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5. Calsonic Kansei Corporation Business Report FY ended Mar. 2016

Calsonic Kansei Corporation Business Report FY ended Mar. 2016

-The Company's sales in the fiscal year ended March 2016 increased by JPY 87.7billin (9.1%) over the previous year to JPY 1,053.3 billion, due to gains from favorable currency translation and increasing of the production volume of the major customers.

-From FY2013 to FY2015, the Company updated for 3 consecutive years record high in sales and operating income.

Contracts

-The Company received its first order for instrument panels used in mini vehicles from Daihatsu Motor Co., Ltd., and has started supplying them to the OEM. This is the Company's first order to supply its instrument panels to an OEM other than its key customer, Nissan Motor Co., Ltd. The Company has previously supplied parts such as heat exchange systems to Daihatsu, but has had no dealings with it for interior components until now. The Company's has positioned its compressors and electrical components as strategic products for creating more customers. With the order from Daihatsu as an impetus, the supplier will actively seek to expand the market for its interior parts. The Company received order for the instrument panels used in the all-new Cast mini vehicle, which was launched by Daihatsu last fall. (From an article in the Nikkan Jidosha Shimbun on February 2, 2016)

-In FY 2016, the Company is aiming to increase non-Nissan sales 30% more than what it was in FY 2011. Between 2011 and 2014 the Company received JPY 110.0 billion in orders from non-Nissan customers.

Mid-term Business Plan

-In June 2011, the Company announced its mid-term management plan called CK GX4 T10. The plan, which is being implemented through fiscal year 2016, is based on four "Gs" and achieving three "T10s", which are objectives for strategic growth.

• Four "Gs": Green, Growth, Global and Great Company
• Achieving three "T10s"

1) Creating 10 new, world-leading, environmentally friendly products (As of FY 2014, it had achieved creating and launching seven. Achieved two in FY2015.)
>>>Link to "Product Development" for details
2) Becoming one of the top 10 global companies (Achieving sales over JPY 1 trillion in FY 2016 → Achieved sales over JPY 1 trillion in FY2015)
3) Becoming one of the most profitable 10 companies in the world (Achieving a profit margin around 7% in FY 2016)

*Adjustment amount of results in FY March 2016 : JPY 66.3 billion
>>> Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Structure

-The Company is expanding its global footprint based on collaboration among the R&D center, headquarters, and experiment/research center functions in Japan.

-The Company announced that it will open a new R&D center in Bedfordshire, England, the UK. The new center will be engaged in researching and developing to expand business with major auto parts suppliers in the country. With a workforce of approximately 40 employees, the new center is scheduled to start operations by mid-April 2016. (From a press release on March 31, 2016)

-The Company and L&T Technology Services inaugurated the dedicated Material Test Centre (MTC) at Chennai, India. The test center is set up and operated by L&T Technology Services to cater to Calsonic Kansei’s global needs of material testing including Japan, Europe, North America, Thailand and India. The new center is equipped with state-of-the-art machines to test a range of automotive plastics. (From a press release on February 26, 2016)


-As the center conducting R&D activities capable of responding to product requirements worldwide, it is in-charge of advanced, basic, and application development. The Company is adding more resources toward advanced and basic development activities, which create future development technology and are designed to enhance its competitive edge.
-In order to strengthen its predominance in terms of product pricing, one element of product competitiveness, the Company has been working on ways to reduce the costs of goods. Making use of R&D capabilities in LLCs is one of these. Specific examples include transferring R&D responsibilities to Calsonic Kansei Engineering Center India-L&T (CECI-L&T) and CK Engineering Shanghai.


-The Company makes use of its Americas R&D capabilities to finalize product development based on discussions with local customers, after basic developments and application specs of vehicle product developments are decided in Japan. The R&D activities for products designed for the Mexican market are managed and operated in the Americas Technical Center.


-The Europe Technology Center serves the same function as that of the American one. The Center is in charge of one critical part of R&D activities for Renault, based on its partnership with the company.


-The importance of R&D in Asia is tied to the growth of the Chinese market. The Company is significantly expanding the R&D structure at its Asian Technical Center, which shares the role with the Japan Technical Center in developing products for the Chinese market, aiming to create a very efficient and cooperative R&D structure.
-The Company has further expanded the R&D functions at Calsonic Kansei Engineering Center India-L&T (CECI-L&T) in Chennai, India, which was established during the fiscal year ended March 2013.

R&D Activities

Improving product competitiveness
-Developing components and systems that respond to environmental concerns.
-Developing an exhaust system, and the components for it, which can improve fuel economy and exhaust purification performance.
-Developing highly advanced modular products as well as to develop components that are higher in performance and lighter in weight.
-Developing meters and information delivery systems that enhance safety.
-Developing air-conditioning systems that provide a comfortable driving environment.
-Developing products for low-cost vehicles sold in emerging markets.

