Mikuni Corporation Business Report FY ended Mar. 2016

Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2016	FY ended Mar. 31, 2015	Rate of Change (%)	Factor
Overall
Sales	97,874	98,518	(0.7)	-
Operating income	3,094	4,913	(37.0)	-
Ordinary income	3,046	4,326	(29.6)	-
Profit for the year attributable to owners of the parent	1,269	2,994	(57.6)	-
Automotive Components Division
Sales	60,064	63,397	(5.3)	-Even though the Company received a greater number of new orders for automobile products in China, the recovery in demand for minicars in Japan was slower than expected.
Operating income	2,537	4,071	(37.7)	-

Long-term Management Plan: Vision 2023 (Management Plan with a Vision toward the Company’s 100^th Year Anniversary)

Objectives for the fiscal year ending in March 2024:

Consolidated sales: JPY 200billion
Consolidated profit margin: 10%

-In the fiscal year that ended in March 2016, motorcycle and special machinery sales accounted for 58% of companywide sales, while sales of automobile products accounted for 42% percent. However, the Company in the fiscal year that ends in March 2021 aims to have motorcycle and special machinery sales account for 50%, and automobile products account for 50%.

Strategy: Vision 2023 2nd Stage (from fiscal year ending in March 2017-fiscal year ending in March 2019)

-Strengthen engineering services
-Effectively control response and timing
-Develop strategic products on-demand as an added value

-Increase production speed fourfold
-Innovate product creation
-Strengthen global procurement network

-Expand customer base
-Strengthen China and India (2 & 4W) + Japan, Europe, USA, Korea (4W)
-Focus on strategic products

-Develop systems to control gas flow (Europe/USA)
-Strengthen life-support business
-Develop trading business in new markets

Outlook for FY ending Mar. 2017

(in millions of JPY)

	FY ending Mar. 31, 2017 (Forecast)	FY ended Mar. 31, 2016 (Actual Results)	Rate of Change (%)
Sales	96,000	97,874	(1.9)
Operating income	2,900	3,094	(6.3)
Ordinary income	2,600	3,046	(14.7)
Profit for the year attributable to owners of the parent	1,400	1,269	10.2

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2016	FY ended Mar. 31, 2015	FY ended Mar. 31, 2014
Overall *1	4,322	4,260	3,581
-Automotive products	3,972	3,881	3,224

*1: Includes improving and applying existing products throughout the Group.

-For FY ending March 2017, R&D expenditure is planned to be JPY 4,800 million as overall.

R&D Facilities

-The Company's Odawara Plant is in charge of conducting overall R&D activities and developing new business sectors.

R&D Activities

Automotive Products
-The Company is promoting R&D of control technology, actuator technology, sensing technology and material technology for computerized control fuel injection systems and engine components.

-The Company is making technological developments for CO2 reduction, as well as for reducing fuel consumption and vehicle electrification.

-As of the end of March 2016, the Company was conducting R&D activities on the following products:

Intake modules and Resin intake manifolds for automobiles
Thermal management systems
Electric variable valve timing (VVT)
Electric exhaust-gas control valves
Electric vacuum pumps
Electric oil pumps

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2016	FY ended Mar. 31, 2015	FY ended Mar. 31, 2014
Overall	5,434	4,758	4,907
-Automotive products	4,981	4,360	4,511

-The Company plans to spend JPY 6,300 million in capital investments in the fiscal year ending in March 2017.

Planned Capital Investments (Automotive segment)

(As of Mar. 31, 2016)

Company/Plant	Location	Estimated amount of investment (in millions of JPY)	Period of the project
Company/Plant	Location	Estimated amount of investment (in millions of JPY)	From	To
Odawara Plant	Kanagawa Pref., Japan	852	Apr. 2016	Mar. 2017
Morioka Plant	Iwate Pref., Japan	1,089	Apr. 2016	Mar. 2017
Kikugawa Plant	Shizuoka Pref., Japan	863	Apr. 2016	Mar. 2017
Mikuni Partec Corporation	Shizuoka Pref., Japan	391	Apr. 2016	Mar. 2017
Mikuni (Thailand) Co., Ltd.	Ayutthaya, Thailand	492	Jan. 2016	Dec. 2017
Mikuni India Private Limited	Rajasthan,India	539	Apr. 2016	Mar. 2017
Mikuni (Shanghai) Co., Ltd.	Shanghai, China	455	Jan. 2016	Dec. 2017
Mikuni (Zhejiang) Co., Ltd.	Zhejiang, China	307	Jan. 2016	Dec. 2017
Mikuni American Corporation	California, USA	809	Jan. 2016	Dec. 2017