Sumitomo Electric Industries, Ltd. Business Report FY ended Mar. 2020

Financial Overview

(in million JPY)
FY ended Mar. 31, 2020 FY ended Mar. 31, 2019 Rate of Change (%) Factors
Overall
Sales 3,107,027 3,177,985 (2.2) ーSales were impacted by lower automobile production volumes, negative currency translation because of the high valuation of the Japanese yen, a drop in copper prices, and a rapid slowdown in economic activities due to the coronavirus pandemic.
Operating income 127,216 166,260 (23.5) -Operating income was impacted by a drop in sales, increased depreciation expenses in preparing for future business, lower selling prices of products in the automotive business, cost increases at the time of launching production for some products, and a deteriorating profitability caused by the growing coronavirus pandemic.
Ordinary income 130,498 188,649 (30.8) -
Profit for the year attributable to owners of the parent  72,720 118,063 (38.4) -
Automotive Segment
Sales 1,683,630 1,709,426 (1.5) -Even though the Company actively worked to expand sales of wire harnesses and automotive electric parts, product demand fell sharply due to the impact of the coronavirus pandemic.
Operating income 68,213 84,669 (19.4) -Income fell because of lower selling prices, rising labor costs in emerging countries, increased depreciation expenses in preparing for future business, cost increases at the time of launching production for some products, negative currency translation because of the high valuation of the Japanese yen, and deteriorating profitability caused by a rapid slowdown in production due to the coronavirus pandemic

 

Business Outlook for the Fiscal Year Ending March 2021

-The Company announced that it cannot make any reasonable forecast of its business results for the fiscal year ending in March 2021 because of the coronavirus pandemic.

 

Business Alliances

-In October 2019, the Company and TomTom announced that they formed a business alliance in the Intelligent Transportation System (ITS) field to provide solutions to traffic problems. Under the alliance, the Company will bring its expertise gained over the years in the ITS field to the table, while TomTom will offer its high-level data on real-time traffic and precision mapping. By combining their respective strengths and capabilities, they hope to be able to offer solutions social problems such as traffic accidents and traffic jams.

 

R&D Expenditure

(in million JPY)
  FY ended Mar. 31, 2020 FY ended Mar. 31, 2019 FY ended Mar. 31, 2018
Overall 125,449 129,627 117,735
-Automotive Business 78,464 81,850 71,766

 

R&D Activities

Wire harnesses
-In order to deliver power to next-generation onboard systems and transmit information, the Company is creating wire harness architecture and designing systems, as well as developing fundamental technology needed for them. (Developing technology on wire harnesses for high-speed transmissions and connectors)
-Developing high-voltage harnesses, connectors, and wiring-modules for battery interiors; for electric and hybrid vehicles.

Onboard Electronic Devices
-Developing power-control devices, semiconductor devices, gateways, and onboard LAN products for next-generation vehicles, which are capable of handling high-speed/high-volume transmission
-Developing new products and technology that can respond to transformations taking place that connect our energy-based and connected society with vehicles.

Traffic Infrastructure
-Developing systems that assist with high-speed travel and infra millimeter wave radar

Recent Developments at Sumitomo Riko
-As part of Sumitomo Riko’s initiatives to optimize its management resources in order to respond to advances in CASE segments and new trends, the company in April 2020 established the New Product Development Center, consolidating all of its R&D centers under one roof, which had been separate functions in the past by operating at each line of business.

 

Capital Expenditure

(in million JPY)
  FY ended Mar. 31, 2020 FY ended Mar. 31, 2019 FY ended Mar. 31, 2018
Overall 208,834 190,314 171,110
-Automotive Business 111,504 91,043 77,008

-Capital investments were made by the automotive business to increase the production of wire harnesses and anti-vibration rubber and to streamline operations.

  

Capital Investments

-Due to the coronavirus, the Company has not decided its capital investments for the fiscal year ending in March 2021.