AKEBONO REPORT 2018

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06420Review of Operations by RegionReview of Fiscal 2017In China, the Akebono Group posted net sales of JPY22.5 billion (12.5% year-on-year increase) due to strong sales of products for SUVs and newly received orders for new models. Operating profit was JPY2.6 billion (2.8% year-on-year increase) mainly due to favorable orders received for highly profitable friction material products and successful rationalization of production, despite increases in labor costs, depreciation, and costs of complying with environmental regulations, thus showing year-on-year increase in sales and profits. Cash Flow StatusCash flows for FY 2017In Thailand, net sales came to JPY7.9 billion (19.0% year-on-year increase) due to increased orders received for products for both domestically sold and exported compact cars and to favorable orders received for aftermarket friction material products. Operating profit was JPY0.5 billion (14.4% year-on-year increase) due to increased sales despite the effects of higher labor costs and the cost of starting up a foundry that began operations last year, thus showing year-on-year increases in sales and profits.In Indonesia, net sales climbed to JPY18.8 billion (14.9% year-on-year increase) mainly due to favorable Cash and cash equivalents at the end of the fiscal year under review decreased by JPY2.9 billion from the end of the last fiscal year to JPY12.7 billion. Free cash flows out of cash flows from operating activities minus cash flows from investing activities came to JPY8.3 billion.Cash flows from operating activitiesThe main factors behind the net cash inflow include profit before income taxes of JPY4.2 billion, depreciation of JPY12.4 billion, a JPY2.9 billion increase in working capital, while income taxes of JPY2.8 billion were paid out.Cash flows from investing activitiesThe main factor behind the net cash outflow was the payment of JPY11.4 billion for the purchase of property, plant and equipment in connection with capital investments, mainly in Japan, the U.S., and Europe.sales for products for new MPVs (multi-purpose vehicles) and increases in orders received for products for global platform vehicles (common platforms for global distribution) exported to Europe, and for motorcycles. Operating profit increased soared to JPY2.0 billion (41.4% year-on-year increase) due to the absence of one-time expenses associated with the new business startup that began operation last year, the rationalization of production and increased orders, despite higher labor costs. Operating profit is expected to remain largely unchanged from that of the last fiscal year because of higher sales and rationalization effects, despite negative factors such as rising labor costs and increasing depreciation expenses associated with capital investment. Outlook for Fiscal 2018Net sales of JPY49.4 billion (0.4% year-on-year increase).Thai casting plant A&MNet sales(Billions of yen)Cash flows from financing activitiesThe main factors behind the net cash outflow include a JPY3.4 billion net decrease in short-term loans payable, repayment of JPY25.3 billion long-term loans payable, and JPY3.1 billion dividends paid to non-controlling interests, while there were inflows of JPY19.2 billion through proceeds from long-term loans payable and JPY2.1 billion through proceeds from sale and leaseback. 604032.6202013201420152016201715.6March 31, 2017Cash and cash equivalents(FY)49.249.442.043.036.22018Forecast(11.1)+19.4(11.3)Cash flows Cash flows Cash flows from from from investing activitiesfinancing activitiesoperating activitiesOperating profit(Billions of yen)(FY)5.25.14.74.44.23.8201320142015201620172018Forecast(Billions of yen)+0.112.7Exchange March 31, rate change2018Cash and cash equivalentsAKEBONO REPORT 2018 44Asia