Contents

1

What is KYB?

4

Ten-Years Summary

6

To Our Shareholders and Investors

10

Corporate Governance

13

Management

14		

Risk Information

16		

Financial Review

18		

Financial Statements

24		

KYB in Globe

26

Corporate Information

27		

Shareholder Information

Forward-Looking Statements
This annual report contains forward-looking
statements, including KYB’s plans andstrategies, as well as statements that reporthistorical results. Forward-looking statements
involve such known and unknown risks
and uncertainties as economic conditions;currency exchange rates; laws, regulations, andgovernment policies; and political instability inprincipal markets.

KYB Corporation

Annual Report 2018 Year Ended March 31, 2018

KYB Corporation

What is KYB?

KYB in Everyday Living

At a Glance

Aircraft Components

As a pioneer in hydraulic technology, KYB is active in a wide range of fields, including automobiles,
motorcycles, construction machinery, railroad cars, aircraft, special-purpose vehicles, seismic isolation
systems, vibration control dampers, and marine equipment.
By developing advanced products that combine hydraulics with vibration control, power control, andsystemization technology, KYB has earned the trust of customers around the world. We aim to continue
earning customer and stakeholder support with our relentless drive to create the technologies andproducts of tomorrow.

Vibration
ControlTechnology

Agricultural Machinery
Railroad Equipment

Construction Machinery
Motorcycles

Railroad Equipment

Automotive Components

Aircraft Components

Motorcycle Components

Power Control
Technology

Marine Equipment
Construction Machinery

Industrial Vehicles

Special-purpose Vehicles

Vibration Control Dampers

Segment

Agricultural Machinery

Industrial Machinery

Automotive
Components(AC) Operations

Sales Breakdown by Segment

Shock absorbers for automobiles

Shock absorbers (OE, aftermarket)

Shock absorbers for motorcycles

Front folk, Rear cushion unitsHydraulic equipment for automobiles

Vane pumps, Power steering systems,
Vane Pumps for CVT, EPS

Building and Stage Equipment

Marine Components

HydraulicComponents(HC) Operations

OthersStay damper, Shock Absorbers for ATVs (All Terrain Vehicle)

Hydraulic equipment for industrial use

Cylinders, Valves, Pumps, Motors, MMP, HSTT

OthersDampers for railroad cars, Brakes for railroad cars, Seals

Electronic
ControlTechnology

Steer-by-wire

Vane Pumps for CVT

DLC Coated Front Fork

Shock Absorbers
Rear Cushion Units

Shock Absorbers for
Snowmobiles

Hydraulic ValvesSemi-active Suspension
Systems for Bullet Train Cars

Gear Pump

Caliper Brakes

Actuators

Vibration Control Devices Movable Floors with
Variable Seating

Vibration Control Dampers

Mobile Communication
DeviceIntegrated HST(pump and motor)

Hydraulic Cylinders

Mobile Communication Device

3

Building Equipment

Special-purpose Vehicles

Automobiles

Annual Report 2018

High-Performance EPS

Special-purpose
Vehicles, Aircraft
Components,
System Products
and Electronics
Components
Business

Special-purpose vehicles

Concrete mixer trucks

Hydraulic equipment for aircraft

Actuators, Valves, Wheels, Brakes

System products and electronic

Vibration control dampers, Auditorium and stage control

components, etc.

systems, ECU, Mobile communication devices

Concrete Mixer Trucks

1

KYB Corporation

What is KYB?

Establishment
Phase

1919

History

Beginning hydraulic technology with the buffered hydraulic strut for aircraft (Oleo)

FY2017 Highlights
2003	
Automobile shock absorber manufacturing subsidiary was established in the Czech Republicplant.
2004	
Industrial-use hydraulic equipment manufacturing subsidiary wasestablished in China.

dampers, catapults, etc. for aircraft.
1935
1943

	Systems Products segment split from the Company, and new company
Kayaba System Machinery Co., Ltd. was established.

Reconstruction
phase

Sales office is established in China and in Mexico.

Post-WWII reconstruction and building thefoundation for growth1948	Kayaba Industry Co., Ltd., was established (based on the Corporate

Reform phase

Building a strong management system

Reconstruction and Reorganization Act).
1956	Kayaba Auto Service Co., Ltd. (presently KYB Engineering and Service

2005

The Company’s stocks were listed on the Tokyo Stock Exchange

2006	Stock acquisition in Takako Industries, Inc., which became a subsidiary.

1961

Urawa special purpose vehicle works was established.

2008

Gifu East Plant was established.

	Joint ventures for manufacturing and sales of railroad equipment and1968

Gifu North Branch Plant (presently Gifu North Plant) was established.

1970	Capital participation in Yung Hwa Machinery Industrial Co., Ltd., in
Taiwan.
1971

Kumagaya Plant and Mie Plant was established.

1974	Sales subsidiary was established in the United States
1975

Sagami Plant was established.

1976	Shock absorber production joint venture was established in Indonesia.
1977

Nippon Power Steering Co., Ltd., was established.

1980

Deming Application Prize was awarded for TQC activities.

Profit Attributable to Ownersof the Parent¥392.4 billion¥21.6 billion¥15.2 billion

Increased 10.4%, or¥37.1 billion

Increased 16.0%, or¥3.0 billion

Increased 4.5%, or¥0.7 billion

Overseas Sales Ratio

ROE

Dividend

54.5%

8.8%

¥150

Increased 1.0%

Decreased 0.5%

Sales office is established in Thailand.

1959

Strengthening the organization, expanding
performance

Segment Profit“KYB” was assumed to be an alias name of the Company.

Co., Ltd.), was established.

Expansion
phase

Net Sales

Stock acquisition in KYB Trondule Co., Ltd., which became a subsidiary.

Kayaba Manufacturing Co., Ltd., was established.
Gifu works (presently Gifu South Plant) was established.

Highlights of the year	Urawa plant was closed and operations were merged into the Sagami

Kayaba Research Center was founded by Shiro Kayaba.

1927	Kayaba Seisakusho was established for manufacturing of hydraulicAnnual Report 2018

motorcycle suspensions established in China.
	Automobile shock absorber manufacturing and sales company established in Spain
2009

European Regional Headquarters established in Germany

2010

Regional Headquarters established in China

2011	Aftermarket hydraulic shock absorbers sales company established in
Panama.
	Yanagisawa Seiki MFG CO., LTD., became a wholly owned subsidiary.
Trade name changed to KYB-YS CO., LTD.
	Operations started at Developmental Experiment Center, an exclusive
test tracks for automobile and motorcycle components.
Machine Tools Center established in Japan
2012

Electronics Technology Center established in Japan

Topics of the year

KYB Europe Headquarters B.V. established in the Netherlands
Aftermarket sales company established in Russia

Moving from Japan to overseas, further
growth	Hydraulic components manufacturing and sales company established1983	Shock absorber manufacturer in Spain was jointly acquired.

	Motorcycle hydraulic oil damper manufacturing and sales company

Development
phasein Mexico	Shock absorber production manufacturing joint venture was established in Malaysia.

established in India
2013	Joint venture aftermarket automotive suspension spring manufactur-

1985	Company name “KYB” in Japanese changed from kanji (Chinesecharacters) to katakana (Japanese Characters).

ing and sales company established in the Czech Republic	Acquired shares in a concrete construction equipment maker in India

1986	Shock absorber manufacturing subsidiary was established in the UnitedStates.
1989

Sales subsidiary was established in Germany.

1996	Shock absorber manufacturing jointly venture was established inand established subsidy
	Hydraulic component manufacturing and sales company establishedin Indonesia	Established KYB Motorcycle Suspension Co., Ltd., for the manufac-

Thailand.

ture and sale of motorcycle hydraulic shock absorbers

	Joint venture was established in Spain for manufacture of hydrauliccomponents for automobiles.
	Joint venture was established in Thailand for manufacture of hydraulic2015

The trade name was changed to KYB Corporation.

