Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of change (%)	Factors
Overall
Sales	1,052,671	955,470	10.2	-Sales revenue in Japan recovered because of greater sales of new-autos that resulted from the recovery of the Great East Japan Earthquake and the stimulation in consumer sales arising from eco-car sales incentives.
Operating income	35,657	39,924	(10.7)	-Operating income decreased due to several factors such as the continued high evaluation of the yen, depressed selling prices of products, and the flooding in Thailand.
Ordinary income	38,649	40,263	(4.0)
Current net income	13,303	20,052	(33.7)
Mechanical Components Division
Sales	902,797	828,962	8.9	-Sales generated from steering systems and bearings increased, triggered by greater volume of new vehicles being sold.
Operating income	22,862	34,529	(33.8)	-The increase in operating revenue, which resulted from greater sales volume, was offset by negative currency translation and depressed product selling prices.

Contracts

-The Company has been awarded a program to supply its column-type electric power steering (C-EPS) systems for the Mitsubishi Motors' "Mirage" global small car, which will be manufactured in Thailand, starting in March. The products will be produced on a new, dedicated production line at JTEKT Automotive (Thailand) Co., Ltd. (JATH) located in central Thailand. The C-EPS system will become the first JATH's steering products to be used on Mitsubishi vehicles. (From an article in the Nikkan Jidosha Shimbun on January 11, 2012)

Joint Ventures

-GKN plc announced the dissolution of its Driveline joint arrangements with JTEKT Corporation in Thailand. GKN and JTEKT have concluded a Share Exchange Agreement under which GKN has acquired JTEKT's 49% shareholding in GKN Driveline JTEKT Manufacturing Limited (GTM), and transferred to JTEKT its 49% shareholding in GKN JTEKT (Thailand) Limited (GTT). Following this dissolution, GKN now owns 100% of GTM (the manufacturing facility) and JTEKT now owns 100% of GTT (the sales and distribution arm). Each will operate independently except for the continuation of certain existing supplies of driveshafts to Toyota. GKN will pay JTEKT net consideration of approximately 7.7 million pounds which will be funded from the Group's existing resources, with further deferred consideration of 1.3 million pounds contingent upon GTM obtaining certain specified future business awards. (From a press release on January 27, 2012)

Restructuring

-The Company announced a merger with Osumi Kogyo its fully owned subsidiary in Higashikagawa, Kagawa Pref., as of Jan. 1, 2012, which the board decided on Oct. 28. Although the subsidiary used to manufacture and sell bearings, it is essentially a dormant company, just renting the site and the buildings to the Company. The Company, therefore, has decided to consolidate the assets for efficient use of the Group's management resources. (From an article in the Nikkan Jidosha Shimbun on October 29, 2011)

-The Company announced it will absorb its sales company of constant velocity joints effective July 1 in a bid to focus its management resources on the product line. The Company will take over GKN JTEKT, which was formed as a joint venture between former Toyoda Machine Works and U.K.-based GKN Group in 1999 before Toyoda Machine Works and Koyo Seiko were merged into JTEKT. The joint venture company had been owned 51 percent by the Company and 49 percent by the GKN Group. It was, however, dissolved to become a wholly owned subsidiary of JTEKT on April 1. (From an article in the Nikkan Jidosha Shimbun on May 31, 2011)

Recent Development in Japan

-Toyota Group parts suppliers said they are reviewing inventory levels of certain parts, materials and finished products in case of disruptions of supply chains due to future natural disasters and other unintended happenings. The Company will build up inventory to a certain level of several components, including electronic parts, adding "We will establish a backup system for alternative sourcing by globally standardizing parts designs and diversifying supply sources." (From an article in the Nikkan Jidosha Shimbun on February 6, 2012)

Outlook for FY ending Mar. 31, 2013

(in billion JPY)

	FY ending Mar. 31, 2013 (Estimate)	FY ended Mar. 31, 2012 (Result)	Rate of change (%)
Sales	1,100.0	1,052.6	4.5
Operating income	45.0	35.6	26.4
Ordinary income	43.0	38.6	11.4
Net income	25.0	13.3	88.0

Outlook by Segment for FY ending Mar. 31, 2013

(in billion JPY)

	FY ending Mar. 31, 2013 (Estimate)	FY ended Mar. 31, 2012 (Result)	Rate of change (%)
Total of  Mechanical Components Division	950.0	902.7	5.2
-Steering	475.0	443.7	7.1
-Bearing	361.0	339.1	6.5
-Driveline	114.0	119.9	(4.9)
Total of Machine Tools Division	150.0	149.8	0.1
Grand Total	1,100.0	1,052.6	4.5

>>>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	34,704	31,938	27,410

-R&D expenditure for FY ending Mar. 31, 2013 is expected to be 35 billion yen.

