FY2018 Mid-Year Financial Results
Ken Shido, President & COO
The first section of the Tokyo Stock Exchange (securities code: 7294)
This is an internal English translation of the YOROZU 2018 Mid-year Financial Reportissued in the Japanese language and is provided solely for the convenience of English
speaking readers. In case of discrepancy the Japanese version prevails.
© YOROZU CORPORATION．2018 All Rights Reserved.

AgendaⅠ. FY2018 Mid-Year Financial Results
Ⅱ. FY2018 Annual Forecast
Ⅲ. Update on Earnings Recovery in the US
Ⅳ. Recent Activities
Ⅴ. Redistribution of Profits to Shareholders© YOROZU CORPORATION． 2018 All Rights Reserved.

21

Ⅰ. FY2018 Mid-Year Financial Results
Ⅱ. FY2018 Annual Forecast
Ⅲ. Update on Earnings Recovery in the US
Ⅳ. Recent Activities
Ⅴ. Redistribution of Profits to Shareholders

3© YOROZU CORPORATION．2018 All Rights Reserved.

Consolidated Financial Statement Summary for FY2018 Mid-Year (Year on Year)
Millions of yen

FY2018
Mid-YearYear on Year

FY2017
Mid-YearPrevious Forecast
for FY18 Mid-Year2

Difference from
Previous Forecast

Sales

82,43385,709-3.8％

83,500-1.3%

Operating Income

2,589

3,148

-17.7％

2,600

-0.4%

Ordinary Income

2,790

3,888-28.2％

2,800-0.4％

Net Profit1

1,673

2,584-35.3%

1,600

＋4.6％

FY2018 Mid-Year

FY2017 Mid-YearDifferences

Rate of changes

Net Profit per Share

70.40 yen108.73 yen-38.33 yen-35.3％

Rate Applied toConsolidated Statement

108.67 yen/$

112.34 yen/$-3.67 yen/$-3.3%

1 Net profit attributable to the parent company shareholders
2 Estimated figures disclosed on May 10, 2018
(No changes in estimated figures disclosed on Aug. 9, 2018)

Sales: Dropped as a decrease in sales of US eroded China’s boosting salesOperating income: Dropped due to output decline in US, Mexico and Japan despite
significant improvement in Tennessee
Ordinary income: Dropped on unfavorable foreign exchange fluctuation
Net profit: A further reason for the drop is impact of corporate tax cuts in US due to US facility loss
© YOROZU CORPORATION．2018 All Rights Reserved.

42

Consolidated Sales by Customer (FY17 Mid-Year to FY18 Mid-Year )Millions of yen
100,000

Millions of yen

85,709Customer

FY17 Mid-Year(%)

FY18 Mid-Year(%)

Nissan Gr *58,46268.2%

56,356

68.4%

Honda Gr

15,47918.1%

13,504

16.4%

Toyota Gr

3,522

4.1%

3,091

3.7%

Isuzu

2,399

2.8%

2,611

3.2%

-1,975（-12.7％） Mazda

1,672

2.0%

1,862

2.3%

Suzuki

1,224

1.4%

1,680

2.0%

Kubota

1,023

1.2%

1,092

1.3%

ＶＷ

439

0.5%

772

0.9%

GM Gr

258

0.3%

240.0%

Others

1,231

1.4%

1,441

1.8%

Total

85,709 100.0%

82,43390,00080,000-431（-12.2％）

ToyotaToyota70,000Honda

60,000Honda

50,000-2,106（-3.6％）

40,000

NissanNissan30,00020,00082,433 100.0%* Sales to Renault included

10,000Decline in sales due to a drop insales to Nissan and Honda

02017 Mid-Year 2018 Mid-Year5© YOROZU CORPORATION．2018 All Rights Reserved.

Analysis on Change Factors of Consolidated Operation Income (FY17 Mid-Year to FY18 Mid-Year)
Millions of yen

8,000

6,000

+575

+444

4,000

Cost saving

2,000Profit fromdie
equipment+157
SalesdropForeignexchange
profitCost increase
Cost reduction in attributed to
newly launchedresponse toproduction basecustomer requestConsolidation-645

Depreciation adjustment-686-284

3,148-559 Profit fall-14-106

2,589

0

FY2017 MidFY2018 MidYear Results
Year Results
Despite favorable effects of cost-saving efforts and die profits, operation income went down dueto Alabama startup costs and a sales drop owing to production shrinking in Japan© YOROZU CORPORATION．2018 All Rights Reserved.

