Consolidated Financial Results for the 1st Quarter of FYE 2019

SUBARU CORPORATION
Toshiaki Okada
Corporate Executive Vice President & CFO
August 6th, 2018https://www.subaru.co.jp/en/ir/1

Summary
Consolidated Financial Results for the 1st Quarter (3 months) of FYE 2019
 Net sales declined due to decreased unit sales and other factors.
 While retail sales in North America, Subaru’s largest market, kept strong momentum, operating
income declined due to factors such as decreased deliveries of the Forester before the launch of its
fully-redesigned version and increased SG&A expenses.
Net sales
Actual results(YoY)¥709.2bil.
(-¥104.8bil.)

Operatingincome¥57.6bil.
(-¥61.8bil.)

Ordinaryincome¥60.1bil.
(-¥59.2bil.)

Net income attributableto owners of parent

Consolidated
automobile sales¥45.5bil.
(-¥36.9bil.)

237.9kunits(-33.4k units)

Forecasts for FYE 2019 The full-year forecasts remain unchanged from the previous forecasts announced on May 11, 2018.
Net salesPlan(YoY)¥3,250.0bil.
(+¥17.3bil.)

Operatingincome¥300.0bil.
(-¥79.4bil.)

Ordinary
income¥305.0bil.
(-¥74.9bil.)

Net income attributableto owners of parent

Consolidated
automobile sales¥220.0bil.
(-¥0.4bil.)

1,100.4k units(+33.5k units)* Changed accounting policies from FYE 2019 (deducting sales incentives from net sales).
The comparative year has been also recalculated under the same conditions.
https://www.subaru.co.jp/en/ir/2Consolidated Financial Results
for the 1st Quarter (3 months) of FYE 2019https://www.subaru.co.jp/en/ir/3

1Q (3 months) :Consolidated Unit Sales(Thousand Units)

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance

Passenger car

33.3

22.9-10.4

Minicar

7.2

6.0-1.2

40.5

28.9-11.6

US

174.0

149.8-24.1

Canada15.5

15.7+0.3

Russia1.8

2.5+0.7

Europe8.3

15.3+7.0

Australia

14.1

10.9-3.2

China

8.0

3.4-4.6

Others

9.2

11.4+2.2

Overseas total

230.9

209.0-21.9

Total

271.3

237.9-33.4

Domestic total

https://www.subaru.co.jp/en/ir/4

1Q (3 months) :Consolidated Income Statements(100 Million Yen)

Actual Results
1Q (3 months)
FYE 2018

Actual Results1Q (3 months)
FYE 2019

Variance(8,548)

8,140

7,092

-1,048Domestic(1,605)

1,603

1,302-301

Overseas(6,943)

6,537

5,790-746

Operating income

1,193576-618

Total non-operating
income & expenses-1+25+26

Ordinary income

1,193

601-592

Net sales

Total extraordinary
income & loss
Income before taxes
and minority interests
Net income attributableto owners of parent-11+15+25

1,182

616-567823

455-369

SUBARU exchange rate

¥112/US$¥108/US$-¥4/US$* Changed accounting policies from FYE 2019 (deducting sales incentives from net sales). The comparative year has been also recalculated under the same conditions.
* Figure in ( ) ：Net sales before deducting sales incentives

https://www.subaru.co.jp/en/ir/5

1Q (3 months) :Analysis of Variance in Operating Income (Consolidated)
Domestic : -111 (volume decrease, mixture deterioration)
Overseas: -336 (volume decrease, mixture deterioration)
Sales Incentive：-69
Others : +78(100 Million Yen)

Fixed Cost: -19 (SUBARU+1, SIA -20)
SG&A : -23 (SUBARU-25, SOA -17, others)
Warranty claims : -74

SUBARU: -8 (material cost -26)
SIA : -3 (material cost -9)

US$ : -90
EURO : +11
CA$ : +1
CNY : -1
Currency exchange adjustment : +47
Unrealized gain: -2

Sales volume& mixture
and others

-438

SG&A
expensesand others-116
Actual Results
Operating Income
1Q (3 months)
FYE 2018
https://www.subaru.co.jp/en/ir/

Loss oncurrency
exchange-34-618

R&D
expenses

CostReduction-19-11
Actual Results
Operating Income
1Q (3 months)
FYE 2019
6

Consolidated Balance Sheets(100 Million Yen)

As of March2018

As of June2018

Variance28,665

28,606-58

Current assets

17,704

17,296-409

Noncurrent assets

10,96011,311+350

13,055

12,960

-95

862

567

-295

15,61015,646+36

Retained earnings

12,835

12,738-98

Shareholders’ equity

15,52815,573+44

Ratio of shareholders’equity to total assets

54.2%

54.4%

-

0.06

0.04

-

Total assets

Total liabilities
Interest bearing debts
Net assets

D/E ratio＊Due to partial amendments to Accounting Standard for Tax Effect Accounting, calculation method has been changed from FYE 2019.
The comparative year has been also recalculated under the same conditions.