2016	
Established Aircraft Components Division, independent from HC

components for automobiles.

Operations.

1998

All plants obtained ISO 9001 certification

KYB-CADAC Co., Ltd. merged with KYB-YS Co., Ltd.

1999

Cadac Co., Ltd., became a wholly owned subsidiary2001	All plants obtained ISO 14001 certification
2001	Shock absorber manufacturing subsidiary in the United States became
a wholly owned subsidiary.
2002	Motorcycle shock absorber manufacturing subsidiary was establishedin Vietnam.
	Automobile shock absorber manufacturing subsidiary was establishedin China.

2

Aftermarket sales company established in Brazil

	KYB Hydraulics Industry (Zhenjiang) Ltd. merged with KYB Industrial
Machinery (Zhenjiang) Ltd.
	KK Hydraulics Sales (Shanghai) Ltd. merged with KYB Trading(Shanghai) Co., Ltd.
2017	KYB Asia Co., Ltd. merge with KYB Technical Center(Thailand) Co.,
Ltd., and established KYB Asian Pacific Corp.Ltd.

Sponsorship Agreement with the FIA
World Rallycross Championship EKS

KYB Awarded Technical Division of the
New Corolla Sport Project Awards

ASTRIC (Active Suspension Systemwith Triple Control Modes)

KYB Corporation has announced that it
has entered a sponsorship agreementwith EKS on June 26, 2017.
Through this agreement, KYB will
aim to increase awareness of the KYB
brand and expand its sales promotions
for electronic power steering (EPS)
used in motorsports. KYB willcontinue strengthening its support
for motorsports, making conventional
products more lightweight, andimproving its product development andtechnological capacities to contributeto the environment.

On June 7, 2018, KYB Corporation
received a Technical Division Award at
the New Corolla Sport Project Awards.
The award was conferred for the shock
absorber, which incorporates thelatest technology and was designed
through KYB’s unique technologicaldevelopment. Toyota judged that thiscomponent has contributed greatly totheir new model’s product appeal.
Encouraged by this award, we will
strive to further advance our efforts todeliver both a luxurious ride feel andthe highest performance.

The is the latest model is the multimode active suspension system. It
automatically switches between fully
active, passive, and semi-active modes
based on input from the controller.
A sensor detects when the carriage
sways, and by greatly reducing
vibration, the system improves theride feel. The suspension system is
at use in all Odakyu Limited Express“Romance Car” 70000 GSE trains.

3

KYB Corporation

Annual Report 2018

Ten-Years Summary
KYB Corporation and its Consolidated Subsidiaries
Years ended March 31,

Millions of yen

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

IFRS

IFRS

IFRS

IFRS

JGAAP

JGAAP

JGAAP

JGAAP

JGAAP

JGAAP

Net sales¥392,394¥355,316¥355,320¥370,327¥352,711¥305,752¥337,159¥320,083¥252,021¥329,262

Cost and expenses

370,794336,692

337,732

354,821334,541

295,279

315,621295,931

248,125

329,212

Operating profit

20,885

19,247

4,327

14,461

18,17010,473

21,53824,152

3,896

50

5.3

5.4

1.2

3.9

5.2

3.4

6.4

7.5

1.5

0.0

Profit before tax / Income (loss) before income taxes and minority interests

20,881

18,852

2,825

14,892

21,032

12,994

21,76024,4401,671(4,300)

Profit (loss) attributable to owners of the parent / Net income (loss)

15,202

14,544(3,161)

8,036

12,761

7,789

13,89817,014661(5,230)Comprehensive income

20,115

18,345(17,832)

25,203

20,31016,061

14,997

14,406

—

—

8.8

9.3

—

5.1

9.7

7.3

14.8

21.1

0.9

—

Cash flows from operating activities

29,252

31,153

19,95822,33528,78818,984

17,39935,43322,655

8,499

Cash flows from investing activities(16,386)(21,337)(20,320)(30,658)(36,078)(36,125)(20,000)(7,233)(12,828)(26,505)

Cash flows from financing activities(4,482)(969)(3,395)

(555)

5,709

8,529

(3,455)(16,968)(6,646)32,200R&D expenses

8,102

7,621

7,760

8,910*

6,917

5,468

4,035

3,218

2,817

3,268

Depreciation and amortization

16,98815,922

17,075

15,191

17,294

14,554

13,50813,427

15,31816,552

Capital expenditures

20,956

20,57821,30030,087

29,90839,21527,173

8,916

10,082

24,968Working capital

39,911

33,27823,511

29,40539,303

22,17942,00646,02348,701

43,513

Total equity attributable to owners of the parent

180,225

164,299

148,278

169,307

—

—

—

—

—

—

Total equity / Total net assets

186,651

169,771

153,381

175,256

153,997

116,435

102,762

89,96478,48976,451

Total assets

412,493

381,326

359,002387,877

361,083

327,912301,349

285,134

269,361

269,655

Cash and cash equivalents at end of period

42,70233,98825,29630,51038,13235,21542,01048,12337,66434,272

43.7

43.1

41.3

43.6

41.2

34.5

33.2

30.6

27.3

26.6

35.24

¥ 62.87

3.03¥ (23.62)

Operating profit margin [%]Return on equity attributable to owners of the parent / Return on equity (ROE)

Ratio of equity attributable to owners of the parent / Equity ratio [%]Yen

Per share data:
Basic earnings per share / Net income (loss)

595.09¥ 56.93¥ (12.37)

Equity attributable to owners of parent per share / Net worth

7,055.40

643.15580.40662.67582.28512.18453.00395.18336.55327.97

Cash dividends applicable to the year

150.00

12.00

11.00

12.00

9.00

8.00

9.00

8.00

2.50

3.50

8.5

10.2

—

14.0

7.9

13.1

8.0

8.6

113.9

—

14,754

14,35013,796

13,732

13,033

12,306

11,975

11,44010,977

11,370¥P/E ratio [Times]
Number of employees

¥

31.45

¥

55.25

¥

¥

77.54

¥

*JGAAP
Note: The Company carried out 1-for-10 reverse stock split on the effective date of October 1, 2017.

4

5

KYB Corporation

Annual Report 2018

To Our Shareholders and Investors

Segment Profits by Business Segment(Billions of yen)(Billions of yen)related to the construction machinery industry

27.2
122.6

18.6

a sudden increase in demand for products

28.0
96.3

in China and a low exchange rate for the yen.

– CHALLENGE & INNOVATION –

6.6

1.0

11.1

In profitability, segment profits were ¥21.6
billion, operating profit at ¥20.9 billion, profit

231.0

242.6
11.0

attributable to owners of the parent was at

A GLOBAL KYB

0.9

21.6

billion, boosted by outside factors including

392.4

performance in FY2017. Sales were at ¥392.4

Net Sales by Business Segment

355.3

FOCUSING ON THE FUTURE
TO ACHIEVE CONTINUOUS
GROWTH

Next, let’s turn to the KYB Group’s¥15.2 billion, all surpassing our forecast at the
beginning of the fiscal year. However, we face

(FY)

issues with worsening profitability for a partof our operations, and a declining ROE.

2016

AC Operations

2017
HC Operations

Special-purpose Vehicles, Aircraft Components,
System Products and Electronics Components

(FY)

2016

AC Operations

9.5

2017
HC Operations

Special-purpose Vehicles, Aircraft Components,
System Products and Electronics Components

Efforts in FY2018
Overview of FY2017

Supported by a Favorable Construction
Machinery Market in China

Toward Continuous Growth: Accomplish structural reforms and stabilize
the revenue base
The outlook for the world economy in FY2018 called for gradual growth, but there are several risks that are causing a sense

FY2017 (the fiscal year ended March 31, 2018) marked the first year of ourof uncertainty. These include concerns over U.S. trade policies and turbulence in the economies of emerging nations due to a

medium-term management plan. During the period, infrastructure investment

rise in interest rates.

and consumer spending increased in China, bringing stable economic growth.