63

Sales and Operating Income by Region (Before Consolidated Adjustment, FY17 Mid-Y to FY18 Mid-Y)◆Sales-5,706-14.4％

60,000-1,605-5.3％

40,00030,259 28,654

Millions of yen

39,726＋3,349＋12.8％

34,020Changes
Rate ofchanges

26,101 29,450

20,0000
FY2017 Mid-Y

FY2018 Mid-Y◆Operating Income

FY2018 Mid-Y

FY2017 Mid-Y

2,883＋115
＋9.3％

-216
-25.6％

2,457

FY2018 Mid-Y

Asia

Americas-426-14.8％

Millions of yen

4,000

FY2017 Mid-YJapan

1,358

1,243

2,000
0- 2,000
FY2017 Mid-Y

FY2018 Mid-Y-845-1,061FY2017 Mid-Y FY2018 Mid-YJapan

FY2017 Mid-Y

FY2018 Mid-Y

Asia

AmericasJapan: Operating income fell due to a decrease in die and part sales and it led to a profit fall.
Americas: Output falls caused a drop in earnings in US and Mexico. Operating income was negatively affected byAlabama base startup and fixed costs in Mexico despite a bump in sales at Tennessee.
Asia: Sales increased in China and profits increased in Thailand as a result of improved operations
7© YOROZU CORPORATION．2018 All Rights Reserved.

Consolidated Balance Sheet Summary (FY2018 Mid-Year)
Millions of yen
Sep. 2018

Mar. 2019

Differences

Current Assets

63,257

69,590-6,333Fixed Assets

104,354

105,493-1,139167,611

175,083-7,472Current Liabilities

40,82645,632-4,806

Fixed Liabilities

32,631

32,435＋196

Total Assets

Total Liabilities

73,45878,068-4,610Shareholders’ Equity

83,95582,845＋1,110

Other Accumulated
Comprehensive Income-5,466-2,992-2,474

Non-controlling Interest, etc.

15,663

17,162-1,499Net Asset

94,15397,015-2,862

Total Liabilities and Net Asset

167,611

175,083-7,472

Cash-1,793
Electronically recorded monetaryclaims+212
Inventories-408
Notes and acc’ts receivable -3,287
Other current assets-1,057

Tangible fixed assets-1,214

Electronically recorded monetary
obligations-509
Notes and accounts payable -2,686
Short term debts-1,183

Net profit
Dividend payment+1,673-808

Valuation difference+130
Foreign currency translation
adjustment-2,632

Reduction in accounts receivable and payable decreased total assets and liabilities.
© YOROZU CORPORATION．2018 All Rights Reserved.

84

Ⅰ. FY2018 Mid-Year Financial Results
Ⅱ. FY2018 Annual Forecast
Ⅲ. Update on Earnings Recovery in the US
Ⅳ. Recent Activities
Ⅴ. Redistribution of Profits to Shareholders

9© YOROZU CORPORATION．2018 All Rights Reserved.

