no U.S. tariff impact in the S&S Sector. In the M&T Sector, as transfer of production locations and price-pass through have been progressing, we anticipate that tariff impact will be almost negligible in the next fiscal year. In the ES Sector, the proportion of production in China is high, and transfer of production locations is being advanced; however, there remain concerns regarding the market deterioration in the U.S. itself, as well as whether the price pass-through would be accepted by local consumers. Overall, in the S&S Sector and the M&T Sector, tariff impact is expected to be generally small and almost negligible in the next fiscal year, whereas in the ES Sector, although less than the current fiscal year, some impact on revenue and core operating income is expected to remain.

A: In the S&S Sector's Communications Systems Business, production is expected to recover in H2, but full-year production will not fully reach the initial plan. As a result, we have slightly revised the full-year earnings forecast. Quantities that cannot be produced in H2 will become backlog of orders, and a portion of them will be carried over to the next fiscal year. We are currently preparing to achieve full production to eliminate the backlog, and we expect that any carryover will not have a significant impact on the next fiscal year. For the next fiscal year, we aim to deliver solid performance within the planned budget.

Q: Could you share your views on the improvement of the product mix and profitability in the S&S Sector's Communications Systems Business for the next fiscal year? Is there a phase in which profitability will further improve, given that there are expected orders for large-scale projects in H2?

A: In the next fiscal year, the major contributor to core operating income will continue to be the North American public safety market. As the sales ratio to this market increases, the overall profitability of the business is expected to improve significantly. We anticipate that in the next fiscal year, further expansion of orders for VP8000 and VM8000 series, compatible with tri-band and currently receiving high evaluations in the same market, will lead to an additional improvement in the core operating income margin through a more favorable product mix.

Q: The core operating income margin of the North American public safety market is currently approximately 30%, which is extremely high even within the Communications Systems Business. Given that this margin is expected to be maintained and sales to the same market are projected to further expand, is it correct to understand that the core operating income margin of the business as a whole will also improve? Or is there still room for further improvement in the core operating income margin for the North American public safety market?

A: The current core operating income margin of approximately 30% is at an extremely high level. As a result, the core operating income margin of the overall Communications Systems Business is currently approximately 20%. By further expanding sales to the North American public safety market, we aim to improve the profitability of the business as a whole.