Sumitomo Electric Industries : Year Ended March 31, 2024

Consolidated Financial Statements

Year ended March 31, 2024

Financial Section FY2023

(Fiscal year 2023, ended March 31, 2024)

Five-Year Financial Data and Indexes

SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIES

			Millions of yen				Thousands of
						U.S. dollars
	FY2023	FY2022	FY2021	FY2020	FY2019*6		FY2023
For the years ended Mar. 31, 2024	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2020		Mar. 31, 2024

For the Year: Net sales Cost of sales

Selling, general and administrative expenses

Operating profit

Profit before income taxes Profit attributable to owners of

parent

Capital expenditures*1 Depreciation and amortization R&D expenses

At Year-End:

Total assets

Total interest-bearing liabilities Total net assets*2

Per Share Data:

Profit attributable to owners of parent*3:

Basic

Diluted Cash dividends

Owner's equity*4

Weighted average number of shares outstanding (in thousands)

Number of employees (at year- end)

Average number of temporary employees

Financial Indexes:

Operating profit / net sales (%) Profit attributable to owners

of parent / net sales (%) Profit before income taxes

• invested assets*5 (ROIC) (%) Return on owner's equity (%) Owner's equity ratio (%) Current ratio (times)
  R&D expenses / net sales (%)

¥4,402,814 ¥4,005,561 ¥3,367,863 ¥2,918,580	¥3,107,027	$29,078,753
3,635,226	3,335,585	2,793,919	2,387,237	2,553,902	24,009,154
540,970	492,533	451,749	417,417	425,909	3,572,882
226,618	177,443	122,195	113,926	127,216	1,496,718
238,545	196,472	159,921	110,340	133,198	1,575,490
149,723	112,654	96,306	56,344	72,720	988,858
193,803	208,278	189,719	172,246	208,834	1,279,988
206,331	195,999	180,508	168,040	163,581	1,362,730
141,992	127,672	123,060	118,820	125,449	937,798
4,365,397	4,013,008	3,807,390	3,381,914	3,100,260	28,831,629
801,499	960,368	859,794	685,087	636,262	5,293,567
2,431,888	2,110,819	2,052,938	1,892,506	1,766,647	16,061,608
			Yen			U.S. dollars
FY2023	FY2022	FY2021	FY2020	FY2019*6		FY2023
¥191.98	¥ 144.45	¥ 123.49	¥ 72.25	¥ 93.24	$ 1.268
－	－	－	－	－		－
77.00	50.00	50.00	32.00	40.00	0.509
2,830.82	2,436.14	2,269.31	2,088.51	1,946.93	18.696
779,870	779,876	779,884	779,893	779,893
293,266	289,191	281,075	286,784	283,910
(43,414)	(45,525)	(48,275)	(38,227)	(37,065)
5.1	4.4	3.6	3.9	4.1
3.4	2.8	2.9	1.9	2.3
7.6	6.6	5.8	4.4	5.6
7.3	6.1	5.7	3.6	4.7
50.6	47.3	46.5	48.2	49.0
171.5	1.5	1.6	1.7	1.7
3.2	3.2	3.7	4.1	4.0

Note: All dollar figures herein refer to U.S. currency. Yen amounts have been translated, for convenience only, at the rate of ¥151.41 to U.S. $1.00, the approximate exchange rate prevailing on March 31, 2024.

*1 Capital expenditures are recorded as property, plant and equipment.

*2 See Note 9.

*3 There were no potentially dilutive common shares.

*4 Owner's equity is the sum of total shareholders' equity and total accumulated other comprehensive income.

*5 Invested assets = total assets - interest-free liabilities

*6 The U.S. consolidated subsidiaries have adopted IFRS to replace U.S. GAAP from the beginning of the fiscal year ended March 31, 2021. The financial data and indexes for the year ended March 31, 2020 have been adjusted retrospectively to reflect the changes in accounting policy.

- 1 -

Management's Discussion and Analysis

Business Conditions in FY2023

With respect to the world economy during this fiscal year, in the U.S., the economic recovery continued, supported by stable personal consumption; however, in Europe, the continued tight monetary policies brought the economy to a standstill; further, in China, the pace of growth slowed due in part to worsening real estate market conditions. The Japanese economy recovered moderately, despite the impact of global price increases, partly due to moves to expand capital expenditure backed by improved corporate profits.