Forecast Summary for FY2018 Consolidated Statement◆Profit and Loss（Year on Year）
FY2018ForecastSalesMillions of yen

FY2017
Statement

Year on Year

FY2018Previous
Forecast 2

Difference from
Previous
Forecast

169,000

171,536-1.5％

171,000-1.2%

Operating Income

5,200

6,029

-13.8％

6,400-18.8%

Ordinary Income

5,300

5,648

-6.2％

6,300

15.9%

Net Profit1

3,100

2,717

＋14.1％

4,000-22.5%FY2018 Forecast

FY2017 Statement

Difference

Rate of change

Net Profit per Share

130.42 yen

114.31 yen＋16.11 yen＋14.1％

Exchange Rate Applied toConsolidated Statements

110.00 yen/$

112.16 yen/$-2.16 yen/$-2.0%

1 Net profit attributable to the parent company shareholders
2 Estimated figures disclosed on May 10, 2018
(No changes in estimated figures disclosed on Aug. 9, 2018)

Sales: A decline is expected due to a reduction of US customers.
Operating income: Will be affected by sales drops in US and growing fixed costs of strategic
investment despite steady improvement in Tennessee.
Net profit: A rise is projected as tentative negative impact of US corporate tax cuts is removed.
© YOROZU CORPORATION．2018 All Rights Reserved.

105

Consolidated Sales by Customer (FY17 Statement to FY18 Forecast)Millions of yenMillions of yen

171,536

180,000

169,000-731（-10.3%)160,000

ToyotaToyota140,000

Honda-3,420（-11.4％）

Honda

120,000
100,000-1,061（-0.9％）

80,00060,000

NissanNissan40,00020,000

Customer

FY17
Statement

Nissan Gr*

117,63868.6%

116,577

69.0%

Honda Gr29,96817.5%

26,548

15.7%

Toyota Gr

7,106

4.1%

6,375

3.8%

Isuzu

5,188

3.0%

5,140

3.0%

Mazda

3,532

2.1%

3,810

2.3%

Suzuki

2,702

1.6%

2,782

1.6%

Kubota

2,028

1.2%

2,189

1.3%

ＶＷ

785

0.5%

2,339

1.4%GM Gr

3420.2%640.0%(%)(%)

FY18 Forecast

Others

2,247

1.3%

3,176

1.9%

Total

171,536

100.0%

169,000

100.0%* Sales from Renault included

A decrease in profits is expected due to adrop in sales to Nissan and Honda

0FY2017 Results

FY2018 Forecast

11© YOROZU CORPORATION．2018 All Rights Reserved.

Analysis of Changes in Consolidated Operating Income (FY17 Statement to FY18 Forecast)Millions of yen
14,00012,000＋1,54010,000＋55
Sales decrease＋1,537

Cost reduction
in response tocustomer
requestForeigncurrency effects

8,000-603

Profit from die
equipment

Depreciation

6,000-1,837

Cost saving
4,000

6,029-829

2,0000FY2017
Statement

Cost increase
attributed tonewly
launchedproduction
baseProfit fall-400-197

Consolidation
adjustment

-924

5,200

FY2018
Forecast

Despite cost savings and profits from dies, a profit fall is expected due to growing costs ofAlabama setup and weak sales in Mexico which has suffered from long term suspension ofoperations at customer production facilities.
© YOROZU CORPORATION．2018 All Rights Reserved.

126Sales and Operating Income by Region (Before Consolidation Adjustment, FY17 Statement to FY18 Forecast)◆Sales-4,649-6.2％-2,781-4.6％

Millions of yen

100,000

60,14775,085 70,436

57,36650,000Changes
Rate ofchanges＋2,259＋4.0％

56,309 58,568

0FY2017◆Operating
IncomeFY2018FY2017

Japan-8-0.2％

Millions of yen

3,804

5,000

FY2017FY2018-252-7.6％＋317＋15.1％

3,796

FY2018Asia

America

3,308 3,056

0- 5,000

FY2017-2,105-1,788

FY2017FY2018FY2018JapanFY2017

FY2018Asia

AmericaJapan: Sales will drop owing to a decrease in die sales. Operating profit will remain the same level.
Americas: Although a sales decrease, no great loss is expected thanks to significant rise in Tennessee.
Asia: Sales will be boosted in China and Indonesia but it will be offset by depreciation expense of 3500t press
installed in China.
13© YOROZU CORPORATION．2018 All Rights Reserved.

