Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	689,477	599,615	15.0	1)
Operating income	43,798	36,706	19.3	2)
Ordinary income	45,847	36,777	24.7
Net income	26,214	21,429	22.3
Automotive component business
Sales	620,079	535,295	15.8	3)
Operating income	42,411	34,278	23.7	-

Performances for FY ended March 2014
1) Sales reached a record high thanks to a significant sales increase at the automotive components division. Sales of auto parts grew due to increased vehicle production and greater sales to European and U.S. automakers, which the Company achieved through active marketing efforts. Correction to the yen appreciation also boosted the division's sales.

2) Operating income, ordinary income, and net income all increased from the previous year's results thanks to a rise in sales at the automotive components division and the effects of group-wide cost-cutting initiatives.

3) Automotive components division achieved higher sales and profits. Major contributing factors to the improvements included increased consumer spending prior to the April 1 consumption tax hike in Japan, strong demand from the international markets such as North and South America, growth in global vehicle production, and reduced company spending as result of group-wide cost-cutting initiatives.

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

Contracts

Actuators for Pop-up Hood Systems
-In 2013, the Company is enjoying growing sales of its actuators for pop-up hood systems, which reduce the impact on a pedestrian in the event of a collision. The company initially supplied its hood-lifting actuators for the Mazda Roadster. Additionally, Toyoda Gosei won the second actuator contract for the new Toyota Crown released last December. As the global crash safety tests are slated to include some pedestrian protection criteria, the company is expecting further growth in demand for pop-up hood safety systems. Already having started full-scale supply to Toyota, Toyoda Gosei is accelerating expansion of its hood-lifting actuator business. (From an article in the Nikkan Jidosha Shimbun on Mar. 8, 2013)

Outlook for FY ending Mar. 31, 2013

(in million of JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	670,000	689,477	(2.8)
Operating income	37,000	43,798	(15.5)
Ordinary income	38,000	45,847	(17.1)
Net income	22,000	26,214	(16.1)

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Automotive Parts Business	25,700	23,500	21,900
Non-Automotive Parts Business	3,400	3,600	3,900
Total	29,100	27,100	25,800

 

R&D Structure

-R&D activities are conducted globally through cooperation among several organizations within the Company: the R&D Center; Production Technology Development Center; Development, Engineering and Production Engineering Departments at each business segment; Technology Management Department; Material Engineering Department, and its subsidiaries outside Japan, namely Toyota Gosei North America Corporation, Toyoda Gosei Asia and Toyota Gosei Europe.

R&D Facilities

Kitajima Technical Center	Aichi Pref., Japan
Miwa Technical Center	Aichi Pref., Japan
TGR Technical Center, LLC	Plymouth MI, USA

R&D Activities

-The Company developed and launched production of the following new products/technologies:

• Pop-up-hood actuators (designed to enhance pedestrian safety)
• Spindle grilles
• Highly stylized, extremely high frequency covers
• Light-weight trim for openings
• Light-weight glass runs
• Plastic turbo pipes

-Development of materials, products, and production methods that are capable of complying with all aspects of environmental regulations.
-Development of all-composite, high-pressure hydrogen tanks for fuel-cell vehicles.

Patent License Contracts for Innovations in Technology

(As of Mar. 31, 2014)

Company	Country	Contract	Period
Autoliv Development AB	Sweden	A patent license agreement for curtain airbags.	Feb. 5, 2001 - Feb. 20, 2016
Stant Manufacturing, Inc.	USA	A patent license agreement for quick turn fuel caps.	Apr. 2, 2001 - Oct. 18, 2014
Intier Automotive Interiors of America	USA	A patent and expertise license agreement for urethane spray surfaces	Nov. 18, 2002 - May 10, 2014
Daimler AG	Germany	A patent for a cover used in millimeter-wave radar	Nov. 10, 2011 - Sep. 23, 2019

Technical Assistance Contracts

(As of Mar. 31, 2014)

Company	Country	Contract	Period
Stant Manufacturing, Inc.	USA	An expertise license agreement for conductive fuel caps	Nov. 17, 1998 - Dec. 21, 2018
Magna Steyr Fuel Systems	Germany	A patent license agreement for conductive fuel caps	Feb. 26, 2004 - Dec. 21, 2018
Orbitronics Co., Ltd.	Pakistan	An expertise license agreement for steering wheels	Dec. 29, 2006 - Dec. 28, 2014
Pong Codan Rubber (M) Co., Ltd.	Malaysia	A technological licensing agreement on weather-strips	Jul. 16, 2007 - Jul. 15, 2017

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Automotive Parts Business	41,600	37,400	33,100
Non-Automotive Parts Business	1,400	1,500	4,400
Total	43,000	39,000	37,600

-The company invested 43,000 million yen mainly in its Automotive Parts Business and Optical Electronics Business.

Automotive Parts Business

-The Company spent 41,600 million yen in capital improvements at its automotive components business in order to produce new products and increase the production capacity at plants, mainly overseas.

Capital Investment Plan (FY ending Mar. 31, 2015)

-The Company plans to invest a total of 54,000 million yen to install new and/or additional equipment and facilities.

