2018

F i n a n c i a l

R e v i e w

Year ended March 31,2018

I M a n a g eme n t M e s s a g e
Mitsuboshi Belting Ltd. was established in
1919 as a manufacturer of industrial belts andthrough untiring efforts, has become one of
the leading companies in the belt industry.
Now our products include waterproofing andwater shielding sheets and engineering
plastics, but we have always adhered to themotto, “produce quality and sell quality” andto earn the trust of customers.

Mitsuboshiʼshigh-quality products are essential to daily life
Chairmanas well as progress of the industry.

Norio Nishikawa

We have always maintained strict quality

President

Hajime Kakiuchi

assurance and both domestic and overseas
factories are obtaining ISO 9001 or IATF
16949, which is considered to be the moststringent international standard for quality
management systems. Our main domestic factories and several other overseas factories have been certified by
ISO14001, and we are actively engaged in development of environmentally-friendly products.
With the basic management policy, “to contribute to society by supplying goods of high performance, high precisionand high quality” and the corporate philosophy, “to give attentive consideration to both humanity and nature”, we strive
for the prosperous future of the society.

Board of Directors
Chairman

Norio Nishikawa

Board of Corporate
Auditors

President, Executive Officer

Hajime Kakiuchi

Managing Executive Officer

Executive Officer

Corporate Auditor(standing)Vice-Senior Managing
Executive Officer

Managing Executive Officer

Executive Officer

Managing Executive Officer

Executive Officer

Managing Executive Officer

Executive Officer

Managing Executive Officer

Executive Officer

President

Masaharu Kurono

Member of the Board

Corporate Auditor

Yoshio Yamaguchi

Yoshio Okushima

Member of the Board

Corporate Auditor

Hajime Kakiuchi

Masayoshi Nakajima

Masayuki Hashimoto

Member of the Board

Corporate Auditor

Yoshihiro Oda

Executive Officers

Yoshio Yamaguchi
Vice-Senior Managing
Executive Officer

Masayoshi Nakajima
Managing Executive Officer

Yoshihiro Oda

Hiroharu Okubo

Managing Executive Officer

Member of the Board

Takashi Katayama

Takashi Katayama

Managing Executive Officer

Director, Member of the Board

Takeshi Hamura
Takashi Sasaki

Kenkichi Masuda
Hiroshi Ikeda

Mineo Morino

Tatsuo Ito

Shinji Kuramoto
Toru Shimomura
Toshimi Kumazaki
Kazutoshi Ishida

Managing Executive Officer

Keiji Mataba

Norio Kumano

Takashi Usami(June 28, 2018)

Director, Member of the Board

Ryuzo Miyao

C on t e n t s

1

Management Message …………………………

1

Financial Highlights………………………………

2

History ……………………………………………

4

Global Network …………………………………

5

Business Overview ………………………………

7

Consolidated Balance Sheets …………………

11

Consolidated Statements of Income …………

13

Consolidated Statements ofComprehensive Income …………………………

14

Consolidated Statements ofShareholders' Equity ……………………………

15

Consolidated Statements of Cash Flows ………

16

Notes To Consolidated Financial Statements …

17

Investor Information ……………………………

18

I F in a n cia l H ig h l ig h t s
Years ended March 31

Millions of yen

2018

2017

2016

2015

2014

2013

Domestic Belts¥28,037¥26,908¥26,536¥27,268¥26,567¥25,692

Overseas Belts

31,97429,49930,87629,35527,38820,636

Building & Construction Materials

4,854

5,345

5,162

5,417

5,725

4,894

Others

4,727

4,642

4,486

4,210

4,003

4,356

Total

69,594

66,396

67,062

66,251

63,68555,581

Exports sales ratio

46.5%

45.1%

46.5%

45.0%

43.7%

37.5%

Cost of sales¥47,182¥44,649¥45,859¥45,828¥44,852¥38,995

Selling, general and administrative

13,982

13,468

13,572

13,28912,70811,364

Operating income

8,429

8,278

7,630

7,133

6,124

5,220

Income before income taxes

8,921

9,406

7,788

8,344

7,012

5,992

Income attributable to owners of parent

6,252

6,663

5,691

6,146

4,721

3,735

Total assets

95,514

89,91287,27886,07378,576

72,790¥103.32¥108.15¥88.35¥95.14¥73.07¥57.06

Sales Business Segment :Per share data (in yen)
Net income
Cash dividends

25.00

22.00

18.00

20.00

16.00

14.00

Book value

1,129.48

1,043.20

946.53935.17785.02683.18Gross profit margin

32.2%

32.8%

31.6%

30.8%

29.6%

29.8%

Operating income margin

12.1%

12.5%

11.4%

10.8%

9.6%

9.4%

Current ratio

326.80%318.30%308.40%281.70%227.70%216.02%

Capital expenditures¥3,239¥3,375¥2,436¥2,076¥4,075¥2,203

Depreciation expense¥2,999¥2,839¥3,092¥3,091¥2,924¥2,830Equity ratio

71.6%

70.2%

68.5%

70.2%

64.6%

60.6%

Long-term debt ratio against equity

12.2%

13.7%

16.1%

12.9%

15.1%

20.7%

Number of shares outstanding (thousands)

65,20865,20868,20868,20871,20871,208

Note: Income statement and balance sheet figure for the periods ended March 31, 2018, 2017, 2016, 2015, 2014, and 2013 were audited by Accounting Auditors and which are
different from ones disclosed in Tokyo Stock Exchange in consideration of expected readers.

