JCU : Financial Results Briefing Material for the Second Quarter of the Fiscal Year Ending March 2024 (Webcast)

JCU Corporation

Q2 Financial Results Briefing for the Fiscal Year Ending March 2024

November 8, 2023

Event Summary

[Company Name]	JCU Corporation
[Company ID]	4975-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Q2 Financial Results Briefing for the Fiscal Year Ending March 2024
[Fiscal Period]	FY2024 Q2
[Date]	November 8, 2023
[Number of Pages]	25
[Time]	16:00 - 16:43
	(Total: 43 minutes, Presentation: 34 minutes, Q&A: 9 minutes)
[Venue]	Webcast
[Venue Size]
[Participants]
[Number of Speakers]	4
	Masashi Kimura	Representative Director, President and CEO
	Hirofumi Ikegawa	Managing Officer, Manager, General Affairs
		Department
	Yoji Inoue	Managing Officer, Manager, Corporate
		Strategy Office
	Takayoshi Onuma	Manager, Accounting Department

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Japan	050.5212.7790	North America	1.800.674.8375
Tollfree	0120.966.744	Email Support	[e-mail]

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Presentation

Moderator: Ladies and gentlemen, thank you very much for taking time out of your busy schedule today to participate in the Q2 Financial Results Briefing for the Fiscal Year Ending March 2024 of JCU Corporation.

This briefing is a live-streamingweb-based financial results presentation via Zoom. If the delivery is interrupted or the video is frozen during the session, please refresh your page after a few minutes. If there are any problems with the video or audio and you are unable to fully view the presentation, we will post the video on our website at a later date, so please either view it there or contact our IR department for an individual financial results presentation.

The financial results briefing is scheduled to end at around 4:45 PM.

First of all, we would like to introduce the attendees from the company side. Today's attendees from the company side are the Representative Director, President and CEO Masashi Kimura. Managing Officer and Manager of the General Affairs Department, Hirofumi Ikegawa. Managing Officer and Manager of the Corporate Strategy Office, Yoji Inoue. Manager of the Accounting Department, Mr. Takayoshi Onuma.

After the financial results presentation, there will be time for questions and answers. Questions can be submitted anytime using the Q&A function at the bottom of your screen. Please include your company name and your name when asking questions. The information will be kept private for other participants and will be read by the management on your behalf. To prevent misreading, please include the furigana after your name.

Now, the President and CEO of JCU, Masashi Kimura, will give his greetings and explain the financial results for Q2 of the fiscal year ending March 31, 2024.

President Kimura, if you would please.

Kimura: Good afternoon, everyone. My name is Masashi Kimura, President and CEO. Thank you very much for taking time out of your busy schedules today to attend our earnings presentation. I would like to thank all of our investors for your continued understanding and support of our management.

In the fiscal year ending March 31, 2024, while the supply chain in semiconductors and various components is normalizing, the business environment remains challenging due to the end of demand for stay-at-home, weak consumer purchasing sentiment, and prolonged trade friction between the US and China. All of us at the Company, both executives and employees, are united in our efforts to achieve our forecasted performance figures even in such a difficult business environment.

I would now like to present our business results for H1 of the fiscal year ending March 31, 2024.

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Japan	050.5212.7790	North America	1.800.674.8375
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Now, page two summarizes our business performance for Q2 of the fiscal year ending March 31, 2024.

Since the closing period of our overseas subsidiaries has been delayed by three months, the domestic non- consolidated business results are from April 2023 to September 2023, and the overseas subsidiaries' business results are from January 2023 to June 2023.

In the electronics components sector, although some printed circuit board manufacturers in China showed signs of recovery, demand for PCBs for smartphones and other high-function electronic devices declined, resulting in a decrease in sales of the chemical business.

In Taiwan, demand for semiconductor package substrates for servers and high-performance electronic devices declined, resulting in lower sales in the chemical business.

Furthermore, South Korea's continued weak semiconductor market caused a decline in demand for semiconductor package substrates, resulting in a decrease in the chemical business.

