March 11, 2022
Pacific Industrial co., ltd.

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

《Results for FY2021》
Q：I have the impression that both sales and profits were properly generated
despite the uncertain factors. You seem to be controlling costs well in response
to production fluctuations. Please let me know what kind of measures you havetaken.
A：I believe that the 4Q reflected the results of our past efforts. We have madevarious improvements and implemented measures even before the Covid-19
disaster, but two years ago, when it began and a major production cutback
occurred, I think the major effect was that we were able to control costs,
including fixed and variable costs, by making expenses and labor costs visible ona weekly basis.
By quickly sharing the latest information within the company, we are able totake corrective and recovery measures more quickly, which has resulted inminimizing losses. The production situation changes on a daily basis, and we havebeen forced to conduct extremely difficult operations over the past three months,
but I think the fact that we have been able to maintain and improve our ability tocontrol costs is the reason why we have been able to secure profits.
Q：As for information sharing, have you introduced any new management tools? I
think it is difficult to control labor costs even if they are visualized, but I would
like to know if you have any specific measures in place to control them.
A：For example, we utilize web conferencing and have conversation in our daily
operations with each other, including domestic and overseas locations. It used
to be that when a problem occurred, we would discuss countermeasures at thenext regular meeting, but now the necessary parties take action as soon as aproblem arises, and it is very important to be able to share problems quickly,
make correct decisions, and make judgments quickly through the use of web
conferencing. During the past two years, good relationship of trust has been
established whereby everyone at each location is able to cooperate with eachother, whereas previously there would have been a delay of one or two tempo.
Regarding Cost control, for example, when making an investment decision,
the department in charge of the project does not consult with the decision

maker at the final stage after examine the details, but at first, when the themeof the project is raised, consults with the decision maker or with a higher-level
person who can consult with the decision maker and who can think about thecorrect approach. This allows the person in charge of each investment toproceed the project with a sense of security and without redoing the work.
As for the labor cost, it is difficult to adjust it in case the production is to be
reduced by half from tomorrow. But if there is an announcement in advance
one week before, it is possible to forecast the latest production volume, review
the man-hours required for each production line, and change the work system
to accommodate the required number of workers. In addition, while production
trials for new model changes are usually conducted on holidays when facilities
are free, when production is to be reduced, we are working to eliminate workon holidays by pulling production hours to weekdays to make free time forfacilities and conducting trials on weekdays.
《Forecast for FY2022》
Q：Please tell us how you have incorporated assumptions, risks, and opportunities
into your plan. Is it correct to understand that sales of stamping and molding
are planned to increase by about 15% excluding the impact of the applicationof revenue recognition, and that Toyota's production volume assumptions arearound 10 million units globally and 3.2 to 3.3 million units domestically?
A：Although there are many points of current change in our plan for this fiscal
year, we expect a gradual recovery in production in the future.
Although it is difficult to make assumptions regarding the number of units,etc., we believe that the stamping and molding business will increase in revenue
due to the certainty of increased production compared to FY2021 and themeasures we have continued to take to improve sales per vehicle.
Q：In the stamping business, there is also the prospect of a domestic production
cutback due to the China lockdown, but I would like to get some hints on theconsidering for the risk. Specifically, have you factored in risk based on thecustomer's monthly production forecast in the latest April-June?
A：The FY2022 forecast announced this time is a planned figure based on theassumptions that can be expected as of March. As reported in newspapers, due
to the Shanghai lockdown, Toyota's production plan for May will be reduced by
50,000 units from 750,000 units. It means, the production in Japan will bereduced by approximately 30,000 units as included number. Since this is notincluded in the initial FY2022 forecast, we need to closely monitor the future
plan to see when the effects of the lockdown will be resolved and what backup
measures will be taken. Although what we can do is limited, we will strive tooperate our production system without loss and make effective use of our timeto enhance improvements.
We also believe that the reason for the production cutback in May is not due
to the impact of semiconductors. We recognize that semiconductors are the main
reason for the overall production constraints, and we will be able to increase
production as soon as the impact of the lockdown recovers. We do not expect any
major impact for the full year.
Q：The plan for valves is also to increase sales by 10%, but what kind of future
direction do you see, given the current situation in Schrader and Europe?
A：Regarding the valve business, the current business environment at Schrader inFrance is showing a slight decline, but production is steady. The situation in theUkraine is still uncertain, and it is very difficult to predict the future impact, but
we will continue to manage the business while keeping a close eye on thesituation.
We cannot change the current situation by ourselves, but for the future, we arealso developing electric expansion valves and others for use in future EVs andbattery EVs, in cooperation with our bases in France, United States and mainly inJapan.
Q：With regard to profit increase/decrease factors, the results of the past severalyears indicate that the cost improvement effect exceeded the negative impactof selling prices and material costs, it appears to be difficult to achieve in thecurrent fiscal year's forecast. On the other hand, other companies seem to benegotiating with OEMs to bear the impact of higher raw material costs this year.
Is there a possibility that Pacific will also reduce its material cost burden in thesame way and that the situation will have an upside?
A：Improvements have been factored into our current plan, but we are continuing
our efforts and hope to exceed them.
Regarding the sharp rise in material prices, we are still asking our customers
to pass on the price to us, and we are working to keep the amount of impact
below the 1.3 billion yen in our current plan. We anticipate that the price hikes
will continue, so we will continue our efforts and hope to be able to report backto you in the direction of improvement.

