Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	215,889	233,381	(7.5)	-Sales were lower year-on-year because the Company's customers had to lower their production volumes downward mainly due to the Great East Japan Earthquake and the flooding in Thailand.
Operating income	7,507	8,895	(15.6)	-Performance was lower year-on-year due to fluctuating sales, changes in product mix, and higher labor expenses, in spite of the Company's successful measures to strengthen its production operations and reduce costs.
Ordinary profit	7,330	8,062	(9.1)
Current net income	2,549	122	1989.3	-This increase was due to profits resulting from the Company's sale of stocks as a minority stockholder.

Highlights by Region (Automotive business)

<Japan>
-The region reported lower performance year-on-year mainly due to the drop in sales of four-wheel vehicle parts because of lower production volumes by customers that resulted from the Great East Japan Earthquake. This was in spite of the sudden increase in demand after the Great East Japan Earthquake and the re-introduction of eco-car sales-incentive programs.

<North America>
-In the U.S.A, even though sales of products for two-wheel vehicles were strong, they were offset by poor sales of products for four-wheel vehicles because of lower demand caused by the Great East Japan Earthquake and the flooding in Thailand. Likewise in Canada, performance was lower year-on-year due to a drop in sales of parts for four-wheel vehicles.

<South America>
-The financial results in Brazil were lower year-on-year due to lower sales of parts for four-wheel vehicles, which couldn't be offset by the strong sales to customers of parts for two-wheel vehicles

<Asia>
-Due to greater sales by the Company's customers in Indonesia, driven by the strong automotive market, the Company's sales of parts for both four- and two-wheel vehicles increased, contributing to improved financial results year-on-year.

-In Thailand, the increase in sales of parts for two-wheel vehicles couldn't offset the decrease in sales of parts for four-wheel vehicles that resulted because of the Great East Japan Earthquake and the flooding in Thailand.

-In India, lower sales of parts for four-wheel vehicles were recorded for the year because the Company scaled down its steering systems operations in the country.

-The results of Showa Auto-parts Vietnam Co., Ltd. were included in the consolidated financial statements for the 2011 fiscal year.

<China>
-Customer demand decreased in China because of the Great East Japan Earthquake. As a result, operating profits in the China operations decreased year-on-year because of lower sales of parts for four-wheel vehicles.。

Restructuring

-The Company, Saitama Pref., Japan and Nissin Kogyo Co., Ltd., Nagano Pref., Japan announced on Jan. 31 that they will dissolve their joint venture in the U.K., Nissin Showa UK Ltd. (NSUK), in March 2013. They have reached the decision because of its poor sales in Europe and 2012 year-end completion of production of parts for current vehicle models. (From an article in the Nikkan Jidosha Shimbun on February 2, 2012)

Acquisitions

-The Company announced the company name of its subsidiary in Vietnam Machino Auto-Parts Co., Ltd. was changed to "Showa Auto-Parts Vietnam Co., Ltd.". The subsidiary is engaged in manufacture of shock absorbers and power steerings for motorcycles and automobiles. (From a press release on November 11, 2011)

-The Company announced that it will increase its investment in Machino Auto-Parts Co., Ltd. (MAP) in Vietnam, raising its shareholding in the Vietnamese company from 10 percent at present to 70 percent, thus making MAP its subsidiary. MAP manufactures shock absorbers and power steerings, supplying them to Honda Vietnam. In July 2011, MAP will adopt a new company name, Showa Auto-Parts Vietnam Co., Ltd. (From a press release on April 28, 2011)

Outlook

-The Company plans to increase its global production of shock absorbers in 2012 by 16 percent over the previous year enough to fit 5.8 million vehicles. Overseas production will be boosted 20 percent from a year ago so that they will be installed on 4.8 million vehicles, especially in other Asian countries than China, where a 20-40 percent growth is projected. In North America, production is assumed to rise 30 percent compared with 2011 when production was affected by the earthquake. Transactions of shock absorber with automakers other than Honda, Showa's leading customer, are also expanding. Showa has begun to consider boosting production capacity in Asia. (From an article in the Nikkan Jidosha Shimbun on January 31, 2012)

