Results Briefing FY2018 1Q - alpsalpine.com · Key Points of FY2018 1Q Consolidated Financial Results 4 Electronic Components Segment Automotive Infotainment Segment (Alpine Electronics,

Friday, July 27, 2018

Securities Code: 6770

Results Briefing FY2018 1Q

Contents

2

■ FY2018 1Q Consolidated Financial Results P. 3 - 12

■ FY2018 Consolidated Financial Results Forecast P. 13 - 15

■ Progress on the Business Integration Between Alps Electrics and Alpine Electronics P. 16 - 19

FY2018 1Q Consolidated Financial Results

Key Points of FY2018 1Q Consolidated Financial Results

4

Electronic Components Segment

Automotive Infotainment Segment (Alpine Electronics, Inc.)

■Year-on-year decreases of net sales and operating income Net sales decreased by 0.5% and operating income decreased by 39.6% year on year.

■Steady increase of sales in Automotive market In-car devices had steady progress. Profitability was improved for in-car modules.

■Decrease of sales in Consumer market Sales of components for smartphones were weak.

■Year-on-year increases of net sales and operating income Net sales increased by 21.3% and operating income increased by 961.0% year on year.

■Sales of commercial product remained unchanged Net sales of audio equipment and navigation systems remained unchanged year on year.

Consolidated■Year-on-year increases of net sales and operating income Net sales increased by 6.7% and operating income increased by 21.7% year on year.

■Increase of sales of genuine products for automakers Sales of navigation systems increased due to strong sales of European cars.

Summary of Financial Results

5

[Consolidated] [Unit: ¥ billion]

NB: Here and subsequently amounts have been rounded down to the nearest ¥100 million.NB: Breakdown of sales shows composition, breakdown of operating income shows operating margin.

Change in Breakdown of Sales by Business Segment

6

Electronic Components Segment [Unit: ¥ billion]

Net sales (1Q)¥111.4 billion (down 0.5% year on year)

Operating income (1Q)¥4.3 billion (down 39.6% year on year)

Automotive market: ¥70.6 billion (up 6.0%)

Operating margin: 3.9%

Sales of devices such as switches and sensors increased.

•

Consumer market: 40.7 billion (down 10.1%)Regarding camera actuators, although sales for Chinese manufacturers remained unchanged, sales for major customers increased overall due to expansion of sales of high grade functional products.

•

■ Operating income

As for modules, sales of instrument panels, door modules and keyless entry systems increased.

•

Sales of HAPTICTM for game console remained strong.•Sales of touch panels for smartphones decreased.•

Profitability was improved due to improved productivity for in-car modules.

•

Depreciation expense relating to products for smartphones increased significantly.

•

■ Net sales

Change in Breakdown of Sales by Business Segment

7

[Unit: ¥ billion]Automotive Infotainment Segment（Alpine Electronics, Inc.）Net sales (1Q)¥71.6 billion (up 21.3% year on year)

Operating income (1Q)¥4.0 billion (up 961.0% year on year)

Commercial products

Operating margin: 5.6%

Sales of audio equipment increased in North America and Asia, and remained unchanged in Japan and Europe.

•Genuine products for automakers

Sales of audio equipment decreased slightly in various regions.

•

Increase of sales of genuine products and streamlining of product development

•

■ Net sales

Sales of navigation systems increased in North America, and remained unchanged in Japan, Europe and Asia.

•

Sales of navigation systems increased significantly in Europe and China due to strong sales by European automakers.

