Consolidated Financial Results for the 3rd Quarter of FYE 2018

SUBARU CORPORATION

https://www.subaru.co.jp/en/ir/

Toshiaki Okada
Corporate Executive Vice President & CFO
February 8, 20180

0Summary
Consolidated Financial Results for the 3rd Quarter of FYE 2018
 Consolidated net sales and global unit sales posted record highs for the April-December period.*1
 Operating income decreased year on year, as factors such as unit sales growth and foreign exchange gains were offset by
an increase in R&D expenses, a rise in SG&A that mainly consisted of sales expenses associated with higher interest rates
in the U.S., and other factors.
 Net income attributable to owners of parent decreased year on year, reflecting an extraordinary loss of 81.3 billion yen toaccount for airbag-related losses.
Net sales
Actual results(YoY)¥2,564.6bil.
(+136.7bil.)

Operatingincome¥306.3bil.
(-0.5bil.)

Ordinary
income¥303.1bil.
(+5.9bil.)

Net income attributableto owners of parent¥152.8bil.
(-54.7bil.)

Consolidated
automobile sales

801.9k units(+16.1k units)*1: Since FYE 2004 - the year SUBARU started quarterly consolidated financial reporting

Forecasts for FYE 2018
 Forecasts for FYE2018 are revised from those previously announced on November 6, 2017, reflecting a change in currency
rate assumptions, an expected increase in SG&A due to quality-related expenses, and other factors.
 Consolidated net sales and global unit sales will mark record highs for the 6th consecutive year.*2
Net sales
Forecasts(YoY)(vs previous plan)¥3,410.0bil.
(+84.0bil.)(+30.0bil.)

Operatingincome¥380.0bil.
(-30.8bil.)(±0.0bil.)

Ordinary
income¥375.0bil.
(-19.3bil.)(-7.0bil.)

Net income attributableto owners of parent¥207.0bil.
(-75.4bil.)(±0.0bil.)

Consolidated
automobile sales

1,067.1k units(+2.5k units)(-0.9k units)*2：Since FYE 1986 – the year SUBARU started full-year consolidated financial reporting

https://www.subaru.co.jp/en/ir/

1

First let's take a look at the highlights of our consolidated financial results for the 3rd quarter of the
fiscal year ending March 2018.

Operating income for the first nine-month period was down 0.5 billion yen, hovering around what it
was last year.

Net income attributable to owners of parent declined 54.7 billion yen year on year due to an
extraordinary loss of 81.3 billion yen posted as an allowance for airbag-related losses.

We made no revisions to the full-year consolidated forecast figures for operating income and net
income attributable to owners of parent that were announced on November 6, 2017.

1

rd Quarter of FYE 2018
Consolidated Financial Results for the 3rd

https://www.subaru.co.jp/en/ir/

22

3rd Quarter :Consolidated Unit Sales（Thousand Units）

Actual Results
3rd Quarter FYE 2017

Actual Results
3rd Quarter FYE 2018

Variance

Passenger car

83.1

97.7

+14.6

Minicar

22.4

21.1

-1.2

105.5

118.8

+13.3

US

501.3

509.1

+7.8

Canada

40.5

44.5

+4.0

Russia

4.1

5.7

+1.6

Europe

29.8

28.5

-1.3

Australia

37.9

42.0

+4.1

China

32.0

21.5

-10.5

Others

34.7

31.8

-3.0

Overseas total

680.3

683.1

+2.8

Total

785.8

801.9

+16.1

Domestic total

https://www.subaru.co.jp/en/ir/<China> FYE2017 :Figures are consolidated on the calendar year basis from Jan. to Sep.
FYE2018 :Figures are consolidated on the fiscal year basis from Apr. to Dec.

3

Here are the financial results for the first nine months of the fiscal year ending March 2018.
Consolidated automobile sales were up 16.1 thousand units year on year, totaling 801.9 thousand
units. This was the highest sales figure ever recorded in a nine-month period.

Overall domestic sales were up 13.3 thousand units year on year to hit 118.8 thousand units.
Passenger vehicle sales rose 14.6 thousand units year on year to reach 97.7 thousand units. This
increase came thanks to strong sales of the Impreza and the SUBARU XV despite the drop inminicar sales, which slipped 1.2 thousand units year on year to total 21.1 thousand units.

Sales in overseas markets rose 2.8 thousand units year on year to reach 683.1 thousand units as aresult of robust sales of the Crosstrek and the Impreza primarily in North America, which is our key
market.

3

3rd Quarter:

Consolidated Income Statements（100 Million Yen）

Actual Results
3rd Quarter FYE 2017

Actual Results
3rd Quarter FYE 2018

Variance

Net sales

24,27925,646+1,367

Domestic

4,449

4,845

+396

Overseas

19,83020,801+971

Operating income

3,068

3,063

-5

Total non-operating
income & expenses

-96

-32

+64

Ordinary income

2,972

3,031

+59

Total extraordinary
income & loss
Income before taxes
and minority interests

16

-855

-871

2,988

2,176

-812

Net income attributableto owners of parent

2,075

1,528

-547

SUBARU exchange rate

¥106/US$¥112/US$+¥5/US$https://www.subaru.co.jp/en/ir/

4

Moving on to consolidated earnings performance,
we see that net sales rose 136.7 billion yen year on year to total 2,564.6 billion yen. The main factors behind thisincrease included a foreign exchange gain of 87.6 billion yen, a gain of 44.6 billion yen due to better sales mix
variances, and a gain of 4.5 billion yen posted at the Aerospace Company, etc.
Operating income totaled 306.3 billion yen. This figure represents a 0.5-billion-yen year-on-year drop due primarily torising interest rates in the U.S. that kept selling and other expenses as well as R&D expenses up despite favorable
currency rates and the better sales mix. Ordinary income rose 5.9 billion yen to hit 303.1 billion yen.