Review of Operations in FY2023

With respect to the business circumstances of the Sumitomo Electric Group, although the business circumstances continued to be challenging in the Infocommunication sector due to restrained investment by customers and inventory adjustments, in the Automotive sector, recovery of the production of automobiles progressed as a result of an easing of a supply shortage of semiconductors and other components, and in the Environment and Energy sector, robust demand continued. In this environment, in the consolidated financial settlement for this fiscal year, net sales increased from the preceding fiscal year to ¥4,402,814 million (preceding fiscal year: ¥4,005,561 million, +9.9%), thanks to efforts to expand the sale of wiring harnesses, anti-vibration rubber, power cables, and other commodities, as well as the depreciation of the Japanese yen. With respect to income and profits, we worked to increase sales as well as to thoroughly improve productivity, reduce costs, and improve selling prices; as a result, operating profit was ¥226,618 million (preceding fiscal year: ¥177,443 million, +27.7%) with an operating margin of 5.1% (preceding fiscal year: 4.4%; +0.7 percentage points) and profit attributable to owners of parent was ¥149,723 million (preceding fiscal year: ¥112,654 million, +32.9%). In this way, each of these items increased from the preceding fiscal year and achieved new record highs. We also made efforts to improve asset efficiency, such as reducing inventories. As a result, ROIC before tax increased from the preceding fiscal year to 7.6% (preceding fiscal year: 6.6%).

Segment Information

Environment and Energy:

Net sales increased by ¥51,738 million (compared with the preceding fiscal year: 5.6%) to ¥979,977 million due to the expansion of sales of power cables and rectangular magnet wires for motors used in electric vehicles. Operating profit increased by ¥4,970 million to ¥42,890 million due to the impact of copper price fluctuations as well as an increase in sales. The operating profit margin improved by 0.3 percentage points to 4.4%. Meanwhile, orders received for plant and installation work came to ¥440,442 million (the order backlog at end of this fiscal year being ¥493,210 million), a rise of ¥69,582 million (18.8%).

Infocommunications:

Net sales decreased by ¥44,251 million (17.7%) to ¥206,074 million as a result of reduced demand for optical fiber cables and optical/wireless devices due to investment restraint and inventory adjustments by telecommunications and data center business operators. Operating profit resulted in a loss of ¥11,552 million and a decrease of ¥33,478 million due to a decrease in sales and a deterioration in productivity due to a decrease in volume.

Automotive:

As a result of the recovery in automobile production due to the easing of the shortage in the supply of components such as semiconductors, demand for wiring harnesses, electronic components of cars, and anti-vibration rubber increased. As a result, net sales increased by ¥409,555 million (18.7%) to ¥2,596,404 million. Operating profit increased by ¥88,929 million to ¥144,674 million partly due to an increase in sales as well as improvement of productivity. The operating profit margin improved by 3.1 percentage points to 5.6%.

Electronics:

Net sales decreased by ¥9,535 million (2.6%) to ¥356,478 million partly due to a decrease in demand for electronic wires and heat shrink tubes for consumer use as well as a decrease in demand from major customers for FPCs (flexible printed circuits). Operating profit decreased by ¥9,052 million to ¥29,297 million partly due to a decrease in sales as well as an increase in personnel expenses. The operating profit margin fell by 2.3 percentage points to 8.2%.

- 2 -

Industrial Materials and Others:

Although demand for cemented carbide tools declined in China and Japan, net sales increased by ¥889 million (0.2%) to ¥364,185 million due to the impact of the depreciation of the Japanese yen. Operating profit decreased by ¥2,911 million to ¥21,067 million due to a decrease in demand as well as an increase in personnel expenses. The operating profit margin fell by 0.8 percentage points to 5.8%.

Cash Flows

Net cash provided by operating activities recorded ¥393,465 million, an increase by ¥128,274 million compared with the preceding fiscal year, after adjustment of the fluctuation in working capital made in the cash flow generated by business activities of ¥444,876 million, represented by an addition of depreciation and amortization of ¥206,331 million back in profit before income taxes of ¥238,545 million.

Net cash used in investing activities recorded ¥123,809 million, a decrease by ¥24,012 million compared with the preceding fiscal year, due to capital expenditure of ¥179,323 million on the purchase of property, plant and equipment and a cash inflow of ¥70,141 million on the proceeds from sales of investment securities.

Free cash flow, represented by net cash used in investing activities offset against net cash provided by operating activities, was positive ¥269,656 million, while free cash flow was positive ¥117,370 million in the preceding fiscal year.

Cash flow from financing activities recorded a decrease of ¥292,313 million, while a decrease of ¥98,290 million was recorded in the preceding fiscal year, due to a decrease of loan payable and payment of dividends offsetting proceeds from issuance of bonds.

