AKEBONO REPORT 2017

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2PARTReview of OperationsProgress of akebono New Frontier 30 - 20163 Expanding high performance brake business and recreating European operations＞Return to a sound nancial conditionProgress is being made according to schedule in the high performance brake business. As a part of plans to create an integrated production structure in Europe, the transfer of Akebono is keen to make a nancial recovery by rmly advancing the three pillars of aNF30-2016, namely 1) rebuilding North American operations, 2) establishing global networks based on product-based business units, and 3) expanding the high performance brake business and recreating European operations. In scal 2016, the rst scal year of aNF30-2016, Akebono made progress in line with the plan, achieving its target for spending JPY14.9 billion on capital investments. The SG&A ratio for domestic operations was 14% in the rst scal year, compared with 14.5% in the previous scal year, against the 12% target. In scal 2016, Akebono spent JPY10.8 billion on development. The Company intends to invest JPY10 billion annually in development, while shifting the allocation of funds from application development to focus on more advanced development. Akebono will accelerate measures with the aim of achieving the targets of the midterm business plan as early as possible. FY2015 ActualFY2016 ActualInitiative 1Control InvestmentControl CAPEX under ¥15 billionCAPEX¥ 18.6 billion¥ 14.9 billion*1Initiative 2Reduce SG&A*2Aim for SG&A ratio in Japan under 12%SG&A ratio in Japan14.5%14.0%Initiative 3Prioritize R&D costsShift priority from application R&D to advanced R&DReduce R&D costs to ¥10.0 billionR&D costs¥ 11.7 billion¥ 10. 8 billion*1 Excluding re-purchase of leased assets of ¥3.8 billion in US *2 Selling, general and administrative expensesthe high performance brake caliper business from ABCS is proceeding on schedule for completion during 2017. Basic policyAkebono’s strengthsR&D StrategyAbsolute commitment to differentiated products, light weight, high performance, enhanced design and high quality• Realize both high performance and high quality by combining high performance brake technologies accumulated through F1 activity, superior NVH knowhow and cutting-edge manufacturing technology.Sales StrategyExpand sales especially in Europe with high performance technologies gained through brake development for premium German automakers.• Mass production of 6-pot opposed high performance brake calipers• Developed and supply world’s rst mass production 10-pot opposed brake calipers• Appeal of advanced technology Aiming for annual production of one million units in 20186-pot opposed aluminum monoblock brake caliper10-pot opposed aluminum monoblock brake caliper23 AKEBONO REPORT 2017