Net income attributable to owners of parent declined 54.7 billion yen year on year to hit 152.8 billion yen due to an
extraordinary loss of 81.3 billion yen posted as an allowance for airbag-related losses.

4

3rd Quarter :Analysis of Variance in Operating Income (Consolidated)
Gain oncurrency
exchange+345

Sales volume& mixtureand others（100 Million Yen）

Fixed cost : -127 (SUBARU -34, SIA -93)
SG&A : -388 (SUBARU-49, SOA -346, others)
Warranty claims : +226

SUBARU: -66(material cost -147)
SIA : +8(material cost -29)

+82

SG&A
expensesand others

-289

R&D
expenses-85

Cost
reduction-58

Domestic : +135 (volume increase, mixture improvement)
Overseas : -198 (volume decrease, mixture improvement)
Others : +145
US$ : +444
EURO : +23
CA$ : +26
CNY : ±0
Currency exchange adjustment: -4
Unrealized gain : -144

Actual Results
Operating Income
3rd Quarter
FYE 2017
https://www.subaru.co.jp/en/ir/-5

Actual Results
Operating Income
3rd Quarter
FYE 2018
5

Now let's look at the reasons behind the change in operating income for the first nine-month period.
The primary factor that brought operating income up wasa foreign exchange gain of 34.5 billion yen.
This includes a gain of 44.4 billion yen due to an approximate 5-yen depreciation against the U.S. dollar, a gain of 2.3 billion yen due
to an approximate 10-yen depreciation against the euro, and a gain of 2.6 billion yen due to an approximate 5-yen depreciation against
the Canadian dollar. On top of that we lost 0.4 billion yen due to foreign exchange adjustments on transactions between SUBARU and
its overseas subsidiaries and 14.4 billion yen from unrealized inventory.
Another contributing factor that brought operating income up was a gain of 8.2 billion yen due to better sales mix variances. This canbe broken down into the following three areas:a gain of 13.5 billion yen in domestic new car sales,a loss of 19.8 billion yen in overseas new car sales,
and a gain of 14.5 billion yen due to inventory adjustments and other factors.
The main factor bringing operating income down was a loss of 28.9 billion yen due to increases in SG&A and other expenses. Thiscan be broken down into the following three areas:
First, we saw a loss of 12.7 billion yen due to an increase in fixed manufacturing costs. SUBARU lost 3.2 billion yen due to higher
costs for supplier dies and 0.2 billion yen due to higher fixed processing costs, for a total loss of 3.4 billion yen.
SIA lost 9.3 billion yen in total, including a loss of 4.7 billion yen due to higher costs for supplier dies and a loss of 4.6 billion yen
due to an increase in fixed processing costs.
Secondly we experienced a loss of 38.8 billion yen due to an increase in SG&A expenses.
SUBARU lost 4.9 billion yen overall as domestic dealers lost 2.0 billion yen, SOA 34.6 billion yen, and our Canadian subsidiary 0.2
billion yen, despite a gain of 2.9 billion yen from other operations.
SOA posted a loss of 3.8 billion yen from mounting advertising expenses, etc.
It also experienced a loss of 30.8 billion yen associated with sales incentives since the per-unit incentive amount was upped 550
dollars year on year, taking it from 1,350 dollars to 1,900 dollars, coupled with increasing sales volumes.
Thirdly there was a decrease in costs associated with warranty claims that led to a gain of 22.6 billion yen.
Another factor bringing operating income down was an increase in R&D expenses, which resulted in a loss of 8.5 billion yen.
The last factor behind the drop in operating income was a loss of 5.8 billion yen associated with cost cuts. SUBARU generated a gainof 8.1 billion yen through cost reductions but lost 14.7 billion yen due to higher material costs, adverse market conditions, etc., which
all added up to a loss of 6.6 billion yen.
SIA yielded a gain of 3.7 billion yen through cost reductions but lost 2.9 billion yen due to higher material prices, etc., resulting in again of 0.8 billion yen.
These factors combined brought consolidated operating income for the first nine-month period of the fiscal year ending March 2018
down 0.5 billion yen year on year to total 306.3 billion yen.

5Consolidated Balance Sheets（100 Million Yen）

As of March2017

As of December
2017

Variance

Total assets

27,62327,932+309

Current assets

18,453

18,344-108

Noncurrent assets

9,171

9,588

+417

Total liabilities

12,974

12,724

-250

1,483

919

-564

14,64915,207+559

Retained earnings

11,733

12,161+429

Shareholders’ equity

14,587

15,131+545

Ratio of shareholders’equity to total assets

52.8％

54.2%

-

0.10

0.06

-

Interest bearing debts

Net assets

D/E ratio
https://www.subaru.co.jp/en/ir/

6

The balance sheet shows total assets were up 30.9 billion yen from what they were at the end of
March 2017 to total 2,793.2 billion yen.
This uptick was due mainly to a 18.6 billion yen increase in investment securities, a 15.0 billion yen
increase in property, plant and equipment, a 10.5 billion yen jump in merchandise and finishedgoods, and a 15.9 billion yen decrease in combined funds on hand comprised of cash and deposits.
Liabilities fell 25.0 billion yen from what they were at the end of March 2017 to total 1,272.4 billion
yen.
The main reasons behind this drop include a 66.9 billion yen decrease in trade accounts payable
comprised of notes and accounts payable-trade and electronically recorded obligations-operating, a40.1 billion yen decrease in long-term loans (including those payable within a year), and a 68.6
billion yen increase in an allowance for airbag-related losses.
Net assets rose 55.9 billion yen from what they were at the end of March 2017 to total 1,520.7
billion yen.
Main factors included a 42.9 billion yen increase in retained earnings.
The ratio of shareholders’ equity to total assets was 54.2%.

