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＜Our main business＞
We sell stamping, molding, valve, and TPMS products.
In the tire valve market, our corporation’s founding enterprise, we are a
specialized manufacturer with the world’s top market share.

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Our history
・In 1930 Started business in valve core nationalization
・In 1962 Listed in the Second Section of the Tokyo Stock Exchange.
・In 1970 Listed in the First Section of the Tokyo Stock Exchange.
Division Structure・・・”Stamping and Molding”, ”Valves”, ”Other”
Stamping and Molding
Accounts for about 70% of total sales.
Primarily working with Toyota group, but also Mitsubishi, Honda, andSuzuki.
Based in Taiwan, the US, China, and Thailand.
Valves BusinessAccounts for about 30% of total sales
Based in Taiwan, the US, China, South Korea, Thailand, andBelgium.

Newly Consolidated Subsidiaries
We have added a sales company in Belgium, and a stamping businesscompany in Thailand since this term.
Schrader, acquired in August, 2018, will be consolidated from thesecond quarter.

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＜Corporate Governance＞
We will conduct company management based on the stockholders’perspective and try to construct and maintain a clear corporate
governance system.
For the “Corporate governance code”, our basic policy is to follow all 73
items.
We will disclose a revised company policy at the end of November due
to a revision of the “Corporate governance code”,

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＜Consolidated Financial Results ＞
Automobile production volume remained strong in Japan, Europe &America, and China
Sales
Consolidated sales were ¥64.2 billion, an increase of 13.7% from theprevious term due to acquisition of new sales.
ProfitProfit increased due to the increase in depreciation by strategic capital
investment, business acquisition costs, and increase in sales.
By business acquisition, profit/loss of U.S Schrader business for one
month is included in the profit/loss for the second quarter; however its
influence is minor.
As for the announced value on 26th April, net sales increased by 3.2
billion yen due to an increase in physical quantity due to changes invehicle composition and exchange rates becoming less expensive than
anticipated.
Profit increased due to sales volume and exchange gains.

7＜Causes of Fluctuation in Consolidated Sales & Income＞
２Q Sales ・・・The main causes of increase and decrease are thefollowing.
Negative Factors
Decrease in selling price ▲¥ 0.4 billion
Positive Factors
Increase in sales volume to ¥ 8.1 billion; ¥5billion is included as new
products such as ultra high-tensile components
２Q Operating Income・・・The main causes of increase and decrease are
the following.
Negative Factors
Increase in costs ▲¥1billion (including acquisition costs ▲¥0.5 billion)
Increase in depreciation cost ▲¥0.5billion, increase in labor costs▲¥0.4 billion
Decrease in selling price ▲¥0.4 billion
Positive Factors
Increase in sales volume ¥1.9 billion, cost improvement ¥0.8 billion

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＜2Q Consolidated Business Segment＞
Stamping & Molding Business
Major customers' automobile production volume remained unchanged
from the previous fiscal year in Japan, the United States, and China.
Sales: Sales of new products contributed to a rise of 13.6% year on
year to ¥45.2 billion.
Operating Income: Despite an increase in variable expenses due toincreased sales and an increase in depreciation and amortization
expenses, operating income increased 74.6% to 1.3 billion yen due to anincrease in sales volume and other factors.
Valve Business
Sales: Sales rose 13.9% to ¥ 18.9 billion due to an increase in sales
volume due to business acquisition.
Operating Income: Despite an increase in sales volume and cost
improvement, operating income declined 12.3% to ¥2.7 billion due to theincrease in expenses resulting from business acquisition.

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＜2Q Consolidated Regional Segment＞
Japan
Sales was ¥31.7 billion, a 4.6% increase.
Operating Income was ¥1.9 billion, a 25.1% decrease in profit due toincreased costs of business acquisition.
Europe and America
Sales was ¥19 billion, a 35.3% increase due to starting massproduction of new models, and an increase in sales volume after ourbusiness acquisition, etc.
Operating Income was ¥1.2 billion, a 109.1% increase in profit due tothe increase in sales volume, etc.
Asia
Sales was ¥13.5 billion, an 11.4% increase.
Operating Income was ¥0.7 billion, an 84.4% increase due to theincrease in sales volume, etc.

