Next is an explanation of factors of increase and decrease in operating income, which is planned to decrease from 45.7 billion yen to 23.0 billion yen.
Factors of increase include improvement of sales volume & mixture 47.4 billion yen. This is classified into the following three: (1) Anticipated improvement in domestic sales volume & mixture 7.6 billion yen, by the increased sales volume of passenger cars; (2) Anticipated improvement in overseas sales volume & mixture 29.2 billion yen; and (3) Others will be 10.6 billion yen.
Meanwhile, factors of decrease include a greater loss on currency exchange 46.0 billion yen. Specifically, an approx. 16-yen appreciation against the US dollar will cause a currency exchange difference -43.3 billion yen; An approx. 7-yen appreciation against the Euro will cause a currency exchange difference -1.5 billion yen; approx. 6-yen’s appreciation against the Canadian dollar will cause a currency exchange difference -1.2 billion yen.
Increases of SG&A expenses and others 13.8 billion yen are classified into the following four: first, (1) increased fixed manufacturing costs 9.4 billion yen, consisting of -8.5 billion yen from FHI and -900 million yen from SIA. FHI’s expenses will consist of an increase in suppliers’ mold costs and an increase in fixed processing costs. SIA will see an increase in other fixed costs, although suppliers’ mold costs and depreciation will be at a lower level. (2) SG&A expenses will increase 3.5 billion yen, including FHI’s domestic SG&A expenses 0.5 billion yen. Overseas, SOA will have increased total expenses due to increased sales volume despite a plan that cuts the incentive per unit to $100 below last year’s. Meanwhile, advertising expense and administrative expense increase. Other overseas subsidiaries will also increase expenses. As a result, total overseas expense will increase 3.0 billion yen. (3) Increase in warranty claim expense 2.7 billion yen. Allowance for product warranty will be increased to match increased sales volume overseas. (4) Others will be +1.8 billion yen.
Reduction in cost, net of raw material price raise will result in -7.3 billion yen, which will consist of -7.3 billion yen from FHI and zero from SIA. Of this, rises in steel plate prices and worsening market conditions due to higher raw material prices will add 23.2 billion yen of expense.
R&D expenses will increase by 3 billion yen (52 billion yen → 55 billion yen) due to full model changes of cars to be released, and expenses to support environmental conditions.

As a result of the above, operating income is planned to decrease by 22.7 billion yen.