Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	Rate of Change (%)	Factors
Overall
Sales	760,870	782,299	(2.7)	-
Operating income	10,250	21,962	(53.3)	-Sales of Japanese brand vehicles fell in China. -The Company incurred high initial costs in expanding its business operations in emerging countries. -The Company incurred costs involved with the start-up of new vehicles mainly in North America; and for transferring production of electric products to Mexico.
Ordinary income	13,247	22,027	(39.9)
Net income	5,857	24,284	(75.9)

Outlook for FY ending Mar. 31, 2014

(in billions of JPY)

	FY ending Mar. 31, 2014 (Outlook)	FY ended Mar. 31, 2013 (Result)	Rate of Change (%)
Sales	830	760.9	9.1
Operating income	20	10.3	94.2
Ordinary income	19	13.2	43.9
Net income	10	5.9	69.5
Investment Expenditure	26.1	24.9	4.8
R&D Expenditure	26.2	23.8	10.1

Estimated Operating Revenue by Region

(in billions of JPY)

	FY ending Mar. 31, 2014 (Outlook)	FY ended Mar. 31, 2013 (Result)	Rate of Change (%)
Japan	350	388.2	(9.8)
North America	250	193.3	29.3
Europe	85	76.1	11.7
Asia	195	158.4	23.1

 

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

Mid-term Business Plans

-The Company has mapped out a mid-term business plan called the CK G×4 T10, which covers a 6-year period from April 2011 through March 2017. Under the new plan, the company aims at becoming one of the top ten (T10) auto parts suppliers in the global market in terms of sales and operating profit, based on the prediction that global vehicle production will be reaching 95 million units in the near future. In order to achieve this target, the manufacturer is going to develop 10 new Green (G) products that are friendly to the environment. It will also aim to meet increasing demand from rapidly growing emerging countries by outsourcing production to its local plants. The G×4 stands for Green, Growth, Global and Great Company, four key words of the company's progress policy. (From an article in the Nikkan Jidosha Shimbun on July 21, 2011)

Objectives
-Worldwide operating revenue among the top-ten companies: (more than 1 trillion yen)
-Worldwide operating profit among the top-ten companies: (value-added sales ratio in the range of 7%)
-By 2016, supplying the 10 leading, environmentally friendly products.

• FY2011 and 2012: designed 2 products (injection molded skin and an EGR cooler)
• FY2013 and 2014: design 5 products
• FY2015 and 2016: design 3 products

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Japan	21,270	21,310	18,820
Americas	1,490	1,210	1,230
Europe	850	670	600
Asia	160	250	350
Total	23,780	23,460	21,010

R&D Structure

-In order to connect its business operations as well as regions, the Company set up four new technical centers that play their own roles in developing mid-term technology and overseeing resource management since the fiscal year ended Mar. 31, 2013.

Name	Location
Advanced Fundamental Development Center	-
Production Technology Center	Yoshimimachi, Saitama Pref.
Testing & Research Center	Sano, Tochigi Pref.
Technological Resources Utilization Center	-

R&D Structure by Region

<Japan>
-As the center conducting R&D activities capable of responding to product requirements worldwide, it is in-charge of advanced, basic, and application development. The Company is adding more resources toward advanced and basic development activities, which create future development technology and are designed to enhance its competitive edge. 
-In order to strengthen its predominance in terms of product pricing, one element of product competitiveness, the Company has been working on ways to reduce the costs of goods. Making use of R&D capabilities in LLCs is one of these. Specific examples include transferring R&D responsibilities to its China Technical Center and CK Engineering Shanghai.

<Americas>
-The Company makes use of its Americas R&D capabilities to finalize product development based on discussions with local customers, after basic developments and application specs of vehicle product developments are decided in Japan. The R&D activities for products designed for the Mexican market are managed and operated in the Americas Technical Center.

<Europe>
-The Europe Technology Center serves the same function as that of the American one. The Center is in charge of one critical part of R&D activities for Renault, based on its partnership with the company.

