Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Sales	259,994	278,490	(6.6)	-
Operating income	10,818	21.598	(49.9)	-Financial results were lower in line with lower sales. In addition, increases in costs for labor and R&D activities, along with negative currency translation, all caused the Company's financial performance to be lower year-on-year.
Ordinary income	11,458	21,694	(47.2)
Current net income	4,239	12,324	(65.6)

Highlights by Region

<Japan>
-In the four-wheel-vehicle sector, the Company experienced an increase in sales of products designed for hybrid cars. However, due to the impact of the Great East Japan Earthquake, sales of other products in Japan and also Asia fell.
-Operating revenue was 144.981 billion yen, which was 1.476 billion lower than that of the previous fiscal year.

<The Americas>
-Operating revenue in the Region was 66.096 billion yen, a year-on-year decrease of 6.975 billion yen. This was not only due to negative currency translation but also due to lower sales volume of products made for four-wheel vehicles marketed in North America.

<Asia>
-Sales of products built for four-wheel vehicles fell year-on-year in Thailand and India because of the horrendous impact that the flooding in Thailand had on business. In addition to this, negative currency translation due to the high evaluation of the yen played a part in the lower year-on-year results. Operating revenue was 71.369 billion yen, which was lower year-on-year by 9.286 billion yen.

<China>
-In spite of negative currency translation negatively impacting the financial results in China, operating income nevertheless increased year-on-year due to greater sales of parts for four-wheel vehicles. As a result, operating revenue was 34.721 billion yen, an increase of 573 million yen year-on-year.

<Europe>
-Operating revenue decreased year-on-year mainly due to lower sales of parts built for four-wheel vehicles. As a result, operating revenue was 4.444 billion yen, a decrease of 1.347 billion yen.

Acquisitions

-The Company announced that it will acquire 60 percent of the stock in the automotive heat exchanger business Thermal Technology from Showa Denko K.K. with effect from January 1, 2012. With this acquisition, Thermal Technology will be renamed Keihin Thermal Technology Corporation. In addition, Keihin intends to turn Keihin Thermal Technology into its wholly-owned subsidiary in January 2014. Keihin Thermal Technology will take over Showa Denko's heat exchanger businesses in the U.S., Thailand, the Czech Republic and China. (From a press release on December 26, 2011)

-The Company and Showa Denko K.K. announced on September 21, 2011 that a transfer of Showa Denko's automotive air-conditioner heat exchanger unit to Keihin will be postponed from the originally scheduled date of October 1, 2011 to January 1, 2012. A three-month postponement is due to an expected delay in competition-law based procedures in China involving the transfer of Thermal Technology Corporation, a company succeeding Show Denko's heat exchanger business. The two companies had announced on June 6 that a new company will take over Showa Denko's automotive air-conditioner heat exchange and tubing businesses and that Keihin will acquire 60 percent shares in the new company in October and 100 percent within the two years. After a complete acquisition the name of the company is planned to be changed to Keihin Thermal Technology. (From an article in the Nikkan Jidosha Shimbun on September 24, 2011)

-The Company announced on June 6, 2011 that it has reached a final agreement with Showa Denko K.K. about Keihin's acquiring the automotive heat exchanger business of Showa Denko. Investment in this project is expected to reach approximately 8 billion yen. Keihin and Showa Denko had made a basic agreement on the business transfer in October 2010. The project includes the aluminum evaporator and other heat exchanger products in the automotive climate control systems, but it does not involve the aluminum cylinder business for laser printers and other technologies. Showa Denko has been conducting automotive heat exchanger business not only at its aluminum product division in Japan but also at its group companies in the U.S., Thailand, the Czech Republic and China. Sales from the segment reached about 28 billion yen in 2010. Prior to the business transfer, Showa Denko will initially spin off its automotive heat exchanger divisions in and outside its company to form a new, wholly owned subsidiary by the end of June. The new company, Thermal Technology, will be capitalized at 400 million yen and headquartered in Oyama City, Tochigi Prefecture. Who will assume the presidency of the new company has not been announced yet. In October, Keihin is going to purchase 60 percent of the stock in Thermal Technology, making it its subsidiary and changing its name to Keihin Thermal Technology. Further in 2013, Keihin intends to acquire the remaining 40 percent shares in the subsidiary to obtain a 100 percent ownership in the business. (From an article in the Nikkan Jidosha Shimbun on June 7, 2011)

Business Plan

-The Company, Tokyo Japan announced on Feb. 21, 2012 its organizational changes to be effective as of April 1. In order to achieve the objective of its 11th medium-term business plan (FY 2011 to FY 2013), that is "to infuse its business structure with the dynamism necessary to survive global competition," it will change its organization in consideration of natural disasters and higher compliance with the law. It will create "the sales promotion office" in the business supervision headquarters in order to expand its automobile business. In the procurement headquarters, it will create "the procurement strategy office" so as to improve its cost-competitiveness in the global market and enhance the supply-chain management. Its global procurement office will further explore new low-cost suppliers overseas. In an aim to address expected problems on quality and delivery from increasing procurement overseas, it will also set up "the procurement QD assurance department." In the production and quality fields, the quality technology function in the quality assurance headquarters will be transferred to the production headquarters in order to establish quality assurance systems at its plants. In the development headquarters, it will create the eighth and the ninth development departments as well as the technology-planning department in order to improve development efficiency. (From an article in the Nikkan Jidosha Shimbun on February 23, 2012)