Consolidated Statements of Income（Japanese Yen）
Net Sales

Operating income

Ordinary income

69,594mil

8,429mil

8,808milSales by Business
Building &Construction Materials
4,854mil

6,252milOperating income by Business
Building &Construction Materials
125milOthers4,727mil

6.8％
7.0％

Domestic Belts
28,037mil

40.3％

Overseas Belts
31,974mil

Profit attributableto owners of parent

45.9％

Total Sales

69,594milOverseas Belts
3,434mil

Others

1.1％ 1.7％ 186mil

31.1％
66.1％
Domestic Belts
7,313milOperating income(before adjustment deduction)

11,058mil

2

I F in a n cia l H ig h l ig h t s
Net Sales

Operating income
Operating income
Operating margin

4.8% increase

from the previous year

（Million Yen）
80,00060,00063,68566,251

67,062

66,396（Million Yen）
9,000

69,594

9.6
6,124

6,000

1.8% increase

from the previous year
10.8

11.4

7,133

7,630

（％）
12

12.5

12.1

8,278

8,429
8

40,0003,000

20,000
0

2014

2015

2016

0

2018

2017

4

Ordinary income

2014

2015

2016

6.2% decrease

from the previous year

7,302

2018

Income attributable to owners of parent

3.8% increase（Million Yen）
9,000

2017

8,217

7,788

8,487

from the previous year

（Million Yen）
9,000

8,808

6,000

6,146

6,000

4,721
3,000

5,691

6,663

6,252

2017

2018

63,136

68,34820172018

108.15103.32

2017

2018

3,000

0

2014

2015

2016

0

2018

2017

Total assets & Equity ratio

2014

2015

2016

60,41459,7502015

2016

Total net assets

Total assets
Equity ratio（Million Yen）
100,000

80,00078,57664.6

60,0000

2014

86,07387,278

70.2

2015

68.5

2016

89,912

95,514
71.6

（％）
80

（Million Yen）
90,00070

60,00060

30,000

0

0

70.2

2018

2017

Cash dividends & Payout ratio

50,7212014

EPS(Earnings Per Share)

Cash dividends
Payout ratio
（Yen）
30

20

（％）
30

21.9

21.0
20

16

25

20.3

20.4
18

24.2

10

2014

2015

2016

2017

2018

ROA(Return On Assets)

6.2

7.5

6.6

7.5

6.7

3
0

3

73.07

30
0

2014

（％）
12

9

88.35

2015

2016

ROE(Return On Equity)

（％）
12

6

0

95.14

90
60

10

0

20

22

（Yen）
120

9

10.0

11.1

9.5

10.8

9.5

6
3

2014

2015

2016

2017

2018

0

2014

2015

2016

2017

2018

0

I H is t or y

2016
Released "Smastar™", Alternator
Dumper Pulley absorbs the rotation
fluctuation of automotive engine.

1966

Released "HYPERFLEX™" Coupling.

2015
1968

Released "Smart Tension",a simple belt tension
measurement app
for smartphones.

Started streamlining of V-belts.

1963

1969

Started manufacturing
Polyurethane Timeng Belts.

2008

Released Waterproofing Sheet.

Released Copper paste "CUX™".

Released Steel Cord Conveyor Belts.

1957

Started manufacturing Timing Belts.

Released "MIZUSHEET",
a water-shielding sheet forcivil (engineering) work.

1971

2007

Released Cast-Nylon.

1940

Startedmanufacturing
V-belts.

Released Silver paste "MDot™".

1979

Released Light Conveyor Belt.

1980

2002 Released "Carbon Filters".

Started manufacturing
Engineering Structural Foams.

1936

Started manufacturing Conveyor Belts.

1999 Released "Worm Wheel".
1929

Started manufacturing Flat Belts.

1996
1919

Released "MITSUBOSHI Hi-COLOR™ F".

Established in Kobe, Japan.

4

I G lob a l Ne t w o r k

MBL (USA) CORPORATION

Mitsuboshi Belting Ltd.

MBL Antriebstechnik Deutschland GmbHMITSUBOSHI POLAND Sp.z o.o.

MBL SHANGHAI INTERNATIONAL
TRADING CO., LTD.

SUZHOU MITSUBOSHI BELTING CO., LTD.

MBL Antriebstechnik Deutschland
GmbH

MITSUBOSHI BELTING-INDIA
PRIVATE LIMITEDMITSUBOSHI OVERSEAS
HEADQUARTERS PRIVATELIMITEDMITSUBOSHI POLAND Sp.z o.o.
P.T. Mitsuboshi Belting Indonesia

P.T. SEIWA INDONESIA

MITSUBOSHI BELTING-INDIA PRIVATELIMITED

5

MITSUBOSHI OVERSEAS HEADQUARTERS
PRIVATE LIMITED

P.T. SEIWA INDONESIAMBL SHANGHAI INTERNATIONAL
TRADING CO., LTD.

SUZHOU MITSUBOSHI BELTING CO., LTD.

MBL（USA) CORPORATION

Mitsuboshi Belting Ltd.
（Kobe Head Oﬃce）

MOI TECH
HONG KONG LIMITED

Mitsuboshi Belting Ltd.
（Tokyo Head Oﬃce）

MOI TECH HONG KONG LIMITEDMITSUBOSHI BELTING VIETNAM CO., LTD.

STARS TECHNOLOGIES INDUSTRIAL LIMITED…Plant & Sales Oﬃce
…Plant…Sales oﬃce
MITSUBOSHI BELTING
VIETNAM CO., LTD.

