1st Nov, 2022
Pacific Industrial co., ltd.
Summary of Questions & Answers for Financial Results Briefing
for Q2 Year Ending March 2023

《Results for Q2》
Q1：I would like to know the details of the factors behind changes in profits bybusiness.
A1：As a whole, it is as shown in the analysis of the factors behind changes inoperating income on page 6 of the materials. Breaking down the stamping businessand the valve business by factor is as follows.
-The breakdown of the 0.3 billion yen increase due to the increased sales volume is0.2 billion yen for the stamping business and 0.1 billion yen for the valve business.
- The breakdown of the 1.9 billion yen decline due to the impact of selling prices is1.3 billion yen for the stamping business and 0.6 billion yen for the valve business.
It seems that the negative impact of the stamping business is large, but since the0.8 billion yen due to the scrap price adjustment is included, the actual price reduction
will be 0.5 billion yen.
- The breakdown of the 0.8 billion yen increase due to foreign exchange gains is 0.1billion in the stamping business and 0.7 billion in the valve business.
- The breakdown of the 0.6 billion decrease due to the rise in material prices is that
0.5 billion increase of the stamping business and 1.1 billion decrease in the valve
business. The decrease of 1.1 billion yen in the valve business is due to the impactof rising brass and aluminum prices, as well as the increase in IC prices for TPMS
purchased in conjunction with the exchange rate (euro) due to the impact of yen
depreciation.
- The 0.9 billion yen increased associated with the cost improvement is all due tothe impact on the stamping business.
- The breakdown of the 0.8 billion yen decreased due to the increase in labor costs
is 0.6 billion in the stamping business and 0.2 billion in the valve business.
- The breakdown of the JPY 0.6 billion decreased due to the increase indepreciation costs is 0.7 billion decrease in the stamping business and 0.1 billion
increase in the valve business.
- The 0.5 billion yen decrease in operating income due to the increase in expenses
is entirely due to the impact of the stamping business.
If you add everything up, the stamping business will have a loss of 1.4 billion yen,and the valve business will have a loss of 1.0 billion yen.

Q2：Compared to the previous plan, sales exceeded the forecast, but operating
income fell short. In terms of business segments, income from the stamping
business decreased, and in terms of regions, Europe and the United States
decreased in 2Q. Please explain the background to this.
A2：Net sales outperformed due to the impact of foreign exchange translation due tothe depreciation of the yen. In terms of profit, as in Japan, there are large
fluctuations in production in the United States, and the cost burden is increasing.
Especially in the United States, it is difficult to hire people and the retention rate is
not good, so we are raising wages to secure stable employment. In the factor
analysis mentioned above, we explained that income in the stamping business will
decrease by 0.6 billion yen due to increased labor costs, and will decrease by 0.5
billion yen due to increased expenses. Many of them are in America.
Q3：Regarding the status of price negotiations with customers, please tell us
whether you have passed on the costs associated with rising raw materials costs
to sales prices in the first half, and whether you have completed cost recovery.
A3：As for the stamping business, the sales price and cost price of materials,
especially steel materials, are basically linked, so there is no impact on profits. We
asked the customer to understand the increase in energy costs and transportation
costs, and allowed us to pass on some of the costs.
In the valve business, all brass and aluminum are procured by our company, soraw material prices have a large impact, and soaring material prices are having anegative impact on profits. We are proceeding with negotiations with customers
one by one, and they have allowed us to partially pass on the sales price in thefirst half. However, as we were unable to pass on all costs to the price, we areresponsible for some of them. Material prices will remain high in the second half,
and we are negotiating tenaciously to somehow recover costs. In some cases, theresults of price negotiations conducted in the first half will be reflected in the pricefrom the second half. We expect the amount of cost recovery in the second half tobe larger than in the first half.
In our factor analysis, the recovery of energy costs up is reflected in” theexpenses”, and the recovery of materials is reflected in” the selling price”.
《Forecast for FY2022》
Q4：I would like to know what your assumptions for Toyota's production volumes arebased on this time.
A4: For this second half, we assume that the impact of semiconductor shortages andthe impact of COVID-19 will continue. Our forecasts are based on the premise that
we incorporate a little more risk, including in Japan and overseas, than the
published figures.

Q5：In terms of costs, I would like to know how you will control labor costs.
A5：Until now, we have tried to control costs as much as possible in response toproduction fluctuations and various points of change. Some of the activities topass on the price of materials in the first half will be effective in the second half.
Regarding labor costs, especially in the United States, the rise in hourly rates andthe low retention rate had the effect of causing a lot of labor costs. This situation
is pretty calm right now. Currently, we are increasing our organizational strength
by enhancing the training system to retain personnel and improving theproduction system. It also makes it easier to see abnormalities and makeimprovements. We expect that such forward-looking activities will contribute tostable profits from the second half onwards.
Even in Japan, we had a hard time in the first half of the year due to frequent
rapid production cuts. In the second half, we expect October to be the bottom,
followed by a gradual recovery from November, and we do not anticipate a rise inlabor costs like in the first half.
Q6：Please tell us about the direction of each business.
A6：We will steadily follow production fluctuations due to the impact of COVID-19 andsemiconductor shortages.
As an activity of each business segment, in the stamping business, we are working
closely with our customers to develop ultra-high tensile strength products.
In the molding business, we are steadily expanding sales of urethane parts inparticular, in anticipation of an increase in electric vehicles in the future.
In terms of valve business, we are planning to start mass production of newelectric expansion valves for electric vehicles from next summer, and we have also
started introducing new types of TPMS. Looking back on the first half of the year,
the business environment was difficult. We have done enough activities for thefuture, so please look forward to it.
Q7：The situation in North America is expected to recover in the second half. Is it
correct to understand that there are prospects for improvement at this point, after
looking at risks to some extent?
A7: Yes. While communicating with the local people, we are dispatching people fromJapan to support production etc., and there is a trend toward improvement. We
want to speed things up and get results.