October 29, 2021
Pacific Industrial co., ltd.

Summary of Questions & Answers for Financial Results Briefing
for Q2 Year Ending March 2022

Q：As for the assumptions of your revised plan for this fiscal year, I am aware that
production volume in Japan is expected to be between 3 million units andslightly more than that, assuming that it recovers in the future. I would like toconfirm whether it is correct to assume that such a level has already been
incorporated.
A：Yes, it is correct.
Q：As for valves, I think your assumption is that sales will not change significantly
from the first half to the second half. In terms of the existing valve business,
Schrader, and TPMS, what kind of business environment have you factored into
the current plan?
A：Our valve-related customers are domestic and overseas car manufacturers andmega-suppliers other than Toyota. Not only in Japan, but also in the US,
European and Asian markets, all car manufacturers are putting on the brakes
for production due to the impact of COVID-19. In such a situation, our Valvebusiness was relatively strong in the first half of this fiscal year. In the second
half, we expect that orders from customers will be slightly weaker thanoriginally planned. However, for the full year, I think the demand environment
will be roughly as expected. The main customers of TPMS are Toyota andNissan, so we generally follow the production trends of them.
Q3：As for your plans for the second half of the fiscal year, compared to last year's,
profits will decrease while sales remain almost the same. Looking at theincrease/decrease in profit, I think the main factors were sales prices andmaterial prices. What are the causes of this change?
A：As for sales, in comparison with the previous year, the cost of materials has goneup, and this will have a positive effect about JPY0.7 billion. In addition, the yen
has weakened so it will be a positive factor of JPY2.2 billion. Also, due to theeffect of revenue recognition standard, it has become a factor of JPY2.7 billion
decrease in revenue and overall it is almost the same as the previous year.
Regarding profits, the negative 1.3 billion in the selling price in the second half
is due to the fact that the regular price revision was the same as in the first halfand the increase in scrap unit price in the first half was reflected in the productselling price in the second half. Those are included in about hundreds of millionsof yen. Since the impact of steel prices will be considered fluctuations from theprevious fiscal year to each fiscal year, it should be understood that in the longrun, the increase in material unit prices and the increase in scrap will not affectprofits.
Also, as for materials other than steel, in addition to that copper prices areincreasing, since we purchase some parts from overseas, we have factored in theincrease in the unit price of materials due to the depreciation of the yen. Taking
that into consideration, we have factored in the fact that the total material will be
negative 1.2 billion yen.
Q4：What are the factors that make the second half plan different from the previous
forecast?
A：As for sales, we changed the exchange rate from JPY105 to JPY110 to USD1 inthe second half of the year and from JPY125 to JPY130 to EUR1, so, thedifference in exchange rates has increased sales by about JPY2.6 billion. The priceof materials for sales of stamping has increased and sales will increase by about
JPY2.2 billion along with the increase in the price of steel materials. Regarding
the effects of exchange conversion and the quoted price of steel materials, sales
will go up and have almost no effect on profits.
Operating profit is expected to decrease by 0.5 billion from the previous forecastin the second half, considering the decrease in sales volume due to production
cuts and cost increase.

Q5：About sales ratio of ultra-high-tensile materials, this time, you have introduced
the target value for 2024, but the rate of change from 2020 to 2024 does notseem to be much. For the future, do you envision a rapid increase in the use ofhigh-tensile materials and cold-pressed materials toward 2030 for the reduction
in CO2 emissions? Or is it better to think that it will change depending on thepace of the spread of electric vehicles?
A：The use of ultra-high-tensile materials has increased considerably compared to
4 or 5 years ago. I think that the scenario of hot stamping being replaced by cold
stamping will accelerate. This does not mean that hot stamping will disappear all
at once, but it will be used where it is necessary for the body structure, so wewill use more cold ultra-high-tensile materials in other areas.
Also, if current vehicles will be replaced to BEVs, FCEVs, and PHEVs in the future,
the weight of the vehicle is expected to increase due to the increased use of

batteries. In such a situation, the use of this ultra-high-tensile material willcontribute to the weight reduction of the vehicle body. It's hard to say right now
how much of this will be used in what areas, and what the growth rate will be
toward 2030, however, the volume of ultra-high-tensile components that we are
currently developing is increasing rapidly, and I believe that this will continue inthe future. It does not mean that everything will be made of ultra-high-tensile
steel, but for example, what used to be a 3-part structure using conventional steel
plates can now be made of 2 parts or 1 part using ultra-high-tensile steel,resulting in weight reduction in many cases. We would like to contribute to ourcustomers' car manufacturing by making appropriate proposals when they design
the body frame.
Q6：I think Toyota has set a CO2 reduction target of several percent annually. Whatkind of figure is being discussed in order to make it realize? Also, from theperspective of CO2 reduction, will there be any changes in the roles of suppliers
within the Group due to major changes in the body structure such as integral
molding?
A：As for CO2 reduction, each company is working on a certain percentage as atarget value set by the customer, and we are in the same situation.
Also, in our pursuit of technology, the need for a lighter vehicle body will notchange and each company is proposing various technologies, including us. In thepast, each company's equipment and technology had its own characteristics, andas a result, various tasks were shared. I think that such schemes probably won'tchange that much in the future.