My next topic is the business environment around the KYB Group and how it will effect our major operations.

Also, economies were strong in Europe and emerging nations. In Japan, a

AC Operations is the division of our company that is centered in automotive hydraulic shock absorbers. Here, we forecast

gradual recovery continued, with increasing consumer spending and improvingthat a rise in sales of aftermarket products in the United States and Europe as well as the effects of making our Brazilian

corporate earnings. Looking at the automobile market, where the majority of

manufacturing plant a wholly owned subsidiary will drive a sales increase. However, we also anticipate that profits will be

demand for KYB’s products is found, sales declined in the United States, but

restricted to a slight increase due to rising fixed costs.

increased in both Europe and China. In the construction machinery market,

HC Operations is the division of our company that primarily deals in hydraulic equipment for the construction machinery

further growth continued in China, and the European market was strong as well.

industry. Here, we expect sales to greatly increase due to growing demand, particularly in the Chinese market. However, weAmidst this environment, we made efforts to create a flexible yet resilient

forecast that worsening profitability from the pressure placed on manufacturing and temporary costs related to the transfer

management base that can deal with rapid changes in the business environment
and a strong revenue base under the policy of “carrying out drastic structuralof control for control valves will cause profits to decline slightly.
Efforts are as follows, separated by business division:reforms,” encompassing everything from the organization to products to plants.
AC Operations: We have rapidly expanded our business operations in order to establish the optimum production system■ Organizational change・ In Automotive Components (AC) Operations, we switched to a threedivision organization comprised of the Suspension Division, Steering
Division and Motorcycle Division
・ Established a new CSR Division under the direct control of the President(currently the CSR & Safety Control Div.)■ Product development/Plant reorganization

Yasusuke Nakajima
Representative Director,
Chairman and President Executive Officer

that meets the needs of the market, customers, and business strategies. However, we are currently facing issues withincreasing profitability. We are tackling those issues through the following efforts to rebuild our revenue base and strengthen
the earning power of AC Operations.
In drastic structural reforms, we will reorganize the motorcycle business by consolidating our plants. Also, we will work
to reorganize the EPS business, which has the technology necessary to achieve integrated control of shock absorbers andpower steering as well as the autonomous driving of the future.
Particularly in the EPS business, with business continuity in mind, we decided to enter the growing Chinese market,

・ Started production on innovative production lines in Japan and Mexico

where we established a joint venture with Hubei Henglong, a company well known by the country’s citizens. China’s・	Constructed a globally optimized local production system bymarket is already seeing a transition from hydraulics to EPS, with the ratio of EPS use in 2020 forecast to rise to 73%. Bothconsolidating products and transferring control・	Plant and company reorganization, including making a Brazilian joint
venture a wholly owned subsidiarycompanies shall apply their resources to the maximum degree, and in addition to capturing EPS demand in the Chinese
market, are opening possibilities for products in the future environmentally friendly vehicle market and for global expansion.
In shock absorbers, as high functionality progresses, we must develop the next generation of shock absorbers that can meetcustomers’ increasingly demanding needs regarding performance and cost. We aim to achieve high performance and low

67

KYB Corporation

Annual Report 2018

To Our Shareholders and Investors

cost through integrating specifications and components. In addition to reducing shock absorber types by 30%, we seek totakes priority above all else,” assigned safety and environmental functions to the CSR Division, and founded the Global

reduce product costs by 20% compared with existing products.

Safety Promotion Committee. We also worked on quality, took a quality management pledge based on our concept that

Also, we will sequentially roll out production lines that make use of IoT and AI to each plant, and aim to introduce fully
automated lines in 2026. We will also increase product competitive power by achieving low costs with existing conventional
shock absorbers, which are in the premium market segment. Through revising product technical specifications and innovative
monozukuri, we will create a firm revenue base for shock absorbers.
In addition to strengthening earning power, we are working to achieve continuous growth. We are creating a system to“Quality is the foundation of management,” and strictly enforced our policy of “Bad News 1st” (whenever something isabnormal, report it immediately).
We are actively working to further strengthen our corporate governance. We are increasing the effectiveness of our internal
controls system, improving global compliance with laws and regulations, working toward the establishment and practical useof an internal reporting system, and strengthening responsiveness to the corporate governance code. Also, we are improving

establish the new product development and technology that can meet customers’ technology needs, and aiming to receive

our business continuity through the establishment of a business continuity plan and business continuity management asorders for value-added products. In April 2018, we opened the Europe Technical Center in Germany to address our immediatewell as striving for social support/contribution activities (non-business) to contribute to the sound development of society.

objective of obtaining orders from Germany’s three premium car brands. Also, we are progressing with developing andmaking sales promotions for high-value-added products with a focus on 10 or 20 years in the future.

In FY2018, we will continue tackling the current management issues of drastic structural reforms, stabilizing the revenue
base and seeking continuous growth.
While providing guidance for the sound resolution of issues, we shall push forward toward achieving our goals in FY2019,

HC Operations: In the construction machinery market, there was a recovery of demand in the excavator market in FY2016

the final year of the medium-term management plan. And we shall aim to reach the next stage—consolidated Group sales ofparticularly in China, and we anticipate that demand will reach a record level in Europe, particularly for small-sized excavators.

¥500.0 billion—at the earliest stage possible.

We will answer this demand by increasing our capacity through accelerating investments in relation to recent high demand
and adding more investments, as well as resuming operations on suspended lines.
In drastic structural reforms, we are planning to construct an integrated line by transferring control valves for mid- tolarge-sized excavators to the Nagano district to establish the optimum mass production system. Also, we are further
strengthening our sales and development system for non-excavator hydraulic products. Furthermore, we are making efforts

Focus on the Future

Offering Value through the Pursuit of Our Core Technology

to stabilize the revenue base by establishing a manufacturing and delivery system that can deal with high demand, and makesales promotions in markets which we were not active.

In the more than 80 years since KYB was established, we’ve developed our core hydraulic technology on a foundation of
power control, representing “strength,” and vibration control, representing “gentleness.” Through our many products, we’ve

Special-purpose Vehicles Div., Aircraft Components Div., System Products and Electronic Components Div.: In theSpecial-purpose Vehicles Div., we plan to strengthen our after service and components sales. In India, where the competition

offered safety and comfort, our key values, to society.
We provide value in pursing our core technology, and combining it with the “intelligence” of IT, we pursue our corporate

is fierce, we plan to achieve profitability with mixers through cost reduction activities and increase our share. In the Aircraft

mission: to contribute to solutions to the problems that our society faces. Even in light of the diversification of values,

Components Div., we will establish a stable production system and earnings system.

changes in social conditions, and technological innovations such as AI and IoT, that mission remains unchanged.
The automobile market is undergoing the kind of revolution that only happens once in 100 years. EV batteries andOutside of our business divisions, we shall make the following efforts.

the popularization of autonomous driving will allow for larger cabin interiors, which puts new demands on suspension
components. Our goal in response to this important issue is to pursue such a high level of comfort that passengers will not

Human resource development: In monozukuri, technology and product development, human resources who can think andeven feel the movement of the vehicle at all. We will respond to the diversification of individual needs and develop shock

act from a global point of view will be indispensible to increasing our competitive power as we move forward. KYB has anabsorbers with sensitivity that make driving more fun. And we will continue to support the lives of people everywhere

overseas trainee dispatch system, provides work experiences for capable young employees, and is increasing opportunities

throughout the world as a trusted brand contributing to the creation of an abundant society.

for female workers. In this way, we promote an environment where diverse human resources can work to the utmost of
their abilities, and are ensuring that we will have talented human resources as Japan moves toward an aging society.

