FY2019 First-half Financial Results
Ken Shido, President & COO
This is an internal English translation of the YOROZU 2019 First-half Financial
Report issued in the Japanese language and is provided solely for the convenienceof English speaking readers. In case of discrepancy the Japanese version prevails.

The first section of the Tokyo Stock Exchange (Securities Code: 7294)© YOROZU CORPORATION. 2019 All Rights Reserved.

Table of Contents
Ⅰ. FY2019 First-half Financial Performance
Ⅱ. Emergency Profit Kaizen Activities
Ⅲ. FY2019 Annual Forecast
Ⅳ. Recent Activities and Targets
Ⅴ. Redistribution of Profits to Shareholders© YOROZU CORPORATION. 2019 All Rights Reserved.

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Ⅰ. FY2019 First-half Financial Performance
Ⅱ. Emergency Profit Kaizen Activities
Ⅲ. FY2019 Annual Forecast
Ⅳ. Recent Activities and Targets
Ⅴ. Redistribution of Profits to Shareholders

3© YOROZU CORPORATION. 2019 All Rights Reserved.

Consolidated Financial Statement Summary for FY2019 1H (Year on Year)
Millions of yen

FY2018 1H

FY2019 1H

Year on Year

Old Forecast for
FY19 1H *2

Difference fromOld Forecast

Sales

82,43378,204-5.1％

79,000-1.0％

Operating Income

2,589

264

-89.8％

450-41.3％

Ordinary Income

2,790

-432

―%

140

―%

Net Income *1

1,673

-832

―%

-330

―%

FY2019 1H (B)Differences (B–A)

FY2018 1H (A)Net Income per Share
Rate applied toConsolidated Statement

Rate of Changes

70.40 yen

-35.04 yen-105.44 yen―%

108.67 yen/$

110.06 yen/$

1.39 yen/$

1.3%*1 Net income attributable to the parent’s shareholders*2 Estimated figures disclosed on August 7, 2019

Sales: Dropped due to output decline in China, US, Japan and Thailand
Operating income: Dropped due to output decline in China, Japan and Thailand despite
significant improvement in Tennessee that withstood output falls in US
Ordinary income: Dropped on unfavorable foreign exchange fluctuation
Net income: Declined due to posting of a loss on valuation of investment securities© YOROZU CORPORATION. 2019 All Rights Reserved.

42

Consolidated Sales by Customer (FY18 1H to FY19 1H )Millions of yen

Millions of yen

100,000
90,00082,433Customer

2018 2Q(%)

2019 2Q(%)*

Nissan Gr

56,35668.4%

51,284

65.6%

Honda Gr

13,50416.4%

12,593

16.1%

Toyota Gr

3,091

3.7%

3,723

4.8%

Isuzu
-911
Honda （-6.7％） Mazda

2,611

3.2%

2,605

3.3%

1,863

2.3%

2,587

3.3%

Kubota

1,092

1.3%

1,248

1.6%

VW

772

0.9%

1,224

1.6%

Suzuki

1,680

2.0%

883

1.1%

78,20480,00070,00060,000ToyotaToyotaHonda+632（+20.4%)50,000-5,072（-9.0％）

40,000

NissanNissan30,000Daimler

0

0.0%

275

0.4%

20,000

GM Gr

24

0.0%

30

0.0%

10,000

Others

1,440

1.8%

1,752

2.2%

Total

82,433100.0%

02018 2Q

78,204 100.0%* Sales from Renault included

2019 2Q

Affected by a drop in sales for Nissan© YOROZU CORPORATION. 2019 All Rights Reserved.

5

Analysis on Change Factors of Consolidated Operation Income (FY18 1H to FY19 1H )Millions of yen

4,500

483

Sales drop

347

3,000

Cost
reduction in
response tocustomerrequestConsolidation
adjustment
Cost saving

Profit from die
equipment

951
1,500

2,589

Worsened productivity at
the second production
site in Mexico694
Depreciation

660

Foreignexchange loss

412
0

FY2018 1H
Results-2,325 Profit fall

400

264

38

FY2019 1H
Results

Drop in sales for the major customer and worsening productivity performanceof the second production base in Mexico led to a profit fall
© YOROZU CORPORATION. 2019 All Rights Reserved.

