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5. Yorozu Corp. Business Report FY ended 2015

Factors
1) Sales
<Japan>
-Sales in the fiscal year ending March 2015 increased 2.8% y/y (JPY 52,988 million) due to increased production of the X-Trail by Nissan (its major customer)  and strong sales of the Honda Fit and Vezel models.

<Americas>
- Sales in the fiscal year ending March 2015 increased 23.7% y/y (JPY 64,581 million) as a result of production increases in the U.S and Mexico and a favorable currency-translation rate due to the rectification of the strong yen.

<Asia>
- Sales in the fiscal year ending March 2015 increased 0.1% y/y (JPY 48,722 million) due to lower vehicle sales in Thailand, even though production increased in China and there was a favorable currency-translation rate due to the rectification of the strong yen.

Mid-term management plan: Yorozu Spiral-up Plan 2017

-During the fiscal year ending March 2015, the Company announced its new, mid-term management plan called Yorozu Spiral-up Plan 2017, which will cover FY2015-FY2017. The Company plans to develop an ideal structure in terms of what it should be like in a period of 10 years, to 2024. The Company aims at becoming a "suspension system maker" creating single-unit, integrated suspension systems, from conducting performance development activities up to launching commercial production. It aims at doubling its consolidated sales, to JPY 300 billion, and achieving a profit margin of 7% or higher. The roadmap for achieving this requires meeting the following targets in FY2017.

-The three pillars to achieving the targets under the Yorozu Spiral-up Plan 2017
1) Further strengthening product appeal and R&D capabilities

• Creating technology for developing suspension systems: strengthen R&D capabilities to develop suspension modules, rear-suspension modules, etc.
• Responding to needs in terms of ultra-lightweight, high rigidity, and low-cost: Develop new materials, designs/architectures, and production methods
• Improving technology on development-simulation: advance virtual development activities
• Revising the YPW （Yorozu Production Way）: achieve extraordinary quality and innovative cost-reductions

2) Expand sales to major global OEMs

• Further increasing orders from Japanese OEMs
• Expanding sales channels targeted at European and American OEMs and advancing sales to OEMs in emerging countries: establish European office
• Strengthening global supply structure: study idea of establishing supply hubs that cover the Alliance, building third plant in China, and building second plant in the U.S.

3) Strengthen global management that emphasizes diversity

• Hiring and regularizing employees, and emphasizing diversity: Ensure and regularize enough employees in anticipation of future business operations
• Developing and exchanging human resources on a global level: develop human resources based on career plans
• Further strengthening matrix organization by function: strengthen global communication based on a 3D matrix organization

New Office in Europe

-The Company will establish a new office in Europe within three fiscal years of its new mid-term business plan that starts from April 2015. The mid-term business plan aims to increase its net sales in the fiscal year ending in March 2018 (FY 2017) to JPY 180 billion, a 20% increase from the FY 2014 sales forecast. The Company intends to achieve the target by increasing sales to Japanese car manufacturers as well as major U.S. and European automakers. (From an article in the Nikkan Jidosha Shimbun on March 16, 2015)

New Plant

<U.S.>
-The Company will set up a new plant in the U.S. The company will choose a candidate site in the southern U.S., planning to start production during the fiscal year ending March 2018. The suspension maker expects a shortage of production capacity at its existing plant in Tennessee in line with Nissan's move to boost production in the U.S. Nissan is the company's major customer. The Company will construct a plant that covers whole processes from stamping to assembly in the southern part of U.S., where other Japanese and European automakers are also operating. The Company intends to win new contracts and strengthen its presence in the U.S., expecting a market expansion thanks to a pickup of the economy. (From an article in the Nikkan Jidosha Shimbun on January 5, 2015)

Major Contracts

-Major contracts concluded in FY ended March 2015

Awards

-Major awards received in 2014

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

R&D Center

-The Company invited its business partners and the press to show the Yorozu Global Technical Center (YGTC), which has just started operations in Oyama, Tochigi prefecture. By enhancing its technological development capability with its new technical center, the Company aims to sharpen its competitive edge based on the integrated production covering all the processes from development to manufacturing. With an investment of JPY 1.1 billion, the new technical center has been built on the site of the company's production subsidiary, Yorozu Tochigi Corporation. (From an article in the Nikkan Jidosha Shimbun on July 5, 2014)

New Inspection Jigs

-The Company started production of inspection jigs by using a 3D printer instead of combining metal parts. Thanks to the 3D printer, production time has been cut by 84% and the sizes of the jigs have also been reduced. The Company also reduced the weight of the jigs by 95% by using plastic parts. The Company will initially use the jigs to inspect new parts, and then consider using it for other mass-produced parts. At present, the jigs cannot be used to inspect hot parts, but the Company says it will make necessary improvements so that they can be used for welded parts. (From an article in the Nikkan Jidosha Shimbun on July 4, 2014)

Product Development

Development of highly rigid pipe-beam
-A rear-beam is being developed based on a new design and production method, which will improve body performance of next-generation cars. Based on stamp-forming and heat-processing, the tensile strength of the metal pipe will be enhanced three-times, from 440Mpa to 1,470MP.

Development of lightweight suspension member
-The Company developed a lightweight suspension member that is 20% lighter than conventional products, by including high-tensile steel in the member's material.

Improving development-simulation technology
-By developing the latest analysis system, the Company is aiming to improve the precision of development activities and further reduce development time.

Capital investment targets in the fiscal year ending March 2015

• Japan: JPY 1,808 to respond to new vehicle models and to build facilities and equipment at the Yorozu Global Technical Center
• U.S.: JPY 9,265 to respond to new vehicle models in the U.S. (YAT) and in Mexico (YMEX); and build a second facility in Mexico (YAGM) and the first facility in Brazil (YAB).
• Asia: JPY 6,760 to respond to new vehicle models and expand operations in Thailand at YEST and in China at W-YBM.

Investments Outside Japan

-The Company plans to introduce 3,000-ton stamping machines to manufacture products using ultra-high-tensile steel at its facilities in China and Mexico. During the period between April 2016 and March 2018, the Company will install a stamping machine in two different Chinese plants and introduce one at its Mexican plant. By March 2018, the Company also plans to add the large stamping machine to its plant in Tennessee, U.S., which is the Company's only overseas facility that currently operates a 3,000-ton stamping machine. The use of high-strength ultra-high-tensile steel is extending to suspension parts. The Company intends to boost its overall supply of stamped parts, while increasing the number of overseas facilities that can handle ultra-high-tensile steel. (From an article in the Nikkan Jidosha Shimbun on March 27, 2015)

-The Company announced that it will raise up to JPY 7.982 billion (approximately USD 77.8 million) through an issuance of new shares and disposal of its own shares. The Company plans to issue 3 million new shares through a public offering and to dispose of 1 million own shares. The procurement fund will be appropriated to capital expenditures in overseas facilities in U.S., Mexico, Brazil, Thailand, and China. (From a press release on August 18, 2014)