>>>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
Total	5,880	5,496	5,910

-In quickly and accurately grasping the needs of its customers, the Company is enhancing its product competitiveness, undertaking R&D activities that pursue cutting-edge technology.
-R&D activities are mainly conducted at the Company's R&D functions, which are focusing on developing auto parts for four-wheel and two-wheel vehicles.
-R&D expenses for Japan were 5.571 million yen, and those for North America were 380 million yen.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Japan	2,250	4,160	3,576
North America	959	1,787	489
South America	401	270	934
Asia	1,061	735	443
China	403	947	652
Subtotal	5,076	7,901	6,095
Others	103	62	110
Total	5,179	7,964	6,205
Adjusted amounts	(44)	(139)	(70)
Consolidated	5,134	7,824	6,135

-Capital investments were made mainly to respond to new products and to increase production capacity.

Investment Outside Japan

<India>
-The Company, Saitama Pref., Japan announced on Jan. 31 that Showa India Pvt. Ltd. (SIP) its subsidiary in Haryana, India, will start manufacture and sales of motorcycle parts in March. It will scale back its current automotive parts production in order to produce front forks and rear cushions of motorcycles. The company said that it will make use of its present assets and excess facilities of other plants and will not make new investment. As for the automotive power steering systems, its current products, SIP will continue manufacturing and supplying on a smaller scale as the business environment has changed. (From an article in the Nikkan Jidosha Shimbun on February 2, 2012)

<Thailand>
-The Company announced that its consolidated subsidiary in Thailand, Summit Showa Manufacturing Co., Ltd. (SSM) and Showa Autoparts (Thailand) Co., Ltd. (SAT), and its nonconsolidated subsidiary, Showa Regional Center (Thailand) Co., Ltd. (SSM) have not suffered flood damages so far. SSM and SAT, for the most part, however, are suspending their operations due to the temporary halt of the operations of their key customers. Showa will decide when to resume the operations considering the operational situation of customers. (From a press release on October 27, 2011)

Planned Capital Investments

-The total amount of capital investment planned for FY ending March, 2013, was 10,616 million yen. The following outlines major construction projects for new facilities.

Facility (Location)	Type of facility	Planned investment (million JPY)	Construction start month	Planned completion	Production capacity growth after completion
Saitama Plant (Gyoda City, Saitama, Japan)	Production facilities for automobile parts	686	Apr. 2011	Mar. 2013	-
Hadano Plant (Hadano City, Kanagawa Pref.)	Production facilities for automobile and motorcycle parts	476	Apr. 2011	Mar. 2013	(Note 1)
Gotemba No.1 Plant (Gotemba City, Shizuoka Pref.)	Production facilities for automobile parts	429	Jul. 2011	Jan. 2013	(Note 1)
Gotemba No.2 Plant (Gotemba City, Shizuoka Pref.)	Production facilities for automobile parts	676	Jul. 2011	Mar. 2013	(Note 1)
Asaba Plant (Fukuroi City, Shizuoka, Japan)	Production facilities for automobile and motorcycle parts	586	Apr. 2011	Mar. 2013	-
American Showa, Inc. Sunbury Plant (Ohio, USA)	Production facilities for automobile parts	879	Dec. 2011	Dec. 2012	-
P.T. Showa Indonesia Mfg. (Cikarang-Bekasi, Indonesia)	Production facilities for automobile and motorcycle parts	1,506	Dec. 2011	Dec. 2012	-
SHOWA Autoparts (Thailand) Co., Ltd. (Chonburi, Thailand)	Production facilities for automobile parts	452	Jan. 2012	Dec. 2012	(Note 1)
Guangzhou Showa Autoparts Co., Ltd. (Guangzhou, China)	Production facilities for automobile parts	781	Dec. 2011	Dec. 2012	-

(Note 1) Since the investments are mainly made under projects to enhance capabilities and rationalize operations, any actual increase in capacities, once the projects are completed, are forecast to be slight.