63

Sales and Operating Income by Region (Before Consolidation Adjustment, FY18 1H to FY19 1H)◆Sales
40,000+196+0.6％-3,719-13.0％

Millions of yen

34,020 34,216

28,654

Changes
Rate ofchanges-4,200-14.3％

29,45024,93525,25020,000
0

FY18

FY18

FY18

FY19

2,457

2,000

-765
-56.3％+135+12.7％

392

FY19

Asia

Americas-2,065-84.0％

Millions of yen

4,000

FY19

Japan

◆Operating Income

1,358

593

0

-1,061 -926
FY19
FY18
FY19
FY18
FY19
Japan
Asia
AmericasJapan: A fall in die and part sales and a royalty income drop affect the sales, which led to a profit falldue partly to depreciation burden
Americas: Sales promotion in Mexico and Brazil withstood output cuts in US and helped sales remain
flat, and Tennessee’s profit kaizen and Alabama’s safe settlement minimized the operating loss
Asia:
A CORPORATION.
significant
in part sales in China and sales fall in Thailand eroded earnings and profits© YOROZU
2019decrease
All Rights Reserved.
- 2,000

FY18

7

Consolidated Balance Sheet Summary (FY2019 1H)
Millions of yen
Mar. 2019

Sep. 2019

Differences

Current deposit-1,694

Notes and acc’ts receivable -2,688

Current Assets

67,42264,528-2,894

Fixed Assets

100,675

96,871-3,804

168,097

161,399-6,698Current Liabilities

40,27340,224-49

Fixed Liabilities

35,51332,038-3,475

Total Assets

75,78772,262-3,525

Shareholders’ Equity

81,88880,509-1,379Other Accumulated
Comprehensive Income-6,235-6,975-740

Non-controlling Interest, etc.

16,657

15,602-1,055

Total Liabilities

Net Asset

92,31089,136-3,174

Total Liabilities and Net Asset

168,097

161,399-6,698

Electronically recorded monetaryclaims-36
Inventories+304
Other current assets+1,220
Tangible fixed assets -3,164

Long term debts-2,984

Net income (loss)
Dividend payment

-832
-546

Valuation difference-342
Foreign currency translation
adjustment-529

Total assets and liabilities decreased due to reduction in accounts
receivable, fixed assets and debts .
© YOROZU CORPORATION. 2019 All Rights Reserved.

84

Ⅰ. FY2019 First-half Financial Performance
Ⅱ. Emergency Profit Kaizen Activities
Ⅲ. FY2019 Annual Forecast
Ⅳ. Recent Activities and Targets
Ⅴ. Redistribution of Profits to Shareholders

9© YOROZU CORPORATION. 2019 All Rights Reserved.

Emergency Profit Kaizen Activities
・Impact of prolonged US-China trade war, and・Tariff issues – Japan/US/EU
are taking a toll on the global economy
as car makers’ sales see slower growth

Japan/US/EU
Tariffs

Impact on
Car Sales

US/China

Yorozu leaves no stone unturned in its efforts
to improve profits – We’ll work as one

1

Ensure maximum efficiency through a production systemaligned with production volume

2

Drive drastic cost cuts – Won’t buy, won’t waste.

Trade Dispute

3 Boost work efficiency along with work style reform
Keywords: Positive kaizen, combination of top-down/bottom-up approach, One Team© YOROZU CORPORATION. 2019 All Rights Reserved.

105

Emergency Profit Kaizen Activities ①

1

Ensure maximum efficiency through a production systemaligned with volume
・Flexible production line to handle fluctuating volume
・Power cost reduction
・Yield ratio improvement

Production system is updated to align with changes in the environment,
and thereby ensure that operation is efficient
11© YOROZU CORPORATION. 2019 All Rights Reserved.

Emergency Profit Kaizen Activities ① Squeeze ・ Stop - ASSY

Mass production line

Downtime

Line that ran 16 h/day → down to 14 h/day due to low volume

UptimeBut by continuing to work 16 h/day rather than 14 h/day, we only
need 4.4 days a week instead of full 5 days.
Therefore, the line is stopped for 0.6 days on weekends.
5 days→4.4 days 12% down

Efficiency UP

The earned extra hours can be set aside for

BeforeAfter cut

© YOROZU CORPORATION. 2019 All Rights Reserved.

・Training (development of multi-skilled workers)
・Kaizen activities (karakuri dojo, equipment maintenance)
・Mandatory vacation day (paid-leave) (work style reform)
126

Emergency Profit Kaizen Activities ① Squeeze ・ Stop - Painting
Painting Line – Now
Squeeze ・ Stop

Painting Line - Before

If ASSY
production issqueezed

Idling Hooks

No Idling Hooks

Painting line is stopped completely

By stopping the painting line on Friday,
power cost is reduced by 20%© YOROZU CORPORATION. 2019 All Rights Reserved.

