Now moving on to the reasons for the change in operating income from15.4 billion yen to 11.9 billion yen:
The primary factor of increase in profit was an increase of 14 billion yen based on improvement of the sales volume and product mixture. It is made up of the following three details: (1) From the domestic market,+2.3 billion yen based on an increase in the number of units for Forester and Exiga. (2) From overseas market, +8.0 billion yen.(3) Others increased 3.7 billion yen [Unrealized inventory -0.5 billion yen (Domestic +0.5 billion yen, Overseas -1 billion yen), others +4.2 billion yen].
R&D expenses decreased 2.1 billion yen (from 15.2 billion yen to 13.1 billion yen). It was due to the fact that development of new models were completed at this period.
On the other hand, as a primary factor for the decrease in profit was a loss of 9.6 billion yen due to foreign exchange fluctuations: A loss of 9.2 billion yen due to an appreciation of 13 yen against the U.S. Dollar; a loss of 0.6 billion yen due to an appreciation of 9 yen against the Canadian Dollar; a gain of 0.2 billion yen due to a depreciation of 2 yen against the Euro.
Decrease of 8.4 billion yen due to an increase in overhead cost and suchlike. It is made up of the following four details: (1) -3.6 billion yen due to an increase in fixed cost (-3.6 billion yen for FHI, 0 billion yen for SIA). -2.2 billion due to fixed processing cost and -1.4 billion yen due to cost of dies of suppliers for FHI, + $6M for cost of dies for suppliers and an increase of fixed processing cost for SIA -$6M. (2) A decrease of 3.6 billion yen due to an increase of SG&A expenses. In the domestic market, an increase of 1 billion yen based on FHI, (+1.2 billion yen) and dealers (-0.2 billion yen). On the other hand, overseas, a decrease of 0.4 billion yen (-$4M) for SOA. Incentives decreased by $1M since the amount was almost the same as that of last year at $1,500. However, advertising costs was -$5M. A decrease of 1.4 billion due to an increase in incentives also in Canada, and consolidate new subsidiaries was -1.8 billion yen, and others was -1 billion yen. (3) A decrease of 1.6 billion yen due to an increase of warranty costs due to an increase in the number of vehicles sold. (4) The remaining +0.4 billion yen was the foreign exchange adjustment with subsidiaries.
Accordingly, operating income decreased by 3.5 billion yen.