Year-end balance of cash and cash equivalents stood at ¥268,273 million, a year-on-year decrease of ¥11,159 million (4.0%).

Supplemental Information

Accounting Fees

a) Fees of the auditor

		Millions of yen			Thousands of U.S. dollars
	FY2023	FY2022		FY2023
For the years ended	March 31, 2024	March 31, 2023		March 31, 2024
	Fees for audit	Fees for non-	Fees for audit	Fees for non-		Fees for audit	Fees for non-
	services	audit services	services	audit services		services	audit services
The Company	¥224	¥ 14	¥207	¥ 8	$1,479	$ 92
Consolidated subsidiaries	457	111	484	23	3,018	733
Total	¥681	¥124	¥691	¥31	$4,498	$819
b) Fees of the network firms to which the auditor belongs (KPMG LLP), excluding fees of the auditor
		Millions of yen			Thousands of U.S. dollars
	FY2023	FY2022		FY2023
For the years ended	March 31, 2024	March 31, 2023		March 31, 2024
	Fees for audit	Fees for non-	Fees for audit	Fees for non-		Fees for audit	Fees for non-
	services	audit services	services	audit services		services	audit services
The Company	¥ 21	¥ 17	¥ 11	¥ 5	$ 139	$ 112
Consolidated subsidiaries	1,310	659	1,135	749	8,652	4,352
Total	¥1,331	¥675	¥1,146	¥754	$8,791	$4,458

- 3 -

Consolidated Balance Sheet

SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIES

				Thousands of
	Millions of yen		U.S. dollars
				(Note 1)
	FY2023	FY2022		FY2023
As of	March 31, 2024	March 31, 2023		March 31, 2024
ASSETS
Current Assets:
Cash and time deposits (Notes 3 and 4)	¥ 269,744	¥ 283,425	$ 1,781,547
Trade notes and accounts receivable (Note 4)	875,933	842,794	5,785,173
Contract assets (Note 21)	36,497	32,838	241,047
Inventories (Note 7)	885,017	851,224	5,845,169
Other current assets	186,414	154,802	1,231,187
Allowance for doubtful receivables	(11,390)	(2,395)	(75,226)
Total current assets
2,242,215	2,162,688	14,808,896

Non-current Assets:
Property, Plant and Equipment (Note 8):
Buildings and structures	873,752	830,737	5,770,768
Machinery, equipment and others	2,477,809	2,259,127	16,364,897
Land	101,934	99,932	673,232
Construction in progress	75,835	73,273	500,859
	3,529,330	3,263,069	23,309,755
Accumulated depreciation	(2,431,179)	(2,200,290)	(16,056,925)
Net property, plant and equipment	1,098,151	1,062,779	7,252,830

Intangible Assets

39,831

36,682

263,067

Investments and Other Assets:
Investments in unconsolidated subsidiaries and affiliates(Note 4)	302,338	269,335	1,996,817
Investment securities (Notes 4 and 5)	304,767	234,456	2,012,859
Net defined benefit asset (Note 13)	303,740	175,997	2,006,076
Deferred tax assets (Note 12)	31,953	30,909	211,036
Other	43,148	40,885	284,975
Allowance for doubtful receivables	(746)	(723)	(4,927)
Total investments and other assets	985,200	750,859	6,506,836
Total non-current assets	2,123,182	1,850,320	14,022,733
Total assets	¥4,365,397	¥4,013,008	$28,831,629