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＜Consolidated Total Assets＞
Total assets at the end of the second quarter
Was ¥195.7 billion; increased by ¥36.8 billion from the end of theprevious term.
Main Increase Factors
Due to a ¥11.4 billion increase in tangible assets via high level
capital investment, in addition to ¥14 billion in goodwill generated
by business acquisitions.
The amount of goodwill is provisional.

＜Consolidated Cash Flow＞
Operating activity gained ¥9.3 billion in cash.
Due to equipment investment and SCHRADER business acquisition,
capital investment activities resulted in expense of ¥ 30 billion, so
financial activity gained ¥ 26.1 billion.
Free cash flow amounted to 20.6 billion yen.
I nterest-bearing debt increased by 27.3 billion to 57.9 billion yen.

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＜Returns for Stockholders＞
As for dividends, we have positioned return of profits to shareholders as
an important management issue. Based on continuing stable dividends,
we comprehensively judge performance and payout ratio, and pay
dividends on surplus.
In the first half we decided on an ordinary dividend of 14 yen, as
planned initially. This is equal to the interim dividend of last fiscal year.
We plan to pay an annual dividend of 28 yen, the same as last year, anda payout ratio of 22.2%.
In the future, we will aim for a dividend payout ratio of 30%.

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＜Consolidated Financial Forecast＞
Sales
Forecasted ¥135 billion, an increase in income of 14.6% fromthe previous term due to the effect of sales expansion andbusiness acquisition.
Current Net Income
Due to tax adjustments from US tax cuts in the previous fiscal
year, the increase in profit margin decreased and we forecast ¥7.6
billion, a 2.8% increase in profit.
As a result of the acquisition of the Schrader business, we areconsolidating the full-year profit of the US for seven months of the
US business and four months of the French business, and weanticipate net sales of about ¥7 billion and operating income ofabout ¥1 billion.
ＲＯＥ・ＲＯＡROE declined from 8.5% to 8.0% due to the increase inshareholder equity.
ROA based on operating income is expected to decline from
5.4% to 5.0% as total assets increased due to acquisitions andupfront investments.

＜Causes of Fluctuation in Consolidated Sales & Income（Forecast）＞
FY2018 Sales・・・The main causes of change are the following:
Negative Factors ・・・The impact on exchange conversion for overseas
sales and decrease in selling price
Positive Factors ・・・Increase in sales volume
FY2018 Operating Income・・・The main causes of change are thefollowing:
Negative Factors
Increase in depreciation of ¥1.7 billion (including ¥0.6 billion in
goodwill depreciation)
Increase in expenses to ¥1.5 billion, and a decrease in sales price of¥0.8 billion
Increase in labor cost ¥0.8 billion
Positive Factors ・・・ Increase in sales volume to ¥4.6 billion, cost
improvement of ¥1.7 billion
Second half exchange rate assumption ¥105/$
Exchange sensitivity

Annual ¥0.1 billion per ¥1

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＜FY2018 Sales Forecast by Segment＞
Business Divisions
Stamping & Molding:¥91.3 billion; 70% of the total

Valve Business:¥43.4 billion; 30% of the total

By RegionJapan¥67.8 billion; 50% of the total

Europe and America ¥40.6 billion; 30% of the total
Asia¥26.6 billion; 20% of the total

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＜Business Segment: Stamping & Molding Business ＞
Sales
・FY2018 Forecast
Sales are expected to be ¥91.3 billion, a 9.7% increase in sales fromthe previous term.
Operating Income
・FY2018 Forecast
Operating income is expected to be ¥3.3 billion, an increase of
63.7% from the previous term, due to increased sales volume and cost
improvement, though there are increases in variable expenses due toincreased sales and depreciation expenses, etc.