In the automotive components sector in Japan, the easing of semiconductor and parts shortages led to a recovery trend in automobile production. Still, our sales in the chemical business remained unchanged.

In China, although automobile production and sales increased as the shortage of semiconductors and parts eased, demand for our target automobile parts declined, decreasing the chemical business.

As for the machine business, the resumption of postponed projects due to the impact of the COVID-19 infection and increased demand for new investments resulted in higher sales and a significant increase in the order backlog.

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As a result of this business environment, our consolidated results for Q2 of the fiscal year ending March 31, 2024, are as shown on page three of the document.

Net sales, operating income, and ordinary income all decreased YoY. The reason for these results was due to the low level of global demand for smartphones and other high-function electronic devices following the end of the COVID-19 disaster's demand to stay at home, particularly in the electronics industry.

However, amid such a business environment, we were able to land higher than our forecast at the beginning of the period due to demand obtained mainly for some printed circuit boards and the depreciation of the yen during the period.

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4

Page four shows the exchange rate.

Since we sell our products in local currencies and convert them into yen at the time of consolidated closing, exchange rates affect our performance. The major currencies used are the yuan, Taiwan dollar, and South Korean won, all of which use the average rates for the period from January 2023 to June 2023.

Regarding exchange rate sensitivity, a 1% change in the major currencies will impact about JPY105 million on consolidated operating income. The depreciation of the yen against all three currencies YoY contributed to the increase in operating income.

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Page five shows the factors of change in the amount of operating income YoY.

Sales of chemicals decreased by JPY1,787 million. The chemical's profit margin increased by JPY63 million. This increase was due to an improvement in the mix, which resulted from lower sales of preprocessing chemicals for POPs with low chemical profit margins.

The impact of foreign exchange rate fluctuations on chemicals increased by JPY184 million due to the depreciation of the yen against three major currencies.

SG&A expenses decreased by JPY26 million due to lower packaging and transportation costs resulting from lower sales of chemicals, despite increases in amortization, depreciation, and travel expenses.

As a result, operating income decreased by JPY1,585 million from the same period of the previous year.

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6

Page six shows consolidated quarterly results for the fiscal year ending March 31, 2024.

The bar graph shows net sales and the line graph shows the operating profit amount. In Q1, chemical sales and operating profit amounts declined due to lower customer utilization in major regions, reflecting the continued market slump since the end of last year, the Chinese New Year holiday period, and the spread of infected patients after the end of the zero-COVID-19 policy.

Although there was no notable recovery in market conditions in Q2, the end of the holiday period brought a partial return to customer utilization, and sales increased.

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Japan	050.5212.7790	North America	1.800.674.8375
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The following is a summary of consolidated quarterly results by business segment.

The line graph on the previous page shows the amount of operating profit, while here it is the operating margin. As with the operating profit, the operating margin also increased in Q2 of the fiscal year ending March 31, 2024. Compared to Q1, the operating margin increased due to an improvement in the mix of chemical sales and a decrease in sales of preprocessing chemicals for POPs, which have low chemical profit margins.

Page eight shows a YoY comparison of consolidated segment results.

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8

In the chemicals business, both the electronics and automotive sectors faced a challenging business environment; in the electronics sector, demand for chemicals for printed circuit boards and semiconductor package substrates declined due to a decrease in demand for various high-performance electronic devices.

For the automotive sector, both net sales and segment income decreased YoY due to a decline in demand for automotive parts, our target market.

In the machine business, sales increased as customers resumed investment activities, and demand for new investments increased with the recovery from the COVID-19 disaster.

Page nine shows the domestic and overseas chemical sales trends.

With regard to domestic and overseas chemical sales trends, overseas sales accounted for approximately 80% of total sales. Due to the unstable global situation, the Company will continue closely monitoring economic trends in each trading region.

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Japan	050.5212.7790	North America	1.800.674.8375
Tollfree	0120.966.744	Email Support	[e-mail]

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