Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	Rate of Change (%)	Factors
Overall
Sales	83,700	79,579	5.2	-
Operating income	4,340	3,699	17.3	-
Ordinary income	5,372	4,147	29.5	-
Net income	2,807	3,297	(14.9)	-
Stamping/resin product business
Sales	59,614	56,841	4.9	-Sales increased due to the recovery in vehicle production at OEMs in Japan and the U.S.A., the Company’s major markets; even though sales were negatively impacted by the boycott on buying Japanese-brand products in China.
Operating income	1,449	1,669	(13.2)	-Profit was lower year-on-year due to the rising costs of materials and initial start-up expenses incurred with launching business operations in China. This was in spite of higher sales, effective cost-cutting initiatives, and lower depreciation expenses for the year.
Valve product business
Sales	23,747	22,361	6.2	-Sales were higher year-on-year as a result of the Company’s selling more TPMSs (Tire Pressure Monitoring Systems) in the U.S.A., a major market; more product sales to Japanese OEMs, who also experienced a recovery in sales; and greater sales of tire-valve cores and other valves.
Operating income	2,928	2,040	43.5	-Greater sales volumes and actions taken to respond to the high valuation of the yen contributed to improved sales year-on-year.

Recent Development in Japan

Strengthening Production Operations for Stamped Parts
-The Company is going to enhance its production structure for stamping parts, positioning the Chubu region, the Kyushu region and the Tohoku region as its three major production bases. The Company will introduce its new production method, which is already employed at its Higashi Ogaki Plant in Chubu, also to its facilities in Kyushu and Tohoku. The advanced manufacturing technology enables increased sharing of welding equipment, which contributes to reducing the amount of investment needed to deal with model changes. Adoption of the production system has also allowed the Company to produce multiple products on a single production line. Leveraging the new manufacturing system based on the three-pole production structure in Japan, the Company aims to establish an optimum supply system that can flexibly cope with demand fluctuations. (From an article in the Nikkan Jidosha Shimbun on Nov. 22, 2012) 

Recent Development Outside Japan

<USA>
Launch of Tire-pressure Monitoring Systems
-The Company is going to expand its capacity to produce tire pressure monitoring systems (TPMSs) in the U.S. to 6 million units a year by FY2014. The Company's domestic plant in Gifu Prefecture has been producing TPMSs for both Japan and the U.S. markets, having a yearly production capacity of 12 million units. Pacific Manufacturing Ohio Inc., the company's U.S. subsidiary, started making TPMSs in the summer, as part of the Company's initiatives to ensure stable supply even at the time of disasters like the Great East Japan Earthquake in March 2011 that caused serious supply chain disruptions. The Company is planning to invest 1 billion yen to establish an optimum production structure at the U.S. plant, with a goal to raise its yearly production capacity in steps to 6 million units by FY2014. The expansion is expected to heighten the company's global TPMS production capacity to 18 million units by FY2014, up 50 percent from the current level. Pacific Industrial is looking to supply its U.S.-made TPMS not only to its North American customers, but also to its European customers, starting by as early as March 2013 as a measure to increase its supply efficiency and cost competitiveness. This expansion is intended to boost sales at the Company's TPMS business to 10 billion yen by FY2015. (From an article in the Nikkan Jidosha Shimbun on Oct. 29, 2012)

Medium-term management plan OCEAN-15

OCEAN-15 numerical targets		FY2015 (Planned)
Sales		95 billion yens
Ordinary income		In the 6% range
Percentage of revenue generated overseas		Over 40%
Total asset turnover		1.05

 

Outlook for FY ending Mar. 31, 2014

(in millions of JPY)

	FY ending Mar. 31, 2014 (Forecast)	FY ended Mar. 31, 2013 (Actual Results)	Rate of Change (%)
Sales	85,000	83,700	1.6
Operating income	5,000	4,340	15.2
Ordinary income	5,500	5,372	2.4
Net income	3,600	2,807	28.3

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

Awards

-The Company announced that it has received the "Parts Standardization Award" and "Excellent Quality Control Award" from Toyota. (From a press release on March 27, 2013)

R&D Expenses

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	647	603	735
-Stamping/resin products business	133	122	114
-Valve products business	447	344	84
-In Common	58	133	525

 

R&D Structure

-The R&D activities of the Company are being conducted by the R&D technical functions and the production-technology functions at each division, with the R&D Technical Planning Department in charge of activities designed to create products for the future. The R&D functions collaborate with each other in developing new materials and production methods so as to develop new products and strengthen the Company's competitive advantages.