P.T. Mitsuboshi Belting Indonesia

STARS TECHNOLOGIESINDUSTRIAL LIMITED6

I B u sin e s s O v e r v ie w

1. Summary of Business Results(1) Business Results(2) Condition of Cash FlowJapanese economy showed a gradual recovery as a whole under the situation

Cash flow from operating activities achieved an income of 9,309 million yen,where the recovery in employment and an improvement of corporate income

which was an increase of 93 million yen over the previous fiscal year. Major

were seen, supported by the constant depreciation of Japanese yen throughout

factors for this increase were composed of 485 million yen decrease in income

this year although the currency was slightly appreciated at the beginning of thisbefore income taxes despite a decrease of 1,041 million yen in gain on sales ofyear.

investment securities.

Meanwhile, in overseas economy, U.S and European economy stayed robust

Cash ﬂow from investing activities resulted in expenditure of 3,559 million yen,

and Asian economy including China was brisk despite the concern about thewhich was an decrease of 1,561 million yen over the previous ﬁscal year. Major

adverse impact caused by political condition and the entire overseas economy

factors for this decrease were composed of a decrease of 1,219 million yen incontinued to be solid."

proceeds from sale of investment securities in addition to an increase of 1,107

Under these circumstances, Mitsuboshi Belting Ltd. (the “Company”) and its

million yen in purchase of property, plant and equipment compared with theconsolidated subsidiaries (together with “the Group”) have been reinforcing

previous ﬁscal year.

sales operations in growing markets mainly in Asia, promoting restructuring of

Cash ﬂow from ﬁnancing activities resulted in expenditure of 2,532 million yen,

the manufacturing system, and working to improve business eﬃciency and towhich was an increase of 3,664 million yen compared with the previous ﬁscal

attain further cost reduction.

year. A major factor for this increase was 2,242 million in purchase of treasury

As a result, for this fiscal year, the Group recorded the consolidated net sales

stock compared with the previous ﬁscal year.

of 69,594 million yen (4.8% increase compared to the previous ﬁscal year), theAfter deducting the effect of exchange rate change on cash and cash

operating income of 8,429 million yen (1.8% increase compared to the previous

equivalents of 259 million yen from the total amount of cash flows throughﬁscal year), the ordinary income of 8,808 million yen (3.8% increase compared

operating, investing and financing activities, a increase in cash and cash

to the previous ﬁscal year) and the income attributable to owners of parent was

equivalents was 2,958 million yen increase. After adding the balance at

6,252 million yen (6.2% decrease compared to the previous ﬁscal year).

beginning of current period 25,166 million yen, the balance as of the end of thisBusiness results by business segment were as follows:

consolidated ﬁscal year for cash and cash equivalent stood at 28,074 million yen.

31
3

37
,0

7,

28

08
,9
6,
58
4

6,500

I

6,000

I

20,0005,500

I15,000I

market, sales of conveyer belts to logistics industry increased and also an increase in sales of engineeringI

manufacturer and robot industries remained strong. Along with the expansion of mail-order shopping

7,500
7,000

I

Sales of industrial belts increased significantly as a whole as sales to injection molding machine

25,000I

due to a decline in a belt replacement demand for car inspection.

Million Yen(Income)I

increase in sales of belts for mini-vehicle. Meanwhile, sales of automotive belts for aftermarket decreased

30,000I

Sales for belt installed car production line decreased but automotive belts sales were flat as a result of anDomestics Belts
Million Yen(Sales)26●Business of Power Transmission Belts（Domestic）

5,000

I

plastic material rises due to an increase in its sales to semiconductor and LCD manufacturing equipment

I
I

3,500

I

compared to the previous fiscal year) while the consolidated operating income by this segment stood at

2017■ Total Sales

2018

3,000

I

As a result, the consolidated net sales by this segment stood at 28,037 million yen (4.2% increase0

I

Chinese markets released by users.

4,000

5,000

I

On the other hand, sales of belts for OA equipment dropped due to the impact of fewer models for

4,500

I

makers.

10,000■ Operating Income

7,313 million yen (11.1% increase compared to the previous fiscal year).

●Business of Power Transmission Belts（Overseas）

97
4
31
,

49
9
29
,

3,
43
4

37
7
3,

I

0

2017
■ Total Sales

2018■ Operating Income

0

I

7

I

3,434 million yen (1.7% increase compared to the previous fiscal year).

1,000

10,000I

compared to the previous fiscal year) while the consolidated operating income by this segment stood at

2,000

15,000I

As a result, the consolidated net sales by this segment stood at 31,974 million yen (8.4% increase

3,000

I

Sales of belts for OA equipment remained same level.

20,0004,000

IChina.

25,0005,000

ISoutheast Asia such as Thailand and Indonesia despite a decline in belts for agricultural machinery inMillion Yen(Income)I

Sales of industrial belts in Asian market increased as a result of sales expansion for aftermarket in

30,000I

And an increase in sales in Europe also contribute to a rise in sales of automotive belts as a whole.

I

motorcycle models, etc.

35,000I

United States and successful sales promotion activity in aftermarket in Asia and incorporation into newI

Sales of automotive belts rose due to aggressive sales promotion activity to acquire new orders in theOverseas Belts
Million Yen(Sales)2. Research and Development Activities
Our management policy is; “To contribute to society by supplying goods of high

3. Summary of Investment in Plant andEquipment

performance, high precision and high quality”. Under this management principle

Our management policy is ”To contribute to society by supplying goods of highwe are strenuously making eﬀorts to further improve fundamental technologies

performance, high precision and high quality”.

and to positively use simulation technologies for luidity analysis, impact analysis

The company made investment of 3,239 million yen in the renovation of old

and stress analysis so that we may cope with customers' demand which ismanufacturing facilities in Japan and overseas factories, expansion of production

diverse and changeable in a timely manner.

plants for automotive functional parts and belt manufacturing machineries,

At the same time, we are performing overall research and development

enhancement of test facilities, etc. with the aim of establishing organizational

activities including studies of materials, facilities, construction methods, analysis

structure to enable to respond to customer demands by self-funding.

methods, etc. with the aim of realizing the reduction of environmental loads,
high productivity and the development of high performance, high precision andhigh quality products as declared in the company management principle.
At present, research and development are promoted by R&D and Research &Designing sections in our operating divisions in cooperation with Development
Department of each group company. Besides, we are pursuing joint researchwith universities and public research institutes as well as joint developmentwith other companies under a close tie-up and cooperation, for the purpose ofcarrying out research eﬀectively and developing a cutting edge technology.
The total R&D expenses of all our group companies for the current ﬁscal year
was 2,835 million yen.
The total R&D expenses included the basic research expenses of 809 million yen
not allocatable to each division, for Silver nanoparticles paste, Coatings & inks forglass, Surface treatments for glass, Conductive copper paste, Thick ﬁlm copper
circuit boards, etc.

