[Presentation Slids] Financial Results Briefing for Q1 FYE 12/2020

Financial Results Briefing
for Q1 FYE 12/2020



MEC COMPANY LTD.
Securities code: 4971
https://www.mec-co.com/en/
Measures against COVID-19 Infection
Maintaining a system for preventing the spread of
infection and continuing to supply products
Placing the President as the Head of the Emergency Response
Headquarters, and carefully continuing corporate activities according to
the circumstances based on the BCP (business continuity plan)
Risk Business Facility
diversification
Way of working Commuting
trips, etc. management
• Decentralizing • Recommendation • Staggered • Prohibition of • Thorough
into two of working from working hours overseas hygiene
bases the home • Recommenda business trips management
staff members • Recommendation tion of • Self-restraint
in charge of of doing flextime regarding
production substitute holiday domestic
work (swapping • Relaxation of business trips
and shipping flextime
operations holidays with • Self-restraint
working days) regulations regarding
and taking • Commuting eating together
substitute by car
holidays



Financial Results Briefing for Q1 FYE 12/2020 1
Q1 FYE 12/2020 Key factors
Assumed/actual exchange rate
JPY to NTD Assumed rate: 3.50 yen / Actual rate: 3.61 yen (previous year was 3.58 yen)
１ JPY to RMB Assumed rate: 15.76 yen / Actual rate: 15.56 yen (previous year was 16.38 yen)
JPY to EUR Assumed rate: 121.17 yen / Actual rate: 120.66 yen (previous year was 125.72 yen)
JPY to USD Assumed rate: 108.62 yen / Actual rate: 109.20 yen (previous year was 110.48 yen)


Exchange rate impact (YOY change)
2 Sales: Down 33 million yen,
Operating income: Down 10 million yen.

Major products sales (YOY change)
3 CZ and SF were good performance,
EXE and V-Bond were almost flat.

Chemicals (YOY change)

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Sales: Up 17.4%, Shipments: UP 15.3%

Financial Results Briefing for Q1 FYE 12/2020 2
Q1 FYE 12/2020 Results - 1
Unit : million yen
Q1 Full-year

FYE19.12 FYE20.12 FYE19.12 FYE20.12

Progress Progress YOY YOY
Results Results Results (Forcast)
ratio (%) ratio (%) (%) (%)
Net sales 2,328 21.4% 2,809 24.2% 481 20.7% 10,865 11,600 6.8%
Chemical sales 2,266 21.3% 2,661 - 394 17.4% 10,657 - -
Gross profit 1,383 20.9% 1,736 - 352 25.5% 6,618 - -
Gross profit margin 59.4% - 61.8% - - - 60.9% - -
SGA 1,178 23.6% 1,238 - 60 5.1% 4,981 - -
Sales ratio 50.6% - 44.1% - - - 45.8% - -
Operating income 205 12.6% 498 29.3% 292 142.1% 1,637 1,700 3.8%
Operating profit margin 8.8% - 17.7% - - - 15.1% -
Ordinary income 240 14.0% 463 26.5% 223 92.9% 1,722 1,750 1.6%
Ordinary profit margin 10.3% - 16.5% - - - 15.9% - -
Profit before tax 241 14.1% 446 - 205 85.0% 1,710 - -
Net income 158 12.8% 317 25.4% 159 100.0% 1,236 1,250 1.1%
Financial Results Briefing for Q1 FYE 12/2020 3
 4
(million yen)

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２，８０９
Q1




Foreign exchange
481 million yen 20.7 % up


Other sales
Financial Results Briefing for Q1 FYE 12/2020
Material sales
Machine sales
Other solution
Etching solution
Net sales YOY



Adhesion improves

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２，３２８




Q1
Million yen
 5

---

(million yen)




Q1

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Foreign exchange
（Selling、general and
administrative expenses）
Selling, general and
292 million yen 142.1 % up



administrative expenses
Foreign exchange
（Gross profit）

Financial Results Briefing for Q1 FYE 12/2020
Material and
Other sales Gross profit
Material and
Operating income YOY




