Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	352,710	305,752	15.4	-
Operating income	18,170	10,473	73.5	-
Ordinary income	20,390	13,561	50.4	-
Current net income	12,761	7,789	63.8	-
AC (Automotive Components)
Sales	218,948	184,802	18.5	1)
Operating profit	9,152	5,106	79.2	-

Factors
1) AC (Automotive Components)
Hydraulic Shock-absorbers for Four-wheel Vehicles
-Sales were 151.50 billion yen, an increase of 24.8% year-on-year, thanks to strong sales in Japan; a recovery in Europe, especially in Germany and Northern Europe; greater deliveries of products in the U.S.A.; in addition to strong sales in the mass-market sector.

Hydraulic Equipment for Four-wheel Vehicles
-Sales increased 13.0% year-on-year to 36.70 billion yen, thanks to new orders for power-steering systems and vane pumps for CVTs.

Global Production Network for CVT Hydraulic Pumps

-The Company is establishing a global supply structure for hydraulic pumps used in vehicles with continuously variable transmissions (CVTs). Its facilities in Japan and China currently produce a total of 280,000 units per month. In addition, the company will begin their production at its plant in Thailand this fall, which will be followed by operation launch at its new facility in Mexico next year. These two new factories are to output a total of 150,000 pumps per month, boosting KYB's global production capacity to 430,000 units per month, up 50% from the current volume. The enhancement is a move to deal with Japanese OEMs and transmission suppliers' expanding their production volumes. KYB intends to build a global supply structure with these four production facilities to be in line with the local production of its customers. KYB also considers increasing production at each base after 2014. (From an article in the Nikkan Jidosha Shimbun on Mar. 5, 2013)

-In 2013, the Company announced on February 7 that it will set up a new manufacturing subsidiary in Mexico, which will produce hydraulic pumps used in continuously variable transmissions (CVTs) for automobiles. The new subsidiary, KYB Mexico S.A. de C.V., will be located in Silao, Guanajuato and is expected to become operational in September 2014, delivering primarily to JATCO Mexico. (From an article in the Nikkan Jidosha Shimbun on Feb. 8, 2013)

Contracts

-In 2013, the Company has received orders for Nissan's steer-by-wire system "Direct Adaptive Steering" mounted on the Infiniti Q50. The ordered parts include gear assemblies, reaction motors, and Electronic Control Units (ECUs). KYB has invested around JPY 2.4 billion and constructed a new plant for exclusively producing the ECUs at its wholly-owned subsidiary, KYB Trondule Co., Ltd. (located in Nagaoka, Niigata). KYB also invested around JPY 900 million in the Gifu north plant (located in Kani, Gifu) and added new exclusive lines for producing the gear assemblies and reaction motors. Both plants already started production for the order. (From an article in the Nikkan Jidosha Shimbun on November 12, 2013)

New Mid-term Management Plan (FY ending Mar. 31, 2015 - FY ending Mar. 31, 2017)

Basic Policies
(1) AC (Automotive Components Business)
-Win customers worldwide by developing an organization based on five global regions
-Expand the mass-market business

(2) HC (Hydraulic Components Business)
-Increase sales of products in the agricultural, aerospace, and railroad industries
-Stay cost-competitive in hydraulic products for construction equipment

(3) Human-resources Development
-Develop and maintain human resources and global management personnel capable of supporting a global growth strategy

(4) Technology and Product Development
-Strengthen product-development framework in line with the needs in every market

(5) Product Creation
-Improve the Group's productivity and reduce global logistic costs by further expanding initiatives to reduce lead-time by half overseas and at suppliers.

(6) Management
-Improve functions that manage the European, Chinese, and American regions

-Mid-term Business Plan

	FY ending Mar. 31, 2017 (Target)
Sales	JPY 430 billion
Operating income	JPY 30 billion
Operating income margin	7.0%

Outlook for FY ending Mar. 31, 2015

(in millions of JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ending Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	369,000	352,710	4.6
Operating income	19,600	18,170	7.9
Ordinary income	20,000	20,390	(1.9)
Net income	12,000	12,761	(6.0)

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	6,916	5,468	4,035
AC (Automotive Components)	4,493	3,398	2,401

R&D Structure

Facility	Location	Research Activities
KYB Developmental Experiment Center	Kamo-gun, Gifu Pref.	-Development and testing of suspensions and steering devices for four- and two-wheel vehicles
Basic Technology R&D Center	Sagamihara City, Kanagawa Pref.	-Conducting basic research on hydraulic equipment and automobile devices and developing new products and technologies.
Electronics Technology Center	Sagamihara City, Kanagawa Pref.	-Designing and testing of electronic equipment. Accumulating production engineering technologies.
Production Technology R&D Center	Kani City, Gifu Pref.	-Development of technologies to improve product performances and reduce costs.
Machine Tools Center	Kani City, Gifu Pref.	-Accumulating knowhow for designing production equipment. -Carrying out projects to manufacture production equipment in-house.

R&D Activities

AC (Automotive Components)
Steering devices for automobiles
-For Nissan: Development of control units for direct-adaptive steering, steering gear boxes, reverse power motors for the Skyline and Infiniti Q50.

Shock absorbers for automobiles
-For Toyota: Supply of super-saturation values used in shock absorbers equipped on the CT200h, which significantly control the elongated damping force at the time of significant input.

Development of Low-Priced Shock Absorbers

-The Company will develop low-priced shock absorbers for emerging markets. Production costs will be reduced by lowering durability and performance and by procuring parts locally. Development of the shock absorber will be completed in 2014. KYB will establish a system to supply the shock absorbers in Southeast Asia and other emerging markets to meet demands from automakers. (From an article in the Nikkan Jidosha Shimbun on October 24, 2013)

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	29,908	39,215	27,172
AC (Automotive Components)	18,391	18,086	9,378

Planned Capital Investments

Planned investment FY ending Mar. 31, 2015: 22,600 million JPY
AC (Automotive Components): 14,100 million JPY

Expanded Production Capacity

<Europe>
-The Company is expanding production capacity for shock absorbers at its facilities in Europe in order to meet increasing orders from European automakers, especially PSA Peugeot Citroen. In Europe, the company plans to boost its annual shock absorber capacity for European automakers from the FY 2012 level of approximately 5.8 million units to 10 million in FY 2014. Of these, about 1.7 million units will be supplied to PSA's facilities in FY 2013, and this volume will increase to 4 million units in FY 2014. KYB's shock absorbers are installed on the Peugeot 2008 and 308, and on the Citroen C4 Picasso. In addition, the company will invest approximately JPY 3 billion in expanding its KYB Manufacturing Czech plant. That subsidiary's annual production capacity is expected to increase from the FY 2012 levels of 4.5 million units to 6.5 million units in FY 2014. (From a press release on December 27, 2013)