May 27th, 2020
Pacific Industrial Co., Ltd.

Q&A summary for the Financial Results Briefing
for the Fiscal Year Ended March 2020

Q：I suppose the business result will be tough due to the impact of COVID-19.
Please tell me Pacific’s direction at present to the extent possible.
A：The stamping and molding business will be in proportion to Toyota’s production
volume. Valve business will be affected by global automobile production volumeand sales volume of the after-sakes markets, however, the impact of reduced
production due to COVID-19 will appear later than that of stamping and molding
business since it is a Tier2 business.
Q：What is the difference between coronavirus crisis this time and the global
financial crisis in 2009?
A：The difference from the time of the global financial crisis, now we have a moreglobal manufacturing footprint. At that time, our overseas sales were small. Now
it accounts for more than 50%, so how to deal with the situation overseas has
become a major issue. The other difference is that while the previous crisis was
about the economy, this time it threatens human lives. Just because the demandhas returned might not mean that our production system is ready. It will becomea major issue if someone is infected. So, the big difference is that taking thoroughmeasures to combat COVID-19.
Q：It may be surmised that the cost burden has become larger because the numberof overseas bases has increased. Then, is it correct to think that the impact on
cost may turn out to be even bigger than the financial crisis?
A：We are currently examining the trends of individual countries and companies.
Q：TPMS's Chinese installation rate has been rising to a certain extent, and thebusiness climate is becoming harsher due to the impact of COVID-19, too. Pleasetell us about the outlook for the future, if possible.
A：Currently, our main customers are Toyota, Nissan, Subaru, and Hyundai, andwe are looking to secure orders for upcoming models. We are also developingnew products.
Q：According to Toyota, although demand in China declined temporarily, there arecomments that the pace of return is quick. Is it okay to simply keep thisexpectation about TPMS in China? Or, should we worry about recovery including
the supply chain because the volume of mass production is large?
A：We recognize that Toyota's sales in China have recovered from April and havealmost returned to full production in pre-corona conditions. We are also currently
in the process of full production including the supply of parts from Japan. We
anticipate an increase in sales volume, but since we had almost no production inFebruary, it will affect on a fiscal year basis.
Q：About cash management, as the number of units produced declines, I assume
some areas of investment might be suspended, but please give us guidance on
your ideas regarding the level of investment and how to reduce costs. And please
explain your policies on dividends, the size of commitment lines, and the level ofyour cash and deposits.
A：With regard to capital investments, FY2019 was the peak. Looking at the content
of the investments, we will not stop all of them as many projects are alreadyunderway and construction has begun. However, we are currently making amajor review on upcoming projects, and we might be able to reduce investments
by about 20% compared to the FY2019 level. As for the dividends, the situationis still unpredictable, so we would like to discuss them separately once we gain
more certainty. The balance of cash and deposit totaled JPY18 billion at the endof March, 2020. The impact of COVID-19 has led to high funding demand. As forthe commitment line, we set JPY6billion. Apart from that, we already have shortterm loan facilities at each bank and we will respond to future fund demands bycombining these amounts.
Q：About synergies with Schrader, please explain what you have invested and its
effects.
A：Schrader, a company we acquired, has two bases, in the US and France. As
synergy activities, we are currently working to improve production sites, that canexpect quick-acting. For example, multi-machine handling at the manufacturingsite can save the number of workers. We are also making capital investments topromote in-house production of products that had been outsourced. We areworking on various things, not only at manufacturing sites, including sales anddevelopment, to pursue synergies.
What we consider is not to impose things unilaterally from the Japanese side,
but rather to respect what the local members want to do, to make quick decisions
and to maximize synergies as much as possible.
In FY2019, we were able to achieve synergies of more than JPY150 million inprofit. From FY2020, we are working to achieve close to twice as much synergy
and profit, although this also depends on the production volume.
Q：Toyota announced the guideline of production volume. How will the performanceof your business be? I assume that there will be additional costs such as forsecuring space between workers in the manufacturing sites as part ofcountermeasures against COVID-19. Will marginal profit ratio change?
A：As for our business results, it is still unpredictable and there is a lot of variables,
so I would appreciate it if we could explain again when we have more visibility
into the situation. In terms of measures against COVID-19 at production sites,
we are taking various measures to prevent the disruption of standard procedures.
and we intend to maintain our marginal profit.
Q：I understand there is a gradual trend to shift design, the preceding process ofstamping, which had used to be performed by OEMs, and the mid-scale assembly,
the downstream processes, to stamping manufacturers, so, the scope of businessof stamping manufacturers are expanding. Does this trend apply to yourcompany due to COVID-19 effect?
A：Yes. We are working on structural reforms of the body while receiving various
information from our customers. Our customers fully recognize our stance anddevelopment capabilities, and we are not stopping anything because of COVID19. We are doing more preceding process, while also working on body weightreduction, particularly with the expansion of ultra-high-tensile and aluminumstamping etc. This trend will continue to make a greater contribution tocustomers' automobile manufacturing going forward.