Capital Investment and Depreciation
Capital Investment

Millions of yen

30,00030,000Asia
25,000Asia
24,643

Americas25,000

Japan
5,106

20,01320,000 17,833
6,936

10,87010,87014,301

10,000011,4006,000

15,000
5,511

8,138
9,265

Japan19,900

6,760

5,000

Americas20,00015,50015,000Depreciation

Millions of yen

9,300

1,769

FY2014FY2015

12,200

6,632

5,262

8,220

1,808

10,000 8,373

11,915

8,373
10,592

5,000
5,236

4,939

4,600

FY2016FY2017FY20180(Forecast)© YOROZU CORPORATION．2018 All Rights Reserved.

FY2014FY2015FY2016FY2017FY2018(Forecast)147

Ⅰ. FY2018 Mid-Year Financial Results
Ⅱ. FY2018 Annual Forecast
Ⅲ. Update on Earnings Recovery in the US
Ⅳ. Recent Activities
Ⅴ. Redistribution of Profits to Shareholders

15© YOROZU CORPORATION．2018 All Rights Reserved.

Update on Earnings Recovery in the US◆Changes in Workforce Number and Turnover Rate at Tennessee
Number of workers

2,500

2,140％

Total workers

25Turnover rate

2,000
1,500

20

12.9%

1,166

1,000

15103.1％

500050

FY2017→FY2018→Support from Japan(Dispatch of officer, Centralized control of kaizen, Instructions）
Early startup of Alabama
Better employee benefits (pay raise)

Headcount and turnover rate have been reduced steadily with the help of kaizen at Tennessee.
Effects of kaizen are not enough to ensure achievement of break-even in 2018 due to output declines.
© YOROZU CORPORATION．2018 All Rights Reserved.

168

Update on Earnings Recovery in the US
Kaizen example at Tennessee
Number of operators
Inspection: 1Packaging: 2- Inspection and packaging
are fully automated- No human operators

Kaizen-based mindset and voluntary behavior have been widespread among local staffs.
17© YOROZU CORPORATION．2018 All Rights Reserved.

Action Plan for Earnings Recovery in the US(Alabama)
Alabama Startup
Commencement of Delivery for New Altima (from Aug. 2018)

Jidoka assembly line
© YOROZU CORPORATION. 2018 All Rights Reserved.

189Ⅰ. FY2018 Mid-Year Financial Results
Ⅱ. FY2018 Annual Forecast
Ⅲ. Update on Earnings Recovery in the US
Ⅳ. Recent Activities
Ⅴ. Redistribution of Profits to Shareholders© YOROZU CORPORATION．2018 All Rights Reserved.

19

Outline of Recent Activities(1) Strategies to Improve Profitability(2) Further Progress in Product Competitiveness andDevelopment Capability(3) Enhancement of Corporate Capabilities(4) Quality Awards in FY2018© YOROZU CORPORATION．2018 All Rights Reserved.

20

10Strategies to Improve Profitability ①
Daimler Jidoka Line (adopted in an overseas site)

ダイムラーの動画Appearance of jidoka welding line
Launched a serial production of suspension that is mounted on
Mercedes-Benz A-Class Sedan© YOROZU CORPORATION. 2018 All Rights Reserved.

21

Strategies to Improve Profitability ②Jidoka of Press (adopted in a domestic site)

Unmanned material handling robot (eye robot) has made real jidoka© YOROZU CORPORATION. 2018 All Rights Reserved.

2211

Improve Product Competitiveness / Development Capabilities

Development of light weight product; plan in 2018 to 2020)2018～2020

～2017

2021～

Innovative evolution of our productsLight weight/ High stiffness/ Low costBy applying new structure / new manufacturing methods/ new materials～2017
Reduced 15% of the weight ofRR AXLE BEAM in FY2017-> Planned for commercialization

2018～2020
New structure & super high-tensilesteel Reduce weight - 15%

New structure & super high tensile steel plate and multi-material (resinand aluminum) Reduce weight - 30%
Evolution through development of new manufacturing methods (for joining, formingand rust prevention)
Development of new products for the future/Suspension system development = Increase added-value
23© YOROZU CORPORATION. 2018 All Rights Reserved.