Investments Outside Japan

<Mexico>
-In 2013, the Company will start operations of a new rubber fuel hose plant in Tamaulipas, Mexico, to enhance cost competitiveness in North America. Production of some items will be transferred from the company’s Kentucky plant. Production will commence in February 2015, to supply products for Toyota plants in the U.S., Canada and Mexico. Toyoda Gosei hopes to receive orders from other carmakers including Honda and Mazda in the medium and long term. The company currently operates two plants in Mexicoproducing safety equipment, such as airbags, and sealing products. The Tamaulipas plant will be the company’s third production plant and the first to produce rubber hoses in Mexico. (From an article in the Nikkan Jidosha Shimbun on August 28, 2013)

<USA>
-In August 2013, the Company established a new plastic fuel tube manufacturing plant in Howell, Michigan, U.S. The plant is the second production base of the company’s U.S. subsidiary, TG Fluid Systems USA Corporation (TGFSUS). Toyoda Gosei rented a plant building and installed new equipment, investing about JPY 1.1 billion into the facility. While meeting growing demand from General Motors and Ford, the new plant will also supply products to Toyota and Chrysler. The new plant is expected to boost TGFSUS’s annual sales to JPY 9 billion in FY 2014 (fiscal year ending in March 2015), up 80% from FY 2012. The 43 million-square-meter plant began operations in July. The number of workers at the new facility will be increased to 50 by FY 2014.

<Canada>
-In 2013, the Company started operations of its newly established plant in Stratford, Ontario, Canada, in July. The new plant supplies instrument panels, pillar garnishes, and column covers for the RAV4 produced at Toyota’s Canadian plant. The Stratford plant is Toyota Gosei’s fifth plant in Canada. It was built at a cost of JPY 1 billion. The company aims to achieve annual sales of JPY 1.4 billion for the plant for FY2014. (From an article in the Nikkan Jidosha Shimbun on August 9, 2013)

<Indonesia>
-In 2013, the Company and PT. Astra Otoparts Tbk announced plans to increase production capacity of their Indonesian joint venture PT. Toyoda Gosei Safety Systems Indonesia (TGSSI), i.e. the steering wheel products 1.5 times in 2016 from the current capacity to be 800,000 units/year, while airbag products to be 1.5 million units/year in 2016, or about five times from the current capacity. The additional investment will be 80 billion rupiah (approximately 800 million yen) through the construction of a new plant at the site adjacent to the current location, which is targeted to absorb 130 new employees. (From a press release on July 3, 2013)

<China>
-In 2013, the Company announced that it has relocated and expanded Tianjin Star Light Rubber and Plastic Co., Ltd., its sealing parts production joint-venture in Tianjin, China. The company has transferred the facility based on the redevelopment project of Tianjin City, while enlarging its plant to meet growing demand in the local market. The new plant has a building area of approximately 42,000 square meters, 50 percent larger than the previous facility. Its land area covers 78,000 square meters, which is 90 percent larger than the previous location with room for further expansion. Tianjin Star Light Rubber and Plastic manufactures and supplies weather-strips and glass runs mainly to Toyota Motor Corporation and other Japanese automakers. It has also been providing products to Chinese OEMs such as Great Wall Motor Company, Ltd., increasing its supply volumes both to Japanese and Chinese customers. The new facility is located at the Zhong Bei Industry Area, Xi Qing Economy Development Zone, Tianjin. Sales at the joint venture with about 1,000 employees (as of March 2013) totaled approximately 6.9 billion yen in 2012. (From an article in the Nikkan Jidosha Shimbun on Jun 11, 2013)

<Brazil>
-In 2013, the Company announced its plan to set up a production subsidiary in Brazil around March this year. The establishment will mark the company's first foray into the Brazilian market. After expanding and revamping the second-hand plant building it acquired in Itapetininga in the State of Sao Paolo, the company is intending to commence production of weatherstrips, airbags, components around the instrument panel and other interior and exterior products at the facility, beginning in November 2014. Initially supplying its products to Toyota and Honda, the subsidiary is going to increase its customer base in steps, as it aims to achieve sales of about 2.7 billion yen a year by 2017. The new company will be capitalized at approximately 4 billion yen, including fund for facility investment. Toyoda Gosei will be investing 94.8 percent of the planned capital. The plant has a land area of approximately 220,000 square meters and a building area of approximately 10,000 square meters. It will hire about 140 people by 2017. (From an article in the Nikkan Jidosha Shimbun on Feb. 23, 2013)

<North America & Europe>
-In 2013, the Company is increasing its production and supply capacity in Europe and the U.S. In order to meet growing demand for fuel hoses from General Motors in the U.S., Toyoda's U.S. subsidiary began operations on its new production line in January this year. In Europe, Toyoda was awarded the first major contract from BMW in Germany. With this achievement, Toyoda will start manufacturing weather-strips for both BMW and MINI brands at its plants in the UK and the Czech Republic by FY2014. Toyoda intends to continue marketing activities to win more business from other OEMs, assuming that it will take a certain amount of time to accomplish its plans. (From an article in the Nikkan Jidosha Shimbun on Jan. 15, 2013)