Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	Rate of change (%)	Factors
Overall
Sales	70,886	70,326	0.8	1)
Operating income	6,286	9,523	(34.0)	2)
Ordinary income	6,935	8,947	(22.5)
Current net income	4,385	5,435	(19.3)
Automotive Bearings
Sales	44,364	41,084	8.0	3)
Operating income	5,345	6,191	(13.7)
Non-bearing automotive business
Sales	13,769	15,225	(9.6)	-
Operation income	3,480	4,245	(18.0)

Factors
1) Operating Revenue:
-Overall operating revenue in the automotive business increased year-on-year due to the Company's efforts focused on winning new program business from its existing customers. However, operating revenue in the non-automotive business such as ships and construction equipment decreased because of the changes in the market environment.

2) Profit:
-Operating profit in the non-automotive business that includes ships and construction equipment, which account for a high proportion of sales of value-added products, decreased. In addition, the Company incurred a huge amount of initial start-up costs associated with building production facilities in Mexico, the Czech Republic, China, and Indonesia, which also negatively impacted profit.

3) Automotive Engine Bearing Business:
-Outside Japan, sales significantly increased in the Asian region, especially in Thailand and Korea. Even though sluggish demand continued in Europe, the Company experienced strong sales to European OEMs due to the demand for exports supported by the weak euro during the fiscal year.
-In Japan, sales were negatively impacted from the autumn and after by the end of the eco-car sales incentive program and by lower export volumes to Europe and China. In the end, sales improved during the year as a whole, largely supported by the increased sales resulting from the eco-car sales incentive program.

New Company

-The Company announced that it has established its new wholly-owned subsidiary in Inuyama, Aichi Prefecture, Japan. Capitalized at 80 million yen, the new company, DAIDO INDUSTRIAL BEARING JAPAN CO., LTD., will be engaged in machining for middle and high speed engine bearings. (From a press release on July 6, 2012)

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	1,251	1,214	1,128

R&D Structure

-R&D activities are conducted at three locations: R&D Technical Center, Production Technology Center, and the Design Center.
-As of March 31, 2013, the Company had 75 researchers.

R&D Activities

R&D on engine bearings providing excellent performance in terms of wear and abrasion resistance, for idling-stop and hybrid systems
-The Company developed a plastic overlay with improved durability. It also developed a highly durable aluminum-alloy bearing for engines, which offers excellent performance in terms of resistance to wear, abrasion, and fatigue.

R&D on bearings with new, lead-free overlay
-The Company is in the midst of developing overlays and copper-aluminum alloys compliant with European lead regulations, aiming to further improve their performance.

R&D on low-friction bearings
-The Company is conducting R&D activities on surface processing methods that lower bearing friction, which is a must in terms of responding to the growth of low-fuel consumption in engines.

R&D on racing bearings
-The Company has developed, and is supplying, racing bearings offering tremendous performance in term of durability and non-firing qualities, capable of enduring ultra-high-speed revolutions in F1 racing cars.

R&D on new PEEK materials
-The Company developed bearings composed of PEEK materials, working to improve their performance in automotive parts, general industrial equipment, and electric power generators.

R&D on shock-absorber bearings to develop materials that increase riding comfort
-The Company is developing bearings made from lead-free, plastic material that enhances riding comfort in terms of steering stability and shock absorption, based on the bearings used in automotive shock-absorbers.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	10,040	5,596	2,763
Facilities exclusively for procesing automotive bearings	6,574	2,768	1,832
Facilties to manufacture bi-metals	247	1,861	589

Investments

Facility	Outlines
Automotive Bearings
-Facilities specialized in processing	-The Company invested in facilities and equipment for the purpose of raising the production capacity at its own and at those of its consolidated subsidiaries (Daido Plain Bearing and NDC) in Japan. -At its consolidated subsidiaries outside Japan, the Company invested in facilities and equipment for the purpose of raising production capacity, especially at its Asian and European plants. -A new production plant is under construction at Daido Metal Mexico S.A.de C.V.
-Production facilities producing bimetal	-The majority of bi-metals used at domestic and overseas plants is supplied by the Company. The Company invested in facilities and equipment mainly at its own production facilities to raise production capacity.

