May. 8th, 2024
Pacific Industrial Co., Ltd.

Briefing for Fiscal Year 2023 Q & A《2024 Full year Forecast》
Q1：For the full year 2024, your company is forecasting lower sales and profits
compared to the previous year. Please elaborate on the vehicle production volume ofcustomers by region and business environment for your assumptions.
A1：Regarding our main customer’s vehicle production volume, we assume that thetotal production volume in 2024 will be almost flat from FY2023. By region, weexpect a slight YoY increase in Japan and the U.S., and a slight decrease in Asia.
By segment, in the stamping and plastic molding business, sales of dies and molds
are expected to decrease significantly. This is due to the fact that there are few newvehicle models to be launched in FY2024 due to customers' development schedules.
On the other hand, product sales volume is expected to increase, and the combined
effect on the sales volume is expected to be plus or minus zero. Regarding selling
prices, in addition to policy price discounting, fluctuations in scrap prices andaluminum material prices at subsidiaries in the U.S. are expected to affect selling
prices, resulting in a expected 2 billion yen decrease in sales and profit. Other major
factors that will reduce profits include a 1.0 billion yen decrease due to increasedlabor costs, a 1.5 billion yen decrease due to increased expenses and property taxes
associated with the start of operations at the new plant, a 1.4 billion yen decrease
due to increased depreciation costs, and a cost improvement of about 3.0 billion yen
as a factor that will increase profits. In total, operating income will decrease by 3.4billion yen.
In the valve business, both sales and profits are expected to remain almost flat YoY
with an increase of 1.3 billion yen YoY due to a decrease in depreciation expenses
following the impairment of fixed assets in Korea and France subsidiary implemented
in FY2023. However, we expect a decline in profit margin in the TPMS business. Thisis due to a shift from the mainstay E-type product to the low-priced G-type model.
As we have been doing with E-type products, we will improve the purchasing method
for ICs and batteries, which account for a large portion of the cost, and negotiate topass on the higher component prices to the selling price, thereby improving
profitability with the current forecast as the bottom line.
We expect that FY2024 will be a period of temporary stagnation. However, we willcontinue to invest in new plants and development centers for future growth.
Ｑ2：I would like to know the background behind the decrease in sales and profit in theAsia segment.
A2：Last year, in conjunction with Mitsubishi motors corporation's withdrawal from theChinese market, our subsidiary in Changsha, China, also downsized its operations,and we recorded expenses related to this in FY2023. Although net sales will
decrease in FY2024 due to lower production in China and other factors. However,since there will be no expenses recorded in 2023, sales will decrease and profits will
increase compared to the previous year.
Ｑ3：Price pass-through is a key word in the industry as a whole. Is there a possibility
that price pass-through, which has not been factored into the forecast for this fiscalyear, will provide an opportunity for increased profits in the future?
Ａ3：Major customers have offered to bear the cost of labor cost increases at its
suppliers, and we assume that this will cover the cost increase to a certain extent.
In addition, since the cost of stamping materials is linked to the selling price, there isbasically no gap between the cost and selling price. However, due to the contract
between the U.S. subsidiary and the customer, there will be a slight delay in thereflection of material price changes in the selling price. In the valve business, we arepromoting price pass-on, but brass material prices have remained high and arerising further. While Japanese customers tend to be relatively receptive to pricepass-on, the situation for overseas customers is different. We will continue to focus
on price pass-on of labor, energy, and material costs. Repeated price negotiations
may lead to the risk of switching suppliers to other companies, so we will work
cautiously while assessing the risks.
Q4：How much upside potential is there in the earnings forecast?
A4：The assumed volume in Japan is expected to increase by about 2% YoY. On theother hand, there is a situation where customers' production lines are partiallysuspended due to the recent Prius recall. We are taking a conservative view ofprofits, as price pass-on negotiations with overseas customers are still in progress.
