takata_first-half financial result for fy2011

First-half Financial Results for FY2011

Results for the period April 1, 2010—September 30, 2010

Takata Corporation IR officeTEL: 03-3582-9228November 12, 2010

■ Disclaimer

The information provided on these materials is not intended to be and should not be construed as an inducement to purchase or sell stock in Takata Corporation. You should make any investment decisions relating to the stock in Takata Corporation on the basis of your own assessment and judgment. The information in these materials includes forward-looking statements and forecasts, as well as historical results.Please be informed that such forward-looking statements and forecasts are not guarantees of future results, but rather are inherently risky and uncertain and therefore actual results may be materially different. Takata Corporation does not assume any responsibility for any damage resulting from the use of the information contained in these materials.

1

Contents

Pages:

2- 6

7-13

14-19

20-25

26-33

■ FY2011 first-half review ・・・・・

■ First-half consolidated financial highlights ・・・・・

■ Revised full-year forecasts and outlook ・・・・・

■ Investment highlights ・・・・・

■ Automobile and airbag production volumes ・・・・・

2

Review: Stronger competitiveness and revenue base

■ FY2009: Automobile production plunges in economic crisis■ FY2009: Automobile production plunges in economic crisis

Began comprehensive restructuring to reflect reduced demand (closed 1 U.S. plant)

Reduced personnel, SG&A, R&D and other fixed costs

Strengthened financial foundation

■ FY2010: OEM bankruptcies in US, Europe; growth in developing markets

Closed 1 European plant, 2 North American plants

Completed rationalization to enable profitability on sales of ¥300 billion

Carefully controlled capex

■ FY2011 first half: Output recovery in U.S and sustained growth in BRIC countries

Further efficiencies in cost of goods sold and expenses

Recovery in automobile production and Takata production volumes

New plants and overseas development to grow market share

3

Review: Financial performance

■ Operating profit margin : recovery to FY2008 levels

Net SalesUnit:：100mill yen

Op marginUnit：％

2,439 2,582 2,402

1,5941,933

1,452

2,579 2,576

1,915

7.9%

7.1%

0.7%

6.9%

4.2%

0

1,000

2,000

3,000

4,000

5,000

6,000

'07/3 '08/3 '09/3 '10/3 '11/3 2Q

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%Second halfFirst halfOperating margin5,018 5,158

3,8543,509

Trends in consolidated sales and OP margin

4

Review: Higher efficiency and productivity

■ SG&A expenses (fixed costs) have continued to fall

FY2010 SG&A 36% lower than FY2008

■ Global employees numbers lower than FY2008

FY2010 employees 9% lower than FY2008

■ Higher gross profit per employee

Added value per employee trending upward (like-for-like currency basis)

31,600

30,000

28,400

33,000

35,00035,00035,900

20,000

25,000

30,000

35,000

40,000

'07/3 '08/3　2Q '08/3 '09/3　2Q '09/3 '10/3　2Q '11/3 2Q

0

100

200

300

400

500

600

700

800

'06/3 '07/3 '08/3 '09/3 '10/3 '11/ 2Q

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

SG&A expense

Sales to SG&A %

SG&A trends

2Q

Global employees

5

Review: Vehicle production and Takata product growth rates

■ Production now approaching 2008 levels (FY2008 = 100%)

■Vehicle output recovering after bottoming out in 2H 2009

40%

60%

80%

100%

120%

140%

08/3 1H 08/3 2H 09/3 1H 09/3 2H 10/3 1H 10/3 2H 11/3 1H

Vehicle Production: Global

Takata Global AB volume

Takata Global SB volume

6

Review: Market development in emerging economies

The Americas

■ Constructing new sled crash test facility

■ Opened third plant in Brazil

Europe

■ Began preparations for Russian plant

■ Opened plant in Morocco

Asia

■ Began construction of Tianjin, China plant

■ Began operations at plant in Northern

India

159

202

122

6846 56

70

118104

106

9489

8580

1019998

84

0

50

100

150

200

250

07 1H 07 2H 08 1H 08 2H 09 1H 09 2H 10 1H 10 2H 11 1H0

20

40

60

80

100

120CAPEX Depreciation

Entry into Russia

Test facility in Michigan, U.S.