Dividend policy
KYB positions the appropriate distribution of earnings to shareholders as an important management policy. In FY2017,

Technology and product development: In five areas of the world (Japan, Europe, China, ASEAN and North America), wetaking into account our new policy of aiming for a consolidated dividend payout ratio of 30% and at least 2% (annual rate) of

are progressing with the establishment of environmental infrastructure and the development of CAE technology, seeking

shareholders’ equity on a consolidated basis, the annual dividend per share was ¥150, consisting of an interim dividend of

to improve quality in design and production technology from the customer’s point of view. We will provide products that¥70 and a year-end dividend of ¥80.

incorporate market needs in a timely manner to customers, thereby increasing orders. In addition, we will focus our efforts

KYB will strengthen our stance by returning to our foundation of putting safety and quality first. At the same time, we willon the creation of new technologies and new products by such means as developing systems products that are fused withsteadily move forward with efforts for innovative monozukuri and structural reforms to improve profitability, thereby reinforcing

our core technologies. And we will continue to provide comfort—a long-standing KYB brand value—to the market.

our business constitution and advancing our growth strategy as we continue seeking to maximize shareholder value.
In closing, I’d like to offer my gratitude to KYB’s shareholders and investors, and humbly ask for your continued support.

Monozukuri: In addition to highly unique production technology, construction methods and equipment development, we are
aggressively pursuing automation that uses IoT and AI. We are making efforts to construct innovative lines that can reduce

July 2018lead time and space by half while doubling productivity, and striving for global monozukuri.
Management: Last fiscal year, we had a serious work-related injury at an overseas plant and received complaints about
quality, which led to a recall. Based on this, we reinforced safety by refocusing our thinking on the principle that “Safety

Representative Director,
Chairman and President Executive Officer

89

KYB Corporation

Annual Report 2018

Corporate GovernanceCorporate Governance Structure

Basic Policy for Corporate Governance

Shareholders' Meeting

KYB seeks to meet stakeholders’ expectations with continuous growth and the improvement of corporate
value, and to contribute to society by fulfilling our corporate social responsibility. We have a swift, efficientmanagement system centering on the Board of Directors, and a highly fair and impartial management
supervisory function. The following Management Principles and Basic Policies are the foundation of ourapproach to strengthening governance and our efforts for further improvements.

Elect / Dismiss

Elect / Dismiss

Board of Directors
Audit & Supervisory
Board

RequestAdvisory Committee(Nomination, Compensation)

Audit
Representative Director,
Chairman andPresident Exective Officer

Management Principles
The KYB Group contributes to society by providing technologies and products that make life safe andcomfortable.
1.	Challenge higher objectives and construct a livelier corporate cultural climate.
2. Maintain grace and good faith, and pay attention to nature and the environment.

Accounting Auditing

Audit

Board of Executive Officers,
Other Management Committees
Audit Dept.
Audit

3.	Always seek creative ideas and contribute to the progress of customers, shareholders, suppliers,

Responsible head office departments, operational headquarters,
Group Companies, Branches, Representative offices

and society.
Basic Policies
1.	We shall respect the rights of shareholders, and ensure the equal and fair treatment of allshareholders.

Selection of Outside Directors and Audit & Supervisory Board Members

2.	We shall take the benefits of stakeholders into consideration and endeavor to appropriately
cooperate with those stakeholders.
3.	We shall disclose not only the information in compliance with the relevant laws and regulations, butalso actively provide the important and/or useful information to stakeholders for their well-informed
decision making.

KYB has two outside directors and two outside audit & supervisory board members and selects inaccordance with the requirements of the Companies Act. Standards for independence prescribed by
securities exchanges and other organizations are used for the selection of independent directors and audit& supervisory board members.

4.	The Board of Directors shall be cognizant of its fiduciary responsibility and accountability toshareholders, and shall appropriately fulfill its roles and responsibilities in order to promote sustainable
and stable corporate growth and increase corporate value, profitability, and capital efficiency.
5.	We shall engage in constructive dialogue with shareholders, and make efforts to obtainshareholders’ support regarding the Company’s Business Policies and also reflect shareholders’opinions and concerns in the improvement of management.
Outline of Corporate Governance Systems Structure

10

Structure based on Companies Act

Company with Audit & Supervisory Board

Board chairperson

Chairman of the Board of Directors

Number of directors

8 (including 2 outside directors)

Number of Audit & Supervisory
Board Members

4 (including 2 outside audit & supervisory board members)

Number of independent directors/
audit & supervisory board members

2 outside directors and 1 outside audit & supervisory board member

Independent auditor

KMPG AZSA LLC

Reasons for Selections of Outside Directors
Rokuro Tsuruta(Independent Director)
Attorney and Representative ofRokuro Tsuruta Law Office

Mr. Tsuruta is an outside director because KYB believes he can continue
to use his knowledge and experience as an attorney to provide valuable
opinions and recommendations for strengthening internal controls andcompliance and about other subjects.

Shuhei Shiozawa(Independent Director)
Professor of Economics,
Keio University

Mr. Shiozawa is an outside director because KYB believes he can continue
to use his extensive knowledge and insight concerning economics
to provide valuable opinions and recommendations concerning KYB’s
finances and CSR activities.

Reasons for Selections of Outside Audit & Supervisory Board Members
Osamu Kawase(Independent Audit & Supervisory
Board Member)

Mr. Kawase is an independent audit & supervisory board member because
KYB believes he can use his knowledge and experience acquired during
a career in the non-life insurance industry to provide valuable opinions
and recommendations primarily from the standpoint of audits of business
operations.

Takashi Saito

Mr. Saito is an outside audit & supervisory board member because
KYB believes he can use his considerable expertise involving financeand accounting based on the knowledge and experience acquired
during his financial institution career to provide valuable opinions andrecommendations.

11

KYB Corporation

Corporate GovernanceManagement

As of June 22, 2018

Representative Director,
Chairman and President Executive Officer

Compensation

Annual Report 2018

Yasusuke Nakajima
1.	Compensation for directors and audit & supervisory board members and the number ofSenior Managing Executive Officers

Hiroshi Ogawa
Shizuka Sakai
Toshihiko Hatakeyama

applicable individuals
Category

Managing Executive Officers

Compensation by category (Millions of yen)

Total
compensation(Millions of yen)

Basiccompensation

Number of applicable
individuals

Bonuses

Directors(excludes outside directors)
Audit & Supervisory
Board Members(excludes outside members)

366

216

149

7

Representative Director,
Executive Vice President Executive Officer

45

45

—

2

Takaaki Kato

Outside officers

62

62

—

4

2. Compensation paid to the independent auditor

Executive Officers
Millions of yen

FY2016
Category

Compensation foraudit certification

Member of the Board of Directors,
Executive Vice President Executive Officers

FY2017Compensation for
non-auditing services

Compensation foraudit certification

Compensation for
non-auditing services

KYB Corporation

73

5

81

3

Consolidated subsidiaries

31

—

32

—

105

5

113

3

Total

Masao Ono

Keiichi Handa

3. Significant Compensation
Five consolidated subsidiaries, including KYB Americas Corporation, have paid ¥116 million to KPMGInternational, which belongs to the same network as the independent auditor used by KYB, for audit
certification and other services for fiscal 2017.

Member of the Board of Directors,
Senior Managing Executive Officers

Keisuke Saito
Investor Relations Activities
The IR Section of the Finance Division discloses information as required by laws and regulations anddiscloses other information that is important or useful for shareholders and other investors.
The IR Section conducted the following activities during the fiscal year ended March 31, 2018.