Building & Construction Materials
Million Yen(Sales)

4,000

I

3,000

I

4
85
4,
12
5

I

100

0

2017

2018

■ Total Sales

0

I

1,000

I

stood at 125 million yen (72.2% decrease compared to the previous fiscal year).

I

compared to the previous fiscal year) while the consolidated operating income by this segment

200

2,000

I

As a result, the consolidated net sales by this segment stood at 4,854 million yen (9.2% decreaseIconstruction works in civil engineering sector.

300

I

for public and private renovation work in construction sectors in addition to fewer large scale

400

I

Overall sales of building & construction materials decreased as a result of a decrease in demand

5,

34

5

I

●Business of Building & Construction Materials

500

45
0

I

5,000

Million Yen(Income)I

6,000■ Operating Income

Others

4,
7

4,
64
2

I

250

I

4,000

18

17
0

I

3,000

The consolidated net sales by other businesses stood at 4,727 million yen (1.8% increase

I

150

2,000

I

compared to the previous fiscal year) while the consolidated operating income by this segment

200

I

6

Other businesses include the supply of engineering structural foams, developed metal
nanoparticles and purchased products, etc.

300

I

5,000

I

●Other Businesses

Million Yen(Income)27

Million Yen(Sales)100

Istood at 186 million yen (8.9% increase compared to the previous fiscal year).
I

0

I

50

I

1,000

■ Total Sales

2018■ Operating Income

0

I

2017

8

I B u sin e s s O v e r v ie w

4. Risks to the Business

However, in a phase of a soaring resource price including crude oil, there is a

Listed below are the various risks that could affect investor's decision withskyrocket manufacturing costs. Moreover, stable and efficient procurement ofregard to the article of the business and financial conditions described in

raw materials from overseas and supply of raw materials to overseas affiliatedfinancial statements.

companies could be interfered by export/import restrictions, etc.

Note that matters pertaining to the future presented herein are determined by

Therefore, in the case that the Company is not able to flexibly procure raw

us as of the end of fiscal year.

materials or procurement costs continue to rise extremely, it may have a

possibility that a rapid rise in market price of major raw materials could

significant negative impact on our performance.

(1) Economic Status
The Group develops, manufactures and provides functional components(5) Exchange Rate Fluctuation

principally in the automobile, general engineering, IT and construction

The Group manufactures and sells its products mainly in Japan, Asia, USA andindustries. Our main markets are Japan, Asia, USA, and Europe,etc. The change inEurope, etc. Exchange rate fluctuations may have a strong influence on

demand from various industries and the economic status around the worldtransactions denominated in foreign currencies involving export in each area

could affect us adversely.

and foreign assets and liabilities such as deposit, account receivable and loans.

The Group distributes our main products, power transmission belts, to the

When preparing our consolidated financial statements, exchange rates used toindustries above. Low demand or a reduction in equipment investment in eachconvert into Japanese Yen have a influence on its value denominated incompany could cause our market to shrink and have a detrimental impact on

Japanese Yen even with no fluctuation of value on its reporting currency basis.

our performance as well.

Appreciation of the yen against other currencies, especially the U.S. dollars andApproximately 75% of the power transmission belts sold by our company are

Euro having a large impact on our groups, could damage our performance.

manufactured in other countries. As we are expected to be more dependent on

The Group has taken as many effective measures to reduce or avoid theoverseas manufacturing in the future due to growing global economy, aexchange risks as possible. Nonetheless, as there are not few cases that would

sluggish global economy could negatively affect our operating performance.

not be cleared in the short term, it causes a negative effect on performance andWar, terror, riots, disaster like earthquake, epidemic could strike a sharp blow ona decrease in asset value potentially.

economy. Slowdown in demand could be expected during the event. Our
problem is that the Company may have difficulty procuring materials andproducts to customers. To reinforce our product material supply system, we
have taken several countermeasures. However, there is no guarantee that all(6) Official Restrictions on Businesses in Japan andOverseasrisks are eliminated.

In the countries where our businesses operate, the Group is exposed to a variety

Therefore, the domestic and international economic situation and industryof regulations on import / export controls, custom duty, and businesstrend may have a significant negative impact on our performance and financial

investment, etc. Also our activities should be restricted legally by antimonopoly

position.

laws, patent rights, tax, and the environmental regulation including waste
disposal and recycling. If our business activities are not able to accommodate(2) Price Competition

quickly and flexibly to these business environments, it would rise costs andMarket competition in our main business areas such as automobile, generaladverse effect on our financial performance.

compel us to retreat from overseas businesses. Obviously it could have aengineering, IT and construction industries is getting extremely severe.
A demands for competitive price and high value-added products from ourcustomers is getting harsh. We have reinforced and enhanced our research and(7) Product Quality

development systems as well as our technical expertise with the aim of

In order to maintain and improve the product quality of the Group, we haveproviding high performance, high precision, and high quality products. We haveestablished a strict standards based on customer demand standards and ouralso been making our efforts to strengthen production and sales constantly

group standards. However, in the case that any defective products are found or

towards supply of our product worldwide.

customer complaints are received, the Group enrolled in insurance to minimize

However, despite our untiring effort on such activities, deteriorating

losses on our group companies.

competitiveness could have adverse effect on our performance.