R&D Facilities in Japan

Facility	Location
R&D center	Nara Pref., Osaka Pref., Aichi Pref.
Electric Systems Development Center	Okazaki, Aichi Pref.

R&D Facilities in Japan

R&D center	-Kashihara City, Nara Pref. -Kashiwara City, Osaka -Kariya City, Aichi Pref.
Product development center	-Okazaki City, Aichi Pref.

-The Company announced the groundbreaking of a proving ground for developing and testing its steering systems, driveline components and bearing products in Iga City, Mie prefecture, Japan. The new proving ground, JTECT Iga Proving Ground, spans an area of 160,000 square meters. The company will invest approximately 3 billion yen in this facility. Construction of the new proving ground is expected to be completed in September 2012. (From a press release on June 21, 2011)

Product Development

Steering Systems Division
-The Company focused its R&D activities in steering systems, especially electric power steering (EPS) systems. Among steering systems, EPSs are considered to contribute the most toward improving the environment. The Company worked to make steering systems more compact and lighter in weight. It developed an integrated ECU/motor-unit EPS system, as a new line in its column-assisted power-steering systems, making it 15% lighter in weight than conventional systems. Integrating the ECU motor with the ECU, which controls that motor, eliminated the harness that was needed to connect the two single units. It also made installation easier. In addition, the brushless motor, the core part of the new integrated unit, is more compact and 20% lighter in weight compared with existing products. Furthermore, the part connecting the steering system with the steering wheel is made of aluminum, which contributed to making the system 2.7 kg lighter in weight than previous systems.

Bearing & Drivetrain Divisions
-Bearing products

• The Company developed a cold-forged hub-unit, which can be produced with a 70% saving in energy consumption.
• The Company developed a hub-unit bearing internally mounted with a super-low torque seal. The Company cleverly designed the shape of the part touching the lip and in doing so was able to lower fuel consumption by 0.2-0.4% by reducing the contact resistance.
• The Company developed a hub-unit attached with a side-face spline that is lighter in weight than conventional products and can be attached much more easily.

-Driveline products

• The Company developed a new, compact, and light-weight drive shaft, which is the first of its kind designed to be equipped exclusively on compact vehicles. Going forward, the same kind of drive shaft is planned to be developed as a series for mid-size sedans.
• The Company developed an electric pump designed for idle-stop systems. By using a brushless motor, the Company made the pump lighter, lowering costs and saving energy too.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	65,864	30,850	25,248
Mechanical Components Division	59,289	27,321	22,432

-In Japan, the Company invested to increase its production capacity for tapered roller bearings and large-size bearings. Outside Japan, the Company invested to increase its production capacity in emerging-market countries such as China and India.

-In the area of machinery, tool, and instrument parts, the Company invested to increase its capacity to produce steering systems and bearings, renew production facilities, and ready production equipment and facilities to produce new models.

-Capital expenditure for FY ending Mar. 31, 2013 is expected to be 85 billion yen.

Investment Outside Japan

<Indonesia>
-The Company announced that PT. JTEKT Indonesia established a new production plant in Indonesia, and it will start the local production of bearings from coming December 2011. Since October 2011, the Electric Power Steering (EPS) production has been changed to wholly local production from former only assembly line production. The total amount of investment is to be approximately 8 billion yen. JID is expected to generate approximately 15 billion yen of annual sales in 2012. (From a press release on November 16, 2011)

<India>
-The Company announced the establishment of the first bearing manufacturing facility in India named "the Bawal plant" at Koyo Bearings India Pvt. Ltd. (KBIN). The total investment amount will be approximately 7 billion yen and plant completion will be scheduled in May 2012. The approximately 18,000 square meters plant will start its production in November 2012. The Bawal plant of KBIN will manufacture automobiles' and motorcycles' bearings and it aims to supply its bearings to Japanese and Local companies of automobiles, motorcycles, construction machines, agricultural machines and so on. The company expects that the total sales of KBIN will be 11 billion yen in 2015. (From a press release on October 17, 2011)

New Equipment Installations

(As of Mar. 31, 2012)

Plant	Location	Type of facility	Estimated amount of investment (in million JPY)	Project Period
				From	To
Kokubu Plant	Osaka, Japan	Facility for manufacturing mechanical components	4,800	Apr. 2012	Mar. 2013
Tadomisaki Plant	Aichi Pre., Japan	Facility for manufacturing mechanical components	3,000	Apr. 2012	Mar. 2013
Tokushima Plant	Tokushima Pre., Japan	Facility for manufacturing mechanical components	2,900	Apr. 2012	Mar. 2013
Daibea Co., Ltd. Head Office & Izumi Plant	Osaka, Japan	Facility for manufacturing mechanical components	1,300	Apr. 2012	Mar. 2013
JTEKT (Thailand) Co., Ltd.	Bangkok, Thailand	Facility for manufacturing mechanical components	9,000	Apr. 2012	Mar. 2013