Masaru Tsuboi
Tomoyuki Nagata
Masayoshi Sakemi
Koji Yamamoto
Hiroshi Kurotaki
Takashi Kondo
kimiro sudo
Masahiro Kawase
Takashi Tezuka
Ryuji Uda
Minoru Ishikawa
Audit & Supervisory
Board Members

Tomoo Akai
Osamu Kawase *Motoo Yamamoto
Takashi Saito *Takafumi Shoji* Outside

Major Activities of FY2017

12

Eiji Hisada
Kenji Yamanouchi
Hideki Nonoyama
Osamu Kunihara
Hitoshi Nitta
Ikuo Inagaki
Hajime Sato

Activities for securities analysts andinstitutional investors• Information meetings: 2 (End of first half and fiscal year)• Small meeting: 1• Conferences: 2• Plant tour: 1• Overseas IR events: 3

Activity for individual investors• Company information meetings: 7• Plant tour: 1

IR website• https://www.kyb.co.jp/ir/index.html• Information meeting materials, flash reports, securities reports, annual
reports and other documents

Member of the Board of Directors(Outside)

Rokuro Tsuruta

Shuhei Shiozawa

13

KYB Corporation

Annual Report 2018

Risk Information

This section explains the major risk factors involving the KYB Group’s results of operations and financial
position that may have a significant effect on decisions by investors. Forward-looking statements in thissection represent the judgments of the KYB Group as of the end of March 2017.

3) Procurement of Materials and Parts
The KYB Group purchases materials and parts from a large number of suppliers. Prices of materials
and other items are closely linked to prices on international commodity markets. If the KYB Groupis unable to fully reflect an increase in the cost of materials or parts in its selling prices, or if it is not

Risks Relating to the Economic Environment

possible to reduce prices of materials and parts sufficiently to reflect a reduction in selling prices, there
may be a significant impact on results of operations.

1) Economic Climate
Consolidated net sales consist primarily of parts that are sold to makers of automobiles, andmotorcycles, construction machinery, and commercial vehicles. Manufacturers of these parts are
expanding overseas operations even faster in response to the growing overseas manufacturing
activities of their customers. The KYB Group supplies parts to customers outside Japan from plants
in the Americas, Europe and Asia. These overseas plants are vulnerable to fluctuations in demand,and the resulting changes in customers’ production volume, caused by changes in the economies in
the regions where these plants are located. As a result, there may be a significant impact on the KYBGroup’s results of operations and financial condition.

2) Fluctuations in Exchange Rates and Interest Rates
Overseas sales are 53.5% of the KYB Group’s total net sales. As a result, changes in foreign exchange
rates may have a significant impact on the Group’s exports from Japan as well as the performance ofgroup companies in other countries.
An increase in interest rates in Japan or other countries may have a significant impact on the KYBGroup’s results of operations.

4) Fund procurement
The KYB Group uses loans from financial institutions in Japan and other countries to meetrequirements involving capital expenditures and working capital. The KYB Group takes out these loans
while carefully monitoring financial markets. However, procuring funds in a timely manner at favorable
terms may not be possible if there is broad decline in prices of the KYB Group’s products, an economic
recession, a credit crunch, a decline in the KYB Group’s credit rating, or for other reasons. Any of these
events may affect the KYB Group’s financial condition and results of operations.

5) Worsening Overseas Business Conditions
If there is a bankruptcy at a KYB Group overseas manufacturing and sales base caused by a decline
in orders, falling earnings or some other reason, there may be a significant impact on results ofoperations.

6) Counterparty Credit Risk
The KYB Group sells its products to automobile and construction machinery makers and many othercustomers. An unexpected problem involving credit risk of a customer may affect the Group’s resultsof operations.

Risks Relating to Business Operations
Risks Relating to Significant Litigation or Other Legal Action1) Demand Trends
Sales of the KYB Group’s automotive components and hydraulic components operations depend
greatly on the global production volume of automobiles and construction machinery. The decline indemand for these products during the global economic downturn caused by the financial crisis may

If the KYB Group is the defendant in a law suit and the outcome is unfavorable, the resulting demands andrequirements may have a significant impact on the Group’s results of operations.

have a significant impact on results of operations. The KYB Group sells most of its special-purpose
vehicles, aircraft components, system products and electronic components in Japan. Especially in thespecial-purpose vehicles business, which involves primarily concrete mixer trucks, demand may be

Risks Relating to Fires, Accidents and Natural Disasters

significantly influenced by changes in the volume of construction activity, which is closely linked to theeconomic outlook, as well as by changes in laws and regulations.

2) Prices and Quality
The KYB Group’s products are subject to intense price-based competition in Japan and other countries.
Customers are always asking for cost cuts and lower prices. Quality is also critical. The Group supplies
vital automotive parts, such as shock absorbers, which maintain a vehicle’s stability, and power
steering systems. For construction machinery and commercial vehicles, the Group supplies key
functional components such as hydraulic cylinders and motors. Consequently, if the Group supplies a
defective product, there may be substantial expenses due to customers’ demands for the payment ofMany plants of the KYB Group produce hydraulic products that utilize the properties of oil. In addition,
plants often have coating equipment that uses organic solvents and storage tanks for various oils,
chemicals and other substances. If there is a fire or a leak of a hazardous substance, manufacturing
activity may have to be suspended temporarily.
In Japan, many plants of the KYB Group and its suppliers are located in the Chubu area (central area ofJapan’s mainland). If there is a major earthquake in this region or other disaster that prevents these plantsfrom operating, there may be a substantial decline in the Group’s production capacity.
In addition, if an earthquake, fire, conflict, act of terrorism or other event outside Japan occurs where
the KYB Group has a plant, there may be a substantial decline in the Group’s production capacity.

damages and other events. Furthermore, sales volume and prices for aftermarket automotive shock
absorbers will probably be influenced by changes in the health of regional economies and the actionsof competitors.

14

15

KYB Corporation

Annual Report 2018

Financial Review

parent was ¥15.2 billion.

absorbers for automobiles increased 7.6% to ¥162.5 billion.

electric power steering and hydraulic pumps. Sales of otherTotal equity increased ¥16.9 billion to¥186.7 billion mainly

14.5

12.8

-3.2

0.0

2014 2015 2016 2017 2018
(IFRS)(IFRS)(IFRS)

2014 2015 2016 2017 2018

(IFRS)(IFRS)(IFRS)(IFRS)

2014 2015 2016 2017 2018

(IFRS)(IFRS)(IFRS)(IFRS)(IFRS)

because of an increase in retained earnings.

products, mainly ATV (all-terrain vehicle) equipment, were

The ratio of equity attributable to owners of the parent¥4.9 billion. As a result, sales in the automotive components

increased 0.6 percentage point from one year earlier tosegment totaled ¥242.6 billion, segment profit was ¥9.5

43.7% at the end of March 2018 due to an increase in net

R&D Expenses

Capital Expenditure

Depreciation and Amortization

billion and the segment profit margin was 3.9%.

assets.

(Billions of yen)(Billions of yen)(Billions of yen)

¥8.5 billion. As a result, hydraulic components segment sales

Net cash from operating activities decreased 6.1% towere ¥122.6 billion, segment profit was ¥11.1 billion and the¥29.3 billion. The main reasons for this decline were profit

segment profit margin was 9.1%.

before tax of ¥20.9 billion, depreciation and amortization of

In the other segment, the primary activities are special-¥17.0 billion, and payment for income taxes of ¥4.9 billion.

purpose vehicles, aircraft components, system products andNet cash used in investing activities decreased 23.2%

electronic components. Sales of special-purpose vehicles,to ¥16.4 billion. This was mainly due to payments of ¥14.4

mainly concrete mixer trucks, increased 11.8% to ¥9.6 billion

billion for purchases of property, plant and equipment.

due to a sales increase in India. Sales of hydraulic equipment

Net cash used in financing activities was ¥4.5 billion. Therefor aircraft decreased 17.8% to ¥6.4 billion. Sales of systemwere payments of ¥13.4 billion for the repayment of long-products and electronic components decreased 3.2% toterm borrowings and ¥3.6 billion for dividends. Major sources¥11.3 billion. As a result, segment sales were ¥27.2 billion,of cash inflow were proceeds of ¥9.4 billion from long-term

segment profit was ¥10.3 billion and the segment profit

borrowing and a net increase of ¥3.4 billion in short-term

margin was 3.8 %.

borrowings.