63rd Quarter :Consolidated Statement of Cash Flows（100 Million Yen）

Actual Results
3rd Quarter FYE 2017

Actual Results
3rd Quarter FYE 2018

Net cash provided by (used in)operating activities

2,164

2,546

+382

Net cash provided by (used in)investing activities-1,665-1,320

+345

499

1,226

+727

-1,884-1,650

+234

60

34

-27

-1,325-390+935

Increase (decrease) in cash and cash equivalents
resulting from change of scope of consolidation

-

-5

-5

Increase (decrease) in cash and cash equivalents
resulting from change in fiscal period of
consolidated subsidiaries

-

37

+37

6,970

6,928

-42

Free cash flows
Net cash provided by (used in)financing activities
Effect of exchange rate change
on cash and cash equivalents
Net increase (decrease)in cash and cash equivalents

Cash and cash equivalents
at end of period
https://www.subaru.co.jp/en/ir/

Variance

7

Moving on to the consolidated statement of cash flows, we see
a net cash inflow from operating activities totaling 254.6 billion yen.
The main factors here include income before taxes and minority interests totaling 217.6 billion yen
and an allowance of 68.6 billion yen for airbag-related losses.
The net cash outflow from investing activities totaled 132.0 billion yen.
Those investments primarily entailed expenditures totaling 98.4 billion yen for the purchase ofnoncurrent assets and a 36.5-billion-yen increase in time deposits.
As a result, free cash flows totaled 122.6 billion yen.
The net cash outflow from financing activities totaled 165.0 billion yen.
This included mainly dividend payments totaling 110.1 billion yen and an outflow of 40.1 billion
yen for the repayment of long-term loans payable.
Cash and cash equivalents totaled 692.8 billion yen.

7

3rd Quarter :Operating Results of Subsidiaries in U.S.
（Million US$）

Actual Results
3rd Quarter FYE 2017

Actual Results
3rd Quarter FYE 201813,454

13,901+447

Operating income

609

336

-273

Net income

376

218

-158

481.6

501.2

+19.5

Actual Results
3rd Quarter FYE 2017

Actual Results
3rd Quarter FYE 2018

5,293

5,706

+413

Operating income

132

116

-16

Net income

80

65

-15

232.2

260.4

+28.2

SOA
Net sales

Retail sales(Thousand units)

SIA
Net sales

Production(Thousand units)
https://www.subaru.co.jp/en/ir/

Variance

Variance

8

Now let's look at the performance of our U.S. subsidiaries.
SOA's retail sales climbed 19.5 thousand units year on year to reach a total of 501.2 thousand units as sales of the
Impreza and the Crosstrek remained upbeat.
Net sales were up 447 million dollars year on year to total 13,901 million dollars while operating income fell 273
million dollars year on year to hit 336 million dollars. This drop comes from a loss of 324 million dollars due to higher
SG&A expenses despite a gain of 51 million dollars from the favorable sales volumes and mix variances.

SIA saw net sales rise 413 million dollars year on year to hit 5,706 million dollars. Operating income, on the other hand,
dropped 16 million dollars year on year to total 116 million dollars. The factors behind the decrease include a loss of 87
million dollars due to an increase in fixed costs despite a gain of 63 million dollars due to sales price and volume
variances and a gain of 8 million dollars brought about by cost reduction efforts.

8

3rd Quarter :Capex / Depreciation / R&D / Interest bearing debt

（100 Million Yen）

Actual Results
3rd Quarter FYE
2017

Actual Results
3rd Quarter FYE
2018

1,076

780

-295

Depreciation

541

653

+112

R&D

805

889

+85

1,455

919

-536

Capex

Interest
bearing debt

Variancehttps://www.subaru.co.jp/en/ir/

9Capital expenditures for the first nine-month period totaled 78.0 billion yen, amounting to a yearon-year decrease of 29.5 billion yen,while depreciation costs rose 11.2 billion yen year on year to hit 65.3 billion yen.
R&D expenses increased 8.5 billion yen year on year to total 88.9 billion yen.

9Forecasts for FYE 2018https://www.subaru.co.jp/en/ir/

10

10Revised Plan FYE 2018 :Consolidated Unit Sales（Thousand Units）

Actual Results
FYE 2017 (a)Previous PlanFYE 2018 (b)Revised PlanFYE 2018 (c)Variance(c)-(a)Variance(c)-(b)

Passenger cars

126.4

135.0

134.5

+8.2

-0.4

Minicars

32.5

31.6

30.6

-1.9

-1.0

158.9

166.5

165.2

+6.2

-1.4

US

667.6

668.0

671.3

+3.7

+3.3

Canada

53.1

55.6

57.0

+3.9

+1.4

Russia

5.3

7.3

7.7

+2.3

+0.4

Europe

40.9

39.5

39.1

-1.8

-0.4

Australia

49.1

55.9

55.9

+6.8

-0.1

China

44.0

29.8

26.3

-17.7

-3.5

Others

45.6

45.2

44.7

-0.9

-0.6

905.6

901.4

901.9

-3.7

+0.5

1,064.5

1,067.9

1,067.1

+2.5

-0.9

Domestic total

Overseas total

Total
https://www.subaru.co.jp/en/ir/<China> FYE2017 :Figures are consolidated on the calendar year basis from Jan. to Dec.
FYE2018 :Figures are consolidated on the fiscal year basis from Apr. to Mar.