Nevertheless, any expense which is not covered by any available insurance
could adversely affect business results or the financial position of the Group.

(3) Impact on Automobile Industry
The degree of dependence on sales of automobile industry exceeds 40%.

(8) Risks from Natural Disasters

Although the Company does not belong to any members of car makers,

Our production bases could be subject to a catastrophic loss caused by natural

unmanageable factors, such as a economy slump in automobile industries, poordisasters such as earthquakes and floods. In the event of natural disasters, theclient business results, damages caused by large-scale natural disasters, andCompany would suffer from a stable supply to our customers and a temporarychanges in component procurement policy could have a knock-on effect at us

massive burden of expense arising from a drop in sales and incurred for

as well.

restoration.

Although the Company have engaged in managerial improvement in order to

In preparation for such disasters, we have established the global and domestic

maintain customer satisfaction for all clients including those in the automobile

production system including the backup system for overseas production sites,industry, such changes may adversely affect our performance.

forming a robust structure for product delivery.
In spite of these efforts, however, there is a possibility that a temporary(4) Material Procurement

suspension of operation, delayed delivery and a huge amount of expenses

Our production sites need a variety of materials such as rubber, fabric, glass fiber

Moreover, it is possible that our business results are adversely influenced byand resin which are essential for product manufacturing. We procure thesedrop in sales if a major client should suffer from a catastrophic damage or facematerials from diverse suppliers considering a stability, price and quality.

production suspension/restriction because of a broken supply chain, etc.

incurred for restoration occur. It may adversely affect our business results.

without any damage on our group's production sites by a natural disaster.

9

5. Corporate Governance(1) Basic Stance on Corporate Governance(2) Overview of the Corporate Governance System

The Company considers corporate governance one of its topmost management

The Company has in place a Board of Directors comprising eight members, ofpriorities, in order to secure the trust of its shareholders and fulfill its corporate

whom two are outside directors, and a Board of Corporate Auditors. This boardsocial responsibilities.

has four members, of whom two are outside corporate auditors.

In accordance with this basic philosophy, the Company strives to enhance its
business productivity in prompt and flexible response to the changes in the

The Board of Directors meets monthly to make decisions on important items

business environment and the market, and for maintenance, the Company

and supervise the execution of operations by directors.

addresses strengthening of supervisory function to management and theinternal control in order to maintain and enhance its management efficiency

The Company employs an executive officer system.

and transparency, and, thereby, enhance its corporate governance in
By separating the functions of management decision-making and supervisionaccordance with the following Basic Policy.

from operational execution, the Company aims to strengthen its operational
execution structure and bolster management efficiency.

[Basic Policy]
1. The Company strives to respect its shareholdersʼ rights and secure its
shareholdersʼ equality.
2. The Company strives to respect its shareholdersʼ rights and positions, andwork properly in harmony with its stakeholders (shareholders, customers,
employees, communities and so on).
3. The Company strives to disclose its corporate information timely andproperty, and, thereby, secure transparency and fairness.
4. The Company strives to cause its board of directors meeting and so on fulfill
properly the functions and the responsibility, in light of its fiduciary
responsibility and accountability to its shareholders.
5. The Company strives to have constructive dialogues with its shareholders.

Governance Structure
General Meeting of Shareholders
Appointment,
removalBoard of Corporate Auditors（8 directors, including
two outside directors）（four corporate auditors, including
two outside corporate auditors）

ReportCooperation

Accounting auditor

Auditing

Board of Directors

Appointment,
removal

Accounting audits
Management,
supervision

Auditing

Representative directors
ReportingManagement Council
Risk Management
Committee
Compliance Committee

Cooperation

Instructions

Cooperation

Product Development
Council
Quality Assurance
CouncilAudit department（Internal Control System
Management Oﬃce）

Accounting audits

Health, Safety andEnvironment Council
Technology Committee（Ernst & Young ShinNihon LLC）

Appointment,
removalInternal audits

Executive oﬃcers/business departments, Group companies

10

I C on s ol id a t e d B a l a n c e S h e e t s

Years ended March 31

ASSETS

Millions of yen

Thousands of U.S.dollers

2018

2017

2018

2017

Cash on hand and in banks¥28,958¥26,262$258,119$234,092

Trade notes and accounts receivable

15,001

14,648

133,715

130,564

Merchandise and finished goods

11,76911,605

104,903

103,445

Work in process

1,752

1,549

15,62213,807

Raw materials and supplies

2,629

2,388

23,436

21,286

Deferred tax assets

818

844

7,297

7,523

Other

729

494

6,497

4,406

Allowance for doubtful accounts

(124)

(112)

(1,107)(999)

61,53457,679548,485

514,126

12,255

11,066109,239

98,642

Other

313

348

2,793

3,103

Allowance for doubtful accounts

(9)

(11)

(80)

(104)

12,55911,403111,952

101,640

Land

4,254

4,280

37,92338,153

Buildings and structures

21,491

21,045191,561

187,591

Machinery, equipment and vehicles

45,281

44,624

403,615

397,755

Tools, furniture and fixtures

14,237

13,792

126,902

122,942

Construction in progress

1,241

721

11,065

6,431

Subtotal

86,506

84,464

771,068

752,873

Accumulated depreciation(65,154)(63,705)(580,748)(567,836)

