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5. Alps Electric Co., Ltd. Business Report FY ended Mar. 2016

Alps Electric Co., Ltd. Business Report FY ended Mar. 2016

Factors
1)
Electronic Components - Automotive market
-Sales and operating income at the electronics components business set new record highs in the fiscal year that ended in March 2016. Sales to the automotive market were JPY 247,500 million, an 18.7% y/y increase. Overall sales of electronic shifters, operational input modules, communications modules, etc. were robust, thanks to the growing pace of sales of electrified vehicles as a result of the dynamic development of advanced-driver-assistance systems (ADASs) and eco-cars by OEMs.

2)
Automotive Infotainment
-Sales at this business fell 7.7% y/y to JPY 267,541 million in the fiscal year that ended in March 2016, and operating profit fell 52.9% y/y to JPY 5,434 million. In spite of the Company’s aggressive sales activities and developing new products, sales fell because OEMs in North America and China switched to building new models, reducing the content of factory-installed products. In addition, the product line seemed to lose its appeal, which reduced operating profit.

Electronic components

Seventh Mid-term Management Plan (starting from the fiscal year ending in March 2014 and ending in the fiscal year ending in March 2016)
-Sales: The significant increase in sales of products destined to both the automotive and smart-phone markets set new records. (Original forecast for the fiscal year ending in March 2016 was JPY 350 billion, while actual was JPY 434 billion.)
-Operating profit: Targets achieved, breaking past performance records. (Original forecast for the fiscal year ending in March 2016 was JPY 24 billion, while actual was JPY 40.7 billion.)

Eighth Mid-term Management Plan (starting from the fiscal year ending in March 2017 and ending in the fiscal year ending in March 2019)
-Based on the slogan of becoming a “Company with Sustainable Growth”, the Company is focusing on three sectors with foreseeable growth: automotive, mobile, and EHII (Energy, Healthcare, Industry, IoT). The Company will work on improving profit at the automotive sector and continue creating new products for the mobile sector, while working at the same time to win new customers. As a result, it will aim to further increase profitability based on following a dual market approach.

Targets: GT510 (Sales JPY 500 (billion); Operating Income 10%)

Major objectives:
1. Achieve sales of JPY 300 billion in the automotive market
・Automotive modules: develop products integrating HMI, sensing, and connectivity
・Automotive devices: develop products for connected cars
2. Achieve sales of JPY 200 billion in the mobile market
3. Achieve sales of JPY 60 billion in the EHII market

Business alliance

-The Company announced that it has signed a business alliance agreement with Asahi Corporation, based in Gunma Prefecture, Japan, to jointly develop, design, and manufacture modules and to procure materials for automobiles. Asahi Corporation is engaged in designing, manufacturing, and selling automotive electric components and audio systems. Prior to this alliance, Alps Electric acquired an 18.9 percent share in Asahi Corporation. (From a press release on May 29, 2015)

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

-R&D expenses for the fiscal year ending in March 2017 are forecast to be JPY 33,900 million.

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.


-In the fiscal year that ended in March, 2016, the Company achieved developing and mass-producing a waterproof detection switch with built-in resistors, which achieves quick detection response over that of disconnection and short of peripheral circuits, and which can accurately detect whether vehicle doors, trunks, and hoods are opened or closed. In the area of detection, the Company made use of its proprietary precision processing technology that demonstrates strong performance against dirt, dust, vibration, and friction to achieve highly reliable contacts.



- In the fiscal year that ended in March, 2016, the Company achieved developing and mass-producing a V2X (Vehicle to X) module for the infotainment and intelligent transport system sectors, making car-to-car and car-to-road communication possible. This is necessary to respond to ADAS, which support autonomous driving; and Driving Safety Support Systems (DSSSs) to prevent accidents from happening.

-The Company is conducting R&D activities on touch-panel modules enhancing the operability of automotive air-conditioning and audio systems. Also, it is developing an automotive long-term evolution (LTE) communication module compatible with communication frequencies worldwide, responding to the need for making it possible to use LTE networks from vehicles.

Product Development

New series of ring type encoders
-The Company will start mass-producing new series of ring type encoders compatible with reflow soldering. Reflow-compatible encoders can be soldered at the same time as other components, and thus reduce assembly workloads. The new products are expected to find uses as dial-type controls for HVAC and audio systems inside vehicles. The Company will start mass-producing them in phases by the end of 2015. (From an article in the Nikkan Jidosha Shimbun on November 19, 2015)

Development of waterproof detector switch with built-in resistors
-The Company announced that it has developed the new SPVQD Series waterproof detector switch with built-in resistors. The new detector switch improves the reliability of detection and contributes to the downsizing of circuits. The SPVQD Series is intended for detecting the opening, closing and malfunctions for automobile doors, trunks and hoods. (From an article in the Nikkan Jidosha Shimbun on September 29, 2015)

-The Company plans to spend JPY 52,500 million in capital investments in the fiscal year that ends in March 2017.

Electronic components
-In the fiscal year that ended in March 2016, the Company invested in R&D and production facilities/equipment to produce actuators for smart-phone cameras, as well as to produce other products such as tact switches and components.

Automotive Infotainment
- In the fiscal year that ended in March 2016, the Company invested to renew and streamline production equipment and ready facilities and equipment to produce dies used on new products.。
-Outside Japan, the Company invested in facilities and equipment at its production plant in Europe, Alpine Electronics Manufacturing of Europe, Ltd.