Financial Results Briefing for Q2 FY2023 Ending in March
October 28, 2022
AISIN CORPORATION
Q1. Regarding the result for operating profit, how much progress has been made in the internal plan? I would also
like to know about temporary expenses and the status of negotiations on raw material prices.
A1. Operating profit for the first half was estimated to be around 35 billion yen in our internal plan, without
including the impact of raw material prices on selling prices. Despite a significant decrease in sales due toreduced production volume, we were able to keep the decrease in profit to around 10 billion yen thanks to thedepreciation of the yen, cost reduction efforts in line with the drop in production, and the recovery of some raw
material expenses. We did not have temporary expenses during the first half. But in addition to the soaring
prices of raw materials such as steel and aluminum, and transportation costs, we have been absorbing andpaying costs in advance to help address some of the difficulties faced by suppliers. While some of the pricerevisions agreed may be reflected in the next fiscal year, we will proceed with negotiations with our customers
in the second half including the impact incurred during the first half.
Q2. The full-year forecast for operating profit remains unchanged. I would like to know about the assumed
production volume and the impact of raw material prices from the perspective of risks and opportunities in thesecond half.
A2. In the first half, the production volume leveled off due to the lockdown in Shanghai and the shortage ofsemiconductors. But we assume the figure for the second half as initially planned. The forecast for January toMarch is set at a high level. So if the impact of the shortage of semiconductors, etc. lasts, the figures may belower by around 100,000 units per month. We will take steady action in response to fluctuations in production
volume. The impact of raw material prices was 65 billion yen in the first half. We will not only aim to balance it
out in the second half, but also make efforts to reduce the impact on our business performance while carefully
discussing the issue with our customers and suppliers.
Q3. You said at the beginning of the year that you would recover around half of the rise in raw material andtransportation costs. Have there been any changes in your forecast? And how far has the recovery progressed?
A3. While spot aluminum prices and transportation costs have been stabilizing, the prices of steel and energy arerising. We expect that we will be able to recover around half of the losses from price rises for the full year,
including rises since the beginning of the year. Therefore, there is no change to the initially estimated impactof 65 billion yen on profit/loss for the year.

1/4Q4. How is the situation in North America? Faced with rising labor costs and setup costs, what action will you takefor profits in the second half and for the future?
A4. Due to soaring labor costs, it is difficult to recruit workers in line with sales increases. We are making efforts,based on a long-term perspective, to achieve manpower savings, automation, and reduction of production
losses. We plan to advance manpower savings of 400 people annually over the next three years upon the launchof new products or updating facilities. The production preparation and depreciation expenses resulted frominvestments for the future. The effects will be reflected after the launch of the products next year.
Q5. Regarding operating profit for the first half, are there any changes from the initial plan other than changes inthe sales mix? Did you pay more for raw materials/transportation compared to the initial plan?
A5. We have not decelerated investment in key areas or production preparation for electrification. We have also
been advancing efforts to improve or reform our corporate structure as planned (though in a smaller quantity)
so as to ensure steady results. Despite the positive factors, namely the weakening yen, advancement inreflecting the rise in raw material prices in selling prices, and the efforts to review costs according to the
reduced production, the impact of the lower-than-expected production volume was significant. The impact ofthe payment for raw materials and transportation costs in the first half was greater than in the previous year
but it was within the range estimated in the initial plan.
Q6. Regarding the full-year forecast for sales by customer, I would like to know the situation of each market.
A6. We have lowered the sales volume of powertrain units by 400,000 units to 10 million units from the forecast
announced in April of 10.4 million units. By market, the forecast was lowered by 340,000 units for China,
140,000 units for Europe, 60,000 units for North America and 20,000 units for Japan. For other markets(Asia/Oceania, South America, etc.), the figure was raised by 160,000 units. By customer, the revisioncomprises decreases of 210,000 units for Chinese OEMs, 160,000 units for Stellantis, and 20,000 units forVW/AUDI.
Q7. As overseas production increases along with the spread of electrification, what will happen to the current low
profitability of the North America business? And are you thinking of starting local production in Europe?
A7. In a production system for 4.5 million electric drive units per year to be established by 2025, sales will increasein China and North America more than in Japan. We will replace existing bases with electrification bases. The
soaring labor costs in North America will be solved by the introduction of automated lines. The new automatedlines will no longer be affected by labor costs. In view of the trend toward carbon neutrality, it is certain thatBEVs will be produced and used locally. We are now examining the possibility of local production in Europe,and we will talk about the results of our research at a later date.

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Q8. Please explain the situation about the inventory of powertrain units in China and at other customers.
A8. Powertrain units in our inventory are only for Europe. Inventory for ocean lead time has increased. In the past,inventory adjustments for China were a problem. But it was about the inventory of our customers, which weare continuing to monitor. At the same time, if their internal forecast seems too high, we set the number ofunits in view of vehicle sales and incorporate it in the plan.
Q9. Profitability in Thailand and other Asia segments is high. I would like to know the reasons.
A9. Unlike North America and China, these segments have not yet entered the phase of investment and production
preparation for electrification. With AT-related investments mostly completed, production volume has been
growing, resulting in high profitability.
Q10. Your forecast for the second half is 160 billion yen with an operating profit margin of around 6%. Assumingthat this includes around 30 billion yen as the impact of material costs in the first half, is it right to think of
130 billion yen as the real figure? Then operating profit margin is around 5%.
A10. If the conditions of production volume, exchange rates, and materials are fixed, it is right to think of it as thereal figure. For the FY2024 target of 7%, we have changed the preconditions. But we are advancing efforts toimprove or reform our corporate structure as planned.
Q11. Regarding your foreign exchange sensitivity, I think the sensitivity is too low considering that exports fromJapan account for 70%, or 1 trillion yen of sales.
A11. Finished AT products exported directly from Japan to customers are on a yen basis. And deficits in North
America contribute to lowering the sensitivity.
SQ11. Does that mean AT prices have declined for customers trading on a yen basis?
SA11. Yes. We are using it as a bargaining chip in negotiations on raw materials and transportation costs.
Q12. Your forecast for the second half of this fiscal year is at a high level even compared to the second half ofFY2021, when we saw a sharp recovery from COVID-19. How do you assess this real-term performance?
A12. In the second half of FY2021, production rapidly recovered from the standstill due to COVID-19, and we were
not able to secure sufficient workers but had to increase overtime hours. So please understand that theperformance results for that period was achieved with such limited production resources. The impact offluctuations in raw material prices was about 100 billion yen, including the impact of the last fiscal year, which
serves as a negative factor for our performance. However, thanks to the accelerating structural reform,
profitability has not worsened.

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Q13. I would like to know about your future business mix, including the direction for the die casting business.
A13. For the die casting business, as the shift to BEVs accelerates, we will abandon the idea of producing
everything internally, from small to large, and focus on areas in which we have competitive advantage whilesetting a cap on capital investment. Since it is related to powertrain units, we will consider what we should dowith development and design. For production, the situation of suppliers varies among regions. We will makecomprehensive decisions taking into consideration these factors. In reviewing the business mix, we will
promote initiatives for BEVs, such as shifting the production focus to battery-related products, such as EA
lockers, taking advantage of our extrusion technology.

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