21,351

20,759190,319

185,037

67

69

605

623

¥95,514¥89,912$851,362$801,428

Current assets

Total current assets
Investments and long-term receivable
Investment securities

Total investments and long-term receivables
Property, plant and equipment

Net property, plant and equipment
Intangible assets
Total assets

11Years ended March 31

LIABILITIES AND NET ASSETS

Millions of yen

Thousands of U.S.dollers (note 3)

2018

2017

2018

2017

Trade notes and accounts payable¥8,694¥7,779$77,497$69,340

Short-term loans payable

2,324

2,325

20,717

20,728

948

1,147

8,449

10,223

Accounts payable-other

2,537

2,300

22,61520,508

Income taxes payable

840

1,360

7,489

12,126

Provision for bonuses

788

759

7,030

6,769

2,694

2,449

24,016

21,831

18,827

18,121

167,817

161,527

Long-term loan payable

2,100

3,048

18,71827,168Deferred tax liabilities

3,652

3,092

32,56027,565Net defined benefit liability

1,549

1,393

13,813

12,418

28

26

251

236

1,007

146

781

1,307

Total long-term liabilities

8,338

8,654

74,322

77,139Total liabilities

27,165

26,776242,139

238,667

Common stock

8,150

8,150

72,646

72,646

Capital surplus

2,111

2,111

18,81818,818Retained earnings

55,12950,328491,392

448,603

Treasury stock(3,315)(3,305)(29,554)(29,461)

Total shareholders' equity

62,07557,285553,303

510,607

Valuation difference on available-for-sale securities

7,181

6,338

64,01356,496

Foreign currency translation adjustment

(585)

(201)

(5,214)(1,797)

Remeasurements of defined benefit plans

(323)

(285)

(2,879)(2,546)

Total accumulated other comprehensive income

6,273

5,851

55,91952,153

Total net assets

68,34863,136609,223562,760

Total liabilities and net assets¥95,514¥89,912$851,362$801,428

Current liabilities

Current portion of long-term loans payable

Other
Total current liabilities
Long-term liabilities

Provision for directors' retirement benefits
Other

Shareholders' equity

Accumulated other comprehensive income

12I C on s ol id a t e d S t a t e m e n t s o f In c o m eYears ended March 31

Millions of yen

Thousands of U.S.dollers

2018

2017

2018

2017

Net sales¥69,594¥66,396$620,325$591,821

Cost of sales

47,18244,649420,558

397,980

Gross profit

22,411

21,747

199,766

193,841

Selling, general and administrative expenses

13,982

13,468

124,633

120,052

Operating income

8,429

8,278

75,13273,788Interest income

127

102

1,132

917

Dividends income

315

346

2,814

3,089

Other

304

336

2,711

2,997

Total non operating income

746

785

6,658

7,004

Interest expenses

25

41

223

368

Foreign exchange losses

159

259

1,423

2,310

Loss on valuation of derivatives

3

0

33

1

Loss on disposal of fixed assets

54

122

482

1,088

Sales discounts

53

48

476

431

Other

71

105

640

936

Total operating expenses

367

576

3,279

5,138

8,808

8,487

78,51175,654Gain on sales of investment securities

―

1,080

―

9,632

Gain on sales of fixed assets

182

―

1,627

―

Total extraordinary income

182

1,080

1,627

9,632

Impairment loss

68

161

613

1,443

Total extraordinary loss

68

161

613

1,443

Income before income taxes

8,921

9,406

79,524

83,844

Income taxes-current

2,437

2,530

21,722

22,554

Income taxes-deferred

231

212

2,066

1,892

2,668

2,742

23,78924,446

Net income

6,252

6,663

55,73559,397

Income attributable to owners of parent¥6,252¥6,663¥55,735¥59,397

Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss

Income taxes

Total income taxes

Per share of common stock

13

Yen

U.S.dollers

Net income¥103.32¥108.15

$0.92

$0.96

Cash dividends¥25.00¥22.00

$0.22

$0.20

I C on s ol id a t e d S t a t e m e n t s o f C o m p r e h e n si v e In c o m eYears ended March 31

Millions of yen

Thousands of U.S.dollers

2018

2017

2018

2017

¥6,252¥6,663$55,735$59,397

Valuation difference on available-for-sale securities

843

58

7,516

525

Foreign currency translation adjustment

(383)

43

(3,417)387

Remeasurements of defined benefit plans

(37)

(0)

(332)

(0)

422

102

3,766

912

6,675

6,766

59,50160,309

6,675

6,766

59,50160,309――――Net Income
Other comprehensive income

Total comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non controlling interests

14

I C on s ol id a t e d S t a t e m e n t s o f S h a r e h ol d e r s' E qu i t y

Years ended March 31
Current consolidated fiscal year (From April 1, 2017 to March 31, 2018)

Millions of Yen
Shareholders' equity

Balance at March 31, 2017

Accumulated other comprehensive income

Commonstock

CapitalSurplusRetainedearnings

Treasurystock
at cost¥8,150¥2,111¥50,328(¥3,305)

Total
Valuation
Foreign
Remeasurements
accumulated
Total share difference
currencyof defined benefit
otherholders'
on availabletranslationplanscomprehensive
equityfor-saleadjustment
incomesecurities¥57,285¥6,338(¥201)(¥285)¥5,851

Total net
assets¥63,136

Amount of changes during consolidated
accounting year
Dividends from retained earnings(1,452)(1,452)(1,452)

Profit attributable to owners of parent

6,252

6,252

6,252

(10)

(10)

(10)

2,115

―

―

―

―

Purchase of treasury stock
Retirement of treasury stock(2,115)

Transfer to capital surplus fromretained earnings

299

(299)

Net changes of items other thanshareholders' equity
Total amount of changes duringconsolidated accounting year
Balance at March 31, 2018―
¥8,150