Unit:100milCapex and depreciation

Plant at Neemrana, India

Construction at Tianjin CY2011

CY2012

CY2011

Planned opening

Tianjin plant

Russian plant

U.S. sled test facility

CAPEX item

7

FY2011 first–half consolidated financial highlights

8

Summary of first-half resultsUnit: 100 million yen

rounded down

197364.7%10213128Ordinary income

128－10299-3Net income

190386.1%10513227Operating income

－

－

21.4%

Change in %

162.33－113.82133.21Euro/Yen

119.40－88.9195.53US$/Yen

2,5813401,9331,593Net sales

08/3First half

For referenceChange in yen

(B-A)

11/3 First half

(A)

10/3 First half

(A)

Net sales

YoY exchange rate effect : ¥15.1 billion

2,5812,402

1,5931,933

151

0

500

1,000

1,500

2,000

2,500

08/3 2Q 09/3 2Q 10/3 2Q 11/3 2Q

Exchange rate effect

9

Unit: 100 million yen rounded downPrior to eliminations

Sales by region

151

-

-

21

86

60

-


1,933

(351)

2,285

394

505

805

578

FY2011 First half

(B)

2,58121.4%3401,593Total

477--(321)Eliminations

3,05819.4%3701,914Subtotal

33916.5%55339Asia

70112.3%55450Europe

1,25624.2%156648Americas

76021.5%102476Japan

FY2008First half

For referenceChange

in %

Change in yen(B-A)

FY2010 First half

(A)

760 741476 578

1,256979

648805

701

749

450

505

339400

339

394

0

1,000

2,000

3,000

4,000

'08/3 2Q '09/3 2Q '10/3 2Q '11/3 2Q

Japan Americas Europe Asia

Sales composition by region

(prior to eliminations)

10

Sales by productExternal Sales

Unit: 100 million yen,rounded down

100%

24.9%

45.7%

29.4%

Composition

340

89

156

94

Change in yen(B-A)

1,933

481

882

569

11/3 First half

(B)

100.0%2,58121.4%100%1,593Total

27.8%71622.8%24.6%392Other

43.8%1,13121.6%45.6%726Airbag

28.4%73319.8%29.8%475Seat belts

Composition08/3

First half

For referenceChange

in %Composition

10/3 First half

(A)

Sales by product (external sales)

569

475

724

733

882

726

1,042

1,131

481

392

635

716

0 500 1000 1500 2000 2500

11/3 2Q

10/3 2Q

09/3 2Q

08/3 2Q

Seat belts Airbag Other

11

Operating income by regionUnit: 100 million yen, rounded down

Prior to eliminations

190386.1%10513227Total

10--(1)(1)Eliminations

180372.4%10513328Subtotal

4447.3%165235Asia

23-11100Europe

80-4817(30)Americas

32122.1%295323Japan

08/3 First half

For referenceChange in %

Change in yen(B-A)

11/3 First half(B)

10/3 First half(A)

Operating income by region

1.7%

3.9%

7.4%7.8%

6.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

'07/3 2Q '08/3 2Q '09/3 2Q '10/3 2Q '11/3 2Q

Operating income margin

3253

80

24

17

24

14

10

44

56

35

52

23

-3 -30

0

-50

0

50

100

150

'08/3 2Q '09/3 2Q '10/3 2Q '11/3 2Q


12

OP margin by region

■ Contribution to operating income led by Asia and Japan

Unit：％

-10%

-5%

0%

5%

10%

15%

'08/3 1H '08/3 2H '09/3 1H '09/3 2H '10/3 1H '10/3 2H '11/3 1H '11/3 2H予

Japan N.A. Europe Asia

13

FY2011 first half operating income analysis

140

11

25

15 6

27

132

FY2010 FirstHalf

Sales impact Rationalization R&D Depreciation FX Rates FY2011 FirstHalf

■ Major contribution from higher sales

■ Negative impact on rationalization from increased in fixed costs (personnel, SG&A)

