Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	183,618	175,122	4.9	-
Operating income	9,400	8,886	5.8	-
Ordinary income	10,098	9,664	4.5	-
Net income	6,270	5,588	12.2	-
Automotive parts division
Sales	157,368	145,543	8.1	1)
Operating income	12,038	10,609	13.5	-

Factors
1) Sales of Automotive Business
-In Japan, demand for medium-duty trucks increased by 11,000 units from the previous year to 80,000 units. Demand for small trucks also grew from last year. It totaled 92,000 units, up 16,000 units from the previous year.  

-Exports of medium-duty trucks decreased from the previous year mainly because of a decline in demand for knockdown parts. Meanwhile, exports of small trucks increased year-on-year supported by strong demand from North America throughout the year.

-Sales grew at PK U.S.A., INC. thanks to strong demand in the U.S. market throughout the year.

Recent Development Outside Japan

<Thailand>
-The TSPKK Group, which includes Thai Summit PKK Co., Ltd., Thai Summit PKK Engineering Co., Ltd., Thai Summit PKK Bangpakong Co., Ltd., and Thai Summit PK Corporation Ltd., is setting up production lines to produce both frames for the next-generation 1-ton pick-up and axles based on a new contract.

<Indonesia>
-PT. PK Manufacturing Indonesia began mass-producing frame products for medium- and small-trucks in January 2014, planning to expand its market in steps.

<U.S.A.>
-PK U.S.A., Inc. will begin producing axle components for a U.S. automaker in June 2014.

Mid-term Management Plan (FY ending March 2015 - FY ending March 2019)

-The Company has drawn up a mid-term business plan. According to the plan, the Company aims to achieve a 10% operating profit on sales of JPY 270 billion in the fiscal year ending March 31, 2019. The Company plans to increase sales by 47%, and double the operating profit from the target figure for the fiscal year ending March 2014. In order to achieve this goal, the Company will expand sales of modules which are currently only sold to a percentage of customers. In addition, the Company will increase the local procurement ratio at its overseas subsidiaries in the U.S., Thailand and Indonesia. The Company will further modularize its key products, including axles and frames for heavy-duty trucks. In many cases, these axle and frame units are assembled in-house by individual truck manufacturers with peripheral components being procured from specific part suppliers. The Company intends to promote sales of the Company's modules to these truck manufacturers. The range of processing will be expanded for the modularization by improving basic technologies such as stamping and machining.

-Sales by Business

(Unit：%)

	FY ending Mar. 31, 2019 (Planning)	FY ended Mar. 31, 2014 (Actual Results)	Change
Automotive components	76	83	(7)
Construction machinery components	19	14	5
Others	5	3	2

-Sales by Region

(Unit：%)

	FY ending Mar. 31, 2019 (Planning)	FY ended Mar. 31, 2014 (Actual Results)	Change
Japan	55	65	(10)
Thailand	19	22	(3)
Americas	11	8	3
China	5	2	3
Europe	4	3	1
Indonesia	4	0.4	3.6
Others	3	-	-

Outlook for FY ending Mar. 2015

(in millions of JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	180,000	183,618	(2.0)
Operating income	9,000	9,400	(4.3)
Ordinary income	8,500	10,098	(15.8)
Net income	5,400	6,270	(13.9)

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

R&D Expenditures

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	262	263	249
Automotive components	179	136	140

R&D Activities

-The Company is focusing on developing its major products such as axles and frames based on a medium- and long-term prospective.

Automotive Components

• FEM (finite element method) analysis: the Company's plastic manufacturing process simulation can simulate the high-speed deformation processes of materials in the die, which cannot be tested visually. This technology greatly contributes to identifying the cause of accuracy problems, finding out measures to solve the problem, reducing the development lead time, and cutting down on development cost.
• Structural analysis in the design stage: utilizing the FEM analysis method and the Company's original database helps exploring ways to reduce the product weight.
• Weld assembly: the Company introduced a new friction welding machine to assemble axle tubes at its Saitama Plant. This machine is the first of its kind in Japan.
  

Product Development

Modularization
-The Company is enhancing modularization in the area of axles and frames for large trucks by integrating peripheral parts such as suspensions and shafts. In many cases, these axle and frame units are currently assembled in-house at each truck manufacturer. By utilizing stamping, cutting and other processing techniques, the Company is developing new frame and axle modules to enhance its high value-added product lineup. Outside Japan, the Company currently supplies its high-strength truck frames to large truck manufacturers which the Company has never supplied to in the domestic market. Demand for truck frames with great durability is particularly strong in emerging countries due to overloading on rough roads. The Company is poised to meet such demand by increasing the use of high-strength materials such as high-tensile steel and taking advantage of its leading technologies to manufacture price-competitive products with high processing accuracy. Through these measures, the Company intends to differentiate its products from those of truck manufacturers and other competing suppliers. (From an article in the Nikkan Jidosha Shimbun on September 30, 2013)

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Automotive components	7,395	6,693	10,042
Construction machinery components	5,636	1,674	1,390
Others	70	1	2
Overall	13,101	8,368	11,435

-The Company focused its investment activities on building up its production operations, promoting labor savings, enhancing production efficiency, and improving the reliability of its products in order to respond to new program business for frames, axles, suspensions, construction machinery cabs and panels, which are its main products.

Planned Capital Investments (Automotive components)

(As of Mar. 31, 2014)

Name	Purpose	Planned amount of investment (in millions of JPY)	Start month	Planned completion
Fujisawa Plant (Fujisawa City, Kanagawa Pref., Japan)	Painting equipment	343	Mar. 2013	Sep. 2014
	Production equipment for axles	810	May. 2012	Mar. 2015
PK U.S.A., Inc. (Indiana, USA)	Production equipment for panels	442	Mar. 2013	Aug. 2014
Thai Summit PKK Co., Ltd. (Chonburi, Thailand)	Production equipment for axles	893	Jun. 2013	Aug. 2014
	Production equipment for frames	845	Jun. 2013	Aug. 2014
Thai Summit PK Bangpakong Co., Ltd. (Chonburi, Thailand)	Production equipment for axles	1,155	Mar. 2013	Oct. 2014
	Production equipment for axles	2,356	Jan. 2013	Oct. 2014
Thai Summit PK Corporation Ltd. (Rayong, Thailand)	Production equipment for frames	1,331	Jul. 2013	Feb. 2015
PT PK Manufacturing Indonesia (West Jawa, Indonesia)	New plant and production equipment	2,373	Dec. 2011	Sep. 2014