843

(383)

(37)

422

422

4,790

843

(383)

(37)

422

5,212

¥2,111 ¥55,129 (¥3,315) ¥62,075¥7,181(¥585)(¥323)

―

4,800

(10)

Current consolidated fiscal year (From April 1, 2017 to March 31, 2018)

Thousands of U.S.dollers
Shareholders' equity

Balance at March 31, 2017

¥6,273 ¥68,348

Retainedearnings

Accumulated other comprehensive income

Treasurystock
at cost

Total
Valuation
Foreign
Remeasurements
accumulated
Total share difference
currencyof defined benefit
otherholders'
on availabletranslationplanscomprehensive
equityfor-saleadjustment
incomesecurities

Commonstock

CapitalSurplus$72,646$18,818 $448,603 ($29,461) $510,607$56,496($1,797)($2,546)

Total net
assets$52,153 $562,760

Amount of changes during consolidated
accounting year
Dividends from retained earnings(12,946)(12,946)(12,946)

Profit attributable to owners of parent

55,73555,73555,735(92)(92)

18,855―Purchase of treasury stock(92)

Retirement of treasury stock(18,855)

Transfer to capital surplus fromretained earnings

2,670(2,670)―Net changes of items other thanshareholders' equity
Total amount of changes duringconsolidated accounting year
Balance at March 31, 201815―
$72,646

7,516(3,417)

(332)

3,766

3,766

42,696

7,516(3,417)

(332)

3,766

46,462$18,818 $491,392 ($29,554) $553,303$64,013($5,214)($2,879)(16,185)

42,789(92)$55,919 $609,223

I C on s ol id a t e d S t a t e m e n t s o f C a s h F lo w s

Years ended March 31

Millions of yen

Thousands of U.S.dollers

2018

2017

2018

2017

Net income before taxes¥8,921¥9,406$79,524$83,844

Depreciation and amortization

2,999

2,839

26,73825,311

7

20

70

183

Operating activities:

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability

182

238

1,626

2,125

Increase (decrease) in long-term accounts payable-other

(48)

(19)

(435)

(171)

1

3

14

31

Increase (decrease) in provision for directors' retirement benefits
Increase (decrease) in provision for bonuses

40

41

363

366

(442)

(449)

(3,946)(4,006)

Interest expenses

25

41

223

368

Foreign exchange losses(gains)

65

27

581

245

Interest and dividend income

(183)

(7)

(1,633)(69)

Disposal of property, plant and equipment

54

122

482

1,088

Gains on sales of investment securities(39)(1,080)(350)(9,632)Losses (Gains) on sales of property, plant and equipment

Impairment loss

68

161

613

1,443

Decrease(increase) in trade notes and accounts receivable

(519)

(677)

(4,628)(6,036)

Decrease(increase) in inventories

(654)

(686)

(5,838)(6,123)

Increase(decrease) in trade notes and accounts payable

890

419

7,934

3,742

4

(14)

42

(125)

Decrease(increase) in other current assets

(250)

54

(2,229)485

Increase(decrease) in other current liabilities

729

24

6,503

216

Increase (decrease) in accrued consumption taxes

Other

3

0

33

1

11,857

10,457

105,691

93,213
4,006

Interest and dividends income received

442

449

3,946

Interest expenses paid

(25)

(41)

(227)

(372)

(2,965)(1,648)(26,432)(14,697)

9,309

9,216

82,97882,150

Payments into time deposits

(450)

(519)

(4,011)(4,626)

Proceeds from withdrawal of time deposits

657

184

5,861

1,647

Purchase of property, plant and equipment(26,378)

Income taxes paid
Net cash and cash equivalents provided by (used in) operating activities
Investing activities:(4,066)(2,959)(36,245)

Proceeds from sale of property, plant and equipment

203

26

1,812

238

Purchase of investment securities

(4)

(4)

(44)

(44)

Proceeds from sale of investment securities

67

1,286

599

11,464

Other

33

(12)

302

(113)

(3,559)(1,998)(31,725)(17,813)

Net cash and cash equivalents provided by (used in) investing activities
Financing activities:
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Purchase of treasury stock
Dividends paid
Other
Net cash and cash equivalents provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalent

(2)

(720)

(18)

(6,421)(1,147)(1,876)(10,223)(16,726)(10)(2,252)(92)(20,081)(1,452)(1,127)(12,946)(10,047)

79

(219)

709

(1,957)(2,532)(6,196)(22,572)(55,234)

(259)

83

(2,314)744

Net increase(decrease) cash and cash equivalents

2,958

1,104

26,367

9,847

Cash and cash equivalents at beginning of period

25,11624,011

223,873

214,026

Cash and cash equivalents at end of period¥28,074¥25,116$250,240$223,873

16

I N o t e s To C o n s ol id a t e d F in a n cia l S t a t e m e n t s

1. Basis of Presenting Financial Statements
The accompanying consolidated financial statements of the Company
and its consolidated subsidiaries have been prepared in accordancewith the provisions set forth in Financial Instruments and Exchange Act
of Japan and on the basis of accounting principles and practices
generally accepted in Japan, which are different in certain respects as toapplication and disclosure requirements of the International Financial
Reporting Standards. As permitted by the Securities and Exchange Law
of Japan, each amount of the accompanying consolidated financial
statements is rounded down to the nearest one million yen.
As a result, the totals shown in the accompanying consolidated
financial statements (both in yen and in dollars) do not necessarily
agree with the sums of the individual amounts.