-The Company's subsidiary, PI Systems, conducts R&D activities on software.

-The Company is working to improve its expertise so as to achieve deeper, more advanced, and newer technology, as well as speed up its development results.

R&D Activities

Business segment	Departments	Major activities
Stamping/resin products business	-Technical Planning Department -R&D Department No. 1, Production Technology Department	-The Company researched and developed new stamping methods, including cold stamping technology for ultra high-tensile steel. -The Company conducted R&D activities on forming technology in order to achieve producing plastic products that are lighter, provide better sound proofing, and have better thermal insulation properties. -In developing new production methods, the Company is working to reduce VOCs (based on paint-less technology) and CO2, working to develop technology on pre-colored materials.
Valve products business	-R&D Department No. 2, Production Technology Department, and TPMS Department	-Tire-valve products: the Company developed a metal-look, plastic valve cap based on the idea of combining dies and materials. -Valves for air-conditioners: The Company is developing valve cores for energy-saving air-conditioners by changing the rubber material used for them. -TPMS: As successors to its current TPMSs, the Company developed TPMSs for small, light-weight compact cars, with the aim of increasing their content rate. These new TPMSs demonstrate excellence in terms of their easy-to-install feature, enabling them to be installed easily on wheels. -High-precision stamped parts: The Company is working on ways to expand uses for parts based on commercializing actuators for electric brakes.
Common	-Technical Planning Department	-R&D activities on compound materials -R&D activities on metal-plasticity processing -The Company is developing products designed for its TPMSs. -The Company is working to develop environmentally friendly products that require less materials and reduce environmental impact.

Product Development

Double-chamber oil pan
-Jointly developed a double-tank oil pan with Toyota. The Company was presented the Award for Best Automotive Part in the 2012 "Product-Creation Parts Competition" sponsored by the Monozukuri Nippon Conference and the Nikkan Kogyou Shinbun (Daily Industrial Newspaper)

Mass-damper
-The Company achieved making a mass-market mass-damper by using sheet-metal-laminating technology, winning the Parts Standardization Award from Toyota in 2013.

Engine Cover
-The world's first technology making it possible to lighten the weight of materials through chemical foam molding and paint-less processes, enabled the Company to create the engine cover being mounted on the new Toyota "Crown". It won the Project Certificate of Recognition.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Stamping/resin products	4,209	4,688	3,074
-In Japan	2,012	3,322	2,687
-Outside Japan	2,197	1,366	387
Valve products	3,610	2,139	1,936
-In Japan	987	-	-
-Outside Japan	2,623	-	-
Others	30	-	-
Elimination	(29)	-	-
Total	7,820	6,855	5,065

 
<Stamping/resin products>
-In Japan, the Company made capital investment mainly for dies, enabling it to produce new products for new-model vehicles.
-Outside Japan, the Company invested to prepare for production of new products at its stamping facilities in China and North America.

<Valves>
-In Japan, the Company mainly invested to upgrade assembly lines for TPMSs and increase production of valves.
-Outside Japan, the Company invested to increase production of compressors in Korea. It also invested in production facilities for TPMSs in the U.S.A.

