Financial Overview

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	1,260,192	1,067,526	18.0	-
Operating income	58,207	29,158	99.6	-
Ordinary income	61,856	34,240	80.7	-
Current net income	23,384	13,862	68.7	-
Mechanical Components Division
Sales	1,104,233	921,798	19.8	-Significantly higher sales of steering systems
Operating income	52,027	17,494	197.4	-Higher sales volumes, favorable currency translation due to the weak yen, etc.

Business Plan

Business launch of rack-parallel electric power steering systems
-The Company will enter the Rack Parallel type Electric Power Steering (RP-EPS) market in 2016. The RP-EPS system is an electric power steering system for sports cars and E-segment or larger cars. The Company has developed a new RP-EPS system whose deceleration gear diameter is 15% smaller than its competitors' products. The decrease in size is expected to reduce the weight of the vehicle and lead to more flexible designs for suspension parts. Acknowledging potential supply issues with global sales, the new RP-EPS system shares parts with the Company's other products. JTEKT is planning to establish supply networks in the U.S., Europe, Japan and other Asian countries in and after 2016. Competitors in the market include ZF Friedrichshafen AG in Germany and TRW Automotive Holdings Corporation in the U.S. JTEKT aims to win new orders over their competitors by introducing the new EPS system with reduced friction and improved steering performance. (From an article in the Nikkan Jidosha Shimbun on November 29, 2013)

Increasing sales of power steering systems
-The Company will increase annual production and sales of power steering units to a 15-million-unit level by the fiscal year ending March 2016. Production and sales of power steering units in the fiscal year ending March 2014 have been at around 13 million units per year. In order to win more orders, the Company plans to introduce new electric power steering units and expand its global supply network. (From an article in the Nikkan Jidosha Shimbun on November 22, 2013)

Increasing production volume of column type electric power steering for mini vehicles
-The Company has begun mass production of next-generation column type electric power steering (C-EPS) for mini vehicles. By increasing the number of production shifts, the Company expanded the production capacity at its Nara Plant in Kashihara, a main C-EPS production base, in the autumn of 2013. The monthly production volume at the plant is now 70,000 units, an increase of 40% from its previous volume of 50,000 units. The first-generation C-EPS had been supplied to Daihatsu Motor Co., Ltd. for the Move since late 2012. The new C-EPS is 20% lighter and uses 30% fewer components compared to the previous generation, making it one of the lightest steering systems among the Company's lineup. The Company decided to expand production after the Company won additional orders for the Mitsubishi eK Wagon and the Daihatsu TanTo. (From an article in the Nikkan Jidosha Shimbun on October 23, 2013)

Outlook for FY ending Mar. 31, 2015

(in billion JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	1,270.0	1,260.1	0.8
Operating income	63.0	58.2	8.2
Ordinary income	62.0	61.8	0.3
Net income	35.0	23.3	50.2

Outlook by Segment for FY ending Mar. 31, 2015

(in billion JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Total of  Mechanical Components	1,107.0	1,104.2	0.3
-Steering	600.5	599.1	0.2
-Bearing	367.5	365.3	0.6
-Driveline	139.0	139.7	(0.5)
Total of Machine Tools	163.0	155.9	4.6
Overall	1,270.0	1,260.1	0.8

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

R&D Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	40,151	36,355	34,704

R&D Facilities in Japan

Division	Name	Location
Automotive System Operations	East Japan Technical Center	Yokohama City, Kanagawa Pref.
	Central Japan Technical Center	Okazaki City, Aichi Pref.
	West Japan Technical Center	Kashihara City, Nara Pref.
Bearing Operations	East Japan Technical Center	Yokohama City, Kanagawa Pref.
	Central Japan Technical Center	Toyota City, Aichi Pref.
	West Japan Technical Center	Kashiwara City, Osaka

Product Development

Steering Systems Division
-The Company is concentrating its R&D activities in developing high-output electric power steering systems that can be equipped on heavy-duty trucks. The new high-output systems have 30% more output than conventional systems. These are a further advancement in the dual pinion electric power steering (DP-EPS) system that the Company started delivering to European OEMs in 2011. The Company is advancing the development of rack parallel electric power steering systems that convey motor power (used for driver assistance) to the direct output axis through a ball-screw architecture, planning to launch them in new markets.

Driveline Division
-The Company developed an ITCC (Intelligent Torque Controlled Coupling), a third-generation electrically controlled AWD coupling that uses a high-performance, new electromagnetic clutch, making it possible for the optimum amount of torque to be distributed in AWD systems. Changes in performance occur because the viscosity of fluids in low-temperature environments deteriorates. However, the improved surface shape of the electromagnetic clutch reduces drag torque 50% and reduces the dependency of torque on high temperature by 85%, i.e., it reduces the need for torque to depend on high temperature environments.