Investments Outside Japan

Setting up Production Plants Outside Japan
-The Company's schedule for completing new production facilities is as follows:

• FY2012: Third production plant in Thailand, second production plant in China (completed)
• FY2013: Second production plant in the Czech Republic (completed); second production plant in Indonesia (scheduled to be completed)

Consolidating Production of Automotive Engine Bearings in Mexico
-The Company integrate production of engine bearings for the North American market into its soon-to-be-opened Mexican Plant by the year ending March 2015. Ever since the company liquidated its two production subsidiaries in the U.S. in fiscal year 2010, products for the U.S. market have been delivered from Daido Metal's plants in Japan, Europe and Southeast Asia. The company is now preparing to launch production operations in Mexico, positioning it as a supply hub for the North American market. Although the plant is a prospective facility to serve the Brazilian market as well, there are some difficulties involved such as a tight import restriction imposed by the government and a limited number of Japanese companies' engine plants in the country. Daido Metal's president says, "We are going to explore the possibility of setting up a manufacturing facility in Mexico in fiscal year 2015 or later as a hub to serve the South American market." (From an article in the Nikkan Jidosha Shimbun on Dec. 3, 2012)

Boosting Production Capacity at Russian Plant
-The Company will boost production capacity of bearings for automotive use at its Russian plant by 30 percent by March 2016 in a bid to expand supply capacity to Japanese and European automakers. Introducing the state-of-the art production technologies the company has developed at its facilities in Japan, Daido will install two new production lines in Russia. Its subsidiary Daido Metal Russia LLC, with production capacity of bearings enough to satisfy demands of 2 million vehicles a year, currently supplies the products mainly to local manufacturers. Given a recovery in the Russian economy and plans to increase production by automakers in advanced countries, the company will enhance production capacity of the subsidiary to a level to meet demands of 2.6 million vehicles a year. Daido forecasts the project will require investments ranging from 500 million yen to one billion yen in retooling the existing production lines, as well as in installing two new lines by March 2016. (From an article in the Nikkan Jidosha Shimbun on Nov. 6, 2012)

Planned Capital Investments (Bearing metal for automobiles business)

Name (Location)	Purpose of Equipment Installation	Estimated amount (in million JPY)	From	To	Capacity increase on completion
Bi-metal production plant (Aichi Pref., Japan)	Facility to produce bi-metals (materials used for bearings)	268	Jul. 2010	Sep. 2013	About 8% increase in bi-metal (bearing material) production capacity
Inuyama Plant (Aichi Pref., Japan)	Facility to produce half-bearings	290	Apr. 2012	May. 2013	About 147% increase in half-bearings production capacity
	Facility to produce half-bearings	142	May. 2012	May. 2013	About 30% increase in half-bearings production capacity
	Facility to produce half-bearings	318	Apr. 2013	Mar. 2014	About 60% increase in half-bearings production capacity
	Facility to produce half-bearings	190	Apr. 2013	May. 2014	Maintain current facilities; no capacity increase
	Facility to produce half-bearings	604	Jan. 2013	Mar. 2014	Increase to shift production of the right products to the right regions
Daido Plane Bearing Co., Ltd. (Gifu Pref., Japan)	Facility to produce half-bearings	247	Sep. 2012	Mar. 2014	About 5% increase in half-bearings production capacity
	Facility to produce half-bearings	500	Dec. 2012	Dec. 2013	About 20% increase in half-bearings production capacity
	Facility to produce half-bearings	130	Jan. 2013	Mar. 2014	Increase of 700,000 half bearings per month
Daido Metal Czech s.r.o. (Brno, Czech)	Plant facility	1,085	Jul. 2012	Jun. 2013	Build 12,600m2 more of additional production space
	Facility to produce half-bearings	680	Jul. 2012	Jun. 2013	About 25% increase in half-bearings production capacity
Daido Precision Metal (Suzhou) Co., Ltd. (Jiangsu, China)	Plant facility	283	Aug. 2011	Jan. 2013	Build 6,600m2 more of additional production space
	Facility to produce half-bearings	189	Aug. 2012	Apr. 2013	About 27% increase in half-bearings production capacity
	Facility to produce half-bearings	240	Feb. 2013	Dec. 2013	About 25% increase in half-bearings production capacity
Dong Sung Metal Co. Ltd. (Chungcheongbuk-do, Korea)	Land and building for production plant	217	Jun. 2012	May. 2013	About 21% increase in half-bearings production capacity
Dyna Metal Co., Ltd. (Chachoengsao, Thailand)	Facility to produce half-bearings	307	Apr. 2012	Apr. 2013	About 13% increase in half-bearings production capacity
	Facility to produce half-bearings	263	Apr. 2013	May. 2014	Increase of 460,000 half bearings per month
	Facility to produce half-bearings	239	Nov. 2012	Oct. 2013	About 406% increase in half-bearings production capacity
	Facility to produce half-bearings	272	Apr. 2013	Apr. 2014	About 11% increase in half-bearings production capacity
PT. Daido Metal Indonesia (Bekasi, Indonesia)	Facility to produce half-bearings	286	Dec. 2012	Dec. 2013	About 29% increase in half-bearings production capacity
Daido Metal Mexico S.A.de C.V. (Jalisco, Mexico)	Plant facility	2,192	May. 2012	Jun. 2013	Additional floor space of 24,795m2
	Other facility	222	Aug. 2012	Apr. 2013	Drainage capacity 40m3/h
	Facility to produce half-bearings	279	Nov. 2012	Jun. 2013	Increase of 700,000 half bearings per month