Unit: 100 million yen, rounded down

14

Revised full-year forecasts and outlookFY ending March 31, 2011

15

Summary of revised full-year forecasts

3,5093,7003,700

323

3,000

3,200

3,400

3,600

3,800

4,000

4,200

10/3 Full year 11/3 Full year(Previous forecast)

Nov. 4 Revision

Net sales


--80 *9092.89FX rate US$/yen

--110 *120131.18FX rate Euro/yen

37.1%4617012469Net income

29.0%55245190156Ordinary income

25.0%50250200146Operating income

-03,7003,7003,509Net sales

Change in %

Change in yen(B-A)

11/3 Full year (B) (Revised Nov. 4)

11/3 Full year (A) (Previous forecast)

10/3 Full year


* 11/3 Second half forecast rate

YoY exchange rate effect : 32.3 billion yen

16

FY2011 forecasts: Sales by region

－03,7003,7003,509Total

－－-700(689)(698)Eliminations

0.3%114,4004,3894,208Sub total

1.1%9810801727Asia

(2.6%)(26)970996981Europe

0.5%81,4801,4721,433Americas

1.8%201,1401,1201,065Japan

Change in %

Change in yen(B-A)

11/3 Full year (B) (Revised Nov. 4)

11/3 Full year (A) (Previous forecast)10/3 Full year


Sales by region

(prior to elimination)

1,065 1,120

1,433 1,472

981 996 970

727801 810

1,140

1,480

0

1,000

2,000

3,000

4,000

5,000

'10/3 Full year '11/3　Full year(Previous forecast)

11/3 Full year(Revised Nov. 4)


17

FY2011 forecasts: Operating income by regionUnit: 100 million yen,

rounded down

250

(3)

253

105

26

34

88

11/3 Full year (B) (Revised)

200

0

200

98

26

26

50

11/3 Full year (A) (Previous forecast)

50

-

53

7

0

8

38

Change in yen

(B-A)

25.0%

-

26.5%

7.1%

-

30.8%

76.0%

Change in %

(3)Eliminations

84Asia

150Sub total

146Total

13

(17)

70

10/3 Full year

Americas

Europe

Japan

Operating income by region (prior to eliminations)

7050

-17

2613

26

2684

98

105

88

34

-20

80

180

10/3 Full year 11/3 Full year(Previous forecast)

FY11/3 Full year(Revised)

Asia AmericasEurope Asia

18

FY2011 forecasts: Operating income analysisUnit: 100 million yen,

rounded down

■ Large contribution from higher sales:

¥19.1 bn YoY sales growth and exchange rate effect of approximately ¥32.3 bn

122

2110 13

36 250

146

10/3 Actual Sales impact Rationalization R&D Depreciation FX rates 11/3 Forecast

19

FY2011 forecasts: R&D, capex and depreciation expenses■ 11/3 Full-year forecast

愛知川

(30)

(30)

-

(20)

Change in yen

(B-A)

(23)

(22)

(12)

Net change w/o exchange

rate effect

150180174Depreciation and Amortization

170200102Capex

4.3%4.9%4.0%R&D ratio

160180141R&D expense

11/3 Full year (B)

(Revised)

11/3 Full year (A)

(Prev. forecast)10/3 Full year

Unit: 100 million yen rounded down

4.3%4.0%

4.4%4.9%

4.4% 4.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

FY06 FY07 FY08 FY09 FY10 FY11F

R&D Ratio

150

170

4.3%

160

11/3 Full year (B)

(Revised)

48%

34%

ー

48%

Progress (a/B)

7289Depreciation and Amortization

5846Capex

4.0%4.4%R&D ratio

7770R&D expense

11/3 First half (a)

10/3 First half

■ 11/3 1H actual

Capex is calculated on the basis of acquired fixed and intangible assets as recorded on consolidated statements of cash flow from investing activities.