13

Emergency Profit Kaizen Activities ②

2

Drive drastic cost cuts – Won’t buy, won’t waste
Director compensation cut

Deep budget cuts
Zero unnecessary traveling expenses

・Prohibit domestic/overseas travel by changing
the way company meetings are run・Take full advantage of TV/Web conferencing

Save outgoing expenses
・Refrain from using (pay) external facilities
・Suspend purchasing of office supplies (reuse, e-documentation)

3 Boost work efficiency along with work style reform

・Reduce overtime thru efficiency driven by bottom-up ideas© YOROZU CORPORATION. 2019 All Rights Reserved.

147

Ⅰ. FY2019 First-half Financial Performance
Ⅱ. Emergency Profit Kaizen Activities
Ⅲ. FY2019 Annual Forecast
Ⅳ. Recent Activities and Targets
Ⅴ. Redistribution of Profits to Shareholders

15© YOROZU CORPORATION. 2019 All Rights Reserved.

Forecast Summary for FY2019 Consolidated Results◆Profit and Loss（Year on Year）

Millions of yen

FY2018Results

FY2019Forecast

Year on Year

FY2019Old Forecast *2

Difference fromOld Forecast

169,111

163,000-3.6％

163,000

0.0%

Operating Income

5,290

2,500

-52.7％

2,500

0.0%

Ordinary Income

5,222

1,950

-62.7％

1,950

0.0%

Net Income *1

402

800

＋98.6％

800

0.0%

Sales

FY2018 Results

Difference

Rate of Change

16.94 yen

33.66 yen

＋16.72 yen＋98.7％

110.44 yen/$

108.00 yen/$-2.44 yen/$-2.2%

Net Income per Share
Exchange Rate Applied toConsolidated Statements

FY2019 Forecast*1 Net income attributable to the parent’s shareholders*2 Estimated figures disclosed on August 7, 2019

Sales: A decline is expected due to the impact of output cuts in US, China and Thailand
Operating income: Kaizen measures taken for US output cuts are not enough to offset the rising
fixed costs in Japan and output cuts in Thailand, and thus it will lead to a profit decline
There is no correction in estimates issued previously© YOROZU CORPORATION. 2019 All Rights Reserved.

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Consolidated Sales by Customer (FY18 Results to FY19 Forecast)Millions of yen
180,000

169,111

Millions of yen

163,000

160,000+1,273（+18.3%)

Toyota140,000

ToyotaHonda
120,000-488
Honda （-1.9％）

100,000-8,954（-7.7％）

80,00060,000

NissanNissan40,00020,0000FY2018 Results

Customer

FY18 Results(%)

Nissan Gr *116,99469.2%

108,040

66.3%

Honda Gr25,82815.3%

25,34015.5%

Toyota Gr

6,950

4.1%

8,223

5.0%

Isuzu

5,322

3.1%

4,761

2.9%

Mazda

3,524

2.1%

4,724

2.9%

VW

2,400

1.4%

2,565

1.6%

Kubota

2,163

1.3%

2,341

1.4%

Suzuki

2,892

1.7%

1,888

1.2%

Daimler

76

0.0%

1,208

0.7%

GM Gr

119

0.1%

91

0.1%

FY19 Forecast(%)

Others

2,843

1.7%

3,819

2.4%

Total

169,111100.0%

163,000

100.0%* Sales from Renault included

FY2019 Forecast

Sales will fall due to a drop in sales for Nissan© YOROZU CORPORATION. 2019 All Rights Reserved.

17

Analysis of Changes in Consolidated Operating Income (FY18 Results to FY19 Forecast)Millions of yen

10,0008,000

984

Cost reduction in

response to
109 customer
request

6,000
Profit fromdie
Cost saving
equipment

4,000

Sales
decrease

1,272

Worsened productivity at
the second production
site in Mexico
Depreciation
Consolidation
adjustment

1,145
5,290
2,000

895

470
79

Foreigncurrency
effects

22 2,500-2,790 Profit fall0

FY2018 Results

FY2019 Forecast

Profits are still expected to fall due to a drop in sales for the major customer and higher
burden of depreciation cost.
Emergency Profit Kaizen Activities are going on to serve as effective cost saving initiatives.
© YOROZU CORPORATION. 2019 All Rights Reserved.