Further Progress in Product Competitiveness & Development Capability
Altima (previous model)【SOP】
US: June, 2012

Development with light-weight technology
New Altima【SOP】
US: August, 2018

Front SUSPENSION MEMBER for Altima in North America
ItemOld Model
New Model
Main
Material

540MPa class

540MPa class

GeneralPlateThickness

1.8mm

1.6mm

Numberof Major
Parts

29

17Weight

32.1kg25.6kg-20.2%
Offering simplified structure and thin plates significantly cuts off the weightin North American specifications© YOROZU CORPORATION. 2018 All Rights Reserved.
2412

Enhancement Corporate Capabilities
Organization review

 Strengthening advanced development
 Elevate Advanced Development Gr. to new R&D Dept., with the aim ofstepping up research and development of new manufacturingmethods and new structural parts.
One Management
Super high tensile
steel forming

Mfg Eng Dept.

Collaborate
Mfg Eng Dept.

Aluminum forming

Advanced Dev.
KaizenMulti materials

R&D Dept.

Parts integration
Adv. Dev. Gr.

R&D Dept.

Integrate
wholeprocess

Dev. &Test

Kaizen Gr.

Collaboration

Dev. & Prototype Gr.

Light-weightsuspension
ElectrifiedSuspension

Product Eng Dept.
Previous organization
Collaborate25© YOROZU CORPORATION．2018 All Rights Reserved.

Enhance Corporate Capabilities
Organization review

 Established new Diversity Promotion Group
Bring together and shape the ideas from the Smart Work Committee andthe proposals from departments.
国籍Nationality

年齢
Age

性別
Gender
障がい
Challenged

人種
Race
文化Culture© YOROZU CORPORATION． 2018 All Rights Reserved.

価値観
Value

ライフスタイル
Lifestyle26

13

Quality and Development Awards in FY2018 Mid-YearFinalist to Quality Award from
Nissan North America (Mexico)

Thai Regional Quality Award from
Nissan Motor Thailand (Thailand)

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

Excellence in Quality Award fromHino Motors USA (US)© YOROZU CORPORATION． 2018 All Rights Reserved.

Quality and Delivery
Excellence Award from
Honda Brasil (Brasil)

Certificate of Achievement fromIsuzu Motors (YC)
27

Ⅰ. FY2018 Mid-Year Financial Results
Ⅱ. FY2018 Annual Forecast
Ⅲ. Update on Earnings Recovery in the US
Ⅳ. Recent Activities
Ⅴ. Redistribution of Profits to Shareholders© YOROZU CORPORATION．2018 All Rights Reserved.

2814

Financial Strategy: Extension of Shareholders Benefit Program(Yen/Share)
100

51.6%

8059yenIncl. commemorative
dividend50%
58yen

35.5% 35.4%
60

51yen

16yen

17yen

18yen

19yen

19

40

4035%

35%

1030%

16

2320%

25232017

2018

899889910101120082009

2010

2011

2012

2013

2014

Interim dividend
Memorial dividend

10%

34

111040%46yen

520020.1%

20yen

53yen
1826yen
40

35.0%

180%
2015

2016

Final dividend
Dividend payout ratio

2019

2020

Forecast Forecast Forecast

Continue 35% as the target payout ratio in FY2018 onward© YOROZU CORPORATION．2018 All Rights Reserved.

29

FY2018 First-halfFinancial Results
Thank you for your attention

Yorozu Website

http://www.yorozu-corp.co.jp© YOROZU CORPORATION．2018 All Rights Reserved.

30

15

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, Finance Dept.
TEL 045-543-6802

FAX 045-543-4915© YOROZU CORPORATION．2018 All Rights Reserved.

3116