11

Now let's look at our full-year forecasts for the fiscal year ending March 2018.

Consolidated automobile sales are expected to total 1,067.1 thousand units.
While this figure represents a projected year-on-year increase of 2.5 thousand units,
it’s 0.9 thousand units below the previous forecast.

By market, domestic sales will increase 6.2 thousand units year on year to total 165.2 thousand
units, which is 1.4 thousand units less than the previous forecast figure.

Overseas sales are projected to fall 3.7 thousand units year on year to total 901.9 thousand units due
to a significant decrease in the sales volume in China despite growing sales volumes in North
America and Australia.
This figure is 0.5 thousand units higher than the previous forecast figure.

11

Revised Plan FYE 2018 :Consolidated Income Statements（100 Million Yen）

Actual Results
FYE 2017 (a)Previous PlanFYE 2018 (b)Revised PlanFYE 2018 (c)Variance(c)-(a)Variance(c)-(b)Net sales

33,26033,80034,100+840+300

Domestic

6,503

6,717

6,703

+200

-13

Overseas

26,75627,08327,397+640+313

Operating income

4,108

3,800

3,800

-308

±0

Ordinary income

3,943

3,820

3,750

-193

-70

Income before taxes
and minority interests

3,947

2,950

2,880

-1,067-70

Net income attributableto owners of parent

2,824

2,070

2,070

-754

±0

SUBARU exchange rate

¥108/US$¥111/US$¥112/US$+¥3/US$+¥1/US$https://www.subaru.co.jp/en/ir/

12

Let's look at our consolidated operating plan.
We have made partial revisions to our previous forecast in light of currency fluctuations, increases
in quality-related expenses and other expenses, as well as better sales mix variances, etc.
We revised our projected net sales figure by 30 billion yen to make it 3,410.0 billion yen. That’s ayear-on-year increase of 84.0 billion yen, which is expected to be brought about by a foreignexchange gain of 79.1 billion yen and a gain of 9.2 billion yen as a result of the favorable sales mix
variances despite a loss of 4.3 billion yen at the companies, etc.
We still expect operating income to fall 30.8 billion yen year on year and total out at 380.0 billion
yen, as previously forecasted.
Our forecast for ordinary income was revised downward by 7.0 billion yen to 375.0 billion yen,which is down 19.3 billion yen year on year.
No revision has been made to the projected figure for net income attributable to owners of parent,
which is expected to drop 75.4 billion yen year on year to reach 207.0 billion yen.

12

（FYE 2017 Actual Results vs. Revised Plan）FYE 2018 :Analysis of Variance in Operating Income (Consolidated)（100 Million Yen）

Fixed cost : -177 (SUBARU-73, SIA -104)
SG&A : -418 (SUBARU-84, SOA -370, others)
Warranty claims : +139
SUBARU: -87 (material cost -183)
SIA: -7 (material cost -54)

Gain oncurrency
exchange

Domestic : +113
(volume increase, mixture improvement)
Overseas : -287
(volume decrease, mixture improvement)
Others : +136

+398

SG&A
expensesand others

R&D
expenses

-118

-456

Cost
reduction-94

Sales volume& mixtureand others

US$ : +371
EURO : +34
CA$ : +30
CNY : +1
Currency exchange adjustment : -22
Unrealized gain : -16

Actual Results
Operating Income
FYE 2017

-308

-38

Revised Plan
Operating Income
FYE 2018

https://www.subaru.co.jp/en/ir/

13

Now let's look at the factors behind the projected year-on-year change in the operating income forecast.
The primary factor that will bring operating income up will be a foreign exchange gain of 39.8 billion yen.
This will include a gain of 37.1 billion yen due to an approximate 3-yen depreciation against the U.S. dollar, a gain of 3.4 billion yen due to an
approximate 11-yen depreciation against the euro, and a gain of 3.0 billion yen due to an approximate 4-yen depreciation against the Canadian dollar.
This will be accompanied by a gain of 0.1 billion yen resulting from currency translations between the yen and the Chinese yuan, a loss of 2.2 billion
yen due to foreign exchange adjustments for transactions between SUBARU and its overseas subsidiaries, as well as a loss of 1.6 billion yen fromunrealized inventory.
The main factor that will bring operating income down will be a loss of 45.6 billion yen due to increases in SG&A and other expenses. This can be
broken down into the following three areas.
First, we will see a loss of 17.7 billion yen due to an increase in fixed manufacturing costs. SUBARU will suffer a loss of 4.4 billion yen due to higher
costs for supplier dies and a loss of 2.9 billion yen due to higher fixed processing costs, for a total loss of 7.3 billion yen.
SIA is expected to see a loss of 10.4 billion yen, which will include a loss of 5.1 billion yen due to higher costs for supplier dies and a loss of 5.3
billion yen due to an increase in fixed processing costs.
The second factor will be a loss of 41.8 billion yen due to an increase in SG&A expenses.
This will include a loss of 8.4 billion yen at SUBARU, a loss of 2.3 billion yen at domestic dealers, a loss of 37.0 billion yen at SOA, a loss of 0.6
billion yen at our Canadian subsidiary, and a gain of 6.6 billion yen from other operations.
SOA will see a gain of 1.3 billion yen from lower advertising expenses, etc. It will also post a loss of 38.3 billion yen due to an expected 550-dollar
increase in the per-unit incentive amount (bringing last year’s incentive of 1,450 dollars up to 2,000 dollars).
The third factor will be a decrease in costs associated with warranty claims that will lead to a gain of 13.9 billion yen.
An increase in R&D expenses will result in a loss of 11.8 billion yen.
We will also see a loss of 9.4 billion yen associated with cost cuts. SUBARU will generate a gain of 9.6 billion yen through cost reductions but lose
18.3 billion yen due to higher material costs, negative market conditions, etc., which will all come to a total loss of 8.7 billion yen.
SIA will yield a gain of 4.7 billion yen through cost reductions but lose 5.4 billion yen due to higher materials prices, etc., resulting in a total loss of
0.7 billion yen.
Another contributing factor that will bring operating income down will be an unfavorable sales mix variance that will lead to a loss of 3.8 billion yen.
This can be broken down into the following three areas:a gain of 11.3 billion yen in domestic new car sales,a loss of 28.7 billion yen in overseas new car sales,
and a gain of 13.6 billion yen due to inventory adjustments and other factors.
All these factors combined will bring operating income for the fiscal year ending March 2018 down 30.8 billion yen from the previous year's total of
410.8 billion yen to 380.0 billion yen.