Other sales
Machine sales
Gross profit
Machine sales
Gross profit
Chemical sales

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Q1

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Million yen
Quarterly Net sales, Operating income and
Operating profit margin (Consolidated)
3,500 30


3,000

---

2,500

---

2,000

---

（％）
1,500
(Million yen )

---

1,000

---

---

---

1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3

---

Net sales 2,660 2,839 2,932 2,896 2,328 2,648 3,128 2,761 2,809
Operating income 520 518 708 475 205 404 755 271 498
Operating profit margin 19.6 18.3 24.2 16.4 8.8 15.3 24.2 9.8 17.7



Financial Results Briefing for Q1 FYE 12/2020 6
Quarterly composition profit and loss
(Consolidated)
3,500 30


3,000

---

2,500

---

2,000

---

1,500




（％）
(Million yen )

---

1,000

---

---

---

1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3

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Operating income 520 518 708 475 205 404 755 271 498
SGA 1,169 1,282 1,212 1,353 1,178 1,242 1,225 1,335 1,238
COGS 970 1,038 1,011 1,067 944 1,001 1,145 1,154 1,073
Operating profit margin 19.6 18.3 24.2 16.4 8.8 15.3 24.2 9.8 17.7



Financial Results Briefing for Q1 FYE 12/2020 7
Product-specific quarterly sales (Consolidated)

3,500


3,000


2,500


2,000


1,500


1,000
(Million yen)

---

---

1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3

---

Other 16 1 4 1 6 1 5 4 4
Mmaterials for PCBs 21 46 19 3 15 15 58 17 17
Equipments for PCBs 9 17 10 15 40 8 10 24 129
Chemicals for PCBs 2,612 2,773 2,898 2,847 2,266 2,623 3,052 2,715 2,661




Financial Results Briefing for Q1 FYE 12/2020 8
Quarterly chemical sales (consolidated)

Adhesion improves : CZ, V-Bond, FlatBOND, UT etc.
3,500
Etching solution : EXE, SF etc.

3,000


2,500


2,000


1,500


1,000
(Million yen)

---

---

1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3

---

Other surface processing solution 158 156 181 162 132 125 133 122 109
Etching solution 855 975 1,076 1,108 773 909 1,200 897 830
Adhesion improves 1,598 1,641 1,640 1,577 1,360 1,588 1,718 1,695 1,720




Financial Results Briefing for Q1 FYE 12/2020 9
Chemical shipment volume (consolidated)

12,000


10,000


8,000


6,000


4,000


2,000

---

1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3
(t)

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Other surface processing solution 360 377 424 399 338 310 320 319 267
Etching solution 1,978 2,186 2,504 2,462 1,758 1,986 2,777 2,242 1,955
Adhesion improves 6,341 6,546 6,527 6,286 5,575 6,356 6,833 6,729 6,626




Financial Results Briefing for Q1 FYE 12/2020 10
CZ series sales

1,600

1,400

1,200

1,000

---

---

---

(Million yen)

---

---

1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3

---

Other CZ 392 407 420 382 413 330 475 446 474

---

---

Financial Results Briefing for Q1 FYE 12/2020 11
CZ series sales （Composition ratio）

---

---

---

---

---

---

---

---

（%）

---

---

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1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3

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Other CZ 29 28 30 28 34 24 32 31 31

---

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Financial Results Briefing for Q1 FYE 12/2020 12
Region-specific sales and overseas sales ratio

1,600 60


1,400

---

1,200

---

1,000




(%)

---

---

---

---

(Million yen)

---

---

---

1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12 1-3

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Japan 1,239 1,332 1,384 1,410 1,077 1,231 1,430 1,303 1,498
Asia 1,240 1,330 1,399 1,355 1,079 1,269 1,512 1,335 1,154
Europe 181 175 148 130 171 146 185 121 157
Foregin sales ratio 55.6 53.1 54.2 53.6 54.9 54.9 55.9 55.0 48.0


Overseas sales ratio is 72.7%(same period of the previous year: 71.6%)
if domestic agents’ overseas chemical sales are included.

