Alps Electric Co., Ltd. Business Report FY ended Mar. 2015

Business Highlights

Financial Overview

(in millions JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of Change
(%)
Factors
Overall
Sales 748,614 684,362 9.4 -
Operating income 53,534 28,528 87.6 -
Ordinary income 57,594 28,090 105.0 -
Net income 34,739 14,311 142.7 -
Electronic Components
Sales 389,120 338,811 14.8 1)
Operating income 36,595 14,012 161.2 -
Automotive Infotainment
Sales 289,783 282,115 2.7 2)
Operating income 11,537 9,813 17.6


Factors
1)
Electronic Components - Automotive market
-For FY ended March 31, 2015, electronic components segment sales for the automotive market surged by 23.7% to JPY 208,400 million. The Company developed and released next-generation head-up displays and communication modules, as demand for technologies to support V2X (vehicle-to-X) communications increases. It also stepped up its business in the areas of switches, sensors, and input modules.

2)
Automotive Infotainment
-For FY ended March 31, 2015, automotive infotainment segment sales grew by 2.7% to JPY 289,700 million. Growth was attributable to releases of new products such as large-screen navigation systems for pickup trucks and SUVs in the North American aftermarket, and large-screen navigation systems for luxury vehicles in the European aftermarket. In the Japanese aftermarket, it launched 10-inch navigation systems featuring the world's largest navigation screen.

Electric Components: The 7th Mid-Term Business Plan covering fiscal years 2013 to 2015

FY ended March 31, 2015
The Company achieved sales of JPY 200 billion a year ahead of schedule. Sales rose thanks to increased demand for instrument panels, power window switches, steering combination switch modules, and remote keyless entry systems. Sales of new products, such as electronic shifters, electronic parking brakes, commanders, W-LAN+Bluetooth, and head-up displays also boosted the Company's revenues.

Plans for FY that ends on March 31, 2016
-In the final year of the seventh Mid-Term Business Plan, the Company aims to expand sales of premium cockpits, head-up displays, and touch panel modules. It will also continue to develop and introduce next-generation technologies that combine human machine interface (HMI), sensing, and connectivity.

Sales Tie-Up

-The Company signed a commercial sales agreement with Qualtré, Inc., its U.S. partner in gyroscope development. Under the agreement, the two companies are allowed to sell the jointly developed gyroscopes under their own brands. Mass production of newly developed three-axis gyroscope will start in 2015. The Company intends to propose the product for use in various products: automotive electronics, industrial systems as well as consumer appliances. In the joint development, Qualtré is in charge of the sensor devices and IC design, while the Company is responsible for packaging and performance testing. With the new agreement, the two companies will also join hands in the promotional activities. The three-axis gyroscopes are based on MEMS sensor technology, which employs high frequencies to achieve excellent device characteristics: low power consumption, superior impact resistance and outstanding immunity to external noise. (From an article in the Nikkan Jidosha Shimbun on January 28, 2015)

Outlook for FY ending Mar. 31, 2016

(in 100 millions of JPY)
  FY ending Mar. 31, 2016
(Forecast)
FY ending Mar. 31, 2015
(Actual)
Rate of Change
(%)
Sales 7,670 7,486 2.5
-Electronic Components 4,150 3,891 6.7
(Automotive market) 2,280 2,084 9.4
-Automotive Infotainment 2,810 2,897 (3.0)
Operating income 545 535 1.8
Ordinary income 545 575 (5.4)
Net income 365 347 5.1


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

R&D Expenditures

(in millions JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 33,035 32,987 28,674
-Electronic components 14,903 13,086 11,747
-Automotive Infotainment 18,132 19,895 16,884

R&D Activities

Electronic Components - Automotive market
-The Company, which has a particular expertise in sensors for engines and chassis, performs R&D in areas covering from components to system devices. It also conducts R&D on in-vehicle input devices.

<Electronic components>
The Company and Tohoku University have been advancing a hetero-amorphous material development and commercialization project through the Tohoku University Business Incubation Program (BIP), and have successfully developed an innovative soft magnetic powder. The new material has 20 to 25 percent higher saturation magnetic flux density and 20 to 25 percent lower core loss than existing amorphous powders. The technology is expected to be applied to a wide range of power electronics such as power module reactors and also to magnetic cores of actuators and motors.