•■ Operating income

Net Sales and Operating Income: Quarterly Change

8

[Unit: ¥ billion][Consolidated]

Change in Quarterly Net Sales

Change in Quarterly Operating Income66.0

（Forecast）28.5 53.5 52.3 44.3 71.9Annual total

Quarterly Consolidated Financial Results (Change from the Preceding Quarter)

9



Quarterly Consolidated Financial Results (Quarterly Change)

10



Summary of Consolidated Balance Sheet

11

[Unit: ¥ billion][Consolidated]Inventories¥98.7 billion(up ¥2.6 billion from previous year-end)Electronic components segment: up ¥0.8 billion(includes -¥0.1 billion in exchange rate effect)Automotive infotainment segment: up ¥1.4 billion(includes +¥0.0 billion in exchange rate effect)

Property, plant and equipment¥188.3 billion(up ¥2.4 billion from previous year-end)Electronic components segment: up ¥1.6 billion(includes -¥0.5 billion in exchange rate effect)

Automotive infotainment segment: up ¥0.3 billion(includes +¥0.0 billion in exchange rate effect)

Logistics segment: up ¥0.4 billion(includes -¥0.1 billion in exchange rate effect)

Net assets¥414.5 billion(down ¥1.3 billion from previous year-end)Foreign currency translation adjustment: down ¥1.1 billion

Equity ratio44.9% (previous year-end: 45.0%)

Amount of Effect from Exchange Rates

12

[Unit: ¥ billion/month/per ¥1]

USD EUR

Net sales

Operating income

Consolidated

0.36

0.10

0.04

0.02

Net sales

Operating income

Electroniccomponents

segment

0.25

0.07

0.02

0.01

NB: The above amounts for the USD effect include other currencies linked to the USD (eg.: HKD, CNY).

FY2018 Consolidated Financial Results Forecast

FY2018 Consolidated Financial Results Forecast[Unit: ¥ billion][Consolidated]

14


FY2018 forecast is revised after review of 1H forecast.

FY2018 Consolidated Financial Results Forecast (Difference vs. 1H Previous Forecast)

15

[Unit: ¥ billion]


[Consolidated]

16

Progress on the Business Integration betweenAlps Electric and Alpine

Feb. 2018 Jun. 2018 Nov. 2018 Dec. 2018 Jan. 1, 2019Alps Electric and Alpine:change to the transactionstructure of the businessintegration

Alpine:Extraordinary general meeting of shareholders toapprove the shareexchange

Effective date ofthe share exchange;Establishment ofALPS ALPINE

Expected completion ofSEC’s review ofthe Form F-4

General meetingsof shareholders;

Completion of the review process by the relevant

competition law authorities

Sales & Marketing

Development

Production and Quality Assurance

Start joint promotion to customers common to the Companies

Formulate a development roadmap and promote a joint development activities

Facilitate mutual exploitation of resources at the Companies’ production sites across the globe

AdministrationExpedite streamlining and standardizing of operations and processes for early realization of the integration of the administrative functions

Achieve net sales of 1 trillion yen and 10% operating income margin(during the term of the 2nd Medium-Term Plan)

Realize a new business of 150 billion yenM

ediu

m-

to L

ong-

Term

Tar

get

“ITC101“Seek steady realization of the business integration synergy effects by expanding the scope of business collaboration activities and accelerating the business collaboration schedule

Execution of the basic agreement on the business collaboration

(Excluding the product areas in which the companies compete with each other)

Procurement Promote activities toward improved procurement capabilities through joint purchasing

* The projects for which an NDA has been executed will be carried out in compliance with the terms of the NDA. For the product areas in which the companies compete with each other, independent business operations will be maintained until the consummation of the business integration.

Execution of the basic agreement onthe business collaboration

(Excluding the product areas in which thecompanies compete with each other)

