Alpine Electronics, Inc. Business Report FY ended Mar. 2017
Financial Overview |
(in millions of JPY) |
| FY ended Mar. 31, 2017 | FY ended Mar. 31, 2016 | Rate of Change (%) | Factors | |
| Overall | ||||
| Sales | 247,751 | 273,056 | (9.3) | -Sales decreased due to unfavorable conditions such as sudden, short-term changes in foreign-currency rates. |
| Operating income | 5,612 | 5,434 | 3.3 | -Operating income slightly increased, thanks to the Company’s efforts at successfully controlling fixed costs. |
| Ordinary income | 7,439 | 6,170 | 20.6 | - |
| Profit for the year attributable to owners of the parent | 7,760 | 10,698 | (27.5) | - |
| Audio systems division | ||||
| Sales | 45,973 | 52,824 | (13.0) | - |
| Operating income | 2,475 | 1,462 | 69.3 | - |
| Information/communication systems division | ||||
| Sales | 201,778 | 220,232 | (8.4) |
-Sales of factory-installed Alpine products decreased due to Japanese OEM’s changing over some of their vehicle models, although sales of displays to European OEMs were strong. |
| Operating income | 8,233 | 8,170 | (0.8) | - |
Recent Developments
Alps to Integrate Its Operations into Alpine Electronics
-Alps Electric Co., Ltd. (Alps Electric) announced it will integrate its operations with Alpine Electronics, Inc. (Alpine). Alps Electric will turn Alpine into a wholly-owned subsidiary through an exchange of shares. Alps Electric will shift to a holding company structure in April 2019. As a result of the business integration, the Alps Electric Group will have sales at a level of JPY 1 trillion. Amid the increased electrification of automobiles in recent years, the two companies' automotive businesses have increasingly overlapped. Because of this, Alps Electric and Alpine will integrate their operations to strengthen their automotive business and improve operational efficiency. Alpine's common shares are scheduled to be delisted from the stock market at the end of 2018. (From an article in the Nikkan Jidosha Shimbun on July 28, 2017)
-The Company announced that it will increase its stake in C's Lab Co., Ltd. (C's Lab), a software developer. Alpine holds a 22.5% stake in C's Lab. Alpine will make C's Lab a subsidiary by increasing its stake in C's Lab to 51%. By doing so, Alpine will strengthen its development capacity for car navigation system application software to prepare for the age of autonomous driving. As an Alpine Group company, C's Lab will be in charge of development in areas including artificial intelligence and other advanced technologies, cloud computing software and server related systems, and next-generation navigation system software. (From an article in the Nikkan Jidosha Shimbun on June 23, 2017)
-The Company announced that Alpine Electronics (China) Co., Ltd. (Alpine Electronics (China)), a subsidiary of Alpine, will purchase 39% of new shares to be issued by Neusoft Reach Automotive Technology (Shanghai) Co., Ltd. (Neusoft Reach Automotive) through third-party allocation. Neusoft Reach Automotive is an Alpine equity method affiliate engaged in technical development and sales operations for automotive products. Neusoft Reach Automotive will issue new shares amounting to CNY 255 million (JPY 4.08 billion) and Alpine Electronics (China) will purchase CNY 99.45 million (JPY 1.59 billion) of them. After the capital increase, Neusoft Reach Automotive will be capitalized at CNY 562.7 million (JPY 9.03 billion) and owned 46.61% by Neusoft Corporation, 44.33% by Alpine Electronics (China), and 9.06% by Shenyang FullRich Enterprise Management Center. (From an article in the Nikkan Jidosha Shimbun on December 3, 2016)
Reorganization
-The Company announced that it will reorganize its subsidiaries to strengthen its automotive electrical component business. The company will merge with its wholly-owned subsidiary, Alpine Giken, Inc. Furthermore, Alpine Technology Manufacturing, Inc. and Alpine Precision, Inc. will be merged into Alpine Electronics Manufacturing, Inc. (all three companies are wholly-owned subsidiaries of Alpine Electronics). The reorganization will be made effective on April 1, 2017. (From an article in the Nikkan Jidosha Shimbun on December 2, 2016)
Outlook for FY ending Mar. 31, 2018 |
(in millions of JPY) |
| FY ending Mar. 31, 2018 (Forecast) |
FY ending Mar. 31, 2017 (Actual) |
Rate of Change (%) |
|
| Sales | 250,000 | 247,751 | 0.9 |
| Operating income | 6,500 | 5,612 | 15.8 |
| Ordinary income | 5,600 | 7,439 | (24.7) |
| Profit for the year attributable to owners of the parent | 800 | 7,760 | (89.7) |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
R&D Expenditure |
(in millions of JPY) |
| FY ended Mar. 31, 2017 | FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | |
| Group | 15,400 | 19,600 | 18,100 |
| Audio System Division | 2,800 | 2,500 | 3,100 |
| Information / Communication System Division | 12,600 | 17,000 | 15,000 |
Joint Development
Development of Next-generation in-vehicle system with IBM Japan
-The Company announced on July 26 that the Company and IBM Japan Ltd. (IBM) have started development of a next-generation in-vehicle system. Both companies will complete a prototype of the system by the end of 2016 and promote it to automakers. The system under development will incorporate the Company's in-vehicle device and IBM's IoT (Internet of Things) solution for the automobile industry "Watson IoT for automotive" as basic technologies and provide a driving environment that suits the driver's and passengers' preferences by utilizing dynamic information through IBM's cloud computing. The companies will examine specific services provided by the system, including displaying route guidance while learning routes that fit the driver's driving preference and tendency, and suggesting destinations and transit locations by analyzing the driver's social information and taste. The system will be designed on the assumption that it will be simultaneously connected with tens of millions of connected vehicles. (From an article in the Nikkan Jidosha Shimbun on July 27, 2016)
Established Joint Venture in China
-The Company announced that Neusoft Reach Automotive Technology (Shanghai) Co., Ltd. , equity-method affiliate, is scheduled to increase its capital share in December 2016. Among the capital increase, ALPINE ELECTRONICS (CHINA) CO., LTD. , a subsidiary of Alpine Electronics, Inc., will take 39% of shares, equivalent amount of CNY 99.45 million. After the capital increase, the capital amount of Neusoft Reach will be CNY 562.7 million. (From a press release on November 24, 2016)
-The Company announced that it established Neusoft Reach Automotive Technology (Shanghai) Co., Ltd., a joint venture. The new joint venture is located in Shanghai and develops automotive technology and conducts sales activities. It is capitalized at CNY 384.6 million (JPY 7.4 billion). The Company’s shareholding is CNY 150 million. The shareholding breakdown is as follows: Neusoft Corporation 41%, Alpine Electronics (China) (a subsidiary of Alpine) 39%, and Shenyang FullRich Enterprise Management Center 20%. The Company is advancing R&D and business in the following areas, in line with the growing Chinese economy: core technology on battery pack management and intelligent charging for electric vehicles; high-performance driver assist systems that integrate image recognition and sensors; core technology for autonomous driving; and cloud-platform based telematics.