As a result, consolidated net sales increased ¥37.1 billion
to ¥392.4 billion.

17.0

15.9

17.1

15.2

17.3
21.0

30.1

29.9

7.6

7.8

8.1

20.6

in cash and cash equivalents to ¥42.7 billion.

21.3

active systems and shock absorbers, increased 10.9% to0.02014 2015 2016 2017 2018
(IFRS)(IFRS)(IFRS)

2014 2015 2016 2017 2018

(IFRS)(IFRS)(IFRS)(IFRS)

Ratio of Equity Attributable to
Owners of the Parent / Equity Ratio(Billions of yen)

(%)

387.9

2014 2015 2016 2017 2018

(IFRS)

Total Equity and Total Assets /Total Assets

412.5

foreign exchange rates, there was an increase of ¥8.7 billion(IFRS)(IFRS)(IFRS)(IFRS)

Return on equity attributable toowners of the parent /Return on Equity (ROE)
(%)

41.2

43.6

41.3

43.1

43.7
9.7

9.3

8.8

5.1

186.7

markets. Sales of other components, mainly railway semi-

381.3¥4.5 billion. After a deduction of ¥0.3 billion for changes in

169.8

with small-sized and mini excavators in the Europe and U.S.

359.0

¥12.9 billion and net cash used in financing activities was

153.4

particularly in the Chinese market, and favorable performance

387.9

Net cash flows from operating and investing activities was

175.3

due to continued stable growth in large-sized excavators,

6.9

Cash Flows

361.1

machinery, surged 28.7% to ¥114.1 billion. The increase was154

hydraulic components, which are used mainly in construction

39.2

8.9

In the hydraulic components segment, sales of industrial

16

20.9

4.3

Total liabilities increased ¥14.3 billion to ¥225.8 billion
mainly because of an increase in trade and other payables.

8.0

and other receivables, and property, plant and equipment.

19.2

India. Sales of hydraulic equipment for automobiles, which

14.5

mainly due to an increase in cash and cash equivalents, trade

18.2

because of strong sales in the core markets of China andtransmissions were steady, however, sales decreased for(Billions of yen)

392.4

Financial Condition
Total assets increased ¥31.2 billion to ¥412.5 billion. This was¥45.7 billion. Sales of vane pumps for continuous variable(Billions of yen)

Profit (Loss) Attributable to Ownersof the Parent / Net Income

24.1

motorcycle shock absorbers increased 3.5% to ¥29.5 billion

is used mainly for power steering, decreased 1.7% to(Billions of yen)

355.3

and European markets were generally strong. Sales ofOperating Profit

355.3

Sales declined in the United States, but the Japan, Chinese,

Net Sales

15.2

taxes was ¥20.9 billion and profit attributable to owners of

370.3

In the automotive components segment, sales of shock

Operating profit was ¥20.9 billion, income before income

352.7

Summary0.0

2014 2015 2016 2017 2018
(IFRS)(IFRS)(IFRS)(IFRS)

2014 2015 2016 2017 2018
(IFRS)(IFRS)(IFRS)(IFRS)

2014 2015 2016 2017 2018
(IFRS)(IFRS)(IFRS)(IFRS)

Total Equity / Total Net Assets
Total Assets

17Annual Report 2018

KYB Corporation

Financial Statements
Consolidated Statements of Financial Position

Consolidated Statements of Income

KYB Corporation and its Consolidated Subsidiaries
March 31, 2017 and 2018

KYB Corporation and its Consolidated Subsidiaries
Years ended March 31, 2017 and 2018
Millions of yen

ASSETS

Millions of yen

2017

2018

Net sales
Cost of sales   Gross profit
Selling, general and administrative expenses
Equity in earnings of affiliates
Other income
Other expenses   Operating profit
Finance income
Finance costs   Profit before taxes   Income tax expenses    Profit for the year

¥355,316
282,886
72,43053,806
1,016
2,036
2,430
19,247593
988
18,852
3,774¥15,078¥392,394
312,810
79,58357,983
173
2,665
3,553
20,885973
977
20,881
5,096¥15,786

Profit attributable to:
Owners of the parent
Non-controlling interests    Profit for the year

¥14,544533
15,078¥15,202584
15,7862018

Current assets:
Cash and cash equivalents
Trade and other receivables
Inventories
Other current financial assets
Other current assets   Total current assets¥ 33,988
92,65349,6401,039
3,641
180,962¥ 42,702
103,881
54,001
1,066
9,904
211,554

Non-current assets:
Property, plant and equipment
Goodwill
Intangible assets
Investments accounted for using the equity method
Other non-current financial assets
Other non-current assets
Deferred tax assets   Total non-current assets   Total assets

158,990
283
5,850
5,438
23,169500
6,132
200,364¥381,326

161,886
268
6,692
4,342
24,731532
2,487
200,938¥412,493

LIABILITIESCurrent liabilities:
Trade and other payables
Borrowings
Income tax payables
Other current financial liabilities
Provisions
Other current liabilities   Total current liabilities

18

2017

Yen

¥ 72,137
50,983
1,536
18,274
3,754
1,001
147,684¥82,695
57,0981,944
22,7605,438
1,708
171,643

Earnings per share
Basic earnings per share¥569.32¥595.09

Consolidated Statements of Comprehensive Income
KYB Corporation and its Consolidated Subsidiaries
Years ended March 31, 2017 and 2018

Millions of yen

Non-current liabilities:
Borrowings
Liability for retirement benefits
Other non-current financial liabilities
Provisions
Other non-current liabilities
Deferred tax liabilities   Total non-current liabilities   Total liabilities

39,962
11,589
2,405
2,127
56
7,732
63,871¥211,555

34,986
9,592
2,255
2,189
21
5,156
54,198¥225,841

EQUITY
Equity attributable to owners of the parent:
Share capital
Capital surplus
Retained earnings
Treasury shares
Other components of equity    Total equity attributable to owners of the parent   Non-controlling interests   Total equity    Total liabilities and equity¥ 27,648
29,414
100,995(587)
6,829
164,299
5,472
169,771¥381,326¥27,648
29,414
114,363(598)
9,398
180,2256,426
186,651¥412,493

Profit for the year
Other comprehensive income:Items that will not be reclassified to profit or loss:  Net change in financial assets measured at fair value throughother comprehensive income   Remeasurements of defined benefit plans  Share of other comprehensive income of investments
accounted for using the equity method   Total
Items that may be reclassified to profit or loss:  Exchange differences on translation of foreign operations  Effective portion of the change in the fair value of cash flow hedges  Share of other comprehensive income of investments
accounted for using the equity method   Total    Total other comprehensive income
Comprehensive income for the year
Comprehensive income for the year attributable to:
Owners of the parent
Non-controlling interests
Comprehensive income for the year

2017

2018

¥15,078¥15,786

3,342
1,705

1,206
1,698

17
5,064

(27)
2,876

(1,509)
(85)

1,333
(71)

(203)
(1,797)
3,267¥18,345

191
1,453
4,329
¥20,115¥17,708636¥18,345¥19,445670¥20,115

19

KYB Corporation

Annual Report 2018

Financial Statements

Consolidated Statements of Changes in Equity
KYB Corporation and its Consolidated Subsidiaries
Years ended March 31, 2017 and 2018

Millions of yen
Other components of equity

Balance at April 1, 2016
Comprehensive income for the year:
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners: Contributions by and distributions to owners
in their capacity as owners:   Acquisition of treasury shares   Disposal of treasury shares   Dividends of surplus   Changes of scope of equity method   Changes due to business combination   Transfer to retained earnings  Total contributions by and distributions to owners
in their capacity as owners
Changes in equity interest of subsidiaries:   Change of non-controlling interests   Dividends of surplus   Total changes in equity interest of subsidiaries
Total transactions with owners
Balance at March 31, 2017
Comprehensive income for the year:
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners: Contributions by and distributions to owners
in their capacity as owners:   Acquisition of treasury shares   Disposal of treasury shares   Dividends of surplus   Change of scope of equity method   Changes due to business combination   Transfer to retained earnings  Total contributions by and distributions to owners
in their capacity as owners
Changes in equity interest of subsidiaries:   Change of non-controlling interests   Dividends of surplus   Total changes in equity interest of subsidiaries
Total transactions with owners
Balance at March 31, 201820

