AKEBONO REPORT 2017
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EURO® Ultra-Premium ceramic disc brake padsReview of OperationsAkebono Brake Corporation’s EURO® Ultra-Premium ceramic disc brake pad line was awarded “Best Overall Import Aftermarket Product or Product Line” by the Import Vehicle Community, an automotive group in the United States. This marks the second time ABC has won this award (the rst time was in 2014). EURO® Ultra-Premium ceramic disc brake pads were designed for European vehicles to realize the excellent braking performance expected in European vehicles, control characteristics and smooth pedal feeling. These brake pads offer the highest levels of performance in terms of reducing noise, vibrations and harshness, which are common problems with brakes. They also drastically reduce brake dust, which helps to keep wheels clean. In addition, these brake pads contribute to the environment by minimizing the content ratio of copper, which is being regulated as a chemical substance in some states in the United States. Akebono’s EURO® Ultra-Premium ceramic disc brake Akebono Brake Corporation’s (ABC) EURO® Ultra-Premium Ceramic Disc Brake Pads Named Best Overall Import Aftermarket Product Awardwill be implemented to strengthen collaboration within the Akebono Group, and restructure the manufacturing function by promoting production efciency improvements and increasing production capacity based upon a return to the basic philosophy of Akebono’s corporate culture of “Monozukuri” (manufacturing excellence) to achieve stability of operations and further improvements in earnings.2. Productivity improvementAkebono Brake is promoting optimization of manufacturing functions on a global basis by considering Akebono Group’s various production facilities’ capacity utilization and reviewing logistics conditions, and by transferring production of some friction material products to overseas facilities within our group (Japan and Thailand) to optimize manufacturing on a global basis. Manufacturing lines had been operating at full capacity three shifts per day, seven days a week in response to the prolonged period of strong demand. But optimization efforts have allowed our company to reduce the work load to three shifts for six days a week, and to begin reducing the number of shifts to two per day at some lines. Consequently, facility maintenance and repairs can now be implemented as planned and expenses for expedited freight of parts because of production delays have been reduced by a large margin and earnings improvements are being achieved.Akebono Group will conduct efforts to achieve further improvements in manufacturing optimization and stability. 3. Manufacturing capacity increaseIn response to the growing demand for aluminum brake calipers in North America and Europe, new manufacturing facilities have been introduced to increase production capacity to the Columbia Plant in South Carolina in April 2016, and a new line began full scale operation in October 2016. Moreover, the expanded manufacturing facilities for friction materials as part of the highly protable aftermarket parts business at the Glasgow Plant in Kentucky were expanded in February 2017. Furthermore, output capacity of products responding to strong demand from pickup trucks and sports utility vehicles (SUVs) applications will be increased with a view to customer needs and market trends.4. Optimization of sales and purchase pricesEfforts to improve manufacturing costs, and reviews of optimization of sales and purchase pricing were undertaken to improve the earnings generating structure of the North American operations. The results of these efforts are expected to contribute to improved earnings of the North American operations from the current term onwards. Outlook for Fiscal 2017While effective pricing revisions were achieved during scal year ended March 2017, our sales are expected to decline due to slow automobile sales in North America and the inuence of termination of some platforms. With regard to prots, pricing revisions, productivity improvements, success of North American operations restructuring efforts, and large declines in consulting and expedited shipment fees recorded during the previous scal year are expected to allow operating prot to improve by a large margin.pad was selected from among hundreds of European car parts sold in the United Stated and honored with this award based on a comprehensive evaluation of its commercial success, quality, level of demand, distribution process, packaging and sales network. AKEBONO REPORT 2017 26Part 2 Review of Operations

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