《Stamping and Molding Business》
Q：When considering the next-generation body parts structure from a long-term
perspective, is it possible that you run until 2030 with the current direction, thatis, ultra-high-tensile strength Steel stamping? Is there any discussion on how theToyota Group as a whole can cooperate in order to maintain the competitivenessof the vehicle body parts against Tesla's Giga-Press?
A：I think the Giga-Press is a threat in that it can make the underfloor, which
normally consists of many stamped parts, in one shot. However, there is a bigproblem from a carbon neutrality point of view, and I think there may be someissues when repairing.
We are engaged in the press business mainly for Toyota, but so far we have notheard anything about going in the direction of Giga-Presses, and we believe thatthe trend toward ultra-high tensile strength will not change because the need forlighter vehicle bodies will further increase due to the shift to EVs.
I believe that Toyota will make a decision on how much aluminum stamping
products to adopt, while balancing the overall cost of the vehicle body, including
the price of aluminum material. We are good at ultra high tensile strength Steels
and aluminum stamping, so we will continue to communicate closely with themand contribute to Toyota's car manufacturing.
《Valve Business》
Q：Please give us an update on the expansion of TPMS applications in the market
with regard to the medium-term direction of TPMS. Also, when considering invehicle systems as a whole, I think there is an emerging trend toward sensing
air pressure, road surface conditions, etc. using indirect systems. Will there bemore competition with indirect systems in the future? Or, since direct systems
are superior in terms of accuracy, will there be a division between the two? Pleasetell us about the future potential of the in-vehicle type.
A：Regarding TPMS, I think that the continuation of orders, mainly from Toyota, isgoing well. However, we also have competitors, and our customers aredemanding improved performance and cost competitiveness. I believe that wewill be able to offer a cost-competitive product lineup by introducing new models
in the future, and we would like to maintain and secure our business as well as
expand sales to other companies.
In addition to passenger cars, we are also developing TPMS with small volumefor motorcycles. We are also furthering development these, because in someareas, there will be an obligation to install TPMS on buses and other commercial
vehicles in the future.
Regarding the indirect and direct types, the indirect type has sufficient merits,
but the direct type is more accurate, and the indirect type has some demerits,
such as the challenge of obtaining vehicle certification. Currently, there are many
European manufacturers and Chinese markets that use the indirect method, butI think they will shift to the direct method, even if it takes some time. Regarding
valves for automotive applications, we will continue to focus mainly on TPMS, weare working to expand our product lineup using sensors. We have the ability touse ICs that are used in the harsh conditions of in-vehicle use, so we are taking

on challenges in fields we have never experienced, such as "e-WAVES" appliedin other fields and the agricultural field with "CAPUSLE SENSE" scheduled formarket launch at the end of May, and we are developing products and sales
channels to solve social issues.
Q：I would like to know more about control valves for heat pump air conditioners,
such as what kind of customers you can promote sales to in the future and how
much market share you can expect.
A：Since the product is still under development, it is difficult to give specificcustomer names or timing, but we are currently developing the product withJapanese, European, and U.S. manufacturers. We would like to tell you when
we are ready to announce the product. We apologize for the inconvenience.