TreasurysharesNet change infinancial assets
measured at fairvalue throughRemeasurements
other comprehenof defined
sive income
benefit plans

Exchangedifferenceson translationof foreign
operations

Effective
portion of
the change inthe fair value ofcash flow hedges

Total
other
componentsof equity

Comprehensive
income for theyear attributableto ownersof the parent

Noncontrollinginterests

Total
equitySharecapitalCapitalsurplusRetainedearnings¥27,648¥29,414¥86,393¥(579)¥4,967¥    —¥275¥160¥5,402¥148,278¥5,103¥153,381

—
—
—

—
—
—

14,544—
14,544

—
—
—

—
3,342
3,342

—
1,702
1,702

—
(1,796)(1,796)

—
(83)
(83)

—
3,164
3,164

14,544
3,164
17,708

533
103
636

15,0783,267
18,345

—
—
—
—
—
—

—
—
—
—
—
—

—
—
(2,810)
1,175
(45)
1,737

(8)
—
—
—
—
—

—
—
—
—
—
(35)

—
—
—
—
—
(1,702)

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
(1,737)(8)—(2,810)
1,175
(45)
—

—
—
—
—
—
—

(8)
0
(2,810)
1,175
(45)
—

—

—

57

(8)

(35)

(1,702)——(1,737)(1,687)—(1,687)————27,648————29,414———57
100,995

—
—
—
(8)
(587)

—
—
—
(35)
8,274

—
—
—
(1,702)—————(1,521)

—
—
—
—
77

—
—
—
(1,737)
6,829

—
—
—
(1,687)
164,299

—
(267)
(267)
(267)
5,472

—
(267)
(267)
(1,955)
169,771

—
—
—

—
—
—

15,202—
15,202

—
—
—

—
1,206
1,206

—
1,675
1,675

—
1,433
1,433

—
(71)
(71)

—
4,243
4,243

15,202
4,243
19,445584
87
670

15,786
4,329
20,115

—
—
—
—
—
—

—
0
—
—
—
—

—
—
(3,576)
—
69
1,674

(11)
0
—
—
—
—

—
—
—
—
—
1

—
—
—
—
—
(1,675)

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
(1,674)(11)
0(3,576)
—
69
—

—
—
—
—
—
—

(11)
—
(3,576)
—
69
—

—

0

(1,834)(11)

1(1,675)——(1,674)(3,518)—(3,518)————¥27,648———
0¥29,414———(1,834)¥114,363

—
—
—
(11)
¥(598)———
1¥9,480———(1,675)
¥ —

—
—
—
—
¥(88)

—
—
—
—
¥6

—
—
—
(1,674)¥9,398———(3,518)¥180,225

541
(257)
284
284
¥6,426

541
(257)
284
(3,235)¥186,651

21

KYB Corporation

Annual Report 2018

Financial Statements

Consolidated Statements of Cash Flows

Segment InformationKYB Corporation and its Consolidated Subsidiaries
Years ended March 31, 2017 and 2018

KYB Corporation and its Consolidated Subsidiaries
Years ended March 31, 2017 and 2018
Millions of yen

Cash flows from operating activities:
Profit before tax
Depreciation and amortization
Impairment loss
Increase (decrease) in assets and liabilities for retirement benefits
Increase (decrease) in provision for product warranties
Finance income
Finance costs
Equity in (earnings) losses of affiliates
Loss on sales of investments accounted for using the equity method(Increase) decrease in trade and other receivables(Increase) decrease in inventories
Increase (decrease) in trade and other payables
Provision for loss on cancellation of joint venture agreement
Loss associated with the Anti-Trust law
Other   Subtotal
Interest received
Dividends received
Interest paid
Income taxes paid
Payments of loss associated with the Anti-Trust law   Net cash from operating activities2018¥18,852
15,922147
149(1,495)(593)
988(1,016)—(5,052)(1,889)
6,640
—
700
2,209
35,562
94
1,072(1,003)(3,815)(757)
31,153¥20,881
16,988
383
422
351
(973)
977
(173)
367
(9,820)(3,874)
9,745
1,189

FY2016 (April 1, 2016–March 31, 2017)—(3,065)33,399131
1,593(1,012)(4,859)—29,252(Millions of yen)
Reportable segment

Net sales:
Outside customer
Intersegment sales and transfers  TotalSegment profit (Note 3)
Equity in earnings of affiliates
Other income and expenses (net)Operating profit
Finance income and costs (net)Profit before taxes
Depreciation and amortization
Impairment loss
Increase of non-current asssets(Note 4)

Automotive
components

Hydrauliccomponents

Subtotal

Other(Note 1)

Total

Adjustment(Note 2)¥231,025
577
231,601
10,997639(315)
11,321¥96,327
2,336
98,663
6,615
377
(120)
6,872

¥327,352
2,913
330,265
17,612
1,016(436)
18,193¥27,964481
28,445
941
—
42
983

¥355,316
3,393
358,70918,553
1,016(394)
19,175¥    —(3,393)(3,393)
71
—
—
71

9,987
81

5,158
42

15,145123783
23

15,928147(6)—¥355,316—
355,316
18,624
1,016(394)
19,247(395)
18,852
15,922
147

14,794

3,751

18,545

2,030

20,575

4

20,578

Consolidated

Notes: 1. “Other” includes “Special-purpose Vehicles,” “Aircraft Components” and “System Products and Electronic Equipment” that are not included in
the two of reportable segment.
2. ¥71 million of adjustment of segment profits are the elimination of intersegment transactions.
3. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.
4. Non-current assets do not include investments accounted for using the equity method, other other non-current financial assets and deferred tax assets.

FY2017 (April 1, 2017–March 31, 2018)(Millions of yen)
Reportable segment

Cash flows from investing activities:
Payment into time deposits
Proceeds from withdrawal of time deposits
Payment for purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payment for purchases of other financial assets
Proceeds from sale of other financial assets
Proceeds from sale of investments accounted for using the equity method
Other    Net cash flows from investing activities

(237)
255
(19,734)
31
(1)
178
—
(1,830)(21,337)(203)
136(14,402)
99
(24)
8
286
(2,287)(16,386)

Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
Repayments of lease obligations
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from non-controlling interests
Payments for purchase of treasury shares
Proceeds from sales of treasury shares
Dividends paid
 Dividends paid to non-controlling interests    Net cash flows from financing activities

5,207
(456)
15,294(17,928)—(8)—(2,810)
(267)
(969)

3,408
(589)
9,388
(13,386)541(11)
0(3,576)(257)(4,482)

(160)
8,687
25,296288
8,672
33,988

5¥33,98842¥42,702

Effects of changes in foreign exchange rates
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting
from merger with unconsolidated subsidiaries
Cash and cash equivalents at end of period

22

2017

Net sales:
Outside customer
Intersegment sales and transfers  TotalSegment profit (Note 3)
Equity in earnings (losses) of affiliates
Other income and expenses (net)Operating profit
Finance income and costs (net)Profit before taxes
Depreciation and amortization
Impairment loss
Increase of non-current asssets(Note 5)

Automotive
components

Hydrauliccomponents

Subtotal

Other(Note 1)

Total

Adjustment(Note 2)

¥242,560
771
243,331
9,256
(207)
(490)
8,559

¥122,603
1,363
123,966
11,021
380(238)
11,163¥365,163
2,134
367,297
20,277173(729)
19,722¥27,231488
27,719
1,004
—
(160)
844

¥392,394
2,622
395,016
21,281
173(888)
20,566¥    —(2,622)(2,622)
320
—
—
320

10,936
301

5,230
57

16,166358

828
25

16,994383(6)—¥392,394—
392,394
21,600173(888)
20,885(4)
20,881
16,988383

14,114

5,489

19,603

1,402

21,005(48)

20,956

Consolidated

Notes: 1. “Other” includes “Special-purpose Vehicles,” “Aircraft Components” and “System Products and Electronic Equipment” that are not included in
the two of reportable segment.
2. ¥320 million of adjustment of segment profits are the elimination of intersegment transactions.
3. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.
4. Non-current assets do not include investments accounted for using the equity method, other other non-current financial assets and deferred tax assets.

