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5. Ahresty Corp. Business Report FY ended Mar. 2018

Ahresty Corp. Business Report FY ended Mar. 2018

Die Casting Business Overview

Japan:

Production volumes supplied to its main customers, the OEMs, increased over the previous year which was negatively impacted by factors such as the Kumamoto earthquake.

Exports to North America and Asia were solid with increased orders. Sales associated with a rise in the market price of aluminum ingots also increased, representing a y/y sales increase of 6.0%.

Segment profitability decreased (42.1%) due to increased labor and fuel costs. We are currently implementing measures such as reducing headcount at the Tochigi Plant.

North America:

Orders decreased due to decelerating OEM sales in North America and engine downsizing. Profitability declined due to delays in improving productivity.

Since January 2018 we have been working to improve the productivity of our U.S. plants as soon as possible.

In Mexico, order volumes increased due to the launch of new components and full-scale volume production. However, profitability was constrained due to an increase labor wages and benefits.

Segment sales decreased 2.2% from the previous fiscal year, and profitability decreased 86.5%.

Asia:

In China, Japanese OEM sales of small passenger cars slowed, while the sales of SUVs continued to remain strong resulting in solid order volumes. continued at Japanese automobile manufacturers, while sales of SUVs continued to maintain solid order volume.

In India, order volumes increased due to the strong automobile market.

Sales increased 16.5%, while segment profitability increased 35.2%.

Contracts

The company has received three orders for its engine blocks in China. Part of the die-cast parts will be used for a Chinese local automaker's plug-in hybrids (PHVs) and other new energy vehicles (NEVs). Production is scheduled to commence in fiscal year 2018 (ends in March 2019). Ahresty will enhance its casting capacity at its plant in China by about 50% from the present level by FY 2020 to meet strong demand in the country. At the same time, the company will establish a flexible production system to enable processing of multiple types of blocks on a single line. The new orders will double the number of production items to six. Ahresty will create a flexible production system to level the production volume on each line, with the aim of improving profitability. (From an article in the Nikkan Jidosha Shimbun on November 30, 2017)

- The new casting foundry of Hefei Ahresty was completed in March, 2018. The processing plant and office building will be completed in September 2018.
Upon the completion of the expansion plan, production capacity is planned to increase by about 23 casting machines and about 160 tooling machines.
- Ahresty Yamagata will start expansion construction work in FY 2018.

The company announced that its automotive die-cast production subsidiary, Ahresty Yamagata Corporation (Ahresty Yamagata), will expand production capacity. Ahresty Yamagata will invest about JPY 2 billion to build new processing and melting process buildings in 2019, as well as to install two 800-ton clamping force die casting machines and 20 processing machines. The company will strengthen its production capacities for inverters, boost converter cases, and other electrified vehicle parts, which are increasingly in demand. Ahresty Yamagata, which mainly produces engine parts, has 18 die casting machines, and 60 processing machines. (From an article in the Nikkan Jidosha Shimbun on June 1, 2018)

Facilities completed in the FY ended in Mar. 2016 (Die-cast business)

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)