Major Technology Licensing-in Agreement |
(As of Mar. 31, 2017) |
| Contract signed with | Country | Contract details | Contract period |
| Dolby Laboratories Licensing Corporation |
U.S.A. | Licensing of patent rights on noise reduction devices for DVD players etc. | -From January 1, 1977, until the patent expires. |
| Toshiba Corporation | Japan | Licensing of patent rights on DVD players |
-From Dec. 31, 2000 to Dec. 31, 2017 |
| Microsoft Corporation | U.S.A. | Licensing of usage rights to basic software |
-From July 1, 2003 to Dec. 31, 2017 |
| Sony Corporation | Japan | Licensing of patent rights on Navigation equipment with audio function | From Jan. 1, 2014 to Dec. 31, 2018 |
Capital Investment |
(in millions of JPY) |
| FY ended Mar. 31, 2017 | FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | |
| Group | 7,978 | 7,494 | 7,496 |
| Audio System Division | 1,538 | 1,648 | 1,731 |
| Information /Communication System Division | 6,440 | 5,845 | 5,765 |
-The Company will expand its traceability management system to record detailed production history globally. The function will be deployed as part of the company's Manufacturing Execution System (MES), which manages manufacturing site information in real-time, to establish a common traceability management system on a global basis. Detailed traceability per item, not per lot, will be standardized to keep problems from worsening through early analysis of the root cause of issues like defects and horizontal expansion of the countermeasures globally. The standardized traceability management system will be introduced in phases to manufacturing sites in and outside Japan from fiscal year 2016 (ends in March 2017) onward. Alpine Electronics will meet the requests of European automakers to their suppliers for standardized traceability systems. In addition to traceability purposes, the data acquired through MES will be utilized to enhance product quality and automate production processes. (From an article in the Nikkan Jidosha Shimbun on July 25, 2016)
Capital Investments in FY ended Mar. 31, 2017
| Audio System Division | (in millions of JPY) |
| FY ended Mar. 31, 2017 | |
| Investment in tangible fixed assets such as dies | 270 |
| Investments in software development | 467 |
| Investments in production facilities | |
| -Alpine Electronics of America, Inc. | 147 |
| -Alcom Electronicos de Mexico, S.A. de C.V. | 65 |
| -Alpine Electronics Manufacturing of Europe, Ltd. | 38 |
| -Alpine Technology Manufacturing (Thailand) Co., Ltd. | 206 |
| -Alpine Electronics (China) Co.,Ltd. | 58 |
| Information /Communication System Division | (in millions of JPY) |
| FY ended Mar. 31, 2017 | |
| Investments in tangible fixed assets that help streamline manufacturing and R&D processes | 1306 |
| Investments in software development | 2261 |
| Investments in production facilities | |
| -Alpine Electronics of America, Inc. | 382 |
| -Alcom Electronicos de Mexico, S.A. de C.V. | 258 |
| -Alpine Manufacturing of Europe, Ltd. | 562 |
| -Dalian Alpine Electronics Co., Ltd. | 382 |
| -Alpine Electronics (China) Co.,Ltd. | 175 |
| -Alpine Marketing Co., Ltd. (sales company in Japan) | 388 |
Planned Capital Investments |
(As of Mar. 31, 2017) |
| Name | Location | Activities/Products | Planned investment amount (million JPY) |
Starting date | Planned completion | Outline |
| Iwaki Plant | Iwaki, Fukushima Prefecture | Facilities for conducting manufacturing, R&D, and other activities | 3,400 | Apr. 2017 | Mar. 2018 | Create new products, increase production, streamline operations |
| Alpine Electronics Manufacturing of Europe, Ltd. |
Biatorbagy, Hungary |
Production facilities | 946 | Apr. 2017 | Mar. 2018 | Create new products, increase production, streamline operations |
| Dalian Alpine Electronics Co. Ltd. | Dalian, China |
Production facilities | 630 | Apr. 2017 | Mar. 2018 | Create new products, increase production, streamline operations |