Changes in reportable segments
In this fiscal year, due to the change in the management method of some domestic affiliated companies, we reexamined the

Financial information for the previous fiscal year has beenrevised to reflect this change.

"Electronic Equipment" business, etc. which had been includedin "Hydraulic components" and "Others." And we disclose partof it into "Automotive components" and "Hydrauliccomponents."

23

KYB Corporation

KYB in Globe

Annual Report 2018

As of June 1, 2018

America (7companies in 3countries)
KYB Americas Corporation (Indiana)
KYB Americas Corporation (Chicago)
KYB Americas Corporation (Detroit Branch)
KYB Americas Corporation (Greenwood)
Takako America Co., Inc.
KYB Mexico S.A. de C.V.
KYB Manufacturing do Brasil Fabricante de Autopeças S.A.
KYB Corporation Aircraft Components Division
KYB International America, Inc.
KYB Latinoamerica, S.A. de C.V.

Europe (9companies in 13countries)

Comercial de Autopeças KYB do Brasil Ltda.

KYB Europe Headquarters B. V.
KYB Europe GmbHKYB Europe GmbH (Spain Branch)
KYB Europe GmbH (Munich Branch)KYB France
KYB Iberia
KYB Italy
KYB Poland
KYB Rumania
KYB Turkey
KYB UKKYB UkraineKYB Suspensions Europe, S.A.U.
KYB Steering Spain, S.A.U.
KYB Advanced Manufacturing Spain, S.A.U.
KYB Manufacturing Czech s.r.o.
KYB Chita Manufacturing Europe s.r.o.
LLC KYB Eurasia
KYB Eurasia Vladivostok

Asia (19companies in 7countries)
KYB (China) Investment Co., Ltd.
KYB Industrial Machinery (Zhenjiang) Ltd.
Wuxi KYB Top Absorber Co., Ltd.
Changzhou KYB Leadrun Vibration Reduction Technology Co., Ltd.
Chita KYB Manufacturing (Zhenjiang) Co., Ltd.
KYB Manufacturing Taiwan Co., Ltd.
KYB Steering (Thailand) Co., Ltd.

KYB Corporation (Head Office)Kayaba System Machinery Co., Ltd.

Kumagaya Plant

KYB Trondule Co., Ltd.

Sagami Plant

KYB-YS Co., Ltd.

Aikawa Plant

KYB Kanayama Co., Ltd.

Gifu North Plant

KYB Motorcycle Suspension Co., Ltd.

Gifu South Plant

Takako Industries, Inc.

Gifu East Plant

KYB Engineering and Service Co., Ltd.

PT. Chita Indonesia

Basic Technology R&D Center

Kensiyuu Co., Ltd.

KYB-UMW Malaysia Sdn. Bhd.

Electronics Technology Center

Japan Analysts Co., Ltd.

Reagional Headquarters (6)KYB-UMW Steering Malaysia Sdn. Bhd.

Products Technology R&D Center

KYB Logistics Co., Ltd.

P roduction base (37)KYB Motorcycle Suspension India Pvt. Ltd.

Machine Tools Center

KYB Systemerit Co., Ltd.

R &D base (6)KYB-Conmat Pvt. Ltd.

Developmental Experiment Center

Chikuyo Seiki Kogyo Co., Ltd.

S ales Office/Other Services (35)KYB Asian Pacific Corp. Ltd.

KYB Middle East FZEKYB (Thailand) Co., Ltd.
KYB Manufacturing Vietnam Co., Ltd.
Takako Vietnam Co., Ltd.
PT. KYB Hydraulics Manufacturing Indonesia
PT. Kayaba Indonesia

48 Companies in
24 Countries

KYB Asian Pacific Corp. Ltd. (Branch)
KYB Trading (Shanghai) Co., Ltd.

24

Japan (13companies in 1country)

Automotive Components Operations Sales &Marketing Headquarters Sales Department No.2
Nagoya Branch
Osaka Branch

Kayaba System Machinery Co., Ltd. Taiwan Office

Hiroshima Sales Office

KYB Corporation Chennai Branch

Fukuoka Branch

25

KYB Corporation

Corporate Information

Shareholder Information

As of March 31, 2018

Company Name:	KYB Corporation

Common Stock Issued:

Head Office:	World Trade Center Bldg., 4-1, Hamamatsu-cho 2-chome,

Number of Shareholders: 10,665

Minato-ku, Tokyo 105-6111, Japan
Tel: 81-3-3435-3511
		

URL: http://www.kyb.co.jp

Date of Establishment:

March 10, 1935

Fiscal Year:

April 1 to March 31

Paid-in Capital:
Number of Employees:

Fax: 81-3-3436-6759

Tokyo Stock Exchange (First Section)

Plants:Kumagaya, Sagami, Aikawa, Gifu North, Gifu South, Gifu East

25,748,431

Mizuho Trust & Banking Co., Ltd.
2-1, Yaesu 1-chome, Chuo-ku, Tokyo 103-8670, Japan

Major Shareholders:Name

14,754 (Consolidated basis)

Securities Traded:

R&D Centers: 	Basic Technology R&D Center, Electronics Technology Center,

Shareholdings(Thousands)

Percent of Total
Shares Issued

Toyota Motor Corporation

1,965

7.7

The Master Trust Bank of Japan, Ltd. (Trust Account)

1,209

4.7

Japan Trustee Services Bank, Ltd. (Trust Account)

1,122

4.4

Meiji Yasuda Life Insurance Company

1,004

3.9

Hitachi Construction Machinery Co., Ltd.

892

3.5

KYB suppliers’ stock ownership

748

2.9

Japan Trustee Services Bank, Ltd. (Trust Account 9)

726

2.8

Trust & Custody Services Bank, Ltd. as trustee for Mizuho Bank, Ltd.
Retirement Benefit Trust Account re-entrusted by Mizuho Trust andBanking Co., Ltd.

611

2.4

Ogaki Kyoritsu Bank, Ltd.

591

2.3

Mizuho Bank, Ltd.

490

1.9

Total

9,358

36.5

Production Technology R&D Center, Machine Tools Center,
Developmental Experiment Center
Sales Branches:

Automotive Components Operations Sales Department No. 2, Nagoya,		Osaka, Fukuoka, Hiroshima

As of March 31, 2018

Transfer Agentand Registrar :¥27,647.6 million

Composition of
Shareholders:(Thousands)

Annual Report 2018

204 (0%)Financial institutions

4,002 (16%)
9,944 (39%)

Foreign companies
Other domestic companies

5,548 (22%)

Individuals and others
Treasury shares

6,050 (23%)

Monthly Stock
Price Range:(Tokyo Stock Exchange)

Stock price (¥)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Trading volume(Share)090,000,000
60,000,000
30,000,000
0FY2013

FY2014FY2015FY2016FY2017

High (¥)

6,750

5,230

4,710

6,460

7,380

Low (¥)

4,020

3,800

2,630

2,980

4,705

At year-end (¥)

4,360

4,400

3,330

5,800

5,050

Note: The Company carried out 1-for-10 reverse stock split on the effective date of October 1, 2017.
Numbers for the prior fiscal years are as recorded after the reverse stock split.

26

27