20

INVESTMENT HIGHLIGHTS

A pioneer in automotive safety systems for more than 50 years

High market share as global Top 3 specialist automotive safety systems suppliers

Supplying global automakers, with overseas sales ratio of around 80%

Vertically integrated R&D, purchasing, manufacturing and sales structure in three global regions

High credit ratings: JCR: A Moody’s: A3

21

Takata: No. 2 worldwide

■ World’s 2nd largest specialist automotive safety systems supplier

■ Approximate 20% global market share in seat belts and airbags

Global Market Share

0 500 1,000

Company B （Jpn）

Company Ａ（Jpn）

ＴＲＷ（U.S.）

Takata

Ａｕｔｏｌｉｖ（Eur.）

Automotive safety business

Other business

Source: Takata, March 2010Notes:

1）FY2009 amounts for Autoliv and TRW as disclosed in annual reports, converted to yen at US$1 = 83yen（end Sept. 2010）2）Results for Takata and other Japanese companies are consolidated sales for the year ended March 31, 20103）Automotive safety business includes airbags, seat belts, steering wheels and related products

Unit: billion yen

Other80%

Takata20%

Other80%

Takata20%

Seat belts

Airbags

Sales comparison with industry peers*Most recent disclosed results (converted to yen)

22

Takata: Forecast global vehicle production shows steady growth（IHS data）

■ FY2013 first-half production forecast up 16% on FY2008 first-half

■ China and other BRICs countries expected to grow, with recovery of production in North America and other mature markets

Unit: 1,000 vehicles

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

'08/3 1H '08/3 2H '09/3 1H '09/3 2H '10/3 1H '10/3 2H '11/3 1H '11/3 2H '12/3 1H '12/3 2H '13/3 1H '13/3 2H

Source: IHS (excluding trucks, as of November 2010)

23

Takata: Global customer base (FY2011 first half)

■ Consolidated sales composition by top customers

52% 48%

Sales composition by Japanese vsnon-Japanese customers

JapaneseNon-Japanese

100%

48%

52%

Daimler

Ford

Toyota

Honda

‘09/3

100%

51%

49%

Daimler

Ford

Toyota

Honda

‘10/3

100%100%Total

53%49%Other

47%51%Top 4

NissanGM4

FordFord3

ToyotaToyota2

HondaHonda1

‘11/3 2Q‘08/3Rank

0%

50%

D3 Other

■ U.S. D3 (Chrysler, Ford, GM) : Takata sales composition in Americas

■ Europe G3 (BMW, Daimler, VW Group): Takata sales composition in Europe

0%

50%

G3 Other

24

Takata: Overseas sales ratio 80%; limited FX impact

■ Overseas sales ratio at around 80%, with R&D and local production structure in three regions

■ Optimal regional production with high in-house supply

●●

●●

●●●

●

●

● ▲ ■●

●

●●

●

●

●

●

●

▲

●●●●▲

●

●

●

●

Overseas sales ratio 79%

Japan21.0%

Americas39.3%

Europe23.5%

Asia16.2%

46 plants in 17 countriesEmployees: 31,657

●

(FY2011 first half)

25

Takata: Airbags high proportion of product segments

Other 24.9%Airbags 45.7%Seat belts 29.4%

(FY2011 first half)

26

Looking ahead:

Global vehicle production growth and Takata’s airbag sales

27

Forecast vehicle production growth FY2008—FY2011

■ Recovery in North America; growth in South America, China

■ Lower domestic sales in Germany but strong exports; variable but moderate

recovery in Japan

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

China North America South America Germany Japan

'08/3'09/3'10/3'11/3 F'12/3 F'13/3 F

Source: IHS (excl. trucks, as of November 2010); South America refers to Brazil and Argentina


28

Takata: Product segments driving growth

■ Airbag market is expanding (airbag sales composition up 8 percentage points)

Side AirbagFrontal AirbagInflator Curtain Airbag

Other25%

Seat belts30%

Airbags45%

FY2011 first half

Change in sales composition by product segment

FY2006

Airbags37%

Seat belts33%

Other30%

29

Takata: Growth in curtain & side airbag production

■ Chart shows growth rates in global vehicle production and Takata airbag production where FY2008 = 100

■ Side and curtain airbag production growth is ahead of recovery in vehicle production

40%

60%

80%

100%

120%

140%

160%

'08/3 1H '08/3 2H '09/3 1H '09/3 2H '10/3 1H '10/3 2H '11/3 1H

Global vehicle production

Takata front airbag production

Takata side airbag production

Global vehicle production volumes and Takata airbag production (Data: Takata)

Source: Global vehicle production IHS (excl. trucks, as of November 2010)

30

Americas: Airbag regulations in North & South America

North America: Side, curtain airbag adoption ratesNorth America

AmericaRevision of Federal Motor Vehicle Safety

Standard 214Stricter side airbag regulations

(offset pole impact testing, etc.)

