Financial Overview

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Remarks
Overall
Sales	93,632	86,102	8.7	-
Operating income	4,162	3,219	29.3	-
Ordinary income	4,449	3,461	28.5	-
Net income	2,796	3,297	(15.2)	-
Automotive Component Business
Sales	79,944	72,365	10.5	-
Operating income	8,291	6,699	23.8	-

 

Major Contracts

-In 2013, Thrust washer with resin coating (RB) for Crankshaft has been developed, and its mass production already started.

-In 2013, Engine bearing with resin coating flange has been ordered from a European car maker, and its mass production already started.

Common Engine Bearing

-In January 2014, the Company announced that It will promote development of common engine bearings for Toyota Motor Corporation, which is now pursuing a new parts-sharing framework called Toyota New Global Architecture (TNGA). TNGA shares parts among vehicles using the same modules and platforms to save costs and manpower. Toyota is planning to introduce new engines based on the TNGA strategy in and after the fiscal year ending in March 2016. The Company will develop bearings for the TNGA engines, making sure that they comply with the designated design and specifications. Generally speaking, each of the engine bearings demonstrates different heat resistance, abrasion resistance and other properties, depending on the treatment given on the surface of its lining. The Company currently combines and uses some aluminum alloys for a lining from 30 to 40 different brass or phosphor bronze- based aluminum alloys. The Company will limit the new bearing's material to one aluminum alloy and make fewer variations in size. This will allow the manufacturer to purchase the material and produce the bearing in a large quantity, which will lead to the company's higher cost competitiveness.

Outlook for FY ending Mar. 31, 2015

(in million JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ending Mar. 31, 2014 (Result)	Rate of Change (%)
Sales	98,000	93,632	4.7
Operating income	5,200	4,162	24.9
Ordinary income	5,100	4,449	14.6
Net income	3,100	2,796	10.9

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

Mid-term Management Plan

-The Company has initiated its VISION 2015 mid-term management plan that covers FY March 2014 through FY March 2016. Its objective is to achieve gross operating revenue of JPY 110 billion and a 6.5% operating profit margin by the end of March 2016.

• Global expansion of products and manufacturing regions: accurately understand the global bearing market and appropriately supply the right products to the right geographical regions.
• Redefining product and manufacturing technology: expand technological expertise gained from conducting its main bearing business, to lubrication systems centered on tribology. 
• Enhance human resources

- Expanding bearing business: Achieving a 20% share of the engine bearing market. Expand sales into other sectors besides the passenger-car market, achieving the top share (25%) of the global market in FY March 2016. In addition, adding seven to eight new production lines worldwide, increasing global production capacity to 40 million units.

-Expanding in sectors other than bearings

• EGR valves: Operating revenue for FY March 2013 was JPY 1,600 million. While the Company is currently supplying EGR valves mainly to large-size vehicles, it plans to expand this business in the future to include diesel-engine vehicles, aiming to achieve operating revenue of JPY 2,300 million in FY March 2016. 
• Vacuum pumps: Operating revenue in the vacuum pump business was JPY 650 million for FY March 2013. The Company plans to expand its product line for low-fuel-consumption and diesel-engine vehicles. In FY March 2016, the Company plans to supply its products to new models of large-size passenger cars. By March 2016, the Company plans to supply vacuum pumps for low-cost vehicles designed for emerging markets by, for example, launching production in Thailand, aiming for operating revenue of JPY 3,000 million. 

Awards

-The Company received the 2013 Excellent TNGA  Award from Toyota for Vacuum pump.

-In 2013, the Company received the Technical Development Award from Hino Motors for Its Electronically controlled EGR Valve for the 3rd time.

R&D Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	3,268	3,202	3,020
Automotive Component Business	3,064	2,910	2,810

R&D Structure

-The Company set up its R&D structure so that it can address diverse issues under a consolidated framework consisting of several divisions such as the basic research division dealing with tribology (friction/wear/lubrication technology) and other themes; the product development division; and the production technology development division, all working at the Main Technology Building.

-In addition to the above, the Company also has a friction technology research center, an engine experiment center, and a production technology development center.

R&D Activities

Automotive Parts Business
<Bearing Business>
-In working to improve fuel efficiency, the Company is developing next-generation, plastic-coasting technology and plastic-coated thrust washers, which it is producing.

-In the area of special bearings designed for automotive air-conditioning compressors, the Company developed low-cost, new shoes and swash plates, launching commercial production of them and enhancing its cost competitiveness.

<Die-casting products>
-The Company has been mass-producing diecast products in which thin-walled-diecasting technology has been effectively applied to make the products lighter. In addition, it is making diecast products that are lower in cost as a result of eliminating the need for machining, and by optimizing cooling and fluidity through fluidity analysis based on CAE (Computer Aided Engineering).