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＜Business Segment: Valve business＞
Sales
・FY2018 Forecast
Sales are expected to be ¥43.4 billion, a 26.6% increase from theprevious term due to an increase in sales volume after the acquisition.
Operating Income
・FY2018 Forecast
Operating income is expected to be ¥5.6 billion, a 5.8% decrease inprofit from the previous term due to the impact of acquisition costs, etc.

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＜Regional Segment: Japan ＞
Sales
・FY2018 Forecast
Sales are expected to be ¥67.8 billion, a 7.5% increase in sales year
on year due to an increase mainly in sales of stamping and molding
products.
Operating Income
・FY2018 Forecast
Ordinary income is expected to be ¥5.2 billion, a 7% decrease inprofit due to the impact of business acquisition costs, though there wasan increase in sales volume and cost improvement.

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＜Regional Segment: Europe and America ＞
Sales
・FY2018 Forecast
Sales are expected to be ¥40.6 billion, a 40% increase year on year
due to an increase in ultra high-tensile components sales in the U.S., andto an increase in sales volume after acquisition.
Operating Income
・FY2018 Forecast
Operating income is expected to be ¥2 billion, a 44.5% increase inprofit due to an increase in sales volume after acquisition and cost
improvement.

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＜Regional Segment：Asia ＞
Sales
・FY 2018 Forecast
Sales are expected to be ¥26.6 billion, a 3.5% increase in sales year
on year due to an increase in sales of stamping and TPMS products in
China.
Operating Income
・FY2018 Forecast
Operating income is expected to be ¥1.3 billion, a 79.1% increase inprofit due to an increase in sales volume and cost improvement.

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＜Capital Investment and Depreciation＞
Capital Investment
Planning to invest more than ¥20 billion in 2018 as well.
Depreciation
Increased due to high level capital investment
FY2018 forecast ¥12.3 billion

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＜Capital Investment by Business＞
・Main capital investment from FY2016 to FY2018
Stamping BusinessWe have 9 cold press equipment units corresponding to ultra hightensile, and 4 hot stamp equipment units in Japan, Asia, and North
America.
Valve BusinessWe are enhancing forging equipment in Japan,
expanding the aluminum die-casting business in South Korea, andstrengthening a new type of TPMS line in China and North America.

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＜＜Reference＞Individual Financial Results and Forecast＞
Sales
・２Q Results
Sales were ¥38.4 billion, a 12.2% increase year on year due toan increase in sales of stamping and molding products.

Income・２Q Results
Operating income was ¥2.3 billion, ordinary income was ¥3.7
billion, and quarterly net income was ¥2.8 billion. Net sales,
ordinary income, and net income for the quarter were the highest
ever.

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＜Acquisition of Schrader Valve Business＞
As of August 31, 2018, we acquired 100% of the shares of SCHRADERBRIDGEPORT INTERNATIONAL, INC. in the United States and France's
AUGUST FRANCE HOLDING COMPANY SAS and its subsidiary SCHRADER
SAS.
Plants are in Altavista, Virginia in the U.S, and Pontarlier, the Burgundy
region of France near the Swiss border.
Regarding the valve products produced by the two companies, we havestarted selling them under the "SCHRADER-PACIFIC" brand.

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＜Business Acquisition Goals and Strategic Significance＞
Our action plan, in the mid-term management plan, holds up thecreation of synergy by strategic M&A.
We decided that it is necessary to speed up and integrate our businessthrough business acquisition, and secure growth and costcompetitiveness by refining our valve business, which is our founding
enterprise.
We welcomed the new SCHRADER brand to our PACIFIC brand, andwill strive to obtain the leading position in the industry.
Also, it enabled us to do business in markets and bases in four global
regions: Japan, the U.S., Europe, and Asia.
We are convinced that along with the stamping & molding business, wewill make great strides towards the goal of “Aiming to be a Top-Class
GLOCAL Manufacturer of Technology Components", which will lead to
improved corporate value and strengthened business foundation.