13

（Previous Plan vs. Revised Plan）FYE 2018 :Analysis of Variance in Operating Income (Consolidated)（100 Million Yen）

Gain oncurrency
exchange+81

Sales volume& mixtureand others

R&D
expenses

Cost
reduction

+40

+53

+31

Domestic : -12(volume decrease, mixture deterioration)
Overseas : -8
(volume increase, mixture deterioration)
Others : +72
US$ : +102
EURO : +9
CA$ : -2
CNY : ±0
Currency exchange adjustment : ±0
Unrealized gain : -27

Previous Plan
Operating Income
FYE 2018±0

Fixed cost : +4
(SUBARU-15, SIA +19)
SG&A : -13(SUBARU+52, SOA -91, others)
Warranty claims : -196

SG&A
expensesand others-205

SUBARU: +22(material cost +19)
SIA : +9(material cost +4)

Revised Plan
Operating Income
FYE 2018

https://www.subaru.co.jp/en/ir/

14

Let's move on to the factors behind the change in the projected operating income figure from the previous forecast.
The primary factor that will bring operating income up will be a foreign exchange gain of 8.1 billion yen.
This will include a gain of 10.2 billion yen due to an approximate 1-yen depreciation against the U.S. dollar, a gain of 0.9 billion yen
due to an approximate 2-yen depreciation against the euro, and a loss of 0.2 billion yen due to an approximate 1-yen appreciation
against the Canadian dollar.
This will be accompanied by a loss of 2.7 billion yen from unrealized inventory.
Another contributing factor bringing operating income up will be a favorable sales mix variance that will lead to a gain of 5.3 billion
yen. This can be broken down into the following three areas:a loss of 1.2 billion yen in domestic new car sales,a loss of 0.8 billion yen in overseas new car sales,
and a gain of 7.2 billion yen due to inventory adjustments and other factors.
A decrease in R&D expenses will result in a gain of 4.0 billion yen.
We will also see a gain of 3.1 billion yen associated with cost cuts. SUBARU will generate a gain of 2.2 billion yen, which will
include a gain of 0.3 billion yen through cost reductions and a gain of 1.9 billion yen in association with material costs, market
conditions, etc.
SIA will yield a gain of 0.9 billion yen, which will include a gain of 0.5 billion yen through cost reductions and a gain of 0.4 billion
yen due to materials prices, etc.
The main factor that will bring operating income down will be a loss of 20.5 billion yen due to increases in SG&A and otherexpenses. This can be broken down into the following three areas.
First, we will see a gain of 0.4 billion yen due to a decrease in fixed manufacturing costs. SUBARU will see a loss of 1.5 billion yen
due to mounting fixed processing costs.
SIA is expected to see a gain of 1.9 billion yen, which will include a gain of 1.2 billion yen due to lower costs for supplier dies and again of 0.7 billion yen due to a decrease in fixed processing costs.
The second factor will be a loss of 1.3 billion yen due to an increase in SG&A expenses.
This will include a gain of 5.2 billion yen at SUBARU, a gain of 0.4 billion yen at domestic dealers, a loss of 9.1 billion yen at SOA,
a gain of 0.6 billion yen at our Canadian subsidiary, and a gain of 1.6 billion yen from other operations.
SOA will see a gain of 0.5 billion yen from lower advertising expenses, etc. It will also post a loss of 9.6 billion yen due to an
expected 150-dollar increase in the per-unit incentive amount (bringing last year’s incentive of 1,850 dollars up to 2,000 dollars).
The third and last factor will be an increase in costs associated with warranty claims that will lead to a loss of 19.6 billion yen.
In light of all these factors, we decided not to revise the projected operating income figure for the fiscal year ending March 2018,
which stands at 380.0 billion yen.