Developing strategic products
-Developing thermal and power management systems for next-generation green vehicles.

-Developing products related to human machine interfaces (HMIs), cockpit modules, and front-end modules, which significantly affect the vehicle's design and performance.

Product Development

-Between from FY 2012 to FY 2016, the Company plans to create 10 new, world-leading, environmentally friendly products under the CK GX4 T10 mid-term management plan. As of FY March 2016, it had already achieved all.

Leather-wrapping technology for instrument panels
-The Company announced that it has developed a leather-wrapping technology for instrument panels. The new instrument panels are expected to be featured in new Nissan models that are scheduled to be released in the near future. Mass production of the new products has already begun on a highly efficient production line. The line uses automated machines for leather cutting, sewing, and bonding processes, and requires minimum manual labor. The company will propose this new technology to automakers by underlining the products' luxury surfaces that enhance the vehicle interior.
The production line starts with leather cutting and sewing processes to create a three dimensional shape for the panel. Then, this leather part will be wrapped around a plastic core to produce a high-quality surface. Previously, the sewing process was done by hand, but the company was able to automate the operation by developing a sophisticated stitch position control technology. This achievement significantly increased productivity and made mass production possible. (From an article in the Nikkan Jidosha Shimbun on June 2, 2016)

Built-in transmission oil cooler/warmer
-The Company announced that it has started producing its new low-profile built-in transmission oil cooler/warmer (LP-BOC). This product is manufactured at the company's plant in Wuxi, Jiangsu Province, China, and will be supplied to Jatco Ltd. The new unit, which is 50% lower in height compared with conventional oil coolers, can be easily mounted onto vehicles. In addition to cooling the transmission oil, the LP-BOC can properly warm the transmission oil at the time of engine start and helps reduce friction loss. (From an article in the Nikkan Jidosha Shimbun on November 13, 2015)

New exhaust gas recirculation (EGR) cooler for diesel cars
-The Company will develop a new exhaust gas recirculation (EGR) cooler for diesel cars. The company will develop a high-efficient and compact EGR cooler using its original structure in its EGR coolers sold for gasoline-engine vehicles. EGR coolers can reduce nitrogen oxides (NOx) in exhaust gas emitted by diesel cars. Since diesel cars are highly economical, automakers are increasingly creating diesel-engine variants in their passenger car models. The Company aims to introduce the new EGR cooler for the diesel variants so as to strengthen its competitive edge and expand sales. The Company jointly developed and commercialized an EGR cooler for gasoline-engine vehicles with Tokyo Radiator Mfg. Co., Ltd., its group company. The EGR cooler cools exhaust gas and recirculates the cooled gas to the gasoline engine. A gasoline-engine vehicle fitted with the EGR cooler offers improved fuel efficiency. The company produces and sells the EGR coolers for 600,000 gasoline-engine vehicles a year, and intends to increase the annual production capacity for 2 million vehicles as the order intake increases. (From an article in the Nikkan Jidosha Shimbun on June 17, 2015)

Long-lasting, quiet-running, and compact brushless motor series
-In FY 2013, the Company developed a 50W brushless motor for use in battery-operated cooling fans for electric vehicles. It is being equipped on the Nissan Skyline HEV launched in November 2013. The Company has won orders to the supply the fan to Nissan HEVs scheduled to be launched in fiscal years 2015 and 2016.

-In FY 2014 the Company commercialized a 200W brushless motor for use in HVAC blower fans. According to an October 2014 press release, the motors are being equipped on GMs HVACs being strategically marketed globally, starting from vehicles being sold in China. The Company won orders from other U.S. OEMs for vehicles scheduled for release in FY 2016.

New-CR compressor series
-In November 2014, the Company has started producing its new series of small-size, lightweight, and power-saving compressors, "New CR Series." The new compressor achieves class-leading light weight and low power consumption, improving actual fuel economy of vehicles. The Company plans to have an annual production capacity of 3 million units in and outside Japan by 2018. The new compressor reduces loss in the discharge of compressed gas; thus, the power for driving the compressor is reduced and the load on the engine is decreased by 9%. The new compressor is 10 to 20% lighter than a conventional compressor with the same performance, through downsizing and a reduction in the number of parts. (From an article in the Nikkan Jidosha Shimbun on November 26, 2014)

-Mainly, the Company invested in production facilities for responding to vehicle model changes being made by its major customers. In addition, the Company invested in production facilities for capacity expansion to respond to production increasing, and invested in testing facilities for strengthening competitiveness.

-In FY ending March 2017, the Company plans to invest increased by 4.2% over the previous year to JPY 25,000 million.