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5. Ahresty Corporation Business Report FY ended Mar. 2020

Ahresty Corporation Business Report FY ended Mar. 2020

Die Casting Business Overview

<Japan>
-Sales were lower year-on-year (y/y) due to decreased production volumes by OEMs that resulted from low demand in Japan and fewer exports to North America and Southeast Asia. As a result, sales were JPY 59,500 million (a 12.5% y/y decrease) due to fewer product orders from customers and a drop in the aluminum bullion market. Even though the Company worked to reduce production costs, it reported an operating loss of JPY 444 million, compared to an ordinary profit of JPY 871 million in the previous year.

<North America>
-Sales were JPY 30,633 million (a 23.0% decrease y/y) due to various factors such as the spread of the coronavirus pandemic in the latter part of the fiscal year and decreased in sales of new-vehicle units for the year. In addition, the Company’s production plants in the USA were affected by the market slowdown and by production suspensions at some of the production plants of customers because of strikes. The production plant in Mexico was negatively affected by sluggish sales by OEMs, so sales were lower. Two businesses in North America were affected by the drop in prices in the aluminum-bullion market. Operating profit was JPY 635 million, a 416.3% y/y increase, because of a significant decrease in depreciation expenses, even though sales themselves fell for the year.

<Asia>
-Sales in Asia were JPY 23,846 million, a 20.4% y/y decrease, due to continued sluggish new-vehicle sales in China, especially by local Chinese OEMs who ordered significantly less products from the Company. Sales were negatively impacted in India due to more strict lending practices on auto loans for new vehicles and stricter exhaust-gas regulations, which negatively affected new-vehicles sales. As a result, new-vehicle sales continued to be lower compared to sales in the previous year and product orders also were lower. In addition to lower automotive sales in China and India, aluminum prices fell. Operating income was JPY 3 million, a 99.8% y/y decrease, because of a huge drop in sales.

R&D Activities

-R&D expenses were JPY 550 million in the fiscal year that ended in March 2020, a 2.0% y/y decrease. The Company continued initiatives in which R&D activities and production operations worked as one to fully develop die-cast production technology on automotive body parts and strive to further enhance the quality of powertrain parts. Also, one initiative for developing high-strength and durable autobody parts involved research on joining technology and enhancing the level of vacuum technology.

Capital Expenditure

-The Company spent a total of JPY 13,821 million on capital investments in the fiscal year that ended in March 2020, of which it spent JPY 13,765 million on the diecast business. The following give an outline of the facilities and equipment that were completed in the fiscal year that ended in March 2020.