17

Disclaimer

Alps Electric Co., Ltd. (“Alps Electric”) may file a registration statement on Form F-4 (“Form F-4”) with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the possible share exchange (the “Share Exchange”) with Alpine Electronics, Inc. (“Alpine” and, together with Alps Electric, the “Companies”). The Form F-4 (if filed) will contain a prospectus and other documents. If a Form F-4 is filed and declared effective, the prospectus contained in the Form F-4 will be mailed to U.S. shareholders of Alpine prior to the shareholders’ meeting at which the Share Exchange will be voted upon. The Form F-4 and prospectus (if a Form F-4 is filed) will contain important information about the Companies, the Share Exchange and related matters. U.S. shareholders of Alpine are urged to read the Form F-4, the prospectus and other documents that may be filed with the SEC in connection with the Share Exchange carefully before they make any decision at the shareholders’ meeting with respect to the Share Exchange. Any documents filed with the SEC in connection with the Share Exchange will be made available when filed, free of charge, on the SEC’s website at www.sec.gov. In addition, upon request, the documents will be mailed to shareholders for free of charge. To make a request, please refer to the following contact information.

Company name: Alps Electric Co., Ltd.Address: 1-7, Yukigaya-otsukamachi, Ota-ku, Tokyo, JapanDepartment in charge: Junji Kobayashi, Senior Manager, Corporate Planning OfficeTelephone: +81-3-5499-8026 (IR Direct)

Company name: Alpine Electronics, Inc.Address: 1-7, Yukigaya-otsukamachi, Ota-ku, TokyoDepartment in charge: Shinji Yamazaki, Senior Manager, Finance and Public Relations DepartmentTelephone: +81-3-5499-4391 (IR Direct)

18

Forward-Looking StatementsThis document includes “forward-looking statements” that reflect the plans and expectations of Alps Electric and Alpine in relation to, and the benefits resulting from, their business integration described above. To the extent that statements in this document do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Companies in light of the information currently available to them, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the actual results, performance, achievements or financial position of one or both of the Companies (or the integrated group) to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements.The Companies undertake no obligation to publicly update any forward-looking statements after the date of this document. Investors are advised to consult any further disclosures by the Companies (or the integrated group) in their subsequent domestic filings in Japan and filings with the U.S. Securities and Exchange Commission.The risks, uncertainties and other factors referred to above include, but are not limited to:(1) economic and business conditions in and outside Japan;(2) changes in demand for and material prices of automobiles, smart phones and consumer electrical equipment and machines, which are the main markets of the Companies’ products, and changes in exchange rates;(3) changes in the competitive landscape, including the changes in the competition environment and the relationship with major customers;(4) further intensified competition in the electronic components business, automotive infotainment business and logistics business;(5) increased instability of the supply system of a certain important components;(6) change in the product strategies or other similar matters, cancellation of a large-quantity order, or bankruptcy, of the major customers;(7) costs and expenses, as well as adverse impact to the group’s reputation, resulting from any product defects;(8) suspension of licenses provided by other companies of material intellectual property rights;(9) changes in interest rates on loans and other indebtedness of the Companies, as well as changes in financial markets;(10) adverse impact to liquidity due to acceleration of indebtedness;(11) changes in the value of assets (including pension assets) such as securities and investment securities;(12) changes in laws and regulations (including environmental regulations) relating to the Companies’ business activities;(13) increases in tariffs, imposition of import controls and other developments in the Companies’ main overseas markets;(14) unfavorable political factors, terrorism, war and other social disorder;(15) interruptions in or restrictions on business activities due to natural disasters, accidents and other causes;(16) environmental pollution countermeasures costs;(17) violation of laws or regulations, or the filing of a lawsuit;(18) the Companies being unable to complete the business integration due to reasons such as the Companies are not able to implement the necessary procedures including approval of the agreement with regard to the business integration by the shareholders’ meetings of the Companies, and any other reasons;(19) delays in the review process by the relevant competition law authorities or the clearance of the relevant competition law authorities’ or other necessary approvals’ being unable to be obtained; and(20) inability or difficulty of realizing synergies or added values by the business integration by the integrated group.

The business results forecasts and future predictions included in these materials are based on the judgment of the Company at the time of preparation of the materials, and are inherently subject to risks and uncertainties. As a result, actual business results and outcomes may differ significantly due to a variety of factors.