<Module products>
-In FY that ended March 2015, the Company developed and began mass-producing a compact and flat head-up display (HUD) that features the world's first laser technology for HUDs. The HUD unit can be installed in a small dashboard space.

-The Company is developing high-performance touch-panel modules for car air conditioners and audio equipment. Other development focus includes LTE (Long Term Evolution) data communication modules for each market with different frequency levels, and V2X (vehicle-to-vehicle, vehicle-to-infrastructure) communication modules that help create secure and safe road traffic.

Product Development

Wireless Communication Module for Automotive Use
-The Company has developed and started mass production of its new all-in-one wireless communication module for automotive use. The new product integrates a wireless LAN driver, a Bluetooth antenna and a protocol stack into one unit. The module is designed for car navigation and display audio systems that are used in conjunction with smartphones. The Bluetooth functions are incorporated in the module as wireless LAN is increasingly being added to car navigation and other automotive systems. Bluetooth supports hands-free calls and music playback through smartphones while wireless LAN enables high-speed communication required for providing cloud services. Bluetooth also supports Wide Band Speech for securing higher quality sound of hands-free calls. (From an article in the Nikkan Jidosha Shimbun on January 23, 2015)

Automotive-Grade Connectivity Module
- The Company and Freescale Semiconductor Japan Ltd. have developed automotive-grade connectivity modules which integrate various communication systems such as Wi-FI, LTE, vehicle-to-vehicle, vehicle-to-road and other various communication standards. Since the new modules can integrate complicated communication functions, system designers can shorten a period for developing a telematics service for linking various communications and an Advanced Driver Assistance System (ADAS). The companies will start providing the new modules in and after 2015 and propose them to automakers and tier-1 suppliers in Japan and Europe. (From an article in the Nikkan Jidosha Shimbun on October 1, 2014)

Head-Up Display (HUD) System
-The Company has developed an advanced head-up display (HUD) system that can automatically control the amount of information to be shown on the display according to the predicted needs of the driver. The HUD system integrated with camera and sensor technologies can detect where the driver is looking at, grasp what kind of information the driver needs at that moment, and automatically select and display necessary information. This will prevent the driver from having to gaze at the display with too much information. The HUD system also has functions to allow the driver to turn up/down the air conditioner without taking his/her hands off the steering wheel. Drivers can also answer/hang up the phone with a simple hand gesture that will be detected by the camera. The Company expects the new HUD will serve as a sophisticated human machine interface, and will help increase the company's presence in the advanced driver assistance system market. (From an article in the Nikkan Jidosha Shimbun on September 25, 2014)

TACT Switch
-The Company has developed and started mass production of the new "SKST Series" TACT Switch for steering wheels and audio systems. The TACT Switch achieves both quiet operations and heavy operating feel. This meets the needs of automakers that pursue the operating feel of switches for in-vehicle systems and the quietness of the cabin. Mass production of the switch is already underway at the Kakuda Plant (in Kakuda, Miyagi Prefecture) from July 2014. The Company plans to attain a monthly output of 3 million switches in April 2015. (From an article in the Nikkan Jidosha Shimbun on August 5, 2014)

Capital Expenditure

(in millions JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 31,416 26,570 31,833
Electronic components 22,210 16,671 23,845
Automotive Infotainment 7,496 8,193 6,719


Electronic components
-The Company made investments to develop and manufacture electronic components, including touch panel devices , switches and camera actuators for smartphones.

Automotive Infotainment
-The Company invested in machines, dies and molds for new products to upgrade and streamline its production facilities.
-Outside Japan, Alpine Electronics of America, Inc. made investments in production facilities.

Planned Capital Investment

(As of Mar. 31, 2015)
Name
(Location)
Division Investment details Planned investment
(million yen)
Start of construction Planned completion
Alps Electric Co., Ltd.
Furukawa Plant and others
(Osaki, Miyagi Pref.)
Electronic components Production facilities for electronic components 18,003 Apr. 2015 Mar. 2016
Alps Electric Co., Ltd.
Headquarters
(Ota, Tokyo)
Electronic components System-related devices and equipment 981 Apr. 2015 Mar. 2016
Alpine Electronics, Inc.
Iwaki Plant
(Iwaki City, Fukushima Pref.)
Automotive Infotainment Production, R&D and other facilities 2,030 Apr. 2015 Mar. 2016