Review of Overseas Subsidiaries and the Overseas Production System for Wiring Harnesses

「Reorganization of overseas production sites and cost reduction」

「We will achieve business growth by integrating the technology development, manufacturing, sales and marketing, and other resources of the globally operating ＴＯＴＯＫＵ through cross-selling and joint development.」

「For wire harnesses, we will further reduce geopolitical risk by diversifying production bases in China and Vietnam and strengthening local procurement and local production for local consumption. During the fiscal year, we will also focus on strengthening competitiveness through a joint venture established in China with a motor manufacturer and on diversification through joint ventures established with an automotive parts company and an autonomous-driving software development company.」

「For wire harnesses, we will focus on capturing strong demand for home appliances in China, Southeast Asia and other markets by diversifying our production bases across China and Vietnam and promoting local procurement and local production for local consumption.」

「To expand overseas production capacity for wire harnesses in anticipation of increased demand, we are proceeding with a plan to build a new plant in Jiaxing, Zhejiang Province, China, and expand and relocate 嘉興昭和機電有限公司, which is located in the same city.」

「We carried out a third-party allotment of shares to achieve sustainable corporate development and make the company a state-of-the-art manufacturing and development base for our Group's harness products. Our equity interest after the capital increase is 97.09%.」

「During the fiscal year, we focused on the reorganization of the China business being pursued with the 富通集団 Group and the launch of the wire harness business in Vietnam. In particular, rationalizing the winding business in China and strengthening the wire harness business in Asia, including China and Vietnam, are urgent priorities for our Group as well, and we will continue working on them in close cooperation with our overseas partners.」

「As all equity interests in 天津昭和漆包線有限公司, which is classified under the winding business, were transferred during the first-quarter consolidated accounting period, the company has been excluded from the scope of consolidation.」

「As all equity interests in 天津昭和漆包線有限公司, which is classified under the winding business, were transferred during the first-quarter consolidated accounting period, the company has been excluded from the scope of consolidation.」

「Since establishing Tianjin Showa Enamelled Wire Co., Ltd. in Tianjin, China, in 1993, our Group has engaged in the manufacture and sale of winding products in China. To rebuild that company's business, we will transfer our equity interest to 富通昭和線纜（杭州）有限公司, a member of the 富通集団 Group, our long-standing business partner in China.」

「Meanwhile, overseas, the Company will review the direction of its China business and work to improve profitability.」

「Although difficult conditions continue at the Chinese subsidiary, conditions are improving, and demand for winding products for domestic automotive electrical equipment and other applications remained firm. As a result, revenue was ¥1,466.6 million, down 12.3% year on year, and operating profit was ¥194 million, compared with an operating loss of ¥78 million in the same quarter of the previous year.」

「Although difficult conditions continue at the Chinese subsidiary, conditions are improving, and domestic demand provided support. As a result, revenue was ¥978.8 million, down 12.7% year on year, and operating profit was ¥61 million, compared with an operating loss of ¥71 million in the same quarter of the previous year.」

「④Toward the recovery of the overseas business (continuation of structural reforms at the overseas subsidiary in the winding business and review of the overseas production system for the wire harness device business)」