Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	347,995	274,509	26.8	-Higher sales year-on-year due to (1) greater sales in Japan of automotive lithium-ion batteries and power-sources, (2) turning an affiliated subsidiary in Thailand into a consolidated subsidiary during the second quarter, and (3) favorable currency translation.
Operating income	18,197	9,775	86.2	-
Ordinary income	20,333	12,258	65.9	-
Current net income	9,982	5,767	73.1	-Higher income due to profits from the sale of investment securities, in spite of the Company’s recording an extraordinary loss because of a product recall for defective automotive lithium-ion batteries.
Domestic Automotive Battery
Sales	56,905	55,648	2.3	-Income increased to the strong sales mainly of automotive lead batteries for new vehicles with start-stop systems.
Operating income	3,310	3,931	(15.8)	-High increase in lead prices, the major raw material used by the Company.
International Business
Sales	164,252	119,885	37.0	-Turning an affiliated company in Thailand into a consolidated subsidiary, and favorable currency translation, etc.
Operating income	8,996	6,380	41.0	-
Lithium-ion Battery
Sales	32,501	10,597	206.7	-Higher sales of automotive lithium-ion batteries for plug-in hybrid ad hybrid vehicles
Operating income	(7,243)	(11,249)	(35.6)	-JPY 4.05 billion year-on-year improvement as a result of higher profits because of increased sales

-During the fiscal year that ended March 2014, the Company posted record-high sales, operating income, and ordinary income.

Major Contracts

-Blue Energy Co., Ltd., based in Kyoto Prefecture, Japan, announced that its new lithium-ion batteries are installed on Honda's new "Accord Hybrid" and "Accord Plug-in Hybrid". The "Accord Hybrid" is equipped with the EH5 battery, which offers higher output and improved durability than conventional products, while maintaining the same product size. Meanwhile, the "Accord Plug-in Hybrid" features the large-capacity, high-power EH19 battery which ensures the outstanding levels of reliability and safety. (From an article in the Nikkan Jidosha Shimbun on July 16, 2013)

Recent Development Outside Japan

<Thailand>
-The Company plans to increase production of automotive lead-acid batteries in Thailand to 5 million units per year by FY ending March 2019. This will be a 70% gain from the 3 million units produced in FY ended March 2013. Demand for these batteries is expected to grow significantly in the Thai market, where the government has introduced the second phase of its eco-car program and Japanese automakers are stepping up production. The Company expects to supply its batteries not only for vehicles sold in Thailand, but also for those destined for exports to its neighboring countries such as Myanmar, Cambodia, and Laos. In these countries including Thailand, sales of vehicles with engine stop-start systems are likely to expand, and these vehicles use lead-acid batteries. The Company expects that this whole region will develop into huge OEM and after-sales markets in the future, and intends to utilize its Thai operations as its major supply hub. (From an article in the Nikkan Jidosha Shimbun on April 17, 2014)

-The Company announced that it will increase its shares in Siam GS Yuasa Battery Co., Ltd. (SGS), an equity method affiliate in Thailand, to 60%. This will make SGS its consolidated subsidiary. GS Yuasa purchased a 10% share of SGS from other shareholders in March 2013, increasing the total share to 49%. In May 2013, the company will further increase SGS shares through a third-party allotment, which will raise its contribution ratio in SGS from 49% to 60%. Founded in 1966, SGS has been a center of automotive lead battery production and sales of GS Yuasa group in Thailand. After taking control of SGS, GS Yuasa will transfer the state-of-the-art battery technologies for idling stop cars to SGS and prepare for the production of five-million-unit batteries for vehicles by 2014 by introducing automated production facilities. GS Yuasa will accelerate the globalization of SGS and business expansion by investing its resources in the Mekong economic region. (From an article in the Nikkan Jidosha Shimbun on May. 18, 2013)

-The Company has established a wholly-owned subsidiary, GS Yuasa Asia Technical Center Ltd. (GYAT) in Samutprakarn Province of Thailand. GYAT is the Company's first overseas development base. The company will conduct market research and develop lead-acid batteries for automobiles and motorcycles to meet a growing demand in Southeast Asia. GYAT is capitalized at THB 30 million (JPY 100 million) and GS Yuasa plans to invest JPY 300 million in total in GYAT. (From an article in the Nikkan Jidosha Shimbun on January 31, 2014)

Mid-term Management Plan

-On July 30, 2013, the Company released its third mid-term management plan for FY ended March 2014-FY ending March 2016. Its lithium-ion battery business, which had been designated as a priority in the previous plan, failed to achieve its target due to a change in market conditions. The latest management plan aims to enhance the Company's competitive strength, placing emphasis on lithium-ion batteries and new energy businesses. The Company will invest a total of JPY 60 billion, of which JPY 12 billion will be spent on the lithium-ion battery business. The Company will boost sales in FY ending March 2016 to JPY 450 billion, up 63% over FY ended March 2013 level, with operating margins of 8% (JPY 36 billion), a net profit ratio of 5% (JPY　23 billion) and a return on equity (ROE) of 15% or higher. (From an article in the Nikkan Jidosha Shimbun on August 2, 2013)