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

71Q (3 months) :Consolidated Statement of Cash Flows(100 Million Yen)

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance

Net cash provided by (used in)operating activities

1,411

260

-1,150Net cash provided by (used in)investing activities-384-300+83

1,027-40-1,067-884

-837

+47

6

166+160

149-712-861-5-+537--37

7,467

6,944-523

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
Increase (decrease) in cash and cash
equivalents resulting from change ofscope of consolidation
Increase (decrease) in cash and cash equivalents
resulting from change in fiscal periodof consolidated subsidiaries

Cash and cash equivalents
at end of period
https://www.subaru.co.jp/en/ir/81Q (3 months) :Operating Results of Subsidiaries in U.S.
（Million US$）SOA

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance4,726

4,205-521

Operating income

139-7-146

Net income

88

3-85

160.0

172.6

12.6

Net sales

Retail sales(Thousand units)

SIA

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance

2,163

1,980-183

Operating income

777-70Net income

50

7-43

99.3

86.7-12.6

Net sales

Production(Thousand units)
https://www.subaru.co.jp/en/ir/9Forecasts for FYE 2019https://www.subaru.co.jp/en/ir/

10

FYE2019:

Consolidated Unit Sales Plan(Thousand Units)

Actual results
FYE 2018

Plan
FYE 2019

Variance

Passenger Cars132.6

122.7-9.9

Minicars

30.9

28.1-2.8

163.4

150.8-12.7

US670.9

707.0

+36.0

Canada56.8

61.4+4.6

Russia7.7

11.5+3.8

Europe40.2

32.5-7.7

Australia

55.7

55.5

-0.2

China

26.9

29.9+3.0

Others45.2

51.9+6.6

903.5

949.7+46.2

1,066.9

1,100.4+33.5

Domestic Total

Overseas Total

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

11FYE2019:

Consolidated Income Plan
(100 Million Yen)

Actual results
FYE 2018Plan
FYE 2019

Variance

Net Sales(34,052)

32,32732,500+173

Domestic(6,686)

6,680

6,086-594

Overseas(27,367)

25,647

26,415+767

Operating Income

3,794

3,000-794

Ordinary Income

3,799

3,050-749

Income before Taxes
and Minority Interests

2,973

2,987+14Net Income Attributableto Owners of Parent

2,204

2,200-4

SUBARU Exchange Rate

¥111/US$¥105/US$-¥6/US$* Changed accounting policies from FYE 2019 (deducting sales incentives from net sales). The comparative year has been also recalculated under the same conditions.
* Figure in ( ) ：Net sales before deducting sales incentives

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

12FYE2019 :Analysis of Variance in Operating Income (Consolidated)
US$ : -653
EURO : +9
CA$ : -10
CNY : ±0
Currency exchange adjustment : +56
Unrealized gain : +14

SG&A
expensesand others+49

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

SUBARU : -54 (material cost -138)
SIA : -93 (material cost -147)

R&D
expenses

Domestic : -126
(volume decrease, mixture deterioration)
Overseas : +326
(volume increase, mixture deterioration)
Sales Incentive : -243
Others : -80+11

Loss oncurrencyexchangeCostreduction-584-147

Fixed cost : -136 (SUBARU -85, SIA -51)
SG&A : -157 (SUBARU -34, SOA -97, others)
Warranty claims : +342

Actual Results
Operating Income
FYE 2018(100 Million Yen)

-794

Sales volume& mixtureand others

-123
Plan
Operating Income
FYE 2019
13

FYE2019:

Operating Plan of Subsidiaries in U.S.
（Million US$）SOA

Actual results
FYE 2018

Plan
FYE 2019

Variance

18,402

19,678+1,276

Operating income

356273-83

Net income

235

227-8

651.9

700.0

+48.1

Net sales

Retail sales(Thousand units)

SIA

Actual results
FYE 2018

Plan
FYE 2019

Variance

7,673

9,157+1,484

Operating income

176

128-48Net income

134103-31

348.6

384.0

+35.4

Net sales

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

14Capex / Depreciation / R&D / Interest bearing debt

(100 Million Yen)

Actual Results
1Q (3 months)
FYE2018

Actual Results
FYE 2018(a)Actual Results
1Q (3 months)
FYE2019

PlanFYE 2019(b)

Variance(b)-(a)

Capex

220

1,414

283

1,300-114

Depreciation

202

898

213

930

+32

R&D

262

1,211

281

1,200-11

1,107862

567

800-62

Interest Bearing Debt

* Changed accounting policies from FYE 2019.
The Company and its major domestic consolidated subsidiaries changed depreciation method of certain tangible fixed assets from the declining-balance method to the straight-line method.