<Asia>
-The importance of R&D in Asia is tied to the growth of the Chinese market. The Company is significantly expanding the R&D structure at its Asian Technical Center, which shares the role with the Japan Technical Center in developing products for the Chinese market, aiming to create a very efficient and cooperative R&D structure.

R&D Activities

Improving product competitiveness
-Developing components and systems that respond to environmental concerns.
-Developing an exhaust system, and the components for it, which can improve fuel economy and exhaust purification performance.
-Developing highly advanced modular products as well as to develop components that are higher in performance and lighter in weight.
-Developing meters and information delivery systems that enhance safety.
-Developing air-conditioning systems that provide a comfortable driving environment.

Developing strategic products
-Developing systems and products for next-generation electric vehicles
-Developing technologies and products that reduce product weight so as to decrease CO2 emissions
-Developing low-cost vehicle systems and products for emerging markets

Product Development

Injection-molded panel skin
-The Company developed the world's first technology to injection-mold instrument-panel skin, under the aim of increasing the content ratio of soft-pad instrument panels. The Company was successful in improving product quality at an even lower cost basis. Commercial production of the skin started in China, Thailand, and Mexico.

EGR cooler
-The company developed an ultra compact and light-weight EGR cooler, forecasting greater vehicle content of this cooler on gasoline-powered vehicles. Based on its recently developed VVG Fin, the Company has succeeded in creating the most efficient heat-exchange rate in the world.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Japan	8,700	7,300	6,700
Americas	6,900	4,900	2,600
Europe	1,500	1,200	700
Asia	7,800	8,100	5,100
Adjusted figure	(100)	-	-
Total	24,800	21,500	15,100

-The Company invested mainly in its auto-parts business to augment and upgrade its testing facilities, in addition to investing in facilities and equipment (including intangible assets) to respond to vehicle model changes being made by its major customers.

Outlook of Capital Expenditure

(in millions of JPY)

	FY ending Mar. 2014
Japan	5,800
Americas	8,500
Europe	3,700
Asia	8,100
Total	26,100

Investment Outside Japan

<China>
Launching plastic molding operations at two plants in China to make instrument panels designed for Nissan
-The Company will start molding plastic instrument panels at two plants in China, the Xiangyang Plant in Hubei Province and the Zhengzhou Plant in Henan Province. The company will install injection-molding equipment in these facilities to begin new operations in 2013 to support Nissan's next-generation models to be built at the automaker's Chinese joint venture. The Company has already been conducting plastic molding process for instrument panels in China at its Guangzhou Plant. Nevertheless, it has decided on the expansion plan to better serve Nissan, which is stepping up vehicle production in the country. (From an article in the Nikkan Jidosha Shimbun on Sep. 21, 2012)

• Up until now, the Xiangyang Plant has been engaged only in the final assembly process for instrument panels using semi-finished products supplied from the Guangzhou facility. Based on the expansion plan, however, the plant will introduce an original, integral molding system to mold the base material and the surface material simultaneously, allowing it to supply high-texture instrument panels at low cost.
• The Zhengzhou facility, which has been outsourcing the molding process to outside manufacturers, will also shift to in-house production to reduce cost. The Xiangyang Plant will initially process instrument panels for the next-generation Teana, while the Zhengzhou Plant will start with those for the future Qashqai and the X-trail vehicles.

Investment in Japan

Expanding On-site Production
-The Company will expand its production of components within the premises of its customers' assembly plants, starting with steering member units, mainstay items of the cockpit module system, at Nissan's Tochigi Plant in December. These components, which have been subcontracted to outside suppliers, will be changed to production by the Company at Nissan's plant. Production at the customer's manufacturing site will eliminate transportation expenses, contributing to purchasing cost savings by automakers. The Company is willing to propose this scheme to other automakers as well, in and out of Japan. (From an article in the Nikkan Jidosha Shimbun on Sep. 11, 2012)