Investment Outside Japan

<Thailand>
-The Company will construct a new plant in Thailand by 2013 with the aim of localizing production of resin products like wheel caps as well as expanding production capacity of tire valves. The new plant will be built as a second facility of Pacific Industrial (Thailand), a subsidiary in Thailand, at a site adjacent to the No.1 plant in the suburbs of Bangkok. About 700 million yen (approx. USD 8.7 million) will be invested. The new facility with a comprehensive production line of tubeless tire valves will produce resin parts like wheel caps and center ornaments. The plant will commence production of components in December 2013 for delivery to automakers like Honda, Suzuki and Toyota. (From an article in the Nikkan Jidosha Shimbun on Nov. 2, 2012)

<China>
-The Company decided to postpone a project to construct a new plant in Hunan Province, China. Given a decline in production and sales at Japanese-affiliated automakers in China in the wake of protest rallies against Japan and Japanese goods, the Company determined to put on hold the construction project for the time being. Pacific Industrial was awarded contracts by GAC Mitsubishi Motors for automobile body and stamping parts in the compact SUV "ASX" also known as "RVR" in Japan. In fall last year, the company  established a new subsidiary Changsha Pacific Hanya Auto Parts Co., Ltd. and made a contract to lease a rental plant in Hunan Province for starting a welding process. The plant currently assembles stamping products by using components supplied from Pacific Industrial's subsidiary in Tianjin. In expectation of continued orders from GAC Mitsubishi for next-generation models, Pacific Industrial planned to set up its own production facility two kilometers from the rental plant and conduct a comprehensive production in that area. The Company intended to make an investment of 2 to 3 billion yen (approx. $25-37.5 million) and to begin the plant construction by March 2014. (From an article in the Nikkan Jidosha Shimbun on Oct. 31, 2012)

Planned Capital Investments

(As of Mar. 31, 2013)

Facility (Location)	Business segment	Purpose	Planned total investment (in million JPY)	Start	Planned completion	Production capacity growth after completion
The Company Nishi Ogaki Plant (Gifu Pref., Japan)	Stamped and resin	New products, etc.	3,157	Jan. 2012	Sep. 2014	-
The Company Higashi Ogaki Plant (Gifu Pref., Japan)	Stamped and resin	New products, etc.	2,289	Mar. 2012	Mar. 2015	-
The Company Yoro Plant (Gifu Pref., Japan)	Stamped and resin	Production expansion, etc.	212	Jan. 2008	Apr. 2014	-
The Company Tohoku Plant (Miyagi Pref., Japan)	Stamped and resin	Production expansion, etc.	2,120	Mar. 2013	Dec. 2014	Expand product-plant building; install stamping facilities
The Company Kyushu Plant (Fukuoka Pref., Japan)	Stamped and resin	New products	900	Aug. 2012	Jul. 2014	-
The Company Kita Ogaki Plant (Gifu Pref., Japan)	Valve	New products, etc.	996	Nov. 2011	Jan. 2016	-
The Company Mino Plant (Gifu Pref., Japan)	Valve	Production expansion, etc.	388	Oct. 2012	Oct. 2014	-
The Company Headquarters (Gifu Pref., Japan)	Common	R&D, etc.	322	Dec. 2012	Sep. 2014	-
Pacific Manufacturing Ohio, Inc. (Ohio, USA)	Stamped and resin, Valve	New products, etc.	1,362	Apr. 2013	Mar. 2014	New production facilities for TPMSs
Pacific Valve (Taiwan) Co., Ltd. (Taichung, Taiwan)	Stamped and resin, Valve	Maintenance and retooling, etc.	31	Apr. 2013	Mar. 2014	-
Pacific Valve Industrial Co., Ltd. (Yangsan, Korea)	Valve	Maintenance and retooling, etc.	71	Jan. 2013	Dec. 2013	-
Pacific Air Controles Co., Ltd. (Asan, Korea)	Valve	Production expansion, etc.	1,131	Jan. 2013	Dec. 2013	Increase production facilities for compressors
Pacific Industries (Thailand) Co., Ltd. (Chachoengsao, Thailand)	Stamped and resin	Maintenance and retooling, etc.	512	Apr. 2013	Mar. 2014	Expand production-plant buildings; add production facilities producing plastic products and valves
	Valve	New products, etc.	495	Apr. 2013	Mar. 2014
Tianjin Pacific Auto Parts Co., Ltd. (Tianjin, China)	Stamped and resin	New products, etc.	1,966	Jan. 2013	Dec. 2013	Expand stamping processes
Changsha Pacific Hanya Auto Parts Co., Ltd. (Changsha, China)	Stamped and resin	New products, etc.	2,689	Jan. 2013	Dec. 2013	Construct plant building; install new stamping machines