Financial Results Briefing for Q1 FYE 12/2020 13
FYE 12/2020 full-year forecast
FYE 12/2019 FYE 12/2020
(51th term) (52th term)

Full-year 1H Full-year

Profit Profit YOY
Amount ratio
Amount Profit ratio Amount ratio change
(million yen) (million yen) (%) (million yen)
(%) (%) (%)

Net sales 10,865 - 5,000 - 11,600 - 6.8
Operating
income 1,637 15.1 600 12.0 1,700 14.7 3.8
Ordinary
income 1,722 15.9 600 12.0 1,750 15.1 1.6
Net income 1,236 11.4 400 8.0 1,250 10.8 1.1
Net income
per share(yen) 65.16 - 21.07 - 65.87 - -
15,000 30
11,600
20.4 10,749 21.8 11,328 19.6 10,865
9,259 15.1
10,000 14.7 20


5,000 10
Million yen




1,887 2,339 2,222 1,637 1,700
1,642 1,803 1,778 1,236 1,250

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3/2017 12/2017 12/2018 12/2019 12/2020（Forecast）

Net sales Operating income Net income Operating margin
FYE 12/2017 & FYE 12/2018: Full-year = Jan-Dec
Financial Results Briefing for Q1 FYE 12/2020 14
Capital investment, depreciation expenses and
R&D expenses

2,500 14.0

12.0
2,000
10.0

1,500
8.0

6.0
1,000




（％）
4.0

---

(Million yen)




2.0

0 0.0

---

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(Forcast)
Capital investment 2,033 1,048* 592 1,362 855
Depreciation expenses 368 568* 609 692 783
R&D expenses 902 1,053* 1,240 1,200 1,407
R&D expense ratio to sales 9.7 9.8 11.0 11.0 12.1

*Converted

Financial Results Briefing for Q1 FYE 12/2020 15
Dividend, payout ratio and ROE

Dividend policy Dividend（Forcast）
Medium-term goal
(consolidated payout ratio)
26.0 yen
Q2 12 yen
30% Q4 14 yen

Dividend / Dividend ratio
50 13.0 * 15.0
13.0 12.0 39.9 39.5

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28.0 7.9 10.0
30 23.6 23.4 * 7.6
Dividend（yen）

---

Dividend ratio（%） 5.0

---

ROE（%）

---

0 0.0
（yen）




（％）

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*Converted (Forcast）




Financial Results Briefing for Q1 FYE 12/2020 16
ESG-H effort
Environment
• Eco friendly products and products that improve yield.
• Contribution to the improvement of the PCBs manufacturing
environment.

Social
• Contribution to social development (5G, autonomous driving).
• WLB support, Success of women in the work place.


Governance
• Invitation of outside directors (majority is outside)
• Establishment of ESG Committee and Compensation Advisory
Committee

Human Resources
• Development and utilization of human resources


Financial Results Briefing for Q1 FYE 12/2020 17
Basic policy of capital policy and shareholder return
In line with the MEC Group's capital policy, we are making the following
efforts in order to help improve shareholder value while securing
financial soundness.

Improvement of corporate value

• Continuously improve consolidated ROE based on a level of 10%

Active, continuous and stable
return of profits
• Set a medium-term goal of 30% for consolidated payout ratio

Medium- and long-term investment
for sustainable growth
• Make upfront investment of approximately 10% or more of
consolidated sales to cover R&D costs

Financial Results Briefing for Q1 FYE 12/2020 18
 ■Contact■
Corporate Communication Office
MEC COMPANY LTD.
Email: mec_ir@mec-np.com
This presentation includes forward-looking statements (such as predictions
and business forecasts) made in May 11, 2020. These statements are
assumptions based on information available at the time, and they are subject
to risks and uncertainties. Actual results or events could differ substantially
from those forecasted in such statements due to a plethora of variables.



Financial Results Briefing for Q1 FYE 12/2020