AKEBONO REPORT 2016

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Review of OperationsTOPICSTo strengthen its operating base in Europe, in 2014 Akebono established disc brake manufacturing subsidiary Akebono Brake Slovakia s.r.o. (ABSK), in Trencin, the Slovak Republic. While the Company has a presence in Europe with AASA of France, which also manufactures disc brake pads, the addition of ABSK is part of Akebono’s strategy to create a total supply structure for brakes in Europe and strengthen competitiveness on a global basis. An opening ceremony for ABSK was held in June 2015. Approximately 50 guests attended the ceremony, including The First State Secretary of the Ministry of Economy of the Slovak Republic, Mr. Rastislav Chovanec, the Mayor of Trencin, Mr. Richard Rybnicek, and the Ambassador of Japan to the Slovak Republic, Mr. Akio Egawa. Akebono was represented by the President and CEO of Akebono Brake Industry, Hisataka Nobumoto, along with several executives and associates. Events included a tree planting ceremony, the presentation of commemorative items, and a ribbon cutting ceremony, as well as the plant tour. ABSK currently handles cast-iron brake caliper assembly operations, and plans to start mass production in August of 2016. The company is also considering expanding operations by adding state of the art facilities for manufacturing aluminum brake calipers for high performance vehicles, which will make the new plant a strategic manufacturing location.(Note: Titles are as of the date of the ceremony.)Manufacturing Subsidiary Akebono Brake Slovakia s.r.o. Begins Mass Production and Supply of Disc Brakes in EuropeOutline of SubsidiaryAkebono Brake Slovakia s.r.o. (ABSK) opening ceremonyABSK office building(1) Name: Akebono Brake Slovakia s.r.o.(2) Location: Trencin, Slovak Republic (110 km northeast of Bratislava, the capital)(3) Representative: Jean de Montlau(4) Business: Manufacturing and sale of automotive brakes(5) Capital: €12,000,000(6) Date of establishment: April 1, 2014(7) Equity ratio: Akebono Brake Europe N.V. (Wholly-owned subsidiary of Akebono Brake Industry) 100%(8) Lot area: Approx. 42,000 m2(9) Building area: Approx. 12,000 m2(10) Start of production: August 2015Automobile sales in China in the first half of fiscal 2015 rose only slightly year on year, due to sluggish demand and a build-up of inventory. In the second half, however, demand increased significantly due to the impact of a tax reduction on compact cars (those with a displacement of less than 1600 cc). Operations in China saw an increase in sales of products for global platform cars, expansion of orders, including business with new customers, and the impact of foreign currency translation (¥2.0 billion). As a result, sales increased 36%, or ¥5.1 billion, year on year to ¥19.4 billion. At the same time, operating income rose by 50.5%, or ¥0.8 billion, year on year to ¥2.5 billion, reflecting increased earnings with the expansion of orders and the impact of production and procurement rationalization and cost reductions, despite increases in depreciation costs and labor costs, among others.Review of Fiscal 2015AsiaAKEBONO REPORT 201625