Issues to be Addressed

Initiatives for Promoting Sustainable Growth in the Future

In accordance with the Business Turnaround Plan under Business Turnaround ADR Proceedings, Akebono has been working on each measure for business structural reforms since 2019.

Due to the impacts of COVID-19, order fluctuations caused by the shortage of semiconductors, and the steep rise in market prices of raw material and energy costs which were not anticipated in the Business Turnaround Plan, the quantitative plan for operating profit was underachieved. However, in FY2023, operating profit recovered to 3.2 billion yen due to the effect of reflecting high market prices in sales prices and rationalization such as improvements in productivity.

Under these circumstances, as disclosed in "Announcement Regarding Borrowing for Refinancing, Full Repayment of Claims after Support, and Completion of the Business Turnaround Plan Period" on June 14, 2024, Akebono entered into a refinancing loan agreement of 32.0 billion yen with Deutsche Bank AG, Tokyo Branch as arranger and repaid the remaining balance of existing loans due on June 30, 2024, as set forth in the Business Turnaround Plan in a lump sum with these borrowings. As a result, the Business Turnaround Plan period was completed as of June 28, 2024. Akebono will continue efforts towards achieving profitability in North American operation by completing the restructuring through the closure of 1 out of 2 plants in the U.S. to establish a one-plant structure.

In these circumstances, Akebono continues to face an uncertain business environment due to the impact of rising prices and geopolitical risks. Rising raw material costs pose challenges for the automotive industry, alongside the pressing need to advance electrification and autonomous technologies. Moreover, stricter environmental regulations have highlighted the urgent need to develop products that contribute to the realization of a sustainable society. Additionally, the automotive industry is facing a challenging business environment, with increased costs in international trade expected due to the tariff policies of the U.S.

Akebono has set the following two key issues to be prioritized in FY2025 to establish a proactive, independent, and sound corporate foundation that is not dependent on changes in the external environment.

(1) Establish a Strong Managerial Structure
- Identify issues and challenges through visualization of each region and business and consider countermeasures and initiatives for implementation.
- Monitor the progress of these measures and ensure their steady implementation, leading to the transformation of Akebono into a company that is capable of independent management and achieving sustainable operating profit.

(2) Clarify the Necessary Path for Survival
- To survive in a severely competitive and rapidly changing market environment, clarify the direction for re-growth.
- Formulate a medium- to long-term business plan to identify businesses where Akebono should focus its management resources in order to enhance our corporate value.

Akebono will strive to achieve sustainable growth in accordance with the above issues.