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＜Strategic Significance＞
By integrating the PACIFIC brand, with superiority in Japan and Asianmarkets, and the strong SCHRADER brand in Europe and U.S. markets,
we have prepared a system to develop and produce with customers andmarkets in the 4 regions worldwide.
Combining PACIFIC and SCHRADER, our world market share in valvecore, tire valves, and charge valves will be 50%. Our company will leadthe market as an unwavering top manufacturer.
In terms of product lineup, in addition to the valves for conventionaltire valves, valve cores, and car air conditioners, valves for fuel systems,
aircraft, industrial machinery, etc., are added, and a wide range of
products can be offered in the valve business.

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＜Image of Operation Promotion＞
Let us explain our activities for “SCHRADER” and “PACIFIC” to growtogether.
For sales, we promote sales expansion by utilizing newly acquired
product lineups and each sales channel.
For development, we will integrate the technologies of both companies,
improve product development capabilities such as joint development, andpromote speedy supply of products that meet our customer needs.
For production, we share product know-how and quality control knowhow, adopt each others’ good points, improve productivity, and work tostrengthen cost competitiveness.
PACIFIC and SCHRADER will create synergy quickly and strive toimprove our company value under “ONE PACIFIC”.

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＜OCEAN-20 Revision＞
With SCHRADER business acquisition, we revised our goals for FY2020.
We aim for consolidated sales of ¥155 billion, a ¥15 billion increase in
the valve business against the previous plan.
For operating income ratio, we will maintain the 8% range as in thepast, despite the burden of "goodwill charges" related to businessacquisition.
We also aim for an ROA based on operating income in the 7% range as
our conventional goal.

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＜The environment surrounding our company＞
In the automobile industry, we are in the midst of a major revolutionthat occurs only once every 100 years due to evolving globalization andvarious paradigm shifts, such as the expansion of emerging markets,
acceleration of overseas production transfers, transition to next
generation cars, and entry from connected IoT, AI, and other industries.
Safety and environmental regulations, among others, further
improvement of safety performance, environmental performance, andcomfort performance are required. Interconnectivity between people andcars will progress with electricization, intelligence, and informationization.
Furthermore, demand for weight reduction, which is quickly becoming acore requirement for good car production, continues to accelerate.
We will work on “OCEAN-20” to meet our customers’ needs and theseindustry trends.

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＜Development of Light-weight Stamping Products＞
Our stamping products have deepened our technology to meet the need
for weight reduction and collision safety improvement indispensable fornext-generation automobiles.
In particular, we are sticking to the cold press method, establishingtechnology to mold ultra high tensile materials, and adoption of 1180Mpa
steel materials is expanding. In addition, we are making technologies in
hand for hot stamps that mold steel materials by heating them at hightemperatures.
In accordance with the adoption of the expanding ultra high tensile, wewill deploy large-class stamping machines both in Japan and overseas,
and will develop the supply system.
Overseas, we have 2 bases in North America, 2 bases in China, 1 basein Taiwan, and we have established a new stamping subsidiary inThailand.
Plant construction was completed last year and we are going to start
deploying facilities starting operation in 2019. We aim to expand orders
in the expanding ASEAN market.
We are also in the process of deploying large-class stamping machines
at existing bases in Taiwan and are scheduled to start operation in 2019.