Bearing Division
-The Company announced that it has developed the next-generation tapered roller hub unit for pickup trucks and large SUVs. While a hub unit and a shaft are mounted separately in conventional products, the new hub unit integrates the shaft with its inner ring. This design optimization increases the strength of the shaft by 20 times and contributes to a 600 g weight reduction per vehicle. Having doubled the sealing performance in muddy and salt water, the new hub unit is suitable for use in harsh environments such as desert and cold areas. The Company started supplying the new hub unit for a U.S. automaker's new model from its manufacturing facility in South Carolina in the U.S. in December 2013. The Company hopes to achieve a sales target of JPY 3.6 billion per year by winning more orders from Japanese and U.S. automakers. (From an article in the Nikkan Jidosha Shimbun on March 7, 2014)

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	76,457	109,602	65,864
-Mechanical Components	67,807	95,771	59,289

Mechanical Components
-In the fiscal year that ended March 2014, the Company increased facilities and equipment at its local operations, especially in emerging countries; and made capital improvements at the facilities of its R&D center in charge of large bearings.

Investment in Japan

-The Company will increase monthly production of power steering systems at its Nara Plant to over 500,000 units by the fiscal year ending March 2016, a gain 20%. The Plant is located in Kashihara, Nara prefecture, the Company's manufacturing hub for the power steering. The decision was made because the Company has received constant orders from its main customer, Toyota as well as other Japanese automakers. The increase in demand is not expected in Japanese market. The Company's electric power steering (EPS) division has resumed business with Honda after almost 20 years. The Company currently supplies column type EPS units for Honda's new Fit. The Company will also start supplying the same type of EPS units to  a mid-sized automaker to be used in the redesigned version of its main model, which is scheduled to be released in the latter half of FY2013. (From an article in the Nikkan Jidosha Shimbun on October 8, 2013)

Investment outside Japan

<Brazil>
-The Company announced that it will start local production of column-type electric power steering systems (EPSs) on a new integrated manufacturing line in Brazil. The new production line has been constructed at JTEKT Automotiva Brasil Ltda. (JABR). JABR manufactures hydraulic power steering systems and also assembles EPSs using column units imported from Japan. JTEKT has invested approximately JPY 3 billion in the expansion project, and already started new operations in February 2014. The Company hopes to meet automakers' needs to procure parts locally by establishing a seamless production structure. (From an article in the Nikkan Jidosha Shimbun on March 26, 2014)

<Mexico>
-The Company will establish its first manufacturing plant in Mexico by the fiscal year ending March 2016. The Company will set up a subsidiary named JTEKT Automotive Mexico S.A. De C.V. (JAMX) in February 2014, and start constructing a new plant in San Luis Potosi. Production of Electric Power Steering systems (EPS) is scheduled to start at the new plant at the end of 2015. The total investment in the plant will be JPY 8 billion, and the plant will have an annual production capacity of 900,000 units. Nissan, Honda, and Mazda are all expanding production capabilities in Mexico. JTEKT hopes to enhance its competitive edge by establishing a new Mexican supply base for these Japanese automakers. (From an article in the Nikkan Jidosha Shimbun on December 25, 2013)

<China>
-The Company announced that it has held an opening ceremony at the plants of its two bearing production subsidiaries, Wuxi Koyo Bearing Co., Ltd. (WKB) and Koyo Needle Bearings (Wuxi) Co., Ltd. (KNBW), in Wuxi, Jiangsu Province, China. These facilities have been relocated to the Hudai Industrial Zone from the previous locations in the same city. WKB has renewed some of its equipment to produce small bearings, while integrating production lines and workshops to improve the efficiency of material handling operations. Meanwhile, KNBW has constructed a new rocker arm production line to establish a local supply structure. KNBW aims to improve its productivity and product quality further by installing new equipment and expanding capacity to triple its production volume by 2014. (From an article in the Nikkan Jidosha Shimbun on Jun 1, 2013)

<Korea>
-Koyo Jico Korea Co., Ltd., the Company's Korean joint venture with Jico Korea Co., Ltd., will move its Pyeongtaek Plant to the Hyeongok Industrial Park in the same city. The plant will produce water plant bearings for Hyudai Motor and Kia Motors. Investment in this project is expected to reach KRW 13 million. Koyo Jico Korea was established in 2003 with JTEKT providing 84.4 percent and Jico 15.6 percent of the capital. (From a press release, May 15, 2013)

Planned Capital Investment

(As of Mar. 31, 2014)

Plant	Location	Type of facility	Estimated amount of investment (in million JPY)	Project Period
				From	To
Kagawa Plant	Kagawa, Japan	Facility for manufacturing mechanical components	3,700	Apr. 2014	Mar. 2015
Kokubu Plant	Osaka, Japan	Facility for manufacturing mechanical components	2,000	Apr. 2014	Mar. 2015
Kariya Plant	Aichi, Japan	Facility for manufacturing mechanical components	1,700	Apr. 2014	Mar. 2015
Daibea Co., Ltd. Head Office & Izumi Plant	Osaka, Japan	Facility for manufacturing mechanical components	1,100	Apr. 2014	Mar. 2015
JTEKT (Thailand) Co., Ltd.	Bangpakong, Thailand	Facility for manufacturing mechanical components	8,900	Apr. 2014	Mar. 2015