-The Company developed a rotational casting method that can produce curved shapes based on die-casting. Previously, such curved shapes could only be produced by conventional gravity casting.

<System products business>
-The Company has developed and is mass-producing Electronically controlled EGR valves, the 2nd generation EGR Valve, that comply with the post New Long Term Exhaust Gas Regulations in Japan, and with exhaust gas regulations "US13" in the U.S.A.

-Currently developing high heat-resistant exhaust control valves: actuators are thermal protected by increasing the cooling water channels. Changed the materials used for gas channels and sliding-sleeve parts to heat-resistant materials. Based on these initiatives, the allowable gas temperature was increased from C200 degrees to C700 degrees, making it possible to apply this to commercial-vehicle EGR valves, exhaust throttle valves, and multi-stage switch valves.

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	7,591	4,763	6,123
Automotive Component Business	6,439	4,397	4,789

Automotive Parts Business
-The Company made capital investments in order to increase its production capacity and facilities and also to migrate to producing new products. Capital investments in and outside Japan are outlined below.

• Affiliated companies in Japan: The Company made capital investments mainly to increase its production capacity and facilities and to migrate to producing new products, especially spending to increase the production capacity of facilities at Taiho Gifu to manufacture bearings.
• Facilities outside Japan: The Company made fundamental investments to make new plants. The majority of spending was to expand the Taiho Corporation of Thailand (TCT).

Investment Outside Japan

<Hungary>
-The Company will expand its plant in Hungary by the fiscal year ending March 2016. A new plant will be constructed to double the production space to 16,000 square meters. The new plant will be used to expand production of bearings and other  parts for the fuel injection system of diesel engines. Investment amount is expected to reach JPY 1.5 billion to JPY 2 billion. The Hungarian plant supplies engine bearings for the European market. The newly added space will be used for the expansion of production in the fiscal year ending March 2017 and onward.

<Thailand>
-Its subsidiary,Taiho Corporation of Thailand (TCT), has built a new plant for producing engine vacuum pumps.The Company hopes to boost its sales in the ASEAN markets centering on Thailand by supplying cost competitive products with high quality. It also aims at producing system products outside Japan. The factory started operations in February 2014, and will start mass-production in January 2015.

Planned Capital Investments

-The Company plans to spend JPY 11,500 million yen to make capital improvements for FY ending Mar. 31, 2015. The breakdown is according the projects listed below.

Plant	Facilities to be built	Planned investment (in million JPY)	Objective
Taiho Kogyo Co., Ltd. Headquarters and Headquarters plant (Aichi Pref., Japan)	Production facilities to manufacture die casting products, etc.	746	Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd. Hosoya plant (Aichi Pref., Japan)	Production facilities to manufacture bearings, etc.	1,164	Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd. Shinohara plant (Aichi Pref., Japan)	Production facilities to manufacture system products, etc.	1,435	Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd. Kyushu plant (Kagoshima Pref., Japan)	Production facilities to manufacture bearings, etc.	216	Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd. Koukai plant (Aichi Pref., Japan)	Production facilities to manufacture bearings, etc.	205	Respond to switching over to producing new products, and maintain and renew facilities
Taiho Seiki Co., Ltd. Headquarters and Headquarters plant (Aichi Pref., Japan)	Production facilities to manufacture bearings, etc.	230	Expand operations and increase production capacity
TET Co., Ltd. Kasugai plant (Aichi Pref., Japan)	Processing facilities	406	Expand operations and increase production capacity
Taiho Gifu Co., Ltd. Headquarters and Headquarters plant (Gifu Pref., Japan)	Production facilities to manufacture bearings, etc.	628	Respond to switching over to producing new products
Nippon Gasket Co., Ltd. Shiga Plant (Shiga Pref., Japan)	Production facilities to manufacture gasket products	367	Respond to switching over to producing new products
Taiho Corporation of America Headquarters and Headquarters plant (Ohio, USA)	Production facilities to manufacture bearings, etc.	553	Expand operations and increase production capacity
PT. Taiho Nusantara Headquarters and Headquarters plant (Karawang, Indonesia)	Production facilities to manufacture bearings, etc.	306	Respond to switching over to producing new products
Taiho Corporation of Europe Headquarters and Headquarters plant (Ujhartyan, Hungary)	Production facilities to manufacture bearings, etc.	679	Fundamental investment
Taiho Corporation of Korea Headquarters and Headquarters plant (Daegu, Korea)	Production facilities to manufacture bearings, etc.	358	Fundamental investment
Taiho Kogyo Corporation of Yantai Headquarters and Headquarters plant (Yantai, China)	Production facilities to manufacture bearings, etc.	75	Maintain and renew facilities
Hengye Bearing Materials Co.,Ltd (Changzhou) Headquarters and Headquarters plant (Changzhou, China)	Production facilities to manufacture bearings, etc.	135	Expand operations and increase production capacity