18

9

Sales and Operating Income by Region (Before Consolidation Adjustment, FY18 Results to FY19 Forecast)◆Sales-2,594
-3.7％

-403
-0.7％

Millions of yen

100,000

70,65456,56356,160FY18

FY19Changes
Rate ofchanges-5,089-8.6％

68,06059,39254,30350,000
0

FY18

Japan

◆Operating
Income-1,800-46.0％

Millions of yen

5,000

FY18

FY19

-1,445-39.4％-437+20.9％

3,910

FY19

Asia

Americas

3,668

2,223

2,110

0
- 5,000

FY18- 2,088- 1,651

FY18

FY19

FY19

FY18

FY19

Asia
Japan
AmericasJapan: Profits will fall due to rising fixed costs to foster innovation in Oita and falling royalty income
Americas: A sales fall in US will be partly offset by profit kaizen in Tennessee and safe settlement of
Alabama that minimize operating losses.
Asia: A decline in sales and profits is expected as the sales of parts decrease in China and Thailand.
19© YOROZU CORPORATION. 2019 All Rights Reserved.

Capital Investment and Depreciation
Millions of yen

Capital Investment

30,000Asia
25,000Americas
Japan

Asia

24,64325,0005,106

20,01320,00020,00015,50015,451

4,780

14,301

10,8705,700

10,870

8,138
6,910

12,075FY2017FY2018

8,373

12,700

5,262

5,000
5,000

8,220

5,236

4,939

1,769
FY2015

10,592

11,915

6,632

10,00010,0000Japan

15,00015,0005,511

Americas15,800

6,936

5,000

Depreciation

Millions of yen

30,000

3,761

5,100
0
FY2015FY2016FY2017© YOROZU CORPORATION. 2019 All Rights Reserved.

FY2018FY2019 (Forecast)

FY2016FY2019(Forecast)

20

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Ⅰ. FY2019 First-half Financial Performance
Ⅱ. Emergency Profit Kaizen Activities
Ⅲ. FY2019 Annual Forecast
Ⅳ. Recent Activities and Targets
Ⅴ. Redistribution of Profits to Shareholders© YOROZU CORPORATION. 2019 All Rights Reserved.

21(1) Improvement in Profitability・Company management based on free cash flow
・More effective project management for profit
・Innovative Monozukuri(2) Further Progress in Product Competitiveness andDevelopment Capability
・More competitive suspension parts

・Taking advantage of unique technologies to develop new products
・Effective sales promotion along 3 axes (Customer, Product and Region)(3) Enhancement of Corporate Capabilities
・Human resources development
・Organizational review
・ESG management© YOROZU CORPORATION. 2019 All Rights Reserved.

22

11© YOROZU CORPORATION. 2019 All Rights Reserved.

23

Tack welding

Main assembly
Jig changeover© YOROZU CORPORATION. 2019 All Rights Reserved.

24

12

Further Progress in Product Competitiveness & Development Capability

Lightweight Tech Development from 2018 to 2020～20172018～2020

2021～

Innovation of in-house products
New structure, New method & New material are the keys to Lightweight, High Tensile & Cost Cut～2017
Achieved 15% weight reduction of
RR AXLE BEAM in FY17-> Commercialization was planned

2018～2020
New structure and ultra high tensile
steel plate reduce weight by 15%

New structure, ultra high tensile steel plate and multi-materials (resin
and aluminum) reduce weight by 30%
New method development toward innovation (bond, forming and rustproofing)
Development of new products and suspension system for the future = Offering of higher added value
25© YOROZU CORPORATION. 2019 All Rights Reserved.

Further Progress in Product Competitiveness and Development Capability

Showcased at the 46th Tokyo Motor Show
Demand for lightweight suspension parts is increasing inrecent vehicle development as customers are required toinclude new features that lead to weight gain.
Yorozu showed off a wide variety of lightweighttechnologies applied to auto parts at the Tokyo Motor
Show 2019.

President Shido presented on Oct. 23
Number of booth visitors: approx. 9,000（ 3,900 at the previous show)© YOROZU CORPORATION. 2019 All Rights Reserved.

26

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Further Progress in Product Competitiveness and Development Capability-Development of Lightweight Tech

ALTIMA (old model)【SOP】
US: June, 2012

New ALTIMA【SOP】
US: August, 2018

Front SUSPENSION MEMBER for ALTIMA in North America
Item
Old Model
New Model
Main
Material

540MPa class

540MPa class

GeneralPlate
Thickness

1.8mm

1.6mm

Numberof Major
Parts

29

17

Weight32.1kg25.6kg▲20.2%
Offering simplified structure and thinner sheets significantly cuts off theweight in North American specifications
27© YOROZU CORPORATION. 2019 All Rights Reserved.

