SMK : Consolidated Financial Results for the Three Months Ended June 30,2022

Disclaimer: This document is an English translation of the original document in Japanese and has been prepared solely for reference purposes. In the event of any discrepancy between this English translation and the original in Japanese, the original shall prevail in all respects.

Consolidated Financial Results

for the Three Months Ended June 30, 2022

[Japanese GAAP]

July 26, 2022

Company name: SMK Corporation

Stock exchange listing: Tokyo Stock Exchange Prime Market

Code number: 6798

URL: https://www.smk.co.jp/

Representative: Yasumitsu Ikeda, President, Chief Executive Officer and Chief Operating Officer

Contact: Kohei Ohgaki, Executive Vice President, Chief Financial Officer

Phone: [phone]

Scheduled date of filing quarterly securities report: August 10, 2022

Scheduled date of commencing dividend payments: －

Availability of supplementary explanatory materials on quarterly financial results: Not available

Schedule of quarterly financial results briefing session: Not scheduled

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Three Months Ended June 30, 2022 (April 1, 2022 - June 30, 2022)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
		Net sales		Operating profit		Ordinary profit	Profit attributable to
				owners of parent
	Three months ended	Million yen		%	Million yen		%	Million yen	%	Million yen		%
	June 30, 2022	12,616		10.6	216		－	1,772	544.4	1,526		－
	June 30, 2021	11,405		9.6	(76)		－	275	－	126		－

(Note) Comprehensive income: Three months ended June 30, 2022: ¥1,948 million [825.2%]

				Three months ended June 30, 2021: ¥210 million [－%]
			Basic earnings	Diluted
			earnings
			per share
			per share
	Three months ended			Yen			Yen
	June 30, 2022		244.88			－
	June 30, 2021		19.66			－
(2) Consolidated Financial Position
				Total assets		Net assets	Equity ratio
				Million yen			Million yen	%
	As of June 30, 2022			58,045		32,152	55.4
	As of March 31, 2022			54,794		30,643	55.9

(Reference) Equity: As of June 30, 2022: ¥32,152 million As of March 31, 2022: ¥30,643 million

2. Dividends

				Annual dividends
		1st quarter-end	2nd quarter-end		3rd quarter-end	Year-end	Total
		Yen	Yen		Yen	Yen	Yen
Fiscal year ended		-	0.00		-	70.00	70.00
March 31, 2022
Fiscal year ending		-
March 31, 2023
Fiscal year ending
March 31, 2023			0.00		-	70.00	70.00
(Forecast)

(Note) Revision to the forecast for dividends announced most recently: None

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(% indicates changes from the previous corresponding period.)

								Profit attributable	Basic earnings
	Net sales		Operating profit	Ordinary profit	to owners of
		per share
								parent
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	27,000		15.1	500	21.6	800	(34.8)	500	(48.9)	80.19
Full year	55,000		14.0	1,500	113.1	2,000	(41.4)	1,400	(53.2)	224.55

(Note) Revision to the financial results forecast announced most recently: None

* Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): None
2. Accounting methods adopted particularly for the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates and retrospective restatement
4. 1. Changes in accounting policies due to the revision of accounting standards: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
5. Total number of issued and outstanding shares (common stock)
6. 1. Total number of issued and outstanding shares at the end of the period (including treasury stock):

June 30, 2022:	7,200,000 shares
March 31, 2022:	7,500,000 shares
2) Total number of treasury stock at the end of the period:
June 30, 2022:	965,430 shares
March 31, 2022:	1,265,186 shares
3) Average number of shares during the period:
Three months ended June 30, 2022:	6,234,706 shares
Three months ended June 30, 2021:	6,435,842 shares

(Notes) 1. The Company cancelled 300,000 shares of its treasury stock on June 30, 2022.

• 2. The number of treasury stock includes the Company's shares held by Custody Bank of Japan, Ltd. (Trust Account E) as trust assets for the Board Benefit Trust (BBT).

