AKEBONO REPORT 2016

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Automobile sales increased over the previous year due to the impact of a gradual economic recovery, although levels remained below those prior to the European debt crisis. In its European operations, the Company saw a drop in some areas of its aftermarket products business, but strong sales of products for global platform cars (common platforms used on a worldwide basis), particularly products imported from the Company’s Asian facilities, and of high-performance brakes imported from the Company’s North American facilities. As a result, net sales rose ¥2.0 billion, or 22.2%, year on year to ¥10.9 billion. On the earnings front, the Company recorded increased costs generated by added labor and depreciation expenses associated with the start of operations at the Slovakia Plant, and costs associated with building a sales structure for the caliper business ahead of future expansion. Nevertheless, optimization of disc brake pad pricing and the emerging impact of improvements in production processes combined with the effects of procurement rationalization kept the operating loss to ¥0.9 billion, as compared to an operating loss of ¥0.5 billion in the previous fiscal year. Net sales are forecasted to drop slightly in fiscal 2016. Operating losses are expected to continue, due in part to the change to a product-based structure, as well as to increased costs related to the future launch of high performance brake production.Review of Fiscal 2015Fiscal 2016 Strategy and OutlookEuropeTOPICSTo begin work on fundamental management reforms in the North American business, including resolving production-related problems there and strengthening governance, Dr. Wilm Uhlenbecker has been appointed president and CEO of Akebono Brake Corporation (ABC), the U.S.-based Akebono subsidiary that functions as its headquarters in North America. Dr. Uhlenbecker holds a doctorate in mechanical engineering as well as a master of business administration degree, both from RWTH Aachen University in Germany. His prior experience includes management positions in engineering, quality control, and numerous other fields. He has a successful record of corporate turnarounds through strategic cost reductions and manufacturing footprint restructuring. Under his leadership, the North American business will move forward with locally-driven efforts to strengthen its management structure.Dr. Wilm Uhlenbecker Takes Over as CEO at U.S. Subsidiary Tapped to Lead North American Management ReformsDr. Wilm UhlenbeckerReview of Operations24AKEBONO REPORT 2016