14

Revised Plan FYE 2018 :Operating Plan of Subsidiaries in U.S.
（Million US$）SOA
Net sales

Actual Results
FYE 2017

Revised PlanFYE 2018

Variance

17,947

18,393+446

Operating income

671

359

-312

Net income

421

239

-182

625.0

652.8

+27.8

Retail sales(Thousand units)

SIA
Net sales

Actual Results
FYE 2017

Revised PlanFYE 2018

Variance

7,525

7,662

+137

Operating income

236

171

-65

Net income

148

107

-41

335.2

349.0

+13.8

Production(Thousand units)
https://www.subaru.co.jp/en/ir/

15

Let's look at the performance forecast for our U.S. subsidiaries.
Retail sales at SOA for this fiscal year are expected to jump 27.8 thousand units year on year for a total of
652.8 thousand units thanks to healthy sales of the Impreza and Crosstrek.
Net sales will increase 446 million dollars year on year to reach 18,393 million dollars.
Operating income will fall 312 million dollars year on year to total 359 million dollars. This drop will comefrom a loss of 345 million dollars due to higher SG&A expenses despite a gain of 33 million dollars resulting
from favorable volume and mix variances.
SIA’s net sales are expected to increase 137 million dollars year on year to reach 7,662 million dollars.
Operating income will drop 65 million dollars year on year to reach 171 million dollars. Factors behind thedecrease will include a loss of 6 million dollars related to cost reductions and market conditions and a loss of
96 million dollars due to an increase in fixed costs despite a gain of 37 million dollars resulting from sales
price and volume variances.

15

Revised Plan FYE 2018 :Capex / Depreciation / R&D / Interest bearing debt

（100 Million Yen）

Actual Results Previous PlanFYE 2017
FYE 2018
(a)
(b)

Capex

Revised PlanFYE 2018(c)

Variance(c) - (a)Variance(c) - (b)

1,585

1,500

1,500

-85

±0

770

920

920

+150

±0

R&D

1,142

1,300

1,260

+118

-40

Interest
bearing debt

1,483

1,000

950

-533

-50

Depreciation

https://www.subaru.co.jp/en/ir/

16

Now let’s look at our full-year forecast for capital expenditures, depreciation costs, R&D expenses, andinterest bearing debt.
Capital expenditures and depreciation costs are expected to total 150.0 billion yen and 92.0 billion yen
respectively, just as projected in the previous forecast.
R&D expenses are projected to total 126.0 billion yen, which is a 4.0-billion-yen drop from the previous
forecast.

Finally, I would like to give you some additional information about the recall related to nonconforming final
vehicle inspections.
When we announced our financial results for the second quarter, we estimated that the number of vehicles
affected would be about 250 thousand units and that related expenses would total about 10 billion yen.
However, the total recall count came to about 420 thousand units, including an additional 27 thousand
vehicles for which we issued a recall today, and the total cost is about 25 billion yen. These figures have beenfactored into the third quarter financial results.
This concludes the briefing on our financial results for the third quarter of the fiscal year ending March 2018.
Thank you very much.

16

Appendix(1)・Non-operating income & expenses and extraordinary income & loss
・Segment information by business & geographic
・Overseas net sales
・Non-consolidated unit sales

https://www.subaru.co.jp/en/ir/

17

17

3rd Quarter : Non-operating Income & Expenses andExtraordinary Income & Loss (Consolidated)（100 Million Yen）

Actual Results
3rd Quarter
FYE 2017

Actual Results
3rd Quarter
FYE 2018

Variance

Financial revenue and expenditure

20

42

+23

FOREX effects

-91

-26

+65

Loss on taxation of overseas subsidiary
OthersTotal non-operating income &expenses
Gain on sales of noncurrent assets

-

-37

-37

-24

-11

+13

-96

-32

+64

3

3

-0

Gain on sales of investment securities

101

7

-94

Loss on sales and retirement of
noncurrent assets

-32

-42

-10

-

-813

-813

Loss related to airbags
Loss on business liquidation

-50

-

+50

Others

-6

-11

-5

16

-855

-871

Total extraordinary income & loss
https://www.subaru.co.jp/en/ir/

18

18

3rd Quarter : Net Sales and Operating Income

by Business Segment (Consolidated)（100 Million Yen）

Net Sales

Operating Income

ActualResults
3rd Quarter
FYE 2017

ActualResults
3rd Quarter
FYE 2018

Variance

ActualResults
3rd Quarter
FYE 2017

ActualResults
3rd Quarter
FYE 2018

Variance

Automobile

23,05324,339+1,286

2,987

2,903

-84

Aerospace

964

1,067

+103

50

116

+66

Others*

262

240

-22

24

40

+15

7

5

-2

3,068

3,063

-5

Elimination& Corporate
Total

24,27925,646+1,367*The "Industrial Products" segment has been included in "Others" since the 3rd quarter of FYE 2017 reporting.
https://www.subaru.co.jp/en/ir/

