T.RAD Co., Ltd. Business Report FY ended Mar. 2019

Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	Rate of Change (%)	Factors
Overall
Sales	136,125	124,490	9.4	-Business results were higher year-over-year in Japan and other regions, except for Europe and some regions
Operating profit	5,092	5,792	(12.1)
Profit before tax	5,572	6,445	(13.6)	-Profit fell because of losses incurred from selling investment securities, increased impairment losses, and increased corporate taxes, even though settlement costs dealing with anti-trust laws decreased.
Profit for the year attributable to owners of the parent	1,735	3,691	(100.0)

Factors
Sales at the automotive heat-exchanger business
-Japan: Increased because of strong sales resulting from more product orders.
-USA: Increased because production launched of products that the Company won new orders for.
-Europe: Increased because customers in the Czech Republic placed more product orders.
-Asia: Increased because of strong sales resulting from more product orders placed by customers in Thailand, Indonesia, and Vietnam.
-China: Significantly increased because of the sales generated by a subsidiary, Qingdao Toyo Heat-Exchanger Co., Ltd., starting from the 3rd quarter.

Business Developments

-The company will boost production of heat exchangers that correspond to high fuel efficiency and electrification. It will start mass production of a new inverter cooler in 2019, and gradually increase production capacity for the oil coolers for motors and continuously variable transmissions, as well as exhaust gas recirculation (EGR) coolers, by the fiscal year that ends in March 2022 (FY 2021), when the popularity of electrified vehicles is expected to grow dramatically. The company will actively invest in plants and facilities to improve production efficiency, and introduce a cloud manufacturing business management system that is under development by its group company. The company improved the cooling performance and weight of oil coolers more than 10% by adopting high-performance fins, and produces oil coolers for sales in Japan, China, and North America. Demand for oil coolers is expected to grow in Europe and Southeast Asia, and the company will raise its annual production capacity for them by 70% from the FY 2017 figure to 11 million units. It developed a new EGR cooler by adopting a tank-less structure that uses less components and is more cost effective compared with existing header-less structures. The company currently produces the new EGR cooler in Japan, and will start mass-producing in North America this autumn. The company aims to raise EGR cooler sales for FY 2021 by 60% from the FY 2017 results. (From an article in the Nikkan Jidosha Shimbun on July 2, 2018)

Mid-term Management Plan “T.Rad-11”

-The Company set the following targets for FY2021

Ordinary profit: JPY 10.5 billion
Ordinary profit margin: 7.2%
Sales: JPY 146.0 billion
ROE: 10.7%

-Regional Strategies

Japan: Improve productivity based on IT, automation, zero accidents, improved quality, and cost reductions. Japanese productions plants support production operations at production plants overseas.
North America: Install a new inventory-control system. Launch commercial production of small-sized EGR coolers for automobiles and radiators for small-sized trucks.
Europe: Focus on returning to profitability by improving processes for producing heat-exchangers for heavy-duty trucks that are currently being built, and EGR coolers.
Asia: Prepare production facilities to manufacture motorcycle heat-exchangers based on water-cooling technology, and casing oil-coolers that are environmentally friendly products.
China: Commercially produce environmentally friendly products for 6 country emissions-controlled vehicles and the Chinese electric-vehicle market.

-Improved Operating Procedures

Manufacture products meeting the needs for electrification, commoditization, larger sizes, and specialty high-mix/small-lot products. Make use of IT expertise at T-RAD Connect that was established in April 2018.

Licensing of Technology to Other Companies

(As of Mar. 31, 2019)

Partner (Country)	Contract	Contract period
PT. Batarasura Mulia (Indonesia)	Manufacturing technology for radiators	Dec. 2014 - Dec. 2019
Tata Toyo Radiator Ltd. (India)	Manufacturing technology for radiators	Jan. 2013 - Dec. 2019
Torc Co., Ltd. (Thailand)	Manufacturing technology for radiators	Jan. 2019 - Dec. 2019

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	FY ended Mar. 31, 2017
Japan	2,835	2,737	2,558
USA	55	33	63
Europe	17	44	9
Asia	23	12	27
China	117	-	-
Total	3,049	2,827	2,659

Product Development

-In the clean-vehicle field, the Company is developing cooling systems that respond to the increasing electrification of hybrid, electric, and fuel-cell vehicles.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	FY ended Mar. 31, 2017
Japan (parent basis)	3,778	3,619	2,358
USA	956	1,105	1,962
Europe	714	433	523
Asia	935	495	408
China	375	198	233
Other	124	122	67
Overall	6,882	5,975	5,551

Planned Capital Investment

(As of Mar. 31, 2019)

Facility (Location)	Equipment to be installed	Planned investment amount (million JPY)	Starting	Planned completion
Hatano Works (Kanagawa, Japan)	Equipment to produce radiators, etc.	359	Nov. 2018	Mar. 2020
Nagoya Works (Aichi, Japan)	Equipment to produce radiators, etc.	860	Nov. 2018	Mar. 2020
Shiga Works (Shiga, Japan)	Equipment to produce radiators, etc.	1,075	Jun. 2017	Mar. 2020
T.RAD North America Inc. (Kentucky, U.S)	Equipment to produce radiators, etc.	1,984	Apr. 2018	Dec. 2019
T.RAD (Vietnam) Co., Ltd. (Hanoi, Vietnam)	Equipment to produce radiators, etc.	487	Dec. 2018	Dec. 2019
T.RAD (Thailand) Co., Ltd. (Chachoengsao, Thailand)	Equipment to produce radiators, etc.	981	Mar. 2019	Dec. 2019
PT. T.RAD Indonesia (Bekasi, Indonesia)	Equipment to produce radiators, etc.	165	Sep. 2018	Dec. 2019
T.RAD (Zhongshan) Co., Ltd. (Guangdong, China)	Equipment to produce radiators, etc.	119	Apr. 2018	Dec. 2019
T.RAD Czech s.r.o. (Unhost, Czech Republic)	Equipment to produce radiators, etc.	118	May. 2018	Dec. 2019