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＜Offering Comfortable, High Environmental Performance Plastic
Molding Products＞
In our plastic molding business, we are offering sound/vibrationproofing products, such as all urethane engine covers and insulators forengines, focusing on urethane products that make use of the flexibility inshape, and focusing on technology development to improve NV
performance.
We believe that the need for quietness and comfort continues to behigh, including strengthening of outside vehicle noise regulations andsound insulation due to progress in EV conversion. We will promotematerial development and production technology development for
urethane foam, further enhance soundproofing and vibration isolation
performance, and achieve No.1 performance.
Regarding our work on decorating technology with resin film, we haverealized weight reduction and recyclability by film transfer technology
with a high degree of freedom of design as an environmentally friendly
technology to replace plating. We have received great praise from
customers. We will continue to develop decorative variations to meet
diverse needs in the future.

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＜Diversified Technologies in Forge Stamping and DC Business ＞
Forge Stamping BusinessWe offer thin, lightweight products that were impossible byconventional methods such as sintering and forging, by using plate
forming technology combining sheet metal forming productivity and highprecision cold forging.
Products are adopted in new-type automatic transmission parts, etc.,
and the range of application is expanding. Domestically, we will expand
the Yoro plant in Gifu Prefecture and promote production expansion andcustomer diversification with the base in Ohio in the U.S.
Aluminum Die Casting BusinessAt the South Korea subsidiary, we have established an integrated
production line that spans from die casting to cutting processing to meet
our customers’ needs.
We will expand the number of order items and offer products of highquality, such as electric compressors, components for electric power
steering, etc.

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＜Expansion of TPMS Products that Contribute to Safety and theEnvironment＞
We have been mass producing TPMS transmitters since 1999. Since
then, we have met our customers’ needs and developed more reliable
products. As an exclusive TPMS transmitter manufacturer, in addition to
our convention clamp-in type, we also offer easily attachable snap-in
models.
One of our strengths as the only manufacturer of transmitters in Japan is
our ability to offer high quality products in an integrated production
system that spans from design and R&D to full production.
We have recently developed the E-type transmitter, which is a small
and light-weight TPMS, and have begun mass production. To achieve
further functional improvement and design variations, we will continue toadvance weight reduction and size minimization for future model
generations.
In China, legislation mandating TPMS installation on vehicles has
officially passed and will be effective from January, 2019.
In production and sales, we have established a global system tocomply with the flow of legal regulations in various countries around theworld. We will increase production capacity, along with China legislationand the launch of production and sales of new types in Japan, the U.S.,
and China.

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＜Our Technology Adopted on the New Camry＞
Our various products and technology have been adopted on the new
Camry launched last July. As an achievement of OCEAN-20, ourtechnology and products will be globally adopted on new types of carsfollowing the Camry.
Lightweight Stamping products
Ultra high tensile material components, aluminum components
Plastic Products
All Urethane Engine Cover for which sound/vibration proofing was
improved
TPMS Products
All are adopted as standard on all cars in Japan, not only in North
America.
Forging Pressure Products
They are adopted on 8th speed AT for gasoline-powered vehicles.

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＜Medium-Term Management Plan”OCEAN-20”＞
We have been striving to be a top-class GLOCAL manufacturer oftechnology components by refining technology, and preparing andexpanding production bases.
We will promote five “Shinka” with the key phrases of “Technology &Overseas”, “Manufacturing is about Developing People”, and “CSR &Environment Preservation”.

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＜Aim for a 100-year Corporation＞
Our company will celebrate 100 years of business in 2030.
As a suitable company, we will strive to improve safety, quality andproductivity, and offer new technologies and new products that meet theneeds of our customers with GLOCAL employees’ sharing of the same
sense of values.
We will promote activities with good governance and plan a sustainable
management strategy.
It is our employees who support further business growth and raise ourcorporate value. We respect diverse ways of thinking and the lives ofdiverse human resources. We will promote continuous development of
the next generation human resources to nurture high workplace skills
under our faith in “Manufacturing is about Developing People”.
We would like to make better relations with our stakeholders in pursuitof creating new value for the future and improving the quality ofcorporate management in order to continue to be a company trusted andexpected by society and to continue to exist as a company necessary forsociety.

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