For Shareholders/Investors

Breaking through the 50 billion yen barrier "Dantotsu" products lead business performance and advance the company on to new stages of development

Performance in the 55th fiscal year (Term ending December 2017)

All segments showed steady growth and the highest sales ever achieved

In Electrical and Electronic Components Business, miniature radio frequency (RF) coaxial connectors were developed to accommodate demand for new wireless communication in the IoT field. In addition, small gauge coaxial connectors were successful with regard to panel connections in laptop PCs. Sales of FPC/FFC connectors also expanded steadily with regard to games consoles and smart phones, but in particular sales of Board to Board connectors expanded significantly for full shield connectors for high frequency noise prevention. HDD-related components sold well because the demand for HDD in servers and games consoles showed steady performance. In addition to this, we commenced mass production supply of our torque sensor, "ESTORQ", for robots made by Yaskawa Electric Corporation, and this started to contribute to business performance.
Next, with regard to Automotive Components Business, because of steady good performance in automobile sales particularly in North America and China, we continued to receive a high level of orders for electronic components such as automotive sensors. Also, as a result of the development of car electronics, there was continued expansion of the number of car models which adopted the SMT connectors that are used in LED headlights, etc., meaning sales grew, and our Automotive Components Business set a new sales record again for the 55th fiscal year.
With regard to Equipment Business, while the semiconductor market has been active mainly with regard to memory, semiconductor manufacturers' willingness to make capital investments also grew. As a result, receipt of orders for resin sealing devices and molds, etc. increased substantially.
As mentioned above, "Dantotsu" products such as full shield connectors and ESTORQ contributed to business performance, and business was good in all segments. As a result, our sales reached 51.9 billion yen and broke through the "50 billion yen barrier" for the first time. In addition, with respect to profit, significant increases were achieved from the previous term, with operating profit at 2.6 billion yen, ordinary profit at 2.5 billion yen and this fiscal year's net income attributable to shareholders at 1.6 billion yen. In order to achieve positive shareholder return taking into consideration these results and the investment and financial situation, etc. for future business expansion, the fiscal year's year-end dividend was increased by 10 yen from the previous term, which was 20 yen per share, so that the annual dividend including the interim dividend shall be 25 yen.

Priority strategies for the 56th fiscal year (Term ending December 2018)

"Dantotsu" products lead business performance, and we move on to preparations for a new stage of development

Since the 53rd fiscal year, work has been underway to produce the "Dantotsu" products of the future; key products that generate over 20% of sales in each business area. In the 55th fiscal year, they contributed to business performance as expected, and have become developments with good future potential. In the 56th fiscal year, the following initiatives will be undertaken.

Electrical and Electronic Components Business

As a result of the growth of IoT, it is anticipated that the installation of wireless communication functions in a variety of things will progress and the market will expand. We will therefore prepare our systems for increased production of micro RF coax connectors for antennas and will focus on sales promotion. Also, it is anticipated that acceleration of data transmission inside the devices will increase, accompanying the capacity enlargement of processing data in the medical care, robot, and automotive fields in addition to PCs, mobile devices, servers, TVs, etc. As a result, we will strive to promote sales of connectors that support high-speed transmission such as micro-coax connectors. In addition to this, we will also channel our strength into the enhancement of our lineup of full shield connectors in order to respond to needs for noise control during high speed transmission. With regard to HDD related parts, we will promote the establishment of production & supply systems overseas. Also, with regard to "ESTORQ", our torque sensor, we will promote sales to robot manufacturers, medical nursing care services and in the industrial machinery field, using our achievements installing them in mass production robots as a stepping stone.

Automotive Components Business

It is anticipated that the production volume of cars will grow steadily, so it is expected that the demand for electronic components including automotive sensors will also maintain its high standard. With regard to automotive sensors, we will also focus on starting up the project for the next term's model, and will work toward further sales promotion pertaining to automotive connectors including ones for LED headlights. Also, it is anticipated that new component demand will expand resulting from the electrification of cars and the spread of autonomous driving assistance systems. As a result, we have restructured the organization and developed a system that enables the sharing of the connector know-how we have developed in the electric device field with that we have developed in the automotive field, in order to strengthen the development of new products. In addition to this, the enhancement of development and manufacturing locations will also be promoted within Japan and overseas in order to prepare for future business expansion. A new plant which is already under construction in Malaysia is scheduled to be completed in October this year, and projects such as the Shanghai Technical Center and Head Office Plant are under way. Through these activities, we aim to maximize our automobile business.

Equipment Business

We will continue to work on developing and making prototypes pertaining to ultra-thin molding technology, for which an expansion of market need is anticipated, feed the results of this development back into our resin molding machines and molds etc., and aim to launch new products onto the market. We will also continue to work on opening up new areas of business by applying the molding technologies we have cultivated through our semiconductor work to other fields such as connectors and automotive parts.

New business

We announced the development of MEMS odor sensors in November last year. It is expected that these will replace the sensory inspections, etc. of food, beverages and cosmetics, which have traditionally depended on human beings. In addition to this, there will also be the possibility of new needs we have not yet imagined including, for example, the measurement of fruits to determine when they are ripe and ready to eat, etc. In order to respond to such needs properly, this year we will transfer to production by conducting demonstration tests with users.
We also announced the development of MEMS ultrasonic sensors on January this year. At 0.48 mm, this sensor is the thinnest three-dimensional drive sensor in the industry, achieved by manufacturing a three-dimensional drive mechanism that applies the technologies of ultrasonic elements and the MEMS mirror devices we had announced before, on a wafer - a first in the industry. It is expected to be used in the detection of obstacles, such as in robots, drones and human sensors, etc. in the future.

* Based on research by our company.

We will continue to work on proactive research and development and investment so that we produce new "Dantotsu" products, and develop them so that they play a lead role in our business performance and take our company to the next stage of development. Through this, we will aim for improvement of our corporate value.

I would like to ask all our shareholders to continue the kind support they have shown to our group in the future.

KONISHI Hideki
President
Dai-ichi Seiko Co.,Ltd.