19

19

3rd Quarter : Net Sales and Operating Income

by Geographic Area (Consolidated)（100 Million Yen）

Net Sales

Operating Income

ActualResults
3rd Quarter
FYE 2017

ActualResults
3rd Quarter
FYE 2018

Variance

ActualResults
3rd Quarter
FYE 2017

ActualResults
3rd Quarter
FYE 2018

Variance

Japan

6,885

7,422

+537

1,940

2,419

+479

North America

15,48016,720+1,240

883

582

-302

Others

1,914

1,504

-410

66

36

-30

178

26

-152

3,068

3,063

-5

Elimination&
Corporate
Total
https://www.subaru.co.jp/en/ir/

24,27925,646+1,36720

20

3rd Quarter :Overseas Net Sales (Consolidated)（100 Million Yen）

Actual Results
3rd Quarter FYE 2017

Actual Results
3rd Quarter FYE 201816,18017,610+1,430

827

851

+24

Asia

1,581

1,074

-507

Others

1,242

1,267

+24

Total

19,83020,801+971

North America
Europehttps://www.subaru.co.jp/en/ir/

Variance

21

21

3rd Quarter :Non-consolidated Unit Sales（Thousand Units）

Actual Results
3rd Quarter FYE 2017

Actual Results
3rd Quarter FYE 2018

Variance

Domestic production

543.1

532.2

-10.9

Domestic sales

113.8

125.9

+12.1

Passenger cars

89.5

103.4

+13.9

Minicars

24.3

22.5

-1.9

441.5

419.6

-21.9

259.0

266.0

+7.0

814.3

811.4

-2.8

Number of exported
vehiclesComponents foroverseas production

Total* Domestic production figures include Toyota 86.
https://www.subaru.co.jp/en/ir/

2222

Appendix (2)rd quarter (3months) consolidated income statements
・3rd・4thth quarter (3months) consolidated income statements

https://www.subaru.co.jp/en/ir/

23

23

3rd Quarter (3 months) :Consolidated Unit Sales（Thousand Units）

Actual Results
3rd Quarter (3 months)
FYE 2017

Actual Results
3rd Quarter (3 months)
FYE 2018

Passenger car

30.7

30.4

-0.2

Minicar

6.8

6.1

-0.8

37.5

36.5

-1.0

US

174.4

175.8

+1.5

Canada

12.0

13.7

+1.7

Russia

0.3

2.0

+1.7

Europe

11.3

10.7

-0.6

Australia

15.5

14.3

-1.2

China

10.2

7.7

-2.5

Others

12.5

9.8

-2.7

Overseas total

236.3

234.1

-2.2

Total

273.8

270.6

-3.2

Domestic total

https://www.subaru.co.jp/en/ir/

Variance<China> FYE2017 :Figures are consolidated on the calendar year basis from Jul. to Sep.
FYE2018 :Figures are consolidated on the fiscal year basis from Oct. to Dec.

24

24

3rd Quarter (3 months) :Consolidated Income Statements（100 Million Yen）

Actual Results
3rd Quarter (3 months)
FYE 2017

Actual Results
3rd Quarter (3 months)
FYE 2018

Net sales

8,502

8,783

+281

Domestic

1,589

1,559

-30

Overseas

6,913

7,224

+311

Operating income

982

942

-41

Ordinary income

694

904

+210

Income before taxes
and minority interests

633

892

+259

Net income attributableto owners of parent

437

678

+242

SUBARU exchange rate

¥105/US$¥112/US$+¥8/US$https://www.subaru.co.jp/en/ir/

Variance

25

25

3rd Quarter (3 months) :Analysis of Variance in Operating Income (Consolidated)（100 Million Yen）

Fixed cost : -11 (SUBARU+7, SIA-18)
SG&A : -131 (SUBARU-5, SOA -108, others)
Warranty claims : +56
Domestic : -24 (volume decrease）
Overseas : -123 (volume decrease, mixture improvement)
Others : +87

Gain oncurrency
exchange+131

SUBARU: -25 (material cost -58)
SIA : +9 (material cost -5)

SG&A
expensesand others-86

Sales volume& mixtureand others

-60

Cost
reduction-16

R&D
expenses-10

US$ : +205
EURO : +15
CA$ : +17
CNY : ±0
Currency exchange adjustment : -98
Unrealized gain: -8

Actual Results
Operating Income
3Q (3 months)
FYE 2017
https://www.subaru.co.jp/en/ir/-41

Actual Results
Operating Income
3Q (3 months)
FYE 2018
26

26

4th Quarter (3 months) :Consolidated Unit Sales（Thousand Units）

Actual Results
4th Quarter (3 months)
FYE 2017

Plan
4th Quarter (3 months)
FYE 2018

Passenger car

43.3

36.9

-6.4

Minicar

10.2

9.5

-0.7

53.4

46.3

-7.1

US

166.3

162.2

-4.1

Canada

12.6

12.5

-0.1

Russia

1.3

2.0

+0.7

Europe

11.2

10.6

-0.5

Australia

11.2

13.8

+2.7

China

12.0

4.8

-7.2

Others

10.8

12.9

+2.0

Overseas total

225.3

218.8

-6.5

Total

278.7

265.2

-13.6

Domestic total

https://www.subaru.co.jp/en/ir/

Variance<China> FYE2017 :Figures are consolidated on the calendar year basis from Oct. to Dec.
FYE2018 :Figures are consolidated on the fiscal year basis from Jan. to Mar.

27

27

4th Quarter (3 months) :Consolidated Income Statements（100 Million Yen）

Actual Results
4th Quarter (3 months)
FYE 2017

Plan
4th Quarter (3 months)
FYE 2018

Net sales

8,981

8,454

-527

Domestic

2,054

1,858

-196

Overseas

6,927

6,595

-331

Operating income

1,041

737

-304

Ordinary income

971

719

-253

Income before taxes
and minority interests

959

704

-255

Net income attributableto owners of parent

748

542

-207

SUBARU exchange rate

¥114/US$¥112/US$-¥3/US$https://www.subaru.co.jp/en/ir/

Variance

28

28

4th Quarter (3 months) :Analysis of Variance in Operating Income (Consolidated)

Gain oncurrency
exchange（100 Million Yen）

Fixed cost : -50 (SUBARU-39, SIA -11)
SG&A : -30 (SUBARU-35, SOA -24, others)
Warranty claims : -87