- 4 -

						Thousands of
		Millions of yen		U.S. dollars
							(Note 1)
		FY2023		FY2022			FY2023
As of March 31, 2024	March 31, 2023		March 31, 2024
LIABILITIES
Current Liabilities:
Trade notes and accounts payable (Note 4)	¥	479,831	¥	445,951	$	3,169,084
Short-term debt (Notes 4 and 8)		385,575		601,237			2,546,562
Commercial papers (Notes 4 and 8)		－		7,000			－
Current portion of bonds (Notes 4 and 8)		10,000		－			66,046
Accrued income taxes		50,227		34,011			331,728
Contract liabilities (Note 21)		74,263		50,168			490,476
Other current liabilities		307,474		261,040			2,030,738
Total current liabilities		1,307,370		1,399,407			8,634,634
Non-current Liabilities:
Bonds (Notes 4 and 8)		174,890		94,864			1,155,076
Long-term debt (Notes 4 and 8)		164,579		195,578			1,086,976
Deferred tax liabilities (Note 12)		136,103		87,895			898,904
Provision for loss on business		12,762		－			84,288
Net defined benefit liabilities (Note 13)		52,935		45,794			349,614
Other non-current liabilities		84,870		78,651			560,531
Total non-current liabilities		626,139		502,782			4,135,387
Total liabilities		1,933,509		1,902,189			12,770,022
Contingent Liabilities (Note 14)
NET ASSETS (Note 9)
Shareholders' Equity:
Common stock:
Authorized─3,000,000 thousand shares in FY2023 and FY2022		99,737		99,737			658,721
Issued─793,941 thousand shares in FY2023 and FY2022
Capital surplus		165,424		166,817			1,092,557
Retained earnings		1,493,708		1,383,046			9,865,319
Treasury stock, at cost: 14,073 thousand shares in FY2023 and		(20,803)		(20,793)			(137,395)
14,068 thousand shares in FY2022
Total shareholders' equity		1,738,066		1,628,807			11,479,202
Accumulated Other Comprehensive Income:
Net unrealized holding gains or losses on available-for-sale		183,971		135,032			1,215,052
securities
Deferred gains or losses on hedges		(2,679)		(2,340)			(17,694)
Foreign currency translation adjustments		155,338		85,258			1,025,943
Remeasurements of defined benefit plans		132,966		53,122			878,185
Total accumulated other comprehensive income
	469,596		271,072			3,101,486
Non-controlling Interests		224,226		210,940			1,480,919
Total net assets		2,431,888		2,110,819			16,061,608
Total liabilities and net assets	¥	4,365,397	¥	4,013,008	$	28,831,629

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 5 -

Consolidated Statement of Income

SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIES

				Thousands of
	Millions of yen		U.S. dollars
				(Note 1)
	FY2023	FY2022		FY2023
For the years ended	March 31, 2024	March 31, 2023		March 31, 2024
Net Sales	¥4,402,814	¥4,005,561	$29,078,753
Cost of Sales	3,635,226	3,335,585	24,009,154
Gross profit	767,588	669,976	5,069,599
Selling, General and Administrative Expenses	540,970	492,533	3,572,882
Operating profit	226,618	177,443	1,496,718
Other Income (Expenses):
Interest and dividend income	9,335	6,305	61,654
Interest expenses	(29,321)	(16,107)	(193,653)
Share of profit of investments accounted for using the equity	20,177	11,485	133,261
method
Gain on sales of investment securities	66,834	32,478	441,411
Gain on sales of property, plant and equipment	－	5,832		－
Fire insurance recovery gain and compensation income	－	2,508		－
(Notes 15)
Foreign exchange losses	(5,680)	(896)	(37,514)
Loss on claims	(6,394)	(3,625)	(42,230)
Loss on disposal of property, plant and equipment (Note 16)	(5,834)	(3,123)	(38,531)
Impairment loss on fixed assets (Note 17)	(9,421)	(2,823)	(62,222)
Restructuring expenses (Note 18)	(15,613)	(9,622)	(103,117)
Provision for loss on business (Note 19)	(12,762)	－	(84,288)
Loss due to fire (Note 20)	－	(2,126)		－
Other, net	606	(1,257)	4,002
	11,927	19,029	78,773
Profit before Income Taxes	238,545	196,472	1,575,490
Income Taxes (Note 12):
Current	77,726	61,828	513,348
Deferred	(8,142)	2,371	(53,775)
	69,584	64,199	459,573

Profit for the year

Profit Attributable to Non-controlling Interests

Profit Attributable to Owners of Parent

168,961 132,273 1,115,917

(19,238) (19,619) (127,059)

¥ 149,723

¥ 112,654

$ 988,858

		Yen		U.S. dollars
			(Note 1)
Per Share of Common Stock (Note 10):
Basic	¥191.98	¥144.45	$1.268
Diluted	－	－		－
Cash dividends	77.00	50.00	0.509

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 6 -

Consolidated Statement of Comprehensive Income

SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIES

Thousands of

Millions of yenU.S. dollars (Note 1)

FY2023 FY2022 FY2023

For the years ended March 31, 2024

March 31, 2023

March 31, 2024

Profit for the year

Other Comprehensive Income (Loss) (Note 11) :

Net unrealized holding gains or losses on available-for-sale securities

Deferred gains or losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans

Share of other comprehensive income (loss) of affiliates accounted for using equity method

Total other comprehensive income (loss)

Comprehensive Income (Loss)

¥168,961	¥132,273	$1,115,917
50,978	58,593	336,688
(328)	(1,048)	(2,166)
65,799	30,112	434,575
78,688	(6,061)	519,701
15,580	18,067	102,899
210,717	99,663	1,391,698
¥379,678	¥231,936	$2,507,615

Comprehensive income (loss) attributable to:
Owners of the parent	347,539	207,375	2,295,350
Non-controlling interests	32,139	24,561	212,265

The accompanying notes to consolidated financial statements are an integral part of these statements.