Negotiations with customers in the U.S. subsidiary are particularly important, andour sales department is focusing on polite conversations with customers to gain theirunderstanding. We expect production volume in Japan and the U.S. to remain
steady, but we are forecasting that production in China and Thailand may fall shortof our initial plan. If business in Japan and the U.S. proceeds smoothly, we believethat we will be able to build a foundation for sales and profits for the entire Group.
We will provide an explanation of our quarterly results when they are available andthe situation becomes clearer.
Q5：In the analysis of factors that will increase or decrease profit in FY2024, there is
no explanation for depreciation. is it correct to understand that there are positive
and negative factors between the Stamping and plastic molding business and thevalve business, which offset each other and are not shown in the figures?

A5：As you understand. First, depreciation and amortization in the stamping andplastic molding business is expected to increase by 1.4 billion yen YoY due to thenew plant etc. In the valve business, depreciation and amortization will decrease by
1.4 billion yen from the previous year due to the recording of impairment losses on
fixed assets and goodwill in Korea and France Subsidiary in FY2023, resulting in a
combined total of plus or minus zero.
《Mid-term Business Outlook》
Q6：Please provide details on the scale and timing of sales of electric expansion valves
since the new plant operation start in March 2025.
A6：Electric expansion valves are used in BEVs, and PHEVs. The growth of BEVs has
been changing since last fall, and we expect that our sales will be slightly behind themid-term plan announced last year, but we expect sales to increase from 2025 to2027. We have already started production in small quantities and have been
receiving orders continuously since then. Since missing the appropriate investment
timing will lead to lost opportunities, we have decided that it is necessary to build
the plant at this slightly earlier time. We will continue to monitor market trends tosee how much the market will expand, and we will plan capital investment at theoptimal timing to match the increase in volume, while keeping abreast of productionplans through communication with our customers.
Q7：Regarding your company's performance after 2025, do you expect profits to growagain or do you expect no growth in profits after 2025? I'd like to know youroutlook. In addition, if you expect profits to return to growth, at what approximate
profit level?
A7：While 2024 is expected to be a period of temporary stagnation, we expect
earnings to recover from 2025 onward. In the plastic molding business, orders arealso favorable. We are not worried about that, as customers' vehicle productionplans are also expected to be at a high level. As for the new plant in the valve
business, we expect sales to increase from 2026 to 2027. The new die plantinvestment is not intended to contribute to sales, but to improve forming technology
for ultra-high tensile strength stamping materials and to ensure appropriate cost andquality in-house. The timing of the results of each investment will differ.
We would like you to understand that we are in an environment where we can makepositive investments in all of our businesses: the stamping and plastic molding
business, the valve business, and our new business. Overall, we expect our businessperformance to recover from 2025 onward, and especially for the new business, weexpect the results to exceed our expectations.
《Changes in the Market Environment》
Q8：It seems that Toyota Motor Corporation's sourcing policy for stamping parts forBEVs is that they want to adopt good products. Are you aware that the orderenvironment is changing in the Japanese market, where the emphasis has been on
Toyota-affiliated suppliers?
A8：We do not feel that there is any difference between ICE vehicles, HEV and BEV
sourcing in terms of customer ordering policy. We recognize that they place orders
with companies that have high technical capabilities as stamping suppliers and cancommunicate smoothly with customers.
In addition, we feel that the unit price per order for BEVs is favorable.
Q9：Please tell us about the impact on your company of developments such as theadoption of GIGACAST and the integration of vehicle components.
A9：We have information that GIGACAST will not be used in all BEV models, but will bedeployed on a limited basis. In addition, since GIGACAST is targeted for vehicle
underbody parts, whereas the parts we have orders for are mainly for vehicle upper
body parts, we do not expect any significant impact. Competition may intensify as
existing underbody order suppliers enter the upper parts market. However, if
GIGACAST is deployed only for some flagship models of BEV, the overall impact will
be limited.
（BEV : Battery Electric Vehicle、PHEV : Plug in Hybrid Electric Vehicle、
HEV : Hybrid Electric Vehicle、ICE vehicle : Internal Combustion Engine vehicle）