Consolidated Financial Results FY2018 1Q (April 2018 - June 2018)

Basic Data

July 2018

Alps Electric Co., Ltd.

１．Outline （Unit：100 million Yen）

１Ｑ２Ｑ３Ｑ４Ｑ Total １Ｑ２Ｑ 1H(Fcst) Total(Fcst)

Net Sales 1,895 2,206 2,341 2,140 8,583 2,022 - 4,210 8,790

Domestic 379 384 390 409 1,564 381 - - -

Overseas 1,515 1,821 1,950 1,730 7,018 1,640 - - -

Operating Income 79 226 288 124 719 96 - 245 660

Ordinary Income 74 226 280 86 667 83 - 230 640

63 185 195 29 473 38 - 140 430

２．Net Sales (by segments) （Unit：100 million Yen）


Electronic Components 1,119 1,383 1,449 1,187 5,140 1,114 - 2,385 5,105

Automotive market 666 683 745 737 2,832 706 - 1,430 3,010

Consumer market 453 700 703 450 2,308 407 - 955 2,095

Automotive Infotainment 590 631 694 759 2,676 716 - 1,433 2,877

Logistics 157 159 168 162 646 162 - 325 675

Others 27 31 29 31 119 28 - 66 132

Total 1,895 2,206 2,341 2,140 8,583 2,022 - 4,210 8,790

３．Operating Income （Unit：100 million Yen）


Electronic Components 71 177 215 65 529 43 - 160 470

Automotive Infotainment 3 34 54 44 137 40 - 60 130

Logistics 12 10 15 11 49 9 - 21 51

Others / Eliminations -8 4 3 3 3 3 - 4 9

Total 79 226 288 124 719 96 - 245 660

４．Capital Expenditures （Unit：100 million Yen）




Logistics 16 16 14 9 55 16 - 30 43

Others 1 1 1 1 6 1 - 3 6

Eliminations 0 0 -0 0 0 -0 - - - Total 177 205 191 186 761 147 - 364 548(Ref.) Estimate booked on the basis of order forecast including lease.

５．Depreciation Expenses （Unit：100 million Yen）




Logistics 5 5 5 5 21 5 - 11 23

Others 1 0 1 1 4 0 - 2 4

Eliminations 0 0 0 0 0 0 - - - Total 71 84 98 105 360 104 - 224 481

６．R & D Expenses （Unit：100 million Yen）




Logistics - - - - - - - - -

Others 0 0 0 0 0 0 - 0 0

Total 79 64 67 86 297 71 - 159 313

７．Inventories （Unit：100 million Yen）2017/6 2017/9 2017/12 2018/3 2018/6 0

Electronic Components 696 719 709 660 669 -

Automotive Infotainment 266 282 304 278 292 -

Logistics 20 21 19 20 21 -

Others 2 2 2 2 3 -

Eliminations -0 -0 -0 -0 -0 -

Total 985 1,026 1,035 961 987 -

８．Employees （Unit：Person）2017/6 2017/9 2017/12 2018/3 2018/6

Electronic Components 22,612 22,407 22,305 22,260 21,968Automotive Infotainment 13,369 13,640 13,013 13,175 13,036Logistics 5,464 5,513 5,585 5,710 5,849Others 1,103 1,128 1,120 1,144 1,184Total 42,548 42,688 42,023 42,289 42,037(Non Consolidated) 5,728 5,659 5,653 5,590 5,797(Ref.) The number of employees represents the number of persons in employment. (Exclude individuals seconded from the Alps to outside.)

Profit attributable to owners of parent

FY2018

FY2018

FY2017

FY2017

FY2018FY2017

FY2018FY2017

FY2018

FY2018

FY2017

FY2017

Results Briefing FY2018 1Q - alpsalpine.com · Key Points of FY2018 1Q Consolidated Financial Results 4 Electronic Components Segment Automotive Infotainment Segment (Alpine Electronics,

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