2. Summary of Significant Accounting Policies(7) Accounting method for retirement benefits(a) Periodic allocation method for estimated benefit obligation
Upon calculating the retirement obligations, the method of attributing
expected benefit to periods until the end of fiscal year is projected unit
credit.
(b) Amortization of actuarial gains and loss and past service cost
Past service is recognized in profit or loss by straight-line method over acertain period within the expected average remaining working lives of
employees (12- 15 years) in the year in which it arises.
Actuarial gain or loss is recognized in profit or loss by straight-line
method over a certain period within the expected average remaining
working lives of employees (12 - 15 years) from the next year in which itarises.

(1) Scope of consideration(a) Number of consolidated subsidiaries: 22 companies.
(b) Nonconsolidated subsidiaries: 1
The above is unconsolidated and does not apply equity method as it isa small-scale and none of its total assets, net sales, net income or loss,
retained earnings or other items have a significant impact on
consolidated financial statements.

(c) Application of simple method at small enterprises, etc.
Some domestic consolidated subsidiaries apply a simple method inwhich an estimated amount required to be paid for voluntary
retirement benefits is deemed as the retirement benefit obligations in
the calculations of net defined benefit liability and retirement benefit
expenses.

(2) Year-ends of consolidated subsidiaries
22 companies except for 2 companies located in China aligned thefiscal year with parent company (January - December fiscal yearchanged April-March fiscal year) and others prepare provisional
settlement of accounts so that consolidated financial statements is
prepared using financial statements at the same reporting date since
preceding fiscal year.

(8) Range of cash and cash equivalents in the consolidated cash flow
statement
Cash and cash equivalents include cash on hand, time deposit which
can be withdrawn on demand and highly liquid investments with amaturity of three months or less, which are readily to be convertible to
known amounts of cash which are subject to insignificant risk ofchanges in value.

(3) Evaluation of Investment securities
Marketable securities:
They are carried at cost moving-average method and revaluated at fair(9) Calculation method of Per Share of Common Stock
Net income per share is computed by dividing net income available tocommon shareholders by the weighted-average number of commonshares outstanding for the year.
Cash dividends per share presented in the consolidated of income are
dividends attribute to the respective years including dividends to be
paid after the year-end.

value with changes in unrealized holding gain or losses.
Non-marketable securities:
They are carried at cost moving-average method.
(4) Evaluation of Inventories
Inventories held for the purpose of usual use:
Inventory is stated at the lower of cost determined by the gross averagemethod or net realizable value.
(5) Depreciation of Property, plant and equipment
Declining-balance method:
Buildings acquired on or after April 1, 1998, buildings and structuresacquired on or after April 1, 2016 and specific fixed assets (all fixed
assets in the office used for developing a production system andproducing prototypes) acquired by the Company and its domestic
consolidated subsidiary are depreciated by the straight-line method
over their estimated lives.
Fixed assets owned by foreign subsidiary companies are depreciated by
the straight-line method.

17(6) Depreciation of Intangible assets and deferred charges
Straight-line method.

3. Conversion to U.S. Dollars
Amounts in U.S dollars are shown solely for convenience and are
unaudited.The rate of ¥106.24 to U.S.＄1 on March 31, 2018,
approximate current rate has been used for the purpose ofpresentation of the accompanying consolidated financial statements in
U.S. dollars. These conversion should not be construed as
representations that the yen amounts actually represent, or have beenor could be converted into, U.S. dollars at that or any other rate.

I In v e s t o r In f o r m a t io n ( A s o f M a r c h 31, 2018)

Corporate data
Company Name:

Mitsuboshi Belting Ltd.

Established:

October 10, 1919

Common Stock:8,150 million yen

Fiscal Year-End:

March 31

Public Accounting Firm:

Ernst & Young ShinNihon LLC

Number of Employees:

711（Consolidated : 4,263）

Major shareholders(Top10)

Ownership breakdown
Number of shares held(Thousands)

Name

Japan Trustee Services Bank, Ltd.

Foreigncorporations
16.7%

6,806

TOYOTA MOTOR CORPORATION

2,355

The Bank of Tokyo-Mitsubishi UFJ, Ltd .

2,340

Client stock ownership

1,927

The Master Trust Bank of Japan, Ltd.

1,765

J.P. MORGAN BANK LUXEMBOURG S.A. 380578

1,534

MITSUI & CO., LTD.

1,500

STATE STREET BANK AND TRUST CLIENTOMNIBUS ACCOUNT OM02 505002

1,481

GOVERNMENT OF NORWAY

1,398

Mitsubishi UFJ Trust and Banking Corporation

1,372

Other
corporate
entities
19.9%

Individuals,
etc.
34.4%

Financial institutions /Brokerages
29.0%

Stock price and trading volume on the Tokyo Stock Exchange

4

5

6

7

8

9

10 11 12

1

2

3

4

5

6

7

8

9

10 11 12

1

2

3

4

5

6

7

8

9

10 11 121

2

Stock Price
(¥)
1,600

3

1,400
1,200
Trading volume(Thousand Shares)

1,000

5,500

800

5,000

600

4,500

400

4,000

200

3,500

0

3,000
2,500
2,000
1,500
1,000
500
0

4

2015

5

6

7

8

9

10 11 12

1

2016

2

3

4

5

6

7

8

9

10 11 12

1

2017

2

3

4

5

6

7

8

9

10 11 12

1

2

3

2018

18

Kobe Head Oﬃce:
4-1-21 Hamazoe-dori, Nagata-ku, Kobe 653-0024, Japan
Tel: +81-78-671-5071 / Fax: +81-78-685-5670
Tokyo Head Oﬃce:
2-3-4, Nihonbashi Chuo-ku, Tokyo 103-0027, Japan
Tel: +81-3-5202-2500 / Fax: +81-3-5202-2520
www.mitsuboshi.co.jp

Q12600201808UR01834A59