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

15

Appendix• Non-operating income& expenses and extraordinary income & loss (1Q)
• Segment information by business & geographic (1Q)
• Overseas net sales (1Q)
• Non-consolidated unit sales (1Q)
• Plan for 1st half of FYE 2019https://www.subaru.co.jp/en/ir/16

1Q(3 months) :Non-operating Income & Expenses and Extraordinary Income & Loss (Consolidated)(100 Million Yen)

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance

Financial revenue and expenditure1124+12FOREX effects-8-7+1

Other-4+9+13

Total non-operating income & expenses-125+26

Gain on sales of noncurrent assets

18+6

Gain on sales of investment securities

121+20-12-13-10-1-1-11+15+25

Loss on sales and retirementof noncurrent assets
OtherTotal extraordinary income & loss

https://www.subaru.co.jp/en/ir/17

1Q(3 months) :Net Sales and Operating Income by Business Segment (Consolidated)(100 Million Yen)

Net Sales
Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Operating IncomeVariance

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance

7,714

6,729-985

1,168552-616

Aerospace339

330-101816-3Others

86

33-53

127-5-5

1+6

1,193

576-618

Automobile(8,122)Elimination& CorporateTotal(8,548)

8,140

7,092-1,048* Changed accounting policies from FYE 2019 (deducting sales incentives from net sales). The comparative year has been also recalculated under the same conditions.
* Figure in ( )：Net sales before deducting sales incentives

https://www.subaru.co.jp/en/ir/18

1Q(3 months) :Net Sales and Operating Income by Geographic Area (Consolidated)(100 Million Yen)

Net Sales
Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Operating IncomeVariance

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance

Japan(2,414)

2,412

2,070-343934454-480

North America(5,635)

5,244

4,542-701

233

24-209(498)

484

480-4

9-2-1018

99+82

1,193576-618

OthersElimination& Corporate
Total(8,548)

8,140

7,092-1,048* Changed accounting policies from FYE 2019 (deducting sales incentives from net sales). The comparative year has been also recalculated under the same conditions.
* Figure in ( )：Net sales before deducting sales incentives

https://www.subaru.co.jp/en/ir/19

1Q(3 months) :Overseas Net Sales (Consolidated)(100 Million Yen)

Actual Results
1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance(5,917)

5,525

4,776-750

Europe(254)252

420+168

Asia(360)

348

224

-123

Other(412)412

371-41

Total(6,943)

6,537

5,790-747

North America* Changed accounting policies from FYE 2019 (deducting sales incentives from net sales). The comparative year has been also recalculated under the same conditions.
* Figure in ( )：Net sales before deducting sales incentives

https://www.subaru.co.jp/en/ir/20

1Q(3 months) :Non-consolidated Unit Sales(Thousand Units)

Actual Results1Q (3 months)
FYE 2018

Actual Results
1Q (3 months)
FYE 2019

Variance

Domestic production

176.3

154.8

-21.6

Domestic sales

44.5

30.5

-14.0

Passenger cars

36.7

24.6

-12.1

Minicars

7.8

5.9

-1.9

Number of exported vehicles

136.5

122.9

-13.6

Components for overseas
production

89.3

90.1

+0.7

Total

270.3

243.4

-26.8

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

21

Plan for 1st Half of FYE 2019:

Consolidated Unit Sales Plan(Thousand Units)

1st Half Actual Results
FYE 2018

1st Half PlanFYE2019

Variance

Passenger car

67.3

56.0-11.3

Minicar15.1

13.0-2.1

82.3

68.9

-13.4

US333.2

313.0

-20.3

Canada

30.7

31.6

+0.8

Russia3.7

7.0+3.3

Europe17.8

20.9+3.1

Australia

27.7

26.9

-0.8

China

13.8

12.4

-1.4

Others22.0

25.7+3.7

Overseas total

448.9

437.4

-11.5

Total

531.3

506.3

-24.9

Domestic total

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

22

Plan for 1st Half of FYE 2019:

Consolidated Income Statements(100 Million Yen)

1st Half Actual Results
FYE 2018

1st Half PlanFYE2019

Variance(16,863)

16,08014,630-1,450

Domestic(3,286)

3,283

2,670-613

Overseas(13,577)

12,797

11,961-837

Operating income

2,121

1,100-1,021

Ordinary income

2,127

1,117-1,010

Income before taxes
and minority interests

1,285

1,082-203

Net income attributableto owners of parent

850

791-59SUBARU exchange rate

¥111/US$¥105/US$-¥6/US$Net sales* Changed accounting policies from FYE 2019 (deducting sales incentives from net sales). The comparative year has been also recalculated under the same conditions.
* Figure in ( ) ：Net sales before deducting sales incentives

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

23

Plan for 1st Half of FYE 2019:

Analysis of Variance in Operating Income (Consolidated)
Domestic : -122
(volume decrease, mixture deterioration)
Overseas : -262
(volume decrease)
Sales Incentive:-176
Others : -20(100 Million Yen)

US$ : -296
EURO : +11
CA$ : +1
CNY : ±0
Currency exchange adjustment : +12
Unrealized gain : +24
Fixed cost : -95 (SUBARU -64, SIA -31)
SG&A : -79 (SUBARU -43, SOA -36, others)
Warranty claims : +36
SUBARU : -20 (material cost -56)
SIA : -34 (material cost -65)

Sales volume& mixtureand others-580

Loss oncurrency
exchange-248

Actual Results
Operating Income
1st Half
FYE 2018
https://www.subaru.co.jp/en/ir/

SG&A
expensesand others-138-1,021

Cost
reduction-54

R&D
expenses-1

Plan
Operating Income
1st Half
FYE 201924https://www.subaru.co.jp/en/ir/

25