- 7 -

Consolidated Statement of Changes in Net Assets

SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIES

Millions of yen

	Shareholders' Equity		Accumulated Other Comprehensive Income
					Net unrealized
					holding gains	Deferred	Foreign	Remeasure-	Non-controlling	Total
Common	Capital	Retained			or losses on	gains or	currency	ments of
Treasury stock		net assets
stock	surplus	earnings		available-	losses on	translation	defined benefit	interests
					for-sale	hedges	adjustments	plans		(Note 9)

securities

Balance at Beginning of FY2022

Hyperinflation adjustment

Restated Balance at Beginning of FY 2022

Cash dividends

Profit attributable to owners of parent

Purchases of treasury stock Disposal of treasury stock Change in scope of

consolidation

Change in scope of equity method

Change in ownership interests arising from transactions with non-controlling shareholders

Other

Balance at End of FY2022

Balance at Beginning of FY2023

Hyperinflation adjustment

Restated Balance at Beginning of FY 2023

Cash dividends

Profit attributable to owners of parent

Purchases of treasury stock Disposal of treasury stock Change in scope of

consolidation

Change in scope of equity method

Change in ownership interests arising from transactions with non-controlling shareholders

Other

Balance at End of FY2023

¥99,737	¥170,539	¥1,346,210	¥(20,781)	¥	76,687	¥(1,366)	¥	38,821	¥	59,941	¥283,150	¥2,052,938
		48						2,268			(33)	2,283
99,737	170,539	1,346,258	(20,781)		76,687	(1,366)		41,089		59,941	283,117	2,055,221
		(39,004)										(39,004)
		112,654										112,654
			(12)									(12)
	(0)		0									0
												－
		(36,862)										(36,862)
	(3,722)											(3,722)
					58,345	(974)		44,169		(6,819)	(72,177)	22,544
¥99,737	¥166,817	¥1,383,046	¥(20,793)	¥135,032	¥(2,340)	¥	85,258	¥	53,122	¥210,940	¥2,110,819
¥99,737	¥166,817	¥1,383,046	¥(20,793)	¥	135,032	¥(2,340)	¥	85,258	¥	53,122	¥210,940	¥2,110,819
												－
99,737	166,817	1,383,046	(20,793)		135,032	(2,340)		85,258		53,122	210,940	2,110,819
		(39,004)										(39,004)
		149,723										149,723
			(10)									(10)
	0		0									0
		(41)										(41)
		(16)										(16)
	(1,393)											(1,393)
					48,939	(339)		70,080		79,844	13,286	211,810
¥99,737	¥165,424	¥1,493,708	¥(20,803)	¥	183,971	¥(2,679)	¥	155,338	¥	132,966	¥224,226	¥2,431,888

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 8 -

Thousands of U.S. dollars (Note 1)

		Shareholders' Equity			Accumulated Other Comprehensive Income
						Net unrealized
	Common	Capital	Retained	Treasury		holding gains	Deferred gains		Foreign	Remeasure-	Non-controlling	Total
		or losses on	or losses on		currency	ments of	net assets
	stock	surplus	earnings	stock		available-	translation	defined benefit	interests
		hedges	(Note 9)
						for-sale	adjustments	plans
						securities
Balance at Beginning of	$658,721	$1,101,757	$9,134,443	$(137,329)	$	891,830	$(15,455)	$	563,094	$350,849	$1,393,171	$13,941,081
FY2023
Hyperinflation adjustment													－
Restated Balance at	658,721	1,101,757	9,134,443	(137,329)			891,830	(15,455)		563,094	350,849	1,393,171	13,941,081
Beginning of FY 2023
Cash dividends			(257,605)										(257,605)
Profit attributable to owners			988,858										988,858
of parent
Purchases of treasury stock				(66)									(66)
Disposal of treasury stock		0		0									0
Change in scope of			(271)										(271)
consolidation
Change in scope of			(106)										(106)
equity method
Change in ownership
interests arising from
transactions with		(9,200)											(9,200)
non-controlling
shareholders
Other							323,222	(2,239)		462,849	527,336	87,748	1,398,917
Balance at End of FY2023	$658,721	$1,092,557	$9,865,319	$(137,395)	$	1,215,052	$(17,694)	$	1,025,943	$878,185	$1,480,919	$16,061,608

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 9 -