From Sept. 1 2010（2011MY）：20%From Sept. 1 2011（2012MY）：40%From Sept. 1 2012（2013MY）：60%From Sept. 1 2013（2014MY）：80%From Sept. 1 2014（2015MY）：100%

※ Vehicles under 3,855kg

200

250

300

350

400

CY2010 F CY2011F CY12F CY13F CY14F

0%

20%

40%

60%

80%

100%

120%

Vehicle production (left)

Frontal airbag adoption (right)

Brazil: Frontal airbag adoption rate

50%

60%

70%

80%

90%

100%

CY08F CY09F CY10F CY11F CY12F

Side AB

Curtain AB


Source: Takata estimates from IHS data (excl. trucks, as of November 2010)

South AmericaBrazilCompulsory fitting of frontal airbags in

passenger and light commercial vehicles（Legalized in April 2009)

From Jan. 1 2010 Progressive application to existing models

From Jan. 1 2011 Progressive application to new models

From Jan. 1 2014 100% application to all models

ArgentinaCompulsory fitting of frontal airbags in

passenger and light commercial vehicles（Legalized in November 2009)

From Jan. 1 2010 Progressive application to all models

From Jan. 1 2014 Applicable to all modelsSource: IHS (vehicle production excl. trucks, as of Nov. 2010): Takata estimates (adoption rates)

31

Americas: Vehicle production and Takata airbag production

■ Americas: Chart shows growth rates in vehicle production and Takata airbag production where FY2008 = 100

• North America: Takata airbag volumes growing with recovery of vehicle production

• South America: Takata airbag volumes expected to grow with compulsory airbag adoption in Brazil and Argentina

20%

40%

60%

80%

100%

120%

140%

160%

'08/3 １Ｈ '08/3 2H '09/3 1H '09/3 2H '10/3 1H '10/3 2H '11/3 1H '11/3 2He

Americas: Vehicle production

Takata: Americas f rontal airbag production

Takata: Americas side airbag production

Americas: Growth rates in vehicle production and Takata airbag production (Data: Takata)

Source: Vehicle production IHS (excl. trucks, as of November 2010)

32

China: Safety standards and forecast airbag production

■ China: Airbag adoption rates expected to grow concomitant with higher safety consciousness

■ China New Car Assessment Program discloses results of safety appraisals

Forecast total airbag production and frontal airbag

adoption rates in ChinaChina New Car Assessment Program

CNCAP

Aim is to lift safety based on publishing results of impact tests

Appraisal items include front impact, side impact and safety equipment levels

Overall points and star rating published on the internet

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

CY10F CY11F CY12F CY13F CY14F60%

62%

64%

66%

68%

70%

72%

74%

76%

78%

80%

China: Airbag production

Passenger airbag adoption rate

Driver airbag adoption rate

Source: Takata estimates from IHS data (excl. trucks, as of November 2010)

33

China: Vehicle production and Takata airbag production

■ Chart shows growth rates in vehicle production and Takata airbag production where FY2008 = 100

50%

100%

150%

200%

250%

300%

350%

400%

450%

'08/3 1H '08/3 2H '09/3 1H '09/3 2H '10/3 1H '10/3 2H '11/3 1H '11/3 2He

China: Vehicle production

Takata: China f rontal airbag production

Takata: China side airbag production

Source: Vehicle production IHS (excl. trucks, as of November 2010)

Growth rates in vehicle production and Takata airbag production (Data: Takata)

34

Message for the future

Our mission – your safety.

We embrace the pioneer spirit of our founder and are motivated by the preciousness of life.

PhilosophyPhilosophy

Our DreamOur Dream

To communicate openly and effectively.To adhere to Sangen-shugi. To be committed in everything we do.

A society with zero fatalities from traffic accidents.

Takata WayTakata Way

takata_first-half financial result for fy2011

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