Domestic : -22 (volume decrease, mixture improvement）
Overseas : -89 (volume decrease, mixture deterioration)
Others : -9

+53

SG&A
expensesand others-167

SUBARU: -21 (material cost -36)
SIA : -15 (material cost -25)

Sales volume& mixtureand others

-120

Cost
reduction-36

R&D
expenses-33

US$ : -73
EURO : +11
CA$ : +4
CNY: +1
Currency exchange adjustment: -18
Unrealized gain: +128

Actual Results
Operating Income
4Q (3 months)
FYE 2017
https://www.subaru.co.jp/en/ir/

-304

Plan
Operating Income
4Q (3 months)
FYE 201829

29

Appendix (3)・Net sales / Operating income
・Consolidated unit sales / OPM
・Complete cars production / Retail sales units
・FCF / Shareholders’ equity to total assets
・Interest-bearing debt / D/E ratio

https://www.subaru.co.jp/en/ir/

30

30

Net Sales / Operating Income
¥102
/$

¥102
/$

¥110
/$

¥118
/$

¥120
/$

¥123
/$

¥121
/$

¥118
/$

¥111
/$

¥104
/$

¥105
/$

¥114
/$

¥112
/$

¥111
/$

¥112
/$

Operating
Income（100M yen）

Net Sales（100M yen）

Net sales
9,000

Operating income
8,172

8,000

7,168

7,505

7,000
6,000

4,000

8,362 8,172 8,136
1,509 1,506

1,342

5,934

7,694

8,083

8,548

8,502

8,315

8,783

1,600
1,400
1,200

1,298

1,245

1,193

1,129

1,069

5,000

7,653

1,800

8,981

1,015

1,070

982

1,000

1,041
928

942

787

800
600

3,000

400

2,000

200

1,000
0

0
1Q

2Q

3Q

FYE2015
https://www.subaru.co.jp/en/ir/

4Q

1Q

2Q

3Q

FYE2016

4Q

1Q

2Q

3Q

FYE2017

4Q

1Q

2Q

3Q

FYE
2018
31

31

Consolidated Unit Sales / Operating Income Margin
Unit sales（1,000 units）

OPM

Consolidated unit sales

300

OPM
267

238

250

200

232

247

247
225

194

17.5%

18.1%

240

246

274

279

271

271

260

245

20%

18.4%

16.6%

18%
16.0%

15%

14.9%

150

13.8%

13.3%

14.0%

13.2% 13.2%

100

11.6% 11.6%

13%
11.2%

10.7% 10%

50

8%

0

5%
1Q

2Q

3Q

FYE2015

https://www.subaru.co.jp/en/ir/

4Q

1Q

2Q

3Q

FYE2016

4Q

1Q

2Q

3Q

FYE2017

4Q

1Q

2Q

3Q

FYE2018

32

32

Complete Cars Production / Retail Sales Units(1,000 units)
Production

300

250

228
211

211 214225

Retail Sales

237241234237

253

244
229

233 231249
242 248237

258
245 242264

273 269

280

276

276
253

261

269
268

249

200

150

100

50

0
Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec
2014

2015

2016

2017
※ Production figures include Toyota 86

https://www.subaru.co.jp/en/ir/

33

33

Free Cash Flows /Ratio of Shareholders’ Equity to Total Assets
Ratio of shareholders’Equity to total assets

FCF（100M yen）
FCF
Shareholders' equity ratio

3,800
3,300

54.2%
53.5%
53.1%

50.2%
48.8%

2,800
2,300

3,586
52.5% 51.8% 52.8% 53.0% 52.8% 52.8%

50%

2,535

46.2% 46.5%
44.0%
42.9%

55%

1,860

45%

1,800
1,388
1,300
711

800
300

769

608

912

894

1,027 1,064

1,226

499

35%

-26

-163

40%

-200

30%
1Q

2Q

3Q

FYE2015

https://www.subaru.co.jp/en/ir/

4Q

1Q

2Q

3Q

FYE2016

4Q

1Q

2Q

3Q

FYE2017

4Q

1Q

2Q

3Q

FYE2018

34

34

Interest Bearing Debt / D/E Ratio
Interest
bearing debt
（100M yen）

D/E ratio

3,000

1.0

Interest bearing debt
2,574

2,500

0.9

D/E ratio
2,322 2,268

0.8
2,112

2,000

2,011 2,014

0.7

1,865
1,700 1,654

1,614

1,500

0.6
1,455 1,483

0.32

1,107
0.27

1,000

0.5

0.24

0.21

0.18 0.17

0.15

500

0.13

0.12

0.12 0.10

0.10

976

0.4
919

0.3
0.2

0.07

0.07

0.06

1Q

2Q

3Q

0.1
0.0

0
1Q

2Q

3Q

FYE2015

https://www.subaru.co.jp/en/ir/

4Q

1Q

2Q

3Q

FYE2016

4Q

1Q

2Q

3Q

FYE2017

4Q

FYE
2018

35

35

Forward-looking statements including projections and future strategies mentioned in this presentation are based on currently
available information and assumptions and are subject to risks and uncertainties. Actual results may vary materially as a result ofvarious factors including, without limitation, economic conditions, market demand and fluctuations in foreign exchange rates.
Investors are asked not to rely solely on the information in this presentation when they make their final investment decisions.
https://www.subaru.co.jp/en/ir/
https://www.subaru.co.jp/ir/36

36

https://www.subaru.co.jp/en/ir/

37

37