August 3, 2020
Pacific Industrial co., ltd.

Summary of Questions & Answer for Financial Results Briefing forQ1 Year Ending March 2021

Q：Please tell me the detailed cost reduction and cost improvement among causes offluctuation in profit by separating temporariness and continuity.
A：Examples of continuity include reviewing the specifications and frequency of use ofpurchased parts, curbing overtime by improving staff operations, and control theincrease in the number of staff by relocation. Examples of temporariness include
suppressing expenses by scrutinizing the contents of capital investment and making
remodeling investment instead of new investment. The travel expenses and theexpenses associated therewith have also been reduced, which has been effective.
Q ： Regarding the full-year plan, if possible, please provide the figures for eachsegment in the first half and the second half of the fiscal year.
A：In the first half of the fiscal year, net sales of the stamping/molding business isexpected to be 40 billion yen and operating income to be 1.8 billion yen in the red.
In the valve business, sales are expected to be 18 billion yen and operating income
is expected to be 200 million yen in the black. Comparing the Q1 and Q2, 2 months
shutdown of two bases in North America and a decrease in production in Q1 in
Japan had a huge negative effect on the stamping and molding business.
Q：Please tell me the assumption of Toyota’s production volume for the full year
forecast this time.
A：Domestic production volume is assumed to be 490,000 units in Q1, 720,000 units
in Q2, and 1.51 million units in the second half of the fiscal year. Since the valve
business is a Tier 2 business and is affected by the production conditions ofEuropean and American car manufacturers, we have made this forecast based on
various information.
Q：What is the assumption of the overseas production volume?
A：Based on our rate of operation, the recovery is expected to be about 40% for Q1,80% for Q2, and 90% for the second half of the fiscal year in North America. China
is recovering steadily with about 70% in Q1 (January-March) and 100% something
extra from Q2 onward. In Europe, the market recovery is delayed, with 80% in Q1,60% in Q2 and 70% in the second half of the year. Thailand is also lagging behindin recovery, with 50% in Q1, 60% in Q2 and will recover gradually 90% in thesecond half of the fiscal year approximately.

Q：To what extent is the impact of expanding the use of ultra-high-tensile materials
included in this number?
A：Hundreds of millions of yen in sales in Q1 to be positive.
Q：It was reported that Toyota has changed the quoted price of steel. Are there anychanges?
A：Requests for price revisions and price revisions for steel products from Toyota aremade every year, and we do not take it as a major issue. We also have not been
informed officially, so we are not able to answer your question yet.
Q：As for Valve business, limited for Schrader, is it going to be below the break-evenpoint this fiscal year? If profits decrease, is there any concern about impairment ofgoodwill?
A：Schrader is a company of France and America. Unlike the business for Toyota, Valvebusiness recovery is slow. Although individual company has made a profit,
Amortization of goodwill associated with the acquisition is occurring in a fixedmanner, and we expect to post a deficit in the current fiscal year after amortizationof goodwill. This is based on the assumption that the company will head toward
recovery, and as synergies will gradually be gained, we don’t assume that goodwill
is impaired at this point.
Q：You found that the full year forecast for Valve business is harsher than that ofStamping & molding business. Are there any factors other than the delayed market
recovery? Is switching new products of TPMS affecting the forecast?
A：Regarding TPMS, switching from type C to type E is underway. The amount of TypeE will exceed in FY2020, so we suppose our product structure will be different fromthe past. In the Valve business as a whole, since we cannot really forecast a part of
the global production recovery precisely, we are creating a forecast according to theinformation we have at this time.
Q：Are there any additional manufacturing costs, or structural changes in terms ofpurchasing due to the impact of COVID-19?
A：In order to prevent the spread of infection, we have taken measures for providing
partitions where necessary but there is no substantial additional cost. For suppliers,
since sales volume has largely fallen, we give consideration to financing. We visit
suppliers and carefully communicate with the managers, check the manufacturingsite to confirm there are no issues with regard to supply chains.