-Performance objectives for the fiscal year that ends March 2016

• Sales: JPY 450 billion
• Operating profit margin: 8% (JPY 36.0 billion)
• Current net income margin: 5% (JPY 23.0 billion)
• ROE: 15% or more

-Major strategic issues

Issues	Initiatives
Strengthening operational foundations for new businesses (lithium-ion batteries, new energies)	・Search and challenge ways for expanding operations in new markets and sectors
Raise ranking in the global market	・Design initiatives for specific target markets, shifting mindset from only thinking of “Japan/non-Japan” -Capture second highest market share in the world of automotive batteries  (in 2015: 11% share and 48 million units) (in 2012, achieved third highest market share, 8%) -Keep No. 1 market share in Asia  (in 2015, 22% share and 28 million units) (in 2012, achieved highest share, 19%) -Capture 14% of the automotive battery market in China in 2015 (In 2012, had 9%) -Expand in new emerging markets such as South America, the Middle East, Africa, etc.
Raise profitability of existing business operations	・Ascertain the market, competition, company trends to further streamline operations and expand sales
Improve financial structure	-

Performance Forecast by Segment for FY ending Mar. 31, 2015

(in billions of JPY)

		FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Domestic Automotive Battery	Sales	52.0	56.9	(8.6)
	Operating income	3.0	3.3	(9.1)
Domestic Industrial Batteries & Power Sources	Sales	86.0	79.2	8.6
	Operating income	12.5	12.2	2.5
International Business	Sales	181.0	164.3	10.2
	Operating income	11.0	9.0	22.2
Lithium-Ion Battery	Sales	52.0	32.5	60.0
	Operating income	(3.0)	(7.2)	-
Others	Sales	9.0	15.1	(40.4)
	Operating income	1.5	0.9	66.7
Total	Sales	380.0	348.0	9.2
	Operating income	25.0	18.2	37.4

Initiatives to achieve objectives set for the fiscal year ending March 2015
-Automotive batteries in Japan: Increase market share by selling more batteries designed for eco-cars.

         -Sales target: 9 million units

         -Market share target: 40%

-Outside Japan:

• Expand production of automotive batteries in China. -Targeted production capacity: 9.5 million units (at new plant facilities in Tianjin; on increased production lines in Shunde)
• Expand production of motorcycle batteries in Vietnam   -Targeted production capacity: 9.0 million units
• Strengthen operational foundations at Siam GS Group, a former affiliated company in Thailand, which was turned into a consolidated subsidiary
• Respond to increased production in Indonesia
-Target production capacity of automobile batteries: 10 million units (began mass-production at new plant at PTGS in Java)
-Target production capacity of motorcycle batteries: 29 million units (plans call for increasing production at PTGS and Yuasa Indonesia)

-Lithium-ion Batteries:

• Lithium Energy Japan (LEJ): launched mass-production on new production line at Ritto Plant 2
• Blue Energy Company (BEC): Launched commercial production on new production line

 

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Domestic Automotive Battery	676	663	596
Domestic Industrial Batteries & Power Sources	1,923	1,793	1,558
International Business	658	684	639
Lithium-Ion Battery	3,046	2,735	2,995
Other	191	351	460
Total	6,495	6,227	6,250

 -R&D Expenditure for FY ending March 2015 is planned to be JPY 7,300 million.

R&D Facilities

Business Unit	Company	Location
Domestic Automotive Battery	GS Yuasa International Ltd.	Kyoto, Japan
International Business	GS Yuasa International Ltd.	Kyoto, Japan
	GS Battery Taiwan Co.,Ltd.	Tainan, Taiwan
	Yuasa Battery, Inc.	Pennsylvania, USA
	Yuasa (Tianjin) Technology Ltd.	Tianjin, China
	GS Yuasa Asia Technical Center Ltd.	Samutprakarn, Thailand
Lithium-Ion Battery	GS Yuasa International Ltd.	Kyoto, Japan
	Lithium Energy Japan	Shiga Pref., Japan
	Blue Energy Co., Ltd.	Kyoto, Japan

R&D Activities

Domestic Automotive Battery
-The Company continued working on R&D activities involved with automotive lead-acid batteries. As part of the Company's activities in the area of technology for automotive batteries needed for fuel-saving vehicles such those with charged-controlled and the idle-stop function (which are becoming more popular with customers), the Company is working to improve durability and battery-charging performance.