Further Progress in Product Competitiveness & Development Capability- For the Future
New Product Built on Unique Technology

Idea for a Battery Case

 Unified structure materialized by performing single-sided spot welding Stamping single sheet metal to form beads removed the need for extra reinforcement→ Fewer components: 7 (14 parts less)© YOROZU CORPORATION. 2019 All Rights Reserved.

Lighter: 12.7㎏ (down 17%)28

14

Enhancement of Corporate Capabilities
Health Management
Health Management Declaration – The aim is to realize a healthy & engaging workplace(Oct 2019)
Stress test

＜Our Focus＞① Promote a healthy way of life andprevent lifestyle-related diseases② Promote mental wellness activities③ Promote work-life balance

Eruboshi Certification
Yorozu was awarded the highest (3rd) level of certification (Dec 2018) underthe Act on Promotion of Women’s Participation and Advancement in the Workplace29© YOROZU CORPORATION. 2019 All Rights Reserved.

Enhancement of Corporate Capabilities -Fruitful Stakeholder Dialogues-

Factory tour for analysts（Oct. 1, 2019)

Factory tour for shareholders (Oct. 18, 2019)

Yorozu Corporate Report (scheduled to be issued in Dec. 2019)© YOROZU CORPORATION. 2019 All Rights Reserved.

30

15Enhancement of Corporate Capabilitis -Effectual Supervisory Functions-Nominating
Committee

Outside Director

Compensation
Committee

Supervise management

Management

31© YOROZU CORPORATION. 2019 All Rights Reserved.

Nissan Motor

Toyota Motor

Regional Quality Award from
Nissan North America (Mexico)

Appreciation Award for Quality Activities
from Toyota Motor East Japan (YC)

KubotaSubaruProcurement General Manager
Silver Award from Kubota (YC) Excellence in Quality Award
from Subaru (YC)
© YOROZU CORPORATION. 2019 All Rights Reserved.

Honda Motor

Quality and Delivery Excellence Award
from Honda Brasil (Brasil)

Isuzu Motors

Quality Achievement Award
from Isuzu Motors (YC)

Hino Motors

Excellence in Quality Award
from Hino Thailand (Thailand)
32

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Ⅰ. FY2019 First-half Financial Performance
Ⅱ. Emergency Profit Kaizen Activities
Ⅲ. FY2019 Annual Forecast
Ⅳ. Recent Activities and Targets
Ⅴ. Redistribution of Profits to Shareholders

33© YOROZU CORPORATION. 2019 All Rights Reserved.

Financial Strategy: Extension of Shareholders Benefit Program
271.5%(Yen/Share)

74.3% 80%

100

80

53yen

58yen

59yen

Memorial dividend
included

51.6%
51yen

60

40
16yen

17yen

19yen

18yen

26yen

35.5% 35.4%
40

19

40

18

46yen

40%
25yen

16

30%

23

20%

5

13

34

8

9

9

10

10

11

8

8

9

9

10

10

11

2008

2009

2010

2011

2012

2013

2014

Interim dividend
Memorial dividend

60%
50%

20.1%

20

0

20yen

70%

18

25

23

10%
12
0%

2015

2016

Final dividend
Dividend payout ratio

2017

2018

2019
Forecast

Prioritize shareholders even in hardship under the principle to achieve the target payout ratio© YOROZU CORPORATION. 2019 All Rights Reserved.

34

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FY2019 First-halfFinancial Results
Thank you for your attention

Yorozu Website

http://www.yorozu-corp.co.jp© YOROZU CORPORATION. 2019 All Rights Reserved.

35

Disclaimer and Copyright
Please note that this document contains the forward-looking statements. We
ensure that the business forecast, estimation and future strategies are based on
the information we reasonably obtained as of the date of this document and thejudgment from normally-anticipated assumptions and beliefs. However, suchforward-looking statements do not provide any guarantees for the future
performance and may involve risks, uncertainties and other factors which causematerial differences in any future results or performance expressed or implied inthis document.
We aim to proactively provide fair disclosure of accurate and necessary
information to investors and other related individuals, but we ask you not to place
undue reliance on such forward-looking statements herein to make any decisions.
In light of the copyright policy, please be advised that unauthorized reproduction
or distribution of this document for any purpose is strictly prohibited.
Thank you very much for your understanding and cooperation.
Contact Us
Yorozu Corporation
Person responsible: AKIRA SASO Vice President (CEVP&CFO), General Manager of Finance Dept.
Contact personnel: YOSHITAKE TAKAHASHI, Manager, Finance Dept.
TEL 045-543-6802

FAX 045-543-4915© YOROZU CORPORATION. 2019 All Rights Reserved.

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