[Enhancing the foundations of manufacturing and overseas development]

 

Ahresty has focused on bolstering its manufacturing foundations under its three-year strategies, which started in fiscal 2010. In fiscal 2011, however, we regrettably incurred an extraordinary loss from product warranty expenses. We take this opportunity to sincerely apologize for any inconvenience experienced by customers and shareholders. Responding to the problems, we have taken extensive measures, including a review of our Engineering standards, to prevent any reoccurrence. We have also reviewed our organizations and rebuilt them to ensure that we can effectively pursue quality and productivity by concentrating its design and technological capabilities on its manufacturing divisions. To facilitate this, we terminated the Technology & Engineering Command, set up the Design divisions in the Advanced Production & Technology Department of the Manufacturing Command, and also created the Engineering Department under the Manufacturing Command.

 

During fiscal 2011, although domestic operations were significantly affected by the earthquake, given rising sales in North America and Asia, net sales reached \103.8 billion. In the die casting business, overseas net sales accounted for 33% of total sales, up 3 percentage points from 30% for fiscal 2010. By sales volume, overseas sales amounted to 37%, rising from 28% for fiscal 2010. Overseas sales are expected to reach 40% of total sales in fiscal 2012, and to exceed domestic sales in fiscal 2014. In this environment, Ahresty commenced operations at a new plant in Hefei City, Anhui, China. Meanwhile, the Guangzhou plant acquired a neighboring area and plans to expand its processing plant and shipping warehouse, the construction of which is expected to be completed in March 2013. Through these initiatives, by consolidating production facilities dispersed across five locations in Guangzhou, into two locations, we are striving to improve our production capabilities and productivity.

 

Moreover, to enhance die production capacity in Guangzhou, Ahresty expanded the plant of Ahresty Precision Die Mold (Guangzhou) Co., Ltd. To respond to rising sales, the plant in Mexico has also been expanding its facilities for die casting and machining. Earnings, meanwhile, declined, given the effects of the disaster and an increase in expenses resulting from a delay in the program to expand production capacity in Mexico. However, we are fully committed to improving earnings by strengthening productivity and taking other specific measures.

 

As for restructuring of production facilities in Japan, where auto production is set to decline in the future, Ahresty has been undertaking the planned consolidation of Tokai Plant’s production in the Toyohashi area, moving from the Hamamatsu area. We also decided at the end of March to sell the site of the plant in the Hamamatsu. As a result, production in Hamamatsu is expected to be terminated next spring.

 

Fiscal 2012 is the final year of the three-year strategies that started in fiscal 2010. We will continue our efforts to develop a manufacturing foundation that focuses on quality. We will then establish new three-year strategies for the term starting in fiscal 2013, aiming to become a trusted global partner for our customers.

 

As we pursue this approach, we hope that we can continue to count on the support and understanding of our stakeholders.