-The Company unveiled the Eco.R Long Life high-performance battery series, the first in the domestic market which can be installed both on normal cars and idling stop cars. The "Eco. R Long Life" battery features a 200 -300% longer life than the Company's standard battery and is scheduled for launch in July 2013, with which the Company aims to achieve 100,000 unit sales per year. (From an article in the Nikkan Jidosha Shimbun on May. 18, 2013)

International Business
-The Company is conducting R&D activities on lead-storage batteries and nickel-metal hydride batteries. In the automotive lead-storage battery sector, the Company is working on developing batteries being produced and used outside Japan for charged-controlled and idle-stop vehicles. Based on its R&D achievements in this sector, the Company began producing lead storage batteries for idle-stop vehicles in China following Thailand.

Lithium-Ion Battery
-Basic R&D on lithium-ion batteries

• The Company is conducting R&D activities on medium- and large-size batteries in order to improve their reliability and safety, as well as improve their energy density. It is doing research especially under the aim of starting operations in the area of iron-phosphate lithium positive electrodes as soon as it can.
• In order to further improve the performance of lithium-ion batteries even more, the Company will search for and evaluate the performance of materials needed for next-generation positive electrodes and next-generation negative electrodes.
• The Company is studying post-lithium-ion batteries.

-Developing onboard lithium-ion batteries

• Increasing not only production volumes but also types of lithium-ion batteries for electric, plug-in hybrid, and hybrid vehicles.

Joint Development Project

-A German company Robert Bosch GmbH and two Japanese companies, the Company and Mitsubishi Corporation, announced on June 20, 2013 that they've agreed to develop the next-generation of high-performance lithium-ion batteries together. The three companies intend to set up a JV for joint research and development in Stuttgart, Germany in early 2014, to support their mother companies in sales and marketing activities. The JV aims to increase energy content of the batteries while reducing their weight, and increase the range of both electric and plug-in hybrid vehicles. Bosh will hold a 50% share of the JV, while the Company and Mitsubishi Corporation are going to hold 25% respectively. The JV will integrate the three companies' respective strengths. They include Bosch's technologies in developing battery packs and integrating them into electrified vehicles; GS Yuasa's expertise in materials systems, electrochemistry, and production of battery cells; and Mitsubishi Corporation's global competence in procuring lithium resources and other materials. They will initially head up a team of some 70 associates in Germany and Japan.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Domestic Automotive Battery	1,096	641	679
Domestic Industrial Batteries & Power Sources	1,659	1,044	890
International Business	5,710	4,078	3,447
Lithium-Ion Battery	6,912	24,943	30,525
Other	3,191	2,451	3,306
Total	18,570	33,159	38,849

 -During the fiscal year ending March 2015, the Company plans to invest JPY 17,000 million total, including JPY 6,000 million outside Japan.

Planned Capital Investment

(As of Mar. 31, 2014)

Facilities (Location)	Equipment	Amount (in millions of JPY)	Date of start	Scheduled date of completion	Purpose of the investment
GS Yuasa International Ltd. (Kyoto, Japan)	Facilities for manufacturing storage batteries, etc. for automotive applications	1,232	Mar. 2014	Within FY ending Mar. 31, 2015 and after April, 2015	Reduce costs, add new manufacturing tools
	Facilities for manufacturing lithium-ion batteries for automotive applications	335	Mar. 2014	Within FY ending Mar. 31, 2015 and after April, 2015	Expand R&D facilities
	R&D facilities, production facilities	3,318	Mar. 2014	Within FY ending Mar. 31, 2015 and after April, 2015	Expand R&D facilities, reduce costs, new manufacturing tools
Lithium Energy Japan (Kyoto, Japan)	Facilities for manufacturing lithium-ion batteries for automotive applications	2,269	Jan. 2014	Within FY ending Mar. 31, 2015 and after April, 2015	Add new manufacturing facilities and increase production capacity
Blue Energy Co., Ltd. (Kyoto, Japan)	Facilities for manufacturing lithium-ion batteries for automotive applications	1,835	Jan. 2014	Within FY ending Mar. 31, 2015 and after April, 2015	Add new manufacturing tools
Tianjin GS Battery Co., Ltd. (Tianjin, China)	Facilities for manufacturing lead storage batteries	1,196	Dec. 2013	Within FY ending Mar. 31, 2015 and after April, 2015	Increase production capacity
Siam GS Battery Co., Ltd. (Samutprakarn, Thailand)	Facilities for manufacturing lead storage batteries	1,038	Dec. 2013	Within FY ending Mar. 31, 2015 and after April, 2015	Increase production capacity
PT. Yuasa Battery Indonesia (Tangerang, Indonesia)	Facilities for manufacturing lead storage batteries	665	Dec. 2013	Within FY ending Mar. 31, 2015 and after April, 2015	Increase production capacity
Century Yuasa Batteries Pty Ltd. (Queensland, Australia)	Facilities for manufacturing lead storage batteries	656	Dec. 2013	Within FY ending Mar. 31, 2015 and after April, 2015	Increase production capacity
GS Battery Vietnam Co., Ltd. (Binh Duong, Vietnam)	Facilities for manufacturing lead storage batteries	648	Dec. 2013	Within FY ending Mar. 31, 2015 and after April, 2015	Increase production capacity