-The Company will use in its automotive throttle bodies components made in China instead of those manufactured in Japan. The company is going to shift to China-made products by the year ending March 2014. Parts such as angle sensors, shafts and springs will be procured from a Chinese supplier that has been providing motorcycle components to Keihin. They will be supplied not only to Keihin's Chinese facilities but also to its other plants in Asia. The major reason behind the change is the dramatic rise in the value of the yen, which is badly hurting the company's price competitiveness. In order to improve its competitive edge, the company plans to procure some of the components from Thailand, as well. Keihin is currently conducting casting, processing and assembly of throttle bodies, part of the air intake system of a vehicle engine, by using angle sensors, shafts and springs made in Japan. (From an article in the Nikkan Jidosha Shimbun on February 7, 2012)

-The Company will review its purchasing practice of auto parts. The percentage of non-Japanese auto parts and materials used primarily for small and mini vehicles, which now stands at 50 percent strong on average, will be boosted to over 90 percent during the period covered by its current mid-term business plan through fiscal 2013. To achieve the target, Keihin will organize a new division specialized in overseas purchasing by the end of this fiscal year to enhance the function of screening overseas suppliers. The leading parts manufacturer in the Honda Group is putting in place a structure to procure components that have a competitive edge in quality and cost from overseas suppliers focused on Asian emerging markets and deploy the products to the global market. In addition to raising localization rate in China and other Asian countries for the time being, Keihin will make further efforts to increase mutual use of cost competitive products among regions. In Americas, it will search new suppliers in Mexico and Brazil, as well as seek the possibility of partly substituting components with products made in Asia. In Japan Keihin will focus on production of high functional parts for hybrids or higher than middle class vehicles. (From an article in the Nikkan Jidosha Shimbun on September 30, 2011)

New Company

-The Company announced that it is going to establish Keihin de Mexico S.A. de C.V., a wholly owned subsidiary in San Luis Potosi, Mexico, in February, 2012. The decision was reached at the company's board meeting held on January 31, 2012. The subsidiary will be capitalized at approximately 500 million Mexican pesos (about 2,670 million yen). The new, 100,000-square-meter-facility will start to mass produce automotive components in September 2013. It is going to hire some 650 people by 2014. (From an article in the Nikkan Jidosha Shimbun on February 2, 2012)

-The Company announced on April 28 that it will establish new subsidiaries to manufacture and sell motorcycle and vehicle parts in Vietnam and India. The establishments will allow the company to meet increasing requirements from Honda and other customers. Keihin Vietnam Co., Ltd. will be formed in the suburbs of Hanoi in June to produce mechanical components. It will be capitalized at 585.2 billion Vietnam dong (28 million US dollars), which will be fully provided Keihin Asia Bangkok Co., Ltd., which is Keihin' s Asian headquarters. The new plant in India, Keihin Automotive Systems India Pvt. Ltd., will be created in the outskirts of Gurgaon, Haryana in August. This company will be Keihin's third company in India, following the existing vehicle components plant and motorcycle parts plant near Delhi. Its start-up capital will be 2 million rupees, of which 70 percent will be invested by Keihin Corporation and remaining 30 percent by Keihin Asia Bangkok. (From an article in the Nikkan Jidosha Shimbun on April 30, 2011)

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	16,547	15,086	14,150

R&D Facilities

Tochigi R&D Center (Takanezawa Town, Tochigi Pref., Japan)

-With system development being a key focus , the Tochigi R&D Center conducts all R&D activities, from developing and inspecting software, to conducting research and analysis using actual vehicles. -As the main facility conducting system development, the Tochigi R&D Center focuses on expanding R&D areas based on systemization and integration as well as developing advanced technologies mainly for electronic control units (ECUs).

Kakuda R&D Center (Kakuda City, Miyagi Pref., Japan)

-The Kakuda R&D Center, in aiming to develop core products that support systems, pursues performance, functionality, durability, and economy, which are elements that form the foundations to improving quality; and at the same time, it links these elements to production technology. -It consists of an analysis building, which analyzes data; a durability building, which conducts vibration tests and measures heat resistance; and a chassis building, which uses actual motorcycles and vehicles to evaluate products in terms of their value as system components.

R&D Activities

Four wheel vehicle business
The Company developed and commercialized
-Fuel-supply systems and induction-systems for environmentally friendly engines
-Products for hydraulically controlling transmissions
-Fuel-supply products and systems designed to handle alternative fuels
-Products for high-performance, compact automotive air-conditioning systems.
-ECUs for engines and transmissions
-Motor and battery control-units for hybrid cars

-The Company, Japan has developed a voltage sensor for lithium-ion batteries, which will be sold from this summer. It will be mounted on the EV and PHV that Honda Motor Co., Ltd. will market in Japan and the U.S. It is the company's first voltage sensor product, even as the one for HV. By entering the EV/PHV parts business, Keihin plans to establish the business structure with a view to expanding electric application in automobiles. The voltage sensor will be produced at Kakuda Plant 3, Kakuda, Miyagi Pref., where electronic products for motorcycles and automobiles as well as general-purpose electronic products are manufactured. (From an article in the Nikkan Jidosha Shimbun on March 30, 2012)

-The Company announced that it has entered into an agreement with Daimler to develop and supply its gas injectors for Mercedes-Benz. (From a press release on June 14, 2011)

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Total	13,013	12,518	9,366

Breakdown of capital investment costs in facilities and equipment:
-Production: 8,842 million yen; R&D: 1,061 million; Others (including intangible assets) 3,109million yen.

Breakdown of capital investment costs by region:

-Japan: 2,813 million yen; The Americas: 2,553 million yen; Asia: 2,819 million yen; China: 636 million yen; Europe: 21 million yen

Planned Capital Investments

Segments	Planned Amount of Investment (in million yen)
Japan	13,362
The Americas	3,430
Asia	10,669
China	2,706
Europe	28
Total	30,198