• These quarterly consolidated financial results are outside the scope of quarterly review by certified public accountants or an audit firm.
• Explanation of the proper use of financial results forecast and other notes
  The earnings forecasts and other forward-looking statements herein are based on information currently available to

the Company and certain assumptions deemed reasonable, and actual results may differ significantly from these forecasts due to various factors. For preconditions for the financial results forecast, notes on the use thereof, etc., please refer to "1. Qualitative Information on Quarterly Financial Results (3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" on page 3 of the attachment.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results .........................................................................	2
(1)	Explanation of Operating Results .......................................................................................................	2
(2)	Explanation of Financial Position .......................................................................................................	3
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information .....	3
2. Quarterly Consolidated Financial Statements and Principal Notes .........................................................	4
(1)	Quarterly Consolidated Balance Sheets ..............................................................................................	4
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income ......................................	6
(3)	Notes to Quarterly Consolidated Financial Statements .......................................................................	8
	(Notes on going concern assumption) ............................................................................................	8
	(Notes in case of significant changes in shareholders' equity) .......................................................	8
	(Segment information, etc.) ............................................................................................................	8
3. Supplementary Information .....................................................................................................................	9
	Status of Orders Received and Sales (by Market) ...............................................................................	9

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

During the three months ended June 30, 2022, the global economy experienced a slowdown in the pace of economic recovery from the COVID-19 pandemic against the backdrop of rising inflationary pressures associated with the recovery in demand after the COVID-19 crisis, as well as procurement difficulties for raw materials and components. The prolonged crisis in Ukraine led to a sharp rise in resource prices. Moreover, China's zero-COVID policy fed through to a deterioration in the function of supply chains, impacting the global economy.

The Ukraine crisis has heightened the risk of global political and economic fragmentation, and exacerbated the uncertainty surrounding the outlook for the global economy.

In the electronic components industry, the car electronics market suffered from a slump in customers' production activities due to the impact of lockdowns in China as well as continuing reductions in car production, in addition to difficulties in procuring semiconductors and raw materials. In the ICT market, some customers continued to decrease production of smartphones, tablets, and other devices due to the shortage of semiconductors and raw materials. In the home appliance market, although sales of air purifiers and cooking appliances were strong against a backdrop of growing stay-at-home demand and attention to hygiene, this is currently slowing down as the boom in demand has run its course. The industry market remained firm due to the recovery of capital investment in line with the resumption of economic activities under the measure of coexistence with COVID-19.

As a result of the Company's thorough countermeasures against COVID-19, procurement of materials, and inventory management, as well as the aggressive introduction of new products and cost reduction efforts, in the three months ended June 30, 2022, net sales amounted to ¥12,616 million (10.6% increase year on year), and operating profit was ¥216 million (operating loss of ¥76 million in the same period of the previous fiscal year). Ordinary profit was ¥1,772 million (544.4% increase year on year) with foreign exchange gains of ¥1,477 million recorded due to the depreciation of the yen, and profit attributable to owners of parent was ¥1,526 million (profit attributable to owners of parent of ¥126 million in the same period of the previous fiscal year).

Results by segment are as follows.

[CS Division]

In the car electronics market, sales of mainstay connectors for cameras were firm, and sales of connectors for electrical devices grew steadily, exceeding those of the same period of the previous fiscal year. In the home appliance market, sales exceeded those of the same period of the previous fiscal year due to an increase in sales of connectors for video game consoles and VR. In the ICT market, sales remained at the same level as the same period of the previous fiscal year, as sales of connectors for smartphones declined due to a decrease in production by some customers caused by difficulties in obtaining semiconductors, although sales of connectors for use in tablet devices for customers in the U.S. increased due to the launch of new models. Sales in CS Division as a whole exceeded those of the same period of the previous fiscal year.

As a result, net sales of CS Division amounted to ¥5,113 million (5.8% increase year on year), and operating profit was ¥297 million (36.0% increase year on year).

[SCI Division]

In the car electronics market, sales of touch sensors declined year on year due to the impact of lockdowns in China, but sales of camera modules, control units, etc. were strong and exceeded those of the same period of the previous fiscal year. In the home appliance market, sales of the mainstay remote control units increased year on year due to the contribution from new models for smart appliances and a strong performance from units for home equipment, air conditioners, etc. Sales increased year on year in the industry market, with a rise in sales of touch sensors for office machines.

As a result, net sales of SCI Division amounted to ¥7,414 million (14.1% increase year on year), and

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